Media Control (Joke)

  This cartoon is from late 2008, after the financial meltdown when people were protesting the reflationary package. Already then most medias where under control and journalism was a joke. 

  In fact the death of independent journalism can be dated precisely to the end of the 1990s when the Internet suddenly starved legacy medias of revenues and they all had to scramble for financing. Most of them did find some financing of course but they had to sell their soul in the process and become the voice of whoever was financing them. This is when the medias became uninterested in "real" scandals and started "promoting" ideas such as "Global Warming", "The Pandemic", "Russia, Russia, Russia" in the US and other entirely made-up stories. 

  You can easily find videos on YouTube of ALL the medias saying exactly the same thing about a specific subject, word for word, in unison. The effect of propaganda is so uncanny that you wonder why people do not notice. But they do not. 30 years of manipulations have utterly dulled the critical senses of most people who for the most part, in these uncertain times, prefer a comforting lie than be exposed to the raw and naked truth. (Blue Pill / Red Pill)

 

How is your data coded? (and stored)

   This is an old slide so you can easily imagine that a lot of progress has been made since. Still, it is important to understand for this is how your data and everybody's else data is coded by the NSA and other agencies which job is to know everything.

 

  The first challenge is to gather everything which is why the Internet is free. Otherwise it would cost an absolute fortune to run such a vast network. (Did someone forgot to tell you that nothing is free in life?) Then convince you to provide as much data as possible through Social networks. (This was truly genius!) 

  The second challenge is to organize the data efficiently. Most of it, at a time "t" has no value or interest whatsoever. It just needs to be stored. But when you need it, it has to be retrieved instantly. So a good classification system is needed. The system as explained above looks old but was enough 20 years ago. It must be an order of magnitude more advanced by now.

  The third and most complex challenge is to merge skillfully and smoothly different types of information: text, video, audio, slides, etc... This, at some stage was my job and later became almost everybody's job if you had anything to do with data. We call it "enrichment" which mostly consists in merging different database and getting insight from the data. This is where most of the progress has been made over the last 20 years.

  Finally, 5 years ago, AI which until then was a rather cumbersome and hard to use tool, called "machine learning" made an extraordinary breakthrough thanks to the technology of transformers and everything changed. The job of organizing and understanding data became much simpler as we entered the next phase. Synthetic data.

  Synthetic data it the data you do not have but can build or deduce from other data. Its realm is infinite. Let's take a simple example: You post a picture on Facebook of you reading a letter to someone. Plain and innocent enough, right? 10 years ago, it would have been.

  Now, I can enhance the picture and reverse read what's written on the letter thanks to the reflection in the mirror behind. Because the picture was 4K, I can see that you are reading the letter to your little sister which is reflected on the pupil of your eyes. Thanks to the meta data, I know when the picture was taken. I can see a house outside the window which can be used to geo-locate the place. There is a person walking outside the house. Scan the face: John Hattaway. Strange, it's 3pm, he is supposed to be at work downtown at this hour. I check John Hattaway's profile. It looks like he is calling regularly a house a little further down the row. (Remember that meta-data, where and who you call is officially fair game in the US.) A romantic encounter? It looks like John is calling regularly on Friday around lunchtime... Which happens to be a very interesting information because the person living in that house is a lawyer dealing with sensitive cases... 

  Do you see where this is going? In the early 2000s, the technology was exposed in movies such as The Bourne Identity. It was possible but difficult to implement and somehow reassuringly, a single well trained individual could easily outsmart the system. That was when humans were doing the intelligence work. Now, imagine today, as we outsource everything, the data, the meta data, the construction of the synthetic data and the deduction process to AI. Add millions, then billions of data sources: public cameras, sensors, alarms, home appliances scanning your house... 

  Now try to imagine "privacy" in such a world? It simply has no meaning. Soon enough the environment around you will be aware of your presence. Forget your mobile phone which has been broadcasting "I am here" for over 15 years now. About 10 years ago, I worked with a company installing "beacons" on vending machines in the streets and shopping malls which sole purpose was collecting a confirmation of your presence and reselling it (for marketing purpose.) This is low value data, but add it to other data and suddenly you have something actionable. Not yet the Matrix but most certainly well on our way!

"We've Already Defaulted!": On Inflation, Deficits, Broken Markets, & The Fiscal Illusion

   Almost 20 years ago, in 2008, it was obvious that the infernal machine would not be stopped in time when the financial system faced the wall and the Fed decided to reflate well-connected banks instead of letting them sink due to their profligacy. We have since been living on borrowed times both figuratively and more ominously in reality. 

  So what comes next, as discussed below is unpredictable. What black swan, which straw breaks the camel's back is unknowable. What we know perfectly well is what comes after that. It will be time for a reset. 

  We, in fact, have a rather long experience of "resets" so there should be no problem. In ancient times, the kings were blaming the Jews, as they were the only ones allowed to lend money. These were the pogroms taking place more or less on regular intervals so, over the centuries, the Jews learned their trade: Get your money back as interest early enough and be in another city when the storm arrived. Later, our world became more complex and larger. It was the time of pillage and colonialism. The Conquistadors, the settling of America and Africa all helped refinance dilapidated treasuries in Europe. Then came the industrial revolution and the time of wars. The enemy would pay!

  But this time, everything is different. To begin with, the scale is different: the world is broke! The Globalist elites at one stage expected to conquer Russia and its almost infinite resources. Putin, by far his greatest "crime", rebuilt the country which consequently dropped out of the menu list which suddenly became much less appetizing. Greenland? Iran? Ukraine? You need resources on a grand scale for a reset because "naked" assets need to be backed up by "something". (Naked assets being the pensions and liabilities of the system without which legitimacy evaporates and revolutions start.) None of these countries fit the bill. Too small or not rich enough. Problem! (which by the way has been explained to Donald Trump who understands perfectly.)

  This is where the idea of financializing ALL the assets in the world was born as we have discussed many times in the past: The great reset. Will it work? Can it work? Nobody knows. One thing is certain: People, especially in the West cannot have an alternative otherwise it won't work. So, no BRICS, no Bitcoins, no gold, no nothing except your money, mostly in a digital form, locked in a bank nearby, distributed as the government sees fit. (Think "green" credits.) It works on paper but could it work in reality? What is certain is that every single day is a step forward towards this reality. There is simply no turning back at this late stage. So with or without BBB, the dye is cast. Trump is only buying time and selling an illusion in-between. The US will NOT outgrow its debt. Nor will anybody else. The laws of finance are for the economy what gravity is for physics. We'd love to see our "stuff" floating around. Everything would be so much easier. But it doesn't and probably never will. 

  Now if you really need to know more about the charade that our markets have become recently, read on:   

Submitted by QTR's Fringe Finance

This weekend, I made an appearance on the Zero Hedge Podcast—a platform I’ve long loved to read and have been a friend of. The full video is below.

At the outset, I explained why I’ve mostly stepped back from doing my own podcast. “I feel like I don’t have anything of dire importance to say anymore,” I said. “Whatever I do have to say, I shoot out on my [Substack] and that’s about it. I’ve kind of done a cease and desist on my podcast.”

I feel like the truth is, a lot of what needs to be said has already been said—repeatedly.

Government overspending, monetary manipulation, and systemic fragility aren’t new topics. They just keep getting worse. And the commentary starts to feel futile when the cycle never changes.

“You have control over nothing,” I said on the podcast. “At some point it becomes fruitless.”

On the New Spending Bill: Same Movie, New Scene

We opened with the recently passed spending bill. My view was simple: it’s more of the same.

“I don't think I can offer anything new that most Zero Hedge readers or Austrian thinkers don't already know,” I said. “Every four years, we rack up debt faster. We spend more money than we have quicker.”

I touched on how both parties campaign on cutting the deficit and then, once in power, punt. “This bill is no different, sadly,” I said. “There’s still this fantasy that we’re going to grow our way out of the debt problem.”

“I know they’re at least thinking differently about money,” I said, referencing the Trump camp and rumors of eventual gold-back treasury bonds. “But then politics and pork always seem to prevail.”

And then there’s the absurdity of actual government spending. “At one point I was reading they gave Rashida Tlaib $5 billion to manage a program on subsidizing refrigerators. I’m like—what the f*** are we doing? What qualifies her to manage $5 billion, let alone $5?”

On Inflation: People Finally Get It

One thing I said I’m hopeful about is that average people now feel and understand inflation. “A couple years ago, if you were an Austrian talking about how the government's stealing your money through inflation, no one wanted to hear it. It was esoteric,” I said. “Now, people feel it at the grocery store. They go home and ask themselves: Why am I getting half as much cereal for twice the price?”

That real-world impact is pushing people to ask deeper questions. And ironically, Bitcoin has played a big role in that education. “You can’t understand Bitcoin without understanding monetary policy,” I said. “It forces the conversation. What’s fiat? What’s sound money? Why does it matter?”

That’s why, despite my preference for gold and silver, I give Bitcoin a lot of credit. “It’s like a gateway drug into monetary theory,” I joked. “You've got kids in their 20s—tattooed freaks—mainlining monetary policy because it helps them understand crypto.”On Trump’s Fiscal Pitch: Wait and See

When asked about Trump’s pitch—tax cuts plus tariffs to generate growth—I didn’t have a definitive take. “I don’t really contend with it,” I said. “We’ll see what happens. I trust that guys like Scott Bessent are smart. I think they know how out of whack the fiscal house is.”

I said I’m in a “wait and see” mode, largely because the macroeconomic compass is broken. “Bad news is good news some days. Good news is bad news other days. Nothing makes sense anymore,” I said. “We’ve distorted things so badly with money printing and QE. There’s no true signal anymore.”

Said another way: it’s f*cking impossible to predict what will happen next. (Please do not forget to renew your paid subscriptions).

On Bond Markets: Watch the Canary

I also emphasized that the bond market is the most important place to watch to see whether or not our fiscal plans are feasible. “Don’t pay attention to stocks the way you would to bonds,” I said. “The bond market will tell you the truth.”

I pointed out the strange behavior of yields rising even as the Fed eases. “It’s not normal,” I said. “We’re seeing equities and bonds sell off together. That’s something you see in emerging markets—not in the country with the reserve currency of the world.”

I also warned that nobody really knows who’s buying the debt at auctions.

“I wouldn’t put it past the Fed or Treasury to create the illusion of demand where there isn’t any,” I said. “A lot of this demand is showing up through shadowy offshore entities, I read — Cayman Islands sh*t. And that’s sketchy.”

What Breaks First?

I was asked what part of the market might crack first. “It could be anything,” I said. “Private credit, commercial real estate, auto paper, regional banks—there are rakes everywhere you step.”

I talked about how systemic risk often hides in plain sight, covered up by accounting games and delay tactics. “We don’t learn about it when the CFO finds it,” I said. “We learn about it when the market forces someone to confess.”

And I warned that a black swan could come from anywhere. “It could be some guy who notices an error on a receipt at Dunkin Donuts in Belgium. He goes to complain, and it reveals 20 years of fraud.”

How I’m Allocated: Hard Assets, Patience, and Boring ETFs

I also talked a bit about my personal asset allocation—not as financial advice, but just how I’m trying to navigate this mess.

For the 25 names I’m watching this year, read my market update from last week here.

On Wealth Inequality and the Big Lie

Then, the lede: calling out the core hypocrisy in the political rhetoric around inequality.

“Every time they print, the inequality gap widens. And the very people who scream about equity are the ones advocating for the policies that make it worse,” I said. “They’re accelerating the wealth divide and blaming capitalism.”

And I ended on this: “At some point, either enough people learn what’s actually going on—or we spiral into a full-blown collectivist mess. The longer we pretend not to see it, the worse the reckoning will be.”

I ended the podcast the same way I try to end all of my writing: by reminding people I get a lot of shit wrong, and to do your own work.

“I don’t give financial advice. I’m not a guru. I’m just trying to figure this out like everyone else,” I said. “Trust no one. Not me. Not you. Do your own research.”

Are we on the edge of the AI abyss? (Although not the one we expected.)

  By the end of the year, most of what you read and see on the Internet will be AI generated. More and more contacts on social medias will be virtual. News will become uncertain. Is it real? Propaganda? Manipulation? Movies with virtual actors are being made as we speak at deep discount (and value?) Employment is just starting to be impacted...

  The AI tsunami is already upon us and we have no idea what to do. And everything may get much worse far faster than we figure out what to do! 

  As we are entering a recession both in Europe and the US which will quickly spread around the world, AI is concentrating further capital, value and investment, which means that demand will crater as employment and opportunities outside the sector dwindle. 

  Expect governments to be slow as usual but by the end of the year, the writing will be on the wall and they will start to panic. Should AI use be restricted for the sake of the economy? But can conversely a country stay behind the AI revolution? 

  We were expecting profound philosophical questions regarding consciousness, what we will get is existential questions, not for people but for the economy. Which country will cope best with the upheaval? China? The US? Russia? The UAE? 

  We may be on the verge of a true revolution and as usual nobody saw it coming. The AI we have is already more than we can chew and it is nothing compared to the capabilities of the next AI generation, not next year but in a few months.

  Agents should be with us very soon. When this finally happens, most of your contacts will be with machines, not human beings. Then because the relations with machines are so smooth and "nicer" (Don't they always somehow agree with us?), conversely relations with other human beings will become quaint, bordering on unpleasant and finally to be avoided? Could this be the invisible revolution which, when looking back, will have changed everything?