Sunday, August 23, 2026

Increases to the Federal Debt since 4Q2000, as horrible as they may seem, are part of a macroeconomic growth trend for federal debt which is lower since 1984

If the macroeconomic growth trend for federal debt as a percentage of GDP were higher, however, that would be different, but that too was arrested in the early 1980s.

Of course, that picture would look so, so much better if the real GDP growth trend since 1983 weren't so disappointing.

The Reagan Revolution delivered on reducing the federal debt growth trend, but not on increasing the economic growth trend. 

The biggest failure of the Reagan Revolution was its misplaced faith in human nature.

We liked hearing that we knew best what to do with our own money. "Tax cuts will boost economic growth". It made us feel so good, so optimistic.

But owners of capital promptly pocketed the windfalls and ultimately invested them elsewhere.

 

Federal Debt:

4Q2000 $5.662T

4Q2008 $10.699T: +$5.037T (+88.9%) Bush 43

4Q2016 $19.976T: +$9.277T (+86.7%) Obama

4Q2020 $27.747T: +$7.771T (+38.9%) Trump I

4Q2024 $36.218T: +$8.471T (+30.5%) Biden

Now $40T: +$3.782T (+10.4%) Trump II to date

 


 

The Federal Debt trend since 1984 is good actually, unless you are a Keynesian, or in the case of AOC, a Milton Keynesian

😂 

 



OK, I charted four months of Strait of Hormuz tanker transits as reported in UKMTO JMIC Updates even though some people have thought the data is . . . Wei Tu Lo

 It is what it is.

You know the score. Gasoline isn't $5, but it isn't a buck seventy-five, either.

Meanwhile, the US Navy is spending vast sums everyday to maintain whatever it is we're supposed to be calling this black hole into which we are flushing billion$ down the drain.

 




 

Middle East tanker transits August 16-22, 2026: Strait of Hormuz 2.4/day, Bab-el-Mandeb Strait 12.6/day

 


Silver is down 3.54% year to date . . .

  . . . but gold is up 6.57% year to date. 

 


 

😁 

 

Just 30% of teenagers worked in 1H2026

 Whose kids are these anyway?


 

Saturday, August 22, 2026

Natalie's only guest tonight will be Mad King Ludwig discussing The Three Amigos

 



Middle East tanker transits August 13-19, 2026: Strait of Hormuz 1.9/day, Bab-el-Mandeb Strait 11.0/day

WTI is $86
Brent is $94
Gasoline averages $4.10
Diesel averages $5.59
 
U.S. Petroleum Balance Sheet, Total Stocks, year over year:
Jan 23  +107.7 million barrels
Aug 14 -127.8 million barrels
 

 

Thursday, August 20, 2026

How the debt is like the dollar

 IYKYK.


 

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.

 

 

Bond vigilantes: Buybacks shmybacks

 Yesterday: Treasury doubles debt buybacks as Bessent moves to steady bond market

Today: 



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.

 


THE GRAUNIAD killed Harday

 IYKYK.


 

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