Cryptocurrency: Crypto's Rising - The Ultimate Unintended Consequence

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The Unintended Consequences Of COVID-9/11

https://tomluongo.me/2021/08/31/from-the-notebook-the-unintended-consequences-of-covid-9-11/



One of the fundamental problems of central planning of any kind is
what we systemic thinkers call the ‘Law of Unintended Consequences.’
It’s not really a law but it should be.

You know you’re dealing with an ‘unintended consequence’ of a policy
when the politicians, bankers, regulators and their apologists in the
media say something like, "well, you know, no one could have foreseen
{fill in the blank}.”

Some of those blanks are:

    The Housing Bubble of 2005-07 which caused the financial crisis of 2008.

    The election of Donald Trump after decades of offering false
choices to the American Electorate.

    Most recently the collapse of the Afghan government to the Taliban
and the U.S.’s ignominious retreat.

These are all events, and there are dozens more in your everyday life
if you just begin looking for them, which nobody in charge would ever
admit to having considered possible when they embarked on a particular
policy but in hindsight were inevitable.

Policies of collective action under the rubric of the State, defined
as that entity with the power to point guns at people to enforce their
edicts, always result in these unintended consequences. But it’s not
because those outcomes weren’t predictable but rather because they
weren’t important to the people who implemented them in the first
place.

They weighed the benefits as absolute and ignored the costs as trivial
things they could, like a bad movie producer, fix in post-production.

So, with that in mind and looking at the saturation of fear porn and
relentless march towards a locked-down, totally-controlled and
regimented society as a result of COVID-9/11, I give you this note the
other day from TASS, the Russian State’s news service.

    Nezavisimaya Gazeta: Public’s attitude to globalization underwent
shift during pandemic

    People’s attitude to free trade and globalization has changed a
lot since the onset of the coronavirus pandemic. Support for
barrier-free trade has considerably declined. Russia is one of the
global leaders in terms of people’s negative view of globalization,
Nezavisimaya Gazeta writes, citing a poll conducted by the Ipsos
company and the World Economic Forum. Only 48% of those surveyed in 25
countries agree that globalization is good for their countries. In
Russia, one in three people stated that they reject the notion that
globalization facilitates an effective economic policy.

    Experts are not surprised by the declining interest in
globalization. “People in large economic powers can see their daily
expenses increase. Consumer prices used to be more stable before
globalization began and free-trade zones were created,” economist
Andrei Loboda said, pointing out that the change of sentiment had been
sparked by rising inflation affecting economies worldwide.

    Globalization has reached its limits and stopped boosting economic
growth, BCS Chief Investment Strategist Maxim Shein pointed out. “The
population’s income is falling, hence the decline in support [for
globalization idea],” he said.
    “A high level of consumption, easy access to any goods at
relatively low prices, good wages, high pensions and access for
businesses to foreign markets – all this used to be associated with
globalization. However, in the late 20th and early 21st century, the
global economy started to face crises, rising unemployment, a decline
in the middle class and increasing income inequality. All these issues
are also directly related to globalization,” Associate Professor with
Department of Enterprise and Logistics at Plekhanov Russian University
of Economics Igor Stroganov emphasized. Besides, large transnational
companies and retail chains enter foreign markets, destroying small
and medium-sized businesses and local agriculture. “In addition, labor
migration increases competition on the labor market. People in many
countries feel that way,” the economist stressed.

While we are bombarded daily by new polls suggesting that a majority
of Americans love their mask or believe their neighbors should be held
down and forcibly injected with an experimental gene therapy, the
Russians have looked upon the face of the New Normal and rejected it.

This is the unintended consequence of pushing for Globalism, people
see it for what it is and reject it.

The big question is why and to answer that I want to discuss what’s
not discussed in the TASS note.

The Toxic Spread Trade

What’s not covered here is the role that central banking and the
Cantillion Effect have on prices. The Cantillion Effect is where price
rises from monetary inflation have a delayed effect as the new money
spreads out through the society. Those that receive the money first
get to spend that money at today’s prices which, over time, raises
everyone else’s bid for the good or service that money then procures.

In reality, government is only in control of that first spend — from
its coffers to the supplier. After that they money flow is chaotic
based on the marginal utility needs of the person who receives it.
But, what you can be assured of is no matter what, those closest to
the source of the money have a massive advantage over those at the
economic fringes.

This is why I find all the hand-wringing modern Progressives do over
government spending so thoroughly repulsive. They argue for the very
thing to help ‘poor people’ which impoverished them in the first
place.

Their argument is instead of giving the money to the banks or the
corporations but directly to the people then that would equalize the
previous theft, a kind of reparations for past monetary sins. Of
course, this is patent nonsense. Giving people money rather than just
stop stealing from them is not the way back to a moral and sustainable
economy.

But it is their path to more permanent power. Ah Ha!

So, the effect of central banks around the world printing money is to
create a constant Cantillion effect at the national level. In the case
of the U.S., The Fed gives the U.S. government and its member banks
preferred access to capital at the lowest costs to borrow, while you
get access at the highest cost, i.e. higher interest rates.

This subsidizes overseas investment while overstating the strength of
the U.S. dollar, because those dollars can be spent to more
effectively procure overseas labor and property than buying those same
things here.

This exports the monetary inflation overseas while keeping a lid on
domestic prices at home. It’s why it’s also so disingenuous of
economic commentators to use domestic CPI as a measure of inflation to
invalidate the Quantity Theory of Money, which I’ve written about
before. If the money goes overseas, something’s price is getting
inflated, just not that thing we’re measuring.

Using the CPI to measure inflation is like trying to measure a board
with a stopwatch. It’s the wrong tool for the job.

As the Fed pushes and pulls the money supply through ‘monetary policy’
over time it greatly exaggerates the natural boom and bust cycle of
the economy.

Now let’s take this one step further and think on the arguments made
by Jeff Snider at Alhambra Partners who argues that with the creation
of the offshore Eurodollar shadow banking system, the Fed itself isn’t
even in control of its own monetary policy, those markets are.

This is another example of unintended consequences of major policy
changes, turning over the role of new money creation to a central
bank, versus basing it on a hard reserve asset like gold. It spawns a
rough beast the central bank can’t control anymore than the government
can control how you spend the money it pays you.

So, when those titanic forces want to enter into new markets through
cheap money they demand it from the Fed and eventually the Fed
accommodates them lest it get blamed for causing a global depression…
sound familiar?

I’m simplifying Jeff’s arguments here, but the fundamental point he
makes is valid.

At the same time it’s also irrelevant to the current argument because
it doesn’t matter if the Fed or the Eurodollar depositors control the
rate of new money creation. The Cantillion Effect of how that new
money spreads globalism is the same, only the points of origin are
different.
The Imperial Marsh

Large scale producers take advantage of the situation by investing
overseas during the busts and repatriating their capital during the
booms. In effect, they are reloading and waiting for the next
Fed-induced cycle to commence. As those closest to the Fed, if not
telling the Fed what to do, then they will also be best prepared when
the policy shifts to take advantage of it.

This dynamic has played out at an accelerating pace during the 21st
century as these boom/bust cycles become more and more erratic and the
‘monetary policy’ employed to support them more and more reckless.

In the end, it is the countries that begin rejecting this scheme by
de-dollarizing that are the ones who insulate themselves from the
effects of this capital in-and-out flow.  That’s why I’ve been bullish
on Russia since 2013, ignoring people calling it a ‘value trap’ early
on because of low equity market multiples.

Putin rejected globalism as an economic weapon and, in effect, turned
globalism on itself by doing this. At the same time, he maneuvered
Russia to control the marginal barrel of oil produced in the world.
This gave Russia the unique position of inserting the ruble into
global trade while improving its regional relevance as the rebirth of
central Asia can now commence with the collapse of the U.S. occupation
of Afghanistan and the final nail in the coffin of the remnants of the
British Empire.

>From here the ruble’s fortunes look bright as long as the Bank of
Russia doesn’t revert to its old ways.

Rejecting globalism is a real problem now for the Great Reset as
individual countries can now move to regain control over
transnationals who were told they would be allowed to run the world.
Martin Armstrong has banged his shoe on the table about Big Tech
getting the roles of the money-center banks for nearly two years.

Today I see the signs of the titanic struggle between the central
banks and the shadow banking system complicating the plans of The
Davos Crowd’s Great Reset everywhere as Big Tech makes good on its
promises assist in the COVID-9/11 operation to destroy and remake the
world.

In recent months, the clear policy from Premier Xi Jinping is for
China to move rapidly to lockdown its domestic economy, cut down its
tallest poppies, and send foreign capital packing. It never gave the
Western banks the access they wanted. It was always globalism on
China’s terms, not the West’s.

Now that Xi is making his moves, Davos is making theirs, attempting to
blame them for COVID-9/11 and turn Americans into raving anti-China
hawks willing to salve a bruised national ego by blowing shit up in
China’s backyard.

Let’s hope this is the one aspect of the Great Reset that fails to
materialize completely.

Rejecting western Globalists was Russia’s sin as well. Putin’s biggest
challenge in his 20+ years in power has been to gain control over his
central bank and the Russian financial system such that their inherent
corruption worked for Russia and not for Davos. Russia, out of
necessity, is much farther along in its quest to reverse/arrest
globalism than China is.

You can clearly see the hand of Davos at the legislative level trying
to keep forcing this to work. The EU still enters trade negotiations
demanding a country give it veto power over its “partner’s” local
governments in bilateral trade…. and notice how many of these deals
they’ve signed in the past couple of years.

Zero.
Globo-Homo-Economicus

COVID-9/11 is globalism’s last stand. It’s goal is explicitly to burn
the world down to ‘build back better.’ I’m sure Davos asked both Xi
and Putin many times to join the big club for the big win and they
both said, “No.” This is where culture and history asserts itself.

Seriously, do these people have no memory of how Europe and the U.K.
have treated China and Russia?

So, the WEF is now accelerating its scorched earth strategy. It’s
clearly using what leverage it has in U.S. institutions to expend the
last of the U.S.’s political capital with diplomatic and geopolitical
‘gaffes’ that even an amateur wouldn’t make. When you see government
policy an order of magnitude more incompetent than can be explained by
internal squabbling and petty corruption, you are dealing with
something willful.

This is always what I’ve envisioned the ‘failure’ of the Great Reset
to look like whenever I’ve invoked that idea.  They’ve taken their
shot at it.  Where they have the most control and favorable
laws/infrastructure — i.e. the English Commonwealth, France, Italy,
Germany, Spain — they are ramping up the tyranny.

In the U.S. they are moving rapidly to liquidate as much of the U.S.
as possible after having already reversed most of the good things done
under Trump.  Pelosi first moved back the deadline on the
Budget/Infrastructure/Debt Ceiling until October. Now she’s really
twisting arms behind the scenes while Afghanistan takes all the
attention trying to shoehorn them all through in the confusion.

If she can’t get that done then the House and Senate could get quickly
bogged down in Afghanistan hearings, if not impeachment/25th Amendment
talks. This is part of the reason why I think Powell was surprisingly
dovish the other day at Jackson Hole. He’s got to stay on D.C.’s good
side to get re-confirmed. He can afford, right now, to let the
pressure off the global financial system until another funding crisis
emerges in the domestic money markets.

So, the USDX falls a little, the euro backs away from oblivion and we
look ahead at the German elections and the next FOMC meeting.

None of this is good news for globalists and globalism since they need
that nearly $5 trillion to complete their takeover of the U.S.
financial and political system.  You don’t have to be a dog to smell
the rising fear.  It’s palpable now.

Pelosi needs these bills passed or her leadership of the Dems will
collapse. The Squad is barking about getting rid of Powell while
Pelosi begins to realize the whole administration is collapsing faster
than Biden’s cognitive function.

The globalists need perpetual war in ‘shitholes’ around the world to
keep laundering the easy Fed Funny Bucks to keep the entire Ponzi
Scheme alive. With Afghanistan now off the table, where are we sending
the military next to export inflation democracy?

But Powell, like the rest of them, know that globalism is failing and
pushing any further for it will only accelerate the creation of what
Vaclav Havel called “parallel systems.” Systems that exist outside of
their control. So, I think he’s treading carefully here with monetary
policy on purpose.

It’s Davos that is getting desperate. The more they grasp for total
control the easier it becomes to see the Law of Unintended
Consequences rearing its head as new solutions to age-old problems
proliferate.

Don’t believe me?

The best and brightest in the U.S. stopped being engineers and
scientists two generations ago when we stopped ‘building things.’ They
became financiers and lawyers. This was an unintended consequence of
the money flowing from D.C. and The Fed to those jobs to feed the
growing regulatory state. Their kids learned to code because that’s
where the growth was as the cheap money was funneled to subsidize the
creation of today’s Big Data and AI systems they believe they will use
to control the flow of everything the world over.

Today, however, those best and brightest have left Google and Facebook
and are working in crypto to solve the very problem which started all
this pernicious globalism in the first place. I’m not the only one
seeing it. It’s clear where the innovation is and what these people’s
motivations are — to reverse the Cantillion effect of privilege
granted to those close to the King and let capital flow to where the
people need it not where the tyrants do.

The Russians may be leading the way, if the polls are correct. Reject
empire and ‘greatness,’ they are telling us. Our leadership is trying
to shame us over Afghanistan. Don’t let them. Be contrite but
internalize the lesson of humility and get back to work rebuilding
what’s been lost. Opportunities for new systems abound.

Because the final consequence of Cantillion’s observations about
prices is that eventually you run out of ways to squeeze people
through fear and inflation. When that happens they squeeze back.



Squeeze Back!