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$250 Billion Fund CIO Blasts Washington’s ‘Soviet-Style’ Central Planning: “Disassociating Demand From Supply In Fundamental Ways”

$250 Billion Fund CIO Blasts Washington’s ‘Soviet-Style’ Central Planning: "Disassociating Demand From Supply In Fundamental Ways"

Authored by Tad Rivelle, CIO at TCW,

Back In The US… Back In The USSR

The inefficiencies of that ultimate

Published

2 years ago

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$250 Billion Fund CIO Blasts Washington's 'Soviet-Style' Central Planning: "Disassociating Demand From Supply In Fundamental Ways"

Authored by Tad Rivelle, CIO at TCW,

Back In The US... Back In The USSR

The inefficiencies of that ultimate state planned economy – the former Soviet Union – were eminently lampoonable. One of former President Reagan’s went this way:

A man walks into a Moscow car dealership and hands over his rubles to the car salesman. The beaming salesman exclaims, “Congratulations on buying your new car. I am scheduling it for delivery exactly ten years from today.”

The buyer, suddenly distraught, quizzically probes: “Ten Years?! – well…is that going to be in the morning or the afternoon?”

The salesman, now perplexed, replies: “Comrade – this is ten years from now – what difference does it make if the car is delivered in the morning or the afternoon?”

The buyer raises his voice and shouts, “Well, I have the plumber coming in the morning!”

Notwithstanding employing armies of well-educated central planners, such economies failed in their ability to deliver what consumers needed. Shortages were widespread and endemic. This is all understandable: the planners were being asked to solve for the impossible. The job of the planning bureau was to set prices and production targets. But as every undergraduate student of economics knows, you cannot simultaneously fix both the price and the quantity of anything. The attempt to do so led to a hopelessly tangled and confused system. In contrast, free market economies seek efficiency by respecting individual preferences. When all is working as it should, the “right” price is solved for, and shortages (or surpluses) are rapidly corrected. You are never supposed to go to the store and find empty shelves, or be told that what you want can’t be delivered for months or years.

The riddle for the day then, is why is our “free market” economy experiencing shortages across a wide variety of goods and services? Shoppers for new cars arrive to find the dealerships out of inventory. Want to upgrade or improve your home? Good luck getting the windows or doors that you want. Businesses struggle to hire workers even as millions remain in the ranks of the unemployed. Wait times for appliances, running shoes, and holiday gifts have “inexplicably” lengthened. Why?

The conventional “explanations” are as plausible as they are superficial. Yes, there are COVID restrictions. And supply chain issues. Also social pressure to decarbonize via the curtailment of fossil fuels. These obviously do constrict supply. The deeper question is why hasn’t the price mechanism corrected for these? Historically, supply constrictions have occurred owing to bad harvests, labor strikes, political disruptions, or trade embargoes. But reductions in supply should jack up prices thereby restraining demand and, eventually calling forth new sources of production. But here we are, closing in on the two year “anniversary” of the pandemic, and the shortages remain. Indeed, using the proxy in the form of shipping congestion, these shortages may be worsening.

Los Angeles/Long Beach Port Congestion

Source: MXSOCAL, Bank of America

The difficulties in balancing supply with demand suggest there may be deeper reasons for the imbalance. Like what? Let’s try this one on for size: perhaps the U.S. economy has taken on some nascent characteristics of a centrally planned economy because it has implemented policies that are more at home in a state driven economy than a “free” market. Indeed, as all well know, the constellation of fiscal and monetary policies implemented under COVID have dramatically kicked up the economic role of the state. Federal spending has gone into overdrive even as the Fed brought asset purchases to new levels. While this was all done in the service of stabilizing the macroeconomy, there can be too much of a “good thing.”

The demand side of the economy has been well fed by these policies, so much so that the supply side isn’t – and can’t – keep up. Year-over-year conventional inflation metrics are running above 5%, even as the shortages suggest further upward price adjustments may be needed to balance supply and demand. Importantly, it isn’t like the supply side isn’t expanding: oil may well be at $80/barrel (at the time of this writing), still global output is expected to rise at a respectable 4% pace in 2021. Employment continues to expand, yet millions of positions remain unfilled.

If this thesis is correct, then the question of whether today’s inflationary uptick is “transitory” may very well depend upon how “transitory” the pandemic motivated expansion of the state’s footprint turns out to be. Already, conventional inflation metrics indicate a rate in excess of 5%. Tellingly, the Citi U.S. Inflation Surprise Index signals that inflationary conditions are worsening at a rate higher than expected by investors and pundits alike:

Citi U.S. Inflation Surprise Index

Source: Bloomberg

To probe the question as to whether today’s market dysfunctions are in fact a direct product of excessive stimulus, note the near asymptotic rise in the size of the Fed’s balance sheet juxtaposed with the observation that nearly half of all the “risk-free” debt being issued (mainly Treasuries and Agency MBS) have been gobbled up by the central bank:

Fed Growth of Balance Sheet

Source: U.S. Federal Reserve

Fed Share of Risk-Free Borrowing*

* Net Fed purchases of U.S. Treasuries and Agency MBS bonds as a percentage of aggregate net issuance.
Source: SIFMA, Deutsche Bank, Morgan Stanley, TCW

Of course, all this buying of debt by the Fed has enabled a massive spending surge by the national government. Ordinarily, so much borrowing would pressure rates higher, causing private sector demand to moderate. With a little help from its friends at the Fed, all this borrowing is accomplished without making credit more expensive.

U.S. Federal Deficit and as a % of GDP

Source: BEA, TCW
** Bloomberg and CBO projections used for the last four months of 2021.

In effect, while the U.S. is not engaged in anything like Soviet style “in the weeds” microeconomic central planning, the policy regime in place now is a kind of macroeconomic driven central planning that has dissociated demand from supply in some fundamental ways. Both the quantity and pattern of spending throughout the economy has been realigned by political direction, even as the financing of this spending has been untethered from market constraints. Indeed, some one trillion dollars per year in Treasury debt alone is simply being journalled from the U.S. Treasury’s balance sheet onto that of the Fed. The Fed is not a market buyer of securities – it is a quantity buyer and, as such, its transactions are “off market.”

Ongoing suppression of market rates by the Fed adds a further dimension to an increasingly uncoordinated economy. The Fed has, in effect, redefined its mandate to that of enabling the turning of the fiscal spigots, suppressing market interest rates and elevating asset prices. The Fed has long ago ceased being the adult in the room who took the punchbowl away. While none of this is exactly a newsflash, the sheer scale of policy implementation has inflated incomes (via transfer payments) in a manner that is non-market. Essentially, the traditional role of interest rates as the coordinating mechanism between, for instance, capital goods and consumption, has been disabled. Meanwhile, inflated asset prices provide the collateral against which credit can be unnaturally expanded creating new spending power today at the risk of heightened vulnerabilities tomorrow.

So, where does this leave us investors? Well, to be fair, it may be the case that U.S. policy may move in a more market friendly direction in 2022.

Already, a certain amount of fiscal tapering – supplemented by monetary tapering – may represent a partial backing away from this expanded governmental presence. Should that happen, and recognizing that one of the consequences of inflation is also diminished purchasing power, we might see a period where demand moderates, and shortages rehabilitate.

Another possible direction is that a slowing economy is championed by the politicians as a reason to double-down on stimulus. Hence, “rinse – cycle – repeat” is an alternative possibility for 2022. Should the politicians take us down that road, i.e., more of the same in terms of policy, expect more of the same in terms of results: shortages, more inflation.

The upshot, then, boils down to the basic market reality that 10-year Treasury securities at or around 1.5% do not represent fundamental “value” in a 5% trailing inflation environment. More stimulus is not likely to be taken kindly by bond investors already suffering a loss in purchasing power. Policy has painted itself into a corner: adding more demand may not so much counteract an economic slowdown as it might add to inflation and promote a market protest in the form of higher rates. But, how might the economy re-coordinate itself unless it is given a chance to hold its breath and rebalance? Markets do have a way of making fools of all, and perhaps a way out will be found. That said, a growth slowdown owing to moderating stimulus or, alternatively, a step further towards stagflation would seem to be the likeliest scenarios going into the new year.

Tyler Durden Thu, 10/21/2021 - 15:40

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Health Officials: Man Dies From Bubonic Plague In New Mexico

Health Officials: Man Dies From Bubonic Plague In New Mexico

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Officials in…

Published

8 hours ago

on

March 13, 2024

By

Health Officials: Man Dies From Bubonic Plague In New Mexico

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Officials in New Mexico confirmed that a resident died from the plague in the United States’ first fatal case in several years.

A bubonic plague smear, prepared from a lymph removed from an adenopathic lymph node, or bubo, of a plague patient, demonstrates the presence of the Yersinia pestis bacteria that causes the plague in this undated photo. (Centers for Disease Control and Prevention/Getty Images)

The New Mexico Department of Health, in a statement, said that a man in Lincoln County “succumbed to the plague.” The man, who was not identified, was hospitalized before his death, officials said.

They further noted that it is the first human case of plague in New Mexico since 2021 and also the first death since 2020, according to the statement. No other details were provided, including how the disease spread to the man.

The agency is now doing outreach in Lincoln County, while “an environmental assessment will also be conducted in the community to look for ongoing risk,” the statement continued.

“This tragic incident serves as a clear reminder of the threat posed by this ancient disease and emphasizes the need for heightened community awareness and proactive measures to prevent its spread,” the agency said.

A bacterial disease that spreads via rodents, it is generally spread to people through the bites of infected fleas. The plague, known as the black death or the bubonic plague, can spread by contact with infected animals such as rodents, pets, or wildlife.

The New Mexico Health Department statement said that pets such as dogs and cats that roam and hunt can bring infected fleas back into homes and put residents at risk.

Officials warned people in the area to “avoid sick or dead rodents and rabbits, and their nests and burrows” and to “prevent pets from roaming and hunting.”

“Talk to your veterinarian about using an appropriate flea control product on your pets as not all products are safe for cats, dogs or your children” and “have sick pets examined promptly by a veterinarian,” it added.

“See your doctor about any unexplained illness involving a sudden and severe fever, the statement continued, adding that locals should clean areas around their home that could house rodents like wood piles, junk piles, old vehicles, and brush piles.

The plague, which is spread by the bacteria Yersinia pestis, famously caused the deaths of an estimated hundreds of millions of Europeans in the 14th and 15th centuries following the Mongol invasions. In that pandemic, the bacteria spread via fleas on black rats, which historians say was not known by the people at the time.

Other outbreaks of the plague, such as the Plague of Justinian in the 6th century, are also believed to have killed about one-fifth of the population of the Byzantine Empire, according to historical records and accounts. In 2013, researchers said the Justinian plague was also caused by the Yersinia pestis bacteria.

But in the United States, it is considered a rare disease and usually occurs only in several countries worldwide. Generally, according to the Mayo Clinic, the bacteria affects only a few people in U.S. rural areas in Western states.

Recent cases have occurred mainly in Africa, Asia, and Latin America. Countries with frequent plague cases include Madagascar, the Democratic Republic of Congo, and Peru, the clinic says. There were multiple cases of plague reported in Inner Mongolia, China, in recent years, too.

Symptoms

Symptoms of a bubonic plague infection include headache, chills, fever, and weakness. Health officials say it can usually cause a painful swelling of lymph nodes in the groin, armpit, or neck areas. The swelling usually occurs within about two to eight days.

The disease can generally be treated with antibiotics, but it is usually deadly when not treated, the Mayo Clinic website says.

“Plague is considered a potential bioweapon. The U.S. government has plans and treatments in place if the disease is used as a weapon,” the website also says.

According to data from the U.S. Centers for Disease Control and Prevention, the last time that plague deaths were reported in the United States was in 2020 when two people died.

Tyler Durden Wed, 03/13/2024 - 21:40

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I created a ‘cosy game’ – and learned how they can change players’ lives

Cosy, personal games, as I discovered, can change the lives of the people who make them and those who play them.

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17 hours ago

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March 13, 2024

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Cosy games exploded in popularity during the pandemic. Takoyaki Tech/Shutterstock

The COVID pandemic transformed our lives in ways many of us are still experiencing, four years later. One of these changes was the significant uptake in gaming as a hobby, chief among them being “cosy games” like Animal Crossing: New Horizons (2020).

Players sought comfort in these wholesome virtual worlds, many of which allowed them to socialise from the safety of their homes. Cosy games, with their comforting atmospheres, absence of winning or losing, simple gameplay, and often heartwarming storylines provided a perfect entry point for a new hobby. They also offered predictability and certainty at a time when there wasn’t much to go around.

Cosy games are often made by small, independent developers. “Indie games” have long been evangelised as the purest form of game development – something anyone can do, given enough perseverance. This means they can provide an entry point for creators who hadn’t made games before, but were nevertheless interested in it, enabling a new array of diverse voices and stories to be heard.

In May 2020, near the start of the pandemic, the small poetry game A Solitary Spacecraft, which was about its developer’s experience of their first few months in lockdown, was lauded as particularly poignant. Such games showcase a potential angle for effective cosy game development: a personal one.

Personal themes are often explored through cosy games. For instance, Chicory and Venba (both released in 2023) tackle difficult topics like depression and immigration, despite their gorgeous aesthetics. This showcases the diversity of experiences on display within the medium.

However, as the world emerges from the pandemic’s shadow, the games industry is facing significant challenges. Economic downturns and acquisitions have caused large layoffs across the sector.

Historically, restructurings like these, or discontent with working conditions, have led talented laid-off developers to create their own companies and explore indie development. In the wake of the pandemic and the cosy game boom, these developers may have more personal stories to tell.

Making my own cosy game

I developed my own cosy and personal game during the pandemic and quickly discovered that creating these games in a post-lockdown landscape is no mean feat.

What We Take With Us (2023) merges reality and gameplay across various digital formats: a website, a Discord server that housed an online alternate reality game and a physical escape room. I created the game during the pandemic as a way to reflect on my journey through it, told through the videos of game character Ana Kirlitz.

The trailer for my game, What We Take With Us.

Players would follow in Ana’s footsteps by completing a series of ten tasks in their real-world space, all centred on improving wellbeing – something I and many others desperately needed during the pandemic.

But creating What We Take With Us was far from straightforward. There were pandemic hurdles like creating a physical space for an escape room amid social distancing guidelines. And, of course, the emotional difficulties of wrestling with my pandemic journey through the game’s narrative.

The release fared poorly, and the game only garnered a small player base – a problem emblematic of the modern games industry.

These struggles were starkly contrasted by the feedback I received from players who played the game, however.

This is a crucial lesson for indie developers: the creator’s journey and the player’s experience are often worlds apart. Cosy, personal games, as I discovered, can change the lives of those who play them, no matter how few they reach. They can fundamentally change the way we think about games, allow us to reconnect with old friends, or even inspire us to change careers – all real player stories.

Lessons in cosy game development

I learned so much about how cosy game development can be made more sustainable for creators navigating the precarious post-lockdown landscape. This is my advice for other creators.

First, collaboration is key. Even though many cosy or personal games (like Stardew Valley) are made by solo creators, having a team can help share the often emotional load. Making games can be taxing, so practising self-care and establishing team-wide support protocols is crucial. Share your successes and failures with other developers and players. Fostering a supportive community is key to success in the indie game landscape.

Second, remember that your game, however personal, is a product – not a reflection of you or your team. Making this distinction will help you manage expectations and cope with feedback.

Third, while deeply considering your audience may seem antithetical to personal projects, your game will ultimately be played by others. Understanding them will help you make better games.

The pandemic reignited the interest in cosy games, but subsequent industry-wide troubles may change games, and the way we make them, forever. Understanding how we make game creation more sustainable in a post-lockdown, post-layoff world is critical for developers and players alike.

For developers, it’s a reminder that their stories, no matter how harrowing, can still meaningfully connect with people. For players, it’s an invitation to embrace the potential for games to tell such stories, fostering empathy and understanding in a world that greatly needs it.

Looking for something good? Cut through the noise with a carefully curated selection of the latest releases, live events and exhibitions, straight to your inbox every fortnight, on Fridays. Sign up here.

Adam Jerrett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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KIMM finds solution to medical waste problem, which has become a major national issue

A medical waste treatment system, which is capable of 99.9999 percent sterilization by using high-temperature and high-pressure steam, has been developed…

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21 hours ago

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March 13, 2024

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A medical waste treatment system, which is capable of 99.9999 percent sterilization by using high-temperature and high-pressure steam, has been developed for the first time in the country.

Credit: Korea Institute of Machinery and Materials (KIMM)

A medical waste treatment system, which is capable of 99.9999 percent sterilization by using high-temperature and high-pressure steam, has been developed for the first time in the country.

The Korea Institute of Machinery and Materials (President Seog-Hyeon Ryu, hereinafter referred to as KIMM), an institute under the jurisdiction of the Ministry of Science and ICT, has succeeded in developing an on-site-disposal type medical waste sterilization system that can help to resolve the problem caused by medical waste, which has become a national and social issue as the volume of medical waste continues to increase every year. This project was launched as a basic business support program of the KIMM and was expanded into a demonstration project of Daejeon Metropolitan City. Then, in collaboration with VITALS Co., Ltd., a technology transfer corporation, the medical waste treatment system was developed as a finished product capable of processing more than 100 kilograms of medical waste per hour, and was demonstrated at the Chungnam National University Hospital.

Moreover, the installation and use of this product have been approved by the Geumgang Basin Environmental Office of the Ministry of Environment. All certification-related work for the installation and operation of this product at the Chungnam National University Hospital has been completed, including the passage of an installation test for efficiency and stability conducted by the Korea Testing Laboratory.

Through collaboration with VITALS Co., Ltd., a corporation specializing in inhalation toxicity systems, the research team led by Principal Researcher Bangwoo Han of the Department of Urban Environment Research of the KIMM’s Eco-Friendly Energy Research Division developed a high-temperature, high-pressure steam sterilization-type medical waste treatment system by using a high-temperature antimicrobial technology capable of processing biologically hazardous substances such as virus and bacteria with high efficiency. After pulverizing medical waste into small pieces so that high-temperature steam can penetrate deep into the interior of the medical waste, steam was then compressed in order to raise the boiling point of the saturated steam to over 100 degrees Celsius, thereby further improving the sterilization effect of the steam.

Meanwhile, in the case of the high-pressure steam sterilization method, it is vitally important to allow the airtight, high-temperature and high-pressure steam to penetrate deep into the medical waste. Therefore, the research team aimed to improve the sterilization effect of medical waste by increasing the contact efficiency between the pulverized medical waste and the aerosolized steam.

By using this technology, the research team succeeded in processing medical waste at a temperature of 138 degrees Celsius for 10 minutes or at 145 degrees Celsius for more than five (5) minutes, which is the world’s highest level. By doing so, the research team achieved a sterilization performance of 99.9999 percent targeting biological indicator bacteria at five (5) different locations within the sterilization chamber. This technology received certification as an NET (New Excellent Technology) in 2023.

Until now, medical waste has been sterilized by heating the exposed moisture using microwaves. However, this method requires caution because workers are likely to be exposed to electromagnetic waves and the entrance of foreign substances such as metals may lead to accidents.

In Korea, medical waste is mostly processed at exclusive medical waste incinerators and must be discharged in strict isolation from general waste. Hence, professional efforts are required to prevent the risk of infection during the transportation and incineration of medical waste, which requires a loss of cost and manpower.

If medical waste is processed directly at hospitals and converted into general waste by applying the newly developed technology, this can help to eliminate the risk of infection during the loading and transportation processes and significantly reduce waste disposal costs. By processing 30 percent of medical waste generated annually, hospitals can save costs worth KRW 71.8 billion. Moreover, it can significantly contribute to the ESG (environmental, social, and governance) management of hospitals by reducing the amount of incinerated waste and shortening the transportation distance of medical waste.

[*Allbaro System (statistical data from 2021): Unit cost of treatment for each type of waste for the calculation of performance guarantee insurance money for abandoned wastes (Ministry of Environment Public Notification No. 2021-259, amended on December 3, 2021). Amount of medical waste generated on an annual basis: 217,915 tons; Medical waste: KRW 1,397 per ton; General waste from business sites subject to incineration: KRW 299 per ton]

As the size and structure of the installation space varies for each hospital, installing a standardized commercial equipment can be a challenge. However, during the demonstration process at the Chungnam National University Hospital, the new system was developed in a way that allows the size and arrangement thereof to be easily adjusted depending on the installation site. Therefore, it can be highly advantageous in terms of on-site applicability.

Principal Researcher Bangwoo Han of the KIMM was quoted as saying, “The high-temperature, high-pressure steam sterilization technology for medical waste involves the eradication of almost all infectious bacteria in a completely sealed environment. Therefore, close cooperation with participating companies that have the capacity to develop airtight chamber technology is very important in materializing this technology.” He added, “We will make all-out efforts to expand this technology to the sterilization treatment of infected animal carcasses in the future.”

 

President Seog-Hyeon Ryu of the KIMM was quoted as saying, “The latest research outcome is significantly meaningful in that it shows the important role played by government-contributed research institutes in resolving national challenges. The latest technology, which has been developed through the KIMM’s business support program, has been expanded to a demonstration project through cooperation among the industry, academia, research institutes, and the government of Daejeon Metropolitan City.” President Ryu added, “We will continue to proactively support these regional projects and strive to develop technologies that contribute to the health and safety of the public.”

 

Meanwhile, this research was conducted with the support of the project for the “development of ultra-high performance infectious waste treatment system capable of eliminating 99.9999 percent of viruses in response to the post-coronavirus era,” one of the basic business support programs of the KIMM, as well as the project for the “demonstration and development of a safety design convergence-type high-pressure steam sterilization system for on-site treatment of medical waste,” part of Daejeon Metropolitan City’s “Daejeon-type New Convergence Industry Creation Special Zone Technology Demonstration Project.”

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The Korea Institute of Machinery and Materials (KIMM) is a non-profit government-funded research institute under the Ministry of Science and ICT. Since its foundation in 1976, KIMM is contributing to economic growth of the nation by performing R&D on key technologies in machinery and materials, conducting reliability test evaluation, and commercializing the developed products and technologies.

 

This research was conducted with the support of the project for the “development of ultra-high performance infectious waste treatment system capable of eliminating 99.9999 percent of viruses in response to the post-coronavirus era,” one of the basic business support programs of the KIMM, as well as the project for the “demonstration and development of a safety design convergence-type high-pressure steam sterilization system for on-site treatment of medical waste,” part of Daejeon Metropolitan City’s “Daejeon-type New Convergence Industry Creation Special Zone Technology Demonstration Project.”

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