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A recent post from Daniel Lacalle, “How Keynesians Got The US Economy Wrong Again,” exposed the widening gap between John Maynard Keynes’ economic theory and reality. Despite the confident forecasts of leading Keynesian economists, the U.S. economy in 2025 continues to defy expectations. The Federal Reserve’s tightening cycle failed to trigger the widely predicted “hard landing,” and growth has proven more resilient. Simultaneously, inflation remains somewhat sticky, but still declining, and the economy refuses to follow the neat, linear pathways that textbook models suggest.

This latest embarrassment for Keynes’ orthodoxy is part of a much larger story. The failures aren’t isolated miscalculations but the predictable result of a flawed framework that policymakers have clung to for decades. Keynesian economics didn’t just “get it wrong” in 2025, but has repeatedly failed to deliver on its promises for over forty years. And the consequences are becoming impossible to ignore.

At its core, Keynesian economics is deceptively simple. When demand for the private sector falls, the government should borrow and spend to fill the gap. The idea is that temporary fiscal stimulus injections will smooth business cycles, reduce unemployment, and quickly return the economy to full capacity.

But the keyword here is temporary. John Maynard Keynes was clear: governments should run deficits during downturns and surpluses during expansions. The debt incurred to rescue the economy should be repaid once conditions normalize.

However, in practice, this discipline never materialized. Politicians discovered that voters liked stimulus but hated austerity. Since the 1970s, deficits have become a permanent feature of U.S. fiscal policy, regardless of the business cycle. The results are sobering: the U.S. national debt now exceeds 120% of GDP, entitlement programs are structurally underfunded, and each crisis requires larger interventions with diminishing economic benefits.



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The COVID-19 pandemic was the ultimate Keynes experiment. Between 2020 and 2022, the federal government injected over $5 trillion in fiscal stimulus into the economy, complemented by the Federal Reserve slashing interest rates to zero and expanding its balance sheet by $120 billion each month. According to the Keynesian model, this unprecedented monetary and fiscal stimulus should have ushered in a durable economic boom.

The Failure of Artificial Growth
However, as we noted in “MMT Was Tried And Failed,” the massive flood of stimulus temporarily boosted economic growth by “pulling forward” future demand but also created several problems.

“The most obvious problem was the impact of dramatically increasing demand on a supply-stricken economy. With the economy “shut down” due to Government-mandated restrictions, the flood of stimulus payments led to a demand boost. Given the basic economics of supply versus demand, prices rose. As expected, the implementation led to a massive surge in inflation. (Given most Americans have fixed healthcare and housing payments for a contractual period, the third measure shows what the cost-of-living is for most every month.)”

Crucially, inflation, excluding housing and healthcare, surged to nearly 12% during the pandemic-stimulus-infused spending spree. However, today, as the economy slows and the stimulus fades from the system, that inflation rate has declined to just 1.61%.



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Secondly, the “economic boom” created by the demand-pull stimulus continues to disappear as the economy normalizes slowly back to roughly $3.50 in debt to make $1 of economic activity. Following the pandemic shutdown, the economy surged to unprecedented levels, nearing 17.5% nominal growth. In a shuttered economy, the byproduct of all that demand was an inflation surge to 40-year highs, peaking above 9% in 2022. Five years later, inflation continues to decline towards the Fed’s 2% target, but remains sticky as remnants of monetary and fiscal stimulus continue to flow through the system.



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The Broken Transmission of Monetary Policy
A further failure of modern Keynesian policy is its overreliance on central banks. Through rate cuts and quantitative easing (QE), monetary stimulus has become the go-to solution for any economic slowdown. Yet the transmission mechanism between monetary policy and real economic activity has fundamentally broken. Artificial interventions and “MMT” failed to work in reality because the underlying transmission system failed.

“The promise of something for nothing will never lose its lustre. So MMT should be viewed as a form of political propaganda rather than any real economic or public policy. And like all propaganda, we must fight it with appeals to reality. MMT, where deficits don’t matter, is an unreal place.”

Meanwhile, the velocity of money, the rate at which money changes hands in the economy, while recovering somewhat from the economic shutdown, continues to trend lower. In other words, the Fed can inject liquidity but fails to circulate productively. The velocity trend does not provide an encouraging outlook for GDP growth.



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Given the weakening economic growth rates and subsequently declining inflation, a direct reflection of weakening consumer demand, banks have little incentive to expand lending at current rates, especially in an environment of tighter regulations and poor credit quality.

One key problem is that Keynesian models assume a linear cause-and-effect relationship between government spending and economic output. They focus almost entirely on aggregate demand, neglecting critical dynamics like debt saturation, supply chain fragilities, and the feedback loops of global capital markets.

In today’s highly financialized economy, government spending does not circulate efficiently. As noted, much of it gets trapped in financial markets, inflating asset prices rather than stimulating productive investment. Ultra-low interest rates, another hallmark of Keynesian policy, discourage savings and encourage debt-fueled speculation. This distorts capital allocation, causing malinvestment in unproductive assets like meme stocks, speculative real estate, and unprofitable tech ventures.

Most benefits remain trapped in the top 10% of the economy, which owns roughly 88% of the inflation-adjusted financial assets.



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In other words, the wealthy retain the monetary injections while inflation taxes them away from the poor.
Mr. Lacallie highlighted this mismatch between Keynes’ theories and economic realities. As he noted, many mainstream economists repeatedly forecasted a 2023-2024 recession that never arrived, underestimated inflation persistence, and misread the impact of fiscal tightening. These forecasting errors expose deeper flaws in how Keynesians model the modern economy.



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Hayek’s Warnings Prove Prophetic
The Austrian school of economics, particularly Friedrich Hayek’s views, starkly contrasts with Keynesian thinking. Austrian economists believe that a sustained period of low interest rates and excessive credit creation creates a dangerous imbalance between saving and investment. In other words, low interest rates tend to stimulate borrowing from the banking system, which leads, as one would expect, to the expansion of credit. This expansion of credit, then, in turn, increases the supply of money.

Therefore, as one would ultimately expect, the credit-sourced boom becomes unsustainable as artificially stimulated borrowing seeks out diminishing investment opportunities. Finally, the credit-sourced boom results in widespread malinvestments. When the exponential credit creation is no longer sustainable, a “credit contraction” occurs, ultimately shrinking the money supply. The markets eventually “clear,” which causes resources to be reallocated towards more efficient uses.



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Modern policymakers refuse to allow this natural process. Each downturn results in more aggressive stimulus, which only delays the necessary corrections. The result has been a relentless build-up of economic imbalances. Inefficient businesses survive on cheap debt, zombie firms proliferate, and innovation suffers. Each economic expansion is weaker than the last, and each recovery depends on larger interventions to stay afloat.

Perhaps the greatest misconception perpetuated by Keynesian economists is that debt-financed stimulus is a free lunch. In reality, servicing the debt and rising debt service costs become a significant economic headwind. The Congressional Budget Office projects that U.S. interest payments will exceed national defence spending in the coming years and approach $1.5 trillion annually by 2030. Of course, that is assuming that rates stay where they are currently. The next crisis, which has become more common since the turn of the century, will significantly lower rates. As shown, a reduction in rates by 1% would dramatically impact future liabilities.



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This is not just a fiscal issue—it’s a macroeconomic drag. Spending dollars on interest payments diverts them from infrastructure, education, or productive investment. Worse, rising debt levels crowd out private investment, distort capital markets, and reduce the flexibility to respond to future crises.

Conclusion: Keynes’ Economic Theory Has Failed
For the last 40 years, each Administration and the Federal Reserve have continued to operate under Keynes’s monetary and fiscal policies, believing the model worked. The reality, however, is that most of the economy’s aggregate growth is financed by deficit spending, credit expansion, and a reduction in savings.

This reduced productive investment and slowed the economy’s output. As the economy slowed and wages fell, the consumer took on more leverage, decreasing savings. The result of the increased leverage required more income to service the debt, rather than fuel increased consumption.



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Secondly, most government spending programs redistribute income from workers to the unemployed. Keynes’ economists argue that this increases the welfare of many hurt by the recession. What their models ignore, however, is the reduced productivity that follows a shift of resources toward redistribution and away from productive investment.

All of these issues have weighed on the overall prosperity of the economy. What is most telling is the inability of current economists, who maintain our monetary and fiscal policies, to realize the problem of trying to “cure a debt problem with more debt.”

This is why Keynes’ economic policies have failed, from “cash for clunkers” to “Quantitative easing.” Each intervention either dragged future consumption forward or stimulated asset markets. Pulling future consumption forward leaves a “void” in the future that must be continually filled. However, creating an artificial wealth effect decreases savings, which could be used for productive investment.

It’s time we wake up and realize we are on the same path.

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Mises Wire

What Happened to the Profit and Loss System?


https://cdn.mises.org/styles/respons...?itok=c6UhVahW
Tags: Big Government, Cronyism and Corporatism, Financial Markets, Inflation

09/04/2025•
Mises Wire•Artis Shepherd

In a free market, the profit-and-loss system plays an essential role. It signals how resources should be allocated, enabling entrepreneurs to pursue productive avenues and make long-term plans. By the same token, a system of profit and loss identifies those entrepreneurs able to synthesize market information, gather required inputs at a certain cost, and sell the output above that cost. Good entrepreneurs are rewarded with profits while the bad entrepreneurs experience losses and ultimately fail.

However, by adding government intervention, the profit-and-loss system is distorted. In economies with significant intervention, that distortion can be overwhelming, as the signals provided by the profit-and-loss system are entirely drowned out by subsidization, inflation, price controls, artificially low interest rates, cronyism, and fraud.

As the signals become distorted, the results do as well. Capital is allocated to unproductive areas of the economy, political entrepreneurs gain primacy over market entrepreneurs, and the profit-and-loss system is replaced with an increasingly socialistic dynamic comprising central planning, welfare-warfare statism, and the obsolescence of individual productive drive and achievement.

All the Silliness Must Go
As of November 2024, nearly 45 percent—an all-time high, up from 14 percent in 1994—of Russell 2000 stocks generate negative earnings. Since 2014, price-to-earnings ratios for the S&P 500 have ranged between 20x and 30x, compared to the historical average of 16x, implying asset prices have decoupled from fundamentals amid ZIRP and QE. Michael Burry, of “Big Short” fame, tweeted in 2022:
This morning, there were still 218 primary stock listings in the United States with a market cap over $1 billion and [earnings] less than NEGATIVE $100 million…29 of them had market caps over $10 billion, totalling $655 billion…

Swaths of the investment management industry, including virtually the entire venture capital (“VC”) segment, make a business out of trading unprofitable companies, slapping progressively higher fiat valuations on them in hopes that a small portion will become objects of speculative fever and earn them enough to offset total losses elsewhere in their portfolio.

This is not advanced probability theory, as many VCs whine. Rather, the industry has abandoned even the pretense of critical business analysis, focusing instead on hype and marketing to pump up portfolio holdings, which they can subsequently offload onto indiscriminate public investors. Doing so has proven remarkably easy in the QE and ZIRP era. Venture capital, in turn, has become an unserious industry populated primarily by buffoons and charlatans.

By the same token, initial public offerings were once the domain of profitable companies. In the 1980s, around 90 percent of IPOs were profitable. That proportion fell to 70 percent in the 1990s and 14 percent during the 1999-2000 dot-com bubble. Since then, profitability has remained a second thought to IPO issuers and their investors, with the average year seeing only a third of IPO companies at profitability.

Lest we forget real assets, for the last several years, commercial real estate has offered prospective investors negative leverage—a condition where the interest rate to finance a commercial building is higher than the initial cap rate (profit divided by purchase price) on the asset. The magnitude is significant, with apartment buildings today typically yielding at least 100-150 basis points (1.0 percent to 1.5 percent) less than the interest rate on the debt used in acquiring them. While not the only factor in commercial real estate returns—especially if investors hold for longer periods—initial negative leverage of that magnitude makes profitability to equity holders extremely challenging.

Bullsh*t Earnings
In order to execute a proper analysis of profit and loss, prevailing terms must be understood. Unfortunately, capital markets are replete with performance metrics of all kinds, many of which are useless. A brief review is necessary, after which I will suggest a more useful metric for measuring true profitability.
EBITDA (earnings before interest, taxes, depreciation, and amortization) is a supposed measure of profitability that has become ubiquitous in capital markets, especially in public company reporting.

The metric came into fashion during the leveraged buyout (“LBO”) boom of the 1980s, when it was viewed as a reflection of unlevered operating earnings and thus a useful indication of how well a company could service the highly indebted capital structures entailed following an LBO transaction. Nonetheless, EBITDA caught on as a widely used metric for publicly traded companies. The problem is that interest, taxes, depreciation, and amortization may be significant expenses. Leaving them out paints an unrealistic picture of a company’s profitability.

As the late Charlie Munger—Warren Buffett’s long-time business partner—famously stated, if you encounter “…any presentation using the word EBITDA…just substitute the phrase ‘bullshit earnings…’”

Moving on from EBITDA, the public market standard for calculating “profit” is GAAP (generally accepted accounting principles) Net Income. This metric purports to communicate a company’s bottom-line earnings—the profits from a company’s sales after all expenses have been deducted. However, expenses within GAAP are defined somewhat loosely. A hypothetical example will illustrate.

A four-unit rental building earns $1,200 per month in rent while incurring maintenance costs of $400, property taxes and insurance of $500, and depreciation expense of $200. Damage caused by the local weather requires the roof to be replaced each month for $500. By GAAP standards, this building is profitable to the tune of $100 per month. GAAP counts roof replacement as a capital expenditure—not an expense—thus inflating profits. In reality, the building loses $200 per month.

Commercial real estate owners and brokers have, for years, treated their marketing materials in a similar fashion, shoving anything that could be deemed capital expenditure “below the line,” thus inflating their profitability and demanding prices in the sale market on that basis. A better computation is needed to look through GAAP Net Income and arrive at a more precise determination of business profitability.

Free Cash Flow, Properly Calculated
Free Cash Flow (FCF) or Free Cash Flow to Equity (FCFE) is a non-GAAP metric that may be more appropriate. It’s generally defined as Operating Cash Flow minus capital expenditure. However, even FCF is subject to accounting shenanigans. The use of stock-based compensation (SBC), for example, is an effective method of inflating reported FCF in a stock market bubble.

Rather than paying employees in cash, a company—especially one whose stock trades at a significant premium to fundamental value—can simply use its stock as currency, thus avoiding a reduction in the computation of FCF. And since stock prices are high, the dilutive effect of SBC is often negligible.

Publicly-traded companies now use SBC extensively. As a percentage of sales for companies in the Russell 3000 index, SBC increased over sixfold from 2006 to 2022, with most of that increase coming after the 2008-09 crisis.

In the S&P 500, reported SBC grew by more than 10 percent annually between 2010 and 2022, reaching a total of $192 billion in that final year of analysis. SBC trends have continued in the same direction since then.

The exclusion of principal payments on finance leases when computing FCF also needs to be addressed. A finance lease is an accounting convention that treats lease payments like loan repayments, but they are not loan repayments. They represent a contractual obligation to pay cash to the owner of equipment or a building.

Lastly, working capital considerations may need to be made when calculating FCF. Delaying vendor payments, for example, may inflate FCF in the short term but is unsustainable as a practice. Over time, these effects even out, so this may be a more relevant consideration for shorter-term analysis.
Therefore, a useful framework for properly calculating FCF follows:

1. Operating Cash Flow (derived from Net Income and shown on cash flow statement);
2. minus Stock-Based Compensation;
3. minus Capital Expenditure;
4. minus Principal Repayments on Finance Leases;
5. [optional, depending on context] plus or minus Working Capital Adjustments

Using this computation, you will find that two of the “Magnificent Seven” companies—a group worth $15 trillion in combined market capitalization—are perennial money losers.

Vigilance in the Golden Age of Fraud
Financial metrics are used selectively by companies in order to present a rosy picture of performance while obscuring financial reality. Proliferation of such practices is part and parcel of an investor psychology that accompanies speculative excess.

The combination of aggressive accounting and undiscerning investors allows shoddy practices to persist until the source of speculative excess—loose, inflationary monetary policy in the case of the US—subsides. In the meantime, discerning investors should familiarize themselves with the bag of tricks used by unscrupulous CEOs and CFOs, amplified by their cheerleaders in the financial media. In so doing, participants in the capital markets and business world can stay grounded in the moral and productive essentials of the profit-and-loss system while recognizing its distortions in the interventionist economy.

Image Source: Adobe Stock

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

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https://www.zerohedge.com/geopolitic...fourth-turning


Quinn: WW3 Is Inevitable, Compromise Isn't An Option During 'The Fourth Turning'


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by Tyler Durden

Friday, September 05, 2025 - 05:00 PM
Authored by Jim Quinn via The Burning Platform blog,

Fourth Turnings never fizzle out.
They build to a crescendo of death and destruction.

Is there any indications whatsoever that we are not on a course towards all-out war?
How it started...

"We gave categorical assurances to Gorbachev that if a United Germany could remain in NATO, NATO would not be moved Eastward," Jack Matlock, US Ambassador to the Soviets 1987-1991, speaking 30 years ago.

NATO did, however, move Eastwards towards Russia, and the rest is history
How's it going?

Professor Jeffrey Sachs explains:
Now, we have the return of the most primitive kind of Russophobia imaginable.
So Europe meets as, as you note, every two or three days in terror of Russia with these fools around the table, without talking to the Russians at all.

If you just watch these people, they don't know anything, and they don't want to learn anything, and they don't want to hear anything.
And especially, in Europe, the most desperate thing is, for God's sake, don't talk to the other side. It may be a little annoying.
And so we actually have a spectacle of grown people like Starmer, Merz, Macron, grown people that won't even have ... a discussion with President Putin.


And what happens next?

https://assets.zerohedge.com/s3fs-pu...?itok=CpnJ_XyB
Dmitry Medvedev:

"The United Kingdom has sent Ukraine $1.3 billion obtained as profit from the use of frozen Russian assets.
This was said by the English idiot Lammy.

Well, this means one thing: British thieves have handed over Russian money to the neo-Nazis.
The consequences?

Britain has committed an offence, and Russia has, as lawyers say, a claim against it and the current Banderaite Ukraine.

But considering that these funds cannot be recovered through legal proceedings for obvious reasons, our country has only one way to reclaim the assets.

To return what was seized in kind. That is, with "Ukrainian land" and other real estate and movable property located on it.
(I am obviously not talking about the lands of the new Russian regions; they are already ours.)

So any illegal seizure of arrested Russian funds or income from them must be converted into additional territories and other property of country 404. Or by confiscating the valuables of the British Crown.

There are still enough of them in various places, including those located in Russia."
The path has been set on the Fourth Turning - it's now when not if.

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John Mauldin - Thoughts from the Frontline

From:[email protected]

To: Bruce W Margolese

Saturday, September 6 at 3:07 A.M.

View as PDF
https://ecp.yusercontent.com/mail?ur...K01aJd56cw--~D
https://ecp.yusercontent.com/mail?ur...GCgPV5W6wg--~D

Housing Headaches and More
By John Mauldin | September 05, 2025
https://ecp.yusercontent.com/mail?ur...OGhI2ThkaA--~D

Perpetual Crisis

Rocking Along

Lower Rates

A Brief Look at Overall Unemployment

Is the Fed Losing Its Mojo?

Austin, Dallas and Longevity, and Houston

We have no scarcity of economic challenges. Price inflation is high on the list, partly because we saw so little of it for so many years. Inflation’s return in 2021–2022 brought back memories for those (ahem) who lived through the 1970s. And not the pleasant kind. None of our generation wants to see the reruns of That ’70s Show.
You’ll note I specified “price” inflation above. I say that because whenever this comes up, readers remind me that Milton Friedman said inflation is always a monetary phenomenon. I get that and agree with it. However, the average household feels inflation as rising living costs, of which shelter is usually the largest. This will be today’s primary topic. What is going on with housing costs, and is there any hope for relief? Also, we have new employment numbers, which are important as well.

Finally, you’ll see below an invitation to join Dr. Mike Roizen and me for a longevity presentation. Lots to cover, so let’s dive in.

Perpetual Crisis
On a national basis, housing inflation has subsided significantly from a few years ago. Home prices and rental rates are even dropping a bit in some markets, and more than a bit in a few markets. But even in those places, costs remain higher—and often much higher—than they were before 2020.
This is where the discussion often gets confused. You see reports saying, “Home prices (or apartment rents) have stabilized.” That simply means they’ve stopped rising. This is good but not necessarily better.

My friend Jim Bianco noted recently that housing is in perpetual crisis. When prices are rising or stable at a high level, we have an affordability crisis. When prices are weak and/or falling, overextended homeowners fall behind on their payments, which can lead to a bank/financial crisis. Both conditions are self-correcting with time… but it can be a long time.
It’s hard to grasp how fast home prices accelerated over the last decade, relative to broader inflation. The chart below shows the Case-Shiller home price index vs. the Consumer Price Index since January 2015
.

https://ecp.yusercontent.com/mail?ur...FvvTqPYEcQ--~D
Source: Paul Krugman


In the five calendar years before COVID struck in 2020, home prices climbed almost 20 percentage points more than CPI headline inflation. Granted, CPI wasn’t rising much in that era, but home prices were definitely moving up (on a national average basis, with the large caveat that all real estate is local, etc., etc., and yes, I did just use a graph from Paul Krugman.)

Notice also how the home price index bent upward starting in 2021 when the Federal Reserve’s aggressive pandemic interventions produced sub-3% mortgage rates. The same thing happened, somewhat less aggressively, before 2020 and likely explains that price increase as well. Artificially low interest rates produce artificially high asset prices, whether for stocks, homes, or anything else. This is also one reason why the home price index briefly declined when the Fed hiked in 2022.

The same pattern is visible in this chart based on Redfin price data. This one is the median price per square foot, so it accounts for changes in home size. Home prices rose steadily during the QE years, rose even faster in the COVID period, then resumed roughly the previous pace since 2022. On this square-foot measure, home prices have risen over 50% since 2020. Coupled with higher interest rates, it does indeed create an affordability crisis, especially for first-time buyers.


https://ecp.yusercontent.com/mail?ur...OFs4_463Qw--~D
Source: Jim Bianco

Rocking Along
Home prices are relevant mainly to homeowners or those who wish to buy a home. A large part of the population either prefers to rent or has to rent because they can’t find a suitable home in a suitable place at a suitable price.
Peter Boockvar, who somehow digests vast amounts of data almost as fast as ChatGPT and generally has better conclusions, had this update on the rental market. (Emphasis mine.)

“Last week, the August Apartment List National Rent Report, in case you missed it, said ‘The national median rent dipped by .2% in August, and now stands at $1,400. This was the first m/o/m decline since January and marks the beginning of the rental market's season. We’ll likely continue to see further modest rent declines through the remainder of the year.’

“Versus last year, new rents are down .9%. The vacancy rate is at 7.1% which is the highest since Apartment List started this survey in 2017, and ‘We’re past the peak of a multifamily construction surge, but a healthy supply of new units is still hitting the market, and vacancies are still trending up.’ I’ll add, most of this supply comes from the Sunbelt states, with Austin, Texas, being the weakest market, followed by Denver (not Sunbelt, but most others are), Phoenix, and Tucson. The best rental markets are on the coasts that have seen less supply growth. For example, San Francisco is now the best market with rental rates up 4.7% y/o/y, playing catch-up. Overall, ‘Units are taking an average of 29 days to get leased after being listed, up one day from last month’s reading, and down from a high of 37 days in January.’

“Not in this report, but from what I heard from the publicly traded REITs, renewal rates are running at about 3–4% so the blended rental growth rate is about 1–2%. This is below what the CPI and PCE are telling us, but again, keep in mind that CPI and PCE never captured the high growth rates seen in rents at the peak in 2022. [JM—As I have written many times, the way the BLS figures rent growth is a backwards-looking average number, so it will always be wrong at times of significant changes.] Also, while the rate of change in rent growth has clearly slowed, new rents are still up 22% from January 2021, and consumer confidence levels for many are still at low levels, with this being the biggest annual cost for those renting.

“The bottom line on where the rental market goes from here, Apartment List said, ‘With construction expected to slow further in the second half of this year and into 2026, conditions are likely to shift, but it will still take time for the market to metabolize the recent growth in the rental stock.’ I expect rent growth to stabilize in the first half of 2026 and expect rents to start rising again in the back half of 2026.”

I bolded Peter’s last sentence there because it’s key to where inflation is going. Any way you measure it, apartment rents are up substantially in many markets, to the great frustration of many workers—particularly young people. The growth has stopped in some places, but rental rates are still elevated, especially as seen from a year-over-year or even perhaps more importantly, over the last four years. Peter thinks this is only a pause and rates will resume rising next year.

I don’t know anyone who expects rental prices to fall much from here, short of a fairly severe recession (think the Great Recession), which of course we want to avoid. A mild recession historically has only modest impacts on prices over a year or so. Employment and wage growth are weakening, which at some point may force landlords to reduce rents, but the weakness would have to get quite a bit worse than we see now to really impact prices and rents.

Last month in my Inflationary Questions letter, I showed how shelter costs and the other “core services” CPI components have been and remain the largest inflation contributors. Now, core goods prices are rising as new tariffs take effect. We’ll see next week if that trend continues into August.
The broader point is that it’s really hard to identify any disinflationary segments. Most consumer prices are steady if not rising. Meanwhile, workers are nervous, wage growth is flattening, and uncertainty about the future is through the roof. It adds up to a kind of “stagflationary” equilibrium—not the kind of mass unemployment that happens in a recession, but also not the confident optimism seen in an inflationary boom. This is illustrated by the fact that for the first time since the pandemic, unemployment is above job openings (although just barely).


https://ecp.yusercontent.com/mail?ur...cQ_a3HIJvw--~D
Source: MishTalk


That combination suggests the economy will rock along in roughly the same condition we see now, until something happens to change it. What might that be?
Lower Rates
Based on Jerome Powell’s Jackson Hole speech, a rate cut seems very likely this month. Getting ahead of rising unemployment seems to be the main goal, but some analysts think lower mortgage rates may be an additional benefit. That gives us two questions:

1. Will lower rates at the short end of the curve also bring down mortgage rates?
2. If so, will the lower rates make homes more affordable?

Let’s take those in order. Recent history suggests the first answer is “no.” Mortgage rates didn’t drop at all when the Fed cut rates this time a year ago. Has something in the last year changed the dynamic? Maybe. But the global trend in long-term interest rates is up, not down, and it’s hard to explain how the US would be different. Bond investors are increasingly concerned about inflation, not just in the US but everywhere. Nothing large, mind you, just the beginnings of the trend. Something that you might expect, along with scores of other minor movements and trends, if we are moving towards a Great Reset by the end of the decade.
(Yes, long-term interest rates fell after Friday’s unemployment numbers. One day’s knee-jerk move is noise. Ask me a month or so from now what the true effect was.)

For rates at the long end to drop, somebody needs to be willing to lend massive amounts of long-term cash at fixed rates. I don’t know who that will be. There’s no shortage of borrowers, i.e., governments. But they are issuing mostly short-term and floating-rate debt, and I suspect it’s because they know the demand for longer-term debt just isn’t there. Few investors are willing to take the inflation and other risks of writing a 30-year loan. That’s not unreasonable. A lot can go wrong between now and 2055.

That said, mortgages are different. The kind we have in the US, which gives the borrower an embedded prepayment option, exists in part because the government supports a market for them and in part because of normal market operations. If Congress, the president, and the Federal Reserve want those loans to be available on better terms, there are things they can do. It would have costs and side effects, but might work for a while. As we have seen in the past, though, the long-term effects of those actions would at best be a serious market distortion.

The other question is stickier. Would lower rates make homes more affordable? They certainly help. The price is less important than the payment amount. Cutting two percentage points off a $300,000 mortgage reduces the payment by about $376 a month. Is that enough to entice a buyer who’s otherwise priced out? Maybe not, once they realize taxes and insurance are also substantial and, unlike a fixed mortgage, will likely rise each year.


Lower mortgage rates alone would have a limited benefit unless prices drop, too. Jim Bianco thinks home prices would actually rise to negate the benefit of lower mortgage rates.

https://ecp.yusercontent.com/mail?ur...wbO_IfWsWg--~D
Source: Jim Bianco on X

This is a supply and demand problem. Lower mortgage rates attack the demand side via reduced financing costs. They don’t magically put more houses on the market. Supply grows when builders decide to build more new homes and/or when current homeowners decide to sell. But in the latter case, the seller is usually a buyer, too. They have to go somewhere, so their decision adds to both supply and demand.

John Burns, who has forgotten more about housing than you or I will ever know, thinks lower rates will help, though not instantly. Reducing monthly payments will draw in enough new buyers to incentivize new supply. It will take time, but small differences add up.

In an interview this week, John also said remote work is an underappreciated housing solution. If a company gives people the chance to work from home 2–3 days a week or even part-time, then the distance to the office becomes less important. This lets people disperse further to places where both houses and apartments cost less.

John also noted something surprising. There’s been a lot of speculation on the way immigration changes affect housing prices. In theory, if people are deported or leave the US voluntarily, it should create vacancies in the places they were living. That would have a downward effect on prices.

At the same time, there’s also concern about the loss of immigrant construction workers, raising building costs. John’s firm works with literally hundreds of builders who say they don’t see widespread labour shortages. Stricter immigration enforcement so far seems to be having little effect on the construction industry.

The “lock-in effect” is gradually fading, too. People who got those sweet COVID mortgage rates are naturally reluctant to sell, but sometimes they have no choice. Death, new jobs, divorces, and other life events shrink the number of such homeowners.
Add all this up, and there’s reason to think housing costs will come down over the next few years. This will help reduce inflation, but it’s going to be a slow process. Meanwhile, inflation seems likely to stay well above that “2% average” target the Fed used to follow.

Making the Fed decision even more uncomfortable will be the likelihood, as I discussed previously, that inflation will move up above 3% in the fourth quarter, making more than two rate cuts problematic. And it will get worse. After we quickly review the unemployment numbers, let’s ask the hard question that I suggested a few years ago might be a large problem in the future, which we may now just see the beginnings of: Has the Fed lost the narrative and control?

A Brief Look at Overall Unemployment
The unemployment numbers came out when I was writing this letter. From my favourite AI (Peter Boockvar), I get the summary:
“Payrolls grew by just 22K in August vs. the estimate of up 75K, and the two prior months were revised down by a combined 21K. The household survey was better as it showed a gain of 288K, but just offsetting the drop of 260K in July, and this number is very volatile month to month. As the size of the labour force rose by more, 436K, the unemployment rate ticked up by a tenth to 4.3%. Of particular note, the U6 all-in rate rose to 8.1% from 7.9% and that is the highest since October 2021.”

The average workweek was down and is close to the lows last seen in 2010, but as wages rose, was offset. On the bright side, participation rates were pretty much up across the board, which is somewhat counterintuitive to the low job growth. But clearly, growth in the job market is slowing, confirmed by other reports like ADP.
Armageddon? Not really. Let’s look at these charts and data from Wolf Richter of Wolf Street.

First, we see initial unemployment benefit claims are in the same range as the last three years, and historically quite low.




https://ecp.yusercontent.com/mail?ur...9smhLySg1A--~D
Source: Wolf Street


While some analysts scream about continuing unemployment claims showing a very problematic employment picture, they are using recent data.


https://ecp.yusercontent.com/mail?ur...gIiazZaaZQ--~D
Source: Wolf Street

But if you look at a 40-year chart, and if you take out the COVID crisis, the picture looks more sanguine.


https://ecp.yusercontent.com/mail?ur...fiCqXFeiTQ--~D
Source: Wolf Street

Wolf Richter summed it up:
“These unemployment claims tell us that companies are laying people off at a historically low rate, but the laid-off workers spend more time on the unemployment rolls looking for a job than they did in 2022–2024, and yet, they spend a lot less time on the unemployment rolls than before 2018.
“So this is no longer the labour market of 2022 and 2023, where employers were struggling with labour shortages. But these unemployment claims depict an overall decent labour market in the historical context over the past four decades.”

Things can change, but so far it seems to me that we are in a slower Muddle Through period. Employers are waiting for some certainty for expansion, putting pressure on numerous markets. Yet nothing is falling out of bed. It’s just simply slowing.

Is the Fed Losing Its Mojo?
As I have been writing, I think annual inflation is likely to move above 3% in the last quarter. This will make it difficult for the Fed to cut more than once more after the September cut. If they lose their inflation-fighting credibility, long Treasury rates and the mortgage rates that are tied to them will suffer.

But the economy is clearly in a Muddle Through slowdown, so there is going to be an impulse among some Fed governors and especially from this administration, for lower rates. The Fed is between the Rock of Gibraltar and the deep blue sea. They could help mortgage rates by buying mortgage bonds, which would expand their balance sheet when they are actually trying to cut it. Would they? Since it would be seen as a loser monetary policy, it might actually have the opposite effect.

One of the things that always accompanies a great economic crisis is the central bank losing its ability to be truly effective. They simply react, trying to contain the crisis. The problem now is that the next crisis will not be one that can be solved by providing liquidity to banks. It will be a sovereign debt crisis driven by higher long-term rates and ever-increasing debt. A total of $60 trillion in debt shortly after 2030 could likely mean well over $2 trillion of yearly interest payments. The interest alone would likely be close to or even exceed nominal GDP. That is unsustainable and would precipitate the crisis I’ve been talking about for so long.

No Fed policy can alleviate such a problem, which will become increasingly apparent over the coming years. When the Fed loses the narrative, its ability to make people think it can actually solve a financial crisis, the game may not be over, but the rules will have substantially changed.
The Fed will have lost its mojo, and that is not a good thing. Stay tuned…
Austin, Dallas, Longevity, and Houston

I will be leaving for Austin next Thursday, where on Friday and Saturday, I will be attending Brad Rotter’s birthday bash with a few hundred guests, many of whom are close friends. On Sunday, I fly to Dallas, meet with friends and visit our clinic, and Dr. Mike Roizen will be flying in and join me for a dinner on Monday, September 15, where he will make a presentation on the latest important discoveries in longevity at a dinner we will host. Things are really getting exciting. If you are in the DFW area and are interested in what you can do to live healthier and longer, please write to [email protected], and we will notify you of the event location.

The next night, I will be in Houston for a dinner with David Bahnsen with a number of my readers and their clients. Lots of friends lined up for those six days.

Last week’s fishing trip in British Columbia simply fed my soul. Not the good fishing, but being with 34 of my readers and friends, and the deep conversations and camaraderie. Honestly, we talked much less about economics and more about our lives. Having Shane there was the icing on the cake.
And with that, it is time to hit the send button. Join me this week and spend more time with friends, even if it is only with the telephone or Zoom. I really have come to enjoy having conversations with Zoom as opposed to a telephone when possible. It’s not the same as being there, but it is better than a phone. You have a great week!

You're hoping we can at least Muddle Through a lot longer, analyst.
https://ecp.yusercontent.com/mail?ur...Rh67YAAlgg--~D
https://ecp.yusercontent.com/mail?ur...BJOSlYLpGA--~DJohn Mauldin
Co-Founder, Mauldin Economics

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NOTE: This Comprehensive and well-researched newsletter was edited using the software GRAMMARLY by BWM.

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NOTE: I opened this $50,000 US dollars FXCM Demo account on August 20, 2025. In 2 weeks, I have done 34 Forex trades, all closed now, with 4 Open Forex trades.

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Trading Real Funds at Friedberg Direct in Toronto, I average an ROI (Return On Investment) of 50% each month.

Sign up for my 90-day Forex trading course for 100.00 Canadian dollars by sending an E Transfer to [email protected]


UPDATE - September 5, 2025, at 10:10 AM

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That is a 40% plus ROI (Return on Investment)

Sign up now for my 90-day Forex trading course for 100.00 Canadian dollars by sending an E Transfer to [email protected]

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https://mises.org/mises-wire/jobs-ec...184c-230184928

Mises Wire

The Jobs Economy Worsens as Full-Time Work and Manufacturing Jobs Disappear
https://cdn.mises.org/styles/respons...?itok=XHJzPcJV09/05/2025•Mises Wire•Ryan McMaken

Following the release of last month’s official federal jobs numbers, President Trump complained that the commissioner of the Bureau of Labour Statistics was publishing inaccurate, too-low employment numbers to make Trump look bad. So, Trump fired the commissioner. Well, it looks like that didn’t fix “the problem”—as Trump saw it—because the latest employment numbers are even worse than last month’s numbers. Moreover, June’s total payroll number was revised down again in this week’s report, showing that the United States actually lost jobs in June.

June’s job losses—which now come in at -13,000—were then followed by a gain of an unimpressive 79,000 in July, with the new August total coming in at a paltry 22,000. Total job gains have now averaged a measly 29,000 for the past three months. This all suggests a rapidly weakening job market.


https://cdn.mises.org/inline-images/...rvey%20aug.png


Some might point to the household survey—where total employed persons increased by 288,000 in August—as evidence of robust job growth. Unfortunately, the household survey also shows that the employment level is still below where it was in January of this year. That is, according to the household survey, there has been no employment growth at all in 2025, and is actually down by 500,000 employed persons over the past eight months. Over the past three months, job growth in the household survey has come in at an average of 40,000 per month. There’s simply not much good news here.

Another reason for concern is the fact that what job growth we have seen in the household survey has been due increasingly to part-time employment. This is usually a sign of a weakening labour market. Specifically, for August, total full-time employment decreased by 357,000, compared to July. At the same time, part-time employment increased by 597,000. Over the past three months, full-time employment has fallen by an average of 360,000 jobs per month, while part-time has increased, on average, by 477,000.


https://cdn.mises.org/inline-images/pt%20ft%20aug.png


We should not be surprised, then, to find that more and more workers are holding down more than one part-time job to make ends meet. Notably, the total number of multiple job holders with two or more part-time jobs has been trending upward since 2021, and now sits near (at least) a 30-year high.


https://cdn.mises.org/inline-images/...0job%20aug.png


This also helps to explain the discrepancy between the establishment survey and the household survey. The establishment survey includes part-time jobs, while the household survey measures employed persons. There are more jobs out there than there are employed persons, but those employed persons are increasingly having to rely on holding down more than one part-time job in the establishment survey.

The stagnation in total employment is also fueling increasing unemployment. Yesterday, we looked at how the total number of unemployed persons (in the July data) exceeded the number of job openings for the same period. I predicted this would translate into a rising unemployment rate, and today’s data release shows this. The unemployment rate in August rose to 4.3 percent, which is the highest since October 2021. That’s being fueled in part by rapidly rising unemployment among young people. I mentioned yesterday that recent college graduates are now experiencing higher unemployment than all workers overall. Now, we find that, for August, the overall unemployment rate for workers ages 16-24 years rose to 10.5 percent. That’s the highest since April 2021. Excluding the COVID period, we have to go all the way back to July 2016 to find a higher unemployment rate for that age group.



https://cdn.mises.org/inline-images/...2016%20aug.png
Meanwhile, the total number of unemployed persons in August rose to 7.38 million, the highest since September 2021. The number of discouraged workers also increased again in August, rising to 1.79 million.

What Will the Policy Response Be?
The employment numbers are so bad that President Trump has not commented on them as of this writing, and the White House has issued no press release on the topic.

The administration may be hard at work trying to come up with some explanation for why the administration’s flagship policy of raising taxes (i.e., tariffs) on millions of Americans hasn’t produced a boon in new employment. Indeed, the promised renaissance in manufacturing jobs—that was to be fueled by protectionist tariffs—has not materialized. Since April, when Trump announced “liberation day” and hiked new tariffs, the US has lost 42,000 manufacturing jobs.

https://cdn.mises.org/inline-images/lib%20day.png


On the other hand, the continued decline in the job market will help Trump in his repeated calls for more monetary inflation from the Federal Reserve in the name of stimulating job growth. Price inflation remains well above the Fed’s target rate of two percent, and this has fueled resistance at the FOMC to further forcing down the target policy interest rate.

With these latest job numbers, though, it is likely the Fed will want to be seen as “doing something” for the job market, and now the Fed is far more likely to implement another reduction to the target interest rate. This will further add to the historic flood of monetary inflation that has fueled new bubbles in asset prices and has contributed to the dollar losing nearly 25 percent of its purchasing power over that period.

Even with an additional boost to monetary inflation, though, we may see moderation in price inflation (i.e., CPI inflation). As workers become unemployed or underemployed in larger numbers, they will have fewer dollars to bid up prices in many areas measured by the CPI basket of goods. That is, workers will have to cut back on purchases of food, gasoline, and related everyday goods. Rising unemployment will also put downward pressure on home prices. Even if mortgage rates fall, unemployed workers can’t make mortgage payments, regardless of how low rates might fall.

Unfortunately, we are unlikely to see much actual deflation, although it is badly needed. Only deflation can return to consumers some of the purchasing power they lost during the COVID panic and the resulting 40-year highs in CPI inflation that appeared during 2022. Deflation would also help to unravel 20-plus years of easy-money-fueled malinvestment and financial bubbles. Were this to occur, the economy would then be rebuilt along more sustainable lines that conform to actual market demand, in contrast to the easy-money economy of speculative manias that enriches wealthy asset-holders at the expense of ordinary people.

It’s this last point that suggests to us what the central bank will do as employment data worsens and deflationary pressures emerge: the central bank will intervene on the side of wealthy asset owners to ensure that no sizable deflation in asset prices occurs, ensuring that consumers continue to see an evaporation of purchasing power even as their job prospects disappear. We’ll start to hear a lot in the media about how the Fed is working to increase inflation to get it back up to the “two-percent target” to combat “deflationary” pressures—as if deflation were a bad thing.

This is the opposite of what the central bank should do, which is to refrain from any further intervention in the economy. The Fed should stop buying assets of any kind, and allow interest rates to be set by the marketplace instead of by central planners at the Treasury and at the Fed. As a result, asset prices would fall substantially, and the prices would rapidly become more affordable. It would also become possible again for ordinary people to early a decent amount of interest on ordinary savings as interest rates gradually rose. In other words, the economy would—for the first time in decades—begin to swing back in favour of ordinary savers, young workers, and first-time home buyers.

Unfortunately, the Trump administration vehemently opposes any such change and will demand that the central bank intervene to further help Trump’s Wall Street allies.

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.

WWW.AVIELFOREXLEARNINGEDGE.COM

(Bloomberg) -- The People’s Bank of China increased its gold holdings in August for a 10th month, in a continued push to diversify its reserves away from US dollars.
Bullion held by the central bank rose by 0.06 million troy ounces to 74.02 million troy ounces last month, according to data released on Sunday. China began this round of gold purchases in November, accumulating a total of 1.22 million troy ounces over the period.

Gold has notched record highs in recent days, breaking a months-long holding pattern, after bets on US rate cuts and the White House’s attacks on the Federal Reserve provided fresh catalysts for its rally. Bullion has climbed more than 30% this year to above $3,500 an ounce, and any damage to the Fed’s independence could push it near $5,000, according to Goldman Sachs Group Inc.

Globally, the accumulation of gold by central banks has slowed as prices have risen, although geopolitical risks should continue to support demand from the official sector, according to the latest report from the producer-funded World Gold Council.

https://traderfeed.blogspot.com/2025...-approach.html

Friday, September 05, 2025

How We Live Life Is How We Approach Trading

https://blogger.googleusercontent.co...7Xsvtx68sk61BA


9/7/2025 - The most recent post below made the point that how we live our lives shapes the attitudes and behaviours we bring to markets. If we become what we do routinely, the reverse is true: Our trading impacts the rest of our lives. If we become obsessed with our trading, can we expect to be sensitive to others and attentive to our personal needs? If trading becomes an arena for frustration and impulsive actions, can we expect to live the rest of our lives in planned, goal-oriented ways?

How you are trading is shaping the person you're becoming.

That should either inspire you or frighten the hell out of you.

The only path to great trading is your personal path to greatness. Great trading reinforces the ideals you pursue throughout life.

=====================

9/5/2025 - In the long run, our trading processes can be no better than the processes with which we live our lives. Can we expect to carefully structure and express our ideas and manage their risk prudently if we're not conscientious in our personal lives? Can we expect a positive, motivated, energized trading mindset when our day-to-day thoughts are filled with frustration and negativity? Trading with integrity comes from a life of integrity. Making the right decisions and taking the right actions each day strengthens our ability to do so in markets.


My recent post about cats and creativity makes the point that finding unique ways to create loving homes for cats who have been neglected, abused, and/or abandoned has made me more creative and loving. We internalize our daily doing. Disciplined, creative processes for physical exercise, researching opportunities, and--yes--even feeding cats reinforce the right trading strengths.

When we live with integrity, we trade with integrity.
Posted by Brett Steenbarger, Ph.D. at 5:40 AM

WWW.AVIELFOREXLEARNINGEDGE.COM

The Bonfire of the Silver Shorts
September 21, 2023

https://silverseek.com/sites/default...?itok=1huNqsaf
Ted Butler
Butler Research


https://platform-cdn.sharethis.com/i...tter-white.svg

After 40 years of silver price manipulation and suppression on the COMEX, the physical market has experienced a lack of production growth and enhanced demand brought about by too-low silver prices. According to the immutable law of supply and demand, silver is now in a deepening physical shortage in which sharply higher prices are both required and inevitable. The key element that I speak of today is the likely behaviour of the short sellers of silver derivatives. Investors hold 2 billion ounces of silver in industry-standard 1,000-ounce bars and a similar quantity in smaller bars and coins. Since these holdings are owned outright, there is no short position as exists in every derivatives contract, including COMEX futures and options and OTC swap contracts.

The derivatives short positions are mostly on the COMEX, in the form of short sales in futures, call options contracts and also in OTC dealings. Thanks to the detailed information provided in the weekly Commitment of Traders (COT) reports, great clarity is given to the potential exposure of the short sellers in COMEX silver futures contracts. The current total open interest in COMEX silver futures (minus spreads) is around 110,000 contracts, or 550 million ounces.

Again, thanks to the detailed data provided in the COT reports, we further know that the 8 largest commercial shorts hold more than 50,000 contracts net short or the equivalent of 250 million ounces. Other traders in the commercial, non-commercial, and non-reporting categories hold 300 million ounces short. This current net short position of the 8 largest shorts, at 250 million ounces, is of extreme danger to them should silver prices explode, as I believe is in the cards. Often overlooked is the even larger 300 million oz short position held by those outside the big 8’s holdings.

Then, there are the long and short positions held in COMEX silver call options, most of which are “out-of-the-money,” meaning they wouldn’t result in great danger to the short sellers of these options until and unless silver prices rose sharply. Conservatively, the true exposure of the call options on the COMEX is “only” 25,000 contracts of the more than 70,000 contracts of total call option open interest. That would bring the total COMEX futures and call options short exposure to 135,000 contracts (110,000 futures contracts plus 25,000 call options contracts) or 675 million ounces.

That means, for every dollar increase in the price of silver, the longs would make $675 million, and those shorts would lose $675 million. A $5 price increase would amount to a $3.4 billion gain and loss, while a $10 increase would amount to a collective gain and loss of $6.75 billion. Should the price of silver increase much more than that, as I believe, the math is astounding for collective gains and losses. The short-sellers of silver would face a cataclysmic financial setback. For the longs, it would be the stuff of dreams – with unimaginable money and profits raining down from the heavens.

However, for those short, it would be a terrifying financial nightmare. The 675 million ounces held short on the COMEX is mostly held on a margin basis, and should silver prices explode higher, as is inevitable and likely imminent, a margin call “hell” scenario would develop. Virtually all silver shorts will be subjected to daily and perhaps intraday demands to deposit untold additional amounts of margin money with little time to do so. In a sharp price rise of the type I envision, the brokers holding the short positions will not hesitate to buy back customers' short positions with little prior notice, adding additional upward pressure to silver prices.

In addition to the net short derivatives position on the COMEX in silver futures and call options, there is the matter of those short call options on SLV, the big silver ETF, where the true net exposure could easily top 200 million ounces. Finally, there is the OTC derivatives market, where I allege that Bank of America, alone, may have a short exposure of a billion ounces of silver. That’s more than the combined short exposure on the COMEX and in SLV. I’ve complained to the S.E.C. and the Office of the Comptroller of the Currency about BofA’s egregious short position in silver OTC derivatives. In fact, the response I received from the OCC did not dispute my contentions and seemed to confirm them.
https://silverseek.com/article/occs-response

As a commodities broker for many years, I have lived through and observed the type of cataclysmic market events and the effects on those on the wrong side of highly leveraged derivatives positions. A comparable event that comes to mind was the sudden, sharp selloff in the stock market in October 1987, when the Dow Jones Average fell nearly 25% in a day. I personally knew many who had large short positions on put options on stocks that to that point had been extremely profitable, until the stock market broke sharply and the losses suddenly became insurmountable to the point of bankruptcy. A more recent example was the meme stock episode of early 2021, when a stock like GameStop rose by more than 25 times in a few months due largely to short covering.

One of the unintended consequences of the 40-year COMEX silver manipulation and the failure of the regulators (both the CFTC and the industry self-regulator, the CME Group, Inc.) to end the manipulation earlier is that it has lulled those short into believing the current price is somehow normal (otherwise no one would be short). However, just as there is no force more powerful on the price of a commodity than a physical shortage, there is no force more powerful in the world of derivatives than a short-covering panic. The impact on price brought about by an inevitable short-covering buying panic in silver promises to be epic.

The greatest liability and danger rests, unfortunately, on the backs of those shorts apart from the big 8 COMEX shorts. If the 8 big shorts lean into the developing rally by aggressively adding shorts to cap and contain the budding silver rally, then the hundreds of millions of ounces of silver derivatives contracts held short by the unsuspecting non-big 8 shorts may be temporarily spared the financial disaster that awaits them. If the big 8 don’t add aggressively to short positions, the financial nightmare for the unsuspecting shorts goes real-time.

It comes down to whether one thinks the current price of silver represents the true free market price according to the actual law of supply and demand, and not some artificial price we’ve gotten used to following decades of artificial COMEX price-setting. Obviously, those short silver don’t suspect, in the least, that the price has been artificially manipulated – otherwise they would never be short. But if the price wasn’t artificially suppressed and manipulated, then why are we seeing signs of physical shortage abound and clear evidence that the short positions in silver derivatives seem excessive and dangerous to the shorts in numerous data points?

Furthermore, since there is no way on Planet Earth can those collectively shorting more than a billion ounces of silver derivatives can ever acquire the physical silver necessary to close out their short positions by actual delivery, that leaves only the buyback on the various markets of the open short positions as a solution for closing out the massive amounts of shorts. While we await the answers to these questions, it would seem quite dangerous and ill-advised to be short silver in the interim.

Ted Butler
September 21, 2023
www.butlerresearch.com

WWW.AVIELFOREXLEARNINGEDGE.COM

"Not A Jobs Recession": Bessent Doubles Down On Tariffs, Predicts Economic Surge, Slams Goldman & Moody's


https://zh-prod-1cc738ca-7d3b-4a72-b.../picture-5.jpg
by Tyler Durden
Sunday, Sep 07, 2025 - 01:25 PM

Treasury Secretary Scott Bessent pushed back Sunday against growing concerns that the U.S. economy is sliding toward a “jobs recession,” defending the administration’s trade policies, tariffs, and fiscal strategy while signaling confidence that growth will accelerate by year’s end.


https://assets.zerohedge.com/s3fs-pu...?itok=pOkEcUOp


In a wide-ranging interview on NBC’s Meet the Press (full interview at the bottom), Bessent rejected forecasts from economists at Moody’s Analytics and elsewhere who have warned that slowing hiring trends and manufacturing job losses point to deeper weakness. Instead, he argued that recent data is noisy, revisions are likely, and that President Donald Trump’s economic agenda remains on track to deliver a "substantial acceleration" in the fourth quarter.

Host Kristen Welker opened the interview by citing Moody’s chief economist Mark Zandi, who recently described the U.S. slowdown as a "jobs recession." Asked if he agreed, Bessent pushed back:

"We’re not going to do economic policy off of one number," Bessent said. "Good policies are in place that are going to create good high-paying jobs for the American people."

He added that August is "the noisiest month of the year" for employment data and stressed that significant revisions are common: "We need good data before we jump to conclusions."

Tariffs at the Center of the Debate
Pressed on manufacturing job losses since the April rollout of the administration’s new tariffs, Bessent urged patience, noting that factories "can’t be built overnight" citing a "record amount of investment intentions" already underway.

He highlighted July’s passage of the administration’s flagship tax and infrastructure package - the One Big Beautiful Bill, which included full expensing for factories and equipment. According to Bessent, many companies were "holding back" investment until the bill passed and are now planning major capital expenditures and expansions.

Still, U.S. manufacturing employment has declined by 42,000 jobs since April, even as the White House has promised a "manufacturing renaissance"” Bessent attributed some of the perceived weakness to flawed data collection and suggested that upcoming revisions could wipe out hundreds of thousands of jobs previously reported under the Biden administration.

"We’re going to get revisions next week that may be as big as an 800,000-job downward revision," Bessent said. "I’m not sure what these people who collect the data have been doing, but we need good data."

Clash Over Tariff Costs
The interview grew tense as Welker pressed Bessent on widespread reports from U.S. manufacturers that tariffs are increasing costs and forcing layoffs.
Companies including John Deere, Nike, Black+Decker, and the Big Three automakers have warned investors that tariffs are adding hundreds of millions - in some cases billions - in unexpected expenses. Goldman Sachs recently estimated that 86% of tariff costs have ultimately been borne by U.S. companies and consumers.

Bessent rejected those conclusions outright.
"For every John Deere, we have companies telling us the tariffs have helped their business," he said, citing meetings with executives at Treasury. "They’re increasing capital expenditures and expanding employment. And if things are so bad, why was GDP up 3.3% and why is the stock market at a new high?"
When asked directly whether tariffs amount to a tax on U.S. consumers, Bessent responded flatly: "No, I don’t."

He also dismissed Goldman Sachs’s analysis, quipping: "I made a good career trading against Goldman Sachs."

Did he though?

Legal Battle Over Reciprocal Tariffs
Beyond the economic debate, the administration faces a significant legal challenge. An appeals court recently ruled that the administration’s use of reciprocal tariffs violated the Constitution, concluding that only Congress can impose taxes unless specific authority is granted to the president.

The administration has appealed the ruling to the Supreme Court, and Bessent expressed confidence that the justices will uphold the tariffs, citing President Trump’s authority under the International Emergency Economic Powers Act (IEEPA).

"I’m not sure on what planet, with 100,000 to 200,000 Americans dying every year from fentanyl, the president shouldn’t be able to use tariffs to stop poison coming across the border," Bessent said.

If the Supreme Court rules against the administration, Bessent acknowledged that the Treasury would be required to refund roughly half the tariff revenues collected — a move he warned would be “terrible for the Treasury.”

Setting Interest Rates and the Search for a New Fed Chair
The administration has also begun the search for a successor to Federal Reserve Chair Jerome Powell, whose term expires in May. Bessent confirmed that interviews began Friday and emphasized that the White House is seeking a leader with an “open mind” and a willingness to adapt to what he described as an “AI-driven productivity boom.”

"Alan Greenspan saw the impact of the internet in the 1990s," Bessent said. "We believe we’re in a similar period now."
Bessent also criticized the Federal Reserve’s forecasting record, accusing it of consistent bias.

"The Fed has overestimated GDP when Democrats were in office and underestimated GDP when Republicans are in office," he continued. "We need to get rid of the orthodoxy that has led them to so many mistakes."

Asked directly whether President Trump would control interest rates, Bessent clarified:

"The Fed chair doesn’t set interest rates. The FOMC sets interest rates. So it is a board."

He added that President Trump would "make his views known" on policy direction, much like President Biden and Sen. Elizabeth Warren did when they publicly pushed for rate cuts during the prior administration.

Escalating Pressure on Russia
The interview ended with foreign policy developments following Russia’s largest aerial attack on Kyiv since the start of the war. Bessent said the administration is coordinating closely with European allies on a package of expanded sanctions and secondary tariffs targeting nations that continue purchasing Russian oil.

"We’re in a race between how long the Ukrainian military can hold up versus how long the Russian economy can hold up," Bessent said. "If the U.S. and the E.U. move together, the Russian economy will be in full collapse - and that will bring President Putin to the table."

The Bigger Picture
Bessent’s interview underscored the high stakes surrounding the administration’s trade, fiscal, and monetary policies. Despite warnings from Wall Street, U.S. manufacturers, and some Federal Reserve officials, the Treasury chief doubled down on tariffs as a central pillar of the administration’s strategy and expressed confidence that the economy will reaccelerate later this year.

The Supreme Court’s pending decision on tariff authority, upcoming revisions to jobs data, and the White House’s Fed chair nomination could all shape market sentiment heading into 2025.

"President Trump was elected for change," Bessent said. "And we are going to push through with the economic policies that are going to set the economy right."

Full interview below:

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