US & UK Warships Down At Least 14 Houthi Drones In Red Sea
Capping off a week which saw daily attacks and threats on commercial shipping in the Red Sea, US and coalition warships have once again intervened against inbound Houthi projectiles.
US Central Command announced Saturday that its guided-missile destroyer shot down 14 drones launched by the Houthis in a fresh attack.
A British warship was also involved in staving off attacks, with UK defence secretary Grant Shapps stating: “Overnight, HMS Diamond shot down a suspected attack drone which was targeting merchant shipping in the Red Sea. One Sea Viper missile was fired and successfully destroyed the target.”
“The ship recently arrived in the region to bolster international efforts to maintain maritime security,” he added.
“The recent spate of illegal attacks represent a direct threat to international commerce and maritime security in the Red Sea. The UK remains committed to repelling these attacks to protect the free flow of global trade.”
Friday saw two Liberia-flagged vessels suffer missile and drone damage. Currently, the USS Eisenhower aircraft carrier is getting closer to the Middle East while traversing the Mediterranean, after earlier this month and last being in the Persian Gulf.
The latest US statement detailed the following incident: “In the early morning hours of 16 December the US Arliegh Burke-class guided-missile destroyer USS Carney (DDG 64), operating in the Red Sea, successfully engaged 14 unmanned aerial systems launched as a drone wave from Houthi-controlled areas of Yemen,” according to CENTCOM.
“The UAS were assessed to be one-way attack drones and were shot down with no damage to ships in the area or reported injuries. Regional Red Sea partners were alerted to the threat,” it added.
Germany-based Hapag-Lloyd has joined Denmark’s Maersk liner in halting all its Red Sea container ship traffic until at least Monday, following a Houthi attack on one of its vessels. “Hapag-Lloyd is interrupting all container ship traffic across the Red Sea until Monday,” Hapag-Lloyd confirmed in a statement.
Iran is meanwhile warning against a Western naval coalition in the Red Sea. But already US and other warships have increased their presence in regional waters, with the US Navy especially directly engaging Houthi projectiles. The incidents are becoming more frequent, even daily. The Western coalition and Houthis are headed for a likely major showdown.
The U.S. Supreme Court on Thursday declined to block a Democrat-backed “assault weapon” ban, leaving the restrictions in place—at least for now.
In a Dec. 14 order, the Supreme Court denied an emergency application for a writ of injunction that would have frozen the Illinois prohibition on certain types of semiautomatic rifles and magazines, with no justices dissenting.
The decision leaves in place the law—called the Protect Illinois Communities Act—making it illegal for the general public to own weapons like the AR-15 and ammunition magazines with a capacity greater than 10 rounds.
The National Association for Gun Rights, along with gun store owner Robert Bevis, filed the emergency petition at the end of November, after a lower court denied their bid for a preliminary injunction against the statewide ban.
“We won’t stop fighting for our members,” the National Association for Gun Rights said in a post on X, reacting to the news.
Hannah Hill, the group’s executive director, said in a post on social media that the high court has taken “serious notice” of this case on two occasions now, and that “we look forward to giving them the opportunity to weigh in on the merits.”
In May, at an earlier stage of the case, the Supreme Court also rebuffed the plaintiffs’ request for an injunction. At that time, like now, no justice publicly dissented from the decision.
Illinois Gov. J.B. Pritzker, who signed the Protect Illinois Communities Act into law in early 2023, hailed the Supreme Court’s latest decision.
“Taking on the gun lobby and passing an assault weapon ban was never going to be easy, but it was always the right thing to do,” the Illinois governor said in a post on X. “Today is a historic win for Illinois communities and families.”
Some commenters objected to Mr. Pritzker’s framing of the Supreme Court decision as a “historic win” given that there was no decision on the merits of the case, merely a denial of emergency injunctive relief.
While there was some praise online for the court decision—and for Mr. Pritzker himself for pushing hard for the ban—others raised objections.
“Good job Boss—criminals will still have guns but the communities and families won’t,” one objecting commenter wrote on X. “That’s not the right thing to do—that’s backwards.”
In January 2023, Mr. Pritzker signed into law the Protect Illinois Communities Act, banning the sale and distribution of many types of high-powered semiautomatic firearms that he and other Democrats deemed to be “assault weapons.”
The ban covers such firearms as the AK-47 and AR-15 rifles, as well as magazines that take more than 10 rounds for long guns and 15 rounds for handguns.
The only exceptions to the ban are for “trained professionals,” such as law enforcement officers, and people who already owned the guns before the law is set to take effect in January 2024.
The governor’s signature came months after a man used an AR-15-style rifle to shoot and kill seven people and injure dozens more at a Fourth of July parade in Highland Park, Illinois.
In a statement on Jan. 10, Mr. Pritzker touted it as one of the “strongest assault weapons bans” in the United States and that it “will stop the spread” of such firearms.
Arguing that the ban covers firearms that are commonly possessed by law-abiding citizens for lawful reasons, including self-defense, The National Association for Gun Rights, joined by Mr. Bevis and his store (Law Weapons & Supply), filed suit to block the law.
A district court rejected the plaintiffs’ request, and a divided three-judge panel on the U.S. Court of Appeals for the 7th Circuit also refused to halt the ban.
U.S. Circuit Judge Diane Wood, an appointee of former President Bill Clinton, wrote for the 2–1 majority in the ruling that the plaintiffs needed to prove that the weapons banned under the Illinois law “are arms that ordinary people would keep at home for purposes of self-defense, not weapons that are exclusively or predominantly useful in military service, or weapons that are not possessed for lawful purposes.”
Under a Supreme Court decision in 2022, the government is required to justify the imposition of Second Amendment-related regulations by showing that they are “consistent with the nation’s historical tradition of firearm regulation.”
The appeals court judges then considered whether the firearms that were banned by the Illinois law are covered by the Second Amendment, with Judge Wood pointing to a 2008 U.S. Supreme Court decision that determined the Second Amendment only applies weapons “typically possessed by law-abiding citizens for lawful purposes.”
“We conclude the answer is no,” Judge Wood said in the ruling, referring to whether the firearms banned by the Illinois law are covered by the Second Amendment.
“We come to this conclusion because these assault weapons and high-capacity magazines are much more like machine guns and military grade weaponry than they are like the many different types of firearms that are used for individual self-defense (or so the legislature was entitled to conclude),” she wrote.
Lawyers for the plaintiffs had argued in court that there are important distinctions between AR-15-style rifles and M16s, a similar looking gun used by the military, but Judge Wood said the answers were “unconvincing.”
Former Fox News host Tucker Carlson reportedly parked billboard trucks emblazoned with “corporate media is dead” outside the offices of major media outlets on Thursday after launching his own streaming service.
Mr. Carlson sent trucks to the offices of MSNBC, CNN, The Washington Post, and The New York Times on Dec. 14, the Daily Mail reported.
The trucks also advertised “a limited time offer” for people to access “exclusive content” through a $72 annual subscription fee and to become the “founding members” of his new website, Tucker Carlson Network.
During an interview with the Daily Mail on Dec. 14, Mr. Carlson suggested that “the era of dominance by a few big media companies” is over now “because they misused their monopoly.”
He also emphasized the need for new institutions to fill in the role.
“And on some level, they know they’re doomed, which is why they’re hysterical. The era of dominance by a few big media companies, the era of total control over all information by, you know, nine people—that’s done.”
Mr. Carlson said the reason behind him sending those billboard trucks to major media companies was to warn them about the situation.
“It’s important. We’re not doing it out of cruelty and hope we’re not rubbing this in anyone’s face or making the people who still work there feel bad, but they’re doomed,” he remarked.
This came just days after the launch of his subscription-based streaming video service website on Dec. 11. The platform features interviews and is priced at $9 per month, according to the website.
Mr. Carlson took to X to announce his new website on Dec. 9, saying that his team would be “launching a brand-new thing very soon.”
“We’ve been out of work for seven or eight months now, hard to know. Time flies when you’re unemployed,” Mr. Carlson said in a video message.
“But, actually, we have been working in secret and producing an awful lot of material for months now, interviews, et cetera,” he added.
The former top-rated host “parted ways” with Fox News in April, although neither party has released many details about why he left. When reached for comment multiple times this year, multiple Fox spokespeople redirected The Epoch Times to the initial news release announcing his departure.
Mr. Carlson and his team had explored launching the streaming service through X, but the social media company was not able to move quickly enough to build out the technology needed for the service, The Wall Street Journal reported on Dec. 10.
He will continue to post the service’s free content on X, the report said.
Other than former President Donald Trump, Mr. Carlson has interviewed influencer Andrew Tate, Rep. Marjorie Taylor Greene (R-Ga.), Douglas MacGregor, InfoWars host Alex Jones, and many others.
Mr. Carlson began airing episodes for a new show on X in early June. Fox News sent a cease-and-desist letter to Mr. Carlson shortly after the show first launched, according to Axios, after the network argued Mr. Carlson was violating his contract.
Meanwhile, Neil Patel will be the new venture’s chief executive officer, according to the statement. Mr. Patel was chief policy adviser to former Vice President Dick Cheney and with Mr. Carlson co-founded the conservative Daily Caller news site, of which he remains publisher.
Justin Wells, Mr. Carlson’s former executive producer at Fox, will serve as president, overseeing all programming and content.
Jack Phillips and Reuters contributed to this report.
CNN Town Hall Host Tries To Disrupt Vivek Ramaswamy As He Reveals Truth Behind J6
Whether one supports the presidential candidacy of Vivek Ramaswamy or not, it’s impossible to deny that some of the best red pill moments of the election cycle so far have been his debates with establishment spin doctors. During a Town Hall discussion in Iowa hosted by CNN, anchor Abby Phillip tried a new tactic to defuse Ramaswamy and disrupt his ability to convey the facts: She simply kept talking over top of him, contradicting his statements and then refused to give him an opportunity to answer back.
The strategy did not work quite as well as she might have hoped, as Vivek trampled her expertly.
The initial exchange started with Ramaswamy’s assertion that the evidence supports the claim of federal agent manipulation of protest crowds at the Capitol Building on January 6th. The CNN anchor immediately launched into a steady droning tirade, suggesting there is no such evidence. Despite numerous videos showing capitol police opening the doors and inviting protesters into the building, the narrative that the protest was an “insurrection” continues to be perpetuated by the corporate media.
In terms of FBI plants and provocateurs within the crowd, FBI officials actually refuse to address their existence while under oath. In a congressional hearing on J6, senior FBI official Jill Sanborn was asked point blank by Senator Ted Cruz if there were FBI agents mixed with the J6 protestors participating with or directing the crowds. Her response was to deflect, saying she could not confirm or deny.
Furthermore, newly released footage of capitol police firing rubber bullets and tear gas grenades into the peaceful crowds proves that there was in fact no violence until police started it. The same two dozen clips of protesters fighting law enforcement officers circulated ad nauseum on establishment media platforms were all recorded after the attacks by police.
Look at all this early J6 footage @TuckerCarlson could show the world, but won’t.
His producer @gregg_re and his team at Fox were given all of this last year. #J6CoverUp
J6 protestors were fired upon with NO warning. USCP Chief Waldow lied saying he gave warnings but never did. pic.twitter.com/xNNsB8XfBy
CNN’s attempt to “fact check” Ramaswamy in real time appeared more like an attempt to silence him and they immediately lost the crowd. Debate is supposed to be an exchange of ideas and information, not a disruption of information to stop the audience from hearing both sides. Vivek’s root position is a sound one that no one can reasonably argue against: The government lies, and it lies often. Given this fact, it is perfectly logical to question the establishment narrative surrounding J6 and to continue to push for the exposure of government operations during the event.
A morose leftist ‘activist’ group has produced a festive video in which Santa Claus catches COVID and dies on Christmas Eve.
Yes, really.
The piece, produced by The John Snow Project, which describes itself as “Reliable, honest information on COVID-19 from public health, clinical, and research experts,” is filmed in the form of a children’s book.
It reads “Twas the night before Christmas and Santa took a deep breath,” with the next page showing a large coffin surrounded by sad elves and distraught children.
The creepy voice over states “Twas the night before Christmas. Santa took a deep breath. If only he’d known it would lead to his death. Santa always listened when the famous doctors spoke. Too bad they didn’t mention that the virus spreads like smoke.”
The video then pushes pushing “respirators (masks), clean indoor air, the latest vaccines, and regular testing,” and instructs “Don’t let COVID ruin Christmas.”
Didn’t intend to, but you seem to be doing a fine fucking job of it.
Watch:
Comments are turned off on the YouTube video, and on X comments are restricted only to accounts mentioned by the organisation. Wonder why that is?
This latest miserable modern trend seems to be usurping, attacking, destroying or even killing Christmas in this case.
They’ve ruined practically everything else, so why not go after what little joy is left in the world.
* * *
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Elon Musk Tells Italy: “Please Don’t Import Woke Mind Virus From America”
Elon Musk spoke at a political event in Rome organized by supporters of Prime Minister Giorgia Meloni.
During the discussion, Musk discussed various hot topics, including sliding birth rates across Western countries, his views on the exaggeration of climate change by alarmists, criticism of what he termed the ‘woke mind virus,’ his stance on supporting humanity, return of advertisers to ‘free speech’ social media platform X, his opinions on woke Disney, and the significance of free speech in democratic societies.
“I’m very much in favor of humanity expanding – and creating a bright and exciting future for the world. But fundamental to the furthering of human civilization is having more humans,” Musk said. He called declining birth rates across the Western world “a bit depressing” because “birth rates seem to decline every year.”
He emphasized that his primary advice for world leaders is to encourage people to have children, thereby creating future leaders.
On the subject of global warming, Musk said, “Climate change alarm is somewhat overblown in the short; it’s still a concern in the long term.” He stressed, “I think it’s exaggerated in the short term.”
Musk pointed out, “We should not demonize oil and gas because that is obviously necessary in the short-term and medium-term – and possibly even several decades to become sustainable” amid the green transition.
He said, “I think some of the environmental movements have/is part of what is causing people to lose hope in the future.”
ROME—Under the shadow of the iconic Castel Sant’Angelo, @elonmusk encourages Italian leaders (@GiorgiaMeloni seen here) to incentivise the preservation of an Italian culture through procreation; rejecting “anti-human” divisive ideologies pushing “Woke Mind Virus”.
Musk then talks about the ‘woke mind virus’ and explains to the crowd, as well as all of Europe: “Please don’t important the woke mind virus from America.” He said the mental virus amplifies racism, sexism, and the ‘isms’ – while claiming to do the opposite as it sows division.
He explained the woke mind virus has created “an artificial mental civil war” among the people.
NEW – Elon Musk in Italy: “Please don’t import the woke mind virus” from America: “It divides people.”pic.twitter.com/eZhZHQndXk
The billionaire then explained how he is “very pro-civilization – and in favor of humanity – and our collective conscious expanding on Earth and beyond.”
Skipping to the latter parts of the discussion, Musk revealed advertisers are returning to social media platform X. He reaffirmed his prior statements about woke Disney: “Disney is deeply infected with the woke mind virus.”
However, the billionaire said, “At least for now, Disney is deeply infected with the woke mind virus. I think that will eventually change.”
ELON MUSK: “Disney is deeply infected with the woke mind virus”
He then re-emphasized that the woke mind virus “is not a message of joy but a message of division – not a message of love but a message of hate.”
Musk then called the woke mind virus: “Anti-civilizational.”
Ending the discussion, Musk then discusses the importance of free speech: “Free speech is incredibly important because if people cannot speak their minds, then we won’t have a democracy,” adding, “The foundation of democracy is freedom of speech.”
To sum up, Musk is sticking to his guns with his pro-humanity rhetoric, and it’s obvious that being pro-civilization, there is no room for the woke mind virus.
Over the past year, there’s been no shortage of scientists, tech CEOs, billionaires and lawmakers sounding the alarm over artificial intelligence (AI) — and now, even the Pope wants to talk about it too.
In a hefty 3,412-word letter dated Dec. 8, Pope Francis — the head of the Catholic Church — warned of the potential dangers of AI to humanity and what needs to be done to control it. The letter came as the Roman Catholic Church prepares to celebrate World Day of Peace on Jan. 1, 2024.
Pope Francis wants to see an international treaty to regulate AI to ensure it is developed and used ethically — otherwise, we risk falling into the spiral of a “technological dictatorship.”
“I urge the global community of nations to work together in order to adopt a binding international treaty that regulates the development and use of artificial intelligence in its many forms.”
The threat of AI arises when developers have a “desire for profit or thirst for power” that overpowers one’s wish to exist freely and peacefully, the Pope explained.
“The inherent dignity of each human […] must undergird the development of new technologies and serve as indisputable criteria for evaluating them […] so that digital progress can occur with due respect for justice and contribute to the cause of peace.”
Technologies that fail to do this “aggravate inequalities and conflicts” and, therefore, can never count as true progress, he added.
Meanwhile, the emergence of AI-generated fake news is a “serious problem,” added the Pope, which could lead to growing mistrust in the media.
The Pope was recently a victim of generative AI when a fake image surfaced of him wearing a luxury white puffer jacket went viral in March.
Fake AI-generated photo of the Pope. Source: Boston Globe
Pope Francis, however, also acknowledged the benefits of AI in enabling more efficient manufacturing, easier transport and more ready markets, as well as a revolution in processes of accumulating, organizing and confirming data.
But he’s also concerned that AI will benefit those controlling it and leave a large portion of the population without employment to pay for a living:
“There is the substantial risk of disproportionate benefit for the few at the price of the impoverishment of many.”
Pope Francis has long warned about the misuse of emerging technologies, stating that “both theoretical and practical moral principles” need to be embedded into them. He is, however, often seen as more tech-savvy and forward-looking than his predecessors.
Pope Francis’ recent remarks come after a year of outcry from all corners of the world over the potential dangers of AI.
Tech leaders, such as Tesla CEO Elon Musk and Apple co-founder Steve Wozniak, have expressed concern about how rapidly AI is advancing. It prompted them and more than 2,600 tech leaders and researchers to sign a petition to pause AI developments in March 2023, sharing concerns that AI more advanced than GPT-4 can pose “profound risks to society and humanity.”
United States President Joe Biden has also expressed concerns. His administration released an executive order on the “safe, secure, and trustworthy development and use of artificial intelligence” in late October to address risks posed by AI.
Even Hollywood filmmakers and celebrities are adding their thoughts to the issue.
In July, Canadian filmmaker James Cameron reportedly said he had been warning of the dangers of AI since The Terminator, which he directed nearly 40 years ago.
”I warned you guys in 1984 and you didn’t listen,” Cameron told CTV News.
“I think the weaponization of AI is the biggest danger […] I think that we will get into the equivalent of a nuclear arms race with AI, and if we don’t build it, the other guys are for sure going to build it, and so then it’ll escalate,” he added.
Watch: Ukraine Politician Throws Hand Grenades In Town Meeting, Wounding 26
A contentious meeting to discuss a Ukrainian village’s 2024 budget turned to carnage on Friday morning when a politician aligned with President Volodymyr Zelensky dropped hand grenades on the floor, wounding 26 attendees, including himself. The incident took place in the western village of Keretsky — population 4,000 — in mountainous territory near the Hungarian border.
Ukrainska Pravda has identified the attacker as Serhiy Batryn, a member of Zelensky’s Servant of the People Party. Some outlets say he is a member of the Ukraine parliament, while others identify him as a village council member. Citing a Ukraine Telegram channel, the New York Post reports Batryn was arguing that he and colleagues should be allowed to fully report on this year’s budget before the 2024 budget was discussed.
Bartryn is said to have a long-running, contentious relationship with the village chief — and was opposed to a 2024 budget provision awarding the chief a 50% pay raise and monthly bonus for the duration of the war. The heated meeting was almost an hour and a half underway when Batryn left the room with another man, but then returned alone a few minutes later to stand just inside the doorway.
Video captured the slowly unfolding horror. Pulling grenades from his coat pockets, Batryn seeks the attention of the crowd by asking, “May I? May I?” While speaking, he pulls the pins from the grenades and casually tosses them to the floor in front of him, in a space between the front row of spectators and the village officials.
The attendees flinch, however, demonstrating normalcy bias — people’s tendency to ignore or disbelieve indicators of danger — almost all of them simply watch as all three grenades are dropped to the floor. One woman can be seen leaning away as if bracing against firecrackers rather than imminent, shrapnel-propelling explosions. Another in the second row merely covers her ears.
The grenades detonate, and the scene instantly transforms into smoky chaos, filled with shouting and agonized screams. While none have died thus far, dozens were injured. “Twenty-six people were wounded, six of whom are in a grave condition,” police said in a statement reported by BBC. Batryn is said to be among the most seriously injured.
During a village council meeting in Ukraine’s western Zakarpattia region on Friday (December 15), a local legislator brought grenades and triggered an explosion, resulting in one death and 24 injuries, according to the national police. The incident occurred during an ongoing… pic.twitter.com/S9uiSwixR3
The bloodshed was first reported to police by a woman who watched it play out on a live broadcast. Police say the grenade attack will be investigated by the Security Service of Ukraine (SBU), a hybrid intelligence and law enforcement entity which also engages in foreign operations, such as last month’s bombing of a rail line in Siberia.
Other than the war-bonus-dispute, there’s no indication the incident was related to Ukraine’s ongoing war with Russia — that is, beyond the possibility that grenades are far easier to come by as the United States and Western allies pour billions of dollars of weaponry into Ukraine, with many critics saying there are insufficient controls in place to ensure they aren’t diverted from the war effort and into the black market.
Jerome Powell is not completely the blithering idiot he seems. Actually, playing the role of chairman of our monetary central planning agency would have done that to anyone— even Einstein.
After all, we are talking about monetary Mission Impossible here. There is an infinitely complex and opaque $26 trillion economy in America, which is deeply and intricately interwoven with a $105 trillion global GDP. As such, the US economy operates far, far beyond the reach of any would-be state administrator, planner or economic czar.
In part that’s because the “incoming economic data” on the Fed’s dashboards is unreliable, incomplete, noise-ridden and frequently undecipherable. Likewise, its tools of policy implementation and control are crude,wobbly and generally unfit for purpose.
So the Fed is pleased to pretend it is precisely and scientifically pursuing macroeconomic “goals” with respect to inflation, full employment and general maximization of prosperity, thereby bestowing the greater good on main street America. But that’s a ruse. In fact, what it actually does is to periodically bend over when Wall Street hands it the proverbial bar of soap.
Yesterday occasioned the latest ignominious episode of this monetary whoredom when Powell pivoted on a dime with respect to rate cuts, thereby flushing down the memory hole his own position of just two weeks earlier. As ZeroHedge noted,
Even Powell’s own mouthpiece, WSJ reporter Nick “Nikileaks” Timiraos, was confused remarking sarcastically after the FOMC “what a difference two weeks can make.“
So to reprise Wednesday’s post: Inflation hasn’t been vanquished, real interest rates are still deeply subnormal and $8 trillion of fiat money production since 2008 is more than enough for decades to come. So why is Powell even talking about rate cuts?
Y/Y Change In 16% Trimmed Mean CPI, 1991 to 2023—At 4.0% Still Highest Trend Rate In 32 Years
Inflation-Adjusted Fed Funds Rate, 1984 to 2023—Real Rates Were Negative 95% Of The Time Since the Great Financial Crisis
Of course, the inmates at the Eccles Building never run short of economic gibberish when trying to justify the unjustifiable. Yesterday, for instance, Powell warned that if the Fed doesn’t soon start cutting rates and inflation keeps falling, real rates might become too tight, thereby restricting the economy and presumably blocking achievement of its full employment “goals.”
Well, that’s rich. Not one of the FOMC’s 12 current members were onboard before April 2008, meaning that real interest rates have been negative during 95% of their collective time of service. And yet Powell is worried about real rates becoming too tight?
Powell repeated his view that officials could lower rates next year simply because inflation is well on its way to their 2% target. Holding rates steady as inflation falls would lead inflation-adjusted or “real” rates to rise, which the Fed doesn’t want. Officials could lower nominal rates simply to prevent real interest rates from turning too tight.
“You wouldn’t wait to get to 2% [inflation] to cut rates,” Powell said. “It would be too late. You’d want to be reducing” the amount of “restriction on the economy well before you get to 2%.” – Wall Street Journal
As we said, the above mendacity is window dressing. Wall Street wants another run at surging stock prices, and the only way to make that happen in the context of an economy that is dead in the water is through yet another cycle of PE expansion.
And when it comes to PE expansion, in turn, the Pavolovian traders and robo-machines of Wall Street have already surpassed AI learning by a country mile:
Lower the rate.
Buy the stock.
Bank the gains.
Done!
Rinse!!
Repeat!!!
The above is the one and only justification for lowering interest rates early next year, late next year or any other time in the period immediately ahead.
The reason is simple: The only agency through which lower rates from current negligible inflation-adjusted levels could possibly impact growth of GDP, employment, spending and incomes is via inducement of still more borrowing by government and private sector actors alike.
After all, rates cuts are the only tool in the Fed’s threadbare tool kit and causing economic actors to borrow and spend more than they would on their own volition is its only real channel of policy transmission.
But here’s the thing. Has it ever occurred to these Keynesian boneheads that when it comes to the endless accumulation of debt that there may come a state of diminishing returns? Or that more debt today ensures less jam tomorrow? Or that in the basic scheme of economic life there is juxtaposed against income statements and cash flow metrics the matter of balance sheet conditions and their repercussions upon the former?
Well, here is the US economy’s total public and private debt (black line) relative to income or GDP (red line) since 1949, with the dashed purple line representing what amounts to the aggregate leverage ratio. As it happened, the latter was stable at about 150%debt-to-GDP from 1950 through 1970, reflecting a historical constant that had dwelled in that range for most of the 100 years after 1870.
Once the dollar was cut loose from its anchor to gold in 1971, however, it was off to the races. Collective income or GDP is now 2,300% higher, while collective debt is up by 5,600%. Accordingly, the US economy’s leverage ratio has soared to 357% as of 2022.
There is far more to this chart than just big numbers, however. The extra two turns of leverage on current national income depicted by the dashed purple line represents $53 trillionof incremental debt burden that would not have existed at the pre-1971 leverage ratio. That is to say, the current aggregate US debt level would be $41 trillion, not $94 trillion.
US Economy’s Debt, Income And Leverage Ratio, 1949 to 2022
So what the Fed’s recurrent bouts of “rate cutting” have actually delivered is temporary gains in borrowing and spending—purchased at the cost of water-logging the GDP with Peak Debt and ever diminishing capacity for growth.
Indeed, a perusal of the chart suggests that the real tipping point was reached on the eve of the Great Financial Crisis in 2007. During the 58 years ending at the first Peak Debt in 2007, real GDP grew by an average of 3.53%per annum. Since then, the gain has been only 1.76% per annum, or barely 50% of its historic rate.
Needless to say, the above outcome is not solely due to the self-evident explosion of government debt. Nor is the GDP growth collapse attributable just to the fact that the overwhelming share of these massive government debt and spending gains have been channeled to the lowest productivity expenditures that exist in the current US economy—namely, military outlays and transfer payments.
The state sector share of the blame for the growth slowdown thus cannot be denied. Yet the Fed’s endless promotion of sub-economic rates also infects the private sectors no less than the elected politicians and the nomenklatura who man today’s sprawling arms of government.
Thus, the household debt and leverage ratio explosion has been even more dramatic than for the US economy as a whole. Between 1960 and 2022, total debt of the household sector has risen from $213 billion to $19.021 trillion or by a staggering 8,830%. That compares to the main source of household income—wage and salary disbursements—which have grown from $274 billion to $11.115 trillion or by just 3,950%.
As a matter of arithmetic, therefore, the household leverage ratio against earned income has jumped from 78% in 1960 to 171% in 2022. And, again, it is self-evident that with 2.2 more turns of leverage, the household sector’s capacity to spend and invest has been severely compromised.
Household Debt, Income And Leverage Ratio, 1960 to 2022
Not surprisingly, the same trends hold with respect to nonfinancial business sector leverage, as well, except that the debt explosion is even more exaggerated. To wit, between 1955 and 2022 US business debt outstanding soared from $131 billion to $20.434 trillion.
That’s right. Business debt (black line) has risen by the staggering sum of 15,500% since 1955. Alas, the means to service all that debt— value added generated by business operations (red line) —rose by only 5,930% during the same 67-year interval.
Again, the math does not lie. The implicit leverage ratio for the US business sector has well more than doubled, rising from 40% in 1955 at the peak of America’s post-war prosperity to 104% in 2022.
Business Sector Debt, Income and Leverage Ratio, 1955 to 2022
Needless to say, ground zero for the post-1971 explosion of debt and leverage has been the domestic financial sectors. The banks, insurance companies, brokers, GSEs and Wall Street conglomerates have become the ultimate LBO.
Thus, the sector’s outstanding debt level (black line) rose from $140 billion in 1970 to $18.77 trillion in 2022 or by13,200%. And that was against a backdrop of GDP growth which increased by the aforementioned 2,300%.
So the domestic financial sector’s leverage level exploded indeed, rising from 12% of GDP in 1970 to 73% at present. Of course, the textbooks said the financial sector is supposed to be in the debt intermediation and distribution business. But nearly $19 trillion of debt issuance on its own accounts says otherwise. Loudly.
Domestic Financial Sector Debt, Income And Leverage Ratio, 1970 to 2022
So here we go again with what will surely be even more counter-productive rate cuts and yet another round of financial repression. Yet if the nation’s central bank were actually in the business of promoting the public good, it would recognize that America’s balance sheets are tapped out, and that what it should be doing is stepping aside and defaulting to the free market.
Only the latter can discover the true economic and sustainable level of interest rates, debt and leverage under current conditions. And the sooner Mr. Market gets started on that mission, the better.
In a word, after yesterday’s pathetic capitulation to Wall Street, the only thing left for Powell to do is cancel the thought of three more stinkin’ rate cuts and get out of the way. Now!
In September, officials had projected one more hike this year followed by two cuts next year, taking the fed-funds rate to around 5.1%. On Wednesday, officials projected they would lower it to around 4.6% by the end of 2024, the equivalent of three quarter-point reductions from the current level.-WSJ
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David Stockman’s Contra Corner is the place where mainstream delusions and cant about the Warfare State, the Bailout State, Bubble Finance and Beltway Banditry are ripped, refuted and rebuked.
Israel Resuming Hostage Talks After Ugly Details Emerge Of ‘Friendly Fire’ Incident
Israel’s Mossad spy agency director David Barnea has been dispatched back to Doha amid reports that the Netanyahu government is open to pursuing a second temporary truce and hostage deal.
Axiosdescribes it as “the first meeting between senior Israeli and Qatari officials since the collapse of the seven-day ceasefire that led to the expansion of the Israeli military operation to southern Gaza.” Looming in the background is intensifying pressure on Prime Minister Netanyahu in the wake of Friday’s ‘friendly fire’ incident which killed three hostages who had been trying to escape Hamas captivity.
Talks are “just a beginning” is is likely to be “long, difficult and complicated” – according to a source speaking to Axios. CIA director Bill Burns and Egyptian intelligence chief Abbas Kamel are also said to be part of efforts to revive talks. Netanyahu has repeatedly vowed to complete Gaza operations which have the aim of eradicating Hamas.
But already at a time that hostage and victim’s families have led huge protests demanding more be done to secure the release of the over 100 captives that remain, both domestic and international pressure is at breaking point.
The new to emerge details made known by a preliminary military investigation are very ugly and will drive controversy against military and government decision-makers into overdrive. The three young men killed by IDF troop fire were shirtless, waving a white-flag and shouting in Hebrew when they were gunned down by Israeli forces. According to the Times of Israel based on military statements:
Three hostages shot dead by Israeli troops in Gaza City’s Shejaiya neighborhood Friday were shirtless, and one of them was carrying a stick with a makeshift white flag, the IDF said Saturday after an initial probe into the tragic incident.
Yotam Haim, Samar Talalka and Alon Lulu Shamriz managed to escape Hamas captivity before they were mistakenly shot dead by troops on Friday morning at around 10 a.m.
According to a senior officer in the Southern Command, citing an initial probe, the incident began after a soldier from Bislamach Brigade’s 17th Battalion stationed in a building identified three suspicious figures exiting a building several dozen meters away.
The details of what happened next get worse from there:
The soldier, who believed the men moving toward him was an attempt by Hamas to lure IDF soldiers into a trap, immediately opened fire and shouted “terrorists!” to the other forces.
According to the probe, that soldier killed two of the men, while the third man, who was hit and wounded, fled back into the building from which he came.
At that stage, the commander of the battalion, who was also in the multi-story building where the soldier had fired from, went outside and called on the forces to stop shooting.
Even at that point, the third hostage was still alive and began trying to communicate in Hebrew, something which would have been extremely unusual if it had been a Palestinian or Hamas fighter:
Meanwhile, sounds of someone — apparently the third hostage — shouting “Help” in Hebrew were heard by troops in the area.
Moments later, the third man came out of the building to which he had fled, and another soldier opened fire at him, killing him.
It was only in the aftermath that a battalion commander suspected the three men may have been Israeli captives, and their bodies were later positively identified in Israel.
The IDF immediately sent out new protocols to all its forces operating in the Gaza Strip, after apparently troops were not prepared for the possibility that hostages may be encountered on the battlefield.
“There is a possibility that hostages were abandoned or escaped, and forces should be aware of the possibility of such an encounter and pay attention to tell-tale signs, such as speaking in Hebrew, raising hands, and clothing,” the new protocols state. Hamas has begun releasing gruesome videos (warning: disturbing and graphic) purporting to show Israel’s aerial bombardment killing hostages held in locations on the ground.
The whole tragic and horrific episode suggests that at least in many cases, inexperienced infantry forces are essentially shooting at anything that moves in this intense urban warfare environment – also fearing the kind of surprise guerrilla ambushes Hamas has been known for.
Controversy and criticism raging over the IDF’s tactics and strategy…
This is what Israel has done to Gaza: You don’t do this to rescue hostages, you do this for ethnic cleansing. pic.twitter.com/qPwcZeesay
As for the potential for this incident to hasten negotiations along with the aim of securing freedom for more hostages, Hamas too says it is open. In the first truce which ended two weeks ago Hamas received hundreds of Palestinians from Israeli prisons. “We are open to discuss any arrangement or initiative that could end the (Israeli) aggression,” Haniyeh said in a televised speech on “Al-Aqsa TV” channel.
The prior truce reportedly wasn’t extended and collapsed as Israel complained Hamas was seeking to separate children from their mothers, and that it was refusing to handover more women captives, as well as the youngest child – an infant.
