Lew Rockwell Institute

Ron Unz tells us the consequence of Trump’s Diplomacy by Threat.

The Chinese have “suddenly imposed an unprecedented new wave of licensing requirements on the import and use of the rare earths that they mine and refine, as well as the vital small magnets produced from those compounds. These extremely severe restrictions would now apply to any companies around the world whose goods contained as little as 0.1% of their value in that category, apparently encompassing an enormous range of major industries including cars, solar panels, and chip-making equipment. The entire supply-claim for phones, computers, data-centers, and AI systems would be covered, requiring individual permissions from the Chinese authorities for their use to continue on a case-by-case basis.

“China’s newest restrictions on rare-earth materials would mark a nearly unprecedented export control that stands to disrupt the global economy, giving Beijing more leverage in trade negotiations and ratcheting up pressure on the Trump administration to respond.

“The rule, put out Thursday by China’s Commerce Ministry, is viewed as an escalation in the U.S.-China trade fight because it threatens the supply chain for semiconductors. Chips are the lifeblood of the economy, powering phones, computers and data centers needed to train artificial-intelligence models. The rule also would affect cars, solar panels and the equipment for making chips and other products, limiting the ability of other countries to support their own industries. China produces roughly 90% of the world’s rare-earth materials.

“Global companies that sell goods with certain rare-earth materials sourced from China accounting for 0.1% or more of the product’s value would need permission from Beijing, under the new rule. Tech companies will probably find it extremely difficult to show that their chips, the equipment needed to make them and other components fall below the 0.1% threshold, industry experts said.

“The article emphasized that China has control over 90% of the refining and production of these small but vital technological components, with no obvious substitutes available. One quoted source described it as the “economic equivalent of nuclear war” and something that could ‘destroy the American AI industry.’

“These new Chinese economic sanctions even extended to all the technologies and equipment related to the mining, refining, and fabrication of rare earth products. Such steps were obviously aimed at preventing any foreign competitors from developing alternate future supply chains able to weaken China’s current stranglehold. The total extraterritorial scope of China’s new restrictions was also dramatic.  As the MoA blogger brought to my attention, these issues were set forth most forcefully by Arnaud Bertrand, a longtime China observer based in that country:

“This is actually big, potentially huge, notably because China’s new rare earth export controls include a provision (point 4 here) whereby anyone using rare earths to develop advanced semiconductors (defined as 14nm-and-below) will require case-by-case approval.

“Which effectively gives China de-facto veto power over the entire advanced semi-conductor supply chain as rare earths are used at critical steps throughout – from ASML (who use rare earths for magnets in their lithography machines) to TSMC.

“The export controls are also extra-territorial: foreign entities must obtain Chinese export licenses before re-exporting products manufactured abroad if they contain Chinese rare earth materials comprising 0.1% or more of the product’s value.

“So China is effectively mirroring the US semiconductor export controls that were used against them, with its own comprehensive extraterritorial control regime, except with rare earths.

“Naturally, the response of President Donald Trump was volcanic, and he quickly declared: ‘It is impossible to believe that China would have taken such an action, but they have, and the rest is History.’”

The post The White House Fool’s Provocations of China Finally Produces a Response appeared first on LewRockwell.

Our diocese has asked the priests to promote a short survey about the laity to the faithful for a projected USCCB Pastoral Letter on the Laity. I wish that there would have been a survey about what kind of pastoral letters we need from the Bishops’ Conference, for I think the vocation crisis might be a topic of great interest and importance. I suppose the Pastoral Letter on the Laity will address the growing trend of lay pastoral “coordinators” in priest-less parishes, which is having a moment.

In some ways, the coordination by laity is a throwback to the pioneer past of the Church in America. However, the small communities who were building community and church buildings and sacramental practice for their families did not hire someone to be a sort of substitute priest. The itinerant priests, who were like the Protestant circuit preachers, were still leaders and formators of the Catholic community and not just Mass priests or sacramental providers. In the rust belt, pastoral coordinators are tending to ever smaller congregations in some historic (and often, beautiful) churches, and it is hard to escape the suspicion that it is a program of downsizing, part of the managed decline of once densely Catholic dioceses.

“Professional” lay “coordination” of parishes has many loose ends. What kind of training and continuing formation is given to the lay coordinator? The emphasis on pastoral or formation leaderships would be interesting in terms of an evangelization project, but sometimes what is more necessary is management expertise in business-like practices. Parishes are not businesses, but old physical plants require much attention, and thin capital reserves need fiscal acuity and creativity. I think that priests might be able to be pastors of more than one parish if those burdens were taken care of by persons, perhaps retired professional management types, who could coordinate more than one congregation’s issues.

However, the questionnaire for the Pastoral Letter does not seem to address such concerns. It is written in a kind of “corporation” prose that could have been helped by AI. The first question is: “How does your baptismal identity impact your engagement with Church and society.”

Perhaps it is my limited experience that makes me think that most lay people will not have very eloquent answers to this question. Why couldn’t we start with something about Jesus? What is your relationship with Him, how have you felt the call to discipleship? And then from Jesus we could talk about the necessary relationship with the Church that Jesus founded.

“Engagement with society” is quite (dare we say “too”) broad conceptually. What about, “How is your discipleship connected to your everyday life? What are the specifics of your following Jesus and taking up the cross?” The next question could be tightened up, also: “How do you feel co-responsible for the work and mission of the Catholic faith?” Wouldn’t the correct word be “Church,” not “faith”? But are we asking “feeling” questions or data questions? “Feeling” co-responsible and understanding our participation in the Body of Christ might be two different things.

The potential for ambiguity in the survey continues: “Where do you see the Holy Spirit at work in your relationship/engagement with the Church?” I suppose the “relationship/engagement” word combo is supposed to be a fine kind of distinction. Again, something about Jesus might be to the point. Even if you were asking, “How do you understand the Holy Spirit working in your life and what has that to do with your parish/local community of faith?” it might provoke more concrete responses.

“What are your joys, hopes and visions for the role of the laity within the Church and society?” is the next question. I know this echoes Gaudium et Spes, but it reminds me too much of the campaign rhetoric (like “Hope and Change”). We are all members of the Church, although our activity “within” the Church should be of our whole person and not a category of involvement. The laity are the Church, just as the clergy and religious are, but there seems a note of alienation or at least differentiation in “activity within the Church.” It’s a nuance and perhaps a false connotation I am responding to, but it is awkwardly put.

So is the next shot, in my opinion: “How do you primarily interact with lay ecclesiastical ministers, formators and lay apostolate leaders?” This is perhaps the real agenda of the designers of the survey. My first reaction is what is the use of the adverb “primarily”? I think they are looking for something like “generally” here. Can you react “secondarily” to professional lay leaders? Leaders of “lay apostolates” seem to be in another category for these other coordinators, formators, etc. People involved in lay apostolates are usually volunteers with very specific roles.

De-clericalizing pastoral care is a more complicated thing than just filling roles. When Catholics talk about their parishes, don’t they usually ask who the pastor is? Are they now to ask who the lay ministers, formators, etc. are? If deacons sometimes encounter resistance in their ministry (e.g., “I want a priest for my child’s baptism,” or “Why is the priest not preaching?”) are we so sure that the parish can be reimagined with a coordinator who “hires” sacramental provider priests? Wouldn’t people respond better to a deacon as a coordinator. Deacons are usually professionals with other capacities, but couldn’t we hire those who are retired from their original profession?

“What concerns might you have around lay ministry, formation, apostolates or the church workplace?” In terms of this essay, I would say, “see above,” but it is a catchall kind of question, mixing apples and oranges. And why do we say “church workplace” and not “parish”?

Developing lay pastoral ministry as a kind of substitute for ordained ministry is my worry here. Laity should participate in Church life, without a doubt. But isn’t the focus of lay discipleship in the world? Isn’t a quasi-institutional lay ministry a more complicated thing much beyond night school certification as lay ministers? Do lay coordinators have to promise something to the bishop, or do merely contractual requirements take care of pastoral care of a community?

In Catholic schools we have “teacher-ministers” who really aren’t sometimes because scarcity of personnel means low formation of those in the classrooms. Is the vision of the pastoral coordinators wedded to a tacit acceptance of what is really extraordinary in Catholic life: a growing Catholic population and a diminishing clergy in a non-missionary context.

Which is why I would like a Pastoral Letter about the vocation crisis.

This article was originally published on Crisis Magazine.

The post The Joys of Consultation: The Pastoral Letter on the Laity appeared first on LewRockwell.

Benjamin Netanyahu’s coalition government has taken control of TikTok and plans to control the social network X as well. However, the State of Israel’s propaganda has long eluded its citizens. Its purpose has never been publicly discussed. A small group decides its messages alone, without considering what would be useful to Israelis—such as combating anti-Semitism. The state’s resources have been seized solely by “revisionist Zionists,” even though they are an ultra-minority.

Israeli propaganda (הַסְבָּרָה – hasbara ) has rarely been a function of Israeli governments, but rather an operation of associations partially funded by them. These associations, which have their own ideologies, are not accountable for their actions to the Israeli people, but exclusively to their sponsors, including the governments in Tel Aviv. The self-proclaimed “largest democracy in the Middle East” thus funds profoundly anti-democratic operations without the knowledge of its citizens.

Israel’s chronic instability since its founding and the habit of appointing central directors of ministries according to political criteria rather than competence have blurred Israel’s message. Several competing powers deliver different messages  [ 1 ] . Ultimately, an authority was created for “public diplomacy” (propaganda). It has become particularly secretive.

Before the founding of Israel, the term hasbara referred to the act of explaining a position in the Diaspora. But over time, it became synonymous with “propaganda.”

In 1974, following the Yom Kippur War, Prime Minister Yitzhak Rabin created a Ministry of Information, which he entrusted to General Aharon Yariv  [ 2 ] . But the latter resigned seven months later and devoted himself to the creation of a prestigious think tank, the Jaffee Center for Strategic Studies. It was not until 2006 that a “Ministry of Strategic Affairs and Hasbara” was again created (now the Ministry of Strategic Affairs and Public Diplomacy; a ministry that does not have a website and does not communicate, but which became famous in 2015 with its campaign against “the phenomena of delegitimization and boycotts against Israel”, that is to say the “Boycott, Divestment and Sanctions” (BDS) movement). This discreet ministry created its own ארגון לא ממשלתי המאורגן על ידי הממשלה (non-governmental organization organized by the government) (sic), Kela Shlomo (Solomon’s Sling) (later Concert, then Voices of Israel) led by Colonel Yossi Kuperwasser, Ambassadors Dore Gold and Ron Prosor and Brigadier Sima Vaknin Gill, former director of military censorship. Various companies (Black Cube, Psy-Group and Cyber ​​Shield  [ 3 ] ) spied on BDS activists on behalf of Kela Shlomo  [ 4 ] .

In recent years, approximately $200 million a year, or four-fifths of the Ministry of Strategic Affairs and Public Diplomacy’s budget, has been given to the Institute for the Study of Global Antisemitism and Policy (ISGAP). Ron Dermer, the current minister since 2022, was an advisor to Natan Sharansky and the author of his book, The Case for Democracy: The Power of Freedom to Overcome Tyranny and Terror. He was entrusted by Benjamin Netanyahu in late 2023 with a plan to minimize the Palestinian population of Gaza  [ 5 ] .

Specifically, Sharansky is the president of ISGAP. He is a Ukrainian revisionist Zionist; a disciple of the other Ukrainian, Vladimir Jabotinsky. He played a central role in the fight against Russia during the USSR era. He was the main reference for Senator Henry M. Jackson’s Straussians, emigrated to the United States, was awarded the Congressional Medal by Ronald Reagan, and became a minister under General Ariel Sharon. In 2001, he founded One Jerusalem, the association that campaigns to have Jerusalem recognized as the capital of the “Jewish state” alone (and not that of the Palestinian state). He now heads ISGAP and, in this capacity, oversees almost all of the hasbara.

Hasbara has won many battles. The latest for ISGAP was the US Congressional hearings of university rectors, which resulted in several resignations and sanctions against pro-Palestinian associations.

However, one cannot help but be surprised by the ineffectiveness of their international campaigns against anti-Semitism. Eighty years after the founding of the State of Israel, not only has the problem not been solved, but it has worsened  [ 6 ] . During this time, machismo, homophobia and racism have considerably declined. It must be considered that anti-Semitism is a means of pressure by the Israeli authorities on their own population. Let us remember that the revisionist Zionists used anti-Semitism to advance their cause in the diaspora.

During his conference at the Israeli Consulate General in New York, Israeli Prime Minister Benjamin Netanyahu revealed that his country aims to control people under thirty-five via social networks  [ 7 ] .

According to YNetGlobal , he launched a campaign to take over social media and influence people under 25, “Project 545”  [ 8 ] . It was entrusted to Havas Media Network, the company of Yannick Bolloré (son of Vincent Bolloré and husband of Chloé Bouygues). The latter awarded Clock Tower X LLC a $6 million contract to “provide strategic communications, planning and media services in support of Havas’s commitment by the State of Israel to develop and execute a national campaign in the United States to combat anti-Semitism.” Clock Tower is the company created by Brad Parscale after he left Donald Trump’s campaign team.

According to a poll conducted for Israel in the United States, 47% of the population believes that the IDF is committing genocide.

The Israeli government’s main idea is to influence the responses of artificial intelligence by creating a multitude of social media accounts that will provide the narrative that ChatGPT and its rivals will feed on.

“Project 545” is the code name for this operation, funded to the tune of NIS 545 million, or $145 million, by 2025. It ended Israel’s contract with SKDKnickerbocker, the communications firm linked to the US Democratic Party.

According to Responsible Statecraft , the influencer network that Benjamin Netanyahu referred to during his speech at the Israeli Consulate General in New York was reportedly formed by Bridges Partners, the company owned by Yair Levi and Uri Steinberg. The campaign, titled Esther Project , has already cost $900,000. Fourteen to 18 influencers are believed to have published 75 to 90 posts during this period. The fees are being paid by the Israeli Ministry of Foreign Affairs.

Three of the influencers have been identified. They are:
 by Lizzy Savetsky, a prominent online defender of Israel since the beginning of the war;
 of businessman Ari Ackerman, grandson of Israeli-American tycoon Meshulam Riklis;
 and digital creator Zach Sage Fox.

Uri Steinberg, meanwhile, is a former senior official in the Israeli Ministry of Tourism. He works at Natan Sharansky’s Institute for the Study of Global Antisemitism and Policy (ISGAP).

A tax document allows Bridge Partners’ overheads to be assessed  [ 9 ] .

Journalist Candace Owens, who relayed Xavier Poussard’s revelations about Brigitte Macron’s real identity, published screenshots of Charlie Kirk showing that his funding had been cut and that he had been threatened two days before being assassinated  [ 10 ] . Charlie Kirk had just taken a stand against the massacres in Gaza.

During his speech in New York, Benjamin Netanyahu said: “The most important purchase that is being made is (…) TikTok. Number one. And I hope it goes through because it can be substantial. And the other one? X. We need to talk to Elon [Musk]. He’s not an enemy, he’s a friend. We should talk to him. Now, if we can achieve those two things, we will achieve a lot. We need to fight the fight, give direction to the Jewish people and give direction to our non-Jewish friends.”

Billionaire Safra Catz became executive vice president of Larry Ellison’s Oracle when it acquired 45% of the social network TikTok on September 25. She said, “We need to integrate love and respect for Israel into American culture.” Oracle will store TikTok’s US user data on its cloud computers.

At the same time, the Israeli Foreign Ministry has just created the company Show Faith by Work, which it has registered as a foreign agent of influence in the United States  [ 11 ] . This time, the aim is to disseminate the official version of the October 7 attack and messages against the existence of a Palestinian state to all American Christian Zionists. A budget of 3.2 million dollars has been planned, including the rental of a caravan which will allow propaganda films to be shown during Christian gatherings.

—

[ 1 ]  “Public diplomacy in army boots: the chronic failure of Israel’s Hasbara”, Gal Hadari & Asaf Turgeman, Hasbara, Israel Affairs , 24:3, 482-499 (2018), DOI: 10.1080/13537121.2018.1455374.

[ 2 ]  Israel’s Public Diplomacy. The Problems of Hasbara, 1966–1975 , Jonathan Cumming, Rowman & Littelfield (2016).

[ 3 ]  “  Spying on Linda Sarsour: Israeli Firm Compiled BDS Dossier for Adelson-funded US Group Battling Her Campus Appearances  ”, Uri Blau, Haaretz , May 28, 2018.

[ 4 ]  “  BDS is a dirty business. Those who battle it on Israel’s behalf must stay clean  ”, David Horovitz, The Times of Israel , June 17, 2018.

[ 5 ]  “  Netanyahu’s Goal for Gaza: “Thin” Population “to a Minimum”  ”, Ryan Grim, The Intercept, December 3, 2023.

[ 6 ]  Acting Propaganda: Viewpoints from Israel , Ron Schleifer & Jessica Snapper, Sussex Academic Press (2015).

[ 7 ]  “  @MiddleEastEye  ”, X , September 27, 2025.

[ 8 ]  “  Report: Israel to spend over half a billion shekels turning ChatGPT into public diplomacy tool  ”, Daniel Edelson & Raphael Kahan, YNetGlobal , October 6, 2025.

[ 9 ]  “  NSD/FARA Registration Unit  ”, September 26, 2025.

[ 10 ]  “  Turning Point USA responds: Yes, The Text Messages Are Real  ” Candace Owens Ep 249, YouTube, October 7, 2025.

[ 11 ]  “  Israel wants to hire Chris Pratt and Steph Curr  ”, Nick Cleveland-Stout, Responsible Statecraft , October 07, 2025.

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This is a a story about a fight between titans in which Europe, due to its leaders stupidity, is the most significant casualty.

Dutch government seizes control of Chinese-owned chipmaker Nexperia – Politico.eu, Oct 13 2025
The move could inflame wider trade tensions between Beijing and the European Union.

The Dutch government has granted itself the power to intervene in company decisions at Dutch-based Chinese-owned chipmaker Nexperia.

The highly unusual step, announced late Sunday, grants the country the power to “halt and reverse” company decisions — meaning Nexperia cannot transfer assets or hire executives without Dutch government approval, according to national media.

The move is a significant escalation in relations between the Netherlands and China and could inflame wider trade tensions between Beijing and the European Union, with Europe caught in the middle of a tit-for-tat chips war between the U.S. and China.

The Dutch have effectively stolen a big Chinese owned company.

The background via Pekingology:

Wingtech Technology is a privately-run, Shanghai-listed Chinese electronics and semiconductor conglomerate headquartered in Jiaxing, Zhejiang Province. It began as an original design manufacturer (ODM) for smartphones and consumer devices and has since grown into one of China’s most prominent integrated technology companies, combining electronics assembly, chip design, and semiconductor manufacturing.

Wingtech in 2019 acquired Nexperia, a Dutch semiconductor firm that was formerly part of Philips’ chip division, NXP. Headquartered in the Netherlands, Nexperia is a global semiconductor company with a rich European history and over 12,500 employees across Europe, Asia, and the United States.

In December 2024, the U.S. Department of Commerce added Wingtech to its Entity List, restricting its access to American components and technology. The U.S. unilateral sanctions threatened heavy losses and forced the Apple supplier to announce, in March 2025, the spin-off of a major part of its operations.

Zhang Xuefeng is the founder of Wingtech and CEO of Nexperia, which closed the 2024 financial year with a total revenue of $2.06 billion.

A successful businessman from China bought the Dutch company. He invested heavily and the company grew with several research and manufacturing sides throughout Europe and the world. The company paid a lot of taxes and the Dutch were happy.

In late 2024 Wingtech was put on the U.S. entity list to block Chinese semiconductor development by cutting it off from U.S. products and technology licenses.

In June 2024 the U.S. planned to extend the entity list. Not only would chip companies in China be prohibited from use of U.S. content but any international company that was 50% or more owned by a Chinese entity would likewise be penalized.

On September 30 2025 the U.S. Commerce Department extended its export restrictions:

A U.S. Commerce Department interim final rule vastly expands the number of entities subject to export control restrictions by extending the Entity List and MEU List restrictions to non-U.S. entities 50% or more owned, directly or indirectly, by listed parties effective as of September 29, 2025.

(The new Chinese export controls on rare earth metals and certain other technologies are a direct response to those new U.S. restrictions.)

The U.S. move cut of Nexperia and other partially Chinese owned companies in Europe from U.S. content.

The Dutch government, which had been forewarned and pressed by the U.S., panicked:

US officials told their Dutch counterparts that the Chinese CEO of Nexperia “will have to be replaced” for the company to be exempt from Washington’s entity list, newly disclosed court documents show.

The disclosure comes after the Dutch government effectively seized control of the semiconductor firm, a subsidiary of the Chinese company Wingtech, forcing a change in management under an obscure law known as the Goods Availability Act.

In doing so, the Dutch authorities removed founding CEO Zhang Xuezheng from his role, sparking fury in Beijing.

Court documents released by the Amsterdam Court of Appeal on Tuesday show that the United States told Dutch officials in June about a forthcoming change in the entity list, which bars American companies from trading with firms on the list.

On Sunday October 12, after the company was seized, Wingtech dropped a bombshell filing with the Shanghai Stock Exchange. It describes how Nexperia’s 2nd level management, under Dutch government pressure, deposed of the Chief Executive Officer and owner of the company:

On 1 October 2025 (Netherlands time), Ruben Lichtenberg, a Dutch national who serves as the statutory director and Chief Legal Officer (CLO) of both Nexperia Holding and Nexperia Semiconductor, filed—with the support of two other executives, Chief Financial Officer (CFO) Stefan Tilger and Chief Operating Officer (COO) Achim Kempe, both German nationals—an urgent petition before the Enterprise Chamber requesting a corporate investigation and immediate provisional measures on behalf of both Nexperia entities.

On the same day, the Enterprise Chamber granted several emergency measures immediately, without a hearing, which took effect at once. These measures included suspending Mr. Zhang Xuezheng from his positions as executive officer of Nexperia Holding and non-executive director of Nexperia Semiconductor; suspending the operation of Article 3 of the Board Rules of Nexperia Semiconductor, which defines the CEO’s duties and authorities; and placing all shares held by Wingtech subsidiary 裕成控股有限公司 Yuching Holding Limited (a Hong Kong-registered company and the sole shareholder of Nexperia Holding) under temporary management by an independent third-party trustee for management purposes, effective until the Enterprise Chamber’s oral hearing scheduled for 6 October 2025 and its subsequent ruling on the request for immediate relief.

Wingtech’s official WeChat blog released a scathing announcement, which was widely distributed in China.

Internal Legal Actions Are a Malicious Extension of External Pressure

Certain foreign executives within Nexperia have attempted to use legal means to forcibly alter the company’s ownership structure.

Their actions are closely aligned with the Dutch government’s administrative directives and, in essence, represent an effort to usurp shareholder rights and subvert lawful corporate governance under the guise of “compliance.”

We strongly condemn such politically motivated attempts to seize control.

We Will Resolutely Defend Our Lawful Rights
…

Today the Chinese government reacted to the Dutch raid of the Chinese owned company by cutting it off from Chinese technologies and products:

Chipmaker Nexperia, a subsidiary of China’s Wingtech Technology and a major supplier of mature chips for the automotive and consumer electronics sectors, announced on Tuesday that it has been banned by the Chinese Ministry of Commerce from exporting products made in China, including those produced by its subcontractors, after the Dutch government took over the company using a Cold-War-era law to secure Europe’s chip supply.

Nexperia said it is seeking an exemption from the export ban, which could affect Dutch access to its chips. The company operates an 80,000-square-meter assembly site in Guangdong province near Hong Kong, as well as fabrication, assembly, and testing facilities in Germany, the Philippines, Malaysia, and Britain.

If the Dutch government does not retract its decision to practically confiscate Nexperia the company will die. Its business is globalized. Parts of its products are made all over the world. Its products and sales in Europe depend on subcontractor products which are made in China.

The company is important to Europe. It produces some 90 billion bread and butter components per year which flow into other higher value European products. Sure, other Chinese companies will be happy to replace those parts. But where is the win for the Netherlands or Europe in that?

In the trade war between U.S. and China Europe should have stayed neutral. It should not have buckled under pressure from either side but rely on its own substantial trade powers to stay out of the fight. It is a fight in which the U.S. has no chance to win.

It was a huge mistake by the Dutch to submit to U.S. demands and to seize Nexperia. It was a huge mistake for Europe to submit to U.S. demands.

The minions leading Europe who have allowed for this deserve to be fired over their utter strategic stupidity.

Reprinted with permission from Moon of Alabama.

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The pool of speculative fervor will be drained, as impossible as that seems in this moment in history.

2025 may go down as The Year When Everything Happened in No Particular Order, tracking William Gibson’s famous line that “The future is already here, it’s just not very evenly distributed.”

Those expecting inflation will find it, those expecting deflation will find it, those expecting a stock rally will get a rally, those expecting a crash will get a crash, and so on.

The forces that drove reliable trends have all weakened or reversed:

1. ever-lower interest rates lowered the cost of credit/capital to near-zero.

2. the deflationary forces of globalization: everything got cheaper and disposable.

3. expanding workforces increased income and consumption.

4. credit/asset bubbles created wealth without productivity improvements or sacrifice.

5. energy supply kept up with rising consumption.

6. the external costs of the “waste is growth” Landfill Economy (pollution, depletion, etc.) were ignored / not priced in.

These titanic forces still have the momentum of recency bias: most people expect the rest of the 2020s to be an extension of the 40+year Bull Market in Everything.

Feedback (doing more of what’s failed) and buffers (print more money and everything will be fixed) are working to maintain the status quo sand castles as the tide rises.

Those castles closest to the sea will dissolve first (the periphery I often refer to). Those with resources will be shoveling sand to build walls around their castles.

But the tide is relentless and so we’re in a period of flux where those benefiting from the status quo are fighting the erosion of all the forces that enabled the status quo to reach such heights.

As they lose ground, they redouble their policy efforts, pushing policies to new extremes–extremes which further destabilize the system.

The global economy is a complex self-organizing adaptive system, and so blunt-force policies intended to protect the status quo stability end up generating unintended consequences which have their own consequences (the second-order effects I often mention).

Those trying to control the system find their control is imperfect.

Long cycles are now in play. Interest rates fell for 40 years–the longest such run in recent history. Now interest rates will rise for some period of time, likely culminating in a financial crisis with no easy resolution, because printing money–the solution for the past 40 years–will be the problem, not the solution.

Demographics are also in play. Workforces are shrinking, retirees living off the earnings of the workforce are soaring.

The world desires ever greater quantities of energy and consumption, but the cheap, easy to exploit materials have already been exploited. Now everything will become more expensive, regardless of technological improvements.

Physical, chemical and cost limits will matter.

Whatever we seek, we can find–but that may prove ephemeral.

Everyone’s on the lookout for Black Swans, but that’s not the way Black Swans work.

Read the Whole Article

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