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Daily Archives: April 29, 2022

Charts: China Retail Sales Fell YoY in March 2022

The first contraction since August 2020

Source : Trading Economics

Chuckles of the Day




The Old Mule

An old hillbilly farmer had a wife who nagged him unmercifully. From morning ’til night she was always complaining about something. The only time he got any relief was when he was out plowing with his old mule. He plowed a lot. One day, when he was out plowing, his wife brought him lunch in the field. He drove the old mule into the shade, sat down on a stump, and began to eat his lunch..

Immediately, his wife began nagging him again. Complain, nag, complain, nag – it just went on and on.

All of a sudden, the old mule lashed out with both hind feet, caught her smack in the back of the head. Killed her dead on the spot.

At the funeral several days later, the minister noticed something rather odd. When a woman mourner would approach the old farmer, he would listen for a minute, then nod his head in agreement; but when a man mourner approached him, he would listen for a minute, then shake his head in disagreement. This was so consistent, the minister decided to ask the old farmer about it.

So after the funeral, the minister spoke to the old farmer, and asked him why he nodded his head and agreed with the women, but always shook his head and disagreed with all the men.

The old farmer said, “Well, the women would come up and say something about how nice my wife looked, or how pretty her dress was, so I’d nod my head in agreement.”

“And what about the men?” the minister asked.

“They wanted to know if the mule was for sale.”

* * * * * * *

Did Anyone See My Face?

A hooded robber burst into a Texas Bank and forced the tellers to load a sack full of cash. On his way out the door a brave Texas customer grabbed the hood and pulled it off revealing the robber’s face.

The robber shot the customer without a moment’s hesitation. He then looked around the bank and noticed one of the tellers looking straight at him. The robber instantly shot him also. Everyone else, by now very scared, looked intently down at the floor in silence.

The Robber yelled, “Well, did anyone else see my face?”

There are a few moments of utter silence, in which everyone was plainly afraid to speak.

Then one old man tentatively raised his hand and said, “My wife got a good look at you.”




“The Richest People on the Planet are Criminals”

Felix Salmon wrote . . . . . . . . .

A secretive group of elite US Army soldiers, under the command of a senior general with access to the full panoply of NSA surveillance technology, steals $2.4 billion of cash in an audacious and bloody attempt to stage a quasi coup in the USA. The money will be used to fund the presidential election campaign of one of the team members, a violent war criminal, while the NSA information is used to gain oppo intelligence on anybody foolish enough to run against him. The path to the Oval Office is dangerous, but clear. Their plan: once elected, the president will essentially dismantle the entire US military apparatus.

That’s the premise of Undermoney, the new thriller from former hedge fund manager Jay Newman. What’s different about this thriller is, first, that group of US Army soldiers trying to buy the presidency with stolen billions? They’re the good guys. And second, this one is written not by someone with intimate knowledge of intelligence services, but instead by a person who spent decades in some of the least savoury parts of the financial world. Jay Newman is arguably the world’s most successful “vulture” — a man who made his millions in a way that’s outlandish even by Wall Street standards. Newman spent most of his career working for the most notorious vulture fund in the world — Elliott Associates, founded by Republican billionaire Paul Singer. A vulture fund buys up defaulted sovereign debt for pennies on the dollar, often from very poor countries, and then uses legal strategies in London and New York courts in an attempt to be repaid at 100 cents on the dollar or even more. Newman repeated that infamous trade multiple times in multiple countries. He’s also a person who knows first hand just how dirty the real world of finance can be. So when I heard about the book, I was interested – and once I polished it off, I gave him a ring and began with a simple question: The real financial world can’t possibly be as unscrupulous and amoral as the world depicted in his novel, right?

Wrong.

Let me first explain why the kinds of trades Newman became known for are twice as crazy as what a normal investor might take on. For one thing, the bonds that vulture funds buy have already defaulted. That means the bonds aren’t paying any interest payments to bondholders like Newman. That automatically puts them out of scope for most bond investors, who buy bonds for the express purpose of being able to receive interest payments.

The other complicating factor is that the debtor is a sovereign, which means the issuer is a nation, which also means there’s no higher authority to whom to appeal who might force the country to make good on its loans. If you take a country to court, the best case scenario is that you win — which means you are now in possession of a court judgment, which is a piece of paper saying that the country in question owes you a certain amount of money. Well, you had that already, and it didn’t do you much good. These difficulties are why the debt was cheap (Newman could buy it for pennies on the dollar). But it also meant that extracting any money often required decades of tireless work involving some very shadowy characters. Amazingly, eventually he often won, most famously against Peru and then against Argentina.

And it also meant he had a window into just how corrupt a lot of the world really is — indeed, Newman once even brought racketeering charges against a French bank in an attempt to collect on a Congolese debt. A different vulture investor told me once of how he was thisclose to getting paid off on a huge and elaborate scheme where he’d bought up thousands of defaulted bonds from individuals and tried to get them all paid off at once — but fell just short at the final hurdle, when the president of the country demanded a multi-million dollar kickback for signing the bill into law. Economically, paying the bribe would make a lot of sense, but also, the investor in question had a desire to stay out of jail, and the Foreign Corrupt Practices Act can apparently be a bitch that way.

“The richest people on the planet are criminals and the leaders of countries — I use that term loosely because they’re criminal enterprises that are masquerading as countries.”

The reason a guy like Newman is so well-positioned to write a thriller (and to explain the dark way the world of money actually operates in the borderless financial world) is that one of the main parts of any vulture investor’s job is to find hidden assets that can be seized by a court in London or New York. That involves learning a lot about financial secrets.

“Forbes is missing fully half of the world’s billionaires,” he tells me. “The richest people on the planet are criminals and the leaders of countries — I use that term loosely because they’re criminal enterprises that are masquerading as countries. Russia, China, Iran, most of Africa. These are not proper sovereigns, even though they might have trappings of democracy. They’re criminal enterprises. There hasn’t been a Mexican president that hasn’t been in bed with the mob.”

One of the things Newman reminds me of is that if you’re a head of state, you have no shortage of opportunities to turn your power into money. Just look at the way the oil and gas markets reacted to Russia invading Ukraine — anybody with advance knowledge of Putin’s actions could make a fortune in the markets, just like they could in the early days of the pandemic, when Putin unexpectedly raised oil production in the face of demand that had fallen off a cliff. That action sent the price of oil plunging. Sure, he might have lost money on any given barrel of exported oil, but how much might he or his cronies have made on derivatives transactions if they knew what he was going to do? Newman understands how such trades work: A lot of his book is centred on a hedge fund that positions itself to make billions when global news events move markets. Naturally, in order for such a strategy to be successful, it helps to know about the news before it happens.

“Rough arithmetic says maybe half the world’s wealth is unconstrained by the rule of law,” says Newman. “That’s a really scary prospect.” His novel is full to bursting with people who act with utter impunity and have no fear of law enforcement — old money, new money, hedge fund money, head-of-state money, even (especially) mercenary-for-hire money. Think of it as Bridgewater meets Blackwater. All of it measured in the billions: The $2.4 billion stolen at the beginning of the book starts to feel like a rounding error later on.

We real-world law-abiding chumps occasionally get a glimpse of that money, through a glass darkly. Newman pointed me, for instance, to a Financial Times report in February. Credit Suisse, the troubled Swiss banking giant, was securitizing an $80 million portfolio of loans backed by megayachts, “to offload risks associated with lending to ultra-rich oligarchs.” The securitization came just in time: One slide explained that a third of the defaults on such loans in 2017-18 were “related to US sanctions against Russian oligarchs.”

Yachts are a perfect place for billionaire outlaws to store their wealth. Not only can they (in theory) be sailed to a friendly jurisdiction at any time, they can also be monetized via banks like Credit Suisse. That kind of financial maneuver is usually cheaper than selling assets and being liable for capital gains tax. But in this case, says Newman, the oligarchs were essentially bribing Credit Suisse by taking out loans they didn’t need. The quid pro quo: If you extend to us this highly lucrative loan, we’ll happily pay you back in full just in return for your imprimatur. After all, once you’re a customer in good standing of Credit Suisse, you can move almost any amount of money anywhere you like. And if Credit Suisse does freeze your accounts, well, you just won’t pay back the loan.

For a lot of shadowy billionaires, says Newman, the one thing that it’s very hard for money to buy is a bank account at a reputable institution. A major trial recently wrapped up in New York, where Tim Leissner, a former Goldman Sachs banker — and ex-husband of Kimora Lee Simmons — testified about the way in which he got the bank involved in a multi-billion-dollar fraud scheme orchestrated by a young Malaysian hustler named Jho Low. Even after Goldman made $600 million in fees from Low’s bond deals and got a meeting with Lloyd Blankfein, the Goldman CEO, Low still couldn’t open an account with the bank. That’s why so much effort and money, as Newman shows in his book, is spent on laundering criminal money to the point at which it becomes acceptable to major international financial institutions. Maybe Jho Low should have asked Credit Suisse to finance his yacht.

In Newman’s book, it’s not necessarily the overt criminals like Jho Low who are the most terrifying. Newman is sympathetic to his coup-adjacent protagonists, who are also the most dangerous individuals in the whole novel.

Newman is self-aware enough to realize the murkiness of the waters he used to swim in, even as he proclaimed himself atop the moral high ground. One ultra-shadowy billionaire in the book has some hard-earned advice for her daughter on page 343. “People who think they have a moral claim to money are always more dangerous than people who just steal it for ordinary, venal reasons,” she says. “Thieves, I can work with. They are predictable. It’s the idealists who terrify me. They’ll stop at nothing.”

Having spent many years covering vulture funds, I can attest that nearly everybody in that world considers themselves to be on the side of truth and justice. Certainly, Jay Newman does: As far as he is concerned, he was just standing up for the rule of law. “I’ve been an enormous beneficiary of the rule of law, and I have no hesitation invoking it,” he says.

Newman’s book, however, paints a world where no one is clean. No noble intelligence officer swoops in to save the world from the dastardly plot, and the Russian mercenaries literally get away with mass murder. It’s a bleak vision. But it’s also probably closer to the truth than most of us would like to believe.


Source : Wealth Simple

Heart Risk Factors Can Be Recipe for Dementia

The faster you pile up heart disease risk factors, the greater your odds of developing dementia, a new study suggests.

Previous research has linked heart health threats such as high blood pressure, diabetes and obesity with mental decline and dementia.

Amassing those risk factors at a faster pace boosts your risk for Alzheimer’s disease and vascular dementia, according to findings published online in the journal Neurology.

“Our study suggests that having an accelerated risk of cardiovascular disease, quickly accumulating more risk factors like high blood pressure and obesity, is predictive of dementia risk and associated with the emergence of memory decline,” said study author Bryn Farnsworth von Cederwald, of Umeå University in Sweden.

“As a result, earlier interventions with people who have accelerated cardiovascular risks could be an effective way to help prevent further memory decline in the future,” he said in a journal news release.

The study included more than 1,200 people (average age: 55) who did not have heart or memory problems at the outset and were followed for up to 25 years.

By the end of the study, about 6% had developed Alzheimer’s disease and 3% developed dementia from vascular disease.

At the outset, participants’ average 10-year risk of heart disease was between 17% and 23%. As time went on, heart disease risk remained stable in 22% of participants, increased moderately in 60%, and rose rapidly in 18%.

Compared to those with a stable heart disease risk, those with an accelerated risk were three to six times more likely to develop Alzheimer’s, three to four times more likely to develop vascular dementia, and up to 1.4 times more likely to have memory decline, the study found.

“Several risk factors were elevated in people with an accelerated risk, indicating that such acceleration may come from an accumulation of damage from a combination of risk factors over time,” Farnsworth von Cederwald said.

“Therefore,” he added, “it is important to determine and address all risk factors in each person, such as reducing high blood pressure, stopping smoking and lowering BMI, rather than just address individual risk factors in an effort to prevent or slow dementia.”


Source: Healthday

The Bear Breaks Down: Andrei Soldatov on Russia’s Self-Destruction

Jonathan Tepperman wrote . . . . . . . . .

About 20 years ago, Andrei Soldatov, a Russian newspaper reporter, co-founded a website called Agentura.ru devoted to monitoring the activities of Russia’s security services. The experience turned him into one of the world’s leading experts on Russia’s secretive intelligence and military agencies. In Moscow’s eyes, it also turned him into a dangerous man. In 2012, a new Russian law expanded the definition of treason to include the sharing of any information the FSB (the successor to the KGB) deemed harmful to Russia’s national interests. The noose tightened further in 2020, when another law made it effectively illegal to write anything at all about the security services—a change that “basically cancelled our profession,” Soldatov says. But the last straw came later that same year, when the Russian government cancelled the media license for Soldatov’s website, citing the death of its editor—the very job Soldatov held at the time. Taking the hint, he and his partner Irina Borogan fled for London. Today he’s a fellow at The Center for European Policy analysis, the co-author (with Borogan) of several books, including The Compatriots: The Brutal and Chaotic History of Russia’s Exiles, Émigrés, and Agents Abroad, and one of the most authoritative voices on Vladimir Putin’s coercive apparatus. We spoke by phone on Thursday about Russian intelligence before and after the Ukraine war began, how to indentify Putin’s goals, and why the Russian state seems to be disintegrating around him.

Octavian Report: Given all of the restrictions Russia has imposed on the media and on independent organizations, how is it still possible to report on the Kremlin and the security services? The government seems like a black box.

Andrei Soldatov: Publicly, people are not willing to express their opinions. So it’s become a big problem to find someone still in Moscow who will go on the record. At the same time, however, more people are actually coming to me and my colleagues, because there is a feeling of desperation, especially among Russian bureaucrats—including in the security services. And if they trust you, they are quite eager to share their feelings, because the climate in Moscow is not good.

And this is new. In 2014, during and after the invasion of Crimea, I spoke to many people inside the government, and you could feel that most, or maybe even all of them, were on the same page as Putin. They believed that he had done the right thing in a really efficient way and with no bloodshed. So there was no distance between Putin and these people. Now it feels completely different. Lots of people in the financial sector, in the security services, and even in the army believe that something should have been done about Ukraine. People were ready for something like the occupation of the Donbass, or maybe some airstrikes in imitation of NATO’s 1999 bombing of Belgrade. Instead of that, we got this mess. My sources in the government think that Putin’s full-scale invasion was a horrible mistake.

OR: Does that mean that if the war continues to go badly and becomes an Afghanistan-style quagmire, say, that the unhappiness in the security and intelligence services could become so extreme that they either force Putin to change policy or remove him from power?

Soldatov: I’m a bit skeptical of that. Or at least, I’m skeptical that they could do it on their own. Why? For several reasons. One is that while we’ve had a heavily militarized society for decades, if not centuries, the history of military coups d’état here is surprisingly short. The last time the army tried it was the Decembrist revolt in 1825, and that failed miserably. There was another failed coup in 1991, but that was mostly led by the KGB.

The second problem is the military does not have a tradition of building underground organizations within the ranks, like in Turkey or Egypt. We’ve never had a Young Officers movement here. And, of course, the FSB has penetrated the military to a huge degree.

OR: But the FSB is also becoming unhappy with Ukraine, isn’t it?

Soldatov: Yes, but I’m also skeptical that the FSB could organize something. The 1991 coup didn’t fail because of the bravery of Muscovites—and they were brave, I was 15 years old and I was there. It didn’t fail because of Boris Yeltsin. It failed because there was a huge level of mistrust between the KGB’s generals and its midlevel officers, and that mistrust is still there. Generals in the Russian security services fail to build patronage networks by distributing money and things like that, so the midlevel officers don’t trust them. They respect the position, but not the person.

One final point: in the 1990s, you had competing political forces in the country. You had opposition parties. You had oligarchs. You had very strong regional centers of powers, such as the mayor of Moscow. All of them were competing, so if a group of generals became unhappy with the president, they could rush to this group or that group for political support. That’s not the case anymore. There is no political force left in the country except for Vladimir Putin. The political opposition is either dead, in jail, or in exile. The oligarchs are extremely dependent on Putin and on the military-industrial complex. The regional governors are really scared, because a number of them have been thrown in prison.

At the same time, I cannot say that things are absolutely hopeless, because Russia is a huge country, and due to the sanctions, the regions are going to have more and more problems. Moscow is already very nervous about the regions. All this talk about the nationalization of industry—it’s about politics, not the economy. In many regions, you have these big enterprises, and if they stop their operations, it would mean huge layoffs, and a lot of people would go out on the streets, which would create a big political problem. Now the government is trying to find a way to deal with that. So if you had this combination of factors—if, say, problems in the regions became worse and worse, and they could connect with some major new political force, then maybe the military or the FSB might do something.

OR: Let’s go back to the beginning. How do you explain the massive intelligence and policy failures that led Putin to start this war? Do you think that Russia’s intelligence agencies shared his fantasies about Ukraine?

Soldatov: Russia’s intelligence agencies might not be extremely competent, but they’re not that stupid. Of course they understood that nobody wants to join a new Soviet Union or any of that. What they believed then is that Ukraine is a dysfunctional state, with dysfunctional government institutions, so if you attack it, it will collapse.

They also had a view that Zelensky was a human being who cares about people’s lives. So what they expected to happen is that Putin would attack Ukraine with airstrikes, and all those Russian troops massed on Ukraine’s borders would convince Zelensky not to counterattack. They believed that they could bluff him and use the army not as a real force that would actually go into Ukraine, but as a deterrent to prevent Zelensky from launching a counterattack. And they thought that that decision, to not counterattack, would then ruin Zelensky politically.

What actually happened, however, is that Putin did something completely different. He decided to attack with ground forces immediately, and that left the Ukrainians with no choice but to say, “We need to fight now.” So it was a terrible miscalculation, but not because of the intelligence. It was because of Putin himself.

OR: What are the big takeaways for you from the way the war has gone so far? Has it revealed, for example, big structural problems in Russia’s military, intelligence, and policymaking bodies?

Soldatov: Yes and no. These days everybody is talking about how bad Russia’s army is. I would be a bit more cautious, because what we’re seeing is a huge degree of political interference. Militarily speaking, many things we are doing in Ukraine don’t make any sense. One is using the national guard. It doesn’t make any sense militarily, but it makes some sense politically. Because politically speaking, if you’re sending in your national guard, it means that it’s not a military operation, it’s a policing operation. So you are just dealing with thugs and drug addicts and so on.

The other problem is that the chain of command being used in Ukraine is very different from Putin’s previous wars. In every other war Putin conducted, you had a joint group of forces led by a commander whose name was known. So the public would know who was ultimately in charge of the operation on the battlefield. We had this knowledge in the second Chechen war, in Georgia, in Syria, everywhere. But not here. Here, we only have Minister of Defense Sergei Shoigu and the chief of the general staff. So we don’t know who’s in charge of the situation in Ukraine. We don’t even know where the headquarters of this joint group of forces is, or how many forces are involved. Nobody knows. This creates confusion, and it’s bad for the military because they don’t understand what is going on. So you can blame the military, but the problem is really with the Kremlin, because it decided how to design this whole thing. It’s absolutely astonishing. The only way I can explain its decisions is by pointing to the fact that Putin is way more emotional about Ukraine than he is about any other region.

OR: A lot of people are saying that his age and isolation have also affected his judgment. Do you agree?

Soldatov: To some extent, yes. And he’s become obsessed with history, which is something old politicians do. But I think he’s been obsessed with Ukraine for a very long time.

OR: What do you make of the recent American claims that Putin is being misinformed by his aides about the progress of the war?

Soldatov: I think it’s true. First thing, it was absolutely clear that Putin was not privy to information about the [widespread use of Russian] conscripts. He was quite astonished when he learned. So we know that the military was hiding something from him from the start. The second thing is much more important, however. We know what his initial war plan was, right? It involved airstrikes combined with sending vehicle columns deep into Ukraine. Now, this plan crashed immediately, as soon as it faced reality on the battleground. But Russia’s tactics didn’t change for more than a month, which is absolutely astonishing. They kept sending these columns deep into Ukrainian territory for weeks and weeks and weeks. And you would only do that if your leader was still convinced that the initial plan was absolutely fine.

OR: Why isn’t he getting good information from the battlefield? Is it because the security services are too frightened to tell him the truth?

Soldatov: I think so. There’s huge confusion inside the Russian government. To start with, the military has a longstanding habit of hiding information from Russia’s top leader. In the past, the FSB has helped fill in the gaps. But the problem is that Putin started this war by attacking his security services. He held a horrible meeting with his security council, where he publicly humiliated his chief of foreign intelligence. Two weeks later, he placed two guys from the FSB under house arrest. A few weeks later, the deputy head of the national guard, a former security services guy, was forced to resign and is now probably under some sort of criminal investigation. What all this ignores is that you cannot fix your intelligence problems with repression.

OR: Speaking of intelligence, why was U.S. intelligence prior to the war so good? How did Washington learn so much about Moscow’s plans?

Soldatov: To begin with, I think the United States had succeeded quite well in penetrating the Russian government. The other thing is that the Russian security services have always been famous for producing the biggest numbers of defectors. So I think the United States probably got some good sources. Maybe they still have some people in place.

OR: Say a little bit more about why Russia’s military performance has been so bad.

Soldatov: Well, there are things that are still not clear for me. Because some units of the Russian army, like the spetsnaz[special forces], are really good, very competent, and very well trained. So why they’ve performed so badly is a really good question. I think it has had something to do with morale. And the problems started before the war. Last year, there was a horrible story reported by the Russian media that in a spetsnaz brigade in Siberia, a commander had raped his soldiers as a form of punishment. That is absolutely unprecedented, because spetsnaz forces tend not only to be Russia’s most professional soldiers, but they don’t have hierarchical problems, because they fight in small groups where you need to trust everyone who’s with you. In the spetsnaz, it doesn’t matter whether you are lieutenant or a captain or just a soldier, you’re all in it together and do the same things. So it looks like something has broken down in the Russian military. That might help explain the really bad performance. And again, all the problems with bad planning and the chain of command were also a big factor.

Back in 2014, the Russians outperformed the Ukrainians by a long distance. For some reason, they’re not doing that now. There are so many mysteries. I’ll give you another example: why hasn’t a big cyberattack happened? It would make perfect sense, because it could produce panicked crowds of people jamming the roads and making it difficult for the Ukrainian military to move around. But that chance was missed completely. Disinformation operations have also not been good. They didn’t have lots of stories prepared for this war. This is very different from what we saw just eight years ago. I do not have an explanation, but it looks like several elements just went completely wrong.

OR: What you’re saying suggests massive disarray within the Russian state, the military, the political apparatus, and the intelligence services, as though everything is breaking down.

Soldatov: That’s my impression.

OR: Do you believe the reports that Russia is now shifting its military strategy and aims in Ukraine toward consolidating control over the east and abandoning the center and the west?

Soldatov: My fear is that they’re just playing for time. I think that when you have a guy in the Kremlin who is being absolutely delusional about the real situation in Ukraine, you can’t speak in terms of a coherent foreign policy. Let’s say he does secure the Donbass, this chunk of land that nobody wanted. He might even make it a part of Russia. So what? It’s never had the symbolic value for Russians that Crimea has. It’s not a big win. And the price is all these sanctions and all these problems with the rest of the world.

OR: So you’re saying that one shouldn’t talk about Russia shifting its strategy because there is no strategy? That Putin is just making things up as he goes along?

Soldatov: Yes. Because strategically speaking, I don’t quite understand his end game. Maybe you have some ideas, but I don’t get it.

OR: Is it possible that his maximalist objectives were just a smoke screen, and that his real objective has always been to establish a land bridge between Crimea and Russia proper and to permanently destabilize Ukraine—to turn a fairly successful, Western-leaning, increasingly liberal democracy into a failed kleptocratic state?

Soldatov: Maybe, but I have a problem with this argument. Because let’s say you want to destabilize Ukraine, or you want to create a land bridge between Crimea and Donbass. That could all be achieved with air strikes. You could do what the Israelis did to Lebanon in 2006, which is to bomb the infrastructure of the country into the ground. Just bomb all its bridges, all its railroads, everything. And if you did that, a lot of countries, especially in Europe, would say nothing about it. Remember that before the war, the French said, “Well, air strikes are bad, but they don’t qualify as a real invasion.” Only after the tanks started rolling into Ukraine did people in Europe say, “Okay, this is a real thing.” So why invite all these horrible sanctions on yourself when you always had the option to use your formidable aviation, which completely outmatched Ukraine’s? I don’t get it.

OR: How, then, do you see the war ending?

Soldatov: Putin’s usual way out of trouble is to escalate even more. I think that people in Moldova and in the Baltics should be extremely, extremely nervous right now. I think it’s absolutely possible that he might start something there, just like he did with the Donbass as a way out of Crimea.


Source : The Octvian Report

Countdown to U.S. Government Default

MN Gordon wrote . . . . . . . . .

Central Bank Digital Currencies (CBDC) are coming. And they’re coming much faster than most people care to think about. Are you ready?

At the moment, roughly 90 central banks – including the European Central Banks and the Federal Reserve – are either experimenting with, or are in varying stages of CBDC implementation. Moreover, these CBDC friendly central banks include all G20 economies. And together, represent more than 90 percent of global GDP.

What’s important to understand is the adoption of a CBDC in your country of residence would accompany the abolition of cash. This would be for your own good, of course. To eliminate nefarious transactions and black markets.

If you value financial privacy and the liberty to spend your money as you please, then the rapidly approaching rollout of CBDCs is a major red flag. Compulsory use of a CBDC, like a digital dollar for example, would give central planners complete oversight and control over your finances.

You see, under a CBDC regime – free of cash – all of your transactions would be subject to government surveillance. All remnants of financial freedom, privacy, and anonymity would be destroyed. But that’s not all…

CBDCs would allow control freak, power mad central planners to do much more than spy and surveil your financial transactions. CBDCs would allow them to control how and when you spend your money.

This may sound crazy to a sane person, who operates with a modicum of modesty and integrity. But, in truth, this is one of the main intents of CBDCs. In fact, several years ago Bank for International Settlements General Manager Agustin Carstens outlined the extraordinary powers CBDCs would afford central planners. Here are the particulars from Carstens himself:

“There is a huge difference [between CBDC and cash]. For example, with cash we don’t know who’s using a 100 dollar bill today. We don’t know who’s using a 1,000 peso bill today. A key difference with the CBDC is the central bank will have absolute control under rules and regulations that will determine the use of that expression of central bank liability, and we will have the technology to enforce that.”

Do you get it? The central planners want absolute control over how you spend your money. This includes the U.S. government too…

Traceable And Programmable

On March 9, the Biden administration released an executive order (EO) requiring several federal agencies to study digital currencies and to identify ways to regulate them. A big part of the EO is focused on blockchain based cryptocurrencies like bitcoin and ethereum.

However, within the EO, Biden also directs the federal government and Federal Reserve to lay the foundation for a potential new U.S. currency, a CBDC – perhaps, a digital dollar.

Specifically, the EO directs the U.S. Treasury, and other federal agencies, to study the development of the new CBDC and report back within 180 days of the potential risks and benefits of a digital dollar. The EO also directs the Treasury Department, Office of the Attorney General and Federal Reserve to produce a ‘legislative proposal’ to create a digital currency within 210 days, about seven months.

The digital dollar is coming, and it’s coming quick.

To be clear, the adoption of a digital dollar by the U.S. government, as Biden intends, would be one of the greatest expansions of federal power ever made. The digital dollar would be much different than a digital version of the existing U.S. dollar. It would also be much different than cryptocurrencies like bitcoin and ethereum, which are decentralized.

Digital dollars would be traceable and programmable. The Federal Reserve, or some other government agency, would have the ability to create digital dollars at whim. Moreover, the digital dollars could be programmed to have various rules and restrictions governing how and when they are spent.

Earlier this year, in Federal Reserve published report about the development of a CBDC, the Fed provided examples of possible ‘design choices’ for a digital dollar, including that “a central bank might limit the amount of CBDC an end user could hold.”

Biden’s EO plan for a digital dollar also includes design choices that will give the federal government total control over financial freedom and the economy. The EO even states the CBDC and other policies governing digital assets must mitigate “climate change and pollution” and promote “financial inclusion and equity.” This is a major focus.

From this, we can speculate that financial inclusion and equity means wealth redistribution. And climate change mitigation means restrictions to fossil-fuel use. These, and other government dictates, like the direct subtraction of taxes and fees from your account, would be programmed into the digital dollar.

Why now…

Blowback

U.S. and European Union sanctions against Russia, including cutting Russian financial institutions off from SWIFT and preventing the Russian Central Banks from using its foreign currency reserves, may prove to be a strategic blunder. The blowback potential is real, and is already happening.

Europe, which depends on Russia for 40 percent of its natural gas, is now reaping the whirlwind. According to Bloomberg, Putin has signed a decree demanding payment in rubles for Russian gas supplies starting April 1 (today). Will Europe submit?

There are rumors European nations are already covertly buying rubles. The ruble’s increase on the foreign exchange market to pre-invasion levels certainly hints something is in the works.

Regardless, the U.S. is losing control over the international financial and payment system. By freezing Russia out SWIFT, Putin is being forced to look for other alternatives. Specifically, China has been developing its own Cross-Border Interbank Payment System (CIPS) as an alternative to SWIFT.

Sanctions against Russia may further accelerate the use and adoption of CIPS by nations that are opposed to western influence. Cryptocurrencies and blockchain technology also offer banks and individuals ways to move payments without using dollars or SWIFT.

The very success of the weaponization of the legacy financial system by the U.S. and Europe is driving Russia and others into such alternatives. Hence, fewer international transactions in dollars could undermine the dollar’s reserve currency status. This would have serious implications for the U.S. economy, as the dollar would likely suffer a significant devaluation.

In the U.S. consumer price inflation (official) is already at a 40 year high. Unofficially, it’s higher than it has been in over 100 years.

Between the financial war being waged, raging consumer price inflation, a $30 trillion national debt, trillion dollar deficits, and unfunded liabilities running into the hundreds of trillions, something’s got to give…

…namely, the U.S. dollar.

Countdown to U.S. Government Default

The popular American myth is that the U.S. government has never defaulted on its debt. Quite frankly, that’s unadulterated hogwash. The U.S. government has (unofficially) defaulted on its debt twice within the last hundred years.

Executive Order 6102 of 1933, which forced all American citizens to turn in gold coins and bars, was, in fact, a default. Gold ownership in the United States, with some small limitations, was illegal for the next 40 years.

Under EO 6102, Americans were compensated $20.67 per troy ounce of gold. They were paid with paper dollars. Immediately following the government’s gold confiscation, the price of gold was raised by the Gold Reserve Act of 1934 to $35 per ounce. Just like that, American citizens were robbed of over 40 percent of their wealth.

The second default occurred in 1971, when President Nixon “temporarily” suspended the convertibility of the dollar into gold.

Prior to 1971, as determined by the Bretton Woods international monetary system, which was agreed to in Bretton Woods, New Hampshire, in July 1944, a foreign bank could exchange $35 with the U.S. Treasury for one troy ounce of gold. After the U.S. reneged on this established exchange rate, when foreign banks handed the U.S. Treasury $35, they received $35 in exchange.

In both instances, the U.S. government didn’t overtly default on the debt. Instead, it changed the fundamentals – the terms and conditions – of the dollar. By all honest accounts, these are defaults.

Similarly, the issuance of a digital dollar (a Fed issued CBDC), which is traceable and programmable, changes the terms and conditions of the cash dollar.

Make no mistake. This is a default…and you won’t like it.

Moreover, per Biden’s EO, this default could happen as soon as T-minus 210 days from March 9 – or as soon as October 4th.

If that doesn’t give you a warm and fuzzy, we don’t know what will.


Source : Economic Prism