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Recently I have had several journalists, academics and progressive activists ask me my opinion on some of the key economic questions of the day. Here are some of my replies: on Trump tax cuts and US growth, current immigration debates, wages, expanding income inequality in the US, on what is the real rate of inflation today, and whether proposals for universal guaranteed income, debt jubilee, Modern Money Theory, green new deal are solutions to today’s economic problems.

Question 1: Is US economic growth under Trump due to his tax cut policy and what is the future of average or low wage Americans today?

Dr. Rasmus: The nominally higher US GDP growth in 2017-18 has little to do with the Trump tax cuts. The Trump tax cuts passed in early 2018 amounted to more than $4.5 trillion over the decade, targeting to wealthy households, businesses, investors and corporations, which have been ‘front-loaded’ in 2018. Offsetting this are $1.5 trillion in tax hikes for wage earners, that begins to hit this year and accelerates after 2022. Assumptions about 3% GDP growth for another decade, with no recession, produces a further offsetting of $1.5 trillion. The net result supposedly is the $1.5 trillion reported by the press. But the $4.5 trillion cuts for business and investors have not gone into real investment and generated the Trump 2017-18 GDP growth rates.

Real investment in structures and equipment declined steadily over 2018 as the Trump tax cuts took effect: measured in percent terms compared to the preceding quarter, residential construction was negative every quarter in 2018. Commercial construction, with a lag, turned negative in the second half of 2018. And equipment spending fell from 8.5% in the first quarter to 3.4% by October 2018.

So if the Trump tax cuts did not go into real investment, creating real employment and real GDP where did it go? It went into stock buybacks, dividend payouts, and M&A activity. Several US banks’ research departments estimate buybacks plus dividends for just the Fortune 500 largest companies in the US will reach a record $1.3 trillion in 2018. Add the largest 2000 or 5000 companies and its close to $2 trillion. Hundreds of billions more for M&A. This diversion of the Trump tax cuts to financial markets is the main determinant driving stock markets (even after corrections) and other financial asset markets.

The government grossly over-reports wage gains for the average and low paid workers in the US. Independent source reports show that more than half of US workers received no wage gain at all in 2018. The official reported wage gains of 3% are skewed to the top 10% of the labor force, dragging up the ‘average’ wage. Moreover, the data is for full time employed only, leaving out tens of millions of part time-temp workers’ wages. And it doesn’t adequately account for local taxes and interest on debt that reduces the take home wage further. Then inflation is under-estimated, making the real wage appear higher. So average workers at best stagnated, with most experiencing a decline in real wages. The rate of inflation in the US is especially under-estimated for median worker family households, while inflation is rising for rents, medical, education, and other major items in household budgets. So the immediate future will mean even less real wage gains for the majority of US workers. If workers were doing so well today, as Trump and the business and mainstream press report, why is it that 7 million of them have defaulted on their auto loans? Probably a like amount for education loans, the defaults of which are grossly under-reported. And why is credit card, auto loans, and education loan debt now all over $1 trillion each? And total household debt load approaching $14 trillion?

Question 2: With undocumented immigrants at 10-12 million, do you believe Trump’s claim that immigrants are invading the US economy?

Dr. Rasmus: Immigrants are certainly not invading the US. The 10-12 million number has been stable for several years. And for immigrants for some countries, like Mexico, the numbers are in sharp decline. It is true that more immigrants are coming from central American countries like Honduras, Salvador and Guatemala. But that is due to the economic crises and violent breakdown of the social order in those countries, which is due largely to US support for the corrupt elites of those countries who encourage the gang violence in their countries and do nothing about the economic crises. If there is a problem with immigration in the US, it is a problem of highly educated tech workers being brought in on H1-B and L-1 visas, and rich Asians who can buy themselves a ‘green card’ residency by promising to spend $50,000 when they come. These groups are taking the best jobs, the high paying tech and other professional jobs, and have been since the 1990s. But Trump is agreeing with the US tech companies to keep bringing them in, taking jobs US workers should and could get. Trump’s immigration policy and draconian action against immigrants from Latin America and elsewhere is about his re-election plans in 2020. By creating ‘enemies’ within and outside the US, he diverts his political base from the real problems of America. Blame the foreigner in our midst has always been a useful fascist argument. And Trump is marching down that road, as witnessed in his latest Constitutional power grab by declaring national emergencies to build his Wall and invoking phony national security to justify his trade wars.

Question 3: Do you believe the widening gap between rich and poor in the era of Trump can boost Americans interest in socialism?

Dr. Rasmus: The income and wealth gaps in the US are not only widening but doing so at an accelerating pace. US neoliberal policy under Obama was to subsidize capital incomes through Federal Reserve cheap money and by extending and expanding his predecessor, George W. Bush, tax cuts for business and investors. He gave more than $5 trillion in tax cuts to business and investors, more than even Bush. Trump policy has accelerated the tax cuts even further and he’s now stopped the Fed from raising interest rates. So we have subsidization on steroids now by both fiscal and monetary policy. The direct consequence is booming stock and corporate bond markets, fed by $1 trillion annual stock buybacks and dividend payouts every year since 2011 (now at record $1.3 trillion in 2018). As wage incomes for the 90% of Americans remain stagnant, barely rise, or decline, the direct consequence is accelerating income inequality and wealth gaps. But it’s mainly due to the shift toward financial profits by American (and increasingly global) capitalists that’s been building since the 1980s.

Will this boost interest in socialism? It already has. A clear majority, well over 60%, of people aged 34 and younger in the work force, have indicated in various recent polls that they prefer socialism over capitalism. It’s not by accident, therefore, that Trump and the US business press has been launching an offensive to attack the idea of socialism once again. This shift in public opinion will continue as the Trump policies continue to create a growing gap in income, wealth and opportunity in America.

Question 4: Some critics of US economic statistics on inflation say that inflation may be as high as 9.6% or at least more than 5%. What’s your view on this?

Dr. Rasmus: I agree the CPI rate is actually higher. I don’t think it’s 9.6%, but certainly not 2.1% (core) or 2.4% (headline). The Shadow Stats source has long critiqued US stats, including inflation. Also, employment and wage data, both of which I’ve been criticizing this past year. The CPI is higher than reported for several reasons. First, as Shadow Stats notes, they make arbitrary assumptions about product quality improvements that lower the actual rate. Second, they use what’s called ‘chain price indexing’ that smooths out, and lowers, the rate over time. Third, the weights for the basket of goods in the CPI is outdated. This is especially true for median income and below families. There should be different weights and definition of the basket for different levels of income, but there isn’t. Middle income and below families are experiencing greater inflation due to rising drug and health prices, rising local taxes and utilities, rising interest rates on mortgages, and rising rents. Rent prices are under-reported in particular since they are smoothed out by including what’s called ‘imputed rents’; that is, assumptions about home owners paying themselves a rent (yes, that’s illogical but true in the methodology), which hasn’t changed much for years but, when added to direct rents, results in a lower average. There’s also issues with how the data is collected on prices.

Of course, we’re talking here about prices for goods and services. Not prices for financial assets which have accelerated several fold since 2009, as bubbles have grown. I suspect that real CPI is about 3.5% to 4%, not the 2.1%. That of course means that real US GDP is not 3% in 2018 but actually less than 1% in real terms. (The price index for GDP real adjustment is the GDP deflator index, which is notoriously even lower than the CPI (or the PCE, which the Fed uses).

Watch the first quarter 2019 GDP come in closer to 1% in official reporting later this spring. That means the Trump tax cuts of more than $4 trillion over the coming decade, front loaded in 2018, have had very little effect on real GDP. Most of it has gone to stock buybacks, dividend payouts and M&A financing. Buybacks pus dividends for the just the Fortune 500 will equal around $1.3 trillion for 2018, a record. Real investment has been sliding throughout 2018, when the tax cuts took effect. Residential construction contracted every quarter. Commercial construction lagged, but turned negative as well in the second half of the year. And equipment investment declined from 8.5% at the beginning of 2018 to 3%-4% by the end. It’s a real fiction that Trump tax cuts are responsible for the 3% plus growth in 2018. It’s mostly been due to government spending, especially defense, and to consumption driven by household debt for the bottom 80%, although nicely rising compensation for the top 10% has driven consumption as well. Trump cut paycheck withholding in 2018 so that average households would think the tax cut was putting more money in their wallets. But it wasn’t. And now, in 2019, most households will start feeling the bite of more taxes. The $4 to $4.5 trillion actual Trump tax cuts are going to the wealthiest individuals, businesses, and corporations, especially the US multinationals. That will be offset by $1.5 trillion in tax hikes for wage earners, which really starts to hit about 2022. Plus phony assumptions about 3% plus GDP growth rates for the next decade, with no recession. That’s how Trump gets his $1.5 trillion total deficit from the tax cuts. It’s a big fiction that the press also fails to report. Reporters are either stupid or the policy is to report the $1.5 trillion.

In other words, it’s not just price stats that are inaccurate, but GDP, wages and jobs data as well. The only thing holding up the house of cards is debt. For households now approaching $14 trillion. For the national government now $22 trillion (and going to $34 trillion by 2028). For state and local governments, trillions more. And for private business well over $20 trillion more. A big problem with leveraged loan debt, junk rate corporate debt, half of investment grade (i.e. BBB) which is also ‘junk’, and who knows what in derivatives and margin borrowing by investors.

Question 5: Progressive proponents of public banking, and what’s called modern monetary theory, both believe that the Federal Reserve could simply create money for all citizens’ economic benefit, not just for the banks. What’s your view on this? And specifically on the idea of a guaranteed basic income, what’s called a debt jubilee of legal forgiveness of debts of households, and a green new deal?

Dr. Rasmus: The Fed isn’t feeding the banks to avoid a recession; the Fed is feeding the financial markets to prevent a third major contraction since Feb. 2018 that is coming. Cheap money in excess keeps rates low (or in this case prevents them from rising further). But the money doesn’t go into real investment. It goes into asset markets (or flows offshore to emerging markets), or into M&A activity, or into stock buybacks and dividend payouts in the trillions annually (this year $1.3 trillion, after 6 years of an average of a trillion a year).

Yes, the Fed could provide credit to households and non-banks, but that’s not why it was created. It was created, like all central banks, to subsidize the banks with cheap credit and to bail them out when they binge too much and create a crisis. In the postscript to my 2017 book, ‘Central Bankers at the End of Their Ropes’, I provide language for legislation (and a constitutional amendment) that would radically change the mission of the Fed to serve all society not just bankers and investors. But the Fed was set up in 1913 to only lend to the banks, and since 2018 the shadow banks which now control more assets than the commercial banks like Chase, Wells, Citi, etc.

As for proposing a Debt Jubilee that’s just nonsense. So long as there’s a capitalist system the capitalists will never allow a debt forgiveness on a major scale. You’d have to change the system before to allow it.

What about guaranteed basic income? Something like that is inevitable. McKinsey Consultants recently estimated that Artificial Intelligence technology, or AI, will destroy 30% of all the job occupations in the US by 2030. Already more than 50 million of the US labor force are part time, temp, gig or what’s called ‘contingent’ or precariat labor force. They’re working two and three part time jobs to make ends meet and still can’t. AI will drive that total to well over half of the labor force. The system just can’t manage that many low and underpaid workers. Consumption will collapse, despite providing ever more household debt to fund consumption. However, as most are proposing guaranteed basic income now, it smacks of welfare and that makes it an easy ideological target for capitalists. It’s all about raising wages and creating real jobs that families can survive on. We need to be more creative than just UBI. But it does bring attention to the crisis of insufficient wage income for tens of millions of Americans, mostly young workers and the older that are forced to work into their seventies and until they drop.

Funding medicare for all? It’s possible to envision how the Fed, as the epicenter of a public banking system (part of my proposal) could provide funding for the infrastructure for medicare for all, in a new layer of clinics and public doctor offices locally. But the real funding for Medicare for all should come from taxing financial markets. That would be more acceptable to voters. Ditto for Green New Deal initiatives.

Progressives enamored with public banking or other monetary solutions (i.e. Modern Monetary Theory advocates) tend to over estimate the potential for monetary solutions to the economic crisis now maturing long run, as real investment continues to slow, productivity falls, prices tend toward stagnation and deflation (wages, interest rates, goods & services), global growth slows, and capitalists turn increasingly to financial asset markets to make their profits instead of past approaches of making things and new services that are useful and provide income for consumption. That is the ‘slow grinding crisis’ of capitalism today.

I support a public bank, but only as a small part of a larger solution that must include fiscal policy, industrial policy, and external (trade, exchange rate, money flows) policies. Money and banking are only part of the new program needed. But the program means nothing without political organization. The lack of that is the key characteristic of the time we live in. It all comes down to the organization question. Where can people turn to participate in realizing the new ideas? Not the Democratic Party. Certain not the Trumpublicans (there’s no Republican Party left, it’s now Trump’s). And the unions, as they grow weaker, turn to the Dems to save their ass. So forget a labor party based on the unions. That’s nostalgia of the 1930s. Won’t come again.

MMT theory is just another equilibrium theory that concludes that money can be created without limit, just use it for progressive programs. I don’t believe that. The Fed’s free money for the bankers and investors since 1980, and especially since 2000, and accelerating after 2009, is leading to unsustainable deficits and debt. The $22 trillion will be $34 trillion in less than ten years. And the interest on it will be $900 billion a year, per the CBO. That means capitalists will either have to give up their tax cuts, reduce their war spending budget, or….massively attack social security, medicare, education, etc. Guess which one is coming? The Trumpublicans make no apologies for it; and the Dems lie about how they won’t either.

Meanwhile, Sanders keeps acting the political Don Quixote tilting at the Dem party, trying to reform it, which keeps shitting on him and will do so perpetually. The Warrens, Bookers, and other ersatz progressives will ‘talk the talk’, the Dem party moneybags and leaders will encourage them to do so in order to outflank and dissipate Sanders’ progressive message, but in the end whomever of the progressives gets the next Dem presidential 2020 nomination, the Party leaders will ditch their proposals and programs and bring them in line. Don’t forget Obama in 2008, sounding like a progressive, but once in office put the bankers back in charge of his administration. But Biden’s the front runner anyway. So it’s not likely the party will even choose Warren, Booker, or any of the other ersatz progressive wannabes and Sanders clones.

In short, while I’ve probably written more about central bankers and financial markets than most ‘on the left’ (latest book coming in March is ‘Alexander Hamilton and the Origins of the Fed’), I’m not a proponent of primary reliance on monetary policy and banking system restructuring as a solution. And nothing matters without having first resolved the ‘organization question’.


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Alternative Visions Radio Show, February 15, 2019, on Trump’s National Emergency Declaration, Amazon v. New Yorkers, the latest on US economy indicators (retail sales, inflation, jobs), the global economy, & predictions re. Brexit, China trade, and Venezuela.






Dr. Rasmus reviews his prior prediction that Trump will declare a ‘National Emergency’ to get funds to build his wall. What it means for the US Constitution and the continuing drift toward the decline of US democracy. (How the Dems were complicit for decades enabling the declaration and what they won’t now do). Rasmus applauds New Yorkers for driving out Amazon. What big tech has done to San Francisco and the bay area in California. The danger of ‘OpenAI’ (Elon Musk’s company) and its machine learning-deep learning ‘fake news’ creation potential. Rasmus addresses the US retail sales recent numbers, a fall of -1.2%, the biggest since 2009 and what it means for the US economy in 2019. Also, the Fed now clearly has ‘thrown in the towel’ (as have other central banks) leaving monetary policy dead in the water for the next recession. Krugman now agrees with Rasmus re. recession. As recession looms, US Treasury faced with an additional $12 trillion in bonds it must sell (as China, Russia and others reduce purchases and buy gold). Recession now imminent in Eurozone, Germany, Italy, UK, and Japan. The latest Brexit vote, China trade negotiations, and US strategy in Venezuela.

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Just leaked today that Senator McConnell, Trump’s echo, has indicated that Trump will declare a national emergency today, even as he signs a compromise bill with Pelosi and the Dems to fully fund his Wall. Mainstream media thinks this is big time news. Comes as a surprise. But I predicted it back on January 7, 2019 in a tweet @drjackrasmus.com.

To quote myself in response to talk whether Trump will declare a national emergency to get his way on the Wall:

“Can (and will) Trump declare national emergency to fund his wall? Yes and Yes. Dem Congress in 1976 law gave him wide powers. 100s laws since say which. He’ll move $ from Defense budget to wall. Dems to be outmaneuvered again. US slouching further toward dictatorship”

Pelosi and Dems will act indignant. But as the historical record is clear, the Dems gave him this authority decades ago. Congress has been steadily giving up its authority to an Imperial Presidency for decades. Now we’re about to move into an era of legislation by Executive-Presidential action. So much for checks and balances and the basic structure of the US Constitution.

Under the US Constitution only the House of Representatives can initiate spending authorization and define how much will be spent on what. That era is over. Now the President can declare emergency and spend on whatever he wants. That’s another drift in US democracy toward dictatorship. That is, where the executive accretes legislative function to itself and ‘dictates’ what will be spent on what and when.

Trump has deep proclivities toward tyranny (ie. sees himself above the law, the definition of a Tyrant) and toward rule by dictate (where he declares law and spends as he wants, not the elected legislature).

So what will the Dems do now? Essentially nothing, I predict. They will huff and puff and file legal suits and use it all as ammunition for their re-election plans in 2020. But will they impeach Trump? Not a chance. They’ll just hold hearings now until November 2020.

What about the Mueller Report and forthcoming indictment? Will they use that to go after Trump now that he’s taking over some of their legislative function by declaring national emergency? Don’t expect much there either. There already are signs that the Mueller ‘Report’ the public gets to see will be an abridged, edited, and carefully whitewashed version. The real report will be shown to only a select few Congresspersons, in secret behind closed doors. And they will have to agree not to discuss it publicly as a condition of reading it. But without public pressure, nothing will happen. There can be no Democracy without public access to what the government is doing.

Meanwhile the Neocons are back in the drivers’ seat in the Trump administration. Bolton, Pompeio, Navarro, Lighthizer,–with mouthpieces like Coulter, Hannity, and others shouting in the background–are running policy. On the foreign policy front, preparations for deploying tactical nuclear war are moving forward, early stages of a proxy invasion of Venezuela are underway, the US is pulling out of treaties with Russia and moving forces closer to its border, phony negotiations pervade the mainstream media, for public consumption, about negotiations with North Korea, the US is adopting a hard line to thwart and stop China technology development, US allies in Europe and elsewhere being ‘brought into line’ to accept US policies or pay the price of sanctions or worse. In short, the US empire is gathering up its loose ends and preparing for a new phase, to restore its global hegemony in a more aggressive foreign policy form.

On the domestic US front, as neoliberal economic policies are being intensified under Trump (i.e. tax cuts for the rich and their corporations, more war spending, more free money from the Fed to subsidize the markets, coming attacks on social security, medicare, educations, etc.) in what is becoming increasing clear is an more aggressive, Neoliberal 2.0 form, the domestic political and Democracy landscape is being whittled away and reconstructed in order to make way and ensure the more aggressive neoliberal economic policies become embedded and institutionalized for another decade.

In other words, what we see happening in the US today in a more aggressive and confrontational US foreign policy, and an intensifying subsidization of capital incomes, amidst an atrophying of Democratic Rights and civil liberties at home. The new, nasty, more aggressive foreign policy and further destruction of US democratic rights are just the consequence of Trump’s new, aggressive neoliberal economic policies. The US elite know the next recession, coming soon, will significantly exacerbate the economic problems at home, while intensifying the political instability abroad. And they are preparing–at home and abroad.

Trump’s imminent declaration of national emergency to get his wall–a big leap toward circumventing the US House and Congress and the US Constitution–is just the latest event in this historical economic and political drift.

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US Treasury was warned by its advisory committee this past week that it will have to sell an extra $12 trillion of US government T-bonds over the coming decade as the US federal government debt increases from current $21 trillion to $33 trillion. On same day, US Senators, Sanders and Shumer, introduced a bill to require corporations to pay more wages and benefits if they want to keep buying back their stock and paying dividends. The total combined buybacks-dividends in 2018 was $1.4 trillion, up from $1.1 trillion in 2017 and from $500 billion in 2009. And all that just for the Fortune 500 largest US corporations. Since the 2008 crisis nearly $9 trillion has been distributed by US corporations to their shareholders.

Listen to my Alternative Visions radio show of February 8, 2018 for the discussion on these and related topics of the past week.






As the main topic of the show, Dr. Rasmus discusses the letter to the US Treasury by the Treasury Bond Advisory Committee (TBAC) this past week, warning that $12 trillion more in US Treasury bond sales will be needed over the next decade in order to finance rising US government debt. The $12T more per the TBAC is about equal to the net increase in federal debt (from current $21T to $33T) that Rasmus has been predicting will occur by 2028 due to Trump tax cuts, rising defense spending, and the next recession around the corner—with Interest payments on that debt alone equaling $900 billion a year, per the CBO. In a related topic, Rasmus discusses the latest data that show that Fortune 500 corporations’ stock buybacks plus dividend payouts will reach $1.4 trillion for 2018—up from $1.1 trillion in 2017 and from $500 billion in 2009. How the two trends of escalating government debt and accelerating $trillion a year plus buybacks-dividends are connected. The latest on Trump-Powell confrontation over rate hikes and coming breakdown of Russia-Saudi agreement on oil production are also addressed.

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How the US manipulates its dollar, the global reserve and trading currency, to crash the economy of targeted countries for regime change and prepare domestic discontent to enable legal coup d’etats; How US sanctions intensify the pressure b y denying the target country essential consumer and business goods, and closing off access to export markets; How ideological offensives charging ‘corruption’ provide the political cover; And how US allies are lined up in the final phase. Venezuela today as a classic case example of 21st century US imperialism strategy and tactics.

To Listen to the discussion on my Feb. 1, 2019 Alternative Visions radio show,






Dr. Rasmus and guest, Alan Benjamin, discuss the latest efforts of Trump administration to engineer a regime change in Venezuela. Rasmus explains how the US employs financial imperialism to destabilize regimes, using the US dollar, sanctions, freezing of assets, cutting off access to trade and markets, denial of loans by US and world banks, and other measures as a prelude to creating an economic crisis in the target country to foster domestic political unrest and opposition forces to topple existing governments. Rasmus explains how this has been developing in Venezuela, and why it has recently intensified over the past six months. Guest Alan Benjamin describes recent political developments in Venezuela and the growing potential for military intervention there using US proxy governments, Brazil and Colombia. Efforts by Europe and Mexico to mediate. Possible responses by Russia and China. And solidarity movements emerging in the US to avoid a US proxy war against Venezuela. (go to jackrasmus.com blog for 2016 article: “How the US Destabilizes Argentina, Brazil, & Venezuela). For emerging US solidarity movements, check outwww.USlaboragainstwar.org)

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Senior negotiators of the US (Lighthizer) and China (Liu He) have been meeting in Washington this past week (Jan. 30-31) as the US-China trade war approaches a climax. China continues publicly to offer concessions to the US on market access to China, US corporate and bank majority ownership of China companies, and China resumption of purchases of US farm and other goods. Meanwhile, the US continues to assume a hard line on China technology development, going after China companies and arranging US allies to do the same. The US also began proceedings to extradite from Canada the co-chairperson of the giant China tech company, Huawei. But news of what’s been agreed to or not thus far in negotiations has been tightly controlled, apart from Trump tweets and typical hyperbole that discussions have been ‘great’. No meeting has been scheduled yet between Trump and China president, Xi–which would be the true indicator that a tentative agreement has been reached. Reportedly, negotiators will continue at a high level mid-February in Beijing, and US trade ambassador, Lighthizer, has announced he will travel to China to continue discussions.

On the eve of last week’s negotiators, I was asked to give an hour interview on TV by the Peninsula Peace and Justice center in Palo Alto, California. Topics focused on China-US trade, NAFTA 2.0, and Trump policies in general. That hour interview can be viewed on Youtube at the following link:


Dr. Jack Rasmus

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Watch my latest TV interview on ‘Other Voices TV’ on January 16, 2019 discussing latest developments on US trade-budget deficits, Trump’s ‘dual track’ trade policy, and upcoming US-China Trade negotiations scheduled for January 30.

TO LISTEN, go to Youtube at:

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