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Thoughts on Coming Apart and the Coming Great Reset

Turning and turning in the widening gyre

The falcon cannot hear the falconer

Kit Webster

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Reviewing the Bidding

Thoughts and Theses

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No changes this week

  • In the early 1990s, I predicted a severe crisis in the US in the early 2000s - see My Journey for details of how those thoughts were developed, and a description of my predictions, essentially all of which have held up well. That crisis would result in a resetting of the country's financial system and financial institutions and therefore would profoundly affect all parts of the culture and all institutions, including government and military. 

  • The crisis would be precipitated by debt, deficits, entitlements and demographics.

  • The purpose of this web site is to Contemplate Out Loud about ways in which current events are reinforcing or contradicting my predictions. And to create a continual update of thoughts for the future.

  • The Fed, Congress and the Executive Branch have now made that crisis inevitable and of a much higher order of magnitude than I anticipated.

  • The crisis should be played out over the remainder of this decade. There will be a new world with a new financial system and a new culture under construction at the end of the crisis.

  • The Fed has three alternative paths: inflation, austerity and default. For now, they have chosen inflation. 

  • We are deep into a multi-year end game and to the point at which things will generally become worse, faster, although nothing will move in a straight line.

  • The Fed will likely continue on its current path until something breaks.

  • When the Fed signals the end of raising interest rates, we will likely enter a new era of currency devaluation and yield curve control.

  • Biden is significantly contributing to underinvestment in fossil fuels that will result in a multi-year, perhaps multi-decade, energy crisis. He is attempting to cross the green energy chasm in two steps. We will get to the point where even leftists will treasure every drop of oil and every lump of coal. I discuss this critically important issue, perhaps the most important issue we face today, in The Energy Crisis.

  • Biden made a major strategic error by confiscating Russian currency reserves.

  • The last stimulus payment, and arguably the one before that, were major errors, contributing significantly to inflation, shortages, extraordinary speculation and the increase in asset prices.

  • Inflation is peaking - for now - and it will remain at a high level. In the long run, because of debt levels, there is no practical alternative to continued, elevated inflations - which will probably rise and fall in waves. Stagflation is my bet for the foreseeable future.

  • There will be deflationary / disinflationary crosscurrents including demographics (retirement of Boomers, declining birth rates), and debt rationalizing and blowing up of debt, worldwide. Temporarily, we will have the interesting phenomenon of too much retail inventory as a result of overordering during supply chain issues and a slowing economy. Inflation is necessary; deflation /disinflation is the wild card.

  • The economy is weakening - recession is probable, and there is definite slowing down at a fairly rapid pace. Actually, there is a good possibility that a recession has already begun. However, recessionary pressures may recede for a quarter or so. The third and fourth quarters of 2022 are two of those quarters where the pressures are temporarily receding.

  • Housing is weakening.

  • Ukraine should lose the war. A combination of Russian incompetence and advanced weapons from the West, primarily the US, is resulting in at least short term advantage to Ukraine. It is not clear what Russia's next moves are. See Ukraine.

  • Russia may be winning the financial / energy war. Energy is so fundamentally important, and Russia has so much of it, while the US is burdened by extraordinary levels of debt, that Russia holds the better hand. The West's counter to that better hand is sanctions. Having said that, sanctions, particularly those leading to an inability for Russia to maintain their oil fields, will begin to create problems over time. These problems will be for Russia and for the whole world, because the world needs Russian oil. Very high stakes poker. See Ukraine.

  • Europe will have serious energy challenges this winter. Now that the Nordstream pipelines have been damaged, they do not have the alternative to reach accommodations with Russia. Nature has smiled on Europe for half a winter with mild weather. The bullet may be dodged until next year. 

  • Food disruptions over at least the next year, and probably for several years, primarily as a result of the Ukraine war, will be significant.

  • I outline my thoughts about how the next few years will unfold here.

Beth tells me, enough with the analysis, already. People want to know how you feel. I am not so sure about that, but if you are interested, I emote here.

Thoughts From

the Archives

More Coming

January 27, 2023

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Seems Like A Good Time To Talk About Gun Control

We want energy to be cheap, reliable, and clean. It is typically easy to meet one of these three criteria, but meeting all three at the same time is difficult. This is known as the energy trilemma ... Trade-offs are real - Richard Tol

It takes a great deal of pain to lead to political change. Unfortunately, you would not wish that level of pain on anyone - Doomberg

IMO it remains poorly understood that in high govt debt, high govt deficit, low economic productivity situations, deflation is often the midwife of hyperinflation. - Luke Gromen

Putin a living nightmare. Putin not alive might be even bigger nightmare. - Harald Malmgren

I cannot assess what "the market" thinks, often consider there is little thinking there. I believe we shall have an epic credit event soonish, probably Q2 but maybe Q3, led initially by nonbank lenders, like the GFC, but this time nonbank lenders bigger than all banks together - Harald Malmgren

Markets

We are still on the cusp of major change. There is a good argument that the dollar has made its top. However, that has not yet been confirmed. When the dollar does make its top, the world will begin a fundamental change.

Same issue with bitcoin. It may have made a bottom, but that is not confirmed either.

UGLY

Gun Control

So, in an effort to irritate as many people as possible, let's talk about gun control in light of the recent mass shootings.

(The fact that there was a mass shooting by a person of Asian background is simply extraordinary. Hopefully, that is a one-off and not the beginning of a trend.)

To establish my priors, I shot competitively in my youth, hunted some in my young adulthood, own a pistol and have not fired a gun in decades. I live in a blue city in a red state and am politically independent. I am comfortable with guns, but do not have any emotional attachment to them.

The number of people killed by guns in the US is an abomination. There is clearly a huge problem.

Given the sensitivity of the subject, I thought I would go to AI for a discussion. ChatGPT was at capacity, so I went to another AI that I have made an extension to Chrome. Here is what it had to say.

Gun violence in the United States is an ongoing and serious issue. It has been a major source of debate among citizens, politicians, and law enforcement for decades. With no clear solution to this problem on the horizon, it's important to understand what gun violence looks like in America today. 

According to statistics from 2019 compiled by Gun Violence Archive (GVA), there were nearly 40,000 deaths due to gun-related incidents across the country that year alone—the highest number since at least 1999 when GVA began tracking such data. This includes mass shootings as well as homicides involving firearms; suicides are not included in these figures but constitute a large portion of overall gun deaths each year too. The majority of victims are male with African Americans being disproportionately affected compared with other racial groups; most incidents also occur within cities or urban areas where access to guns is easier than more rural parts of the country which tend to have stricter regulations on firearm ownership and usage laws. 

There is much disagreement over how to best address this issue, but some common proposals include increasing background checks before allowing people to purchase weapons or strengthening existing laws around who can own guns—particularly those deemed mentally unstable or convicted felons who shouldn’t be allowed to obtain them legally under any circumstances regardless their individual state’s current restrictions. Other ideas involve implementing stricter punishments for those caught committing crimes using firearms, investing more resources into mental health services, providing better education about responsible use/storage practices, etc. Ultimately though whatever steps may be taken must ensure public safety while respecting individuals' Second Amendment rights; finding balance between both will likely remain a difficult task going forward given all complexities involved here.

In 2022, there were 44,287 deaths in the US from gun violence, including 647 from mass shootings.

 

Interestingly, the US is not in the top ten countries for gun deaths per capita (it is actually number 18), with El Salvador, Venezuela and Guatemala leading the way. The US is at 10.6 per 100,000 people with the closest Western, developed nation being France at 2.7. (El Salvador is 39.2, China is 0.2, Russia is 2.7 and Singapore is lowest at 0.1.) Brazil even has more total gun deaths than the US, which is in second place.

But, just because we cannot win any prizes does not mean we are not awful.

If you want to look at it by state, Alaska (23 per 100,000 people), Alabama (21.4) and Louisiana (21.2) are on top, with Massachusetts (3.4), New York (3.9) and New Jersey (4.1) on the bottom. Note that our least violent state by this measure at 3.4 is still above the most violent Western, developed country other than the US - France at 2.7.

For those of you who must view everything through a political lens, this really does divide reasonably well into red states and blue states, with red states having the highest rates.

For completeness, Chicago has the 12th highest gun death rate in the country of any big city, and pales in comparison to Baltimore, Memphis and Detroit. This turns out to divide reasonably well into red city, blue city, only in the other direction than with states, with blue cities having the highest rates.

Finally, you can't get away from the race issue. This is gun death rates by race (note the implied suicide rate by whites as the grey part of the chart, and remember that blacks make up only 13% of the population but 66% of gun deaths).

We own a lot of guns - we get first place in this category with 120.5 civilian guns per 100 people (the Falkland Islands are second with 62.1). The closest Western, developed country is Canada with 34.7. Other countries: El Salvador 12.0; China 3.6; Russia 12.3; Singapore 0.3; Brazil 8.3.

So, my first conclusion is that gun control in a country having 1.2 guns per person is an oxymoron. You can fix things around the edges, but that train has left the station. Perhaps a better metaphor is that Pandora's box has been opened.

With so many guns around, people who are unstable or are emotionally overwrought, or want to settle a score or want to commit suicide-by-cop or suicide at all are going to be able to use a gun.

You cannot take people's guns away without amending the Second Amendment and that ain't gonna happen. A more liberal Supreme Court might restrict some gun rights, but even very-liberal Supreme Courts in the past have not done so.

We have a very, very serious inner-city violence problem, including a violence-and-gun-use culture. This is one of the outrageous, festering sores on our society which requires, but is not getting, serious attention.

We have an individualistic, violent culture, which now has outrage exuding from every pore. 

Given those facts and circumstances, what can, not should, be done? Given the extensiveness and seriousness of the problem, we have to do something, don't we?

Well, if it were easy, it would have been done, already. The problem is endemic, serious and very difficult.

Here are my thoughts:

As an overstated, simplistic generalization, this is a cultural, mental health, inner city problem. You can and should do all the around-the-edges things like background checks, which will only make a small dent in the problem - but they will move the ball forward while making you feel better and giving politicians something to talk about. You have to address culture, mental health and the inner cities in order to deal with the fundamental issues and actually make a difference.

The cultural challenge is huge and basically unsolvable on the timeframe of generations. Great strides have been made in the culture for blacks, women and homosexuals, so it can be done. However ...

The mental health problem is basically a surveillance problem. It is a different mental health problem than that associated with homelessness. The homeless mentally ill are seriously mentally ill. Time after time a mass shooter has been said to have been "on the police's radar." However, the monitoring problem is so large as to be practically impossible.

The inner-city problem is an abomination and something we morally and practically have to address, even if there were no violence. But we are not addressing it, and if we do put together a program to address it, this is another multigenerational task.

What I am saying is that there are things we can do, like hardening schools, but in the end, gun violence in the US seems to me to be a pandemic. It is within us and a part of us. It is solvable, but the effort is huge, multifaceted and multigenerational.

 

As with all trends, we have taken the "well-regulated militia" trend to extremes.

And there we are.

There Is A Wobble In The Zeitgeist

Grinding Down - Quality Of Life (Necessarily) Deteriorates

(entirely appropriate steps being taken to fight climate change and to gain sustainability that will negatively impact your life)

(Click here for an introduction to the grinding down process.)

“Limiting your contribution to climate change requires an adapted diet, and coffee is no exception. Choosing a mode of coffee preparation that emits less GHGs (greenhouse gases) and moderating your consumption are part of the solution,” the researchers at the University of Quebec at Chicoutimi wrote. (Kit) Actually, everything, and I mean everything, has to change, so there will be a series of articles of this kind about literally every item and every activity in your life. Coffee really is not that big of a deal, but if you have to eliminate 70-90% of all greenhouse gas emissions, you have to look in every nook and cranny.

Profound Change Having Profound Implications

War, Energy and Food

(Things will remain slow until the upcoming Russian (or perhaps Ukranian) offensive and until planting season gets under way)

Colombia:

National Grid to pay customers to cut power as freezing weather bites UK

China Sets Coal Production Record In 2022. "We Don't Want To Be Like Europe"

This update from Peter Zeihan on the war is worth watching

The Dutch government plans to close the Groningen gas field this year despite Europe’s precarious supply position. Groningen is the largest gas field in Europe. Production from Groningen has been curtailed substantially, and there were plans in place to phase out production altogether because of increased seismic activity in the vicinity of the field even before the energy crisis began in 2021.

The Russians have called up so many new recruits that the coming battles may become wars of attrition in which Russia dominates by simply throwing people at it.

Short Takes

This is the correct take: The GOP is 100% correct to push for spending cuts…the Dems are correct for pointing out that GOP doesn't seem to care as much when they are constructing the budget. We should be glad that someone is pushing for spending cuts. Also, there will be no spending cuts.. - Jim Iuorio

I wonder who is going to tell them about oxymorons? - More consumers have an appetite for sustainable travel options

Um, no. It's Economics 101. The price of eggs will rise. The questions then revolve around who pays, or are there shortages and black markets? Been happening since long before socialism and capitalism. - EGG PRICES FORCING RESTAURANTS TO RAISE PRICES FOR CUSTOMERS USA Today opinion columnist Michael J. Stern claimed “classic capitalism” was responsible for high egg prices. “#1 – 50,000,000 chickens have died in the U.S. due to Avian flu. #2 – Supply and demand made egg prices increase. #3 – That’s classic capitalism, which y’all love…until you pay $5 for a dozen eggs. Then you want the government to do something about it. That’s socialism,” he taunted.

Fascinating. I would have guessed that if the Democrats had to choose one subject for a Constitutional amendment, it would have been abortion. I get their point, but it is not clear to me that many people actually care. - Democrats in the House of Representatives have introduced a constitutional amendment to overturn the Supreme Court’s controversial Citizens United v. FEC decision made in 2010. Committee member Rep. Adam Schiff (D-Calif.) speaks during the fourth of eight planned public hearings of the U.S. House Jan. 6 committee on Capitol Hill in Washington, on June 21, 2022. The court ruled 5–4 that the free speech clause of the First Amendment prohibits the government from restricting independent expenditures for political campaigns by corporations and overruled an earlier decision that banned corporations from making “electioneering communications.”

The number of migrant encounters across the U.S. southern border for December 2022 reached a record high, with the U.S. Customs and Border Patrol (CBP) reporting a figure of more than a quarter of a million.

US banks are cutting customers off from crypto exchanges and brokers at an alarming clip

ChatGPT just passed a Wharton MBA exam. Professor Christian Terwiesch at University of Pennsylvania's prestigious Wharton School of Business tested ChatGPT this week by running it through the final exam of a typical MBA core course, Operations Management. And yes, the A.I. technology which is still in its infancy "would have received a B to B- grade on the exam," according to the prof, who added that our future tech overlord "does an amazing job at basic operations management and process analysis questions including those that are based on case studies."

Pennsylvania’s Democratic Gov. Josh Shapiro signed an executive order opening 92 percent of the state’s government jobs to people without four-year college degrees. Plus, he asked the state administrator to examine whether the other 8 percent could also drop the degree requirement.

One day, I will do a retrospective on the Covid "vaccines." (I think vaccine is a misnomer - it is a temporary symptom reducer. The really interesting question - what are the long-term effects of the rewiring of our immune systems - will take a while to answer. I am, however, a very strong critic of the way the FDA, CDC and WHO handled the pandemic.) Not today. The data are still coming in and looking at one or two studies is not particularly useful. In the meantime, it seems that the boosters are low-hanging fruit. Following are some interesting excerpts from Allysia Findley's article in The Wall Street Journal:

As summarized in ZeroHedge: "Wall Street Journal editorial board member Allysia Finley has taken a flamethrower to vaccine makers over their 'deceptive' campaign for bivalent Covid boosters, and slams several federal agencies for taking 'the unprecedented step of ordering vaccine makers to produce them and recommending them without data supporting their safety or efficacy.' ...

 three scientific problems have arisen.

  1. The virus is mutating much faster than vaccines can be updated.

  2. Vaccines have 'hard wired' our immune systems to respond to the original Wuhan strain, "so we churn out fewer antibodies that neutralize variants targeted by updated vaccines."

  3. Antibody protection wanes after just a few months."

However, vaccines were effective in preventing deaths, particularly of the elderly.

The term mummy is 'dehumanising' and should no longer be used, museum says in bid to protect ancient Egyptians preferring "mummified person" or "mummified remains" as a politically correct alternative.

God, I love irony - On Saturday afternoon, former FBI agent Charles McGonigal, who was head of counterintelligence in the New York Field Office and a part of the investigation into supposed ties between Trump and Russia, was arrested over his alleged ties to Russia.

It ain't easy being green - Wind Turbines Taller Than the Statue of Liberty Are Falling Over - Breakdowns of towers and blades have bedeviled manufacturers in the US and Europe.

The developed world is dying off; the developing world, particularly Africa, is growing rapidly

Unfortunately true - Bill Gates warns Australia to prepare for the next pandemic - which could be man-made and far more brutal than Covid.

Pope Francis has stated that homosexuality should not be considered a crime, even though it is a sin. Time to begin angel-counting-on-the-head-of-a-pin on this one

Pelosi really, actually had the Church exorcise any demons from her home.

A food additive made out of powdered crickets began appearing in foods from pizza, to pasta to cereals across the European Union.

There is a thread that Damar Hamlin, the Buffalo Bills player who went into cardic arrest on the field is actually dead and what you are seeing from time to time is an impersonator. While this seems bat-shit crazy, my problem is that in these disjointed times, I would actually give it a 10% probability of being true.

We live in genuinely weird times

Fun And Games

(Now Mike Pence has classified documents - all the cool kids are doing it.)

Then There Is This

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