Pulling back the curtain of deceit

Thursday, 18 May 2023 — South Melbourne

[7 min read]

Dear Reader,

Imagine five years ago being told you’ll one day live in a society where those you’ve grown to trust betray you and sell you out for their own agendas that profit them at your expense.

Few of you’d believe it. We don’t live in a third-world dictatorship like China, North Korea, Venezuela, and Zimbabwe!

But today, you’d have to be wilfully ignorant to not have an ounce of scepticism for those who run society and inform us on the daily goings-on.

You don’t need to dig into the dark corners of the internet to see it. The ‘Twitter files’ have painted a picture of governments, intelligence agencies, Big Tech, media, multinational corporations, and academic think-tanks colluding to control your perception of reality.

On Tuesday, a report was released to the public by US Special Counsel John H Durham that exonerated Trump’s campaign of colluding with Russia to win the 2016 US election.

In short, this report revealed that the entire Russian collusion scandal was concocted by lies. Worse still, the campaign of Former Secretary of State and First Lady Hillary Clinton paid for and spread these lies to try and smear her opponent. Several agencies — including the Federal Bureau of Investigation, the Department of Justice, and foreign intelligence agencies — were involved. Information was leaked to the complicit mainstream media, amplifying the narrative to sway public opinion of the Trump Administration.

This scandal was one of the leading news stories in 2017–18. Several reporters won prizes for covering this story, including the coveted Pulitzer Prize that was awarded to The New York Times and The Washington Post.

There’s been several developments in the past year, including the indictment of Clinton campaign lawyer Michael Sussmann, Russian analyst and FBI informant Igor Danchenko, and cybersecurity expert Rodney Joffe.

Their trials all resulted in acquittals, but that didn’t point to their innocence. Rather, it revealed to the public the corruption in the justice and legal system.

What’s alarming is that the organisations responsible for maintaining law and order and administering justice are found wanting.

Those you’d turn to for righting the wrongs are the ones on the dock.

Let that sink in!

Fools no longer

The public is coming to realise almost everything they’ve experienced in the past five years came from organisations that colluded together to control the flow of information. Let’s look at some recent events where a new narrative is now being revealed:

The rise and rise of alternative and dissenting opinion

In the past, the mainstream narrative could use ad hominem attacks against outlets and organisations that stood in their way, and sway undecided voters.

Nowadays, the alternative media is no longer a fringe society of niche agencies, lone reporters, and online influencers doing their own thing. The dissenting opinion is gaining momentum and scale. They’ve gained credibility in their coverage on major events and social issues, often taking the mainstream narrative head-on and making the right calls in the process.

The tide is shifting here, albeit slower than in the US and other countries.

If I was to take a guess, the tide turned sharply against the authorities during the vaccination push. The constant browbeating of dissenters gradually wore down people’s good grace and the insistence that vaccines were safe and effective despite evidence of the contrary turned people against them.

The shocking admission by a Pfizer executive last October to the European Union Parliament that the drug was never properly tested was a fatal blow to the health and medical profession. Now, as more Australians are receiving compensation for injuries and deaths arising from taking these experimental drugs, some are beginning to question this authoritative enforcement.

And the public isn’t going to let this one slide. Scroll down to the comments section in that last link and you’ll find an overwhelming number of openly hostile or mocking posts aimed at the organisations and medical experts who had failed them.

A coming storm or a global renaissance?

So where does this leave us?

I wrote an article last December on how fake money brought us into this mess.

Now that the curtain is being pulled back, those responsible aren’t going to let up.

Notice how there are threats of war, a debt crisis, and increasing civil instability?

On one hand, this threat is real. That’s why it’s important to be prepared lest you become a victim of circumstances.

On the other hand, a lot of the fear that’s coming out of the news outlets is hysteria. They’re hoping to bring maximum chaos. It might not play out as they’d hoped.

I believe it could result in a global renaissance.

As such, you’ll want to look into a crucial metal that’s necessary to take society to a new level of efficiency.

Copper is a necessary ingredient in powering our future. But supply is coming onboard slower than what researchers believe is necessary to realise future demand.

The current price of copper isn’t attracting enough exploration and development. Which means you can get in early and beat the crowd.

But mining investments aren’t a buy and hold, nor can you randomly pick a few companies expecting easy gains.

My colleague, James Cooper, has a lot of experience in the mining industry. He’s also a geologist who’s worked in several projects that turned into mining operations. Check out his latest presentation ‘The Red Drought’ and find out more about how to invest in copper companies that could deliver rewards for the years to come.

God bless,

Brian Chu,
Editor, The Daily Reckoning Australia

Dear Reader,

Erratum: We got our charts mixed up the other day. No problem: we’re sure you figured it out.

Our story so far…

Presidential candidate, Robert F Kennedy Jr wanted to know what we thought.

‘Go back and read our daily messages for the last 25 years’, we might have said.

‘And don’t miss our five books; you need to read those too.’

Instead, we prepared an ‘executive summary’. In Part I, we explained how the post-1971 dollar was cut loose from the real world of time and resources. Its gold-backing was removed. This allowed the financial economy to race ahead of the real economy of goods and services.

Money is just a way of keeping track of who owes what to whom, like tickets in a parking garage. ‘Financialisation’ is what happens when you add tickets; you go to get your car and find that someone else has driven away in it. It meant that a lot of people thought they had ‘wealth’ that didn’t really exist. Their stocks weren’t worth as much as they hoped. Their houses were overpriced. Their pensions were underfunded. Their government deficits piled up…waiting for a day of reckoning. Our chart showed GDP output practically flat, while ‘assets’ increased 10 times.

So, let us pick up our letter to RFK Jr (we promised fewer than 1,000 words…alas, we ran over), where we left off:

Dear Robert,

The second major change to the financial system occurred in the late ’80s when Alan Greenspan gave out his famous ‘Greenspan Put’. Investors then knew that the game was rigged — in their favour. When they made money, they pocketed the gains. When they lost money, the losses were shared out — by lowering interest rates and inflating the currency — to the general population.

This was dramatically demonstrated in 2001–04, 2007–16, and again in 2019–22. Each time, the ‘market’ tried to reduce asset prices and debt, and the Fed stepped in with cheaper credit (and more debt). Remarkably, the Fed’s key lending rate remained under the inflation rate for the whole period 2008–23 to today (excepting a few months in 2019).

In other words, instead of allowing the economy to correct mistakes and excesses, the Fed made them worse. It drove down interest rates, claiming — perhaps believing — that it was ‘stimulating’ the economy. Between 1999 and 2023, the Fed added some US$8 trillion in new money. The federal government added some US$28 trillion in deficits. This should have been more than enough ‘stimulus’ — enough to wake a dead man.

But if there is a success story, in which real growth was stimulated by fake money lent out at fake interest rates, it is absent from the historical record. Every instance of excessive money-printing — from ancient Rome in the time of Diocletian…to Zimbabwe, Venezuela, and Argentina in our own time — shows the real fruit of ‘stimulus’ is bitter…even fatal. It leads to poverty and discontent, not prosperity.

Here’s Chart #3. It shows what happens when you leave interest rates way too low for way too long. You get a lot of debt:

Cause, meet effect

Absurdly low interest rates enticed people to borrow. Debt grew proportionally. Federal debt is now 86 times higher than it was in 1971. Credit card debt nears US$1 trillion. Student loans have surpassed US$1.7 trillion. Total US debt is more than US$90 trillion. The federal government already owes US$32 trillion and expects more US$1 trillion deficits ‘as far as the eye can see’.

The effect of these two policy changes — the ‘flexible’ post-1971 dollar…and ultra-low interest rates — was exhilarating to the rich. But devastating to everyone else. A family in the top 1% now has 680 times as much wealth as one in the bottom 50%.

Trillions of dollars’ worth of easy money created an unnatural hot-house environment. People got used to 4% mortgages. Businesses got used to rolling over their debt at a 3% interest rate. The federal government got used to borrowing at a negative real rate on its 10-year bonds. And speculators got used to ‘negative carry’. At one point, they borrowed at the Fed’s low rates, then lent the money back to the government (by buying US Treasury bonds). The transaction was economically sterile and fruitless. But it was profitable. And the Fed’s ‘forward guidance’ removed the risk of a sudden shift in policy. But now, like a dense jungle canopy, exorbitant debt shades and stifles the eco-system beneath it.

Then, in July 2020, the credit cycle hit bottom (the lowest yields in 500 years). Interest rates began to rise. And today, 10-year Treasury bond yields are five times higher than they were just two years ago. The correction that the Fed has postponed for more than three decades is upon us. The traditional, dreaded feedback loop has reasserted itself; the Fed can no longer stimulate the economy, not without causing consumer prices to rise.

Inflate or die

None of this would have happened without the bumbling intervention of the Fed. Market-set interest rates would have risen a long time ago. Higher rates would have halted the build-up of debt, flattened the bubble in asset prices, and encouraged real capital formation.

In a better world, the Fed would be disbanded. After all, the idea that a group of greying lawyers and economists can set interest rates for a US$24 trillion economy is pure fantasy. Neither theory nor experience supports it.

As it is, the Fed faces a grim choice. Inflate or Die. Either it backs off and allows the bubble economy to die…with a crash on Wall Street, recession, bankruptcies, unemployment, and all of the other nasty things needed to correct its own policy mistakes. Or it protects the gains of the rich and the powerful by continuing to inflate the economy.

The inflation option postpones the reckoning…but it increases the pain. And it destroys the middle class. The poor get inflation-adjusted handouts. The rich have their assets, their hedges, and their hustles. But the middle classes sell their time by the hour. Prices go up. Real wages go down. Jobs disappear. And houses, where the middle classes keep their savings, become debt traps. As prices rise, families borrow heavily to buy them. Then, they must refinance…at higher and higher rates.

An honest democracy cannot exist without a strong, independent middle class. The poor are easily distracted with circuses and bribed with bread. The rich may still call themselves ‘capitalists’, but they become ‘crony capitalists’…manipulating the masses and the financial system to extract as much fast, easy cash as possible.

So, it is not just the financial system that is in danger. It’s the whole kit and kaboodle of US society. Money affects everything.

Our guess is that when the going gets tough the deciders will choose the worst option — inflation. Politically, it is the smoother road…for a while.

But maybe you can be the decider who will change that.

Good luck,

Bill Bonner,
For The Daily Reckoning Australia