Inflation is still under control and the economic outlook remains healthy
The Fed's drive to push rates higher has made a significant difference in the inflation fundamentals, because they have dramatically altered the incentives to borrow, spend, and hold money. Higher rates have NOT adversely impacted the economy like they have in the past, moreover. Why not? Because the Fed has limited its tightening to interest rates while leaving an abundance of bank reserves in the system. It's not really the case that money is "tight" in the sense that it's hard to come by. The Fed has responded to the abundance of liquidity (and the 2020-2021 surge in the M2 money supply) by dramatically increasing (using the tool of higher interest rates) the world's incentives to hold on to money rather than to just spend it wantonly. And it's working.
But the surprising economic resilience we’ve seen lately is a good indicator that R* is indeed higher than many economists thought just a year ago. That has big implications for monetary policy in the coming years.
"Soft Landing"? More Like "No Landing"
One might have thought that the combination of post-pandemic fiscal tightening and Federal Reserve interest rate increases would have done something to slow down the U.S. economy. We cannot know the counterfactual, but at least on the surface, one would have been wrong.
We were supposed to have been done with this sort of inflation as consumer spending patterns normalized, retailers used discounts to get rid of excess inventories, and supply chains became unclogged. But while things improved in the second half of 2022, the process of improvement seems to have paused, if not reversed outright.
Indeed, in terms of year-on-year contributions, only two major categories—food and core services—now make up the vast majority of inflation. Barring a large unexpected surge in gas prices, energy is likely to be a major negative contributor to headline inflation by March at the latest, as gasoline prices were so high this time last year that the fall in prices since then will pull inflation significantly downward. Depending on how the vehicle market develops, core goods could become a negative contributor shortly as well—although stronger-than-expected goods demand and a recent stabilization in used car prices might keep its net contribution very low in either direction.
The paychecks of some people in markets depend on correctly forecasting the Fed’s decisions. But be careful of getting whipped around by every data point. Fed is data-driven. They indeed ground their judgment about appropriate policy in data. It’s also true that the Fed is not a high-frequency trader. So smooth across the bumps; take three-month averages, for example, with this week’s retail sales. There was a big jump in January after two sizeable declines. On balance, spending growth is slowing.
In addition, the Fed will get data on employment (including any revisions to January), the CPI, and retail sales for February, as well as PCE spending and inflation for January before it votes in March. It’s too soon to say what its next move will be.
Private markets don’t ‘launder volatility’, honest
Is this approach wrong? It’s pretty clear that public markets overreact to information, and can diverge substantially and durably from their fundamentals. Instead of calling it “laundering volatility”, perhaps private market NAVs actually bring a healthy dose of prudence and reason to an otherwise wildly gyrating financial system?
I’d argue that these NAVs should even be seen as a valuable source of independent financial information — although still available on average with a three- to six-month delay.
The maze is in the mouse—What ails Google. And how it can turn things around.
Wholesale Used-Vehicle Prices See Large Increase in First Half of February
FOREIGN
Key article shows China aiming to tackle major economic issues in 2023 and Xi's article on economic work published. I don’t speak Communist, so I can’t make much of this, but I am told it indicates that a big housing bailout is NOT coming, domestic consumption will be the policy focus, and attracting foreign capital is a goal. The attracting foreign capital policy doesn’t seem super consistent with the disappear Bao Fan policy, but I’m not the target audience.
The Israeli Agents of Chaos—A remarkable series of articles from Haaretz in conjunction with Forbidden Stories (confusingly a journalism NGO and not softcore porn on Cinemax) about mimetic combat. Team Jorge is a must read.
Demographer James Liang on China's extremely low fertility
In general, the total fertility rate (TFR) between 1.3 and 1.5 is referred to as an ultra-low fertility rate. A case in point is Japan, whose TFR stands at 1.4. In China, if there are 9.56 million births per year (the 2022 level), the TFR is still less than 1.1, only half of the replacement level and even 0.3 lower than Japan's and 0.5 lower than western developed countries. Such TFR can be called an extremely low fertility rate and is almost among the world's lowest, only slightly higher than South Korea. Predictably, China will face more severe birth shrinking and population aging than any other country. Worse, its 2022 decline is just a start — there is little chance to reverse it in the short term.
Here’s the better definition of victory. Ukrainians rose up against their domestic tyrants. Why? Because they wanted to join Europe. It’s the same goal that they have now. And that has to be the definition of victory: Ukraine gets into the European Union. If Ukraine regains all of its territory and doesn’t get into the E.U., is that a victory? As opposed to: If Ukraine regains as much of its territory as it physically can on the battlefield, not all of it, potentially, but does get E.U. accession—would that be a definition of victory? Of course, it would be.
Ukraine, the tomb of liberal nationalism
I have no brief for Mr. Putin. The fellow is, so far as I know, a snake. Let us assume he is a snake. It is also the case that the United States of America must share the planet with Mr. Putin, and with many other snakes. But, compensating the management so generously as I do, I do expect it to show genuine expertise in the field of snake-handling.
Looking at the objective results of our Ukrainian policy, you could swear we were devils—devils governed by devils, maybe—and had it in for the people of the Ukraine. They had sinned, we decided. So they needed to be spanked by the hard hand of war. For—reasons. Who knows. There must be reasons. Crypto scams, camgirls and spam?
While many liberals are indeed consistent in their default-liberal ethics, liberalism as a movement never seems able to detach itself from its ruthless unprincipled cousin. The conservative is a conservative not because he does not respect default liberalism—he often used to be one—but because he knows it can never defeat its ugly cousin.
In particular, liberal nationalism is always an expression of Machiavellian liberalism; and default liberalism always supports Machiavellian liberalism against conservatism. This is why it always makes most sense to study historical leftism as a unity, despite the notoriously fissiparous nature of leftist parties and sects.
US/CULTURE
The Class Politics of Instagram Face
Because, as these women know, natural looks have always been, and still are, more valuable than artificial ones. Partly because of our urge to legitimize in any way we can the advantages we have over other people. Hotness is a class struggle. The beauty of the princess justifies her estate. The symmetry of the wealthy, the sanity of the system. One is never insecure about one’s rightful place, and what could be more insecure than a nose job?
The current oligarchs may deserve opprobrium, but the ultimate danger posed by the nonprofit tsunami lies in their feckless embrace of a policy agenda that undermines the very essence of competitive capitalism. Like feudal lords, this new elite, emboldened by a common ideology, may continue to thrive in a world of frozen social relations, but only by destroying the very system that brought them their own good fortune—and that could someday threaten even their own privileged position.
Look, this is going to sound crazy. But know this: I would not be talking about Bing Chat for the fourth day in a row if I didn’t really, really, think it was worth it. This sounds hyperbolic, but I feel like I had the most surprising and mind-blowing computer experience of my life today.
Here’s the twist, though: I’m actually not sure that these models are a threat to Google after all. This is truly the next step beyond social media, where you are not just getting content from your network (Facebook), or even content from across the service (TikTok), but getting content tailored to you. And let me tell you, it is incredibly engrossing, even if it is, for now, a roguelike experience to get to the good stuff.
A Black Professor Trapped in Anti-Racist Hell.
Related: JFK’s inaugural—Those who foolishly sought power by riding the back of the tiger ended up inside
The Temptations of Carl Schmitt
If portions of the American right have today turned to Schmitt as a guide, it may be because they now have plenty of reason to believe the purported procedural neutrality of the liberal technocratic state is nothing but the thinnest of veils covering an existential antagonism; that in truth the crucial political distinction has now already been made for them: they have been identified, in concrete clarity, as the enemies of the state.
Thus for Schmitt, like for so many today, the deepest problem of life was fundamentally the question of how to deal with what Weber had described as modernity’s “demagification of the world (entzauberung der welt).” Schmitt would, over the course of his intellectual career, seek – in all the worst places – for a way to re-enchant that world.
This was a quest that likely would have been quite a bit simpler and more productive if, for Schmitt, God hadn’t been dead.
Schmitt would, until his dying day, vociferously defend himself as having always remained a lifelong Catholic. I find this doubtful.
We now have the most authoritative estimate of the value provided by wearing masks during the pandemic: approximately zero. The most rigorous and extensive review of the scientific literature concludes that neither surgical masks nor N95 masks have been shown to make a difference in reducing the spread of Covid-19 and other respiratory illnesses.
The Booming Market for Backdoor Ozempic
Healthcare lawyer Harry Nelson says there are “well over 100” businesses across the U.S. now peddling off-brand semaglutide. Most get the Novo Nordisk knockoff from compounding pharmacies—places that mix and combine active ingredients to create custom formulations. A quick online search pulls up promises for same-day prescriptions with no office visits needed. While none of this is illegal, medical experts question the ethics of the off-label boom.
All About the New Weight Loss Drugs
Out of all the weight loss drugs the industry has pushed and tested and tried, the GLP-1 agonists actually help people lose weight.
A recent paper tested semaglutide for two years in obese people.1 The average starting body weight was 106 kilos, or 233 pounds. Average starting BMI was 38. Most were women. One group got the drug, the other got placebo. Both groups were counseled to follow a “behavioral intervention,” which probably means exercise and other typical things.
By 104 weeks, the semaglutide group had lost an average of 15.2 percent of their bodyweight. The placebo group had lost an average of 2.6 percent.
Liraglutide has been shown to increase adipogenesis, the creation of new fat cells, at least in mice.8 Even as the rodents lost weight, they increased the number of fat cells in their body. This is a process that normally occurs in childhood. It’s one reason why childhood obesity is so hard to overcome and so often leads to adult obesity. You have a ton of “extra” fat cells from when you were obese as a kid, so filling them up becomes easier and easier. If liraglutide or semaglutide also increase the creation of new fat cells, what happens when you stop taking it? What happens in five or ten years? Do those “empty” fat cells quickly fill up? It’s an interesting question we simply don’t know the answer to. Yet.
Teenagers need about nine hours of sleep a night—but they get closer to seven. And around puberty, their circadian clocks shift by a couple of hours, meaning they get tired later at night than before and wake up later in the morning than they used to. This shift reverses at adulthood. The biological nature of this daily rhythm means that sending a teenager to bed earlier won’t necessarily mean they fall asleep earlier.