Table of Contents
Movies and Documentaries
Food for the Soul: The Moneylender
I. Solari Report Resources
My goal in The State of Our Currencies is to communicate where we are in the evolution of our currency system and describe the issues before us. As Solari Report subscribers have a diverse background, some may not be comfortable with basic terms and conditions regarding currencies. Wikipedia, Investopedia, and other readily available sources can give you general definitions. I encourage you to access them if you need a primer on currencies.
An analysis of global currencies touches on everything going on in our world. Global governance and resource use has an impact on all people, all places, and most institutions. It touches all natural resources, assets, and industries. It also deals with the fundamental laws and models we use to govern and manage our global economy and societies—not just the models we claim to use, but the models that we actually use. Consequently, a review of the state of our currencies necessarily is a high-level conversation, integrating much of our invisible and visible realities.
If you have digested the relevant content The Solari Report has published over the last decade, following such an overview will be relatively easy. If you are new to The Solari Report and your map of the world has not yet had the opportunity to consider or digest these aspects of where we are and where things are going, you may want to dive into our main website and well as our library to access a wealth of materials that will help you follow this discussion.
Recommended Solari Report resources include:
A. The State of Our Currencies audios. These are my overview discussions of this topic on The Solari Report in 2019 and 2020.
B. Discussions of the financial coup d’état that occurred in the United States from 1995 on, including $21 trillion missing from the U.S. government. These resources include interviews with Dr. Mark Skidmore and Rob Kirby, supported by a comprehensive collection of documentation at the Missing Money website (https://missingmoney.solari.com) and in the 2018 Annual Wrap Up: The Real Game of Missing Money. This also now includes the explosion of new fiscal and monetary stimulus begun in 2020 (see the Stimulus Tracker on the Solari website) and the likelihood of a “cut and run” following the issuance of FASAB Statement 56 by the Trump Administration in October 2018, which facilitates the transfer of government assets and operations to private hands on a non-transparent basis.
C. Annual and Quarterly Wrap Up themes from 2014 to date. Wrap Up themes help Solari Report subscribers understand long-lived trends underway. These include our coverage of the financial coup d’état and missing money; the shift from an industrial economy (Global 2.0) to a network economy (Global 3.0); the investment in a space economy and the transition to a multiplanetary civilization; the changes in the global food system; the rise of China and the resulting land empire between Asia and Europe; the globalization and growth of securitized equity, real estate, and debt markets; and the integration of new technology into centralized, technocratic control systems, including the use of the U.S. federal credit and financial coup d’état to centralize global wealth. These are all covered in our individual themes but also in my quarterly in-depth discussions with Dr. Joseph P. Farrell analyzing News Trends & Stories. All of the Wrap Up cover pages—which illustrate the Wrap Up’s primary theme—are linked from the bottom left on the home page.
D. Discussions about bringing transparency to the governance system. One of the defining features of life on our planet is that the real governance system is a secret. We don’t have the answers as to who is really in charge. We have asked a lot of Unanswered Questions in Solari Report interviews with Dr. Joseph Farrell about the governance system and “breakaway civilization” and in discussions with Joseph for the News Trends & Stories section of our Wrap Ups. Additional Solari Reports on the black budget, underground bases, and “breakaway civilization” have also been invaluable.
E. Resources addressing “How could this be happening without me knowing?” One of the challenges involved in understanding the state of our currencies is coming to grips with the fact that our understanding of the world may not match what is actually going on. I am reminded of Bobby Kennedy’s comment after his brother was assassinated in Dallas. After he spent increasing time visiting poor neighborhoods in his campaign for the Senate and then the Presidency in 1968, he said: “I found out something that I never knew. I found out that my world was not the real world.” Valuable materials include our interviews on secrecy with Amy Benjamin, on 5G and technology with Jason Bawden-Smith, on understanding reality with Dr. Mark Skidmore, on control systems and propaganda with Jon Rappoport, as well as Solari Reports on mind control and entrainment. The latter also include related recommendations for excellent documentaries that inform about the nature and application of mind control technologies since the creation of the National Security State in 1947. Finally, many subscribers have found our Deep State Tactics 101 series helpful to understand the nuts and bolts of how this divergence between reality and official reality has been engineered.
I am not going to try to document or prove my thesis in The State of Our Currencies. This is one practitioner’s point of view at this moment in time. I hope my analysis inspires continuing discussion that helps the Solari network understand what is happening and what we can and should do about it. At the web presentation, I do provide a bibliography of recommended sources, a chronology of selected dates in the history of currencies, and helpful movies and videos.
If you find yourself having difficulty following The State of Our Currencies, I encourage you to post comments at Subscriber Input or at the related Solari Report commentaries, or send an email to firstname.lastname@example.org for specific recommendations to help you supplement your investigation in a sequence that works best for you.
“Let me issue and control a nation’s money and I care not who writes the laws.” ~ Mayer Amschel Rothschild
Discussions of monetary systems and policies often happen in a vacuum. However, given that our currency and financial systems are a subset of our governance system, it is not possible to understand them divorced from an understanding of our governance system—including who really runs things, what risks concern them, and what their goals are. As that information is secret, it is all too tempting to just ignore it.
Despite the uncertainties, it is imperative that we place the governance system question front and center. This is challenging in a period of rapid change. While some of us spent several decades discussing whether or not we should return to a gold standard, the United States experienced a financial coup d’état, including $21 trillion missing from U.S. government accounts and extraction of $29 trillion from the U.S. government to reimburse the banking system for massive mortgage and financial fraud. Now, the U.S. is embarked on $10-plus trillion (and counting) of monetary and fiscal stimulus in 2020. The accumulation of federal deficits and debt combined with retirement and pension obligations raise questions regarding the future existence of the United States, its laws, and government structure—and, with these, the U.S. dollar. We are approaching $60 trillion shifted out of the existing system, much of it into hidden hands, while liabilities are ballooning, with even more being moved onto taxpayers’ balance sheet.
These are all signs that a potential “cut and run” is underway. If not a “cut and run,” then certainly a radical reengineering of the U.S. governmental systems lies ahead. Indeed, it has been quietly happening behind the scenes for some time. Presumably, the radical reengineering is accelerating now that FASAB 56 has arranged complete freedom from financial reporting or laws.1
These actions have been supplemented by massive quantitative easing by the G7 central banks combined with engineering of interest rates down to near zero (and in some cases below zero), making it possible for sovereign governments to steadily increase their debt and deficits. This has resulted in a series of monetary and fiscal tsunamis that have managed to buy up control of almost everyone and everything, leaving us with a global society highly dependent on financial steroids, corruption, and criminal kickbacks—and excessively obedient to invisible centralized control.
This centralization was facilitated with a digital technology and telecommunications revolution. Since the late 1990s, a trillion-dollar infrastructure of cables, towers, and satellites to support this revolution has been rolled out at astonishing speeds. Moving from a handful of DARPA (Defense Advanced Research Projects Agency) scientists on the Internet communicating directly with each other, we now have five billion people with mobile devices. Approximately half of those are on smartphones. We are on our way to all eight billion people being able to communicate and transact directly, with the greatest growth coming in the emerging and frontier markets.
The suborbital platform around Earth is a critical element of the infrastructure for managing the necessary telecommunications on the ground.2 This makes our investment in space infrastructure a high priority. In essence, the control of the population and economy depends increasingly on the suborbital platform around us, just as it once depended on the global sea lanes. In an attempt to maintain dominance, including in the face of a rising Eurasia land empire between a growing China and a wealthy Europe, the United States has announced its intention to create a multiplanetary civilization while abrogating existing space treaties and converting space to a war-fighting domain.
The state and evolution of our currency systems has far more to do with technological change and our decision to become a multiplanetary civilization than with monetary policy. This makes it complicated. It is defined first and foremost by who is really in charge and where technology—much of which has been financed and developed in secrecy—will permit those in charge to take us.
III. Governance Structure: Who’s In Charge?
“Power corrupts, and absolute power corrupts absolutely.” ~ Lord Acton
“‘That’s not the way the world really works anymore,’ he continued. ‘We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors . . . and you, all of you, will be left to just study what we do.’” ~ Ron Suskind, The Price of Loyalty (Suskind’s book about Paul O’Neill’s experience as Secretary of Treasury in the Bush II Administration)
The most important unanswered question of our time is: “Who is in charge and what is the governance structure on Earth?”
I raise this question often. It is always in the list of Unanswered Questions in our quarterly and annual Wrap Ups. It invariably comes up when we talk about space investment and the space-based economy or when we discuss some of the more baffling issues related to our global financial system. These include the creation and growth of the black budget and related operations and technology development after 1947; the explosive growth of the National Security State after its assassination of U.S. Defense Secretary James Forrestal in 1949, Forrestal’s protégé, President John F. Kennedy, in 1963, and his brother and presidential candidate Senator Robert F. Kennedy in 1968; the financial coup d’état that began in the mid-1990s; and the near-miraculous longevity of the U.S. dollar as global reserve currency.
Any serious discussion of our currency system will bring this unanswered question front and center. When a discussion of how to improve or reinvent the currency system ensues, it does not take long to realize that the currency system is but one part of a larger financial system, which in turn is just one component of the governance system. You cannot tinker with one aspect without understanding and optimizing all aspects together.
An Accurate Diagnosis
My father was a surgeon. Surgery was a topic he liked to discuss at the dinner table. As he was a brilliant man and passionate about his work, these were fascinating discussions. One of the things that became clear to me as a child was the importance of a sound diagnosis before cutting into a man’s or woman’s living body.
My father would sometimes spend hours and days ruminating on what was wrong with one of his patients before he would proceed with surgery. All the different parts of the body were connected. He did not want to affect one without understanding what it might do to the other parts. He wanted to make sure he solved the problem, rather than solving a symptom and making the problem worse. His colleagues said that his genius stemmed from remarkable intuition and powers of diagnosis. I saw it as a form of integrity.
I think of the surgery metaphor a lot during discussions of our currency system.
I am often told that our currency system does not work. However, until recently, it worked just fine for the central banks who operated it and the central bank members and owners. The currency system has been used to centralize political and economic control. If you look at this effort since the mid-1990s—the period that launched what I call the “financial coup d’état”—the currency system has engineered a remarkable centralization of wealth. While our existing nation-states have been levered up with trillions in debt, a great deal of that credit, money, or assets has been transferred out to private hands—with liabilities retained or moved back into the nation-states. It is the greatest “piratization” of all time. In short, our currency system has been quite successful for the beneficiaries. It also worked for some of the American middle and upper classes who preferred to benefit from the kickbacks and subsidy it provided, rather than “turn the red button green.”3
Centralization has generated significant frustration on the part of those whose power and wealth has been skimmed, diminished, or destroyed. This includes the BRICS nations, the growing economies in Asia, and the emerging markets, who resent the costs, restrictions, and liabilities of working through the U.S. dollar trade and settlement systems. It also includes communities and citizens in the United States and throughout the world who are experiencing significant debasement of their currency holdings and pension fund assets, are struggling with corrupt governments, and find themselves responsible for exploding sovereign debt.
These groups often say that the currency system is not working for them and that we need a new currency system. What they mean is that the existing governance system is not working for them, and they do not want their transaction capability to be unnecessarily controlled or restricted through the currency mechanism maintained by the syndicate that controls the U.S. dollar. Here is another way to look at it: One group is skimming, and another group is being skimmed. The group being skimmed is tackling the hard, inconvenient challenge of building workarounds and alternatives. Meanwhile, the skimming group is pushing back.
Indeed, there is no reason that the U.S. dollar system could not be reformed to work productively as a liquid global currency. However, that would mean that it could not be used—as it increasingly is—as a political tool to control or extract economic value. The reason that we hear very little discussion of reforming the dollar system is that those who control it would rather use new technology to move to even greater levels of control. Those who don’t control the system would rather get out from under it or compete with superior control systems. No one believes that cooperation and alignment is a possible way forward.
What currency systems need to work is trust. Unfortunately, trust is leaving global currency bubbles like air leaving a ballon.
This issue of governance systems versus currency systems is essential to consider when someone proposes changes to the currency system that represent an attempt to solve the symptom rather than the problem. The dangers of doing surgery without a proper diagnosis are significant. Let’s look at some examples.
Example: A Gold Standard
Within the financial world, there is a wonderful group of highly intelligent, passionate people who extol the virtues of the Austrian School of Economics and sound money, including proposals for returning to a gold standard.
From the Merriam-Webster Dictionary:
Austrian School: “The proponents of and adherents to the economic theories developed by Karl Menger (1840–1921), Friedrich von Wieser (1851–1926), and Eugen Böhm-Bawerk (1851–1914) of Vienna, Austria, who originated a subjective theory of value that utilizes the doctrine of marginal utility rather than the Ricardian labor theory of value and who formulated a productivity theory of interest and capital that emphasizes the importance of the time element in production.”
Sound money: “Money not liable to sudden appreciation or depreciation in value.”
Stable money: “A currency based on or redeemable in gold.”
Gold standard: “A monetary standard under which the basic unit of currency is defined by a stated quantity of gold and which is usually characterized by the coinage and circulation of gold, unrestricted convertibility of other money into gold, and the free export and import of gold for settling of international obligations.”
Much of what the Austrian School says makes sense, until you start to consider tinkering with the actual currency system. Let’s demonstrate the problem.
A simple estimate of the monies that have been transferred out of the U.S. pension funds and U.S. government in the financial coup d’état since fiscal 1998 is approximately $60 trillion. This consists of $21 trillion missing from the Treasury through DOD and HUD between fiscal 1998-2015, $24-$29 trillion from the 2009-2012 bailouts, plus what is now approaching $10-plus trillion on various stimulus packages in 2020. It may well be more by the time you read this. As of this writing, the U.S. deficit for fiscal 2020 (which ends on September 30, 2000) is estimated to reach $4-$5 trillion.
If we add more for quantitative easing policies by the Federal Reserve since the bailouts, we could get much higher. If we were to throw in what has been happening at the European Central Bank (ECB), the Bank of Japan (BOJ), and other governments and central banks, we could get to a higher number still.
Suffice it to say that at least $60 trillion has been transferred out of the G7 governments, including that portion financed by the sale of sovereign bonds to our pension and retirement funds and trusts. This theft of assets was facilitated by a central bank and its private members with the power to create fiat currency. The resulting monetary inflation and debasement of our currency has been significant and is likely to be more significant in the future.
All of this is, of course, quite true. Now that a small group has gotten together and stolen $60 trillion and a great deal of the gold on the planet, the solution put forth by the well-intentioned—such as those who adhere to Austrian School economics—is to institute a sound money policy, with a return to a gold standard as one proposal. Are we really going to institute a sound money policy that will protect the small group’s assets, dramatically increase the value and strategic power of their gold holdings, and diminish our own access to capital going forward? This will simply consolidate and further enhance the power of the people who engineered the theft of our capital through the coup d’état, while dramatically diminishing our ability to recreate or replace our lost wealth. In other words, a policy that focuses on sound money rather than governance will both consolidate and significantly increase the success of the financial coup.
Example: A Debt Jubilee
Proposals for a debt jubilee that are not specific about who and what will benefit have similar shortcomings. What is the point of further enhancing the power of the coup leadership at our own expense? Let’s take a look.
A small Group A steals $60 trillion through governments and central banks. They use the money to buy up all the real assets—gold, real estate, weapons, and spaceships. To finance this, they sell most government bonds to Group B’s pension funds and retirement assets. Then they announce that to give relief to Group B, “we need a debt jubilee.” That sounds great, right? With the jubilee, all of Group B’s pension funds, retirement assets, and even some insurance holdings are wiped out since they were stuffed full of the debt used by Group A to finance their financial coup.
In other words, Group A just doubled down on their winnings by tricking the body politic into a debt jubilee. But the game is not over yet because then Group A comes in for the kill and buys all of Group B’s assets at fire sale prices—using the money stolen from Group B!
Cui Bono? Who Benefits?
Here is the bottom line: Whether adopting sound money policies or proceeding with a debt jubilee are good ideas depends on how they are designed—the devil is in the details.
In the game of economic warfare, please always ask “who.” Who’s doing this? Cui bono? Who benefits? Who wins? Who loses?
When we go into the invention room to reinvent the currency, exactly who will be the winner and who will be the loser? Do you want to redo the currency system if it makes the people who used the existing currency to repeatedly pump and dump you and engineer a financial coup d’état more powerful? Do you want to engineer a system in which “crime pays”?
This is why I keep asking the question, “Where is the $21 trillion of missing money?” Unless the money that was stolen in the financial coup d’état (and the money being stolen through the new stimulus measures) is on the table, I have little desire to go into the financial surgical suite with Mr. Global (my nickname for “the committee that runs planetary governance”). Better to first bring transparency to the governance system. Who is really running things? What are the risks they are managing? Where do they want to go, and why?
My point is that we cannot have an intelligent discussion regarding our currency without understanding how it fits into our existing governance structure.
Our challenge is that everything we need to know is cloaked in a veil of secrecy—from government finances to central bank ownership and operations, to the fundamental nature, leadership, and process of global governance. This secrecy—and the force that makes it go—have been major contributors to the corruption of our financial system and society. Unless and until we are prepared to do something about it, changes in the currency system will be harmful to each and every one of us.
When people ask me to propose a design of a new currency system, my response is simple. Step one: Turn on the lights. Stop contemplating surgery without a proper diagnosis. Supporting changes to our currency when we are ignorant of the global political chessboard is a recipe for political and financial suicide.
IV. The U.S. Dollar: Dominant and Dangerous
“The United States accounts for 23% of global GDP and 12% of merchandise trade. Yet about 60% of the world’s output, and a similar share of the planet’s people, lie within a de facto dollar zone, in which currencies are pegged to the dollar or move in some sympathy with it. American firms’ share of the stock of international corporate investment has fallen from 39% in 1999 to 24% today. But Wall Street sets the rhythm of markets globally more than it ever did. American fund managers run 55% of the world’s assets under management, up from 44% a decade ago. The widening gap between America’s economic and financial power creates problems for other countries in the dollar zone and beyond. That is because the costs of dollar dominance are starting to outweigh the benefits.” ~ “Dominant and Dangerous: A Special Report on the Dollar’s Role in the World Economy,” The Economist, 2015
The United States became the world’s largest economy in the 1870s, but it took another five decades for the U.S. dollar to make serious inroads to compete with the British pound sterling as the world’s reserve currency. From World War I through the creation of the Bretton Woods system in 1944—a year before the end of World War II—the pound sterling and the U.S. dollar shared a reserve currency duopoly. After Bretton Woods, the U.S. dollar emerged as the global reserve currency.
The U.S. dollar has remained the global reserve currency ever since. Although the launch of the euro in 1999 drew meaningful market share from the dollar, the countries in the European Union still depend on the U.S. military and NATO for their defense. The Japanese yen has a small market share of global reserves and trade, but Japan also depends on the U.S. for its national security umbrella. The pound sterling continues to function modestly as an international currency. These four currencies were the basis of the International Monetary Fund’s (IMF’s) Special Drawing Rights (SDR) until the Chinese reminbi was added in October 2016.
The process by which the dollar rose to its current status is instructive for understanding the characteristics of a global reserve currency. Factors at play include the size of the economy, central banking, market liquidity, the role of the military, and the “financial bazooka.”
Size of the Economy
The size of the issuer’s economy is important—but not as important as you might think. It took 70 years after the U.S. became the largest economy in the world for its currency to dominate. The U.S. remains the largest country in terms of GDP. However, when measured in purchasing parity, China has now surpassed the U.S., and the European Union is the largest consumer market. If China continues to grow at higher rates, its GDP can be expected to pass that of the United States in nominal terms.
Source: CIA World Factbook
The GDP sector composition of the two countries reflects China’s manufacturing juggernaut and the growth of U.S. financial and tech sectors and dependency on services.
Source: CIA World Factbook
Source: CIA World Factbook
The two countries are similar in size.
Source: CIA World Factbook
However, China has a much larger labor force, reflecting a much larger population. Despite its growth and the size of its total GDP, its per capital GDP remains much lower.
Source: CIA World Factbook
Source: CIA World Factbook
The U.S. dollar did not begin to share reserve currency status until it had a central bank that was a central management and transaction point for global central banks and financial institutions. This helps to explain the bitter war to create the U.S. Federal Reserve in 1913. Those who conspired to do so understood the extraordinary benefits of shifting the dollar into a reserve currency status. I suspect this also helps explain the current push for the equivalent of either a global central bank or transitioning the Federal Reserve to function as a global bank. Many of the current tensions of operating the Federal Reserve are between providing global liquidity versus serving the domestic economy well.
For the dollar to serve as a global reserve currency, U.S. banks and Wall Street had to be prepared to provide liquidity and lending in both New York and in financial capitals around the world. Building out the necessary relationships and transaction mechanisms was no small feat. It took New York many decades—and a World War—to build out sufficient networks to supplant the City of London in the reserve currency role.
Role of the Military
The global financial system operates on a central banking-warfare model. The central banks and their member banks print or digitize fiat currency out of thin air, and the military makes sure that people and countries exchange it for valuable natural resources and labor. The fundamental economics depend on the benefits (cheap labor and natural resources) exceeding the cost of the military and intelligence capacity and financial infrastructure that make the system go.
Traditionally, Ango-American dominance—first the pound sterling and then the dollar—depended on naval power and control of the global sea lanes. I remember reading that the dollar’s rise began with the U.S. Navy asserting dominance of the sea lanes in the Caribbean. That’s an important historical footnote relevant to the current effort by the Chinese to advance its control over the sea lanes in the South China Sea.
Increasingly, dominance in the suborbital platform and space is required as GIS and other satellite capacity become critical components of the infrastructure needed for global communications and operations. The high cost of maintaining dominance in both space and on the high seas—especially after very expensive military commitments in the Middle East—is contributing to the United States’ demands that NATO and Asian allies contribute more to defense. The importance of space also explains why both the EU and China are building global satellite capacity independent of the Americans. Russia has long been and continues to be a leader in space and satellite technology.
The Chinese are remarkably open regarding their long-term plans. If you look at their published plans for the military and the buildout of their currency systems globally, their military investments are clearly designed to support significant increases in global currency liquidity.
One of the key components of the dollar’s leadership has been its managers’ ability to engage in financial warfare. I call the combined machinery in place to do this a “financial bazooka.”
One of the reasons the dollar did not replace the pound sterling until after World War II is that it took a while for New York and Washington to assemble a financial bazooka that could match that of the City of London and handle the treacheries of trading and maintaining liquidity in the global system. Major factors contributing to the financial bazooka were the creation in 1934 of a long-term mortgage market through the passage of the National Housing Act—which created the Federal Housing Administration (FHA)—and the Gold Reserve Act that created the Exchange Stabilization Fund (ESF).
The real juggernaut, however, came at the end of World War II with the creation of a hidden system of finance that allowed U.S. intelligence agencies to function as the most powerful bank in the world—free from laws and taxes—and the provisions for the U.S. black budget that came from the National Security Act of 1947 and the Central Intelligence Agency Act of 1949. This system has now been operating for many decades, enhanced domestically by the power of the National Security Agency (NSA) and internationally by the Five Eyes intelligence and surveillance systems. It is hard to imagine how another country could launch a financial bazooka that could match this one, although it helps to explain why the U.S. battle with Huawei is at the heart of the matter.
The United States led a new round of globalization after the passage of the Uruguay Round of GATT and the creation in 1995 of the World Trade Organization (WTO). Sir James Goldsmith described this process in his interview with Charlie Rose at the end of 1994. If you have not watched that video, I recommend it as a basis for understanding the last three decades of globalization and the reason many are pushing to slow it down or reverse it.4
This three-decade wave of globalization was accompanied by a “strong dollar policy.” A rising dollar, combined with a variety of actions to lower the value of currencies and assets in the emerging markets, facilitated a wave of “sell high, buy low” in the global sweepstakes. The events of 9/11 then followed, justifying the shift of American military forces into the Middle East and the global “war on terror.” The plan announced shortly after 9/11 was regime change in seven countries in five years.
One had the distinct impression that the seven-countries-in-five-years plan represented a currency war to prevent oil from being traded in euros, halt rising plans to use gold, and impede new arrangements to facilitate trade and equity in the emerging markets outside of New York and the City of London. In addition, the plan appeared to be an attempt to force all nations into the Bank of International Settlements (BIS) central banking system, with central banks that could be owned and directed privately. These were steps toward “one-world government.”5
The plan did not work. While its backers certainly got wealthier, the U.S. Army and American policy got bogged down in the Middle East. Secretary of the Treasury Paul O’Neill and senior economic advisor Dr. Larry Lindsey, who both presented an obstacle to starting the Iraq War, left the Bush administration in December 2002. Lindsey was replaced by Stephen Friedman6 after a dispute over the projected cost of the Iraq war.7 Lindsey estimated the cost could reach $200 billion, while Secretary of Defense Rumsfeld estimated the cost at less than $50 billion. The actual cost is now approaching $6 trillion, and even so, a few countries remain with central banks that are not privately owned or are not in the central bank system. Perhaps our current state of biowarfare is designed to finally get the job done.
The financial crisis that began in 2008 strengthened the dollar position. Global investors sought significant amounts of safe-haven securities, and liberal monetary policies provided significant monies to fund dollar-denominated loans and capital throughout Asia and the emerging markets. The subsequent euro crisis and European bank losses resulting from sovereign debt issued by the Southern European countries flatlined further growth in the euro share of reserve currency holdings. The dollar remained—as The Economist described in 2015 —“dominant and dangerous.”
As the world recovered from the shock of the financial crisis, there was a growing push outside the Anglo-American alliance to find ways of reducing dependency on the dollar as the dominant global reserve currency. The 2008 financial crisis had not been the first such shock. Earlier episodes included the Asian financial crisis in 1997 and numerous other examples of “shock doctrine” during this wave of globalization. However, the extent of the financial fraud and corruption exposed during the 2008 crisis created a new urgency and spirit of collaboration to lessen dollar dependency.
The syndicate that runs the U.S. dollar, however, did not sit still. The financial crisis was followed by an aggressive extension of U.S. legal and regulatory authority throughout the global financial and banking systems, along with a new regime of U.S. financial sanctions8 and aggressive competition for offshore haven funds. U.S. enforcement has used the dollar system to assert global jurisdiction and, through that jurisdiction, to engage in economic warfare to gain control of companies and assets globally.
Stories of “Sheriff of Nottingham” type enforcement actions and prosecutorial misconduct against both domestic and foreign business executives and globally against foreign companies have badly debased the notion of the American “rule of law,” redefining it as the “rule of racket.”9 Increasingly, one wonders if the Department of Justice exists to shake down small domestic companies and foreign companies to expand markets and profits for American monopolies. I am reminded of one of my investment colleagues who referred to the Patriot Act as “The Control and Concentration of Cash Flow Act.”
The BRIC nations—Brazil, Russia, India, and China (with South Africa joining in 2010 to make it BRICS)—as well as the Association of Southeast Asian Nations (ASEAN) went to work on creating swap capacity between central banks. New lending banks were created to reduce dependency on the IMF and dollar-denominated lending. Central banks began developing cryptocurrencies. Gold reserves rose in Russia and in central banks along the Silk Road, often at the expense of the dollar market share. In response to a series of sanctions, Russia shifted its reserves out of U.S. dollars, increasing euros and yen in addition to gold.
Source: Bank of Russia
Source: World Gold Council
Data from IMF’s International Financial Statistics, as of January 2020
Source: World Gold Council
Data from IMF’s International Financial Statistics, as of January 2020
Source: World Gold Council
Data from IMF’s International Financial Statistics, as of January 2020
Meanwhile, China got to work establishing multiple centers globally to create liquidity for the renminbi in financial capitals around the world and was finally able to persuade the IMF in 2015 to include the renminbi in the SDR in 2016. China and Russia also significantly increased their financial and economic cooperation. Russia’s central bank opened its first overseas office in Beijing in 2017, creating an institutional capacity to bypass the dollar and phase in a gold-backed standard of trade.
After President Trump was inaugurated in early 2017, major changes unfolded, with efforts to repatriate capital to the U.S., the U.S. cancellation of the Paris and Iran agreements, and a U.S. Congress intent on Russophobia. Russia proceeded to launch an alternative to the SWIFT payment system, and Europe created the INSTEX system to avoid sanctions on trade with Iran while working on an independent credit card system.
In late 2018, in response to pressure regarding the inability of the Department of Defense to complete an audit in the midst of pressure regarding the $21 trillion missing from DOD and HUD, the Trump Administration and Congress adopted a statement by the Federal Accounting Standards Advisory Board (FASAB) that they claimed permitted them to maintain secret books. The Solari Report has provided extensive coverage of what this means to the U.S. federal credit and the credit of U.S. Treasuries and related mortgage, municipal, and corporate securities. In short, the U.S. government now takes the position that it is free to operate outside of the laws related to government or securities financial disclosure and internal financial controls.
The Missing Money website
FASAB Statement 56: Understanding New Government Financial Accounting Loopholes
Caveat Emptor: Why Investors Need to Do Due Diligence on U.S. Treasury and Related Securities
While there are days when it feels like we are all pretending that this did not happen, no doubt the continued breakdown in U.S. financial practices contributed to the pivot in Fed policies to reverse course on raising interest rates and intervene in the repo markets starting in the fall of 2019 as well as to increasingly public warnings by both government and central bank officials.
Mark Carney, governor of the Bank of England, announced the movement to a multipolar world at a meeting of central bankers in Jackson Hole, Wyoming in August 2019, saying, “The world’s reliance on the U.S. dollar won’t hold and needs to be replaced by a new international monetary and financial system based on many more global currencies.”
In September, French President Emmanuel Macron declared the unipolar empire a failure. Mike Smith summarized his comments as follows:
“We are probably in the process of experiencing the end of Western hegemony over the world. We were used to an international order that had been based on Western hegemony since the 18th century – French in the 18th century, inspired by the Enlightenment; British in the 19th century thanks to the Industrial Revolution, and American in the 20th century thanks to two major conflicts and the economic and political domination of that power. Things change. They have been deeply affected by the mistakes made by Westerners in certain crises, by American decisions over the last several years which did not start with this Administration, but have led us to re-examine certain involvements in conflicts in the Middle East and elsewhere, and to rethink fundamental diplomatic and military strategy and on occasion elements of solidarity which we thought were forever inalienable, even though we had developed them together during periods of geopolitical significance, which have however now changed. And it is also the emergence of new powers whose impact we have probably underestimated for far too long.
China, first and foremost, as well as Russia’s strategy that has, let’s face it, been pursued with greater success over the last few years. India and emerging new economies that are also becoming not just economic but political powers and which consider themselves genuine civilization states and have not only disrupted our international order, but assumed a key role in the economic order.”
Finally, in November 2019, the BRICS nations met to discuss the creation of a joint cryptocurrency, and Putin announced that the U.S. dollar was likely to collapse soon:
“The dollar enjoyed great trust around the world. It was almost the only universal currency in the world. For some reason, the U.S. began to use dollar settlements as a tool for political struggle, imposing restrictions on the use of the dollar. They began to bite the hand that feeds them. They’ll collapse soon. Many countries in the world began turning away from using the dollar as a reserve currency. They restrict Iran in its dollar settlements. They impose some restrictions on Russia and other countries. This undermines confidence in the dollar. Isn’t it clear? They are destroying the dollar with their own hands.”
Putin’s comments attracted more than a little attention given that the dollar market share, while falling, remained quite strong—both as reserve currency and as share of trade.
Kimberly Amadeo, president of WorldMoneyWatch, summed up the continued strength of the dollar market share nicely in August 2019 in “Why the US Dollar Is the Global Currency”:
As of 2018, the U.S. had $1,671 billion in circulation. As much as half that value is estimated to be in circulation abroad. Many of these bills are in the former Soviet Union countries and in Latin America. They are often used as hard currency in day-to-day transactions.
In the foreign exchange market, the dollar rules. Around 90% of forex trading involves the U.S. dollar. The dollar is just one of the world’s 185 currencies according to the International Standards Organization List, but most of these currencies are only used inside their own countries.
Theoretically, any one of them could replace the dollar as the world’s currency, but they won’t because they aren’t as widely traded.
Almost 40% of the world’s debt is issued in dollars. As a result, foreign banks need a lot of dollars to conduct business. This became evident during the 2008 financial crisis. Non-American banks had $27 trillion in international liabilities denominated in foreign currencies. Of that, $18 trillion was in U.S. dollars. As a result, the U.S. Federal Reserve had to increase its dollar swap line. That was the only way to keep the world’s banks from running out of dollars.
The financial crisis made the dollar even more widely used. In 2018, the banks of Germany, France, and Great Britain held more liabilities denominated in dollars than in their own currencies.”
In the meantime, the U.S. Dollar Index has remained strong following its sharp rise in 2014. That was a year in which I had more than a few bruising fights with financial commentators and colleagues. Early that summer, they insisted that the dollar was going to collapse. I insisted it was going to rise and rise strongly. I was right, but being right was not very popular.
U.S. Dollar Index 30-Year
I have a framed $1 bill from Greg Hunter of USA Watchdog in my office—payment in full for my bet that the dollar would not collapse that year. The refusal of many to look deeply under the carpet regarding why they had been wrong—to do a proper “lessons learned”—was a major line in the sand for me. I rearranged my time to only collaborate with those who were willing to deal with reality, including the related unanswered questions.
By the end of 2019, however, the dollar and the global financial system were under stress. U.S. federal debt was rising, with greater deficits as a result of mounting military expenditures. A new tax cut was expected to raise deficits and debt even more. As a result of the Fed’s pivot, the U.S. monetary base was rising quickly, as was the domestic cost of labor and household goods.
Source: Federal Reserve Bank of St. Louis
As Putin’s comments in November 2019 indicated, the winds of war were brewing. Some of the most prescient comments came from a haunting interview that Herman Gref, President and CEO of the largest Russian bank Sberbank, gave to TASS10:
“An explosion will be imminent, unless the international and national institutions are reformatted. It’s a very sad story. Apparently, humanity will have to live through hard times again and to suffer a lot to realize the preciousness of the world that we once had. The pace of development of modern technologies and the linear development of human mentality are in dramatic conflict. Everything has to be restored to balance. All the rest is a consequence of this main conflict.”
As the 2019 year came to a close, the dollar syndicate was clearly under pressure. Every investment advisor or investment analyst I spoke to in December shared the opinion that the very central bank and financial engineering steroids that, since the financial crisis, had helped the U.S. equity markets outperform equity markets in Europe, Asia, and the emerging markets had reached their limits, and it was time to rebalance into economies that had more attractive growth rates and lower price-earnings (P/E) ratios. Moreover, there was a good chance that the U.S. dollar index would fall as the spiral up in debt and deficits, the gimmickry in federal accounting, and intense political tensions in the United States signaled growing economic and political weakness.
Very few expected that the health care establishment could come to the rescue of the central bankers to engineer a shock-doctrine deflation designed to provide the justification for a new round of rich financial bailouts and to accelerate adoption of a new digital transaction system. It was–yet again–a miraculous save for the dollar syndicate and system. By spring 2020, the U.S. dollar was up 4% for the year, and the long Treasury ETF had returned 31% for the prior 12-month period.
Before I dive further into current events, I want to spend some time on several areas that are critical to understanding our existing currencies and financing and where we are headed. These include China, space and the National Security State, the Internet of Things, and financial transhumanism.
V. The Rise of China and Too Much Debt
“But anti-American sentiment strong as it may be, is not enough for de-dollarization to gain the serious momentum needed to challenge the dollar reserve currency status. For this to happen there must be a more formal consensus backed by an organizational structure and coordination, similar to the one that gave rise to our current multinational and exchange rate system in the first place…. Today’s de-dollarization movement still lacks broad international consensus, a sense of urgency or multilateral mechanisms that would support a Bretton Woods-style architecture.” Gal Luft and Anne Korin, 2019
“The most dangerous scenario would be a grand coalition of China and Russia, united not by ideology, but by complementary grievances.” ~ Zbigniew Brzezinski, 2017
For many years now, rumors have circulated that the U.S. dollar is about to collapse, to be replaced by the Chinese renminbi (RMB) as the new global reserve currency. These rumors come in waves.
- In 2014, the “Asian Elders” were going to recapitalize the global economy in a “global reset,” unleashing hundreds of billions in profits to be made from speculation in the Iraqi dinar.
- In 2016, it was the inclusion of RMB in the International Monetary Fund SDR that was going to send “gold to the moon.”
- In 2018, it was the launch of a crude oil future traded on the Shanghai Futures Exchange that permitted Chinese oil buyers (China is the world’s biggest oil buyer) to lock in prices and transact in local currency. Foreigners were permitted to invest as well—a first for Chinese commodities markets. Indeed, this did reduce the U.S. quasi-monopoly on oil trade in the dollar. However, it certainly did not break it.
On the one hand, it is easy to understand why currency, gold, dinar, and freeze-dried food dealers promote and then profit from such fears and exaggerations. The hype is, however, an unending source of frustration to those who understand the nuts and bolts of global currencies and the forces that maintain their liquidity. I will never forget Dr. Joseph Farrell in 2014 erupting with frustration at a seminar participant who was spinning the Asian Elder rumor, saying, “For heavens sake, the Chinese just got their first aircraft carrier, and they are still learning how to sail it.”
In fairness, the U.S. national security state needs bogeymen to justify its command of the enormous federal budget, and it needed them to engage in fraudulent financing and spending sufficient to fund $21 trillion in undocumentable adjustments and engineer the adoption of FASAB 56. (For a detailed discussion, see Missing Money at https://missingmoney.solari.com and The Real Game of Missing Money at https://hudmissingmoney.solari.com.) Every appropriations cycle provides more impetus to play up the power of the Russian and Chinese bogeymen—and that means sometimes encouraging some of the gold dealers, preppers, and dinar dealers who promote compatible fear porn.
That said, there is no doubt that the rise of China is having a profound impact on global politics and trade and that China has achieved superpower status much faster than expected. In the process, China has worked aggressively to build global liquidity for the renminbi—a strategic move to lower its cost of capital and improve its geopolitical position. Depending on which measurement one uses, China’s GNP is now the largest or second largest in the world. At current growth rates, China will only extend its lead relative to the G7 nations and its power as the lead or most important trading partner to most nations going forward.
In thinking about global reserve currencies, it is important to understand what it takes to field a liquid global reserve currency. The Chinese are not there yet—but they are making progress. Their financial clout is a force to be reckoned with as it continues to grow.
It is also essential to understand what the growing effort to “de-dollarize” reflects—namely, the desire for a reserve currency that works for a multipolar world and is not a vehicle that a single superpower can weaponize. Switching out the U.S. superpower for a Chinese superpower would not be an improvement in the eyes of global nations and their finance ministers. Instead, the world wants a currency that can be run through an international consensus and a mechanism that will not be weaponized for the parochial interests of one nation or one faction. Countries want currencies for the purpose of trading, and—to the extent possible—they want weapons of war to remain separate. Given the nature of digital technology, this will be a tall order as digital systems are taking us in the opposite direction.
This is why it is not just China’s efforts to create liquid global markets for its currency that are threatening the U.S. dollar’s status. Rather, it is China’s efforts, in concert with attempts by Russia and other nations in Asia and the emerging economies to build a new international consensus, that have the power to build the institutions and mechanisms necessary to shift significant reserves and trade market share away from the dollar.
In contemplating China’s role in the currency markets, it is worth noting that China has been at the currency game much longer than the Western nations and private interests that have led the central banking system for the last few centuries.
The first emperor of a unified China, Qin Shi Huang (260–210 BC), abolished all other forms of local currency and introduced a uniform copper coin, the Ban Liang coin, along with standardizing the units of measurement such as weights, measures, and the width of cart axles to facilitate transport on the road system (https://en.wikipedia.org/wiki/Ban_Liang).
It took until the 9th century for China to invent paper money, with the base unit of currency remaining the copper coin—used as the chief denomination until the introduction of the yuan in the late 19th century. (The yuan remains the basic unit of the RMB today.) It was the travels of Marco Polo to China that helped introduce paper money to medieval Europe in the 13th century. The West then took hold of Chinese innovations—whether paper money or gunpowder—and surged ahead.
Here is my description in our 2nd Quarter 2018 Wrap Up: The Rise of the Asian Consumer:
“It’s important to take the long view and look at events from a historical perspective. In one sense, Asia is returning to its former preeminence in the world economy. In 1820, China accounted for 30% of global GDP, and the U.S. accounted for 2%. China, in fact, was arguably the wealthiest country in the world 200 years ago. In a sense, China is returning to a historical position—one that it views as its rightful position in the world.
What knocked China out of top position? It was losing wars and failing to lead in the application of new technology.
China’s markets were forced open to trade, including narcotics trafficking, by the two Opium Wars. The first Opium War took place from 1839 to 1842. The second Opium War occurred in 1852 and between 1856-1860. Both weakened the Qing Dynasty, which ruled China from 1644 to 1912. Subsequently, China failed to industrialize while the Anglo-American alliance industrialized aggressively. Then the two World Wars further accelerated the Anglo-American ascendency over Asia. By 1950, the United States accounted for 20% of global GDP, and China produced 4.5%. These numbers represent hundreds of millions of people enduring a deep, grinding poverty.
I once had a college history professor who said that two empires had gone bankrupt trading with the Chinese. The first was the Roman Empire, where trade with China was a significant contributor to its collapse. The second was the British Empire, which was seriously threatened by the Chinese trade and silver drain, until its leaders figured out how to rebalance with force and opium.
Asia thinks of the West as violent. One of my favorite quotes is from Samuel Huntington, who wrote The Clash of Civilizations:
The West won the world not by the superiority of its ideas or values or religion to which few members of other civilizations were converted, but rather by its superiority in applying organized violence. Westerners often forget this fact; non-Westerners never do.
One recent quote from Xi Jinping illustrates the theme:
Some foreigners with full bellies and nothing better to do engage in finger pointing at us. First, China does not export revolution; second, it does not export famine and poverty; and third, it does not mess around with you. So what else is there to say?
It’s important to remember when you think about the rise of the Asian consumer that China and India are ancient cultures. Many parts of Europe are also ancient cultures. The non-European parts of the English-speaking world where most Solari Report subscribers live are younger cultures—Australia, Canada, New Zealand, and the United States. For ancient cultures like China and India, defeat was humiliating. The Opium Wars were humiliating. The World Wars were humiliating. The Korean and Vietnam Wars were humiliating. Decades of brutal poverty were humiliating. One thing you see and feel now as confidence in Asia grows is the Asian desire to reverse these defeats.”
What this all means is that currencies are at the heart of something much bigger than money, bigger even than political power. They are at the heart of the deep tribal impulse to survive. This is one of the reasons why battle over our currencies has become so bitter.
The Rise of China and America’s False Prosperity
I regularly recommend our Solari Report titled “Seeking U.S.-China Balance” with Stephen Roach, author of Unbalanced: The Codependency of America and China (see https://library.solari.com/special-report-stephen-roach-seeking-us-china-balance/). Roach does a good job of explaining how the economies of the U.S. and China became so intertwined.
By 1990, China was struggling with brutal poverty and unemployment, which was the legacy of Mao and the Cultural Revolution. The U.S., meanwhile, was contemplating how to maintain consumer spending while allocating increased capital to the national security state (and its secret spending) as well as to globalization—which went into high gear subsequent to the adoption of the Uruguay Round of GATT and the creation of the WTO in 1994.
The two countries came up with a solution. China built a low-cost manufacturing industry serving U.S. and G7 multinationals, while the resulting savings got channeled into the sovereign bonds that funded the government subsidies that in turn converted into consumer purchases of Chinese goods at Walmart. For the United States, there were numerous benefits of outsourcing manufacturing and transferring significant intellectual capital to China. These included reducing the political power of the unions and labor, offsetting U.S. monetary inflation with global labor deflation, helping to centralize markets in the United States into large multinationals, and exporting environmental pollution to Asia—all done in a manner that increased the equity value of Western investment in China and Asia.
The Financial Crisis & Growing the Debt
When China and Asia were rocked by the 2008-2012 financial crisis, they were no strangers to the challenges of maintaining their economies and financial liquidity in the face of Western financial crises and disaster capitalism.
The Asian financial crisis of 1997 had previously raised fears of what both Asian and global meltdowns could do. The Russian government defaults the following year triggered more withdrawal of capital from emerging markets. In 2000, ten members of ASEAN plus China, Japan, and South Korea launched the Chiang Mai Initiative, including a series of bilateral currency swap arrangements to manage Asian liquidity needs and avoid the need to turn to the IMF.
Although Chinese and Asian equity and bond markets had grown dramatically over the decade, the Chinese were concerned about the risks of linking their securities markets too directly with the global system. They were also losing confidence in the U.S. dollar. At the World Economic Forum in 2005, a Chinese economist said as much, openly stating that China had lost faith in the stability of the U.S. dollar. The intimation was that the Chinese were not willing to finance U.S. purchases of Chinese manufactured goods indefinitely.
The start of the 2008 financial crisis triggered a 30% drop in China’s exports, causing an estimated 20 million Chinese employees to lose their jobs almost immediately. Beijing’s response to this shock was an unprecedented stimulus package financed with growing government resources, including heavy issuance of bank and local debt. As Europe became immersed in a sovereign debt crisis in 2009, a former head of the Bank of China called for an international reserve currency that was independent of individual nations. Russian President Putin at the G8 Summit called for a global currency that would represent a mix of regional currencies. The BRICS group had its first meeting in Russia and also called for a new global currency. In the meantime, the Chiang Mai group went to work on expanding their swap agreements.
The result of the global financial crisis, like the Asian financial crisis before it, was to inspire central banks around the world to maintain more reserves and pursue arrangements to protect against volatility in both trade and currency markets. Another outcome was to encourage governments to promote a “debt growth model,” engineering more stimulus financed with debt. As a result, global debt almost doubled by 2014. Here is our summary of global debt trends from our 1st Quarter 2015 Wrap Up: Planet Debt.
“From the statistics we have, global debt has almost doubled since 2007:
Global bailouts have helped financial institutions improve their financial condition at the cost of governments and households. We now have over 39 countries with debt-to-GDP ratios of more than 100%.
Whereas before the bailouts, the developed world was highly leveraged, now it is both the developed and developing economies. Developing countries have significantly increased their debt loads during this period.”
A review of global debt by McKinsey in 2018, “Visualizing Global Debt,” summarized their findings as follows:
“Since the financial crisis of 2008, global debt has continued to rise. Total debt has increased by $72 trillion, or 74 percent, from $97 trillion in 2007 to $169 trillion in the first half of 2017. Government debt accounts for 43 percent of this increase, and nonfinancial corporate debt for 41 percent. Japan has the highest level of government debt to GDP of any of the 51 countries, at 214 percent in the second quarter of 2017, and international financial centers Hong Kong and Luxembourg top the list for nonfinancial corporate debt to GDP, largely reflecting the activities of foreign companies. China’s total debt has quadrupled over the last decade, a rise of $32 trillion, fueled by debt of the nonfinancial corporate sector.”
Today, the debt continues to grow.
Source: BIS as of 2018
The U.S. response to other nations’ calls for new global currency arrangements as a result of the financial crisis and bailouts was to extend its powers to enforce the dollar system. Supported by its economic and military clout, this included expanding legal powers based on a variety of justifications, including terrorism, money laundering, and human rights. These actions included:
- The Foreign Account Tax Compliance Act in 2010
- Expanded enforcement of the Foreign Corrupt Practices Act from 2010 on
- Passage of the Magnitsky Act in 2012 and use of its Terrorist Tracking program
- Access to the SWIFT payment system as part of the sanctions portfolio.
Edward Snowden’s revelations that the NSA was monitoring SWIFT traffic kicked global payment systems politics into high gear. China launched its own Cross-border Interbank Payment System (CIPS) in 2015, and CIPS signed a Memorandum of Understanding with SWIFT in 2016. In 2017, U.S. Treasury Secretary Mnuchin threatened to ban China from SWIFT.
With a clear need to rebalance its dependency on the U.S. export market and U.S. dollar reserves while keeping its growing capacity engaged, China announced the Belt and Road Initiative in 2013 to develop Eurasia’s “Silk Road.” This included the creation of the Asian Infrastructure Investment Bank. The bank started operations in 2015, having received top credit ratings, making it a clear rival to the World Bank and the IMF. The growth of China’s external lending—whether along the Silk Road or throughout Africa and the emerging markets—began making a serious contribution to the RMB’s capacity to serve as a global reserve currency.
The message to the United States was clear. Rather than financing the U.S. consumer’s purchases at Walmart, China would finance a land empire between a rising Asia and the world’s largest consumer market in the European Union that would significantly compete for power against the U.S. dominance of global sea lanes and trade. New road and rail systems would cut transit times by as much as 50% to 75%. The Chinese decoupling was clearly on.
The problem was, the U.S. consumer kept buying, U.S. multinationals kept outsourcing to China and competing to win Chinese sales, and Wall Street kept helping Chinese companies raise capital in U.S. markets. As a result, the U.S.-China trade deficit continued to grow. So did the debt of both countries, prompting the German Finance Minister Wolfgang Schäuble to warn at the Shanghai G20 meeting in February 2016, “The debt-financed growth model has reached its limits…. If you want the real economy to grow, there are no shortcuts which avoid reforms.”
With China choosing to finance global competition, the U.S. trade deficit with China and its heavy reliance on Chinese manufacturing began to bite, as did the national security issues of China’s leadership in 5G and tech, its increased presence in space and in the South China Sea, and its encroachments toward Hong Kong and Taiwan.
Source: CIA World Factbook
Source: CIA World Factbook
Source: CIA World Factbook
Building Global Liquidity & De-Dollarization
For China to create a global currency, it needed to create the relationships and clearing mechanisms to support global liquidity for the RMB. Investors needed to be confident in their ability to buy and sell in size with low transaction costs, and they needed to be able to do so in financial capitals around the world.
If you do a quick review of the following selected items from our currencies chronology (see full chronology on the web presentation for this 2nd Quarter 2019 Wrap Up), you will see that China’s central bank and government went to work following the 2008 financial crisis to put into place the arrangements to support a truly global currency. Perhaps most threatening to the U.S. is that they were working with Russia and BRICS to create alternative trading mechanisms using gold and cryptocurrencies.
Moscow Interbank Currency Exchange (MICEX) becomes the first regulated market to trade the renminbi outside of China.
Japan makes an agreement with China to trade in national currencies.
Japan and China begin direct currency trading between the Japanese yen and Chinese renminbi in Tokyo, and Shanghai Sumitomo Mitsui Banking Corporation acts as the first major Japanese bank to accept deposits in RMB.
People’s Bank of China (PBOC) authorizes Bank of China (Taipei) to serve as RMB clearing bank in Taiwan.
Singapore becomes the world’s third largest foreign exchange hub, behind the UK and U.S. In October, plans for the Singapore dollar to trade directly against the renminbi are finalized.
The Bank of England signs a currency swap agreement with the PBOC for ¥200 billion.
Brazil makes an agreement with China at the BRICS summit to trade in Brazilian real and Chinese yuan.
The European Central Bank signs a currency swap agreement with the PBOC for ¥350 billion.
As China becomes Australia’s largest trading partner, Australia and China agree to trade their currencies directly. Australia make a series of agreements with China to trade in national currencies, increase cross-border liquidity, and establish clearing agreements.
China opens link between Hong Kong and Shanghai stock market.
PBOC appoints China Construction Bank (London) to serve as the RMB clearing bank in London. The UK leads Europe with 123.6% growth in RMB payments between July 2013 and July 2014.
Based on a Memorandum of Understanding (MOU) with Bundesbank, the PBOC authorizes its Frankfurt Branch to serve as the RMB clearing bank in Frankfurt. China is the EU’s number-one supplier of goods, and Germany is China’s largest EU trading partner.
PBOC appoints Bank of Communication (Seoul) as the RMB clearing bank in South Korea.
PBOC and the Swiss National Bank sign a bilateral currency swap agreement.
Canada becomes the first country in the Americas to sign a reciprocal currency deal with China, enabling direct business between the Canadian dollar and the Chinese yuan.
China allows foreign central banks to trade on China’s onshore foreign exchange market and negotiates foreign exchange swaps with numerous central banks—29 at last count (11 in Asia, 10 in Europe, and 8 in other regions). Before October 2013, only Hong Kong had an official renminbi clearing bank. Since then, more than a dozen official clearing banks have been designated for financial centers—from Seoul to Qatar to London and New York—and China has set up multilateral swap arrangements with a variety of regional partners.
The RMB becomes the world’s fifth most widely traded currency.
The IMF adds the renminbi to its SDR basket with a weighting of 10.92 (US dollar 41.73%, euro 30.93%, renminbi 10.92%, yen 8.33%, British pound 8.09%).
Source: CIA World Factbook
MSCI announces its intention to include China A-shares in the MSCI Emerging Market Index.
South Korea and China agree to extend their currency swap arrangement.
Russia’s central bank, the Bank of Russia, opens an office in Beijing—the first time the Bank of Russia has opened a representative office in a foreign country. The Russian and Chinese financial authorities also reach agreement on several other significant matters, the Bank of Russia says in a statement. A clearing and settlement center for renminbi-denominated transactions opens in Moscow on March 22.
A MOU on gold trading between the Bank of Russia and PBOC is signed at an inter-country meeting on financial cooperation chaired by deputy governors in the Russian city of Sochi, location of the 2014 Winter Olympics.
Sergey Shvetsov, First Deputy Chairman of the Bank of Russia, confirms that the BRICS group of countries are in discussions to establish their own gold trading system. Four of these nations (Russian Federation, China, South Africa, and Brazil) are among the world’s gold producers. China and Russia are the two largest importers and consumers of physical gold. Shvetsov alludes to new gold pricing benchmarks to come from this BRICS gold trading cooperation.
The BRICS nations agree to explore cryptocurrencies, including for settlement and to avoid U.S. financial sanctions.
Russia announces a de-dollarization plan that includes selling almost all Treasury holdings and replacing them with gold. The plan also involves shifting import-export transactions from dollars to national currencies (primarily ruble, euro, and yuan) and providing incentives to businesses that settle in rubles.
The first trades in crude oil futures denominated in yuan, referred to as petro-yuan, appear on the screens of the Shanghai International Energy Exchange.
Italy endorses China’s Belt and Road Initiative and signs related commercial deals. Italy also borrows money (in yuan) in China’s $12 trillion bond market.
Xi Jinping and Putin reach a currency agreement. The draft decree states, “Settlements and payments for goods, service and direct investments between economic entities of the Russian Federation and the People’s Republic of China are made in accordance with the international practice and the legislation of the sides’ states with the use of foreign currency, the Russian currency [rubles] and the Chinese currency [yuan].”
Following the 11th BRICS summit in Brazil on November 13-14, President Putin states, “The dollar enjoyed great trust around the world but for some reason it is being used as a political weapon, imposing restrictions. Many countries are now turning away from the dollar as a reserve currency. The U.S. dollar will collapse soon.”
In mid-November, reports emerge from Wuhan that there is a lockdown for a coronavirus.
As the U.S. economy shuts down for coronavirus restrictions, the March U.S.-China Trade deficit is less than half of that of the prior year.
China’s ability to support global RMB liquidity and to work with the BRICS nations to create alternatives to dollar trading and payment systems were not just a result of their financial and economic clout. They included important military, space, and technology advances—all areas that are critical to the development of a global currency system.
VI. Space, the National Security State, Secrecy, and Privatization
“Imagine what you could do if you could sell technology to somebody from China and deliver wifi and once you’ve built the infrastructure in space you can deliver it for pennies. Electricity? Where your satellite dish doesn’t just give direct TV now, it gets energy…. It supplies your Chinese batteries and capacitors as they are building to get radio waves from space that gives you energy over time.” ~ Steven L. Kwast, Lieutenant General, United States Air Force (Ret.), “The Urgent Need for a U.S. Space Force,” December 201911
If Data Is the New Oil, Space Is the New Ocean
I have written and talked a lot on The Solari Report about what is happening in space and what space means for politics and economics on Earth. Our 2015 Annual Wrap Up: Space – Here We Go! and our 1st Quarter 2018 Wrap Up: Who’s Who & What’s Up in the Space-Based Economy are two excellent resources to help you understand the importance of space operations in our financial system and economy. If data is the new oil, then space is the new ocean. The satellite lanes in the orbital platform above and around us are becoming the sea lanes of the 21st century.
Space is an ocean in which many activities can be kept secret. Moreover, because command of the satellite lanes is expensive—something few parties can afford—only a handful of players have the wherewithal to compete. Managing the reserve currency is certainly handy for helping finance the investments that fund dominance of both sea and satellite lanes (including the undersea submarine communications cables that currently carry the majority of international data).
Existing treaties and agreements among the world’s nations12 regarding space no longer reflect the latest developments in private and military investment. However, they have not yet been replaced with more relevant agreements. And, without a legal framework that all nations, corporate players, and investors agree to abide by, the orbital platform, the moon, various asteroids, and Mars all have the potential to become the new Wild West.
At the heart of space uncertainty is a long list of unanswered questions as well as a growing space race between the United States and China. Trust is important to any currency system, but under current conditions, it is hard to envision how a currency system reliant on the outcomes of a covert space build-out and covert space warfare could be trustworthy.
One of the most important questions I have asked about current events is why the G7 nations adopted the Uruguay Round of GATT13 and created the WTO in 1995. One possibility is that our satellite and Five Eyes systems made it practical to do so. Investors invest where they can monitor and enforce. Satellites provide critical intelligence agency and military support to make monitoring and enforcement feasible and economic. Consequently, it has not been surprising to see the trends toward centralization of the financial system and economy correlate with the build-out of satellite constellations and the orbital platform.
A second possibility explaining WTO-led globalization is that creating a multiplanetary civilization on an accelerated basis required the engineering capacity that China and India could provide. While reliable statistics are not available, it appears that the number of engineers that Asia is graduating is many multiples of those produced by the U.S. and G7 nations. The explosion of space programs and supporting engineering capacity in Asia is certainly compatible with such a theory.
The U.S. and Leadership in Space
Of all the nation-states, the United States has long dominated development of the orbital platform around Earth as well as space exploration. A review of the latest OECD publication on space, The Space Economy in Figures: How Space Contributes to the Global Economy (July 2019),14 estimates global employment in space activities at approximately 1 million, with 350,000 in the United States, 200,000 in Russia, and 60,000 in Europe. The OECD does not offer estimates for the Chinese space program in its 2019 report; however, the growth of China’s investments in space and its inclusion of space in its published five-year plans reveals China’s understanding of the importance of space for deploying global communications, payment, currency, and financial systems. Given relative population size, it would not be surprising if China now had a larger head count in its space programs than the United States.
The U.S. space program grew aggressively under Presidents Eisenhower and Kennedy. After Kennedy’s assassination, space program expenditures as a percentage of the official U.S. federal budget fell. The question is whether spending continued to rise on a secret basis. My guess is that there has indeed been a significant secret space program and ongoing investment in both space technology and weaponry as well as in technology reverse-engineered from captured UFOs. An important question is whether the U.S. government controls these assets—or whether the assets have been transferred to and are owned by private entities, including a “breakaway civilization.”
Although it was the Russians who launched Sputnik, the first satellite, it was not long before the U.S. became the dominant satellite power, achieving a satellite-based Global Positioning System (GPS) in the 1970s. The U.S. GPS was a condition precedent to the wave of globalization that followed. The dominance of U.S. satellites—which facilitated military, telecommunications, media, and financial transactions—ensured the power of the military-industrial complex that built and controlled the infrastructure.
I will never forget talking with a CNN producer fired in 1998 over an investigative piece on the use of sarin gas by the U.S. military in Operation Tailwind in Laos during the Vietnam War.15 The producer had run the story through the editors and the general counsel. The story was evidenced, reviewed, and approved by CNN’s corporate chain of command. Nevertheless, CNN later retracted the story and fired the producer despite his prominent establishment credentials. I asked the producer how that could happen. The response: “The U.S. military controls our satellite feeds. CNN will do whatever they say.” It’s not surprising that as more satellites are launched and the media and telecommunications grow more dependent on them, the media become more controlled.
It took until 2010 for the Russians to field their own satellite-based GPS, and only now has Europe finished launching its Galileo global satellite navigation system. The Chinese likewise just completed their system (summer 2020).16 According to the Union of Concerned Scientists, as of March 31, 2020, the U.S. had 1,327 satellites, the Chinese had 363, Russia had 169, and all other countries combined had 807, for a total of 2,666.
The traffic jam in the orbital platform ultimately will require a more mature legal framework and cooperation. And, as I have often said, one of the great fortunes of the twenty-first century will be created by the engineers who manage to implement low-cost space debris removal, backed up by attorneys who can protect their intellectual capital and operations from dirty tricks and sabotage.
As background regarding the U.S. role in space, it is important to understand the expanded role of corporations for a wide variety of investments and services. This includes the explosion of cloud and IT service contracts being issued by U.S. intelligence agencies and the military. These are an integral part of the communication and information systems supported by U.S. satellites. Systems include Amazon Web Services,17 which provides cloud services to the CIA and through it to all 17 intelligence agencies;18 Leidos (including the former IT business that Lockheed Martin spun off to Leidos after the close of federal fiscal 2015 in which DOD reported $6.5 trillion of undocumentable adjustments), which just finalized a $7.7 billion network contract with the Navy; and the $10 billion JEDI contract at DOD won by Microsoft in 2019, which Amazon continues to contest in the courts. Meanwhile, Amazon has entered into a strategic partnership with Lockheed Martin, the leading DOD and third leading NASA contractor, to provide ground station services.19
Jeff Bezos, founder and CEO of Amazon, is also the lead investor in Blue Origin, a suborbital space flight services manager. Watching the capital access, government contracts, and other benefits that Amazon and Bezos enjoy, it is worth asking whether the centralization of private capital in private hands has in fact been intentionally engineered in a manner that distances private space investment from Congressional and Freedom of Information Act inquiry.
From cloud capacity to space companies, a full range of investments are being made in anticipation of multiple opportunities once the full hardware infrastructure—including related 5G telecommunication networks—and the Internet of Things (IOT) are in place. IOT “killer apps” include robotics, wireless energy, and driverless cars. Being able to deliver these from space will radically alter who the winners and losers are at ground level. The real estate developer with wireless energy will soon displace the local real estate developer without it.
The biggest “killer app,” of course, is one or more global digital currencies. Such currencies and systems, in turn, will make possible the reengineering of all federal, state, and local cash flows and employment—much of which can be done on a private basis. To the extent that Mr. Global succeeds in integrating digital hardware into every human, the ability to “go direct” becomes significant from a financial standpoint, offering a seamless way to have humans teach AI how to do essentially all functions and making the education of robots much more efficient and the AI management of both humans and robots possible on an integrated basis. Although I find this vision psychopathic, the potential financial wealth is phenomenal. As I have often said, the most profitable business historically has been slavery.
Space and Secrecy
One of the reasons that it is difficult to understand the history of global space programs is that so much of the investment and so many of the activities are secret. In the U.S., these programs hide behind an extraordinarily rich, powerful, and secretive national security state. If you have not heard our Solari Report interview with Amy Benjamin titled “The Many Faces of Secrecy,” it will help you understand how it is possible to keep such an extraordinarily large infrastructure and so many activities almost completely secret.
My understanding is that several efforts to lift the secrecy and move toward disclosure have stalled as a result of fear of the liabilities that might result. This includes the financial liabilities that would result from public disclosure of the exceptionally valuable intellectual capital and assets that have been transferred to corporate and private ownership as well as to China for little or no compensation.
I have spent considerable time on The Solari Report and with Dr. Joseph P. Farrell documenting the takeover of the global economy by a hidden system of finance that began with the seizure of assets from the Axis powers at the end of WWII and—with the 1947 National Security Act and the 1949 CIA Act—the creation of the black budget. I have covered these developments in interviews with Richard Dolan on the U.S. budget and the national security state as well as on underground bases and false flags, which are essential to running these operations. See also my interview with David Martin on the assassination of Secretary of Defense James Forrestal, which I believe was critical to getting Congress to pass the 1949 CIA Act.
Space and Unanswered Questions
To understand the state of our currency, it is essential to integrate what is happening in space. However, the history of secrecy and the resulting uncertainties make for a puzzle palace full of unanswered questions.
My first unanswered question is, “Why is it so important to consolidate into a global central bank, with all countries having a privately owned central bank in the Bank of International Settlements (BIS) system?” If you doubt that an extraordinary investment has been made to accomplish this task, I would recommend you watch Princes of the Yen (about the multi-decade war on the Japanese economy) or revisit the cost in human and financial terms of the “seven countries in five years” invasion and regime change plan20 after 9/11, as well as the destruction of Libya in 2011.
When you study de-dollarization, it is obvious that the BRICS nations are frustrated by the restrictions of the U.S. dollar system and would prefer a more globally governed currency, with trade and settlement systems that are less partisan. As the faster growing nations, they will clearly benefit from being free of many U.S. regulations, enforcement, and sanctions.
For the emerging and frontier markets, the existing fees and costs related to G7 payment systems are too high. The benefits of universal global access can only be realized when the costs of financial access and transactions are in line with what newcomers and the institutions serving them can afford. According to a report titled “Investigating the impact of global stablecoins,”21 released by the G7 Working Group on Stablecoins of the BIS Committee on Payments and Market Infrastructure in October 2019:
“Despite significant improvements in recent years, current payment systems still have two major failings: lack of universal access to financial services for a large share of the world’s population and inefficient cross-border retail payments. Globally, 1.7 billion adults do not have access to a transaction account, even though 1.1 billion of them have a mobile phone (Demirgüç-Kunt et al (2018)). As transaction accounts are gateways to additional financial services such as credit, saving and insurance, the lack of access to such accounts impedes financial inclusion (Coeuré (2019a)).”
However, the pressure for a global currency mechanism is not just about facilitating global trade. Plans are underway to build a colony on Mars—some say it is already there. In addition, the Chinese have announced plans for a $10 trillion economic development zone on the moon22 and are competing to build the first solar power stations in space.23 Vodafone and Nokia are building a 4G network on the moon.24 It is also reasonable to assume that the Anglo-American alliance has probably extended its haven system by creating legal jurisdictions in space to support off-planet tax havens and trusts in the orbital platform.
The U.S. created the Federal Reserve to build the “one-stop shop” capacity and infrastructure necessary for the dollar to serve as a liquid global currency. Now, with growing pressure to build out and transact on a multiplanetary basis, multiple players will push for the global legal and financial mechanisms—including a global central bank—that will enable off-planet transactions, trade, and settlement. Given the “winner take all” nature of space, this pressure and the expense of centralizing are setting up a dangerous situation.
The U.S.-China Space Race and More Unanswered Questions
Geopolitical Futures is publishing a series by Jacek Bartosiak on the competition over dominance in outer space.25 I recommend it if you are interested in the issues related to U.S.-China competition in space. The first two parts—“The Politics of Space” and “Topography in Outer Space”—have already been published, with two more segments anticipated.
Bartosiak quotes President Trump’s comments when he signed the first round of funding for the new U.S. Space Force in December 2019:
“Space is the world’s newest war-fighting domain. Amid grave threats to our national security, American superiority in space is absolutely vital. And we’re leading, but we’re not leading by enough. But very shortly, we’ll be leading by a lot. The Space Force will help us deter aggression and control the ultimate high ground.”
Trump’s creation of the U.S. Space Force reflects an appreciation of the risks of not controlling the orbital platform around Earth, which Bartosiak describes clearly:
“The new [space] race will concern emerging technologies, but the condition for this is military dominance. In fact, one enables the other. And in space there is no prize for second place; whoever gets access control may deny access to others.”
Let me repeat this for emphasis: “In space there is no prize for second place; whoever gets access control may deny access to others.” Now do you appreciate the pressure for military dominance?
Remember, the more of a competitive edge China gains in space, the more possibilities it has for independent financial payment and settlement systems. This type of competitive edge would also give the Chinese more advantages navigating and controlling the South China sea lanes, managing offensive and defensive missile systems, engaging in global cyberwarfare, or blocking our Five Eyes systems. Space is the capacity that leverages numerous capacities on the ground.
Who are we talking about when we refer to “denying access to others”? This question raises the recurrent and uncomfortable question of whether Earth’s economy is open or closed. Are we, in fact, already trading off-planet? What might this have to do with the efforts to digitize our atmosphere via the building of a so-called “space fence”? Are we obligated to deliver a dividend off-planet? Who controls the moon? Who controls our debt and derivatives? These are serious questions, particularly given the fact that the Department of Defense just confirmed the existence of several high-tech UFOs. We know that we live on a planet run by force, and that raises the question of who has the biggest gun.
Military dominance of space has a great deal to do with what happens on the ground, including with our financial and currency systems. The fact is that there are trillions of dollars of spaceships flying around—whether hardware or hologram—that were not made by our civilization as we know it. Who built them? Who owns them? What else do they own? These, too, are serious questions when it comes to the state of our currencies.
Optimizing trade on one planet with one global gross economic product is a far different story than optimizing trade on multiple planets. Let’s say that our economy is closed—that is, we are only trading with humans on Earth. Now imagine the difference if our economy is open and the trade potential off-planet is large in percentage terms—so that the total gross product is many multiples of the gross economic product on Earth. Imagine what would happen in an open economy if the absence of a global central payment mechanism allowed the off-planet trading partners to effectively play us against each other. There would be enormous pressure to centralize our response. This is not unlike when Alexander Hamilton argued for a central bank after the Revolutionary War. He wanted an American institution that could stand up to the European central banks.
When we explore these unanswered questions, the possibilities are endless. I bring them up repeatedly because they are questions that must be both addressed and answered by any serious financial professional. Remember that our currency system is a subset of our financial system, which is a subset of our governance system. Reengineering our currency system without understanding its relationship to our governance system is impossible.
Do we want improved currency systems to improve trade and liquidity on Earth, or do we also want them to manage trade and liquidity as we begin to build out and explore the Moon, Mars, and across the solar system? Do we also want a currency system to help manage existing trade and liquidity with other civilizations? Is it possible that we are being forced to do so? Are the billionaires now driving the U.S. governance systems running amok with technology simply because they can or because they want to convert to a technocracy run by AI—or are they subject to “treaty obligations”? Are these the reasons why they are digitizing the atmosphere? Again, these are serious questions, and all the more so now that the entire planet has been thrown into a debt entrapment. We need to take these questions out of the realm of entertainment and integrate them into our reality. Not to ask the questions and at least try to frame the uncertainties is, in my opinion, a material omission under law.26 Think about it.
A Note on FASAB 56
Secrecy was a major obstacle to addressing the unanswered questions about space well before the adoption of FASAB 56 in October 2018.27 Now, however, secrecy is even more of a barrier. FASAB 56 dramatically increases the ease with which secret projects can be adopted and financed.
I have long said that the financial coup d’état that began in 1996 reflected a decision to take our accumulated capital and shift it into space and technology before it could be used for financing retirement and nursing homes. As the Baby Boomer generation struggles with the impact of the financial coup on its finances, FASAB 56 has been designed to obfuscate where the money has gone. Now, the world is dividing into two new categories of “haves” and “have-nots”—as in “have access to FASAB 56 secrets and financing” and “don’t have access to FASAB 56 secrets and financing.” One of the reasons that the 2020 U.S. presidential campaign has become the most bitterly contested in history is that it is the first campaign since the adoption of FASAB 56. All factions are fighting to control the secret spigot. As we have just seen, the nature of the economics of centralization—factoring in what is happening in space—is “winner take all.”
Who has the most powerful gun? That will decide who dominates in space. The player who dominates in space will likely dominate the currency decisions and management on Earth. Whoever that is, the global currencies and the payment mechanisms and institutions that support them will need to operate in a multipolar global economy as well as on a multiplanetary basis. Moreover, they will have to operate in a legal and technology framework that is evolving at an accelerating speed. While the sound money audience is debating whether we want a global currency, we should add to the discussion whether we want a multiplanetary currency.
VII. The IOT “Gold Rush,” Land, Real Estate, and the Final Mile
“The world’s most valuable resource is no longer oil, but data.” ~The Economist, May 6, 2017
The Internet of Things (IOT) is the name that has been given to the digitalization of essentially all man-made objects—from toys to kitchen appliances to cars to your wallet. The idea is that “things” will be able to receive and transmit information, communicate with each other in an intelligent manner, and, in many cases, follow instructions. This, of course, raises the question of who has access to and controls the delivery and receipt of such data and whose algorithm is issuing the instructions.
The IOT is being marketed as something phenomenally convenient to consumers. You can turn on your lights as you are pulling up into your driveway. Drones will automatically deliver more milk to your doorstep when your refrigerator lets your grocer know you are running low. Ultimately, the vision involves digital access and integration with all things—which is a lot of things.
A system goes where hardware permits. The transcontinental railway required train tracks to be laid, tested, and maintained from sea to shining sea. No train could run unless the tracks had been installed to the necessary standards. So it is with the IOT, which will not work until the “train tracks” are laid in communities, homes, offices, and related equipment. In the case of the IOT, this infrastructure includes the so-called “smart grid” and enough telecommunications capacity to handle the explosive load of 24/7 digital communications contemplated. This is one of the reasons the competition around the rollout of 5G telecommunications—and concerns regarding who has access to what data—have been so heated.
As Bill Binney, Edward Snowden, Julian Assange, and numerous whistleblowers have described, the tech and telecommunications companies and related government intelligence agencies have been less than respectful toward consumers as they roll out this infrastructure. Google provides a perfect example:
“After being sued by 38 states, Google admitted last March that its weird-looking cars outfitted with roof cameras facing four directions were not just taking pictures; they were collecting data from computers inside homes and structures, including ‘passwords, e-mails and other personal information from unsuspecting computer users…”
~Steven Rosenfeld, “4 insane ways Google has been invading our privacy. It’s even worse than you thought…”
Just as the transcontinental railroad needed the tracks to run through every community between here and there (albeit with some routing flexibility), the IOT needs every place and everyone in the system. For example, driverless cars won’t work if they cannot get down the highways because some states or municipalities opt out of the necessary telecommunications systems. At the household level, utility billing and monitoring systems will be far easier to organize if every energy customer has a smart meter, and if the software is provided by the same software and database provider who manages the government’s census.
Some applications differ in terms of the percentage of users who need to adopt them to make them functional, economic, or fabulously profitable. However, centrally controlled digital financial transaction systems ultimately require universal adoption, with the train tracks built into every smartphone, community, and home without exception.
This may help explain the aggression that has sometimes marked the push to fully extend the digital train tracks—with installers forcibly breaking into residential homes to get a smart meter in place, and laws passed to deny municipalities the right to consider health impacts before approving local cell towers. Just ask any electrically sensitive person what it is like to deal with the private interests demanding access in the “final mile.” Governments and corporations are claiming the right to access, manipulate, and pollute electromagnetic space and bodies without notice, disclosure, or compensation. As a practical matter, they have taken the position that our individual electromagnetic body—including our electromagnetic mind—is not sovereign. Unfortunately, this is a critical step on the road to compromising all human sovereignty.
It is essential to see the build-out of the IOT in the context of the wider build-out of digital systems. I would argue that the IOT is part of the digitalization and electromagnetic manipulation of all life—not just of man-made things but of living systems as well. There is evidence to suggest that global spraying includes nanotechnology or particles that facilitate invisible technology such as weather warfare and high-tech radar systems, and that electromagnetic manipulation (with systems such as HAARP) is occurring on scale. (Listen to our Solari Report interviews with Clifford Carnicom, Nick Begich, Dr. Gwen Scott, and Elana Freeland.)
One of the most powerful dynamics behind the IOT (and the satellite constellations that support it) is the potential for adoption of breakthrough energy, including energy from space delivered by wireless means. I believe that we have had the technology to dramatically reduce the cost of energy for more than a century. If that is so, it remains an unanswered question as to why we have continued to depend on oil and gas. One possibility is that breakthrough energy technology, if adopted widely, could be weaponized—creating highly unstable political risks. Another is that cheap energy could result in a population explosion that would cause the human race to dramatically overshoot our ecological systems. These or other factors might partially explain the extraordinary central controls now being put into place to manage the integration of breakthrough energy into an IOT world.
If I am right that the potential exists to dramatically lower the cost of energy, it is important to realize what that means to the economics of both manufacturing and real estate. The way to make money on breakthrough energy is not just to own or control the energy system but also to own things that currently have high energy costs—and enjoy the capital gains that result when the price of energy drops dramatically—and also control who can and cannot get access to the new low-cost energy in a manner that extracts significant ownership and financial interests on the ground.
I believe this is one of the reasons there has been a quiet but forceful push in the United States to centralize ownership and control of land and real estate—whether with housing bubbles and trillions of dollars of mortgage fraud, weather warfare, or targeted looting and riots.28 Part of the dynamic also involves the complex politics of space. The more that satellites and high-tech weaponry in space drive and operate the economy, the more the players who monopolize space access and operations will also dominate ownership, assets, and activities on the ground.
The biggest economic impact from building out the IOT is the ability to convert the economic model from the current model of market economics—where resource allocation is determined by open competition and prices—to technocracy, where resource allocation is centrally controlled using a rule-based system managed by AI and software. If you have not had a chance to listen to our Solari Report interview with Patrick Wood on technocracy, I recommend it. This is critical background to understand the design and implementation of the IOT and related concepts such as “smart cities.” In technocracy, 24/7 access to rich flows of IOT-generated digital data is required to make the system go.
The IOT, of course, also requires the build-out of the Internet cloud—giant databases with the capacity to collect data and convert it into the new oil. Over the last few years, we have seen enormous cloud capacity brought online, including the CIA and integrated U.S. intelligence agency cloud with Amazon, the Department of Defense JEDI contract with Microsoft (still being disputed in court by Amazon Cloud Services), and a Leidos contract with the U.S. Navy. Leidos is the successor to Lockheed Martin’s government IT division, which spun its operations out to Leidos after $6.5 trillion of undocumentable adjustments were booked in U.S. Army accounts at the Department of Defense at the end of the U.S. federal fiscal year 2015. (This was ultimately the event that triggered the adoption of FASAB 56.)29 Once fully installed and operational, these clouds will create the ability to radically reengineer and reinvent U.S. federal payment systems with both citizens and the U.S. depository—that is, the New York Fed and its member banks. The New York Fed complex controls the U.S. government accounts and its financing in the U.S. Treasury and mortgage markets, and manages its Exchange Stabilization Fund.30
This brings us back to the push for universal adoption. The functions that make a technocracy go are highly complex digital transaction, payment, and settlement systems that can be designed, controlled, and managed directly (note the emphasis on the word “directly”—we will come back to it in a subsequent chapter) by national and global central banks. This is a critical step in establishing a global central banking mechanism that can function in a multiplanetary financial system. If data is the new oil, then data about money is the sweetest form of Crude. As Nicholas Negroponte, then head of the MIT Media Lab, famously said, “Data about money is worth more than money.”
Aaron Russo explained the bankers’ goal years ago:
I gave a speech in 2017 at a conference on crypto systems and used that clip from Aaron’s interview. I prefer not to refer to crypto systems as currencies, as that is not what they are. A currency is something that permits a free exchange between two transacting parties, and its value is the same to any party that holds it. Cryptos, on the other hand, represent the end of currencies—a centrally controlled system that can be adjusted or turned off on an individual basis with the help of systems like the Chinese social credit system. In other words, they are the equivalent of a conditional “credit at the company store.” With the IOT providing the necessary surveillance and data flows, they will allow for an individual to be centrally controlled on a 24/7 basis. Ultimately, this could include electronic prisons that severely restrict and manage access to physical space and transportation.
Bitcoin and other private digital currencies have represented a prototyping phase of both blockchain technology and crypto systems. Now, the central banks are ready to take over. Note the press release issued by the Bank of International Settlements (BIS) on June 30, 2020. This is how the train tracks of a new crypto system are being “laid.”
The BIS Innovation Hub is an investment in the future of central banking and the financial system. These new centres will expand our reach significantly and help create a global force for fintech innovation. ~ Agustín Carstens, General Manager
- BIS Innovation Hub to extend global reach with four new centres over next two years in collaboration with central banks.
- New locations in Toronto, London, Frankfurt & Paris and Stockholm; strategic partnership in New York.
- Expansion will allow Innovation Hub to spur central bank work across multiple fintech pillars.
The Board of the Bank for International Settlements (BIS) today announced the expansion of the BIS Innovation Hub with the establishment of new Hub centres across Europe and in North America in cooperation with member central banks.
In the next two years, the BIS will open centres in collaboration with the Bank of Canada (Toronto), the Bank of England (London), the European Central Bank/Eurosystem (Frankfurt and Paris) and four Nordic central banks (Danmarks Nationalbank, the Central Bank of Iceland, the Central Bank of Norway and Sveriges Riksbank) in Stockholm. The BIS will also form a strategic partnership with the Federal Reserve System (New York).
In short, the push for the final mile represents a new gold rush. And the killer app of the entire system—once the final mile is laid for the IOT—will be cryptos controlled by global central banks.
If you have not yet read our analysis of the looting patterns in Minneapolis, contiguous to the Opportunity Zones and near the Minneapolis Federal Reserve branch, it is recommended. So is our ongoing discussion in my Money & Markets commentary on looting contiguous to Fed locations and the use of the Fed bond portfolio to finance private companies and possibly municipalities in building out the final mile.
VIII. Financial Transhumanism and the Final Inch
“We are focusing on a novel approach for integrating electronics within the brain and other areas of the nervous system, which involves non-invasive syringe delivery of neural network-like mesh electronics into targeted distinct brain regions.”
~Lieber Research Group, run by Dr. Charles Lieber, Harvard professor and leader in brain-machine interface (arrested by the Department of Justice in the early weeks of the coronavirus “pandemic”)31
Your community and your home represent the final mile for the IOT build-out. Unfortunately, however, there is even more to go. The design of the “smart grid” envisions running its train tracks all the way into the final inch—not just electromagnetically but physically—meaning, into your body and brain.
As I stated earlier, the IOT is part of the digitalization of all life—not just of man-made things but of living systems as well. As our Solari Report interviews with Clifford Carnicom, Dr. Gwen Scott, and Elana Freeland indicate, there is evidence to suggest that global spraying includes nanotechnology and nanoparticles that are ingested by humans, plants, and animals. In addition, the Solari Report interview (in our Food Series) with Dr. Don Huber describes mysterious electron-microscopic pathogens in our food—both mystery ingredients and nanoparticles.32
Thanks to the research of a group of fearless Italian scientists published in 2017, we know that there are also mysterious nanoparticles in injections incorrectly referred to as “vaccines.” (A vaccine is defined as medicine. I consider it inappropriate to refer to injections that include nanoparticles and biowaste and have a serious record of harming humans as “vaccines.” I will use the name suggested by one subscriber, “toxxines.”)33 The range of technologies currently being considered or tested—generally in association with or delivered by toxxines—includes tattoos, chips, injectible nanotechnology and a brain-machine interface in humans.
To keep track of this dazzling dystopian collection of technologies, we have created a database in our News Trends & Stories section (at solari.com) under the title “Dr. Gates’ Creepy Technology.” The name was inspired by the fact that so many of them are financed by the Gates Foundation. To further help you understand the technologies involved, we have also included a “Glossary of Human Ingestibles and Injectables” in this Wrap Up, prepared for us by Jason Worth, who has been helping us with the database. Finally, our March 2020 Solari Report interview with law professor Amy Benjamin about the Nuremberg Principles can help you understand the breathtaking violations of international legal principles involved.
Some of the most challenging conversations I have regarding currencies are with people eagerly engaged in developing crypto systems. They are passionate about privacy and convinced that blockchain can offer them high-integrity systems with privacy. There is little understanding of the many ways that the most advanced intelligence agency systems can compromise them—at the point of entry as well as transmission—or of the numerous people and enterprises involved in the crypto food chain. The ultimate compromise, however, is a brain-machine interface that can read thoughts, insert thoughts, and mind-control.
But let’s get back to the economics. As a result of the build-out of digital systems, real estate and breakthrough energy represent an enormously profitable gold rush. With data as the new oil—and financial data being the most valuable—financial cryptos become the killer app. As we have seen, though, this requires the build-out of enormous cloud capacity, which is the platform through which radical reengineering of cash flows can be engineered. This is supported by millions of miles of cables underground as well as expanding satellite constellations overhead.
With most of these train tracks in place, technocracy can be adopted as a new regulatory and economic model that permits far greater central control, replacing traditional systems of markets and democratic processes in the G7 and Commonwealth nations. As Patrick Wood has pointed out in our interviews, the beauty of technocracy is that it is possible to integrate it into any political system—whether a one-party system in China or a republic in America.
There is one more important aspect to the economics of the new technocratic system to be explored, however. Traditionally, the most profitable industry in human history has been human slavery. The African-American slave trade was outlawed in the British empire in 1807 and 1833, and slavery ended in the United States during the American Civil War. One of the reasons behind the decision to end slavery was the inability of the European armies to overturn the Haiti rebellion. There was concern that the rebellion would spread to the American mainland. I suspect that historical example of pushback is a primary reason why Haiti has been subjected to such a hard time since the CIA’s creation and authorization as the world’s most powerful covert bank in 1949.
Another reason for ending slavery was the difficulty of perfecting collateral. Slave traders and plantation owners would finance a slave purchase with local banks, which would then syndicate their position to the New York and London banks. When commodity prices were down, owners would sell the slave “west” for ready cash, leaving the financial institutions without any way of identifying and recapturing their collateral in fulfillment of their loan. If we look at what is now possible with new technology—whether the surveillance mechanisms already in place with the NSA and Five Eyes satellite and telecommunications systems or the ability to “chip” human beings, including nanotechnology and nanoparticles used without chipped individuals’ knowledge—it looks like the problems of perfecting collateral and putting down violent rebellions have been solved.
Reviewing the tactics used on “targeted individuals”—individuals subjected to systematic electronic torture—indicates to me that both government agencies and private corporations have been working out the reinvention of a new digital “whipping machine.” (For more on the “whipping machine,” see my review of The Half Has Never Been Told.34) The institution of a high-tech version of the “whipping machine” creates the potential for slavery to generate extraordinary profits. This is likely one of the reasons there is so much interest in getting people to work and function online—thereby dramatically increasing technocrats’ ability to monitor, entrain, mind-control, and squeeze productivity.
A shift to technocracy made possible by the integration of digital technology into human electromagnetic and physical minds and bodies is a return to human slavery on a much broader scale. It is essentially the “mark of the beast” system described in the New Testament. Christians have been warned for centuries about this system—deemed to be demonic in nature and purpose. From what I can tell, adoption of the system is highly dependent on entrainment and mind control, which is why we have spent so much time on these topics at The Solari Report. It is difficult to protect yourself from invisible weaponry if you cannot “see” it. Even if you are educated and can protect yourself, however, many challenges remain if members of your family and community cannot even fathom that it exists and are regularly digesting and integrating it—and, in the process, increasingly engaging in self-destructive behavior and even madness. Certainly, they will not be available to help you organize productive alternatives or options, and they may be injecting a pollution into your field that is even worse than that put out by the propaganda media.
The economics of potential high-tech slavery systems also benefit from the integration of robotics into the labor force. A great deal of time and money can be saved by simply integrating robots into the current human labor legal and regulatory systems as well as taxation systems—as opposed to trying to create a whole new system just for robots. Conveniently for the central bankers, the legal line between a robot and a human will be increasingly blurred if they are successful at introducing transhumanism and prototyping the integration of digital technology into humans. Much of the dystopian legal and regulatory decision-making around LGBT rights or creating citizenship for Sophia the robot are actually steps being used to achieve these ends.
One of the reasons for the adoption of 5G—originally created by the Israelis for crowd control—is to ensure the surveillance and management of a combined robot and human workforce on an integrated basis using software and AI. By “chipping” humans and integrating them into the cloud, the human workforce can “teach” the AI how to transfer human jobs to robots on an accelerated basis. (It is a bit like U.S. companies that send their employees to India to teach the Indian workforce how to do American workers’ jobs on an outsourced basis.) The potential savings and optimization of labor productivity that can be achieved from integrating both breakthrough energy and robotics in this fashion are mind-boggling. Presumably, quantum computing can make an essential difference in terms of processing power.
The question remains whether electromagnetic compromise and pollution, including entrainment and mind control, will become sufficiently visible to the body politic to reverse current trends before humans are fully “chipped.” One of the populations best positioned to understand this threat to humanity would be Christians, who have been warned for centuries about the danger of these systems. So, it is not surprising that as we see the corporate media promote transhumanism and related memes, we also see, around the world, the burning of churches, their conversion to mosques, government decrees that churches are “non-essential,” and government prohibitions against singing or chanting in church. This demonstrates that religions that oppose chipping and usury are in for a serious fight from today’s high-tech Bolsheviks.
Welcome to World War III. The war is for control of your mind, and the killer app is a digital crypto system that will institute global human slavery. Successful currency systems involving markets, prices, and the ability for humans to transact freely have always been at the heart of freedom. Coin and cash transferred between you and me physically leaves no digital record. It is hard to control. The goal, therefore, is to end currency.
If you can start a local currency system now, I highly suggest you do so. Pray that the central bankers fail in their efforts, and be prepared to act and transact without them when they do. Their secret weapon is the extraordinary profits to made—on land and real estate, on data as the new oil, on the reengineering of government credit and cash flows, on lowering the cost of energy with breakthrough energy, and on lowering the cost of labor with robotics and slavery. Unfortunately, the promise of those profits continues to attract many members of the human race as both employees and investors willing to prototype and build out our new prison.
The good news is that we still have the power to stop supporting and financing this vision. This is our choice. What will you do?
IX. Currency and the “Going Direct” Global Reset
“It’s called ‘Going Direct.’ That’s the financial bailout plan designed and authored by former central bankers now on the payroll at BlackRock, an investment manager of $7 trillion in stock and bond funds. The plan was rolled out in August 2019 at the G7 summit of central bankers in Jackson Hole, Wyoming…. One month later, on September 17, 2019, the U.S. Federal Reserve would begin an emergency repo loan bailout program, making hundreds of billions of dollars a week in loans by ‘going direct’ to the trading houses on Wall Street.” ~Pam and Russ Martens, “BlackRock authored the bailout plan before there was a crisis – Now it’s been hired by three central banks to implement the plan,” Wall Street on Parade, June 5, 2020
Chronologies are excellent tools to help understand the world around you, particularly when you need to integrate activities in different industries and sectors, and some activities and players function behind a wall of secrecy.
To help understand how multiple trends are converging to engineer the Going Direct reset in 2020, we compiled a chronology to support the State of Our Currencies discussion. Recent excerpts are listed below, and you can find the full chronology at the web presentation for this Wrap Up: https://currency.solari.com/the-state-of-our-currencies-chronology/.
Before we discuss the global reset, let’s review some of the steps that began as the financial crisis unfolded in 2006-2008. You can see that while U.S. financial fraud was rocking the world, measures to launch the hardware and software for a crypto system and the related smartphone, smart grid, and smart city infrastructure were already being rolled out:
2007 (February) The U.S. National Association of Regulatory Utility Commissioners passes a resolution to eliminate regulatory barriers to the widespread implementation of smart meters.
2007 (June 29) Apple releases first iPhone.
2008 (August 18) Registration of “bitcoin.org.” On October 31, 2008, a paper authored by “Satoshi Nakamoto” titled “Bitcoin: A Peer-to-Peer Electronic Cash System” is posted to a cryptography mailing list. Bitcoin software as open-source code is released in January 2009, introducing blockchain technology.
2009 The American Recovery & Reinvestment Act (Recovery Act) provides the Department of Energy with $4.5 billion for the smart grid. The Recovery Act also funds a variety of other smart grid programs.
Moving through the financial crisis—as the G7 governments and central banks engaged in trillions of stimulus and world governments piled on more debt—the Chinese and Russians worked steadily to expand the liquidity of their own currencies and worked through the BRICS nations to accelerate “de-dollarization.” De-dollarization gained steam as the parties worked to build the institutional mechanisms to divert market share in trade, investment, lending, and reserves. In the meantime, extensive prototyping of cryptos and blockchain technology proceeded in the private markets, with the central banks monitoring and studying the results.
Finally, in late 2018 and 2019, the G7 central banks, nations, and related decision-making groups moved aggressively to finalize and adopt the “Going Direct” global reset. The reset is designed to extend the dollar reserve system, accelerate the implementation of a new global governance and financial transaction system, and gather the power necessary to herd all parties into the new system—all while ensuring that global financial bubbles do not crash.
I will never forget when one brilliant ally told me that he believed that Covid-19 was a real health care crisis. I laughed so hard I almost started to cry, saying, “That is truly the most miraculous save of the U.S. dollar yet.” I do believe in miracles, but not when it comes to this level of support for the dollar reserve currency and the current dollar bubble of debt and derivatives. On one Solari Money & Markets report in 2020, I noted that the long U.S. Treasury ETF had a total return of over 30% year-to-date. That is not performance—that is a miracle. Or a global reset.
The events of the Covid-19 pandemic have underscored how important it is to watch financial patterns when epidemics and pandemics are being used as a legal pretext to dramatically expand central bank control and shut off income to a majority of the global population. Investigative reporter Jon Rappoport has followed and documented the efforts to engineer and falsify epidemics and pandemics for decades. This is not a new phenomenon—Covid-19 is simply the first that has been successfully converted to a global reset cover story.
By no means am I dismissing health risks or the possibility or risks of bio and chemical warfare, including pathogens that can be turned on and off by electromagnetic means. Yes, people have died from Covid-19, and something unusual is causing it. We are in serious physical danger from a cocktail of ingredients and exposures, including GMO foods, global spraying, EMF radiation, and injections. In part, Covid-19 may be serving as a cover story for the sickness and deaths caused by what I often refer to as “the great poisoning.” However, the actual nature and scale of Covid-19 do not warrant its designation as a pandemic nor an officially demanded response that is expected to kill far more people than the disease. This is an engineered situation.
Chronology from FASAB 56 Adoption to Date
The watershed moment in building the financial platform for a global reset was the adoption of FASAB 56 in October 2018. This ensured the secret financial and operational flexibility necessary to support the U.S. dollar “financial bazooka” through a global reset. Combining the resources of the U.S. Treasury (empowered with FASAB 56), the New York Fed, and the Exchange Stabilization Fund—with operational capacity from BlackRock, the New York Fed members, and a Fed strategic partnership with the BIS under the umbrella of a G7-approved plan—provides a lot of fire power. Implementation of the reset will require a great deal of trial and error and having that firepower will make it much easier to power through it. No doubt the central bank players are teamed up with the combination of global military and intelligence necessary to implement on the ground.
Here is the chronology from the adoption of FASAB 56 to date:
2018 (October 4) Several months after beginning the promised FY 2018 DOD audit, the government accepts the recommendations of the Federal Accounting Standards Advisory Board (FASAB) and publishes final FASAB Statement 56. Since the Federal Reserve went operational in 1914, the U.S. dollar has lost 97% of its purchasing power. Since 1910, the U.S. national debt has grown from $2.6 billion to $22 trillion with unfunded liabilities for Social Security and health care benefits estimated at $240 trillion.
2019 (May) The annual Bilderberg Meeting is held in Switzerland. Their number-one topic is “a stable world order.”
2019 (July 20) The G7 finance ministers agree to a Crypto Action Plan.
2019 (late July) Bohemian Grove meets.
2019 (August) G7 central bankers meet in Jackson Hole, Wyoming to review “Going Direct” plan by former central bankers of Switzerland, Canada, the U.S., and Israel now working at BlackRock, an investment manager of $7 trillion in stock and bond funds soon retained by the Fed to manage some of its “Going Direct” portfolios. Mark Carney of the Bank of England gives an interview stating that the dollar reserve currency system cannot remain as is.
2019 (September 17) U.S. Federal Reserve begins a repo loan bailout program, making hundreds of billions of dollars a week in loans by “going direct” to the trading houses on Wall Street.
2019 (September 19) The ID2020 Alliance—led by Microsoft, Accenture, IDEO, GAVI, and the Rockefeller Foundation and incorporated into the UN Sustainable Development Goals—hosts its annual summit in New York City. Among other goals, ID2020 aims to offer “a persistent digital identity from birth” using “cutting-edge infant biometric technologies” and microchip implants.
2019 (October) The BIS publishes the G7 Working Group on Stablecoins report, “Investigating the impact of global stablecoins.”
2019 (October 18) The Bill & Melinda Gates Foundation, Johns Hopkins Center for Health Security, and World Economic Forum hold Event 201, a “pandemic tabletop exercise” simulating the outbreak of a novel coronavirus that becomes a pandemic.
2019 (October 25) Pentagon awards $10 billion JEDI cloud computing contract to Microsoft.
2019 (November) Following BRICS meeting, President Putin says, “The dollar enjoyed great trust around the world but for some reason it is being used as a political weapon, imposing restrictions. Many countries are now turning away from the dollar as a reserve currency. The U.S. dollar will collapse soon.”
2019 (November) Denmark-based tech company BiChip cancels launch of microchip implant readable from a distance and connected to the Internet in the face of protests by Christian activists. BiChip has contracts to produce the microchip implants for the Danish government and U.S. Navy. A 2018 update to the implants allows wearers to store Ripple cryptocurrencies using Ripple’s payment system.
2019 (November 14) Amazon, which manages the CIA and intelligence clouds, notifies U.S. Court of Federal Claims of its intent to protest award of JEDI contract by DOD to Microsoft.
2019 (December) U.S. creates the United States Space Force to be the space operations service branch of the United States Armed Forces.
2019 (December 12) Basel Committee invites comments on the design of a prudential treatment for crypto-assets by March 13, 2020.
2019 (December) Verizon 5G rollout in several U.S. cities, including Los Angeles, goes into effect. The 5G rollout has begun and accelerates to support the “Going Direct” global reset, marked by competition between the U.S. and China over who controls the telecommunications hardware and AI access to data.
2019 (December) MIT researchers publish study—funded by the Gates Foundation and directly requested by Bill Gates—that establishes a proof of concept for “intradermal on-person vaccination record keeping.” The study uses dissolvable microneedles to codeliver vaccines and “near-infrared quantum dots” into the skin that encode information about vaccination status readable by modified smartphones. The senior author says the invisible “tattoos” could create “new possibilities for data storage, biosensing and vaccine applications.”
2020 (January 24) The World Economic Forum meets in Davos and launches its Global Reset website to market the Going Direct plan to young people and non-financial sectors.
2020 (January 31) United Kingdom withdraws from the European Union (thus protecting its global offshore haven system from EU regulators and disclosure requirements).
2020 (January-February) A rising number of CEO resignations permits corporate leaders to sell their stocks at or near the market high. Reports of selling by members of Congress who receive early briefings on Covid-19 circulate. Jeff Bezos of Amazon is reported to sell $4 billion of Amazon stock.
2020 (February 7) The CIA begins multibillion-dollar procurement process to update its cloud technology as part of the Commercial Cloud Enterprise (C2E) process.
2020 (February) The U.S. Navy awards a $7 billion cloud contract to Leidos. Lockheed Martin spun out its government IT division to Leidos after the 2015 fiscal year in which the Army reported $6.5 trillion in undocumentable adjustments. Leidos has large contracts in Antarctica.
2020 (March) The FCC authorizes SpaceX to begin rolling out up to one million ground antennas to connect Starlink satellites to end users.
2020 (March) SpaceX expresses intent to compete for $16 billion in government subsidies for satellite Internet in rural areas.
2020 (March 9) Arthur Firstenberg republishes The Invisible Rainbow: A History of Electricity and Life (originally published in 2017) documenting the significant increases in disease and death resulting from the progressive adoption of electricity and increases in EMF radiation. The book raises profound questions regarding the potential impact of 5G technology on the human race.
2020 (March 11) The WHO declares Covid-19 a pandemic. This means that the waiver of liability under the U.S. PREP Act of 2005 applies.
2020 (March) Oil prices crash more than 20%, dramatically cutting revenues to Russia, Brazil, and other countries in the “de-dollarization” group. Major meltdown in the $20 trillion U.S. Treasury market begins.
2020 (March 12) Pentagon seeks court permission to “reconsider certain aspects” of the decision to award the JEDI cloud computing contract to Microsoft.
2020 (March 18) Bill Gates holds an “Ask Me Anything” Q&A on Reddit, one week after stepping down from the boards of Microsoft and Berkshire Hathaway. Gates calls for a national coronavirus tracking system, including “digital certificates” that show who has (and has not) been vaccinated.
2020 (March 26) The U.S. Senate passes the CARES Act.
2020 (April 15) Operation Warp Speed is announced as a U.S. public-private effort to accelerate the funding and launch of Covid-19 injections under U.S. military leadership and operations.
2020 (April 15) The IMF warns against “contraction of the global economy.”
2020 (May 13) WHO announces that the virus “may never go away.”
2020 (April 24) The Congressional Budget Office revises its earlier January estimate of a $1 trillion federal deficit in fiscal 2020 to $3.7 trillion. A later report by Kiplinger states that U.S. state government deficits will reach $500 billion by the end of fiscal 2021. McKinsey Global Institute predicts that global government deficits could be a worldwide $10 trillion deficit in 2020 and a cumulative shortfall of up to $30 trillion by 2023.
2020 (May 20) Dr. Mark Skidmore provides a major update to his 2017 Missing Money Report regarding $21 trillion of undocumentable adjustments in DOD and HUD accounts, including $6.5 trillion in fiscal 2015. This update includes a review of redemptions in the U.S. Treasury market, indicating a much higher volume of redemptions than should be necessary to manage officially outstanding debt and raising questions regarding total outstanding debt.
2020 (May) During May 2020, year-over-year growth in the dollar money supply is at 29.8%, up from April’s rate of 21.3% and up from May 2019’s rate of 2.15%.
2020 (May) Moncef Slaoui is named Operation Warp Speed chief adviser. Slaoui—a vaccine researcher and, formerly, Chairman of Global Research and Development and Chairman of Global Vaccines at GlaxoSmithKline—is described by the Financial Times in 2012 as an expert on brain-machine interface and bioelectronics. General Gustave F. Perna—Commanding General, Army Materiel Command—is named Operation Warp Speed chief operating officer. The project has a budget of $10 billion, with additional funds allocated through the Biomedical Advanced Research and Development Authority (BARDA) at the U.S. Department of Health and Human Services (HHS).
2020 (May 31) Looting and violent protests take place in 75 U.S. cities. Of these, 33 are cities with a Fed board, bank, or branch. A review of Minneapolis small business and property damage indicates possible redevelopment patterns in local Opportunity Zones. Are cities being cleared for “smart city” redevelopment? Will this development be financed by the Fed’s new bond-buying portfolios managed by BlackRock pursuant to the “Going Direct” approved plan?
2020 (June 2) Bank of America pledges $1 billion to address racial and economic inequality (now that looting has lowered the price of real estate).
2020 (June 4) John Titus reports on the Solari Report Money & Markets that the Fed has expanded its balance sheet by $2.8 trillion, or 60%-70%, since March 11, 2020. A similar size expansion in 2008-2012 took many years. The reported increase is primarily in Treasury bonds and mortgage-backed securities, but the Fed has authorized portfolios to buy corporate bonds and municipal bonds and to finance bank small-business loans. Some portfolio operations are outsourced to BlackRock. Some are backstopped by the Exchange Stabilization Fund.
2020 (June 30) The BIS announces it will open Innovation Hub centers in collaboration with the Bank of Canada (Toronto), the Bank of England (London), the ECB (Frankfurt and Paris), and four Nordic Central Banks in Stockholm. It will also form a strategic partnership with the Federal Reserve System (New York). The BIS has previously established Innovation Hubs in Singapore, Hong Kong, and Switzerland.
2020 (June-July) GAVI reports that Mastercard’s “Wellness Pass” program will be adapted to the pandemic response and integrated with Trust Stamp’s biometric identity platform in a test on low-income Africans to prototype vaccinations integrated with biometric identity and payment systems. (See “Africa to Become Testing Ground for ‘Trust Stamp’ Vaccine Record and Payment System” by Raul Diego, MintPress, July 10, 2020.)
2020 (July 16) Carlyle Group announces it is seeking to raise $2 billion for an Americas growth equity fund dedicated to mid-size private equity deals in North America, “according to people with knowledge of the matter” (Bloomberg). Chairman Powell of the Federal Reserve is considered to be worth over $100MM made as a partner at Carlyle during the explosive investment in globalization that occurred as money began going missing from U.S. accounts.
2020 (July 22) U.S. regulators (Office of the Comptroller of the Currency or OCC) grant authority to U.S. banks to hold and offer cryptocurrencies.
Again, you can find the full chronology at the State of Our Currencies web presentation.
What Is a Reset?
The Merriam-Webster Dictionary defines “reset” as a verb, meaning “to set again or anew” and “to change the reading of (such as a meter), often to zero.”
Numerous members of the financial community have been talking about a “reset” for years, expecting it to be a process akin to “changing the reading to zero.” Generally, this element of the financial community—people who understood that the dollar as reserve currency was at the heart of enormous debt and derivative bubbles—believed that trillions in worthless paper would be written down in a big crash. Then, we could go back to a market economy in which prices made sense. In other words, there would be a general feeling of coherence shared with other people broadly as one does when prices accurately communicate supply and demand realities.
This traditional notion of a reset assumed that the resources extracted from the market-based economy during the financial coup d’état that began in fiscal 1997 ($21 trillion from the U.S. government, $24-$29 trillion during the financial bailouts) would be reinvested in the same economy, with the same legal and financial frameworks. That tragically faulty assumption ignored what was happening with black budgets, a hidden system of finance, the creation of underground bases, and high-tech operations on earth and in space—literally, the creation of a “breakaway civilization” immune from the enforcement reach of traditional legal systems.
What we are experiencing is more akin to “set anew,” as in, throw out the meter and start off in a whole new system. This is a reset of global governance and control made possible through the integration of new technology. This new system is a technocracy marked by tight central control under the leadership of the central banks and private financial interests.
In this new system, prices will not be set by free humans expressing their desires through supply and demand in markets. Rather, prices will be determined by AI, algorithms, and policies set by central control and risk management. The price-setting mechanism will often be incomprehensible to the general population, particularly given the extraordinary levels of secrecy involved. Moreover, prices can be calibrated to the individual through a near-infinite series of rewards and punishments. In the process, currencies for the general population will be replaced by a “credit at the company store.”
Hence, it is important to leave behind prior notions of what a reset might be and stare down the barrel of the reset that is actually happening. Among other things, this requires facing the possibilities of what our real governance structure may be—a frustrating business, given the magnitude of the secrecy and uncertainties involved.
First Reset Priority: Build Out the Hardware
A reset this large has many parts. One track is the rolling out of the significant hardware needed to operate the system. This hardware includes:
- Satellites, undersea cables, towers, and telecommunications
- Smartphones, smart homes, smart grids, and smart cities
- Clouds, blockchain, crypto software, and exchanges
- AI and quantum computing
- Related utility capacity
If you look at the accelerated implementation of 5G systems during the Covid-19 pandemic or the patterns of looting that likely anticipate the installation of smart cities, it would not surprise me if a significant amount of funding from the Covid-19 stimulus packages and central bank bond-buying was financing the build-out.
As we watch SpaceX rockets deliver satellite payload after payload and the extraordinary mining and manufacturing underway to build out this high-energy-consumption control infrastructure (not to mention the new nuclear, missile, and space weapon races), it is more than amusing to be constantly reminded of the damage being done to our environment by cow “farts.”
Second Reset Priority: Establish Pandemic Legal Advantages
John Kaminski was describing the War on Terror when he wrote the following, but it applies to “Virus Mania” as well:
“For endless war, you must have an enemy who cannot be caught, who is completely vaporous, therefore necessitating nonstop aggressive emergency measures, variously colored alerts and tough talk for those who are unable to see the deeper meaning of words. The perfect enemy for a state that seeks endless war and strives forever to pull the wool over the eyes of its own citizens for purposes of endless robbery and implementing slavery where freedom previously existed would be an enemy who cannot, under any circumstances, ever be caught….”
A critical step in making a global reset possible has been the creation of legal and financial capacity to support central control. This has been accomplished through international, national, and local government health agencies and the engineering of special police and enforcement powers.
Exercising the requisite police and enforcement powers involves making sure that government leaders do as they are told. Apparently, years of regime change engineered by G7 military and intelligence agencies—including the invasion of Libya in 2011—have not managed to fully suppress the remarkable continued resistance to central control. For example, since the launch of the Covid-19 pandemic, we have seen national leaders in Burundi, Belarus, and Brazil targeted or killed when they refused to shut down and destroy their national economies as ordered. In Tanzania, the president ordered his security forces to randomly obtain non-human samples (including from a pawpaw fruit, a goat, and a sheep) to test imported coronavirus test kits. After the random samples were assigned human names and ages and sent to a laboratory, the pawpaw and goat samples tested positive for Covid-19, and the results were splashed across the Internet globally. He is now facing a tough reelection.
The tactic of using a health scare to increase central control makes sense after the 2008 financial bailouts. The population would be seriously resistant to a second round of bailouts to “save the banks.” Instead, under the guise of saving the elderly, the sick, and the poor, we have managed to generate the equivalent of three to five years worth of bailouts, quantitative easing, and stimulus in a mere three months. Clearly, the Covid-19 pandemic is a winning strategy.
The epidemic and pandemic laws and regulations developed globally over decades have not only created extraordinary police and enforcement powers—that can be exercised centrally—but also free numerous government and corporate parties from legal and financial liability. The next few months will test just how far these powers can go. Although existing death statistics and related pathology reports do not yet support the case for a health emergency, my concern is that 5G technology and Covid-19 injections will generate a serious health crisis—one that can be attributed to Covid-19.
Third Reset Priority: Concentrate the Cash Flows and Assets
Another important part of the reset is reorganizing who owns assets and resetting asset values. Although this is akin to more traditional notions of what a reset is, in this case, we are watching what I have called “the mother of all debt entrapments.” With debt climbing steadily, a significant drop in income is being engineered that is throwing governments and businesses around the world into a debt trap. When incomes and equity are lost, creditors can assert control.
The rebalancing of the U.S.-China relationship is part of this picture. That is why it is important to keep an eye on the U.S.-China trade deficit to see how “Going Direct” is doing.
Those who have borrowed in dollars but cannot now earn dollars are increasingly at the mercy of their dollar creditors and the Federal Reserve and its swap line offerings. As this happens, their deficits and debt continue to grow. McKinsey Global Institute predicts that global government deficits could amount to a worldwide $10 trillion deficit in 2020 and a cumulative shortfall of up to $30 trillion by 2023. In this environment, governments with outstanding debt denominated in currency that their central banks can print have a very powerful advantage.
Printing currencies is not a solution available to debt-entrapped state and local governments. A recent report from Kiplinger indicates that U.S. state government deficits will reach $500 billion by the end of fiscal 2021. State government officials are being ordered to shut down their own tax base, which raises the question of how they are going to fund their expenses once their tax base is gone. One of the reasons that this is such an interesting question is that “Going Direct” could be interpreted to mean “cutting out all the intermediaries.” If seven billion people can be individually and directly hooked up to AI through the clouds at DOD, the CIA, and the NSA, what role will be left for local, state, and national governments to play? Possibilities include significant “piratization” and corporate management and control of municipalities.
Beyond government, debt entrapment also extends to millions of small businesses and farmers around the world, as well as millions of churches and cultural, sports, and civic institutions whose operations have been shut down, limited, or threatened as a result of Covid-19. As health agencies deem the operations of small businesses and local farmers “non-essential,” large corporations and online services can move in on their customers, revenues, employees, and operations. In the United States, the build-out of distribution warehouse capacity occurred well in advance of the market migration of retail sales from local stores and shopping malls to online companies—that is, until Covid-19. From the construction I observed while driving around the United States, it seems that the players setting the construction timeline understood that this switch from brick-and-mortar to web-based shopping would soon be accelerated.
Debt entrapment will be particularly painful as the central banks expand the money supply and national governments provide stimulus primarily for the benefit of insiders. Those who have lost income and employment will find their expenses inflating as the “slow burn” accelerates.
The monetary stimulus to date has been extraordinary. On Solari’s June 4th, 2020 Money & Markets commentary, John Titus reported that the Fed has expanded its balance sheet by $2.8 trillion, or 60%-70%, since March 11, 2020. During May 2020, year-over-year growth in the U.S. dollar money supply was at 29.8%, up from April’s rate of 21.3% and up from May 2019’s rate of 2.15%. This was on top of the $2.2 trillion of stimulus added by the U.S. CARES Act in March. With this extraordinary amount of monetary and fiscal expansion, we would expect to see inflation, or even hyperinflation. However, shutting down whole parts of the economy on Main Street is highly deflationary—likely offsetting inflationary trends.
This game is an old one. Let’s look at a gross oversimplification to help you see how it works. You have two groups: Insiders and Outsiders. The Insiders crash the economy. They declare the Outsiders’ enterprises non-essential—they must remain shut down or “old people will die.” Insider enterprises are deemed essential and are allowed to stay open. As the economy collapses, the government offers government subsidy to the unemployed to “help them during these hard times.” Recipients of subsidy are now wholly dependent and must do what they are told—like only shopping at Insider stores and doing their business online, allowing AI and software to determine how Insider businesses can best take their remaining income away and reengineer with software and robotics.
As the process unfolds, numerous governments, institutions, and enterprises struggle with their debt, given the sudden drops in income. They must do what they are told by their creditors—often banks and financial institutions owned by the Insiders. Meanwhile, Insiders receive stimulus monies and cheap central banking capital to roll up land, real estate, and businesses that heretofore belonged to Outsiders. The Outsiders start selling their homes and real assets to generate funds for daily expenses and debt payments.
As debt entrapment rolls out, one goal is to shift assets out of the old system (at below-market prices) into the new system, where Insiders and their allies now own them at low cost. Another goal is to leave liabilities—such as retirement and health care obligations—behind. Ideally, all the assets end up in the new system and all the liabilities remain in the old system. This makes it feasible later to reduce or abrogate the liabilities, blaming Covid-19 for resources not being available.
As Jim Cramer stated after a few months of Covid-19, this is one of “the greatest wealth transfers in history.” After approximately three months, U.S. billionaires had increased their wealth by 20%—an estimated $500-plus billion. Surely this explains the celebrity and media slogan, “We are all in this together.”
Accumulating and organizing the land and real estate needed for smart cities is a big job. If Insiders establish that protests against racism are not subject to Covid-19 restrictions—this being a magical, virtuous virus—and send in looters, arsonists, and demands for reparations, then redevelopment challenges may get much easier, including picking up real estate cheap, changing zoning laws, and implementing evictions. Are we surprised that 33 of the 37 cities with a Fed board, bank, or branch had looting and protests?
The Supreme Court just returned Eastern Oklahoma to Indian tribal ownership. Is this how local sheriffs will be steamrolled, as jurisdiction transfers to the Bureau of Indian Affairs? We will see. The process has just begun. I dare not think what must be happening throughout the Southern Hemisphere.
One of the industries that will play a critical role in this process is the insurance industry—whether insurance covering health, long-term care, life insurance, annuities, errors and omissions (E&O), home and fire, business interruption, or mortgages. An item that is bound to be high on the central bankers’ list is making sure that the long-term solvency of the insurance industry is protected. What I wouldn’t give to have access to the strategic planning sessions and supporting analytics of the Lloyd’s of London board and senior executives!
Fourth Reset Priority: Drive the Herd into the New System
When did this vision begin—the vision of downloading an operating system into a human being (let’s call it “windows 1984”), with toxic injections that are regularly justified with the threat of invisible “viruses” and whose manufacturers and distributors are protected from all liability and accountability, no matter how many people they poison or kill?
Throughout history, the evolution of financial systems has been marked by the competitive search for more efficient transactions and innovations to lower transaction costs. Transaction costs are a form of resistance that slows the financial process down. Thus, what both command structures and financial systems most crave is not just lower fees but lower resistance.
A system with no resistance has four features. First, it is not diminished by transaction costs—you send $1, and $1 shows up on the other side. Second, it does not disappear in the middle into someones else’s mafia or take extra time that requires the parties’ time and attention. Third, the party who receives it books it in a manner that matches how you account for it, so that all regulatory and taxation treatments are aligned. Fourth, you have economic proof that the transaction was effected successfully.
In this context, we can see that downloading an operating system into humans would create the capacity to ensure near frictionless transactions globally and the ability to achieve low-cost obedience—the kind that makes it possible for large complex systems to be run by AI. There are also significant implications for taxation systems, management of interest rates and debt service, management of natural resource use, and engineering of productivity through a high-tech “whipping machine.” In addition, the integration of robotics into the human labor force—and the continued prototyping of cyborgs, clones, and other forms of transhumanism—would be dramatically improved.
In a system with no resistance, Mr. Global gives an order and it is implemented. It is not altered or resisted by elected presidents, governors, mayors, local referendums, or pesky independent-minded CEOs. It does not break down and get messy. It is simply done, while algorithms handle and manage exceptions in Mr. Global’s interest.
Look at the world from Mr. Global’s point of view. A no-resistance system not only would make life much easier but would result in enormous savings in transaction costs and intermediary governance costs. Imagine the theoretical savings that would come from deleting 75%-90% of the cost of government bureaucracy worldwide. And if this level of control also permitted the wider implementation of breakthrough energy—a big plus given current energy-wasteful technology—the wealth potential would be staggering. Mr. Global would also have significant risk management tools at his disposal to manage the explosive cocktail of a growing population and diminishing resources, particularly if populations start to figure out that they are being financially harvested and depopulated.
Looking back over the State of Our Currencies chronology, it looks to me like this plan has been in the works for many decades, certainly at least from the time that the 1986 National Childhood Vaccine Injury Act was passed. The Act made it economically attractive for pharmaceutical companies to engage in large-scale human experimentation with nanotechnology, gene manipulation, heavy metals, and other materials designed to implement transhumanism.
Clearly, as computer operating systems were facilitating intelligence agency surveillance, Trojan horses, and back doors, the concept of a human operating system was also in the works. It is interesting to note that the money laundered through both the Madoff and Epstein frauds found its way to brain research at Harvard and MIT. And just as “viruses” have been used to compromise our computer operating systems and engineer perpetual updates, now “viruses” are being used to terrorize the body politic and justify extraordinary police and enforcement powers that would never be tolerated if the reset were explained as a purely financial phenomenon.
Not missing a trick, the magic Covid-19 is rapidly extinguishing financial and legal liabilities and accountability as if we were in another large round of financial bailouts. The health emergency is the new marketing department of the national security state—so, it’s not surprising that DOD is in charge of distributing the Operation Warp Speed toxxines. Presumably, we will all be hooked up to the DOD-Microsoft JEDI cloud. We can’t wait to see what credit card companies the central banks will choose to be part of the injectible credit card team. GAVI has already chosen Mastercard for its African prototype of vaccinations integrated with biometric identity and payments.
How do you persuade people to agree to install an unnatural operating system in their body and the bodies of their children that will subject them to complete control managed by a machine? It is quite a marketing challenge, requiring considerable propaganda and mind control.
For many decades, Jon Rappoport has done a magnificent job of documenting how propaganda and mind control work. If you have not read his interviews in his Matrix Revealed collection, and particularly his interviews with retired spin master Ellis Medavoy, you should do so. They are prescient beyond imagination:
“People think it’s very esoteric to talk about disruption in the space-time wave. But setting up certain psyops is very much about that. The theory of these operations has everything to do with the fact that people exist in an average and consistent space-time wave. They become used to that. They’re not even aware of it. So a psyop can go two ways. It can encourage that form of sleep, to make it continue. Or it can blow people right out of their wave into something that’s very disorienting. In the latter case, you’re forcing people out of their average perception of space and time, but you’re not giving them anything to replace it. They’re hanging in a void, so to speak. What’s the result? People desperately want a resolution of the psyop, so they can return to their former continuum. And because they feel desperate, they’ll take whatever and whoever you give them. You can say a deer chewed on a power cable and blew out the power for the entire east coast for a week, and they’ll believe you. And that’s what you want. The ability to say anything and have people believe you.”
~Ellis Medavoy (pseudonym) to Jon Rappoport, 2002
As Medavoy’s comments suggest, the marketing rolls out in phases:
- First, you use the magic virus to scare people.
- Next, you persuade people that the only way to protect themselves from the virus is to get designated tests and toxxines—pushed and injected up their nose near the brain barrier.
- You keep the ingredients of the toxxine secret, attacking or killing scientists or doctors who try to document or publish the real ingredients.
- You get vaccine mandates legislated around the world and end religious exemptions. Bankrupting and outlawing the churches helps with that—especially because you need a large supply of aborted fetal tissue for such a massive global vaccination program.
- You build a large army of contact tracers and snitches to locally herd people into the vaccination process and cull from the herd people who may inspire resistance to the process.
- As you shift all the essential businesses into your companies, you require the vaccinations for employment, purchases, and transactions. Now that you have shut off many people’s income and moved them to dependence on government subsidies, receipt of subsidies can be made subject to vaccination.
None of this has anything to do with health. It has to do with herding the population into your control system.
We have spent a reasonable amount of time on The Solari Report addressing propaganda, entrainment, subliminal programming, and other types of mind control, as well as fake news, fake science, and other forms of disinformation. The current global reset is heavily dependent on all of these techniques. If you are new to these ideas and techniques, I recommend that you access Solari’s material right away.
When a small number of people wishes to enslave and/or depopulate billions of people, how do they complete the task without spooking the herd? It is essential that the few “weaponize” some of those billions to help them engineer their goals. The “Judas Goat” is one old trick. When animals are slaughtered, they sometimes follow a Judas Goat into the slaughterhouse. The Judas Goat is not slaughtered but simply returns to the pens to lead the next herd in. As you look around, what you will see is a surprising number of well-paid people who are serving this Judas Goat function, including many celebrities, politicians, and members of the media.
Technology has increased the herd management techniques available to the few—including technologies that are way beyond the general population’s ability to fathom. For example, it is important to understand that 5G technology was developed by the Israelis for crowd control. In addition, published descriptions indicate that available brain-machine interface and bioelectronics technology can read and implant thoughts. Long-existing mind control technologies can wipe memories and implant false memories. Not only can such technologies generate astonishingly different world views within a population, but they can produce high levels of anger—including violent or homicidal anger—setting up the conditions for divide-and-conquer politics or cultural or physical civil war. When combined with high levels of immigration, even mass migration, these technologies can be used to engineer a form of societal “suicide.”
If you want to navigate this period in our lives successfully, I strongly encourage you to educate yourself regarding the techniques and invisible technologies used to weaponize other people. All of these techniques have been prototyped in a variety of countries around the world as well as on individuals targeted or gang-stalked by organized crime or on the so-called “targeted individuals,” so there is significant information available. I encourage you to start by accessing our Wrap Up presentations titled Control 101 and Deep State Tactics 101. If you want to thrive through the global reset, you will need to understand how to identify, avoid, and manage weaponized people—and make sure you do not become one of them.
When legal and financial systems are changing at such a deep level, a great deal of the traditional risk management embedded in a culture and economy can disappear. Things can go “out of control.” Once begun, the establishment is obligated to proceed organically, prototyping at high speed. They must ignore or suppress collateral damage and move forward at all costs. The boats have been burned, and there is no turning back. Because populations have not been trained to understand or adapt, in many cases they can pose a much greater threat than the leaders, whether they have been weaponized and become dangerous or are simply unable to cope. EMF radiation and toxxines also have the potential to kill a significant number of people when combined with the stress, time demands, and “shadow work” that come with radical change. To the extent that these deaths can be attributed to an invisible virus, the potential to create even greater central control grows.
Take a deep breath. We have started into a process that will be going on for quite a while—at least two to three years. Understanding the process we are in and learning how to “rock and roll” through it are absolutely essential navigation skills.
X. Crypto Transaction Systems: Institutional & Retail Challenges
"Bitcoin uses as much energy as the whole of Switzerland, a new online tool from the University of Cambridge shows…..Currently, the tool estimates that Bitcoin is using around seven gigawatts of electricity, equal to 0.21% of the world’s supply. That is as much power as would be generated by seven Dungeness nuclear power plants at once. Over the course of a year, this equates to roughly the same power consumption as Switzerland." ~Chris Baraniuk, BBC Technology reporter, July 3, 2019
Source: CryptoCurrencyChart B.V.
Integrating cryptos and related systems into the existing central bank, banking, and payment systems is no simple task. On December 12, 2019, four months after the G7 central bankers approved the “Going Direct” reset, the BIS-based Basel Committee on Banking Supervision invited comments on “the design of a prudential treatment for crypto-assets” by early March 2020.
The questions asked, along with recent speeches published by the BIS, give a sense of some of the institutional and retail challenges the central banking system is grappling with:
Sovereign or Private
- Should integration be limited to cryptos issued by central banks and/or sovereign governments, or should privately issued cryptos be included?
- What is the standard for determining which cryptos are in, which are out, and—specifically—with respect to which functions? Private cryptos can be expected to be highly volatile, which is why there is interest in stablecoins and other mechanisms to manage volatility as well as crypto systems for institutional use only.
Central Bank Direct or Intermediaries
- Should central banks issue crypto directly to the public, or should they continue to rely on intermediaries?
- Do central banks want direct interaction with the retail public—and the related liabilities and customer support responsibilities?
- Will deposit insurance extend to crypto holdings of any kind?
- Which functions should be open to cryptos? Should it be the full range of payment, asset taking, lending, and investments?
- Will banks be permitted to be major market makers in the crypto markets?
- Crypto systems require excellence in distributed ledger technology and encryption. Does the global capacity exist to implement the necessary capabilities worldwide? At the peak prices in 2018, the crypto market was still relatively small in the scheme of the global financial markets.
- As crypto systems grow, how will the technological capacity grow? Can distributed ledger technology handle significantly greater volumes without extraordinary logjams, failures, and energy expense?
Law & Taxation
Inventing whole new legal treatments for cryptos, testing the relevant case law, and integrating cryptos into current taxation systems (at the same time that robotics are being integrated into the labor system) is another area that will require significant investment from hundreds of jurisdictions—that is, unless events such as Covid-19 ease the way for a steamroller effort.
Capital and Regulatory Requirements
The banks’ capital requirements and regulatory compliance must be extended to include cryptos and all the related functions into which they are integrated. Moving the U.S. capital requirements to zero has certainly made crypto adoption easier.
The complexity of these issues is likely why the BIS is launching “innovation hubs” with central banks around the world—it’s best to keep the new systems’ development somewhat divorced from existing systems. The US regulators (OCC) proceeded on July 22, 2020, giving initial authorization to US banks to hold crypto and offer crypto services.
The most challenging issues that the central bankers face are generally not discussed, however. These include:
The whole point of “Going Direct” is to go to 100% controlled. That means 100% digital, with real-time information, and it means killing cash. Since a large part of the general population is firmly entrenched in the benefits of cash and appreciates the connection to privacy and freedom, the process of migrating to digital has taken decades. The Covid-19 destruction of income, putting millions in a major debt entrapment, is no doubt part of the push for an all-digital system. The U.S. Congress keeps trying to require that Covid-19 benefits be paid in crypto. If you want a sobering example of how much damage the war on cash can do, check out the harm done in India when they did their last round of killing cash. (Yes, Bill Gates is part of that ugly story, too.)
Organized Crime, Existing Securities Fraud, and Dark Pools
Official figures indicate that transnational organized crime has a “GDP” approximately equivalent to that of Germany or Japan—making it one of the largest economies in the world. I suspect it is actually much bigger (if all securities fraud were consolidated). Add wars that are really illegal under international law, and it gets even bigger. Because the central bank and payment systems are relatively consolidated, the central banks and large banks have always played a delicate spin game in communicating their management of these flows. A retired senior DEA agent once said to a reporter I was working with, “Let’s face it. The Fed knows where every penny is. All the wires are batched and run through the New York Fed.” Move to a 100% digital system, and it seems that we are talking about radical centralization of organized crime activities. It’s worth thinking about how this will work in reality.
Rebalancing the China Trade: Two Systems or One?
How China will fit in is not clear. China is clearly on board for an all-digital control system, particularly given its leadership in social credit systems. However, the Chinese appear to want independent space, military, payment, and financial market capacity and systems. Will China accept being a major player within a G7-managed system, or will it insist on independence, let alone continue to push for dominance? The G7 nations will never accept Chinese dominance, and the signs of covert warfare continue to grow. Consequently, the question is how hot will the currency or covert war grow? Because of the “winner take all” aspects, the space race could be long-lived and quite heated.
As I write this, the U.S. government has just issued a call for contractors to help formulate ideas about how to build nuclear power plants on Mars and the moon. Vodaphone and Nokia have already been hired to install a 4G network on the moon. One of the reasons for the push for tighter global central bank control is to create the mechanisms necessary for multiplanetary trade and transactions. The uncertainty around this topic is enormous. Are we already in an open economy? What is the level of transaction and trade? We do not yet have a stable legal framework for space activities, “offshore jurisdictions,” or property rights—what will it take to get there?
The central bankers seem to have left the most gruesome aspects of “injectible credit cards” and the injection fraud to the tech and pharmaceutical industries and the “health sciences.” Again, please note that the head of the U.S. Operation Warp Speed project to produce Covid-19 injections is the former head of GlaxoSmithKline’s research department and is an expert in bioelectronics and brain-machine interface. This is clearly one of the arguments in favor of keeping the intermediaries in place. Better that Mastercard get tagged for teaming up with the GAVI alliance and Bill Gates in Africa than that the Fed or BIS—God forbid—associate their brand with Africans dying or disabled from more Gates-funded injections. This way, there is also no need to cut the local central banks in on the deal early or depend on them.
As I write this, Google has announced that it will have its employees work from home until the summer of 2021. The reason given, of course, is Covid-19. However, I am willing to bet that this is a “Project Veritas policy.” Google does not want its employees to understand what they are really doing on contact tracing and the injection fraud or how mind control may apply, let alone have them connect the dots and let Project Veritas know. So, Google will keep employees compartmentalized at home. Covid-19 is the new air cover for institutions going dark. The Harvard Endowment as of 2017 and the federal government—with FASAB 56 in 2018—are already dark. A major systemic excuse has now made it possible for thousands to join them behind the veil of secrecy in the use of “other people’s money”—asserting freedom from the traditions and legal and regulatory obligations of a fiduciary. The profits of weather warfare and disaster capitalism are great—so long as no one connects the dots.
Zero Integrity Systems
By and large, our digital hardware and software systems were designed from the beginning to be compromised. In my experience, they are systemically untrustworthy. Now that this fact is widely known, numerous interests around the world have built cyberwarfare capacity. Digital systems have become a full-fledged warfare domain, and they depend on space, which has also become a warfare domain and the center of a new arms race. How in the world are we going to create trustworthy crypto transaction systems using hardware and software of questionable integrity?
The Psychic Storm
One of the goals of moving to crypto is to dramatically increase access to the financial system in the emerging and frontier markets. This will bring in billions of new users from multiple cultures—a new and powerful psychic storm that serious hypermaterialists ignore to their detriment. Who knows what the eventual impact will be.
Usury and Negative Interest Rates
When the United States legalized usury in the 1990s, the writing was on the wall as to where things would go. Throughout history, failure generally follows the institution of usury—just as assassinations and ousters plague leaders who outlaw it. Negative interest rates are a newer phenomenon. Any system that allows for tight central control by the central bankers creates tremendous latitude for interest rate policy. If we evolve one or more central bank and/or sovereign cryptos integrated with injectable credit cards, biometric surveillance, or tracking systems, beware the value that can be extracted with creative interest rate policies.
Entrainment, Mind Control, Subliminal Programming, and Propaganda
If you were simply to make a wild-a** guess as to how much mind control is being used to implement the Covid-19 op, you would probably say something like “a lot.” The problem with this large amount of mind control is that it is likely to result in a lot of blowback and unintended consequences. Mr. Global may believe the AI can handle it, but I am not so sure—particularly given that so much of the AI is optimizing a specific organizational agenda, instead of the whole.
Crypto is phenomenally energy-expensive. This is one of the reasons I get to laughing over climate change. If we need to stop using so much fossil fuel and coal, why are we promoting crypto? I assume that complete digital controls increase the chances that breakthrough energy can be introduced, at which point the energy expense of crypto will not be a problem. However, the transition seems to be mighty expensive. Don’t dismiss that idea; that may be a contributing factor—along with secrecy for the corporations and complete digital access for the intelligence agencies—to having people work from home. The commuter energy may be needed to help fund the crypto energy hog.
The interesting thing about the central bankers’ predicament is that they now have no choice but to evolve the new system somewhat openly by trial and error. I have heard more than a few people insist that the Covid-19 restrictions will be with us for another three to five years. If you look at what has to be prototyped, tested, and implemented, you can understand why the “Going Direct” global reset has just begun and why it will be with us for quite a while. This could take an entire decade. This is one reason why it is invaluable to see the relationships between the central bankers’ plan and what is happening in the jurisdictions within which you and your networks are operating. Take the time to get this map right—you will be able to use this knowledge to your advantage for a long time to come.
XI. Life in the Global Reset Invention Room
“An explosion will be imminent, unless the international and national institutions are reformatted. It’s a very sad story. Apparently, humanity will have to live through hard times again and to suffer a lot to realize the preciousness of the world that we once had. The pace of development of modern technologies and the linear development of human mentality are in dramatic conflict. Everything has to be restored to balance. All the rest is a consequence of this main conflict…. What’s the point in waiting? We should go on living. You will never guess what the last drop will be like. The crisis strikes later than we expect it and before we are prepared for it, the saying goes.”
~Herman Gref, Sberbank President and CEO, November 2019
The global reset train has left the station. There is a broad framework for our destination and a long list of things to be invented, refined, and implemented. Our planet has become a large invention room, proceeding with a global experiment marked by trial and error and marketed with massive disinformation and mind control.
I am reminded of one of my favorite quotes from the Buddha: “Those who are awake live in a state of constant amazement.” We will spend our days in a state of constant amazement for some time. That is, if we are lucky.
I am also reminded of my favorite quote from Albert Einstein: “Technological progress is like an axe in the hands of a pathological criminal.” When a society embarks on a process this chaotic, fluid, and open-ended regarding the most fundamental aspects of its governance, culture, economy, and finances, a lot can go wrong.
It is impossible to come up with a theory to explain why we have entered a global invention room without reaching the conclusion that the leadership either welcomes significant depopulation or had no choice given what is hidden behind the walls of secrecy. In the latter case, we are either subject to off-planet or interdimensional invasion in an open economy or are facing compelling geophysical and/or advanced technological risks.
The U.S. Marines have a slang expression—“cluster f**k”—that captures a “chaotic and messy situation from multiple mistakes or problems happening in rapid succession.” This is what World War III looks like—a five- to ten-year massive succession of “cluster f**ks” as we invent our way through to the future. We are introducing such a large number of new technologies and legal, regulatory, and enforcement changes all at once that many people will find it unbearable to manage the resulting incoherence and related shadow work. If you don’t appreciate the meaning of another Marine expression, “the friction of war,” I suggest you look it up and learn about it.
Our leadership has a hypermaterialist vision. Under this vision, we become a multiplanetary civilization and live a high-tech existence under a centralized global technocracy. Billionaires live 145 years, while a reduced human population evolves into transhumanism and is managed as private property through an AI system marked by mind control, injectible operating systems, and a brain-machine interface—integrated with digital technology, the cloud, and a large population of robots. In short, the hypermaterialist vision migrates the human population from “divine human” to “animal” to “vegetable.”
Many of us reject this vision and retain a vision of the “divine human”—and of a people who can grow and manage breakthrough technology responsibly and an advanced civilization defined by spiritual power and personal freedom. This, however, requires an end to secrecy and related mind control, and integration of our spiritual lives with our science and politics. The establishment is insistent that the average person cannot face or deal with reality. I appreciate their research and arguments on this point. However, if we have to put the human race through a gauntlet, better that the gauntlet cull out idiocracy than eliminate leadership, wisdom, and responsibility.
We are likely to witness a daily clashing of top-down power and bottom-up sensibilities for years to come—and what eventually happens will be some creation that results from this process. Which is to say, it matters what you dream, what you pray for, and what you think. It also matters where you put your time, attention, and money. We are all in the global invention room with the central bankers, and you get a vote—whether you want it or not, and whether the central bankers like it or not.
“A living history is not always a pretty picture. It is, however, a real one. When mastered, it starts the student on a journey of taking life with both hands to create something true and beautiful. Each of us can say, ‘I am part of a great story and that story is not over yet—I have something to say about how it goes.’” ~ Catherine Austin Fitts, 2006
Please make sure you have heard my Red Button Story:
The Red Button. You never want to have an epiphany in the middle of a speech, but I did. In the summer of 2000, I spoke to a wonderful group of people called Spiritual Frontiers Foundation International. They have a conference once a year to talk about how they can help evolve our society spiritually. They are very dedicated, wonderful people.
A friend asked me to give a speech called ‘How the Money Works on Organized Crime’. In the middle of the speech, I described the fact that a reporter I was doing research for had been told by the Department of Justice that the US economy and the financial system laundered $500 billion to $1 trillion a year of all dirty money.
So I said to this wonderful group of spiritually evolved people, “What would happen if we stopped laundering $500 billion to $1 trillion a year of all dirty money?”
We had a little interaction, and they said, “Well, the stock market would go down because that money would leave and go to Hong Kong or Singapore or Zurich, and we would have trouble financing the government deficit because we would offend the people who control that money and the accumulated capital for years thereon. Our government checks might stop, or our taxes might go up.”
So I said, “Okay. Well, let’s pretend that there is a big red button up here on the lectern, and if you push that button, you can stop all hard narcotics trafficking in your community, your state, and your country tomorrow, thus offending the people who control $500 billion to $1 trillion of annual dirty money. Who here will push the button?”
Out of 100 people, only one would push the button. I said to the other 99, “Why would you not push the button?”
They said, “We don’t want our mutual funds and our IRAs to go down in price, we don’t want our government checks to stop, and we don’t want our taxes to go up.”
So that is what I call ‘The Red Button problem’. The Solari mission is about how do we turn the red button green. In other words, how do we make money pushing the red button because if we can make money pushing the red button, then we can push the red button.
Welcome to 2020. Mr. Global has pushed the Red Button. Now, can you and I turn it green?
1 See "FASAB Statement 56: Understanding New Government Financial Accounting Loopholes" (https://constitution.solari.com/fasab-statement-56-understanding-new-government-financial-accounting-loopholes/) and "Caveat Emptor: Why Investors Need to Do Due Diligence on U.S. Treasury and Related Securities" (https://home.solari.com/caveat-emptor-why-investors-need-to-do-due-diligence-on-u-s-treasury-and-related-securities/).
2 From Pew Research, February 2019: “Mobile technology has spread rapidly around the globe. Today, it is estimated that more than 5 billion people have mobile devices, and over half of these connections are smartphones. But the growth in mobile technology to date has not been equal, either across nations or within them. People in advanced economies are more likely to have mobile phones – smartphones in particular – and are more likely to use the internet and social media than people in emerging economies. For example, a median of 76% across 18 advanced economies surveyed have smartphones, compared with a median of only 45% in emerging economies.” https://www.pewresearch.org/global/2019/02/05/smartphone-ownership-is-growing-rapidly-around-the-world-but-not-always-equally/
3 If you have not read or watched The Red Button Story, you can find it at https://home.solari.com/the-red-button-story/.
5 For an excellent example of the intensity of the effort to achieve private control of central banks, see the documentary Princes of the Yen http://princesoftheyen.com
9 You can find excellent examples in the story of Hamilton Securities, found in Dillon Read & Co. Inc. & the Aristocracy of Stock Profits (https://dillonreadandco.com/), the story of Abacus Savings Bank (https://www.abacusmovie.com/), our Solari Report interview with Howard Root (author of Cardiac Arrest: Five Heart-Stopping Years as a CEO on the Feds’ Hit-List), the Solari Report interview with Helen Chaitman (author of JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook) regarding JPMorgan’s leadership in the Madoff Ponzi scheme, my interview with attorney Carolyn Betts on legal tactics in our series on Deep State Tactics 101 (Part V), and my book review of The American Trap: My Battle to Expose America’s Secret Economic War Against the Rest of the World by Frédéric Pierucci with Matthieu Aron.
28 We recommend that you read our mapping of the Minneapolis riots and Solari’s listing of the violent protests and looting in 33 of the 37 Federal Reserve locations, as well as listen to our interviews with Patrick Wood on technocracy, Opportunity Zones, and in the 1st Quarter 2020 Wrap Up: The Real Deal on Going Local.
29 See “FASAB Statement 56: Understanding New Government Financial Accounting Loopholes” (https://constitution.solari.com/fasab-statement-56-understanding-new-government-financial-accounting-loopholes/) and “Caveat Emptor: Why Investors Need to Do Due Diligence on U.S. Treasury and Related Securities” (https://hudmissingmoney.solari.com/caveat-emptor-why-investors-need-to-do-due-diligence-on-u-s-treasury-and-related-securities/).
30 See “The History and Organization of the Federal Reserve: The What and Why of the United States’ Most Powerful Banking Organization” (https://constitution.solari.com/the-history-and-organization-of-the-federal-reserve-the-what-and-why-of-the-united-states-most-powerful-banking-organization/) and the Solari Report interview with Rob Kirby about the Exchange Stabilization Fund (https://home.solari.com/the-exchange-stabilization-fund-with-rob-kirby/).
32 Solari Food Series: Dr. Don Huber – Food Patriot (https://home.solari.com/solari-food-series-dr-don-huber-food-patriot-2/).
33 See “The injection fraud – It’s not a vaccine” by Catherine Austin Fitts (https://home.solari.com/deep-state-tactics-101-the-covid-injection-fraud-its-not-a-vaccine/).