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2022-11-18 07:00 by Karl Denninger
in Politics , 655 references
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The GOP cannot win in its current incarnation, and none of the people running it and in leadership positions today -- none of them, including Trump, DeSantis, Noem and others -- will face this and change it.

Therefore it will die, and the question is what displaces it, since America has always been a two-party system.

The Whigs disappeared awfully fast when the point break came.

So it will be this time.

Thus let's get positioned for it -- if you're politically-inclined then here's the opportunity.

We'll name the party too: Federation, and those running under it Federationists.

That's what America is supposed to be, after all: A Federal Republic.

Yes, I know, I talked about this years ago.  It is more-pressing now than then.  Let's start the debate here with a platform upon which we will demand candidates adhere, no exceptions.  This in turn means we must be sparse with said platform because that is the only way to be "big tent" and at the same time protect everyone's rights.

Thus I propose a platform that is relatively simple and has no cheats.  In no particular order:

  • The Constitution sets the boundaries for both the Federal and State governments, without exception.  Any political group that asserts a desire to change things on a 50-state basis, where same either "stretches" or outright violates the Constitution must change it.  We shall not permit end-runs around this process and any attempt to do so, no matter what it is is comingled with, shall be turned away.

  • The people have the right to retain the fruits of improved productivity.  This, in turn, means that the government may not spend what it does not first tax, and no private party, including banks, may violate published credit to capital ratios nor may they be changed capriciously as they were in 2008.  The former 10% "reserve" ratio is to be restored immediately and enforced.  Violations are to be treated as counterfeiting because they are.  The sole exception under which deficit spending is permitted is during a time of declared war.

  • The Federal Government has no right to mandate the bodily invasion of a person who is a citizen and present in the United States.  There is no federal power granting this authority within the United States with respect to a person.  The regulation of interstate and international commerce, on the other hand, does rest with the Federal Government.  Your personal travel for non-commercial purpose is not commerce; this has long been decided by the USSC.  As such federal "mandates" within the US for any vaccine or medical prophylaxis, for any purpose, are unconstitutional.  Period.  This does not prohibit isolating a person who is actually infectious until said time that they no longer are.  We did this years ago with TB and it was both successful and constitutional.

  • The Constitution clearly delegates to Congress the right to declare war -- and nobody else has that power.  Exigent circumstances may well arise but unlike 200 years ago the capacity to call Congress into session and have it actually meet with a quorum is now, absent an event such as a nuclear strike, possible within 48 to 72 hours in essentially every case.  As such no executive action that is otherwise within the domain of Congress, including war assistance or other declared "emergencies", will be permitted to stand beyond the time required for Congress to be called into session and we demand a Constitutional Amendment that codifies that all declared "Executive" emergencies expire 72 hours after Congress can convene, whether or not the House and Senate choose to do so.  If an event demands authorization beyond that point Congress remains the only legitimate place in which it may rest and must originate from.

  • The First Amendment means what it says, part 1.  No branch of the Government may collude with or set policy of any element of the private sector as pertains to restrictions on speech.  Any such attempt is both void and renders the seat(s) held by the persons who do so within the Government vacant, and we shall enforce this irrespective of who is doing so or why they claim they should.  Further, we support a private right of action against all who collude in such a fashion, enforceable against said person in their personal capacity.

  • The First Amendment means what it says, part 2.  No law at the federal or state level may compel a person to violate their religious beliefs through forced association of any sort.  You may no more be forced to shoot photographs of a gay wedding if you are opposed to same than you may be compelled as a Baptist to have your sermon delivered by a Satanist -- or vice-versa.  It is all fine and well to provide that full faith and credit applies to marriage across state lines however such a power does not extend to compelling a private, religious agency to associate with those who openly and deliberately violate their religious tenets, and seek through said forced association to compel the commission of what said persons and institutions define as "sin."  You may no more compel a Church to marry two women or two men than you may compel a Southern Baptist or Mormon to serve alcohol at a church function, or forbid the Catholic Church from using wine in the context of the Eucharist.

  • 15 USC Chapter 1 means what it says.  If you collude to fix prices or monopolize markets, irrespective of the means in any good or service that crosses a State or National boundary all persons in the United States who are so-involved will, in each and every case, go to prison.  Period.  If the DOJ will not bring said cases their budget will be zeroed until they do.  The entire medical system in this nation consumes 20% of our economy and three quarters of that, at least, is effectively stolen due to these acts.  They are not alone in this regard, "social media" firms and corporations monopolize on the basis of what opinions are deemed "acceptable" as well.  This ends now and forever; it was codified as a criminal felony over a hundred years ago and Congress was right to do so.

  • The Federal Government shall not use the power of federal funds to compel actions within a state or locale's jurisdiction.  This is flatly unconstitutional as it is a clear dodge around the separation of delegated powers.  This in turn means "national" speed limits, BAC or "national" drinking or smoking ages and similar, never mind paying for procedures during an epidemic of dubious effect rather than for outcomes shall no longer happen.  Period.  Close to a million people are dead as a direct result of CMS mandates in this regard since 2020 and every bit of that was and remains improper.

  • As regards abortion it is within the realm of the 50 States and their respective legislatures.  Period.  The Constitution clearly delineates the point at which Constitutional protections attach and that is at the moment of birth.  To change this you must amend the Constitution.  Until that occurs this is where the line is at a federal level.  This does not prohibit the 50 States from having disparate laws however all states must, under full faith and credit, respect the laws of all others and thus no person may be punished in any way, and the Federal Government shall protect all citizens from same, should they seek a procedure legal in one state but not another.  The good answers to this question will succeed and the poor ones will fail and be replaced; exactly where these lines wind up is not knowable at present and should have debated and figured out 50 years ago.  We get to do it now because we tried to short-circuit that process then; we were wrong and we admit it.

  • The border shall be secured.  Period. Those actions unconstitutional prior to now will be ended and, to the extent people must leave and then apply for entry and residency, that is what they must do.  Those who attempt to enter the United States unlawfully or remain without authorization are invaders and shall be treated as such.  America is a nation largely comprised of lawful immigrants and we shall never disrespect that heritage or the efforts made by persons desiring to come to this nation and become citizens, but we insist that all do so with respect for and adherence to our laws.  A person who, as their first act when coming here, violates the law has proved their depraved indifference to our citizens, our land and our legal system and shall not be permitted to stay.

That's it.  We can debate the rest as the party forms together.

There is no way to fix either the GOP or Democrat parties and both have hard-core crazies in control of the funds.

Therefore one or both must go, and the obvious target is the GOP.

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2022-11-16 08:41 by Karl Denninger
in Macro Factors , 439 references
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This was rather unexpected...

Advance estimates of U.S. retail and food services sales for October 2022, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $694.5 billion, up 1.3 percent (±0.5 percent) from the previous month, and 8.3 percent (±0.7 percent) above October 2021. Total sales for the August 2022 through October 2022 period were up 8.9 percent (±0.5 percent) from the same period a year ago. The August 2022 to September 2022 percent change was unrevised from virtually unchanged (±0.2 percent)*.

Uh, so much for "interest rate increases are causing a recession and thus must be stopped."


Indeed even furniture and home decorating stores were up on a seasonal basis, and barely down on a non-adjusted (this thing called "fall" tends to reduce traffic in same, natch.)  Gasoline sales were up very materially but people are paying it.  And both non-sotre and general merchandise were up, along with groceries.

Where's the money coming from?

Credit cards, which we already knew and said debt hit records.

This is not sustainable but it also contains no signal to tell The Fed to back off.

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2022-11-15 08:38 by Karl Denninger
in Macro Factors , 513 references
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So why was the Ticker late this morning?

The PPI was due at 0830 ET, and it has now dropped.

The Producer Price Index for final demand increased 0.2 percent in October, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. Final demand prices rose 0.2 percent in September and were unchanged in August. (See table A.) On an unadjusted basis, the index for final demand advanced 8.0 percent for the 12 months ended in October.

Hmmm..... the market added quite a bit -- and ex food and energy it was flat and on goods, less food and energy, was down 0.1%.

Final demand services was down 0.1%.

On the 12 month run-rate basis it was up 5.4% ex foods, energy and trade -- and up 8% gross.

Intermediate tells an interesting story; foods and feeds are down, three months running now.  Unprocessed energy was down materially, which stomped on the index generally.

These are reads on a forward basis; unprocessed goods are in front of intermediate and this looks like a three month trend.

Services, however, advanced on a 12 month basis and our economy is much-more service-oriented than goods.  On that basis we're still running three times the 2% "target" and, equally-importantly the last three months is accelerating higher.  That's bad.

What do I expect out of this?

50 bips in December and no, we're not done -- the market's exuberance is nuts.

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2022-11-12 07:00 by Karl Denninger
in Corruption , 759 references
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It's really not very complicated when you get down to it.

First, all items in an economy respond to supply and demand.  If there is zero demand there will be zero supply and thus no price.  But for any amount of demand above zero there is a price, and to the extent demand exceeds supply price rises until equilibrium is established, either by it simply costing more or additional supply showing up as there's incentive to provide it.  The opposite is also true.

The problem with so-called cryptocurrencies is that they have zero inherent value of any sort.  That is, the fact that I can solve a mathematical problem and prove I did through a cryptographic signature doesn't have value; there is no utility, per-se, in doing that.  Leaving aside that all such designs are inherently and intentionally ponzi schemes (that is, the "founders" always get the first of whatever it is at zero cost or nearly zero, then sell them to others at ever-higher prices) if anyone can use leverage without prior disclosure and thus become an emitter of credit into the stream they can move the price in either direction on command.

Of course their benefit and thus, for most, their motivation, is to move it higher.

But what if there the alleged "dollar" exchanged and thus which set the demand level doesn't actually exist?

If I can take a customer's "funds" and blow them on something else then until and unless I am forced to immediately remove that from the so-called "cryptomarket" where it was I have in fact emitted more dollars in the context of the cryptocurrency.  The problem at its core is that I had no legitimate way to do that and thus the alleged "demand" -- and price response to it -- is a fraud.  In the United States banks have an allegedly limited license to do this, that is, it is legitimate, and so does Congress through deficit spending.

Nobody else, however, holds the power to do so in a legal fashion yet the common theme is that it keeps being exposed.

You must therefore assume that all of the alleged "value" of said crypto "assets" is in fact nothing more than smoke.


Because if it was possible to make a reasonable return running an exchange without doing this -- that is, the fees charged for the service covered costs plus a profit -- then those doing it legitimately would be VERY interested in finding and outing every scam immediately.  The reason for that is obvious: The scammer operates with what amounts to a digital printing press and the non-scammer does not; ergo the honest operator cannot compete in such a market as they will always lose to the scammer.

The facts, however, are that the so-called "mainstream" exchanges are not diligently looking for and exposing the frauds and the reason why not is transparent: They profit from it too even if they don't personally engage in it.

But if you profit from a scam even if you don't engage in it then you must expect that there will always be said scam and worse, since during the time it is unexposed there's nobody interested in stopping it there is no pushback to put a stop to it and in fact that takes over as the largest, if not the only mechanism by which price actually moves.

In other words ex the scamming the "value" of said "token" is, for all intents and purposes, zero.


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