New Stiglitz just dropped.

Here's the inflation story everyone believes (warning: it's false): America gave the poor too much money during the recession, and now the economy is awash with free money, which made them so rich they're refusing to work, meaning the economy isn't making anything. Prices are soaring due to increased cash and missing labor.

Lawrence Summers says there's only one answer. We must impoverish the poor: raise interest rates, cause a recession, and eliminate millions of jobs, until the poor are stripped of their underserved fortunes and return to work.

https://pluralistic.net/2021/11/20/quiet-part-out-loud/#profiteering

This is nonsense. Countries around the world suffered inflation during and after lockdowns, whether they gave out humanitarian money to keep people from starvation. America has slightly greater inflation than other OECD countries, but it's not due to big relief packages.

The Causes of and Responses to Today's Inflation, a Roosevelt Institute report by Nobel-winning economist Joseph Stiglitz and macroeconomist Regmi Ira, debunks this bogus inflation story and offers a more credible explanation for inflation.

https://rooseveltinstitute.org/wp-content/uploads/2022/12/RI CausesofandResponsestoTodaysInflation Report 202212.pdf

Sharp interest rate hikes exacerbate the slump and increase inflation, the authors argue. They compare monetary policy inflation cures to medieval bloodletting, where doctors repeated the same treatment until the patient recovered (for which they received credit) or died (which was more likely).

Let's discuss bloodletting. Inflation hawks warn of the wage price spiral, when inflation rises and powerful workers bargain for higher pay, driving up expenses, prices, and wages. This is the fairy-tale narrative of the 1970s, and it's true except that OPEC's embargo drove up oil prices, which produced inflation. Oh well.

Let's be generous to seventies-haunted inflation hawks and say we're worried about a wage-price spiral. Fantastic! No. Real wages are 2.3% lower than they were in Oct 2021 after peaking in June at 4.8%.

Why did America's powerful workers take a paycut rather than demand inflation-based pay? Weak unions, globalization, economic developments.

Workers don't expect inflation to rise, so they're not requesting inflationary hikes. Inflationary expectations have remained moderate, consistent with our data interpretation.

https://www.newyorkfed.org/microeconomics/sce#/

Neither are workers. Working people see surplus savings as wealth and spend it gradually over their lives, despite rising demand. People may have saved money by staying in during the lockdown, but they don't eat out every night to make up for it. Instead, they keep those savings as precautionary balances. This is why the economy is lagging.

People don't buy non-traded goods with pandemic savings (basically, imports). Imports don't multiply like domestic purchases. If you buy a loaf of bread from the corner baker for $1 and they spend it at the tavern across the street, that dollar generates $3 in economic activity. Spending a dollar on foreign goods leaves the country and any multiplier effect happens there, not in the US.

Only marginally higher wages. The ECI is up 1.6% from 2019. Almost all gains went to the 25% lowest-paid Americans. Contrary to the inflation worry about too much savings, these workers don't make enough to save, even post-pandemic.

Recreation and transit spending are at or below pre-pandemic levels. Higher food and hotel prices (which doesn’t mean we’re buying more food than we were in 2019, just that it costs more).

What causes inflation if not greedy workers, free money, and high demand? The most expensive domestic goods produce the biggest revenues for their manufacturers. They charge you more without paying their workers or suppliers more.

The largest price-gougers are funneling their earnings to rich people who store it offshore through stock buybacks and dividends. A $1 billion stock buyback doesn't buy $1 billion in bread.

Five factors influence US inflation today:

I. Price rises for energy and food

II. shifts in consumer tastes

III. supply interruptions (mainly autos);

IV. increased rents (due to telecommuting);

V. monopoly (AKA price-gouging).

None can be remedied by raising interest rates or laying off workers.

Russia's invasion of Ukraine, omicron, and China's Zero Covid policy all disrupted the flow of food, energy, and production inputs. The price went higher because we made less.

After Russia invaded Ukraine, oil prices spiked, and sanctions made it worse. But that was February. By October, oil prices had returned to pre-pandemic, 2015 levels attributable to global economic adjustments, including a shift to renewables. Every new renewable installation reduces oil consumption and affects oil prices.

High food prices have a simple solution. The US and EU have bribed farmers not to produce for 50 years. If the war continues, this program may end, and food prices may decline.

Demand changes. We want different things than in 2019, not more. During the lockdown, people substituted goods. Half of the US toilet-paper supply in 2019 was on commercial-sized rolls. This is created from different mills and stock than our toilet paper.

Lockdown pushed toilet paper demand to residential rolls, causing shortages (the TP hoarding story was just another pandemic urban legend). Because supermarket stores don't have accounts with commercial paper distributors, ordering from languishing stores was difficult. Kleenex and paper towel substitutions caused greater shortages.

All that drove increased costs in numerous product categories, and there were more cases. These increases are transient, caused by supply chain inefficiencies that are resolving.

Demand for frontline staff saw a one-time repricing of pay, which is being recouped as we speak.

Illnesses. Brittle, hollowed-out global supply chains aggravated this. The constant pursuit of cheap labor and minimal regulation by monopolies that dominate most sectors means things are manufactured in far-flung locations. Financialization means any surplus capital assets were sold off years ago, leaving firms with little production slack. After the epidemic, several of these systems took years to restart.

Automobiles are to blame. Financialization and monopolization consolidated microchip and auto production in Taiwan and China. When the lockdowns came, these worldwide corporations cancelled their chip orders, and when they placed fresh orders, they were at the back of the line.

That drove up car prices, which is why the US has slightly higher inflation than other wealthy countries: the economy is car-centric. Automobile prices account for 9% of the CPI. France: 3.6%

Rent shocks and telecommuting. After the epidemic, many professionals moved to exurbs, small towns, and the countryside to work from home. As commercial properties were vacated, it was impractical to adapt them for residential use due to planning restrictions. Addressing these restrictions will cut rent prices more than raising inflation rates, which halts housing construction.

Statistical mirages cause some rent inflation. The CPI estimates what homeowners would pay to rent their properties. When rents rise in your neighborhood, the CPI believes you're spending more on rent even if you have a 30-year fixed-rate mortgage.

Market dominance. Almost every area of the US economy is dominated by monopolies, whose CEOs disclose on investor calls that they use inflation scares to jack up prices and make record profits.

https://pluralistic.net/2022/02/02/its-the-economy-stupid/#overinflated

Long-term profit margins are rising. Markups averaged 26% from 1960-1980. 2021: 72%. Market concentration explains 81% of markup increases (e.g. monopolization). Profit margins reach a 70-year high in 2022. These elements interact. Monopolies thin out their sectors, making them brittle and sensitive to shocks.

If we're worried about a shrinking workforce, there are more humanitarian and sensible solutions than causing a recession and mass unemployment. Instead, we may boost US production capacity by easing workers' entry into the workforce.

https://pluralistic.net/2022/06/01/factories-to-condos-pipeline/#stuff-not-money

US female workforce participation ranks towards the bottom of developed countries. Many women can't afford to work due to America's lack of daycare, low earnings, and bad working conditions in female-dominated fields. If America doesn't have enough workers, childcare subsidies and minimum wages can help.

By contrast, driving the country into recession with interest-rate hikes will reduce employment, and the last recruited (women, minorities) are the first fired and the last to be rehired. Forcing America into recession won't enhance its capacity to create what its people want; it will degrade it permanently.

Nothing the Fed does can stop price hikes from international markets, lack of supply chain investment, COVID-19 disruptions, climate change, the Ukraine war, or market power. They can worsen it. When supply problems generate inflation, raising interest rates decreases investments that can remedy shortages.

Increasing interest rates won't cut rents since landlords pass on the expenses and high rates restrict investment in new dwellings where tenants could escape the costs.

Fixing the supply fixes supply-side inflation. Increase renewables investment (as the Inflation Reduction Act does). Monopolies can be busted (as the IRA does). Reshore key goods (as the CHIPS Act does). Better pay and child care attract employees.

Windfall taxes can claw back price-gouging corporations' monopoly earnings.

https://pluralistic.net/2022/03/15/sanctions-financing/#soak-the-rich

In 2008, we ruled out fiscal solutions (bailouts for debtors) and turned to monetary policy (bank bailouts). This preserved the economy but increased inequality and eroded public trust.

Monetary policy won't help. Even monetary policy enthusiasts recognize an 18-month lag between action and result. That suggests monetary tightening is unnecessary. Like the medieval bloodletter, central bankers whose interest rate hikes don't work swiftly may do more of the same, bringing the economy to its knees.

Interest rates must rise. Zero-percent interest fueled foolish speculation and financialization. Increasing rates will stop this. Increasing interest rates will destroy the economy and dampen inflation.

Then what? All recent evidence indicate to inflation decreasing on its own, as the authors argue. Supply side difficulties are finally being overcome, evidence shows. Energy and food prices are showing considerable mean reversion, which is disinflationary.

The authors don't recommend doing nothing. Best case scenario, they argue, is that the Fed won't keep raising interest rates until morale improves.

Who is AMTD Digital?

An unknown Hong Kong corporation joined the global megacaps worth over $500 billion on Tuesday.

The American Depository Share (ADS) with the ticker code HKD gapped at the open, soaring 25% over the previous closing price as trading began, before hitting an intraday high of $2,555.

At its peak, its market cap was almost $450 billion, more than Facebook parent Meta or Alibaba.

Yahoo Finance reported a daily volume of 350,500 shares, the lowest since the ADS began trading and much below the average of 1.2 million.

Despite losing a fifth of its value on Wednesday, it's still worth more than Toyota, Nike, McDonald's, or Walt Disney.

The company sold 16 million shares at $7.80 each in mid-July, giving it a $1 billion market valuation.

Why the boom?

That market cap seems unjustified.

According to SEC reports, its income-generating assets barely topped $400 million in March. Fortune's emails and calls went unanswered.

Website discloses little about company model. Its one-minute business presentation film uses a Star Wars–like design to sell the company as a "one-stop digital solutions platform in Asia"

The SEC prospectus explains.

AMTD Digital sells a "SpiderNet Ecosystems Solutions" kind of club membership that connects enterprises. This is the bulk of its $25 million annual revenue in April 2021.

Pretax profits have been higher than top line over the past three years due to fair value accounting gains on Appier, DayDayCook, WeDoctor, and five Asian fintechs.

AMTD Group, the company's parent, specializes in investment banking, hotel services, luxury education, and media and entertainment. AMTD IDEA, a $14 billion subsidiary, is also traded on the NYSE.

“Significant volatility”

Why AMTD Digital listed in the U.S. is unknown, as it informed investors in its share offering prospectus that could delist under SEC guidelines.

Beijing's red tape prevents the Sarbanes-Oxley Board from inspecting its Chinese auditor.

This frustrates Chinese stock investors. If the U.S. and China can't achieve a deal, 261 Chinese companies worth $1.3 trillion might be delisted.

Calvin Choi left UBS to become AMTD Group's CEO.

His capitalist background and status as a Young Global Leader with the World Economic Forum don't stop him from praising China's Communist party or celebrating the "glory and dream of the Great Rejuvenation of the Chinese nation" a century after its creation.

Despite having an executive vice chairman with a record of battling corruption and ties to Carrie Lam, Beijing's previous proconsul in Hong Kong, Choi is apparently being targeted for a two-year industry ban by the city's securities regulator after an investor accused Choi of malfeasance.

Some CMIG-funded initiatives produced money, but he didn't give us the proceeds, a corporate official told China's Caixin in October 2020. We don't know if he misappropriated or lost some money.

A seismic anomaly

In fundamental analysis, where companies are valued based on future cash flows, AMTD Digital's mind-boggling market cap is a statistical aberration that should occur once every hundred years.

AMTD Digital doesn't know why it's so valuable. In a thank-you letter to new shareholders, it said it was confused by the stock's performance.

Since its IPO, the company has seen significant ADS price volatility and active trading volume, it said Tuesday. "To our knowledge, there have been no important circumstances, events, or other matters since the IPO date."

Permabears awoke after the jump. Jim Chanos asked if "we're all going to ignore the $400 billion meme stock in the room," while Nate Anderson called AMTD Group "sketchy."

It happened the same day SEC Chair Gary Gensler praised the 20th anniversary of the Sarbanes-Oxley Act, aimed to restore trust in America's financial markets after the Enron and WorldCom accounting fraud scandals.

The run-up revived unpleasant memories of Robinhood's decision to limit retail investors' ability to buy GameStop, regarded as a measure to protect hedge funds invested in the meme company.

Why wasn't HKD's buy button removed? Because retail wasn't behind it?" tweeted Gensler on Tuesday. "Real stock fraud. "You're worthless."

(The author's opinions should not be used to make investment decisions or as a recommendation to invest.)

The pandemic and social media pseudoscience have made us all epidemiologists, for better or worse. Flattening the curve, social distancing, lockdowns—remember? Some of you may remember R0 (R naught), the number of healthy humans the average COVID-infected person infects. Thankfully, the world has moved on from Greater China's nightmare. Politicians have refocused their talent for misdirection on getting their constituents invested in the war for Russian Reunification or Russian Aggression, depending on your side of the iron curtain.

Humanity battles two fronts. A war against an invisible virus (I know your Commander in Chief might have told you COVID is over, but viruses don't follow election cycles and their economic impacts linger long after the last rapid-test clinic has closed); and an undeclared World War between US/NATO and Eurasia/Russia/China. The fiscal and monetary authorities' current policies aim to mitigate these two conflicts' economic effects.

Since all politicians are short-sighted, they usually print money to solve most problems. Printing money is the easiest and fastest way to solve most problems because it can be done immediately without much discussion. The alternative—long-term restructuring of our global economy—would hurt stakeholders and require an honest discussion about our civilization's state. Both of those requirements are non-starters for our short-sighted political friends, so whether your government practices capitalism, communism, socialism, or fascism, they all turn to printing money-ism to solve all problems.

Free money stimulates demand, so people buy crap. Overbuying shit raises prices. Inflation. Every nation has food, energy, or goods inflation. The once-docile plebes demand action when the latter two subsets of inflation rise rapidly. They will be heard at the polls or in the streets. What would you do to feed your crying hungry child?

Global central banks During the pandemic, the Fed, PBOC, BOJ, ECB, and BOE printed money to aid their governments. They worried about inflation and promised to remove fiat liquidity and tighten monetary conditions.

Imagine Nate Diaz's round-house kick to the face. The financial markets probably felt that way when the US and a few others withdrew fiat wampum. Sovereign debt markets suffered a near-record bond market rout.

The undeclared WW3 is intensifying, with recent gas pipeline attacks. The global economy is already struggling, and credit withdrawal will worsen the situation. The next pandemic, the Yield Curve Control (YCC) virus, is spreading as major central banks backtrack on inflation promises. All central banks eventually fail.

Here's a scorecard.

In order to save its financial system, BOE recently reverted to Quantitative Easing (QE).

BOJ Continuing YCC to save their banking system and enable affordable government borrowing.

ECB printing money to buy weak EU member bonds, but will soon start Quantitative Tightening (QT).

PBOC Restarting the money printer to give banks liquidity to support the falling residential property market.

Fed raising rates and QT-shrinking balance sheet.

80% of the world's biggest central banks are printing money again. Only the Fed has remained steadfast in the face of a financial market bloodbath, determined to end the inflation for which it is at least partially responsible—the culmination of decades of bad economic policies and a world war.

YCC printing is the worst for fiat currency and society. Because it necessitates central banks fixing a multi-trillion-dollar bond market. YCC central banks promise to infinitely expand their balance sheets to keep a certain interest rate metric below an unnatural ceiling. The market always wins, crushing humanity with inflation.

BOJ's YCC policy is longest-standing. The BOE joined them, and my essay this week argues that the ECB will follow. The ECB joining YCC would make 60% of major central banks follow this terrible policy. Since the PBOC is part of the Chinese financial system, the number could be 80%. The Chinese will lend any amount to meet their economic activity goals.

The BOE committed to a 13-week, GBP 65bn bond price-fixing operation. However, BOEs YCC may return. If you lose to the market, you're stuck. Since the BOE has announced that it will buy your Gilt at inflated prices, why would you not sell them all? Market participants taking advantage of this policy will only push the bank further into the hole it dug itself, so I expect the BOE to re-up this program and count them as YCC.

In a few trading days, the BOE went from a bank determined to slay inflation by raising interest rates and QT to buying an unlimited amount of UK Gilts. I expect the ECB to be dragged kicking and screaming into a similar policy. Spoiler alert: big daddy Fed will eventually die from the YCC virus.

Threadneedle St, London EC2R 8AH, UK

Before we discuss the BOE's recent missteps, a chatroom member called the British royal family the Kardashians with Crowns, which made me laugh. I'm sad about royal attention. If the public was as interested in energy and economic policies as they are in how the late Queen treated Meghan, Duchess of Sussex, UK politicians might not have been able to get away with energy and economic fairy tales.

The BOE printed money to recover from COVID, as all good central banks do. For historical context, this chart shows the BOE's total assets as a percentage of GDP since its founding in the 18th century.

The UK has had a rough three centuries. Pandemics, empire wars, civil wars, world wars. Even so, the BOE's recent money printing was its most aggressive ever!

BOE Total Assets as % of GDP (white) vs. UK CPI

Now, inflation responded slowly to the bank's most aggressive monetary loosening. King Charles wishes the gold line above showed his popularity, but it shows his subjects' suffering.

The BOE recognized early that its money printing caused runaway inflation. In its August 2022 report, the bank predicted that inflation would reach 13% by year end before aggressively tapering in 2023 and 2024.

Aug 2022 BOE Monetary Policy Report

The BOE was the first major central bank to reduce its balance sheet and raise its policy rate to help.

The BOE first raised rates in December 2021. Back then, JayPow wasn't even considering raising rates.

UK policymakers, like most developed nations, believe in energy fairy tales. Namely, that the developed world, which grew in lockstep with hydrocarbon use, could switch to wind and solar by 2050. The UK's energy import bill has grown while coal, North Sea oil, and possibly stranded shale oil have been ignored.

WW3 is an economic war that is balkanizing energy markets, which will continue to inflate. A nation that imports energy and has printed the most money in its history cannot avoid inflation.

The chart above shows that energy inflation is a major cause of plebe pain.

The UK is hit by a double whammy: the BOE must remove credit to reduce demand, and energy prices must rise due to WW3 inflation. That's not economic growth.

Boris Johnson was knocked out by his country's poor economic performance, not his lockdown at 10 Downing St. Prime Minister Truss and her merry band of fools arrived with the tried-and-true government remedy: goodies for everyone.

She released a budget full of economic stimulants. She cut corporate and individual taxes for the rich. She plans to give poor people vouchers for higher energy bills. Woohoo! Margret Thatcher's new pants suit.

My buddy Jim Bianco said Truss budget's problem is that it works. It will boost activity at a time when inflation is over 10%. Truss' budget didn't include austerity measures like tax increases or spending cuts, which the bond market wanted. The bond market protested.

30-year Gilt yield chart. Yields spiked the most ever after Truss announced her budget, as shown. The Gilt market is the longest-running bond market in the world.

The Gilt market showed the pole who's boss with Cardi B.

Before this, the BOE was super-committed to fighting inflation. To their credit, they raised short-term rates and shrank their balance sheet. However, rapid yield rises threatened to destroy the entire highly leveraged UK financial system overnight, forcing them to change course.

Accounting gimmicks allowed by regulators for pension funds posed a systemic threat to the UK banking system. UK pension funds could use interest rate market levered derivatives to match liabilities. When rates rise, short rate derivatives require more margin. The pension funds spent all their money trying to pick stonks and whatever else their sell side banker could stuff them with, so the historic rate spike would have bankrupted them overnight. The FT describes BOE-supervised chicanery well.

To avoid a financial apocalypse, the BOE in one morning abandoned all their hard work and started buying unlimited long-dated Gilts to drive prices down.

Another reminder to never fight a central bank. The 30-year Gilt is shown above. After the BOE restarted the money printer on September 28, this bond rose 30%. Thirty-fucking-percent! Developed market sovereign bonds rarely move daily. You're invested in His Majesty's government obligations, not a Chinese property developer's offshore USD bond.

The political need to give people goodies to help them fight the terrible economy ran into a financial reality. The central bank protected the UK financial system from asset-price deflation because, like all modern economies, it is debt-based and highly levered. As bad as it is, inflation is not their top priority. The BOE example demonstrated that. To save the financial system, they abandoned almost a year of prudent monetary policy in a few hours. They also started the endgame.

Let's play Central Bankers Say the Darndest Things before we go to the continent (and sorry if you live on a continent other than Europe, but you're not culturally relevant).

Pre-meltdown BOE output:

FT, October 17, 2021 On Sunday, the Bank of England governor warned that it must act to curb inflationary pressure, ignoring financial market moves that have priced in the first interest rate increase before the end of the year.

On July 19, 2022, Gov. Andrew Bailey spoke. Our 2% inflation target is unwavering. We'll do our job.

August 4th 2022 MPC monetary policy announcement According to its mandate, the MPC will sustainably return inflation to 2% in the medium term.

Catherine Mann, MPC member, September 5, 2022 speech. Fast and forceful monetary tightening, possibly followed by a hold or reversal, is better than gradualism because it promotes inflation expectations' role in bringing inflation back to 2% over the medium term.

When their financial system nearly collapsed in one trading session, they said:

The Bank of England's Financial Policy Committee warned on 28 September that gilt market dysfunction threatened UK financial stability. It advised action and supported the Bank's urgent gilt market purchases for financial stability.

It works when the price goes up but not down. Is my crypto portfolio dysfunctional enough to get a BOE bailout?

Next, the EU and ECB. The ECB is also fighting inflation, but it will also succumb to the YCC virus for the same reasons as the BOE.

Frankfurt am Main, ECB Tower, Sonnemannstraße 20, 60314

Only France and Germany matter economically in the EU. Modern European history has focused on keeping Germany and Russia apart. German manufacturing and cheap Russian goods could change geopolitics.

France created the EU to keep Germany down, and the Germans only cooperated because of WWII guilt. France's interests are shared by the US, which lurks in the shadows to prevent a Germany-Russia alliance. A weak EU benefits US politics. Avoid unification of Eurasia. (I paraphrased daddy Felix because I thought quoting a large part of his most recent missive would get me spanked.)

As with everything, understanding Germany's energy policy is the best way to understand why the German economy is fundamentally fucked and why that spells doom for the EU. Germany, the EU's main economic engine, is being crippled by high energy prices, threatening a depression. This economic downturn threatens the union. The ECB may have to abandon plans to shrink its balance sheet and switch to YCC to save the EU's unholy political union.

France did the smart thing and went all in on nuclear energy, which is rare in geopolitics. 70% of electricity is nuclear-powered. Their manufacturing base can survive Russian gas cuts. Germany cannot.

My boy Zoltan made this great graphic showing how screwed Germany is as cheap Russian gas leaves the industrial economy.

$27 billion of Russian gas powers almost $2 trillion of German economic output, a 75x energy leverage. The German public was duped into believing the same energy fairy tales as their politicians, and they overwhelmingly allowed the Green party to dismantle any efforts to build a nuclear energy ecosystem over the past several decades. Germany, unlike France, must import expensive American and Qatari LNG via supertankers due to Nordstream I and II pipeline sabotage.

American gas exports to Europe are touted by the media. Gas is cheap because America isn't the Western world's swing producer. If gas prices rise domestically in America, the plebes would demand the end of imports to avoid paying more to heat their homes.

German goods would cost much more in this scenario. German producer prices rose 46% YoY in August. The German current account is rapidly approaching zero and will soon be negative.

German PPI Change YoY

German Current Account

The reason this matters is a curious construction called TARGET2. Let’s hear from the horse’s mouth what exactly this beat is:

TARGET2 is the real-time gross settlement (RTGS) system owned and operated by the Eurosystem. Central banks and commercial banks can submit payment orders in euro to TARGET2, where they are processed and settled in central bank money, i.e. money held in an account with a central bank.

Source: ECB

Let me explain this in plain English for those unfamiliar with economic dogma.

This chart shows intra-EU credits and debits. TARGET2. Germany, Europe's powerhouse, is owed money. IOU-buying Greeks buy G-wagons. The G-wagon pickup truck is badass.

If all EU countries had fiat currencies, the Deutsche Mark would be stronger than the Italian Lira, according to the chart above. If Europe had to buy goods from non-EU countries, the Euro would be much weaker. Credits and debits between smaller political units smooth out imbalances in other federal-provincial-state political systems. Financial and fiscal unions allow this. The EU is financial, so the centre cannot force the periphery to settle their imbalances.

Greece has never had to buy Fords or Kias instead of BMWs, but what if Germany had to shut down its auto manufacturing plants due to energy shortages?

Italians have done well buying ammonia from Germany rather than China, but what if BASF had to close its Ludwigshafen facility due to a lack of affordable natural gas?

I think you're seeing the issue.

Instead of Germany, EU countries would owe foreign producers like America, China, South Korea, Japan, etc. Since these countries aren't tied into an uneconomic union for politics, they'll demand hard fiat currency like USD instead of Euros, which have become toilet paper (or toilet plastic).

Keynesian economists have a simple solution for politicians who can't afford market prices. Government debt can maintain production. The debt covers the difference between what a business can afford and the international energy market price.

Germans are monetary policy conservative because of the Weimar Republic's hyperinflation. The Bundesbank is the only thing preventing ECB profligacy. Germany must print its way out without cheap energy. Like other nations, they will issue more bonds for fiscal transfers.

More Bunds mean lower prices. Without German monetary discipline, the Euro would have become a trash currency like any other emerging market that imports energy and food and has uncompetitive labor.

Bunds price all EU country bonds. The ECB's money printing is designed to keep the spread of weak EU member bonds vs. Bunds low. Everyone falls with Bunds.

Like the UK, German politicians seeking re-election will likely cause a Bunds selloff. Bond investors will understandably reject their promises of goodies for industry and individuals to offset the lack of cheap Russian gas. Long-dated Bunds will be smoked like UK Gilts. The ECB will face a wave of ultra-levered financial players who will go bankrupt if they mark to market their fixed income derivatives books at higher Bund yields.

Some treats People: Germany will spend 200B to help consumers and businesses cope with energy prices, including promoting renewable energy.

That, ladies and germs, is why the ECB will immediately abandon QT, move to a stop-gap QE program to normalize the Bund and every other EU bond market, and eventually graduate to YCC as the market vomits bonds of all stripes into Christine Lagarde's loving hands. She probably has soft hands.

The 30-year Bund market has noticed Germany's economic collapse. 2021 yields skyrocketed.

30-year Bund Yield

ECB Says the Darndest Things:

Because inflation is too high and likely to stay above our target for a long time, we took today's decision and expect to raise interest rates further.- Christine Lagarde, ECB Press Conference, Sept 8.

The Governing Council will adjust all of its instruments to stabilize inflation at 2% over the medium term. July 21 ECB Monetary Decision

Everyone struggles with high inflation. The Governing Council will ensure medium-term inflation returns to two percent. June 9th ECB Press Conference

I'm excited to read the after. Like the BOE, the ECB may abandon their plans to shrink their balance sheet and resume QE due to debt market dysfunction.

Eighty Percent

I like YCC like dark chocolate over 80%. ;).

Can 80% of the world's major central banks' QE and/or YCC overcome Sir Powell's toughness on fungible risky asset prices?

Gold and crypto are fungible global risky assets. Satoshis and gold bars are the same in New York, London, Frankfurt, Tokyo, and Shanghai.

As more Euros, Yen, Renminbi, and Pounds are printed, people will move their savings into Dollars or other stores of value. As the Fed raises rates and reduces its balance sheet, the USD will strengthen. Gold/EUR and BTC/JPY may also attract buyers.

Gold and crypto markets are much smaller than the trillions in fiat money that will be printed, so they will appreciate in non-USD currencies. These flows only matter in one instance because we trade the global or USD price. Arbitrage occurs when BTC/EUR rises faster than EUR/USD. Here is how it works:

1. An investor based in the USD notices that BTC is expensive in EUR terms.

2. Instead of buying BTC, this investor borrows USD and then sells it.

3. After that, they sell BTC and buy EUR.

4. Then they choose to sell EUR and buy USD.

5. The investor receives their profit after repaying the USD loan.

This triangular FX arbitrage will align the global/USD BTC price with the elevated EUR, JPY, CNY, and GBP prices.

Even if the Fed continues QT, which I doubt they can do past early 2023, small stores of value like gold and Bitcoin may rise as non-Fed central banks get serious about printing money.

“Arthur, this is just more copium,” you might retort.

Patience. This takes time. Economic and political forcing functions take time. The BOE example shows that bond markets will reject politicians' policies to appease voters. Decades of bad energy policy have no immediate fix. Money printing is the only politically viable option. Bond yields will rise as bond markets see more stimulative budgets, and the over-leveraged fiat debt-based financial system will collapse quickly, followed by a monetary bailout.

America has enough food, fuel, and people. China, Europe, Japan, and the UK suffer. America can be autonomous. Thus, the Fed can prioritize domestic political inflation concerns over supplying the world (and most of its allies) with dollars. A steady flow of dollars allows other nations to print their currencies and buy energy in USD. If the strongest player wins, everyone else loses.

I'm making a GDP-weighted index of these five central banks' money printing. When ready, I'll share its rate of change. This will show when the 80%'s money printing exceeds the Fed's tightening.

Recent investigations have shown that generative AI can boost hackers and misinformation spreaders.

Since its inception in late November 2022, OpenAI's ChatGPT has entertained and assisted many online users in writing, coding, task automation, and linguistic translation. Given this versatility, it is maybe unsurprising but nonetheless regrettable that fraudsters and mis-, dis-, and malinformation (MDM) spreaders are also considering ChatGPT and related AI models to streamline and improve their operations.

Malign actors may benefit from ChatGPT, according to a WithSecure research. ChatGPT promises to elevate unlawful operations across many attack channels. ChatGPT can automate spear phishing attacks that deceive corporate victims into reading emails from trusted parties. Malware, extortion, and illicit fund transfers can result from such access.

ChatGPT's ability to simulate a desired writing style makes spear phishing emails look more genuine, especially for international actors who don't speak English (or other languages like Spanish and French).

This technique could let Russian, North Korean, and Iranian state-backed hackers conduct more convincing social engineering and election intervention in the US. ChatGPT can also create several campaigns and various phony online personas to promote them, making such attacks successful through volume or variation. Additionally, image-generating AI algorithms and other developing techniques can help these efforts deceive potential victims.

Hackers are discussing using ChatGPT to install malware and steal data, according to a Check Point research. Though ChatGPT's scripts are well-known in the cyber security business, they can assist amateur actors with little technical understanding into the field and possibly develop their hacking and social engineering skills through repeated use.

Additionally, ChatGPT's hacking suggestions may change. As a writer recently indicated, ChatGPT's ability to blend textual and code-based writing might be a game-changer, allowing the injection of innocent content that would subsequently turn out to be a malicious script into targeted systems. These new AI-powered writing- and code-generation abilities allow for unique cyber attacks, regardless of viability.

OpenAI fears ChatGPT usage. OpenAI, Georgetown University's Center for Security and Emerging Technology, and Stanford's Internet Observatory wrote a paper on how AI language models could enhance nation state-backed influence operations. As a last resort, the authors consider polluting the internet with radioactive or misleading data to ensure that AI language models produce outputs that other language models can identify as AI-generated. However, the authors of this paper seem unaware that their "solution" might cause much worse MDM difficulties.

Literally False News

The public argument about ChatGPTs content-generation has focused on originality, bias, and academic honesty, but broader global issues are at stake. ChatGPT can influence public opinion, troll individuals, and interfere in local and national elections by creating and automating enormous amounts of social media material for specified audiences.

ChatGPT's capacity to generate textual and code output is crucial. ChatGPT can write Python scripts for social media bots and give diverse content for repeated posts. The tool's sophistication makes it irrelevant to one's language skills, especially English, when writing MDM propaganda.

I ordered ChatGPT to write a news piece in the style of big US publications declaring that Ukraine is on the verge of defeat in its fight against Russia due to corruption, desertion, and exhaustion in its army. I also gave it a fake reporter's byline and an unidentified NATO source's remark. The outcome appears convincing:

Worse, terrible performers can modify this piece to make it more credible. They can edit the general's name or add facts about current wars. Furthermore, such actors can create many versions of this report in different forms and distribute them separately, boosting its impact.

In this example, ChatGPT produced a news story regarding (fictional) greater moviegoer fatality rates:

Editing this example makes it more plausible. Dr. Jane Smith, the putative author of the medical report, might be replaced with a real-life medical person or a real victim of this supposed medical hazard.

Can deceptive texts be found? Detecting AI text is behind AI advancements. Minor AI-generated text alterations can upset these technologies.

Some OpenAI individuals have proposed covert methods to watermark AI-generated literature to prevent its abuse. AI models would create information that appears normal to humans but would follow a cryptographic formula that would warn other machines that it was AI-made. However, security experts are cautious since manually altering the content interrupts machine and human detection of AI-generated material.

How to Prepare

Cyber security and IT workers can research and use generative AI models to fight spear fishing and extortion. Governments may also launch MDM-defence projects.

In election cycles and global crises, regular people may be the most vulnerable to AI-produced deceit. Until regulation or subsequent technical advances, individuals must recognize exposure to AI-generated fraud, dating scams, other MDM activities.

A three-step verification method of new material in suspicious emails or social media posts can help identify AI content and manipulation. This three-step approach asks about the information's distribution platform (is it reliable? ), author (is the reader familiar with them? ), and plausibility given one's prior knowledge of the topic.

Consider a report by a trusted journalist that makes shocking statements in their typical manner. AI-powered fake news may be released on an unexpected platform, such as a newly created Facebook profile. However, if it links to a known media source, it is more likely to be real.

Though hard and subjective, this verification method may be the only barrier against manipulation for now.

AI language models:

How to Recognize an AI-Generated Article ChatGPT, the popular AI-powered chatbot, can and likely does generate medium.com-style articles.

AI-Generated Text Detectors Fail. Do This. Online tools claim to detect ChatGPT output. Even with superior programming, I tested some of these tools. pub

Why Original Writers Matter Despite AI Language Models Creative writers may never be threatened by AI language models.

Apocodes helps entrepreneurs create SaaS products without writing code. This post introduces micro-SaaS and outlines its basic strategy.

Strategy

Vision and strategy differ when starting a startup.

• The company's long-term future state is outlined in the vision. It establishes the overarching objectives the organization aims to achieve while also justifying its existence. The company's future is outlined in the vision.

• The strategy consists of a collection of short- to mid-term objectives, the accomplishment of which will move the business closer to its vision. The company gets there through its strategy.

The vision should be stable, but the strategy must be adjusted based on customer input, market conditions, or previous experiments.

Begin modestly and aim high.

Be truthful. It's impossible to automate SaaS product creation from scratch. It's like climbing Everest without running a 5K. Physical rules don't prohibit it, but it would be suicide.

Apocodes 5K equivalent? Two options:

• (A) Create a feature that includes every setting option conceivable. then query potential clients “Would you choose us to build your SaaS solution if we offered 99 additional features of the same caliber?” After that, decide which major feature to implement next.

• (B) Build a few straightforward features with just one or two configuration options. Then query potential clients “Will this suffice to make your product?” What's missing if not? Finally, tweak the final result a bit before starting over.

(A) is an all-or-nothing approach. It's like training your left arm to climb Mount Everest. My right foot is next.

(B) is a better method because it's iterative and provides value to customers throughout.

Focus on a small market sector, meet its needs, and expand gradually. Micro-SaaS is Apocode's first market.

What is micro-SaaS.

Micro-SaaS enterprises have these characteristics:

• A limited range: They address a specific problem with a small number of features.

• A small group of one to five individuals.

• Low external funding: The majority of micro-SaaS companies have Total Addressable Markets (TAM) under $100 million. Investors find them unattractive as a result. As a result, the majority of micro-SaaS companies are self-funded or bootstrapped.

• Low competition: Because they solve problems that larger firms would rather not spend time on, micro-SaaS enterprises have little rivalry.

• Low upkeep: Because of their simplicity, they require little care.

• Huge profitability: Because providing more clients incurs such a small incremental cost, high profit margins are possible.

Micro-SaaS enterprises created with no-code are Apocode's ideal first market niche.

We'll create our own micro-SaaS solutions to better understand their needs. Although not required, we believe this will improve community discussions.

The challenge

In 100 days (September 12–December 20, 2022), we plan to build 10 micro-SaaS enterprises using Apocode.

They will be:

• Self-serve: Customers will be able to use the entire product experience without our manual assistance.

• Real: They'll deal with actual issues. They won't be isolated proofs of concept because we'll keep up with them after the challenge.

• Both free and paid options: including a free plan and a free trial period. Although financial success would be a good result, the challenge's stated objective is not financial success.

This will let us design Apocodes features, showcase them, and talk to customers.

(Edit: The first micro-SaaS was launched!)

Follow along

If you want to follow the story of Apocode or our progress in this challenge, you can subscribe here.

If you are interested in using Apocode, sign up here.

If you want to provide feedback, discuss the idea further or get involved, email me at nicolas.tresegnie@gmail.com

Don't know how to start an online business? Here's a guide. By following these recommendations, you can build a lucrative and profitable online business.

What Are Online Businesses Used For?

Most online businesses are websites. A self-created, self-managed website. You may sell things and services online.

To establish an internet business, you must locate a host and set up accounts with numerous companies. Once your accounts are set up, you may start publishing content and selling products or services.

How to Make Money from Your Online Business

Advertising and marketing are the best ways to make money online. You must develop strategies to contact new customers and generate leads. Make sure your website is search engine optimized so people can find you online.

Top 5 Online Business Tips for Startups:

1. Know your target audience's needs.

2. Make your website as appealing as possible.

3. Generate leads and sales with marketing.

4. Track your progress and learn from your mistakes to improve.

5. Be prepared to expand into new markets or regions.

How to Launch a Successful Online Business Without Putting in a Lot of Work

Build with a solid business model to start a profitable online business. By using these tips, you can start your online business without paying much.

First, develop a user-friendly website. You can use an internet marketing platform or create your own website. Once your website is live, optimize it for search engines and add relevant content.

Second, sell online. This can be done through ads or direct sales to website visitors. Finally, use social media to advertise your internet business. By accomplishing these things, you'll draw visitors to your website and make money.

When launching a business, invest long-term. This involves knowing your goals and how you'll pay for them. Volatility can have several effects on your business. If you offer things online, you may need to examine if the market is ready for them.

Invest wisely

Investing all your money in one endeavor can lead to too much risk and little ROI. Diversify your investments to take advantage of all available chances. So, your investments won't encounter unexpected price swings and you'll be immune to economic upheavals.

Financial news updates

When launching or running a thriving online business, financial news is crucial. By knowing current trends and upcoming developments, you can keep your business lucrative.

Keeping up with financial news can also help you avoid potential traps that could harm your bottom line. If you don't know about new legislation that could affect your industry, potential customers may choose another store when they learn about your business's problems.

Volatility ahead

You should expect volatility in the financial sector. Without a plan for coping with volatility, you could run into difficulty. If your organization relies on client input, you may not be able to exploit customer behavior shifts.

Your company could go bankrupt if you don't understand how fickle the stock market can be. By preparing for volatility, you can ensure your organization survives difficult times and market crashes.

Conclusion

Many internet businesses can be profitable. Start quickly with a few straightforward steps. Diversify your investments, follow financial news, and be prepared for volatility to develop a successful business.

Thanks for reading!