Author: Nichols Lisa


Strong gains in industrial production in March

Industrial production rose 0.9 percent in March, following a similar 0.9 percent increase in February and 1.0 percent in January. The gains resulted in a very strong 12.1 percent annualized growth for the first three months of 2022, pushing total industrial production to a record high and clearly above the December 2019 level before the epidemic (see first chart). In the last one year, the total industrial production has increased by 5.5 percent.

Total industrial capacity utilization rose 0.7 points from 78.7 percent in February to 78.3 percent, the highest since January 2019 (see first chart). However, total power consumption remained below the long-term (1972 to 2021) average of 79.5 percent.

Manufacturing output - about 74 percent of total output - also grew 0.9 percent month-on-month (see first chart). Production output is at its highest level since July 2008 and is 2.9 percent above the December 2019 pre-epidemic level (see first chart). Compared to a year ago, production output increased by 4.9 percent.

Production usage rose 0.3 points to 78.7 percent, above the December 2019 level of 75.6 percent and slightly above the long-term average of 78.1 percent and the highest level since July 2007. However, it remained below the 1994-95 high of 84.7 percent (see first chart).

Mining output posted about 14 percent of total industrial production and a strong 1.7 percent increase last month (see the top of the second chart). In the last 12 months, mining output has increased by 7.0 percent.

Utility output, which is generally related to weather patterns and accounted for about 12 percent of total industrial production, increased 2.4 percent from natural gas to 0.4 percent (see chart at the top) but electricity rose 0.9 percent. Compared to a year ago, utility output increased by 7.5 percent.

Among the major components of industrial production, energy production (approximately 27 percent of total production) increased by 1.2 percent per month (see second chart below) with profits across four of the five components. Total energy production rose 8.2 percent from a year earlier but slightly below the December 2019 level (see third chart). Motor-vehicle and parts manufacturing (slightly less than 5 percent of total output), one of the industries most affected by lockdown and post-lockdown recovery, continued to be affected by the shortage of semiconductor chips, although output increased sharply in March. After a 4.6 percent decline in February and a 1.1 percent increase in January, motor vehicle and parts production jumped 7.8 percent month-on-month (see second chart below). Since a year ago, production of vehicles and parts has increased by 3.9 percent but is equal to the December 2019 level (see Chart 3).

Total vehicle congestion grew at a seasonally-consistent annual rate of 9.75 million, the highest since January 2021 but still well below the pre-epidemic average (see Chart 4). This includes 9.47 million light vehicles and 0.28 million heavy trucks. Among light vehicles, light trucks were 7.62 million and cars were 1.86 million.

The selected high-tech industry index rose 1.4 percent in March (see second chart below), and up 8.9 percent from a year earlier, and about 22 percent above December 2019 (see third chart). The high-tech industry accounts for only 1.9 percent of total industrial production.

Combined with all other industries (excluding energy, high technology and motor vehicles; total; about 67 per cent of total industrial production) rose 0.3 per cent in March (see second chart below). This critical segment is 4.5 percent above March 2021 and 4.0 percent above December 2019 (see Chart 3). Industrial production posted a strong, broad-based gain in March. Although many output systems have returned to pre-epidemic levels or above, ongoing deficits and labor supply constraints, rising costs and equipment shortages, and logistical and transportation constraints continue to limit manufacturers' ability to meet significantly higher demand. The lockdown came after the recession. Moreover, continued upward pressure on prices, the ongoing wave of new COVID-19 lawsuits, geopolitical instability and global economic disruptions surrounding Russia's aggression in Ukraine, and a new Fed tightening cycle maintain high risk and uncertainty for the economic outlook.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 for over 25 years researching economic and financial markets on Wall Street. Bob previously headed Brown Brothers Harriman's Global Equity Strategy, where he developed an equity investment strategy that combines top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a senior equity strategist at State Street Global Markets, a senior economic strategist at Prudential Equity Group, and a senior economist at Citicorp Investment Services and a financial markets analyst. Bob holds an MA in Economics from Fordham University and a BS in Business from Lehigh University.

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About securing sources of supply: what the government should repatriate.

Since the beginning of 2020, the world economy has been severely disrupted. Covid himself, Covid Lockdown, protests against Covid Lockdown, and most recently Vladimir Putin's heinous invasion of Ukraine, have disrupted the flow of supplies to all world economies. Since we Americans are a major participant in this economy, we have certainly suffered some of the worst consequences of being disrupted on the global supply web. (The familiar term "supply chain" is very wrong. The global economy is much more like a giant web than a chain series.)

A common reaction to these supply disruptions is to demand that the government solve the problem by increasing the domestic production of those supplies that we now have problems importing. This 'solution' seems so simple! If we Americans made items here on our own coast that we now have difficulty obtaining from foreigners, we would not experience such difficulties when future epidemics and shooting wars begin. QED

Alas, in the case of much more economic-policy advice, the truth, which seems simple, is in fact simply wrong.

The specific products that we import, and the quantity that we import, for a good reason: the cost we incur to get these products from abroad is less than the cost we incur instead of producing these products internally. . And so if we produce these products internally, it will cost us more to acquire them. Instead, since it would cost us more to acquire these products, we would have to make less use of these products. But this is not the worst consequence we will suffer. Since we cannot produce more of these products at home without removing resources from the production of our other products and services, we may also lose access to other products and services.

When people call on the government to provide us with more masks, more drugs, more ventilators, more steel, more of these 'critical' inputs and more of those 'essential' items, many of these people find it easy. . Unknown is the fact that we have to sacrifice a relatively large number of other products and services for the successful fulfillment of their aspirations. But even those who are aware that this cost is inevitable speak with strange, blind faith and write that the benefits we will achieve through the successful fulfillment of their aspirations will be worth the price.

In reality, however, the benefits - though often real - are very likely to be Less Compared to the cost

The main reason why the benefits of forced repatriation of the 'supply chain' (as it is sometimes called) is likely to be affected by the cost is that there are already strong incentives to ensure that private companies are best protected against supply disruptions. Any government intervention would then undermine these best personal arrangements.

Consider, for example, an automobile manufacturer. The managers of these firms are aware that, relying on only one steel supplier or microchip supplier, compared to multiple suppliers, the company is at risk of finding itself one day without key input. Further, these managers have a keen incentive to accurately identify these risk levels, as well as to accurately assess the consequences that will actually occur if their firm's supply is actually disrupted. So these managers must consider diversifying the source of supply of the firm. Whether they will do so - and if so, the extent to which they pursue such diversification of the firm's supply sources - depends on the cost of diversification. And the cost of diversifying the source of supply depends, consequently, on the price difference that the firm has to pay to different suppliers.

If sheet metal can be purchased from Smith Steel Co. for 500 500 per tonne and the same quality sheet metal can be purchased from Jones Steel Inc. for 5 510 per tonne, the automobile manufacturer may well decide to buy a significant portion of its sheet metal. Jones is successful. But the greater the difference in price charged by Jones than the lower price charged by Smith, the more reluctant the automaker would be to buy sheet metal from Jones. The price difference can be so great that the automaker chooses to take the risk of acquiring its sheet-metal supply from a single source.

Suppose this price difference is so great that the automaker voluntarily carries the risk of buying all its sheet metal from Jones. Further, suppose that one day a fire destroys most of the productive capacity of Jones. Can we conclude - since we are shutting down the automaker indefinitely, or shaking frantically to buy sheet metal from other companies at much higher prices in the spot market - that the automaker was wise to rely solely on Jones for all its sheets? No- metal supply? No. When the automaker decides to rely exclusively on Jones, it determines that the much lower price charged by Jones compensates for the risk of relying on a source of sheet-metal supplies.

It is possible that the amount of money that the automaker has saved year after year by exclusively purchasing sheet metal from Jones exceeds the amount lost today - or must be spent - as a result of Jones' sudden failure to supply sheet metal. If so, the automaker made the right call despite its current unfortunate condition.

But even if the amount of money saved by the automaker, which relies exclusively on Jones for sheet metal, is less than the cost of facing a supply cut off from Jones, the automaker's earlier decision should be evaluated as correct. . The fact that the automaker is now suffering the unfortunate consequences of suddenly being unable to get supplies from Jones proves that the automaker was not wise to rely solely on Jones to pay an insurance company a few thousand dollars in compensation. Customers for fire damage prove that the insurance company was not wise to sell fire insurance to those specific customers.

We all have to take risks for the unknown of the future. Per The course of action involves some risk. Yet even the most prudently chosen steps sometimes reveal themselves when over time we would be rejected if we had a better knowledge of the future.

The unusually heavy challenges, misfortunes, and difficulties that manifest themselves today are not necessarily proof that yesterday's decisions - the decisions that led to today's problems - were wrong.

This fact should be borne in mind whenever we see domestic companies facing disruption in their sources of supply. Each of these firms had a strong incentive to weigh the costs of diversifying their sources of supply as opposed to the convenience of doing so. There is no good reason to assume that these companies usually made their sourcing decisions unreasonably or unjustly.

Even politicians, pundits and bureaucrats - none of whom risk their own money in such an assessment - have less reason to assume - that private firm owners and managers know better or less how much or how little source of supply for a particular business. 'Should. For politicians or pundits, when supplies from abroad are disrupted due to war preferences or cowardly lockdowns, it is not easy that government tariffs or subsidies should have been used to avoid disruption. Yet the fact that private companies themselves - at their own financial risk - have chosen not to source their supplies in a way that is later approved by politicians and pundits is strong evidence that these politicians and pundits are less likely to publicize their proposed plans. The best interests of the country in the long run.

Background, as they say, 20/20. (In fact, I suspect that although at least the recent past is actually more visible than the future, in reality it is closer to 20/40. This is a matter for another time.) The fact that scholars and politicians can take stock of the current situation and describe How much better it would have been if different choices had been made in the past is insignificant evidence that these individuals should be trusted with the ability to ignore the decisions of traders regarding future sourcing of supplies.

In short, the government is too weak to take supply chain repatriation seriously. Exclude.

Donald J. Boudrox

Donald J.  Boudrox

Donald J. Boudroux is a Senior Fellow at the American Institute for Economic Research and with the FA Hayek Program for Advanced Study in Philosophy, Politics and Economics at George Mason University's Mercatas Center; A Mercatus Center board member; And Professor of Economics and former chair of the Department of Economics at George Mason University. He is the author of books The Essential Hayek, Globalization, Hypocritical and half-wittedAnd his articles appear in such publications The Wall Street Journal, The New York Times, U.S. News & World Report As well as numerous scholarly journals. He wrote a blog called Cafe Hayek and a regular column on economics Pittsburgh Tribune-Review. Boudreaux holds a PhD in economics from the University of Auburn and a law degree from the University of Virginia.

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Elon Musk as president? | Armstrong Economics

Question: Twitter has retested less on your ECM date and the whole rally started with that goal. Did Socrates predict what the mask was going to do? And btw, would you support Elon Musk for president? Have you ever met a mask? He is also in AI.


Answer: OK the answer would be yes, but you need to know that only a "normal born citizen" can be president. Her mother was Canadian but her father was a Canadian of American descent. So I don't do that to qualify him as President or VP. It is clearly stated in the constitution that a constitutional amendment would be required to change it. There is no other requirement of this nature for appointment to the US Supreme Court in any one chamber of Congress. Section II, Section 1 states:

“No person other than a natural-born citizen, or a citizen of the United States, shall be eligible for office of President when this Constitution is adopted; No one will be eligible for the office if he has not reached the age of thirty-five and has lived in the United States for fourteen years. "

Therefore, Musk could be in the president's cabinet or he could run for the Senate or Congress, but I would not recommend it. He will be one of many voices and it will not change. So, Trump won for him No. A politician. This is why some people are now saying that Elon Musk is a better choice. I understand that but under the constitution it is not realistic.

No, I've never met Musk. I wanted to, but that opportunity did not present itself. I think he would find Socrates attractive, but he doesn't drive. Whether or not Socrates predicted the capture of the mask, but who did not. Just as the computer predicted in 1985 that a potential third-party / non-politician would win in 2016 (31.4 years in this wave) predicted that Trump would win but it did not predict that it would be Trump 31.4 years ago. It projected a product boom based on the rise of authoritarianism, civil unrest, disease and scarcity. There is only one time and place for everything.

Are Democrats going to dump Biden?

Understanding CPI | AIER

The Consumer Price Index (CPI) is the most well-known and widely used measure of price in the United States. This index is prepared monthly by the Department of Labor for the 32 largest cities in the United States. Although it ignores rural value, it still covers 90% of the US population. Annual percentage change in CPI is the most widely used measure of inflation. Until recently, inflation was under control in the United States, but in some other countries it was much higher. In Zimbabwe, for example, in 2008, prices doubled every day. Most recently, Argentina, Turkey, Russia and Venezuela have also experienced severe devaluation of their currencies. High inflation can significantly damage the performance of an economy, to the extent that economic policymakers claim a low and stable rate of inflation as one of their main objectives.

Origin of CPI among the researchers of the Department of Labor in 1919. The Department of Labor wanted a measure of consumer value to explain their already collected wage data. The initial choice of which food items to include in 1888 was unscientific, as researchers simply went home and asked their wives what they bought each month. The 1919 product basket was chosen based on a survey that determined which type of consumer goods were most regularly purchased. Each month, Department of Labor researchers assess the value of survey baskets in 32 cities covered by the CPI. Every ten years, the CPI basket is adjusted based on a new survey that reflects changes in consumer behavior and preferences, the introduction of new products and the closure of other products.

Figure 1 shows the relatively steady uptrend of CPI since 2000, with short-term inflation during the 2007-2009 Great Depression and the 2020 Covid-19 Recession. Note that since the last recession, the CPI has risen significantly faster than the average — thus we are currently experiencing 7.5 percent inflation.

Figure 1. Consumer Price Index 2000-2022 for all urban consumers

The Department of Labor needs to make another adjustment called the hedonic adjustment. To some extent, technological advances are captured by adjusting product combinations, adding new products, and removing obsolete ones. Hedonic adjustment predicts the effects of rapid technological advances that can combine falling prices with quality improvements. For example, in 1948, on a mahogany breakfront made for Baker Furniture's RCA, you could buy the largest combination of RCA Berkshire Festival series radio tuners, phonographs, and television sets. It retails for about $ 4,000 when purchasing a new Cadillac. The TV was a 29-inch diagonal rear projection black-and-white set. This is particularly significant because one of the largest conventional cathode-ray-tube sets ever made was a small 4-inch diagonal.

Today you can buy a much larger HDTV, providing a dramatically high-quality color picture, at a much lower price. Similarly, the first PCs were retailed in 1985 for about $ 20,000, and by today's standards it was as effective as a doorstep. Not only did the price fall below $ 1,000, but computing power, speed, and storage space increased rapidly. Like TVs, we are now paying much less for much better products. Hedonic adjustment seeks to capture the full impact of these improvements, which is more than just a price reduction suggestion. Although car prices have risen over the years, newer cars are safer, and generally provide better, more sustainable, and better fuel economy, as well as harmonic coordination efforts to capture such quality improvements.

The CPI is currently based on an index of 1982 = 100, so its current value of 280 indicates that consumer prices are, on average, about 2.8 times higher than in 1982. Since 1982, M2 has grown by a factor of more than 10, M1 by a factor of about 50, and the financial base by a factor of over 36,000! With the way the Federal Reserve has handled the money supply, what really calls for an explanation is why prices aren't already dramatically higher.

The annual percentage change in CPI is the policy of inflation and the most widely used measure. The main option is a GDP price deflator, which includes non-consumer goods, but imports are excluded because they are not part of US GDP. The main difference between CPI and GDP deflator is that CPI is an indicator of representative price of consumer goods, where GDP deflator tries to estimate the growing impact of price changes on any domestically produced product and service, including investment products. Or capital equipment. Imported products are not included in the GDP deflator because they are never part of the US GDP. Some import prices are included in the CPI.

The Department of Labor also collects producer price information because, over time, these ultimately factor into future CPI. The Department of Labor publishes a comprehensive Product Price Index (PPI) for all products, as well as specialized PPIs for different industries and product groups. Looking at the broader PPIs for all products in Figure 2, we can see more pronounced inflation in commodity prices during each recession, as businesses have slowed down and their demand for products has declined. There has also been a significant inflation in 2014-2016, which may be responsible for the increase in oil production.

Figure 2. Producer price index, all products 2000-2021

Since producer prices captured in the PPI are later reflected in the consumer price contained in the CPI, the PPI can be taken as an early warning sign of what might be reserved for the CPI at a probable interval of about six months to one year. If we calculate PPI inflation over the previous 12-month period, we get a PPI inflation rate of 24 percent for all products. The picture is even more grim when we look at some more focused PPIs. For example, the PPI inflation for the metal-producing industries is an incredible and obviously quite alarming 45 percent compared to last year. Soon, some of this will translate into higher consumer prices.

However, a shortcoming of both CPI and PPI is the specific basket of product methods made on these price indicators. The use of a specific basket of products ignores replacement. When the prices of some products go up, our usual response is to replace cheap products to expand our budget. Both the company and the consumer do it. However, many manufacturing companies or construction activities will be limited in the extent to which they can replace alternative materials to steel or aluminum, especially in the short term. No matter how hard the replacement business tries, they need to use some of the products to produce their output. PPI inflation is 24 percent for all products, although it does not necessarily predict future CPI growth so much, it strongly suggests that CPI inflation will continue to rise.

Robert F. Mulligan

Robert Mulligan

Robert F. Mulligan is a career educator and research economist working to understand how monetary policy drives business cycles, creating recessions and limiting long-term economic growth. His research interests include executive compensation, entrepreneurship, market processes, credit markets, economic history, time series fractal analysis, financial market pricing skills, maritime economics and energy economics.

He is its author Entrepreneurial and human experience And Executive Compensation. Both books can be purchased through Amazon as hard copy or Kindle ebook.

He is from Westbury, New York and holds a BS in Civil Engineering from the Illinois Institute of Technology and an MA and PhD in Economics from Binghamton State University of New York. He also received an Advanced Studies Certificate in International Economic Policy Research from the German Institut fuer Weltwirtschaft Kiel. He has taught at SUNY Binghamton, Clarkson University, and the University of Western Carolina.

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Can we teach “Federalist Papers” today?

Reprinted from The Constitutionalist

I have taught over the years Federalist Papers More times than I could count and it was always a challenge. This is not because of the underlying difficulty of the text, although its language and arguments are often demanding, but because students believe that they already know what the book is about before they open it. They know, presumably, that it contains eighty-five articles written by James Madison, Alexander Hamilton and John J. - collectively known as Publius - designed to persuade the New York State Convention to ratify the new constitution. But what they don't know and it seems increasingly difficult to explain is the true revolutionary nature of the book. Far from being an occasional document written for the limited purpose of securing ratification of the new constitution, Federalist Papers He did not initiate anything less than a revolution in political thought.

The Federalist Papers Three decisive ways have changed our understanding of government. First, it offers a defense of what was truly the first in political history; Namely, a written constitution. Our closest model, the British Constitution, consists of ancient pieces of common law extending to the Norman conquest but not something coded in a single document or text. Today, of course, the written constitution is the norm but in the eighteenth century it was unheard of.

It is the omnipresence of the written constitution that impresses the uniqueness of the federalist achievement. As the constitution expands, so do their demands. The Soviet constitution of 1936 enumerated a basket of economic rights not found in Western democracies. The 1945 UN Charter guarantees some previously unknown social and cultural rights in history. And all 235 pages of the EU constitution - a conflicting bundle of demands for social justice, universal healthcare and full employment - far beyond the power of any country. There is a growing gap between the promises of this constitution and the political realities they claim to describe.

Second, Publius has redefined what it basically means to have (or have) a Republican government. In the past, republics were considered possible only at small rural outposts, such as Switzerland or the city-states of northern Italy. Opponents of the constitution have repeatedly called for Montesquieu's authority The spirit of the law Arguing that a vast territory imagined by the Framers would inevitably lead to monarchy or even dictatorship. In a large state, the center of government must be remote and away from the people it is supposed to represent.

Moreover, the idea was that any people who had to govern themselves had to be relatively homogeneous in terms of manners, habits, and customs. A republic represents not only a set of institutions but also a policy, a shared way of life, which is possible only among people with common moral habits and dispositions. Large state production Luxury, A term that was synonymous with inequality and corruption for most of the eighteenth century. Only small states can create a society where there is no wealth, influence, or education, which creates a kind of moderation - some call it moderation - necessary for an ordinary, strong and virtuous person. The small republic was regarded as a school of citizenship as much as a plan for government.

Federalist writers have completely reversed these earlier assumptions. They first proposed a large-scale republic with a combination of different parties and interests, with a representative body designed to create the necessary checks and balances in power. It was nothing less than a new definition of a republic that had no previous model that could refer to it. This idea of ​​a republic was the first in the history of political theory without the difficulty of concentrating power in the hands of a far-flung ruler to ensure the multiplicity of competitive interests in the larger states. It is aptly called the "Madison Moment".

From its inception, the Madison Republic has to be a shameless bourgeois republic based on the protection of property rights and individual freedoms. The work of government will not impose an impossibly high standard of justice and morality - the last, for example, Plato. Republic - However, control the risk of factionalism and conflict arising from the diversity of different types of property. In a modern commercial republic, the function of statehood is not to eliminate or eliminate factions but to manage the differences between them. "This is the control of diverse and intervening interests," Madison wrote Federalist # 10, "Modern law-making forms the main task."

This led to the proposed third great innovation Federalist Papers; Namely, the principle of representation. According to Hamilton, the principle of representation - including checks and balances and the judicial term for good conduct - marks a great discovery in modern political science. It leads to a distinction between democracy based on direct rule of the people and indirectly governed republics through representatives. Democracies have been "sometimes spectacles of unrest and conflict, sometimes incompatible with personal security or property rights," Madison writes. In contrast, the purpose of the representation was to "refine and expand the views of the public through an elected body of citizens." The representation will act as a smelting process where gold is extracted from the draw.

The question of who could represent whom was a clear theme Federalist # 35. Based on Madison's sociology of different types of property, Hamilton divides society into two broad economic classes, which he describes as the interests of builders and mechanics on the one hand, and the interests of landowners on the other. He said mechanics and builders would find their natural patron among the rich merchants just as different landowners would find their patron among the rich zamindars. Standing between the two would be the group that Hamilton considers their "natural arbiter", the "educated profession" who can make a broader and more neutral understanding of the whole through education and learning. By educated profession, Hamilton meant mainly lawyers. It will be through their talents and demonstrated abilities that this class will attract the “sympathy” of its elements. This passage expresses Hamilton's hope - at best only partially realized - to reconcile popular government with something like liberal education.

The Federalist Papers The modern republican government has been remarkably successful in defining the terms. They have established nothing less than a conceptual revolution in political thought. A republic - or what we call democracy today - is basically what Publius said. And yet many today are extremely dissatisfied with the representative republic. Complaints that our representing organizations are remote and unresponsive have been around for a long time. Some also believe that we are facing a crisis of representation that requires new forms of direct political participation. Experiments with mini-public, crowdsourcing techniques and sorting are some of the more extreme solutions being offered.

Criticism of it Federalist Papers Today comes mainly from two sources. People on the left complain that the commercial republic does not do enough for the interests of the rich and redistribution of wealth at the bottom. They have a point. The goal of federalist writers was not to eliminate class and redistribute resources. Publius' goal was not to cancel classes but to represent them. The American establishment was both more modest and more successful than the later revolutions - the French, the Russians - who demanded that society be rebuilt from the ground up. The American founders not only rejected the ancient egalitarianism presented by Sparta but also indirectly rejected the later socialist experiments. The Marxist critique of the American establishment was correct. It was only the goal of a political revolution, not a social one. In today’s environment it is difficult to show how Publius ’goal was actually a work of heroic self-restraint that they hoped would be a guide for future statesmen.

Critics on the right complain that the Republic of Madison does not pay enough attention to the demands of civic quality - forms of "social capital" - which create a healthy moral climate. No regime, especially a republic, can be indifferent to the character of its citizens. The problem facing the Madison Republic is whether there is room for traditional republican themes such as equality, virtue and common good. There is almost complete silence about religion and religious education Federalist Papers Which then (and probably still remains) is the primary source of moral guidance for most people. Was it a supervision? It seems that the Federalist writers simply accepted that religious education would be the primary form of education, but that is certainly not the case today. This raises the question of whether a republican government can survive on the principles of individualism and self-interest at the core of the modern capitalist economic system.

The question is whether teaching Federalist Papers Can be rescued today. Students are more likely to meet the failures of American founders than their successes. The fact that many of the signatories to the constitution were slave owners and the document itself is silent on slavery, would be taken as evidence of a bad intention. Recent efforts by scholars to place the American establishment in a "global" context have had the effect of reducing the mere novelty and iconoclasticism of the founding moment. Perhaps most clearly, the qualities of a bourgeois republic - honesty, compromise, tolerance and fairness - seem to fade in comparison to the demands for social justice here and now. As one of my students once said, "I need something to help me wake up in the morning."

There is no easy answer to these objections except to return to writing again and again. However, if the defense of the bourgeois democratic system against the rising tide of dictatorship is not enough to get out of bed, I do not know what.

Steven B. Smith

Steven B. Smith is a professor of political science at Alfred Cowles Yale University. He received his Ph.D. From the University of Chicago.

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Smart Investor Articles (English translation provided)

I recently appeared on the cover of "Smart Investor" after visiting journalist Ralph Malish. Click here to read the full interview (German).

English translation available below:

Corona talks about war and rebuilding the world with smart investor legendary bicycle analyst Martin Armstrong

Smart Investor: Mr. Armstrong, in 2015, released a powerful film about your life, The Forecast. We interviewed you extensively at Smart Investor 5/2015. How are you doing already and what is your current project?
Armstrong: I was involved with the sequel to the film that would be released later this year. Otherwise, we have expanded our services and now launched our computer system, which the government wanted for itself. It now produces more than 1,000 written reports a day worldwide without human intervention. We now use it in more than 40 countries, which means we probably have the largest institutional customer base in the world.

Smart Investor 5/2015

Smart Investor: Can you briefly explain our forecasting method to our readers?
Armstrong: In the 1980s and 1990s, I was one of the top international hedge fund managers, and was even named hedge fund manager of the year for predicting the fall of Russia, which triggered the 1998 hedge fund long-term capital management crisis. At the time, I saw a re-focus of global investment capital in the markets and then moving forward - followed by Japan in 1989, Southeast Asia in 1994 and Russia in 1998, following the euro. All this was fueled by capital flows. One can follow these movements of capital and see how they cause boom-bust cycles around the world.

Smart Investor: Corona has kept us under its spell for over two years. Was this turning point, or a drastic event like this, your cycle model visible?
Armstrong: Yes, I warned at our own World Economic Conference that if our model reversed in January 2020 (= year 2020.05) then the market would crash. We were even able to mark the exact day for March 2020 below. If an incident like Corona happened during the uptrend, it could have been largely ignored. But if something like this happens while rejecting the model, the feeling is inherently bearish. We further warned that there will be a deficit-based product cycle from January 2020 to 2024.

Smart Investors: In our perception, big epidemics happen with a certain regularity. Have you thought about the plague cycle and how it can go on?
Armstrong: Such epidemics have always existed - but never in history has the government gone so mad. The global lockdown has increased job costs and disrupted the supply chain, which will continue for years to come. This is an irrational response that has been proven wrong and has done a lot of damage. Most people know someone who fell ill with covid but did not die from it. Those who died probably died of any type of respiratory disease, such as during the annual influenza cycle. It was not a dangerous plague that killed 30% to 50% of the population in the 14th century like smallpox or the Black Plague.

Smart Investors: Now a new impressive event has begun with the heated war in Ukraine. How does this battle fit your model, especially the war cycle?
Armstrong: That too came at the right time. Our model showed 1/16/2022. Unfortunately, instead of trying to bring peace to the world, the West has turned Putin into a monster. The claim that Putin wanted to restore the old Soviet Union was pure propaganda. For the past 22 years he has made no attempt to restore communism, only calling Lenin a communist. He did not try to expand the border but warned against NATO occupation. In war, it is always important that both sides carry propaganda and be objective about the demands of both sides. Putin's invasion of Ukraine was consistent with his warning, and came four days after US Vice President Harris recommended that Ukraine join NATO. It was completely irresponsible.

Smart Investors: Can you see in your models which regions or countries will suffer the most in this conflict, who will leave lightly and who will benefit?
Armstrong: On both sides there are people we call neocons, people who hate the other side. They cannot sleep at night as long as they have enemies. Unfortunately, the deteriorating economic outlook is a reminder that war has often served as a deterrent in the past. It seems that China is allying with Russia. I believe that the seizure of Russian private property is a serious violation of international law. Others will also realize that their assets could be confiscated if their country is in conflict with the West. This will definitely lead to a decline in global investment. It seems that this process has started properly and according to our model, it will get worse in the next ten years. Conflicts between countries are likely to be at this level. The arrests of people for being Russians only reminded them of the concentration camps for the Japanese in the United States during World War II, based solely on their nationality. If free investment is hampered it is very detrimental to the world economy.

Photo: © Angelov -

Smart Investor: If we understand this correctly, cycles basically develop independently of the specific actions of individuals. It's hard to imagine, but would the rise have been inevitable had the Russian president not ordered the attack?
Armstrong: That's right. It is unreasonable to demonize Putin. There have been worse leaders in history, like Hitler or Stalin, who can kill millions without thinking twice. The development of things is largely determined by the economy. Usually you don't bite the hand that feeds you. But imposing sanctions on Russia has the exact opposite effect: they sever Russia and sever economic ties, resulting in casualties and resulting in anger and retaliation. Rome survived for 1,000 years because the conquered provinces made a profit by selling their goods to Rome. The seizure of Russia's currency reserves is, above all, a warning to China to be vigilant in its dealings with the West. For China, excluding Russia from the SWIFT system means that it is working on a flat basis for the introduction of its CIPS variant. Saudi Arabia has agreed to sell oil in yuan. These measures only guarantee that the conflict will continue to escalate and the world economy will be halved.

Smart Investors: As investors, we try to prepare for such strong cycles. Which asset class or sector should be avoided in this situation and where security can be expected?
Armstrong: Government bonds in particular should be avoided. The government will default and you will get nothing back. Borrowings from European governments from before World War II are now simply an attractive wall decoration. When a company goes bankrupt, its assets are sold and at least you get something back. But you can't just run into art museums and steal government picassos. In times of war and geopolitical conflict, real security is the best resource.

Smart Investors: Gold is considered a safe haven, and in some places Bitcoin is also considered. However, these two resources are more than a thorn in the side of our government. What do you think about the idea that Russia's argument could make life difficult for investors here in the future?
Armstrong: Gold has lost its mobility - so you can't fly a plane with gold coins or a briefcase full of bars. Cryptocurrencies are weak, because credit cards without a power grid are a thing of the past. The government is trying to switch to digital currency and they will not allow competition so they will confiscate the cryptocurrency. The best is paper money or small denomination silver coins which are recognized by the average person. If there is no electricity grid, there will be exchange rate for tin cans.

Smart Investors: Gold and cryptocurrencies are also the main alternatives to paper money, which is putting extra strain on the war. Will the US dollar and euro survive this?
Armstrong: The US dollar will surpass the euro, but if we get involved in a real world war, the paper dollar may lose its value. While Europe has historically scrapped its Fiat money
The US dollar has never been canceled. Even Canada is now canceling its currency.

Smart Investors: The Great Reset, the World Economic Forum, and Professor Dr. Klaus Schwab are making waves in Europe. During the Corona epidemic, government action literally shattered the medium-sized economy. What do you think of the "big plans" of corporations, and are the actors' ideas consistent with the cycle?
Armstrong: The Great Reset is indeed a real goal. This is not a conspiracy theory. Trump, Putin and Xi stumble across the road. They got rid of the first one and now the propaganda has turned to demonize Putin and Shike. They believe that with the release of these two leaders, they will be able to bring the world together under the auspices of the United Nations. Our model warns that authoritarianism will increase in this last decade. But they will fail. Marx succeeded only because slavery in Russia did not end until 1861, while in Europe it lasted only until the fourteenth century. So the ownership of the people was nothing, and the wealth of the aristocracy was easy to confiscate. Today people save for their own home, car and future. The slogan "You will have nothing and be happy" promoted by WEF is a red herring. The government will no longer be able to borrow indefinitely and will be a defaulter. To disguise this fact, the idea is given that all debts are being forgiven and they are doing it for you. Today there will be a guaranteed basic income to replace the government debt pension fund.

Smart Investor: Thank you very much for your very interesting explanation.

In stock market circles, American Martin Armstrong (born 1949) is considered a legend. In the early 1980's, he accurately predicted the stock market crash of 1987 - and in the panic he predicted new heights for 1989. He also predicted that the Japanese stock bubble would burst in late 1989. He made his own predictions using the "Economic Confidence Model" (ECM), based on a database of currency history, which he used to reconstruct Armstrong's (financial) history. You can find his daily updated evaluation on the blog .

«Interview: Russia / Ukraine Story from Martin Armstrong

Marco Rubio is preparing to join Biden to destroy the world economy

The world has gone completely nuts and now even Republican Marco Rubio is drafting legislation to ban China. Biden's sanctions have completely destroyed the world economy, abruptly ended globalization and world peace. I wrote to Marco Rubio in response to his tweet, but I seriously doubt he will ever respond.

"It simply came to our notice then. However, I will publish it on ArmsatronEconomics.COM. I have advised countries and testified before the House Wages and Means Committee. These sanctions on Russia have already destroyed the world economy and destroyed the integrity of the Swift system. Sanctions have never worked in history, and before Biden every president wanted world peace where what we see now is World War III. All this nonsense has confirmed the end of the United States as the leader of the world economy. Even SWIFT somehow told Obama in 2014 that they would not remove Russia from the system. Now Swift has committed suicide and Biden has split the world economy. It will never return to normal and your proposal to ban China is crazy. In fact, it is the arrogance of the United States as the world's police that has caused our inevitable death. The SWIFT is no longer the foundation of the world economy and it is ending the dollar and the economic situation in the United States. No nation lasts forever, and just as Athens' arrogance led to the Peloponnesian War; We too have become much more arrogant by sealing our own destiny for foolishness. China bans and you guarantee their Swift alternative and once you stop being goodwill, then without trade they will no longer have the incentive to participate in the world economy and thus it is no longer a threat to bite your hand to feed. "

The European Union's relations with China have also plunged into unprecedented new lows. The United States, along with its European allies, has introduced these theories to impose sanctions on China, with absolutely no understanding of how the world economy works. World peace is established not by threats and demonstrations or by nuclear weapons. It is free trade that binds the Roman Empire together, where the conquered lands find it economically advantageous to be part of the empire rather than spear-wielding on the other side of the border. By removing Russia from SWIFT and now threatening China with sanctions, if they give Russia the courage to use their alternative, I can say that the United States is doomed. Biden calls Putin a war criminal, yet under this theory, President Johnson was a war criminal for abusing troops in Vietnam. There are allegations of war crimes against Americans from Afghanistan, Iraq and Syria. So is Obama also a war criminal? Such allegations Guarantee There will be no peace - ever!

Marco Rubio also mentioned that he was thinking of enacting legislation to allow China to help Moscow avoid the Swift embargo. Once trade is broken, there is no incentive to work together. The only thing that can resolve such conflicts is war. We see India, among many countries, viewing American arrogance as an obstacle and pushing them into the arms of an alternative economy.

The United States is financing the civil war in Ukraine because Neokon hates the Russians. They are now stabbing China and threatening to impose the same sanctions on China and dare to think that they will kneel down and apologize. This thought is complete madness. The American people are tired of endless war. The United States is sending National Guard Foreign troops. The Reserve and the National Guard are being sent abroad because we do not have the necessary troops. These are people who have families - 18 year old boys were not sent to die. These are also National Guard soldiers, who No. Defend the race, but other people.

A closer look at the National Guard's website tells us that it has one or two missions. The "State Mission"Which you will remember from your service," provided to provide trained and disciplined forces for domestic emergencies or otherwise required by law. "Here's one more"Federal Mission"Maintain properly trained and equipped units available for immediate mobilization in case of war, national emergency or otherwise." Our National Guard troops have been called in on the basis of this federal mission in Iraq, Afghanistan and elsewhere, yet it is doubtful whether it is legitimate without a declaration of war.

We need to remember that our politicians are quick to kill people without considering their families. There seems to be no serious thought about what is happening, and it is playing with all the word-bites.


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Market Talk – April 14, 2022


The World Bank on Wednesday downgraded its economic growth forecast for India and the entire South Asian region, citing supply disruptions due to the Ukraine crisis and the risk of rising inflation. International lender India has cut its growth forecast for the region, the region's largest economy, from 8.7% in the current fiscal year to 8% in March 2023, and reduced its growth outlook for South Asia, excluding Afghanistan, to 6.6%. In India, household use will be limited by an incomplete recovery of the labor market from epidemics and inflationary pressures, the World Bank has said.

The World Bank has raised its growth forecast for Pakistan, the region's second-largest economy, from 3.4% to 4.3% for the current year ending in June, leaving next year's growth outlook unchanged at 4%.

The World Bank has cut its growth forecast for the Maldives from 11% to 7.6% this year, citing its large imports of fossil fuels and a slowdown in tourist arrivals from Russia and Ukraine.

Major Asian stock markets had a green day today:

  • NIKKEI 225 increased by 328.51 points or 1.22% to 27,172.00
  • Shanghai rose 38.82 points, or 1.22%, to 3,225.64
  • Hang Seng rose 143.71 points, or 0.67%, to 21,518.08
  • The ASX 200 rose 44.40 points, or 0.59%, to 7,523.40
  • Kospi rose 0.22 points, or 0.01%, to 2,716.71
  • Sensex closed
  • Nifty 50 closed

Major Asian currency markets had mixed days today:

  • AUDUSD fell 0.0042 or -0.56% to 0.74097
  • NZDUSD fell 0.00217 or -0.32% to 0.67791
  • USDJPY rose 0.452 or 0.36% to 125.925
  • USDCNY rose 0.01693 or 0.27% to 6.39274

Precious Metals:

  • Gold down 7.26 USD / t oz. Or -0.37% to 1,970.46
  • Silver lost 0.282 USD / t. oz or -1.10% to 25.438

Some economic news from last night:


Foreign bond purchases increased from -1,666.1B to -1.4B

Foreign investment in Japanese stocks rose to 1,675.4B from 543.3B

South Korea:

Export Price Index (YoY) (Mar) increased from 20.5% to 22.8%

The Import Price Index (YoY) (Mar) has gone up from 30.7% to 35.5%

The interest rate decision (April) has been from 1.25% to 1.50%


MI inflation expectations rose to 5.2% from 4.9%

Employment changes (March) from 77.4K to 17.9K

Complete employment change (March) from 121.9K to 20.5K

The participation rate (March) remains the same at 66.4%

Unemployment rate (March) remains the same at 4.0%

New Zealand:

Business NZ PMI (Mar) rose from 53.6 to 53.8


GDP (QoQ) (Q1) has risen from 2.3% to 0.4%

GDP (YoY) (Q1) fell to 3.4% from 6.1%

Today's economic news


FDI (March) has increased from 37.90% to 25.60%


The United Kingdom could send thousands of asylum seekers to the East African country of Rwanda, Prime Minister Boris Johnson said on Thursday, in a bid to break the smuggling network and stem the flow of migrants across the channel. Concerns about immigration were a major factor in the 2016 Brexit vote, and Johnson is under pressure to deliver on his promise to "regain control" of Britain's borders. But his plan has been sharply criticized by opponents of his Conservative party and charities. Anyone who has come to Britain illegally since January 1 could now move to Rwanda, which would disrupt the business model of the human-trafficking ring, the prime minister said.

The European Central Bank on Thursday confirmed plans to end its Hallmark stimulus project in the third quarter, fearing that high inflation could enter, even as the outlook for the war in Ukraine has become exceptionally uncertain. The ECB has been unwinding support at a glacier pace, much slower than its peers, worried that growth could quickly collapse due to war, sky-high energy prices and the risk of losing access to Russian gas batteries as an already fragile economy.

Europe's major stock markets had a green day:

  • The CAC 40 rose 47.21 points, or 0.72%, to 6,589.35
  • The FTSE 100 rose 35.58 points, or 0.47%, to 7,616.38
  • The DAX 30 rose 87.41 points, or 0.62%, to 14,163.85

Europe's major currency markets had mixed days today:

  • EURUSD fell 0.0077 or -0.71% to 1.08170
  • GBPUSD decreased 0.00617 or -0.47% to 1.30578
  • USDCHF rose 0.00903 or 0.97% to 0.94286

Today's economic news from Europe:


Germany Thomson Reuters IPSOS PCSI (April) dropped from 51.93 to 47.75

German WPI (MoM) (Mar) increased from 1.7% to 6.9%

German WPI (YoY) (Mar) increased from 16.6% to 22.6%


PPI (MoM) (Mar) increased from 0.4% to 0.8%

PPI (YoY) (Mar) increased from 5.8% to 6.1%

United Kingdom:

Thomson Reuters IPSOS PCSI (April) down from 51.5 to 47.4


Italy's Thomson Reuters IPSOS PCSI (April) drops from 42.91 to 42.43


France Thomson Reuters IPSOS PCSI (April) dropped from 46.63 to 44.22


The deposit facility rate (APR) will remain the same at -0.50%

ECB marginal loan facility remains the same at 0.25%

ECB interest rate decision (April) will remain the same at 0.00%

US / Americas:

Consumer spending peaked in March, according to newly released CPI data. Retail sales in the United States rose 0.5% month-on-month and 6.9% year-on-year. Energy saw a surprisingly large spike after an increase of 8.9% and gas 19.3%. The energy sector is now up 37% compared to last year.

U.S. jobless claims advanced 185,000 in the week ended April 9, up 18,000 from the previous week. Analysts had expected a rate of 172,000. Continuous claims (data collected from the previous week) decreased by 48,000 to 1.475 million.

US market closed:

  • The Dow fell 113.36 points, or -0.33%, to 34,451.23
  • The S&P 500 fell 54 points, or 1.21%, to 4,392.59
  • Nasdaq fell 292.51 points, or -2.14%, to 13,351.08
  • Russell 2000 fell 20.12 points, or -0.09%, to 2,004.98

Canada Market Closed:

  • The TSX Composite rose 17.68 points, or 0.08%, to 21,855.7
  • The TSX 60 advanced 1.59 points, or 0.12%, to 1,320.93

Brazil market closed:

  • Bowespa fell 600.35 points, or -0.51%, to 116,181.61


The oil market was a green day today:

  • Crude oil rose 0.97 USD / BBL or 0.93% to 105.220
  • Brent rose 1.13 USD / BBL or 1.04% to 109.91
  • Natural gas rose 0.216 USD / MMBtu or 3.09% to 7.2130
  • Petrol rose 0.0352 USD / GAL or 1.07% to 3.3261
  • Heating oil rose 0.156 USD / GAL or 4.20% to 3.8744

The above information was collected around 13:00 EST on Thursday

  • Top product beneficiaries: heating oil (4.20%) and natural gas (3.09%), palm oil (2.46%), rubber (3.12%)
  • Top products damaged: cotton (-1.25%), bitumen (-3.64%), wheat (-1.16%) and oats (-3.55%)

The above information was collected around 13:07 EST on Thursday.


Japan 0.253% (+ 1.5bp), US 2 2.45% (+ 0.081%), US 10 2.8140% (+ 11.15bps); 2.91% (+ 0.101%) of US 30, Bunds 0.842% (+ 6.7bp), France 1.333% (+ 6.1bp), Italy 2.506% (+ 12.8bp), Turkey 22.74% (+ 0bp), Greece 2.914% ( + 0bp) 6bp), Portugal 1.862% (+ 7.8bp); Spain 1.808% (+ 9.2bp) and UK Gilts 1.891% (+ 8.6bp).

Market Talk - April 13, 2022

A bounce of expectations pushed consumer sentiment in early April

Preliminary April results from the University of Michigan Survey of Consumers show that overall consumer sentiment bounced back in early April after hitting a multi-year low in March (see top chart). Profits are almost entirely due to a jump in consumer expectations for the future. Composite consumer sentiment rose to 65.7 in early April, up 6.3 points or 10.6 percent from 59.4 in March. The index is still 35.3 points below its February 2020 high.

The current-economic-situation index rose to 68.1 from 67.2 in March (see the middle of the first chart). This is a 0.9-point or 1.3 percent increase for the month but still leaves the index with a 46.7-point drop from February 2020.

The second sub-index - Consumer Expectations, one of the main indicators of AIER - jumped 9.8 points, or 18.0 percent, to 64.1 (see chart below). The index is still below 28.0 points from February 2020.

All three indicators are below the four seen in the last six recessions (see first chart).

According to the report, "almost all gains were in the expectation index, which posted a monthly gain of 18.0%, including a 29.4% jump in year-over-year outlook for the economy and a 17.2% jump in personal financial expectations." The market has strengthened wage expectations among consumers under the age of 45 to 5.3% সবচেয়ে the biggest expected gain in more than three decades since April 1990. Consumers are still hoping that the national unemployment rate will drop an inch, working to improve consumer attitudes toward the national economy. "

One-year inflation expectations remained unchanged at 5.4 percent in early April, the highest level since November 1981. One-year expectations have risen several times over 3.5 percent since 2005 only to fall behind (see second chart). Five-year inflation expectations were unchanged at 3.0 percent in early April. That result ranges from 2.2 percent to 3.5 percent (see second chart) in the 25-year range.

According to the report, "Perhaps the most surprising change is that consumers expected gas prices to rise by only 0.4 cents a year earlier in April, which completely reversed the March rise to 49.6 cents." Retail gas prices have fallen since the peak of March, and that fact was immediately recognized by consumers. The change in gas price expectations may be due in part to the announcement of Biden's strategic oil reserves and the relaxation of some seasonal EPA rules. "

The report added, "Nevertheless, the April survey provides temporary evidence of a slight gain in sentiment, which is still close to reassuringly low." There are still significant sources of economic uncertainty that could easily reverse April's gains, including the impact on the domestic economy from the Putin war and the potential impact of the new Covid form.

A return to consumer sentiment, especially in anticipation of the future, could be a knee-jerk reaction to lower gas prices. Economic risks continue to mount due to Russia's aggression in Ukraine, the beginning of the Fed's austerity cycle, and the continuing wave of new Kovid-19 lawsuits. Ramping up negative political advertising during midterm elections could also affect consumer sentiment in the coming months. The overall economic outlook remains highly uncertain.

Robert Hughes

Bob Hughes

Robert Hughes joined AIER in 2013 for over 25 years researching economic and financial markets on Wall Street. Bob previously headed Brown Brothers Harriman's Global Equity Strategy, where he developed an equity investment strategy that combines top-down macro analysis with bottom-up fundamentals.

Prior to BBH, Bob was a senior equity strategist at State Street Global Markets, a senior economic strategist at Prudential Equity Group, and a senior economist at Citicorp Investment Services and a financial markets analyst. Bob holds an MA in Economics from Fordham University and a BS in Business from Lehigh University.

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