Steve Bull's Blog, page 32
May 19, 2024
Does Inflation Lead To Civilizational Collapse? A Look At Rome
With the US national debt at $34 trillion and climbing, USD reserve status under pressure, inflation destroying standards of living, and the Biden administration stoking costly war on several fronts, perhaps it’s time for more thoughts on the Roman empire.
In a Tuesday thread posted to X, user ‘Culture Critic‘ (@Culture_Crit) posted a deep dive into the unraveling of the Rome in the 3rd century. Let’s jump in;
When Augustus slowed the expansion of the empire, wealth stopped flowing from conquered lands into the treasury. Managing expenditures (construction, armies, bureaucracy) became increasingly difficult.
Whenever costs exceeded tax income, emperors minted new coins to cover it. Mining precious metals increased the supply of gold and silver coinage.
Things remained pretty stable for two centuries…
But the army was an immense burden. In the mid-2nd century, it was 70% of the entire budget — half a million soldiers were on the payroll.
Then, crisis struck.
Frontiers across the empire came under attack in the 3rd century. Military expenses soared as entire provinces were being abandoned and their tax yields lost. Plus, the mines were drying up…
When soldiers’ wages could no longer be paid, “debasing” the currency was the only option.
Emperors issued new denarius (the silver coin troops were paid in) with less and less silver content — i.e., further increasing the money supply.
Nero had already begun clipping coins and diluting silver purity in 64 AD. The state soon got addicted to solving its problems this way — and lining the pockets of political insiders at the same time.
The denarius was down to 60% silver purity by the 3rd century AD. Of course, prices inflated with it.
Still, the state kept spending to maintain the illusion of prosperity, until things got really bad…
…click on the above link to read the rest of the article…
Tree rings reveal summer 2023 was the hottest in 2 millennia
Tree rings suggest the Northern Hemisphere summer of 2023 was the hottest in 2,000 years, with temperatures exceeding those of the coldest summer in the same period by 7 degrees Fahrenheit (3.9 Celsius).
Last year’s summer was the hottest in 2,000 years, ancient tree rings reveal.
Researchers already knew that 2023 was one for the books, with average temperatures soaring past anything recorded since 1850. But there are no measurements stretching further back than that date, and even the available data is patchy, according to a study published Tuesday (May 14) in the journal Nature. So, to determine whether 2023 was an exceptionally hot year relative to the millennia that preceded it, the study authors turned to records kept by nature.
Trees provide a snapshot of past climates, because they are sensitive to changes in rainfall and temperature. This information is crystalized in their growth rings, which grow wider in warm, wet years than they do in cold, dry years. The scientists examined available tree-ring data dating back to the height of the Roman Empire and concluded that 2023 really was a standout, even when accounting for natural variations in climate over time.
READ MOREThis was the hottest summer ever recorded on Earth
Experts are certain 2023 will be ‘the warmest year in recorded history’
“When you look at the long sweep of history, you can see just how dramatic recent global warming is,” co-author Ulf Büntgen, a professor of environmental systems analysis at the University of Cambridge in the U.K., said in a statement. The data indicated that “2023 was an exceptionally hot year, and this trend will continue unless we reduce greenhouse gas emissions dramatically,” he said.
…click on the above link to read the rest of the article…
It’s Not Just Gold. This Is A Full-On Commodities Bull Market
Which, ironically, is a good reason to be careful
First, uranium had a nice run. But it was all alone for a depressingly long time.
That changed a couple of months ago as gold, silver, and copper began runs of their own:
Nickel, meanwhile, has staged a nice recovery from its brutal late 2023 flash crash:
The point? This isn’t just gold breaking out of its trading range. We’re witnessing the launch of a broad-based commodities bull market. And history says that once such a thing gets started, it can persist for a very long time (on the following chart, CAGR stands for “compound annual growth rate”).
Another way of analyzing this trend is to compare commodities to equities. The next chart is a bit outdated but its point remains valid: Commodities are dirt cheap relative to the S&P 500, and if history repeats, gold, copper, etc., should outperform tech and financial stocks for another decade or two.
Keep a Cool Head
This is potentially a once-in-a-generation cycle, with “real” replacing “financial” in the esteem of momentum traders. But don’t jump in with both feet. The charts on this page contain multiple bull market corrections. And after the nice recent run, a double-digit percentage loss for many commodities won’t be surprising.
So continue to buy high-quality commodities stocks gradually via low-ball bids, dollar cost averaging, or put writing.
Yoyo Fed and Yoyo Markets
Once again, we have a report saying consumer sentiment is collapsing just as economists were projecting it would be continuing to float along, and once again we have a report of rising inflation, just as the Fed decided to reduce its fight against inflation by slowing down QT to save the federal government from its overwhelming debt financing burden, and once again we have an actual voting Fed official saying the Fed may have to raise rates. Yet, all of that has been OK apparently, since, once again, stock and bond markets have shot up in a buying frenzy because, once again, Fed Chair Jerome Powell filled them with his hot air so they would rise again on the hopes that rate cuts still might be coming this year.
So, the delusion in markets, continues intensely, causing investors to take back more of the financial tightening in the last three weeks that the Fed had finally put back into place, undoing, ONCE AGAIN, the premise Powell rested his hope of rate cuts on back in November, which was that the markets were doing enough tightening on their own that the Fed could stop its own inflation fight sooner. This is the second time he’s undone that tightening by markets; so, we’ll see more inflation and a worse inflation fight down the road because Powell has encouraged the markets to loosen financial conditions with his false hopes.
Consumers get what the Fed doesn’t
The University of Michigan Survey of Consumers sentiment index for May posted an initial reading of 67.4 for the month, down from 77.2 in April and well off the Dow Jones consensus call for 76.
…click on the above link to read the rest of the article…
Watch: Pelosi Dismantled In Real Time In Masterclass On Populism
Two weeks ago, former House Speaker Nancy Pelosi was thoroughly savaged during a debate at Oxford University over the question of whether populism is a “threat to democracy.” In case you missed it, read on as it’s making the rounds. If you have 14 minutes to spare, jump right in:
Opening the case for the left was Rachel Haddad, Secretary of the Oxford Union. She argued that populist leaders like Donald Trump and Nigel Farage pose a threat to democracy, and are not a “new generation of geniuses” who can find simple solutions to longstanding, complex problems.
Pelosi closed the debate for the proposition, defining populism as an “ethno-nationalist populism, generated by an ethnic negativity to immigrants, people who are different from them and the rest” (so, ‘they’re racists!’).
Speaking against the motion were Union committee members Sultan Kokhar (Chair of Consultative Committee) and Oscar Whittle (Director of Research), as well as former Mumford & Sons lead guitarist, Winston Marshall – now a podcaster for The Spectator – who got into an exchange with Pelosi during parts of his speech.
Marshall started out by saying:
“Words have a tendency to change meaning when I was a boy, “woman” meant “someone who didn’t have a cock.”
Populism has become a word used synonymously with “racists.” We’ve heard “ethno-nationalist,” with “bigot,” with “hillbilly,” “redneck,” with “deplorables.”
Elites use it to show their contempt for ordinary people.”
He then noted that Barack Obama, while still president, tried to frame he and Bernie Sanders as actual populists vs. Donald Trump, who ‘doesn’t care about working people.’
But then, “If you watch Obama’s speeches after that point, more and more recently, he uses the word “populist” interchangeably with “strong man,” with “authoritarian.” The word changes meaning, it becomes a negative, a pejorative, a slur.”
…click on the above link to read the rest of the article…
Orange Juice Prices Primed For Breakout After Forecast Warns Brazil Set For Worst Harvest In Decades
Breakfast lovers are in for another jolt as orange juice prices surge to near-record levels. A new report released on Friday indicates that Brazil, the leading global exporter of OJ, is facing its worst harvest in over three decades. This alarming development compounds existing issues in Florida’s citrus groves, which have been plagued by disease and are experiencing collapsing production levels to the lowest in decades.
Fundecitrus wrote in a note that Brazil will produce 232.4 million boxes—each weighing about 90 pounds—for the growing season this year. That’s a 24% collapse from a year earlier and the lowest production levels in 36 years.
“Excessive heat brought stress to orange trees during a crucial period of flowering and early fruit formation between September and November last year. Further hurting output is an increase in citrus greening, a disease that causes fruit to prematurely drop from trees,” Bloomberg wrote, commenting on the report.
The report sparked additional fears about a worsening global OJ shortage.
In markets, prices of concentrated OJ futures in New York surged as much as 5% on Friday, closing up about 3% to $394 and only 8% off the record high of $425.
Sliding production in Brazil could soon impact US retail prices at the supermarket, considering Florida has yet to stage a significant comeback in production.
In the last year, the US has ramped up imports of OJ from Brazil to mitigate losses in Florida.
Don’t worry. Federal Reserve Chair Jerome Powell has everything under control on the food inflation front, as the prices of OJ, coffee, eggs, and cocoa have hyperinflated.
Watch OJ futs in NY into the new week.
May 18, 2024
Drought fuels wildfire concerns as Canada braces for another intense summer
Smoke from wildfires in Quebec enveloped New York City in 2023. (Photo credit: Anthony Quintano / CC BY 2.0 DEED)As widespread drought raises expectations for a repeat of last year’s ferocious wildfire season, response teams across Canada are grappling with the rapidly changing face of fire in a warming climate.
No longer quenched by winter, nor quelled by the relative cool of night, last summer’s wildfires burned an unprecedented 18.5 million hectares of land—more than seven times the historic average.
Canada’s warmest ever winter followed, with low to non-existent snowpack in many areas, and ongoing drought raising fears that this summer will see more of Canada’s forests and wildland urban interface go up in flames.
“The dry and historically warm winter we just experienced across Canada puts the country in a bad spot heading into wildfire season over the weeks and months ahead,” The Weather Network reported in March.
In April, Canada’s Drought Monitor found much of western Canada, swathes of the Northwest Territories, central Ontario, and much of northeastern Quebec and Labrador in moderate to severe drought conditions. Meanwhile, British Columbia and Alberta are experiencing extreme and “exceptional” drought in pockets. B.C.’s scant snowpack after spring snow was at 63% of normal levels in early April, with conditions in some regions far worse, reports CBC News.
What happens next depends upon how spring progresses.
While B.C.’s south coast and interior did receive much-needed rain this past weekend and snow at higher elevations, The Weather Network predicted that any precipitation would “fall far short of what we need to meaningfully put a dent in the drought.”
…click on the above link to read the rest of the article…
Belgium and Hungary Launch Controversial Digital IDs, Vaccine Passport, Ahead of EU Regulations
If you’re tired of censorship and surveillance, join Reclaim The Net.
Belgium and Hungary are leading the way in launching digital ID wallets ahead of EU’s eIDAS (“electronic identification and trust services”) 2.0 regulation and EUDI Wallet coming into force later this month.
In Belgium, the MyGov.be app, covering all of the country’s federal public services, was launched on Tuesday, with the government promoting the digital identity as “simplifying” the use of its services, and “making life easier.”
In other words, the authorities there are playing the convenience card – while downplaying the risks that come with this type of centralization of people’s identities.
The wallet, via “eBox” mailbox, gives access to government-issued documents, as well as 683 services, identity data, Covid vaccination records, and more.
However, the success of the scheme is by no means guaranteed – on the one hand it is not mandatory, so people are free to decide not to use it.
Judging by an opinion poll Deloitte carried out last year, “71 percent of Belgians do not want a digital ID on their phone,” reports say, adding that the same survey showed that 79 percent “do not want a mobile driver’s license, while half refuse to fully digitize their IDs.”
“Ease of use” is also how digital ID is pushed in Hungary, where the appropriate app will be made available for download as soon as this week, while the service will be fully operational from September.
Enthusiastic reports about this development describe the digital ID program as “innovative,” “handy” and “saving costs.”
At the same time, putting all of a person’s data in one place and storing it in the cloud is advertised as something positive, instead of what opponents consider as scary – from the security standpoint alone.
…click on the above link to read the rest of the article…
Is China Dumping US Treasuries and Buying Gold? Bloomberg Says Yes, Pettis Uncertain
Bloomberg reported that China is selling a record amount of US debt while buying gold. Previous reports of debt selling were false. Let’s check in with Michael Pettis at China Financial Markets for another opinion.
China Sells Record Sum of US Debt
Bloomberg reports China Sells Record Sum of US Debt Amid Signs of Diversification
China sold a record amount of Treasury and US agency bonds in the first quarter, highlighting the Asian nation’s move to diversify away from American assets as trade tensions persist.
Beijing offloaded a total of $53.3 billion of Treasuries and agency bonds combined in the first quarter, according to calculations based on the latest data from the US Department of the Treasury. Belgium, often seen as a custodian of China’s holdings, disposed of $22 billion of Treasuries during the period.
China’s investments in the US are garnering renewed investor attention amid signs that tensions between the world’s largest economies may worsen. President Joe Biden has unveiled sweeping tariff hikes on a range of Chinese imports, while his predecessor Donald Trump said he might impose a levy of more than 60% on Chinese goods if elected.
“As China is selling both despite the fact that we are closer to a Fed rate-cut cycle, there should be a clear intention of diversifying away from US dollar holdings,” said Stephen Chiu, chief Asia foreign-exchange and rates strategist at Bloomberg Intelligence. “China’s selling of US securities could speed up as US-China trade war resumes” especially if Trump returns as president, he said.
China is Buying Gold
One part of the story is not in question. That part pertains to China buying gold.
Is China Dumping US Debt?
I asked Michael Pettis that question yesterday. Pettis graciously replied with an email this morning plus a five-part Tweet.
…click on the above link to read the rest of the article…
Doug Casey on the Relentless Rise of Taxes, Regulations, and Inflation
International Man: Almost every government worldwide is moving to increase taxes and regulations on its citizens while at the same time engaging in ever-increasing currency debasement.
What do you think of this trend, and where is it going?
Doug Casey: Higher taxes, more money printing, and more regulations are long-standing trends. The cat first got out of the bag with the French Revolution and the triumph of the Jacobins, who wanted to collectivize French society. They almost succeeded. Not many years later, Karl Marx wrote The Communist Manifesto and Das Capital, letting another feral meme loose into society. The idea that the State was a good thing and should grow is now everywhere.
With the turn of the 20th century, roughly 120 years ago, governments all over the world created central banks and the income tax. They started small but have become behemoths, funding welfare and warfare. Both things are highly destructive. In the 19th century there was no welfare and very few wars, because wars are expensive. Governments were hard-pressed to extract adequate revenue from their populations for fighting.
Like all living creatures, the prime directive of the State is to survive and grow. But the State is unique. The State, as Mao said, comes out of the barrel of a gun. Since it’s based on coercion, it’s only natural that some form of socialism would be its preferred way to organize society. Currency inflation, income taxes, and debt have enabled governments to get completely out of control. The prognosis is not good.
International Man: There seems to be a coordinated effort to increase capital gains taxes.
For example, Canada just announced an increase in the capital gains tax from 50% to 67%. President Biden has proposed increasing the US capital gains tax to 44.6% and adding a tax on unrealized capital gains.
…click on the above link to read the rest of the article…
