From one clown show to the next. The Pentagon wasted millions of dollars shooting down harmless weather balloons…while the whole nation watched what it thought was either a war with extra-terrestrials…or at least a war with the Chinese.
Member of Congress James Comer — who is supposed to be endowed with normal human intelligence — worried that the balloons might be vectors for ‘bioweapons’, forgetting that thousands of tonnes of imports from China arrive every day. If China wants to attack with bioweapons, it doesn’t need to send up silly party balloons.
Meanwhile, the Bureau of Labor Statistics let it be known — what everybody already knew — that prices were going up. Despite all the reports of ‘softening’ inflation and a soon-to-come ‘pivot’, the numbers show inflation is not going away anytime soon. From USA Today: ‘Stubborn inflation is worrying economists as new numbers reveal hotter-than-expected price data’:
‘Producer prices, or those charged by manufacturers, farmers and wholesalers, jumped 0.7% in January after dipping 0.2% in December. It was the largest gain since June and nearly double what economists had forecasted.
‘Over the 12 months to January, [CPI] prices rose 6%, which was also more than economists had predicted but slower than December’s 6.5%.’
Producer price increases lead to consumer price increases later. So, the Fed will have to stick with its rate hikes. And higher rates are bound to cause consumers and businesses to make cutbacks (aka ‘recession’).
The essential problem is this: The interest rate cycle turned in July 2020. So, the cost of carrying debt is going up. As interest rates rise, more and more people will have trouble keeping up. Then, debt that can’t be paid, must be liquidated.
Last week, it was reported that thanks to the Fed’s ultra-low interest rates, the US now has a record amount of debt. Corporate debt…government debt — are at record highs — and still going up. Here’s The New York Times with a report on household debt: ‘Household Debt Rises to $16.90 Trillion; Credit Cards Pass Pre-Pandemic High’:
‘Total household debt rose by $394 billion, or 2.4 percent, to $16.90 trillion in the fourth quarter of 2022, according to the latest Quarterly Report on Household Debt and Credit. Credit card balances increased by $61 billion to reach $986 billion, surpassing the pre-pandemic high of $927 billion; mortgage balances rose to $11.92 trillion, auto loan balances to $1.55 trillion, and student loan balances to $1.60 trillion. The share of current debt transitioning into delinquency increased for nearly all debt types.’
In an honest economy, people create wealth by producing goods and services. The value of this output is recorded and preserved in ‘money’. But in a dishonest society, they just print money. In the first instance, money is a credit — it reflects real wealth. In the second instance, it is a debit; it is a claim on wealth that doesn’t exist, measured as ‘debt’.
A stunning lack of thought
And then, as debt increases and the cost of carrying it goes up, the mismatch between the money and the real goods and services it can buy becomes unsustainable. The accounts must be reconciled. How? The claims can be erased — by defaults, write-offs, and market crashes, for example. Or the value of the money itself can be adjusted downward in a devaluation or inflation.
Inflation is the most likely outcome. Politically, it’s the only acceptable way.
Another absurd report last week came from the Congressional Budget office. It estimates that we’ll almost double our ‘national’ debt over the next 10 years. That goofy news deserves special comment, so we’ll return to it tomorrow.
For today, we’ll close with an observation. What was most amazing about the media reports of last week was what wasn’t in them. Yes, the press worked hard last week to ignore the biggest story to come along in many years.
It appears that the president ordered the destruction of a vital piece of commercial infrastructure. The report, from respected investigative journalist Seymour Hersh (of Mỹ Lai and Abu Ghraib fame) presents a plausible case that the Biden Team blew up the Nord Stream pipeline. This is the sort of thing, as we pointed out last week, that Think Tanks might want to think about, but as Chesterton pointed out in his Twenty Ways to Kill a Wife, actually doing the deed reflects a stunning lack of thought.
Imagine if the president had ordered his goons to blow up the Holland Tunnel or the Golden Gate Bridge. The Republicans would be holding hearings already; they’d have the president impeached almost immediately.
But this vandalism is much worse. Blowing up someone else’s infrastructure is not only illegal, unconstitutional (the constitution gives the president no power to start a war), and criminal — it is an act of war against two foreign countries, one of which is our own ally.
In Germany, at least one member of parliament has called for an investigation. If the report is confirmed, he says he will demand the removal of US troops. There have been low rumbles, too, in the press throughout the world.
But in the US…not a peep. An interview with Hersh, that appeared on YouTube, was suddenly blocked. The US Government has gone rogue. But Americans don’t want to know…and the mainstream press doesn’t want to tell them.
For The Daily Reckoning Australia