I’m not a doctor. Though I bet I know more about fluid mechanics than the overwhelming majority of medical doctors.

Air is a fluid. Not fluid as in liquid – but fluid as in behaves in exactly the same way when flowing as fluids like water behave. Air flow is modeled by exactly the same equations as water flow.

Anyway – it is sometimes confusing to think of air as a fluid – but it is.

There is a pressure drop across any filtration media whenever there is any fluid flow across it. This applies to every filter. Always and everywhere. 3 main conditions impact the pressure drop across the filter:

The more clogged the filter becomes, the higher the pressure drop across it.

The higher the airflow through the filter, the higher the pressure drop across it.

The better the filtration performance, the higher the pressure drop across it (given the same surface area media and material).

You need a really good (read physically massive) filter to screen out particles 0.2 microns in size for any length of time with insignificant pressure drop.

COVID-19 spike protein is said to be less than 0.2 microns. Viruses are not large.

Again – no doctor – but human bodies were designed to to inhale air (oxygen) at a pressure of approximately one atmosphere. Human beings were designed to exhale their “exhaust” (carbon dioxide) into a pressure of approximately one atmosphere.

When we slap humans with “filters” over their noses and mouths, we restrict the volume of air on inhalation, while decreasing the amount of carbon dioxide exhausted to the outside air on exhalation.

During inhalation – the filter causes the one atmosphere air on the outside of the filter to become less than one atmosphere on the inside of the filter. We can observe this pressure drop by the mask “sucking in” towards the wearer during inhalation

During exhalation – the filter causes the one atmosphere of air on the outside of the filter to become more than one atmosphere on the inside of the filter. We can observe this by the mask “blowing out” from the wearer during exhalation.

But wait – it gets even better:

All surgical, cloth, and N95 masks also “filter” (aka restrict) your exhaled CO₂. The CO₂ concentration inside the filter is several hundred percent higher than it is in the surrounding air.

In fact, it is several hundred percent higher than the CO₂ limit OSHA states is too dangerous to work under.

The medical term for restricting your oxygen is “hypoxia.” It is low oxygen in the blood. The medical term for re-breathing your own exhaust gasses is hypercapnia. Excess carbon dioxide in the blood. Masks always and everywhere increase both of these conditions. If you are doing any kind of physical excursion, the pressure drop across the filter increases in proportion to respiration into and out of your lungs. So does the amount of hypoxia and hypercapnia.

Many school districts mandated people playing singles tennis – or running – outside – to wear face filters. Yes – really. This is “the science” talking.

You are working harder to exhaust your waste gasses through an extremely inefficient filter. You’re also re-breathing a good chunk of those very same exhaust gases on your next inhalation.

Sounds healthy. This is a terrible idea. Sorry doctor – I disagree.

Let me get this straight doc – speak slowly so I can understand:

You want to slap people – even elderly and sick people who have trouble breathing even without a respiratory viral infection – with filters that make them even more susceptible to hypoxia and hypercapnia? And you want people and those filthy kids kids to wear these disgusting things all day long?

Sorry – I utterly reject your medical advice. No M.D. required.

Our bodies were not designed to work with filters. Period.

You are not going to stop a 0.2 micron aerosolized respiratory virus with a surgical mask, or a bandanna, or a face shield, or even a well fitted N95 mask. It’s not going to protect the wearer, and it’s not going to work for “source control” (protecting those around the wearer) either.

I don’t need a study to know this. Just by looking at these filter designs I can tell that they will do absolutely nothing to prevent infection or transmission, and they have some very major downsides.

Lucky for me, I’ve read 58 of the 150+ studies in their entirety that conclude the very same thing. And I’ve read the conclusions of the rest. We knew this about aerosolized respiratory viruses and masks decades before anyone had even heard of COVID-19.

If you are that worried about it, get yourself one of the masks that you see car painters wear – with the 2 cartridges on the sides rated for organic vapor, and make sure it covers your eyes. also make sure you have a clean shave if you have facial hair above a very small mustache.

The above type full face respirator has a wide open exhaust valve, which are generally “illegal.”

These still have the hypoxia concern when worn for long periods, but the hypercapnia is not a concern since the exhaust is not recirculated back into the intake.

Not surprising the only type that actually has a chance of working is banned by “the science,” while the less than useless “poser” filters are mandated.

Hint: It’s got nothing to do with science – It is obedience training: Do what I say or else.

Wait – I’m not done slaughtering face filters from a pure design standpoint.

I would contend that the biggest “torture test” for a human filter (aka obedience cloth) would be during a sneeze event. That is when you will have your highest (albeit short-lived) airflow rating – with correspondingly highest pressure drop across the filter.

Surgical masks don’t even stay airtight against the wearer’s face during normal conversation. What’s wrong with that you say? Pressure drop across the filter increases in proportion to airflow across the filter.

During a sneeze, you generate a very high pressure inside the filter compared to outside of the filter. This higher pressure inside the filter pushes the filter away from your face since it can’t physically flow that much air that quickly. Since the filter is also restricting your sneeze, the velocity of the sneeze is increased and escapes the only place it can: Around the sides, top, and bottom of the filter.

For a quick experiment on why restricting any fluid increases it’s velocity, try to restrict a wide open garden hose with your thumb while keeping the sides open and you’ll have a nice demonstration of what happens when you try to block viral aerosols from escaping a sneeze with an obedience cloth. You’ve spared the person 6 inches in front of you from a soak but sprayed water droplets 40 feet in every other direction. Hope nobody was standing anywhere around you…

This means during a sneeze, you are shooting aerosolized particles even further than they would absent any mask.

Congratulations on shooting viral aerosols even further during a pandemic Stop pretending there are no downsides to “masking.”

Well at least that’s the end of the downsides – right?

Wrong. What happens to filters when they get wet? They work even less efficiently than they do when they are dry.

Well – at least that’s the end of the downsides – right?

Maybe not: What is the temperature and relative humidity of the inhaled air inside a face mask? Is there more or less oxygen per unit volume in higher temperature or lower temperature air? Hint: There’s less oxygen in higher temperature air. I’d guess the temperature of the air inside a face mask to be approximately 98.6 degrees. I’d guess the relative humidity to be extremely high as well. Condensing humidity levels for sure based on how well these things tend to fog up eyeglasses.

Again – no doctor – but I would describe an obedience cloth worn for long periods as breath-moistened petri dish resting directly on your mucous membranes. Sounds healthy. Do viruses replicate faster in higher or lower oxygen environments? What about bacteria? What about fungus? Restricting oxygen and increasing CO2 sounds very healthy – especially when you do it all day long – for years on end. Especially when we’re all panicked about a virus that attacks your respiratory system.

And for certain – let’s slap elderly people, many of whom already have trouble breathing, with devices making it even harder to breath.

In summary – face masks result in the following conditions:

• Lower pressure on the inside of the mask during inhalation results in less oxygen per breath than no mask
• Higher pressure inside the mask during exhalation results in less CO2 expelled per breath than no mask
• Insufficient exchange of CO2 to the surrounding air during exhalation results in re-breathing exhaled CO2 at a level that is several hundred percent higher than OSHA’s “safe workplace limit” for CO2 concentration
  • Higher CO2 concentration in a workplace = “unsafe.”
  • CO2 concentration several hundred recent higher than levels unsafe for a workplace = “safe.”
• Higher temperature air during inhalation decreases oxygen even further
• Higher relative humidity inside the mask decreases oxygen even further
• Higher relative humidity and lowered oxygen results in higher probability of bacterial and fungal infections.
• Zero efficacy against catching or transmitting viral infections. Meaning whether used for wearer protection or “source control” (protecting others).
• Dangerous to wear during physical excursion due to the very high pressure drop across the filter.
• Increases velocity of breath expelled during cough or sneeze events, causing aerosolized viral particles to travel even further.

Again – who makes this up?

I can see no upsides.

What’s the first thing that your doctor makes you do when going to see him about – say – breathing difficulties? Force you to restrict your breathing further with a less than useless surgical mask.

It is beyond reckless to suggest that a “face covering” is going to protect the wearer, or anyone around the wearer, from contracting or spreading an aerosolized respiratory virus. If you are at high risk of severe disease – stay home.

There is a very good reason that not a single manufacturer of surgical masks or even N95 respirators is willing to state on their packaging that these devices offer any protection whatsoever from aerosolized respiratory viruses: If they did – they would be lying.

Anybody that works at a publicly traded company large enough to warrant an HR department has heard about the dire need to “improve diversity.” Anybody who watches / reads news has certainly also heard this statement.

This statement is taken as fact. Diversity must be “improved.”

To question any aspect of this is to invite accusations of racism, or insert your favorite “____ist” or “____phobic” pejorative here.

The question that is never asked is the most critical question:

How does one define “perfect” diversity?

Unless somebody can do that, they can’t possibly “improve” it. Until you do that, you can’t even measure with any degree of certainty that you aren’t making matters worse with your efforts.

Here’s a rule that universally applies to anything that anyone, at anytime is trying to improve:

If you can’t define – explicitly – what “improvement” even looks like, then you have no business changing anything.

Until one knows exactly where the “bullseye” is, how does one even take aim at it – let alone hit it?

Is perfect diversity defined as an equal proportion of each race / gender / gender identity / sexual preference of the surrounding community being employed with equal proportions inside your company? Does age weigh into it? What about physical attractiveness? Height? Weight? There are literally an infinite number of ways one can define “diversity.”

How exactly does it work? People really need to stop and think about this because again – it’s the single most important question.

Is the “surrounding community” considered the city limits? The county? The state? The country? The entire planet? Serious question. What is it?

OK – so let’s assume there is a definition: Your companies’ employees must be hired in equal proportions to the surrounding city in terms of race, gender, gender identity, and sexual preference.

Great. At least now you have a definition of theoretically perfect diversity. That’s a start. Now comes the hard part.

How do you not only achieve this, but maintain it?

Let’s say your office is in City X. City X has the following makeup as of the 2020 Census:

• White: 62.73%
• Black: 19.95%
• Asian: 14.07%
• Native American: 0.35%
• Native Hawaiian or Pacific Islander: 0.08%
• Two or more races: 2.40%
• Other race: 0.42%

Now assume you’ve somehow managed to hire everyone you need to hire in the exact proportions to the above. You haven’t. You can’t. But let’s assume for his exercise that you have.

Congratulations! You’ve achieved perfect diversity! Not so fast: You haven’t even considered gender and sexual preference yet. Or age, physical attractiveness, height or weight.

As for gender, there are reliable publicly available statistics. For City X, they are 48.46% males and 51.54% females.

Now imagine you’re not only integrated your workforce at the same racial percentages as above, but you have also achieved the “perfect” 48.46 to 51.54 percent male to female ratio.

You’re still not even close. Sexual preference and gender identity statistics aren’t even available. What about all the other parameters I’ve highlighted?

OK – now you see why this discussion is a lot more complicated than it seems. In fact – you start to see how utterly untenable this entire exercise actually is.

Let’s assume you settle for perfect race and gender representation as “perfect diversity.”

Now – let’s assume you’ve achieved that. Congratulations – or I’m sorry to hear that. I’m honestly not sure which statement is more applicable. I’m leaning towards “sorry to hear that.”

Now comes the maintenance part.

Suppose 4 families of Pacific Islanders decide to move out of City X to Florida to retire. Suppose 4 white families move in.

Does this mean that your large company must now fire some Pacific Islander employees and hire some white employees to replace them?

Do you see where this is going? Are you starting to see why this is on par with some of the worst ideas ever to be taken seriously by large groups of people?

Their are literally hundreds of “Diversity Officers” in companies and colleges across the US. Surely they could provide me with an explicit definition of what constitutes theoretically “perfect” diversity. Until I hear even one person define this – the whole discussion is beyond pointless. I’ve yet to hear anyone even attempt to define it.

So unless and until someone can define exactly what “perfect diversity” is, and how that can be both achieved and maintained, I shall not and will not agree with the statement: “Diversity is our strength.” You are asking me to agree with a word that you can’t even define. I do not agree.

First – define what it is. Then – explain why any organization of any type should attempt to implement it.

Please define exactly what perfect diversity is before lecturing others about their need to “improve” it.

How on earth can any private company mandate the vax – regardless of SC decision?

Aren’t they opening themselves up to all matters of liability?  This seems legally suicidal.  Disclosure – I’m no lawyer – background in mechanical engineering.

Please let me know if my facts are straight:

The only vax with full FDA approval is marketed under the name “Comirnaty” by Pfizer/Biontech

Comirnaty received FDA approval nearly 5 months ago.

My understanding is that not a single dose of Comirnaty has been produced outside those for the clinical trails – let alone distributed and injected. Read down a bit and you’ll begin to understand why.

Pfizer-Biontech are still producing and distributing the EUA vaccine – and only the EUA vaccine.

We are told the EUA vax and Comirnaty are identical.  The label in Comirnaty says it is 100% interchangeable with the Pfizer/Biontech EUA vaccine from a dosing standpoint.

While it may be “interchangeable,” it couldn’t be more distinct – legally.

Manufacturers are held harmless from liability on any EUA drug.  They don’t get this “all-benefit – no risk” deal with FDA approved medicines.

So even though Comirnaty has been FDA approved for almost 5 months, Pfizer/Biontech continue to produce and distribute only the EUA version. It make total sense from a business standpoint: Produce a medicine with full immunity from any liability, or produce an “interchangeable” medicine at the same profit level (I assume) that is subject to all liability.

Moderna and J&J are yet to be awarded full FDA approval. Pfizer/Biontech would be at a severe competitive disadvantage if they produced and distributed Comirnaty – which is subject to liability – at the same time that Moderna’s & J&J’s competing products are not.

In summary:

The only vaccines available – even today – are those with EAU.  Pfizer-Biontech, Moderna, J&J.

The manufacturers are held harmless from liability for any side effects of these medicines – up to and including death.

Here’s a quote directly from the Comirnaty label. See page 5 for yourself. After listing known side-effects (italics my emphasis):

“These may not be all the possible side effects of the vaccine. Serious and unexpected side effects may occur. The possible side effects of the vaccine are still being studied in clinical trials.”

In summary:

Your employer is mandating that you must take a medicine.  The manufacturer of this medicine is held harmless from liability.

Again – no lawyer – but if the manufacturer of this medicine is held harmless – and you can’t sue the FDA – or the CDC – or OSHA – or the executive who wrote the executive order – then who is left holding the bag?

A sharp lawyer could make a compelling argument that the company is on the hook for any and all damages caused by mandating their employees take an experimental medication in order to remain employed there.

Sure – the company’s opposing counsel could argue that no employee was technically forced to take an experimental medication. After all, they had the option of just quitting or being fired. Good luck with that. Bad optics either way.

So to all the companies mandating the vax for their employees who wish to remain employed there – know this:

You forced your employees to be unpaid participants in a clinical trial for which the manufacturer of the drugs being studied in the trail is held harmless from any and all liability. I don’t know the legalese term for that but reckless is nowhere near strong enough.

Of course we all know that when manufactures are held harmless from liability, they are extra extra careful. They pinky-swear it.

I don’t know – perhaps even a not so bright one could make the case…

However, there will be some difficulty proving the vaccines are the cause for any harmful side-effects, since the placebo group is now MIA.

.

I’m going to go way out on a limb and say that every American who wants “the” vax (TM), has already had “the” vax, or 2 or 3.

Local and cable news “inform” us every day about how safe and effective (TM) it is. When the news isn’t pushing the vax, the commercials between news segments are pushing the vax – many times directly from your state’s health director or governor. Some public businesses actively bar the “Filthy Unvaxxed” (TM) from entering, or make them identify themselves some way – like a less than useless face covering (article brewing). When that’s not happening, your employer is pushing the vax. Some employers are pushing it so hard they are firing people who choose not to get it. The Supreme Court is already arguing on the vax mandate.

See here for my thoughts on that.

In summary – this vax is being sold harder than a Florida timeshare at the Ramada Inn. Act TODAY – or you’ll DIE!!!! If you don’t die you might just KILL GRANDMA!!!! Let’s just forget about the viral load being statistically identical between vaccinated and unvaccinated for now.

Actually no – let’s not forget that. Nobody is killing grandma by being unvaccinated. Nobody is killing anybody by being unvaccinated. Stop lying. Just stop it.

In America today, it is impossible to not know that:

1: The vax is out there

2: Your life will be inconvenienced (at bare minimum) if you choose not to take it.

Given the above – I reiterate my first statement: Every single person in America who wants the vax, whether enthusiastically or begrudgingly, has already taken either 1,2, or 3 doses of it. As hard as this thing is being pushed, it wouldn’t shock me the learn that some people have taken jabs from Pfizer/Biontech+Moderna+J&J. If one is good – right???

Given this, who is left to volunteer for a clinical trial as a potential member of the placebo group?

Everybody who wants anything to do with the vax has already received it. They can’t be part of a clinical trial. They’ve already taken the medicine.

Everybody left over is so dead-set against it they are willing to lose their jobs, endure public ridicule and shame, risk divorce, risk losing friends and family members, be barred from college, and generally be banned from “normal” life. These people will never volunteer for a clinical trial. They’ve already made their decisions quite clear.

I am one of these people. I recoil from high pressure sales tactics. The more I hear about it – the more I despise it. I suspect I’m not alone.

So tell me this: How does one conduct an efficacy study with a double-blind or merely observer-blind clinical trial without any placebo group? Uh-oh.

Given the sharp efficacy fade over 6 months and the negative efficacy against some variants after a period of time, I can say with utmost certainty I will never take this medicine.

Let’s not forget that since the original placebo group was given the option to take the vax, we may never know long term side effects. Some have asserted that this was the intention. I have no evidence of intentional spiking. The fact that it was done at all – for whatever reason – is scientifically appalling.

What kind of clinical trial gives the placebo group the medicine? What is the purpose of even having a placebo group at that point?

You know the fast talking side effect lists you hear at the tail end of every pharmaceutical commercial on TV? (A bit off subject – but “diarrhea with fainting” is my all time favorite side effect.) They get those by comparing results of those who actually took the drug to those who just think they took the drug, but took the placebo instead.

The initial clinical trials for Pfizer/Biontech, Moderna, and J&J were not double blind. They were observer blind. Test subjects were notified whether they got the drug or the placebo. That decision alone is scientifically reckless. The reason for double blind studies is by having the test subjects not know whether they got the real deal or the fake, their behavior cannot be influenced by this knowledge. It is also – as above – how side effect profiles are produced. If the people on the drug report headaches (or whatever), but so do the same percentage of people on the inert placebo, then “headache” is not a side effect of the drug. It is just a certain percentage of both groups having headaches.

Now you see why double-blind studies are extremely important.

Now – there is nobody left to even be a potential placebo group.

How do you measure absolute and relative risk reduction if you have no control group to compare the results to? To ask is to answer. Hence the title of this post.

Bravo – hard sellers.

RIP science.

There is some serious cognitive dissonance in the argument for mandatory vaccinations.

I can understand people believing one or the other of these political talking points.  What I can’t grasp is so many people simultaneously believing both.  These 2 thoughts are the very definition of “mutually exclusive.”

1. There is a “Pandemic of the unvaccinated”
2. “We must protect vaccinated workers from their unvaccinated co-workers”

Do I need to even say it?  If the pandemic is limited to the unvaccinated, then what exactly do the vaccinated need protection from?  For the record, I know both taking points are pure BS.

The only scientifically literate justification for mandatory vaccination would be if unvaccinated people were spreading the virus more readily than their vaccinated counterparts.

The jury is in.  Not guilty on all counts.

NBC news:  ‘The internal CDC presentation concluded that, “breakthrough infections may be as transmissible as unvaccinated cases.”’

NPR:  ‘It also found no significant difference in the viral load present in the breakthrough infections occurring in fully vaccinated people and the other cases, suggesting the viral load of vaccinated and unvaccinated persons infected with the coronavirus is similar.’

See Figure 2:  the CDC box and whisker chart for yourselves (hope I’m not banned for sharing CDC “misinformation”).  There is zero statistical difference in the viral load between the vaccinated and unvaccinated.

So the only scientifically rational argument for mandatory vaccinations has been shredded by none other than the CDC.  I guess since NBC news, NPR, and the CDC are all “right wing extremist sites,” we may need to take their conclusions with a grain of salt…

Last, let’s go over the clinical trials again:  Pfizer, Moderna, and J&J only looked at safety, tolerability, immunogenicity, and efficacy.  Transmissibility was never even considered, let alone measured.

Everyone arguing for mandatory vaccinations has the sum total of exactly zero data to support the assertion that unvaccinated people are any more of a threat to them than vaccinated people.

Maybe the argument is coming from compassion: “We care so deeply about you dying of COVID we’re going to fire you from your job so you can be homeless and starving.”

Finally, during the time of the clinical trials, the vaccines were given a 95% efficacy rating.  During that time, the only vaccinated people in the entire country were the participants in the trial who did not get the placebo.

So we’ve gone from “95% efficacy against an entirely unvaccinated population” to “We need the entire population to be vaccinated for this thing to work” in less than 8 months.

And nobody is calling BS on this? Really? Is this where we are?

And people ask me why I’ve lost all respect for “public health officials.”  And the overwhelming majority of doctors who know better but are unprepared to deal with the consequences of telling the truth. Might be too inconvenient not towing the line. Go along to get along. I get it.

I may be acting too harshly: There is serious confirmation bias on both sides of vax debate. It’s just that only one side of it is barred from public discussion, may be fired from their jobs, are ridiculed and called stupid by many people whose depth of knowledge on the subject stops at “safe and effective = the science.”

There’s also a deep psychological need to not change your mind about something you’re strongly believed. See here for my theory on that.

I’m not just an “Anti-vaxxer.” I’m a rabid Anti-Statiner as well if I may coin a new pejorative. If I had the Guinness Book of World Records highest cholesterol ever measured, I’d still never take a Statin drug.

Nobody needs a medical degree to understand the results of a clinical trial. Nobody needs an engineering degree to understand a DVP&R. All one needs is a basic understanding of statistics. Get one for free on the internet – then click down in the links for the actual story.

The largest mistake people make about the news is that they are the news’ customers. No. The advertisers are the ones who keeps the lights on there. You are only a news consumer, not a customer. Big difference.

“Today on the News: Stories to keep you terrified brought to you by advertisers who promise to make all that terror go away.”

How long do you reckon a news outlets #1 provider of ad revenue is going to continue with them questioning their products? To ask is to answer. Piper. Tune. You know the thing.

by Tom Woods

Please take a look at Tom Wood’s e-book. Mostly charts – so a very quick read.

If you like this – get a lot more here.

“15 days to flatten the curve” is approaching its first anniversary. The impact of COVID-19 on the auto industry is far-reaching. The primary consequences are barely understood, let alone the ones further downstream. Restrictions from governments at the local, state, and federal level, around the globe, have made the predictability of assuring manufacturing operations at pre-COVID daily capacity impossible. Capacity restrictions, hourly restrictions, and closures are random, severe, and often based on PCR tests that are bordering on meaningless. Furthermore, these restrictions are based on “re-open criteria” that is ever-shifting and ill defined, if defined at all.

Lets say a customer wants you to quote a part. This part is required to pass both DV and PV testing before it can be approved for production. Traditionally, these tests are based on rigidly defined test procedures and explicit acceptance criteria.

Would you quote a part to a customer whose test acceptance criteria is:

“Pass is whatever I say it is, my criteria can and will change at any time, and full acceptance will never actually be granted. Additionally, there are other people just like me. Pass is whatever they say it is, their criteria can and will change at any time, and full acceptance will never actually be granted by them either. You must satisfy me, plus all the other people just like me, before full approval shall be granted. Furthermore, if you dare to question any aspect of this plan, you will be demonized publicly for literally wanting grandma to die.”

“Following the science” is a phrase completely devoid of meaning. “Following the science” is what people who are utterly clueless about science say about science.

Nobody in their right mind would even think about quoting a part with the test acceptance criteria mentioned above. Why are you so willing to accept that it’s your fault you can’t meet the manufacturing capacity you initially quoted? Your quote was made before governments around the world added the exact same “manufacturing reopen criteria” above to every link in your global supply chain.

Primary impacts are legion: Manufacturing plant closures with non-firm re-open dates. Permanent manufacturing plant closures. Random border restrictions and closures. Flight restrictions. Mandatory quarantines for personnel. Mandatory quarantines for parts in some cases. Social distancing with no correspondingly larger manufacturing areas. Less $ earned per square foot of manufacturing space. These primary impacts are hard enough to model themselves. Add in downstream consequences at the Tier 1, 2, 3, and higher levels, and it becomes a near impossibility to predict the train-wreck headed our general direction.

Secondary and tertiary impacts are even more convoluted. OK – so maybe the miner of the raw materials you need is still able to work at pre-COVID capacity. They just gave you the thumbs up. However, they just learned that the firm that makes the equipment they need had restrictions placed on them, leading to reduced raw material output. Again – this kind of thing is impossible to predict. These are anything but obvious connections.

We can make educated guesses. Anybody who says they know how this all plays out is lying.

All is not lost. To use a popular phrase, we’re all in this together.

Commodity and asset prices

As if the variables above could be accurately modeled (and they can’t), there is also a grand economic experiment being tested – globally.

U.S. M1 Money Stock

It took more than 15 years, from June 15, 2004, to February 3, 2020 to create the last 2.73 trillion dollars. It took only one year, from February 3, 2020 to January 25, 2021, to create the next 2.73 trillion.

Again – anybody who says they know how this all plays out is lying. Unprecedented does not even begin to describe what’s going on.

There are those arguing this may lead to inflation. I disagree. Technically, this is the very definition of monetary inflation. Will it lead to price inflation? I argue it already has.

Many, if not most, people associate inflation with the consumer price index, or CPI. Are your groceries getting more expensive? Is your rent getting more expensive? Gasoline? Clothes?

What is happening with the prices of assets lately? Anybody who is invested in the stock market is seeing a lot of “inflation” in broad categories of asset prices. Anybody who’s sold a house recently is pleasantly surprised at the “inflation” in real estate values. Anyone who’s just bought a house is shocked at how expensive they’ve become.

I do some remodeling work on my home. I use an outfit called Garvin Industries for some of my electrical work. They overwhelmingly sell galvanized steel electrical boxes, conduit, and fittings to commercial electricians. Here’s the notice I just received:

Garvin notice dated February 15, 2021

Good thing steel or shipping isn’t used in very many things, or this could get serious.

Anybody who already knows the overall size of the molds they might need should be buying the steel now. Speaker baskets? Same instructions. Engine blocks? Heck yes. Body panels: You betcha! Rotors: Certainly.

At least it’s only steel we have to worry about right? There are gold bugs and there are silver bugs. The copper bugs have slightly edged out both this past year, even with the short squeeze on silver in recent headlines.

Well, how much of our BOM cost is actually comprised of steel and copper? Not much really. At least what we use most of isn’t increasing in price – right?

I will spare everyone the rest of the commodities, but unless you consider hotel rooms and luxury cruises commodities, they are either doing awesome or terrifying, depending on which side of the transaction you’re on The increase in the PPI will lead the increase in the CPI, at least for the things people are most interested in buying.

Cube farms are so Pre-COVID

From every one of our competitors, to every one of our customers, there will be some firms that lose and others that win. We’ve been forced into a year long experiment we could have attempted at least a decade ago, but didn’t have the nerve to try: Work From Home (WFH): All day. Every day. It turns out we really can work from home efficiently. Knowing this, why on God’s green earth are so many companies holding on to cube farms? What benefit do they provide over WFH? I’m listening. Crickets.

• Why are you paying rent, or a lease, or a mortgage on that many empty square feet?
• Why are you heating and cooling that many square feet?
• Why are you paying property taxes on it?
• Why are you paying maintenance on it?
• Why are you paying liability insurance on it?
• Why are you just asking for a lawsuit over an employee or customer that catches COVID at your facility and later dies? It wouldn’t even need to be proven.
• Why even bother with this headache? It’s totally self inflicted at this point.

Some companies see the WFH writing on the wall. They refer to it as WFHF (Work From Home Forever). Others (the ones who will lose) think things are going back to normal real soon. May I remind you: 15 days to flatten the curve. Sure it will. Any day now. Right around the corner. Keep telling yourself that. Your competitors will ditch their cube farms and fund only lab space, a few conference rooms, and some flexible work areas. If you want to survive, you must do this as well. The sooner the better. Those that didn’t will be competitively quoting against those that did. You think competition is intense now? Just wait. Sell those cube farms before everybody understands their true value: Approaching zero. Heck – you could convert the spaces to residential or expand your testing facilities if you’re absolutely stuck with the space. Just stop paying for empty cube farms – please. Hear that sound? It’s your valuation slipping away.

I bet your employees would overwhelmingly support this plan. So much so they’d be willing to pay for their own high speed internet and telephones in exchange for potentially never having to commute to the office again. I surely would – and I only had a 13 minute commute. In fact, I have been using my own high speed internet service. I have been using my own monitors. My monitors at home provide me 65% more total pixels than those I had at the office. The bathroom is closer. Less distractions from chatterboxes. More convenient and healthy lunches. Better lighting. No shoes required. I could go on. What are we waiting for? This is a win-win. Employers save overhead cost. Employees are happier and more productive. What – exactly – is not to like about this?

The only downside to this plan is a selfish one: How many million annual vehicle miles are driven by cube-dwelling employees on their daily commutes to the cube farm? This will put some amount of downward demand on new car sales as current vehicles will not rack up as many miles and require replacement as quickly. However, your competitors will do it, if they aren’t actively planning it already. Your choice. Should be an easy one.

Shipping

The overwhelming majority of previous cube dwellers are now working form home, at least some of the time. The overwhelming majority of the office working planet has been forced to spend a lot more time at home. Many are now there both during work hours and afterwards, whether they like it or not.

Disclaimer: I was a borderline recluse before this whole thing started. This has not impacted my life much.

The amount of shipments going to homes all over the world has increased. Many of these shipments are air freight.

Air freight once reserved for things that were relatively urgent (like late car parts) are now used to deliver everything under the sun to every person under the sun. This has resulted in a surge in demand for air freight, with the resulting pricing and availability pressures. Now – the parts keeping 5,000 people from being able to build a car are competing for airplane space with OLED TVs or other electronic gadgets being demanded by adults bored out of their skulls by the lock downs and going crazy from the social isolation.

Speaking of electronic gadgets and OLED TVs, your suppliers of microprocessors and electrical components are now flush with the new customers mentioned above. These electronic gadgets have much less stringent specs than the automotive industry, as well as much shorter production and service support requirements. Your X-box and iPhone don’t need to operate from-40°C to 85 °C and survive thermal shock, vibration, humidity endurance, or any of that nonsense. Instead of supporting 3-6 year production life + 10 years service, they only need to support 1-3 year production life plus zero service. Consumer electronics are disposable and obsolete very quickly. Furthermore, as long as the device doesn’t literally catch on fire, there are no real high severity failure modes for consumer electronics. Annoyed customer is about the worst it gets.

If I were a microprocessor manufacturer, I would prefer to supply consumer electronics over automotive – all day – every day. Now we’re competing for micros from that fast growing segment as well.

And you thought your troubles were limited to raw material prices and unpredictability of manufacturing operations.

Mitigating risk

Again – we are all in this together, It’s not in our interest to bankrupt our suppliers any more than it’s in our customer’s interest to bankrupt us. Nobody wins when that happens.

Expect and prepare for cost increases and margin squeezes. From the furthest tier suppliers to your customers to their customers, everything that there is a strong demand for is going up in price. Hedge what you can with your finance team. Work to improve receivables so the cash can be put to use hedging downstream material and process prices. If there ever was a Force Majeure moment – this is it. Hire legal representation skilled in this law. Pre-COVID contracts are obsolete. If you aren’t even referencing raw material pricing in your latest contracts, how are you still promising year over year cost reductions? If you are paying to fly parts to your customer because your supplier was facing restrictions illegal to avoid, how exactly is this your problem? If your customer is saying everything that was promised pre-COVID is still in force because we’re “back to normal,” remind them to get their head examined – just do it politely. These are late car parts. Nobody is going to die if they can’t get their car on the same date predicted 20 months ago. 8 months before the entire international supply chain was mangled beyond all recognition by force of law.

Everybody is somewhat lost right now. The smart people with impressive credentials from name-brand universities don’t know. If anything is obvious this past year – it’s that the downside of arbitrary lock downs is supply chain gyrations that will resonate for years to come. This is OK. You don’t need to be the smartest. You do need to understand that it is never going back to normal. The sooner you accept this, the sooner you can address it. You definitely want to be making bold decisions now, since they’ll only be forced on you later, and on much less favorable terms.

Conclusion

The precedent has been set. The public has accepted it with barely a whimper. It is foolish to think this is ever going away. Things are never gong back to normal in the office environment. The new normal is a command from a single local, state, or federal official declaring your production capacity and profitability “nonessential.” It is declaring your office at full capacity illegal. Why expose at least that part of your business to this risk at all? Ditch the cubes. Stick a fork in them. They are done. You have quite enough challenges and risks to voluntarily accept that one.

Things are anything but predictable in the global supply chains. Ditto for commodity prices.

There is global experiment in monetary policy ongoing and how it plays out is anyone’s guess. If you truly believe that more dollars chasing assets, materials and and labor will lead to decreases in prices of these things – ignore everything I’ve said about hedging and buying commodities now. Short them if you truly believe they are already overvalued.

Hire global supply chain experts. Hire expert legal counsel regarding contracts. Force Majeure escape clauses may be buried 3,4,5,6 tiers down the supply chain and you just haven’t unearthed them yet. Anybody arguing things are “back to normal” is ignorant, lying, or posturing. Call their bluff.

You don’t need to be the best and fastest, but you also can’t just close your eyes and make believe some nebulous”back to normal” criteria will ever actually arrive. The dinosaurs clinging to the hope that the all clear siren will soon wail will go bankrupt. Don’t be one of these.

Since intense competition for raw materials, labor, and shipping will only accelerate, you need to take a good hard look at any and all of your internal processes. Streamline these processes now. Reexamine anything that is putting you at a competitive disadvantage since there’s going to be a lot more of these coming your way. Can your competitors perform high value add processes in house that you are forced to outsource? Consider looking at what it takes to bring these processes in house. Outsourcing high value added processes is especially risky in this brave new world. You barely understand your local government’s edicts. Concede that you are utterly clueless about edicts coming your way from halfway around the world, in a language you don’t speak, at a supplier whose facility you’re not even allowed to visit in person anymore.. Any link in your supply chain is at risk. Repair the weak links now.

You have 2 choices: Either fight the lock-downers, or fight the customers who pretend the lock-downers don’t exist while forcing you to pay for the consequences of their actions. The lock-downers are here to stay. They will be here as long as we put up with them. They’ve gotten a taste of power. They’ve grown accustomed to this taste. They will never give it up voluntarily. You can’t concede to both the lock downers and the customers who pretend they don’t exist and actually stay in business.

Bottom line: Stop conceding to everyone.