#176. Protect and Survive


Before we can assess the outlook for the economy after the Wuhan coronavirus pandemic, we need to be familiar with the measures adopted by the authorities to tackle the crisis itself. Whilst these measures themselves are reasonably well-known, it seems that some of the associated risks are by no means so clearly understood.

Critically, governments and central banks face an imprecise (but undoubtedly critical) time-deadline which, if missed, could create an extraordinarily hazardous combination of circumstances.

The ‘standard model’ response

The coronavirus crisis, and the use of lockdowns in an effort to curb the spread of the virus, have posed two different challenges to the economy, and these have been met by two different types of response.

The more obvious and immediate impact has been the sharp fall in economic activity itself.

The second is the risk that households may lose their homes, and that otherwise-viable enterprises might be put out of business, by an inability to keep up with rent payments and debt servicing due to the temporary impairment of their incomes.

Official responses to these problems have involved, respectively, support and deferral.

Support has been provided by governments running extraordinary (and, in anything but the very short term, unsustainable) fiscal deficits in order to replace incomes, with these deficits essentially monetised by central banks’ use of newly-created QE money to acquire pre-existing government debt. The alternative, of course, would be for central banks to sit this out, and let government debts soar, but monetisation seems to have been judged, perhaps correctly, as the lesser of two evils.

Deferral, meanwhile, has taken the form of rent, debt and interest ‘holidays’, whose effect is to push such costs out into the future.

Fiscal support programmes are exemplified by the British situation, in which a deficit of £48bn limited, to ‘only’ 20.4%, a decline in April GDP which would otherwise have been a slump of close to 50%. A further deficit of £55bn during May pushed the two-months’ total to £103bn, a number remarkably (and surely by no means coincidentally) similar to the £100bn of QE thus far undertaken by the Bank of England.

A time-constrained expedient

Though there have been variations around this theme – most notably in the United States, where the Fed seems to have attached inordinate importance to the prevention of slumps in asset prices – there has been an identifiable ‘standard model’ of responses which combines deficit-funded support for the economy with central bank monetisation of equivalent amounts of existing public debt. Over the course of three months, the three main Western central banks – the Fed, the ECB and the Bank of Japan – have increased their assets by $4.5 trillion, or 31%, a sum equivalent to 10.5% of their aggregate annual GDPs.

Essentially, and despite some variations in the types of assets purchased, this amounts to the back-door monetisation of the new debts incurred to support economic activity. Although Japan has been getting away with wholesale debt monetisation for many years, this process nevertheless carries very real risks. If markets, and indeed the general public, ever came to think that the monetisation of deficits had become the ‘new abnormal’, the credibility and purchasing power of fiat currencies would be put at very serious risk.

This risk most certainly should not be underestimated – after all, the $2.9tn of asset purchasing undertaken by the Fed between February and May equates, on an annualised basis, to 55% of American GDP, with the equivalent ratios for other areas being 39% in Japan, 32% in the Euro Area and 23% in Britain.

If any of these central banks actually did monetise debt at these ratios to GDP over a whole year, currency credibility would suffer grievous impairment.

A race against time

This ‘standard model’ of support response, then, is a time-constrained process, viable for a single quarter, and perhaps for as much as six months, but not for longer.

Meanwhile, there are obvious time constraints, too, on a deferral process which imposes income delays on counterparties such as lenders and landlords.

If all goes well, a reasonably rapid economic recovery will enable governments and central banks to scale back deficits and monetisation before this process risks impairing credibility. An optimistic scenario would postulate that, by the time that this normalization has been concluded, the authorities will also have worked out how to wind up the deferrals process in ways that protect households and businesses without imperilling landlords and lenders.

There is, though, an all-too-plausible alternative in which deficit support is still being provided at a point when deferral is no longer feasible. This is a ‘nightmare scenario’ in which, as well as continuing to monetise high levels of fiscal deficits, central banks also have to step in to rescue lenders and landlords.

Thus understood, governments and central bankers are engaged in a race against time. They cannot carry on monetising deficit support for more than a few months, and neither can they prolong rent and interest deferrals to the point where landlords and lenders are put at risk. This makes it all the more surprising (and disturbing) that some countries are acting in ways that seem almost to invite a crisis-prolonging “second wave” of coronavirus infections.



54 thoughts on “#176. Protect and Survive

  1. In the UK at least landlords could well be bailed out, even if it had to be clandestinely. A precedent exists in the slave owners of the past which taxpayers of the whole country (most of whom didn’t have slaves) have only recently finished paying off if I remember correctly. Looking at the numbers, sustainable farming as practised by the Amish for example requires a surprising amount of land, so the 1%, who own most of the best land, should do well when land becomes the only real currency.

    In the past people didn’t fight to death over the best land for nothing, they knew it meant life, providing as it did, fuel, shelter, medicine, food and water. We clutch pieces of paper and trinkets.

    • Thanks.

      I shouldn’t worry, though. If you remember discussion of the previous article, we learned that, according to conventional economics, since farming is only 6% of world GDP, loss of the ability to produce any food at all would leave 94% of the economy perfectly OK.

      That’s nice to know!

    • we could go Amish but you’re right, the land required is a big issue,
      humanity never really made it over 1 billion globally when we ran on an agricultural energy base with food, wood, muscle, wind and water wheels for power,
      it took an increasing use of coal and industrialisation to push us over the 1 billion mark,
      I was rather hoping for a steady gentle decline in population to help matters,
      ideally the UK would want to slim down to 30-40 million inhabitants to make some sort of sustainability feasable,
      do I sound selfish when I say I was somewhat less than impressed when our govt. announced it would give up to 3 million British passports to Hong Kongers?

    • I have read conflicting reports on the amount of land needed to feed one person. Ted Trainer in his book ‘The Conserver Society’ provided a lot of examples of huge amounts of food having been produced on small patches of land, especially in urban areas. But these instances appear to involve intensive horticulture, which is very labour intensive. They also presuppose a largely vegetarian diet. The implication would appear to be, that living on a limited land budget requires a lot of human labour in the production of food, something that is incompatible with an affluent lifestyle.

      Historically, the best way of feeding a lot of human beings from a limited land area, was to grow potatoes. What could possibly go wrong?

  2. Tim, rescuing lenders and landlords won’t work more than temporarily if the new normal is that 20 – 30% or more of former workers will now be permanently unemployed.

    Many of the lost jobs will never return.

    I’m not just talking about what is viable as a business model. E.g., most restaurants and bars won’t be viable because they need to have too many customers in their small spaces. Much of the travel industry is toast. But there is also this: Many companies are now learning that they can force customers to get by on less, and need less staff and/or resources. Here in Boston e.g., we are in Phase II and all bank branches are permitted to be open. Notwithstanding that, the local TD banks only have a few branches where it is possible to go in and speak to someone, and then only for a 3-hour window per day. Other branches remain closed to the public. The handful of employees that remain are required to do more. This lesson will not be lost on the bean counters. Branches will be closed, staffing permanently reduce, hours shortened. IOW, fixed costs can be dramatically reduced while revenues remain relatively unchanged. All for public safety of course.

    Same thing is happening in the health insurance realm. It’s harder and takes longer to get to see a doctor there will be less surgeries etc. so insurance payouts will go down, but premiums remain the same. Again, the corporate overlords are taking note. .

  3. If I were half my 75 years, I’d consider starting again what I did for a decade at 45: organic gardening and managing ~120 acres of mixed forest land. Our son has zero interest in that kind of life. Neither did my wife, except for picking some vegetables and fruits. 😉

    As I noted before, I’ve around 7% of investment $s in DBA, which is Deutsche Banks Agricultural Commodity ETF. It is all food items. Retirees are stuck trying to protect buying power with interest rates under 2% on decent quality credits. And the currency risk you mention induced me to get 50% or so out of the $US, which is my home fiat. 12% physical gold rounds out the hedged portfolio. I await the next storm which will undoubtedly arrive eventually..

    • What would you suggest? Real estate is an accident waiting to happen as most is heavily mortgaged.

    • There are no easy strategies for what’s coming.
      A little more metal might be good but who knows. I m 64 and still working but have the same predicament re trying to preserve some purchasing power for the duration
      I sympathize because none of my adult children are interested in the rural life in a family farm type business
      I would say have a well stocked pantry ( the Mormon goal of a 1 year supply is worthwhile) have some reliable means of heating your home with wood and a good supply and have a means of purifying drinking water. Strengthen ties with neighbors. From past things you have said i think you’re already well down that road.

    • Maybe some land. Agricultural. But not a lot, they can tax the hell out of you. Look at the gypsies, maybe a nice golden necklace would look very nice on you. Diversify. Never go all in.

      A few years back i bought myself a set of good quality handtools. Very energy intensive to produce… it will keep its value. Think in value.

    • Maybe i should add, what would be the cost (not the ‘price’) of a set of good quality handtools without a debt/qe based system? Think about that.

    • @houtskool Re: “Maybe i should add, what would be the cost (not the ‘price’) of a set of good quality handtools without a debt/qe based system? Think about that.”

      Maybe trade for a month’s worth of food? Guns, ammo, canned and dried food, firewood…also good to barter.

  4. “ There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.”

    Ludwig von Mises

    If we replace credit expansion by QE, i think we have a quite good discription of our current situation.

    We are already beyond credit expansion.

    • “ There is no means of avoiding the final collapse of a boom brought about by credit expansion. . . . ”

      It depends on the ‘type’ of credit?

      “They found that the composition of credit does matter for the trade balance; lending to consumers has a negative effect on net exports, while loans to firms contribute to a rise in net exports. This is again empirical evidence in support of our disaggregated credit model: productive corporate loans should deliver noninflationary growth, and as part of that also exports. Consumer loans only result in greater domestic demand, which at any given marginal propensity to import will have a negative impact on the trade balance.”

      Click to access Werner_IRFA_QTC_2012.pdf

    • That’s true postkey. But who will be able to buy the output of all this cheap credit to firms?

  5. Dr. Morgan

    I am not clear on a point. No dumb questions, right? What is the risk of “prolong(ing) rent and interest deferrals to the point where landlords and lenders are put at risk” ? Why do central banks have to rescue lenders(banks?, Hedge Funds?) and landlords?

    The U.S. Federal Reserve seems to have a strong aversion to an U.S. equity market collapse. It feels like they think a U.S. stock market collapse risk is greater than the currency devaluation risk? Maybe that is just a perception I have. Maybe they are just trying their best to keep all the balls up in the air as long as they can.


    • Because eliminating half the planet’s cash flow would destroy the system.

    • If the equity market(s) decline 50% or so, and stay in that general area for a couple of years, many pension plans – public and private, insurance companies, annuity companies, etc. will fail. With bonds yielding 1/4 or less than historically, many are on the brink now. The Fed is stuck.

    • Shawn
      Never forget that the real job of the Fed is to protect the banks. This means keeping asset values up to protect collateral value, to purchase the banks’s dodgy assets and give them fresh cash for those assets so they can try again and eventually if all else fails to provide cash flow to borrowers so they can pay their loans to the banks

      Currency devaluation and hyperinflation are not problems for saving banks balance sheets because the accounting is in nominal dollars.

      Don’t fall for the BS that the CBS are some kind of guardians of the economy or the currency. I think that is pretty tangential to their real purpose

  6. Tim, can I repeat a comment from last time?

    There are some investment ideas in the comments on this post, but I thought people might like to discuss ideas more frequently or at greater length, in light of this blog’s thesis. Accordingly I set up, after Dr Morgan’s previous post, a chat group on the Discord app.


    A few joined – I was late in making the suggestion- but as yet I am the only contributor.

    What form it takes is up for grabs – I would think ideas for medium term and median upheaval would be helpful, and portfolios and so on.

    • Chris,
      I registered, but the search finds nothing. I tried various forms of your link.

    • As soon as critical mass discovers the true face of fiat currencies, the scramble for hard assets will be mindblowing. All paper promises will be wiped out.

    • @houtskool Re:
      “As soon as critical mass discovers the true face of fiat currencies, the scramble for hard assets will be mindblowing.”

      That might be decades… What to do in the meantime?

    • @houtskool Re: “As soon as critical mass discovers the true face of fiat currencies, the scramble for hard assets will be mindblowing.” That might be decades… What to do in the meantime?

      “At the current rate of monetisation, I doubt if it’s decades………..”

      SK: The Japanese have been doing it for three decades, and there hasn’t been a run on the Yen. I expect all the majors to do it at the same time to greater and lesser degrees. It looks like it is a matter of which economy is perceived as weakening most rapidly…As the $US has been king of the hill for a century or so, and has been slowly declining for around 1/4 century. The Pound did a rolling decline for a century. See this 43 yr chart of the $ Index:


    • Agreed doc.

      Steven, life is short, and than you die. Becoming wealthier is not a way of life.

      Maybe that golden necklace you bought on my advise will eventually pay for your grand granddaughters education.

    • I recommended gold in Oct 2001 in a guest article for contratheheard that is still on their website( see commentaries)
      The piece was about the end of growth! I was early🤓

    • Glad we solved that one.

      Paper is dying Steve. We both know that. It will get messy.

      So no more questions about investing, ok?

    • @houtskool
      “Glad we solved that one.”

      SK: We solved nothing in my opinion.

      “Paper is dying Steve. We both know that. It will get messy.”

      SK: I suspect; I don’t know the future with any precision. Recall Niels Bohr and Yogi Berra!

      “So no more questions about investing, ok?”

      SK: Your request is unreasonable. Other list members (including me) may have questions and ideas. This is an economics blog, and the analyses by Tim and others include things such as pensions, incomes, and the continuation of civilization.

      Tim: I have a post from hours ago awaiting moderation. The football is over. 😉

  7. A Systemic Way of Thinking About (the US) Government
    The brain is exquisitely designed to balance conflicting objectives. At the present time, governments in the US have to choose between conflicting objectives…open up the economy vs. minimize infections and deaths. There are a couple of systemic explanations for how the brains of government officials, and the general public, are deciding what to do. The first principle is ‘avoid the worst case’…figure out which is the worst thing that can happen, and take some other course of action. The worst case in the official mind and the public mind is likely to be the 1918 Pandemic…along with the notion of Global Nuclear Warfare. But the second principle is time discounting…anything that might happen years from now is less relevant than what is likely to happen right now. And the third principle is blame avoidance…the bad situation we are in is the fault of somebody else. I am sure that addiction counselors will recognize these reactions.

    And so we see the US adopting a military budget which spends 3 times as much as China, the second largest spender, while taking swipes at Russia and China and also Trump. Even Congresspeople and the public probably understand at some level that taking swipes at nuclear powers risks global nuclear warfare and human annihilation. But the other two factors above are outweighing the risk of the awful. As for the Pork Barrel Defense Bill, every Congressperson knows this is ‘delivering the bacon’ to their district, and the public thinks that ‘spending is good…no matter what the spending results in’. The State of Georgia is re-opening the colleges, and is not requiring face masks, and is specifically prohibiting teachers from requiring face masks in their classes….while the number of new cases is reaching record levels. So there are renewed efforts to
    ‘blame it all on China’. The politicians are willing to see some more people die in order to attract the voters of the Right who dispute that face masks do any good at all.

    What about the Public? My perception is that people just want to get back to ‘normal’. Any idea of ‘adapting to what is likely to be an endemic situation’ is buried under an avalanche of ‘feel good again’.

    I don’t think very many of the Public would it still for a lecture on how the massive debt that has just been created in their name is a millstone around their necks and the necks of their children.

    Don Stewart

  8. The article mentions a “a reasonably rapid economic recovery”. Unfortunately, I don’t see any sunshine over the horizon.

    Despite it being almost 20 years since we had a budget surplus, we now have Boris’s splurge and an invitation to 3,000,000 Hong Kongers to live and work here at a time when jobs are going out of fashion.

    Personally, I feel we need a radical change in how we do things and how we can get the same for less money. Sadly, I don’t think our political class are up to it.

    • Thanks. Just to clarify, I didn’t mean that there will be a rapid recovery, but that this is what governments and CBs are pinning their hopes to. I should perhaps have made that clearer, but my feeling was that the interpretation of offical fiscal and monetary responses to the crisis, as set out in this article, could be significant, and needed brevity.

      Economic prospects are likely to be the subject of the next article. I’ve been doing a lot of preparatory work on this using SEEDS. The emerging picture isn’t pretty.

      I think the public are being prepared for a cosmetic recovery, as I keep hearing the term “jobless recovery”. Just to be absolutely clear about this, there is no such thing as a “recovery” that does not create/restore jobs.

      Unless jobs, incomes and consumer demand are restored, the economy cannot recover. There are many ways of manufacturing a cosmetic “recovery” – run huge deficits and monetise them is one way, inflate asset prices still further is another.

    • As for the political class, and if it’s the UK you have in mind, then I think we’re watching an ‘omni-shambles’ without precedent. It’s emerged today that the huge numbers tested for the virus were not asked to provide their addresses.

    • Thanks Tim.

      I wasn’t specifically commenting on your use of ‘rapid recovery’, just its use in general. I believe the global economy was heading south before the virus struck.

      Regarding the UK’s political class, they seem too preoccupied with their playground politics within the Westminster bubble to want to tackle the real problems we face and faced even before Covid-19.

    • Thanks. We’ve been discussing the very evident, long-pre-crisis economic deterioration here for more than two years. In that time we’ve seen sharp falls in sales of cars, smartphones, chips, electrical components and much more, and a slump in world trade in goods.

      On the UK – and in no party political sense – I cannot recall ever seeing such an utter shambles, or such mind-boggling incompetence, as we’ve been witnessing in recent weeks. This isn’t, I suspect, just ‘the government’, in the sense of the politicians, but the machinery of policymaking, though of course ministerial incompetence cannot be excused.

    • I have an elderly neighbour who, having grown up during the war and when ‘austerity’ meant what it said on the Ration Book, can rustle up a three-course meal from half an egg and some dandelion leaves.

      I think we’re going to need such people – inventive people – in the changing world we’re heading into.

  9. what I find mystifying is quite how diligently and consistently our glorious leaders manage to ignore the bleedin obvious,
    the Club of Rome’s first act was to commission the study that was published as the report: The Limits of Growth in 1971,
    as far as I’m aware it’s the greatest and probably only positive thing the Club of Rome has ever done,
    ever since this initial study the Club has spent it’s entire energy on trying to devise technical workarounds to avoid the inescapable, it still doesn’t seem to have accepted the conclusions of their first study.
    in the 70’s & 80’s Exxon was doing world leading scientific research into the consequences of releasing so much co2 into the atmosphere, they were spending millions on this research, they had such good data that they were well placed to be part of the inter-governmental negotiations on how to achieve reductions and earn themselves kudos for corporate responsibility,
    then suddenly they dropped the research and started funding think tanks to contradict their findings and sow doubts and mis-information,
    watching the film: ‘Critical Mass’ there’s part of an interview with the oil geologist Colin Campbell who’s been a strong advocate for taking peak oil seriously,
    during the interview he said; ‘oh did I tell you the CIA came to see me, oh you might want to turn off your recording gear at this point (they didn’t though) yes I had a chap from the Office of the Director of Naval Intelligence come and invite me to go give them a presentation on peak oil’
    so this is a form of confirmation that the US military is aware of the coming challenge,
    I’ve also seen research papers from US military think tanks discussing the challenges of providing the energy to power US forces in the future and calling for more fuel efficient ground vehicles and alternate aviation fuels,
    I think there’s plenty of evidence that behind closed doors there is an understanding of the need for copious amounts of cheap surplus energy and it’s direct link to enabling further growth,
    there is the knowledge and understanding of the energy bottleneck that we’re now actually entering,
    yet nothing is said publicly and there are no signs of any appropriate action being taken?
    why is no one making any attempt to avert disaster?
    in fact, why do they seem to only do things that are likely to increase the severity of future challenges?
    I accept there may be the power of group think in play and a desire to run with the herd and not break away, but this group think has to be in complete contradiction to the best scientific advice they’ve been supplied with on numerous occasions?

    I struggle to imagine what might compel them to maintain this charade and the only thing I’ve been able to come up with is that too many of them feature in Jeffrey Epsteins private photograph album.
    this flippant suspicion will only become firmer if Ghislaine Maxwell succumbs to a mysterious and fatal accident along the lines of Mr Epstein and, let us not forget, her father.

    • @Matt,
      “I think there’s plenty of evidence that behind closed doors there is an understanding of the need for copious amounts of cheap surplus energy and it’s direct link to enabling further growth,………yet nothing is said publicly and there are no signs of any appropriate action being taken?”

      I believe you are right in your assertion that “surely they must know”. “They” being the government and so called “Deep state”.
      About 10 years ago, I was part of a group in the UK, tasked with looking at Resource Security issues and mitigation. Although the primary movers within our group were from academia and industry, it came as no surprise to find officials from the Ministry of Defence attending sessions. Whatever they were up to, will remain under wraps for security reasons. The point is, they were on the case, and understood the crucial role of rare earth metals in renewable energy technologies, not to mention their usage in defence system applications.

      On the question of “Why doesn’t the state spill the beans and just tell us about our energy predicament?” I suspect the answer to that question is slightly more complex than politicians just looking after their own interests; although no doubt, that plays a big part. For example, what would happen if the UK were to go it alone, and unilaterally announce that it’s all over for growth, and we must plan for ongoing declines in energy availability and prosperity.The population at large would surely reject it out of hand, if the rest of the world was sticking to their guns regarding “business as usual”.

      Politicians are frequently criticised for being economic with the truth, but perhaps they are a product of what we have made them. Generally, the population only wants to hear good news, and good news usually means it’s a promise of “more, more, more”.

      For as long as I have looked at the issue of resource depletion, I’ve been convinced that a globally coordinated response is the way forward. But what’s the chances of that happening? The basis of international trade is nation competing against nation, and the peak of international cooperation is probably behind us now. The rhetoric of world leaders is increasingly nationalistic, suggesting their responses to ongoing resource depletion will be the polar opposite to global cooperation and coordination. It’s looking more likely that it will be every man for himself, in the great game of “last man standing”. Just look at what happened with the “resource grab” for PPE during early stages of the Covid-19 Pandemic. So called “allies” were hijacking each other’s supply chains.

      Unless a new breed of world leadership emerges quickly, I foresee an era of ugly confrontation for dwindling surplus energy flows, and other critical resources. If that’s going to be the reality, then it’s the duty of national governments to prepare effectively for that.

      A good start will be taking serious steps towards self-sufficiency in food supply, and in the manufacture of strategically important products.

  10. Interesting chart from the world bank. Since 2008, global trade in merchandise, has been shrinking as a percentage of GDP.

    This suggests either that the world’s leading economies are genuinely becoming more self sufficient, or that a large part of recorded GDP is fake and not tied to real goods.

    • That reminds me of running into a lamp post trying to catch a bus all those years ago.

      An analogy of us sleepwalking into the future?????

    • I just stumbled upon this on twitter and it ties in perfectly with you ZH post about smartphones!

      it was all predicted 70 years ago!

  11. Charles Smith (behind pay wall)
    Looking at the parallels between the French Revolution and the US today:
    “That America has gotten away with this magic for decades only fuels the confidence of those who reckon the way to “get more of everything” is so easy and simple: just create another few trillion dollars out of thin air and buy the world’s resources with this “free money.”

    Eventually the rest of the world will tire of this fraud, and America will face the loss of its magic printing press.

    At that point, inflation will destroy the purchasing power of the US dollar and commoners will be unable to afford the cost of living.

    As with the French Revolution, that will be the trigger for a wholesale replacement of our failed institutions. Whether that replacement can be accomplished within the existing political system will depend on a great many factors that will be unfolding simultaneously and interacting with each other in unpredictable, nonlinear ways.

    My work is all about sketching out alternative systems that are non-hierarchical, opt-in, decentralized, adaptive, self-organizing and anti-fragile–everything that our current systems are not.

    How do we get from “there”–failed, centralized hierarchies dominated by self-serving insiders–to “here”–opt-in, decentralized, adaptive, self-organizing and anti-fragile institutions?”

    As someone inside the US, I’m probably not the best person to speak for someone in, say, Africa or Southeast Asia. What is clear, from Dr. Morgan’s work and simple observation, is that the US is unable to operate a stable economy despite still having access to enormously (theoretically) productive fossil fuels. Which has to mean, just like France at the fall of the Bastille, we are essentially bankrupt…not because we have no energy but because our economy is malfunctioning. The rest of the world continues to support the US, by virtue of the Reserve Currency, and the US will attempt to use military power to insure that it continues to do so. There are zero votes in Congress to take a hard look at military spending. In contrast, Putin’s Russia HAS taken a hard look, and settled on a policy of Mutual Assured Destruction….which does not require the deployment of a dozen carrier groups. The Russians are not capable of land army aggression against anyone except some very small neighboring states, but it IS capable of destroying life as we know it in the US. Yet the US continues to justify increased military spending to ‘deter Russian aggression’. This is only one example of all the costly mistakes being made in the allocation of resources. I think Charles has nailed it when he says that almost all Americans think that we can just print our way to anything we want….congresspeople frequently call it ‘imposing our will’.

    Will it end in my lifetime (I’m 80)? Will it last a thousand years (Hitler’s promise)? Might it end in 2020? Whatever….I personally feel helpless to control the flow of events. The state Board of Elections puts signs on buses…Vote, You Have the Power. That is a sad joke from where I stand.

    Don Stewart

  12. Race Against Time?

    Wolf Richter examines the conflicting numbers and finds that the virus (or financial collapse) is winning. Separately, it seem that, on a global scale, the virus is winning in terms of infections. Is Wile E. Coyote actually falling off a very tall cliff, but just doesn’t realize it yet? The Fed balance sheet is actually shrinking over the last few weeks…are we now dependent on exponentially rising Fed balance sheets? But some things continue to levitate…Tesla reports declining sales and the stock becomes an astronomical object orbiting far from Earth.

    Don Stewart

  13. Relevant to my two posts above:

    If the US (and some other countries) are currently bankrupt, and things must change either by choice or bloody revolution, then we need to be looking around for alternative models. The bloated US sick care system needs to take a hard look at the Cuban health care system, as one example. It is telling that US officials cannot see the forest for the trees:
    *Bush II refuses to let Cuban doctors help in New Orleans as thousands die
    *US sponsored counter-revolutions in Latin America result in the expulsion of Cuban doctors within days
    *US Generals describes their jobs as ‘fighting socialism’
    Will it come to guillotines and bloody riots and incoherence?

    Don Stewart

  14. Houtskool,
    I enjoyed the video that you posted, “The Princes of the Yen”. Very interesting.
    So basically the BIS & IMF wanted a crisis to enable them to change the rules of the game.
    They then went about creating a Housing bubble in Japan, which they would then Pop when they required it to, and they also trashed the economies of Thailand, Malaysia and Indonesia so they could bring the central banks of these countries to heel.
    One needs to ask:
    ” Have they engineered this present crisis too ? ”
    Is this the lead-up to the One World Government ?

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  16. An interesting presentation on pneumatic capsule pipelines for anyone interested.

    Click to access session4liu.pdf

    This involves transportation of freight using wheeled vehicles through concrete pipes or ducts, which are usually buried. The vehicles are typically mounted on rails and are propelled by compressed air, blown through the tunnel. No drivers needed.

    The advantage of this concept is that no fossil fuel is needed to power these vehicles, as compressed air can be generated by electricity from the grid, or even from a wind turbine whose shaft is directly coupled to a blower. In a fully operational system, the transport of freight should be cheap, as the vehicles involved are simple and rail is energy efficient.

    The downside of this system is that it is an entirely new mode of transportation, with its own set of capital costs. This has tended to limit this idea to niche applications until now.

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