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Visualizing The Changing World Population, By Country

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Visualizing The Changing World Population, By Country

On average, there are 250 babies born every minute around the world. As Visual Capitalist’s Freny Fernandes details below, this adds up to over 130 million new human beings entering the world every year.

Then it’s no surprise that the world’s population, which now stands at a whopping 8 billion, has more than tripled since the mid-20th century.

This graphic by Truman Du uses December 2022 population data from the UN and summaries from the French Institute for Demographic Studies (INED) to show the unequal rise and fall of the world’s population by 2050.

Let’s take a closer look at some of these population trends.

Most Populous Countries: 2022 vs. 2050

The Asian countries of India and China have topped the rankings of the world’s most populous countries for hundreds of years.

China currently holds the number one spot on this list. But the population of India is expected to surpass that of China’s by later this year, eventually reaching a total of 1.67 billion in 2050.

The United States, Nigeria, Pakistan, and Indonesia are the next most populous countries in 2022, and they are expected to hold onto these spots until 2050. However, they have a long way to go before catching up with the top two, as their combined population doesn’t add up to half that of India and China’s total.

Interestingly, it is estimated that Nigeria’s population will shoot up to 375 million by 2050, almost matching the population of the United States. In 2022, the African country’s population was just around 219 million. This expected spike is largely due to a high birth rate and booming economy, and the resultant rural-to-urban migration.

Countries with Declining Populations

While many countries will be seeing their populations boom over the next three decades, other nations such as China are expected to experience the opposite.

 

Several countries in the world are expected to see their populations decline over the next 30 years. And the main reason for this: extremely low birth rates.

South Korea, which has the world’s lowest fertility rate, is expected to see a sharp decline of almost 12% in its population as it falls to 46 million by 2050.

Changing world population trends like this can pose challenges for economies around the world, such as labor shortages, aging populations, and an increasing financial burden on younger generations.

Tyler Durden
Sun, 01/15/2023 – 23:00

The Importance Of Being Biden: How Hunter Reached New Low Seeking To Bar Daughter From Using His Name

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The Importance Of Being Biden: How Hunter Reached New Low Seeking To Bar Daughter From Using His Name

Authored by Jonathan Turley,

In Oscar Wilde’s “The Importance of Being Ernest,” the main character’s search for his true name comes to a head when he finally demands “would you kindly inform me who I am?” In an astonishing filing this week, Hunter Biden answered that question for his four-year-old daughter Navy Joan and effectively declared “you are no Biden.”

Hunter Biden’s disgraceful treatment of his daughter has long been on display in Arkansas where he long denied being her father, fought paternity, and was threatened with contempt of court over his failure to supply needed documents. After DNA testing was forced by a court, Hunter was found to be the father but he continued to resist efforts to force him to pay child support and supply financial records.

Recently, Lunden Roberts sought to have a surname change for her daughter to Biden. Even after his long and abusive treatment of his daughter in court, Hunter Biden’s opposition is breathtaking.  He opposes his daughter using his name and says that, if she does, she will never have a “peaceful existence.”

Of course, Biden did not feel that way with his other four children. They are all true Bidens and living peaceful existences. It is only Navy Joan who he does not want to bear the family name.

Hunter’s concern for Navy Joan’s peaceful existence is a bit odd since he has reportedly never even seen his daughter after fighting for years to deny his paternal status and child support.

While living in a luxurious mansion in Malibu, Hunter continued to fight his obligations under child support and requested in September 2022 to have the payments lowered, bemoaning how his “financial circumstances” were difficult for him.  The public pays more for his security in his mansion than he does in monthly support for his daughter.

Hunter is asking Circuit Court Judge Holly Meyer to deny Navy Joan the ability to use her father’s surname and claiming that it is in her best interest. The filing is so self-serving and transparently dishonest that it does what was once thought impossible: reach a new low for Hunter. All of his reported selfies having sex and doing drugs with prostitutes were shocking. His attacks on his former sister-in-law, Hallie Biden, widow of the deceased brother (with whom Hunter later had a romantic relationship), were appalling. However, the craven effort to deny this child his name reaches a level of cad that stands unrivaled.

The position of Hunter in court has been disgraceful, but the media has largely ignored the matter. It has also ignored the utter lack of support from President Joe Biden and the First Lady, who tellingly omitted a stocking for Navy Joan as one of their grandchildren. (The dog and cat did receive stockings). There is no record that Joe or Jill Biden have ever sought to meet, let alone embrace, their grandchild. The President has, however, sought to deny the child security protection (despite his son’s concern for her “peaceful existence”).

Joe Biden has long campaigned against “deadbeat Dads” but when a Fox reporter asked about Hunter’s refusal to pay child support, President Biden snapped at him and refused to answer the question on the “personal matter.” (The media also ignored Hunter’s deadbeat dad record in fawning interviews about this “bravery” in writing a book on his life).

The obvious effort of the Biden family in this filing is to preserve distance from this child. The legal standard for a name change in Arkansas has been based on the “best interests of the child,” not the political interest of the father and his family. Indeed, historically, Arkansas courts followed a presumption in favor of a child have the surname of its father.

More recently, the Arkansas Supreme Court in Huffman v. Fisher laid out various factors to balance including (1) the child’s preference; (2) the effect on the child’s relationship with each parent; (3) the length of time that the child has borne the prior surname; (4) the community respect for the rivaling surnames; (5) the social difficulties that could arise from the adoption of the new surname; and (6) the presence of any parental misconduct or neglect.

The petition is based on the best interest of the child.  Roberts’ lawyer claims that the Biden name is “now synonymous with being well educated, successful, financially acute, and politically powerful.” The “financially acute” part did jump out for many of us who have followed Hunter Biden’s scandals for years.  The Bidens have certainly made themselves wealthy during Joe Biden’s time in office. However, they are synonymous not with financial acuity but influence peddling. While influence peddling has long been the leading industry in Washington, the Bidens have long taken it to levels unimagined by other powerful families with millions in windfall payments from foreign sources, including some connected to foreign intelligence operations.

Nevertheless, the child is clearly better off with the Biden surname, particularly in establishing the very connection that Hunter, Joe, and Jill Biden seem committed to conceal or ignore.  Navy Joan is the grandchild of the 47th President of the United States. That alone makes the change beneficial. Navy Joan will be able to benefit from the cache of that connection in applying to college, seeking employment, and other pursuits. It also establishes (despite the efforts of the Bidens) that she is part of the family’s legacy.

Joe Biden often talks about his Irish roots and his family tree. The familial legacy also includes Navy Joan. Those are her relatives even if they refuse to recognize or embrace her.

There is no real doubt about the best interests of his child in his filing.  For their part, the Bidens have made it clear what is in their best interest. It is not this child. The court should make fast work of this petition and change Navy Joan’s surname to Biden. That will not make the family more loving or supportive or accepting. She will have to eventually deal emotionally with this latest effort to conceal her true identity.

Yet, she is a Biden and could easily prove the best of the lot.

Tyler Durden
Sun, 01/15/2023 – 22:30

How Long Is Compulsory Military Service?

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How Long Is Compulsory Military Service?

Taiwan is extending its mandatory military service in 2024 from four months to one year, as tensions continue to rise with China. Taiwanese President Tsai Ing-wen announced early last week that conscription will include more intense training so that the country is better equipped should China invade. Conscripts will also receive a higher monthly stipend, increasing from NT$6,500 (US$211) to NT$26,307 (US$856), which is roughly akin to minimum wage. In a poll conducted by the Taiwanese Public Opinion Foundation in December, 73 percent of respondents supported the move.

Fewer than 30 countries worldwide still require whole age cohorts to complete military service. But, as Statista’s Anna Fleck details below, among those that do, four months is a relatively short period of time. Taiwan had originally stipulated two years of service, however this was gradually cut down to four months as of 2013, with the intention of relying more heavily on volunteer forces instead.

As Statista’s chart shows, North Korea stands at the other end of the spectrum in terms of duration, although media reports vary. The Guardian reported 10 years for men and 7 for women as of 2015, while the Indian Express puts the figures closer to 8 years for men and 5 for women. According to media reports, those in the elite class are usually able to avoid conscription.

Infographic: How Long Is Compulsory Military Service? | Statista

You will find more infographics at Statista

Israel too has a fairly long and rigorous conscription, albeit far shorter than North Korea. Most Israeli men over the age of 18 who are Jewish, Druze or Circassian must serve in the Israel Defense Forces for 32 months and women for 24 months, according to the IDF. Meanwhile, in Egypt, conscription is compulsory for men aged between 18 and 30 for up to 36 months. As with several countries on the chart, service can be pushed back until students finish their studies and there are a number of clauses that exempt men from joining the forces, for example, if they are the only son/sole breadwinner of the family.

South Korea, which is technically still at war with North Korea, also has mandatory conscription for all able-bodied men for a period of 18 months to 21 months, depending on the posting. Some athletes and classical artists are allowed to postpone or forgo the draft entirely. The K-Pop group BTS brought the issue to light recently, with debate over whether they could be excused from service. The decision was made that men can delay their military draft until the age of 28 and those working in the entertainment industry are now allowed to postpone their service until they turn 30. The oldest member of BTS, Jin, has now started his mandatory draft.

There’s huge variation in the rules for how long citizens must join the military in the countries that still have mandatory conscription as well as possible reasons for exemptions. For instance, in Turkey, new laws introduced in 2019 decreed that instead of the mandatory six months of military training, conscripts could do one month and buy-out the remaining five months for a fee of 31,000 Turkish Lira ($1,651), according to the Australian Government’s Department of Foreign Affairs and Trade. Conscripts’ levels of higher education can also impact the type and length of their post.

Punishments for not enlisting vary too. In Eritrea, anyone evading or attempting to evade compulsory military service could face imprisonment of one to three years. According to DFAT, this could increase to 7-10 years imprisonment in a time of emergency or war.

While most countries with conscription only draft men, a handful of countries including North Korea, Israel, Norway, Sweden, Eritrea and Mozambique conscript women too.

Tyler Durden
Sun, 01/15/2023 – 22:00

Japan’s Experts Baffled By High ‘COVID Deaths’ Despite High Vaccination Rate

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Japan’s Experts Baffled By High ‘COVID Deaths’ Despite High Vaccination Rate

Authored by Guy Gin via ‘Making (COVID) Waves In Japan’ Substack,

After three booster campaigns in 2022, the Japanese are now in a league of their own among mRNA consuming countries, administering far more boosters than countries that had far more coercive vax campaigns.

Japanese over 65 have done their best to reduce Japan’s 612-million-dose stockpile of mRNA jabs, with 3rd, 4th, and 5th jab rates of 91%, 82.5%, and 56%, respectively. But unfortunately, Japan has started 2023 by reporting its highest ever daily Covid death tolls. During the booster era starting in early 2022, each wave has been noticeably higher than the last.

What could possibly explain this? Let’s ask Takaji Wakita, chairman of Japan’s Covid Response Advisory Board.

The cause of the rise in Covid deaths is *hard to explain.*

What about Dr Satoshi Kamayachi, director of the Japan Medical Association?

JMA director on increased Covid deaths: “There’s a lot we don’t know, and we don’t have evidence.”

Nice to see an expert admit the limit of his knowledge. But there must be something Dr Kamayachi can tell us, right?

Dr Kamayachi, citing the rapid spread of Covid infections as one reason, explained that the majority of those who died were over 60 and many had underlying medical conditions. The direct cause of death is often heart failure or kidney disease, and he said that “thorough analysis is needed.”

Heart failure, you say? Well, it’s not like most Japanese over 60 have been injected multiple times with anything that causes cardiovascular problems, is it? And kidney disease is coincidentally a side-effect of Remdesivir, an approved Covid treatment in Japan.

Of course, Japan has been counting anyone who dies with a positive test result as a Covid death regardless of actual cause of death since 2020, but Dr Kamayachi and the rest of Japan’s experts haven’t bothered bringing up the issue of attribution until now. In fact, they were more than happy to cite inflated mortality data to help promote the jabs. But now that people may question why daily reported Covid deaths are higher than ever after the majority of over 65s have taken the experts’ advice to get multiple boosters, underlying medical conditions can apparently be discussed.

But although he’s three years late, Dr Kamayachi has a point. Although reported Covid deaths have been much higher in the booster era, far fewer Covid cases have been receiving mechanical ventilation (the gray line shows the number of ventilators/ECMO secured for Covid patients).

But even if hardly any of them have been struggling for breath on mechanical ventilation, Japan’s elderly have been dying in higher than expected numbers in the booster era. The national figures for December won’t be out until late Feb, but Yokohama (Japan’s second largest city) has already releases its all-cause death numbers for 2022. Somehow I doubt Dr Kamayachi will call for a “thorough analysis” to find out the cause of the increase since August.

All-cause deaths in Yokohama 2016-2022

Although there’s no good news here for Japan’s vaxed-to-the-max elderly, there is for Japan’s medical establishment: high numbers of Covid deaths mean the publicly funded Covid gravy train will keep going. From The Nikkei.

On 11th Jan, experts offered their views on reclassifying Covid-19 under the Infectious Diseases Act. In light of the current situation where the number of reported Covid deaths per day is the highest ever, the experts called for the government to continue to provide a certain amount of financial support to cover treatment and hospitalization costs and for securing hospital beds.

Basically, the government’s selected experts, including Dr. Wakita above, recommend that Covid should be downgraded “gradually”, i.e., medical costs should continue to be covered by public funds rather than health insurance/out-of-pocket payments like every other medical condition. This might seem reasonable. But under the current scheme of Covid support payments, hospitals can be paid ¥436,000 (US$3,370) per day to “secure” a single ICU bed regardless of whether anyone is in it. And overpriced Covid treatments include glorified cold medications like Shinogi’s Xocova.

So let’s recap what the experts have told us.

The cause of increased Covid deaths? “Dunno.”

Should the government keep showering medical institutions and pharma companies with money? “Absolutely!”

Well, what were you expecting them to say?

Tyler Durden
Sun, 01/15/2023 – 21:30

House GOP Bill Would Order Federal Workers Back To Office

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House GOP Bill Would Order Federal Workers Back To Office

House Republicans have introduced a bill that would command legions of federal employees to stop teleworking and return to the office. 

The Stopping Home Office Work’s Unproductive Problems Act — or “SHOW UP Act” — was introduced by Kentucky Rep. James Comer, who chairs the House Committee on Oversight and Accountability. 

“Americans have suffered from the federal government’s detrimental pandemic-era telework policies for federal bureaucrats,” said Comer. “President Biden’s unnecessary expansion of telework crippled the ability of departments and agencies to fulfill their responsibilities and created cumbersome backlogs.”

The bill gives federal employees who worked in person prior to the pandemic 30 days to get back to the office. A November Federal News Network survey found that 60% of feds were working in a “hybrid” environment, with a third working entirely remotely.  

Kentucky Rep. James Comer says it’s time for federal employees to return to their offices (Tom Williams/Pool via AP and WBKO)

Comer says Oversight Committee members have received whistleblower reports indicating that General Service Administration’s (GSA) chief Robin Carnahan has spent the majority of her time away from Washington, DC.   

The SHOW UP Act would also direct federal agencies to study the impact of tele-work on their missions and report their findings to Congress. “The federal government’s expansion of telework during the pandemic has delayed critical assistance to veterans, tax refunds, passport applications, and other basic services,” said Comer’s office.

Agencies would also have to provide data on locality pay received by federal employees — who may not actually be spending much time in that locality at all. 

Locality pay is a substantial layer of compensation that’s added to federal employees’ base pay. As the name implies, it varies depending on where the job is located. The 2022 default locality pay for areas of the country without a customized percentage was 16.5% of base pay.

However, in Washington DC, it’s a whopping 32.49% of base pay. For 2003, employees in the DC locality received one of the largest locality-pay hikes: 4.86%.  

The SHOW UP Act alludes to an important question: How many purported Washington DC federal employees are receiving enormous locality pay while living somewhere else and phoning it in? That question isn’t only relevant for DC: The same dynamic would apply federal employees in other localities who’ve left the big city to go live cheap somewhere else and only visit the office when required.  

In 2021, the federal Office of Personnel Management said employees in “remote work” arrangements — a permanent arrangement with no expectation of coming to the office — should receive locality pay based on their remote location.

Things get murkier, though, where flexible “telework” is concerned. Telework usually requires reporting in-person twice every two weeks…unless that requirement is waived. Teleworking feds’ locality pay is determined by the office location, not their home. 

To that point, the SHOW UP Act says agencies must analyze costs attributable to “paying higher rates of locality pay to teleworking employees as a result of incorrectly classifying such employees as teleworkers rather than remote workers.” 

DC Mayor Muriel Bowser says empty federal office buildings are hurting the city (Mayor’s office photo)

It isn’t just Republicans who are itching to get federal employees out of their pajamas and back to work. Earlier this month, DC Mayor Muriel Bowser urged President Biden to kill the liberal telework policies that have left many office buildings nearly vacant, with corresponding impacts on the city economy. Otherwise, she wants government offices repurposed. 

The SHOW UP Act, which has no future in a Democrat-controlled Senate, would bolster her case: It commands agencies to assess the cost of “owning, leasing or maintaining under-utilized real property.” 

Tyler Durden
Sun, 01/15/2023 – 21:00

The Benefits Of A Savings Culture & The Future Role Of China’s Yuan

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The Benefits Of A Savings Culture & The Future Role Of China’s Yuan

Authored by Alasdair Macleod via GoldMoney.com,

Savings are a vital component of any successful economy, and the foolishness behind the paradox of thrift is exposed in this article. It has been a huge error for Keynesian policy makers to discourage savings in the interests of temporary boosts to consumerism.

It is probably too late now but encouraging people to save by removing all taxation from savings makes an enormous contribution to reducing price inflation and trade deficits, while enhancing national wealth. This is evidenced empirically and demonstrated by reasoned theory. 

Furthermore, there is an error in assuming that there is no alternative to Triffin’s dilemma, which posited that for a nation to produce a meaningful level of reserve currency for external circulation it must run trade deficits. Triffin was describing the problems the United States gave itself under the Bretton Woods agreement, leading to the failure of the London gold pool in the late sixties. It still informs US policy makers today, and wrongly leads American commentators to believe that the dollar cannot be toppled from its pre-eminent position.

But Triffin’s dilemma assumes that central banks must accumulate currency reserves. Unless a government has foolishly indebted itself in a foreign currency, there is no need for them to do so. Currency reserves add nothing to a domestic currency’s stability. Gold fulfilled this role successfully, and likely to do so again in future.

It is a savings ratio of 45% which is at the root of China’s power. The lack of savings in America and its western alliance is their Achilles heel.

Empirical evidence

If there was one taxation policy which would reduce consumer price inflation, stabilise a fiat currency, encourage capital allocation for productive purposes, and improve government finances for the longer-term, what would it be?

Remove all taxes from savings.

This is the lesson from past-war West Germany and Japan, both of which suffered absolute defeat and economic destruction in the Second World War. Their currencies were worthless. But they recovered to become economic powerhouses in Europe and Asia respectively in little more than two decades. Both implemented savings-friendly taxation policies, which made capital available at stable interest rates for new industries to invest in production. Germany developed its Mittelstand, and Japan built on her vertically integrated Zaibatsu.

Germany was fortunate in its Economy Minister, Ludwig Erhard. A free marketeer who on 20 June 1948 took the bull by the horns, Erhard unilaterally ended rationing on the same day as the new mark was introduced, presenting it as a fait accompli to the military governors in the British and American zones. In a week, shops had begun to reopen, and goods became widely available.

In negotiations with the military governors, Erhard managed to obtain income tax concessions for savings, which through the banking system were invested making capital available for private sector reconstruction. While he struggled against both military governments in the two zones to retain lower taxes and for favourable treatment for savings into the 1950s, Erhard had laid the foundations for a savings driven, free market economy. By the 1980s, the only tax on savings was a 10% withholding tax on bank interest and bond coupons, which was not generally pursued by the German tax authorities in the knowledge that attempts to do so would simply drive savings beyond their reach into Luxembourg and Zurich.

For this reason, Germany remained a savings driven economy with a strong currency right up to the mark’s incorporation in the new euro. Much to the confusion of British and American neo-Keynesians subscribing to their cherished savings paradox, Germany became the wealthiest of the European nations, other than perhaps Switzerland. In both cases, hard currencies accompanied wealth creation.

Erhard’s post-war opposition was principally from General Sir Brian Robertson, the head of the British occupation government, and from the French. The commander of the American occupation zone, General Lucius Clay was more sympathetic with free market solutions. The Americans had promoted A Plan for the Liquidation of War Finance and Financial Rehabilitation of Germany (1946), written at Clay’s behest, one of the co-authors being Joseph Dodge. In 1949, Dodge was then appointed to advise the Japanese government on its post-war reconstruction as an aide to General MacArthur. And Dodge was instrumental in ensuring that up to a certain level, post office savings accounts were entirely tax free. It was probably a deliberate oversight on his part, but the tax law didn’t stop an account holder merely opening another savings account when the tax-free limit on an existing account was reached.

Dodge implemented what became known as “The Dodge Line”. By insisting on a balanced national budget and shutting down the printing presses, he ended hyperinflation. The exchange rate between the yen and the dollar stabilised. Government economic intervention and interference was slashed across the board. Echoing John Cowperthwaite’s free market policies in Hong Kong, Dodge realised that the best economic progress was obtained by eliminating state interference, leaving it to Japan’s businessmen and entrepreneurs who, despite the war, retained the skills and connections to run their businesses. With MacArthur’s support, he ruthlessly eliminated subsidies and price controls. Dodge was eventually recalled to America, becoming Truman’s Director of the Budget where in the space of only a year he had cut the US federal deficit in half.

Dodge’s free market approach was supplemented by the assistance of another American adviser, W Edwards Denning. Denning introduced quality control techniques to Japanese manufacturing which revolutionised production. As a consequence of Denning’s contribution, Japan rapidly evolved from a source of shoddy goods into a producer of the best consumer technology and the manufacture of world-beating high quality consumer goods.

Behind this revolution was the tax incentive to save – a simple approach of assuming that taxed earnings put aside should not be taxed again. In both Germany and Japan, these were not the only factors that led to a successful emergence from total desolation, but they are the elements that ensured that both nations continued to flourish. And in Japan, despite the government fully embracing Keynesian philosophy in the wake of the late-eighties speculative bubble, the savings culture of “Mrs Watanabe, the Japanese housewife” persists to this day.

After his stint in Japan and while Joe Dodge worked his budget magic for Truman, the British were going in the opposite direction, eschewing free markets, embracing Keynesianism, persisting with rationing until 1954, and imposing punitive taxes on savings. The decline of post-war Britain and much of Europe need not enter our narrative, but it was a feature of all nations which implemented economic policies of taxing savings.

The theory behind savings

The empirical evidence is clear. Since the Second World War, economies that embraced free markets and the role of personal savings outperformed those which saw savings as an easy source of tax revenue. Furthermore, we can easily explain why free markets succeed in creating wealth for all, while a state directed economy is anti-progress. It was demonstrated by the Austrian economist, Ludwig von Mises, who in an essay written in 1920 explained the futility of central planning due to a lack of the ability to perform economic calculation. Admittedly, he compared the full-blown socialism which Russia had embraced with free markets. But his conclusions, that the state is unable to allocate economic resources including capital as efficiently as profit-seeking capitalists applies equally to less aggressive forms of socialism.

In a free market economy, individuals are compelled to make provision for the unknown vagaries of the future. Often through the medium of insurance policies and pension plans, they put aside a portion of their income to protect themselves from the financial consequences of ill-health and incapacity, provide for their old age, and to ensure there is something to pass on to their heirs. If the circulating medium is sound, no financial skill is required to preserve the value of savings in these arrangements and in the form of bank deposits. Within the limits of their acumen, those with some financial knowledge can venture into other forms of savings, such as bonds issued by their government agencies and corporations and even to acquire equity interests in ventures.

As always, investors with skill and knowledge will improve their position relative to those less financially literate, which is anathema to redistributors of wealth. But the corruption of the value of credit that goes with monetary intervention by the state impoverishes those who lack investing skills most, always the poorest in society. It stands to reason therefore, that an economy that benefits most from the savings of the masses must protect the value of credit.

The Keynesian revolution rode roughshod over this issue. Keynes dismissed capitalist savers as rentiers, a term with emotive connotations suggesting that they are workshy and greedy only for interest on their capital. His academic environment at Cambridge and afterwards the Bloomsbury set in London was certainly populated with these flaneurs. But this was not representative of the wider population which was to be deprived by his desire for the euthanasia of the rentier expressed openly in his General Theory.

So it was that Keynes came up with the paradox of thrift, while he was working his way towards discarding Say’s law to justify his General Theory. In Chapter 23, he takes preceding crackpot theories on the subject as evidence of the destruction wrought by saving. Earlier in Chapter 3, on Observations of the Nature of Capital, he claimed that excess savings could lead to “the fate of Midas…  assuming that the propensity to consume and the rate of interest are not deliberately controlled in the social interest but are left mainly to the influences of laissez-faire”. In working his way towards a role for the state, which appears to be his objective here, Keynes makes a number of errors, the principal ones being glossing over the role of bank credit (there is only one indexed reference to credit, commercial bank or otherwise in the whole book!), and whether it is the borrower or lender who sets the rate of interest. To be absolutely certain of the role of savings in an economy, and as to whether there can be an excess leading to the fate of Midas, we must explore Keynes’s errors further.

Variations in the rate of interest are not due to the ephemeral dispositions of rentiers but in large part to fluctuations in the supply of bank credit. It is the expansion of bank credit which leads to an economic boom, which when it leads to excessive demand and speculation by driving up prices engenders caution in the banker’s mind. Naturally, he then restricts the supply of credit, which raises the interest cost. This is why the cycle of bank credit would never permit “the fate of Midas” to occur. Clearly, Keynes’s conclusion that there can be a savings glut is based on his wilful ignorance of the nature of money and credit.[iii]

Furthermore, Keynes’s basic assumption, that it is the greed of the rentier which forces an unnecessary and arguably immoral cost onto production is also incorrect. It is the same error that leads monetary policy makers today to assume that by manipulating the interest rate the general level of prices can be controlled. It was Keynes himself who earlier noted this error, which he named Gibson’s paradox after Arthur Gibson, who pointed out the lack of correlation between the two. Because Keynes was unable to explain the paradox, he simply proceeded as if it did not exist, and so has every monetary policy committee ever since.

The paradox is real, and the explanation is simple, falling into two elements. The first is that savers are generally reluctant to save, because it means a deferment of consumption, an immediate satisfaction being exchanged for one in the future of less certain value. Therefore, a business requiring capital for production must bid up the rate of interest it is prepared to pay to a level where the consumer is willing to defer his enjoyment. It is this marginal rate that balances the demands for capital with the availability of savings in an economy. And it is not just a question of setting the rate of interest for recycling credit through the banks’ balance sheets. It sets the rates of return for all financial assets as well and the cost of funding for their issuers.

The second element is the time-preference for which savers will naturally expect compensation. Time preference describes the value of possession of money or money substitutes. A saver loses the value of possession until his money or credit for money is returned. For simplicity’s sake, we must ignore counterparty risk but include expectations of changes in the purchasing power in the circulating media for the time that possession is lost.

It becomes clear that if a potential saver is to part with possession of money or credit when the evidence points to its debasement, he will reasonably seek compensation. Therefore, for the saver interest rates are not the cost of money which he demands, except in a strictly minimally additional and marginal sense. For a central bank to assume that by varying the underlying rate of interest it can control the economy is therefore incorrect. Central banks have it the wrong way round, which explains why there is no correlation between their interest rate setting and the rate of price inflation. 

Furthermore, Gibson pointed out that the correlation was between interest rates and the general level of wholesale prices, and not their rate of change. This correlation is consistent with a businessman’s economic calculation: in order to calculate the profitability of an investment, he must consider the price he will expect for his production, by necessity always referring to current levels. He can then calculate the interest cost he is prepared to pay to secure the capital necessary for his project, and therefore assess its profitability.

The hope harboured by Keynes, that the state can stimulate the economy at the expense of savings beyond the very short term is incorrect. His paradox of thrift, which Keynes used to try to dissuade a propensity to save, was a conclusion drawn from these errors. They are in large part responsible for the plight in which the US, the UK, and various member states of the EU now find themselves. 

Savings in the context of national finances

More than any other factor, the propensity to save is a major influence on national finances, being a “swing factor” between a government’s budget and the national trade position.

There is an important question most analysts ignore. It is the twin deficit hypothesis, whereby if the savings rate doesn’t change, a budget deficit leads to a matching trade deficit.  The reason the two deficits are linked in this way is because of the following national accounting identity:

(Imports – Exports) ≡ (Investment – Savings) + (Government spending – Taxes)

In other words, a trade deficit is the result of a budget deficit not funded by savings but by additional credit. This can be confirmed by following the money. For a budget deficit, there are only two sources of funding. Consumers put aside some of their spending to increase their savings in order to subscribe for government bonds. Otherwise, the banking system comes up with funding in the form of credit issued by the central bank or by commercial banks, putting additional credit into circulation which didn’t exist before.

The financing of a budget deficit by credit expansion leads to excess credit in an economy without matching production. This is the point behind Say’s law, which defines the division of labour. We produce to consume, and the function of money and credit is one of intermediation between the two. Injecting extra credit into an economy does nothing to raise production, but it does increase overall demand, at least until it is absorbed into the economy in accordance with the Cantillon effect.

Directly or indirectly, this excess demand can only be satisfied by imported consumer goods, because an increase in domestic production is unavailable. 

The role of savings in the context of national finances is very important. An increase in savings is at the expense of consumption, which is why economists often refer to savings as consumption deferred. For consumption to remain deferred requires it to be invested, either into production or government debt usually through the banks, pension funds, insurance companies or other financial channels acting on the savers’ behalf.

If the destination of additional savings is investment in government debt, they are turned into consumption by the government. By not being spent on additional consumer goods, the trade deficit falls relative to the budget deficit. 

As noted above, despite the destructive Keynesian policies of its government, Japanese savers habitually respond to an increase in credit by retaining it in their savings accounts. Consequently, consumer price inflation is subdued, relative to that in other countries. While the Eurozone has employed similar interest rate policies and is suffering CPI-recorded debasement of over 10%, in Japan it is about 4%. As we note below, in China whose savings ratio is 45%, CPI measured inflation is currently less than 2%.

The deployment of capital by Japan’s corporations, which is the counterpart of increased savings, is invested in improvements in technology and production methods, keeping consumer prices lower than they would otherwise be. Because Japanese savers are so consistent in their savings culture, Japanese corporations have benefitted from a relatively low and stable cost of capital, making business calculation more reliable. For Japan, savings are the positive swing factor in the twin deficit hypothesis.

The same is true of any economy where there is a government deficit while at the same time there is a propensity in the population to save rather than spend. It is the driving force behind China’s export surpluses, because with the sole exception of Singapore, the Chinese are the biggest savers on the planet. The position of nations whose economic policies have been to tax savings and to encourage immediate consumption is diametrically different. It is consumption funded by the expansion of money and credit without increases in savings which has led to persistent US trade deficits, twinned with budget deficits. 

The evidence confirms that a savings driven economy is more successful than a consumption driven economy. Not only does the former protect the currency’s purchasing power by reducing the need for reliance on foreign capital inflows to finance internal deficits, but empirical evidence clearly shows savings-driven economies are more successful at creating wealth for their citizens. Importantly, a currency backed by a savings culture can weather a greater level of credit expansion by its central bank without adverse consequences for prices.

The condition which must apply is that fiat currencies continue to operate as media of exchange. The moment a major currency such as the US dollar fails, then all fiat currencies are likely to be destabilised. The cure for that risk is to tie currencies to legal money, which is gold. In the absence of that link, even the strongest fiat currency loses purchasing power over time. The Japanese yen has lost 95% of its purchasing power relative to gold since 1970, an average of 1.83% every year. But including tax-free bank interest, the Japanese housewife has probably just about retained the value of her post office savings account, unlike her taxed equivalents in the other major currencies.

Supplying a reserve currency 

As Robert Triffin, the Belgian-American economist put it, for a currency to be available internationally to act as the reserve currency requires irresponsible short-term domestic economic and monetary policies. Triffin originally described why this is the case in evidence before the US Congress in 1959. It was a dilemma, which would eventually lead to an erosion of confidence in the currency. He was proved right eight years later when the London gold pool failed, leading to the abandonment of the Bretton Woods agreement in 1971.

In a twist of Triffin’s earlier warning whereby his predicted outcome is ignored, in recent years the dilemma has been taken to justify continual trade deficits, the counterpart of which is the accumulation of dollars in foreign hands. The eventual consequences are ignored. Currently, these dollars and the US financial assets in which they are invested total over $30 trillion, significantly more than US GDP. This total has fallen by over $3 trillion in the year to September, mainly due to a fall in market valuations. But there has been net foreign selling of existing US dollar assets as well, while the US trade deficit has added to the outflow by an additional trillion dollars.

The US now appears to be in a similar position to that described by Triffin as the inevitable outcome of providing the world with its reserve currency. Furthermore, the scale of dollar and dollar denominated financial asset accumulation has been encouraged by a bond bull market on the back of a declining interest rate trend which has lasted forty years. Crucially, domestic funding of budget deficits as recorded by the savings rate has failed to match this foreign interest.

However, domestic investors have made substantial portfolio gains along with foreign holders of dollars. Driving these gains has been the inflation of credit directed into financial activities thereby sustaining the bubble, while the Fed goosed valuations by suppressing interest rates to the zero bound.

When the rate of consumer price inflation unexpectedly broke the bounds of statistical management — independent analysts had it far higher than official figures for many years citing changes in methodology — it became clear that the bull market in US asset values was over. Being in the early stages of a bear market, this fundamental change is yet to be widely recognised, but with official interest rates well below the CPI rate of increase, foreign investors are certain of yet more portfolio and currency losses. Domestic investors and bulls of their own currency assume foreigners will still demand dollars, when the evidence from the continuing trade deficit and the US Treasury’s TIC figures confirm they are already turning sellers.

This dichotomy between foreigner and domestic users of a currency is not unusual. An examination of previous episodes of currencies in trouble confirms that the foreign exchanges are usually first to recognise they should be sold, while domestic users usually continue to believe that they will retain their value. 

If it is not too late, the solution to stabilising today’s fiat currencies is to remove all obstacles to savers, in an attempt to increase the savings ratio. But when a currency is already on its way to eventual extinction, removing tax disincentives may not be enough, and other measures to reduce the budget deficit must be taken in order to reduce the trade deficit. But then we run into Keynes’s savings paradox: discouraging consumption in favour of savings is viewed by neo-Keynesians as recessionary when economic growth is already stalling.

The Saudi’s decision to ditch dollars in favour of yuan — turning from petrodollars to petroyuan — couldn’t have come at a worse time for the dollar. In addition to facing a bear market for their dollar assets, foreign holders now find its mainstay justification is distinctly frayed. Almost certainly, the dollar is on the verge of a Triffin crisis.

The future role of China’s yuan 

This time, it appears that the dollar has nowhere to turn. Asia is now the most important geopolitical region, with some 3.8bn people rapidly industrialising. Member states of the Shanghai Cooperation Organisation, the Eurasian Economic Union, and BRICS are increasingly determined to move away from dollars, its hegemony, and influence. As the Saudis and the whole Gulf Cooperation Council of oil exporters are demonstrating, China’s yuan is being seen as the dollar’s replacement for inter-Asian payments. The roles of the euro, yen, and sterling in foreign reserves are also likely to diminish with the dollar as well. 

At this stage the new global currency reserve position is still unclear, with the Eurasian Economic Union planning a trade settlement currency, and the Russians sending vague signals but yet to prognosticate. But in the context of Triffin and savings rates, China could hardly be more different from the US. 

China has a savings rate of about 45% of its GDP. With this propensity to save, it is unsurprising that consumer price inflation is under two per cent. Moreover, government finances have taken a hit from China’s covid lockdown policies and a property development crisis, leaving a deficit of over $1 trillion equivalent for 2022. But even so, with such a high savings rate the surplus on the balance of trade for 2022 was still positive at $890bn.

The Triffin dilemma suggests that for the yuan to become a replacement reserve currency the Chinese government will have to start spending like drunken sailors while taxing domestic savings to the hilt. Only then can a trade deficit be expected to arise. But such a volte face in economic policy would surely destroy the yuan’s credibility. After all, it took ten years from the suspension of the Bretton Woods agreement and interest rates rising to 20% for the dollar to then assume the role of a reserve currency in gold’s stead.

We must question the need for central banks to maintain currency reserves in the future. Not only did the western alliance send a signal that they could be made worthless by its cartel at the stroke of a pen, but the shift from the petrodollar to the petroyuan is symbolic of a currency regime that has had its time. The possession of reserves originated with the requirement for central banks to back their currencies with legal money — gold. It is the abandonment of this link with money that led to possession of currency reserves, with dollar holdings at their core. But other than for limited international intervention purposes there seems to be little reason to hold them, particularly for those central banks who have become aware of the western alliance’s declining influence.

China with its trade surplus while maintaining a balance in its payments by exporting capital has no need for other currency reserves beyond some minor liquidity. The capital being exported is in yuan in the form of bank credit, and it suits China with her plans for the industrialisation of Greater Asia and its suppliers in Africa and South America to make substantial investments for her greater good. The Chinese government controls its major banks and can direct the application of this surplus credit. There is no need therefore for China to destroy its finances to provide yuan as a reserve currency, as Triffin originally suggested.

Clearly, there must be a revolution in central bank thinking underway in the broader Asian camp. Central banks are beginning to replace the major currencies in their reserves with yuan and even roubles. But these currencies are not available in sufficient quantities to replace their dollars, euros, yen, and sterling. This is why they are turning the clock back and beginning to accumulate physical gold.

In a few words, it is China’s high savings rate which gives its government the resources, the power, and the opportunity to displace the American dollar and its hegemony from Greater Asia and much of the developing world. Our mistake leading to our relative decline was to listen to Keynes and his paradox of thrift.

Tyler Durden
Sun, 01/15/2023 – 20:30

Prediction Consensus: What The Experts See Coming In 2023

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Prediction Consensus: What The Experts See Coming In 2023

In this fourth year of Visual Capitalist’s Prediction Consensus (now part of their more comprehensive 2023 Global Forecast Series), they’ve learned a few things about the universe of predictions, experts, outlooks, and forecasts.

  1. Experts are reasonably good at predicting the future one year out, though they are also in a strong position to help shape the future through their influential thought leadership and actions.

  2. Situations can and will flare up in unexpected ways, which can have knock-on effects on the whole system (e.g. COVID-19, Ukraine invasion).

  3. Experts are just as susceptible to hype as the rest of us, as evidenced by the glut of Web3 predictions in 2022 and AI predictions this year.

Of course, as Visual Capitalist’s Nick Routley admits, we’re susceptible to hype as well, which is why we asked ChatGPT to write the intro to this article:

Not bad. But, simple curiosity aside, it’s the practical considerations we’ll focus on today. This article serves as an overview of how experts think the markets will move, how trends will develop, and which risks and opportunities to watch over the coming 12 months.

Let’s gaze into the crystal ball.

The Economic Vibe Check

First, we’ll look at some big picture themes, and how experts see them playing out over 2023.

Inflation: This was the top economic story of last year, so it’s a natural starting place. Many of the expert opinions in this year’s database (now at 500+ predictions) are pointing to inflation easing off as the year progresses*. On the downside, few predict that inflation will drop back down to the 2% range that Fed policymakers favor.

GDP: Forecasters have been revising their economic projections downward in recent weeks. The latest was World Bank, which now sees global growth declining to 1.7% in 2023, down from 3% just six months ago. Most of the predictions in our database see global economic growth in the range of 1.5% to 2%.

Recession: As 2022 came to a close, the broad sentiment among experts in the financial industry is that recession is all but inevitable in developed markets this year. As dawn breaks in 2023, a few analysts now feel that the U.S.—and possibly Europe—could narrowly avoid recession.

Markets: Experts on Wall Street and beyond are cautiously optimistic about equities, and after the worst year on record for bonds in 2022, most analysts are declaring that “Bonds are back”.

*Interestingly, this was also last year’s prediction, but the scale of Russia’s invasion of Ukraine was a curve ball that caught many experts off guard.

AI is Eating the World

Jobs being displaced by automation is far from a new theme, but given the exponential improvements in AI in recent years, the risk to entire industries feels more existential today.

As an example, let’s consider art and design. One of the ways many illustrators and artists earn a living is through commissions⁠—essentially being hired and paid to create a specific piece of art in their style.

Today though, free, powerful AI tools, such as Midjourney, allow users to generate high-quality art in an infinite number of styles with just a few clicks. Real art will never truly go out of style, and accomplished artists will always attract an audience, but this one example shows how quickly technology can disrupt an industry. (Artists can take solace in the fact that AI is still comically bad at rendering hands.)

Of course, there are obvious positive aspects to this technological advancement as well. Generative AI tools are useful for generating ideas and mock-ups, and even functional snippets of code. AI systems like AlphaFold unlock a world of possibilities in scientific domains.

From the hundreds of predictions we evaluated, it’s clear that experts view AI as a major catalyst this year. AI start-ups are forcing Big Tech to innovate faster, and employees are finding new ways to use AI-powered tools to increase productivity.

Experts predict that AI will impact peoples’ lives in a much more visible and tangible way in 2023 than in past years.

The China Factor

As world’s second largest economy and linchpin of global trade, events in China have a major impact on the world economy.

Xi Jinping’s reversal of Zero-COVID restrictions should drastically change the trajectory of the country’s economy. For one, reopening will unleash a flood of household spending and consumption.

China’s reopening will also impact other economies as well. For example, the resumption of travel will be a boon to destinations favored by Chinese vacationers. Economically, Hong Kong stands to benefit immensely—its GDP could jump upwards of 8% after reopening is complete. Emerging market commodity exporters could see a lift as well, though inflation could be reinvigorated as a result.

In the U.S., a storm is brewing over the extremely popular video app, TikTok. Many experts predict that regulators will either ban the app altogether in 2023, or force the sale of the company to an American entity. Regardless how that situation plays out, it underscores the souring relationship between the U.S. and China. The rivalry will continue to have ripple effects on the global markets throughout the year.

Energy

Energy was the S&P 500’s top performing sector two years in a row, and many experts feel that more growth is on the horizon.

The global system that supplies us with energy is breathtakingly complex, with a lot of unpredictable factors at play. Of all factors, conflict can create the most volatility, and 2023 has a number of geopolitical risks that could impact energy supplies. First, Europe will continue to diversify its energy imports away from Russia. Recently, liquefied natural gas from the U.S. has helped fill gaps.

Next, Iran could be a flashpoint in the Middle East this year. A brewing conflict in the region could cause instability, which will have knock-on effects on the energy industry—particularly in the event of attacks on oil and gas infrastructure.

Here are a few other factors to consider this coming year:

  • The U.S. Energy Department will aim to replenish its Strategic Petroleum Reserve

  • Easing of U.S. sanctions on Venezuela could lay the ground work for increased oil production

  • In post-Zero-COVID China, economic activity will increase, pushing up demand

  • In the UK, the energy price guarantee will rise in April, meaning higher energy bills for households

The Elon Playbook

After a lull in December (nobody wants to be the company that fires people during the holiday season) tech and tech-adjacent companies have resumed their zealous slashing of headcounts.

There had been a slew of layoffs already in 2023, topped by Salesforce, which is trimming 7,000 jobs, and Amazon, which is cutting 18,000 roles—primarily impacting the corporate side of the business.

Given the influence of Elon Musk in the tech industry, many experts are suggesting that his strategy of ruthlessly slashing headcount at Twitter might serve as inspiration for other technology leaders.

Employees in the tech industry are very well compensated, and many were hired during periods of intense competition between companies to attract talent and capture market share.

During a downturn, it’s tempting—and often necessary—for companies to course-correct. There were also predictions that the whole start-up and investment ecosystem could be switching from a hypergrowth to a value-focused mindset, which is a theme that is worth consideration in 2023.

Tyler Durden
Sun, 01/15/2023 – 20:00

LAPD Chief Blasted For “Political Pandering” After Banning ‘Blue Lives Matter’ Flag From Los Angeles Police Stations

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LAPD Chief Blasted For “Political Pandering” After Banning ‘Blue Lives Matter’ Flag From Los Angeles Police Stations

Authored by Monica Showalter via AmericanThinker.com,

So Los Angeles has a new mayor — the far-left Karen Bass, and it hasn’t taken long for changes to kick in, letting the police know she doesn’t have their back.

Latest news is this diktat from above, as reported by Fox News:

The Los Angeles Police Department banned the Thin Blue Line flag from public areas within police departments this week over a complaint that the flag represented “violent, extremist views.”

LAPD Chief Michel Moore defended the controversial move in an email sent to Fox News Digital, saying, “Yesterday, we received a community complaint of the presence of a Blue Line Flag” with “the view that it symbolized support for violent extremist views, such as those represented by the Proud Boys and others.” 

“I directed to have the item taken down from the public lobby. The U.S. flag should be proudly displayed in our lobbies whenever possible. Memorials for our fallen are also authorized in all public spaces,” he said. 

The banned flag looks like this:

Where’d I take that photo? At a party full of LAPD cops, celebrating the birthday at the home of one of their own. The photo doesn’t include the cops, but there were a lot of them. 

It was at this party that I learned how much that flag means to these officers, all of whom were black or Hispanic, none of whom were white. This flag is a big deal to them, an emblem of their hard job, an expression of the dangers and death they face, and a rallying point for their reasonable interests.

They want to ban this? Because of one wokester complaint, a complaint from someone who undoubtedly doesn’t want any cops whatsoever, a cop-hater, and they are out there, as that’s been the party line in the anti-cop wokester-activist community for several years now.

The excuses from headquarters were really pathetic:

Moore explained that a flag displayed in one station’s lobby spurred a complaint and he added, “It’s unfortunate that extremist groups have hijacked the use of the ‘Thin Blue Line flag’ to symbolize their undemocratic, racist, and bigoted views.” 

The LAPD chief ordered all flags with the symbol to be removed from public areas. Moore said officers still can display the flag “their workspace, locker door, or personal vehicle.” 

While Moore said he viewed the flag as symbolizing “the honor, valor, dedication, and sacrifice of law enforcement to protect our communities,” he said others had undermined the flag with their “racist, bigoted and oppressive values.”

Really? Let’s hear some names, which naturally, Moore and his ilk didn’t give.

This has about as much credibility as the Pentagon’s hunt for extremists (read: Trump supporters) in the military’s ranks, or the FBI’s hunt for domestic terrorists among the parents attending school board meetings.

And while we are at it, let’s look at the diversity composition of the LAPD these days since policing is so synonymous with white supremacy and that flag the LAPD brass hates so much.

According to Wikipedia:

As of 2019, the Los Angeles Police Department had 10,008 officers sworn in. Of these, 81% (8,158) were male and 19% (1,850) female. The racial/ethnic breakdown:[50]

The claim that flag was white supremacist, accompanied by the dog biscuit thrown to the cops, that they can still display the flags on their personal cars and lockers, pretty well pegs any cop who has such stickers as a white supremacist. After all, if they’re going to peg a symbol as white supremacist, why are they allowing it on lockers and cars? Do they allow Klan or White Aryan Brotherhood symbols on cars and lockers of cops, too?

Don’t think so.

The concession given is because they know how alienated the cops are by this decision. According to Fox News, a union representing 9,900 Los Angeles police officers fire back with this statement:

“It is difficult to express the level of utter disgust and disappointment with Chief Moore’s politically pandering directive to remove Thin Blue Line flags and memorials for fallen officers from all public areas within our police stations. This direction came as a result of complaints from anti-police, criminal apologists, and activists who hold too much sway over our city leaders and, unfortunately, our Chief,” the Board of directors for the Los Angeles Police Protective League wrote in a statement.

The union said they “vehemently” opposed “this disrespectful and defeatist kowtowing by our department leadership to groups that praise the killing of police officers and outright call for violence against those of us in uniform. We have directly expressed our outrage to the Chief.”

Note that word “vehemently.” 

We pretty well can tell what the sentiment in the not-so-white ranks is regarding this ban on the only public emblem the cops even have — and which without, they are all alone out there, no rallying symbol for their lives and welfare.

With the police brass playing politics, as they say, it’s pretty obvious that the “politics” here is the politics of the new mayor, Karen Bass, who’s a wokester fanatic so leftwing she was rejected by the Biden team for the vice presidency, which handed the slot of the giggly and less competent Kamala Harris instead. Obviously, they’ve been read the Riot Act by Bass, and are looking to save their skins. The bad part here is that the line officers have been sent a message — that politicians and the police brass don’t have their backs now. Already thousands of officers, including many at that very party, have retired, or retired at their desks.

This flag message sends the message in the already crime-plagued city, one of the country’s worst, that it’s time to quit and move someplace where they want the blue in place and are willing to support the blue.

Tyler Durden
Sun, 01/15/2023 – 19:30

The Rise And Fall (And Rise Again) Of Music Sales, By Format (1973-2021)

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The Rise And Fall (And Rise Again) Of Music Sales, By Format (1973-2021)

We live in a world of music. Whether when driving to work or jamming out at home, people around the world like to have their favorite tunes playing in the background.

But while our love for music has been constant, the way we consume media has evolved drastically. The past 50 years have seen many different music formats used to access these tunes, mirroring society’s shift from analog to digital.

This video, created by James Eagle vis Visual Capitalist using data from the Recording Industry Association of America (RIAA), highlights sales of different music formats in the U.S. over the last 50 years.

Vinyl

Up until the late 1980s, vinyl dominated the music format industry, earning billions of dollars in sales annually. Records of Bruce Springsteen’s Born to Run or Pink Floyd’s Dark Side of the Moon were some of the top selling albums available.

Vinyl is said to provide its listeners with analog sounds that reverberate and the warm notes of almost-live music. For vinyl users and enthusiasts to this day, the music produced by these sleek yet massive records is unparalleled.

8-Track

If you’re a millennial (or younger), you may have never heard of the 8-track. But this music format played an integral part in the history of music.

When the booming automotive vehicle industry found it challenging to translate the music experience to cars using vinyl, it looked to the “Stereo 8” eight-track cartridge, better known as the 8-track. This cartridge used an analog magnetic tape and provided 90 minutes of continuous music play time.

8-track carved a niche for itself much before the advent of cassettes and CDs. And through the proliferation of vehicles, 8-track sales climbed to reach a peak revenue of $900 million in 1978.

Cassettes

The era of cassettes pushed 8-tracks into the history of music in the early 1980s. These pocket-sized tapes were more convenient to use than 8Tracks and quickly spread worldwide.

By 1989, the cassette format reached its peak revenues of $3.7 billion.

CDs

First released in 1982, the Compact Disc or CD came into the music market as the successor to the vinyl record.

Developed by Philips and Sony, sales of the sleek and portable CD grew quickly as home and car stereos alike added CD functionality. The format brought in $13.3 billion in revenue in both 1999 and 2000. To date, no other music format has reached the same milestone since.

Digital Music Formats

When it comes to preferred music formats over time, convenience (and cost) seem to have been the biggest catalysts of change.

From the start of the early 2000s, CDs had started to be replaced by other forms of digital storage and distribution. The massive shift to internet consumption and the introduction of digital music, available through downloads, pushed audio CD sales down rapidly.

The launch of streaming platforms like Spotify in 2006 exacerbated this decline, with CD sales dropping by around $4 billion in five years.

Digital sales continued to evolve. Ringtone sales alone brought in $1.1 billion in 2007, and in 2012, the revenues from downloads shot up to a peak of $2.9 billion. But music streaming platforms kept climbing through 2021, and will likely continue to be the future face of music consumption.

RankMusic formatsRevenue in 2021

1Streaming$11.5 billion

2Vinyl$1.0 billion

3CD$0.6 billion

4Downloads$0.5 billion

 Other$1.4 billion

 Total$15.1 billion

Music streaming and subscription services pushed the accessibility of music to new highs, especially with free ad-supported platforms.

In 2021, streaming secured the music industry a whopping $11.5 billion in sales, good for 76% of the total. If it keeps growing in popularity and accessibility, the format could potentially challenge the peak popularity of CDs in the late 90s.

The Vintage Comeback?

There’s no doubt that digital music formats are getting increasingly popular with every passing year. However, one of our vintage and beloved music formats—the vinyl record—seems to be making a comeback.

According to the RIAA database, the revenue earned by LP/EP sales has shot up to $1.0 billion in 2021, its highest total since the mid-1980s.

Tyler Durden
Sun, 01/15/2023 – 18:00

Morgan Stanley: “We Are Focusing On These Three Key Global Transitions”

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Morgan Stanley: “We Are Focusing On These Three Key Global Transitions”

By Michael Zezas, Head of Global Thematic Research at Morgan Stanley

What do you get when 45 global research analysts gather in a room for two days to debate secular market trends? A plan. Amid rapid change, Morgan Stanley Research views concentrating on multiyear secular trends as an opportunity. In markets where short-term focus has become the norm (i.e., the average equity holding period has declined from eight years in the 1960s to six months today), it stands to reason that there’s less competition and more potential alpha to be found from analyzing the market impacts of longer-term trends. A collaborative, cross-asset culture has long been core to our mission, and in the spirit of debate and collaboration, we gathered analysts from around the globe to identify the key secular themes that Morgan Stanley Research should focus on this year.

Our dialogue made it clear that collaboration can eliminate blind spots for investors who are grappling with complex global themes. The agenda for our meeting included over 30 topics, none of them unfamiliar to market participants. But the discussion raised questions of broader concern, suggesting their answers could impact markets beyond what analysts could plausibly perceive or analyze individually. Many of these questions centered on knock-on impacts to inflation, interest rates, and the structure of markets themselves as the world undergoes major geopolitical and technological transformations.

This year, we’re taking our collaborative, in-depth work a step further, focusing on three key global transitions. We think these shifts will have a profound impact on markets for many years, but that a collaborative, cross-asset approach is required to master their complexity and produce meaningful insights for investors. The three transitions are: 1) Rewiring global commerce for a multipolar world; 2) Decarbonization; and 3) Accelerated technology diffusion. We plan to address them this year in collaborative in-depth reports, briefs, and podcasts.

  • Rewiring global commerce for a multipolar world: With the shift from unbridled globalization to a world with more than one meaningful power base and commercial standard, companies and countries can no longer seek efficiencies through global supply chains and market access without factoring in geopolitical risks. While we first flagged this secular trend in 2018, we believe it became the consensus following Russia’s invasion of Ukraine and the West’s policy response, which created fresh trade barriers and incentives to realign supply chains.

    What our analysts believe is less well understood are the practical implications of this rewiring. It makes sense in theory but is exceedingly complicated to execute in practice. Questions that surfaced in our discussions included: How long will it take? Will it lead to higher inflation and, if so, for how long? How will bond markets cope with financing the transition? Which companies and countries will benefit or suffer because of it? Having come early to this theme, we believe we are well placed to address these questions through a collaborative, multidisciplinary approach across economists, market strategists, and equity analysts.

  • Decarbonization: Between 1) Europe’s problematic reliance on imported natural gas being laid bare by Russia’s invasion of Ukraine; 2) Growing EU policy support for energy transition infrastructure via the REPowerEU plan; and 3) The US appropriation of $400 billion+ to speed the adoption of clean energy technology, we think it’s fair to say that the developed world is accelerating its efforts to reduce carbon emissions. Still, this is a tall order. To reach ‘Net Zero by 2050’, carbon emissions would need to start falling by ~8% per year. Even during 2020, when the lockdowns heavily impacted mobility and global GDP shrank, emissions fell only 5%. In addition, the cost would be significant. The IEA estimates that the energy transition will cost an extra ~$70 trillion over the next 30 years, taking energy spending to 4.5% of global GDP from its current run rate of 2.5%.

    Investors will need to grapple with both the positive and negative impacts of this transition. Our assessment of which companies, sectors, and macro markets will benefit or be challenged will be shaped by answers to the following questions: What are plausible scenarios for timelines? Which technological and policy developments and failures could speed or slow the transition? Which markets will finance it and how must they change and expand? Which companies will benefit and which are exposed to downside risks? What are the macroeconomic and geopolitical impacts of different paths to Net Zero?

  • Tech diffusion: While this is hardly a new theme, what’s different and noteworthy are the speed and breadth with which tech diffusion can impact sectors that were previously untouched. Fragmented industries or those with high regulatory barriers – which have typically not reaped as much tech-driven productivity benefit – suddenly look poised for a multi-year transition via tech diffusion. Opportunities range from embedded finance in consumer user experience and payments, to tokenized assets allowing for greater global financial inclusion, to modernizing healthcare data ownership and biopharma R&D breakthroughs. We expect the next five years of tech diffusion to move meaningfully faster than the last five.

And what if we’ve identified the wrong themes? We’ll regroup and tell you about it. Our analyst group stressed the importance of remaining flexible. While not fans of the source, we see wisdom in the truism that “there are decades where nothing happens, and there are weeks where decades happen”. The past three years certainly underscored how unforeseen events, e.g., a global pandemic and a war in Europe, can give rise to new, dominant secular themes. Hence, if similar events occur in 2023, we’ll be quick to reorganize our thematic efforts, let you know, and deliver the collaborative insights you need to navigate new transitions.

Tyler Durden
Sun, 01/15/2023 – 17:30