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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 (January 2023) - 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 was 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

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April 12, 2024

This Is Your Brain On Drugs

The opposite of courage in our society is not cowardice, it is conformity ~Rollo May

Reality exists in the human mind, and nowhere else - George Orwell

Markets

Updated Charts

We continue to struggle to make some kind of top in the stock markets (and in bitcoin). We are probably not there, yet, but we are close.

The latest inflation announcement reinforces my thoughts that there is another round of inflation coming. However, we may have to navigate a pretty nice market decline either prior to or, and this will be fun, at the same time that, inflation is increasing.

Some Call Trump an Authoritarian

And he is

But, so far, Biden has out-authoritarian-ed every president except FDR and possibly Wilson - ok, Lincoln.

 

I cannot begin to tell you how dangerous this is. Just a very, very, very bad idea.

The difference is that in his first term, Trump was pretty ineffective at it. While it could be worse in his second term, so far, Biden is running rings around him.

And nobody cares.

Biden is considering restricting immigration by executive order, following probably-illegal executive orders on gun control and definitely-illegal and immoral executive orders on student loans.

"Some are suggesting that I should just go ahead and try it," Biden said in a recent Univision interview. "And if I get shut down by the court, I get shut down by the court."

This Is Your Brain On Drugs

Alice in Wonderland is my favorite metaphor for the times we live in. Words mean exactly what I say they mean. Painting roses red. Hurrying as fast as you can to stay in one place. Talking backward.

We have fallen down a rabbit hole and live in a very strange land - a very different land from the one we left behind.

As Jefferson Airplane said in White Rabbit, "One pill makes you larger, and one pill makes you small, and the ones your mother gives you don't do anything at all." (Actually, the dormouse never said, "feed your head.") 

Drugs are now an integral part of our culture. One day, this drug use will be looked back upon as one indication of our descent into a hedonistic loss of discipline, but today, we just view it as fun.

Culture does not show up in just one place. If we are going to have a hedonistic loss of discipline, we are going to do it pretty much everywhere at once - or rather, it will eventually spread into every nook and cranny. One of my slogans is that sex, drugs and rock and roll win every time.

It is the classic values and virtues that sustain and provide the foundation for a stable, flourishing society, but that is a topic for another time. That is the land we left when we fell down the rabbit hole. And it includes requires self discipline and sacrifice, which are definitely downers.

One area in which the permanent orgy is particularly important is the economy, and the drugs of choice are deficits and ever-increasing debt.

We live in a state of a permanent high because we are on the drug of money creation. Money creation is responsible for essentially all of our recent prosperity. It is like an individual maxing out credit cards, auto loans and mortgages to live, eat and vacation well. That analogy is imperfect in that the government can create its own credit by printing money and you can't. So your personal orgy is limited by outside constraints.

But, when you are the biggest, baddest kid on the block, there is no one to provide constraints.

This will end, not with a whimper but with a bang, when it implodes from within.

Oh, the other kids on the street will throw rocks and call you names, and they will take advantage of every stumble, but you will ultimately put yourself in the position of the necessity of failure.

We have now gotten to the place with the funding of new debt and the refunding of old debt that we are hurrying as fast as we can to stay in one place. We have to hurry ever faster.

Although my imprecise predictions of when this will all end have centered on the nice, round number of 2030, I am amazed and more than impressed at the creativity and innovation that has enabled us to get where we are now.

We are beginning to reach our limits, but we can stay high for a while longer with just ... one ... more ... fix.

Short Takes

Dispair inducing

From The Economist

From The Telegraph - important in an era when laws are not enforced so that official statistics become increasingly irrelevant -

On crime, NBC News recently asserted that “Americans believe crime rates are worsening, but they are mistaken.” It’s actually NBC and Biden who are mistaken, as the best crime stats show a marked increase in crime in recent years – largely driven by crime spikes in urban areas.

The most reliable US crime statistics come from the National Crime Victimisation Survey (NCVS). This is especially true now that the FBI’s crime stats, which used to cover essentially the whole country, are failing to include police forces in about one-sixth of all US towns or cities, including Los Angeles, San Francisco, and New York.

The NCVS, which dates to the Nixon administration, is the largest crime survey in the US and one of the largest federal surveys on any topic. It asks about a quarter of a million US residents annually whether they were the victim of a crime over the past year – and, if so, to give more information about that crime. So, the survey captures crimes not reported to police – and victims say that most crimes are not reported to police – as well as those reported. The NCVS is run by the Bureau of Justice Statistics, which I directed from 2017 to 2021.

In 2020 – the summer of Covid-19 lockdowns, George Floyd, and Black Lives Matter protests – Left-leaning organisations and politicians profoundly de-emphasised the importance of law enforcement. They clamored to “defund the police,” said we should stop enforcing “minor” crimes in the name of racial “equity,” and pushed to get lenient prosecutors elected, especially in major cities controlled by progressive prosecutors. Their rash experiment in encouraging lawlessness has played out in real time.

According to the NCVS, violent crime rose from 5.8 million violent victimisations in 2019 to 6.6 million in 2022 (the most recent year for which statistics are available), an increase of 800,000 violent victimisations and 14 per cent. Excluding simple assault – the least serious violent crime category and the one least likely to be prosecuted as a felony – the increase was notably worse: 37 per cent.

The real story, however, is where violent crime has risen. In suburban areas, the rate of violent victimisations was 22.3 per 1,000 residents ages 12 and over in 2019 and 23.9 per 1,000 in 2022 – an observed 7 per cent increase that wasn’t statistically significant. In rural areas, the rate per 1,000 went from 16.3 in 2019 to 15.4 in 2022 – an observed 6 per cent decrease that also was not statistically significant.

But in urban areas, the rate per 1,000 rose from 21.1 in 2019 to 33.4 in 2022 – a massive 58 per cent increase that was very much statistically significant. Excluding simple assault, the rate of violent victimisations in urban areas rose by a whopping 73 per cent over that span.

In other words, American cities are profoundly less safe than they were just a few years ago. What’s more, the reason for this change is quite clear. Not only has lax law enforcement encouraged more violent crimes, it has facilitated a decline in civilised norms. Many of America’s major urban centers are now replete with tent cities, drug addicts, shoplifting and subsequent store closures, the pervasive smell of marijuana, and a general sense of foreboding.

A ray of hope - Italy has banned the addition of insects to pizza and pasta.

With declining birthrates and labor shortages, famously insular Japan is beginning to allow immigration. IMO this is both economically necessary and a cultural disaster. A wonderful, clean, safe, polite society will become increasingly compromised.

It's starting to get ugly. Pelosi signed a letter asking Biden to quit arming Israel. If the war against Hamas is not over soon, the Democrat convention could be messy. (Since I remember the convention in Chicago in 1968, I hope history does not rhyme this time round.)

 

Offered without comment -

Last Tuesday, Mass General Brigham announced it will stop reporting to child welfare officials suspected incidents of abuse or neglect solely because a fetus or a newborn is exposed to drugs.

...

Sarah Wakeman, MD, Mass General Brigham’s senior medical director for Substance Use Disorder, described the policy as “the latest step in our efforts to address long-standing inequities in substance use disorder care.” 

A press release justifying the change noted that “black pregnant people are more likely to be drug tested and to be reported to child welfare systems than white pregnant people.” 

Clearly a significant problem -

Ok - lightening strikes the Statue of Liberty, an earthquake hits NY, we have an eclipse and now a plague of "locusts" - 

It was right out of a movie script.

The eclipse was coming, but, although Austin was in the zone of totality, it was also forecasted to be socked in.

Sure enough, when our dog and I began our daily walk just before the eclipse started, we were socked in.

We got back and things had not gotten better. As we came close to totality, Beth and I went outside with our glasses. We could actually make out the eclipse through the cloud cover.

Maybe 5 minutes before totality, the clouds went away and we had a clear view of the eclipse through totality.

Maybe 3 or 4 minutes after totality, we were socked in again.

Should have bought some lottery tickets.

If you’re in Chechnya, from now on you are only rocking between 80 and 116 beats per minute. That’s because a new law bans any music faster or slower than that range.

I'm shocked, shocked!

Civil rights groups call for Baltimore to rename collapsed Francis Scott Key Bridge

Mattel is coming out with a new Scrabble game, dumbed down for Gen Z

The new launch is a double-sided version of the famous board game — one side with the original game for those who want to stick to the long-time traditional version, and one side with a "less competitive" version to appeal to Gen Z gamers …

So what's new exactly? In addition to a dual-sided board, there are helper cards, which provide assistance, prompts and clues and can be selected to match the player's challenge level of their choice.

The player who completes 20 challenges is the winner, while the player who used all their helper cards without completing a challenge is the loser.

That should be embarrassing, but my guess is that Gen Z has normalized being relatively uneducated.

Something in the water, I guess - 

Very nice - one picture that captures our present and our future - 

Margorie Taylor-Greene is still my poster child for why our republic is in trouble, but up pops Rep. Shiela Jackson-Lee, who graduated from Yale and has a law degree - emphasis mine - 

“The sun is a mighty powerful heat, but it’s almost impossible to go near the sun,” Jackson Lee continued. “The moon is more manageable, and you will see in a moment—not a moment, you will see in a couple of years—that NASA is going back to the moon.

A full moon is that complete rounded circle which is made up mostly of gases, and that’s why the question is why or how could we as humans live on the moon? Are the gases such that we could do that? ... We have yet to know whether you can live on the moon. But I don’t know about you, I want to be first in line to know how to live and to be able to survive on the moon—that’s another planet which we’re going to see shortly.”

In a press release promoting the congresswoman’s appearance at the school, her office pointed out that Jackson Lee had previously “served as a member of the Science Committee and the Ranking Member on the Space and Aeronautics Subcommittee,” and that she would be there to “highlight the experience” of the eclipse.

From The Free Press -

A Reuters/Ipsos poll published Wednesday recorded a four-point lead for Joe Biden over Donald Trump. It’s the latest in a run of strong polls for the president, who has more or less drawn level with Trump in the Real Clear Politics polling average, at 45.3 to Trump’s 45.5.

Reality check: unfortunately for Biden, national polls don’t matter all that much. The picture is less encouraging for Biden in swing states—which is where the election is actually decided. A Wall Street Journal poll from last week found that Trump had a lead in six of seven battleground states.

Harvard Reinstates Standardized Testing Requirement, Following Yale, MIT

Interesting comparison of international student achievement with the US broken down by race - US Asians are number 3 and US whites are number 7.

It Ain't Easy Being Green

An oldie-but-goodie

We're here for you

From Semaphor

Africa now emits as much carbon as it stores, reflecting both a rapid decline in tree cover and a surge in emissions, a recent study showed. Although the continent makes up around 20% of the world’s carbon sink, a rapid rise in agriculture and fossil fuel burning have outpaced its capacity to store emissions. Africa is no longer “providing a climate service to the globe,” the study’s authors wrote. Although energy production from renewable sources has increased modestly as the continent has urbanized, its grid is still heavily reliant on gas and coal, data by Ember showed.

Noted without comment -

"The eclipse could be a further indication of climate change," Sonny Hostin on The View

Further to my point that the word, could, does a lot of heavy lifting these days - from heathday.com - 

Temperature swings caused by climate change could be fueling stroke deaths

War, Energy and Food

Yay sanctions

Russian banks' profits this year could exceed the record levels achieved in 2023, Central Bank Deputy Governor Olga Polyakova said at a banking conference on Tuesday, an increase in the bank's previous forecast.

Miscellany

So, be very, very careful not to do that - 

The Bee, of course

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