Friday, 3 December 2021 — Baltimore, Maryland

By Bill Bonner Editor, The Rum Rebellion

[4 min read]

• Cold comfort
• Future of expensive scarcity
• Costly transition
• Cold War on fossil fuels

Dear Reader,

‘Winter is coming.’

 Game of Thrones

This week, Federal Reserve Chair Jerome Powell told Congress that he may ‘taper’ a little faster than expected in order to squelch inflation.

As it is, inflation is running hot. And the Fed’s enthusiasm for stopping it is, at best, tepid.

As we showed last month, the Fed would have to put its key lending rate up to nearly 10% (it’s currently less than one-10^th of 1%) in order to achieve the same tightening effect as then Fed Chair Paul Volcker got in 1980.

Powell says the Fed is planning to remove US$15 billion per month from its bond-buying program…ending it completely by the middle of next year.

In other words, no ‘tightening’ is planned, just a very timid cutback on loosening.

And John C Williams, head of the New York Fed, says his august organisation will now ‘grapple’ with what to do next.

Cold comfort

It comes as no comfort to us to know that the Fed is grappling with policy changes. Its policies have made a colossal mess of the economy and its markets. And it shows no hint of having learned anything.

Here at the Diary, we have followed the Fed for more than 20 years, chronicling its clownish missteps and dumbbell mistakes.

We have not been shy about predicting where this will lead — to a disaster of corruption, runaway debt, and inflation…and an eventual blow-up of the whole system.

For what else can you expect when the central government spends far more than the nation can afford…the central bank papers over its deficits with newly printed money…and the elite gets richer and richer?

Future of expensive scarcity

‘You’re way too negative’, say some dear readers.

‘Don’t be so cynical’, say others.

Maybe they’re right.

The future always surprises us. And it will be a surprise to us all — including your editor — if things develop precisely as we foresee. Maybe we will muddle through without a real disaster, after all.

But what if the surprise comes from the other direction? What if we have been too Panglossian in our outlook, lacking the imagination to see the immensity of the catastrophe awaiting us?

Our view of the future is usually nothing more than a limp extrapolation of today. But let’s try to see what lies ahead in a different, more pernicious light.

That is…we will walk ahead…and look back at what the policymakers have wrought, giving you a brief history of tomorrow.

Sometime…maybe two years from now…maybe 10…you go to the supermarket. You find a gallon of milk priced at $49. Bacon isn’t $10 a pound; it’s $100.

And your favourite breakfast cereal? It’s not there at all. Sometimes, half the shelves are empty.

‘Supply chain disruptions’, they say.

Politicians blame ‘greedy middlemen’ for ‘price gouging’. A House Committee promises an investigation of ‘market manipulation’. President Pete Buttigieg calls for another stimmy cheque ‘to help hard-pressed American families.’

Winter is coming, the cold bites.

Costly transition

‘Something is going seriously wrong’, you tell yourself. ‘Nature has turned against us.’

But the fault lies not in our stars, but in ourselves. And it’s more than just $50 for a pound of beef…or a $1,000 monthly electricity bill. This mid winter nightmare gets worse, much worse.

On your drive to the gas station, you detour to avoid a group of protestors/looters, who are burning tires in the middle of the road. You don’t want to get stopped by them. They will pull you from your car and beat you to death right in the street.

And then, when you see the prices at the pumps, you may want to murder someone, too. You paid just $39 for a gallon of regular the week before. Now, it is $45.

And then, there’s no gas at all.

Well, what would you expect?

The world’s leading governments embarked on a ‘Great Transition’ away from fossil fuel. At the United Nations COP26 Climate Change Conference in 2021, they aimed to cut the use of gas, coal, and oil in half by 2035.

It would cost US$150 trillion, said US Secretary of the Treasury Janet Yellen.

But all the major nations were already running huge deficits. The only way they could fund the ‘transition’ — along with their marvellous ‘social infrastructure’ programs — was by printing money.

Cold War on fossil fuels

Thus did the great nations light a stick of dynamite at both ends.

It was fossil fuel that made it possible to feed, clothe, and house eight billion people.

There were fewer than two billion people on the planet in 1900. Solar energy, sequestered in oil, gas, and coal, made it possible to quadruple the population.

But take away the fossil fuel, and what would those extra six billion people eat? Where would they live? How would they keep warm?

And pay for this transition with fake money? Even in 2021, the inflation rate in the US was running at 6%. Wasn’t it obvious that printing more money would make it worse?

The policymakers said they would replace oil, gas, and coal, with solar, wind, and geothermal energy. But in 2021, ‘renewables’ only represented, effectively, about 5% of the world’s total energy supplies — even after four decades of investment and development.

And tractors didn’t run on solar power or windmills; they ran on gasoline, which had gotten scarce.

And where was the mystery in that?

When governments turned off traditional energy sources…while subsidising and bankrolling ‘green’ energy with trillions in newly printed money…they set in motion supply-side disruptions that proved…well…fatal.

Tune in next week for the tragic denouement.

Regards,

Bill Bonner,
For The Rum Rebellion

By Cory Bernardi Editor, Cory Bernardi Confidential

Parliaments are meant to act as a robust check on the excesses of power.

That’s necessary because politicians always think the reasons their policies aren’t working is because there wasn’t enough money allocated or they had too many people interfering in the decision-making process.

I am yet to meet a political leader, one who is actually leading a government, who actively looks for that government to do less rather than more.

Every policy failure helps them to make all sorts of rational justifications for their desire to centralise authority. But more often than not, it is the centralisation of authority and the lack of scrutiny and accountability that is the problem in the first place.

The Victorian government is the best Australian example of this.

The centralised and unaccountable decision making at the start of the pandemic cost the lives of more than 800 Australians. Countless more were associated victims as lockdowns, curfews, and other questionable health measures were imposed.

They broke businesses, drained bank accounts, and ruined lives.

Some of us warned about the perils of granting state premiers ‘emergency powers’ and the potential abuse of process they represented.

Emergency powers were clearly an opportunity to impose an iron fist on the state, and it’s quite clear that Victorian Premier Daniel Andrews has not missed any chance to do so.

Earlier this year, Andrews sought a permanent extension of that dictatorial authority through the Pandemic Management Bill.

It concerned many civil libertarians; those concerned with the rule of law and those familiar with the irresistible lust of politicians for power.

That sentiment was noted by critical upper house crossbench MP Rod Barton, who said earlier this year:

‘To have this completely open-ended leaves us having to rely on faith that future leaders will not exploit this vague legislation. This is not good enough.’

Given the Andrews government’s track record, it’s not just future leaders we should be concerned about.

In any event, Barton, from the Transport Matters Party, changed his mind and his vote allowed the bill to pass.

He claims that safeguards on arbitrary detention have been built in, but this is sheer sophistry.

No single person or political committee should be able to curtail the liberties of any citizens with no reference to parliament or the judicial system.

This is simply an outrageous step for any government in Australia to take.

And, I am sorry to say, the insatiable desire for power isn’t limited to hard left Labor governments either. Soft left Liberal ones aren’t that different.

South Australia’s Marshall government sought a permanent extension of their emergency powers earlier this year. It was only the pushback by some principled Liberal MPs that forced Marshall to abandon his own plans.

But now that the Victorian legislation has passed, it won’t be long before others follow suit, citing Victoria as justification.

I regret to say that this country has already taken steps toward tyranny that most of us could never have envisaged.

It’s been justified to save us all while governments sought to eliminate an invisible enemy.

Whatever threat this virus or any future one may pose to the populace, it pales in comparison to the danger of granting almost unfettered power to our politicians.

Regards,

Cory Bernardi,
For The Rum Rebellion

PS: To sign up to Cory’s free weekly email, Cory Bernardi Confidential, click here.