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Roundup of the Week's Top Stories in Economics and Freedom
Read the article "AI Lays off One-Fifth of Facebook" at https://www.profstonge.com/
Visit our Sponsor: Monetary MetalsWelcome back, I'm Peter Seinoffs. This is a weekly roundup of my daily videos on the
economy and freedom where I cut through the BS and lay out with the gas-lating clouds
pulled out of their hats this week and what is coming next.
The deficit just topped one trillion dollars and we are not even half through the fiscal
year. Congratulations, Congress. You earned it. Well, yes, stole it.
This puts us on track to a two trillion dollar deficit that's not including the war. To
be fair, it is 140 billion less than last year. Sadly, that is not because Congress
spent less. Actually, height spending, despite applauding like trained seals for doge,
no, the deficit fell because taxes rose by 200 billion. It's like bragging you paid off
your credit card by stealing it from your girlfriend. The numbers come from Treasury who
reported they've already spent 3.1 trillion just five months into the fiscal year,
of which just 2.1 trillion was taxes. The rest was borrowed to the tune of $7 billion per day.
Breaking it down, defense spending jumped 14 billion. Again, this is before the war.
Interest jumped 31 billion where borrowing to pay the interest,
non-defense discretionary did fall entirely driven by defunding the Department of Education.
But that was swamped by automatic increases in entitlements, so Medicaid,
Medicare, Social Security, which Congress puts on autopilot so they don't actually have to
sell their hands voting for national bankruptcy. Meanwhile, taxes jumped even more with income tax
jumping a hundred billion, payroll tax jumping 34, and tariffs of worse jumping a 109 billion.
Now, argue tariffs are worth it if they replace income tax, which hits Americans much harder,
but that's not what Congress did. They took a buck nine and tariffs on top of an additional
133 of income and payroll. But the best you could say is at least the economy's growing fast enough
to keep up with the debt thanks to Trump extending tax cuts, which boost investment,
along with cutting red tape and extorting foreign countries into building factories in America.
But in debt terms, Congress is canceling all that with additional spending.
Note all of this is before the war that the Pentagon just admitted is costing nearly $2 billion per day
that $60 billion per month. For perspective, $60 billion could build on our factories to employ
60,000 Americans, and that would be every month. Prediction market calcium is actually pegging
it closer to $3 billion a day, not all war spending is counted by the Pentagon. The problem is if oil
sets off a recession, that historically recessions blow out the deficit because tax revenue
collapses and welfare payments soar. If we average every recession going back to 1981,
the average deficit swing is 6% of GDP, which is $2 trillion today. In other words, Congress is
planning a $1.9 trillion deficit, a long war could push that to two and a half. A recession puts
it at $4.5 trillion, which is 15% of GDP, also known as Banana Republic territory.
So as said, while the world is focused on Iran and oil prices, Congress lurks in the shadows
marching us off the fiscal cliff. Doge was the opportunity of a lifetime, and it bounced off the
swamp like a rubber ball off an oil tanker. Perhaps someday Republican voters will get angry
enough to vote the bums out until then you might want to buy some gold, silver, or bitcoin.
In case you haven't filled the tank in a while, gas prices went up a lot. How can Trump maybe even
our useless Congress get them back down? Since Trump started rocking the Casbah a gallon of gas
went from $2.98 to now $3.70, according to AAA. That's actually a lot less than oil,
which spiked about 50%, which is common since the gasoline supply chain runs on a lag.
But it means gas is trending up. Prediction market calcium thinks we hit $4.30 in the next two weeks.
A gas at $4.30 means the average American household would be spending $300 a month filling up,
so how to get it down? Now the obvious one is a short war, either win the war or declare victory
and go home. Prediction markets are currently 50-50 on the war ending by May, May 31st. As in 50%,
it keeps going into the summer. Other than that, there's a lot Trump's already done to get gas
prices down like providing insurance or escorts for oil tankers pretending not to notice sanctioned
Russian oil going to India and releasing oil from the Strategic Trolling Reserve, which
thanks to Drill Baby Drill covers around about 40 years of Middle East oil, even though Biden
drained it by a third to buy his 2022 midterm elections. Still, all that is already baked into
prices you need more. That we could drill more, the US could probably raise oil production by almost
a third if permits environmental reviews and offshore drilling were freed up. But all that
takes years to build. So what's fast? And the single fastest is waving the 18 cent federal
tax on gasoline, maybe even the state taxes that average number 33 cents up to 70 cents in California
and Illinois. Trump can also immediately push three deregulations that add up to another 20 or
25 cents. So wave ethanol blending, which is welfare for corn farmers, allow winter,
grade fuel, which is cheap, but the climate fairies don't like it, and get rid of an abomination
dating from 1920s, the Crony Jones Act, which bans foreign ships and crews from domestic shipping,
is welfare for the minuscule but donor-heavy shipbuilding industry and it drives up prices in
normal times, it's why peanut butter costs 12 bucks in Hawaii, and it's also why it's cheaper to
ship a couch from Shanghai than Ohio. But it is catastrophic when you've got an oil shortage
and can't use 99.5% of these ships in existence. Together, these might drop gas prices 20 cents closer
to 25 of the East Coast where foreign tankers make a bigger impact. Finally, the nuclear option
and oil export ban. China and Thailand have already done this. India and South Korea are considering
it. This was interesting because the US is one of the largest oil exporters in the world. So a
ban would drop domestic prices, potentially by 10 to 25%, so that's up to a dollar cheaper on gas,
but it would also drive up prices in Europe and Asia by almost as much. That would accelerate
shortages in Asia and it could spark a crisis in Europe which is already facing in embargo from
Russia. They'd be down to pixie farts, also known as windmills. So it's next oil prices will
stay high until the Iran war ends. But every crisis is an opportunity to permanently lower prices,
whether it's gas taxes, drilling, ethanol, or the crony Jones Act.
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Job openings jumped 400,000 last month, which is annualized five million new jobs
yearning for a worker. So much for the collapsing job market CNN promised was the largest
increase in 2024, and it's odd since just last month, the BLS reported a catastrophic drop
of 92,000 jobs. So what is going on? Last week, the notorious Bureau of Labor Statistics released
their so-called Joltz numbers, job openings, and labor turnover, which tallies the number
of job openings along with hires quits and layoffs. Hires rose a smidge about 20,000 calling
into question. BLS's previous estimate of 92,000 lost, meanwhile layoffs actually fell,
according to the BLS by 35,000, so much for the AI jobs Armageddon that is going to buy us the UBI.
The all-important quick rate actually rose. This is good because if more people quit their jobs,
it means they think jobs are easy to find. You get worried when nobody's quitting.
And interestingly, quick rates are highest in blue collar jobs like construction and trades,
and they're worst in high pay white collar jobs. I've been warning all year this is what AI is
doing. It's helping blue collars and it's gutting the cubicle jobs. And then the big one from Joltz
job openings, which rose 400,000 on the month to nearly 7 million unfilled jobs in the country.
Breaking it down by sector, one of the biggest was finance and insurance, which surged
170,000 openings on the month. They almost doubled openings. As weird since finance is supposed
to be ground zero for AI replacing jobs along with entry-level tech, but there's a simple explanation
financial stress creates finance jobs. People to restructure loans, analyze credit risk,
handle bankruptcies and defaults, figure out which edge fund just vaporized on a dog powered coin.
And the poster child for that stress is the $1.8 trillion shadow banking system private credit
that has apparently gone wild with risk and is now announcing defaults and lock-ins nearly daily.
Lock-in is where you can't take your money out of the fund. It's not yet 2008 level,
but it is looking ominous and it's apparently splendid for financial hiring.
The next biggest jump was retail trade and transportation openings jumped to 130,000 in retail alone.
The reason here is the tariffs, which ran down inventories in 2025. They were dodging the tariffs
and now companies have to restock. Then the third big jump, leisure and hospitality. This actually
never recovered from COVID openings are still down nearly half a million from 2019,
so it's been slogging back month by month and it matters because it is enormous. So restaurants
alone employ 12 million Americans, larger than manufacturing, and it's also a safety net job.
Whatever happens, you can always bartend. Moreover, these jobs are immune to AI. It'll be a while
before AI can clean your hotel room or serve that drink. Now, it wasn't all rosy. The biggest
drop in openings was professional and business services' cubicle jobs. These collapse by 200,000
on the month. They're down 300,000 on 2026. This is ground zero for AI, which is replacing
consultants, marketing and corporate services, and with tech contractors, H1Bs. So a sex
The main risk to jobs this year is the war, specifically oil prices. But zooming out,
American jobs are splitting in two with white collars hurting but blue collars hashing in.
This will drive a tsunami of AI dune porn since it's those white-colored journalists,
professors and analysts who write the dune porn. We'll see how long the war goes, but for now,
we are growing jobs faster than Americans can fill them.
Canada just lost 84,000 jobs in a single month in US terms that is almost 800,000 jobs in a month.
That goes on top of losing 25,000 jobs in the previous month's January, which is another quarter
million in US terms. Of course, 96% were private sector jobs over the two months,
government workers are doing just fine. Meanwhile, new study found over half of Canadians have
to borrow money for groceries, including by now pay later and pay day loans. It also found
over half of Canadians are skipping meals to make ends meet. That is partly because they don't
have jobs and partly because food inflation is now the highest. In the G7 at 7.3% year-on-year,
beef is up 17% coffees, up 30% timmy's is a luxury at this point. So incomes are West Virginia,
home prices are San Francisco and now Canadian jobs and groceries are going Venezuela.
Broadcaster CBT sums it up, quote, it feels like an empty pit of despair. But don't worry,
assisted suicide is now same day in Canada, perfect if you are hungry and in a rush.
The numbers come from Stats Canada, report 109,000 full-time jobs were torched in just two months.
Outside COVID, that is the most since the 2008 crisis. This send unemployment to 6.7%,
which is 50% higher than the US. Canadian youth unemployment hit 14.1%, which is 1 in 7.
Keep in mind, that's just people actively looking for jobs. It does not help discouraged workers
who have given up. That might bring it to 1 in 4, young Canadians. So what's driving it?
Well, part of it was importing 4,000,000 third-world migrants. That's about 40 million US
terms who turn Canada into a one-party communist state while liberal state and raised welfare costs
and taxes to the point Canadians can only spend half their paycheck. But the other part was Canada's
globalist tool, Mark Harnie going elbows up with Trump. Meaning let's fight, playing the
nationalist card instead of negotiating to reduce Canada's trade barriers that shut out American goods.
To give a flavor, Canada puts 160% tariffs on American eggs,
200% on chicken, 298% on American milk, cheese, and butter. They block American banks while Canadian
banks have grabbed 700 billion of US deposits, and they block American trucking, replacing us with
Indians who have killed dozens of Canadians, including a crash in Saskatchewan. That killed 16
members of a junior hockey team. The trade war drives food inflation since half of Canada's
imported food comes from the US, so retaliatory tariffs get passed on. In the trade wars crushing,
Canadian manufacturing as companies flee to the US. Jeep just moved its biggest plant ever from
Ontario to Illinois and Ohio. Nationwide, goods producing sectors in Canada lost 28,000 jobs
last month, a quarter million in US terms in a single month. So elbows up plays great with
Canada's elite, who are willing to sacrifice Canadian blue collars to score points on American
Trump. Many probably enjoy the sacrifice since Canada's left wing elite hates blue collars
just like in America. So as next, it's going to get a lot worse because the US Canada trade deal,
USMCA, is up for re-negotiation by July and Trump has been very clear he wants major revisions,
or even a pullout. USMCA currently exempts six-sevenths of US Canada trade, meaning if Trump re-rights
it or withdraws, it could threaten 2.3 million Canadian jobs, US terms that is 20 million jobs.
That would be the biggest drop since the 1930s when there were soup kitchens across Canada.
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Okay, back to our show.
Last week, Facebook and else, they're laying off 20,000 workers,
one-fifth of the company because AI can do it cheaper. In a cruelty, they'll be plowing those
20,000 salaries and free back rubs into building more AI data centers. And so, with AI
job replacement finally putting some numbers on the board, it is prudent to ask what happened
last time we wiped out two-thirds of jobs, the industrial revolution. Interestingly,
AI is the opposite of the industrial revolution. It doesn't replace physical jobs, it replaces
mental jobs. In fact, it makes physical jobs pay more because automation makes us rich, that is
the whole point. Automation is cheaper. Courses is deeply disturbing for the overeducated white
collars who spent their life looking down on men who work with their hands. So when the
industrial revolution hit nearly 1800s, roughly 70% of Americans worked on a farm. The other 30%
were split between domestic servants, traders, wholesale and retail, and skilled crafts, so weaving,
collars, blacksmiths, tailors. Now, fast forward, 200 years, and farm workers have dropped to 2%
replaced by tractors, combines, and refrigeration. The servants, traders, and crafts actually
doubled asmaids and butlers for the 1% converted into everybody using Uber Eats to deliver
pokeballs while the dogs at the grimmer. So those went from 30 to 50% of jobs. What happened to
the other 50? A big chunk sadly was government which grew from 2% of jobs in 1800 more than 20% today,
because good times make big parasites. Another truck was healthcare, going from
almost nothing in 1800, you basically went to the hospital with a die, 2-1-8 jobs today.
The final 20 got replaced 1-2-1 by what we now call white collar work, cubicle jobs. So accounting
and finance, tech, analysts, administrative workers, these are in the AI firing line. Now they won't
all go, customers still won't talk to a human and somebody's got to check what the AI is doing,
but if we lose a 15 of those 20, how do we replace them? Easy these same way we did last time
after all we're not trying to replace 70% of farm jobs, we're talking one fifth that.
On the ground this would mean regular people consuming services like rich people do today,
almost nobody would mow their lawn, just like today almost nobody cuts their own hair or raises
their own chickens. Meanwhile more wealth means more stuff, bigger houses, second houses, more
electricians, plumbers, carpenters, and they all make much more since automation races everybody's
wages. Consider that today you make 200 bucks a day painting a house, in India you make 9 bucks
and that's only half an industrial revolution, India does have electricity. Now in theory robots
are coming next but they'll go much slower probably 20 or 30 years because you only need one AI
for 8 billion people but you need 5 robots for a McDonald's. Consider it took 50 years from the
first electrified factory to half of factories using electricity, we don't even have the first
robot factory yet. In short if AI delivers the productivity revolution it promises Starbucks will
pay 6 figures and if it doesn't false alarm AI was a bust. So at 6 when the smoke clears will be fine
but AI job replacement will hurt the young and unskilled. It will gut high income overeducated
Democrat leaning white collars including the journalist professors and analysts who write
the AI doom porn. So there's a lot of disruption and a lot of doom porn between here and there.
