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Lessons On Inflation From The Past

Lessons On Inflation From The Past

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Lessons On Inflation From The Past Tyler Durden Sat, 09/26/2020 - 07:00

Authored by Alasdair Macleod via GoldMoney.com,

This article examines two inflationary experiences in the past in an attempt to predict the likely outcome of today’s monetary policies.

  • The German hyperinflation of 1923 demonstrated that it took surprisingly little monetary inflation to collapse the purchasing power of the paper mark. This is relevant to the fate of the “whatever it takes” inflationary policies of today’s governments and their central banks.

  • The management of John Law’s Mississippi bubble, when he used paper money to rig the market is precisely what central bank policy is aimed at achieving today. By binding the fate of the currency to that of financial assets, as John Law proved, it is the currency that is destroyed.

Introduction

At the outset, I shall make a point about the relevance of the chart below, a screengrab from Constantino Bresciani-Turroni’s The Economics of Inflation, which has been frequently reproduced and will be familiar to many who have read about Germany’s post-First World War inflation.

Looking at the progress of the collapse of the paper mark from its parity with the gold mark, we can take a punt on where the dollar might be today on this scale. The dollar has lost 98.2% of its purchasing power since the failure of the London gold pool in the late 1960s. That puts the dollar at 56 on the chart, which is approximately the equivalent of Germany’s paper mark valuation relative to gold in the first half of 1922. If it follows the same course as the paper mark, in five- or six-months’ time it will be 100 and in ten- or twelve-months about 12,000. Instead of the paper mark’s original pre-1914 parity to the gold mark, the dollar started at $35 to the ounce, so the gold price in dollars would be $1960, $3,500 and $42,000 respectively. The final price at which the German inflation was stopped on 20 November 1923 when it was fixed to the rentenmark at a trillion to one would be the equivalent today of $35 trillion to the ounce.

Playing around with figures like these is not a replacement for sound reasoning, but it does impart an interesting perspective. A better understanding of the possible demise of the unbacked dollar is not to think of the numbers of dollars per ounce of gold rising or gold potentially hitting $42,000 within a year, a seemingly ridiculous number, but to think of gold as being broadly stable while the dollar loses its purchasing power. The presentation of an impossibly steep and accelerating uptrend is less believable than a collapsing one. Furthermore, the commonality of the paper mark and the dollar is that they were and are unbacked state-issued currencies liable to the same influences, a fact the consequences of which are becoming increasingly apparent.

Germany’s 1920s hyperinflation

For the paper mark it all started in 1905, when a German economist and leader of the Chartalist movement, Georg Knapp, published a book whose title translated as the State Theory of Money. Thus encouraged, under the direction of Bismarck the Prussian administration financed the military build-up to the war to end all wars by utilising the state’s seigniorage. And when Germany lost, any thoughts of raiding the wealth of the vanquished came to nought. Instead, it was Germany that faced reparations and a post-war crisis. Just as the Fed is responding to the covid crisis today, the answer was to print money. Monetary inflation became the principal source of government finance, just as it is now in America and elsewhere.

There is hardly an economist today who does not condemn the Reichsbank for its inflationary policies. Yet they are supportive of similar monetary policies by the Fed, the European Central Bank, the Bank of Japan and the Bank of England. We should compare the stewardship of Rudolf Havenstein at the Reichsbank with that of Jay Powell, who after reducing interest rates the previous week, on 23 March issued an FOMC statement promising an inflationary policy of “whatever it takes”. And Rishi Sunak, the British Chancellor, used the phrase multiple times in his emergency budget.

But there is a difference. Today, alternatives to inflationism are never discussed amongst policy makers, who are like a blind cult believing entirely, with only minor variations, that monetary inflation is the cure for all economic ills. At least in Germany, the actions of the government were the subject of wider debate both in Germany and without, even though the answers were mostly ill-informed.

Part of the problem was the quantity theory of money was dismissed in a confusion between cause and effect. As Bresciani-Turroni put it, a great number of writers and German politicians thought that government deficits and paper inflation were not the cause, but the consequence of the external depreciation of the mark. A financier, politician and one of the leading German economists at the time, Karl Helfferich put it this way:

“The increase of the circulation has not preceded the rise of prices and the depreciation of the exchange, but it followed slowly and at great distance. The circulation increased from May 1921 to the end of January 1923 by 23 times; it is not possible that this increase had caused the rise in the prices of imported goods and of the dollar, which in that period increased by 344 times.”

It is a valid and important point, but not in the way Helfferich thought. The disparity between the increase in the money quantity and the increase in the general level of prices should be noted by observers today. Crucially, it did not require hyperinflation of the money supply to cause a hyperinflation of prices, a point we address later.

As well as dealing with the post-war economy and the capital dislocation that needed to be corrected, there was the burden of reparations. Many blamed the collapse of the paper mark on the latter, which is an inadequate explanation, when the Austrian crown, the Hungarian crown, the Russian rouble and the Polish mark all collapsed at roughly the same time.

Having resorted to monetary inflation as the means of marginal finance it rapidly became the principal source of government revenue. The German authorities then observed a dislocation between the increase in the quantity of money and the effect on its purchasing power, as described by Helfferich. It was taken as evidence against the quantity theory, as expounded by David Ricardo a century before, and upon which Peel’s Bank Charter Act of 1844 in England was based. Clearly, the dismissal of the quantity theory paved the way for more inflationary financing in 1920s Germany in the manner of today’s monetary planning. It led to the observation that the money supply was insufficient for an economy faced with rapidly escalating prices for imported goods.

The disparity between increases in the money supply in Germany and the effect on the paper mark’s purchasing power was so great that the accuracy of the underlying numbers does not matter. But today, while we can presumably rely on monetary statistics being reasonably accurate, the statistics that reflect the effect on prices are not. Today’s suppression of increases in the general price level simply disqualifies any statistical analysis, and in that sense, Helfferich’s observation is a more honest appraisal than those of today’s monetary planners.

On the surface, his deduction appeared to have some merit. He goes on to say,

“The depreciation of the German mark in terms of foreign currencies was caused by the excessive burdens thrust on to Germany and by the policy of violence adopted by France; the increase of the prices of all imported goods was caused by the depreciation of the exchanges; then followed the general increase of internal prices and of wages, the increased need for means of circulation on the part of the public and of the State, greater demands on the Reichsbank by private business and the State and the increase of the paper mark issues. Contrary to the widely held conception, not inflation but the depredation of the mark was the beginning of this chain of cause and effect; inflation is not the cause of the increase of prices and of the depreciation of the mark; but the depreciation of the mark is the cause of the increase of prices and of the paper mark issues. The decomposition of the German monetary system has been the primary and decisive cause of the financial collapse.”

The starting point in this logic is it is never the government’s fault but always the fault of external factors and markets. And doubtless, as the dollar declines in the foreign exchanges over the coming months and commodity prices rise, we shall continue to see similar arguments embedded in future FOMC statements.

The error common to both is to misunderstand the underlying subjectivity of money. Money takes its value from the marginal value placed upon it relative to owning goods. If money is widely regarded as sound, an economising man is happy to hold a reserve of it, only exchanging it for goods and services when they are needed. This is the most important quality of metallic money, to which people have always returned when government money fails.

A further benefit, which state currencies lack, is that gold and silver as money are accepted everywhere, having the same values in New York, London, and Mumbai. With the exception of cross-border trade, investment, and perhaps longer-term strategic considerations, government currencies are generally restricted to national boundaries. Paper currencies are therefore vulnerable to changes in demand in the foreign exchanges in a way gold and silver are not; if the foreigners don’t like your currency, they will reduce their exposure by selling it, irrespective of fundamental considerations.

In a currency collapse, the foreign exchanges are often the first to be blamed, as a press cutting from Germany towards the end of 1922 illustrates:

“Since the summer of 1921 the foreign exchange rate has lost all connection with the internal inflation. The increase of the floating debt, which represents the creation by the State of new purchasing-power, follows at some distance the depreciation of the mark. Furthermore, the level of internal prices is not determined by the paper inflation or credit inflation, but exclusively by the depreciation of the mark in terms of foreign currencies. To tell the truth, the astonishing thing is not the great quantity but the small quantity of money which circulates in Germany, a quantity extraordinarily small from a relative point of view; even more surprising is it that the floating debt has not increased much more rapidly”

Blaming a falling currency on foreign influences is the oldest excuse in the fiat book, but generally, foreigners who do not have much attachment to a national currency are only the first to sell. Initially, domestic users notice that prices have generally risen and that their income and savings buy less. It is a cause for complaint instead of a reasoned assessment, and of the logic employed in the press cutting above. And despite the evidence that it is the currency losing purchasing power instead of prices rising, the purchasing power can fall substantially before a currency’s users abandon it altogether.

Given upcoming events, we can see a similar trend for today’s paper money, particularly when represented by the American dollar. The first covid wave was assumed to be a one-off, hitting the American economy but to be followed by a rapid return to normal — the V-shaped recovery. Everywhere the official story was the same, that following lockdowns the economy, wherever it was, would return to normality. But it drove the US budget deficit to over $3.3 trillion in the fiscal year just ending, up from a previously forecast trillion or so. The Federal deficit is already one hundred per cent of Federal tax revenues.

Now we face a second covid wave, which will require more money-printing. The US Government budget deficit in the next fiscal year will again exceed revenues by a substantial margin. From last March, it has been in the position the German government faced in the early 1920s: monetary inflation has become the dominant source of government funding over tax revenue.

The slide in global cross-border trade, which is the consequence of the imposition of trade tariffs between America and China, comes at the end of a decade-long period of bank credit expansion, replicating the fragile position in America at the end of the roaring twenties. The stock market and economic collapses that followed had limited inflationary effects at the price level only due to a working gold standard; but even that could not withstand the political consequences of the depression, leading to a dollar devaluation in January 1934. This time, there is no check for the dollar, which is doubly afflicted by coronavirus lockdowns.

In Germany, the collapse of the paper mark ended by being stabilised at the rate of a trillion to one gold marks on 20 November 1923, the equivalent of 4.2 trillion to the US dollar. The paper mark was then replaced by a new unit, the rentenmark which was simply given the value of the gold mark. This arrangement only became legal on 11 October 1924. The success of the stabilisation, despite an inflation of the rentenmark — the quantity increasing from 501 million on 30 November 1923 to 1,803 million by the following July — has confused economists ever since.

Students of the Austrian school, and particularly of the writings of Ludwig von Mises should deduce that after the final flight out of money into goods, the emergence of a new money requires its users to accumulate a reserve of it. All that was required was a growing acceptance that the rentenmark would stick. The increase in cash and savings balances in the economy absorbed the increased inflation of the rentenmark with the result that consumer prices remained broadly stable.

If the stabilisation arrangement had been introduced before foreigners, businesses and the wider public had not discarded the paper mark entirely, the stabilisation would have failed. Those who think a German-style inflationary collapse today can be avoided by an early currency reset with a different form of fiat should take note.

The comparison with John Law’s crisis in 1720

The collapse of the paper mark is not the sole representation of how a government currency loses its facility. The advantage of its comparison with today is that a substantial cache of books, records and statistics exist on the subject, prompting economic historians to use it as a template for all the other hyperinflations of fiat money recorded since.

The economic history of John Law’s experiment in France in not so blessed in this regard. Exactly 300 years ago, his Mississippi bubble deflated, taking his currency, the livre, down with it. But to understand the relevance to the situation today, we must first delve into the facts behind his scheme.

The death of Louis XIV in 1715 left France’s state finances (which were the royal finances) insolvent. The royal debts were three billion livres, annual income 145 million, and expenditure 142 million. That meant only three million livres were available to pay the 220 million interest on the debt, and consequently the debt traded at a discount of as much as 80% of face value.

Following Louis XIV’s death, the Duke of Orleans had been appointed Regent to the seven-year old Louis XV, and so had to find a solution to the royal finances. The earlier attempt in 1713 was the often tried and repeatedly failed expedient of recoining the currency, depreciating it by one-fifth. The result was as one might expect: the short-term gain in state revenue was at the expense of the French economy by taxing it 20%. Furthermore, the Controller General of Finances foolishly announced the intention of further debasements of the coinage with a view to raising funds. This bizarre plan was announced in advance as an attempt to somehow stimulate the economy, but the effect was to increase hoarding of the existing coinage instead.

At about this time, John Law presented himself at court and offered his considered solution to the Regent. He diagnosed France’s problem as there being insufficient money in circulation, restricted by it being only gold and silver. He recommended the addition of a paper currency, such as that in Britain and Holland, and its use to extend credit.

Banknotes did not previously exist in France, all payments being made in specie, and Law persuaded the Regent of the circulatory benefits of paper money. He requested the Regent’s permission to establish a bank which would manage the royal revenues and issue banknotes backed by them as well as notes secured on property. These notes could be used as a loan from the bank to the king at 3% interest instead of the 7½% currently being paid on billets d’etat.

On 5 May 1716 he gained permission to establish Banque Generale as a private bank and to issue banknotes. Law succeeded in persuading the public to swap specie for his banknotes. He was so successful that after only eleven months, in April 1717 it was decreed that taxes and revenues of the state could be paid in banknotes, of which Law was the only issuer.

Law could now capitalise his bank. Besides his own money, this was done mostly with billets d’etat, in the books at their face value but obtained at a discount of 70% or so. He used public anticipation of future currency debasement to encourage the public to swap metallic money for his notes, which he guaranteed were repayable in coins that had the silver content at the time of the note issue. Law’s banknotes became an escape route for the general public from further debasement of silver coins.

The banknotes rose to a fifteen per cent nominal premium over coins within a year. The bank was exempt from taxes, and by decree foreigners were guaranteed their deposits in the case of war. The bank could open deposit accounts, loan money, arrange for transfers between accounts, discount bills and write letters of credit. Law’s banknotes could be used to settle taxes. There was no limitation placed on the total number of banknotes issued.

Money that had been hoarded for fear of further debasement was liberated by the premium on Law’s banknotes, and the improved circulation of money rapidly benefited the economy. Other private banks and moneylenders used Law’s banknotes as the basis of extending credit. This success meant his credibility with the Regent, the French establishment, and the commercial community was secured.

The use of his banknotes to settle taxes gave the bank the status of a modern note-issuing central bank. The expansion of circulating money stimulated trade, particularly given the banknotes’ convenience compared with using coin. It is worth noting that the earliest stages of monetary inflation usually produce the most beneficial effects, and this combined with Law’s apparent financial and economic expertise, particularly measured against the ineptitude of the Controller-General of Finances, gave the economy a much-needed boost.

It is worth noting that at this stage, there was no material inflation of the currency, banknotes being issued only against coins. However (and this appears to have generally escaped economic historians) it was clear that a loan business was facilitated on the back of Law’s paper money, which inflated the quantity of bank credit in the economy.

Law could now turn his attention to raising asset prices to pay down the royal debts, to enhance the public’s riches, and thereby his own wealth and that of his bank.

The Mississippi connection

The Regent was understandably impressed by Banque Générale’s apparent success at issuing paper currency and rejuvenating the economy. The bank was being run on prudent lines, with banknotes being exchanged only for specie, and the quantity of what today would be called narrow money had not expanded materially beyond the release of hoarded specie. But Law had a problem: the note issue and the fact the bank had been capitalised on a mixture of partial subscriptions and billets d’etats at face value meant the bank had insufficient capital and profits to achieve its ultimate objective, which was to reduce the royal debts and the interest rates that applied to them.

Consequently, Law developed a plan to increase the bank’s assets as well as those under its indirect control. In August 1717, Law had requested of the Regent and was granted a trading and tax-raising monopoly over the French territory of Louisiana and the other French dependencies accessed by the Mississippi River, the existing trading lease having lapsed. A major attraction was supposed to be precious metals as well as the tobacco trade.

The Mississippi venture’s corporate title was Compaigne de la Louisiane ou d’Occident, but ever since has been commonly referred to as the Mississippi venture. For nearly two years, Law kept the project on hold while he established his bank. The shares languished at a discount to their nominal price of 500 livres, and what was needed was a scheme of arrangement to beef up the both the bank and the company.

As a first step, in the summer of 1719 he acquired three other companies to merge with the Mississippi venture. These had exclusive trading rights to China, the East Indies and Africa, which effectively gave Law’s Mississippi company a monopoly on all France’s foreign trade. To pay off these companies’ debts and to build the ships required for transport, Law proposed a share issue of 50,000 shares at 500 livres per share, 10% payable on application. By the time legal permissions were granted, the shares stood at 650 livres, making the new shares worth three times their subscription price in their partly paid form.

Law’s earlier success with his banknote issue, and the contribution made to improving the French economy, coupled with his ability to enhance the share price by issuing bank notes, were a guarantee that his scheme would be spectacularly profitable for anyone lucky enough to have a subscription accepted.

The bank was re-authorised as a public institution and renamed Banque Royale in December 1718. At the same time, the Regent authorised the further issue of up to a billion livres of notes, which was achieved by the end of 1719. While it had been the Banque Generale, notes had only been issued in return for specie to the extent of 60 million livres, but this new inflationary issue was entirely different. While it is impossible at this distance to forensically track the course of this money, we can be certain that it was used to manage the share price of the Mississippi venture, and it fuelled much of the public’s panic buying of shares that year.

But it was not only the printing of money to push the share price that fuelled the bubble. Law’s skills as a promoter took its inflation to a new level, with further issues of 50,000 shares approved in the summer of 1719 and executed as rights issues that autumn. Existing shareholders were offered the opportunity to subscribe for one share for every four old shares held, to be partly paid with an initial payment of 50 livres, the next payment deferred for over a month. These could be sold for an immediate profit, while providing a low-price entry point for new investors.

The expansion of the banknote issue without an offsetting acquisition of specie was used by Law to assemble and finance a total monopoly of France’s foreign trade. As well as this monetary expansion, we can be sure that private banks and moneylenders used it as a base to expand credit. We know this to be the case from court documents in London when Richard Cantillon in 1720 successfully sued English clients in the Court of Exchequer for £50,000 owed to him (about £18 million today), despite having already sold the Mississippi shares as soon as they were deposited as collateral.

It seems obvious to us that to give to one man both the monopoly of the note issue and monopolies on trade, and then for him to use the notes to create wealth out of thin air is extraordinarily dangerous. It seems equally obvious that such an arrangement was certain to collapse when the excitement died down and investors on balance sought to encash their profits.

It seems less obvious to us today that the principal elements of Law’s monopolies exist in modern government finances, which use paper money to inflate assets providing their electorates with the illusion of wealth.[xi] The difference is not in the methods employed, but the gradualness of today’s asset inflation, and the claim by the state that it is acting in the public interest, rather than one individual making the same claim on the state’s behalf.

Meanwhile, the Mississippi venture share price had continued rising, and by the end of 1719 it stood at 10,000 livres. Increasing pressure from share sales by people who sought to take profits had to be discouraged. The announcement of a 200 livres dividend per share was undoubtedly with that in mind, to be paid, like in any Ponzi scheme, not out of earnings but out of capital subscriptions. The price finally peaked at 11,000 livres on 8th January 1720.

By late-1719, Law had found it increasingly difficult to sustain the bubble. The banknote issues continued. In late-February 1720, the Mississippi Company and the Banque Royale merged. Afterwards, the shares began their precipitous fall, and by May, Law lost his position as Controller-General and was demoted. By the end of October that year, the shares had fallen to 3,200 livres, and a large portion of them had faced further unpaid calls throughout that year.

The year 1719 saw monetary inflation take off, directly fuelling asset prices. The decline of the Mississippi share price the following year was not as sharp as might otherwise have been expected, but against that must be put the fall in the paper livre’s purchasing power, particularly in the later months. The exchange rate against English sterling fell from nine old pence to 2 ½ pence in September 1720, most of that fall occurring after April as the price effect of the previous year’s inflation worked its way through into the exchange rates.

In the last three months of 1720 there was no sterling price quoted for paper livres, indicating they had become worthless.

The relevance to today

John Law’s ramping of a single financial asset by monetary inflation correlates with the Fed’s monetary policy today. The material differences are the suppression of interest rates, and therefore the market costs of government funding, and the far wider range of financial assets being inflated on the back of government bonds. The importance of maintaining financial asset prices is not only Fed policy, but it is increasingly realised that it is a policy that cannot be allowed to fail.

To the extent that other central banks are suppressing yields on their government bonds, this policy extends beyond America. This time, the John Law strategy has gone truly global, with the consequence that the future of fiat currencies is tied to the perpetuation of current financial bubbles.

In this regard it is interesting to note that the most astute banker in John Law’s time, Richard Cantillon, never played Law’s game on the bull tack. He made his first fortune extending credit to others for the purchase of John Law’s stock, which as collateral he promptly sold. Subsequently, he sued for the return of the loans to those who refused to pay up, thereby getting two bites of the cherry. His second fortune was shorting Law’s scheme in 1719, not by selling shares in the scheme, but by selling the currency for foreign exchange. In other words, he calculated that when the scheme failed, it would be the currency that collapsed more than the shares. He was right.

Conclusion

The two empirical models by which we can judge the collapse of a fiat currency offer food for thought in our current situation.

  • The policy of deliberately rigging financial markets replicates that of John Law’s scheme, suggesting the collapse of currencies will be tightly bound to the end of the government bond bubble. Today’s bubbles in financial assets are sustained by equally artificial means, even more transparent than Law’s market rigging — quantitative easing, suppressed and negative interest rates etc., to which we can add the manipulation of price inflation statistics.

  • The German experience in the early 1920s showed how it did not take as much monetary inflation as monetarists might think to collapse a currency. Karl Helfferich’s quote about the relationship between the 23 times increase in the money quantity while the number of paper marks to the dollar increased 344 times gives us an important perspective: it will not require a hyperinflation of the money supply to destroy paper currencies today.

A fundamental difference is that the greatest sinner, if not on scale but likely effect, is the Fed in its puffery of the dollar, everyone else’s reserve currency. And unlike Germany a century ago and unlike France three centuries ago, there is no foreign currency against which to measure the dollar’s decline, except perhaps in the short run, because all central banks follow similar inflationary policies with their fiat currencies.

In the past a suitable foreign currency was fully exchangeable into silver or gold, so the decline and collapse could only be measured accordingly. It also means that it will be impossible for businesses to bypass the currency collapse by referencing prices to other currencies, being all similarly fiat. Many businesses in Germany survived the paper mark collapse in this way, but their modern equivalents will not have this option.

The final collapse of a currency is always a flight out of government fiat currency into goods. That can be the only outcome from the continuation of current macroeconomic policies. But above all, it would be a mistake to think it cannot happen, nor that it will be a long process giving us all plenty of time to plan. The final flight out of paper marks took approximately six months. Law’s scheme took slightly longer to destroy his livre. These should be our reference points.

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Government

Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

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Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

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Spread & Containment

‘I couldn’t stand the pain’: the Turkish holiday resort that’s become an emergency dental centre for Britons who can’t get treated at home

The crisis in NHS dentistry is driving increasing numbers abroad for treatment. Here are some of their stories.

This clinic in the Turkish resort of Antalya is the official 'dental sponsor' of the Miss England competition. Diana Ibanez-Tirado, Author provided

It’s a hot summer day in the Turkish city of Antalya, a Mediterranean resort with golden beaches, deep blue sea and vibrant nightlife. The pool area of the all-inclusive resort is crammed with British people on sun loungers – but they aren’t here for a holiday. This hotel is linked to a dental clinic that organises treatment packages, and most of these guests are here to see a dentist.

From Norwich, two women talk about gums and injections. A man from Wales holds a tissue close to his mouth and spits blood – he has just had two molars extracted.

The dental clinic organises everything for these dental “tourists” throughout their treatment, which typically lasts from three to 15 days. The stories I hear of what has caused them to travel to Turkey are strikingly similar: all have struggled to secure dental treatment at home on the NHS.

“The hotel is nice and some days I go to the beach,” says Susan*, a hairdresser in her mid-30s from Norwich. “But really, we aren’t tourists like in a proper holiday. We come here because we have no choice. I couldn’t stand the pain.”

Seaside beach resort with mountains in the distance
The Turkish Mediterranean resort of Antalya. Akimov Konstantin/Shutterstock

This is Susan’s second visit to Antalya. She explains that her ordeal started two years earlier:

I went to an NHS dentist who told me I had gum disease … She did some cleaning to my teeth and gums but it got worse. When I ate, my teeth were moving … the gums were bleeding and it was very painful. I called to say I was in pain but the clinic was not accepting NHS patients any more.

The only option the dentist offered Susan was to register as a private patient:

I asked how much. They said £50 for x-rays and then if the gum disease got worse, £300 or so for extraction. Four of them were moving – imagine: £1,200 for losing your teeth! Without teeth I’d lose my clients, but I didn’t have the money. I’m a single mum. I called my mum and cried.

Susan’s mother told her about a friend of hers who had been to Turkey for treatment, then together they found a suitable clinic:

The prices are so much cheaper! Tooth extraction, x-rays, consultations – it all comes included. The flight and hotel for seven days cost the same as losing four teeth in Norwich … I had my lower teeth removed here six months ago, now I’ve got implants … £2,800 for everything – hotel, transfer, treatments. I only paid the flights separately.

In the UK, roughly half the adult population suffers from periodontitis – inflammation of the gums caused by plaque bacteria that can lead to irreversible loss of gums, teeth, and bone. Regular reviews by a dentist or hygienist are required to manage this condition. But nine out of ten dental practices cannot offer NHS appointments to new adult patients, while eight in ten are not accepting new child patients.

Some UK dentists argue that Britons who travel abroad for treatment do so mainly for cosmetic procedures. They warn that dental tourism is dangerous, and that if their treatment goes wrong, dentists in the UK will be unable to help because they don’t want to be responsible for further damage. Susan shrugs this off:

Dentists in England say: ‘If you go to Turkey, we won’t touch you [afterwards].’ But I don’t worry because there are no appointments at home anyway. They couldn’t help in the first place, and this is why we are in Turkey.

‘How can we pay all this money?’

As a social anthropologist, I travelled to Turkey a number of times in 2023 to investigate the crisis of NHS dentistry, and the journeys abroad that UK patients are increasingly making as a result. I have relatives in Istanbul and have been researching migration and trading patterns in Turkey’s largest city since 2016.

In August 2023, I visited the resort in Antalya, nearly 400 miles south of Istanbul. As well as Susan, I met a group from a village in Wales who said there was no provision of NHS dentistry back home. They had organised a two-week trip to Turkey: the 12-strong group included a middle-aged couple with two sons in their early 20s, and two couples who were pensioners. By going together, Anya tells me, they could support each other through their different treatments:

I’ve had many cavities since I was little … Before, you could see a dentist regularly – you didn’t even think about it. If you had pain or wanted a regular visit, you phoned and you went … That was in the 1990s, when I went to the dentist maybe every year.

Anya says that once she had children, her family and work commitments meant she had no time to go to the dentist. Then, years later, she started having serious toothache:

Every time I chewed something, it hurt. I ate soups and soft food, and I also lost weight … Even drinking was painful – tea: pain, cold water: pain. I was taking paracetamol all the time! I went to the dentist to fix all this, but there were no appointments.

Anya was told she would have to wait months, or find a dentist elsewhere:

A private clinic gave me a list of things I needed done. Oh my God, almost £6,000. My husband went too – same story. How can we pay all this money? So we decided to come to Turkey. Some people we know had been here, and others in the village wanted to come too. We’ve brought our sons too – they also need to be checked and fixed. Our whole family could be fixed for less than £6,000.

By the time they travelled, Anya’s dental problems had turned into a dental emergency. She says she could not live with the pain anymore, and was relying on paracetamol.

In 2023, about 6 million adults in the UK experienced protracted pain (lasting more than two weeks) caused by toothache. Unintentional paracetamol overdose due to dental pain is a significant cause of admissions to acute medical units. If left untreated, tooth infections can spread to other parts of the body and cause life-threatening complications – and on rare occasions, death.

In February 2024, police were called to manage hundreds of people queuing outside a newly opened dental clinic in Bristol, all hoping to be registered or seen by an NHS dentist. One in ten Britons have admitted to performing “DIY dentistry”, of which 20% did so because they could not find a timely appointment. This includes people pulling out their teeth with pliers and using superglue to repair their teeth.

In the 1990s, dentistry was almost entirely provided through NHS services, with only around 500 solely private dentists registered. Today, NHS dentist numbers in England are at their lowest level in a decade, with 23,577 dentists registered to perform NHS work in 2022-23, down 695 on the previous year. Furthermore, the precise division of NHS and private work that each dentist provides is not measured.

The COVID pandemic created longer waiting lists for NHS treatment in an already stretched public service. In Bridlington, Yorkshire, people are now reportedly having to wait eight-to-nine years to get an NHS dental appointment with the only remaining NHS dentist in the town.

In his book Patients of the State (2012), Argentine sociologist Javier Auyero describes the “indignities of waiting”. It is the poor who are mostly forced to wait, he writes. Queues for state benefits and public services constitute a tangible form of power over the marginalised. There is an ethnic dimension to this story, too. Data suggests that in the UK, patients less likely to be effective in booking an NHS dental appointment are non-white ethnic groups and Gypsy or Irish travellers, and that it is particularly challenging for refugees and asylum-seekers to access dental care.


This article is part of Conversation Insights
The Insights team generates long-form journalism derived from interdisciplinary research. The team is working with academics from different backgrounds who have been engaged in projects aimed at tackling societal and scientific challenges.


In 2022, I experienced my own dental emergency. An infected tooth was causing me debilitating pain, and needed root canal treatment. I was advised this would cost £71 on the NHS, plus £307 for a follow-up crown – but that I would have to wait months for an appointment. The pain became excruciating – I could not sleep, let alone wait for months. In the same clinic, privately, I was quoted £1,300 for the treatment (more than half my monthly income at the time), or £295 for a tooth extraction.

I did not want to lose my tooth because of lack of money. So I bought a flight to Istanbul immediately for the price of the extraction in the UK, and my tooth was treated with root canal therapy by a private dentist there for £80. Including the costs of travelling, the total was a third of what I was quoted to be treated privately in the UK. Two years on, my treated tooth hasn’t given me any more problems.

A better quality of life

Not everyone is in Antalya for emergency procedures. The pensioners from Wales had contacted numerous clinics they found on the internet, comparing prices, treatments and hotel packages at least a year in advance, in a carefully planned trip to get dental implants – artificial replacements for tooth roots that help support dentures, crowns and bridges.

Street view of a dental clinic in Antalya, Turkey
Dental clinic in Antalya, Turkey. Diana Ibanez-Tirado, CC BY-NC-ND

In Turkey, all the dentists I speak to (most of whom cater mainly for foreigners, including UK nationals) consider implants not a cosmetic or luxurious treatment, but a development in dentistry that gives patients who are able to have the procedure a much better quality of life. This procedure is not available on the NHS for most of the UK population, and the patients I meet in Turkey could not afford implants in private clinics back home.

Paul is in Antalya to replace his dentures, which have become uncomfortable and irritating to his gums, with implants. He says he couldn’t find an appointment to see an NHS dentist. His wife Sonia went through a similar procedure the year before and is very satisfied with the results, telling me: “Why have dentures that you need to put in a glass overnight, in the old style? If you can have implants, I say, you’re better off having them.”

Most of the dental tourists I meet in Antalya are white British: this city, known as the Turkish Riviera, has developed an entire economy catering to English-speaking tourists. In 2023, more than 1.3 million people visited the city from the UK, up almost 15% on the previous year.


Read more: NHS dentistry is in crisis – are overseas dentists the answer?


In contrast, the Britons I meet in Istanbul are predominantly from a non-white ethnic background. Omar, a pensioner of Pakistani origin in his early 70s, has come here after waiting “half a year” for an NHS appointment to fix the dental bridge that is causing him pain. Omar’s son had been previously for a hair transplant, and was offered a free dental checkup by the same clinic, so he suggested it to his father. Having worked as a driver for a manufacturing company for two decades in Birmingham, Omar says he feels disappointed to have contributed to the British economy for so long, only to be “let down” by the NHS:

At home, I must wait and wait and wait to get a bridge – and then I had many problems with it. I couldn’t eat because the bridge was uncomfortable and I was in pain, but there were no appointments on the NHS. I asked a private dentist and they recommended implants, but they are far too expensive [in the UK]. I started losing weight, which is not a bad thing at the beginning, but then I was worrying because I couldn’t chew and eat well and was losing more weight … Here in Istanbul, I got dental implants – US$500 each, problem solved! In England, each implant is maybe £2,000 or £3,000.

In the waiting area of another clinic in Istanbul, I meet Mariam, a British woman of Iraqi background in her late 40s, who is making her second visit to the dentist here. Initially, she needed root canal therapy after experiencing severe pain for weeks. Having been quoted £1,200 in a private clinic in outer London, Mariam decided to fly to Istanbul instead, where she was quoted £150 by a dentist she knew through her large family. Even considering the cost of the flight, Mariam says the decision was obvious:

Dentists in England are so expensive and NHS appointments so difficult to find. It’s awful there, isn’t it? Dentists there blamed me for my rotten teeth. They say it’s my fault: I don’t clean or I ate sugar, or this or that. I grew up in a village in Iraq and didn’t go to the dentist – we were very poor. Then we left because of war, so we didn’t go to a dentist … When I arrived in London more than 20 years ago, I didn’t speak English, so I still didn’t go to the dentist … I think when you move from one place to another, you don’t go to the dentist unless you are in real, real pain.

In Istanbul, Mariam has opted not only for the urgent root canal treatment but also a longer and more complex treatment suggested by her consultant, who she says is a renowned doctor from Syria. This will include several extractions and implants of back and front teeth, and when I ask what she thinks of achieving a “Hollywood smile”, Mariam says:

Who doesn’t want a nice smile? I didn’t come here to be a model. I came because I was in pain, but I know this doctor is the best for implants, and my front teeth were rotten anyway.

Dentists in the UK warn about the risks of “overtreatment” abroad, but Mariam appears confident that this is her opportunity to solve all her oral health problems. Two of her sisters have already been through a similar treatment, so they all trust this doctor.

Alt text
An Istanbul clinic founded by Afghan dentists has a message for its UK customers. Diana Ibanez-Tirado, CC BY-NC-ND

The UK’s ‘dental deserts’

To get a fuller understanding of the NHS dental crisis, I’ve also conducted 20 interviews in the UK with people who have travelled or were considering travelling abroad for dental treatment.

Joan, a 50-year-old woman from Exeter, tells me she considered going to Turkey and could have afforded it, but that her back and knee problems meant she could not brave the trip. She has lost all her lower front teeth due to gum disease and, when I meet her, has been waiting 13 months for an NHS dental appointment. Joan tells me she is living in “shame”, unable to smile.

In the UK, areas with extremely limited provision of NHS dental services – known as as “dental deserts” – include densely populated urban areas such as Portsmouth and Greater Manchester, as well as many rural and coastal areas.

In Felixstowe, the last dentist taking NHS patients went private in 2023, despite the efforts of the activist group Toothless in Suffolk to secure better access to NHS dentists in the area. It’s a similar story in Ripon, Yorkshire, and in Dumfries & Galloway, Scotland, where nearly 25,000 patients have been de-registered from NHS dentists since 2021.

Data shows that 2 million adults must travel at least 40 miles within the UK to access dental care. Branding travel for dental care as “tourism” carries the risk of disguising the elements of duress under which patients move to restore their oral health – nationally and internationally. It also hides the immobility of those who cannot undertake such journeys.

The 90-year-old woman in Dumfries & Galloway who now faces travelling for hours by bus to see an NHS dentist can hardly be considered “tourism” – nor the Ukrainian war refugees who travelled back from West Sussex and Norwich to Ukraine, rather than face the long wait to see an NHS dentist.

Many people I have spoken to cannot afford the cost of transport to attend dental appointments two hours away – or they have care responsibilities that make it impossible. Instead, they are forced to wait in pain, in the hope of one day securing an appointment closer to home.

Billboard advertising a dental clinic in Turkey
Dental clinics have mushroomed in recent years in Turkey, thanks to the influx of foreign patients seeking a wide range of treatments. Diana Ibanez-Tirado, CC BY-NC-ND

‘Your crisis is our business’

The indignities of waiting in the UK are having a big impact on the lives of some local and foreign dentists in Turkey. Some neighbourhoods are rapidly changing as dental and other health clinics, usually in luxurious multi-storey glass buildings, mushroom. In the office of one large Istanbul medical complex with sections for hair transplants and dentistry (plus one linked to a hospital for more extensive cosmetic surgery), its Turkish owner and main investor tells me:

Your crisis is our business, but this is a bazaar. There are good clinics and bad clinics, and unfortunately sometimes foreign patients do not know which one to choose. But for us, the business is very good.

This clinic only caters to foreign patients. The owner, an architect by profession who also developed medical clinics in Brazil, describes how COVID had a major impact on his business:

When in Europe you had COVID lockdowns, Turkey allowed foreigners to come. Many people came for ‘medical tourism’ – we had many patients for cosmetic surgery and hair transplants. And that was when the dental business started, because our patients couldn’t see a dentist in Germany or England. Then more and more patients started to come for dental treatments, especially from the UK and Ireland. For them, it’s very, very cheap here.

The reasons include the value of the Turkish lira relative to the British pound, the low cost of labour, the increasing competition among Turkish clinics, and the sheer motivation of dentists here. While most dentists catering to foreign patients are from Turkey, others have arrived seeking refuge from war and violence in Syria, Iraq, Afghanistan, Iran and beyond. They work diligently to rebuild their lives, careers and lost wealth.

Regardless of their origin, all dentists in Turkey must be registered and certified. Hamed, a Syrian dentist and co-owner of a new clinic in Istanbul catering to European and North American patients, tells me:

I know that you say ‘Syrian’ and people think ‘migrant’, ‘refugee’, and maybe think ‘how can this dentist be good?’ – but Syria, before the war, had very good doctors and dentists. Many of us came to Turkey and now I have a Turkish passport. I had to pass the exams to practise dentistry here – I study hard. The exams are in Turkish and they are difficult, so you cannot say that Syrian doctors are stupid.

Hamed talks excitedly about the latest technology that is coming to his profession: “There are always new materials and techniques, and we cannot stop learning.” He is about to travel to Paris to an international conference:

I can say my techniques are very advanced … I bet I put more implants and do more bone grafting and surgeries every week than any dentist you know in England. A good dentist is about practice and hand skills and experience. I work hard, very hard, because more and more patients are arriving to my clinic, because in England they don’t find dentists.

Dental equipment in a Turkish treatment room
Dentists in Turkey boast of using the latest technology. Diana Ibanez-Tirado, CC BY-NC-ND

While there is no official data about the number of people travelling from the UK to Turkey for dental treatment, investors and dentists I speak to consider that numbers are rocketing. From all over the world, Turkey received 1.2 million visitors for “medical tourism” in 2022, an increase of 308% on the previous year. Of these, about 250,000 patients went for dentistry. One of the most renowned dental clinics in Istanbul had only 15 British patients in 2019, but that number increased to 2,200 in 2023 and is expected to reach 5,500 in 2024.

Like all forms of medical care, dental treatments carry risks. Most clinics in Turkey offer a ten-year guarantee for treatments and a printed clinical history of procedures carried out, so patients can show this to their local dentists and continue their regular annual care in the UK. Dental treatments, checkups and maintaining a good oral health is a life-time process, not a one-off event.

Many UK patients, however, are caught between a rock and a hard place – criticised for going abroad, yet unable to get affordable dental care in the UK before and after their return. The British Dental Association has called for more action to inform these patients about the risks of getting treated overseas – and has warned UK dentists about the legal implications of treating these patients on their return. But this does not address the difficulties faced by British patients who are being forced to go abroad in search of affordable, often urgent dental care.

A global emergency

The World Health Organization states that the explosion of oral disease around the world is a result of the “negligent attitude” that governments, policymakers and insurance companies have towards including oral healthcare under the umbrella of universal healthcare. It as if the health of our teeth and mouth is optional; somehow less important than treatment to the rest of our body. Yet complications from untreated tooth decay can lead to hospitalisation.

The main causes of oral health diseases are untreated tooth decay, severe gum disease, toothlessness, and cancers of the lip and oral cavity. Cases grew during the pandemic, when little or no attention was paid to oral health. Meanwhile, the global cosmetic dentistry market is predicted to continue growing at an annual rate of 13% for the rest of this decade, confirming the strong relationship between socioeconomic status and access to oral healthcare.

In the UK since 2018, there have been more than 218,000 admissions to hospital for rotting teeth, of which more than 100,000 were children. Some 40% of children in the UK have not seen a dentist in the past 12 months. The role of dentists in prevention of tooth decay and its complications, and in the early detection of mouth cancer, is vital. While there is a 90% survival rate for mouth cancer if spotted early, the lack of access to dental appointments is causing cases to go undetected.

The reasons for the crisis in NHS dentistry are complex, but include: the real-term cuts in funding to NHS dentistry; the challenges of recruitment and retention of dentists in rural and coastal areas; pay inequalities facing dental nurses, most of them women, who are being badly hit by the cost of living crisis; and, in England, the 2006 Dental Contract that does not remunerate dentists in a way that encourages them to continue seeing NHS patients.

The UK is suffering a mass exodus of the public dentistry workforce, with workers leaving the profession entirely or shifting to the private sector, where payments and life-work balance are better, bureaucracy is reduced, and prospects for career development look much better. A survey of general dental practitioners found that around half have reduced their NHS work since the pandemic – with 43% saying they were likely to go fully private, and 42% considering a career change or taking early retirement.

Reversing the UK’s dental crisis requires more commitment to substantial reform and funding than the “recovery plan” announced by Victoria Atkins, the secretary of state for health and social care, on February 7.

The stories I have gathered show that people travelling abroad for dental treatment don’t see themselves as “tourists” or vanity-driven consumers of the “Hollywood smile”. Rather, they have been forced by the crisis in NHS dentistry to seek out a service 1,500 miles away in Turkey that should be a basic, affordable right for all, on their own doorstep.

*Names in this article have been changed to protect the anonymity of the interviewees.


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Diana Ibanez Tirado receives funding from the School of Global Studies, University of Sussex.

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Beloved mall retailer files Chapter 7 bankruptcy, will liquidate

The struggling chain has given up the fight and will close hundreds of stores around the world.

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It has been a brutal period for several popular retailers. The fallout from the covid pandemic and a challenging economic environment have pushed numerous chains into bankruptcy with Tuesday Morning, Christmas Tree Shops, and Bed Bath & Beyond all moving from Chapter 11 to Chapter 7 bankruptcy liquidation.

In all three of those cases, the companies faced clear financial pressures that led to inventory problems and vendors demanding faster, or even upfront payment. That creates a sort of inevitability.

Related: Beloved retailer finds life after bankruptcy, new famous owner

When a retailer faces financial pressure it sets off a cycle where vendors become wary of selling them items. That leads to barren shelves and no ability for the chain to sell its way out of its financial problems. 

Once that happens bankruptcy generally becomes the only option. Sometimes that means a Chapter 11 filing which gives the company a chance to negotiate with its creditors. In some cases, deals can be worked out where vendors extend longer terms or even forgive some debts, and banks offer an extension of loan terms.

In other cases, new funding can be secured which assuages vendor concerns or the company might be taken over by its vendors. Sometimes, as was the case with David's Bridal, a new owner steps in, adds new money, and makes deals with creditors in order to give the company a new lease on life.

It's rare that a retailer moves directly into Chapter 7 bankruptcy and decides to liquidate without trying to find a new source of funding.

Mall traffic has varied depending upon the type of mall.

Image source: Getty Images

The Body Shop has bad news for customers  

The Body Shop has been in a very public fight for survival. Fears began when the company closed half of its locations in the United Kingdom. That was followed by a bankruptcy-style filing in Canada and an abrupt closure of its U.S. stores on March 4.

"The Canadian subsidiary of the global beauty and cosmetics brand announced it has started restructuring proceedings by filing a Notice of Intention (NOI) to Make a Proposal pursuant to the Bankruptcy and Insolvency Act (Canada). In the same release, the company said that, as of March 1, 2024, The Body Shop US Limited has ceased operations," Chain Store Age reported.

A message on the company's U.S. website shared a simple message that does not appear to be the entire story.

"We're currently undergoing planned maintenance, but don't worry we're due to be back online soon."

That same message is still on the company's website, but a new filing makes it clear that the site is not down for maintenance, it's down for good.

The Body Shop files for Chapter 7 bankruptcy

While the future appeared bleak for The Body Shop, fans of the brand held out hope that a savior would step in. That's not going to be the case. 

The Body Shop filed for Chapter 7 bankruptcy in the United States.

"The US arm of the ethical cosmetics group has ceased trading at its 50 outlets. On Saturday (March 9), it filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk including those in a distribution center that still holds millions of dollars worth of stock," The Guardian reported.

After its closure in the United States, the survival of the brand remains very much in doubt. About half of the chain's stores in the United Kingdom remain open along with its Australian stores. 

The future of those stores remains very much in doubt and the chain has shared that it needs new funding in order for them to continue operating.

The Body Shop did not respond to a request for comment from TheStreet.   

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