"Bitcoin’s recent over 25% plunge illustrates why it will never be a true currency"
Nowadays, of course, no one would think of shelling out Bitcoin for something as mundane as a pizza without thinking first about how much money they might be giving up in the future. In the years since Hanyecz’s splurge, Bitcoin has gone from being an interesting experiment in decentralized finance to being the best-performing asset of the decade, rising more than 10,000,000% since 2010 and jumping 220% last year alone. There’s a Bitcoin ticker on every finance website. Legendary investors like Paul Tudor-Jones, Stanley Druckenmiller, and Bill Miller speak approvingly of its prospects, and companies like Square and MicroStrategy have invested their corporate cash into Bitcoin. Despite being extraordinarily risky and volatile — as evidenced by the 25% drop it took between last Friday and Monday afternoon — Bitcoin has, in some sense, been admitted to the club and is now seen by many as a plausible competitor to assets like gold. But along the way, something odd happened: Bitcoin completely lost its original reason for being. Bitcoin was, after all, not designed to be a speculative asset. It was designed to be a currency, a new medium of exchange that people could, and would, use to transact daily business with each other. (That’s why we call it a cryptocurrency.) When Bitcoin was first introduced to the world in 2008 in a white paper, its mysterious creator, who dubbed himself Satoshi Nakamoto, described it as “a purely peer-to-peer version of electronic cash [which] would allow online payments to be sent directly from one party to another without going through a financial institution.” He billed Bitcoin as “an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party,” like a bank or credit card company. And that’s exactly what Hanyecz was doing on that day in 2010: sending an electronic payment directly from himself to another person without any third party being involved. He may have unknowingly made a terrible investment decision, but he was using Bitcoin exactly as it had been designed to be used. It’s easy to forget now, but Bitcoin’s promise in those early days was that it would be a new currency, one that could challenge the hegemony of so-called fiat currencies like the dollar (which are issued by governments) by being untraceable money that would allow people to conduct business cheaply and anonymously. And because Bitcoin was designed to have a fixed number of coins — it will have 21 million coins by 2140, and then no more — people could use it without worrying about inflation debasing its value. It was a kind of cyberpunk fantasy that enchanted many. As recently as 2018, Twitter CEO and Square founder Jack Dorsey said, “The world will ultimately have a single currency. I personally believe that it will be Bitcoin.” Even today, you can still find pundits who trumpet Bitcoin’s revolutionary possibilities and point to things like PayPal’s plan to offer its merchants the ability to transact in cryptocurrencies in 2021 as evidence that radical change is afoot.
Most Bitcoin transactions have been trades: people simply buying and selling it. The blockchain analysis company Chainalysis, for instance, found that in the first four months of 2019, just 1.3% of total transactions involved merchants. And that trend has only accelerated as the value of Bitcoin has soared. Strikingly, despite the speculative fervour that has surrounded Bitcoin, the total number of transactions has risen only mildly over the past two years. And that number is so small relative to the total number of electronic bank and credit card transactions as to be barely worth mentioning. On average, there are now around 325,000 Bitcoin transactions — including trades — per day. There are roughly a billion credit card transactions per day.
Some of the failure of Bitcoin to live up to its promise as a currency has to do with practical problems with the way it works, most obviously the fact that Bitcoin’s design makes it very slow at processing transactions. For instance, Visa processes approximately 6,000 transactions a second and has the capacity to do many times that. Bitcoin can do seven. So Bitcoin transactions often take a long time to complete, which doesn’t work so well if you’re trying to use Bitcoin at the local convenience store or even buying something online. Bitcoin’s transaction fees have also, at different points, been shockingly high. During the last Bitcoin boom, in 2017, fees reached as high as $55 per transaction, and while they’ve come down sharply since then, as recently as last May it cost more than $6 to buy something with Bitcoin. That’s not a problem if you’re making an investment, but it’s a big obstacle if you want to buy a pizza. The more fundamental problem for Bitcoin as a currency, though, has to do with the very thing lots of people like about it—namely that the supply of Bitcoin is controlled and limited. Because the supply is limited, when demand for Bitcoin rises (because, say, people are convinced they can get rich quick by buying it), then the value of Bitcoin is going to rise as well. So, if you believe your Bitcoin is going to become more popular, then it’s foolish to spend it on a pizza: You should hoard it and then sell it once its price rises. And since you can get along perfectly well without spending Bitcoin, there’s never been anything pushing people to stop hoarding. The more people hoard Bitcoin, treating it as a speculative asset, the less appealing it seems as a currency. On top of this, the extraordinary volatility of Bitcoin’s price — which, as we’ve seen in the past week, can fall 10% to 20% overnight — discourages businesses and individuals from accepting Bitcoin in exchange for real goods and services, since few people want to get paid today with something that might be 10% less valuable tomorrow. (Of course, it might also be 10% more valuable. But that kind of gamble isn’t one most businesses are interested in making.) Bitcoin’s transformation from putative currency to speculative asset, in other words, was effectively built into the system from the start. It’s where Bitcoin was headed all along. (Cryptocurrencies have emerged in Bitcoin’s wake that are better designed to function as currencies, but paradoxically they’re nowhere near as popular as Bitcoin.) Even though it may have been designed as a payment system and a medium of exchange, Bitcoin’s real appeal was, inevitably, going to be as what economists call a “store of value,” a kind of digital analogue to gold. Like gold, Bitcoin is valuable to the extent that people think it’s valuable: You buy it because you think someone else will pay more for it in the future. And like gold, its value can’t be inflated away by a central bank. The fact that Bitcoin has no intrinsic value (the way a stock or bond does) doesn’t mean it’s headed to zero. It just means that Bitcoin has become totally untethered from its original purpose. What was supposed to be a way to revolutionize people’s everyday financial lives is now mostly a way for people to get rich quick (or lose their shirts) or, in an ideal scenario, for people to protect their wealth against inflation. Bitcoin began as a cryptocurrency. It has ended as a cryptoasset.
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China’s most important holiday — the Spring Festival — falls between January 31 and February 6 this year and might appear a bit different than usual. Amid the ongoing COVID-19 pandemic, this year’s festival is unlikely to prompt the world’s largest human migration (millions of people travel thousands of miles across China to their homes during the Lunar New Year), unlike years past. In fact, this holiday’s travel rush is likely to be the least busy of the past seven years, with an estimated 280 million railway passenger trips. Locals who want to travel home will confront multiple challenges, including targeted pandemic prevention and control efforts aimed at securing the 2022 Beijing Winter Olympic Games. As such, the Spring Festival certainly won’t be as lively this year. But will the economy suffer from it?
In the past, locals used to pay in-person visits to relatives and friends, bringing them presents to celebrate Spring Festival. However, China’s COVID-free plan is reshaping this tradition. Since local governments and businesses have encouraged residents to stay home to minimize a virus spread and keep supply chains stable, the country’s travel economy is likely to get dampened. But this could allow other industries to flourish. Shoppers might spend less money on presents and have more money for self-rewards. Therefore, personal care and luxury are likely to benefit from this trend. Meanwhile, the stay-at-home economy will see a boost, further fuelling livestreams, e-commerce sites, and takeaway options for people reducing time outside their homes. So, if Maisons want to celebrate positive Spring Festival sales, their marketing activities should reflect those trends by doubling down on digital and personal goods. Yet, the brands that give back to the community during this challenging time through initiatives that comfort families who cannot reunite are sure to fare very well in China this year. In the ongoing tug of war between the gold trading centres of, on the one hand, the United Arab Emirates (UAE), and on the other, the axis of London-Switzerland, the UAE has now thrown down the gauntlet with the launch of a UAE Good Delivery Standard for gold, a system which will go into effect beginning in February. This UAE Good Delivery Standard will be pretty much like the LBMA Good Delivery Standard for gold, and will govern which gold bars from which refiners will be acceptable for settlement and trading in the UAE market. Readers of The Peet Journal blogs will be familiar with the fact that UAE-Dubai and London-Switzerland have not been on the best of terms for quite some time, and that the Dubai / UAE gold industry, in the form of such personalities as Ahmed Sultan Bin Sulayem, executive chairman of the Dubai Multi Commodities Centre (DMCC), have not been afraid to push back against LBMA – Swiss interference.
“In Delusional Push, LBMA Threatens to Blacklist Entire Gold Trading Centres” (24 November 2020), “In Ongoing Saga, Dubai Stands its Ground with the LBMA" (18 June 2021), and “Swiss pressure against UAE gold imports causes sharp rebuttal” from Dubai (27 October 2021). This latest launch of a UAE Good Delivery (UAEGD) Standard for gold must therefore be seen in the context of developments which have been ongoing for quite some time, a context which while frequently cloaked in front men such as NGOs and the OCED, and a complicit MSM spin about illicit gold mining / gold smuggling, is, at the end of the day all about UAE commercial and sovereign independence vs LBMA bullion bank cartel control. Note that the United Arab Emirates (UAE) consists of 7 Emirates, namely Abu Dhabi, Dubai, Sharjah, Ajman, Ras Al Khaimah, Fujairah and Umm Al Quwain. Abu Dhabi is the administrative capital, Dubai is the most populous emirate. The total population of the UAE is 10 million. The Dubai Precious Metals Conference (DPMC)While discussion of a UAE Good Delivery standard for gold (which is much like the LBMA Good Delivery standard for acceptable gold bars) first emerged at a meeting of the UAE’s Ministerial Development Council in Abu Dhabi on 6 December 2020, the actual launch of the UAEGD was announced on 18 November at the 2021 Dubai Precious Metals Conference (DPMC), after details were finalized at a meeting of the UAE Bullion Market in Abu Dhabi Committee on 9 October. UAE Good Delivery Standard launch Ten days later on 28 November in Abu Dhabi, the UAE Bullion Market Committee conducted the ‘official’ launch of the UAE Good Delivery standard, which they also call the “Emirates Standard for Good Delivery” for refiners and smelters. This launch was officiated by Thani Al Zeyoudi (which is also chairman of the UAE Bullion Market Committee), and UAE Minister of Economy, Abdullah bin Touq Al Marri. Standard, 28 November 2021, Abu Dhabi Based on coverage of this launch (from a statement by the UAE Ministry of Economy), what do we know about this new standard for gold? In summary:
The Bank of Russia proposed slapping a ban on mining, issuing, circulating, and exchanging cryptocurrencies, including bitcoin, by any Russian players, crypto exchanges, crypto exchanges, and P2P platforms in Russia. The regulator agrees only to allow citizens to own cryptocurrency, but not to buy it from any Russian infrastructure. Experts told Vedomosti that a complete ban on operations with cryptocurrencies is not the best option to deal with any possible problems. The Bank of Russia wants to ban all financial institutions, banks or, for example, brokers from being intermediaries and providing their infrastructure for carrying out any operations with cryptocurrency. Financial institutions will not be able to invest in cryptocurrencies. The regulator believes that not only does direct ownership of cryptocurrencies but also investing in its derivative financial instruments hold risks. Tight regulation will only apply to cryptocurrencies, but not assets such as NFTs. The regulator proposed introducing fines for all these violations. So far, there are no specifics in the report of the Bank of Russia for public consultations.
The ban on cryptocurrencies in Russia means lost profits for the country's budget, CEO of ANO Digital Platforms Arseniy Shcheltsin told the newspaper. In addition, it would limit the development of Russian projects in this area and provide a signal to developers and professional users not to conduct business related to cryptocurrencies in Russia. The prohibition would not be appropriate either for investors or for the state, attorney at Criminal Defense Firm Daniil Gorky says. Imposing bans can lead to investors losing their crypto-currency assets, while Russia already today ranks third in the world in terms of cryptocurrency mining. KPMG Law Partner Olga Yasko believes that the risks named by the Bank of Russia are real, but it would be more effective to manage them through control mechanisms. The annual volume of operations involving cryptocurrency among Russians, according to the Central Bank, reaches around $5 bln, thereby demonstrating that Russians are one of the most active players on this market. US President Joe Biden considers deploying ‘several thousand’ of American troops in the Baltic States and in the east of Europe, New York Times daily reported citing its unnamed sources in the US administration.
"President Biden is considering deploying several thousand US troops, as well as warships and aircraft, to NATO allies in the Baltics and Eastern Europe, an expansion of American military involvement amid mounting fears of a Russian incursion into Ukraine, according to administration officials," the daily reported. The New York Times daily cited its source, who spoke on conditions of anonymity as saying that "In a meeting on Saturday at Camp David, the presidential retreat in Maryland, senior Pentagon officials presented Mr. Biden with several options that would shift American military assets much closer to Mr. Putin’s doorstep… The options include sending 1,000 to 5,000 troops to Eastern European countries, with the potential to increase that number tenfold if things deteriorate." The press service of the US Embassy in Ukraine reported on January 22 that a shipment of military cargo, including ammunition, weighing over 90 tonnes arrived in Ukraine. The embassy noted that last year, the US provided more than $650 million worth of military aid to Ukraine since 2014, while the country received $2.7 billion for these purposes. Last Thursday, Ukrainian Foreign Minister Dmitry Kuleba confirmed information by Western media outlets that Kiev would receive $200 million worth of military aid from Washington. He noted that the country received a total sum of $650 million for these purposes from the United States last year. Western and Ukrainian media outlets recently echoed claims about Russia’s alleged aggression against Ukraine. Russian Presidential Spokesman Dmitry Peskov earlier slammed such statements as "empty and groundless" saying that their goal was to whip up tensions. Peskov stressed that Russia did not pose any threat to anyone. He also said that provocations to justify the remarks at the issue were possible and warned that attempts at using force to settle the crisis in southeastern Ukraine would have the most serious consequences. The U.S. government has held talks with several international energy companies on contingency plans for supplying natural gas to Europe if a conflict between Russia and Ukraine disrupts Russian supplies. Two U.S. officials and two industry sources told Reuters on Friday. The United States is concerned Russia is preparing for the possibility of a new military assault on the country it invaded in 2014. Russia denies its plans to attack Ukraine. The European Union depends on Russia for around a third of its gas supplies, and U.S. sanctions over any conflict could disrupt that supply. Any interruptions to Russia's gas supply to Europe would exacerbate an energy crisis caused by a shortage of fuel. Record power prices have driven up consumer energy bills as well as business costs and sparked protests in some countries.
State Department officials approached the companies to ask where additional supplies might come from if they were needed, two industry sources familiar with the discussions told Reuters, speaking on condition of anonymity due to the sensitivity of the matter. The companies told the U.S. government officials that global gas supplies are tight and that there is little gas available to substitute large volumes from Russia, the industry sources said. The State Department's discussions with energy companies were led by a senior advisor for energy security Amos Hochstein, a senior U.S. State Department official said, also speaking on condition of anonymity. The State Department did not ask the companies to increase output, the official added. "We've discussed a range of contingencies and we've talked about all that we're doing with our nation-state partners and allies," the source said. "We've done this with the European Commission, but we've also done it with energy companies. It's accurate to say that we've spoken to them about our concerns and spoken to them about a range of contingencies, but there wasn't any sort of ask when it comes to production." As well as asking companies what capacity they had to raise supplies, U.S. officials also asked whether companies had the capacity to increase exports and postpone field maintenance if necessary, the sources said. It was unclear which companies U.S. officials contacted. Royal Dutch Shell, ConocoPhillips and Exxon declined to comment when asked if they had been contacted. Chevron Corp, Total, Equinor and Qatar Energy did not immediately respond to a request for comment. A second industry source said his company was asked whether it had the ability to postpone maintenance at gas fields if necessary. A spokesperson for the U.S. National Security Council would not comment on U.S. discussions with energy companies, but confirmed contingency planning was underway. "Assessing potential spill overs and exploring ways to reduce those spill overs is good governance and standard practice," the spokesperson said. "Any details in this regard that make their way to the public only demonstrate the extensive detail and seriousness with which we are discussing and are prepared to impose significant measures with our allies and partners." Moscow has alarmed the West by massing troops near Ukraine in the past two months, following its seizure of Ukraine's Crimea peninsula in 2014 and its backing of separatists fighting Kyiv troops in eastern Ukraine. Biden has previously told Russian President Vladimir Putin that a new Russian move on Ukraine would draw sanctions and an increased U.S. presence in Europe. Russia denies planning to attack Ukraine and says it has the right to move its troops on its own soil as it likes. "The United States promised to have Europe's back if there is an energy shortage due to conflict or sanctions," the second industry source said. "Amos is going to big LNG producing companies and countries like Qatar to see if they can help the United States," he added, referring to Hochstein. If pipeline supplies from Russia to Europe are reduced, European buyers would need to seek cargoes of super chilled gas to compensate. U.S. exports of liquefied natural gas (LNG) are set to soar this year to make it the world's top LNG supplier. Europe competes for LNG supplies from suppliers such as the United States and Qatar with top consumers China and Japan, which also face an energy crunch. Preliminary research from Israel suggests that a fourth COVID-19 mRNA vaccine booster shot may be ineffective against breakthrough infection from the Omicron variant. The authors of a study that looked at the effectiveness of a fourth Pfizer-BioNTech or Moderna shot against Omicron said they were releasing data early on Monday to keep the public up to date with the latest developments in vaccine research. “Despite a significant increase in antibodies after the fourth vaccine, this protection is only partially effective against the Omicron strain, which is relatively resistant to the vaccine,” Dr. Gili Regev-Yochay, the lead researcher on the study, told reporters Monday (January 17, 2022). The study included 154 health care workers at Sheba Medical Center who received their fourth Pfizer shot. Another 120 workers received a fourth dose of the Moderna vaccine, and a control group of 6,000 workers were not given a fourth booster shot of either vaccine.
Regev-Yochay said that a third shot resulted in "much higher antibodies, neutralization and the antibodies were not just higher in quantity but also in quality" than the second shot — but the fourth shot did not produce similar results. "These are very preliminary results. This is before any publication, but we're giving it out since we understand the urgency of the public to get any information possible about the fourth dose," Regev-Yochay explained. "We have a follow-up of the Pfizer vaccine for two weeks now, and we have a follow-up of the Moderna vaccine just for one week at this time point. And what we see is that the Pfizer vaccine, after two weeks, you see an enhancement or increase in the number of antibodies and neutralizing antibodies — a pretty nice increase. It's even a little bit higher than what we had after the third dose," she said. "Yet, this is probably not enough for the Omicron." Regev-Yochay added that slightly fewer infections were observed among those who got the fourth vaccine shot compared to the control group, which may indicate there's a small benefit to letting the people most vulnerable to COVID-19 get a fourth booster. "I think that the decision to allow the fourth vaccine to vulnerable populations is probably correct," she said. "It may give a little bit of benefit, but probably not enough to support the decision to give it to all of the population, I would say." International bodies are warning governments and public health authorities against requiring a fourth vaccine shot. At a press briefing last week, the European Medicines Agency said there was no need for a second booster, even warning that repeated vaccine doses could actually weaken people's immune systems. Boosters “can be done once, or maybe twice, but it’s not something that we can think should be repeated constantly,” Marco Cavaleri, the EMA head of biological health threats and vaccines strategy, said, according to Bloomberg. “We need to think about how we can transition from the current pandemic setting to a more endemic setting,” Cavaleri added. The EMA advised countries to leave more time between booster programs and to tie them to the cold season on each hemisphere. The World Health Organization has also warned that repeated booster doses of COVID-19 vaccines are "not a sustainable global strategy," raising concerns about the supply of vaccine doses. “With near- and medium-term supply of the available vaccines, the need for equity in access to vaccines across countries to achieve global public health goals, programmatic considerations including vaccine demand, and evolution of the virus, a vaccination strategy based on repeated booster doses of the original vaccine composition is unlikely to be appropriate or sustainable,” the WHO said last week.
What's worse is that these numbers are typically at the low end of the range and suggest the unemployment level may only improve marginally from here and typically preceded a recession. But more importantly, interest rates were much higher, which means the Fed is now very far behind the curve. That means the Fed will now be raising rates at peak employment and economic growth. In reality, the time for them to raise rates has passed. Ending QE, raising rates, and running off the balance sheet will be more than the economy and the markets can handle. It will be a huge mistake.
The last time the U6 measure of unemployment was at 7.3% was in late 2018. The Federal Funds rate was at 2.4%, not its current 0.08%. CPI was also well under 3%. So to say that the Fed is behind on the curve may be a massive understatement.
Inflation May Be Cooling It seems that rates will need to rise aggressively from here, but only the short end of the curve. I think that is less likely to happen on the longer end of the yield curve. The market will realize that an overly aggressive Fed tightening monetary policy at the wrong time will raise the risk of the Fed over tightening and causing a recession. That is why 10-Yr rates have risen so slowly in recent weeks following very high inflation reports. NEXT WEEK, the CPI report will likely show that the pace of inflation cooled in December. The ISM manufacturing survey showed that prices paid in December fell sharply, 14.2 points. That was the most significant decline since October 2011. That would suggest that the CPI also fell sharply in December, as the two tend to move in the same direction. Currently, a Reuters poll shows that estimates are for the CPI to climb in December to 7% from 6.8% in November. A weaker than expected CPI may push rates on the longer end of the yield curve lower, resulting in further yield curve flattening. We already have evidence of water on Moon. But it was collected mainly by lunar orbiters focussing their equipment's at the Earth's only natural satellite as they revolved around. Now, information about the first on-site proof of presence of water has come to light. The on-site observation was made by China's Chang'E-5 probe on Moon. When the probe visited the Moon in December 2020, it not only collected samples for analysis back on Earth but also made some in situ (on-site) analysis of its own. Measurements made by Chang'E in its surroundings on Moon revealed that water was present in a boulder in a concentration of 180 ppm (parts per million).
This is drier by Earth standards but obviously it is easy to understand its significance as the water is on the Moon. The particular boulder that was analysed by the probe was light and had many cavities. This suggests that this rock was a result of underground volcanic activity. This in turn, suggests that more water may be present in Moon's interior. This on-site detection has further boosted the idea of relative abundance of water on the lunar surface. It may be fused with the minerals in the regolith, the surface dust. Does this mean that human settlements on Moon may have easy access to water? No, since it is very hard to extract water present in such concentrations. But the observation and analysis on the on-site findings may help us understand Moon and how water is retained on planets and satellites in space. “Progressive” ideology always rests on a conviction that the current “regressive” system is comprehensively unjust and must be destroyed by exploiting its weaknesses. The most famous proponent of such tactics in recent years has been the late Saul Alinksy, the intellectual godfather of the modern Democrat Party, but former Soviet journalist and KGB informant Yuri Bezmenov laid out an even more concise strategy for subversion in a 1984 interview. Alinksy’s seminal book specified 13 Rules for Radicals, but Bezmenov had only four “stages of ideological subversion,” and they will sound very familiar to anyone following the current wave of left-wing riots, or the politicized final stages of the coronavirus panic before it: Demoralization, Destabilization, Crisis, and Normalization. Bezmenov defined ideological subversion, or “active measures” as the KGB preferred to call it, as a “slow brainwashing process” to “change the perception of reality of every American to such an extent that despite their abundance of information, no one is able to come to sensible conclusions in the interests of defending themselves, their families, their community, and their country.”
Stage 1: Demoralization Bezmenov said the first stage, Demoralization, could take 15 to 20 years to complete because “this is the minimum number of years it takes to educate one generation of students.” “Marxist-Leninist ideology is being pumped into the soft heads of at least three generations without being challenged or counterbalanced by the basic values of Americanism, American patriotism,” he warned in 1984, judging that the demoralization process had been “basically completed” by that point. “Actually, it’s over-fulfilled, because demoralization now reaches such areas where previously, not even Comrade Andropov and all of his experts would even dream of such tremendous success,” he added, referring to former KGB head and Soviet leader Yuri Andropov. “Most of it is done by Americans to Americans, thanks to a lack of moral standards.” Bezmenov explained that demoralization is important because it robs the targeted population of its ability to process valid information. Even when demoralization targets are “showered with authentic proof” of contrary positions, they simply “refuse to believe it.” Demoralization is quite obvious among today’s young people, whose faith in their country has been systematically destroyed throughout their lives by the education and media establishment. To take a recent high-profile example, the New York Times’ fraudulent “1619 Project” argued that “American history” actually began with the arrival of black slaves in North America and the Revolutionary War was fought by the colonists to preserve slavery. Although comprehensively debunked by actual historians, and even the original author has admitted her core thesis was not true, the 1619 Project is now part of some school curricula. Another word for demoralization is guilt. Americans are routinely compelled to feel guilty about their society and national history. Guilt is the most powerful force in left-wing politics and academia. People will not accept the radical expansion of punitive government power unless they feel guilty and deserving of punishment. Stage 2: Destabilization The second stage, Destabilization, is much faster, requiring only two to five years under KGB doctrine. In this stage, the fundamentals of the targeted population’s economy, political system, and culture would be attacked, while the demoralized population could not mount much of a defence. Bezmenov in 1984 found it “absolutely fantastic” how much influence Marxist-Leninist ideas had developed in the American economy and military. In essence, a demoralized population becomes willing to believe the worst criticisms of its own society, while learning to see defenders of that society as their enemies, while avowed enemies become natural allies. The defenders are held to strict standards, while anything goes for the most strident critics. Whatever Bezmenov saw in the destabilized American society of the early 1980s with respect to the Soviet Union, it’s easy to see how the American Left has destabilized entire segments of modern society after demoralizing them. They see enemies everywhere, while no pro-American authority can be trusted. It’s hard to imagine a better illustration of demoralization followed by destabilization than hordes of anti-capitalist activists texting each other on their iPhones. Not coincidentally, hostile foreign powers like Communist China and Iran are reaching out to destabilized American communities and offering themselves as guides and allies. Their sales pitches aren’t exactly smooth, but they definitely are making an effort. A destabilized population becomes obsessed with hypocrisy as the ultimate political sin. They believe the best ideas – individual liberty, sovereign rights, capitalism, even the rule of law – are presented insincerely by sinister powers who seek to exploit and manipulate them. The precious resource of goodwill disappears from society as everyone comes to believe their neighbors hate them and cannot be trusted. Demoralized people lose faith in their nation, history, and ideals; destabilized people lose faith in each other. Stage 3: Crisis Once a society has been destabilized, Bezmenov said the time would be ripe to create a Crisis, which he estimated would take six to eight weeks in the Eighties. With turbo Internet speed, the modern era can punch out a crisis much faster than that. A crisis has the obvious benefit of panicking demoralized, destabilized people into abandoning their legal protections and constitutional ideals. During the coronavirus panic, people who brought up those ideals were treated like lunatics. The pendulum swung the other way with blinding speed during the riots. In the span of one week, the right to peaceable assembly went from a crazed defiance of common-sense lockdown rules to an urgent matter that utterly transcended the deadly pandemic. Suddenly, angry political demonstration magically cured the coronavirus, or made the projected wave of sickness and death into a purely secondary concern. If you wanted to work at the store so you could feed your family in late March, you were selfishly trying to “kill my Grandma to pad your bank account.” If you wanted to burn the store down in early June to protest white supremacy, nobody mentioned their imperiled grandmothers. The more subtle benefit of a crisis is that it tends to de-legitimize aspects of the existing system that have already been softened up by the long process of demoralization and destabilization. Those who control the organs of public communication have the power to decide which aspects of the system are supposedly indicted by the crisis. For example, the dominant media Left will go to great lengths to avoid painting the coronavirus as an indictment of the flabby, blinkered, bureaucratic Big Government that grew over the past few decades, and it will not discuss the failures of left-wing mayors and governors. On the contrary, the pandemic was used to attack the competence of Republican governors who turned out to be entirely correct in their actions, as in Florida and Georgia. During the riots, the media is completely uninterested in discussing the incompetence of left-wing officials who allowed violence to rage out of control with deadly consequences. Somehow the lesson of wanton violence that killed people and destroyed countless livelihoods became “let’s get rid of the police altogether.” The threat of a crisis is essential for terrorizing the middle class into accepting a political agenda that is actively hostile to its interests, which leads to the fourth stage of subversion: the offer to make the pain and fear go away by accepting political domination. Stage 4: Normalization “After a crisis, with a violent change of the power structure and economy, you have a so-called period of Normalization that may last indefinitely,” Bezmenov said, arriving at the fourth stage of subversion. “Normalization is a cynical expression borrowed from Soviet propaganda,” he explained. Interestingly, it also happens to be the core theme of the 2020 Democrat presidential campaign. “When the Soviet tanks moved into Czechoslovakia in 1968, Comrade Brezhnev said, ‘Now the situation in brotherly Czechoslovakia is ‘normalized.’ This is what will happen in the United States if you allow all the schmucks to bring the country to crisis, to promise people all kinds of goodies and a paradise on Earth, to destabilize your economy, to eliminate the principle of free-market competition, and to put a Big Brother government in Washington, D.C. with benevolent dictators like Walter Mondale, who will promise lots of things – never mind whether the promises are fulfillable or not,” Bezmenov cautioned. As things turned out, Walter Mondale never got his chance to be a benevolent dictator, and to some extent Bezmenov’s four-step model of subversion could be applied to almost any political campaign. They almost all begin with telling voters things are awful, crises have erupted, and normality can be restored only by voting for the challenger (or preserved only by voting for the incumbent). Bezmenov, however, was insistent that American left-wing professors and civil-rights leaders were deliberately running Andropov’s strategy with a conscious effort to achieve destabilization, the step that truly distinguishes ideological subversion from the usual promises to put a chicken in every pot. “They are instrumental in the process of subversion only to destabilize a nation,” he said of the academics and activists. “When their job is completed, they are not needed anymore. They know too much. Some of them, when they get disillusioned, when they see that Marxist-Leninists come to power, obviously they get offended. They think that they will come to power. That will never happen, of course. They will be lined up against the wall and shot.” The American version of this process probably would not end with the mass execution of inconvenient intellectuals, but there is a parallel in what would happen to the intellectual supporters of the current riots if the Democrats win in 2020. They would discover that the victorious Democrat Party is not at all interested in their systemic criticisms of public union employees, such as police officers. Many bones would be thrown to activist groups to purchase their loyalty – and, much more importantly, the loyalty of their leaders – but not the one concession they ostensibly care about the most: a system that makes it easier to discipline and fire government employees. This metaphorical lining up and shooting of intellectuals is already happening with Lockdown Forever enthusiasts, who only a few days ago were hammering out passionate arguments that American businesses must remain shuttered for weeks or months to come, and anyone who dared to question their dire warnings was a selfish monster willing to kill other people’s grandmothers to pad out their 401k accounts. In the blink of an eye, Lockdown Forever went from the vital engineers of a politically useful crisis to inconvenient obstacles for the new crisis, nationwide riots. Most of the lockdown gurus sensed this shift in the political winds and quickly trimmed their sails, hammering out new screeds that claimed protesters are probably immune to the coronavirus somehow, or even more incredibly, that another outbreak would be a small price to pay for righteous political activism: These are the same medical activists who were shrieking in March that the coronavirus could kill millions of Americans if lockdowns were not imposed immediately, and just a few weeks ago, left-wingers were obsessed with calculations that showed COVID-19 is exceptionally deadly to the black community. But suddenly the risk of millions of deaths, 70 percent of them purportedly likely to be black Americans, means nothing compared to the vital urgency of protesting against “white supremacy.”
Who is Cai?
Cai Niangniang is a pseudonym for the model, who is 28 years-old and from Leshan in the western province of Sichuan. And in her weibo statement, she said she did not deserve to be cyber-bullied because of her appearance. “My looks were given to me by my parents,” she wrote. “I’m just an ordinary worker doing my job.” Netizens had attacked her for days, with some accusing her of being “unpatriotic” and “uglifying Chinese people”. Such was the public interest that Three Squirrels removed the ads online and apologised, saying the model’s makeup had been chosen to suit her features, not to make her appear in a certain way. “Regarding the opinion that the model does not fit the mainstream’s aesthetic taste and makes the public feel uncomfortable, we are sincerely sorry,” the company pleaded. What’s the problem? Angry Chinese netizens users have recently accused several – mostly Western – companies of promoting racist stereotypes through their ads. Prominent fashion photographer Chen Man was forced to apologise for her “ignorance” in November amid a similar controversy over an ad for the French luxury brand, Dior, that featured another ‘narrow-eyed’ model. Mercedes-Benz and Gucci have also been targeted for similar situations. State media has often weighed in too – as did the China Daily, the official English-language newspaper, in an opinion piece on the Cai Niang Niang saga in late December. “As a domestic brand, Three Squirrels should have known about the sensitivity of Chinese consumers to how they are portrayed in advertisements,” it said. “For too long, Western criteria for beauty, and Western likes and dislikes have dominated aesthetics.” Many netizens have argued that ad campaigns should feature models with rounder eyes and fairer skin – more typical ideals of beauty in China. Others, however, expressed an alternative view: that such ‘ideals’ are themselves Western imports and that narrower eyes should be considered equally beautiful. Members of the Federal Reserve indicated at their mid-December policy meeting that they were increasingly uneasy about high inflation, while envisioning an accelerated timetable for raising interest rates this year. This was revealed in the minutes of the Fed's latest policy meeting on Wednesday evening.
Most central bank officials foresee three rate hikes before 2022. In September, about half of officials still believed that rate hikes could wait until 2023. In general, participants noted that, given their individual outlook for the economy, the labour market and inflation, it may be justified to raise interest rates earlier or at a faster rate than they previously thought. The minutes also revealed growing concerns among participants that higher inflation could persist and force a more aggressive response from the Federal Reserve, especially as businesses and consumers increasingly begin to expect prices to fall quickly. continue to rise. For months, Fed executives maintained that the higher price pressures in 2021 were mainly caused by supply chain bottlenecks and would subside on their own. But Fed Chair Jerome Powell already said in the run-up to the meeting that he was much less convinced about this. Policy-making committee officials broadly shared his view. Their concerns were reflected in the decision to scale back or phase out bond purchases more quickly. The Fed wants to end this program before raising short-term interest rates to curb inflation. The earlier end of asset purchases - in March instead of June - opens the door for the US central bank to raise interest rates at its second scheduled meeting this year, in mid-March. The next Fed meeting is on January 25 and 26. The pace of decreasing monthly purchases has accelerated from the current $15 billion per month to $30 billion per month. The Fed noted that the pace could be adjusted where necessary. Some officials also believed the Federal Reserve should start shrinking its $8.76 trillion portfolio of bonds and other assets relatively soon once it has started raising interest rates. The federal funds rate remained at 0.00 to 0.25 percent as expected. The discount rate was maintained at 0.25 percent. The French government defended President Emmanuel Macron, Wednesday, for his use of coarse language in a stepped-up campaign against France's unvaccinated, after his words drew condemnation from the opposition and mixed reactions from voters. Macron said he wanted to "piss off" unvaccinated people by making their lives so complicated they would end up getting jabbed. He was speaking in an interview with Le Parisien newspaper in which he also called unvaccinated people irresponsible and unworthy of being considered citizens.
"A president cannot say such things," Christian Jacob, chair of the conservative Les Republicans party, told parliament as it discussed a bill to make it mandatory for people to show proof of vaccination to enter many enclosed public spaces. But spokesman Gabriel Attal said that, amid a "supersonic" rise in COVID cases, the government stood by Macron's comments. "Who is pissing off who today?" Attal said, quoting health workers struggling to cope or businesses hurt by the pandemic. "It's those who refuse the vaccine." People who got the jab are "exasperated" with the unvaccinated, Prime Minister Jean Castex said. With a presidential election due in April in which he is expected to run, Macron may have calculated that enough people are now vaccinated ― and upset with remaining anti-vaxxers ― for his comment to go down well with voters. In a country where more than 124,000 people have died of COVID-19, his words resonated with some. "He's right," said 89-year-old Paris pensioner Jean, who has had his COVID-19 booster and a flu shot too. "Those who are against the vaccine should understand the dangers, and they should get vaccinated." But others agreed with lawmaker Jacob that Macron's use of the slang term "emmerder" ― from "merde" (shit) ― was unacceptable. "That shows an aggressive side, it's a bad word, it's not very clever of him," said 25-year old sales representative Maya Belhassen. "That's not a good comment from a president," added newspaper seller Pascal Delord. Targeting the sceptics France has historically had more vaccine sceptics than many of its neighbors, and pandemic restrictions have triggered many street protests, but nearly 90 percent of those aged 12 and above have now been inoculated, one of the continent's highest COVID-19 vaccination rates. People have for several months had to show either proof of vaccination or a negative COVID-19 test to enter venues such as cinemas and cafes and use trains. But with Delta and Omicron variant infections surging, the government decided to drop the test option in the new bill. The opposition forced several suspensions of the parliamentary debate on the vaccine pass after the interview was published late Tuesday. "I'm in favor of the vaccine pass but I cannot back a text whose objective is to 'piss off' the French," Jacob told parliament. "Is that your objective, yes or no?" A government source said they were not worried about the adoption of the text, despite the heated parliamentary debate, which resumed Wednesday afternoon, and after hundreds of amendments. The initial plan was for the new legislation to enter into force Jan.15. One day or two of delay would not change much, the source said. After the lower house of parliament eventually votes on it, the bill will go the senate for approval. |
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