IYKYK.
Thursday, August 20, 2026
Larry Kudlow is back touting a non-existent booming economy just like he did during Trump's first administration
This Is the Best 'Hard Goods' Boom in Decades
... Tuesday’s industrial production report showed back-to-back gains in June and July for both total production and manufacturing production. ...
Larry is rightly happy about the increase in the durable manufacturing index.
No doubt about it, it is up, but notice that it is still not as high as it was in Trump 2018 or Obama 2014.
More importantly, percent change in the index for 1H2026 was 1.94, lower than the 2.28 in 1H2018 when Trump was president the first time.
But this isn't an economic boom, and neither was that.
Those are welcome highpoints but in a long-term trend all down hill since the 1980s when Reagan was president, and no one asks why.
Kudlow & Co. never go back in the data as far as they should, even though they served in the Reagan Revolution and touted the results for the economy of the posthumous JFK tax cut in the Revenue Act of 1964, which cut the top marginal rate from 91% to 70%.
Today they use these data sets which go back only to the beginning of 1972, but even at that there is a giant durable goods growth spike of 9.02% in 2H1983 which we have been unable to reproduce since then, which should make them ask themselves, What went wrong?, but it doesn't.
Socrates said that the unexamined life isn't worth living.
So let's examine it.
Robust post-war growth is a truism which is true!
Industrial production generally, and for manufacturing specifically, grew robustly year over year, and the trend for those growth rates was itself strongly positive, as the chart for 1948 to 1984 shows.
But look at what happens after 1984.
You still get positive growth rates year over year, but not as robust as before, and the trend for those growth rates becomes strongly negative.
Something changed in the 1980s to cause this.
I say it's the Reagan Revolution in ordinary income tax rate reductions which caused this, not because tax cuts for rich people is bad, but because Reagan unintentionally sabotaged the tax rate arbitrage which before those tax cuts existed had pushed rich people for decades to make long term capital investments here at home in order to get low capital gains taxes in return.
In other words, Reagan destroyed the negative incentives which drove domestic investment. Take away the penalty of high ordinary income tax rates, and suddenly there's no reason to plow your money into the investments which drive business, jobs, and GDP, especially as enthusiasm for regulations of all kinds began to grow and hamstring profits.
The new tax cut windfalls freed up a lot of money to seek return wherever it could be found, and in the aftermath of the Reagan era that money increasingly went abroad. For people who lived through it, the one persistent theme of the business news was one business after another closing up shop in America and moving production overseas. After China entered the WTO, the steady departure of businesses from America became a flood.
And that's why that last chart, for 1984 to the present, looks like hell.
It has nothing to do with the U.S. Dollar being the world's reserve currency either. That is the dumbest thing I've heard in years, and I can't tell you how amusing that is coming out of the mouth of a Yalie. I guess they don't teach 'em at Yale that the dollar was the world's reserve currency 1948-1984.
I am not an economist. I do not know how to wave a magic wand of policy to make it all right again.
I am just a scholar in the humanities who wanted to know what turned my world upside down in 2007 and why I and millions like me have never recovered.
I have made a life for myself in spite of it all, as people do, but I tell you what, America was pretty great once, so don't tell me this is an economic boom.
I knew the economic boom. The economic boom was a friend of mine. And Larry, this isn't an economic boom.
Wednesday, August 19, 2026
Abdul emphasizes that your private health insurance goes bye-bye under Medicare For All
He's not "public option". He's Medicare For All.
Otherwise known as: Private Health Insurance For Nobody.
Adjusted for inflation, March 1994 diesel for $1.10 should have cost $2.50 in July 2026, but it averaged $4.95 instead
And we're pushing $5.50 in August.
Middle East tanker transits Aug 11-17, 2026: Strait of Hormuz 1.4/day, Bab-el-Mandeb Strait 8.7/day
JMIC UPDATE 086:
... IRGC attacks, hailing, and routing pressure continue, particularly for AIS-on vessels [in the Strait of Hormuz]. ... Vessels stationary for extended periods, or maintaining AIS-on while static, may still face elevated targeting risk [in the Arabian Gulf]. ... AIS-off operations at Yanbu remain the established norm. The AIS-off berth and waiting-area posture has been sustained without interruption for six weeks. ... AIS-off operations at Yanbu berths, waiting areas and approaches are highly likely to remain elevated. ...
Industrial production missed the consensus estimate yesterday, so they trotted out Larry Kudlow to tell you otherwise lol
For month over month in July, the consensus estimate was for +0.3%. Instead we got +0.2%.
Meanwhile the big picture shows, like so many indicators, that industrial production hit the big brick wall of Reaganism in 1984.
Post-war industrial production grew handsomely and its growth rate trended upward from 1948 to 1984, but not after.
Why is that?
I think it's because the incentive to invest in domestic industry went away because of the Reagan tax revolution.
Up to that time, high ordinary income tax rates had pushed owners of capital to invest in America for decades because by doing so they could take advantage of relatively much lower long term capital gains tax rates when they wanted to take income. After the dramatic Reagan cuts to ordinary income tax rates, that arbitrage disappeared. From that time onward owners of capital, now flush with cash from taking income at low ordinary income tax rates year upon year, found it more advantageous to invest abroad where low labor costs and unregulated markets promised even more fabulous returns on investment as America hobbled itself with regulation at home. The exit of businesses of all sizes from the United States to East Asia which began from this time turned into a flood after China was admitted into the WTO in 2001.
But today J. D. Vance thinks the U.S. Dollar's status as the world's reserve currency is the cause of all our problems.
If you want to know what makes me despair, that's it.
The following news story was more accurate than Kudlow.
US: Industrial Production Up Again in July as Modest Manufacturing Recovery Continues
Tuesday, August 18, 2026
Foreign holdings of U.S. Treasury securities fell to $9.299 trillion in June, from $9.371 trillion in May
Big whoop.
Year over year the value of holdings is up 2.26%, from $9.093 trillion in June 2025.
Monday, August 17, 2026
Yeah, well, the reports were "benign" but the facts weren't
This is the problem with fake economic news, which isn't meant to inform. It's meant to shape, just like fake polls.
It's disinformation, meant to blunt the bad news every time its ugly head pops up to keep stock markets from falling.
Everybody's talking the stock market book, because everything else sucks. They're afraid that speaking the truth would be all it takes to destroy confidence in the economy, when everyone who must experience the economy on the street knows it is not booming.
What rising Treasury yields are telling us
... The yield on the 30-year Treasury bond ended the week at 5.26%, the highest since June 2007, despite benign reports on consumer and wholesale price inflation. (This is unusual, as long-term yields tend to move lower when inflation becomes less of a worry.) ...
Core wholesale prices have been increasing at an average monthly rate of 4.24% in 2026. Peak before the pandemic was 2.99% in August 2011.
Core consumer inflation averaged 2.62% in 1H2026. Before 2021 there wasn't a reading that high since 2H2006 at 2.72%. Twenty years ago.
The bond market isn't blind to the facts like these reporters are, who have their heads in the sand.
Yields are rising because of persistent inflation.
Only 3.2 million vehicles in the U.S. have a current "park outside" recall lol
Reported here:
... An estimated 3.2 million vehicles nationwide currently have an outstanding “park outside” recall, according to vehicle history provider Carfax, which described the surging numbers as “concerning.” ...
“For consumers, there seems to be no easy choices,” Kane said. “Where are you going to park it?”...
Well of course the choice is easy.
Don't buy a Kia, Hyundai, or Jeep.
TLT and IEF in the bond drawdown news
SPR isn't the only thing in drawdown lol, down 49.5% since the beginning of 2022. Oil. Pffft. Who needs it, right?
Long term bond investors are getting killed, if any are left still standing. The article linked says most fixed income investors have gone ultra short.
Meanwhile the personal saving rate, which includes monies being socked away in retirement accounts, has plunged to 2.7% in June 2026. A prosperous people saves. Ours is doing something else.
Imagine being down 6.7% per year for five years straight in the "safe" part of your portfolio, or even 1%, when inflation has been raging at 4.5% on average. Real return is far, far more negative.
Here:
... The iShares 20+ Year Treasury Bond ETF (TLT), for example, has posted an average annual return of negative 6.7% over the past five years, while its 7-10 Year Treasury Bond ETF (IEF) has posted an average annual decline of 1%. ...
Nothing in this story indicates to me that Democrats or Republicans are ready to do what is necessary to fix Social Security
What the results of a Connecticut congressional primary race may mean for Social Security
The full retirement age needs to be increased gradually to 69 from 67 over the next forty years, just as it was from 65 to 67 starting in the 1980s, and a two-point increase in the payroll tax, shared equally by employers and employees, needs to be passed immediately.
Sorry, but that's the deal.
You cannot expand benefits, and you cannot tax people to oblivion to pay for a retirement system who will never have a reasonable expectation of receiving benefits under the program commensurate with what they contributed.
The $1.45 trillion spent by Social Security in retirement benefits in 2025 is NOT welfare.
Sunday, August 16, 2026
Mexico will finally pay for The Wall when J. D. Vance becomes president . . .
. . . but in pesos because J.D. will end the U.S. Dollar as the world's reserve currency.
Saturday, August 15, 2026
GAO said in 2022 the SPR was in very good condition, Trump's Energy Department came into office saying it wasn't, recent drawdowns only compound the problems in the 60 salt caverns
The damn thing will probably collapse before they're done.
Maybe instead of a ballroom next to the White House they can build some new tanks instead.
SPR depletion raises questions about integrity of caverns that store oil
... The Government Accountability Office said in a May report that “repeated partial drawdowns followed by refill can leach a single part of a cavern repeatedly, leading to undesirable shapes.”
The majority of the SPR’s caverns were found to be in “very good condition” after the 2022 drawdown, according to the GAO.
“However, every drawdown cycle expands cavern volume and reduces the spacing between caverns within the salt dome, which ultimately reduces their long-term viability,” it said.
To release oil from the SPR, water is pumped into the bottom of the caverns to displace the crude to the surface and pump it through wells into pipelines.
Seventy million barrels is the strict physical minimum needed at the top of the caverns to keep the extraction pipes safely submerged in oil rather than water, said Siddharth Misra, a petroleum engineering professor at Texas A&M University.
But “the practical operational floor for the crude inventory is between 250 million and 300 million barrels,” Misra said in an email to CNBC. At current inventory levels, “cavern integrity and overall operational capability are at an elevated risk,” he said.
When the inventory drops below 300 million barrels, the SPR loses its ability to pump oil at rapid speeds to address emergencies, Misra said. The system’s pipes and pumps could also get damaged as the oil layer thins at the top and sludge rises toward the extraction intake at the cavern ceiling, he said.
Fresh water is often pumped into the caverns during rapid drawdowns which dissolves the salt walls, Misra said. This “creates flatter, less stable roof and severely thins the critical salt pillars that separate adjacent caverns, greatly increasing the geological risk of a structural cave-in,” he said.
The SPR was originally designed for five full drawdowns. Instead, it has executed dozens of large and small releases over the past 40 years, Misra said.
“Because the system was not designed for this many cycles, the repeated injection of water and extraction of oil have caused severe cavern deformation, accelerated the rate of massive salt falls from the ceilings, and significantly weakened the overall structural integrity of the aging reserve,” he said.
Energy Department officials told the GAO that they are “holding the SPR infrastructure together with ‘Band-Aids,’ and that it is uncertain how long they will hold.” More than a quarter of the SPR inventory was “not available for drawdown due to a combination of construction outages and cavern outages” as of December 2025, the GAO found. ...
Subscribe to:
Posts (Atom)