Usually blab about economics, finance, markets, business. Comment on news, int'l relations, CH, civil liberties, good governance - corporate & political.
Plano, TX
Joined January 2010
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Much fraud in the US has one thing in common: a bank account receiving the funds & quickly moving it on. This fraud would not occur without those accounts & knowing the banks involved will simply shrug & not release any information without a warrant. @EverettStern1
Dear Secretary Bessent @SecScottBessent,
My name is Everett Stern. In 2010 I was a compliance officer at @HSBC. From a back office in New Castle, Delaware, I watched billions of dollars move to drug cartels, sanctioned regimes, and terrorist organizations. The enemies of the United States. I documented it, I escalated it, and when the bank would not act, I took it to the @FBI, the @CIA, and eventually the @SECGov.
The result was a $1.92 billion settlement. At the time, it was one of the largest in American history. It was also about five weeks of the bank’s profit. Not one banker was charged. Not one went to prison.
I paid a different price. I lost my career, my savings, and my place in the industry I had trained for. I was blacklisted. Every door in American finance closed at once. I slept on a camping cot in a 300 square foot apartment because I could not afford a bed, and I waited tables at @PFChangs to eat. I tell you this not for sympathy, but so you understand that I know exactly what it costs to do the right thing in American finance, and exactly how little the system does in return.
I made that sacrifice because I believed it would change something.
Yesterday, your department fined @BankofAmerica $1.2 billion for failing to report more than $5 billion in suspicious transactions, some of it tied by your own findings to Chinese laundering networks, narcotics, and the southwest border, alongside 475 apparent sanctions violations touching Russia, Iran, and global terrorism. The bank admitted it willfully violated the Bank Secrecy Act.
Fourteen years after HSBC. A bank with “America” in its name. And once again, not one individual charged.
Secretary Bessent, I want to say plainly what I believe you already know. The fines are not working.
A fine is paid by shareholders, absorbed by the balance sheet, and forgotten by the next earnings call. Bank of America reported earnings this morning. Nobody who set the alert thresholds, nobody who decided the 2024 cease and desist could wait, nobody who chose the backlog over the law will lose a single thing they value. Their lives are untouched. That is the entire reason the behavior repeats.
This is money laundering. This is blood money. Money that reaches a cartel buys fentanyl that kills Americans. Money that reaches a terrorist organization buys the next attack. This country has fought a war on drugs and a war on terror for decades, at enormous cost in lives and treasure, and all the while we have allowed the financing to flow through institutions we charter and regulate. Cut off the money and we win. We have never seriously tried.
There is also a question of equal justice that I cannot let go.
Before I walked into the FBI building to report HSBC, I stopped in front of the Great Seal on the wall and read the words engraved beneath it: “Justice is the defense of our liberty.” I believed that. I still want to. But every day in this country, people go to prison for crimes that are nothing next to moving money for the people who want Americans dead. A suit, a title, and a corporate badge should not be a shield from the consequences that apply to everyone else. If a street dealer goes to prison for what he sells, the banker who moved the cartel’s money should be standing next to him.
I also want to raise something that is rarely said in these conversations. Why has no one inside Bank of America come forward the way I did? The answer is that everyone in American banking knows what happened to me, and to the whistleblowers who came after. The last person who spoke up is the only policy anyone believes. That is a culture problem, and it starts with leadership, in the banks and in the agencies that regulate them.
This is not a political issue. It has spanned administrations of both parties. It is a national security issue, and I am asking you to treat it as one.
Three things would change the math overnight.
Refer individuals for criminal prosecution. Not the analyst in the queue. The executives who set the thresholds and chose the risk. One banker in handcuffs would do more than every fine in Treasury’s history combined.
End “too big to jail.” An institution cannot be too big to fail and too big to jail at the same time. If it is the first, it must be held to a higher standard, not a lower one.
And if Bank of America will not act as America’s bank, review its charter. A national charter is a privilege granted on behalf of the American people. It should be conditioned on not moving money for the people trying to kill them.
Secretary Bessent, you said yesterday that these actions send a clear message that even the biggest institutions are not above the law. With respect, the institution was never the problem. The people inside it are above the law, and they know it. Until that changes, I will keep writing letters like this one, and the next bank will keep paying the next fine.
I gave up everything I had to stop this. I am asking you to use the power you have to finish it.
Respectfully,
Everett A. Stern
HSBC Whistleblower
Founder and Intelligence Director, Tactical Rabbit
John Innes retweeted
Q: Why can't the Fed reach its 2% inflation target? A: Because we are running a $2 trillion budget deficit.
In Zurich for August 1st last weekend. Somewhere there is a joke about sound monetary policy, but it escapes me.
This is great. To the extent benefits flow to state education or general funds, better to have players from jurisdictions that don’t benefit.
Cheese SPV launches and now stories of reduced supply. 🤷
🔊Extreme heat in Europe is threatening Italy's Parmesan heartland. Learn how it could drive down the production and quality of cheese on the Reuters World News podcast reut.rs/3RlqHTC
John Innes retweeted
Yes, that just shows how late he was. He should have tapered QE 18 months before he did and been hiking a year before he did. Jerome Powell's classic "Fool in the Shower" monetary policy of waiting too long to act and then acting too aggressively to make up for it led to a 40 year high in inflation, a series of bank failures, bailouts and added to the moral hazard now endemic to our financial system. His recklessly inflationary policies undermined what little faith there was left in the distribution of wealth by turning capitalism further into a lottery and pricing a generation out of the housing market. The hagiographies of him are generally just a reflection of the short sighted greed of their authors who think they the stock market is the ultimate barometer of national accomplishment.
Speaking of predictability, an incumbent business advocating for regulation.
While we don’t agree with everything in this bill, Kalshi strongly supports it.
Prediction markets have gone mainstream, from a niche corner of the internet, to a 500B asset class.
It’s time to strengthen the rules to make sure the markets are fair and transparent. This bill is a comprehensive and thoughtful approach to doing that.
Thank you @SenGillibrand and @SenMcCormickPA for taking the lead to protect consumers and promote responsible innovation.
John Innes retweeted
Claude knows! —>
The Lump of Labor Fallacy and Why AGI Unemployment Panic Is Economically Illiterate
Let me lay this out with full rigor, because this argument deserves to be prosecuted completely rather than waved away with a sound bite.
I. What the Lump of Labor Fallacy Actually Is
The lump of labor fallacy is the assumption that there exists a fixed, finite quantity of work in an economy — a lump — such that if a machine (or an immigrant, or a woman entering the workforce) does some of it, there is necessarily less left for human workers to do. It treats employment as a zero-sum pie.
The fallacy was named and formalized in the early 20th century but the error it describes is far older. It animated the Luddite riots of 1811–1816, where English textile workers destroyed power looms convinced that the machines would steal their jobs permanently. It drove opposition to the spinning jenny, the cotton gin, the mechanical reaper, the steam engine, the telegraph, the railroad, the automobile assembly line, the personal computer, and every other major labor-displacing technology in the history of industrial civilization.
Every single time, the catastrophists were wrong. Not partially wrong. Structurally, fundamentally, categorically wrong — because they misunderstood the nature of economic production itself.
The reason the fixed-pie assumption fails is this: demand is not fixed. Work generates income. Income generates demand for goods and services. Demand for goods and services generates new categories of work. This is an engine, not a reservoir. When you drain some of the reservoir with a machine, the engine speeds up and refills it — and often refills it past its previous level.
II. The Classical Economic Mechanism That Destroys the Fallacy
To understand why the lump-of-labor assumption is wrong about AGI, you need to understand the precise mechanism by which technological unemployment resolves itself. There are four distinct channels, all operating simultaneously:
Channel 1: The Productivity-Demand Feedback Loop (Say’s Law, Modified)
When a technology increases the productivity of labor or replaces labor entirely in a given task, it lowers the cost of producing whatever that task was part of. Lower production costs mean either:
∙Lower prices for consumers (real purchasing power rises), or
∙Higher profits for producers (which get reinvested, distributed as dividends, or spent as wages for other workers), or
∙Both.
Either way, aggregate real income in the economy rises. That additional real income does not evaporate. It gets spent on something — including goods and services that didn’t previously exist or were previously too expensive to consume at scale. That spending creates demand. That demand creates jobs.
This is not a theoretical conjecture. The average American in 1900 spent roughly 43% of their income on food. Today it’s around 10%. Agricultural mechanization didn’t produce a nation of starving unemployed farm laborers — it freed up 33% of household income to be spent on automobiles, television sets, air conditioning, healthcare, education, travel, smartphones, and streaming services, most of which didn’t exist as industries in 1900. The workers who left farms went to factories, then to offices, then to service industries, then to information industries. The economy didn’t run out of work. It metamorphosed.
AI employment doomerism is rooted in the socialist fallacy of lump of labor. It is wrong now for the same reason it’s always been wrong. More people really should try to learn about this. The AI will teach you about it if you ask!
(Hinton is a socialist. youtube.com/shorts/R-b8RR60a…)
John Innes retweeted
The Great Depression wasn't capitalism's failure—it was the government's masterpiece of economic destruction, and Murray Rothbard proved it beyond any doubt.
The crash began with the Federal Reserve's massive credit expansion during the 1920s, pumping artificial money into the economy and creating the mother of all asset bubbles. Interest rates were held artificially low, encouraging malinvestment on an unprecedented scale. When reality finally hit in 1929, the correction should have been swift and painful but brief—exactly what happened in the forgotten depression of 1920-21.
But Herbert Hoover had other plans. This supposed "laissez-faire" president immediately launched the biggest peacetime government intervention in American history up to that point. Wage controls, massive public works projects, agricultural subsidies, and direct interference with the natural liquidation process. Sound familiar? Roosevelt simply continued and expanded Hoover's disastrous policies.
British pedophile John Maynard Keynes later swooped in to provide intellectual cover for this catastrophe, claiming that government spending and intervention had *saved* capitalism rather than nearly destroyed it. The Keynesian myth persists: that "animal spirits" and mysterious psychological factors caused the Depression, requiring wise technocrats to manage aggregate demand.
Complete nonsense. Rothbard showed us the truth—central bank credit expansion created unsustainable booms, and government intervention transformed a necessary correction into a decade-long nightmare.
The Austrian theory of the business cycle explains it all: artificially cheap money distorts price signals, creates malinvestment, and when the music stops, only liquidation can clear the wreckage. Government "solutions" just pile more wreckage on top.
John Innes retweeted
Mortgage rates have fallen to 5.98%, the first sub-6% level since September 2022.
Outside the zero-rate era, today’s rates remain historically moderate and well below the double-digit levels seen in past decades.
Kids these days complaining about high interest rates have no idea how high they can go.
If he can’t find uses because they have too much cash, return it to shareholders as a special dividend. Let shareholders invest in other opportunities. This capital could be efficiently applied instead of sitting there as a bad asset, as Warren said.
This quoted post is unavailable.
Is having credit via a credit card purchasing power? Comment on @FaceTheNation by Gary Cohn that capping card interest rates would reduce purchasing power. Always viewed credit cards as just time shifting purchasing power with a net decrease long-term if interest is paid.
Lower regulations and cost of public listings. Corporates try to achieve lowest cost of capital, but look beyond simply the rate at all associated costs. Let people take and bear risks in capital markets, because they are going to speculate anyways.
Thanks for the thought-provoking piece.
My main critique is that you are overemphasizing flashy but low probability events like “left-handed bacteria,” while merely giving lip service to the risk of extreme economic concentration of power, which is very real and materializing as we speak.
Anthropic is reportedly raising funds at a $350B valuation, and the wealth created thus far has been concentrated into a few hundred (perhaps more like dozens) high net worth individuals / institutions. It’s looking increasingly likely to me that none of the leading AI labs will IPO until they reach valuations in the trillions, at which point retail investors will finally be able to get shares. In order for retail to get a 100x return on these investments, which was achievable for Apple, Microsoft, Amazon, and Google, the valuations of the AI labs will need to reach hundreds of trillions of dollars, meaning it’s likely too late for a more equitable redistribution of wealth.
Simply put, you are currently exacerbating the problem. The consequences of this are that voters may take matters into their own hands and push for either or both 1) more aggressive / nonsensical forms of redistribution — the CA Founders’ Tax is just the beginning or 2) a drastic knee-capping of the AI industry in America, which make the CCP dominance scenario more likely.
The solution is to enable retail ownership now, increasing the number of Americans with economic exposure to Anthropic and other AI labs from hundreds of people to millions.
Independents will go in, take the sovereign and other risks, and make billions. The majors will then buy them.
What’s the old saying about going against conventional wisdom?
