Water is flowing uphill. Why?

El gato malo does more intelligent analysis in a week than the idiots in our governments do in a year.

Today’s analysis suggests Dr. Geert Vanden Bossche was correct in predicting that applying a leaky vaccine effective at preventing sickness in the middle of a pandemic was a very bad idea.

https://boriquagato.substack.com/p/are-leaky-vaccines-driving-delta

all a virus wants is to replicate. “make a copy of me and pass it on.” that’s the biological imperative of the selfish gene. excel at it, you win. fail, you disappear. simple as that.

killing or harming the host is maladaptive to viral spread. it’s like burning down your own house with your car in the garage. now you have nowhere to live and no way to get around. that’s not a recipe for reproductive fitness.

so viruses evolve to become less, not more virulent. they do not want to kill you. ideally, they’d like to help you. figure out how to be a useful symbiote, and you get a huge boost in propagation. (mitochondria were probably bacteria that were so useful, all our cells incorporated them.)

so seeing case fatality rate (CFR) rise in a variant of a virus is like watching water flow uphill. it’s not supposed to do that and when it does, you need to suspect some external force acting on it.

and we’re seeing water flow uphill here.

Key points:

  • Case Fatality Rate (CFR) is rising for Delta and is probably not caused by Antibody Dependent Enhancement (ADE) or Original Antigenic Sin (OAS) because CFR is rising in both vaccinated and unvaccinated, and is not rising in previously infected, and Vaccine Efficacy (VE) for deaths remains good.
  • The most probable explanation is Vaccine Mediated Evolution (VME) in which a leaky vaccine that keeps the host healthy causes the virus to evolve to a more deadly variant.
  • Vaccine Efficacy (VE) on spread is negative (bad) because infected people don’t know they’re infected which accelerates spread.
  • Everyone is harmed but unvaccinated are worse off creating the illusion that the vaccines are a good idea.

it’s just simple math. if we do something to one group that makes their death rate rise from 1 to 2 per 100 but that also makes the death rate in another group rise from 1 to 4 per 100, that looks like a VE of 50%. in reality, it’s killing 100% more vaxxed people and 300% more of the unvaxxed.

mistaking that gas pedal for the brake and pushing ever harder when you fail to slow would represent an accelerating disaster curve.

I like that el gato malo seeks to prove himself wrong. That’s a strong signal for someone with integrity and intelligence that we should trust.

it’s still, or course, possible that i’m wrong, but this is looking more and more like it has to be the answer. i can find nothing else fits the facts and the facts themselves are weird enough that “it’s just normal” does not look like a satisfying explanation either and we have enough features here that we can really start testing our puzzle pieces. this one aligns in an AWFUL lot of places.

for something this odd to happen, it takes a truly uncommon exogenous stressor.

i’m just not seeing what else it could be than vaccine mediated selection for hotter variants driving pernicious delta evolution.

so, i’m putting this out to you all to see if you can find some other explanation for what’s going on that fits these facts.

looking forward to the peer review as, honestly, i hope i’m wrong here. this is not an outcome that anyone wants. it’s the nightmare scenario both as a pandemic and as a political horror in the making as if this was an “own-goal”, what would the experts and politicians that pushed this plan not be willing to do to avoid accepting the blame?

because this is career or pharma franchise polonium, and that’s if you’re lucky.

I also very much like that el gato malo does not subscribe to crazy conspiracies that lack evidence. I would of course augment el gato malo’s explanation by including an element of genetic reality denial in our leaders.

“But what is the end game if purposefully designed this way?”

i don’t think it was. i think these fools really thought mRNA and adenovirus carrier vaccines would be sterilizing.

they pushed them as herd immunity.

having it all fall apart cornered them but by the time they knew it, they were “pot committed” and had already vaxxed 100’s of millions of people.

this has been this shiny tech they have been trying to make work (and recoup money on) for decades and failing over and over.

i doubt this was deliberate. it was just stunningly arrogant and reckless.

So now the million dollar question:

Assuming a better explanation does not emerge, what should an unvaccinated person do?

Prioritizing self-preservation this analysis suggests one should either:

  • get vaccinated, or
  • acquire natural immunity by deliberately getting infected before the variants become more deadly, and apply early treatment protocols to maximize the probability of a successful recovery.

Choosing to get vaccinated makes the most sense if:

  • you are in a high risk group (old or obese)
  • you do not care about worsening the overall outcome for both vaccinated and unvaccinated.

Choosing natural immunity makes the most sense if:

  • you are in a low risk group
  • you are concerned about the yet to be established long term health effects of the novel vaccines
  • you want to be a good citizen and do what is best for everyone.

I’m old but not obese which makes the choice difficult.

I’m going to watch the data and hope for a better explanation to emerge for a while longer before making a decision.

You can’t make this shit up: observe that our “leaders” are pushing hard in exactly the opposite direction of what wise leaders would do if this VME hypothesis is correct:

  • stop further vaccination of low risk people
  • start collecting the data necessary to prove or disprove this hypothesis
  • promote healthy immune systems (vitamin D, weight loss, etc.)
  • aggressively evaluate and deploy promising early treatment protocols (Ivermectin etc.)
  • aggressively investigate root causes and modify policies to prevent a recurrence.

One more observation to make you admire our “leaders” even less:

the same NIH that was funding the GoF research in wuhan miraculously had the viral code to drop into the moderna mRNA vaccine in under 2 weeks.

that always smelled like a sushi bar dumpster.

https://boriquagato.substack.com/p/were-some-folks-a-little-too-prepared

17-Oct-2021 Addition

In a paper today, Dr. Geert Vanden Bossche argues that boosters will probably boost the virulence of Delta rather than long term protection from severe disease.

Israel is misreading their booster results by only tracking booster effectiveness for 12 days.

https://www.geertvandenbossche.org/post/what-happens-if-israel-fails-the-stress-test

17-Oct-2021 Addition

El gato malo reviewed new UK data today which supports his Vaccine Mediated Evolution (VME) hypothesis.

Rate of cases down 30% from a year ago. CFR up 3x since June.

getting 50% protection from a tripling in virulence caused by the vaccines is still a net loser for the vaccinated. and it’s savage for the unvaccinated. everyone loses. and this evolution is ongoing.

establishing what is going on here should be the all hands on deck mission of global public health right now.

none of us want to be living in the world where we leaky-vaxxed ourselves into a second pandemic by reversing the evolution of one that was about to go endemic and harmless.

that’s a terrible place to be.

but if that IS where we are, we need to know, and we need to know right now.

https://boriquagato.substack.com/p/is-this-the-smoking-gun-for-leaky

I keep searching for a rational reason for the obsession with 100% vaccination, other than assuming every health official in every country of the world is corrupt, because that seems improbable.

What if they’re aware of the Vaccine Mediated Evolution (VME) trend and know that their mistake of vaccinating more than the high risk with a leaky vaccine will kill many more unvaccinated than vaccinated?

They can’t disclose the real reason for the push for 100% because they would lose their credibility and jobs.

This would also explain why they’re so willing to accept possible long term vaccine side effects in low risk children.

It’s analogous to continuing to print money long after it no longer provides a net benefit, because you know if you stop many will be harmed on your watch, and if you continue, many more may be harmed in the future, but it will be on someone else’s watch, and maybe someone will think of something by then.

21-Oct-2021 Addition

A fresh, intelligent, clean sheet, big picture review of vaccine efficacy vs. risk. I remain impressed with el gato malo’s productivity and clarity of thought.

https://boriquagato.substack.com/p/properly-measuring-vaccine-efficacy

– measuring vaccine efficacy as % reduction in likelihood of severe outcomes can be misleading

– we must also measure absolute risk reduction. 50% drop from 20% risk is very different from 50% drop on 0.2% risk

– vaccines seem to show % efficacy in reducing hospitalization and death

– but for the young, healthy, and recovered, risk was already so low that the absolute drop does not look like good risk/reward vs side effect profile of the vaccines

– vaccines do not provide sterilizing protection against spread and seem to make it worse. there is no case to be made for societal obligation to vaccinate to protect others.

– mandating vaccination rather than allowing personal choice based on individual circumstance will inflict net harm on a great many people

– that’s immoral and represents medical malpractice

478 thoughts on “Water is flowing uphill. Why?”

  1. Dr. Sebastian Rushworth reviews a new Swedish study…

    As I see it, there are two possible explanations for the rapidly declining effectiveness of the vaccines. The first is that it’s due to the limited immunity produced by the vaccines themselves, and the second is that it’s due to the continued evolution of the virus and in particular the rise of the delta variant. If the second reason is true, then there is no reason whatsoever to give people boosters, because the boosters won’t do anything to improve immunity.

    If the first reason is true, then there is a case to be made for boosters, although it feels pretty absurd to give everyone a booster every four months to protect against a virus that for most people is little more than a cold, that 99,8% of infected people will survive, and for which there is now massive natural population immunity, thanks to all the people who have already had covid. Unlike the short-term protection offered by the vaccines, the protection generated by infection has been shown to be both durable and broad, in spite of junk science claims to the contrary produced by the CDC. There is however a pretty good case to be made for regular boosting of the multi-morbid elderly every four months, preferentially with the Moderna vaccine.

    So, what can we conclude?

    The vaccines are much less effective than was initially believed, and effectiveness declines rapidly. With that being the case, the idea that it’s going to be possible for countries to vaccinate themselves out of the pandemic is clearly nonsense. The only way the pandemic ends is by enough people getting infected and developing natural immunity, which is the same way every prior respiratory virus pandemic has ended.

    https://sebastianrushworth.com/2021/11/05/covid-how-long-does-vaccine-based-immunity-last/

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  3. I thought Eugyppius was perhaps an ancient name -one of the early commentators on the works of Aristotle or some such. But this dude Rob likes may have named himself after an Old World vulture…

    Aegypius is a genus of Old World vultures found in the subfamily Gypinae. Of the three species in the genus, only the cinereous vulture is extant. The Cinerous vulture (Aegypius Monachus) is a creature that is hard to find as it is “a near threatened raptor that occurs in isolated populations across its range” (Çakmak). There were studies being conducted on the cinerous vulture and it indicates “that the Turkish birds hold, along with those from the Caucasus, an intermediate position between European (Balkan and Iberian) and North Asian (Mongolian) lineages” (Çakmak). The genus name Aegypius is a Greek word (αἰγυπιός) for ‘vulture’, or a bird not unlike one; Aelian describes the aegypius as “halfway between a vulture (gyps) and an eagle”. Some authorities think this a good description of a lammergeier; others do not. Aegypius is the eponym of the species, whatever it was.[1]

    Aegypius

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  6. Rob, you’ve mentioned trees being stressed by ground level ozone pollution. But did you know trees can die of drought-induced xylem embolism?

    “ In some cases, the deaths are a result of carbon starvation, in which trees close their pores, essentially starving themselves by blocking the entry of carbon, which is needed for photosynthesis. Or the culprit is hydraulic failure: the inability of a plant to move water from roots to leaves.

    Adams explains that 99 percent of the water moving through a tree is used to keep stomata open. Stomata are the pores that let in carbon dioxide, allowing a tree to carry out photosynthesis.

    Trees respond to the stress of drought by closing these pores. They then need to rely on stored sugars and starches to stay alive, and will die if these run out before a drought ends.

    If a tree loses too much water too quickly, an air bubble (embolism) forms. The tree then has hydraulic failure and cannot transport water from the roots to the leaves, causing it to dry out and die.

    The scientists found that hydraulic failure is universal when trees die, while carbon starvation is a contributing factor roughly half the time.” 2017

    https://nsf.gov/news/news_summ.jsp?cntn_id=242634

    https://nph.onlinelibrary.wiley.com/doi/abs/10.1111/nph.17786

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    1. I love their videos but honestly the wind turbine stock footage and blathering on about EVs is really annoying me.
      In terms of good to society from govt subsidies, I’d rather they were all going to fossil fuels. Or better yet … noone gets subsidies!! and we let the economy decline – which is the only real way to reduce emissions anyhow 🙂
      People really need to grow up and tell the truth about our predicament, including in satire

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        1. I just decided to run some quick numbers. Even if the economy barely grew (less than 1% GDP per year), we would be completely out of oil by 2055. A fast growing economy would get us there around 2045 – disregarding the cliff obviously. A percentage point difference in GDP tends to only +/- 5 years. Net zero by 2050 can be easily achieved by doing absolutely nothing except growing the economy, even if it’s subpar growth 🙂

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          1. Thanks.

            I suspect we’ll effectively be out of oil long before the reservoirs run dry due to cascading effects of debt default, capital market collapse, infrastructure decay, transportation breakdowns, grid instability, social unrest, war, etc.

            It’s so close and so decisively devastating on everything we value that it’s gobsmacking that so few see it coming, hence my interest in Varki’s MORT theory.

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              1. That was very interesting, thank you.

                Trucking is vital to everything in our modern lives, and it’s pretty vulnerable as Alice Friedemann explained in her excellent book.
                https://un-denial.com/2017/04/30/by-allan-stromfeldt-christensen-book-review-when-trucks-stop-running/

                Notice that none of the current problems Ryan Johnson discussed are caused by diesel shortages or price increases. God help us when trucking diesel demand exceeds supply.

                I’m pretty relieved that most of my preps complete.

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                  1. Every once in a while I offer small tips:
                    https://un-denial.com/2020/12/26/preptip-save-your-sole/
                    https://un-denial.com/2021/04/20/overshoot-doubt-chris-clugston-kills-it/comment-page-1/#comment-40997
                    https://un-denial.com/2021/09/03/retreat-to-sanity/comment-page-1/#comment-49472
                    https://un-denial.com/2021/09/03/retreat-to-sanity/comment-page-1/#comment-48916
                    https://un-denial.com/2021/10/02/take-us-to-defcon-1/comment-page-1/#comment-49685
                    https://un-denial.com/2021/10/02/take-us-to-defcon-1/comment-page-1/#comment-49786
                    https://un-denial.com/2021/10/05/book-review-by-aj-our-one-and-only-spaceship-denial-delusion-and-the-population-crisis-by-eric-pianka-laurie-vitt-2019/comment-page-1/#comment-49943
                    https://un-denial.com/2021/10/10/water-is-flowing-uphill-why/comment-page-1/#comment-51555

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                    1. Thanks for the tips. Funnily, I have added hiking to my hobbies just shortly before Covidmania started. While 2020 was a huge success in this regard, the weather this year was really bad for going outside. Maybe that is one of the reasons why my mood decreased siginificantly during 2021 (in addition to Covidmania).

                      At the moment, I am looking for the right shoes. After watching this entertaining video, I am still not sure, which way to go:

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  9. Tim Watkins is excellent today.

    I’ve heard the argument before that reducing consumption of gasoline would reduce the availability of vital diesel we need for farming, mining, and trucking.

    I’m not sure I totally agree. You can power trucks and tractors with gasoline engines. They are less powerful and less efficient but they do work. I suppose you could argue that we can’t afford to replace diesel engines with gasoline engines which may be true depending on the rate of transition.

    For most of those discussing climate change both inside and outside the COP26 conference this week, there appears to be little awareness even that oil and gas are actually fossil fuels. The activist demand that humanity – or even that part of it which lives in the developed states – cease consuming fossil fuels immediately, would bring about mass fatalities on a scale which would make Hitler, Stalin and Pol Pot blush, as each one of our life support systems – food, water, lighting and heating, healthcare, etc.. – failed within a matter of days. Indeed, even without a full-scale cessation of use, shortages and high prices would disrupt the economics of what are better referred to as “fossil carbons,” if we are to include the full range of products derived from them:

    This is because there is little scope to vary the substances derived from a barrel of oil during the refining process. Petrol – largely a waste product – accounts for the majority of a barrel and is sold to the public as a means of subsidising the price of the more valuable products – especially diesel fuel. One consequence of the proposed switch to electric vehicles is that most of those other products will become unaffordable; not just because of the loss of petrol sales, but because of the new requirement to somehow dispose of all of that petrol.

    The shear volume of products derived from oil which we take for granted but which we would struggle to do without is mind boggling. And yet ill-informed activists, corporate CEOs and supposedly responsible political leaders are warmly applauded when they propose an immediate end to fossil fuels before we have had a serious debate about the kind of economy we could realistically have with the available alternatives (as opposed to fantasy technologies which do not – and in many cases cannot – exist).

    https://consciousnessofsheep.co.uk/2021/11/08/beyond-the-green-false-deal/

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          1. My guess? His wife finally put the hammer down, demanding he obtain a real job so that they could move out of the primitive cabin and possibly have another baby without her having to carry the entire financial load. He garnered a lot of criticism from doomers when he had that first kid, so he started coming up with excuses as Eric Holthaus did. Pathetic, really.

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            1. I’m sorry, I didn’t ever get that impression. My take on his perspective is that he thought that blogging in the face of extinction was kinda pointless. Also I got the impressions that he was concerned about being more of a “gray man” and becoming more inconspicuous in his rural location. My take on all us doomers is that we are a highly critical lot that spend far too much time defending our take on how this should all end and where that end will be (re: constant internecine sniping at Doomstead Diner for years!). As I said below, I think Tdos had some of the most elegiac writing I have ever seen on the web or in written literature. He was a gift.
              AJ

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              1. . . . and my take is on the potentiality of his wife’s influence. I certainly have no gripes concerning the man’s writing, but I always pay attention to action, not verbiage, and I cannot possibly respect someone who reproduces while in the midst of analyzing possible near-term extinction and definitive suffering.

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        1. Maybe because if we don’t collapse real soon we will destroy the biosphere completely for all life (Maybe we already have completely destroyed it, but every day that BAU continues we come closer to crossing the line of no return). He had some of the most profoundly beautiful yet haunting writing I have ever read on the web.
          AJ

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        2. The concluding paragraph of his first post touches on why it is called pray for calamity.

          “We won’t shop our way to a livable planet. We won’t vote our way to a livable planet. We won’t garden our way to a livable planet. We will not maintain a livable planet hiding in our homes, waiting for those with power and wealth to make it so. We will not survive if we are obedient to those who run the machine. To be sure, even outright attacking the industries that kill the living planet may not be enough. There is no reason to hope, only a roll of the dice that is heavily weighted against us. But we have allies. Hurricanes and droughts and wildfires and all of the other natural forces of destruction will grow in frequency as human civilization further destabilizes the climate. We can let the juggernaut of calamity bowl over us, primarily the least among us, or we can act strategically to save habitat, to save life, and maybe, just maybe, have something make it to the other side of the bottleneck.”

          I think it’s a very appropriate name for a blog about the perils of modern industrial civilization. While there are plenty of others, I agree with AJ that prayforcalamity was particularly well written.

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  12. We’re bottle feeding lambs at the moment. We bought new bag of milk powder and it kept settling out so I rang the manufacturer. I was told that they are having trouble sourcing the raw ingredients to make milk powder and what is around is really expensive. The raw ingredients for milk powder is….. milk. There is a scarcity of milk. In Australia! I haven’t read that on the news.

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        2. Yes I only recently learned it would be impossible to make milk powder at home. It basically has to be blown and heated at the same time

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  13. Good analysis today of risk vs. benefit data by el gato malo.

    this is an atrocity.

    these signals are so blatant, especially among the young that having them crop up post approval is a staggering indictment of the process by which they were authorized.

    there is just no way this should have happened.

    these vaccines are not only non sterilizing, but they are incredibly dangerous in comparison to not only any other vaccine ever rolled out but, for the young and healthy, even compared to the disease they are supposed to help.

    the “cure” is flat out worse than the disease.

    these vaccines have clear negative cost/benefit for young people, especially kids, and for basically any healthy adult who lacks major comorbidities.

    they never showed ANY all cause death benefit, even in their trials.

    they not only do not stop spread, they likely make it worse.

    they may well be making the virus worse by inverting it’s evolutionary gradient.

    it’s shameful these were ever cleared for use and it ought to be criminal to mandate them.

    this whole tawdry tale of regulatory capture, crony capitalism, medical malpractice, and health agencies as propaganda services is now unravelling too fast to hide anymore.

    efficacy is dropping and covid is coming into season in the northern latitudes. by the end of december, this story is going to be in flaming tatters and if vaccines spread widely into school kids, the results are going to be too horrific to sweep under the rug.

    covid responses from lockdowns to masking to closing schools and pushing poorly conceived vaccines of notoriously problematic method of action is going to go down in history as the greatest public health policy disaster in the history of the human race. it has already won the crown.

    if you want this to stop getting worse, then gather your friends and make this stop.

    it’s long past time.

    https://boriquagato.substack.com/p/the-french-are-correct-to-stop-using

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  14. Excellent explanation of what’s going on in the world, and why so few people understand what’s going on. This might be Gail Tverberg’s best work ever.

    https://ourfiniteworld.com/2021/11/10/our-fossil-fuel-energy-predicament-including-why-the-correct-story-is-rarely-told/

    Gail explains WHY our leaders and experts believe fairy tales, but she does not explain HOW these mostly intelligent, educated, and well intentioned people can believe fairy tales.

    For the HOW you need Varki’s MORT theory:

    https://link.springer.com/chapter/10.1007%2F978-3-030-25466-7_6

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  16. No need to watch the whole thing but in summary inflation is rising enough to worry leaders who want to be re-elected.

    I’m very curious to see how the inflation/deflation dynamic plays out.

    Physics tells us people must become poorer. The big question is, can our leaders achieve a smooth (and peaceful) decline in our standard of living, or will there be some socially destabilizing event?

    I lean to a very rough ride because the debt we’ve used to deny reality has created an unstable system.

    Anyone have an opinion?

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    1. If I had to guess, I think that Mac10 is right and that the stock market must collapse (worse than 2008 or 1929) https://zensecondlife.blogspot.com/
      The question that should be asked is will the Fed try to save it – i.e. is the market to big to save? or is the fact that the dollar is the world’s reserve currency more important? Charles Hugh Smith asked that today and thinks the Deep State might screw the elite to maintain U.S. power in the world? https://www.oftwominds.com/blog.html
      Anybody’s guess but this can’t go on indefinitely (that’s growth on a finite planet). Denial has to face reality once in a while – it’s the subsequent scapegoating that I fear.
      AJ

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      1. One way to look at the mess is that if in reality there are no future returns this implies that rates will be zero, but stock prices can approach infinity. The higher the price of a security, the lower the predicted return. If the mass psychology makes this conclusion, the gig is up. In large part psychology is now levitated by ESG (wind and solar will save us and generate economic growth). Something real which would pop this bubble of denial is energy shortages in Western nations. But it could just as likely be food crisis in developing nations. The latter could lead toward developed nations being unable or unwilling to help, fracturing alliances and disrupting global trade among nations who disagree on taking political action. Either of these could create enough suffering that violent social revolution becomes reasonable in people’s minds. Nothing like the real prospect of freezing to death or going hungry to shake up peoples calculations on risk vs reward. Political rivals who were formerly just annoying now appear as existential threats.

        For instance, waves of refugees into a successful economy may be politically tricky – but waves of refugees into an economy suffering from energy shortages could get kinetic very quickly.

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        1. I understand that central banks adjust the interest rate to track economic growth. Energy (and too much debt) is constraining real growth so interest rates are low to keep the system functioning.

          The piece that seems to be missing from today’s equation, and the piece that confuses me, is that interest rates also reflect risk.

          If a borrower is perceived to be a default risk, say because they already have high debt and can’t afford higher energy prices, or if lenders are worried about being repaid with inflated currency, then lenders will either charge a higher interest rate to compensate for higher risk, or will not lend regardless of the central bank interest rate.

          When will these risk based forces re-emerge?

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            1. Yes, that’s one type of risk, but the other type of risk is being repaid with dollars that are worth less than when you loaned them. Inflation should force interest rates up, but if they do go up, everything explodes.

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              1. I’ve worked in a pricing related field since leaving uni and I can tell you regular businesses used to dismiss and rubbish the idea of high inflation and supply chain issues … those were supposed to be things of the past.

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              2. We’ve entered an era where raising rates seems very powerful, but lowering rates is not. I think it’s important to remember that most of the interest baring debt is about collateral rather than income from the basic instrument. So the risk of inflation is more on ordinary citizens (repaid with money worth less). This can reflect as retirees not having spending power. It’s balanced off partially in that borrowers find debt easier to pay off on some core obligations like mortgages in a higher inflation environment – at least historically when inflation also meant rapid wage increases.

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                1. I’m trying to understand what you said. When you say “most of the interest baring debt is about collateral rather than income from the basic instrument”.

                  Do you mean that most of our debt is used to speculate in assets and therefore as long as the price of those assets increases faster than inflation lenders ignore the inflation risk?

                  If yes, I still don’t understand why lenders can ignore the risk of being repaid with devalued dollars. Please explain.

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                  1. I think the retail lender (“investor”) is at great risk. Other types not so much, since most of them aren’t lending (investing?) cash. I think most of this exists as unrealized losses – people own a great many instruments which will produce negative real yields eventually, but perhaps still less bad than holding cash. The S&P 500 average valuation would predict negative real returns for 20+years if bought at current prices.

                    When I said most debt is about collateral not income take for instance US treasuries:

                    A typical 30 year treasury is bought and held primarily for use as collateral (default risk insurance) on very short term cash lending (overnight). Or these are purchased with deposits in money markets where the profit is a spread between the security and the deposit interest paid. A second type of buyer is an institution who may buy anticipating rates going down, and planning to make a profit on the new higher price (total return = interest plus capital gains). It would only really be the retail investor pledging their money for 30 years at 2% who is at risk.

                    Bank/Mortgage lending doesn’t put the bank at risk in the same way because they are not lending cash. They create the deposit that allows the loan, make money off the origination, and make money from selling the loan to be collateralized as an MBS. These are then used much like treasuries above, but also sold to institutional investors who are indeed at varying degrees of risk since the return on these are currently less than inflation.

                    Corporate lending typically creates a bond, which is then packaged and sold same as above. It all ends up eventually in pensions and other long term income funds.

                    Cash lending typically has pretty high rates unless it is backed by some underlying collateral (i.e. an asset which will change ownership upon default). And all assets are screaming, which predicts lower future returns on everything, which is what we actually see.

                    Anything purchased as an income stream right now seems very risky. Stocks have lousy dividends, bonds of all sorts have negative yields relative to inflation. Their is no yield to be found, only speculation in price movement.

                    The “wealth effect” in my mind could be more accurately called “the destruction of wealth.” Since any real valuation is about a stream of income. Hussman said it good recently is that in P/E – wealth is the denominator.

                    https://www.hussmanfunds.com/comment/mc211015/

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                    1. Thank you very much! Got it.

                      A key insight for me is that not all debt is the same. A loan made from savings by a citizen that expects an income stream is much different than a loan created by a bank that expects to profit from fees and asset valuation changes.

                      Is it then correct to say that as inflation increases, there is no systemic reason that interest rates must rise other than the political pressure from citizens who are losing purchasing power? If true, this could be a good thing because we need a way for everyone to become poorer without the system blowing up.

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                    2. @ Rob: You asked: “Is it then correct to say that as inflation increases, there is no systemic reason that interest rates must rise other than the political pressure from citizens who are losing purchasing power? If true, this could be a good thing because we need a way for everyone to become poorer without the system blowing up.”

                      Great question and I’m just speculating here: Just thinking through the three I mentioned above. Some people point to bonds of various kinds and predict that high inflation in a low rate environment would cause people buying bonds to go on strike.

                      With top notch collateral like UST’s this hasn’t proved to be the case. You’d see low demand in the auctions bidding up rates (More yield curve control than we’ve seen). I think these are buoyed by the need for strong collateral, rather than the actual rate.

                      MBS seems a weaker contender, but CB’s are propping up this market by buying them to some degree. Can that ever end?

                      But corporate bonds have been the real surprise to me. For the first time ever average US corporate bonds are being made available below inflation levels. So if this inflationary trend continues corporations could be limited in raising capital or rolling over debt. https://www.morningstar.com/news/dow-jones/202012078525/demand-for-corporate-bonds-drives-inflation-adjusted-yields-to-zero

                      I think this is being offset by what you mentioned – absence of risk premium. Corporate profits are at record levels, making people consider them less risky. But this is due in large part to recent fiscal stimulus. We should expect a reversion based on labor pressure. I.E. If pressure for higher wages starts cutting into corporate profits we will see serious problems.

                      Hussman had a brand new one with some useful charts near the end. The recent government deficit created surplus for corporate profits and personal savings. Planned spending pales in comparison to COVID times, so it’s an arithmatic certainty that one of three things needs to happen: Corporate profits fall, savings collapse/more private debt, or the trade balance drastically changes.

                      https://www.hussmanfunds.com/comment/mc211108/

                      From the article:

                      “…the deficit that the U.S. government ran during the pandemic amounted to nearly 19% of GDP, and that – in equilibrium – is exactly why corporate earnings, personal savings, and trade deficits enjoyed a record surge in recent quarters. Meanwhile, the spending bills currently on the table ($1 trillion for infrastructure and $1.8 trillion for social and climate spending) are 8-10 year spending proposals, partially offset by revenue measures. There’s nothing in current legislation that’s going to replicate the breathtaking federal deficits we’ve seen in the past 18 months. That means – purely by the force of arithmetic – that the sum of those other three surpluses must shrink. The only question is which of the three will take that hit.”

                      So I predict if labor can successfully demand higher wages corporate profits will take a hit, and this could be a catalyst for a pullback. Alternately, if rates rise we will see the hurt in housing and financial stocks who are making money on carry trades and interest rate arbitrage – I’d think much of the shadow banking sector would suffer from the latter.

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    2. I think there will be continue inflation in the short term, a crash, and then deflation until the CB’s either (a) try for one more cycle of “more of the same” (QE/negative rates), or (b) they rewrite the laws governing CB’s and create money directly (not backed by debt issuance). This is ultimately a political response – and while I think there may be short term grumblings about the need for austerity (2-4 year political cycle) governments will ultimately pull out all the stops to try and get green growth.

      It seems the West is already loosely committed to creating 150 Trillion dollars of debt to achieve decarbonization. I believe they may try, with a rocky road down.

      Then again, I’ve been negative for a long time. I had promised myself after the GFC that if no major collapse event happened by 2020 I’d need to assume I was wrong and go long stocks. COVID reset my clock. Now I’m roughly committed to being 50/50 hedged – have of my savings assuming BAU, and half assuming a rocky road ahead.

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    1. Just wanted to say. . .
      Lost the internet a couple of days ago for about 24 hours. It appears that a cable from my DSL modem to my phone splitter went bad. I could not have found the fault by myself – needed the phone tech to come out from town with his “magic box” (a portable analyzer that can ping the line) to find the fault. I was lost without the internet, no up to the minute radar to tell when a weather front would pass overhead, no news (unless you consider MSM TV news?), no finance, text messages (we have no cell service – other than VOIP in this rural area) no cell phone.
      SOON, no internet might becoming to all of us and that will be both sad and frightening. I, like most have become dependent on this civilizational crutch.
      Perhaps most dependent on this and a few other web sites for both the camaraderie of discussing collapse with like minded (sometimes?) thinkers and to relieve the isolation of thinking that I am the only one that understands some of what is happening.
      So, thanks to you all . . .
      we at some time will part when all this goes dark, so good luck. It’s been a pleasure.
      AJ

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      1. Good luck to you too, I appreciate your company while we have the internet.

        My internet went down for 12 hours yesterday. It takes a lot of energy and complex equipment mostly made in Asia to keep it functioning. I expect the internet, like everything else heavy on energy and complexity, will become unreliable. I have built a large library of digital entertainment and education content to keep me occupied in old age without an internet.

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      1. Thanks. Hindmarch’s document may be the best I’ve read. I see he’s from British Columbia. Can you provide any color on him and the document? Is it gaining any traction? Is he widely respected?

        The conclusion from both are clear and powerful.

        Proof of vaccination is presented as a solution to “ending the pandemic,” when in reality it is being offered as a means to end the restrictions imposed by the state.

        Why do the protected need to be protected from the unprotected by forcing the unprotected to use the protection that didn’t protect the protected in the first place?

        Independent, rational, critical analysis that seeks truth has been supplanted by deference to authority and its alternative “science”: the science of politicians, technocrats, the media, and lawyers. This alternative science has us thinking what was previously unimaginable, and doing what was previously unacceptable: never do you quarantine the healthy; never do you vaccinate the immune; never do you inject new treatments into children who do not need them; never do you vaccinate during a pandemic; and, never do you try new drugs on pregnant women. As we think the unthinkable, collaborate with the unimaginable, and support the unsupportable, we as academics are conspiring with those who demand we assert the unquestionable.

        This has to change, and it has to change now.

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