A prime number for prime moneyGuest post by Robert Gore at Straight Line Logic
Change, like death, prompts psychological turmoil. Intellectually, most of us grasp that change is ceaseless, just as most of us realize we’re going to die. Emotionally, however, few embrace the former or accept the latter.
Humanity is in the throes of a change that is reversing a centuries-long trend. Power, in all of its aspects, is migrating downward. This epochal reversal has received scant intellectual recognition. Psychologically, it manifests as panic among the powerful and as newfound assertiveness among the formerly less powerful. It will take decades, perhaps centuries, to fully play out.
The Houthis, a Yemen-based, Iran-linked insurgent group, have brought shipping through the Red Sea to a standstill with drones and missiles launched from mobile launchers. Iran could do the same in the Persian Gulf, shutting down the Strait of Hormuz, which would send the price of oil per barrel well into triple digits, tip Western economies into depression, and unravel the global derivatives daisy chain.
On land in Ukraine, $500 Russian drones are taking out $10 million Western tanks. Ukraine has burned through billions of dollars of Western armaments and stolen billions of aid. It has lost more than half a million soldiers and millions of Ukrainians have fled west to Europe or east to Russia. Its much heralded counteroffensive impaled itself on the spears of Russia’s multilayered defenses. Russian missiles are methodically destroying Ukraine’s electrical grid. Now that the country has been decimated, Russia can advance, consolidate its gains, and—if the West eventually acknowledges reality—impose peace on its own terms.
The Ukraine war has revealed the inadequacies of expensive Western antimissile technology. Iran just gave another demonstration.
The Iranian deterrence posture has implications that reach far beyond the environs of Israel or the Middle East. By defeating the US-Israeli missile defense shield, Iran exposed the notion of US missile defense supremacy that serves as the heart of US force protection models used when projecting military power on a global scale. The US defensive posture vis-à-vis Russia, China, and North Korea hinges on assumptions made regarding the efficacy of US ballistic missile defense capabilities. By successfully attacking Israeli air bases which had the benefit of the full range of US anti-ballistic missile technology, Iran exposed the vulnerability of the US missile defense shield to modern missile technologies involving maneuverable warheads, decoys, and hypersonic speed. US bases in Europe, the Pacific and the Middle East once thought to be well-protected, have suddenly been revealed to be vulnerable to hostile attack. So, too, are US Navy ships operating at sea.
Scott Ritter, “Checkmate,” April 18, 2024, LewRockwell.com
The estimated costs of U.S. and Israel’s ineffective missile defense are triple-digit multiples of what Iran spent on drones and missiles. Iran didn’t even use its best weapons. Drones are only going to become more capable and missiles faster and more maneuverable.
Netanyahu and U.S. neocons’ cherished dream of invading Iran is pure fantasy. Iran knows it cannot invade and conquer Israel. It can, however, make Israel’s defense prohibitively expensive. The cost of an Israel-U.S. invasion of Iran and defense against Iran and its allies response would be off the charts, bankrupting both countries. Not to mention the costs imposed on Western economies if Iran were to shut down the Strait of Hormuz.
Vladimir Putin and Chinese leader Xi Jinping have recognized the sea change in hard power dynamics and instead of fighting it are adroitly employing soft power tactics with the “little guys.” They have put together multinational political, economic development, and financial networks, reaching out to the world’s non-golden seven billion. The key rhetorical concepts are multipolarity, state sovereignty, and joint infrastructure development. Quite a contrast to the U.S.’s “rules-based order,” which has devolved into rules-based subjugation and hypocrisy.
Across the Sahel in Africa, nations are switching from historical U.S. and French colonial relationships to alignment with the Russian-Chinese axis. In July of 2023, a military junta led by a U.S.-trained officer took over the government of Niger. The U.S. has a $110 million air base there, a hub for drone operations, and over 1,000 troops. The new government has asked the U.S. to leave and the Biden administration recently announced that it would. Niger’s government and people favor Russia, which may end up with the U.S. air base.
Niger’s switch is emblematic of a movement of African nations that would rather be courted than coerced. For the West, this means the loss of both military and economic assets. Many of these countries have petroleum reserves and mineral deposits, including vital materials for semiconductors and EV batteries. A U.S. exit from Niger would mark the first concession in Washington to the emerging power of nations that it had always regarded as Western colonies. That’s not to say that the U.S. government has a newfound respect for self-determination and sovereignty. Perhaps someone has calculated that the benefits of subjugating Niger aren’t worth the costs, a rare instance of U.S. rationality.
However, Iraq has been asking the U.S. to leave for years, and the U.S. has refused. Iraq has substantial oil reserves and it is right next to Iran, which already exercises a fair degree of influence over its neighbor. The U.S. can’t rule Iraq from its fortress embassy in Baghdad, but it would cede strategic Middle East positioning and whatever influence it has over Iraq if it left. The U.S. would rather stay and contend with the political pushback and perpetual guerrilla warfare.
The West is vulnerable militarily and diplomatically to the power accreting to the world’s little guy nations. It’s about to discover how vulnerable it is on the financial front to millions of little guys and gals. Central banking and deposit insurance are thought to have made bank runs a thing of the past. We’ll see, but there are plenty of reasons for the high and mighty to fear mass withdrawal of depreciating debt-based units from the entire financial system, not just the banks, and conversion into cryptocurrencies or precious metals—“Real Money.”
Fractional reserve banking by definition means banks only keep a fraction of their total deposit liabilities in reserve. Customers who deposit fiat currencies are unsecured creditors of the bank. In a bank run, unless they are at the head of the line, they are not going to get their currency back. Systemic bank runs would quickly deplete deposit insurance funds. Central banks are supposed to step in as lenders of last resort, but to cover the banking system’s deposit liabilities—and liabilities of other financial institutions as panic spread—they would have to manufacture so many debt-based units that it would drive their value towards limit zero.
We little people have always had the power to bring indebted governments and their allied financial institutions to their knees if a sufficient number of us were to withdraw our funds (see “Revolution in America”). That ability gives us even more power than we have with our bullets and blogs (see “Ants at the Picnic, Parts One and Two”). Thus, we are not entirely at the mercy of the Corruptocracy. For one thing, we know the broad outline of what they plan to do to us. And contrary to the Wall Street adage that they don’t ring a bell at the top, bells are ringing loud and clear. People can still act if they do so quickly.
The first bell is at the grocery store. Every trip requires more currency to buy the same amount of groceries. Fiat, debt-based units known as dollars, yen, and euros are losing value against groceries and everything else. Consider your switch from expensive beef to cheaper chicken and pork a providential warning.
Financial markets are ringing bells. When fiat currencies lose value against real goods and services, creditors demand higher interest rates to compensate for the debasement. U.S. interest rates bottomed (and bond prices topped) in 2020 when governments, in response to COVID, loosed the floodgates of debt, which central banks “monetized” with their own debt. The price of gold has moved irregularly upward since the turn of the century. Fiat garbage is being converted to real money gold. This is a strategy open—for now—to guys and gals both little and big.
Big guys—Russian and Chinese governments and monetary authorities—have been at the forefront of the garbage out, gold in movement. They’ve led their confederated alliance’s dedollarization efforts, shed U.S. Treasury debt, and accumulated element 79. Laying the groundwork for potential gold-backed currencies, they’ve encouraged their citizens to own gold. They are managing the economic and financial aspects of changing power dynamics as adroitly as the military and political aspects.
Panicking Western leaders will continue to shriek at everything Russia and China do. The wiser lights among long-suffering Western populations will hear the bells and mimic their accumulation of real money. Conversion of paper assets, or more correctly, digital claims that are subordinate to more politically connected systemically important claims, is especially pressing if there are plans for a Great Taking. At this point, that’s a highly plausible possibility. The movement towards Central Bank Digital Currencies (CBDCs)—an indirect Great Taking—looks like a certainty unless it’s met with massive resistance. Withdrawal from the wholly corrupted financial system—leaving only the minimum necessary to pay expenses—is the necessary first step.
CBDCs—wholly digital fiat garbage under the complete control of governments and central banks— will be more deadly than vaccines and climate hysteria. As fiat garbage, they’ll inevitably be debased. Alan Greenspan’s classic 1966 essay “Gold and Economic Freedom” made the moral case for the gold standard and is highly recommended, although Greenspan is not. Fifty-eight years later, the essay’s counterpart would be: “CBDCs and Slavery.”
Such an essay would outline the economic and political subjugation government-controlled digital money would make possible. Not only would it facilitate unlimited debasement, the totalitarian overlords will know your every transaction. That knowledge will give them complete control of everyone herded into this financial gas chamber.
If they don’t like your transactional choices . . . or your politics, lifestyle, work, jokes, art, writing, sexual proclivities, gender identification, firearms, ethnicity, race, ancestry, religion, affiliations, what you say during conversations recorded on ubiquitous microphones, what you do captured on ubiquitous cameras, or transgressions reported by a snitch in what will become a society if snitches, it will be: “No digitalized fiat currency for you!” There will be no escape from this system except, perhaps, ad hoc black markets. Governments will have finally “solved” the problem of runs on the financial system. You can check out any time you want, but you can never leave.
You can be a financial Gazan, huddled in the house-of-cards wreckage of malevolent central banking and out of control debt, waiting for the missile, bullet, or bulldozer that has your name on it. There is no way the current system is going to be fixed, unless you think that digital currency whose use can be conditional or that can be canceled outright at the whim of tyrants is a fix.
Or you can be a financial Houthi, using what drones and missiles you have to protect yourself and stymie ships of rapacious fools looking to claim your assets as their next victim. The hour is late and collapse is nigh—better a few months early than a minute late. CBDCs will inevitably be sprung on us in the dead of night, probably in response to an impending financial crises that’s as inevitable as corrupt politicians. In the morning, when millions of panicked depositors unsecured creditors try to get their money out of online accounts, the WITHDRAW button will be disabled . . . forever.
