Tag: economics

Perhaps More Sanctions on Russia Would Help

Both Great Britain and Germany are teetering on the brink of economic crises:

Britain is facing the prospect of a repeat of its crippling 1976 economic crash as soaring debt and borrowing costs raise doubts over Labour’s budget policies, leading economists have warned, according to a Telegraph report.

The crisis nearly fifty years ago saw a Labour government forced to seek an emergency loan from the International Monetary Fund (IMF) after deficits and inflation spun out of control. It became one of Britain’s worst postwar crises, with the bailout bringing deep spending cuts and Labour losing power a few years later.

Now Chancellor Rachel Reeves faces similar warnings, with forecasts showing a £50 billion ($68 billion) gap in the public finances and debt interest set to exceed £111 billion. Debt now exceeds 96% of GDP. At around £2.7 trillion, it is one of the heaviest burdens in the developed world. Government borrowing costs have surged, with yields on 30-year bonds climbing above 5.5%, higher than those of the US and Greece.

Losing a proxy war is costly. The insanity of Clown World can be seen in how both the British and German governments are pushing for more of the war and more of the sanctions that is bringing them to the breaking point.

For some reason, the servants of the Black Rider never seem to understand that they’ll be discarded once they’re no longer of use to him.

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Opposing AI is Marxian

Since it’s obviously too difficult for the average individual who denigrates the use of AI and opposes its use on the grounds of insufficient human involvement to understand their own position well enough to recognize its obvious intellectual roots, I asked Claude to dumb down my observations enough to permit their little midwit minds to grasp it.

The Hidden Marxism Behind “AI Slop” Complaints

When critics dismiss AI-generated art as “soulless pablum” or “AI slop,” they’re often unknowingly channeling a 19th-century economic theory that most economists abandoned long ago. Their argument, stripped to its core, reflects the labor theory of value that Karl Marx popularized—the idea that something’s worth comes from the human work put into it. This perspective, while emotionally appealing, fundamentally misunderstands how we actually value art and creativity.

The Labor Theory in Disguise

Marx argued that a product’s value stemmed from the “socially necessary labor time” required to produce it. A chair was valuable because a carpenter spent hours crafting it; a coat, because a tailor labored over its seams. Critics of AI art make remarkably similar claims: a painting matters because an artist struggled with brushstrokes for days, a novel has worth because a writer agonized over every sentence, a song touches us because a musician practiced for years to master their instrument.

Notice the pattern? The anti-AI argument insists that art without human toil is worthless—that the struggle itself creates the value. When someone calls AI art “slop,” they’re not really critiquing the output’s quality. They’re saying it lacks value because it lacks human labor input. A beautiful AI-generated landscape might be visually indistinguishable from one painted by hand, but critics dismiss it anyway. Why? Because no one suffered for it.

Where This Theory Falls Apart

Economists largely abandoned the labor theory of value because it couldn’t explain basic market realities. Why does water, essential for life, cost less than diamonds? Why can two painters spend equal time on portraits, yet one sells for millions while the other goes unsold? The answer isn’t labor—it’s what economists call subjective value. Things are worth what people believe they’re worth, based on their preferences, needs, and circumstances.

Art has always been the ultimate refutation of labor-value thinking. Van Gogh died penniless despite pouring his soul into his work; his paintings gained value only when audiences decided they mattered. A child’s finger painting might take minutes but become priceless to a parent. Street artists create elaborate chalk drawings knowing rain will wash them away. If labor determined artistic value, none of this would make sense.

The Real Source of Artistic Value

What actually makes art valuable? The answer varies by person and context. Sometimes we value technical skill—but photography didn’t become worthless when cameras replaced the painstaking work of portrait painters. Sometimes we value emotional resonance—but a simple song can move us more than a technical masterpiece. Sometimes we value novelty, sometimes tradition, sometimes the story behind the work, sometimes pure aesthetic pleasure.

AI art can fulfill any of these value sources. It can create novel combinations no human imagined, generate perfectly crafted compositions, or help disabled individuals express visions they couldn’t physically create themselves. When someone uses AI to illustrate their novel or design their album cover, the value comes from bringing their creative vision to life, not from how many hours they spent learning how to use Photoshop.

The Ignorance in the Argument

The “AI slop” position reflects a peculiar ignorance about how art has always evolved. Every new tool faced similar criticisms. Photographers were told they weren’t real artists because machines did the work. Electronic musicians heard that synthesizers were cheating. Digital artists were dismissed because “the computer does it for you.” Yet each tool simply changed how humans express creativity, not whether the results had value.

More fundamentally, the anti-AI position ignorantly assumes we value art for the artist’s effort rather than our own experience. But people don’t listen to music thinking, “I enjoy this because someone practiced his scales for years.” They don’t admire paintings on the basis of the painter’s hours invested. Art’s value lives in the connection between work and audience, not in the production method.

Moving Beyond Marxian Mysticism

The fear driving “AI slop” rhetoric is understandable—artists worry about their livelihoods, and change is scary. But wrapping economic anxiety in Marxian labor mysticism doesn’t help anyone. It obscures real conversations about attribution, consent, and fair compensation while promoting a backward-looking view that confuses suffering with value.

Art made with AI tools isn’t automatically valuable, but neither is it automatically worthless. Like art made with brushes, cameras, or computers, its value depends on whether it resonates, inspires, or satisfies human needs and desires. Artistic value, like all value, is inherently subjective. That’s how value has always worked, despite what Marx claimed.

The next time someone dismisses AI art as “soulless,” ask them this: are they evaluating the work itself, or are they calculating the human hours that weren’t required to make it? The answer usually reveals that they subscribe to an outdated socialist economic theory from 1867, whether they know it or not.

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Peter Turchin Kept the Receipts

One of my favorite analysts, Peter Turchin, is one of the few people who loves data even more than I do. He quite usefully chose a pair of opposite predictions concerning the Ukraine war back in 2022, one from Paul Krugman and one from Scott Ritter, and constructed models on the bases of those predictions in order to track the way the war unfolded.

Now, I could have told him that Paul Krugman’s model would be wrong, because Paul Krugman is always wrong. But that’s some high-level UHIQ pattern recognition in action; warning: do not try this at home! In the statistical world, one has to at least pretend to take his predictions seriously and give them a fair shake, even though one has a very high level of confidence that they’ll comprehensively fail.

One of the topics that I wrote about in End Times was Ukraine. After I turned the final version of the text to the publisher in late 2022, I continued monitoring the news about the course of the conflict there, because I was curious to see how well my assessment of the Ukrainian state (a plutocracy) and the war there (a proxy conflict between NATO and Russia) would fare as history unfolded. It was, thus, interesting to see that in the early 2023 the views on this conflict, and predictions about its future course, could be so diametrically opposed, depending on who was writing and what ideological background they came from. The tone in the MSM (main-stream media reflecting the official American position) was quite triumphant. But many American analysts, former military and intelligence professionals, held a very different view.

It occurred to me at that time that this difference in predictions is actually amenable to an empirical test. As long-time readers of my blog (now here on Substack, previous posts archived on my web site) know, I view ability to empirically test predictions from rival theories as key in doing Science (with a capital S). Just search my blog archive using the keyword “prediction” and you will see multiple posts on this subject. So I decided to conduct a formal test.

For concreteness sake, I selected two predictions, both based on an explicitly quantitative argument, but coming from opposite ends of the ideological spectrum. One was from Paul Krugman, channeling the official American position. The other was from another American, who is, however, considered as a “rogue actor” and a “Putin’s stooge”, Scott Ritter. You can read the actual quotes from both in the Introduction of the SocArxiv article, in which I “pre-registered” predictions of my model.

I won’t repeat the details here, because you can read them in the series of blogs I published two years ago, followed by the SocArxiv article that put it all together in a systematic manner and provided R scripts that allow others to replicate all my results.

They’re all well worth reading, although by the middle assessment, it’s already perfectly clear which of the two models, which Turchin labels the Economic Power model (Krugman) and the Casualties Rates model (Ritter), works better, although he combined elements of both into what he describes as an Attrition Warfare Model that appears to outperform both. This makes since, because what really matters most is Industrial Capacity and Male Population Demographics, both of which are presumably incorporated in Turchin’s AWM.

And he explains exactly what his AWM suggests at the moment.

As you can see (the dashed red line “We are here”), we’ve already entered the region where Ukrainian army can collapse at any moment, although this “moment,” according to the model can happen at any point between now and February 2027 (corresponding to 60 months after the start of the conflict). As I explained in my posts and the article, the final outcome is not much in doubt, but the rupture point is extremely difficult to predict. The situation is akin to seismology. For example, the recent Kamchatka earthquake of exceptional power was predicted 30 years ago, except nobody could know when it would actually strike. The Attrition Warfare Model is actually more precise than that. From its point of view, it would be a surprising outcome if Ukraine is still fighting beyond February 2027.

Note that I said, “from its [the model’s] point of view.” I emphasize that the future is unknowable in precise terms. In any case, the goal of this article was not to predict the future, but to use the method of scientific prediction to empirically test between two, or more theories.

The Attrition Warfare Model (AWM) encodes both alternative theories, (1) the Economic Power hypothesis, which predicts a win for Ukraine (Krugman) and (2) the Casualties Rates hypothesis, which predicts a win for Russia (Ritter). It is clear that the first theory will be rejected, no matter when the war ends.

Turchin’s work can be a little wonkish for the average individual to follow, but it’s not as complicated as it might look at first. He keeps things simple enough, and his writing style is clear enough, that with just a little concentration, that it’s both insightful and educational for anyone with the intelligence to be paying attention to these small matters of war, revolution, and societal survival.

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Tripling Down on Failure

Western sanctions on Russia have completely failed. Additional sanctions on China have completely failed. So now, instead of accepting their defeat in both economic and proxy war in Ukraine, both the USA and the EU are going to try sanctioning India. This effort too will fail.

On Sunday, a top aide to President Donald Trump accused India of financing Russia’s war in Ukraine by buying oil from Moscow. “What he [Trump] said very clearly is that it is not acceptable for India to continue financing this war by purchasing the oil from Russia,” said Stephen Miller, deputy chief of staff at the White House and one of the US president’s most influential aides. “People will be shocked to learn that India is basically tied with China in purchasing Russian oil. That’s an astonishing fact,” Miller said on Fox News.

This marks a significant hardening of tone, signalling that bipartisan pressure on India’s Russia policy may persist regardless of the administration in power.

The Indian government issued a stern response, saying Delhi would keep purchasing oil from Moscow if it is in line with national interests. Its foreign ministry stated that country’s energy purchases are guided by market dynamics and national interests. “⁠The government is committed to prioritizing the welfare of Indian consumers. Our energy purchases will be based on price, availability and market conditions,” the statement read.

Despite Trump’s claims that India had stopped buying Russian oil after his threats, the Indian government said it is not aware of any pauses in imports. People in the oil and gas industry have confirmed that the government has not issued any officials requests to refiners to stop purchasing Russian oil.

As global energy flows are increasingly weaponized, India’s path is becoming tougher, but also more clearly defined. This is no longer merely a question of compliance with sanctions; it is about resisting the politicization of trade and asserting agency in a fragmented global order. The message to the West at large: India’s energy decisions will not be dictated by external red lines.

The era of quiet compromise is over. In its place, a more assertive India is stepping forward, redefining its energy calculus, managing geopolitical headwinds, and defending its autonomy with both pragmatism and resolve.

It’s really remarkable to observe how prodigiously stupid the flailing actions of a declining empire and the posturing rhetoric of its retarded politicians are. It’s as if they have no ability to grasp the fact that they are in no position to demand the things they are demanding.

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Castalia and the Cost of Tariffs

So President Trump has imposed a 39 percent tariff on Switzerland. This has a direct impact on all the Castalia Library books now being produced in Switzerland, beginning with the Byzantine histories and Dracula. Now, the tariff is imposed on the declared value, not the retail price, so it’s not quite as bad as it looks, but it is a bit of a problem going forward since the discounts provided to subscribers for paying in advance don’t account for this additional expense to the 12 or so books now in production.

Now, even if we jacked up the subscription prices by 40 percent, our books would be a much-better value than Easton Press books, which go for $168. However, we know things are tight, and we don’t want to price our books out of the reach of subscribers who can’t afford a price increase right now.

So what we’re contemplating doing is to add a T-version of our base subscriptions to Library and History, similar to the Euro version of History, that will allow those subscribers who can a) afford the additional tariff cost and b) want to support the bindery. Libraria and Cathedra prices have a sufficient cushion to absorb the additional expense; we priced Cathedra with the expectation that there would be a tariff, although we were hoping for something in the 10-15 percent range. That would mean increasing the monthly subscription price from $50 to $75 for Library.

Another option, indeed, one that we’d originally contemplated from the start, is going back to producing all the US books in the USA, while producing the higher-quality books from the Bindery for Europe and the rest of the world. This would complicate our production runs, but since we could still produce all the interior book blocks from the same tariff-neutral location, would be entirely viable from a manufacturing standpoint. The primary downside is that we would have to establish another shipping operation instead of being able to rely solely on the US one.

Speaking of US production, THE SWISS FAMILY ROBINSON has passed the stamp test and will be getting bound and shipped to the warehouse very soon.

Anyhow, if you’re a Library, History, or Cathedra subscriber, please feel free to share your thoughts on how you think we should address the situation.

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Europe’s Coming Lost Decades

Richard Werner, the author of one of the most important books on banking and economic history ever written, Princes of the Yen, explains why Europe is economically stagnant, and in doing so, inadvertently provides a hint at what might be the real reason Shinzo Abe was assassinated three years ago.

Many observers are puzzled by the dismal economic performance in Europe – which is not getting better, although a new rearmament program may create the illusion of growth. It is argued here that there is a link to the puzzling period of two lost decades of stagnation in Japan, which also created world record national debt for an industrialised country. The analysis goes back to first principles: Only if we understand how economies actually function will we be able to tackle such questions and make reliable forecasts about the future.

Degrowth prescribed for Japan, now exported to Europe

With hindsight we now know that the Japanese recession that began in the early1990s lasted twenty years. In the first decade the recession took most Japan-hands by surprise by its depth and length. Then it came to be used to argue that “structural reform” was necessary for a recovery, although this argument wore thin in the second decade. More and more analysts concluded that my assessment of the early 1990s was correct, namely that the recession had been artificially prolonged by the Japanese central bank.

The great Japanese recession was finally ended in 2013, after Prime Minister Shinzo Abe had won a landslide victory on the unusual election platform of wanting to tackle the too-powerful Bank of Japan – a central bank that had been acting against the interests of the Japanese people for too long. In some speeches Mr Abe was indeed referring to research in my book Princes of the Yen and its policy recommendation to reduce the Bank of Japan’s powers.

Initially, Prime Minister Abe had contemplated a change to the Bank of Japan Law, which had only been changed in 1997 to make the central bank independent and legally de facto barely accountable to anyone. Mr Abe originally joined my recommendation to formally reduce the central bank’s power and independence, and increase its accountability, by revising the Bank of Japan Law again.

This kind of change had earlier been endorsed by a number of (former) fellow LDP politicians and members of the Japanese parliament, including Mr Yoshimi Watanabe, who later became a government minister, Mr Yoichi Masuzoe, who was a member of the Upper House of the Diet, was a government minister later and from 2014 to 2016 was governor of the city of Tokyo, and Mr Kozo Yamamoto, who is a former Ministry of Finance official. They had been readers of Princes of the Yen, which had made a splash in Japan and was widely discussed in the mainstream media in 2001 and 2002. Based on its analysis, they founded the ‘LDP Bank of Japan Law Reform Group’, to which I was formally invited as advisor. Changing the Bank of Japan Law would have been the safest way to permanently derail the reach for ever greater powers that the central planners at the Japanese bank had been working on.

Unfortunately, for some reason, the Prime Minister, who is the grandchild of Nobusuke Kishi, who featured in important chapters of Princes of the Yen, despite his election promises, failed to attempt any change in the Bank of Japan Law.

This is from Werner’s new substack, which I very highly recommend adding to your regular reading. I didn’t realize he even had one until today, when I was reading the transcript of his excellent, two-hour interview by Tucker Carlson, which is the best concise history of money and banking you will find on the Internet.

And while I am tempted to post the entire 30k-word interview here now that it’s been nicely formatted, I’d prefer to see readers here visit Werner’s site; hopefully he will do it himself soon. I have to admit, it’s annoying that when Google has its own AI system, it doesn’t provide an easy, or better yet, automatic means of providing a nice AI-formatted transcript without timestamps on YouTube.

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The Globalist Charade

It’s fascinating to observe how simply paying attention to the details of the Ukrainian war inevitably leads to the observation of the complete failure of the globalists presently running what passes for the West:

The entire globalist charade at this point consists of presenting an image of solidarity, growth, and ‘optimism’—a narcotic psyop for the masses drowning in the post-modernist hell of social and cultural breakdown. Think of these deals as nothing more than kabuki theater aimed at concealing the massive printing of central bank debt meant to prop up the disintegrating system a little while longer. At this point, the elite cabal’s only remaining mandate is to conceal the disrepair and present an air of ‘health’ and systemic structural integrity—nothing else matters to them; but the charade no longer fools us.

Granted, what Trump is doing is still head and shoulders above the decrepit Biden regime’s lifeless pantomime. From the perspective of the US, Trump is at least attempting something radical, rather than the same old hyper-progressive Keynesian Malthusianism. But at the same time, the increasing vapidity of each new ‘victory’ can only be interpreted as a dead cat bounce theory of the US’ terminal imperial decline. All the pomp and glory associated with Trump’s ‘triumphant’ return to the throne seems to be a kind of last gasp from the stiffening cadaver: everything we see rings hollow, every initiative superficial and short-lived; the thin gold leaf veneer is flaking off to reveal weathered vinyl.

This translates to the combined ‘victories’ of the Euro-American Atlanticist sphere. We’re barraged with daily proclamations of bold new initiatives dressed up with pomp and frills, but nothing concrete is ever done: lives never improve and infrastructure stays rotting…

But ultimately, one cannot escape the feeling that, even despite hopes for a broader global restructuring, any benefits that come will too represent nothing more than the dead cat’s final feeble bounce. The systemic undergirdings prevalent in the nineteenth and early twentieth centuries are simply not in place anymore, and the monstrosity of global finance and capital which has grown since the post-war era likely cannot be undone with even these far-looking and well-intentioned half-measures.

Which is to say, as I wrote in 2004, you can’t fix a corpse.

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Europe’s Century of Humiliation

European observers are appalled by the USA’s ability to play hardball with the EU:

If Europeans were paying attention (or being told the truth), they should be beyond appalled by this “deal”. It’s nothing more than one of the most expensive imperial tributes in history. Just a massive one-way transfer of wealth with no reciprocal benefits

The “deal” is:

  • The EU now gets charged 15% tariffs on its exports to the US when they commit to charging zero tariffs on US imports in the EU
  • The EU agrees to invest $600 billion in the US, for no other obvious reason than pleasing “daddy”
  • The EU will “purchase hundreds of billions of dollars of American military equipment”
  • The EU commits to buying 750 billion dollars worth of very expensive US LNG, specifically $250 billion for each of the next 3 years

In exchange for all these concessions and extraction of their wealth they get… nothing. I’m not even exaggerating, that IS the deal: the EU gets nothing.

This does not even remotely ressemble the type of agreements made by two equal sovereign powers. It rather looks like the type of unequal treaties that colonial powers used to impose in the 19th century – except this time, Europe is on the receiving end.

What this signifies is the complete failure of the European Union project. The idea was that it would allow the various nations of Europe to band together and form an economic superpower that would challenge the United States. Instead, it’s broken itself with migration, socialist governance, and economic self-destruction, and seen itself surpassed by China, and soon, Russia.

The sooner more nations follow the lead of Britain and extricate themselves from this monstrosity, the better.

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Throw ‘Em in Dat Briar Patch

President Trump – presumably the short fake one – threatens the BRICS countries with an additional 10 percent tariff:

US President Donald Trump has threatened to impose an additional 10% tariff on any country which “aligns itself” with BRICS, accusing the economic bloc of adopting “anti-American policies.”

The warning came just hours after BRICS leaders concluded their annual summit in Rio de Janeiro. In its joint declaration, the bloc criticized unilateral tariff actions and condemned what it described as “indiscriminate” trade measures, without mentioning the US directly.

“Any Country aligning themselves with the Anti-American policies of BRICS, will be charged an ADDITIONAL 10% Tariff. There will be no exceptions to this policy,” Trump wrote in a post on Truth Social on Sunday.

There is just one problem with this tactic. The whole point of BRICS is to break free of the Clown World financial system. So increasing the cost of doing business with the United States, which requires submitting to that financial system, only further increases the incentives for the BRICS countries to not do business with the USA, but with each other instead.

And BRICS is already economically outperforming both the USA and the other G7 nations. We can expect it to continue doing so, especially as the USA wastes its resources in the Middle East, Eastern Europe, and the South China Sea.

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US Begs China for Help

Are we seriously supposed to believe that no one in the Trump administration took the probability of Iran restricting global oil supplies into account?

US Secretary of State Marco Rubio has called on China to prevent Iran from closing the Strait of Hormuz, one of the world’s most important shipping routes. His comments came after Iran’s state-run Press TV reported that parliament had approved a plan to close the Strait but added that the final decision lies with the Supreme National Security Council.

Any disruption to the supply of oil would have profound consequences for the economy. China in particular is the world’s largest buyer of Iranian oil and has a close relationship with Tehran.

Oil prices rose following the US attack on Iranian nuclear sites, with the price of the benchmark Brent crude reaching its highest level in five months.

“I encourage the Chinese government in Beijing to call them [Iran] about that, because they heavily depend on the Straits of Hormuz for their oil,” Rubio had said in an interview with Fox News on Sunday. “If they [close the Straits]… it will be economic suicide for them. And we retain options to deal with that, but other countries should be looking at that as well. It would hurt other countries’ economies a lot worse than ours.”

I would be too sure about that, given the way China obviously foresaw the need to avoid utilizing the more traditional sea routes.

On May 25, 2025, the first freight train from Xi’an, China, arrived at the Aprin dry port, Iran, marking the official launch of a direct rail link between the two countries. This new logistical artery significantly reduces transit times (from 30–40 days by sea to roughly 15 days by land) yielding a direct impact on transportation costs. This railway is part of a much larger and broader East-West Corridor that is designed to link China, physically, with a trade route directly to Africa, and to Europe, without having to use the more traditional sea trade routes.

An oil tanker carries between 500k and 2 million barrels of oil. 18.5 million barrels transit the Straits of Hormuz every day, which means about 18 tankers per day. China utilizes 16 million barrels per day, although obviously not all of it comes through the Straits.

A rail tanker car carries 700 barrels and Canada ships 150,000 barrels by rail every day from the Albert oil sands. Taking the faster rail delivery time into account, it would require 9,150 rail cars to replace those 16 daily tankers, and a total of 274,500 rail cars to meet the daily oil requirements without a hitch. That sounds like a lot, until you observe that the China Railway Rolling Stock Corp. is the world’s leading manufacturer of rolling stock, with the capacity to manufacture over 500 high-speed train sets, 12,000 subway cars and 50,000 freight cars per year.

I think it is safe to assume that China has already built the 300k or so freight cars required to replace the 1,120 sea tankers that historically supplied it, given that they didn’t just start building the Aprin-Xi’an link in 2024 and the two countries signed an economic cooperation pact in 2021.

However, China doesn’t transport all its oil through the Strait of Hormuz. It only obtains about one-third of it that way, 5.1 million barrels per day. So it only needs a total of 87,500 freight cars to substitute for that particular source. Which, one notes, the Chinese could have completed before the launch of the railroad if they started manufacturing them as recently as August 2023.

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