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David B. Collum is a Professor of Chemistry at Cornell University. His 2019 year in review is another gem.

Collum has been emailing me since at least 2012. In one previous email Collum wrote "I must confess that when you were the lone deflationist, I thought you were nuts."

Perhaps he was right about me being nuts and his only mistake was linking those two ideas together.

Another Beast

This year he emails ...

Hello Mish

Here it is again: the beast. You get a cameo. I enjoy the exchanges immensely. This year was particularly difficult. Somehow the finance seemed to be secondary—sort of a pre-game activity—whereas social change seemed very real.

Collum's thoughts are expressed in two parts, each very long, on Chris Martenson's Peak Prosperity site.

I provide a few excerpts below, but my snips do not do his articles justice.

I highly recommend reading both parts.

Part 1 Year in Review

Adam Taggart at Peak Prosperity writes, If it happened this year & mattered, it's covered here: Dave Collum: 2019 Year in Review (Part 1).

I hope David comes to his senses.” Nassim Taleb (@nntaleb), best-selling author and Professor at NYU

It is that time of year again when I sit down and, in a frenzied stream of subconsciousness, bang out my view of the world. It’s my 11th chronicling of human folly and anthropogenic global idiocy (AGI). It’s like when Forest Gump jogs: I start writing, go on too long, and then just stop. Forty years of writing about organic chemistry has taught me that you do not understand something till you finish writing about it. Constrained by time—you can’t write an annual synopsis in May—I have made sure to sacrifice quality not length.

That's Collum's introduction.

In part 1 he writes about Investing, Almond-Eyed Aliens and Other Conspiracy Theories, Gold, Bitcoin, Modern Monetary Theory, the Fed, Repo-Madness, Share Buybacks, and Climate Change.


I like the way, Collum quotes people, sometimes in praise and sometime mocking them.

  • “MMT has all the markings of being a gold-bug’s dream come true—and a true nightmare for people living on fixed-incomes.” Grant Williams (@ttmygh)
  • “The MMT people aren’t really Keynesians. They’re a blend of Keynesian and Marxist.” Cullen Roche (@cullenroche), Orcam Group and Pragmatic Capitalist blog
  • “The speed with which young activists on both left and right are migrating toward MMT is going to have a profound effect on US politics in the 2020s and 2030s.” James Wilson, New York Times
  • “I reject the idea that MMT is about using taxes to fight inflation. That is a mischaracterization of everything we’ve written, but people say it all the time.” Stephanie Kelton, Professor at SUNY Stonybrook, MMT activist, and Bernie Sanders' economic advisor.
  • “The govt pays the tab rather than the rest of us." Stephanie Kelton

Collum's Summary of MMT

They are going to use and dramatically expand the government to manage the subtleties of the economy including the growth rate, the quality and quantity of jobs, the supply-demand curve, savings, which industries to emphasize, inflation, and corporate profits, all while solving a perceived global warming crisis and making sure that nobody acquires more than the appropriate level of wealth.

Big Digs, California high-speed rail systems, Bridges to Nowhere, and Cash for Clunkers will use temp workers who will then be “disemployed” when the economy is going well.

This will all be overseen by a group of 535 legislators that includes the likes of AOC, Maxine Waters, Adam Schiff, and Hank “The Guamster” Johnson.

Meanwhile, that albeit imperfect control of the money supply by lenders and borrowers dickering over the price and quantities of loans will be replaced by centralized decisions exclusively at the Fed and Treasury with guidance by committees of luminaries.

The role of the private sector or how it is supposed to function under such a regime is unclear to me.

That's a brilliant synopsis of MMT.

Enlightening Discussion and One Mistake

MMTers have been excellent at explaining modern banking for the masses. Before moving on to some gripes on a few of those cringeworthy tenets of MMT, I should note that one of the silver linings of the MMT debate is that it has been enlightening. Proponents of MMT have done yeoman’s work delineating the process by which money is created in the current system and how the banking system and central banks have no shortage of hucksters and frauds. Despite explicit statements by the Bank of England, 84% of British lawmakers don’t know that banks create money when they lend. The notion that you lend against existing reserves rather than lend the actual reserves is critical.

Mish Comment: Collum is correct in the above paragraph but flat out wrong in the next paragraph as I explain shortly. It's not clear to me whether Collum is quoting someone or making an incorrect statement himself, but either way, Collum's next paragraph merits correction.

Don't let one correction ruin an otherwise brilliant article.

Since you are allowed approximately a 10:1 leverage ratio, the tenfold increase in freshly created money finds its way into the reserves of other banks (the banking system), which now can serve as reserves and fuel the virtuous cycle of leverage, at least until the next credit contraction, economic crisis, and reset.

Money Multiplier Theory is Wrong

I agree with the notion that banks lend money into existence. But the Money Multiplier theory is wrong.

Banks do not lend against reserves or deposits. Banks lend when they believe they have creditworthy borrowers, provided the lenders are not capital impaired.

BIS Statement

Please consider BIS Working Papers #292 Unconventional monetary policies: an appraisal, page 19.

  1. "The level of reserves hardly figures in banks’ lending decisions. The amount of credit outstanding is determined by banks’ willingness to supply loans, based on perceived risk-return trade-offs, and by the demand for those loans. The aggregate availability of bank reserves does not constrain the expansion directly."
  2. "By the same token, an expansion of reserves in excess of any requirement does not give banks more resources to expand lending. It only changes the composition of liquid assets of the banking system."

There is no money multiplier.

Notice that I said "Banks lend when they believe they have creditworthy borrowers."

By "creditworthy" I mean banks "believe" the loan will be paid back or rising asset prices will take care of the loan if not. The key word is "believe".

In the housing bubble, banks believed two falsehoods: 1: People would not walk away from their homes, and 2: rising home values would protect the banks if lenders defaulted.

The lenders did not give a damn if people blew up. Indeed, many lenders knowingly made the loans that would throw people under the bus.

Why? They mistakenly believed rising asset prices would bail them out.

One word: Greed.

And of course the Fed was willing to bail out the banks.

Climate Change

  • “Nobody on the planet—not one person—knows what will happen to the World’s climate and ecosystem 50 years from now. We are all guessing, some more than others.” Me [David Collum]
  • “Vintners in France haven’t seen such a succession of hot weather and dry harvest since the 14th century, during a time called “the Black Death.” Bloomberg news, inadvertently noting it was hot 600 years ago.
  • We’ve got to ride the global-warming issue. Even if the theory of global warming is wrong, we will be doing the right things in terms of economic policy and environmental policy.” Tim Wirth, Senator, chair of Clinton-Gore Campaign, and UN official
  • “…one has to free oneself from the illusion that international climate policy is environmental policy. Instead, climate change policy is about how we redistribute de facto the world’s wealth…” Ottmar Edenhofer, IPCC official speaking in November 2010

Projected Sea Level Rise

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Collum's Thoughts, Emphasis Mine

The internet is loaded with projections like this one above showing an exponential rise in sea level. Looks kinda scary but one wonders about the origins of that exponential curvature. I stare at plots for a living and can’t grasp what physical model would justify putting an exponential into that function. As we shall see below, the data does not show such exponential growth. Quite to the contrary.

The sea level has been rising for 14,000 years following the last glaciation. At the current rate, by the year 2100 sea levels will have risen 10 inches. OMFG! Can you guess how much they rose in the 20th century? Yup, 10 inches. Remember all those catastrophes? Me neither. Over the last 8,000 years, sea levels have risen on average 10 inches per century.

Failed Projections

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  • “If you’re not a billionaire in the next 10 years, it’s your own fault.” 20-year-old bitcoin guru
  • “The blockchain is real, you can have cryptodollars in yen and stuff like that.” Jamie Dimon, CEO of JPMorgan

Collum's Thoughts on Bitcoin

A poll shows 19% of crypto investors have been hacked and 15% experienced fraud.2 I’m not sure about the Venn diagram of those two groups. That is all just shenanigans compared to what the bankers do to steal your money, so it is hard to get too worked up over them.

The risk, in my opinion, is when the banks and sovereign states begin to sense a turf war. The IRS is starting to bear down on the hodlers, matching up tax returns with data from exchanges. Paying sales and capital gains taxes takes the fun out of buying a pizza.

Elitists like Mark Carney, Mohammad El Erian, and Christine Lagarde have been chatting about a central importance of crytocurrencies. I suspect they do not intend to use somebody else’s, however.

The dark interpretations include a move to cashless society and anticipation of a global reset, which is a euphemism for monetary Marxism and a replacement of the dollar as the reserve currency. A multinational, intergovernmental group representing 37 countries has recommended regulating digital currencies.

The hodlers are shaking their fists defiantly…like the citizens of Hong Kong. You can keep your anonymity if you want, provided you give up your name, account number, and physical address. Speaking of which, Kyle Bass tells us that Bitcoin started its big downward trek when China clamped down on the hodlers to stem fleeing capital. Of course, we would never do that, would we?

Jerome Powell sent a letter to several Congressman about risks of a private company creating a widely used cryptocurrency. The Fed has already implemented its own digital currency called “the dollar.” Meanwhile, Visa, Mastercard, and PayPal pulled out of Facebook’s crypto consortium after U.S. and European government officials provided an attitude adjustment. Senator Sherrod Brown of the banking committee noted that “We cannot allow Facebook to run a risky new cryptocurrency out of a Swiss bank account without oversight.”

I agree with Collum on Bitcoin and have written many similar ideas.

QE and Repo Madness

  • “I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis…in no sense is this QE…it’s not QE, did I mention that?” Jerome Powell
  • “Remember this is not QE4, as the Fed has repeatedly assured us. Tell that to the equity market…We have heard these Fed denials before…QE is totally discredited…the damage QE did in terms of wealth inequality compounded years of painful income inequality.” Albert Edwards (@albertedwards99), Global Strategist Societe’ General
  • “Powell was supposed to be different.” Jeff Gundach (@TruthGundlach)
  • “Yeah. I fell for it too.” Grant Williams (@ttmygh)​
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​We have strayed profoundly from honest price discovery and free market capitalism in the money markets. The Fed has completely lost its fear—maybe even its institutional understanding—of inflation. They haven’t always been this big for their britches. They didn’t always think they could control markets and the economy like King Canute.

Part 2 Year in Review

There is much more in Part 1 and I advise you to give it a further look.

Next, please consider Dave Collum: 2019 Year in Review (Part 2).

Part two discusses the Jeffrey Epstein Affair, Civil Liberties, Political Correctness, Social Justice, and of course, Gretta.

Jeffrey Epstein

  • “I’m at a loss to understand or explain Mr. Epstein’s lifestyle.” Prince Andrew on the rape lifestyle
  • “Dear Bureau of Prisons: Please get Jeffrey Epstein to a super Max prison pronto, or the people who want him dead will make sure we never know the truth. ACT NOW!” Ann Coulter (@AnnCoulter)
  • “Jeffrey Epstein sexually abused me for years…Finish what you started…We are survivors and the pursuit of justice should not abate.” Sarah Ransome, Epstein rape victim and sex slave, to prosecutors in court
  • “I was told Epstein ‘belonged to intelligence’ and to leave it alone.” Alex Acosta, judge in Epstein’s 2005 conviction in Florida and future Trump Labor Secretary, explaining the case sealing.

Covington Boys Maga Saga

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  • “The face-off between Catholic school teens and Native American elder is a reminder of 500 years of conflict.” Washington Post
  • “Why Trump’s MAGA hats have become a potent symbol of racism.” CNN Headline
  • “We condemn the actions of the Covington Catholic High School students towards Nathan Phillips specifically, and Native Americans in general, Jan. 18, after the March for Life, in Washington, D.C.” The Diocese of Covington, being less than Christian
    Here is the Paul Harvey version of the story in a nutshell: The kids were waiting for a bus; they could not just walk away. They were getting harassed by hyper-racially motivated epithets for an hour straight by a group of black Israelites. (Where was the left when those guys are bloviating or can you no longer criticize people of…never mind.) The Israelites threatened the kids with violence, goading them to retaliate. They called the kids “white incest babies” and “faggots”, eliciting boos from the students. The kids asked permission to chant the school’s pep song and got it. Mr. Nathan Phillips—a self-appointed Chief of his group—is a professional activist and bullshit artist of a higher order. Phillips was caught on tape announcing he would bait the kids.
    The kid’s name is Nick Sandmann. He looks like “The Beave”. Imagine what was going through his head while Phillips was in his face.
    In the aftermath, four licensed investigators spent 240 hours going through all available videos, agreeing with Robby Soave by finding no fault by the kids or chaperones: they stuck it like Russian gymnasts. Phillips, on the other hand, was AWOL. He never served in Vietnam, went AWOL on multiple occasions, and was discharged early. The Lakota People’s Law Project carried out an independent investigation and came to a more guarded conclusion: they circled the wagons. Many detractors started deleting their tweets; some found the character to publicly apologize for their rush to judgement, but not all. Reza left his hateful tweets. The debate about the wretched kids in MAGA hats raged on for days. Apparently, wearing a MAGA hat is an unforgivable sin for some.


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The climate pedophrasts found what they thought was the perfect prop—a young girl “on the spectrum” named Greta Thunberg—who, by her own admission, should be picking marshmallows from her Lucky Charms and heading off to school. Her vapid speeches add absolutely nothing of substance to the debate. I suspect she even has to fake her sneers because of her high function whatever. She is a Child of the Corn—a weaponized Shirley Temple—straight out of 17th century Salem, MA. In a ridiculous media stunt Greta crossed the Atlantic in a zero-emissions sailing boat, fitted with a diesel engine and made from carbon fiber that required 14 times more energy to produce than a conventional boat.

Six crew members had to take trans-Atlantic flights. She gave the most cringe-worthy speech to the UN, chastising the audience for taking air flights to the same meeting while the fawning crowds of nitwits did the baby shark dance. After a snafu got her stuck on the wrong side of the pond, a shadowy cabal of handlers realized they had created a big optics problem: How do they get her back across the Atlantic without emitting carbon?

How dare You!

Gretta took the world by storm, so much so that she became Time Magazine's Person of the Year.

In response I Tweeted ...

Peak Gretta

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Believe the cause or not.

I think the notion that changes in CO2 explain what's happening is potty. I stand with those who think changes in solar activity are the controlling force.

Regardless, blaming nearly everything that going on in an amazingly complex system evolving over hundreds millions of years, on a single variable (man-made CO2), seems patently absurd.

Collum's comments ring a bell for me.

Meanwhile, Gretta, AOC and others are now promoting total nonsense with comments about the world ending in 12 years or whatever.

AOC has tried to walk them back.

The whole discussion is of course now a religious one. Despite false prediction,after false prediction, after false prediction, people believe.


Collum explains

In 2015, 30 Nobel laureates got huge media attention by signing a letter asking for immediate action on climate change while it went unnoticed that 35 other Nobel laureates sitting in the room did not sign.

The most popular of all statistics declares that “97% of climate scientists believe anthropogenic global warming (AGW) is a significant problem.” A colleague and climate change activist at Cornell recently claimed in a debate at Cornell, “that 97% number is not even debatable.”

He’s right; it’s complete garbage. Over 11,000 abstracts from papers supposedly on climate change were culled down to 79 papers, of which 77 said climate change was a problem. The one chard of truth: 77 of 79 is about 97%.

Attention Grabbing

Doom sells. The world ends in 12 years is an attention grabber.

Try making a good headline out Collum's climate thesis "No one knows".

More importantly, parents are willing to politicize and use their kids as pawns in some game they do not even understand.

Think about the moral implications of that obvious fact.


Collum wrote a great pair of articles, sure to offend some, especially the climate fearmongers and Bitcoin supporters.

But read them anyway. You will probably learn something.

Mike "Mish" Shedlock