Category U. S. Neocons

Jun 17 2022

The Federal Reserve Cannot Combat Inflation Alone


Armstrong Economics Blog/Inflation Re-Posted Jun 17, 2022 by Martin Armstrong

Fed Chair Jerome Powell was notably frustrated when pressured about the Fed’s role in inflation. During his Q&A session this Wednesday, Powell plainly stated that the Federal Reserve alone could not combat inflation. It is far more complex than simply raising rates and hoping for the best. The Federal Reserve cannot increase the supply to meet demand. They have no say over clogged ports and closed factories. The Federal Reserve cannot reverse Biden’s policies that have made America energy-dependent, nor can it reserve sanctions against countries that hold essential supplies. As an independent entity, the Federal Reserve has no control over tariffs or diplomatic relations with regard to trade. Notably, the Federal Reserve cannot combat excessive government spending.

The US just sent another billion to Ukraine and plans to continue funding another endless war that does not support any domestic policy objectives. Jerome Powell has no control over the promises politicians make on the campaign trail to distribute free money to the public in exchange for votes. At any moment, lawmakers can implement policies that completely throw the entire economy off track. They had no say in the lockdowns or restrictions that crippled the economy in 2020.

The Federal Reserve miscalculated the situation by artificially lowering rates for a long time. They failed to look at other clear examples, such as Japan, and realize what has and has not worked historically. Powell admitted long ago that he misjudged the severity of inflation and was wrong to call it “transitory.” Unfortunately, when people in power make mistakes, the repercussions cause global shockwaves. Although separate entities, the White House needs to help the Federal Reserve tame inflation by re-evaluating its policies that are directly causing prices to rise.

Jun 17 2022

Taxpayers Fund Drag Shows In Public Schools


Armstrong Economics Blog/Education Re-Posted Jun 17, 2022 by Martin Armstrong

Certain schools in New York City do not have the funds for basic supplies. There are children who take the subway to school as the bus will not pick them up if they live too far. Some schools cannot afford basic supplies, and children must share. Teachers frequently pay for supplies out of their own pockets. However, the city has chosen to prioritize drag shows for children. Sadly, this is not a parody. A group previously known as the Drag Queen Story Hour NYC has already received $207,000 in taxpayer funds.

New York State paid $50,000 through its Council on the Arts, while the city’s Departments of Education, Cultural Affairs, Youth and Community Development and the Department of Transportation handed over an additional $157,000. Why is there a necessity for children to learn about cross-dressers? There is clearly an agenda at work when kindergarteners are forced to be subjected to this alternative lifestyle that they cannot possibly comprehend.

The worst part is that many parents were not informed that their children would be attending a drag show during school hours. Some schools did tell parents about the show but did not permit them to opt their children out of the program. This is a complete waste of taxpayers’ dollars and borders on child abuse. Yet another example of what happens when the government takes on the role of the parent.

Jun 17 2022

The Heat Wave is Right on Target into Peak 2024


Armstrong Economics Blog/Climate Re-Posted Jun 17, 2022 by Martin Armstrong

COMMENT: Mr. Armstrong, your forecast for 2022 to be hot and dry has come true. It was 86 years from the Dust Bowl. Do you try to get those in government to listen? Obviously, all the dead cattle would have survived if people would just follow your model.

FD

ANSWER: I suppose I have given up in that regard. I think that is part of the crash and burn is necessary to change the thinking process. We are in the midst of climate change which has a natural cycle. The Dust Bowl was the same as we see today. There was extremely dry, hot weather that exacerbated farming and turned regions into scorching, dust wastelands. I remember in school they blamed the farmers saying they failed to rotate crops. But the record high summer temperatures in the Central U.S. during July 1936 had killed some 5,000 people in addition to livestock.

ABC News said that the temperature was forecast to reach 96 degrees in Minneapolis, which could see its longest June heat wave since 1949. The city has already had four days with temperatures in the 90s. Of course, everyone and their twice removed ex-spouse are blaming climate change. Why not? It’s just obvious. The actual record highs back then reached 112.5 degrees. Don’t worry, we still have time left for this to get even hotter.

If we are simply objectives, this is 86 years from 1936 when many called it a “living hell on Earth” during the Dust Bowl conditions. The National Oceanic and Atmospheric Administration recently announced that the 2021 meteorological summer (June-August) has matched 1936 as the hottest summer on record in the continental U.S. Over 18% of the Lower 48 states have experienced record warm average summer temperatures.

By 1937, they were talking about buying land that was no longer suitable for farming. All the hobos were former people who worked in agriculture and no longer had a job. These continuously rising temperatures are NOT human-caused climate change. People were dying from heart attacks during the 1936-1939 period.

The Dust Bowl began in 1935 and lasted for about 4.3 years into 1939. It has been our model which warned that post-2020 into 2024 would be a commodity boom and it would be based upon shortages. In addition to the stupidity of COVID, then the Ukraine War, add to that the climate, as we have one highly dangerous collision of cycles that were coming together beginning 2020.05.

Jun 17 2022

Putin: They Even Named Inflation After Me


Armstrong Economics Blog/World Trade Re-Posted Jun 17, 2022 by Martin Armstrong

Vladimir Putin is not suffering from sanctions. The West has shot itself in the foot by banning essential Russian imports without an alternative in place. “They even named inflation after me,” he joked, hinting at the “Putin price hike” western politicians have been declaring.

The difference now, according to Putin, is that the West attempted to shun Russia. “In the Soviet times when we cut ourselves off, created the so-called Iron Curtain, we created it with our own hands,” he admitted. Putin admitted the Iron Curtain was a mistake that he has learned from. Anyone claiming Putin is pro-Communist or eager to bring back Cold War-era policies is sadly mistaken.

As I have mentioned, Russia has created a new G8. They have alliances with Brazil, Indonesia, China, Mexico, Iran, and Turkey. They claim that this new G8 will not partake in sanction wars and noted that they are already 24.4% ahead of the former G8 in terms of GDP per capita. They are welcoming new alliances as well. Countries previously begged to join Western coalitions, but they are now failing due to a flawed design from the outset. All of this is part of what our computer has been indicating – the financial capital of the world is beginning to drift from West to East.

Jun 17 2022

Russia Gas to Europe to Stop


Armstrong Economics Blog/Energy Re-Posted Jun 16, 2022 by Martin Armstrong

The Russian EU Ambassador has informed the EU that gas will stop through Nordstream because a turbine that was needed was stuck in Canada because of the sanctions. Then the biggest gas field in Siberia is now on fire. That can also provide an excuse to reduce gas delivery to Europe. This will also add to the reduction in gas supply to Europe This is making things very interesting. If Gas bottoms next week, we could be looking at much higher volatility thereafter. For now, a June closing above 625 will keep the market in a broader-term support position but a real breakout would require a close for June above 795.

Jun 17 2022

Pope Francis Believes Russia Was Provoked


Armstrong Economics Blog/War Re-Posted Jun 16, 2022 by Martin Armstrong

Pope Francis has been advocating for peace between Ukraine and Russia. He has condemned Russia’s “brutality” and said he believes Putin miscalculated the duration of the war. “They encountered a brave people, a people who are struggling to survive and who have a history of struggle,” he said. Yet the Pope is now coming under pressure for suggesting that the war could have been avoided. No one has more “behind the curtain” information than the Vatican.

Before Russia invaded Ukraine on February 24, there were signs that NATO and Ukraine were “barking at the gates of Russia.” Even the Pope has admitted the West was eager for war profits and that the conflict was “either provoked or not prevented.”

The head of the Catholic Church stated: “But the danger is that we only see this, which is monstrous, and we do not see the whole drama unfolding behind this war, which was perhaps somehow either provoked or not prevented. And note the interest in testing and selling weapons. It is very sad, but at the end of the day that is what is at stake,” he added. This is not a matter of “good and bad” as the “roots and interests [are] very complex.”

Furthermore, Pope Francis met with an unnamed Russian head of state shortly before the war began. He noted, as I have reported, that Russia was fearful of an imminent attack. “Yet here the situation is even more complex due to the direct intervention of a ‘superpower’ aimed at imposing its own will in violation of the principle of the self-determination of peoples,” he explained. This war is far more complex than Russia v Ukraine. It has become a proxy war instigated by NATO.

Jun 17 2022

Tucker Carlson Interviews American Rancher about Extreme Kansas Heat Causing Cattle Loss


Posted originally on the conservative tree house on June 16, 2022 | Sundance

There have been several videos on social media about a significant loss of cattle in Kansas due to extreme heat.  During a segment on his broadcast tonight, Tucker Carlson interviews cattleman Steve Stratford about the circumstances and the potential impact to the U.S. beef supply.  WATCH:

Jun 17 2022

Elon Musk Talks With Twitter Staff During All Hands Meeting, Video


Posted originally on the conservative tree house on June 16, 2022 | Sundance 

Project Veritas has published another recording of an internal Twitter all hands meeting wherein Elon Musk addressed thousands of employees for the first time since news broke of his plans to acquire the company. On the call, Musk described his affinity for Twitter and said the platform was best for “getting a message out” but noted that he was concerned about the platform as it currently stands, reiterating previous statements he’s made about bots, spam, and censorship.

“I think it’s essential to have free speech,” Musk said in response to a question about his highly publicized goal to bring free speech to the platform. When pressed about what that might mean in the context of animal abuse, sexual content and offensive tweets, Musk maintained his stance. “I think there’s also, there’s freedom of speech and freedom of breach, so I think people should be allowed to say … pretty outrageous things that are within the balance, the law, but, but then they don’t, you know, get amplified,” Musk added.  WATCH:

.

Jun 17 2022

Russian Oil Revenue Returns to Pre Sanction Levels in May


Posted originally on the conservative tree house on June 16, 2022 | Sundance 

Western sanctions against Russia have been used primarily to obfuscate the cause of western inflation and keep the citizen pitchforks from reaching various government offices.  So far, the strategy -assisted by western media- has been mostly successful.

However, the International Energy Agency (IEA) is reporting that despite the western sanctions against Russia, the Russian energy sector is having no trouble finding customers for its oil sales.  With global oil prices at their highest rates in years, in part driven by the energy policy of the same western leaders who triggered the sanctions, Russia is getting just as much economic benefit as it was before the sanctions regime was triggered.

(EU FINANCE) – Russia continued to rake in oil revenues in May despite a global boycott from companies and most countries following its invasion of Ukraine, a new report has shown.

The International Energy Agency (IEA) said the Kremlin’s oil-export revenues surged to around $20bn last month, an 11% increase from the month before, despite shipping lower volumes.

Its latest monthly report, published on Wednesday, said this takes Moscow’s total revenue for shipping oil and crude products roughly back to levels before the invasion of Ukraine. Russian exports fell by about 3% due to lower oil-product flows, the Paris-based agency estimates.

Meanwhile, crude shipped during the month grew by nearly 500,000 barrels a day compared to the start of the year, largely thanks to higher deliveries in Asia.

“China and India, which have both sharply increased crude oil purchases from Russia, are net product exporters and have no need to lift Russian products,” it said. (read more)

Jun 17 2022

There it is, Samsung Signal Flare, Demand Side Contraction, Inventories Too High, Request Suppliers Stall Shipments


Posted originally on the conservative tree house June 16, 2022 | Sundance 

We have been waiting for the non-essential durable goods side of the manufacturing sector to start showing evidence of demand side contraction in consumer purchases.  There have been subtle sector-by-sector indicators of consumer spending shifts for several months; however, today we get the direct evidence from Samsung.

Samsung is one of the leading manufacturers of consumer electronics and products that require chips.  For three months the electronics sector has shown background signals that inventory was not moving.  One of the more recent indicators of a demand side contraction was the lack of upward price pressure inside the electronics sector.  Essentially, consumers are not purchasing the current inventory, so prices are actually dropping in this segment.  [SEE TABLE 2, CPI Chart]:

Despite overall inflation of 8.6% within the CPI, deep inside the category indexes you will note that electronic prices are actually dropping.  Televisions -9.5%, Video equipment -4.3%, etc.  Video and audio products overall dropped in price 1.4% for May, and dropped 5.2% year-over-year.

The supply chain in this sector is lengthy. Meaning inventory builds slowly as consumers stop purchasing in the USA.  Retail store inventory turns slow, store inventory climbs, then warehouses inventories climb as stores do not need product. The negative boxcar effect travels back to the manufacturer overseas over the course of several purchase cycles.  Eventually, everyone within the sector is telling the supplier we do not need product.  Then the manufacturer has to quickly slowdown raw material.

Due to lengthy supply chains, including trans-pacific shipments, the process to stop deliveries in this electronic goods sector is around 90-days before the drop in retail sales reaches the manufacturer to stop production.  Here is the announcement from Samsung:

TAIPEI/ SEOUL — Samsung Electronics is temporarily halting new procurement orders and asking multiple suppliers to delay or reduce shipments of components and parts for several weeks due to swelling inventories and global inflation concerns, sources have told Nikkei Asia.

The notification by the South Korean tech titan applies to components for multiple key product lines, including TVs, home appliances and smartphones, four people familiar with the situation said, and the postponement of orders involves a wide range of components across chips, electronics parts and final product packages.

The move by Samsung, the world’s No. 1 smartphone and TV maker and one of the leading home appliance providers, is the latest sign that electronics makers are pessimistic about the economic outlook amid global inflation risks.

Samsung told suppliers that the company needs to closely review its inventory levels of both components and final products to ensure stock on hand is manageable, according to the sources. Two people said the move will last until the end of July. One of the people said shipments from that source’s company have not been completely halted but the volume of the company’s planned shipment to Samsung for July has been slashed by 50%.

Samsung’s inventory assets reached 47.6 trillion won ($36.9 billion) at the end of March, up from 41.4 trillion won in December, according to its first quarter earnings report. The ratio of inventory assets to total assets also jumped to 10.8% from 9.7% during the same period. (read more)

Various Wall Street economists and MSM pundits have stated, erroneously – and many intentionally, there has been no evidence of a demand side contraction.  However, CTH reviews of the data have shown exactly the opposite.  There are multiple indicators of demand side contraction, including drops in retail sales units that goes all the way back to last holiday season.

Yesterday the U.S. Dept of Commerce released the May retail sales [pdf DATA HERE], showing a 0.3% drop in retail sales for the month.

Retail sales -as measured in units purchased- have been in a contracting position since June of 2021.  When the current data shows a drop of -0.3% in May, the actual drop in retail sales is much, much greater.  The dept of commerce calculates retail sales in dollars.  When prices are 20% higher and sales are low, retailers are selling less stuff (fewer units) at higher prices.  This has been the reality of our economy for several months.  This is also why productivity has been declining for more than a year.

If you take the 8.6% inflation rate (far understated) and an aggregate drop in sales of 0.3% (again, far understated as a measure of inflation), that means consumers are spending limited incomes on critical or essential purchases like housing, food, fuel and energy.  Consumers are not purchasing durable goods; people are hunkering down.

Yearly retail sales (May ’21 compared to May ’22) are +8.1%.  However, yearly retail inflation for the same period is +8.6%.  Again, reflecting that less stuff is being purchased inside the economy at higher prices.  If the commerce dept was measuring actual units being purchased, we would be seeing massive drops in sales.

Samsung is reacting to a demand side contraction.