Hegseth Reveals "AutoWarCom" As $74 Billion Drone Splurge May Ignite This Stock

Beyond nuclear, the "powering up America" theme, AI, and the more recent "own the bottlenecks" theme, we have also outlined incoming tailwinds for drone and counter-UAS companies as the Department of War adapts to the wars in Ukraine and the Gulf area. That requires massive drone stockpiling and the development of conflict-free supply chains.

To do this, Defense Secretary Pete Hegseth is creating a four-star combatant command for autonomous warfare, seeking to accelerate the DoW's purchases across all categories of drones, robotics, and AI to prepare the military for warfare that has forever changed - that inflection point arrived in March. 

The Autonomous Warfare Command, dubbed "AutoWarCom," is set to become operational in the fall of next year, according to a new Wall Street Journal report.

The WSJ quoted Hegseth as saying in a speech earlier at US Marine Corps Base Quantico, Virginia, that this effort will be "the fastest peacetime shift in modern military history."

The key is the massive rearmament supercycle set to kick off, if it hasn't already. It will provide massive tailwinds for drone companies as the military begins stockpiling all categories of drones and counter-UAS technology while fortifying military installations around the world. 

To do this, the US supply chain must be built out to produce millions of one-way attack drones with components made domestically or in conflict-free areas. In other words, drone engines, blades, sensors, and other components must be sourced outside China.

Owen West, a former Marine, assistant defense secretary, and Goldman Sachs trader, will initially lead the effort alongside Navy SEAL test pilot Max Strasiser, according to the outlet.

"Once we apply sustained budget to changed doctrine, we will outperform the world," said West, who has been leading the Pentagon's Defense Innovation Unit. "And by snapping in AI, we will be ahead of the world, because we are the leaders in AI."

To understand the tailwinds coming to the drone industry, the report notes that the DoW has sought to triple spending on autonomous warfare, proposing $74 billion for drone and counterdrone technology in its largest-ever budget request.

Our drone theme began in late January, when we warned (read report) that every data center needs a kinetic interceptor (read here). The worst-case scenario materialized a month later when Iran attacked several data centers in the Gulf with one-way attack drones. Our pick in the space is Ondas.

Our reporting from last weekend shows that the DoW nearly doubled the value of a contract for Ondas' ULTRA platform, which appears to be a lower-cost Group 5 drone that could complement the MQ-9 Reaper and eventually assume some of its ISR missions (read report).

Follow the money. 

* * *

Tyler Durden Thu, 10/01/2026 - 23:00

Counter-ISIS Mission In Iraq Comes To An End

Authored by Patty Nieberg via Task & Purpose,

The U.S. military-led mission to counter the Islamic State in Iraq has officially come to an end.

Counter-ISIS Mission In Iraq Comes To An End. Operation Inherent Resolve will continue with a new hub in Jordan to counter ISIS in Syria.

U.S. Central Command (CENTCOM) announced Wednesday that the "orderly departure" of U.S. personnel and equipment from Erbil Air Base in northern Iraq was officially complete. Officials said the withdrawal marked the end to Operation Inherent Resolve in Iraq, the U.S. military's counter-ISIS mission in the country.

The Erbil Air Base had served as a central hub for the Combined Joint Task Force-Operation Inherent Resolve mission since U.S. forces had been invited back by the Iraqi government to fight ISIS insurgents in the country.

The U.S. invaded Iraq in 2003 to topple Saddam Hussein, and by 2011, American forces left the country. As ISIS insurgents took hold of broad swaths of the country, Iraqi authorities invited a smaller contingent of U.S. forces to help counter the growing threat. Operation Inherent Resolve, a U.S.-led international coalition of military partners, was then established in 2014.

A majority of the 1,500 American and coalition partners supporting these operations worked out of Erbil. The mission will now be headquarters based in Jordan for U.S. forces to continue its mission focused on Syria, officials said.

"As we step back and hand full primary responsibility for Iraq's security to the Government of Iraq and the brave people of Iraq, U.S. and Coalition forces stationed across the region will remain ready to respond to any ISIS threats that arise," Adm. Brad Cooper, CENTCOM's commander, said in a release. "Maintaining our vigilance and readiness is essential to protecting the U.S. homeland and strengthening regional security."

For more than a decade, U.S. troops have trained and assisted Iraqi partner forces to fight ISIS in Iraq and Syria. In 2024, the U.S. and Iraq reached an agreement for a new bilateral security partnership, which ended the coalition's work in the country and moved the U.S. towards more of an "advisory" and "capacity-building" role for Iraqi security forces.

"ISIS no longer poses a systemic threat to Iraq's national security and Iraqi security forces, including the Peshmerga and other Iraqi Kurdistan Region security forces, now possess the capacity, leadership, and operational independence to unilaterally manage threats to their homeland," Cooper said.

When the new security partnership with Iraq was announced in 2024, U.S. officials would not say how many of the roughly 2,500 troops in Iraq would ultimately withdraw or stay behind. Department of Defense officials said in a release Wednesday that local security forces would lead counter-ISIS efforts in the country but that the U.S. would continue providing "targeted training and intelligence support to our Iraqi partners."

In response to inquiries about how many American troops would be in Iraq going forward, a U.S. official declined to comment, citing operational security.

The withdrawal comes as the U.S. war with Iran enters its eighth month. The U.S. withdrawal prompted mixed feelings among Iraqis about the departure of American forces in the country after decades of war, and concerns from Kurdish officials who worry that the removal of U.S. air defense equipment will leave the Kurdistan region vulnerable to Iranian drone and ballistic missile attacks.

Tyler Durden Thu, 10/01/2026 - 22:35

Trump Explains Why He's Okay With North Korea Having Nukes, But Not Iran

Here's what White House spokesperson Anna Kelly said a mere week ago on the rationale for the US attacking Iran: "The President is courageously ensuring that such an evil country never possesses a nuclear weapon, which will make the entire world safer and more stable," she said.

This week President Trump was asked why he seems OK with a deeply totalitarian state like North Korea and its dictator Kim Jong Un having nuclear weapons, and not Iran.

Trump's blunt response really deflates the sham talking points of the war's cheerleaders among Conservatism Inc, the FoxCon crowd, and NeoCon pundits and "intellectuals". So much for the whole defeat the "mullahs because they're evil!" fake morality tale...

Q: You said that Iran cannot have nuclear weapons. Why not? North Korea can have nuclear weapons.

Trump: Ahh because you had a different president. Kim Jong un. He's a friend of mine. He likes Trump. I like him. As long as I’m around, he’s going to be fine. You know why? He… pic.twitter.com/TnnNJ5cMmJ

— Acyn (@Acyn) September 29, 2026

"Ahh, because you had a different president. Kim Jong Un. He’s a friend of mine. He likes Trump. I like him," Trump said when a reporter pressed him.

"As long as I’m around, he’s going to be fine," Trump continued. "You know why? He respects me."

By this strange logic, Pyongyang - which has on many more occasions (than Iran) directly threatened the United States going back literally decades  - possessing nukes is just fine. Or in other words Kim="friend"/Good, Ayatollah= Rogue Bad Guy, according to the simplistic equation. The inconsistency of the obviously self-defeating 'moral high ground' narrative advanced by the administration is baffling.

On a more serious note, the above exchange highlights something deeper: nation-states most often seek nukes precisely in order to get respect especially when facing destruction at the hands of a more powerful enemy.

The US and Israel have long claimed that Tehran is bent on annihilating Israel, and that its leaders will pull the trigger the moment they develop an atomic weapon (a pursuit the Iranians have over many years denied). Essentially, this is the mad mullahs myth, based on the NeoCon axiom that every Iranian leader is an irrational actor fundamentally bent on ushering in nuclear apocalypse against the Jews, self preservation or any other domestic consideration be damned.

When Trump said of Kim, "he respects me" - the irony here is in reality it is Washington that's forced to 'respect' North Korea because it possesses dozens of nukes and has the military tech to deliver them. Countries like Iran want this 'respect' too.

On the level of strategic realism, it's just the way the world works (ask Gaddafi)-->

From the perspective of its beleaguered leaders who've been under US bombs and blockade for seven months, Iran has two choices. It must choose one:

1. Become Libya

2. Become North Korea

"We Came, We Saw, He Died." — Hillary Clinton

"We Came, We Saw, He Died." — Hillary Clinton pic.twitter.com/PeVRk2peiA

— WarNuse (@WarNuse) June 27, 2025

Below: On the 'moral mythmaking' of Neocons & Liberal Interventionists VS. strategic realism in international relations, an important conclusion:

"These leaders need to be treated as rational actors that, in turn with other members of their government, act based on strategy."

Rajan Menon, professor emeritus of international relations at the City College of New York, told Newsweek: "If you stand for nonproliferation, you can't say it's OK because they already have them." And the reality is, Menon continued, "there’s no reasonable way to undo the fact that North Korea is a nuclear-armed state."

*  *  *

An archived interview where retired diplomat Jim Jatras talks nukes and 'rogue' actors getting 'respect'...

'Possibility' Iranians will now rather 'be North Korea' than become another Libya — former US diplomat Jim Jatras on repercussions of Trump's attack on Iran

'Kim Jong Un gets respect because he does have nukes' pic.twitter.com/YoS7dFaAFp

— RT (@RT_com) June 22, 2025

Tyler Durden Thu, 10/01/2026 - 22:10

Australia's Tobacco Taxes Have Fueled A Massive Black Market For Cigarettes

One lesson governments never seem to learn is that when taxes push the legal price of something high enough, a black market will eventually show up to collect the difference.

Australia is now getting a particularly ugly demonstration of that principle. After more than a decade of relentlessly increasing tobacco taxes in an effort to crush smoking, the country has created an enormous price gap between legal and illegal cigarettes, and organized crime has rushed in to fill it, according to the Financial Times.

A legal pack of cigarettes now costs close to A$60, or roughly US$42, making Australian cigarettes the most expensive in the world. Excise taxes account for more than 70% of that price, and the cost of legally purchased tobacco has roughly tripled since the end of 2016. Meanwhile, contraband cigarettes can be bought for around one-fifth of the legal price.

Charts: Financial Times

Not surprisingly, smokers have migrated to the underground market. Australia's tobacco regulator estimated that illegal cigarettes accounted for roughly 55% of the market last year, although other government estimates suggest illicit tobacco's share of consumption may be considerably higher.

Criminology professor James Martin estimates Australians spend about A$8.5 billion each year on illegal cigarettes and vaping products, roughly twice what the country spends on cannabis, cocaine, ecstasy and heroin combined. In practical terms, criminal organizations have become major tobacco distributors.

FT writes that the consequences are no longer limited to lost tax revenue or smokers buying cheap cigarettes under the table. The business has become lucrative enough to produce violent competition between criminal groups, including extortion, robberies and a wave of firebombings in Melbourne and Sydney. A recent Senate report cited three deaths connected to the violence, while the convenience-store industry says there have been roughly 300 arson attacks associated with the tobacco trade.

The Senate report described the situation as reaching a breaking point and recommended halting further excise increases while substantially reducing tobacco taxes. The government has resisted, maintaining that expensive cigarettes remain an effective deterrent. There is evidence for that argument: the smoking rate among Australians over 14 reportedly fell from 8.3% to 5.6% between 2023 and 2025.

Charts: Financial Times

But nicotine consumption tells a less straightforward story. Wastewater measurements from the Australian Bureau of Statistics indicate that nicotine consumption increased by almost 40% between 2017 and 2025, with illicit tobacco driving much of the increase. Illegal vaping products have also captured an overwhelming share of their market.

The fiscal side of the experiment has deteriorated just as dramatically. Tobacco excise revenue reached about A$16 billion in 2020, fell by more than half by 2025 and is projected to sink toward A$2 billion by 2030.

Authorities have committed A$365 million since 2024 to fighting the illicit trade, including efforts against smugglers and retailers. One recent joint operation with Chinese authorities intercepted roughly 60 million cigarettes shipped from Shanghai to Sydney, valued at about A$92 million. But the market continues to spread, with contraband reportedly sold online, from parking lots and through ordinary businesses such as barbers and fruit shops.

Australia's tobacco experiment has therefore arrived at a strange destination. Legal cigarettes have been taxed to extraordinary prices, government revenue is collapsing, billions of dollars are flowing through an underground economy, and criminal groups are fighting over the proceeds. Whatever public health benefits higher taxes initially produced, policymakers are now confronting what happens when the legal price of a widely demanded product becomes disconnected enough from its black-market price to make breaking the law enormously profitable.

Tyler Durden Thu, 10/01/2026 - 21:20

How The Iran Conflict Opened A New Threat To The Global Monetary System

Authored by Milan Adams via Preppgroup,

Midnight fell differently on February 28, 2026. Across trading floors from Singapore to Chicago, monitors flickered with data streams that would soon curdle into panic. At 0400 hours Tehran time, American B-2 Spirit bombers and Israeli F-35I Adir fighters crossed into Iranian airspace, unleashing Operation Epic Fury. Nine hundred strikes in twelve hours. Ali Khamenei, Supreme Leader of the Islamic Republic, perished in the initial bombardment, his body recovered from the rubble of a command bunker beneath Tehran's northern suburbs. Markets had anticipated conflict. They had not anticipated decapitation.

Brent crude, trading at $72.48 per barrel at market close on February 27, surged past $120 within seventy-two hours. By March 19, Dubai crude reached $166 per barrel, an all-time record. California gasoline exceeded $5 per gallon.

Kristalina Georgieva, Managing Director of the International Monetary Fund, stood before cameras in Washington on April 9, 2026. "All roads now lead to higher prices and slower growth," she declared. Her institution had just slashed global growth projections to 3.1 percent, down from 3.4 percent anticipated before the first missiles launched. "Had it not been for this shock, we would have been upgrading global growth." Instead, the Fund warned of a "severe scenario" where global growth collapses to 2.0 percent, brushing against the technical definition of worldwide recession - a threshold breached only four times since the Second World War. "This would mean a close call for a global recession," the World Economic Outlook stated.

Donald Trump, returned to the presidency for a second non-consecutive term, addressed the nation from the Oval Office on August 20, 2026. "Any country that allows its financial institutions, businesses, airports, or government entities to provide any type of lifeline to Iran will itself face tremendous economic consequences," he warned, announcing what he termed "the toughest sanctions in history." Earlier, he had posted an image on social media showing the Strait of Hormuz crudely labeled as "New US Territory," a digital annexation that sent tremors through diplomatic channels. His administration's Operation Economic Fury sought to complete what Operation Epic Fury had begun. "To the ordinary soldiers supporting this regime," Trump addressed Iranian conscripts directly, "as more and more of your paychecks stop or are supposedly just delayed, ask whether your commanders are leading your country to triumph or to ruin."

Jerome Powell, in his final months as Federal Reserve Chair, confronted the economic paradox that would define 2026. At a Harvard forum on March 30, he admitted the central bank's predicament with uncharacteristic candor. "Nobody knows," he stated, referring to the war's ultimate economic impact, while acknowledging that "you can be confident that an inflationary shock will fade, but have very little idea how long it will take." The Fed's March 18 decision to hold interest rates steady - projecting only a single rate cut for the year despite inflation spiking to 3.3 percent - represented a capitulation to uncertainty. Powell's institution projected higher inflation, steady unemployment, and minimal monetary relief.

Nouriel Roubini, the economist whose prescient warnings preceded the 2008 financial collapse, offered scenarios in May 2026 that chilled institutional investors. "Oil prices could spike past $200 a barrel in the worst-case scenario," he predicted, describing a return to "1970s stagflation." Mohamed El-Erian, former Pimco chief and now Chief Economic Advisor at Allianz, tweeted his assessment of the IMF's April report: "Reading between the lines, the message of today's IMF flagship report is sobering: Virtually every challenge facing the global economy is poised to intensify due to the fallout of the Middle East War."

The World Bank's June 11, 2026 Global Economic Prospects report confirmed these apprehensions. Global growth would slow to 2.5 percent in 2026, the weakest expansion since the COVID-19 pandemic. For developing and emerging markets, the forecast plummeted to 3.6 percent. Iran's economy contracted by 6.1 percent, with the Bank noting that "real GDP is projected to contract by 6.4 percent in 2026, reflecting the collapse in tourism, weaker consumption, disrupted supply chains, heightened insecurity, and prolonged displacement." Qatar and Kuwait faced potential GDP contractions of 14 percent. The Institute for Economics and Peace calculated that a resumption of full-scale hostilities would deliver a $2.2 trillion hit to the world economy.

Economic Impact Projections by Institution, 2026 Institution Global Growth Forecast Inflation Projection Severe Scenario Oil Price Assumption IMF (April 2026) 3.1% (down from 3.4%) 4.4% 2.0% growth, 5.4% inflation $100/bbl (reference), $140+ (adverse) World Bank (June 2026) 2.5% (down from 2.9%) 4.0% 2.0% or below $120/bbl average OECD (March 2026) 2.7% 3.2% US, 3.0% Eurozone Technical recession in energy-intensive economies $90-110/bbl range Oxford Economics 2.8% 4.2% 1.5% growth if Hormuz closed 3+ months $140/bbl threshold for demand destruction Regional GDP Contraction Projections, 2026 Economy Pre-War Forecast Post-War Projection Revision Primary Transmission Channel Iran +1.1% -6.1% to -6.4% -7.2 pp Infrastructure destruction, sanctions Qatar +3.2% -14.0% -17.2 pp LNG export disruption, Hormuz closure Kuwait +2.8% -14.0% -16.8 pp Oil export cessation Iraq +2.1% -8.5% -10.6 pp Supply chain fracture, refugee costs Bahrain +1.9% -6.8% -8.7 pp Financial sector exposure Saudi Arabia +3.5% -3.0% -6.5 pp Reduced oil volumes, price volatility UAE +3.8% -5.0% -8.8 pp Trade finance disruption Eurozone +1.2% +0.8% -0.4 pp Energy import costs, manufacturing United States +2.1% +1.8% -0.3 pp Gasoline prices, consumer sentiment Oil Market Disruption Metrics, February-September 2026 Metric Pre-War (Feb 27) Peak Crisis (Mar 19) Recovery Phase (Jun 24) Current (Sep 30) Brent Crude ($/barrel) $72.48 $166.00 (Dubai) $72.24 $73.23-$97.00 Daily Oil Flow via Hormuz (mbpd) 21.0 0.5 8.2 14.5 Strategic Reserve Drawdown (US, mb) 0 180 120 85 Gasoline Price California ($/gal) $4.12 $5.08+ $4.45 $4.28 LNG Force Majeure Declarations 0 12 (QatarEnergy) 3 0

Beneath these statistics lies a more troubling reality. Global debt reached $348 trillion in 2025, according to the Institute of International Finance, expanding by nearly $29 trillion in that single year. By mid-2026, estimates placed the figure above $365 trillion. This edifice of obligation, constructed during fifteen years of central bank suppression of interest rates, now faces a refinancing crisis as monetary authorities maintain elevated borrowing costs to combat inflation. The OECD's Global Debt Report 2026 warned of "increasing pressures from sustained fiscal deficits, rising interest costs and investment needs, a structural decline in long-term demand, and growing refinancing risks as the maturity of issuance shortens."

Small and medium enterprises find themselves particularly exposed. S&P Global's 2026 banking risk analysis noted that SMEs "have thinner capital buffers and proportionately more floating-rate exposure," rendering them acutely vulnerable to the higher interest costs that the Iran war's inflationary impact necessitates. When the Federal Reserve chose steady rates over relief in March 2026, these businesses absorbed the blow directly.

The weaponization of the dollar has generated blowback that Washington's Treasury Department struggles to contain. China's Cross-Border Interbank Payment System (CIPS), processing the equivalent of $245 trillion in yuan-denominated transactions in 2025, has emerged as a functional alternative to SWIFT. By January 2026, CIPS linked 1,467 indirect participants across 119 countries, connecting 4,800 banks in 185 nations. While still smaller than SWIFT, its trajectory suggests a fragmentation of monetary infrastructure that the Iran conflict has only accelerated.

The petrodollar system faces unprecedented stress. Russia and Saudi Arabia, the two largest oil producers, generated "essentially zero petrodollars" in 2025 according to Wright Research analysis, having shifted to yuan-denominated settlements. Iran, excluded from dollar markets since 1979, pioneered this transition. Now the template spreads. BRICS nations conducted an estimated 90% of intra-bloc transactions in local currencies by 2025.

This matters profoundly for American fiscal sustainability. Foreign holdings of U.S. Treasury securities have plateaued as central banks diversify reserves. The dollar's share of global foreign exchange reserves declined from 73% in 2001 to approximately 54% in 2025, per IMF data. Each percentage point shift represents hundreds of billions in reduced demand for dollar-denominated assets, increasing the interest premium Washington must pay to finance its $34.6 trillion national debt.

The Iran war operates as an accelerant upon these pre-existing trends. When Trump threatened "crushing economic warfare" in August 2026, he extended a sanctions regime that had already demonstrated diminishing returns. Iran's economy, while battered by 6.4 percent contraction and currency collapse, had developed sophisticated evasion mechanisms through shadow banking networks and cryptocurrency channels. The Islamic Republic's oil smuggling to China, estimated at 1.2 million barrels daily despite sanctions, continued through "dark fleet" tankers operating with disabled transponders.

European Central Bank President Christine Lagarde, in deliberations that postponed planned rate cuts on March 19, 2026, confronted the dilemma that would define transatlantic economic divergence. Energy-intensive European economies faced technical recession risks if the Hormuz maritime blockade persisted. German manufacturing, already weakened by the cessation of Russian natural gas supplies following the Ukraine conflict, confronted additional input cost shocks. The ECB raised its 2026 inflation forecast while slashing growth projections.

Japan's position proved equally precarious. As the world's largest liquefied natural gas importer, Tokyo faced energy security vulnerabilities that the Iran war exposed with brutal clarity. QatarEnergy's declaration of force majeure on LNG exports during the March 2026 Hormuz closure sent Japanese utilities scrambling for alternative suppliers at premium prices. The yen, already depreciating against the dollar amid interest rate differentials, faced additional pressure as import costs surged.

China's strategic calculus shifted in response. While publicly advocating de-escalation, Beijing accelerated yuan internationalization through energy purchase agreements denominated in renminbi. Saudi Arabia's 2024 decision to allow yuan-settled oil sales, followed by similar arrangements with Iraq and the UAE, created the infrastructure for a parallel monetary order. The Iran war's disruption of dollar-denominated energy flows provided practical demonstration of the vulnerabilities inherent to single-currency dependence.

India's position illustrated the impossible choices facing emerging economies. As the third-largest oil importer, New Delhi faced inflationary pressures that threatened the Modi government's economic credibility. Yet India's strategic partnership with the United States constrained options for evading American sanctions on Iranian oil. The result: higher import bills, currency depreciation, and postponed infrastructure spending as fiscal resources diverted to energy subsidies.

The banking sector's exposure to these stresses remains imperfectly understood. Commercial real estate loans, particularly those financing office properties in urban centers hollowed out by remote work trends, carry default risks that energy price shocks amplify. Regional banks in the United States, having faced depositor flight in the 2023 Silicon Valley Bank collapse, now confront renewed pressure as bond portfolios lose value amid interest rate volatility. The $1.5 to $2.1 trillion private credit market operates with opacity that systemic risk assessments struggle to penetrate.

Corporate debt maturities in 2026-2027 present a refinancing cliff of historic proportions. Companies that borrowed at near-zero rates during the quantitative easing era must now roll obligations at 6-8 percent interest, if markets remain open to them at all. The "zombie firm" phenomenon - enterprises kept operational only through continuous debt refinancing rather than operational profitability - threatens mass insolvency if credit conditions tighten further.

Agricultural markets compound these vulnerabilities. Wheat and corn prices, already elevated by Ukraine conflict disruptions and climate anomalies, face additional pressure from energy-intensive fertilizer production costs. Natural gas, the primary feedstock for nitrogen fertilizer manufacturing, saw European prices spike 300% during the March 2026 Hormuz closure. The transmission to food prices operates with inevitable lag but equal certainty.

Humanitarian consequences extend beyond abstract statistics. Iran's population of 87 million faces food insecurity as sanctions disrupt import financing and currency collapse destroys purchasing power. The rial's depreciation against the dollar, exceeding 80% since 2021, has rendered imported medicines unaffordable for ordinary families. Brain drain accelerates as professionals emigrate to Dubai, Istanbul, and European capitals.

Israel's economy, despite receiving $14.3 billion in American military aid during 2026, faces its own contradictions. The Bank of Israel slashed growth prospects as the war's toll mounted, with defense spending consuming resources that might otherwise support social services. Military mobilization of reservists disrupted technology sector productivity, while tourism revenues collapsed amid security concerns.

The United States enters the final quarter of 2026 with economic indicators that defy simple categorization. Unemployment remains near historic lows at 4.1%, yet labor force participation among prime-age males continues declining. GDP growth, projected at 1.8% for the year, masks distributional shifts that concentrate gains in asset-owning classes while wage workers confront eroded purchasing power. The Federal Reserve's preferred inflation metric, core PCE, hovers above target at 3.3%, constraining monetary policy flexibility.

Presidential rhetoric in this environment oscillates between triumphalism and threat. Trump's August 2026 declaration that Iran "outsmarted themselves" over Hormuz control, accompanied by social media posts depicting the waterway as American territory, suggests a transactional approach to territorial sovereignty that unsettles international law. His simultaneous threats against nations maintaining economic ties to Tehran create compliance dilemmas for allies whose strategic interests diverge from Washington's.

The configuration of military confrontation, monetary stress, and debt fragility creates conditions for systemic stress that would exceed the 2008 financial crisis in scope. Not through single catastrophic event but through cascading failures that compound across interconnected systems. An oil price spike above $200 per barrel, as Roubini warned, would trigger demand destruction in transport sectors that eliminates millions of jobs. Corporate defaults in energy-intensive industries would cascade through credit default swap markets that remain opaque to regulators. Sovereign debt crises in emerging markets would force IMF interventions that impose austerity conditions, generating political instability that feeds further conflict.

The dollar's reserve currency status faces its most credible challenge since Bretton Woods. Not because rivals possess superior alternatives - the yuan remains non-convertible, the euro fragmented - but because Washington's weaponization of financial infrastructure has created irresistible incentives for diversification. Each sanctions round against Iran accelerates this process. Each threat of secondary sanctions against allies hastens the construction of parallel systems.

The optimistic scenario, increasingly dismissed by market participants, envisions negotiated settlement by early 2027, Hormuz reopening, and gradual price normalization. Even this outcome, Georgieva emphasized, leaves "permanent scarring" on growth trajectories. Output levels in 2030 will remain 2% below pre-war trends according to IMF projections. The opportunity cost of military confrontation - the infrastructure unbuilt, the research unfunded, the human potential unrealized - accumulates across decades.

The pessimistic scenario defies precise modeling because its variables interact non-linearly. Oil at $200 per barrel simultaneously triggers recession and accelerates energy transition investments that strand fossil fuel assets. Banking crises in vulnerable jurisdictions propagate through derivatives exposures that regulatory stress tests failed to capture. Political radicalization, fed by economic desperation, produces leadership incapable of crisis management.

Historical analogies offer limited guidance. The 1973 oil shock occurred within a Bretton Woods framework that no longer exists. The 2008 financial crisis, while demonstrating interconnected fragility, benefited from coordinated central bank responses that current geopolitical polarization may preclude.

What distinguishes the present moment is the convergence of multiple stressors upon a system already operating near capacity. Global debt at $365 trillion represents claims that cannot all be satisfied simultaneously. The Iran war's energy price shock applies pressure to this leveraged structure in ways that individual components - sovereign borrowers, corporate issuers, financial intermediaries - may withstand in isolation but cannot survive collectively.

The Strait of Hormuz, that narrow channel through which one-fifth of global petroleum flows, embodies this vulnerability. Twenty-one million barrels daily transit waters barely twenty-one miles wide at their narrowest point. Iranian missile batteries, mines, and fast attack craft can interdict this flow with minimal warning. American carrier groups can suppress such threats at enormous cost but cannot eliminate them entirely.

Trump's social media annexation of Hormuz as "New US Territory" in August 2026, however rhetorical, signaled an American willingness to assert direct territorial control over international waterways that precedent has long treated as global commons. Such assertions, if operationalized, would encounter resistance not merely from Iran but from China, Russia, and regional powers whose energy security depends upon unimpeded navigation.

Economic warfare, as practiced against Iran in 2026, operates through mechanisms that escape traditional accounting. The exclusion of Iranian banks from SWIFT messaging does not merely inconvenience; it severs commercial relationships built over decades. The secondary sanctions threatening foreign entities that transact with Iran force impossible choices upon multinational corporations between American market access and Iranian commercial relationships. The cumulative effect is a fragmentation of global commerce into competing blocs that reduces overall efficiency and prosperity.

The BRICS bloc's expansion in 2024 to include major oil producers Iran, Saudi Arabia, and the UAE created an organizational framework for this monetary diversification. While the proposed common BRICS currency remains technically distant, the infrastructure for reduced dollar dependence develops apace.

For American households, these macroeconomic abstractions translate into concrete hardships. Gasoline prices above $5 per gallon, as experienced in California during March 2026, reduce discretionary spending that drives consumer-dependent growth. Home heating costs surge in northern winters. Food prices, transported by diesel-powered logistics networks, follow energy costs upward. The Federal Reserve's interest rate restraint, maintained despite these pressures to combat underlying inflation, keeps mortgage rates elevated and housing affordability diminished.

The political economy of these stresses generates feedback loops that complicate resolution. Populist movements, fed by economic grievance, demand more aggressive confrontation with perceived adversaries rather than diplomatic compromise. Interest groups benefiting from military expenditure lobby for sustained confrontation. Media ecosystems amplify threat perception, reducing the political space for negotiation.

Iran's leadership, despite decapitation and economic devastation, maintains negotiating positions that reflect their assessment of American political constraints. They observe the American electoral cycle, the influence of pro-Israel constituencies, and the transactional nature of Trump's diplomacy. Their strategy of brinkmanship - escalating to de-escalate - assumes that Washington's pain threshold, while higher than Tehran's, remains finite.

The September 2026 ceasefire, brokered through Qatari intermediation, paused direct military confrontation but resolved nothing. Iranian nuclear facilities, though damaged, remain operational at undeclared sites. Israeli security guarantees, demanded as condition for permanent settlement, exceed what Tehran's fractured leadership can deliver. American troops remain deployed across the region in configurations vulnerable to proxy attack.

Economic forecasts for 2027 diverge based upon assumptions about this unresolved confrontation. The IMF's reference scenario assumes short-lived conflict with gradual normalization, projecting 3.1% global growth recovery. Its adverse scenario, increasingly probable as negotiations stall, envisions 2.5% growth with 5.4% inflation. The severe scenario - 2.0% growth brushing recession - requires only modest additional escalation: Hormuz closure persisting beyond three months, Iranian missile strikes on Saudi infrastructure, or Israeli expansion of operations into Lebanon and Syria.

Each of these triggers remains plausible. Iranian Revolutionary Guard factions, empowered by Khamenei's death and competing for succession influence, may calculate that renewed confrontation serves domestic political purposes. Israeli leadership, facing domestic pressure for decisive security solutions, may authorize strikes that previous restraint avoided. American electoral considerations in the approach to 2028 may incentivize foreign policy aggression that rallies domestic support.

The debt dimension compounds these risks. Sovereign borrowers facing recessionary revenue shortfalls and inflationary expenditure increases encounter debt servicing requirements that crowd out productive investment. Corporate issuers with 2027 maturities confront rollover costs that render previously viable enterprises insolvent. Financial intermediaries, holding claims upon these borrowers, face capital constraints that restrict new lending. The resulting credit contraction amplifies recessionary dynamics.

Central banks, having deployed extraordinary measures during the COVID-19 pandemic, possess diminished capacity for repetition. Balance sheets already swollen with asset purchases offer limited room for additional expansion. Interest rates, while above zero, remain below inflation in real terms, constraining traditional monetary policy space. Fiscal authorities, confronting debt burdens that limit countercyclical spending, face political resistance to deficit expansion.

A system that requires 3%+ growth to service $365 trillion debt will struggle to maintain stability at 2% growth without structural adjustment that political processes resist. The Iran war, by reducing growth and increasing inflation simultaneously, forces this adjustment upon unwilling participants. Whether through negotiated settlement that restores energy flows and reduces risk premiums, or through continued confrontation that amplifies systemic stress, adjustment will occur.

The form it takes - gradual normalization or sudden rupture - remains the variable that will define economic experience for the decade ahead. Current trajectory favors rupture: unresolved confrontation, accumulating sanctions, escalating rhetoric, and structural fragility that compound across months rather than years. The optimistic scenario requires not merely ceasefire but durable settlement, not merely sanctions relief but economic reconstruction, not merely diplomatic engagement but fundamental reassessment of regional order.

Such reassessment appears improbable given current leadership configurations. Trump approaches his final term's conclusion with incentive to cement confrontational legacy rather than compromise. Iranian factions compete for succession advantage through nationalist positioning rather than pragmatic accommodation. Israeli security establishment, validated by apparent military success, resists territorial concessions that might address underlying grievances.

The economic consequences of this political configuration will unfold across quarters and years with accumulating damage. Growth forecasts will revise downward repeatedly. Inflation projections will revise upward. Debt sustainability assessments will deteriorate. Financial market volatility will increase. Each revision, each deterioration, each increase reduces the margin for error that prevents systemic crisis.

The Iran war has demonstrated that geopolitical confrontation can impose economic costs that exceed the combatants' calculations. Those costs, interacting with pre-existing vulnerabilities in global debt and monetary architecture, create conditions for crisis that policy instruments cannot readily address. Whether this crisis arrives in 2026, 2027, or beyond matters less than its likelihood given current trajectory.

Markets, having priced some risk premium, may remain complacent until rupture occurs. Policymakers, having normalized extraordinary measures, may discover their exhaustion only in crisis. Populations, having accommodated gradual deterioration, may confront sudden deprivation with inadequate social infrastructure. The Iran war's ultimate economic legacy may prove not the direct costs of military confrontation but the revelation that global economic integration, assumed permanent, rests upon political foundations more fragile than understood.

Tyler Durden Thu, 10/01/2026 - 20:55

The $40 Billion Minerals Gamble: Can Trump Break China's Chokehold Before The West's Rearmament Hits A Wall?

The Trump administration has committed billions of dollars to rebuild conflict-free critical materials supply chains outside China. The question remains whether these supply chains will be up and running in time for the West's rearmament cycle, which desperately needs missiles, bombs, drones, fighter jets, submarines, and even night-vision equipment.

Bloomberg Intelligence analysts published a note today titled "Defense-Critical Mineral Capital Moves Downstream," analyzing whether more than $40 billion in announced support will translate into reliable near-term supplies and improve defense readiness.

"Execution, not government support alone, will determine if US critical-minerals policy translates into durable revenue and stronger defense readiness," the analysts wrote.

They continued, "Policy is moving beyond grants toward equity, price floors, loans, offtake and stockpiles designed to preserve capacity through commodity cycles."

Adding, "MP Materials and ATALCO offer the clearest near-term links to magnets and gallium, while IperionX and Perpetua provide targeted titanium and antimony exposure. Defense-grade output, customer qualification and contracted volume still need to follow announced capacity."

Beyond the mining aspect of rejiggering critical materials supply chains, refining and downstream production remain critically important, including heavy-rare-earth separation, manufacturing yields, customer qualification, and reliable deliveries.

These high-grade critical materials are essential for missiles, drones, satellites, and undersea platforms. The F-35 alone requires more than 900 pounds of rare-earth materials, the analysts noted.

Breaking China's "quasi-monopolistic position" in critical materials is unlikely to be a this-decade story. Christian Keller, Barclays' global head of economics research, recently pointed out that mining and refining of these critical materials will persist through 2030. 

Stifel aerospace and defense analyst Jonathan Siegmann wrote in a note last week that investors want to "own the bottlenecks" in the critical materials space, mainly the producers that can deliver today. 

Siegmann's most important chart in the report was the near-depletion of US tungsten reserves. 

Adrien Rabier, Bernstein's equity analyst covering European aerospace and defense, put a timeline on the EU's defense rearmament supercycle, which is already ramping up and will last through 2030.

Bloomberg Intelligence analysts added that the Trump administration's Project Vault, intended to rebuild the nation's critical materials stockpiles, provides another buffer by financing inventories for civilian and dual-use manufacturers can draw down and replenish. It complements the National Defense Stockpile but does not replace its emergency role or guarantee that material will be available in military-qualified form.

The only problem is that new mining projects take years to commission, while refining supply chains also take time to come online, as this shortage of critical materials collides with a rearmament supercycle in the West. As for tungsten, Jefferies, Goldman, and Stifel favor this miner, which is set to become the West's largest ex-China supplier. 

Tyler Durden Thu, 10/01/2026 - 20:30

3 Huge Storms Will Combine Over The Central United States To Form A Gigantic "Hybrid Storm" That Will Cause Widespread Flooding

Authored by Michael Snyder via End Of The American Dream,

We are about to witness something extremely rare. At the same time that a historic financial storm is brewing on Wall Street as bond yields go wild, a historic weather event threatens to dump trillions of gallons of rain over the middle of the country. Meteorologists are telling us that 3 enormous storms will combine to create an absolutely colossal "hybrid storm" that will cause "considerable" flooding over large stretches of the nation. We have never seen anything quite like this before, and it appears that this disaster will be significantly worse than the experts were originally anticipating.

The remnants of Hurricane Polo are about to merge with the remnants of Hurricane Odalys and an upper level low that will be funneling massive amounts of moisture from the Gulf of Mexico to form "a new, hybrid storm" which will be very dangerous...

A soggy, potentially dangerous week is ahead for a "huge" section of the central United States, forecasters warned, as the remnants of Hurricane Polo interact with a separate, sprawling weather system to bring days of rain and possible flooding.

"As these features combine into a new, hybrid storm, the influx of moisture spreading across the central United States will pose the risk for flash flooding," AccuWeather meteorologist Alyssa Glenny said.

The National Weather Service explained that tropical moisture from the remnants of Hurricane Odalys and Hurricane Polo will surge over the Southwest into the central U.S. this week with several days of heavy to excessive rainfall, which may bring limited to "considerable" flooding. The threat area is "huge," the weather service said in an online forecast.

This wasn't supposed to happen.

But it is happening.

Even if the remnants of Hurricane Polo and Hurricane Odalys were not an issue, the upper level low which is about to move into the center of the nation "would still be a heavy rain and flood threat"...

In addition to the moisture from Polo, the other system, known as an upper-level low, or trough, will be moving into the central U.S. from the West, Marc Chenard, a meteorologist with NOAA's Weather Prediction Center, told USA TODAY.

That low will help funnel plentiful moisture northward from the Gulf, he said. "This will produce a widespread area of heavy rainfall."

"Even if we didn't have Polo," there would still be a heavy rain and flood threat in the central U.S. this week, Chenard told USA TODAY.

It is very unusual to see three major systems come together like this.

On Tuesday, flood watches were issued in 10 different states, and we are being warned that this is just the beginning...

Flood watches have been issued in ten states Tuesday morning as meteorologists warn that the widespread effects of Hurricane Polo are merging with leftover moisture from Hurricane Odalys and a dip in the natural jet stream running across the US to create one massive storm.

This 'triple flood' is expected to bring the heaviest rainfall to Arizona, Colorado, New Mexico, Kansas, Oklahoma and Texas on Tuesday, but the storm threat will continue throughout the entire week.

To say that the worst hit areas will get a lot of rain is a major understatement.

According to Accuweather, there are a few isolated locations that could see up to 18 inches of rainfall...

AccuWeather's latest forecast has warned that as much as eight inches of rain could flood parts of Colorado, Iowa, Kansas, Missouri, Nebraska, New Mexico, Oklahoma and Texas this week.

However, the weather service's worst-case scenario noted up to 18 inches of rain could fall in isolated areas.

If you live in an area that is prone to flooding, you may want to brace for the worst.

We are being told that in some parts of New Mexico this could be "the most dangerous flash flooding risk in the last 5 years or more"...

"In some places, especially in New Mexico, this may be the most dangerous flash flooding risk in the last 5 years or more," AccuWeather Chief Meteorologist Jon Porter said.

Accuweather is normally very conservative in their forecasts, and so I would take this warning very seriously.

Even if you do not live in one of the danger zones, that doesn't mean that you won't get rain.

In fact, Accuweather is projecting that 30 U.S. states will receive at least one inch of rain this week...

There are many parts of the nation that could desperately use some rain.

But we didn't want to get it all at once.

Hopefully the flooding will not be quite as bad as they are currently forecasting.

There is one other thing that I wanted to mention in this article.

An extremely vast "Kelvin wave" will soon bring "an untold amount of warm water" to the west coast...

Concerns are mounting about an ocean phenomenon known as a Kelvin wave that could raise sea levels along the California coastline by up to a foot, as scientists say El Niño is supercharging the threat of storm surges and flooding in the coming months.

As an incredibly strong El Niño continues to develop in the Pacific, the phenomenon brings with it a strange shift in the ocean. The Kelvin wave phenomenon is created when trade winds that usually blow from South America towards Asia die down or reverse in El Niño years, setting off a massive, slow-moving slosh of water.

Kelvin waves are not like crashing waves at the beach. They are planetary in scale, spanning thousands of miles. And when a Kelvin wave kicks off, it brings with it an untold amount of warm water that slowly moves from the western Pacific, along the equator, towards South, Central and North America.

This "Kelvin wave" hit South America late last month, and now it is traveling north toward California...

"You can follow them along ... we see the higher sea levels along the equator, and when the wave reaches the coast of South America, it cannot continue to go eastward," Severine Fournier, a research scientist studying ocean circulation at Nasa's Jet Propulsion Laboratory, said. "So it goes north and south."

One such wave hit the northern tip of South America in late August and has begun moving up towards the west coast of the US. That wave could reach California shores within days, and when it does, ocean scientists say it may raise sea levels by up to a foot for months as El Niño lingers and keeps that warm water trapped along the coast.

Ocean levels along the west coast will rise significantly.

But that is only temporary.

Of much greater importance is what all of this warm water will mean for storms that approach the California coastline.

Normally, very cool water along the California coastline causes tropical storms and hurricanes to fizzle out as they approach.

But now conditions will be ideal for a tropical storm or a hurricane to come slamming right into the state.

The Super El Niño that is causing this to occur will be sticking around for quite a while, and so this is a story that is not going to go away any time soon.

Tyler Durden Thu, 10/01/2026 - 20:05

Trump Sees Likely Iran Link In FlyDubai Attack, Vows 'Very Hard' Response

It hasn't taken long at all for Israeli and US officials to strongly suggest a link between Wednesday's scary FlyDubai security incident and Iran.

President Trump raised Thursday that Iran may be linked to the copilot who tried to crash an Israel-bound plane, which forced it to make a dangerous rapid descent and an emergency landing, after passengers and crew rushed the cockpit.

But while investigators have yet to disclose a motive in what Israel called a full-fledged terror attack, which also left the flight's captain with a stab wound, Trump laid out the following on Thursday:

Fox's Peter Doocy: "Has anybody briefed you about whether or not the guy, the pilot of the flight in FlyDubai plane is linked to Iran?"

President Trump: "We're working on it right now. They're being very open with us. I would say the answer based on what I'm hearing is yes, but we're working on it right now.”

Doocy: "So this guy might have been either put in there by the IRGC or ratified some other way, and then he tried to take down the plane."

Trump: "It could have been, yeah."

JUST IN - Trump, asked whether the FlyDubai pilot is linked to Iran: “I would say the answer, based on what I’m hearing, is yes, but we’re working on it right now.” pic.twitter.com/9Q6rjIYz0v

— Insider Paper (@TheInsiderPaper) October 1, 2026

So we've gone from no motive yet being publicly offered to assertions that the IRGC may have clandestinely inserted the pilot onto the flight with an aim to conduct some kind of 9/11-style terror attack against Israel and the over 170 passengers who were inbound from Dubai.

Trump was further asked whether - if it is established that Iran was behind it - he would retaliate, to which he responded: "Oh they’ll be hit, very hard, don’t worry."

"You just ask them," he added. "They know what happened. They’ll be hit very hard."

Netanyahu too has been quick to suspect Iran - though without saying if this is based on any evidence, though this is perhaps to be expected considering his history of such linkages.

"I spoke to the president of the United Arab Emirates, Sheikh Mohammed bin Zayed, and he agreed that Israel would join the investigation and we'll find out," Netanyahu told CNN..

"Look, we know that Iran is sponsoring a lot of this, but I can't speak specifically of this. I can say that they did stand behind the attack in Britain. We passed that information to the Brits."

He still acknowledge that ultimately it's too early to tell, while confirming that co-pilot accused of stabbing the captain and trying to bring down the plane is currently in the custody Saudi Arabia (where the plane diverted upon the emergency) and is expected to be sent to the UAE.

Netanyahu met the passenger who helped stop the Flydubai cockpit attack, telling him "without you it could have been another 9/11."

Yaniv Hayoun, a plumber still in a blood-stained shirt, said he put the attacker in a chokehold and pulled the controls back.

He told Netanyahu…

— Clash Report (@clashreport) October 1, 2026

The timing of the horrible episode couldn't be worse (or also some pundits might also say the timing is curious), set against the background of the Iran conflict. Trump is said to be mulling resuming a major bombing campaign against the Islamic Republic by end of November, after the midterm elections in the US. The terror incident will likely exacerbate US-Iran tensions, and seems to already be doing so.

Tyler Durden Thu, 10/01/2026 - 19:40

Why Congress Should Restore The Monetary Veto

Authored by Sean Fieler via RealClearMarkets,

American democracy prides itself on being "of the people, by the people, and for the people." But the people lack control over a key part of their daily lives: the money supply.

Its expansion and contraction affect the value of every paycheck, every dollar of savings, and the price of virtually everything that can be purchased. Americans once had the ability to redeem their dollars for gold at a fixed rate. Congress should restore that power. Doing so would give every American a direct check on monetary expansion and force Washington to reckon with the consequences of fiscal excess.

The idea is actually simpler than it sounds. If Americans believed Washington was undermining the value of their money, they could exchange dollars for a legally fixed quantity of gold. As those redemptions drew down the nation's gold reserves, monetary authorities would face pressure to contract rather than continue expanding the money supply. In effect, every dollar holder would possess a monetary veto.

For 55 years, America has relied upon a small group of experts to manage our money supply without the external discipline imposed by gold convertibility. The impact on fiscal policy has been disastrous and stands in stark contrast to much of the historical record before 1971. For much of the 182 years after the first federal budget in 1789, the nation treated balanced budgets - and, during prosperous peacetime years, surpluses - as the fiscal norm. Even accounting for spending spikes during crises like the Civil War, America's average budget deficit remained modest. Our democracy survived existential threats with reasonable fiscal discipline.

The developed world remained fiscally disciplined even after the enormous strain of WWII, crawling out from under mammoth wartime debts within a few decades. By 1971, the 23 countries in the OECD had an average debt-to-GDP ratio of just 35%. This discipline was encouraged in part by the design of Bretton Woods, which created a self-correcting feedback loop. The system of fixed exchange rates subjected countries, including America, to external discipline. Foreign monetary authorities could redeem dollars for gold if they lost confidence in American monetary policy. France famously exercised that power in the 1960s after Charles de Gaulle rebuked the U.S. for glutting the globe with dollars. The French government redeemed hundreds of millions of dollars of its foreign exchange reserves for gold, drawing down America's stock.

Yet foreign governments were not the first to possess such power. A century ago, ordinary Americans could redeem dollars for gold at $20.67 per ounce. Prior to 1933, the Federal Reserve was required to maintain gold reserves equal to at least 40% of the value of the currency it issued. Gold redemption therefore placed direct pressure on the monetary system and constrained its expansion. Washington, in other words, could not expand money without facing potential consequences from the people holding it. Americans did not need to understand the arcane financial terminology that bedevils monetary policy today. They could simply convert their dollars into gold.

That right disappeared in 1933 under President Franklin Roosevelt and was solidified into law the following year. Foreign monetary authorities could still redeem dollars at the new rate of $35 per ounce under the postwar monetary system. That lasted until 1971, when President Richard Nixon ended dollar-gold convertibility, beginning the collapse of Bretton Woods. The end of gold convertibility did not by itself cause the modern era of chronic deficits. But it removed one external constraint governments faced when financing them. The OECD countries' debt-to-GDP ratio has risen dramatically since the end of Bretton Woods.

Congress should use its authority clearly granted in Article 1, Section 8 of the Constitution to establish a statutory right of dollar-gold redemption and determine the conversion rate, appropriate gold backing, eligibility for redemption and responsibilities of the Treasury and Federal Reserve. Those are difficult questions of design, but they are precisely the questions Congress should begin examining.

Congress could start with hearings on convertibility and require the Treasury and Federal Reserve to report on possible redemption mechanisms, reserve requirements, conversion rates and transition periods. The objective would be to give millions of Americans an exit right. If citizens lose confidence in the stewardship of their currency, they could exchange it for an asset Washington cannot create at will.

Such a system would carry real costs. Gold redemption could contract the money supply and leave the Federal Reserve with little freedom to respond during financial crises. Indeed, the constraint of gold redemptions can certainly intensify economic contractions. But the alternative of monetary discretion carries the greater cost: fiscal profligacy and ultimately insolvency. Americans should not be expected to entrust something as fundamental as the value of their money exclusively to a small circle of experts. They deserve a direct check - and Congress should give it back to them.

Sean Fieler is Chief Investment Officer of Equinox Partners.

Tyler Durden Thu, 10/01/2026 - 19:15

Bridgewater CEO Warns Unregulated AI Could Trigger 'Societal Breakdown' - Even As The Firm Profits From It

Artificial intelligence could displace nearly one-fifth of the US labor market, threatening profound societal disruption if left unregulated, according to Bridgewater Associates CEO Nir Bar Dea. Speaking on an upcoming episode of The David Rubenstein Show: Peer-to-Peer Conversations, Bar Dea projected an 18% labor dislocation rate, noting that a technology capable of radically improving the world carries equally severe downside risks.

Nir Bar Dea Photographer: Zak Bennett/Bloomberg

The stark warning aligns Bar Dea with other prominent financial executives sounding the alarm on rapid technological upheaval. Bridgewater Managing Co-Chief Investment Officer Greg Jensen - an early backer of OpenAI and Anthropic - has likened the current public underestimation of AI to the early, dismissive days of the Covid-19 pandemic. Similarly, billionaire investor Paul Tudor Jones recently characterized the looming AI transition as "waiting for a Category 6 hurricane."

Despite these existential concerns, the $100 billion macroeconomic hedge fund remains deeply committed to integrating machine learning into its core operations. In 2024, Bridgewater raised nearly $2 billion for a dedicated AI-driven fund where technology generates market insights and human analysts manage the risk. Since its launch, the fund has beaten the market while producing distinct investment theses that diverge from the firm's traditional human traders.

"That just blows your mind thinking what the future holds," Bar Dea said, though he cautioned that achieving an institutional edge requires more than off-the-shelf software. Profitable integration, he argued, relies heavily on proprietary training and unique data sets to combine human intuition with technological processing.

Bar Dea, a former major in the Israel Defense Forces, has transformed the 51-year-old firm since taking over as sole CEO from founder Ray Dalio in 2023 - paring down in size. Both of its flagship funds are currently closed to new investors.

Bar Dea's is the third such warning from a hedge-fund heavyweight in three weeks. Jones, whose Skynet-style alarm we covered last year, took to the Wall Street Journal on Sept. 10 to argue AI is becoming a "third superpower" that Trump and Xi must jointly contain. Jensen followed a day later, telling Bloomberg that AI will probably have to kill people before regulators move.

Every one of these warnings comes from a firm that is long the trade. Bridgewater's machine-learning fund is beating its human traders; Jensen holds early stakes in two of the labs; Tudor's flagship is not short Nvidia. Which is roughly where this audience landed when the AI labs themselves started asking for regulation earlier this month: the people best positioned to profit from AI are also the ones most insistent that somebody else slow it down.

Tyler Durden Thu, 10/01/2026 - 18:50

Why Insurance Fails To Protect Americans From Medical Debt

Authored by Sylvia Xu via The Epoch Times,

Having health insurance is no guarantee of avoiding medical debt, according to a recent study.

About one-third of working-age Americans who have health insurance also have outstanding medical bills or debt, according to a Sept. 17 survey conducted by Commonwealth Fund, a private healthcare foundation.

That includes people with an employer-sponsored health plan, an individual health plan, or Obamacare, according to the report.

Hospitals are the main creditors, the survey found. Sixty-four percent of insured people with medical debt said it was from hospital services such as inpatient care, outpatient care, and emergency department care.

Routine care added to the debt for many of the 4,000 survey respondents. That included doctor visits (43 percent), treatment for chronic conditions (39 percent), lab work or diagnostic tests (38 percent), and dental care (25 percent).

Nearly half reported having $2,000 or more in unpaid medical bills.

Most of those having medical debt laid the blame on insurance companies (64 percent) or the broader healthcare system (57 percent), according to the survey.

"When insured people are left owing thousands of dollars for their care, coverage is falling short of its most basic purpose: protecting people financially when they get sick," wrote Sara Collins, coauthor of the report.

Here's why having health insurance often fails to protect Americans from debt.

Coverage Denials

At least one in five adults or their family members experienced coverage denials, either before or after they were provided care from July 22 to Oct. 27, 2025, according to a June study from Commonwealth Fund.

A similar March study from KFF, a healthcare policy research center, found that 33 percent of insured adults had coverage denied between 2022 and 2024.

Common denial reasons include noncovered services, out-of-network providers, failure to seek prior approval, or a determination by the insurer that the treatment is not medically necessary, according to KFF.

Physician billing or administrative errors can also lead to claim denials.

"Minor data errors are the most common culprit for claim denials," said Blue Cross Blue Shield in Texas in a report. That happens when a provider submits the wrong code, leaves information out, or has a patient's name or birthdate wrong.

Among those who reported billing errors or coverage denials, fewer than half challenged them, mostly because they weren't aware they had the right to do so, according to a 2024 Commonwealth Fund survey.

While about one-third of prior authorization denials in the Obamacare system were overturned after appeal, fewer than 1 percent of denied claims are appealed in 2024, according to KFF.

"Not everyone has the time, knowledge, or resources to challenge their insurer's decision," stated Alex Hoagland, assistant professor of health economics at the University of Toronto, in a 2025 Commonwealth Fund study.

Benefit Cuts

About 60 percent of working-age Americans got health coverage through an employer in 2025, according to KFF. That's more than 165 million people.

But the cost to employers has been rising.

For 2027, employers are expected to pay more than $19,000 in healthcare premiums per employee, a nearly double-digit increase for the fourth straight year.

Employers have been scaling back the benefit as a result.

Nearly three-quarters of small employers (73 percent) are considering dropping group coverage benefits in 2027, according to a September survey from eHealth, an insurance agency.

More resilient larger employers may respond by "shifting costs to employees through higher deductibles, coinsurance, or restricted networks," said Dr. Paul Fronstin, director of Health Benefits Research at the Employee Benefit Research Institute, in a January report.

Fewer employers are covering GLP-1s to treat obesity due to high costs, according to an August employer report from Business Group on Health, with coverage dropping from 72 percent in 2025 to 60 percent in 2026.

"That could preserve offer rates but reduce the value of coverage, potentially lowering take-up," Fronstin stated.

"For workers, the impact could be significant, meaning higher out-of-pocket costs, greater reliance on public programs and increased financial insecurity tied to healthcare expenses."

Higher Premiums, Cost Sharing

While employers pay the primary portion of premiums, employees cover about 20 percent, according to the U.S. Bureau of Labor Statistics.

Over the past decade, the contribution has increased more than 30 percent for single coverage (31 percent) and the family coverage average (37 percent). In 2025, workers' annual contribution amounted to $1,440 for single coverage and $6,850 for family coverage, according to KFF.

Beyond premium payments, Americans are responsible for out-of-pocket costs including deductibles, copays, and coinsurance.

More than three-quarters (78 percent) of working-age adults are responsible for at least $1,000 in deductibles for most covered services before the insurer pays anything. Ten years ago, only 62 percent of insured adults had a deductible of $1,000 or more, according to KFF.

Coinsurance kicks in after employees meet deductible limits. Coinsurance payments average 20 percent of the charge for covered services. For hospital admission, that amounts to an average of more than $300 per day.

In addition, most of the working population must pay at least $20 in copays every time they visit a doctor for primary care, according to KFF. Average copays exceeded $300 for hospital admission and $180 for outpatient surgery in 2025.

Most plans have an annual out-of-pocket limit, beyond which the insurance company pays 100 percent of covered charges. The average out-of-pocket limit is $3,000 for 72 percent of workers and $6,000 for 21 percent in 2025, according to KFF.

At least half of adults with employer-sponsored insurance or marketplace coverage said their insurance was fair or poor when it comes to monthly premiums and out-of-pocket costs, according to an April report from KFF.

In 2024, nearly 23 percent of insured Americans reported that their insurers did not protect them from high out-of-pocket or unaffordable healthcare costs, according to the Commonwealth Fund.

The breaking point, beyond which an average American cannot pay their medical bills, is around $4,354, according to JG Wentworth, a financial service company.

Unexpected Medical Expenses

Patients can get a surprising bill when they receive care through out-of-network providers, when hospitals charge facility fees, or due to miscalculated prices.

About one in five adults had major, unexpected medical expenses in 2025, with most of the amount over $1,000, according to the Board of Governors of the Federal Reserve System.

Forty-five percent of insured, working-age adults received an unexpected medical bill in 2024 that they thought should have been free or covered by their insurance, according to the Commonwealth Fund.

"Unexpected medical expenses can push households into medical debt, particularly those with limited savings or unstable income," stated the Commonwealth Fund in the September report.

More than a third of insured non-elderly would be unable to pay a $1,000 bill within a month for an unexpected medical expense, according to the Commonwealth Fund.

An unexpected expense of $500 represented a hardship for nearly half of adults in 2025, according to the Federal Reserve, potentially forcing them to borrow money or sell an asset in order to cover the expense.

"As a primary care physician, one of the most difficult things is seeing a patient who can't afford something they truly need, whether it's important testing, a critical follow-up visit, or necessary treatment. This can have real clinical consequences and be incredibly demoralizing for caregivers," said Commonwealth Fund President Joseph R. Betancourt, M.D., in a statement.

"No patient should have to avoid or delay care or experience anxiety about medical bills and debt. We can and should do better. There are clear steps policymakers, insurers, and hospitals can take to ensure people can get and afford the care they need, when they need it most."

Tyler Durden Thu, 10/01/2026 - 18:25

While Subprime Auto Loans Default, Their Bonds Somehow Keep Performing

America’s subprime auto market has become a fascinating example of how financial engineering can remain remarkably healthy even while the consumer sitting underneath it is getting progressively sicker, according to Bloomberg.

Bloomberg recently dug through nearly 3 million auto loans originated by Exeter Finance, Santander, Carvana and GM Financial and subsequently stuffed into publicly traded asset backed securities between 2021 and 2023. What emerges from the data is a system built with enough interest, fees and collateral protection that borrowers can fall behind, restructure their loans and eventually lose their cars without necessarily interrupting the stream of cash moving toward lenders and bondholders.

The math helps explain why. Subprime borrowers in these pools paid interest rates averaging roughly 18%, while the securities created from those loans were issued at rates reaching about 6.7%. That enormous gap provides room to absorb defaults, pay expenses and still leave money behind for lenders. On top of that, lenders servicing the loans collect fees month after month, regardless of whether the borrower is comfortably current or barely hanging on.

This is where the incentives become interesting. Exeter was particularly aggressive about keeping troubled loans alive. Bloomberg found that it modified nearly two thirds of the loans in its securitized pools, frequently moving missed payments further down the road by extending the life of the loan. Nearly a quarter were modified at least four times. Santander generally followed the opposite playbook, modifying far fewer loans and moving more quickly to repossess and sell the underlying vehicles.

For borrowers, however, postponing the reckoning often did little more than make it more expensive. One Virginia borrower financed a Chevrolet Silverado for roughly $32,000 at 21.5%. After five modifications and more than $10,500 in payments, the truck was repossessed and the borrower had reduced the principal by less than $50. Roughly one quarter of modified loans Bloomberg examined eventually ended in repossession anyway, while another 15% slipped back into delinquency. Among Exeter borrowers specifically, almost one out of every three modified loans still ended with the vehicle being repossessed.

Jamie Talley’s experience puts a human face on the numbers. She borrowed $12,000 from Exeter at nearly 20% to buy a used Chevrolet Sonic, then fell behind. Exeter modified the loan four times and eventually pushed the repayment schedule out nine months. “They said they can push the loan back and you will be back current,” Talley recalled. But being technically current did not solve the underlying problem. Her car broke down, she borrowed more money for repairs and fell behind again. “They almost keep badgering you until you do it,” she said of the extensions.

Bloomberg writes that Talley’s loan was eventually swept into a $1.2 billion Exeter securitization containing more than 53,000 auto loans. Four years and nearly $13,000 in payments later, she still owed $9,230 on a car that had been worth only $8,500 when she bought it.

That is the remarkable part of this machine. The consumer can be financially exhausted while the security built on top of the consumer continues functioning. High interest rates provide a cushion against losses, servicing fees generate additional revenue, repossessed cars retain resale value and extensions can keep payments flowing through the securitization longer. Together, those protections have allowed subprime auto ABS to remain surprisingly durable even as the borrowers underneath them deteriorate.

And that deterioration is becoming harder to ignore. The share of borrowers in securitized subprime auto deals who were at least 60 days delinquent reached 8% in July, the highest level since 2018. S&P has also raised projected losses on certain Exeter securitizations issued in 2022 to as much as 31%, pointing to elevated delinquencies and extensions. Yet the securities themselves have largely continued to hold together.

That divergence is what makes this worth watching. Loan modifications can change the accounting timeline, but they cannot manufacture household income. Moving missed payments to the end of a loan does not suddenly make the borrower capable of affording the car, and while the debt gets pushed further into the future, the collateral underneath it continues getting older.

Even Talley understood the impossible tradeoff. Losing the car earlier might have saved her thousands of dollars, but she also needed it to work and transport her children. “They got us between a rock and a hard place,” she said.

For the moment, the subprime auto securitization machine continues humming despite worsening consumer stress. The deterioration is already visible at the bottom of the structure, among the people actually making the payments. The question now is how far that pressure can travel upward before the financial machinery built on top of them finally begins to feel it.

Tyler Durden Thu, 10/01/2026 - 18:00

Waste Of The Day: IRS Enforcement Delayed

Authored by Jeremy Portnoy via RealClearInvestigations,

Americans underpaid their taxes by an estimated $696 billion in 2022, according to new data released by the Treasury Inspector General for Tax Administration.

Most of the money came from people and businesses that understated their income. But 9% came from people who didn't file a tax return at all, and efforts to track them down have been slow-moving as the Internal Revenue Services' case log remains backed up.

Key facts: The IRS' backlog of cases increased when its office buildings closed during the Covid-19 pandemic, but the Inflation Reduction Act of 2022 appropriated supplemental funding to help resolve the delays.

However, Congress reduced that funding in 2025, and the Trump administration laid off 28% of the IRS' workforce. As a result, "the IRS no longer has the resources to pursue all delinquent filers," according to the inspector general.

The inspector general found that nearly 39,000 people with incomes of $400,000 or more were notified in early 2024 that they had not filed a tax return. As of December 2025, the IRS had not followed up with almost 34,000 of them. Their unpaid taxes are worth an estimated $15.7 billion.

For another almost 11,000 delinquent tax returns, the IRS placed the case in its enforcement queue, instructing agents to take measures like garnishing wages or bank accounts. As of December 2025, 9,463 of the cases have still not been assigned to an IRS agent and remain in limbo. The unpaid taxes are worth an estimated $2.5 billion.

The IRS is also wasting time and resources on people who paid their taxes honestly. Almost 5,000 people received a notice stating that they did not file a tax return, even though they did.

The inspector general estimates that the number of people who did not file a tax return almost doubled over seven years, from 8.8 million people in 2015 to 14.7 million people in 2022.

Had the IRS successfully collected all $696 billion of unpaid taxes in 2022, federal revenue would have increased by 14% that year.

Background: Some of the unpaid taxes come from federal employees themselves. More than 571,000 current and retired federal employees owed $6.3 billion worth of unpaid taxes as of 2024, including thousands within the IRS.

Summary: As politicians debate tariffs and other sources of government revenue, Congress and the White House should also be finding new ways for the IRS to collect the money it's already owed.

The #WasteOfTheDay is brought to you by the forensic auditors at OpenTheBooks.com.

Tyler Durden Thu, 10/01/2026 - 17:40

Cotton Calls For Military Supply Chain Security Review After F-35 Parts Diverted To Hong Kong

Authored by Arthur Zhang via The Epoch Times,

Sen. Tom Cotton (R-Ark.) asked the Department of War on Sept. 29 to review security controls for U.S. military equipment and supplies transported through commercial and contractor-managed supply chains, citing reports that F-35 components bound for the United States from Australia were diverted to Hong Kong.

A U.S. Air Force F-35 takes flight in the Middle East in support of Operation Epic Fury on March 2, 2026. Courtesy of U.S. Air Force

In a letter to Secretary of War Pete Hegseth, Cotton cited the diversion of F-35 components being shipped from Australia and reports that the Chinese government had taken possession of the parts and had not returned them.

"We can't afford for U.S. military equipment to fall into the hands of a foreign adversary because of vulnerabilities in commercial transportation," Cotton wrote.

Cotton, chairman of the Senate Select Committee on Intelligence, also said in a Sept. 29 post on X that secure supply chains are critical to ensuring weapons, technology, and supplies reach U.S. troops rather than adversaries.

"That's why I'm calling on [the Department of War] to conduct a review and take any necessary actions," he wrote.

5 Areas for Review

Cotton's request extends beyond the circumstances of the missing F-35 components.

He asked the Department of War to examine five areas: chain-of-custody requirements for military equipment and supplies moved by contractors and commercial carriers, the department's ability to track the location and routing of shipments, procedures for approving and reporting route changes, criteria for allowing shipments to pass through foreign jurisdictions, and safeguards against military materiel transiting through or being diverted to China and other adversary-controlled jurisdictions.

The department relies extensively on contractors and commercial carriers to move military equipment, replacement parts, and other supplies around the world, Cotton wrote.

He said those arrangements provide speed and ease of movement but should not come at the expense of the U.S. military advantage.

While classified and designated sensitive components should receive heightened protections, Cotton said all U.S. military materiel could give adversaries information about American weapons systems, logistics, and readiness, as well as access to U.S. troops.

Cotton said securing the supply chains was necessary both to ensure U.S. troops have access to advanced equipment and technology and to prevent adversaries from gaining access to U.S. technology.

F-35 Parts Diverted to Hong Kong

The F-35 Joint Program Office confirmed to The Epoch Times on Sept. 18 that it and the Office of the Secretary of War were aware of a "shipment issue" involving unserviceable F-35 Lightning II components.

"We are actively working with U.S. authorities and industry partners to retrieve these components, investigate the incident, and place safeguards to avoid a future occurrence," the program office said.

The office did not identify the components, say where the shipment had been diverted, or explain how the diversion occurred.

Australian Defense Minister Richard Marles said on Sept. 22 his understanding was that the shipment did not involve sensitive equipment or sensitive parts. He said the matter ultimately would be managed by the United States and Lockheed Martin.

Earlier Problems Tracking F-35 Parts

The Government Accountability Office (GAO) has previously identified problems with the Pentagon's ability to account for parts in the F-35's global supply system.

A 2023 GAO audit found that one F-35 prime contractor had recorded more than 1 million spare parts worth over $85 million as lost since May 2018. The F-35 Joint Program Office reviewed the circumstances surrounding less than 2 percent of those losses.

The watchdog said the Pentagon lacked sufficient oversight of government-owned F-35 spare parts held outside prime-contractor facilities and recommended procedures for reporting losses and disposing of excess, obsolete, or unserviceable parts. The Defense Department concurred with all four recommendations at the time.

Ryan Morgan contributed to this report.

Tyler Durden Thu, 10/01/2026 - 17:00

Tennessee Man Who Recorded Police Sues After Eight Armed Officers Raided His Home

A Tennessee man has taken legal action against the Kingsport Police Department after a yearslong criminal case that began with him recording an officer on the road and ended with an appellate court throwing out his conviction, according to Fox News.

Joshua Gibbons says police targeted him because he publicly called attention to an officer’s behavior. His lawsuit, brought with the Foundation for Individual Rights and Expression, or FIRE, names the city of Kingsport, its police chief and individual officers and alleges that the department retaliated against speech protected by the First Amendment.

The confrontation began in October 2022, when Gibbons saw a Kingsport police SUV traveling quickly at night without its emergency lights activated. He recorded the vehicle, eventually catching up with the officer at a fast food restaurant and questioning him about his driving. Nothing came of the encounter at the time, and the officer simply continued on his way.

The situation escalated after Gibbons put the footage online. Gibbons frequently records police activity and publishes the videos, and FIRE contends the department began scrutinizing his YouTube account after another person complained about separate footage in which an officer appeared to give Gibbons the middle finger.

According to the lawsuit, police soon turned their attention to the earlier driving video. Authorities secured a warrant accusing Gibbons of disorderly conduct as well as traffic violations related to his own driving while recording. FIRE says the warrant was obtained through a court clerk rather than presented to a judge.

The response that followed was far more aggressive. Before sunrise the next morning, eight armed officers showed up at Gibbons’ home and took him into custody in front of his daughter and elderly mother. The arrest occurred nine days after his original encounter with the officer.

Gibbons says the raid had a lasting impact on his family and believes its purpose was to frighten him into silence. He has said he intends to continue pursuing the case because his family no longer feels secure in its own home.

Fox News writes that the resulting prosecution stretched across nearly four years. Gibbons was cleared of the traffic-related accusations during his first trial but convicted of disorderly conduct. After challenging that decision, he was again convicted by a jury in circuit court.

Tennessee’s Court of Criminal Appeals eventually reversed the result. In a unanimous June decision, the appellate court concluded that the evidence did not establish disorderly conduct and dismissed the remaining charge altogether.

The judges found that Gibbons had neither threatened anyone nor behaved violently and that his comments did not stop anyone from carrying out a lawful activity. The ruling also underscored that offensive or insulting language directed toward police does not, by itself, amount to criminal conduct.

FIRE argues that the timing is central to the civil case. Attorney Adam Steinbaugh said the officer who initially encountered Gibbons did not treat his criticism as criminal behavior. It was only after Gibbons published the encounter and drew attention to the department, FIRE contends, that police decided to pursue him.

Gibbons is now seeking to hold the city and department officials accountable for what he alleges was retaliation against constitutionally protected activity. Beyond his own case, he says he wants the lawsuit to force changes in how Kingsport police respond to citizens who record or criticize officers.

Tyler Durden Thu, 10/01/2026 - 16:40

Remembering The False Gloom And Doom Of The 1992 Elections... And The Upcoming Midterms

Authored by Victor Davis Hanson via American Greatness,

Republicans risk repeating 1992 by failing to counter economic pessimism with the facts about strong growth, falling inflation, rising incomes, and a recovering economy.

In 1992, Bill Clinton won the presidential election partly on the basis of his campaign's false accusation that George H. W. Bush had overseen "the worst economic performance since the Great Depression." Or so claimed Clinton's running mate Al Gore.

James Carville, chief campaign adviser to Clinton/Gore, amplified that message with the constant refrain: "It's the economy, stupid."

That strategy worked for three reasons.

First, third-party candidate Ross Perot siphoned off nearly 19 percent of the vote. Most of his supporters would otherwise likely have gone to Bush. Perot allowed Clinton to win with a mere 43 percent of the popular vote, in part by echoing the false narrative of a crushing Bush recession.

Second, the brilliant Bush campaign strategist Lee Atwater, who had virtually destroyed the Dukakis campaign in 1988 - remember the tank ad, the Boston Harbor ad, and the Willie Horton ad? - had died in 1991 at the age of 40 from a brain tumor.

Atwater's canny but hardball 1988 tactics had turned off establishment Republicans. So in 1992, Republicans reverted to the notion of losing nobly rather than winning ugly and resumed unilaterally playing by the Marquess of Queensberry rules. The result of Democratic demagoguery was that the sober and competent elder Bush was branded a heartless elitist who had wrecked the economy and defended Kuwait only for "blood for oil." And without Atwater, the Bush team utterly failed to refute such caricatures and counterattack.

Third, and most important, the anemic Bush reelection campaign never refuted the Clinton-Gore economic hysteria. That "recession" deception had drowned out the historic foreign policy achievements of Bush's four years, from the successful policies that followed the fall of the Berlin Wall in 1989 to the decisive 1991 Gulf War.

Despite overwrought claims about a recession or even a new Great Depression, in truth, the recession had ended in March 1991. In fact, final GDP growth for 1992 was a robust 3.52 percent. That was hardly a recessionary indicator. Indeed, the election-year growth proved even stronger than in Clinton's first year of governance in 1993.

While unemployment was still high at 7.5 percent, the 1992 stock market nonetheless grew by 7.6 percent. And the 1992 inflation rate had stayed moderate at 2.9 percent.

In other words, the economy had already begun to recover from the 1990-91 recession, which - to reiterate - had officially ended 20 months before the 1992 election.

One cause - eerily now familiar - of the earlier 1990-91 downturn was that oil prices had initially doubled after the 1990 Iraqi invasion of Kuwait and the U.S. military response. But prices collapsed as soon as Operation Desert Storm began, despite the later torching of the Kuwaiti oil fields and continued uncertainty in the Gulf. Yet by the November 1992 election, oil prices had long been back to pre-invasion levels.

In short, the Democrats' charge that 1992 saw the worst recession in 60 years was absurd. (The 1973-75 and 1981-82 recessions were far worse than the 1990-91 recession.)

Fast forward to the present. The economy today is far better than in 1992. But Democrats' successful 1992 demagoguery should remind Republicans that the perception of the economy peddled by campaign rhetoric can often decide elections more than the reality does.

Take the just-released 2025 poverty rate. It hit an all-time low of 10.2 percent. Child poverty also fell to a historic low. Such amazing news refutes wild leftist charges that uncovering vast welfare fraud, deporting thousands of illegal aliens, and cutting 400,000 federal jobs would spike poverty. In fact, those actions more likely contributed to reducing poverty, as did an astounding lowest violent crime rate in some 70 years.

Median household income also hit a record high of $87,460. That is the highest median household income in the world, dwarfing all other large industrial nations that are not petro-states or tax havens. The same holds true for our GDP per capita - which, incidentally, was already over $34,000 higher than in Canada.

New business reports show that this past August manufacturing achieved its largest monthly increase since 2022. And service-sector growth jumped to its highest level since 2021. New orders for metals, machinery, computers, appliances, communications - in truth, almost everything - continue to rise every month, especially and most recently in August.

Despite the Iran war and its global petroleum interruptions, the Atlanta Federal Reserve now predicts that third-quarter GDP growth will finish at a blistering 5 percent. The Dow and the S&P have grown by a strong 8.1 percent and a staggering 13.5 percent, respectively, in 2026.

Take away the climb in gas prices from a January 2026 average of $2.81 a gallon to $4.50, and the inflation rate was only 2.5 percent - below the 2025 yearly average of 2.7 percent - and Wall Street estimates put the annual rate at around 2.2 percent once the Iran war ends and a huge influx of oil hits the global market. The United States is now the greatest producer of oil and the greatest producer and exporter of natural gas in history - and is still increasing output.

August unemployment was a low 4.1 percent, while 162,000 new jobs were created in that month alone. Consumer spending remains strong.

The U.S. economy is entering a boom cycle. Its growth ensures that it remains the largest in the world and continues to outpace all competitors.

Many of the dire predictions at the millennium about the supposedly superior collectivist paradigm of the European Union - or the inevitable rise of a China of 1.4 billion people - surpassing the United States simply did not come true.

The EU has about 100 million more people than the United States. China's population is four times larger than America's. Yet both have fallen further behind the United States in terms of economic production.

Indeed, the U.S. economy is roughly $10 trillion larger than either China's or the EU's. Far from some predictions of a decade ago that within 10 years China would overtake the United States, the opposite has occurred. America's nominal GDP of $18.8 trillion in 2016 soared to $32.4 trillion in 2026 - as the American share of global GDP increased to 26 percent. In contrast, the EU's share of global GDP actually shrank, and China's still stayed well behind the United States.

In key categories such as digital media, software, AI, bioengineering, and space technology, American companies remain the world's largest and most successful. They usually dominate global top-ten rankings, with eight or nine U.S. corporations among the top slots.

If the Republicans broadcast this positive news about the economy, it will in turn complement Trump's unambiguous foreign policy successes, which are largely underappreciated, if not unknown, among the public.

But they remain impressive: the rebooting of NATO by getting its members to rearm and take up their fair share of collective defense; the acquisition of new treaties ensuring an American military presence in the Greenland to monitor the contested Arctic; the radical transformation of much of the Western Hemisphere from leftist and anti-American nations into pro-American, tough-on-crime, free-market countries; the expulsion of the Chinese bad actors from the Panama Canal and the extradition of the anti-American communist Maduro from Venezuela; the restoration of Pentagon recruitment; and the change in Pentagon procurement to emphasize quantity of weaponry along with quality.

The verdict on the unpopular war against the Iranian theocracy is still out. But the idea that the last seven months of on-again, off-again strikes and negotiations amount, in terms of human and material costs, to a "forever war" is absurd and a lie.

While all our soldiers' deaths are tragic, the conduct of the war against the terrorist powerhouse of the Middle East had deliberately been waged to limit the loss of American lives. Indeed, the average daily fatality rate due to accidents in all branches of the military during the seven months of the Iran conflict is some eleven times greater than the number of those killed fighting Iran.

The roughly $40 billion cost of the war so far, while substantial, amounts to about 25% of the conservative estimates of recently discovered welfare corruption and fraud in California alone - involving theft of Medi-Cal, unemployment insurance, in-home services, and hospice funding.

The war will be judged by historians, fairly or not, on whether it delays for years or, if not, ends Iran's quest for nuclear weapons altogether, and on whether it so weakens the theocracy that it permanently loses its terrorist leverage over the Middle East - if not eventually implodes from popular resistance. If such a regime collapse should follow the conflict, the Middle East miasma of the last 70 years would largely end, marking the most profound American achievement abroad since the fall of the Berlin Wall.

So much is at stake.

Nevertheless, the Republicans have not yet developed a strategy to inform the public that the economy is sound and improving - and will likely soon take off, after the Iran conflict is over, oil becomes plentiful again, and tax cuts, foreign investment, deregulation, and productivity gains from AI take their full effect.

Most importantly, Republicans have still not articulated why the "affordability" issue persists. Under Joe Biden, average prices were nearly 21 percent higher than when he took office, with a yearly average increase of more than 5 percent.

The Trump administration nearly halved that annual rate in 2025. It will reduce Biden's yearly inflation rate substantially again in 2026.

But neither Trump nor any other president could or would wish by design to engineer radical deflation to restore prices to the pre-Biden levels of 2020 during Trump's last year in office.

Trump's first-term total four-year inflation rate was under 8 percent, averaging about 2 percent per year - far less than half the yearly inflation average of the subsequent Biden years.

In 2025, wages still climbed higher than the rate of inflation. But it would require a damaging recession to undo Biden's 20 percent rise in prices. And worse still, the cost of staples such as food, shelter, vehicles, fuel, and insurance rose nearly 30 percent over Biden's four years.

Nor have Republicans made the easy case that the midterms are no longer merely a matter of liberal versus conservative, Democrat versus Republican, or even progressives versus MAGA.

Rather, November 3 represents normality and common sense pitted against an unrecognizable "Democratic" revolutionary party that is driven by Islamist-sympathizing socialist zealots who are not fond of the United States as it has existed for 250 years. They are not shy about planning to remake America along the lines of, at best, radical European socialism and, at worst, something resembling Cuba.

Needless to say, if they get their way, even the most lurid false liberal claims about our current alleged economic problems will pale by comparison.

We publish a variety of perspectives. Nothing written here is to be construed as representing the views of ZeroHedge.

Tyler Durden Thu, 10/01/2026 - 16:20

"Showings Have Stopped": Housing Market Freezes As Mortgage Rates Soar To 7.28%, Highest In 3 Years

The American dream has never been more out of reach.

Mortgage rates posted their largest increase in four years this week, one of the clearest signs of how the recent bond-market selloff is spilling into the broader economy - if not memory and chip stocks which continue to trade entirely on the highly efficient circular financing and junk bond markets.

30-year fixed-rate mortgages rates surged 25bps in one week, to 7.28% from 7.03%, the biggest jump since October of 2022, according to Freddie Mac.

Mortgage rates have risen to the highest since November 2023 as inflation, a surge in government debt and heavy corporate borrowing for the build-out of AI (not to mention the latest European sovereign debt crisis) push up bond yields. The recent sharp selloff in the bond-market has risen borrowing costs for home buyers and dealt a blow after blow to a limping housing market.

“Showings have stopped basically,” said Don Wessel, a real-estate agent in Greenville, S.C, quoted by the WSJ. "I’ve got good listings in downtown Greenville, which is one of the hottest areas, and nobody’s looking at them."

In 2022, rates surged as part of postpandemic inflation that ended years of below 5% mortgage rates and ground the housing market to a halt. Home sales still haven’t recovered from that rapid freeze four years ago. With rates now at their highest point since 2023, buyers are likely to stay planted on the sidelines, while sellers may take their homes off the market.

The market may not be completely frozen - yet - but it's getting these: for the week ending Sept. 25, mortgage applications plunged 6%, the fourth consecutive week of declines, according to the Mortgage Bankers Association. 

At the start of the year, mortgage rates touched below 6%, but the beginning of the war in Iran caused them to jump. As the conflict has drawn on, fears of sticky inflation have driven rates higher and higher. Rates began September at 6.71% before a historic bond selloff sent them surging more than 50bps higher. 

With the 10Y TSY today hitting the highest yield in 24 years, Americans have been feeling the pain of the bond selloff most directly and rapidly through the housing market, where mortgage rates closely follow 10Y Treasury yields. 

As the WSJ reports, the recent run-up in mortgage rates has brought sales activity in the housing market to a standstill, as buyers have already been coping with record home prices and stretching to afford down payments. Plus, with sky-high homeowners association fees and property taxes, the math has become impossible for first-time buyers to work out.

Now, the end of 2026, a year that was expected to launch the market’s recovery, is likely to be a slog.

“I still see it declining and you’re coming into the slow part with the holidays,” Wessel said. “I think there’s a short window now for sellers to sell and then buyers get out of the market.”

That said, buyers in the upper end of the market, many of whom transact in all cash and don't need mortgages and are generally less constrained by affordability, are continuing to show interest, said Anthony Rael, an agent in Denver. “They seem to be flush with cash, bringing 20%, 30% down payments into the mix,” he said. “Whereas the lower market, let’s just say closer to a half a million and below, is really struggling where we’re getting lots of showings and no activity, no offers.” 

Higher mortgage rates could also halt progress the market has made in freeing up inventory. For years, homeowners have been wary of selling their homes to preserve their low mortgage rates from years ago. That sent inventory plummeting, which has allowed home prices to continue hitting new records, despite weak demand.

While there were a few scattered signs that the lock-in effect was starting to ease as sellers lost patience and gave up their low rates to move for family reasons or new jobs, as inventory approached prepandemic levels in August, but now, rates well above 7% are sure to drive sellers away.

In July, Adam Wharton and his wife bought a new house in Georgia but haven’t been able to sell their old house, which they listed at the beginning of September. There initially was a flurry of interest, and they accepted an offer, before the buyer backed out.

“We were getting multiple showings a day. Within four days, we had a full-ask offer on it,” he said.

But then after rates jumped, the buyers disappeared. Their last showing was two weeks ago. “Since that, it’s been nothing, no scheduled showings, no offers, no nothing from people who have looked at it before,” he said.

The mortgage they have on the house, with a rate of 3.35% and a monthly payment under $1,000, is extremely cheap, and so Wharton isn’t in any rush to sell. Now, they are considering taking it off the market and renting it out if they don’t get any offers, waiting for the market to loosen up before listing it again.

“Everybody has in their minds these two and three and four percent mortgages,” he said, but he will have to wait until the next recession - or depression - before those come back again. 

With mortgage rates breaking through 7%, some home buyers are considering the familiar strategies for lowering their monthly payments: putting more money down, using adjustable-rate mortgages and even buying in cash.

While increasing the size of the down payment would help offset the monthly bill that comes with a higher mortgage rate, home prices are up more than 50% since 2019, and many buyers are struggling to find the cash to boost their deposits above the typical 10% to 15% down.

That has scrambled the usual buyer playbook for adjusting to higher borrowing costs. Typically, when mortgage rates rise, sellers have to cut prices to keep buyers in the market. But for years, supply has lagged behind as many homeowners have opted to stay put to preserve the 3% to 4% mortgage rates that they secured in the wake of the pandemic. 

This lock-in effect—homeowners refusing to sell and give up a low mortgage rate they locked in years ago—has allowed prices to continue rising, even as demand has sagged. The national median existing-home price in August rose 1.6% from a year earlier, to $429,100, an August record. That is despite sales falling to their lowest level and interest rates pushing to their highest point in more than a year.

Median down payments have increased a bit this year as the rise in mortgage rates has encouraged buyers to spend more money upfront to lower their monthly payments. The median down payment in January of this year was $23,053, according to Realtor.com. In August, it was up to $27,166. Over the same period, the median down-payment percentage has risen to 13.8% from 12.8%.

But Christina Beitler, who runs a mortgage brokerage firm in Austin, Texas, said the recent rise in rates has ground the market to a halt.

“We’ve all hit a wall. We’ve pretty much seen a very large stalling of activity,” she said. “I do think right now, buyers are taking a step back, taking a moment of pause.”

As the WSJ notes, even in the wake of the 2008 housing crash, when home sales sank, buyers with good credit could take advantage of lower mortgage rates than today and a fall in home prices. Supply benefited from lenders looking to unload millions of foreclosed homes. Beitler said she recently quoted someone a mortgage rate on a Monday, and by the time they went under contract on a Thursday, the rate had increased over half a percentage point. “They literally just said, ‘I can’t do this,’” she said, adding that the person terminated the contract.

As older homeowners often point out, before 2001, mortgage rates were just about always above 7%, and in the 1980s, they reached as high as 18.63%, according to Freddie Mac. As a result, housing affordability was even worse back then, but low home prices allowed buyers to put down larger-percentage down payments to help mitigate the higher rate. 

In 1980, the median home value was $47,200, while median household income was $17,710, according to the Census Bureau. Now, home values are up to $368,700, according to Zillow, outpacing income, which in 2025 was up to $87,460. That means that for many buyers, down payments have become far more of a financial burden.

Continued growth in down payments could be modest, mostly because many buyers are already putting down as much as they can and simply can’t afford to contribute any more, said First American Chief Economist Mark Fleming.

“For a lot of the affordability-constrained borrowers, they don’t have the option,” he said.

Tyler Durden Thu, 10/01/2026 - 15:46

Supertanker Ablaze After Iran Attack In Hormuz As US Deploys 10K More Troops & Third Carrier To Mideast

Update(1530ET): Iranians are apparently going back on the offensive, after it's been widely reported that US-protected oil transit through the Strait of Hormuz has been fast gaining steam. Iran state media says a supertanker is burning off the coast of Oman after coming under Iranian attack:

Local sources reported that a 2.5 million barrel capacity supertanker that was traveling through the Strait of Hormuz illegally was hit 8 kilometers off the coast of Oman and is burning, reports Fars

Earlier we reported that starting in mid-August (on Aug. 16), Iran’s Supreme National Security Council set October 1 as a deadline. It warned at the time that if Washington failed to lift its naval blockade of Iranian ports within 45 days, Tehran could resume attacks against US forces, and by implication step up attacks on foreign shipping.

Iran’s 45-day deadline for the United States has now expired. That deadline has now passed, potentially adding another layer of uncertainty to an already tense confrontation where Tehran may decide it must act 'preemptively' while facing more bombs by Trump (likely after the midterms).

*  *  *

Signs of potential major escalation, or the next round at least (which Trump has hinted will come after the midterm elections), just hit The Wall Street Journal, and sent oil prices soaring. A quick summary:

• The Pentagon is sending a third aircraft-carrier strike group and additional Marine Corps ships to the Middle East, adding 9,000 to 10,000 more troops to the region.
• The ships, jet fighters, Marines and sailors will arrive in the region by the end of November, as President Trump considers renewing strikes on Iran after the midterm elections.
• The additional servicemembers will add to the more than 50,000 troops already in the region, with the deployments coming after Trump rejected Iran's latest proposal for a seven-day ceasefire.

The Trump administration is deploying a third aircraft carrier to the Middle East along with additional Marines, an American official also told Israeli media on Thursday. And later, in the afternoon, Trump posted a new Truth Social message as follows:

The USS Theodore Roosevelt is en route to US Central Command's (CENTCOM) area of operations after having just left San Diego this week. It is expected to relieve the Japan-based USS George Washington, which entered regional waters in mid-August.

But both carriers could also stay on extended deployments. The WSJ writes further:

The additional moves will further strain the U.S. Navy, however, which has experienced supply shortages and faced near-record deployments during the conflict. Iran has in recent weeks fired ballistic missiles at American warships. The crew of the Roosevelt is prepared for a longer-than-normal deployment as well, according to senior Navy officials.

Source: US Navy

Carriers which more frequently had Indo-Pacific deployments have been increasingly diverted to the Middle East in recent years, a trend which had only picked up steam amid tensions with Iran and the Houthis out of Yemen.

Also on Thursday Al Jazeera is newly reporting that three carriers will stay in regional waters, "By the end of November, three aircraft carriers and two landing groups will be deployed around Iran," a US official told the Qatar-based outlet.

And USNI News earlier detailed:

On September 28, USNI News reported that a U.S. defense official had confirmed the carrier’s departure from San Diego the previous day. Navy officials had also warned families that the deployment could exceed seven months, with eight months being used as the planning baseline.

Carrier Strike Group 9 includes Theodore Roosevelt, Carrier Air Wing 11, Destroyer Squadron 23, Information Warfare Squadron 9 and the Ticonderoga-class guided-missile cruiser USS Chosin (CG-65). Its embarked air wing brings together several combat and support aircraft. The strike component includes F-35C Lightning II fighters from VFA-86, F/A-18E Super Hornets from VFA-211 and VFA-25, and F/A-18F aircraft from VFA-154. VAQ-137 operates the EA-18G Growler for electronic warfare, while VAW-115 flies the E-2D Advanced Hawkeye for airborne surveillance and command and control.

Whether one of the carriers ends up leaving the theatre or not, the extra deployment does mean President Trump will have a wider range of options for more possible military actions against the Islamic Republic.

He has in a freshly published TIME interview this week reiterated that he may be escalating attacks on Iran after the November midterms if an acceptable deal can't be reached.

Tyler Durden Thu, 10/01/2026 - 15:30

Cantor: Almonty "Moving Seamlessly" Into Production As Korean Tungsten Mine Becomes Western Lifeline

Cantor Fitzgerald metals and mining analyst Matthew O'Keefe provided clients on Tuesday with an update on Almonty Industries, citing a corporate update from CEO Lewis Black. The miner's crown jewel tungsten mine in South Korea has begun shipping concentrate as the West's answer to conflict-free tungsten supply comes online, playing into a bigger theme we've outlined called "owning the bottlenecks."

O'Keefe says the Sangdong mine has begun shipping concentrate, is moving toward 24/7 operations, and has about 4.6 months of stockpiled ore to support its ramp-up. Phase II expansion is also already underway, with completion expected in 2027.

O'Keefe outlined why Sangdong is critical to expanding Western-aligned tungsten supply and breaking China's "quasi-monopoly" grip:

A major source ex-China: Phase II would increase throughput to 1.2 million tonnes annually, potentially supporting more than 460,000 MTU of tungsten trioxide production per year at Sangdong.

The production inflection: Cantor’s detailed model forecasts consolidated output rising from 126,287 MTU in 2026 to 444,400 MTU in 2027, while all-in sustaining costs fall from $905 to $319 per MTU. These are forecasts, contingent on successful execution.

"This is a defining moment for Almonty and for Western supply chains: tungsten mined and processed in an allied nation is now a reality," CEO Black wrote in a statement. 

CEO Black added more color on the ramp-up of the South Korean mine:

Sangdong Phase II: The Next Chapter Is Already Underground

The stockpile on the surface does more than feed the mill. It buys us time, and we are putting that time to work. With enough ore on-hand to carry Phase 1 through ramp-up and early production, our mining teams have been free to turn their attention deeper into the mountain, where underground development for Phase II is already well underway.

While the drills advance below ground, the mill above it has gained an important partner. Metso, a global leader in minerals processing technology, is on site at Sangdong, working alongside our operators to support the Phase 1 ramp-up. The same engineers helping us fine-tune today's plant are laying the technical groundwork for tomorrow's future.

That brings me to the news many of you have been waiting for.

Phase II is officially a go.

Underground development is progressing, and we are placing orders with Metso for the equipment that will power the expansion, including new mills. The same partner that helped bring Phase 1 to life will now help build its successor. We expect Phase II to be completed in 2027, further ramping capacity to up to 1.2 million tonnes per annum and positioning Sangdong to potentially produce over 460,000 MTU annually, making it one of the largest tungsten mines outside of China and definitively the largest producing currently.

Sangdong's ramp-up comes as Stifel aerospace and defense analyst Jonathan Siegmann pointed out that the US strategic stockpile of tungsten has been nearly depleted. This is merely an indication that the Trump administration's push to secure conflict-free critical material supply chains will create massive tailwinds for the metals space, and those miners that can deliver today will be the big winners.

The most glaring problem is that China's control over critical materials mining and refining will remain in play through the end of this decade...

Adrien Rabier, Bernstein's equity analyst covering European aerospace and defense, outlined earlier this week that the rearmament cycle in Europe, and more broadly across the West, is already underway.

The problem is that missiles, bombs, drones, fighter jets, tanks, and just about everything else in the defense world require high-quality critical materials. Shortages could derail production lines, which is why the West is actively seeking to build out new supplies, making early movers such as Almonty and others that can deliver conflict-free supplies the winners.

O’Keefe reiterated a "Buy" rating on Almonty with a 12-month $25.50 target, implying about 93% upside from the previous close cited in the report. 

Tyler Durden Thu, 10/01/2026 - 14:40

What Zohran Mamdani Could Learn From His Father

Authored by Peter Jacobsen via The Daily Economy,

Before Zohran Mamdani burst onto the scene of NYC politics with promises of cheap groceries, rent control, and calls to seize the means of production, his father, Mahmood Mamdani, was making important political contributions himself. The elder Mamdani's work is more academic in nature and generally more interesting than the "free stuff" brand of left-wing politics.

A family welcomes a new baby in rural India. Shutterstock.

In particular, Mahmood was decades ahead on one issue that other academics were getting extremely wrong in the 1970s - population.

In 1972, Mamdani published his book The Myth of Population Control: Family, Caste, and Class in an Indian Village. The book started with a (then) controversial claim: ecologist and population doomer Paul Ehrlich was wrong.

The Population Debate

Ehrlich was catapulted to popular fame after the success of his provocatively titled book The Population Bomb in 1968. Ehrlich's message was simple: the world was overpopulated. In his view, population growth would soon lead to mass famine throughout the world. His beliefs on this issue were so strong that he went as far as to claim England would collapse before the year 2000 due to food shortages.

Ehrlich's message was popular, and he wasn't the lone anti-population force. Around the same time, the United Nations formed its Fund for Population Activities (UNFPA), and USAID also began taking on major population aid projects. The theory shared by these groups was clear - if countries want to develop economically, they need to slow their population growth.

In hindsight, we know much of this thinking was both wrong and dangerous. Overpopulation concerns amounted to nothing, and anti-natal policy ended up having devastating impacts in developing countries. The UNFPA's first "population awards" were given to Indira Gandhi in India and Qian Xinzhong in China.

Both of these governments are now notorious for the coercive population policies they used to achieve the ends lauded by the UN. Both countries were engaged in aggressive campaigns of sterilization and compulsory abortion, with record rates of sex-selective infanticide. These terrible policies were no secret at the time: Nobel Prize-winning economist Theodore W. Schultz resigned his advisory position with the UNFPA in protest over these awards, calling them a "travesty."

Relatively few voices in the academic world spoke out against overpopulation hysteria. Among those were some economists like Julian Simon and P.T. Bauer. Joining arms in that intellectual fight was anthropologist Mahmood Mamdani.

These figures aren't exactly likely allies. Simon and Bauer could both be broadly construed as free market economists. Mamdani, on the other hand, is a political scientist and anthropologist who frequently publishes on the impacts of colonialism. Their shared humility, though, helped them understand Ehrlich's error.

Mamdani's Fieldwork

Mahmood Mamdani's 1972 Myth of Population Control examined one of the early notorious failures of attempted population policy: the Khanna study. The Khanna study was an attempt by the Rockefeller Foundation to test whether distributing birth control in rural India would reduce birth rates. Early results seemed promising: 90 percent of the local population favored free contraception. Yet birth rates did not fall. What explains this tension? Mamdani provides an answer:

But, in brief, there was only one reason for such behavior: politeness. As one of the villagers explained to me: 'Babuji, someday you will understand. It is sometimes better to lie. It stops you from hurting people, does no harm, and might even help them.'

In other words, the villagers enthusiastically accepted the gift of birth control to be polite! Policymakers and social engineers believed the acceptance of these methods signaled acceptance of lower population growth. Villagers were happy to "help" researchers by accepting their gifts, but had no interest in using them. Why? Mamdani clarifies this early on in his book.

To talk, as Ehrlich does, of 'overpopulation'"' is to say to people: You are poor because you are too many. As this essay will show, people are not poor because they have large families. Quite the contrary: they have large families because they are poor.

But why would the poor want large families? The answer becomes clear through Mamdani's interviews with locals. Mamdani gives one case which is particularly illustrative:

Milkha Singh has no desire to limit the size of his family. His reaction is again typical of the poor in Manupur: 'You think I am poor because I have too many children. [He laughs.] If I didn't have my sons, I wouldn't have half the prosperity I do. And God knows what would happen to me and their mother when we are too old to work and earn.'

The commissioners of the Khanna study simply didn't understand how different the context of rural India was. For Indians, children were necessary for help with daily work and for security in old age. Telling them they would be richer without children would be similar to telling Americans they would be richer if they didn't invest their money. The proposition was nonsensical.

Mamdani's study succeeded by simply allowing the people on the ground to explain themselves. Distant bureaucrats focused on a "population approach to development" simply tried to replicate the conditions that existed in richer countries (like lower birthrates) under the mistaken assumption that those conditions caused growth.

Centrally planned attempts to "solve" rural Indian problems without understanding rural Indian context naturally failed. As one review stated, the policies "have not had a major impact on people's attitudes, practice of contraceptives, or the average fertility rate."

Even if they had been successful, it's unlikely they would've brought development. This result is explained well by economist William Easterly in his book The Elusive Quest for Growth. In it, Easterly examines several "development panaceas" implemented in the twentieth century, of which population control was only one. He points out, "the general wisdom among economists from these [population] studies is that there is no evidence one way or the other that population growth affects per capita growth." In fact, for developing countries, the population growth slowdown in the late twentieth century was accompanied by an economic growth slowdown:

[P]opulation growth has slowed down by about 0.5 percentage point from the 60s to the 90s in the Third World. But, as we have seen, Third World per capita growth slowed down over the same period. Moreover, there is no association across countries between success at slowing population growth and success at raising per capita growth.

This is a terrible track record. Despite coercive policies that harmed millions of individuals, the societal impact was negligible for both the intended purposes: no reduction in population growth and no clear improvement in economic growth resulted from these programs. While China and India gather the most attention for the sheer size of their operations, campaigns of secretive, coercive, and unnecessary sterilizations are also recorded in Mexico, Chile, Bolivia, Peru, Indonesia, Bangladesh, Namibia, Canada and the United States, and as recently as this year.

The rural Indians understood their own lives in a way that would-be developers simply didn't. Economic prosperity cannot be engineered from the top down by changing certain parameters, as if the economy is simply one big equation.

Mahmood Mamdani's work helps to demonstrate the folly of central planning in the face of the complex realities of local communities. His son, New York City mayor Zohran Mamdani, should bring that same humility to his plans for the rest of the economy.

Peter Jacobsen teaches economics and holds the position of Gwartney Professor of Economics. He received his graduate education George Mason University. His research interest is at the intersection of political economy, development economics, and population economics.

Tyler Durden Thu, 10/01/2026 - 14:25