Don't Trust Cuban Health Care Statistics

The federal government’s Bureau of Labor Statistics released new price inflation data on Tuesday, and according to the report, year-over year inflation continued to climb—although at the slowest pace since July of this year. According to the BLS, Consumer Price Index (CPI) inflation rose 3.2 percent year over year during October, before seasonal adjustment. That’s the thirty-second month in a row of price inflation above the Fed’s arbitrary two-percent inflation target. Month-over-month inflation was flat with the CPI rising 0.04 percent (essentially zero percent) from September to October. 

The continued growth in the CPI was driven largely by "food away from home" (up year over year by 5.4 percent) and shelter, which was up year over year, by 6.7 percent. Moderation in the rate of increase, on the other hand, relied largely on year-over-year declines in the price indices for gasoline (down 5.3 percent) and used cars and trucks, which were down 7.1 percent. 

It will grieve many ordinary people to note, however, that while food prices have somewhat moderated, the other most essential category within the CPI overall index—shelter—remains near a 35-year high when measured year-over-year. The shelter index rose 6.7 percent from October 2022 to October 2023. That is a similar annual increase to what we saw in mid-1977 and mid-1982. Meanwhile, the month-to-month increase from September to October was 0.3 percent. That's for all types of shelter. The situation is more grim when we looks just at renters. The index for "rent of primary residence" has been up for three months in a row and may be reaccelerating toward the 27-year high in monthly rent growth reached in September 2022. 

One noticeable oddity in the CPI report was a purported 34-percent drop in the index for health insurance, year-over-year. Those who actually pay premiums will find this rather hard to believe. The CPI report also showed a very suspect two-percent decline in the index for "medical care services," year over year.  As explained by Wolf Richter at Wolf Street, the index for medical services has been problematic for some time, understating month to month changes while overstating year-over-year growth. The new method has further created bizarre swings in the index, turning it into, as Richter says "chickenshit." 

Any ordinary person knows that medical care services are hardly falling, yet the index for medical care—which is a not-insignificant 6.3 percent of the full index—tells us prices are going down. On Monday, Bloomberg noted how the CPI index has become detached from reality on health services: "The health insurance index ... is currently at its lowest reading in nearly six years. But what Americans actually pay for coverage is a different story." Healthcare prices in the real world are rising rapidly, but you wouldn't know that from reading about the CPI, however. 

Moreover, in spite of claims that price inflation is now "falling" or moderating, real average earnings continue to go nowhere. Thanks to a 20-percent increase in the CPI over the past three years, the real average wage has increased a mere 23 cents since the eve of the Covid lockdowns. That, of course, is an average and understates the substantial losses (in real terms) felt by households at the lower end of the income scale—who have not seen as much income growth overall during the past decade. 

The news of some moderation in the CPI—which remains nearly 19 percent above the index as measured in January 2020— was interpreted by both Wall Street and much of the financial media as a great victory over price inflation and as evidence of the imagined "soft landing." 

The Wall Street Journal, for example, reported on Wednesday: 

The U.S. economy is approaching what most economists had thought either unlikely or impossible: inflation returning to its prepandemic norm without a recession or even much economic weakness, a so-called soft landing. ... “What we are expecting now is a soft landing,” said Nancy Vanden Houten, lead U.S. economist at Oxford Economics. “We expect the economy to weaken quite a bit but it does look like we’ll avoid an outright contraction” in gross domestic product. ... Six months ago, the consensus among economists surveyed by The Wall Street Journal was that the economy would enter a recession over the next 12 months. In October’s survey, the average forecast of economists was for no recession. 

The argument offered by most of these economists, however, amounts to little more than "it's different this time." Even the Journal concedes  "If they’re right, it would be highly unusual. In the past 80 years, the Federal Reserve has never managed to bring inflation down substantially without sparking a recession." 

By the BLS's own measure, CPI inflation remains well above the Fed's two-percent target even as numerous economic indicators point toward recession. Tax revenue, the yield curve, temp jobs, manufacturing activity, and the leading indicators index all point toward recession. 

What really matters in terms of stock prices and Wall Street frenzies, however, is the prospect for a return to easy money. Any decline in CPI inflation is interpreted as a sign that the Federal Reserve will once again turn very dovish and force interest rates lower. With price inflation now moderating, it is assumed cuts to the target policy interest rate will soon be in the cards, and Wall Street is getting excited. Unfortunately, the investment game is no longer about underlying fundamentals, but is about making money off the bubbles created by Fed-induced monetary expansion. 

Today, wars rage in the Ukraine and Middle East. What attitude should libertarians adopt toward these wars? Is it consistent with libertarian principles to support whatever side you think has the better case? Can you urge that side to go all-out for victory?  Murray Rothbard, the greatest of all libertarian theorists, did not think so. And this is true even if you have assessed the conflict correctly. Let’s look at what he says in his great book The Ethics of Liberty.

As you might expect, Murray doesn’t begin his analysis by taking conflicts between states as the starting point. He asks what individuals involved in a conflict could properly do in an anarcho-capitalist society. Here is what he says:

“Before considering inter-State actions, let us return for a moment to the pure libertarian stateless world where individuals and their hired private protection agencies strictly confine their use of violence to the defense of person and property against violence. Suppose that, in this world, Jones finds that he or his property is being aggressed against by Smith. lt is legitimate, as we have seen, for Jones to repel this invasion by the use of defensive violence. But, now we must ask: is it within the right of Jones to commit aggressive violence against innocent third parties in the course of his legitimate defense against Smith? Clearly the answer must be “No.” For the rule prohibiting violence against the persons or property of innocent men is absolute; it holds regardless of the subjective motives for the aggression. lt is wrong, and criminal, to violate the property or person of another, even if one is a Robin Hood, or is starving, or is defending oneself against a third man’s attack. We may understand and sympathize with the motives in many of these cases and extreme situations. We (or, rather, the victim or his heirs) may later mitigate the guilt if the criminal comes to trial for punishment, but we cannot evade the judgment that this aggression is still a criminal act, and one which the victim has every right to repel, by violence if necessary. In short, A aggresses against B because C is threatening, or aggressing against, A. We may understand C’s “higher” culpability in this whole procedure, but we still label this aggression by A as a criminal act which B has every right to repel by violence. To be more concrete, if Jones finds that his property is being stolen by Smith, Jones has the right to repel him and try to catch him, but Jones has no right to repel him by bombing a building and murdering innocent people or to catch him by spraying machine gun fire into an innocent crowd. If he does this, he is as much (or more) a criminal aggressor as Smith is. The same criteria hold if Smith and Jones each have men on his side, i.e. if “war” breaks out between Smith and his henchmen and Jones and his bodyguards. If Smith and a group of henchmen aggress against Jones, and Jones and his bodyguards pursue the Smith gang to their lair, we may cheer Jones on in his endeavor; and we, and others in society interested in repelling aggression, may contribute financially or personally to Jones’s cause. But Jones and his men have no right, any more than does Smith, to aggress against anyone else in the course of their “just war”: to steal others’ property in order to finance their pursuit, to conscript others into their posse by use of violence, or to kill others in the course of their struggle to capture the Smith forces. If Jones and his men should do any of these things, they become criminals as fully as Smith, and they too become subject to whatever sanctions are meted out against criminality. In fact, if Smith’s crime was theft, and Jones should use conscription to catch him, or should kill innocent people in the pursuit, then Jones becomes more of a criminal than Smith, for such crimes against another person as enslavement and murder are surely far worse than theft. Suppose that Jones, in the course of his “just war” against the ravages of Smith, should kill some innocent people; and suppose that he should declaim, in defense of this murder, that he was simply acting on the slogan, “give me Iiberty or give me death.” The absurdity of this “defense” should be evident at once, for the issue is not whether Jones was willing to risk death personally in his defensive struggle against Smith; the issue is whether he was willing to kill other innocent people in pursuit of his legitimate end. For Jones was in truth acting on the completely indefensible slogan: “Give me liberty or give them death” —surely a far less noble battle cry.”

Murray next argues that because you may never harm the innocent, nuclear war is always wrong, because there is no way of confining the damage these weapons do to legitimate targets. Murray makes this point unmistakably clear:

“lt has often been maintained, and especially by conservatives, that the development of the horrendous modern weapons of mass murder (nuclear weapons, rockets, germ warfare, etc.) is only a difference of degree rather than kind from the simpler weapons of an earlier era. Of course, one answer to this is that when the degree is the number of human lives, the difference is a very big one. But a particularly libertarian reply is that while the bow and arrow, and even the rifle, can be pinpointed, if the will be there, against actual criminals, modern nuclear weapons cannot. Here is a crucial difference in kind. Of course, the bow and arrow could be used for aggressive purposes, but it could also be pinpointed to use only against aggressors. Nuclear weapons, even “conventional” aerial bombs, cannot be. These weapons are ipso facto engines of indiscriminate mass destruction. (The only exception would be the extremely rare case where a mass of people who were all criminals inhabited a vast geographical area.) We must, therefore, conclude that the use of nuclear or similar weapons, or the threat thereof, is a crime against humanity for which there can be no justification. This is why the old cliché no longer holds that it is not the arms but the will to use them that is significant in judging matters of war and peace. For it is precisely the characteristic of modern weapons that they cannot be used selectively, cannot be used in a libertarian manner. Therefore, their very existence must be condemned, and nuclear disarmament becomes a good to be pursued for its own sake. Indeed, of all the aspects of liberty, such disarmament becomes the highest political good that can be pursued in the modern world. For just as murder is a more heinous crime against another man than larceny, so mass murder—indeed murder so widespread as to threaten human civilization and human survival itself-is the worst crime that any man could possibly commit. And that crime is now all too possible. Or are libertarians going to wax properly indignant about price controls or the income tax, and yet shrug their shoulders at or even positively advocate the ultimate crime of mass murder?”

Read the full article at LewRockwell.com.

After running the third-largest budget deficit in US history in fiscal 2023, the Biden administration kicked off fiscal 2024 with another big budget shortfall.

The US government ran a $66.56 billion deficit in October, according to the Monthly Treasury Statement. This was slightly lower than last year’s October shortfall of $88 billion due to record federal receipts as Americans impacted by natural disasters paid deferred tax bills.

The government took in $403.43 billion in October, a 26.7% increase over last October. It was the largest influx of October federal receipts on record. This was due to a surge in tax receipts from people in California and other states who were allowed to extend their annual April tax deadline to October as they coped with natural disasters. This resulted in a 70% increase in non-withholding taxes from individuals and a whopping 170% increase in corporate tax receipts.

This papered over a general downward trend in federal tax receipts through last year. Federal revenue fell by 9.3% in fiscal 2023.

The federal government enjoyed a revenue windfall in fiscal 2022. According to a Tax Foundation analysis of Congressional Budget Office data, federal tax collections were up 21%. Tax collections also came in at a multi-decade high of 19.6% as a share of GDP. But CBO analysts warned at the time that it wouldn’t last. And government tax revenue will decline even faster as the economy spins into a recession.

Meanwhile, the Biden administration blew through $470 billion last month. Federal spending increased by 15.7% compared to October 2023.

This underscores the fact that the fundamental issue isn’t that the US government doesn’t have enough money. The fundamental problem is that the US government spends too much money. Despite the pretend spending cuts, the debt ceiling deal didn’t address that problem. Even with the new plan in place, spending will go up. And it’s already historically high. That means big budget deficits will continue and the national debt will mount.

In fact, the Biden administration is already looking for more money.  The president recently proposed a $100 billion aid package for Israel, Ukraine and other “national security” priorities. No matter what you hear about spending cuts, the federal government is constantly finding new reasons to spend more money.

The national debt blew past $33 trillion on Sept. 15. Just 20 days later, it pushed about $33.5 trillion. In other words, the Biden administration added half a trillion dollars to the debt in just 20 days.

Most people seem to think the excessive spending, the growing deficits and the national debt don’t really matter, but somebody has taken notice. Last week, Moody’s Investor Service lowered its outlook on US government credit from “stable” to “negative.” This could be a prelude to a downgrade in the country’s AAA credit rating.

The Bigger Problem

This rapid increase in the national debt is happening during a time of sharply rising interest rates. This is a big problem for a government that primarily depends on borrowing to pay its bills.

Interest payments on the national debt grew by $41 billion year-over-year to $88.9 billion. This accounted for about two-thirds of the October spending increase. The only spending category that was higher was Social Security. The interest expense was bigger than the amount spent on national defense and the combined total of the government-run Medicaid and Medicare health insurance programs.

There is no relief in sight. There is currently about $26 trillion in outstanding Treasury securities. The average interest rate on that debt is up from 2.19% in October of last year to 3.05% today. At that number will likely quickly climb higher.

A lot of the debt currently on the books was financed at very low rates before the Federal Reserve started its hiking cycle. Every month, some of that super-low-yielding paper matures and has to be replaced by bonds yielding much higher rates. That means interest payments will quickly climb much higher unless rates fall.

Rising interest rates drove interest payments to over 35% as a percentage of total tax receipts in fiscal 2023. In other words, the government is already paying more than a third of the taxes it collects on interest expense.

If interest rates remain elevated, or continue rising, interest expenses could climb rapidly into the top three federal expenses.

Originally published at SchiffGold.com

Good news: the Pentagon is having trouble meeting recruiting goals, and an increasingly small portion of the American public is interested in fighting wars for the regime. 

It's been apparent for several years now that the Pentagon is having serious trouble with recruitment. In September, the New York Post reported that "Much of the military will fall short of recruitment goals by as much as 25% this year." 2023 is the first time the Air Force has missed its recruiting goals since 1999. 

Moreover, a Gallup poll in June found confidence in the military declined for a sixth consecutive year, to 60 percent.

It doesn't look like a major war will induce most Americans to sign up either.  For example, Newsweek reports today: 

A poll by the research institute Echelon Insights of 1,029 likely voters, conducted between October 23-26, found that 72 percent of those asked would not be willing to volunteer to serve in the armed forces were America to enter a major conflict, compared with 21 percent who would. The remainder were unsure. The poll was conducted after Hamas led an unprecedented militant attack on Israel on October 7.

Note how the question is phrased. It's not asking people if they would fight to defend their communities. Rather, the question is whether or not one would be willing to volunteer to fight in "a major conflict."  Few are apparently interested, and why should they be? It has become abundantly clear over the past 25 years that the elective wars fought by the US regime have nothing to do with the defense of Americans or their communities. The US bombing of Libya and Syria has had nothing to do with keeping Americans safe. The multi-decade wars in Iraq and Afghanistan had nothing to do with keeping Americans safe.  After all, the US lost the wars in both Afghanistan and Iraq, with no invasion of the United States imminent as a result. In fact, those wars likely increased the danger to  Americans by destabilizing the region—the US invasion made ISIS possible—and making more enemies for the US around the world. 

Sadly, every American who died in those conflicts died for little except to enrich local warlord "allies" in those countries made rich by suitcases full of US taxpayer dollars.

In 2023, the "we're fighting them over there so they don't fight us here" slogan only works on the most gullible of Americans, and fewer than ever are falling for it. That worked well in 2001. Most have now caught on to the ruse. 

On the other hand, it's worth noting that a majority of Americans still say they'd volunteer to fight if the United States were actually invaded. Newsweek continues:

At the start of October, a survey of 1,000 likely voters conducted by J.L. Partners for the Daily Mail found that while an overall majority of Americans said they would die fighting for their country were the U.S. invaded...

Discerning potential recruits have figured out the reality which is that joining the military most likely means being shipped 10,000 miles away to do the bidding of wealthy arms dealers, White House officials, and uniformed politicians—known as Pentagon generals. At any time these political cliques could ask ordinary American soldiers to do any of the following: 

• Provide security guarantees to the dictators of Saudi Arabia.
• Fight to prop up the Ukraine regime, known to be one of the most corrupt governments on earth. 
• Fight in a war against Iran because some Washington interest groups don't like that country. 

Of course, most service members won't ever be in combat. They'll spend their time doing more mundane tasks—such as computer programming or logistics planning—to justify a defense budget that now nears a trillion dollars per year. 

One thing that is clear to most, however, is that virtually none of this has anything to do with defending the United States from invasion, so most young people who have real talent, skills, and plans know they can contribute to the community is far more useful ways. Ordinary nurses, truckers, roofers, private-school teachers, and insurance salesmen do far more net good for their communities than any member of the military who spends his time guarding a hill of sand in Syria or protecting the dictators of Kuwait. 

There are other factors behind the lack of recruitment also, of course. A low unemployment rate is one of them. But it's also true the Pentagon recruiters have abandoned the usual fertile ground of middle-class and working-class right-leaning Americans, and turned to relentless promotion of "diversity, equity, and inclusion" (DEI) recruits instead. It seems to not have worked, if the Army's latest ad is any indication. While the recruiters spent 2021 promoting a recruit named "Emma" and her lesbian moms, this latest ad feels like something from 1989: a bunch of cisgendered men jumping out of airplanes. 

Together, we can take on any challenge.

Jump into the unlimited #ArmyPossibilities to #BeAllYouCanBe at https://t.co/H2pnYPLqaQ #MondayMotivation pic.twitter.com/N5kUAuyJ3O

— U.S. Army (@USArmy) November 6, 2023

If recruiters think this will bring traditional recruits flocking back, the Twitter comment section—which is virtually 100% negative, mocking commentary on the Army—should disabuse the Army brass of any notion that people are falling for it. 

If the US military wants to see a return of enthusiasm for enlistment, there are some things they could do:

• End all foreign deployments of National Guard troops, and make the National Guard a strictly domestic defense force controlled by state governments. (A return to what the Guard was before the 1980s.)
• End all US military foreign deployment to any place where the US Congress has not formally declared war against the local regime. 
• Stop fighting elective wars that have nothing to do with the defense of Americans in America. 

Of course, doing those things would put significant obstacles in the way of the regimes that seeks to ever expand an de facto American global empire that reserves to itself the right to invade or bomb any country on earth at any time for any reason.