As a result of western governments’ taking collective action under the auspices of a ‘climate change’ agenda, we are on the cusp of something happening with ramifications that no one has ever seen before.

Western governments’, specifically western Europe, North America (U.S-Canada) and Australia/New Zealand, are intentionally trying to lower economic activity to meet the intentional drop in energy production.

This is the core consequence of the Build Back Better agenda as promoted by the World Economic Forum.

Anyone who says there is a reference point to determine both the short-term and long-term consequences is lying. There is no precedent for nations’ collectively and intentionally trying to reduce economic activity.

Hiding behind the false justification that current inflation is driven by too much demand, central banks in Europe, the Bank of England, Bank of Canada and U.S. federal reserve are raising interest rates.  The outcome we are currently feeling is an intentional economic contraction and global recession.

The Build Back Better monetary policy is successfully shrinking western economic activity; however, the impacted nations that produce goods for markets in North America and Europe, specifically southeast Asia, Japan and China, are not raising interest rates in an effort to try and offset the drop in demand.  China has announced they are dropping their central bank rates in a desperate effort to lower costs and keep their export dependent economy working.

Underneath all of this, is a drop in energy production in the same nations trying to lower economic activity.  The political policymakers are attempting to manage this process without informing the citizens of the unspoken goal.   Shortages of oil, coal and natural gas are self-inflicted problems, all part of the BBB agenda.

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In the second quarter of 2021 Target earned $1.82 billion in profit.  In the second quarter this year, target earned $183 million. That’s the result of inflation hitting the middle-class consumer.

Few people are buying electronics, home goods, durables or clothing.  Any retailer that specializes in the sale of non-essential items is going to feel the financial results of working-class families reprioritizing their spending.  Checkbook economics is the economics that matters.

Hopefully, CTH readers are well prepared for this phase of the Joe Biden economy. It will almost certainly get worse.

(Daily Mail) – Target reported on Wednesday that its profits plunged nearly 90 percent last quarter after it was forced to slash prices to clear unwanted inventories of clothing, home goods and electronics.

In early June, Target warned that it was canceling orders from suppliers and aggressively cutting prices because of a pronounced spending shift by Americans as inflation cuts into spending on non-essential items.

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Looks like we are going to find out exactly what Joe Manchin’s leverage was over Joe Biden, Nancy Pelosi and Chuck Schumer {REMINDER HERE}.

On July 31, According to Manchin the deal between himself, Chuck Schumer, Nancy Pelosi and Joe Biden includes his support for the current green energy spending, in exchange for two new items in future legislation: 1) Streamlined energy permitting/regulation; and 2) Increased development of Oil, Coal, Gas.  Both of these pieces of legislation have to be handled in a separate Senate bill.

According to Manchin, his agreement to the current spending bill was contingent upon a promise that: (A) Senate Majority Leader Chuck Schumer will generate a new bill for streamlined energy permitting and increased oil, gas and coal development; (B) House Speaker Nancy Pelosi will take up the Senate bill and whip enough of her House Democrat membership to join with Republicans in support of that Senate bill; and (C) Joe Biden will sign that increased energy production bill.

Here’s the important part.  Senator Manchin claimed he has leverage over Biden, Pelosi and Schumer to ensure a new bill with those priorities is created and advanced.  Manchin further claimed there were “consequences” for Biden, Pelosi and Schumer if they were to renege on the deal.  He is quite emphatic about that point if you listen to the NBC interview. (LINK)

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Neil Oliver returns from a vacation to deliver one of his best contemplative monologues to date.  Mr. Oliver rightly says that if you reset your historic reference points, and you begin to recognize that thinking the unthinkable is actually the best reference point for your current state, it is like a key that unlocks the answers.

We are the battered spouses in an abusive relationship with government. Nothing we can do is going to appease the abuser, it is the inherent state of their disposition. WATCH:

[Transcript] – It is hard to think the unthinkable – but there comes a time when there’s nothing else for it. People raised to trust the powers that be – who have assumed, like I once did, that the State, regardless of its political flavour at any given moment, is essentially benevolent and well-meaning – will naturally try and keep that assumption of benevolence in mind when trying to make sense of what is going on around them.

People like us, you and me, raised in the understanding that we are free, that we have inalienable rights, and that the institutions of this country have our best interests at heart, will tend to tie ourselves in knots rather than contemplate the idea those authorities might actually be working against us now. I took that thought of benevolent, well-meaning authority for granted for most of my life, God help me. Not to put too fine a point on it, I was as gullible as the next chump.

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The price differential is remarkable.  In this report from NewsNation, they follow Americans who travel to Mexico for their essential purchases.  Not only is gasoline over a $1/gal cheaper, but everyday essential items are significantly lower.

Retailers in the video highlight an increase in sales of 20 to 30% from cross border shoppers. Biden’s economic plan is Making Mexico Great Again.  WATCH:

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The Bureau of Labor Statistics (BLS) has released the July inflation figures known as the Consumer Price Index (CPI) [DATA HERE]. I’m not going to spend much time on the review because the big picture results are exactly what we expected, the appearance of a false inflation plateau, drop and/or moderation of inflation.

The July energy prices dropped significantly driven by a reduction in consumer demand for gasoline and fuel oil, which lowered prices.   We can expect a very similar outcome in August (report in Sept).

Most financial and economic media are reporting an “unexpected” drop in inflation, ex:

“Prices that consumers pay for a variety of goods and services rose 8.5% in July from a year ago, a slowing pace from the previous month due largely to a drop in gasoline prices. On a monthly basis, prices were flat as energy prices broadly declined 4.6% and gasoline fell 7.7%. That offset a 1.1% monthly gain in food prices and a 0.5% increase in shelter costs. {link}

Most econ people will look at the price drop sectors and accept that consumer spending on durable goods and non-essentials has become a downward price point on key categories like vehicles etc.

This is the ‘stag’ part of the ‘stagflation’ (economy), or the new lingo; the ‘dis’ part of the ‘disinflation’ (consumer spending).

For the middle-class or working class, especially those families with young children, I would shake all those data points away, clear the table and look more closely at [BLS Table-2] to see where our eyeballs should be focused.

Look closely at all food group products that originate as “ROW CROPS” and/or “GRAIN”.   Just by looking at the current rate of price increase, you can easily see that all grain and row crop outcomes are going to explode in price in around 60 to 90 days.

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The previous first quarter productivity drop of 7.4% was the largest quarterly drop in 74 years.  Today the Bureau of Labor Statistics (BLS) reports the second quarter productivity dropped another 4.6% [Data Here].

For July, companies are paying 5.7% higher wages and getting a 4.6% drop in output, resulting in a total unit labor cost increase of 10.8%.  That increase in final output cost will either result in higher prices or lower profits.

With weak consumer purchasing (low demand) already creating an inventory surplus, hence lower outputs, lower profit leads to cutbacks.  The largest company expenses are generally labor and energy costs. The more variable and controllable of those two expenses is labor.  You know what comes next.

(WSJ) – […] Rising productivity is the key to improving living standards; it allows companies to raise wages without raising prices and fueling inflation. Instead, businesses appear to be paying workers more to produce less. The higher unit labor costs suggest companies will either endure lower profits or pass on higher costs to consumers.

“The trend in productivity growth has worsened compared to prior to the pandemic, and the surge in unit labor costs makes the Fed’s challenge of getting inflation back down to its 2% target all the more challenging,” Wells Fargo economist Sarah House said in a research note.

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Prior to the 51-50 passage of the massive $700+ billion democrat spending bill, they called it the “inflation reduction act.”  However, after Senate passage they are now calling it the climate change bill.  Funny how that happens.

The bill itself contains absolutely nothing that will lower inflation; in fact, the bill itself will raise supply-side inflation in direct proportion to the energy production it reduces. To offset the contracted revenue caused by a much smaller economy, the Democrats have doubled the IRS tax army that will enforce personal income tax compliance.

The income tax compliance portion of the bill is very significant on two fronts.  First, it literally doubles the size of the IRS, giving them much more power to conduct audits and capture taxes from income earned.  As a review of tax audits has shown, the ordinary U.S. taxpayer is the target of this increase enforcement mechanism, not corporate tax review.

WASHINGTON – […] The bill, a product of 18 months of intense wrangling, passed by a margin of 51 to 50 on Sunday with Vice-President Kamala Harris casting the deciding vote. It was previously blocked by two Democrat senators who shared Republican concerns about its cost.

The Senate bill includes $369bn for climate action, the second largest investment on Green New Deal spending in US history.  The largest bill on climate change was the previous Obama-era American Recovery and Reinvestment Act (AARA), that paid billions of dollars to solar groups (ex. now bankrupt Solyndra) and climate energy companies connected to Democrat donors.

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The great pretending continues.  During a Sunday talk show appearance, San Francisco Fed Chair Mary Daley states, “what I see is supply and demand are just unbalanced. About 50% by my own staff’s estimates of the excess inflation we see is related to demand. The other 50% to supply.”  Note, she is not talking about energy.

Margaret Brennan, maintaining her position as the professional CBS narrative engineer, never thinks to ask: (a) where is this demand you speak of, and what exactly are they demanding? and/or (b) What is this 50% inflation on the supply side connected to?  Obviously, an actual probing of inflation wasn’t in the script. The great pretending continues.  [Transcript Here]

CTH has stated without reservation that August’s inflation report will show a significant –albeit temporary– drop in inflation as measured by the govt.  The drop in gasoline prices throughout July (created by a drop in demand) will allow the fiscal and monetary policy makers to falsely claim overall inflation peaked. However, after a brief respite the inflation now growing in the ground (massive increases in farm costs), will then launch into the food supply chain.  This delayed food inflation will overtake the energy inflation in the latter part of this year.  WATCH:

[Transcript] – MARGARET BRENNAN: We turn now to the state of the economy and the president of the San Francisco Federal Reserve Bank, Mary Daly. Good morning to you.

FEDERAL RESERVE BANK OF SAN FRANCISCO PRESIDENT MARY DALY: Good morning.

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The good news is that gasoline prices have dropped in the past several weeks to an average of $4.13/gal.  However, the bad news is that most of the drop in price is related to gasoline demand dropping to the same level as July 2020 during the pandemic lockdown phase.

Obviously, $4.13/gal is still a very high price for gasoline, and that is leading to fewer people purchasing gasoline.

(Via Fox) – […] New data from the Energy Information Administration (EIA) shows that gas demand dropped from 9.25 million barrels per day to 8.54 million per day last week. That’s 1.24 million barrels per day lower than last year and “in line with demand at the end of July 2020,” when there were widespread virus-related restrictions and fewer people were hitting the road, according to AAA. 

The latest demand figures bolster a recent AAA survey that revealed 64% of drivers had changed their driving habits or lifestyle since March to offset the high prices at the pump. (read more)

If you think about the position of the Organization of Petroleum Exporting Countries (OPEC or OPEC+), it makes sense for them to recognize the intentions of the western leaders to shrink the western industrial economies and respond accordingly.

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