Digital Kill Switches: How Tyrannical Governments Stifle Political Dissent

  What fundamentally has changed in the 21C is that governments and globalist entities such as the WEF can test ideas in different countries to understand what works without raising concerns, what is unacceptable and how the roadblocks can be lifted. 

  The caveat is that these techniques work one at a time. In case of a major crisis, the incompetence and bureaucracy would probably create a mess out of any strategy. Well, we'll know soon enough.

Authored by John and Nisha Whitehead via The Rutherford Institute,

“No president from either party should have the sole power to shut down or take control of the internet or any other of our communication channels during an emergency.”

 - Senator Rand Paul

What’s to stop the U.S. government from throwing the kill switch and shutting down phone and internet communications in a time of so-called crisis?

After all, it’s happening all over the world.

Communications kill switches have become tyrannical tools of domination and oppression to stifle political dissent, shut down resistance, forestall election losses, reinforce military coups, and keep the populace isolated, disconnected and in the dark, literally and figuratively.

As the Guardian reports, “From Ukraine to Myanmar, government-run internet outages are picking up pace around the world. In 2021, there were 182 shutdowns in 34 countries... Countries across Africa and Asia have turned to shutdowns in a bid to control behaviour, while India, largely in the conflict-ridden region of Jammu and Kashmir, plunged into digital darkness more times than any other last year… Civil unrest in Ethiopia and Kazakhstan has triggered internet shutdowns as governments try to prevent political mobilisation and stop news about military suppression from emerging.”

In an internet-connected age, killing the internet is tantamount to bringing everything—communications, commerce, travel, the power grid—to a standstill.

Tyrants and would-be tyrants rely on this “cloak of darkness” to advance their agendas.

In Myanmar, for example, the internet shutdown came on the day a newly elected government was to have been sworn in. That’s when the military staged a digital coup and seized power. Under cover of a communications blackout that cut off the populace from the outside world and each other, the junta “carried out nightly raids, smashing down doors to drag out high-profile politicians, activists and celebrities.”

These government-imposed communications shutdowns serve to not only isolate, terrorize and control the populace, but also underscore the citizenry’s lack of freedom in the face of the government’s limitless power.

Yet as University of California Irvine law professor David Kaye explains, these kill switches are no longer exclusive to despotic regimes. They have “migrated into a toolbox for governments that actually do have the rule of law.”

This is what digital authoritarianism looks like in a technological age.

Digital authoritarianism, as the Center for Strategic and International Studies cautions, involves the use of information technology to surveil, repress, and manipulate the populace, endangering human rights and civil liberties, and co-opting and corrupting the foundational principles of democratic and open societies, “including freedom of movement, the right to speak freely and express political dissent, and the right to personal privacy, online and off.”

For those who insist that it can’t happen here, it can and it has.

In 2005, cell service was disabled in four major New York tunnels, reportedly to avert potential bomb detonations via cell phone.

In 2009, those attending President Obama’s inauguration had their cell signals blocked—again, same rationale.

And in 2011, San Francisco commuters had their cell phone signals shut down, this time, to thwart any possible protests over a police shooting of a homeless man.

With shutdowns becoming harder to detect, who’s to say it’s not still happening?

Although an internet kill switch is broadly understood to be a complete internet shutdown, it can also include a broad range of restrictions such as content blocking, throttling, filtering, complete shutdowns, and cable cutting.

As Global Risk Intel explains:

“Content blocking is a relatively moderate method that blocks access to a list of selected websites or applications. When users access these sites and apps, they receive notifications that the server could not be found or that access was denied by the network administrator. A more subtle method is throttling. Authorities decrease the bandwidth to slow down the speed at which specific websites can be accessed. A slow internet connection discourages users to connect to certain websites and does not arouse immediate suspicion. Users may assume that connection service is slow but may not conclude that this circumstance was authorized by the government. Filtering is another tool to censor targeted content and erases specific messages and terms that the government does not approve of.”

How often do most people, experiencing server errors and slow internet speeds, chalk it up to poor service? Who would suspect the government of being behind server errors and slow internet speeds?

Then again, this is the same government that has subjected us to all manner of encroachments on our freedoms (lockdowns, mandates, restrictions, contact tracing programs, heightened surveillance, censorship, overcriminalization, shadow banning, etc.) in order to fight the COVID-19 pandemic, preserve the integrity of elections, and combat disinformation.

These tactics have become the tools of domination and oppression in an internet-dependent age.

It really doesn’t matter what the justifications are for such lockdowns. No matter the rationale, the end result is the same: an expansion of government power in direct proportion to the government’s oppression of the citizenry.

According to Global Risk Intel, there are many motives behind such restrictions:

“For instance, the kill switch serves to censor content and constrain the spread of news. This particularly concerns news reports that cover police brutality, human rights abuses, or educational information. Governments may also utilize the kill switch to prevent government-critical protestors from communicating through message applications like WhatsApp, Facebook, or Twitter and organizing mass demonstrations. Therefore, internet restrictions can provide a way of regulating the flow of information and hindering dissent. Governments reason that internet limitations help stop the spread of fake news and strengthen national security and public safety in times of unrest.”

In this age of manufactured crises, emergency powers and technofascism, the government already has the know-how, the technology and the authority.

Now all it needs is the “right” crisis to flip the kill switch.

This particular kill switch can be traced back to the Communications Act of 1934. Signed into law by President Franklin D. Roosevelt, the Act empowers the president to suspend wireless radio and phone services “if he deems it necessary in the interest of national security or defense” during a time of “war or a threat of war, or a state of public peril or disaster or other national emergency, or in order to preserve the neutrality of the United States.”

In the event of a national crisis, the president has a veritable arsenal of emergency powers that override the Constitution and can be activated at a moment’s notice. These range from imposing martial law and suspending habeas corpus to shutting down all forms of communications, restricting travel and implementing a communications kill switch.

That national emergency can take any form, can be manipulated for any purpose and can be used to justify any end goal—all on the say so of the president.

The seeds of this ongoing madness were sown several decades ago when George W. Bush stealthily issued two presidential directives that granted the president the power to unilaterally declare a national emergency, which is loosely defined as “any incident, regardless of location, that results in extraordinary levels of mass casualties, damage, or disruption severely affecting the U.S. population, infrastructure, environment, economy, or government functions.“

Comprising the country’s Continuity of Government (COG) plan, these directives (National Security Presidential Directive 51 and Homeland Security Presidential Directive 20), which do not need congressional approval, provide a skeletal outline of the actions the president will take in the event of a “national emergency.”

Just what sort of actions the president will take once he declares a national emergency can barely be discerned from the barebones directives. However, one thing is clear: in the event of a perceived national emergency, the COG directives give unchecked executive, legislative and judicial power to the president.

The country would then be subjected to martial law by default, and the Constitution and the Bill of Rights would be suspended.

The internet kill switch is just one piece of the government’s blueprint for locking down the nation and instituting martial law.

There may be many more secret powers that presidents may institute in times of so-called crisis without oversight from Congress, the courts, or the public. These powers do not expire at the end of a president’s term. They remain on the books, just waiting to be used or abused by the next political demagogue.

Given the government’s penchant for weaponizing one national crisis after another in order to expand its powers and justify all manner of government tyranny in the so-called name of national security, it’s only a matter of time before this particular emergency power to shut down the internet is activated.

Then again, an all-out communications blackout is just a more extreme version of the technocensorship that we’ve already been experiencing at the hands of the government and its corporate allies.

Packaged as an effort to control the spread of speculative or false information in the name of national security, restricting access to social media has become a popular means of internet censorship.

In fact, these tactics are at the heart of several critical cases before the U.S. Supreme Court over who gets to control, regulate or remove what content is shared on the internet: the individual, corporate censors or the police state.

Nothing good can come from techno-censorship.

As Glenn Greenwald writes for The Intercept:

"The glaring fallacy that always lies at the heart of pro-censorship sentiments is the gullible, delusional belief that censorship powers will be deployed only to suppress views one dislikes, but never one’s own views… Facebook is not some benevolent, kind, compassionate parent or a subversive, radical actor who is going to police our discourse in order to protect the weak and marginalized or serve as a noble check on mischief by the powerful. They are almost always going to do exactly the opposite: protect the powerful from those who seek to undermine elite institutions and reject their orthodoxies. Tech giants, like all corporations, are required by law to have one overriding objective: maximizing shareholder value. They are always going to use their power to appease those they perceive wield the greatest political and economic power."

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, these censors are laying the groundwork to preempt any “dangerous” ideas that might challenge the power elite’s stranglehold over our lives.

Whatever powers you allow the government and its corporate operatives to claim now, whatever the reason might be, will at some point in the future be abused and used against you by tyrants of your own making.

By the time you add AI technologies, social credit systems, and wall-to-wall surveillance into the mix, you don’t even have to be a critic of the government to get snared in the web of digital censorship.

Eventually, as George Orwell predicted, telling the truth will become a revolutionary act.

EU President Calls For Globalist Control Over All Information

  You didn't think that pesky things like "freedom" (of information for now, but the rest will follow soon enough) would last much longer right? 

  Either we get their skin or they gets ours but the status quo is finished!

Via: Modernity:

President of the European Commission, Ursula von der Leyen addressed elites at the World Economic Forum in Davos Tuesday, calling for overarching globalist control over the flow of all information in the digital age.

“The top concern for the next two years is not conflict, or climate, it is disinformation and misinformation,” von der Leyen proclaimed, adding “The boundary between online and offline is getting thinner and thinner, and this is even more important in the era of generative AI.”

Addressing the elite as “Excellencies,” and personally naming “dear” Klaus Schwabb in her introduction, von der Leyen further called for the development of “a new global framework for AI risks,” and a vow to “drive global collaboration” to prevent the spread of ‘misinformation’ (information they don’t want you to know about).

"It's All Over": Powell's WSJ Mouthpiece And JPMorgan Confirm Imminent End Of QT

 

  When do people realize they painted themselves into a corner? 

  In a square room, it should be before you start but with money it is not so easy. It always looks like there will be a way to get out of the trap. A new miraculous source of "money" which will solve temporarily the problem. And if you look at the recent past, that is indeed the lesson you can draw... unless you look deeper and the picture changes drastically. In the long term, every single currency has gone to zero. No exception. This is why King Croesus of Lydia is no more and you do not have Roman denarius in your pocket. 

  "So what happens in the end?" you may ask. Well, we're about to find out!

On December 13 the financial world was stunned when, just two weeks after Jerome Powell had said he it was "premature" to speculate on rate cuts, the Federal Reserve did a shocking U-turn and pivoted dovishly, ending the Fed's hiking cycle with inflation still running at double the Fed's target of 2%, and said that it had in fact discussed the start of rate cuts, contrary to what Powell said just two weeks earlier.

Or rather, we should say "the financial world that had not read Zero Hedge was stunned" because just one week ahead of the Fed's December FOMC meeting, we correctly predicted the Fed's pivot due to one simple reason: as we laid out in "The Canary Just Died: Sudden Spike In SOFR Hints At Mounting Reserve Shortage, Early Restart Of QE", the Fed no longer had a choice and was forced to pursue a dovish pivot because the liquidity in the all-important systemic and interbank plumbing had hit dangerously low levels, resulting in the highest SOFR print on record, and the biggest spike since the last time there was a repo market crisis in March 2020.

As we said at the time, "the spike caught almost everyone by surprise, even such Fed-watching luminaries as BofA's Marc Cabana because it was with "no new UST settlements, lower repo volumes, and lower sponsored bi-lateral volumes."  And yet, the spike was clearly there and ominously it was consistent "with the slow theme of less cash & more collateral in the system" - i.e., growing reserve scarcity -  and "may have been exacerbated by elevated dealer inventories, bi-lateral borrowing need, and limited excess cash to backstop repo."

And the punchline: "If funding pressure persists, it risks Fed re-assessment of ample banking system reserves & potential early end to QT", and depending on how bad the funding shortage gets, an early restart of QE.

One week later, the Fed capitulated on tight monetary policy and ushered in the era of rate cuts, just as we said it would. But more importantly, one month later it was Dallas Fed president (and former head of the NY Fed's plunge protection team) Lorie Logan who said the quiet part out loud when she confirmed our "canary in the coalmine" note, namely that the Fed's QT is effectively over due to the sudden, unexpected slide in systemic liquidity, primarily due to the rapid drain in the reverse repo facility which now has just $600 million left and is set to be fully drained some time in March...

... and that by extension, another round of QE may be on deck.

Of course, it's one thing for a regional Fed president to opine on such things, it's something entirely different for Powell's preferred media leak conduit to confirm it, and yet this morning that's precisely what happened when Nick Timiraos, aka Nikileaks, aka Powell's favorite media mouthpiece confirmed that QT's days are now numbered writing that "Fed officials are to start deliberations on slowing, though not ending, that so-called quantitative tightening as soon as their policy meeting this month. It could have important implications for financial markets."

If that wasn't enough, Nikileaks also confirms our suspicion about the driver behind said QT runoff: the financial plumbing is starting to clog up:

But whereas the Fed expects to cut short-term interest rates this year because inflation has fallen, its rationale for tapering bond runoff is different: to prevent disruption to an obscure yet critical corner of the financial markets.

Five years ago, balance-sheet runoff sparked upheaval in those markets, forcing a messy U-turn. Officials are determined not to do that again.

Several officials at the Fed’s policy meeting last month suggested beginning formal conversations soon, so as to communicate their plans to the public well before any changes take effect, according to minutes of the meeting. Officials have indicated that changes aren’t imminent and that they are focusing on slowing—not ending—the program.

As we first explained almost two months ago, the reason for the Fed's panic is that the central bank wants to avoid the same repo market cataclysm that market both the liquidity drain in Sept 2019 and the violent eruption in basis trades that sparked bond market contagion in March 2020; here is Timiraos confirming as much:

... in September 2019, a sharp, unexpected spike in a key overnight lending rate suggested reserves had windled to the point they were either too scarce or difficult to redistribute across the financial system. The Fed began buying Treasury bills to add reserves back to the system and avoid further instability.

In 2020, the Covid-19 pandemic created a huge dash for dollars. To prevent markets from seizing up, the Fed resumed buying huge quantities of securities. It stopped buying in March 2022 and three months later set the process into reverse, once again shrinking the portfolio.

... which brings us to today, when the Fed did the math and realized that doing $60BN in QT per month once the reverse repo is fully drained will crash the market:

Policymakers have several reasons to consider slowing runoff. First, the Fed is shrinking its Treasury holdings by $60 billion a month—twice as fast it did five years ago. Continuing to run at this rate raises the risk that the Fed drains reserves so quickly that money-market rates jump as banks struggle to redistribute a dwindling supply of reserves.

Slowing the pace of the runoff later this year might allow the Fed to continue the program for longer than otherwise by “reducing the likelihood that we’d have to stop prematurely,” Dallas Fed President Lorie Logan said in a recent speech.

And by "stop prematurely" she of course means suffering a market crash in an election year, one which would drag the economy into a recession in days. And we all know by now (thanks to former NY president Bill Dudley) that is unacceptable, especially when the alternative is a Trump presidency.

Timiraos also confirms that we were right in cautioning that it's all about the accelerating rate of decline in the reverse repo facility (see "How Treasury Averted A Bond Market "Earthquake" In The Last Second: What Everyone Missed In The TBAC's Remarkable Refunding Presentation"):

there are signs that the cash surplus in money markets is rapidly diminishing. The Fed allows money-market firms and others to park extra cash that would otherwise end up in reserves in an overnight reverse repurchase facility. The facility has shrunk by around $1 trillion since late August to around $680 billion. Logan endorsed slowing runoff once that facility is nearly drained of cash because, after that, forecasting demand for bank reserves will be more uncertain.

This "faster-than-expected decline" in the overnight reverse repurchase facility’s balances is spurring the Fed’s movement toward contingency planning around how to slow runoff:

“It has been a surprise to everyone that overnight reverse repurchase balances have fallen this quickly and that reserves have actually increased over this period,” said Brian Sack, who managed the Fed's Plunge Protection Team at the New York Fed from 2009 to 2012.

Actually Brian, you and others may have been surprised, but it certainly wasn't "everyone": we've been warning this would happen since the start of the year, and most recently one week before the Fed's pivot.

There is another reason why the December SOFR spike freaked out the Fed: whereas previously the central bank was wrong repeatedly in estimating what level of reserves would be seen as "ample" by the market, this time around, officials told TImiraos they are going to rely more on market signals in identifying the right level of reserves.

“Last time, we had lots of estimates of where we thought that terminal level of reserves was, and our estimates were too low,” Philadelphia Fed President Patrick Harker said in an October interview. “At the end of the day, the market will dictate where we are.”

Indeed it will, and that's precisely why our premium subscribers were fully aware that the "canary in the liquidity coalmine" died at the start of December, and the Fed's dovish pivot, the end of QT, and the coming QE are now logically following just as we said they would.

And just in case Timiraos' conveying Powell's message that QT is effectively done wasn't enough, here is JPM's head of fixed income strategy with a note overnight admitting the same

This is how JPM sees the wind down of QT: "We now expect that the FOMC will have the outline of a timeline at the January meeting, communicated mid-February minutes to that meeting. We expect that this plan will be formally agreed to at the mid-March meeting and will be implemented beginning in April" at which point the monthly cap on the runoff of Treasury securities to be reduced to $30bn/mo, from $60bn/mo (full note available to professional subscribers in the usual place).

Bottom line: after several years of tightening, 2024 is when the liquidity floodgate reopen and not only does the Fed start to cut rates aggressively, but with QT tapering, we fully expect the next QE to be launched in the near future, sending the dollar into its next, and possibly final, reserve currency death spiral as printer goes BRRRR.

Col. Douglas Mcgregor about the dexline of the West (Video - 1h31)

  This is a long but extremely intelligent and interesting interview. Almost the exact opposite of what you can hear these days on the MSM. Does it offer any hope? I am afraid too few people among the elites think this way.

Note: Amazing! A day later, the video is already gone! And sure enough Douglas Mcgregor did talk about a lot of things in the video, one must have been taboo somehow. But I cannot find a better example of a crumbling society than this endless censorship especially when it concerns the most competent people around. So who are we supposed to listen too? The Davos crowd?

 

The EU Wants To Spy On Europeans' Internet Use

  This is a complicated and technical post so most people will yawn and may move to something else. It would be a mistake because it is important. 

  There is a clear effort in Europe to take back control of the narrative. The first wave concerned platforms and their ability to remove posts. It would have been difficult 10 years ago but has become over time an easy shot. But likewise, people have become more sophisticated and the information is now becoming more diffuse and distributed to the great dismay of most Eurocrats. 

 The only way to fight this is to insert a "man-in-the-middle" in the Internet so that you can actually identify nodes of information such as this blog and suppress them before the erroneous, extremist, misinformation (pick your choice) spreads. Never mind that you made "one" mistake among hundreds of articles, the mere fact that you contradict the official version will eventually get you cancelled. Imagine such a system monitored in real time by AI and lo, the Chinese system is here. So much for democratic principles. In the end the goal of any bureaucracy is total control. No exception. We are getting closer.

Authored by Robert Blumen via The Brownstone Institute,

The European Commission is an EU legislative body with regulatory authority over digital technology. The EC’s eIDAS Article 45, a proposed regulation, would deliberately weaken areas of internet security that the industry has carefully evolved and hardened for over 25 years. The Article would effectively grant the 27 EU governments vastly expanded surveillance powers over internet use. 

The rule would require all internet browsers to trust an additional root certificate from an agency (or a regulated entity) from each of the national governments of each one of the EU member states. For the non-technical readers, I will explain what a root certificate is, how internet trust has evolved, and what Article 45 does to this. And then I will highlight some of the commentary from the tech community on this matter. 

The next section of this article will explain how the trust infrastructure of the internet works. This background is necessary in order to understand how radical the proposed Article is. The explanation is intended to be accessible to a non-technical reader.

The regulation in question addresses internet security. Here, “internet” means, largely, browsers visiting websites. Internet security consists of many distinct aspects. Article 45 intends to modify public key infrastructure (PKI), a part of internet security since the mid-90s. PKI has been at first adopted, and then improved over a 25-year period, to give users and publishers the following assurances: 

• Privacy of the conversation between the browser and the website: Browsers and websites converse over the internet, a network of networks operated by Internet Service Providers, and Tier 1 carriers; or cellular carriers if the device is mobile. The network itself is not inherently safe nor trustworthy. Your nosy home ISP, a traveler in the airport lounge where you are waiting for your flight, or a data vendor looking to sell leads to advertisers might want to spy on you. Without any protection, a bad actor could view confidential data such as a password, credit card balance, or health information. 

• Guarantee that you view the page exactly the way the website sent it to you: When you view a web page, could it have been tampered with between the publisher and your browser? A censor might want to remove content that they don’t want you to see. Content labeled as “misinformation” was widely suppressed during covid hysteria. A hacker who had stolen your credit card might want to remove evidence of their fraudulent charges. 

• Guarantee that the website you see is really the one in the browser’s location bar: When you connect to a bank how do you know that you are seeing the website of that bank, not a fake version that looks identical? You check the location bar in your browser. Could your browser be tricked into showing you a fake website that appears identical to the real one? How does your browser know – for sure – that it is connected to the correct site? 

In the early days of the internet, none of these assurances existed. In 2010, a browser plugin available in the add-on store enabled the user to participate in someone else’s Facebook group chat in a cafe hotspot. Now – thanks to PKI, you can be pretty sure of these things. 

These security features are protected with a system based on digital certificates. Digital certificates are a form of ID – the internet version of a drivers’ license. When a browser connects to a site, the site presents a certificate to the browser. The certificate contains a cryptographic key. The browser and the website work together with a series of cryptographic calculations to set up secure communication.

Together, the browser and the website provide the three security guarantees:

• privacy: by encrypting the conversation.

• cryptographic digital signatures: to ensure that the content is not modified in flight. 

• verification of the publisher: through the chain of trust provided by PKI, that I will explain in more detail below. 

A good identity should be difficult to counterfeit. In the ancient world, a wax casting of a seal served this purpose. Identities for humans have relied on biometrics. Your face is one of the oldest forms. In the non-digital world, when you need to access an age-restricted setting, such as ordering an alcoholic beverage, you will be asked for a photo ID.

Another biometric from before the digital era was to match your fresh pen-and-ink signature against your original signature on the back of your ID. As these older types of biometrics become easier to counterfeit, human identity verification has adapted. Now, it is common for a bank to send you a validation code on your mobile. The app requires you to pass a biometric identity check on your mobile phone to view the code such as face recognition or your fingerprint. 

In addition to a biometric, the second factor that makes an ID trustworthy is the issuer. IDs that are widely accepted depend on the ability of the issuer to verify that the person applying for an ID is who they say they are. Most of the more widely accepted forms of ID are issued by government agencies, such as the Department of Motor Vehicles. If the issuing agency has reliable means to track who and where its subjects are, such as tax payments, employment records, or the use of water utility services, then there is a good chance the agency can verify that the person named on the ID is that person.

In the online world, governments have, for the most part, not involved themselves in identity verification. Certificates are issued by private sector firms known as certificate authorities (CAs). While certificates used to be quite expensive, fees have come down considerably to the point where some are free. The best known CAs are Verisign, DigiCert and GoDaddy. Ryan Hurst shows the seven major CAs (ISRG, DigiCert, Sectigo, Google, GoDaddy, Microsoft, and IdenTrust) issue 99% of all certificates.

The browser will accept a certificate as proof of identity only if the name field on the certificate matches the domain name, which the browser shows in the location bar. Even if the names match, does that provide that a certificate saying “apple.com” belongs to the consumer electronics business known as Apple, Inc.? Identity systems are not bulletproof. Underage drinkers can get fake IDs. Like human IDs, digital certificates can also be fake, or invalid for other reasons. A software engineer using free open source tools can create a digital certificate named “apple.com” with a few Linux commands. 

The PKI system relies on CAs to issue any certificate only to the owner of the website. The workflow to acquire a certificate goes like this:

1. The publisher of a website applies to their preferred CA for a certificate, for a domain. 

2. The CA verifies that the certificate request comes from the actual owner of that site. How does the CA establish this? The CA demands that the entity making the request publish a specific piece of content on a specific URL. The ability to do this proves that the entity has control over the website.

3. Once the website has proven ownership of the domain, the CA appends a cryptographic digital signature to the certificate usings its own private cryptographic key. The signature identifies the CA as the issuer. 

4. The signed certificate is conveyed to the person or entity making the request. 

5. The publisher installs their certificate on their website, so it may be presented to browsers. 

Cryptographic digital signatures are “a mathematical scheme for verifying the authenticity of digital messages or documents.” They are not the same thing as the online document signing provided by DocuSign and similar vendors. If the signature could be forged, then the certificates would not be trustworthy. Over time the size of the cryptographic keys has increased with the aim of making forgery more difficult. Cryptography researchers believe that current signatures, in practical terms, are impossible to forge. Another vulnerability is when the CA has its secret keys stolen. The thief could then produce valid signatures of that CA. 

Once the certificate has been installed, then it is used during the setup of a web conversation. The Register explains how that goes:

If the certificate was issued by a known good CA, and all the details are correct, then the site is trusted, and the browser will try to establish a secure, encrypted connection with the website so that your activity with the site isn’t visible to an eavesdropper on the network. If the cert was issued by a non-trusted CA, or the certificate doesn’t match the website’s address, or some details are wrong, the browser will reject the website out of a concern that it’s not connecting to the actual website the user wants, and may be talking to an impersonator.

We can trust the browser because the browser trusts the website. The browser trusts the website because the certificate was issued by a “known good” CA. But what is a “known good CA?” Most browsers rely on the CAs provided by the operating system. The list of trustworthy CAs is decided by device and software vendors. The major computer and device vendors – Microsoft, Apple, Android phone manufacturers, and the open source Linux distributors – preload the operating system on their devices with a set of root certificates.

These certificates identify the CAs they have vetted and consider to be reliable. This collection of root certificates is called the “trust store.” To take an example close to me, the Windows PC that I am using to write this piece has 70 root certificates in its Trusted Root Certificate Store. Apple’s support site lists all of the roots trusted by the Sierra version of MacOS. 

How do the computer and phone vendors decide which CAs are trustworthy? They have audit and compliance programs to evaluate the quality of CAs. Only the ones that pass are included. See for example, the Chrome browser (which provides its own trust store rather than using the one on the device). The EFF (which describes itself as “the leading nonprofit organization defending civil liberties in the digital world”) explains:

Browsers operate “root programs” to monitor the security and trustworthiness of CAs they trust. Those root programs impose a number of requirements varying from “how must key material be secured” to “how must validation of domain name control be performed” to “what algorithms must be used for certificate signing.”

After a CA has been accepted by a vendor, the vendor continues to monitor it. Vendors will remove CAs from the trust store should the CA fail to uphold the necessary security standards. Certificate authorities can, and do, go rogue, or fail for other reasons. The Register reports:

Certificates and the CAs that issue them are not always trustworthy and browser makers over the years have removed CA root certificates from CAs based in Turkey, France, China, Kazakhstan, and elsewhere when the issuing entity or an associated party was found to be intercepting web traffic. 

In 2022, researcher Ian Carroll reported Security concerns with the e-Tugra certificate authority. Carroll “found a number of alarming issues that worry me as to the security practices inside their company,” such as weak credentials. Carroll’s reports were verified by the major software vendors. As a result, e-Tugra was removed from their trusted certificate stores. 

The Timeline of Certificate Authority Failures tells of other such incidents. 

There are still some known holes in PKI as it currently exists. Because one particular issue is important to an understanding of eIDAS Article 45, I will explain that next. A CA’s trust is not scoped to those websites that conduct their business with that CA. A browser will accept a certificate from any trusted CA for any website. There is nothing preventing the CA from issuing a website to a bad actor that was not requested by the owner of the site. Such a certificate would be fraudulent in the legal sense because of who it was issued to. But the contents of the certificate would be technically valid from the browser’s viewpoint. 

If there was a way to associate each website with its preferred CA, then any certificate for that site from any other CA would be immediately recognized as fraudulent. Certificate pinning is another standard that takes a step in this direction. But how would that association be published and how would that publisher be trusted? 

At each layer of this process, the technical solution relies on an external source of trust. But how is that trust established? By relying on an even more trusted source on the next higher plane? This question illustrates the “turtles, all the way down” nature of the problem. PKI does have a turtle at the bottom: the reputation, visibility, and transparency of the security industry and its customers. Trust is built at this level through constant monitoring, open standards, the software developers, and the CAs. 

Fraudulent certificates have been issued. In 2013, ArsTechnica reported French agency caught minting SSL certificates impersonating Google:

In 2011…security researchers spotted a bogus certificate for Google.com that gave attackers the ability to impersonate the website’s mail service and other offerings. The counterfeit certificate was minted after attackers pierced the security of Netherlands-based DigiNotar and gained control of its certificate-issuing systems.

The secure sockets layer (SSL) credentials were digitally signed by a valid certificate authority…In fact, the certificates were unauthorized duplicates that were issued in violation of rules established by browser manufacturers and certificate authority services.

Fraudulent certificate issuance can happen. A rogue CA can issue one, but they won’t get far. The bad certificate will be detected. The bad CA will fail compliance programs and be removed from trust stores. Without acceptance, the CA will go out of business. Certificate Transparency, a more recent standard, enables more rapid detection of fraudulent certificates. 

Why would a CA go rogue? What advantage can the bad guy gain from an unauthorized certificate? With the certificate alone, not much, even when signed by a trusted CA. But if the bad guy can team up with an ISP, or otherwise access the network that the browser uses, the certificate gives the bad actor the ability to break all of PKI’s security guarantees. 

The hacker could mount a man-in-the-middle attack (MITM) on the conversation. The attacker could insert himself in between the browser and the real website. In this scenario, the user would be talking directly to the attacker, and the attacker would relay the contents back and forth with the real website. The attacker would present the fraudulent certificate to the browser. Because it was signed by a trusted CA, the browser would accept it. The attacker could view and even modify what either party sent before the other side received it.

Now we come to the EU’s sinister eIDAS, Article 45. This proposed regulation requires all browsers to trust a basket of certificates from CAs designated by the EU. Twenty-seven to be exact: one for each member nation. These certificates are to be called Qualified Website Authentication Certificates. The acronym “QWAC” has an unfortunate homophone to quackery – or perhaps the EC is trolling us.

The QWACs would be issued either by either government agencies, or what Michael Rectenwald calls governmentalities: “corporations and companies and other adjuncts of the state who are otherwise called ‘private,’ but really are operating as state apparatuses, in that they’re enforcing state narratives and dictates.” 

This scheme would bring EU member governments one step closer to the point where they could man-in-the-middle attack against their own citizens. They would also need to access the networks. Governments are in a position to do that. If the ISP is run as a state-owned enterprise, then they would already have it. If ISPs are private firms, then local authorities could use police powers to gain access. 

One point which has not been emphasized in the public conversation is that a browser in any of the 27 EU member nations would be required to accept every single QWAC, one from each EU member. This means that a browser in, for example, Spain, would have to trust a QWAC from entities in Croatia, Finland, and Austria. The Spanish user visiting an Austrian website would have to transit over Austrian portions of the internet. The issues raised above would all apply across countries within the EU. 

The Register, in a piece titled Bad eIDAS: Europe ready to intercept, spy on your encrypted HTTPS connections explains one way this might work:

[T]hat government can ask its friendly CA for a copy of [the QWAC] certificate so that the government can impersonate the website – or ask for some other certificate browsers will trust and accept for the site. Thus, using a man-in-the-middle attack, that government can intercept and decrypt the encrypted HTTPS traffic between the website and its users, allowing the regime to monitor exactly what people are doing with that site at any time.

Having penetrated the shield of encryption, monitoring could include saving users’ passwords, and then using them at another time to access citizens’ email accounts. In addition to monitoring, governments could modify content inline. For example, they could remove the narratives they want to censor. They could attach annoying nanny state fact checks and content warnings to dissenting opinions.

As things currently stand, CAs must maintain the trust of the browser community. Browsers currently warn the user if a site presents an expired or otherwise untrusted certificate. Under Article 45, warnings or the ejection of trust abusers would be forbidden. Not only are browsers mandated to trust the QWACs, but Article 45 prohibits browsers from showing a warning that a certificate signed by a QWAC. 

Last Chance for eIDAS (a website displaying the Mozilla logo) advocates against Article 45: 

Any EU member state has the ability to designate cryptographic keys for distribution in web browsers and browsers are forbidden from revoking trust in these keys without government permission. 

…There is no independent check or balance on the decisions made by member states with respect to the keys they authorize and the use they put them to. This is particularly troubling given that adherence to the rule of law has not been uniform across all member states, with documented instances of coercion by secret police for political purposes.

In an open letter signed by several hundred security researchers and computer scientists:

Article 45 also bans security checks on EU web certificates unless expressly permitted by regulation when establishing encrypted web traffic connections. Instead of specifying a set of minimum security measures which must be enforced as a baseline, it effectively specifies an upper bound on the security measures which cannot be improved upon without the permission of ETSI. This runs counter to well established global norms where new cybersecurity technologies are developed and deployed in response to fast moving developments in technology. 

Most of us rely on our vendors to curate the list of trusted CAs. However, as a user, you may add or remove certificates as you please on your own devices. Microsoft Windows has a tool to do this. On Linux, the root certificates are files located in a single directory. A CA may be untrusted simply by deleting the file. Will this also be forbidden? Steve Gibson, noted security pundit, columnist, and host of the long-running Security Now podcast asks:

But the EU is stating that browsers will be required to honor these new, unproven and untested certificate authorities and thus any certificates they issue, without exception and without recourse. Does that mean that my instance of Firefox will be legally bound to refuse my attempt to remove those certificates?

Gibson notes that some corporations implement similar surveillance of their employees within their own private network. Whatever your opinion about those working conditions, some industries have legitimate audit and compliance reasons to track and record what their employees are doing with company resources. But, as Gibson continues,

The trouble is that the EU and its member nations are very different from the employees of a private organization. Any time an employee doesn’t want to be spied upon, they can use their own smartphone to circumvent their employer’s network. And of course an employer’s private network is just that, a private network. The EU wants to do this for the entire public Internet from which there would be no escape.

Now we have established the radical nature of this proposal. It is time to ask, what reasons does the EC offer to motivate this change? The EC says that identity verification under PKI is not adequate. And that these changes are needed to improve it. 

Is there any truth to the EC’s claims? Current PKI in most cases only requires the request to prove control of the website. While that is something, it does not guarantee, for example, that the web property “apple.com” is owned by the consumer electronics company known as Apple Inc, headquartered in Cupertino, California. A malicious user might obtain a valid certificate for a domain similar name to that of a well-known business. The valid certificate could be used in an attack that relied on some users not looking hard enough to notice that the name does not quite match. This happened to payment processor Stripe.

For publishers who would like to prove to the world that they are truly the same corporate entity, some CAs have offered Extended Validation (EV) Certificates. The “extended” part consists of additional validations against the business itself, such as the business address, a working phone number, a business license or incorporation, and other attributes typical of a going concern. EVs are listed at a higher price point because they require more work by the CA. 

Browsers used to show highlighted visual feedback for an EV, such as a different color or a more sturdy lock icon. In recent years, EVs have not been particularly popular in the marketplace. They have mostly died off. Many browsers no longer show the differential feedback. 

In spite of the weaknesses that still exist, PKI has improved markedly over time. As flaws have become understood, they have been addressed. Cryptographic algorithms have been strengthened, governance has improved, and vulnerabilities have been blocked. Governance by a consensus of industry players has worked quite well. The system will continue to evolve, both technologically and institutionally. Other than meddling by regulators, there is no reason to expect otherwise.

We have learned from the lackluster history of EVs that the marketplace does not care so much about corporate identity verification. However, if internet users did want that, it would not require breaking existing PKI to give it to them. Some small tweaks to existing workflows would suffice. Some commenters have proposed modifying the TLS handshake; the website would present one additional certificate. The primary certificate would work as it does now. The secondary certificate, signed by a QWAC, would implement the additional identity standards that the EC says it wants.

The EC’s purported reasons for eIDAS are simply not credible. Not only are the reasons given implausible, the EC does not even bother with the usual sanctimonious whining about how we must sacrifice important freedoms in the name of safety because we face the grave threat of [pick one] human trafficking, child safety, money laundering, tax evasion, or (my personal favorite) climate change. There is no denying that the EU is gaslighting us.

If the EC is not honest about their true motives, then what are they after?

Gibson sees a nefarious intent:

And there’s only one possible reason for them wanting [to enforce browsers to trust QWACs], which is to allow for on-the-fly Internet web traffic interception, exactly as happens inside of corporations. And that’s acknowledged. 

(What Gibson means by “web traffic interception” is the MITM attack described above.)Other commentary has highlighted the sinister implications for free speech and political protest. Hurst in a long-form essay makes a slippery slope argument:

When a liberal democracy establishes this kind of control over technology on the web, despite its consequences, it lays the groundwork for more authoritarian governments to follow suit with impunity.

Mozilla quoted in techdirt (with no link to the original) says more or less the same:

[F]orcing browsers to automatically trust government-backed certificate authorities is a key tactic used by authoritarian regimes, and these actors would be emboldened by the legitimising effect of the EU’s actions…

Gibson makes a similar observation:

And then there’s the very real specter of what other doors this opens: If the EU shows the rest of the world that it can successfully dictate the terms of trust for the independent web browsers used by its citizens, what other countries will follow with similar laws? Now everyone gets to simply require that their own country’s certificates get added. This takes us in exactly the wrong direction.

This proposed Article 45 is an attack on user privacy in the EU nations. If adopted, it would be a massive setback not only in internet security, but in the evolved system of governance. I agree with Steve Gibson that:

What’s completely unclear, and what I haven’t encountered anywhere, is an explanation of the authority by which the EU imagines it’s able to dictate the design of other organization’s software. Because that’s what this comes down to.

Response to the proposed Article 45 has been massively negative. The EFF in Article 45 Will Roll Back Web Security by 12 Years writes, “This is a catastrophe for the privacy of everyone who uses the internet, but particularly for those who use the internet in the EU.” 

The eIDAS effort is a four-alarm fire for the security community. Mozilla – maker of the open source Firefox web browser – posted an Industry Joint Statement opposing it. The statement is signed by an all-star roster of internet infrastructure companies including Mozilla itself, Cloudflare, Fastly, and the Linux Foundation. 

From the the open letter mentioned above: 

After reading the near-final text, we are deeply concerned by the proposed text for Article 45. The current proposal radically expands the ability of governments to surveil both their own citizens and residents across the EU by providing them with the technical means to intercept encrypted web traffic, as well as undermining the existing oversight mechanisms relied on by European citizens. 

Where does this go? The regulation has been proposed for some time. A final decision was scheduled for November of 2023. Web searches show no new information on this topic since that time. 

In these past few years, outright censorship in all its forms has increased. During the covid lunacy, government and industry partnered to create a censorship-industrial complex to more efficiently promote false narratives and suppress dissidents. In these past few years, skeptics and independent voices have fought back, in courts, and by creating viewpoint-neutral platforms. 

While censorship of speech continues to be a great danger, the rights of writers and journalists are better protected than many other rights. In the US, the First Amendment has an explicit protection of speech and the freedom to criticize the government. Courts may be of the opinion that any rights or freedoms not protected by highly specific statutory language is fair game. This may be the reason that the resistance has had more success on speech than other efforts to stop other abuses of power such as quarantines and population lockdowns. 

Rather than a well-defended foe, governments are shifting their attacks to other layers of the internet infrastructure. These services, such as domain registration, DNS, certificates, payment processors, hosting, and app stores, consist largely of private marketplace transactions. These services are much less well protected than speech because there is, for the most part, no right for anyone to purchase a specific service from a particular business. And the more technical services such as DNS and PKI are less well understood by the public than web publishing.

The PKI system is particularly vulnerable to attack because it works by reputation and consensus. There is no single authority that rules the entire system. The players must earn a reputation through transparency, compliance, and honest reporting of failures. And that makes it vulnerable to this type of disruptive attack. If EU PKI falls to the regulators, I expect other countries to follow. Not only is PKI at risk. Once proven that other layers of the stack can be attacked by regulators, they will be targeted as well.

Avoiding the next inflation may now require a Zombie Apocalypse

  There is a custom in Japan where for the New Year you build a huge ball of straw on top of a hill, then light a small fire on the side before throwing it down-slope. By the time the ball rolls down to the foot of the hill, it has become a huge ball of fire called Hi-no-kuruma. (You can see that in Nara among other places.)

  Likewise, politicians have the same custom but with government budgets. The fall takes 250 years instead of 3 minutes but the resulting explosion is no less impressive. Considering the frequency, only 1 out of 10 generations can enjoy such fireworks, but fortunately, we are that generation. Enjoy! 

  PS: For those interested in how big is the fire right now, read on. Sparks are already flying all around in Washington. 

by Simon Black via Sovereign Man

Earlier this week, leaders from both major parties in the Land of the Free announced a grand bargain that, in theory, should avoid a government shutdown later this month.

According to their agreement, Congress will supposedly cap its ‘discretionary’ spending at $1.6 trillion for Fiscal Year 2024. That’s down from about $1.7 trillion in FY23.

So, yes, technically this $100 billion reduction represents about a 6% decrease over last year. And if we want to be even more cheerful about it, we could call it a 9% decrease on an inflation-adjusted basis.

If we’re being intellectually honest, that’s a step in the right direction for the US. A tiny, tiny, tiny step in the right direction.

How tiny, you ask?

Well, pretty much non-existent; the agreement to cut spending is an almost entirely symbolic gesture that won’t do much good.

Before we go further, it’s important to understand that government spending is generally categorized into three distinct buckets.

The first bucket is interest on the debt. And, at least for now, this is non-negotiable. It has to be paid.

And I don’t mean it ‘has to be paid’ in the moral sense that “America always pays its debts.”

I mean, legally, interest on the debt is automatically paid. Just like your monthly mortgage, interest payments on the US national debt get automatically sucked out of the Treasury Department’s bank account.

The second bucket is what’s known as “Mandatory Spending”, which includes programs like Social Security and Medicare. Just like the interest bucket, Mandatory Spending gets sucked out of the Treasury Department’s bank account every month.

Those two buckets– Interest payments and Mandatory Spending– constitute the vast majority of US federal spending.

The third bucket is known as Discretionary Spending… because it’s at Congress’s discretion.

Discretionary spending is what results from all their debates and arguments over annual appropriations, for everything from the military to the national parks. It also includes supplemental spending for pandemic bailouts, Ukraine, Hunter Biden artwork, etc.

So, the announcement this week was about a $100 billion reduction to Discretionary Spending.

But consider that Mandatory Spending (which Congress doesn’t touch) on Social Security alone surged $281 billion last year… and will likely increase by a similar magnitude this year.

So that single increase to Mandatory Spending will more than wipe out the entire $100 billion Discretionary Spending reduction.

Easy come, easy go.

Then there’s interest on the debt, which increased by $177 billion last fiscal year. It will probably increase by at least that much this year… which, again, more than wipes out the entire $100 billion in Discretionary Spending reduction.

If you drill down into the numbers, you’ll see pretty clearly that there are very few credible paths forward for the United States.

One path is to drastically… and I mean almost entirely… slash Discretionary Spending.

Look at it this way– last year’s Discretionary Spending was $1.7 trillion. The government is claiming that their annual budget deficit last year was also $1.7 trillion.

This means that, in order to balance the budget, they would have to almost completely eliminate ALL discretionary spending. No more military. No more Homeland Security. No more government.

In other words, one of the only ways to balance the budget would be a Zombie Apocalypse in Washington DC.

The second path forward is to make major cuts to Mandatory Spending… which would involve politically unpopular overhauls to Social Security and Medicare.

Few politicians have the courage to do so. And given that they can’t even agree on basic priorities for Discretionary Spending, it seems unlikely that they’ll come together for more difficult cuts to Mandatory Spending.

This leaves the third path forward: to prioritize economic growth and productivity… by slashing regulations and actually make it easy once again for people to do business.

And this approach would really work. If real (i.e. inflation-adjusted) economic growth were 3% or even 3.5%, instead of 2%, then America’s fiscal woes would be over within a decade.  And this is totally achievable.

With just 3% real growth, tax revenues would soar, the budget would be balanced, and the national debt would be trivial in comparison to the size of the US economy.

Seems like the obvious approach, right? Except that they’re doing the opposite… foisting even more regulatory burdens onto small business.

It’s no surprise that tax revenue last fiscal year was down 9% from the year before; that’s a testament to not only a weakened economy, but the Byzantine regulatory state that they’ve created over the past few years.

The most recent example is the Corporate Transparency Act (CTA), the completely idiotic and destructive piece of legislation that I discussed last week.

The CTA exists because the government thinks that its tax revenue should be higher. And they’re right– federal tax revenue SHOULD be higher.

But the government never points the finger at themselves. They never conclude that dwindling tax revenues are the result of their criminal mismanagement of the economy, including all the excessive regulations which debilitate business.

No, to them, the only possible reason why tax revenues are down is because of criminal tax evasion. So, their solution is to create even more regulation which forces business owners to file information reports to the government.

The even more pathetic part is that US businesses already must provide this information to the IRS.

But Congress doesn’t care. Instead, they demand that taxpayers provide the exact same information– but in a different format– to a separate agency within the Treasury Department.

Saddling small businesses with more paperwork is hardly the sort of thing that is going to make the US economy more productive.

So, they’re not going to eliminate Discretionary Spending. They’re most likely not going to find the courage or wisdom to cut Mandatory Spending.

And it sure as hell doesn’t look like they’re going to prioritize growth and productivity.

That leads to the fourth and final option: inflation… which, from a historical perspective, is what almost ALWAYS happens in these scenarios.

We’ll talk a lot more about this soon.

Want more articles like this? Sign up here to receive Sovereign Man letters to your email.

The Financial System Has Reached ‘The End’; Von Greyerz

  It is indeed the end of a 250 year financial cycle as almost everybody agrees. Now combine this with a 80 year fourth turning and you have the recipe for quite some turbulence ahead.   

Authored by Egon von Greyerz via GoldSwitzerland.com,

The world is now witnessing the end of a currency and financial system which the Chinese already forecast in 1971 after Nixon closed the gold window.

Again, remember von Mises words: “There is no means of avoiding the final collapse of a boom brought about by credit expansion.”

History tells us that we have now reached the point of no return.

So denying history at this point will not just be very costly but will lead to a total destruction of investors’ wealth.

POLITICIANS LIE WITHOUT FAIL

History never lies but politicians do without fail. In a fake system based on false values, lying is considered to be an essential part of political survival.

Let’s just look at Nixons ignorant and irresponsible statements of August 15, 1971 when he took away the gold backing of the dollar and thus all currencies.

Later on we will show how clearsighted the Chinese leaders were about the destiny of the US and its economy.

So there we have tricky Dick’s lies.

• The suspension of the convertibility of the dollar in 1971 is still in effect 52 years later.

• As the dollar has declined by almost 99% since 1971, the “strength of the economy” is also declining fast although using fiat money as the measure hides the truth.

• And now to the last lie: “Your dollar will be worth as much tomorrow”. Yes, you are almost right Dick!  It is still worth today a whole 1% of the value when you closed the gold window. 

The political system is clearly a farce. You have to lie to be elected and you have to lie to stay in power. That is what the gullible voters expect. The sad result is that they will always be cheated.

CHINA FORECAST THE CONSEQUENCES ALREADY IN 1971

So in 1971 after Nixon closed the gold window, China in its official news media the People’s Daily made the statements below:

Clearly the Chinese understood the consequences of the disastrous US decision which would destroy the Western currency system as they said:

• Seriousness of the US economic crisis and decay and decline of the capitalist system

• Mark the collapse of the monetary system with the US dollar as its prop

• Nixon’s policy cannot extricate the US from financial and economic crisis

I am quite certain that the US administration at the time ridiculed China’s official statement. As most Western governments, they showed their arrogance and complete ignorance of history.

How right the Chinese were.

But the road to perdition is not immediate and we have seen over 50 years the clear “decline of the capitalist system”. The end of the current system is unlikely to be far away.

Interestingly it seems that a Communist non-democratic system is much more clairvoyant than a so called Western democracy. There is clearly an advantage not always having to buy votes.

IRRELEVANT WHICH CURRENCY WINS THE RACE TO THE BOTTOM

As the whole currency system is about to implode,  it is in my view totally irrelevant where the US dollar is heading short term measured against other fiat currencies.

The dilemma is that most “experts” use the Dollar Index (DXY) as the measure of the dollar’s strength or weakness.  This is like climbing the ladder of success only to find out that the ladder is leaning against the wrong building.

To measure the dollar against its partners in crime (the other fiat currencies) misses the point as they are all on the way to perdition.

So the dollar index measures the dollar against six fiat currencies: Euro, Pound, Yen, Canadian Dollar, Swedish Kroner and Swiss Franc. The Chinese Yuan shines in its absence even though China is the second biggest economy in the world.

But here is the crux. The dollar is in a race to the bottom with 6 other currencies.

Since Nixon closed the gold window in 1971 all 7 currencies, including the US dollar, have declined 97-99% in real terms.

Real terms means constant purchasing power.

And the only money which has maintained constant purchasing power for over 5,000 years is of course gold.

So let’s make it clear – the only money which has survived in history is GOLD!

All other currencies have without fail gone to ZERO and that without exception.

Voltaire said it already in 1729:

PAPER MONEY EVENTUALLY RETURNS TO ITS INTRINSIC VALUE – ZERO

And that has been the destiny of every currency throughout history.

Every single currency has without fail gone to ZERO. And this is where the dollar and its lackeys are heading.

To debate if a currency, which has fallen 98.2% in the last 52 years, is going to strengthen or weaken in the next year or two is really missing the point.

It is virtually 100% certain that the dollar and all fiat money will complete the cycle (which started in 1913 with the creation of the Fed) and fall the remaining 1-3% to ZERO.

But we must remember that the final fall involves a 100% loss of value from today.

BRENT JOHNSON & MATT PIEPENBURG DEBATE THE DOLLAR

So to debate whether the dollar index which today is 103, will reach 150 first as my good friend Brent Johnson argues in his Dollar Milk Shake Theory or that it will fall from here as my colleague Matt Piepenburg contends, really misses the point.

There is no prize for coming first to the bottom. The dollar is down almost 99% in real terms since 1971. So it has a bit over 1% to fall to reach ZERO.

And history tells us that the final fall is INEVITABLE.

So why worry if the Dollar or the Euro becomes worthless first? It really is a moot point.

Brent Johnson and Matt Piepenburg recently had a debate on Adam Taggart’s new platform “Thoughtful Money”. Adam is an outstanding host with great speakers and both Brent and Matt were superb in their presentation of the arguments for or against the dollar. But even though they both like and understand gold, they got a bit too caught up in the dollar up or down debate rather than focusing on the only money which has survived in history. Still, I know that they both appreciate that gold is the ultimate money.

NOT ALL CURRENCIES ARE BAD

The world’s reserve currency has had a sad performance based on lies, poor real growth, all due to a mismanaged economy based on debt and printed money.

So although most currencies have lost 97-99% in real terms since 1971 there are shining exceptions.

When the gold window was closed in 1971 I was working in a Swiss bank in Geneva. At the time, one dollar cost Swiss Franc 4.30. Today, 52 years later, one dollar costs Swiss Franc 0.88!

This means that the dollar has declined 80% against the Swiss Franc since 1971.

So a country like Switzerland with virtually no deficits and a very low debt to GDP proves that a well managed economy with very low inflation doesn’t destroy its currency like most irresponsible governments.

The Swiss system of direct democracy and people power is totally unique and gives the people the right to have a referendum on almost any issue they choose.

This makes the people much more responsible in their choices as a winning vote on any issue becomes part of the constitution and cannot be changed by government or parliament. Only a new referendum can change such a decision.

THE US BANANA REPUBLIC

Swiss Debt to GDP is around 40%. This was the level of US debt back in 1971 before the gold window was closed.

As the graph below shows, US debt to GDP is now 132%. In 2000 it was 55%.

132% debt to GDP is the level of a Banana Republic which is frantically trying to survive by printing and borrowing ever increasing amounts of worthless fiat money.

So debt to GDP is now reaching the exponential phase. I have explained the final phases of exponential moves in many articles like here.

Since there is no intent or possibility to reduce the US deficit, the likely deficit for next fiscal year is most probably in excess of $2 trillion and that is before any bad news like higher inflation, higher interest rates, bank failures, more war, more QE etc.

As I discussed in a recent article,“THE CYCLE OF EVIL”, the world is today facing unprecedented risks of a magnitude never before seen in history.

The EU's Worst-Nightmare: Pitchforks!

 

  Sure enough, Europe is toast as we warned already 3 years ago. 

  Europe was originally and should have stayed a common market. The cultures are simply too different to merge seamlessly even with huge numbers of unassimilated migrants creating a common mess. EU politicians out of hubris and grandiosity decided otherwise, then wasted the popular goodwill on foreign adventures such as Ukraine. 

  Now the greens in Berlin and the gays in Paris will have to solve real problems!

Authored by John Butler via FortuneAndFreedom.com,

• Farmers are revolting in Germany and neighbouring countries

• Populist parties continue to rise in the polls

• The EU may not survive in its current form

I recently wrote about what has become a global, populist political phenomenon.

Citizens of multiple countries, in both hemispheres, are not only voting for populist candidates but are also working outside their entrenched political establishments to either enact desired changes or oppose undesired ones.

The latter has been in focus this week as German farmers travelled to Berlin and other cities to blockade the roads in protest at the removal of certain subsidies considered noncompliant with official climate policies. Although not well reported in the British media, in the continental media, the protests made the front page.

Farm subsidies have existed all across Europe ever since the EU was founded. Affordable and available basic food was considered – and still is – a matter of national security. And since European farmers are not always as competitive as those elsewhere, subsidies were deemed required to keep them in business.

No longer. Apparently, climate goals now trump food security and affordability. And so the subsidies are to be ended, rendering farmers less competitive and possibly forcing some into bankruptcy.

As has been true throughout modern European history, the progressive Dutch were among the first to revolt against what they perceived as oppressive rules handed down from above. Farmers blockaded multiple cities and motorways in response to proposed nitrogen (fertiliser) quotas. More recently, the Dutch gave the largest portion of seats in the Tweede Kamer – their equivalent of the House of Commons – to the populist party of Geert Wilders.

Now farmers in Germany, the EU’s largest, wealthiest country, and largest net contributor to the EU budget, have joined the fray. They, in turn, have been joined by farmers in neighbouring Poland, Hungary and Austria. HGV drivers, many of whom supply farms with fertilisers and other essentials and in turn deliver produce from farm to table.

The pitchforks have come out, as it were.

As it happens, the UK also has a venerable populist tradition. In 1381, there was the so-called “Peasants Revolt” led by Wat Tyler. It began in Brentwood, Essex, with a dispute over unpaid taxes and rapidly spread to engulf much of southeast England. London was sacked, and many prominent buildings were set on fire. These included the Tower of London, in which Richard II’s lord chancellor and lord high treasurer were discovered by the rebels and summarily killed.

By comparison, today’s EU farmers are rather restrained in their actions. But they have laid down a populist political gauntlet of sorts. The common agricultural policy has been the backbone of the EU for decades. The perceived common interest of farmers has functioned as a form of political “cement” to hold the European project together and provide a base on which to build further integration into other industries.

Having been pushed too far, the farmers are now threatening to undermine the entire European project with support for populist and, in some cases, outright anti-EU parties. Recent polls suggest that, in eastern Germany, Alternative für Deutschland (AfD) is the leading political party.

Brussels has yet to voice any specific concerns about the matter. Perhaps they see these developments as just storms in teacups.

Ensconced in their modern glass and steel palaces, they might even ponder whether, if European food security and affordability are compromised in pursuit of their lofty climate goals, they should just let their peasants eat cake instead.

The Establishment Is Unmasking Itsel

  But it doesn't matter! As long as you control the medias, all is fine.

Authored by Connor O'Keefe via The Mises Institute,

Two weeks ago, I wrote an article laying out the political class’s struggle to preserve its legitimacy by fighting to regain control over the digital information space.

The piece built on Martin Gurri’s thesis that the wide adoption of the internet has caused an information revolution that, similar to the adoption of the printing press, has allowed dissent to grow and spread beyond the control of the ruling classes. The results have been political shocks like the Arab Spring, the passage of Brexit, and the election of Donald Trump.

If the twenty-first century has been a war to preserve the establishment’s legitimacy, the current battle in the United States is the 2024 presidential election.

There’s truth to the familiar cliché that the next election is always the most important in history. As the federal government grows, spends more of our money, and intrudes more in our daily lives, the stakes of elections get higher and higher.

That still holds true for 2024, but there is much more going on. In Anatomy of the State, after defining the state as the “organization in society which attempts to maintain a monopoly of the use of force and violence in a given territorial area,” Murray Rothbard dedicates a chapter to how states preserve themselves.

In Rothbard’s words:

While force is [the ruling class’s] modus operandi, their basic and long-run problem is ideological. For in order to continue in office, any government (not simply a “democratic” government) must have the support of the majority of its subjects. This support, it must be noted, need not be active enthusiasm; it may well be passive resignation as if to an inevitable law of nature. . . . Therefore, the chief task of the rulers is always to secure the active or resigned acceptance of the majority of the citizens.

In the United States, the political establishment has for many years evoked democracy to legitimize its actions in the eyes of the public. Doing so transforms any action they take into an embodiment of the people’s will and any opposition into a selfish denial of everyone else’s wishes.

But the internet allowed the public to see that many views and beliefs that had been presented as fringe were in fact popular—often even more popular than so-called mainstream ideas.

That revelation bolstered the anti-establishment movements of the 2010s—Occupy Wall Street, the Tea Party, the Ron Paul Revolution, and Trump’s 2016 campaign. And it sent the political establishment into a crisis of legitimacy.

Tens of millions of Americans sent Donald Trump to the White House in one of the biggest repudiations of the established political class in American history. In response, instead of reflecting on why so many Americans were so fed up with them, the establishment decided to frame Trump as the root cause of all the nastiness and hostility aimed their way. According to them, one man was corrupting America with hate, greed, and Russian propaganda.

That thinking has culminated in years of establishment attempts to remove Trump from power and later to bar him from ever holding office again. First, there was discussion of ousting him using the Twenty-Fifth Amendment. Then came the attempt to tie him to Russian intelligence. Next, they tried to impeach him twice. Finally, they charged him with felonies. Now some states are attempting to remove him from the 2024 ballot for a crime he hasn’t even been charged with.

The establishment is unwilling to admit that they are the reason Trump was elected. But, ironically, by attempting to disqualify him from participating in the election, they undermine the illusion of democracy - their main source of legitimacy in the eyes of many Americans. It’s hard to see how that will go well for them.