A Brave New World
So here we are with another extremely close, and possibly contested, presidential election. As of this writing former Vice President Joe Biden has 264 electoral votes and Donald Trump 214 and there are four states where the race is too close to call. However, the path to 270 favors Biden and Trump has already demanded a recount in Wisconsin and is filing a lawsuit in Pennsylvania. In September, I wrote a piece entitled, American Pulp Fiction, a fictional account of the aftermath of a very close contested election that included all sorts of ugly outcomes. This fictional account was based on an actual war-game exercise conducted by the Transition Integrity Project (TIP), a group created by attorney and former Obama administration executive Rosa Brooks. Brooks also serves as senior fellow at New America Foundation whose funders include billionaires George Soros, Bill Gates (Microsoft), Reid Hoffman (LinkedIn/Netflix), Eric Schmidt (Google). By its own admission, TIP is virulently anti-Trump and believes that the American Electoral College is, in their words “profoundly anti-democratic, and that numerous long-standing practices also function to create structural biases in our voting system.”
Here is a description from their confidential Aug 3, 2020 findings document, entitled “Preventing a Disrupted Presidential Election and Transition,” that was leaked to the press:
“In June 2020, the Transition Integrity Project (TIP) convened a bipartisan group of over 100 current and former senior government and campaign leaders and other experts in a series of 2020 election crisis scenario planning exercises. The results of all four table-top exercises were alarming. We assess with a high degree of likelihood that November’s elections will be marked by a chaotic legal and political landscape. We also assess that the President Trump is likely to contest the result by both legal and extra-legal means, in an attempt to hold onto power.”
Well, here we are! What increasingly looks like a very narrow contested Biden victory, we are still a sharply divided nation with three tumultuous months until January 20th 2021, the date that the Constitution mandates that a new President must be sworn in. I would encourage you to read or re-read my two-month old American Pulp Fiction, piece to see how things might play out. Regardless, we have already learned a lot of important things from this election including:
· Polling is completely screwed up. Take them with many grains of salt.
· America is still sharply divided and likes divided government
· Hispanic-Americans in battleground states voted for a GOP President higher than they have in decades
· African Americans are slowly voting more for GOP candidates
· Trump has a strong brand that will make him a powerful ex-President who won’t go quietly into that good night like his predecessors have done.
· We need a wholesale reform of how we vote so Americans can trust elections.
· Local still matters in the power game. Only a handful of American counties will determine the election.
Other than hurt egos and millions of disappointed supporters, I’m not sure how much it will really matter who is elected President, especially if the GOP retains the Senate which looks highly likely. In fact, the biggest betting forum in the world, the stock market set a record a post-election high on November 4. Maybe this is a reaction to the fact it appears the GOP will hold the Senate which effectively means Washington DC gridlock. The market is reasoning this gridlock will prohibit Biden from implementing most of the society-disrupting policies that radical left wing of his party is demanding.
Unfortunately, the COVID pandemic and the government lockdown policies derailed what was a historic American economy into a serious economic recession. If not for an unprecedented government money -printing and distribution program, things might have spiraled into another Great Depression. On March 27th Trump signed the $2.2 trillion CARES Act, and this, combined with a breathtaking array of asset purchase programs, marked the effective start of Modern Monetary Theory (MMT) with the Federal Reserve and Treasury coordinating policy.
Since the Pandora’s Box of MMT has been opened, it just matters less who is elected because the connection between what the government collects in taxes and what it can spend, is completely broken. Who becomes President just doesn’t matter, at least to the financial markets. Regardless who is president or who controls Congress, the equity markets just grind higher. During the previous six "Blue Wave" periods, the S&P was up 56% on average. During three prior "Red Waves", the markets rose 35% on average. But the winner isn’t the blue product or the red product. It’s the purple product. Wall Street prefers divided government. During the seven periods of divided government in the United States, the S&P is up 60% on average!
Why do financial markets do best during government gridlock? Because government dysfunction, means the Fed must take matters into its own hands and that means printing more money. This is why stocks soared to all-time highs even as the economy barely grew for the past ten years and then fell into the steepest contraction in history. And in a moment of brutal honesty from my former alma-mater, JP Morgan writes in last Friday’s Flows and Liquidity report "The equity bull market should resume post US election."
They two main reasons they cite are:
1) a surge in debt will boost stocks as it has forever. In other words, don’t’ fight the Fed.
2) and if things get really bad the Fed will step in.
So, in a twisted dystopic sort-of-way, the worse it gets for our economy, the better it will be for the stock market, JPMorgan's Nick Panigirtzoglou spells it out clearly:
“Although it has had a negative impact in the short term, the reemergence of lockdowns and resultant growth weakness could bolster the equity upside over the medium to longer term via inducing more QE and thus more liquidity creation.”
By the way, Say Goodbye to your Money
The COVID pandemic has accelerated several disturbing trends that have been in place for years. These include, increasing citizen dependence on government and huge central bank interventions into markets and the economy. Now, central bankers are about to embark on the mother of all power grabs.
Federal Reserve Chairman Jerome Powell, in coordination with the European Central Bank and International Monetary Fund (IMF), is preparing to roll out central bank digital currencies. I guess they were jealous of the success of Bitcoin. IMF Managing Director, Kristalina Georgieva, recently called for a new “Bretton Woods Moment” to address the loss of trillions of dollars in global economic output due to the coronavirus.
In the aftermath of World War II, the original Bretton Woods agreement established a world monetary order with the U.S. dollar at the center of it. A critical feature was that the dollar was pegged to the price of gold. Foreign governments and central banks could also redeem their dollar reserves in gold, which they started doing in the 1960s and early 1970s. As a result, in 1971, President Nixon ended gold redemption, and voila! A new world monetary order was born that was based solely on the full faith and credit of the United States. Then came the very predictable inflation crisis a few years later which forced the Fed to rapidly increase interest rates to defend the US Dollar and tame rising prices. I remember well those long gas lines and home mortgage rates of 15% in the 1970’s and early 1980’s.
Fast forward to 2020, and the Fed has thrown its statutory dual mandate of full employment and stable prices out the window in favor of evermore debt, more inflation, and picking of winners and losers in the economy. It now gives itself an unlimited mandate to inject stimulus and bailout cash wherever it sees fit. Instead of pursuing sound money and stable prices, the Fed has begun a campaign to raise inflation above 2% for as far as the eye can see.
The next chapter of the Fed’s unlimited power will be “FedCoin” – a central bank digital currency. Earlier this month Chairman Jerome Powell participated in an IMF panel on international payments and digital currencies. He supported electronic payment systems and the possibility of including them into a central bank digital currency regime. “We have a chance to improve cross-border payments with huge benefits, especially for many of the world’s poorest people and there is a pressing need to do so,” said IMF Chief Kristalina Georgieva
She sees expanded monetary tools being aimed at every issue on God’s green earth: “We will have a chance to address some persistent problems – low productivity, slow growth, high inequalities, a looming climate crisis… We can do better than build back the pre-pandemic world – we can build forward to a world that is more resilient, sustainable, and inclusive,” Georgieva stated. And Powell agrees with her on the larger agenda of expanding the role of monetary policy in shaping economic and social outcomes. While he hasn’t yet endorsed moving toward a fully cashless society as China and Sweden have, the Fed continues building the backbone of digital currencies in its technology lab. This reminds me of that famous line from the Wizard of Oz, “Pay no attention to that man behind the curtain.”
In a related development, the IMF is being pressured to sell some of its gold reserves in favor of issuing newly created currency called Special Drawing Rights (SDRs) to cancel the debts of poor countries. In a world where the balance sheets of central banks are now more than $26 trillion, everyone wants a piece of the pie and many now view gold as dispensable and even counter-productive. So, is gold just an ancient relic in this brave new digital world? If it was, then it would have collapsed in price with all the new central bank rollouts, instead of surging to an all-time high. Year to date, gold has increased in price by over 24% and silver over 32%. It seems precious metals may be the ultimate hedge against the new world monetary order. If the Fed launches a new digital dollar and assigns every American a virtual wallet, there would be no escaping adverse monetary policy except by refusing to use fiat currencies entirely.
Under a central bank digital currency, our monetary overlords could impose negative interest rates on all currency holdings. They could do this without needing anyone to buy negative-yielding bonds or deposit money into negative-yielding bank accounts. The Fed could simply charge periodic fees to your digital currency account to erode its value and there would be nothing you could do about it. Under a central bank digital currency, direct credits and debits would replace stimulus checks and taxes. It would be the highly efficient mechanism through which Modern Monetary Theory could be fully imposed. Central banks would become the tax collector and funder of all government operations. Once paper notes are phased out, holding cash itself would no longer be a way for individuals to escape negative rates. The only escape hatches would be digital crypto currencies like Bitcoin or precious metals. There is no other way to look at this but as legalized theft on the grandest scale imaginable. Under a monetary order where electronic digits representing currency can be created out of thin air in unlimited quantities, the best hedge is the exact opposite – tangible, scarce, untraceable wealth held off the financial grid.
As big of an inflection point as the Fed digital payments are, it’s merely part of a much larger scheme by global ruling elites. For decades, the political left in most western nations have attempted to use climate change to justify liberal policy changes. This is culminating in a radical new proposal called the “Great Reset”.
At a meeting this past June hosted by the World Economic Forum (WEF), a group of the world’s most powerful corporate and government leaders joined activists in announcing a proposal to “reset” the global economy. Instead of traditional capitalism, this group thinks the world should adopt more socialistic policies, such as wealth taxes, additional regulations and massive new government programs like those supported by Sen. Bernie Sanders (I-Vt.), and Rep. Alexandria Ocasio-Cortez (D-N.Y.) in their Green New Deal plan.
“Every country, from the United States to China, must participate, and every industry, from oil and gas to tech, must be transformed,” wrote Klaus Schwab, the founder and executive chairman of the World Economic Forum, in an article published on WEF’s website. “In short, we need a ‘Great Reset’ of capitalism.”
Schwab also said that “all aspects of our societies and economies” must be “revamped, from education to social contracts and working conditions.” Or, put another way, we need a form of socialism — a word they have avoided using, despite calling for policies that are exactly that. The reason for the Great Reset is that, thanks to technology, the planet has gotten small, and the infinite expansion economic model is broken. However, the super wealthy want to remain super wealthy, and so they need another bubble, plus a surgically precise system for managing what they perceive as “their limited resources.” They desperately want a bubble providing new growth out of thin air using Modern Monetary Theory and digital money, while limiting opportunity for the rest of us. This effort starts with “behavioral modification,” like COVID lockdowns which are a dress rehearsal for even larger societal control programs.
Proponents of the Great Reset believe that every part of nature, including humans, represent the global inventory that must be managed by a theoretically benevolent state enabled by a few theoretically benevolent super rich elites, using technology. The global inventory must be accounted for in a centralized database, be monitored by surveillance systems and managed by Artificial Intelligence, using the latest “science.” The goal is to count and efficiently control all resources, including people, on an unprecedented scale. You can see how unimportant the rest of we sovereign peasants are, with our pesky privacy, free speech and individual liberty. In other words, the Great Reset is an efficient new global feudalism that blows away the previous medieval version because it is all-seeing: every person, every currency unit, and every widget is digitally tagged and tracked under the great “Internet of Things.” Ideally, the peasants can be convinced that all this is good for them, like with contact tracing and masks for COVID, and that this is what progress looks like. If the peasants cannot be convinced, there will be other ways to coerce them like “cancel culture”, shutting down their new digital Fed accounts or good old jackboot brownshirt violence.
One of the main talking points of the June WEF meeting was that the COVID pandemic has created an important “opportunity” to implement the vision of the radical transformation of capitalism. “We have a golden opportunity to seize something good from this crisis — its unprecedented shockwaves may well make people more receptive to big visions of change,” said Prince Charles at the meeting. But everyone realizes that COVID-19 lockdowns cannot last forever so these elites will pivot to their new crisis that will require the necessary permanent expansion of government power: that would be climate change. Prince Charles went on to say, “The threat of climate change has been more gradual [than COVID-19]—but it’s devastating reality for many people and their livelihoods around the world, and its ever greater potential to disrupt, surpasses even that of COVID-19.”
Of course, these government officials and corporate leaders cannot impose systemic change of this size by themselves. That’s why they’ve already activated vast networks of activists from around the world, who will demand changes in line with the Great Reset. The WEF 2021 Davos summit will include thousands of members of the Global Shapers Community, youth activists located in 400 cities across the world. The Global Shapers program was involved in the widespread “climate strikes” of 2019, and 1300 of its members have been trained by the Climate Reality Project, an influential, well-funded organization run by former Vice President Al Gore, who also serves on the World Economic Forum’s Board of Trustees.
Lockdowns and restrictions of movement and physical contact are powerful tools of behavioral modification and social engineering that have been used for centuries by authoritarian governments. China is the most important example of this today. Effective social engineering starts with the education system then plans many steps ahead to create situations where people beg for the desired changes to resolve their sense of confusion and insecurity and make them a “better person.” It’s a frightening version of mass Stockholm Syndrome, a psychological response where the abused bonds with abuser and may even sympathize with them and share common goals.
For those of us who support free markets and individual freedom, the Great Reset is our worst nightmare. The iconic dystopic novels of the 20th century like, Aldous Huxley’s Brave New World, George Orwell’s 1984 and Ayn Rand’s Atlas Shrugged warned us of this long ago. It’s no wonder these books are rarely taught in our schools. Our current crony capitalist system surely has many flaws but giving more power to the government agents who created that crony system is not the approved solution. America is the world’s most powerful, prosperous nation precisely because of the constitutionally guaranteed freedoms that the Great Reset supporters hate.
Prince Charles was right: The present pandemic is a “golden opportunity” for radical change. And if Prince Charles, Al Gore, George Soros, Bill Gates, Eric Schmidt, Marc Benioff, the IMF, the World Economic Forum, and all the other globalist institutions can convince enough people that trying to stop climate change is worth pushing humanity to drastically greater government control, then change is exactly what we’re going to get.