Author Archives: Reid Mukai

A Fed-Issued Digital Currency: The Mark of the Beast

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A Fed-issued digital currency would be no more in our interests than the current dollar system.

By Jeremy R. Hammond

Source: Jeremy R. Hammond Blog

China’s ‘Social Credit’ System

“And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand, or in their foreheads: And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.” — Revelation 13:16-17

In China, as you have likely heard, the government has been experimenting with a “social credit” system aimed at giving politicians even greater control over people’s behavior. China was, of course, also the country whose authoritarian “lockdown” response to the outbreak of SARS‑CoV‑2—the coronavirus that causes COVID‑19 and was likely engineered in a Chinese lab with US government funding—was pointed to as a model for the rest of the world to follow by the World Health Organization (WHO).

The WHO has since been aiming to acquire even more centralized global authority to issue diktats in the event of another pandemic, such as implementation of “lockdown” measures that might include travel restrictions, prevention of employment, and vaccine mandates or passport systems.

As of December 2020, around the time of the initial outbreak of the virus in Wuhan, China, social credit laws and regulations had been implemented in an estimated 80 percent of the country.

Naturally, the system is characterized by its proponents as a benevolent means to reward socially responsible people while denying privileges to unsavory and untrustworthy characters and businesses. But you and I both recognize the grave threat posed by politicians wielding this type of power and control over the population. It is an obvious threat to privacy and liberty.

The people of China regrettably but unsurprisingly appear to have welcomed this system, although the perception of public approval might be largely an artifact of people being afraid to publicly criticize the system lest their names be placed on one of the government’s “blacklists”.

As with any law or government policy, we should view it through the lens of how such power could be used as opposed to how politicians say they intend to use it.

A glimpse of how it could be used is the city of Rongcheng’s prohibition on “spreading harmful information”, violations of which could result in subtraction of points off residents’ social credit scores.

Such prohibitions must be seen in light of how governments are in the habit of interpreting “harmful information” as any information that does not align with the adopted political agenda. In the US during the COVID‑19 pandemic, there has been no greater purveyor of misinformation than the US government itself.

According to MIT Technology Review, the central government actually pressed the city to scale back the threat to individual liberty posed by its social credit system, such as enabling residents to opt-out. “The Chinese government did emphasize that all social-credit-related punishment has to adhere to existing laws,” the Review states, “but laws themselves can be unjust in the first place.”

The takeaway from that article is that “the social credit system does not (yet) exemplify abuse of advanced technologies like artificial intelligence”. But that’s no reason for the citizenry to consent to the implementation of systems that are conducive to extreme governmental abuses of authority.

A July 2019 article in Wired magazine related the example of Liu Hu, a journalist who was arrested, fined, and blacklisted, reportedly for writing about censorship and government corruption. He found himself on a “List of Dishonest Persons Subject to Enforcement by the Supreme People’s Court as ‘not qualified’ to buy a plane ticket, and banned from travelling some train lines, buying property, or taking out a loan.”

A more recent Newsweek article appropriately describes the system this way:

On an individual level, the government seeks to instill in the public an increased sense of morality to discourage everything from fraud and plagiarism to counterfeit goods and petty crime. But a system to make individual actions more transparent would necessitate the creation of tools to monitor all aspects of life. Social control, if not the original aim, could be an inevitable consequence, researchers say.

. . . While China’s vision of the system has yet to emerge as a dystopian tool for control driven by big data, there are real concerns about the way personal information is to be collected and processed to create social credit profiles, which could have lasting implications for individuals.

An untrustworthy government has no place dictating to its citizens what types of behaviors should be regarded as creating or breaking trust.

Human Rights Watch provides the example of lawyer Li Xioaolin, who was denied a plane ticket home while away on a work trip inside China because his name was on a blacklist of “untrustworthy” people in relation to a years-old court-related issue that he thought he had resolved.

According to Human Rights Watch, journalist Liu Hu was punished not for criticizing the government and exposing corruption but for having offered an apology that the government deemed “insincere” after losing a defamation case for publishing an article alleging that someone was an extortionist. Still, the organization notes, in both cases, “penalties were exacted in wildly arbitrary and unaccountable manners.” Additionally, “the courts failed to notify them, leaving them no chance to contest their treatment.”

According to the human rights organization, between 2013 and 2017, the Chinese government imposed more than seven million punishments to people for failing to carry out local court orders, which punishments have included publicly naming and shaming individuals and barring them from flights and trains.

After experiencing the totalitarianism of the disastrously harmful lockdown regimes and the accompanying efforts to coerce the population into accepting COVID‑19 vaccines and to censor truths countering the government’s incessant lies (I was permanently banned from LinkedIn, for example, for accurately reporting that the CDC’s claim that COVID‑19 vaccines provide greater protection against SARS‑CoV‑2 infection than natural immunity was a bald-faced lie), it should not be too difficult to imagine such a system being dangerously used to silence critics and punish dissenters so that whatever ruling regime can continue its crimes against humanity unobstructed.

The idea of a “social credit” score, of course, is inherently tied to the idea of central banking. In the US, the central bank is the Federal Reserve, a government-legislated private monopoly over the supply of currency. Increasingly, there is talk of a central bank digital currency, heightening concerns about the government having the means to exercise power over us and control our behavior.

“Project Hamilton”

As an example of how the Fed is exploring the idea of adopting a digital currency, the Massachusetts Institute of Technology (MIT) has teamed up with the Federal Reserve Bank of Boston under the appropriately named “Project Hamilton”.

Alexander Hamilton, of course, was instrumental in the adoption of central banking by the US government, famously at odds with Thomas Jefferson, who rightly opposed the idea and warned about the dangers inherent in such an institution. Jefferson appeared to hold the view that the means of exchange and interest rates ought to be determined by the market as opposed to being determined by fiat by a roomful of central planners.

Jefferson accurately foresaw how the government would use the central bank to pay for its spending as an alternative to raising taxes directly, and how the debt that would consequently be incurred by this uncontrolled spending would ultimately be borne by future generations.

In a letter to John Wayles Eppes in 1813, for example, Jefferson wrote:

I have said that the taxes should be continued by annual or biennial re-enactments; because a constant hold, by the nation, of the strings of the public purse, is a salutary restraint, from which an honest government ought not to wish, nor a corrupt one to be permitted, to be free. No tax should ever be yielded for longer than that of the Congress granting it, except when pledged for the reimbursement of a loan.

. . . Bank-paper must be suppressed, and the circulating medium must be restored to the nation to whom it belongs. . . . Treasury bills, bottomed on taxes, bearing, or not bearing interest, as may be found necessary, thrown into circulation, will take the place of so much gold & silver, which last, when crouded, will find an efflux into other countries, and thus keep the quantum of medium at its salutary level.

In a letter to John Taylor in 1816, Jefferson described central banking as rightly “reprobated” and as “a blot left in all our constitutions, which, if not covered, will end in their destruction”. He wrote, “And I sincerely believe with you, that banking establishments are more dangerous than standing armies; & that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale”.

Jefferson viewed the federal government as having no authority to institute a central banking system. As he wrote in 1791, “The incorporation of a bank, and the powers assumed by this bill, have not, in my opinion, been delegated to the United States, by the Constitution.”

The stated aim of Project Hamilton “is to investigate the technical feasibility of a general purpose central bank digital currency (CBDC) that could be used by an economy the size of the United States and to gain a hands-on understanding of a CBDC’s technical challenges, opportunities, risks, and tradeoffs.”

The project is part of MIT’s “Digital Currency Initiative”, which is aimed at bringing minds together “to conduct the research necessary to support the development of digital currency and blockchain technology.”

The aim of the collaboration with the Federal Reserve Bank of Boston has been “to develop a hypothetical CBDC.” MIT describes the possibility of a “central-bank-issued digital currency” as “a unique opportunity to address challenges in our existing payments system and design an economy that is more resilient, participatory, and open.”

We can reasonably assume that Thomas Jefferson, were he alive today, would disagree and view the idea as anathema to both a sound economy and a free society.

Noting that it was Alexander Hamilton “who laid the foundation for a U.S. central bank”, a project white paper published in February 2022 concluded that it is “critical” for research to continue for “achieving goals for a CBDC.” That is, it is not a question of whether the Fed should adopt a digital currency but how and when.

Biden’s Executive Order and Project Lithium

In January 2022, the Federal Reserve Board of Governors similarly published a paper titled “Money and Payments: The U.S. Dollar in the Age of Digital Transformation”, the aim of which was “to foster a broad and transparent public dialogue about CBDCs in general, and about the potential benefits and risks of a U.S. CBDC.”

Then in March 2022 President Joe Biden signed an “Executive Order on Ensuring Responsible Development of Digital Assets”, which declares the supposed need for the US government to “regulate” digital assets, including for the purpose of preventing circumvention of its sanctions regimes—in which context we might remember the US government’s criminal sanctions regime against Iraq in the 1990s and how Secretary of State Madeleine Albright insisted that the “price” of half-a-million dead Iraqi children was “worth it”.

The executive order, number 14067, describes how the government has an interest in maintaining the US dollar’s “central role” in “the global financial system”, which refers to the use of the dollar as a reserve currency. To that end, the order states, the Biden administration “places the highest urgency on research and development efforts into the potential design and deployment options of a United States CBDC.”

The White House is intent on determining what actions would be required to launch such a currency “if doing so is deemed to be in the national interest”. Of course, as the example of half a million excess childhood deaths in Iraq due to sanctions once again illustrates, determining just what is in the “national interest” is not a task that government policymakers seem particularly good at.

The lockdown measures, which utterly failed to project those at highest risk from COVID-19 while causing devastating harms globally, are another useful example of the ineptitude of policymakers when it comes to making decision that are in our best interests.

Following Biden’s executive order, in April 2022, the Depository Trust & Clearing Corporation (DTCC) announced “the development of the first prototype to explore how a CBDC might operate”. This endeavor was given the name “Project Lithium”, on which the DTCC is collaborating with The Digital Dollar Project (DDP), an organization that advocates US leadership “in advancing a CBDC” and encourages the executive branch of government “to support appropriate legislation” to authorize further research and development of such a currency.

The DDP published a white paper in May 2020 concluding that the US government “should, and must, take a leadership role in this new wave of digital innovation” and preserve the dollar’s role as “the world’s primary reserve currency” by working toward “the launch of a tokenized digital dollar”.

End the Fed!

Naturally, advocates of a central bank digital currency describe the aims of such a development as benign, just as the Federal Reserve system was originally established on the pretext that having a more centrally controlled economy would benefit all.

In truth, the Federal Reserve system serves the interests of the financially and political elite at the expense of the rest of us. Central banking itself, whatever the form of currency issued, is harmful to the economy because central banks essentially exist to effect a transfer of wealth upward. Schools of economic thought like Keynesianism and Modern Monetary Theory (MMT), which I like to refer to as “Keynesianism 2.0”, exist to justify the existence of central banks.

The Fed, a government-legislated private monopoly over the currency supply, enables the government to spend on whatever, including endless wars (euphemistically called “defense” spending), but the means of paying for it all, the creation of “money” out of thin air, results in upward wealth transfer. The elite classes who receive the newly created dollars first are able to spend it for purchasing assets prior to the resulting devaluation that manifests in the form of higher prices for goods and services.

Monetary inflation robs us of our purchasing power and so serves as a hidden tax. It also causes widespread malinvestment and major economic distortions like the housing bubble that burst in 2007 and precipitated the 2008 financial crisis, not to mention the current housing bubble and general asset inflation. (For more on that, see my book Ron Paul vs. Paul Krugman: Austrian vs. Keynesian Economics in the Financial Crisis.)

We are meant to believe we need centralized control over the currency supply for economic growth, but central banks instead serve to impede real economic growth in favor of enabling the government’s endlessly wasteful and harmful spending.

The chief appeal of a cryptocurrency like Bitcoin is that it is a decentralized medium of exchange that serves to compete with central-bank-issued currency and potentially enables people to opt-out of the exploitative dollar system. The idea of a “legal tender” digital currency in the hands of the bankers and politicians is anathema to the whole concept of a peer-to-peer electronic cash system.

One might argue that the replacement of print dollars with a centrally controlled cryptocurrency is just a natural evolution from the current system, in which exchange of actual cash is becoming less frequent and most transactions occur digitally anyway. We should keep up with the times and adapt to advancements in technology, the argument goes.

However, this overlooks the more fundamental issue that we should not have central banks in the first place. The way I see it, the movement towards replacing the US dollar with a Fed-issued cryptocurrency is far from benign. We have seen in the past few years just how far government policymakers are willing to go to exercise authoritarian control over us.

To illustrate, remember how businesses deemed “non-essential” were shut down by clueless bureaucrats under threat of punishment, and how coercive measures including mandates and travel restrictions were used to get people to accept COVID‑19 vaccinations?

With the World Economic Forum (WEF) having announced its “Great Reset” agenda, which ties directly into the global mass vaccination agenda, the advocates of greater centralized control over society do not deserve the benefit of our doubt about their intentions. It would be naïve to think that if the authoritarians in government had even greater means to penalize citizens for disobedience to the regime that they would not attempt to use it. It is safer to assume that if they can utilize a digital currency to control our behavior, they will.

It seems therefore imperative to oppose a centralized digital currency, but we also need to go further than that and oppose the existence of the Federal Reserve altogether. Whatever the form of currency, centralized economic planning is an abomination and anathema to the principle of a free market.

“And I heard another voice from heaven, saying, Come out of her, my people, that ye be not partakers of her sins, and that ye receive not of her plagues.” — Revelation 18:4

How Covid lockdowns primed the current financial crisis

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By Christian Parenti

Source: The Grayzone

The lockdowns and the stimulus required to keep the economy alive helped drive inflation. Then the Fed jacked up interest rates. And all hell broke loose.

On Friday March 10th, 2023, Silicon Valley Bank (SVB) died of Covid. Alright, it’s a little more complicated than that, but Covid lockdowns followed by massive government stimulus were a critical – and massively under-acknowledged – factor in propelling the bank’s demise.

At the heart of the crisis is the gigantic pile of low-interest debt that was issued during the height of the pandemic. While private-sector pandemic-era debt like corporate bonds also soared, US government debt like Treasury bonds piled up.

In a nutshell, during the pandemic the government issued enormous amounts of extremely low interest government debt — about $4.2 trillion of it. But now interest rates, including on government debt, are higher than they have been in 15 years and investors are dumping their old low-interest debt. As they dump, the resale price of the old debt goes down. The more it declines, the more investors want to dump. And thus, a panic is born. 

To understand the problem fully, the question of US government debt has to be put into its larger context, which is: the pandemic response as a whole.

When news of the Covid virus first broke in December 2019, the 2 Year Treasury bond was being offered at 1.64% interest; the 10 year was at about 1.80%, and the resale value of such bonds on secondary markets was strong. Then, in March 2020, as Covid cases and deaths spiked, the US began to shutter its economy with panicked lockdowns that were supposed to “flatten the curve” or slow the spread of the virus and thus protect the hospitals. But Covid was politicized and the lockdowns were extended.  

As the lockdowns dragged on, the US economy began to collapse, shrinking at a record-shattering annualized rate of 31.4% during the second quarter of fiscal year 2020.

To avoid total economic devastation, the federal government began massive debt-financed spending. In March 2020, Trump signed into law the $2.2 trillion economic stimulus bill the CARES Act, or Coronavirus Aid, Relief, and Economic Security. Then, in March 2021, Biden signed the American Rescue Plan Act which contained $1.9 trillion more in Covid relief. Finally, in April 2021, another trillion or so of Covid relief arrived in the Consolidated Appropriations Act. 

Thanks to these laws, every industry and most people received public money. There was increased and extended unemployment payments, as well as the so-called “stimmy checks” or stimulus payments to everyone earning under $75,000 a year (about half the population). The Paycheck Protection Program spent almost a trillion dollars. The Provider Relief Fund doled out $178 billion to the healthcare system. 

All this debt spending kept millions of people in their homes, and helped feed, employ, and care for millions more. The measures allowed hundreds of thousands of businesses to stay afloat even as many thousands of others went under. The impact of the spending on Americans’ well-being was generally positive. For a moment, the US child poverty rate was cut in half, falling to 5.2%. 

But the economically destructive lockdowns were not necessary and did not work. Covid fanatics maintain that the lockdowns were unavoidable because the virus is so deadly. That, however, is uninformed. Last year I explained in detail how the Lockdown Left got the Covid crisis wrong. Not a single critic has challenged any of the facts I presented so there is little point in rehashing them all here. 

Those who advocated an alternative to ham-fisted lockdowns, like the authors of the Great Barrington Declaration, which called for “focused protection” of vulnerable groups like the elderly, were viciously targeted in a reputation destruction campaign covertly orchestrated by former NIH director Francis Collins and de facto Covid czar Anthony Fauci. Never mind that the document’s authors were three eminently qualified scientists: Sunetra Gupta, professor of Theoretical Epidemiology at Oxford University; Jay Bhattacharya, professor of medicine at Stanford; and Martin Kulldorff, formerly a professor of medicine and biostatistics at Harvard. They were portrayed as far-right cranks who were almost eager to see millions die. But now, they have been vindicated.

Ultimately, the federal government spent $4.2 trillion propping up the economy that it was simultaneously choking to death with lockdowns. These two contradictory pressures laid the groundwork for the recent bank failures. Government mandated lockdowns hit the economy like a body blow. Factories closed, small businesses went under, ports and logistic hubs reduced operations, and about 2 million mostly older workers simply resigned. But at the same time, the federal government injected vast amounts of purchasing power into the economy, thus boosting consumption.

These two, contradictory government moves imposed almost unbearable pressure on supply chains. As shortages mounted, prices began to surge. Put simply: lockdowns plus stimulus equaled inflation.

Consider just one of the most important bottlenecks in the whole economy. During lockdown, many commercial driving license schools were closed. This helped create a shortage of about 80,000 truckers. If trucks do not roll supplies run low and prices go up.

At first, the official line on inflation – parroted by the Lockdown Left – maintained that inflation was “transitory.” But it was not. Inflation peaked at 9.1% in June 2022 while wage growth lagged at about 5%. In April 2020 during the worst of the lockdown, the Federal Reserve’s Federal Funds Rate sank to 0.5%. By February 2022, it had only risen to 0.8%.  

Meanwhile, inflation was surging. By February 2022, inflation had reached 7.9%. Only then did the Fed, in an effort to tamp down prices, begin raising interest rates at the fastest pace rate in its history. The federal Funds rate was around 4.57% when SVB went under. Perhaps a massive wave of taxation could have soaked up enough liquidity to have helped cool prices, but that was a political impossibility. The more politically palatable response in Washington was for the Federal Reserve to raise interest rates. 

Herein lies the problem. During the height of the lockdowns, banks bought up enormous amounts of government debt. As the Wall Street Journal put it: “U.S. banks are suffering the aftereffects of a Covid-era deposit boom that left them awash in cash that they needed to put to work. Domestic deposits at federally insured banks rose 38% from the end of 2019 to the end of 2021, FDIC data show. Over the same period, total loans rose 7%, leaving many institutions with large amounts of cash to deploy in securities as interest rates were near record lows.” Awash in deposits with not enough demand for loans, the banks bought US government securities. Their purchases surged 53% between 2019 and the end of 2021, to a total of $4.58 trillion, according to Fed data reported by the Wall Street Journal.

Because so much debt was being issued, it carried super-low interest rates. For example, on July 27, 2020, the 10 Year Treasury was offered at an annual interest rate of only 0.55%. This is fine if you are the borrower of money, but if you are the lender (that is to say, a bank giving the federal government money in exchange for a Treasury bond), it means your income stream will be reduced to a mere trickle. If inflation rises, it essentially disappears. 

As the yield on new government debt reached toward 5% and inflation hung stubbornly at around 6.4%, all of that old, low-interest, pandemic-era debt started to look like garbage and banks began unloading it. The more that banks dumped old debt, the less value that debt had on resale markets. The lower its resale value, the more the banks wanted to dump it. SVB lost almost $2 billion selling off Government securities. And when they announced the loss, their stock price plunged by 60%. 

At the same time, many of SVB’s clients were withdrawing money. This was in part because rising interest rates made borrowing new money more expensive and thus incentivized the use of savings in day-to-day business operations. Also, higher inflation and higher interest rates made low-earning bank deposits less attractive and compelled depositors to redeploy their surplus capital towards higher-earning investments. So, just as SVB needed cash, deposits were evaporating.

By the end of the week of March 10, the four biggest banks in the United States had lost $51 billion because of their panicked dumping of pandemic-era debt. Right after SVB was taken under government control, state regulators closed the New York-based Signature Bank. Before the weekend was over the Federal Reserve announced the creation of a new lending facility that would ensure that “banks have the ability to meet the needs of all their depositors.” Furthermore, the Fed said it was “prepared to address any liquidity pressures that may arise.”

It would seem that the federal government is ready to execute another de facto partial nationalization of US banking, just as they did in 2008 via emergency “cash injections” and then the Troubled Assets Relief Program (TARP). In this current crisis, banks can avoid losses on their low-interest debt if they do not sell it before its maturity. For that to happen, the banks need money. The Fed has said it will pour enormous amounts of money into the banks while all of the relevant officials have proclaimed that the banking system will somehow pay for this. All of this will almost certainly mean even more government debt will be issued. 

Already, interest payments on the federal debt are one of the largest single items in the US budget – set to reach $400 billion this year. That is almost half as much as the grotesquely overdeveloped military budget. By comparison, federal spending on housing is only $78 billion.

Shoring up the banking system is necessary because if it collapses, the whole economy goes with it. At least in the short term, Americans are hostages of the US financial system. But government intervention without any new regulations and taxes upon the financial sector will likely mean more inflation and a bigger financial bubble. By refusing to properly tax the top 1%, the federal government also commits itself to more austerity for the many and more welfare for the rich, because rising government debt means a rising portion of our taxes must go toward interest payments. 

This system of crisis-prone, hyper-financialized capitalism seems ever more like a junkie. If it doesn’t get its regular fix of public sector help, it will simply collapse and die. 

Even if the federal government can stanch the current crisis, the pandemic debt story is global and very likely to cause trouble for some time to come. As a 2021 report by the World Bank put it: “The debt buildup during the pandemic-induced global recession of 2020 was the largest in several decades. This was true for all types of debt—total, government, and private debt; and advanced-economy and EMDE [emerging market and developing economy] debt; external and domestic debt. In 2020, total global debt reached 263 percent of GDP and global government debt 99 percent of GDP, their highest levels in half a century.” 

The US intelligentsia and its media elites are finally beginning to reckon with the impact of misguided and authoritarian lockdowns on student learning and the psychological and physical health of millions. But in all the discussion of the current bank runs, the pivotal role of lockdowns in priming the crisis remains overlooked.

Ukraine is America’s Afghanistan More Than Russia’s

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By Peter Van Buren

Source: We Meant Well

The thinking in Washington goes like this: for the “low cost” of Ukrainian lives and some American dollars, the West can end Putin’s strategic threat to the United States. No Americans are dying. It’s not like Iraq or Afghanistan ’01-’21. This is post-modern, something new, a clean great power war, Jackson Pollack for war. Getting a lot of foreign policy mojo at little cost. It’s almost as if we should have though of this sooner.

Um, we did. It didn’t work out past the short run and there’s the message. Welcome to Afghanistan 1980’s edition with the U.S. playing both the American and the Soviet roles.

At first glance it seems all that familiar. Russia invades a neighboring country who was more or less just minding its own business. Russia’s goals are the same, to push out its borders in the face of what it perceives as Western encroachment on the one hand, and world domination on the other. The early Russian battlefield successes break down, and the U.S. sees an opportunity to bleed the Russians at someone else’s bodily expense. “We’ll fight to the last Afghani” is the slogan of the day.

The CIA, via our snake-like “ally” in Pakistan, floods Afghanistan with money and weapons. The tools are different but the effect is the same: supply just enough firepower to keep the bear tied down and bleeding but not enough to kill him and God forbid, end the war which is so profitable — lots of dead Russkies and zero Americans killed (OK, maybe a few, but they are the use-and-forget types of foreign policy, CIA paramilitary and Special Forces, so no fair counting them.) And ironic historical bonus: in both Afghanistan 1980s and Ukraine, some of the money spent is Saudi. See the bothersome thread yet?

Leaving aside some big differences that enabled initial successes in Afghanistan, chief among which is the long supply lines versus Ukraine’s border situation, let’s look at what followed early days.

Though NATO countries and others sent small numbers of troops and material to Afghanistan, the U.S. has gone out of its way to make Ukraine look like a NATO show when it is not. Washington supposedly declared support for Ukraine to preserve and empower NATO (despite the fact that Ukraine was not a member.) Yet, to keep Germany on sides in the Russian-Ukraine war, Washington (allegedly) conducted a covert attack on Germany’s critical civilian infrastructure that will have lasting, negative consequences for the German economy. Seymour Hersh reported the Nord Stream pipeline connecting cheap Russian natural gas to Europe via Germany was sabotaged by the United States. An act of war. The destruction of an ally’s critical infrastructure, and no doubt a brush back pitch carefully communicated to the Germans alongside a stern warning to stay put on sanctions against energy trade with Russia. It’s a helluva thing, blowing up the pipeline to force Germany to color inside the lines NATO (actually the U.S.) laid out. This, in addition to the U.S. treating NATO countries as convenient supply dumps and little more, shows that NATO will emerge from Ukraine broken. One does also wonder if the future of Europe is at stake why the greatest concern is expressed in Washington and not Bonn or Paris.

As with Afghanistan, there are questions if we Americans will ever be able to leave, about whether Colin Powell’s “Pottery Barn” rules applies — you break it, you bought it. President Zelensky, portrayed in the West as a cross between Churchill and Bono, in actuality was a comedian and TV producer who won the 2019 Ukrainian presidential election. Zelensky’s popularity was due in part to his anti-establishment image and promises to fight corruption and improve the economy. He was also aided by his portrayal of a fictional president in a popular TV show, which helped to increase his name recognition and appeal to young voters.

Zelensky was preceded by the Ukrainian Revolution, also known as the Euromaidan Revolution, which began in late 2013 as a series of protests in response to then-President Viktor Yanukovych’s decision to reject an association agreement with the European Union and instead pursue closer ties with Russia. The protests grew in size and intensity, with demonstrators occupying the central Maidan Nezalezhnosti square in Kiev, demanding Yanukovych’s resignation and new elections. In February 2014, the situation escalated when Yanukovych’s security forces cracked down on protesters, resulting in violent clashes that left dozens dead. This led to Yanukovych fleeing the country and a new government being formed in Ukraine. The revolution also sparked tensions with Russia, which subsequently annexed Crimea and supported separatists in eastern Ukraine. None of those problems goes away even if the Russia army retreats to its pre-invasion borders. The notion that there is nothing going on here except a rough land grab by a power-made Putin is shallow and incomplete.

What’s left are concerns about the level of corruption in Ukraine, and the U.S.’s role in addressing it. Despite the U.S. providing significant financial aid to Ukraine, there have been reports of corruption and mismanagement of funds. Some have argued that the U.S. has not done enough to address these issues, and has instead turned a blind eye in order to maintain its strategic interests in the region. America’s history with pouring nearly unlimited arms and money into a developing nation and corruption is not a good one (see either Afghanistan, 1980s or ’01 onward.) Corruption can only get worse.

A great fear in Afghanistan was arms proliferation, weapons moving off the battlefield into the wrong hands. Whether that be a container of rifles or the latest anti-aircraft systems, an awful lot of weapons are loose in Ukraine. In the case of Afghanistan, the real fear was for Stinger missiles, capable of shooting down modern aircraft, ending up in terrorist hands. The U.S. has been chasing these missiles through the world’s arms bazaars ever since, right into the Consulate in Benghazi. It is worse in Ukraine. America’s top-of-the-line air defense tools are being employed against Russian and Iranian air assets. What would those countries pay for the telemetry data of a shoot down, never mind actual hardware to reverse engineer and program against? There are no doubt Russian, Chinese, Iranian and other intelligence agencies on the ground in Ukraine with suitcases full of money trying to buy up what they can. Another cost of war.

It is also hard to see the end game as the demise of Putin. This would mean the strategy is not fight until the last Afghani/Ukrainian but to fight until the last Russian. The plan is for that final straw to break, that last Russian death, to trigger some sort of overthrow of Putin. But by whom? Trading Putin for a Russian-military lead government seems a small gain. Look what happened the last time Russia went through a radical change of government — we got Putin. In Afghanistan, it was the Taliban x 2.

History suggests the U.S. will lose in a variety of ways in Ukraine, with the added question of who will follow Putin and what might make that guy a more copacetic leader towards the United States. As one pundit put it, it is like watching someone play Risk drunk.

Rage Against The War Machine: What Rage? ‘When Will They Ever Learn?’

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By Robert J. Burrowes

In his iconic 1950s anti-war hit song ‘Where Have All the Flowers Gone?’, Pete Seeger posed the eternal question about war: ‘when will they ever learn?’ Of course, Seeger’s question was primarily directed at those individuals who choose to participate in the fighting. But it might equally have been directed at those in the ‘anti-war’ movement.

A few years later in 1963, Native Canadian Buffy Sainte-Marie penned the equally iconic ‘Universal Soldier’ to draw attention to ‘individual responsibility’ for war.

The question ‘Why war?’ has troubled human beings for millennia and individuals of conscience have long resisted it, sometimes paying a heavy price for doing so. And back in 1932, two of humanity’s giants – Albert Einstein and Sigmund Freud – grappled with the question, exchanging letters on the subject.

See ‘Why War?’

Beyond war, a great deal of effort has gone into understanding conflict and violence, including their structural and cultural components, and I have noted some of these efforts, including my own, in a wide range of documents such as these:

‘Why Violence?’,

‘Comforting a Baby is Violent’,

‘The War to End War 100 Years On: An Evaluation and Reorientation of our Resistance to War’ and

‘Einstein and Freud’s ‘Why War?’

Revisited: Why Anti-War Efforts Go Nowhere’.

Four things fundamentally missing from all previous efforts to halt a particular war or to end war generally, however, are these:

  1. a serious effort to understand the dysfunctional psychology, and what causes it, that drives human violence generally,
  2. a serious effort to analyse war as a system of power: Who is causing it, why and how? (This is important because understanding how power works in the world system as well as who, precisely, is driving what is happening, why, and how they are doing it are crucial prerequisites for developing an effective strategy to resist, or end, war.)
  3. a sophisticated nonviolent strategy based on this understanding and analysis that is thoughtfully designed to address each of the foundational components of war, and
  4. sufficient courageous people committed to implementing this strategy by participating in it themselves and mobilizing others to do so too.

Consequently, to say that anti-war efforts lack sophistication is to put it mildly in the extreme. As the very long history of ‘anti-war’ struggle clearly demonstrates.

And so it was listening to the anti-war speeches delivered in Washington DC at the Rage Against the War Machine rally on 19 February 2023. You can watch whole or abridged versions of these speeches here: Rage Against the War Machine.

Rage might give a person power in some contexts but, in itself, rage has zero strategic value. And are these people really feeling ‘rage’ about the ongoing war all over the planet or even the war in Ukraine? And acting on it? Of course not. Even if they were, as mentioned ‘rage’ is no substitute for acting powerfully (that is, strategically) to end war.

Moreover, there is a simple reason for this. Most anti-war activists do not feel rage against the war machine for the simple reason that they are terrified of it.

And this fear incapacitates them, leaving most anti-war activists too scared to seriously commit themselves to doing what is necessary to end war. Again, as the record demonstrates.

Hence, they complain powerlessly, rather than analysing, devising strategy and then acting powerfully knowing that their actions will contribute to the long-term struggle to end war once and for all.

So let me go back a step and analyze why the anti-war movement is so frightened and powerless and why it cannot learn from its own history of failure.

Why do most people complain?

In essence, this happens because when they were children, their parents interfered with their emotional expression which, in turn, stifled those innate behaviors bestowed by evolution to ensure that the baby, and later the child and then adult, acted to have their needs met. Usually by a young age, the child will learn to complain powerlessly when they do not get what they want. But complaining, rather than acting, does not meet their needs.

Thus, just as the child, endlessly thwarted by a parent who ignores the child’s genuine needs and then ignores their pleas to have these addressed, is trapped in the mode of complaining, most activists never learn that the role of politicians is to ignore them too. Of course, the value in this for those who genuinely wield power in society and whose aim is to facilitate perpetual war to achieve a variety of Elite ends (notably including the ongoing consolidation of Elite power and the maximization of corporate profits by financing both sides in any war) is that efforts of this nature, such as public protests against ‘government policies’ absorb and dissipate dissent, as intended.

And so it was on 19 February 2023 when a list of anti-war speakers echoed the eternal cries of powerlessness at one of the latest manifestations of an anti-war street protest:

‘Enough is enough! We demand change! Do the right thing! Implement ceasefire in Ukraine!’ See ‘Twenty Years after the Start of the War in Iraq, People Around the World are still Raging Against the War Machine’.

Einstein and Freud’s ‘Why War?’ Revisited: Why Anti-War Efforts Go Nowhere

Really?

As even former US Secretary of State Alexander Haig once noted about a massive anti-war demonstration: ‘Let them march all they want, as long as they continue to pay their taxes.’ See Alexander Haig. As a four-star general, Haig, not regarded as the most intelligent Secretary of State in US history, certainly understood that tactical choice is a question of strategy. Most activists have no idea.

So What Must We Do to End War?

Earlier in this article I identified four elements missing from the anti-war movement’s efforts. Let me restate them and offer my own learning in relation to these points.

  1. a serious effort to understand the dysfunctional psychology, and what causes it, that drives human violence generally.

As the final stage of more than four decades investigating the cause of violence, I spent 14 years living in seclusion with Anita McKone. You can read what I learned in the document ‘Why Violence?’, in which I explain the destructive impact of the ‘visible’, ‘invisible’ and ‘utterly invisible’ violence that adults relentlessly inflict on children – resulting in the bulk of the adult human population being unconsciously terrified, self-hating and powerless, with Anita’s description of our process in:

‘Fearless Psychology and Fearful Psychology: Principles and Practice’.

If you like, you can also read other articles I have written such as

‘The Psychology of Projection in Conflict’ and

‘Challenges for Resolving Complex Conflicts’.

  1. a serious effort to analyse war as a system of power: Who is causing it, why and how? This is important because understanding how power works in the world system as well as who, precisely, is driving what is happening, why, and how they are doing it are crucial prerequisites for developing an effective strategy to resist, or end, war.

I made considerable effort to explain this as part of a wider study identifying the Global Elite and how its power is exercised in the world system. This included explaining why the Elite has a vested interest in ensuring that war continues. For more than 200 years, members of this Elite have carefully facilitated the precipitation of war and then profited immensely from financing both sides in any war of significance as well as the rebuilding of infrastructure and the care of injured soldiers in its aftermath. Hence, preparations for war, the conduct of war and the rebuilding/healing necessary post-war is the most profitable economic venture, by far, conducted on Planet Earth and it greatly enriches Elite families, such as the Rothschilds and Rockefellers, as well as their agents.

See Historical Analysis of the Global Elite: Ransacking the World Economy Until ‘You’ll Own Nothing.’

  1. a nonviolent strategy based on this understanding and analysis that is thoughtfully designed to address each of the foundational components of war.

First, this requires a completely different approach to parenting if we want to raise powerfully nonviolent children.

See ‘My Promise to Children’ and

‘Do We Want School or Education?’

And given that strategy has long been a passion of mine and nonviolent strategy particularly, I investigated this thoroughly when I wrote The Strategy of Nonviolent Defense: A Gandhian Approach.

But for the simplest explanation of nonviolent strategy to end war, you can read it on this website starting with the list of ‘Strategic Goals for Ending War’.

  1. sufficient courageous people committed to implementing this strategy by participating in it themselves and mobilizing others to do so too. This is important because nonviolent activism to end war has a price, measured in jail terms, adverse psychological assessments from people intent on stopping you, and a myriad other penalties depending on the legal jurisdiction in which the activist operates.

But if the antiwar activist is not willing to pay the price of their nonviolent activism, then the victims of wars in other places will pay the price of war with their lives.

Clearly, identifying sufficient courageous people is a primary challenge and the obvious shortage of courageous and tenacious people committed to strategically resisting war is just another outcome of our violently dysfunctional parenting of children mentioned in the first point above.

So if we are going to mobilize sufficient people willing to act powerfully over an extended period to resist all of those foundational elements that make war possible, we must profoundly alter our parenting model to produce powerful children and offer adults a chance to heal from the violence they suffered as children as well.

See ‘Putting Feelings First’ and ‘Nisteling: The Art of Deep Listening’.

Otherwise we are condemned to watch people speak against war and march up and down in ‘anti-war’ rallies (or employ other tactics devoid of strategic impact) until the world is blown up.

An Obvious Criticism

An obvious criticism of the approach I have outlined above is that it is ‘too slow’. It offers no quick solution to deal with the immediacy of the threat we face at the current moment with the proxy war being fought by the US and NATO through Ukraine against Russia which includes the risk of the war ‘going nuclear’.

See ‘The Dire Significance of Putin’s Feb 21 Speech’.

And I am well aware of the many calls for negotiations on the one hand – see, for example, ‘The Ukraine War: Think Deeper Or We Shall All Lose’ – and long-standing US war-fighting policy on the other as routinely explained in a plethora of US Government ‘defense strategy’ documents.

See, for example, ‘2022 National Defense Strategy of The United States of America’ and a thoughtful discussion of US nuclear strategy by Professor Michel Chossudovsky in

‘“Preemptive Nuclear War”: The Historic Battle for Peace and Democracy. A Third World War Threatens the Future of Humanity’.

I am also aware of calls, such as that by Scott Ritter, for US anti-war activists to focus on nuclear arms control as the highest priority for now.

See ‘Scott Ritter on the War Machine and the Future of the Antiwar Movement’.

And other perspectives and proposals besides.

But the obvious response to the ‘too slow’ criticism of my longer-term proposals above is simple: The result of the current crisis is so far beyond the existing anti-war movement to realistically influence, it is laughable. And so, in my view – which is consistent with my research into, and analysis of, what has transpired historically:

see Historical Analysis of the Global Elite: Ransacking the World Economy Until ‘You’ll Own Nothing.’ – the war will most probably end when Russia has defeated the Ukrainian state but only after the war has been dragged on for as long as it can be conducted profitably, from an Elite perspective.

And while there is undoubtedly considerable risk of the war ‘going nuclear’ through policy or strategic miscalculation – see ‘Stanislav Petrov, “The Man Who Saved The World,” Dies At 77’ – accident – see Command and Control – or rogue local ‘initiative’, the Elite will ‘gamble’ against these possibilities while (presumably) constraining it at policy level, as has most likely occurred throughout the nuclear age.

Insane? Of course, it is insane. See ‘The Global Elite is Insane Revisited’. It’s just that, in my view, there is nothing new to observe here: Just repetition of what we have seen before, which includes being taken to the brink of nuclear war and relying on ‘unknown factors’ – including, but not exclusively, background control by the Elite – to avoid it.

Conclusion

War is brutal. The Elite perpetuates war endlessly to capture control of people and resources to maintain the existing system of world power and make monumental profits. It will not be stopped because we make fine speeches, chant anti-war slogans at rallies or call for negotiations.

The human world is a system of power. And we need to understand how that system of power works to understand, and change, the world. This applies particularly when dealing with systems, structures and processes at the heart of Elite power, such as economics and war.

But underlying even this we need to understand the psychology of human violence because this also enables us to understand why the Elite controls world affairs to precipitate war (among a vast range of other violent and exploitative outcomes) as well as why ‘ordinary’ people fight in wars and the vast bulk of people who identify as ‘anti-war’ are so powerless.

In essence, war will be ended by analysing and understanding what makes it all happen and taking action intelligently, courageously and tenaciously to change what makes it possible; that is, by resisting in strategically appropriate ways the foundational components on which the entire system of war is built.

And given the ultimate foundation of the war system is our violent parenting model that renders virtually all humans into a state of fearful submission to violence, we haven’t even started the long journey to end war yet.

Nevertheless, while my own lifetime of effort has failed to remedy anything significant about the war system, out of love for my uncles, great uncles and humanity generally – see ‘Who Am I?’ – I continue to focus my own attention on undermining its foundations as documented above. It is slow, ‘unrewarding’ work in the short term.

But my hope is that some future generations of humans, assuming we effectively resist a myriad of current and future threats notably including the vast range of threats we all face at the hands of the Elite now – see ‘We Are Being Smashed Politically, Economically, Medically and Technologically by the Elite’s “Great Reset”: Why? How Do We Fight Back Effectively?’ – will live in a world without violence and war.

Obviously, given the precarious state of the world in many respects, a tremendous amount of intelligent, strategically-oriented action will be needed for this hope to be realized.

Biodata: Robert J. Burrowes has a lifetime commitment to understanding and ending human violence. He has done extensive research since 1966 in an effort to understand why human beings are violent and has been a nonviolent activist since 1981. He is the author of ‘Why Violence?’ http://tinyurl.com/whyviolence His email address is flametree@riseup.net and his website is here. http://robertjburrowes.wordpress.com

The Devil’s Milkshake

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The water’s just fine!

By Tarence Ray

Source: The Baffler

YOU’VE SEEN IT BEFORE. An industrial disaster poisons a town’s food or water supply. Residents get angry. Public officials try to dispel that anger through a public act of self-sacrifice, of reassurance. They convene a press conference, whereupon some hapless courtier brings forth a chalice of the supposedly poisoned material. And then, in front of God and the television cameras, the public official imbibes.

Examples from recent history abound. In 2019, former Japanese prime minister Shinzo Abe ate possibly irradiated rice balls from Fukushima to demonstrate the progress made toward rebuilding the prefecture since its 2011 nuclear meltdown. In 2013, former Colorado governor John Hickenlooper claimed he drank fracking fluid to assuage his constituents’ concerns around natural gas drilling. (Not “tasty,” he said.) And, most famous of all, in 2016 Barack Obama took a sip of (filtered) water from the lead-poisoned water supply of Flint, Michigan, to prove it was safe. (“This is not a stunt,” he noted of the stunt.)

Officials are already lining up to drink the forbidden poison issuing from East Palestine, Ohio. When a Norfolk Southern freight train derailed there earlier this month, producing an airborne toxic event of hazardous chemicals, concerns about the water inevitably arose. Enter one Troy Nehls, a Republican congressman from Texas, who became the first intrepid soul through the breach. On February 16, Nehls—who was inexplicably in Ohio, some fourteen hundred miles away from his district—posted a video to Twitter to get word out that the water was safe. To prove it, Nehls slurped it up. This was promptly followed by a video from Ohio lieutenant governor Jon Husted, wherein a group of public officials huddled together and threw back shots of supposed tap water like they were freshman college students out on the town.

But Nehls and Husted were just the undercard features. On February 21, following reports that Norfolk Southern had funded preliminary tests declaring the water totally safe, Ohio’s Republican governor Mike DeWine and a merry caravan, including an EPA official and a congressman, stalked around East Palestine with news cameras, gamely drinking from residents’ taps. (“That’s good,” the EPA official gushed. “That’s really cold coming from the tap.”) The photos and videos from this danse macabre mirrored Husted’s, but on a grander scale—half a dozen people standing around, toasting and clashing cups together like they were at a medieval banquet. If these dizzying trends hold, it’s probably a matter of time before Transportation Secretary Pete Buttigieg, or even President Biden, follows suit.

Years ago, I surveyed the literature looking for a name or term to describe this phenomenon of consuming potentially tainted materials. After all, it seemed to be increasing in frequency, and I’d even started witnessing it at the level of local politics. But if there was a name, I couldn’t find it. So I gave it one: the Devil’s Milkshake.

The Devil’s Milkshake is bipartisan. Neither Democrats nor Republicans hold monopoly on it. Which means it can be multiple things, depending on who wields it. To some, it’s cynical political theater, meant to make the politician look invincible and brave. To others, it can be a genuine—yet transparently phony—attempt at showing solidarity. And to others still, it abets a kind of mass hysteria, in which public officials feel increasingly pressured to outdo each other for attention and admiration.

The Devil’s Milkshake can also be an effective way for a public official to shirk any commitment to doing something about the conditions that gave rise to the disaster in the first place. One time I was at a town hall in Martin County, Kentucky, where the water system has been degraded by years of coal mining, corruption, and neglect. Residents were getting sick, and they’d convened the town hall to demand action from the local government. But instead of committing to any substantive action, one local official ran to the front of the hall and demanded a glass of that sweet local tap, so he could drink it right there on the spot, and thus prove that nothing needed changing. A few awkward minutes passed, wherein the crowd grew uncomfortable with the prospect of witnessing a man poison himself in public. So they talked the official down. To this day, Martin County’s water is still unsafe to drink.

It’s likely the Devil’s Milkshake is a modern phenomenon. After all, medieval rulers used to employ taste testers precisely in order to avoid being poisoned. But historical examples are nonetheless difficult to track down because the phenomenon has been heretofore unnamed. So I’ve had to crowdsource its history. It’s clear, reviewing this data, that public officials have had to tweak, refine, and workshop the spectacle; it developed over time through a process of trial and error.

A PhD student at Indiana University, Justin Hawkins, sent me what is perhaps the earliest historical example. In the 1850s, New York City was in the middle of an adulterated milk scandal. Across the country, thousands of infants were dying every year from milk cut with “swill”—excess mash from nearby distilleries, whitened with plaster and drained of nutrients. Tammany Hall sent an Alderman named Michael Tuomey to investigate. But Tuomey vigorously defended the dairy owners and their milk supply. While visiting one dairy, Tuomey threw back some whiskey with the farmers, concluded the milk was perfectly safe, and slandered anyone who thought otherwise as “prejudice[d].” But, as Hawkins points out, it’s unclear whether or not Tuomey’s stunt was performed before a crowd. This highlights a crucial ingredient in the Devil’s Milkshake formula: for it to be a proper Devil’s Milkshake, it must be performed in public, or at least in front of cameras.

The second criteria of the Devil’s Milkshake is that one must actually go through with it. This example came to me by way of a researcher friend, Jack Norton. It’s the story of New York governor Hugh Carey who, in 1981, volunteered to drink a big glass of polychlorinated biphenyls, or PCBs, from a contaminated state office building in order “to satisfy the unions” that the building was safe. Carey, however, was warned that doing so might actually make him sick, and so he reportedly did not follow through. He nonetheless displayed a curious willingness to put his body on the line for the sake of scoring political points.

Occasionally, the Devil’s Milkshake can be fobbed off on the inferiors or family members of the elected official trying to harness its powers. To illustrate this, we turn to our cousins across the pond. In 1990, four years after the fatal mad cow disease was discovered in Britain’s beef supply, the nation’s agriculture minister, John Selwymn Gummer, carted his four-year-old daughter before news cameras and tried to feed her an “absolutely delicious” hamburger. Six years later, researchers confirmed humans could be infected with the degenerative neurological disease—and in 2007, the daughter of a Gummer family friend died of it. Perhaps Gummer’s logic was that of a hostage taker: if his audience saw his craven recklessness, they, too, might be willing to put their lives on the line to make beef sales go up.

But perhaps the grimmest example of the Devil’s Milkshake is that of Peruvian president Alberto Fujimori and his fisheries minister, Felix Alberto Canal Torres. This story was sent to me by Twitter user @JimmyFalunGong. In 1991, cholera was spreading throughout Peru by way of raw fish, resulting in massive profit losses to the Peruvian fishing industry. In order to get the industry back on its feet, President Fujimori and Minister Torres chowed down on some raw fish live on television, hoping to encourage the public to do the same. Unfortunately, the epidemic wore on for months, eventually killing over three thousand people, and Minister Torres reportedly wound up hospitalized with cholera, no doubt acquired from the raw fish.  

The Gummer and Fujimori-Torres debacles show that, from the very beginning, the Devil’s Milkshake was always just that: a deal with the devil. A gamble. One that, if successful, could pay enormous dividends. But, if unsuccessful, could be very embarrassing. Perhaps that’s why nowadays, the Devil’s Milkshake is most likely just a stage trick. When that aide brings out the chalice, whatever’s inside almost certainly isn’t poison. It’s something harmless that is meant to look poisonous. (Someone on Twitter even pointed out that the officials taking shots of East Palestine’s water in lieutenant Governor Husted’s video had neglected to hide their bottle of Smart Water.) Besides, even if President Obama really did drink lead-poisoned water in Flint, his stunt missed the point: prolonged, chronic exposure is what leads to severe impairment, not a single sip. Race, class, and geography are the major determinants of environmental harm. Most people know this, which is why many Flint residents viewed Obama’s theatrics with skepticism.

Yet I would argue that leaders like President Obama are, like the constituents they seek to deceive, fully aware of this structural truth. It’s what makes the Devil’s Milkshake so strange. The stunt seems to be a tacit acknowledgement by the ruling class that they know the general public doesn’t trust them. (Only 19 percent of Americans believe they can trust the government “most of the time.”) Its recent proliferation must be seen as proof of a ruling class desperate to uphold the illusion of democracy. It is the last gasp of a dying order, drinking and eating its way to the grave, restrained or unwilling to fix anything, and thus doomed to play act a fantasy before klieg lights and newscasters. The dizzying amount of Devil’s Milkshake footage issuing from East Palestine only proves their desperation: these people could not be more unlike you. In fact, the only thing you have left in common with them is the fact that they, too, still have to eat food and drink water to stay alive. That’s it. The Devil’s Milkshake is a measure of the gaping chasm between you and them.

The sad thing is that, sometimes, the water or food in question is actually safe to consume. Watersheds can be hard to wrap your head around. A lot of hysterical and paranoid information leeched into the ether following the East Palestine toxic event. People upstream from the Ohio River worried that they, too, were at risk of exposure. Were boil water advisories fifty miles southeast in Pittsburgh related to the derailment—even though local officials said otherwise? Were birds dying in Kentucky because of the crash? All these places probably are under threat, but from other things entirely: chemical plants, microplastics, algae blooms, air pollution, you name it.

The public has by now seen so many of these large-scale pollution events that they well understand no one will be held accountable; that the clean-up will be, at best, half-assed; and that we’re just going to bide our time until the next one occurs. (Indeed, in the weeks since the East Palestine incident, a commercial tanker truck full of chemicals crashed outside Tucson, killing the driver and releasing a plume of nitric acid into the air; a train derailed in Texas, killing one; another train carrying coal derailed in Nebraska; and on and on.) People, naturally, have lost trust in their leaders to keep them safe. No amount of poisonous water consumed by governors, congressmen, or EPA officials will restore that trust.

This is why the Devil’s Milkshake is ultimately an insult to your intelligence. The point isn’t to give you actionable information about what’s going on. If it was, public officials would just do that, instead of histrionically parading around in front of the cameras to show off the sacrifice they’re making. Nor is the point to rebuild trust in institutions. After all, these figures could just fix the problems, and make our natural and infrastructural environments responsive to crises and safe to navigate.

No, the point of the Devil’s Milkshake is to arrest further complaint. To recycle anger back into “acceptable” forms of discourse and mechanisms of accountability. To move on, forget it ever happened. It’s almost as if, through this act of symbolic consumption, a public official telegraphs their willingness to die for corporate America’s sins. That, because they’re willing to literally metabolize the issue, it’s been addressed, processed, and fixed.

The problem with this is that no one ever forgets. People remember it all. Not just the fear and terror of seeing a black pillar of smoke towering over their community. Not just the health scares and medical bills, the family members and friends and pets dying before their time. Not just the agonizing mystery of it all, of wondering which recent toxic event is responsible for their debilitating sickness, or if they’re crazy for even having that thought.

They’ll also remember the most terrifying, mind-bending thing of all: that their leaders sacrificed them at the almighty altar of profit, and then mocked them for daring to question it. They’ll wake up in the middle of the night, their minds retracing the choreographed ritual of power known as the Devil’s Milkshake, their gleeful leaders sending up veritable toasts to the fact they were getting away with it all. And this remembering brings on a final realization: that the next time may be even worse.

Saturday Matinee: Stranger at the Gate

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How Many Strangers Are At the Gate?

By David Swanson

Source: Let’s Try Democracy

Spolier Alert: if you want to watch an excellent 30-minute film without knowing what happens, scroll down and watch it before reading any of these words.

We’ve long known that U.S. mass-shooters are disproportionately trained in shooting by the U.S. military. I don’t know whether the same applies to those who kill in the U.S. with bombs. I wouldn’t be surprised if the connection were even greater.

The Oscar-nominated short film Stranger at the Gate tells the story of a man who went from a difficult childhood straight into the U.S. military at 18.

When learning to shoot at paper targets, he had concerns about killing actual people. He recounts being given the advice that if he could look at those he would kill as anything other than human he would have no problems. So, that, he says, is what he did.

But, of course, conditioning people to thoughtlessly kill doesn’t provide them with any way of being unconditioned again, of comfortably ceasing to be self-deceptive murderers.

This guy went off to U.S. wars where he killed people he thought of as Muslims. The characterization of the people killed as belonging to an evil religion, was largely a game of military propaganda. The actual motivations of those picking the wars tended to have more to do with power, global domination, profits, and politics. But bigotry has always been used to sucker the rank and file into doing what’s desired.

Well, this good soldier did his job and returned to the United States believing that he had done his job, and that that job had been to kill Muslims because of the evil of Muslims. There was no Off switch.

He was troubled. He was drunk. The lies didn’t rest easily. But the lies had a tighter grip than the truth. When he saw that there were Muslims in his hometown, he believed he needed to kill them. Yet he grasped that he would no longer be praised for it, that he would now be condemned for it. Even so, he still believed in the cause. He decided that he would go to the Islamic Center and find proof of the evil of the Muslims that he could show everyone, and then he would blow the place up. He hoped to kill at least 200 people (or non-people).

The men and women at the Islamic Center welcomed him and transformed him.

In the United States today one may want to rewrite this line:

“Do not neglect to show hospitality to strangers, for by so doing some people have entertained angels without knowing it.”

in this way:

“Do not neglect to show hospitality to strangers, for by so doing some people have entertained would-be mass-murderers without knowing it.”

How many?

Nobody knows.

Silicon Valley Bank Crisis: The Liquidity Crunch We Predicted Has Now Begun

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A worker, middle, tells customers that the Silicon Valley Bank headquarters is closed on Friday, March 10, 2023, in Santa Clara, California. Silicon Valley Bank was shut down on Friday morning by California regulators and was put in control of the U.S. Federal Deposit Insurance Corporation. (Justin Sullivan/Getty Images/TNS)

By Brandon Smith

Source: Alt-Market.us

There has been an avalanche of information and numerous theories circulating the past few days about the fate of a bank in California know as SVB (Silicon Valley Bank). SVB was the 16th largest bank in the US until it abruptly failed and went into insolvency on March 10th. The impetus for the collapse of the bank is tied to a $2 billion liquidity loss on bond sales which caused the institution’s stock value to plummet over 60%, triggering a bank run by customers fearful of losing some or most of their deposits.

There are many fine articles out there covering the details of the SVB situation, but what I want to talk about more is the root of it all. The bank’s shortfalls are not really the cause of the crisis, they are a symptom of a wider liquidity drought that I predicted here at Alt-Market months ago, including the timing of the event.

First, though, let’s discuss the core issue, which is fiscal tightening and the Federal Reserve. In my article ‘The Fed’s Catch-22 Taper Is A Weapon, Not A Policy Error’, published in December of 2021, I noted that the Fed was on a clear path towards tightening into economic weakness, very similar to what they did in the early 1980s during the stagflation era and also somewhat similar to what they did at the onset of the Great Depression. Former Fed Chairman Ben Bernanke even openly admitted that the Fed caused the depression to spiral out of control due to their tightening policies.

In that same article I discussed the “yield curve” being a red flag for an incoming crisis:

“…The central bank is the largest investor in US bonds. If the Fed raises interest rates into weakness and tapers asset purchases, then we may see a repeat of 2018 when the yield curve started to flatten. This means that short term treasury bonds will end up with the same yield as long term bonds and investment in long term bonds will fall.”

As of this past week the yield curve has been inverted, signaling a potential liquidity crunch. Both Jerome Powell (Fed Charman) and Janet Yellen (Treasury Secretary) have indicated that tightening policies will continue and that reducing inflation to 2% is the goal. Given the many trillions of dollars the Fed has pumped into the financial system in the past decade as well as the overall weakness of general economy, it would not take much QT to crush credit markets and by extension stock markets.

As I also noted in 2021:

“We are now at that stage again where price inflation tied to money printing is clashing with the stock market’s complete reliance on stimulus to stay afloat. There are some that continue to claim the Fed will never sacrifice the markets by tapering. I say the Fed does not actually care, it is only waiting for the right time to pull the plug on the US economy.”

But is that time now?  I expanded on this analysis in my article ‘Major Economic Contraction Coming In 2023 – Followed By Even More Inflation’, published in December of 2022. I noted that:

“This is the situation we are currently in today as 2022 comes to a close. The Fed is in the midst of a rather aggressive rate hike program in a “fight” against the stagflationary crisis that they created through years of fiat stimulus measures. The problem is that the higher interest rates are not bringing prices down, nor are they really slowing stock market speculation. Easy money has been too entrenched for far too long, which means a hard landing is the most likely scenario.”

I continued:

“In the early 2000s the Fed had been engaged in artificially low interest rates which inflated the housing and derivatives bubble. In 2004, they shifted into a tightening process. Rates in 2004 were at 1% and by 2006 they rose to over 5%. This is when cracks began to appear in the credit structure, with 4.5% – 5.5% being the magic cutoff point before debt became too expensive for the system to continue the charade. By 2007/2008 the nation witnessed an exponential implosion of credit…”

Finally, I made my prediction for March/April of 2023:

“Since nothing was actually fixed by the Fed back then, I will continue to use the 5% funds rate as a marker for when we will see another major contraction…The 1% excise tax added on top of a 5% Fed funds rate creates a 6% millstone on any money borrowed to finance future buybacks. This cost is going to be far too high and buybacks will falter. Meaning, stock markets will also stop, and drop. It will likely take two or three months before the tax and the rate hikes create a visible effect on markets. This would put our time frame for contraction around March or April of 2023.”

We are now in the middle of March and it appears that the first signs of liquidity crisis are bubbling to the surface with the insolvency of SVB and the shuttering of another institution in New York called Signature Bank.

Everything is tied back to liquidity. With higher rates, banks are hard-pressed to borrow from the Fed and companies are hard-pressed to borrow from banks. This means companies that were hiding financial weakness and exposure to bad investments using easy credit no longer have that option. They won’t be able to artificially support operations that are not profitable, they will have to abandon stock buybacks that make their shares appear valuable and they will have to initiate mass layoffs in order to protect their bottom line.

SVB is not quite Bear Stearns, but it is likely a canary in the coal mine, telling us what is about to happen on a wider scale. Many of their depositors were founded in venture capital fueled by easy credit, not to mention all the ESG related companies dependent on woke loans. That money is gone – It’s dead. Those businesses are quietly but quickly crumbling which also conjured a black hole for deposits within SVB. It’s a terribly destructive cycle. Surely, there are numerous other banks in the US in the same exact position.

I believe this is just the beginning of a liquidity and credit crisis that will combine with overt inflation to produce perhaps the biggest economic crash America has ever seen. SVB’s failure may not be THE initiator, only one among many. I suspect that in this scenario larger US banks may avoid the kind of credit crash that we saw with Bear Stearns and Lehman Brothers in 2008. But, contagion could still strike multiple mid-sized banks and the effects could be similar in a short period of time.

With all the news flooding the wire on SVB it’s easy to forget that all of this boils down to a single vital issue: The Fed’s stimulus measures created an economy utterly addicted to easy and cheap liquidity. Now, they have taken that easy money away. In light of the SVB crash, will the central bank reverse course on tightening, or will they continue forward and risk contagion?

For now, Janet Yellen and the Fed have implemented a limited backstop and a guarantee on deposits at SVB and Signature. This will theoretically prevent a “haircut” on depositor accounts and lure retail investors with dreams of endless stimulus.  It is a half-measure, though – Central bankers have to at least look like they are trying. 

SVB’s assets sit at around $200 billion and Signature’s assets are around $100 billion, but what about interbank exposure and what about the wider implications?  How many banks are barely scraping by to meet their liquidity obligations, and how many companies have evaporating deposits?  The backstop will do nothing to prevent a major contagion.

There are many financial tricks that might slow the pace of a credit crash, but not by much.  And, here’s the kicker – Unlike in 2008, the Fed has created a situation in which there is no escape. If they do pivot and return to systemic bailouts, stagflation will skyrocket even more. If they don’t use QE, then banks crash, companies crash and even bonds become untenable, which puts the world reserve status of the Dollar under threat. What does that lead to? More stagflation. In either case, rapidly rising prices on most necessities will be the consequence.

How long will this process take? It all depends on how the Fed responds. They might be able to drag the crash out for a few months with various stop-gaps. If they go back to stimulus then the banks will be saved along with equities (for a while) but rising inflation will suffocate consumers in the span of a year and companies will still falter. My gut tells me that they will rely on contained interventions but will not reverse rate hikes as many analysts seem to expect.

The Fed will goose markets up at times using jawboning and false hopes of a return to aggressive QE or near-zero rates, but ultimately the trend of credit markets and stocks will be steady and downward.  Like a brush fire in a wind storm, once the flames are sparked there is no way to put things back the way they were.  If their goal was in fact a liquidity crunch, well, mission accomplished.  They have created that exact scenario.  Read my articles linked above to understand why they might do this deliberately.

In the meantime, it appears that my predictions on timing are correct so far. We will have to wait and see what happens in the coming weeks. I will keep readers apprised of events as new details unfold.  The situation is rapidly evolving.