[TL;DR - The more I read about AI the more convinced I become that we have gone off the “deep end” when it comes to expecting technical precision in ordinary conversation. On Thomas Paine’s Blog I purposefully expose myself to ridicule from the “specialists” because I honestly believe that learning requires prior frames of reference, and those frames should not have to conform to the expectations of ‘experts’. On no other subject does this seem more apparent than AI. We simply MUST have a prior frame of reference, even if when forming it we end up being less than accurate. The following article makes some necessary compromises to explain how AI forces computer science and philosophy into a necessary intersection.]

If you love cheese - and even if you don’t - you can probably imagine holding a knife as you slice through a block. It takes some elbow grease if its hard cheddar. It’s like a “hot knife through butter” with soft brie. And if you’re cutting into Swiss, you expect those empty pockets from the CO₂ that develops during fermentation.

I’ll explain more below, but this is what a Large Language Model is like. The metaphor (I know… it’s really a simile… humor me, OK?) isn’t quite exact because the block of cheese has six faces and the cheese is on or inside those faces. LLMs aren’t quite like this in the on, inside, or outside sense. But I’m going to use the metaphor anyway because there are some things about cheese that can really help the average person understand what AI is, what it isn’t, and why it all matters.

Cheddar, Brie, and ‘Swiss Pockets’

When LLMs train on a large set of texts, words and phrases are transformed into ‘embeddings’ or ‘vectors.’ If you can imagine a mental space containing points that shift relative to one another based on how they pair with other points, you have the beginnings of a frame of reference. From there, it is natural to assume something like a 3D cube,1 (ergo the block of cheese). Roughly speaking, things that are opposite or unlike each other will appear far apart within the cube.2 The “points” for things that are similar or like each other will be closer to each other.

When the “textual corpora” (specialty language for the whole body of texts fed to the model to be transformed into embeddings) contains a lot of material on a specific subject, the embeddings will pack tightly together in roughly the same “space” within the cube. Where the subject matter is sparsely covered in the textual corpora, the embeddings will be less dense in a given space. And in some areas the embeddings are so sparse as to be “epistemically insignificant.” (There we go again. Specialty language. Hang in there.)

The relatively dense vs. sparse distribution of the embeddings transformed from text is why I worked with ChatGPT to get the image of this block of cheese just right. (It took quite a few prompt iterations.) Recalling the effort needed to slice hard cheddar vice soft brie, the areas of an LLM where the embeddings are densely packed are the orange cheddar in the block of cheese. When the embeddings are more sparsely distributed, we have the soft brie.

And then we have the ‘Swiss Pockets’.

It is not quite accurate to say there is nothing there. Even in an actual block of Swiss, there is the CO₂ that created the pocket. The problem is the underlying textual corpora contains so little data in this “area” that the LLM can only approximate where the embeddings from that text should land.

It is very important to understand what does and does not happen when you run into a Swiss pocket.

The LLM does not “make things up.” The term “hallucinate” is actually one of the worst possible words we can use because it sounds like the LLM is “seeing something” that isn’t really there. I think it is safe to say that - mathematically - this is absolutely NOT what is happening.

The LLM does not “guess.” It is statistically analyzing the patterns in your prompt. Then, similar to how an infrared (IR) camera can be tuned to “light up” things based on temperature, areas in the model are “lit up” based on the patterns in your prompt. The model then infers from those areas how your prompt’s patterns usually complete themselves. It generates its response accordingly.

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Swiss Pockets as ‘Epistemic Voids’

So, what, exactly, is happening in and around these pockets? This is where computer science and philosophy begin to intersect. We will have to start moving back and forth between the two somewhat. We’ll start with philosophy.

Classically, the study of philosophy breaks out into ‘ontology’ and ‘epistemology’. Both are crucial to understanding the promise - but perhaps much more importantly - the limitations of AI. Briefly,3 ontology inquires into reality as it actually is (i.e., what it means to “be”). Epistemology concerns itself with how we come to approximate reality, and what justifies calling that approximation knowledge.

We can approximate reality visually (with graphics) as well as textually (with language). We can create a fictional “reality” for our entertainment via 3D animation. It turns out that human languages model “reality” in all but exactly the same “3D” way. AI really is “the geometry of human language.”4 By recognizing at the outset that language merely approximates reality, we set ourselves up to appreciate the philosophical limits of AI. Epistemology in this context then becomes an inquiry into when, how, and why the outputs of an LLM can be justified as knowledge.

So, now let’s swing from philosophy to computers.

The reason I find the Swiss cheese pocket a compelling metaphor is because it describes spaces in the geometry of the LLM where embeddings are only provisionally located. There are embeddings there, but they have been created from very little data. Locating the embedding somewhere in the pocket is statistically justifiable, even if its specific location is not well-grounded - again, for lack of adequate underlying data.

Ultimately, your prompt is going to start a pattern and the LLM is going to complete the pattern. If your prompt pattern “lights up” an area with pockets of “poorly grounded” embeddings, the LLM will complete the pattern by making the best inferences possible from those poorly grounded embeddings. Or the LLM will look to a cheddar or brie area nearest to the pocket and use those areas to infer the completion of the pattern.

The problem here is that the LLM output will “sound knowledgeable” even though the answer is not well-grounded; the LLM does not really ‘know’ anything.

Data, Information, Knowledge, Wisdom (DIKW)

Here on the computer science side of the intersection between philosophy and computers is a discipline called “knowledge management.” This starts with data being gathered from diverse sources. An “ETL Engineer” (ETL stands for Extract/Transform/Load) writes code to extract this disparate data, transform it into a common format, and then load it to a computer system. That system will “contextualize” the data. The textbook definition of the word “information” is “data-in-context-with-data.”

Then - again to oversimplify - math is done on the information to generate knowledge. That knowledge then becomes the basis for (hopefully) good decision-making - wisdom. That math - inference - is what the LLM is doing when it completes the patterns started in your prompt. And that is all the LLM is doing.

[UPDATE: 1/7/2026: I changed the paragraph below to avoid the implication that an LLM can “assume” something. It is us as users that “assume” things based on the fluency of the output.]

An LLM does not “know” anything. All it does is infer what comes next. Because the result appears fluent and natural, we assume what is stated to be true - even if the inferences are grounded with little to no actual data. As such, the LLM cannot determine for us whether its inferences justify calling its output ‘knowledge’.

To use another metaphor: When we have a deep “reservoir” of reliable data, we can produce dense, robust information. When we do math on this robust information, we can produce stable knowledge. On the other hand, where we have a shallow reservoir of reliable data, we can only have sparse information. We can do our math and produce knowledge - but we will be limited to volatile knowledge. In other words, it is highly likely this knowledge will change as it becomes more stable as the reservoir of reliable data deepens over time.

As for wisdom? Well, that should be pretty clear: We cannot reasonably expect wisdom from volatile knowledge.

With AI, we are geometrically modeling language in a boundless 3D space just like computer animation.5 If we are playing a computer game, being in the “cheddar” is like being in a part of the game crowded with lots of objects. Collisions are happening all the time and there are only a few ways you can actually move. In an LLM, that “crowding” limits the possible ways the LLM can complete the pattern you start with your prompt. Those limits are created by the volume of underlying data, so the LLM completes the pattern in predictable, tightly constrained ways.

The problem we face is that the LLM is designed to dynamically infer from our prompt a contextualization of embeddings in the model to create information. It will then infer the completion of the patterns we started. That completion will be presented to us in natural language as if it were knowledge. To the extent that the embeddings that make up the information come from densely packed cheddar regions transformed from reliable data, the LLM response presents a strongly inferred (meaning tightly constrained by lots of reliable data) completion of the pattern we started with our prompt.

Stressing this again: The LLM does the complex geometry of language for us: It can return to us strong inferences tightly constrained by the available information. It can also sound unreasonably confident in the absence of adequate information. Our task is to figure out what this implies for intelligence and knowledge.

‘Epistemic Optimization’

Once we get to a point where we understand epistemology as how we come to know things, and we appreciate how language is one way we represent what we know, then we can begin to appreciate how LLMs draw computer science into philosophy, and vice versa. We are faced with an a priori:6 We can no longer speak of computers without the conversation leaking into philosophy. Nor can we speak of coming to know things without that conversation leaking into computer science. In practice, we might express these constraints by saying that “Artificial Intelligence” is neither artificial, nor is it intelligent.

Computer science has proven that human language maps our understanding of reality in 3D geometric space much like we do with computer graphics. There is nothing artificial about the massive textual corpora humans have created to represent our understanding of reality - and the subset of that corpora from which an LLM is trained. There is nothing artificial about the complex statistics and data science that is being applied to this textual corpora to build out an LLM of geometric embeddings. There is nothing artificial about the starting patterns we provide in our prompts. There is nothing artificial about the statistical inferences which join the patterns in our prompts to patterns in the embeddings. There is nothing artificial about the best inference as to how the starting pattern most likely completes.

It has been said that if the only tool you have is a hammer, every problem looks like a nail. Alan Turing (1912 - 1954) might be considered the father of modern computing. He famously asked whether machines could ‘think’. He proposed the “Turing test” - whether a machine could perform in conversation in a way indistinguishable from a human. We might say his “Turing machine” (the forerunner of the computer) was his hammer and ‘thinking’ itself became his nail. By collapsing the idea of thinking and intelligence like this, he left us vulnerable to the mimesis of intelligence.

Mimesis is a term from philosophy that roughly describes our ability to imitate things. For Plato it was problematic and moves us further away from truth. For Aristotle it was a natural part of how we interact with the world around us and as such is essential to learning. There may be no contrast in classical philosophy more important to the discussion about the place of AI in our modern world. But to simplify: If a masterful impersonator can fool everyone into thinking they are the person being impersonated,7 that does not make them that person - it just means they are a masterful impersonator.

In software engineering, an “interface” defines how the program accesses and operates underlying data. If we might provisionally define “intelligence” as the way humans construct language as an “interface” between human thinking and reality, then all we have done with LLMs is normalize and optimize the interface across all domains of knowledge - epistemic optimization. We still have to judge for ourselves whether or not - along with why or why not - the output qualifies as knowledge.

Why this matters

There is something else “AI” is not. It is not a “race.”

In October 1957 American society was paralyzed with the fear that the U.S. was losing - or had lost - the “space race” to the Soviet Union. Sputnik orbited the globe, and could be seen traversing the night sky. President Kennedy later called the country to go to the moon, and in 1969 we did. That “one giant leap for mankind” felt like we had gotten our footing back. At least we won the race to the moon.

AI is not like this. The process of transforming text to spatial embeddings was discovered by a team working for Google at the time. If that is the finish line - well, we won already.

Since we have seen that LLMs model language in 3D geometric space like the mathematics used in graphics, it is not surprising that computer graphics cards (GPUs - or Graphics Processing Units) proved to be the best hardware/chip model for LLM operations. The challenge now is how to optimize the chip design to do the huge mathematical lifting using the least energy. This is not likely to “speed up” the LLMs, though, but to allow them to absorb ever larger amounts of training data, covering larger areas of knowledge with ever more densely packed embeddings.

But, as we have discussed above, this will only be as useful as the training data is reliable. We have discussed how LLMs generate text to complete a pattern started in the prompt. We have pointed out that completion can depend on ‘pockets’ in the LLM where the embeddings are provisionally located based on scarce data. If we explode this to the generation of whole papers that take the form of academic research, but do not represent actual research, we will learn a hard lesson - that more is not always better. Being able to transform ever larger volumes of text may only make it more likely LLMs develop densely packed embeddings from previously AI-generated texts - that were originally based on embeddings in the soft brie or the Swiss pockets.

But what about China?

Indeed, what about them?

What if China scales these systems faster, regardless of quality, and gains an advantage? The concern is understandable, but it rests on a mistaken assumption - that speed and scale alone produce “intelligence” or strategic clarity. Large Language Models do not become more reliable simply by absorbing more text. If the material the model ingests was previously generated by the model (or a competing model), or otherwise is poorly grounded, scaling only increases the density of error. The result is not superior insight, but hardened confidence built on weak foundations. Any society that relies on such systems risks degrading its own decision-making.

The real competition, then, is not who moves fastest, but who can scale without eroding the integrity of knowledge itself to the point where they have to scrape the mold off the cheese and wisdom is nowhere to be found.

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[Correction - 1/3/2026: The article below was very much a “hot-take” reaction to the assassination of Charlie Kirk. In it, I significantly mis-stated the role of aromatase as it relates to sex and gender. I still believe the underlying debate is hugely important, so I have edited that paragraph substantially to correct the errors.]

I am going to wade into this matter of Charlie Kirk, but I am going to stick to one main issue, and yes - I am going to politicize it. Just yesterday Kirk said the murder of the Ukrainian immigrant in Charlotte, NC needed to be politicized to draw attention to the consequences of allowing violent criminals to walk free. He was right on that - when you can no longer ride public transit without being in fear for your life - it is political.

I appreciated Kirk because he succeeded in getting young people engaged in current events. As a conservative, I agreed with him on most things, but certainly not everything - especially about what I will say next. I genuinely mean to honor his attempts at dialog. So in genuine honor of his memory...

Prove me wrong.

Kirk has made the common conservative argument that “there are only two genders.” Well, if we limit that question to genetics, then yes, the human egg carries the X chromosome. The sperm then donates another X and a girl (XX) is born. Or the sperm donates a Y and a boy (XY) is born.

But... If the chromosomes are our “source code” it is “compiled” into the biology (and psychology) of the body we spend the rest of our lives in. That “compiler” is our endocrine system. Our body and mind is like “machine code” run by the computer. I write software. If the compiler is corrupted, it makes no difference how perfect my source code is.

There is an enzyme called aromatase that converts testosterone into estrogen and is found in many tissues, including fetal gonads which will become either ovaries or testes. For an “XX” fetus (girl) the gonads will naturally become ovaries. For a boy (”XY”) the “Y” chromosome will signal the gonads to become testes, which will then produce testosterone. If endocrine-disrupting chemicals alter aromatase activity, they may disrupt the balance of estrogen and testosterone during development. I believe such disruptions can, in some cases, influence aspects of brain development that later shape how a person experiences sex and gender.

If you want to see what happens to frogs when they are exposed to otherwise normal levels of a pesticide named atrazine, how it affects aromatase, and then how sex and gender can be disconnected from genetics, by all means read the science for yourself here: https://pmc.ncbi.nlm.nih.gov/articles/PMC2842049/.

Now, someone might say this does not prove anything as to humans. This is correct. But it does present a plausible hypothesis, because aromatase as an enzyme functions the same way in humans. In her recent book “Follow the Science” Sharyl Atkinson covers this study in depth and interviews the author. If you want to honor Kirk’s commitment to open dialog, get the book and read it for yourself. They talk about whether atrazine might be the reason why a child feels like a girl in the body of a boy (or vice versa).

Here is where I might say “prove me wrong.” The problem is we can’t. This is a hypothesis and the only way to falsify it is to poison some human fetuses and not others. God forbid we even think about it; we’d make the Nazis look like saints.

But if it is plausible - and I would argue with Kirk if I had the chance that it is - then he was wrong as to biology and psychology. We might say God is the author of our source code (our genome). We might say “God doesn’t make mistakes.” We’d be right on both counts. But we (mankind) most certainly do make mistakes. And what if we have made many in allowing the kinds of chemicals in our environment and food supply that corrupt the human “compiler?”

In an environment where endocrine disrupting chemicals are ubiquitous, biological gender is not binary. It should be. But it isn’t. And if the formation of a child’s mind and body have been affected by this - well, whose fault is that? It most certainly is not the child’s - nor is it the fault of the adult that child grows to be.

Prove me wrong.

The Monster in the Mirror

Now let’s go even further - into our churches. (I am speaking broadly of Evangelical Protestantism in the United States.) The recent shooting at the church/school in Minnesota was done by a transgender young person. She drew a portrait of herself sitting on a chair looking in the mirror. The image in the mirror was of a monster.

This is what we teach.

Mind you, it might not be what we mean. But it is how we are heard. I talked through some of the above with my transgender friend (some of my friends in church have met her) and she stopped me. She said - firmly but very kindly, our friendship made ample room for it - that it sounded like I was saying God’s design was like a perfect white dress, and she was a stain.

That, of course, was not what I meant. But it was what she heard. I grew a great deal from her kindness at that moment. I gained a lot of self-awareness.

Yes, we teach them to see themselves as monsters.

Prove me wrong.

(I do not know if she had been prescribed SSRIs, but I believe that research will soon come to light linking it to violent outbursts. I was on an SSRI for quite some time for anxiety and while I never experienced violent ideation - it usually happens in younger people - I know excruciatingly well how emotionally hard it is to wean oneself off of those medicines. My faith - and some friends I’ll mention below - saw me through that time.)

No, none of this justifies violence. But to the extent that it drives us apart, it can only deteriorate into violence - political violence. So yes, this is all inescapably political.

I’ll finish with this. My main angst right now starts with something the pastor I grew up under as a teenager would say: When you point a finger, note the other three - they point back at you. We are so easily manipulated. We have been raised with a picture of what I will shorthand as the queer community. It is a dark picture... and to someone who has lived their entire life at emotional and psychological war with their own body, it looks like a monster. And now we have social media throwing that pervasively in our face - knowing it agitates us and keeps our eyeballs on their product - to their immense profit.

It isn’t real, folks. I don’t believe the picture was originally drawn in bad faith. But it was drawn out of ignorance. We are not taught to make friends here so how would we know?

Prove me wrong.

From Picture to Prayer

Lastly I want to say as loudly and proudly as I can... I am a better man, a better Christian, and yes - a better husband to my wife of 30 years - because the San Diego Gay Men’s Chorus accepted me to sing with them (even though I was not feeling well and basically bombed in my audition).

As I struggled from time to time with the emotional rawness of getting off of SSRIs, I found that our Monday evening rehearsal was exactly what I needed. I once was on the verge of dropping out because of the stress of moving to Tennessee (which only made getting off the SSRI all the harder). My friend Ernie - a godly man if there is one - pulled me out of the practice at the mere mention of dropping out. He told me how they all struggled with various challenges and the discipline and work needed of us together to sing well was a big part of how they managed - and supported each other. He simply would not allow me to walk away like that.

I am absolutely certain God wanted me to experience this immense kindness in their company. I needed this kindness. I needed it desperately. And God provided it - but not in church. He wanted me to have an honest picture so I could turn from that honest picture to Him, with honest, heartfelt, powerful prayer that God would somehow use whatever of His image I could love into their lives to draw them closer to Him.

God does not need me to “preach.” Neither does He need us to win arguments or elections. He just needs us to be His image in our world. Sometimes - like now - the politics of the moment cannot be escaped and must be faced. On gender and sex, the stories of our neighbors are complicated and more often than not are fraught with a soul crushing loneliness and isolation. But when God looks at them He see what He sees when he looks at me and you - the sacrifice of His Son. It will always remain that we have to respond to this in faith. But apart from this, we are all shut up under sin - gay, straight, and trans alike. None of are without sin, so none of us can throw that first stone.

Yes, God’s mercy calls us to a higher life in Christ, but I don’t know what that means for my queer friends. I barely know what it means for me. I do know I need friends to walk with me in God’s lovingkindness, rediscovering that higher life - day by day. I know my queer friends deserve the same.

Prove me wrong.

TL;DR

Bobby Kennedy Jr. is a man of his word. At the start of his independent bid for President, he said he would drop out if it became clear he would only be a spoiler. That day came shortly after the assassination attempt on President Trump. I believe the president was humbled by what happened in Butler, PA. I believe Butler formed a bond between the President and Kennedy; the President has to wonder why he was spared the fate that befell Kennedy’s father and uncle. For Kennedy, it has always been his prayer to be in a position to end the scourge of childhood chronic disease. These two men are on the cusp of doing just that - and industry is in an existential panic.

Below I’ll share a video I took of Mr. Kennedy speaking at a campaign fundraiser in March of 2024. Listen carefully and today’s news will make complete sense. This is how we got where we are today.

A whole new round of hit pieces on Bobby Kennedy, Jr. are dropping because he and his team are about to drop a nuclear bomb on the industrial players that have crippled an entire generation with chronic disease. I’m going to share a video below that I took at a Kennedy campaign rally in a San Diego County suburb in March of 2024 because - all the way back shortly after he launched his independent bid for President - he laid out exactly how he would approach public health.

But before I do that...

We’re still meeting, active, and ready

I was a communications lead for the Kennedy California volunteer team. After the 2024 Republican Primary (in March) I switched my registration from Republican to Kennedy’s early effort to bootstrap the “We the People” party in California. Later in June the American Independent Party of California (AIP) - one of six formally recognized parties with access to the ballot for President and Vice President in California - nominated Kennedy and Nicole Shanahan as their candidates. I volunteered over the Spring and Summer and in October was formally named by the AIP as a primary elector (each primary elector has an alternate) for the Electoral College. If Kennedy had remained in the race and had been able to gain a plurality across the six candidates on California’s ballot, I would have been one of Kennedy’s 54 Electoral College votes.

From the start, Kennedy made it clear to us that if polling showed him merely as a spoiler, he would drop out. During the race, he spent a considerable amount (with Zogby polling, I believe) on a poll with a margin of error of next to zero. He made it clear he wanted the true picture of the race. And it looked entirely possible that we could see a “Contingent Election.” This is where no one gets a majority of Electoral College votes and the selection of President is thrown to the House of Representatives. (The Senate chooses the VP.)

California has the largest number of Electoral College votes at 54. With six candidates appearing on the ballot, a plurality merely requires 17% of the popular vote to win all 54 of the Electoral College votes. A majority of all Electoral College votes is 270. The California contingent of 54 is exactly 20% of the votes needed to become President. If we could take those from Trump and Biden (as we thought at the time) we might deny both of them a majority and force a Contingent Election.

While the chance Kennedy could win in the House seemed slim, we were undeterred because just by triggering the Contingent Election we would have taken a sledge hammer to the image of inevitability people tend to have of the two party system. (The two parties assiduously collude to maintain that aura of inevitability.) It would have been an absolutely historic crack in the status quo.

But even though the odds seemed slim, what would have happened in that case is that we (our ground game of volunteers) would have made something abundantly clear to ALL members of the House (Rs and Ds alike). If they voted for Mr. Kennedy we would support them two years later (the 2026 cycle), without regard to party affiliation. If they didn’t, we would guarantee they would face a well-funded and well-staffed primary challenger from their own party. And if you don’t think it is possible to pull together a national team of volunteers who come from both sides of the traditional aisle and are willing to stand together like this - well, you weren’t in the meetings I was in. So we were quite motivated on the California team.

How Butler, PA changed the race

And then came the assassination attempt. You can imagine how fraught that moment was for Mr. Kennedy, with both his father and uncle having been assassinated. What made it even more fraught was how Mr. Trump reacted. The polls changed immediately and dramatically. A large part of the undecided voters who polled as seriously considering Kennedy made up their minds for Trump.

And then we saw Mr. Kennedy for who he is; he is a man of his word. He had warned us about this day. The polling - again, he sunk a lot of money into getting the most accurate polling numbers possible - showed that remaining in the race would throw the election to Kamala Harris. He did exactly what he said he would do; he dropped out. I believe the assassination attempt humbled Trump and created a bond between him and Kennedy. I think Trump appreciated Kennedy’s deeply felt prayer that God would allow him to be in a position to put and end to the scourge of childhood chronic disease. I think this resonated with Trump as he had to grapple with his own questions of why he was spared the fate Kennedy’s father and uncle had met.

I vividly recall the next conference call with the California team; not everyone was happy with the move. I raised my hand and when my turn came I said something like this: “If we’re looking at this from a public health policy standpoint, having Kennedy as Secretary of Health and Human Services is actually a bigger win than having him as President.” You’ll see in the video below, and in my explanation of Kennedy’s remarks, why I felt that way.

I told the group while we were going to continue to table for Kennedy at county fairs and the like, we needed to be ready if Trump won and then nominated Kennedy to HHS. At that point we (as a national team) needed to pivot. I provided a list of every Republican Senator who would have to run for reelection in 2026. I said that if Bobby were to be nominated, we needed to be on the phone, making it very clear to that batch of Senators that we were still together, still motivated, and fully ready to support primary challengers if need be.

And that is exactly what happened. Kennedy was nominated and confirmed because every Republican Senator saw the handwriting on the wall. That was our handwriting.

And now to the video... I’ll come back to the matter of the 2026 mid-term election in a moment.

There are about 10 minutes here and I’ll apologize up front for the poor audio and shaky video. This is just me holding up my phone. I realize that readers might not have the time or inclination to listen through these ten minutes. But I urge you to do so anyway. You simply have to understand the lessons Kennedy has learned litigating against companies for polluting the environment and selling harmful products.

Once you hear him explain his approach - right here all the way back to March of 2024 - you will immediately understand the subtext of what you are reading and hearing in the news. Here is a preview of what you will hear in the video below.

0:00: Kennedy talks about a toxicologist who has served as an expert witness in Kennedy’s cases. He then asks why in one generation there has been an explosion of autoimmune diseases. The toxicologist observes: “There's only about 13 things it could be...”

Why this matters: Our legal protections do not just come to us from legislatures in our state and in Congress. They come first from our tradition of common law. This reaches as far back as the English King Henry II in 1154 - even before the Magna Carta! The idea of “precedent” developed such that a present case was expected to be decided in a way consistent with past similar cases. The idea is that precedent predates, and then outlives, the current ruler and lays a foundation for a truly independent system of justice.

The U.S. legal system, both at the state and federal level, allows for persons to bring cases based on common law principles drawn from this history - not just on laws passed by our legislatures. One of these principles includes ‘product liability’.

So let’s go back to Kennedy’s toxicologist. If there are only about 13 things that can be causing the epidemic of autoimmune disease, the manufacturers of these things can end up on the hook for instances where people have been made sick. Because this is rooted in the tradition of common law, the principles of justice predate, and will outlive, whatever party happens to control Congress and the White House.

Kennedy’s famous case against Monsanto (now Bayer) over their Roundup weed killer is an example of what happens when a product is adequately proven to cause sickness. This is why it is important to listen to Kennedy throughout this video.

5:10 Kennedy gives voice to the skeptical who understand the problem of chemicals in the food supply and environment, but do not think anything can be done about it. “A lot people say, well, even if you can prove... there's nothing you can do about it... because industry is so powerful, so ingrained in our agricultural model...”

5:43: Kennedy answers the concern: “I know how to fix it... They way to fix it is you do good science... Because when you have enough science out there; when you have a critical threshold of science, then the lawyers come in...” (Please forgive me, I am one laughing loudly at that in the video.)

6:00: The Daubert Rule:1 “The Daubert rule says that if you are claiming that you got sick from an exposure... the judge is not allowed to let your lawyer make that argument to the jury unless there is a critical threshold of science...”

Why this matters: First, because a product liability case is based on common law - not on laws passed by Congress. In a very real sense, the common law is our last refuge in a system of laws (statutes passed by Congress) almost entirely bought and paid for otherwise.

It also matters because if we are to prevail in court in a case where we have been made sick by a product sold to us, we will have to show “proximate cause.” This is just a fancy way to say that we will have to make some reasonably objective case that our sickness was, in fact, caused by the product. And as we learned in high school science, “cause and effect” can only be “proven” by doing controlled experiments. “Anecdotes” help the scientist ask the right questions, but they are not proof. Statistical correlations help the scientist further refine their hypotheses, but “correlation is not causation.”

7:05: Industry is desperate to prevent these studies: “But, at about 2016 there were enough studies being done all over the world... and Monsanto was trying to stop them all... that the International Agency for Research on Cancer made a definitive finding that [Roundup] was a probable cause of Non-Hodgkin’s Lymphoma...”

Why this matters: This is the whole ball of wax, folks! This is literally everything. Industry cannot abolish the common law without completely overturning the entire United States judicial system. While they can - and do - wield tremendous influence over what does and does not become law by way of statutes passed by Congress, they cannot repeal the tradition of common law, which reaches back even further than the Magna Carta! So they have to corrupt publicly funded science to prevent those who are made sick by their products from being able to prove their case in a common law court.

8:50 Enough science: “If we have enough science out there... that's what I am going to do... to make sure that every one of these exposures for every one of these chronic diseases, that we know what the cause is... and then we can clean up our country.”

Watch and listen for yourselves.

September is almost here. We are on the cusp of seeing Kennedy - with the support of President Trump - make good on this promise. That is why the knives are really coming out now.

Before I go on, let me make this one sidebar point. For reasons that will have to wait for another article, I am suspicious of anyone who attaches a “movement” label to themselves. We do not need a “movement” - medical freedom, food safety, you name it - we just need honest science. When we have honest science we can then vindicate our rights under common law and there isn’t a damn thing either the Ds or the Rs can do about it on behalf of their corporate clients.

Unless the government is literally required to ignore honest science.

House Appropriations Bill (Sections 453 & 507)

The Republican led House is moving an appropriations bill for the Department of the Interior in a way that observers have described as hasty. It is possible their haste is to get in front of the September report from HHS.

It is also believed that “Section 453” of this bill was added at the insistence of companies like Bayer (who acquired Monsanto) to overcome an adverse decision by the Ninth Circuit Court of Appeals which the Supreme Court refused to review. This decision came in the aftermath of the Monsanto case Kennedy describes in the video. On appeal, Bayer argued that the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) pre-empted California's common law standard for “duty to warn.” The Ninth Circuit disagreed and SCOTUS refused to take the case. Section 453 seems to be industry's answer:

“SEC. 453. None of the funds made available by this or any other Act may be used to issue or adopt any guidance or any policy, take any regulatory action, or approve any labeling or change to such labeling that is inconsistent with or in any respect different from the conclusion of (a) a human health assessment performed pursuant to the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 136 et seq.); or (b) a carcinogenicity classification for a pesticide.”

Section 507 says something similar about an industrial sludge byproduct referred to euphemistically as “biosolids” and used as “fertilizer” in agriculture.

“SEC. 507. None of the funds made available by this or any other Act may be used to finalize, implement, administer, or enforce the draft risk assessment titled ‘Draft Sewage Sludge Risk Assessment for Perfluorooctanoic Acid (PFOA) and Perfluorooctane Sulfonic Acid (PFOS)’ published by the Environmental Protection Agency in the Federal Register on January 15, 2025 (90 Fed. Reg. 4 3859)”

Let’s work our way back from getting sick and seeking to vindicate our common law right not to be harmed by the product that made us sick. We will have to show that the manufacturer knew or should have known the product was harmful, and that they failed in their “duty to warn.” This was basically the case made by Kennedy against Monsanto.

There are two streams of information to consider here:

• That “threshold of science” spoken of by Kennedy. These are independent studies that, in the aggregate, overcome Daubert Rule limitations. Or...

• As for Section 453, the “human health assessment” under FIFRA. Each registered pesticide must be reviewed every 15 years, and the process can take between four and 15 years to complete. The assessment includes a classification as to whether the pesticide causes cancer. And as for Section 507, it is even more egregious. These chemicals have already been identified as harmful.

If these sections remain in the bill the government will not be allowed to “follow the science.” It will be prevented from requiring appropriate warnings on product labels even in the face of a “threshold of science” showing that they cause cancer or otherwise are harmful. And for the toxic sludge passed off as fertilizer, it will not be able to take any action based on the harm science has already proven.

Let me say this again for emphasis: If these sections remain in the bill the government will not be allowed to “follow the science.”

This, in turn, will allow the manufacturer to claim that federal law does not allow them to add warnings to their labels beyond what has been previously approved by the Environmental Protection Agency.

It is not quite accurate to say this grants “immunity” from being sued. Rather, it makes it practically impossible to prevail in a suit claiming a breach of the “duty to warn.” By hiding behind the FIFRA process, industry is all but guaranteed the ability to wait out the current administration - under which they are no longer able to control what science is funded - in hopes they can regain that control when Kennedy is no longer head of Health and Human Services.

Simply put: Sections 453 and 507 strip us of the ability to vindicate our common law rights.

Back to the 2026 Election

House Republicans, already with a razor slim majority, simply need to understand that Mr. Kennedy inspired a movement that defied the myth of two party inevitability. Former Democrats and former Republicans joined forces, and then followed as Mr. Kennedy showed himself to be a man of his word. And we have watched as he has pursued his goal of Mak[ing] America Healthy Again EXACTLY as he said he would.

He was confirmed for a very simple reason. Senate Republicans were made to understand - in no uncertain terms - that the force that voted with them in November of 2024 can very easily vote against them in 2026. Honest science - in support of our common law right not to be harmed by products sold to us - is what we voted for. It is what was promised. Promises made. Promises kept. It really is that simple.

This is now Main Street vs “K Street”2 and House Republicans need to understand - again, in no uncertain terms - that the language of Sections 453 and 507 is the language of their political tombstone.

TL; DR: If Europe sends troops into the Ukraine and Russia attacks them, they need to understand that NATO’s Article V only means what parents like me are willing to tolerate. And I’ll stand right here, right now, and put it as clearly and bluntly as I can. I will tell my boys that when they come to take you off to war, you put your two hands out, wrists up, and tell them to hook you up and take you away. For I would rather visit you in jail than visit you in Arlington.

I walked into Arlington National Cemetery with my wife not too long ago. We were in Washington, D.C. for a work-related event and the bonus of visiting our younger son, who works as a finance editor for a major news outlet.

As my wife explained to me why this visit meant so much to her, I was taken back to 2009-2010. She was studying for the U.S. citizenship exam. The boys were in grade school. When I quizzed her on some of the topics and she paused to think, they would spin around and blurt out: “Mom! We learned that in third grade!”

My wife is of Chinese ethnicity from Malaysia. My boys and I watched as she took the oath of U.S. citizenship on January 20, 2010. Some 13 years later she explained how important it was to her that she take the time to remember the people who sacrificed everything for the freedoms we cherish. I kept my peace for a bit to gather my thoughts.

I then explained to her how I was conflicted. The imagery reminds me of the graves in France and “Saving Private Ryan.” As for them, yes, I shared that sense of reverence. But I could not help but feel the ghosts of souls who should still be with us. I felt then, and still feel today, that they actually got the better of the deal. The ones who survived Iraq and Afghanistan returned to fetid homelessness, substance abuse, and have no choice each night but to redeploy to their nightmares.

Because I respected my wife’s feelings in that moment, I kept this question to myself. I wondered as taps was played: What does it mean to remember them?

From Vietnam through Afghanistan we printed money to paper over the lies told to draw us into war and to perpetuate the stupidities of the interventionist foreign policy establishment. In the 1940’s we printed ration coupons to ensure that World War II was adequately supplied. Now we print money rather than demand these sacrifices of ourselves. If we had to make these kind of sacrifices here at home today, we would never have tolerated the incompetence of these blood-thirsty war-mongers.

These feelings started out as esoteric academic interests. Now, with boys in their 20’s, they are visceral, passionate, and conflicted. If I put pictures of liberated concentration camps alongside these ration coupons, I can imagine proudly supporting my boys if they were called up to fight such a war.

But this? Russia, Europe, and the Ukraine? Hell no! Enough of the lies. Here is the truth.

The world view of the people of Eastern Europe is inescapably colored by the old things of family memories and the ancient things which have always been. The tens of millions of people who died - Polish, Ukrainian, and Russian - in the Great War (to use the Russian description) are the old things of family memories. The bitter inter-ethnic blood feuds between them are the ancient things which have always been - and always will be.

We have our own family memories. I recall my late father telling me on September 11, 2001 that it would be our generation’s Pearl Harbor. That attack took 2,403 Americans. 9/11 took 2,977. And we say “Never Forget.”

The last time Russia had a Western military power at her borders, 25 million Russians were killed. Next time you listen to this cross-Atlantic cadre of political and think-tank dimwits, just ask yourself whether Russia might have that same sentiment. And then go here and read Thomas Friedman recount his 1998 interview with the late George Kennan - right at the point NATO began creeping eastward. You’ll then appreciate how shockingly stupid these people really are. It’s not as if they were not warned about what would happen in the Ukraine.

You’ll also learn who really started this war.

What we don’t have are the ancient inter-ethnic blood feuds. This is a testament to the singular thing that makes America exceptional. No nation had ever forged a national identity around anything other than language, ethnicity, and religion. None until we did. Our national identity is built around a set of ideals about individual liberty. These are the values we have historically shared with Europe. (More on these values in a moment.)

We will never view the world as the Russians view it. And for this we ought to celebrate. This is why we honor those buried at Arlington. But we must not allow these fools to propagandize us with their ahistorical, moralizing claptrap. If Europe wants to ignore history and moralize with their smug sense of superiority over Russia’s view of the world, then Europe can put their money where their mouth is and leave the rest of us the hell alone.

But it is more than just not being willing to fund - with either blood or treasure - this continued circle jerk of interventionist stupidities. A Europe who truly shares what were once our common Enlightenment values is worth fighting for and with. Immanuel Kant was asked to sum up the Enlightenment, and is reported to have boiled it down to two words: Sapere Aude! - Dare to Think!

Today’s Europe bears little, if any, resemblance to these values. Today’s Europe looks a lot like Europe right as the Black Death began to take hold. You did not think for yourself - what was true was what was taught to you by the clergy. And then comes a “global” pandemic, and the clergy were dying like everyone else.

It became clear that the priests were not who they said they were, nor did they know what they claimed to know. The ecclesiastical epistemology of the ruling class was the last casualty of the Black Death. And as we see over and over again, these same rulers were the last to realize it. It was out from this post-pandemic Europe that came Copernicus, Galileo, Leonard DaVinci, the great polymaths, the sciences, the Enlightenment, the Renaissance, and the Reformation.

And here we are, on the back end of Covid and now the priests wear white lab coats.

And as seems to always be the case, they are the last to realize that the rest of us - especially those who bear the burden of fighting their wars - see them as the fools they really are: They are not who they claim to be nor do they know what they claim to know. God forbid we dare to think. They tell us not to “do our own research” and “trust the science.” So we quietly tune them out. We turn our back on those to timid to be free and replace them with the few mainstream voices too free to be intimidated.

“Europe” - its people as proud heirs of true Enlightenment values - is worth fighting with and for. “Europe” as embodied by the bureaucrats in Brussels, and the banking fraud writ large known as the European Central Bank that funds them, is the last rotting corpse of the most recent pandemic. It is best buried in an unmarked grave.

This European ruling class and their lab coat draped clergy desperately need a wake up call. If they send troops into the Ukraine and Russia attacks them, they need to understand that NATO’s Article V only means what parents like me are willing to tolerate. And I’ll stand right here, right now, and put it as clearly and bluntly as I can. I will tell my boys that when they come to take you off to war, you put your two hands out, wrists up, and tell them to hook you up and take you away. For I would rather visit you in jail than visit you in Arlington because you died fighting for a European ruling class who abandoned our shared Enlightenment values and were too stupid to learn from their past.

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TL;DR - The number of people who remain hardened in their hostility toward the LGBT community has steadily declined. The number of us that have at least started to draw our own pictures of the LGBT community - based on our own experiences - has been slowly growing. These trends aren’t about politics. They are about people like Gina and people like me and people like the many other deep, meaningful friendships I now enjoy in the queer community. Unfortunately this trend can be aborted by politics, and that is a tragedy I cannot silently watch happen.

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A woman’s reproductive system produces eggs, each of which has an 'X' chromosome. A man’s reproductive system produces a sperm. But here it’s not so simple. The sperm can carry an 'X' or a 'Y'. If the sperm donates (we men are just so wonderfully philanthropic, now, aren’t we?) an 'X' we have a zygote with an 'XX' pattern - a girl! If our sperm donates the ‘Y’, the zygote has the 'XY' pattern - a boy!

This is genetics, folks. Wouldn’t it be nice if human experience were so neat, nice, and tidy?

But it isn’t.

Pictures that are drawn for us, but not by us

Please forgive me as I introduce myself. I am a human being. Then I am the child of parents who I would describe as conventionally Christian. I was raised in a Roman Catholic home I would describe as politically Liberal - in the sense that the Catholic social tradition demands the faithful attend to the concerns of the widow and orphan. But that same tradition demands respect for life and recoils at the idea of abortion as a response to the inconvenient consequences of human sexuality. I went on to complete the formal education of a Protestant chaplain. I know all of the typical conservative Christian arguments about human sexuality.

Beyond these labels - which I think are important and meaningful - my parents were what political historians might call “Reagan Democrats.” I heard the following long before Robert F. Kennedy, Jr. and his supporters were saying it: My parents did not leave the Democratic party, the Democrats left my parents. I graduated from high school in 1985. I missed the opportunity to vote for Ronald Reagan’s re-election by a couple weeks.

From these origins I have identified with typical conservative Christian Republican politics. This intersection of culture and politics drew for me a picture of what I will simplify as the “queer” community. And it was a dark picture - and got only darker with the advent of social media. It was a picture that bore more resemblance to the violence of ancient pagan temple ritual than to the lives of my neighbors. I was ignorant of that difference, for I knew nothing of the lives of those neighbors.

Until friendship.

Pictures that are drawn by us, not for us

Gina and I share just about everything in common. She is an aeronautical engineer for a major airline. I am a software engineer turned cybersecurity business owner. We both live and breathe ones and zeroes. Gina is a championship competitive shooter, an expert firearms instructor, and a Second Amendment advocate. We share basic conservative political beliefs. And Gina is transgender.

A conservative talk radio host in our town made a comment about transgender people - much like what we hear right now. Gina was listening, and handled it in the way Gina handles everything. She emailed the host, and with her typical kindness and professionalism asked him if he would have coffee with her and just allow her to tell her story. He agreed. Then she called me. She knew I came from the same tradition, but she also trusted me as a friend to join her for emotional support.

Listening to her story changed everything. She was born with severe genital ambiguity - out of the womb the doctors did not quite know what to think. They do not do this anymore (and rightly so), but back then they performed male sex assignment surgery right after birth. Her mother was given tiny testosterone pills to give when feeding her baby.

It might have sounded odd, but I introduced myself above as a human being for a reason. Because there she was, my friend Gina, a human being - who has never lived in a body with a “normal” endocrine system. But on a more fundamental, important level, she is a “normal” human being who remembers dreaming as a girl as early as seven or eight years old. In her dreams she was a girl and the world was perfect. And then she wakes up and sees the body of a boy in the mirror.

Her story really bothered me. But it wasn’t that there was something wrong with it. I was bothered because with the formal education of a Protestant chaplain, I was shocked that there were people around me with stories like this and I had not been exposed to it in school.

Our pictures are only as honest as we are free to think and ask questions

Gina and I have talked a lot about this since. I treasure her friendship because I am free to think through these things as makes sense to me. I can ask her pretty much anything and even if gets into private areas, she is open, honest, and kind with her answers. On a couple occasions the pastor of our church asked me to stand in for him on a Sunday morning, and if I was going to tackle topics related to human sexuality, I would invite Gina to join us. I knew how I intended to be heard, but I wanted someone who could give me honest feedback on how I might actually be heard by someone in the LGBT community.

From this I have learned to take care and accept responsibility for the fact that what I will say next will not land well in the ears of some of my friends. Human sexuality runs to the core of how we see ourselves as human beings. I certainly do not want someone to come along and suppose to explain me to me. I imagine my friends are no different. It would be as ridiculous as me - a white male - explaining to a Black woman what being a Black woman in America is like.

But I also know I can trust my friends in the LGBT community to understand that this explanation is not for them. It is for the people I grew up with in church. It addresses the current public policy controversies surrounding the Trump administration ordering the Executive branch to recognize only two genders.

Gender, sexuality, genetic, biology, and psychology

To continue with computers as an analogy: I write source code. But the computer does not run my source code; it runs what is called “machine code.” There is technology called a “compiler” between my source code and the computer’s machine code. I can write perfect source code. But if the compiler is corrupted, the computer is not going to operate as I expect it.

Conversations about sex and gender in our conservative Christian circles often include assertions like “God does not make mistakes.” I might look at my source code for a simple program and say the same thing: I made no mistakes in the source code. But if the compiler is corrupted, it doesn't matter.

If we take this analogy into human sexuality, our chromosome pattern is our source code. On this level, the insistence that there are only to genders - male and female - is correct. But it is only at this level - genetics - that this is true. We know enough about fetal development to know that the zygote - right at the point of fertilization - starts out as female by default. If the sperm has donated an 'X', the mother’s endocrine system manages the balance of estrogen and testosterone such that the fetus continues to develop the body and mind (biology and psychology) of a girl. If the sperm donates the 'Y', the mother’s endocrine system has to recalibrate that balance such that the fetus differentiates into the body and mind of a boy. This differentiation actually continues after birth and the baby’s endocrine system takes over.

The human endocrine system is the compiler. The genes are the source code and the biology of the human body - including the mind and human psychology - is the machine code. The question is whether the “compiler” has been corrupted by chemicals in the food supply and environment.

It is a risky question…

There are numerous studies which document apparent relationships between chemicals and the disruption of animal and human endocrine systems.1 A particularly famous one2 gained attention when Robert F. Kennedy Jr. mentioned it during his campaign for president. His comments were in the context of discussions about gender dysphoria and were met with derision and controversy, which is unfortunate but understandable. At best, and at a deeply personal level, this will sound like me (“hopelessly hetero-cis-normie” as I like to say to the amusement of my gay friends) trying to explain my transgender friends to my transgender friends. At worst it sounds like I am saying my transgender friends are something other than “normal.”

This is bad. And at first look it seems there is no way around it.

In this study, frogs and their larvae were subject to exposure to the ubiquitous (at least in the U.S.) herbicide atrazine at levels otherwise considered by the U.S. EPA to be safe. The study “...hypothesize[s] that atrazine induces aromatase and promotes the conversion of testosterone to estrogen.” At the most extreme, genetically male frogs were transformed into “hermaphrodites” - organisms with both male and female reproductive organs and confirmed the apparent corruption of the testosterone/estrogen balance.

Two things need to be noted. The study was done on frogs and correlation (which is compelling) does not mean causation. But beyond being honest with the data, there is something much more important to me: Being honest with myself as a professing Christian. I shared Gina’s story with a friend I grew up with church and he responded with a statistic - that these kinds of births are rare. This is rather typical. When we do this - respond to a story with a statistic - we reveal something ugly about ourselves: We care more about defending our preconceived notions than we do about the person in front of us.

…with a compelling answer

Again: Gina is a fellow human being as am I; neither of us are a statistic. And if I do not want my story dismissed by a statistic, I should not treat others as I would not want to be treated. This idea is about as basic as it gets and is a thread running through all known religions.

But in our Judeo/Christian (and, yes, Islamic) tradition we have something even more fundamental. We are created in the image of God. Oceans of ink have been spilt in the West over this, only for it to probably be very simple. If I want to know what God is like, I do not carve a statue for my fireplace mantle.

I make friends. That is where He has created His image to be seen by me - in my neighbor. And that means it is in me that He has created His image to be seen by my neighbor.

There is nothing special about this in the pews on Sunday morning in church, or Sabbath at the synagogue. There is something special when it happens between people whose lived experiences are so different.

It’s still a hard topic to discuss, even for the best of friends. But there is a way to overcome what will never be easy. We are both “normal” when we are both able to see the image of God in each other.

Until friendship

It was because of Gina that I began to seek out friendships in the LGBT community. Whether it be hobbies like music or other common interests, I have learned to appreciate the nature of the divide between us. I have no idea what it must be like for Gina to have lived her whole life at emotional and psychological war with her own body. I have no idea what it is like to be sexually attracted to men rather than women.

There is nothing by way of shared human experience that would naturally draw me into friendships with people in the LGBT community. But to give into that is to accept defeat. We Christians like to talk about spiritual victory, not defeat. But what does that look like? I got a glimpse when Gina called me asking to join her at that conversation for emotional support. There must be a way to build these relationships. But it isn’t going to come to me; I have to go to it. I have to seek out these friendships by finding people who love doing the same things I love doing (like singing).

There is a “vibe shift” in society right now. Honestly, it is a relief to see that merit and qualifications are going to return to their proper place in our society. But I am scared. I am scared because I fear a setback in the good that I have seen. The number of people who remain hardened in their hostility toward the LGBT community has steadily declined. The number of us that have at least started to draw our own pictures of the LGBT community - based on our own experiences - has been slowly growing. These trends aren’t about politics. They are about people like Gina and people like me and people like the many other deep, meaningful friendships I now enjoy in the queer community.

Unfortunately this trend can be aborted by politics, and that is a tragedy I cannot silently watch happen.

To the people who grew up like me, my point is this: Our neighbors in the LGBT community are not statistics - they are human beings. Many of them - especially those who feel at war with their own bodies - fight on through a soul-crushing loneliness and isolation. What if we have not even begun to talk about where the “sin” is in all of this? What if our sin is in how we have allowed ourselves to be poisoned to the point that a woman’s body is no longer able to calibrate the hormones needed for normal fetal development? What if the baby is born with his or her own endocrine system corrupted by further exposure to disruptive chemicals in the food supply? And if this - even if only partly - explains the chasm between us and the LGBT community... Please... tell me... Why do we condemn what we barely understand?

To my fast-growing group of friends in the LGBT community, my message is simple: You are loved for who you are right now. Period. Your friendships have made me a better man, a better neighbor, and a better Christian.

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P.S. I don't know if it is possible, but somehow I hope a link to this post lands in the email of Defense Secretary Pete Hegseth. If it does, I’ll just finish with this. The LGBT community looks nothing like what we see on social media. That picture is false, and drawn only to stoke fear and anger. We might agree that the process of gender transition is physically incompatible with combat readiness. I just hope we can also agree that public policy should arise from thoughtful, informed nuance characterized by compassion - not from cheap caricatures.

I have to admit, I really had a really hard time believing the story about what Michael Saylor said concerning Bitcoin and “custody.” I am suspicious of faux outrage online, so I was hesitant to pile on. And then today Saylor backs away from the parts of his comments that attracted the most attention.

But before he “reversed” his most inflammatory of his remarks, I listened to the podcast for myself for the full context. And now I don’t think Saylor should be allowed to get off so easily. I am also convinced the outrage is legitimate.

I’ll say up front: I cannot read Saylor’s or any one else’s minds. (I have a hard enough time reading my own.) So I know nothing about what may be motivating these remarkable comments. But there are some things happening right now that might shed light on this.

The TLDR version: The U.S. Dollar is in some very serious trouble. It may be starting its final run-up in value (relative to other fiat currencies) prior to an epic collapse. Michael Saylor (and honestly, most of the names you will recognize among “Bitcoin maximalists”) are not quite the Bitcoin advocates they claim to be. They like Bitcoin only to the extent that its value is referenced against the USD. That is, of course, not at all the point of crypto - which is to offer a viable path to disintermediating all fiat currencies entirely. Saylor and those like him value their “book” in USD. So now - all of a sudden - they are “talking their book.”

Three Signs of Serious Trouble

Sign #1: The U.S. debt has now crossed a Rubicon:

Interest payments are now the single biggest expense in the U.S. budget - bigger even than the U.S. Department of Defense. This is one of those philosophical/historical things that is hard to understand and even harder to explain. So let’s just say this: The history of war is the history of money, and the history of money is the history of war.

Where this all went wrong goes back to the end of the Cold War. An undersecretary of defense by the name of Paul Wolfowitz authored a planning memo which immediately caused quite a stir. In this memo he argued for the U.S. to become the single global hegemon. This was rightly panned as a road map for imperialism. What was founded as a republic would become an empire - and eventually fall for the same reasons all empires before it have fallen. Adjacent to this argument were comments from people like former U.S. Vice President Dick Cheney who said “Reagan proved deficits don’t matter.”

To which I’ll respond: Sure, deficits don’t matter - until they do.

We have spent the years since 1990 running up the national debt in order to maintain global hegemony. Can you see the problem we now face when the cost of our debt service exceeds the cost of the purpose of borrowing that money to begin with? The more obvious observation is how this cannot possibly lead anywhere but to bankruptcy. The less obvious - but far more crucial observation - is that our debt is now at a place where it can only be serviced with dollars that are significantly cheaper than when they were borrowed.

Huh?

I know - not exactly the kind of simple language I like to at least strive for in my blog. Here is an example of what I mean:

If I owe $300,000 on my home, and my salary is $50,000 a year (leaving out interest to simplify the math) my debt is 6x my earnings. ($50K per year for six years is $300K.) Now, if by way of printing money, mainly to prop up the ability of the government to borrow in the ever-more-expensive enterprise of maintaining global hegemony, prices and then wages rise to where I am making $100K a year, my annual salary has doubled but my debt has remained the same. (Let’s assume I have an “interest-only mortgage” - which is basically the same thing as a “bond.”) Now my debt has gone from 6x earning to only 3x earnings. This is what I mean by “cheaper dollars” - cheaper in terms of the labor needed to acquire them.

For those who own their own home there is an offsetting reality here: My mortgage is easier to pay off, but everything else (energy, food, etc.) is more expensive. This is why I like to divide the “middle class” into an “upper middle class” and “lower middle class.” The difference is whether you own your own home - not your annual income.

“Deficits don’t matter” is a distinctly upper-middle-class and “rich” way of thinking because the inflation of our assets (mainly our homes) and the static nature of the mortgage against our homes offsets the other added expenses. And the more other assets (e.g., stocks, bonds, and precious metals) we own, the more in our favor the arrangement becomes.

Until you cross that Rubicon.

Let’s leave aside what ought to be the moral outrage at watching this utter theft of purchasing power from the poor and lower middle class. Let’s leave aside the fact that before he wrote The Wealth of Nations Adam Smith - who was a professor of moral philosophy, not economics - wrote A Theory of Moral Sentiments. Let’s just make sure we don’t miss how the hegemony required to keep the U.S. Dollar at the center of the world economy is being paid for by U.S. Dollars conjured up out of thin air and then charged as a debt per U.S. person of $106,056 or $272,173 per household.

Now the annual interest on hegemony exceeds the annual cost of that same hegemony.

If you do not think you are paying that debt, please look again at your shopping cart and notice how much less you now get for the same salary. Look at your utility bill. Look at how much a tank of gasoline costs. You are paying for it - in purchasing power. Do not let anyone lie to you about this. Your shopping cart will tell the truth - and the truth just might set you free. They are going to come to you with an appeal to patriotism. It is a lie. They merely seek to excuse their theft.

Sign #2: Gold and silver (especially) are dramatically increasing at the same time the U.S. Dollar is “increasing.”

This is not normal. Usually when gold and silver increase the dollar decreases. But right now the USD is increasing at the same time as gold and silver.

It has been noted that when “fiat” currencies start to wobble, the USD always increases in value. The problem with this is the increase is not being measured in real-world terms like what your USD salary buys you in energy and groceries, but against other fiat currencies. The currency markets are picking the currency that stinks the least, and since 1971 that has been the USD. To see what is really happening, compare the value of the USD to gold alongside its peers. That line series will be downward for all fiat. The USD is just not declining as fast as the others.

The USD stinks the least among its peers, but only for so long. To see why, go back and re-read Sign #1.

Sign #3: Once again, the history of money is the history of war, and the history of war is the history of money.

The best analogy is how the English King Charles I wanted to bring the Scots to heel by appointing bishops over the Church of Scotland. This is hard to appreciate today because back then “social order” was the same as “church order.” The Church of England’s order was monarchical, authoritative, and “top down.” The Church of Scotland is the origin of what Americans know as Presbyterianism, and was (and still is) decidedly consent-based and “bottom up.”

The Scots fought Charles I to a standstill in the First Bishop’s War. (Neither side’s soldiers were really interested in fighting.) After an interim period of politics which failed to produce his desired outcome, Charles set out to fight the Second Bishop’s War.

Only this time he needed money.

English merchants had “custodied” their gold with the Royal Mint. Well, not quite. But it helps to put it this way so you understand where this is going. The merchants delivered their gold to the Mint to have it melted and struck into the coinage of the realm to use as currency. King Charles I confiscated these coins from the Mint as a “forced loan” to pay his soldiers.

The first lesson here is this: Money is the scaffolding of all social order. If you do not control the money supply you cannot control the social order. King Charles I needed to seize control of the money supply in order to fight his wars to control church order - and by extension the social order. The Scots, being very Scottish, simply weren’t having it.

There is only one way the USD can be cheapened to the point of pulling the U.S. back from across the Rubicon. And that way is war. We are being brought to the precipice of World War III by provoking Russia with an advanced military power at its doorstep. The last time such affairs obtained, it was Hitler’s German army. When that movie ended there were 25 million Russians dead. On 9/11 we lost about 3,000 souls, and we say: “Never Forget.” Can you imagine the sentiment of “Never Forget” in Russia?

But Russia has not played along quite like some folks over here thought they would - they refused to be baited. Republicans in the U.S. House of Representatives started balking at the blank check the war in the Ukraine seems to require. Largely because of a secret side-deal with Democrats on funding for the Ukraine war, on October 3rd 2023 something happened in the U.S. government which had never happened before. The party in control of the House - where all spending bills must start - deposed their own Speaker. Kevin McCarthy was ousted by his own party.

Personally, I believe this caused sheer panic in the rarified air of Western finance. The war needed to cheapen the USD to stave off the inevitable hadn’t yet happened, and a small cadre of Republicans (the few genuinely conservative among them) looked poised to drive a stake into the funding for needed to provoke that much needed war.

Remember, this happened on October 3rd, 2023. What then happened four days later - on October 7th, 2023? If they cannot get their war in the Ukraine, then maybe between Israel and Iran? And if not there, how long will it be before things really heat up in Taiwan?

Let’s Review

Sign #1: Interest on the debt needed to support hegemony becomes greater than the cost of that hegemony;

Sign #2: Gold and silver start rising against the USD at the same time the USD rises against its fiat peers;

Sign #3: The western ruling class shows an ever more desperate thirst for war.

And now for Saylor, Bitcoin, and “Custody”

Because I prefer to traffic in context rather than sound bites, I have transcribed a part of Saylor’s comments on this podcast. Starting at 20:30 you can hear the question posed about risk of confiscation with large percentages of Bitcoin in the custody of a few institutions. Please keep in mind the history of the Royal Mint and King Charles I as I have outlined above as you consider Saylor’s response. It starts at 20:52. By all means, watch and listen to this for yourself. Hold on your cold storage wallets because this is an amazingly revealing three minutes:

[Saylor]: No I think its the opposite. I think when the Bitcoin is held by a bunch of crypto anarchists who aren’t regulated entities, who don’t acknowledge government, or don’t acknowledge taxes, or don’t acknowledge reporting requirements, that increases the risk of seizure. [Saylor then uses China as an example from 21:14 to 21:32].

So, normally, the risk is greater when there are unregulated private entities that are perceived to be holding the asset. When you have regulated public entities like Blackrock and Fidelity and JP Morgan and State Street Bank holding the asset. Well, all the lawmakers and all the law enforcement arms, they’re invested in those entities, right? So there’s no way that all the Senators and Congressmen are going to seize the asset from Fidelity and Blackrock or Vanguard because that’s where all their retirement money is invested.

So the assets moving from private to public hands and moving into regulated entities - it does a bunch of things. It decreases the volatility. It decreases the risk of loss. It decreases the - you know. Who do you trust more as a custodian? FTX or Fidelity? Right? Or Vanguard. Or State Street, right? And if you walked down the street and you said would you put all your family’s money in an offshore entity without a headquarters run by five dudes without an auditor. Or would you put it with a bank that’s too big to fail in the U.S.

At the end of the day you have an “O.G.” crypto community [I had to look this up. It apparently means “Original Gangster”] that’s very hard core about it. But, if you look at where all the money is - 99.9% of the money - is actually in the traditional economy. And in the war for the future of money, the war is going to be won with money, right? At the end of the day, Bitcoin is capital. Who is going to actually decide who is a winner and a loser? The people with the the capital. And so where is the capital? Its at Vanguard, Fidelity, State Street, JP Morgan Stanley. They’re all regulated entities of sorts.

So, when Bitcoin is held by those entities, it becomes regular and normal and, you know, people would no more think about seizing that than they think about seizing a building in the middle of Manhattan. Or seizing the S&P Spider assets [this is an ETF which tracks the S&P 500]. Why would you do that? That’s just the capital that you’ve built the country on. [23:53].

All I can say at the outset is I will never again take seriously a single thing Michael Saylor has to say - about anything. Honestly, his whole Bitcoin-related social media presence now makes an immense amount of propaganda sense to me. But before I dissect this gem, let me point out two “tells” from my experience working with people who end up revealing their true intentions.

First is the repetitive use of the interrogative: “Right?” I picked up on this immediately. It tells me the speaker is not secure in what he (or she) is saying. At this point I ask myself: Are they bullshitting me? Or do they just not know what they are talking about? My bet here is on the former. The second is related, but you have to watch the podcast. As he starts tossing “Right?” in his speech he also “gesticulates” - he uses his hands more. Putting these two things together, my bullshit radar pops up and starts spinning wildly.

Beyond that, let’s unpack this - starting at the end and working back.

“That’s just the capital you’ve built the country on.”

This one is simple: Read “Founding Finance: How Debt, Speculation, Foreclosures, Protests, and Crackdowns Made Us a Nation” (Available on Amazon here.) That story is not as nice as Saylor seems to want you to believe.

“And in the war for the future of money, the war is going to be won with money. Right? At the end of the day, Bitcoin is capital. Who is going to actually decide who is a winner and a loser?”

Holy shit! He actually uses “war” as his metaphor for the “future of money.” Damn, he makes my case for me!

Please think this trough: How are we going to fund a war over the future of money? How, exactly, is a war provoked by the failure of fiat money going to be funded with that same failed fiat money?

[W]ho do you trust more as a custodian? FTX or Fidelity? Right? Or Vanguard. Or State Street. Right? And if you walked down the street and you said would you put all your family’s money in an offshore entity without a headquarters run by five dudes without an auditor. Or would you put it with a bank that’s too big to fail in the U.S.?

So, “too big to fail” is now a business model to which we should trust our family’s money? Do you really think we’re this damn stupid?

How about neither? Or maybe just me? This is the most abjectly dishonest part of this whole discussion. The idea of “self custody” means I have my Bitcoin on a device much like a USB stick. It is not “deposited” with “… an offshore entity without a headquarters run by five dudes.” If I want to convert it to USD, I can transfer it into an account on an exchange, spend it, and call it a day.

At the end of the day you have an “O.G.” crypto community [I had to look this up. O.G. apparently means “Original Gangster”] that’s very hard core about it. But, if you look at where all the money is - 99.9% of the money - is actually in the traditional economy.

So, Bitcoin is not “money?” Paging Satoshi Nakamoto! Somehow I think “he” would disagree!

For God’s sake, the “economy” is what ordinary people do with money over time. There is no such thing as the “traditional economy.” There is the economy of the ruling class who skim rents off of every transaction. And then there is the economy of people who actually make things for a living. There is an economy built on rents. And then there is an economy where wealth is created when people use these things God gave us called hands and take the raw materials of the earth and make useful things. Saylor has shown us which economy pays his bills. And it is clearly not the economy we have built with our own hands!

So the assets moving from private to public hands and moving into regulated entities - it does a bunch of things. It decreases the volatility. It decreases the risk of loss.

Wait, what?

Do you mean “publicly traded hands?” These “regulated entities” are regulated by what? Oh, that’s right, by the Federal Reserve! So you want us to custody our crypto within the Federal Reserve System? Because it “decreases volatility [and] the risk of loss[?]”

Folks, please understand that the Federal Reserve System has a “bank note.” Pull out a dollar bill from your wallet - whatever the denomination - and look at the top. It says “Federal Reserve Note.” The U.S. Dollar is the Federal Reserve Note. They are one in the same. And the degree to which the Federal Reserve creates money out of thin air is the degree to which they subtract from your purchasing power so the government can continue to borrow in the service of maintaining global hegemony.

If there is “volatility” in the USD price of Bitcoin, that volatility is an indictment of the USD, not Bitcoin. And the risk of loss? Please. Loss of what? The USD value of your Bitcoin? Or the loss you see everyday in your shopping cart as you get less and less for your USD salary?

Bottom line, up front: In Saylor’s world you must value your Bitcoin in USD - meaning the Federal Reserve System’s banknote. And you thought Bitcoin freed you from “counterparty risk?” If you value your Bitcoin in USD, the Federal Reserve System is your counterparty!

So, normally, the risk is greater when there are unregulated private entities that are perceived to be holding the asset. When you have regulated public entities like Blackrock and Fidelity and JP Morgan and State Street Bank holding the asset… well, all the lawmakers and all the law enforcement arms, they’re invested in those entities, right? So there’s no way that all the Senators and Congressmen are going to seize the asset from Fidelity and Blackrock or Vanguard because that’s where all their retirement money is invested.

So, here’s how this works, y’all. We’re supposed to be OK storing the value of our labor in the same place the ruling class stores the value of the rents they skim off the top of our labor. Just stop and think about that for a moment.

We’re supposed to believe that the ruling class is just as dependent on the same institutions as the rest of us.

Dude (that would be you, Michael Saylor): There are real people out here who do real work, but who do not own real assets. You do know what that means, right? It means they have nothing but the work of their hands to earn an income. You and I - we have at least the house we own. Maybe we have other assets that are managed by people like you. You do get it, Right? We are not all there is of America!

And since 1971 we have been systematically raped of the value of our labor. When do we finally say enough is enough?

And finally:

No I think its the opposite. I think when Bitcoin is held by a bunch of crypto anarchists who aren’t regulated entities, who don’t acknowledge government, or don’t acknowledge taxes, or don’t acknowledge reporting requirements, that increases the risk of seizure.

[CORRECTION: Below I originally referred to John Locke as a Scotsman. I had confused him for Adam Smith, who was Scottish. Smith’s quote from Wealth of Nations most salient to this - and all discussions concerning money and crypto - was “The property which every man has in his own labour, as it is the original foundation of all other property, so it is the most sacred and inviolable.”

“… a bunch of crypto anarchists who aren’t regulated entities.” You mean your neighbors who mow you damn lawn for you. The problem isn’t that we “…don’t acknowledge government..” The problem is we aren’t Statists. That means we believe the authority to govern arises from the consent of the governed. It means our beliefs about government come to us from John Locke rather than Thomas Hobbes - whose writing informed a certain American Founding Father named Thomas Jefferson.

You do remember him? Right?

It’s not that we don’t acknowledge taxes. It means that we acknowledge our American tradition of taxation, where we account for our income and make an offer to the government as to what we honestly believe we owe - rather than being dictated to from on high. You do understand, Mr. Saylor, what we call this, right?

The word you’re looking for right now is “freedom.”

It does not get any bigger than this, folks. As reported here, a court in Dubai has upheld an employment contract in which the employer agreed to pay an employee’s wages partially in a crypto token (in combination with the government-issued fiat money). In an earlier, similar case, the court “…did not enforce the payment in crypto, as the employee failed to provide a clear method for valuing the currency in fiat terms.” However, in this more recent case, the Dubai court “[ordered] payment of the crypto salary as per the employment contract without converting it into fiat.”

Why this is such huge news

As I have written elsewhere, legal tender must be at the center of any discussion of the future of crypto (Bitcoin, Ether, tokens, etc.). Admittedly, this is not a concept ordinary people are familiar with, perhaps beyond noticing that U.S. Dollar bills have the following words printed to the left of the presidential image: “This note is legal tender for all debts, public and private.”

So, what exactly does this mean? Let’s start with the Black’s Law Dictionary definition of “debt.”

A sum of money due by certain and express agreement. The obligation of a debtor to pay a certain amount of money or to give a certain amount of value.

The most fundamental form of debt is the money an employer owes to their employee. In this Dubai case, the “certain and express agreement” was that the employee would perform their assigned employment duties (“…give a certain amount of value”) in return for the “…pay[ment of] a certain amount of money.”

There are several ways in which a debt can be considered legally extinguished. For our purposes, the simplest and most common way is for the debtor to tender full payment of the debt to the creditor. The assertion printed on the face of the U.S. Dollar arises from the Legal Tender Act of 1862. This made it possible for the Union to fund the Civil War. Convertibility of the Dollar to gold or silver was temporarily suspended, and the Legal Tender Act required Americans to accept payment of debts in paper money.

Later, in the Coinage Act of 1965, the U.S. Congress eliminated the precious metal content in U.S. coinage and established what I call the U.S. Dollar’s “monopoly on legal tender.” Lest someone claim the U.S. Congress exceeded its authority, consider Article I, Section 10, Clause 1 of the U.S. Constitution (emphases added):

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

When the Constitution was written, this provision struck a delicate balance. Article I also gave Congress the authority to coin money, regulate its value, and enact uniform bankruptcy laws. The Constitutional Convention was called partly in response to the Daniel Shays Rebellion, provoked by unscrupulous debt collectors going after Revolutionary War veterans, many of whom were never paid their rightful wages. Such debtors would now have recourse to the courts, which would rule uniformly as to what was owed and how those debts would be extinguished.

Back to wages and legal tender

In the Coinage Act of 1792, Congress established the U.S. Dollar as a weight in silver. The U.S. Eagle was established as a weight in gold and was equivalent to $10. If you were to take 1/10th of the weight (in gold) of a U.S. Eagle and compare it to the weight in silver of one U.S. Dollar, the ratio of silver to gold was 15 units (of silver) for each unit of gold.

This worked well with legal tender laws because it secured the interests of creditors and debtors alike. Creditors knew they would be repaid in a monetary unit that was a stable proxy for gold or silver. Debtors were protected because creditors could no longer ask state courts to force the debtor to surrender some other form of property (e.g., horses, livestock, crop yield, etc.) without it being fairly valued by the court in a unit universally recognized by law as a tender in the payment of debts.

So, imagine: It used to be that a person’s labor was valued in a monetary unit that was a proxy for silver or gold. As I try to explain (I’ll admit poorly so) in my book Liberty’s Silver Bullet: The Digital Liberties Amendment to the United States Constitution if you “store the value” of your labor in a one-ounce bar of silver, the value of your labor does not dissipate because the silver does not rust. This is not some esoteric academic theory handed down from on high. This is chemistry: Silver is a Noble Metal (as is gold, platinum, and palladium). And, as your high school chemistry teacher probably tried to explain, chemistry is math.

And so is crypto

Precious metals have an inherent superiority over crypto because they can be used as money without the need for electricity. But beyond that, its immutability makes crypto “like” gold. Just as the laws of chemistry preserve the weight of gold and silver, the laws of math maintain the value of cryptocurrencies.

When you store the value of your labor in the U.S. Dollar, you are using a unit now issued with no real tie to underlying productivity. This is why prices are soaring. If you keep those dollars in a U.S. bank, you surrender the value of your labor to a system where the rules are whatever the Ruling Class wants them to be. (If you don’t believe me, read up on the failure of Silicon Valley Bank).

The single most important waypoint in adopting cryptocurrencies like Bitcoin is the ability to store the value of your labor in a cryptocurrency of your own choice and agreed upon by your employer. But there is no point in considering this unless you can go to court in a dispute, and the court can enter a judgment in your favor in that same crypto unit. As long as the USD enjoys its monopoly on legal tender, that simply cannot happen here in the United States.

But it can in the United Arab Emirates (Dubai)

And that is why this is the second biggest story in crypto - the first being the Bitcoin whitepaper itself.

This is not an argument against the United States or in favor of the United Arab Emirates. The court system in the United States is rooted in the tradition of English common law. The courts in the UAE follow civil/criminal law, which in turn arises from the Islamic tradition of sharia law. The superiority of common law systems arises from the independence of the judiciary. A population’s ability to confidently engage in commerce depends on a court system that can refer to similar cases for guidance when a dispute arises. These courts must be free to follow precedent - regardless of who was or is in power, then or now.

Instead, this is an argument for bringing the Constitution of the United States into the Digital Age. To do so requires we rescind the power to make laws respecting private legal tender. Simply put, if we choose to work for a cryptocurrency and our employer agrees, we should be able to rely upon the courts to adjudicate the eventual dispute - in the same cryptocurrency unit we initially decided to use.

Read here for how we do this.

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The speeches by Robert F. Kennedy, Jr. and Donald Trump at the 2024 Bitcoin Conference are a strong net positive for crypto, but neither candidate really “went there.”

Let’s be realistic. Donald Trump is about his brand, which is valued in USD. It is unlikely he understands the issues beyond what his position on them means for his brand. Bobby Kennedy’s brand—frankly—is measured in the blood of his father and his uncle.

But honestly, Trump might be starting to realize the reality of that kind of brand.

Kennedy seems to have a much stronger grasp of the subject than Trump because he deliberately surrounds himself with people who do not care what he (Kennedy) thinks about a subject.

They are making similar proposals, but they both miss the heart of the matter. They haven’t quite “gone there.”

“There” is Legal Tender

“There” - in the sense of “He actually went there.” - is legal tender. The entire crypto space right now is a stateless, digital foreign exchange (FOREX) play. To understand why, this article in The Block about the bankruptcy of crypto exchange FTX is a classic example of burying the lede. It states in its last sentence: “The Bahamian claims, like the Chapter 11 claims, will be valued as of November 11, 2022, the original date of the bankruptcy claim.”

“…will be valued?” In what?

Here is what is happening here:

When FTX filed for bankruptcy protection on November 11, 2022, the BTC/USD price was $17,036. The bankruptcy plan filed with the court uses that date to determine the USD value of the crypto units customers held in their wallets. There is a court hearing on this plan scheduled for October 7, 2024. FTX customers who owned BTC on the exchange naturally want their BTC to be priced at a later date since BTC has appreciated a great deal. The plan filed with the court on December 16, 2023, uses the bankruptcy filing date. So let’s look at these dates:

• November 11, 2022 (bankruptcy protection sought): BTC/USD was $17,036

• December 16, 2023 (bankruptcy plan was filed): BTC/USD was $42,272 (+248.13%)

• July 28, 2024 (today): BTC/USD is $67,904 (+398.59%)

• October 7, 2024 (next hearing): BTC/USD will be ???

Now, let’s flip the price pair to USD/BTC. Please understand that we’re showing the drop in the value of USD using BTC as our reference point.

• November 11, 2022: USD/BTC was ₿0.0000586992

• December 16, 2023: USD/BTC was ₿0.0000236563 (-59.70%)

• July 28, 2024: USD/BTC is ₿0.0000147267 (-74.91%)

• October 7, 2024: USD/BTC will be ₿???

Let’s imagine an FTX customer with a claim before the court. He owned exactly ₿1.0 in his BTC wallet when FTX filed for protection. The court ordered that he be paid $17,036 from the liquidation of FTX. There will be a lot of hot air in the media about him being “made whole.” But was he? Flipping the price-pair math above shows clearly that the USD he will receive has lost 74.91% of its value as of this writing. And that is if we start at the filing date. If we go back further to when he bought the BTC, the loss will be even greater. And who knows what it will be on October 7th if the court accepts this plan.

Trade reserve status, the USD, and Crypto

In order to really understand what “going there” entails, we have to back up and consider a side to this matter of the USD as the world’s main trade reserve currency. This is a side that gets very little attention, which is why this article is a must-read. The money-quote:

In fact, there’s reason to argue that common law — enforceable in U.S. and U.K. courts — not only underpins the value of the dollar but is, in and of itself, the equivalent of a reserve currency. Rather than failing and fading as geopolitics becomes more fraught and contentious, both the dollar (sic) and the legal system that defines it will grow in influence and utility.

First, we should note the author is a bit parochial here. Singapore’s legal system is a common law system arising from the same English roots as the U.S. system. Hong Kong’s system is as well, but there is now this nagging little problem called the Chinese Community Party (CCP) that one has to deal with when considering Hong Kong’s courts.

The author is right, however, to ask (earlier in the article):

In addition, while technology may help to displace the dollar (sic) over time, decentralized finance has lost much of its luster after the last 12 scandal-ridden months in the crypto world — though “smart contracts” and blockchain-based public ledgers could offer transparent and enforceable transactions in the longer term, without the dollar serving as an intermediary.

However, the biggest failing of this decentralized nirvana is that there’s no one to complain to if — and when — things go wrong. To whom do you appeal for restitution when a contract fails? Until that important question is settled, trusted legal systems, which in practice means the U.S. and the United Kingdom [TPB: and Singapore], will remain the easy fallback.

BRICS, as it is configured today, will never issue a currency that will be widely adopted for the simple reason they (the BRICS members) do not even trust each other’s court systems. Engaging in trade where the contract is denominated in the currency of a sovereign necessarily implies trust in that sovereign’s court system to fairly adjudicate disputes. Does anyone really think a CCP court will adjudicate a dispute in a way consistent with Western traditions of common law? (This has to be asked of courts in Hong Kong as well as any other CCP jurisdiction.) Other BRICS countries come closer to what we otherwise would expect. But the question still must be asked.

NOTE: This little interlude is NOT INVESTMENT ADVICE OF ANY KIND!!! If Singapore becomes a full member of BRICS, we may find ourselves in a whole new world. The Monetary Authority of Singapore was recently the third-largest central bank buyer of gold. Singapore has an impeccable track record of fiscal competence. It has to place a premium on competence because it has nothing in the way of natural resources and must import almost everything. Singapore also has a highly credible court system built on the same common law foundation as the US and UK. If it has enough gold and silver to back the Singapore Dollar, it has a powerful trifecta that very well might herald the end of the USD’s preference in global trade.

This is where we see Kennedy's strength

Kennedy understands how the landscape of common law is the essential bulwark of individual liberty. He has been fighting on this turf his whole life. I am just not sure whether he has thought through the implications of cryptocurrency as money, the common law, and legal tender.

I am not even certain some Bitcoin maximalists want Bitcoin to gain legal tender status. Their argument is that Bitcoin is designed to be held with no counterparty risk. However, the bankruptcy of FTX clearly shows us that FTX customers did not own their BTC. FTX customers owned an unsecured claim against the FTX balance sheet that, as the bankruptcy proceedings show, is clearly a claim measured in USD. If your only recourse in a dispute is a recourse measured in the banknote of the Federal Reserve System (i.e., the USD), then the Federal Reserve System ends up being your counterparty anyway. (If you don’t believe this, go back up and review how much value the USD lost against BTC as the reference unit just between November 11, 2022, and today - nearly 75%.)

Holding your crypto in a “cold-storage wallet” (meaning a USB device designed solely for this purpose) does not change this. Why would we decide to contract with someone else in a crypto unit when we know that if the contract fails, we are not going to be paid what we are owed in that unit? There it is again—the Federal Reserve System banknote sits at the center of everything.

Can Kennedy see when crypto advocates are “talking their book?”

I believe some in the crypto space understand this and prefer it because it opens up a business opportunity. To see what I mean, consider this thing called a Stablecoin. They exist to reduce the transactional friction created by USD regulations. If you fund a crypto account in a crypto exchange with USD, you bear the regulatory burden on the front end of that funding, and then when you convert that USD to a Stablecoin. Once into the Stablecoin - acting as a crypto proxy for the USD - you can transact among digital assets (BTC included) freely without having to worry about the red tape such transactions would otherwise require.

This only works, however, if the Stablecoin issuer can maintain a 1:1 peg between the Stablecoin and USD. Terra Labs, the creator of the Terra Blockchain and issuer of UST/LUNA, tried to do this with an algorithm that minted (inflated) or burned (deflated) the supply of its coin called LUNA on their Terra Blockchain based on how UST traded against the USD. (There it is again. The Federal Reserve System’s banknote as the central reference unit.)

There is some speculation that Alameda Research, part of the FTX ecosystem, flooded the market for UST with sell orders. This forced the Terra Blockchain to “burn” (deflate) the supply of LUNA to defend the 1:1 peg of UST. Terra’s Blockchain is thought not to have kept up with the volume. As a result, Terra was not able to manage the supply of UST fast enough to protect its 1:1 peg.

If this is true, it is a fascinating combination of a “short sale” and a “denial of service” attack. Alameda Marketing allegedly shorted UST at a volume over time fast enough to overwhelm the ability of the Terra Blockchain to provide its service (maintaining a real-time 1:1 peg between UST and USD). As a result, market confidence in UST was crippled, creating the doom loop sell pressure that ended UST as a viable Stablecoin. Remember, the Stablecoin exists to proxy the USD in the crypto economy.

Another Stablecoin issuer - Tether - issues USDT. Instead of relying on an algorithm, it maintains a reserve of various other assets. That the Terra/LUNA catastrophe did not bring down USDT with it is noted by Tether as a remarkable story of market resilience. They were able to convert highly liquid assets from their reserves to USDT to defend the peg in real-time. But this is really an admission of a high degree of centralization. It is also an admission that USDT cannot be considered a commodity since its value is based on centrally held and managed reserve assets - which are valued in USD. (Yes, there it is again - the USD as the central reference unit.)

Why do this?

What is the for-profit business model? What are the assumptions of that business model?

The first assumption is that the USD will always and forever be the reference unit for all that is valued in the US economy. Please don’t miss the corollary: all business decisions will be based on knowledge that will depend on the value of all assets in the economy—value that will be measured in USD.

When you understand how knowledge management systems take data, bring them into context to create information, and then do the math on the information to create knowledge, you should see that as long as the USD is the reference unit for the value of all assets, the Federal Reserve System is our inescapable counterparty.

I think many in the crypto space are seeking to monetize this reality by creating a competing parallel financial system with their Stablecoin issuance as the intermediary between the legacy financial system and crypto. The winner of the Stablecoin Wars literally takes all the rents generated by transactions on the crypto side of this parallel universe. And when you see how Tether defended the USDT and compare it with how the Federal Reserve manages its reserve book of US Treasuries and Mortgage Backed Securities to defend the government’s ability to keep borrowing, you’ll see that these businesses are just competing to be the crypto version of the Federal Reserve.

The supposed crypto advocates who run these businesses are talking their book—not individual liberty. The only question is whether Kennedy can see through it.

I think we can all agree that we really need to walk away to a calm place and ask ourselves: How did we get here? A former president and candidate for “re-election” - even if disjointed by Joe Biden’s 2020 win - escapes assassination by inches, and otherwise “ordinary” neighbors are on social media griping that the shooter missed. I asked my mid-twenties son what people his age were saying:

“[Trump] is horrible. But this isn’t the way we deal with that,” he said.

My neighbors on the Left

I want to start this next paragraph with: “My neighbors on the Left...” But, honestly, I am not deaf. I can hear readers muttering “F**k your neighbors on the left.”

Again, How did we get to the point where an attempt at reason is met with an F-bomb? And yes, there is a moral equivalence here: “F**k your neighbors on the Left” is just a waypoint to complaining about a failed assassination attempt on the opposing candidate. Let’s stop it now before we end up like them.

It is massively immodest of me to say so, but I know exactly how we got here. But you’re going to have to tolerate me starting my next paragraph the way I do.

My neighbors on the Left... They share a common belief with us on the Right. Do you want proof? Try suggesting we set aside the First Amendment... No, not THAT part - the part about religion. Suggest we should allow the majority - it is “our democracy," after all - to prescribe a State religion and then go about as the English once did - knocking on doors to demand an explanation why the resident wasn't in church on Sunday. Watch how quickly our neighbors on the Left “get religion” on the First Amendment's prohibition against the establishment of religion.

We agree. Just stop. Turn the damn phone off for a second. Find a calm place and ponder those two words. We agree.

We agree that the power of government must be limited. It’s when we start talking about where the limits are to be drawn that we argue.

Our Democracy

Let’s make a simple but essential distinction. Liberal Democracy is our principle of government, and a Constitutional Republic is our form of government. The basic idea—ostensibly the foundation of Western civilization—is that the human dignity of each person leads us to conclude that there must be some boundaries that the power of a legitimate government cannot cross.

Where are those boundaries? When we try to answer this question, we reveal our perspective on government. Our neighbors on the Left—who likely identify as “Liberal”—will want these boundaries drawn expansively to allow the government to act in furtherance of the common good. We on the Right identify as “Conservative” and will draw these lines tightly in defense of individual liberty.

I learned conservatism at the dinner table. And this was from a family with deep roots in Wisconsin Democrat politics and Organized Labor. My father used to say, “The role of government is to do those things for us that we cannot do for ourselves and to otherwise leave us alone.”

What are those things? What are “public goods?” As neighbors, these are the questions we have debated among ourselves for almost 250 years.

Politics is a Clock - Not a Spectrum

Consider the clock (the analog one, kids...) Let's call 12 o’clock “Liberal Democracy.” Let's call 9 o’clock, which would be moving left, or counter-clockwise, classical Liberalism. 3 o’clock - moving right - is classical Conservatism. Our debate is supposed to be a give-and-take among neighbors between 9 and 3. On some issues, we might land more toward 9 (left of center); on others, we might end up more toward 3 (right of center).

This is what “politics” is supposed to be. It is imperative that we own this and refuse to be entertained with false pieties about “putting politics aside.” We should be able to put partisanship aside. But politics is baked into human nature. We must also refuse the false piety of “no labels.” The problem is not with labels like “Liberal” and “Conservative.” The problem is our dishonesty. And this dishonesty starts with another false piety - that politics is a “team sport.”

I grew up listening to a pastor who was fond of reminding us that when we pointed a finger, we should not miss the fact that we have three other fingers on our own hand—which were pointed back at us. So, let’s start at home.

We have neighbors with us on the Right who are blinded by some very peculiar ideas about who we, as Christians, ought to be in this world. There is a flavor of Evangelical Protestantism unique to the United States called Dominion Theology. They actually believe Christians are to assume political power to “hasten” the Second Coming. While this is painting with a broad brush, the larger point is how they push well past 3 o’clock as they move to the Right. They end up at 6 o’clock when they fuse their version of spiritual and biblical authority with political power to create a governing philosophy.

Now for my question to my neighbors on the Left. Do you see in your own midst those who would push right past 9 o’clock as they move to the Left? This will likely be just as broad a brush, but there are those who apparently believe the state has the right to dictate to parents how their children should be raised. Dishonest appeals to the “common good” of public education mask a Marxist effort to psychologically divorce children from their parents. Posing as “anti-racists” and as “LGBTQ activists,” they exploit otherwise legitimate grievances in an effort to seize control of public education. They fuse the economic power of organized labor with the political power of government to push their governing philosophy.

If 12 o’clock is Liberal Democracy, 6 o’clock is Fascism

The whole point behind looking at politics as a clock and not a spectrum is to see that we can end up at fascism either way—blowing past 3 as we move right or blowing past 9 as we move Left. Those among our neighbors on the Left who blindly blow past 9 o’clock pose as mainstream among us on the Left. They are the Left’s version of the Bolsheviks of a century ago.

But do not for one moment think we on the Right are immune to this. Dominion Theology among fundamentalists blows right past 3 o’clock, claiming all along to be mainstream “Conservative.” The truth is they are a small fringe. But they adamantly claim the title “Conservative” and want to paint those who oppose their governing philosophy as “Libertarians.” They are just as much a new form of the Bolsheviks among us.

This is a very clever, elegant form of propaganda. The word Bolshevik comes from a Russian word meaning great or many. A small fringe of Russian civilization posed as mainstream. “Dissidents” in Russia were called Mensheviks—from a word meaning light or small. In truth, the mainstream in Russia hated the Bolsheviks. The dissidents carried the ideals of the mainstream in Russian society.

We are facing exactly the same propaganda today. From the Left, Bolsheviks masquerade as Progressives. From the Right, they masquerade as Conservatives.

From the Left, it is an elegant play on the common sense in which people see themselves as “progressive.” (Note the lowercase 'p'.) As a governing philosophy, Progressivism shares a common history with Fascism. It especially shares a common focus on bundling the perceived authority of “The Science” together with economic and political power. In the minds of the real mainstream, “progressive” means roughly what Liberal has classically meant. It is less important that we delve into the philosophies and more important that we see the neo-Bolshevism from the Left for what it is - a fringe posing as mainstream that uses the classical sense of the term Liberal as equivalent to neo-Menshevik.

From the Right, Bolsheviks pose as Conservative and bundle their “spiritual authority” with political authority. They identify as Conservatives and label those who dissent from their authoritarianism as "Libertarians" in an identical effort to tag their mainstream opponents as neo-Mensheviks. The appeal to the authority of their peculiar interpretation of the Bible reeks of the same false piety of the pre-Reformation clergy who once wielded a monopoly over how we came to know what is true - until the Black Death disabused the whole world of their false claims.

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Where do we go from here? Five thoughts

It just got real. So, what now?

1) We must call B.S. on the partisan piety that says “politics is a team sport.”

No, it isn’t.

The last words of the First Amendment guarantee to us the right “…to petition the Government for a redress of grievances.” Politics is how we used to do that. As neighbors. We must stop allowing “our team” to bastardize our politics into a means by which they simply monetize our grievances and set us against each other. If there is any seed we have sown that has now flowered its evil fruit, it is this view of politics as a team sport.

2) We are the mainstream. Stop buying into the Bolshevik propaganda. Don’t let anyone label you as a “dissident” because you refuse to play by the partisan playbook. Together, we must reclaim the word “Liberal” to first be how we describe our common principle of government: Liberal Democracy.

3) We must stop paying attention to the loudest voices. Stop watching their programming. Unfollow them. Those posing as mainstream are, in fact, a fringe minority. This is true of the Progressives on the Left and of the Fundamentalists on the Right. Both are running the same plays from the Bolsheviks of 20th-century Russia. Tune them out. Tune in your neighbors. Find someone opposite you politically, have a beer together, and ask them: “What do you see happening in our country? What do you think we should do about it?” And if they say something that upsets you, take another sip of your beer and say: “Tell me more.”

4) We must start paying attention to how media affects us emotionally. Political consultants and media executives have discovered the same about social media and other tech platform products. It allows for the creation of an “emotional dossier” on you. (The fancy word for this is psychographics.) If they discover how to keep you angry and afraid of your Political Other, they can keep you engaged in their programming or with their candidate.

5) Lastly, remember this basic truth about Liberal Democracy: The authority to govern arises from the consent of the governed. This means it does not arise from our church pulpits. Neither is it conferred at the hooding ceremony when an academic gets their Ph.D. Science is descriptive, a method we use to formally investigate and describe cause and effect in nature. Public policy is prescriptive; it is how we move forward as neighbors seeking to preserve the common good. Governing should be informed by science. But the authority to govern does not come from “The Science.” It comes from us as neighbors - on the Left, Right, and everything in between.

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Michael Schellenberger of Public, Matt Taibbi of Racket, and Bari Weiss of The Free Press landed what should go down as the scoop of the decade when they reported the Twitter Files from material made available to them by Elon Musk, the then-new owner of what was formerly known as Twitter. (Of course, now known as “X”.)

Since then, we have seen a mountain of evidence characterized as “censorship.” I am purposely being coy about this description if only to provoke a combination of curiosity and self-awareness. There is an angle to this that appears entirely missed—both in independent media coverage and in the legal reasoning of the cases being brought against the Biden administration.

I provide consultation and expert witness services in cybersecurity and, more generally, in information technology. I am not a lawyer. However, I grew up in a family of lawyers and police officers, taught undergraduate critical thinking, and made my career in information technology. Below, I will do a deep dive into various sources, including the transcript of oral arguments before the Supreme Court in Murtha v Missouri and the lawsuit just filed by Robert F. Kennedy and others. (Full disclosure: I am volunteering for Mr. Kennedy in San Diego County.)

But first, the TL; DR version:

I believe the government in Murtha v. Missouri will prevail. There will be a lot of contretemps along the lines of “How could they?” We’ll hear a lot of hyperbole about the end of the First Amendment.

But the problem will not be with the Court. The original Missouri v. Biden lawsuit was litigated from a precedent captioned as Bantam Books, Inc. v. Sullivan (1963). This case revolves around whether or not the government is engaging in coercion concerning publishers and distributors. In the recent oral arguments at SCOTUS, a lot was made of the aggressive, angry, and vulgar nature of government personnel communicating with platforms like Facebook and Twitter (now X). The matter involves more, however, than how the government interfaces with private businesses. 47 U.S.C. § 230 (the infamous “Section 230”) protects social media from liability arising from content posted by their users. It seems Justices like Samuel Alito want to subject the government to increased scrutiny regarding social media because choosing not to do the government’s bidding can be perceived as a risk to their Section 230 protections - even if no actual threat is made concerning it.

There is another precedent, however. Lamont v. Postmaster General (1965). Rather than turning on coercive behavior, this case turns on requiring the reader/hearer to bear an unconstitutional burden before certain kinds of publications (i.e., those considered by the government to be “communist propaganda”). The essence of the distinction between Bantam Books and Lamont is between the right of the speaker/writer and the right of the hearer/reader. We’ll see below that the fact pattern in Missouri v. Biden does not fit the precedent in Bantam Books. (The facts were tried by the District Court in Missouri v. Biden. The District Court’s application of the law (its ruling) is being appealed in the name of the U.S. Surgeon General - Vivek Murtha - as Murtha v. Missouri.) This fact pattern fits the precedent in Lamont far better than in Bantam Books.

Buckle up, boys and girls; this will be a long one.

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The Internet is the ultimate library, and social media and search engines are the ultimate card catalogs.

Let’s go back in time before the digital age. Imagine for a moment you write a book. A publisher shares your perspective and publishes it. The government thinks your ideas are wrong and believes (even in good faith) that those convinced by your argument might suffer harm. But they don’t “ban” your book from the shelves of bookstores or libraries. Instead, they communicate their perspective with non-governmental organizations (NGOs) - many of which have contracts with, or grants from, the government. As a result, privately organized lobbying emerges and is directed toward bookstores and libraries. Private businesses like bookstores perceive a threat to their brand reputation and avoid the problem by not carrying your book.

Local libraries, however, don't have a “brand” to protect, and the public is rightly sensitive to efforts to ban books. So, the NGO takes a more subtle approach. They pressure libraries to remove the index card for your book from the Author and Title Card Catalogs. Your book can be on the shelf, but by causing the catalog index cards to be removed, a significant amount of “friction” has been deliberately created between the public as a reader and you as a writer. (The Kennedy lawsuit makes mention of Meta admitting to creating such “friction.”)

What has happened here? Whose rights have been invaded? Compare these precedents: Bantam Books, Inc. v. Sullivan (1963) and Lamont v. Postmaster General (1965). In Bantam Books, a Rhode Island commission published a list of books it felt contained obscene materials. Its communication with distributors claimed it had a “duty to recommend prosecution of purveyors of obscenity.” Four publishers sued on Fourteenth Amendment grounds and prevailed in their claim that the commission’s work amounted to unconstitutional coercion. The Missouri case will stand or fall on whether the Biden administration’s actions involved similar coercion.

“Communist Propaganda” and “Disinformation”

In contrast, procedures took effect on March 15, 1965, based on Section 305(a) of the Postal Service and Federal Employees Salary Act of 1962. These procedures required the Postmaster General to hold mail deemed “communist propaganda.” A postcard was sent to the addressee, who was required to check a box indicating they wanted to receive the publication. If the postcard was not returned within 20 days, it was presumed the addressee did not want to receive the publication or any others deemed “communist propaganda.” The Court ruled that “...the Act, as construed and applied, is unconstitutional, since it imposes on the addressee an affirmative obligation which amounts to an unconstitutional limitation of his rights under the First Amendment.”

In this decision, Justice William O. Douglas articulates what is now summarized as the "right to receive publications" in this paragraph - presented here in full for appropriate context:

“It is true that the First Amendment contains no specific guarantee of access to publications. However, the protection of the Bill of Rights goes beyond the specific guarantees to protect from congressional abridgment those equally fundamental personal rights necessary to make the express guarantees fully meaningful. See, e.g., Bolling v. Sharpe, 347 U.S. 497; NAACP v. Alabama, 357 U.S. 449; Kent v. Dulles, 357 U.S. 116; Aptheker v. Secretary of State, 378 U.S. 500. I think the right to receive publications is such a fundamental right. The dissemination of ideas can accomplish nothing if otherwise willing addressees are not free to receive and consider them. It would be a barren marketplace of ideas that had only sellers and no buyers.”

When reading the record of Missouri v Biden (now Murtha v Missouri), if we transport the "digital" fact pattern back to the time before the digital age when publications were on store shelves, in the library, or sent by “snail mail,” we see clearly that the First Amendment right being invaded is more properly the “right to receive publications” litigated in Lamont. However, the ability to recognize this depends on the legal profession’s understanding of the path between an author and a reader in the digital age.

Alex Berenson and Pre-Elon Twitter

California Civil Code § 2100 - known as its “Common Carrier Law” - has been widely interpreted as including companies in carrying messages. In Alex Berenson v Twitter, Berenson’s third claim asserts a violation of California’s Common Carrier Law. While the lawsuit was settled out of court, Berenson insisted in pursuing the matter into discovery. In a subsequent lawsuit against the Biden administration, he shows a graphic of an email obtained during discovery. As I will explain below, one sentence is profoundly jam-packed with potentially explosive information.

Independent media (that means you, Taibbi, Weiss, Schellenberger, & others) just needs to know what questions to ask.

“[] Andy Slavitt suggested they had seen data viz that had showed [Berenson] was the epicenter of disinfo that radiated outward to the persuadable public.”

Let’s unpack this little gem:

1) Exactly what is a “data viz?” This is shorthand for “data visualization.” This is a graphical representation of “graph data.” In contrast to “tables” of rows and columns, this approach to data breaks everything into subjects/objects (nouns or “nodes”) and interactions between them (predicates or “edges”). Nodes are circles joined to each other with lines (edges). Descriptions are modeled as labels that can attach both to nodes (adjectives) and edges (adverbs).

2) “Berenson” is a noun - a person, place, or thing. This makes him a “node” in the “data viz.” That he is the “epicenter of disinfo” tells us two different things: First, in a data visualization such as this, they will show nodes in the middle (the “epicenter”). Second, someone has “labeled” Berenson (and others) as a source of “disinfo[rmation].” There is an important distinction here: Misinformation simply means someone is mistaken - they are misinformed. Disinformation implies intent. The person is not simply mistaken; they are intentionally spreading falsehoods with malicious intent to deceive.

3) “Radiated outward...” Graphically, this shows one or more nodes in a circle’s (epi)center. There are other nodes (see #4 below) to which the nodes in the “epicenter” are connected with “edges,” which represent actions (predicates) like reading and commenting.

4) “...outward to the persuadable public.” Well. We know the “public” are persons. That means they are nodes in the data viz. But how, exactly, does the Biden administration know they are “persuadable?”

Cambridge Analytica, Brexit, Trump, and “Psychographics”

By now, it is commonly known that if a Big Tech product is free, you, as the user, are the product. But what does this really mean? You - as in your consumer interests? Sure... that’s comfortable... It squares with our expectations. Companies want to know what kinds of products we’re interested in so they can target their ads. Who knew?

But what if this isn’t about your interests as a consumer? What if this is about an emotional dossier where you are profiled according to the following five traits - OCEAN: Openness, Conscientiousness, Extroversion, Agreeableness, and Neuroticism. What if these traits are broad domains of human behavior and account for differences in personality and decision-making?

The context for this part of the picture is narrated in a Netflix documentary titled The Great Hack. It tells the story of Brittany Kaiser, an idealistic Progressive who goes to work for the Obama campaign’s digital outreach team. She was later hired by Cambridge Analytica to work on the Brexit campaign, then later for Texas Senator Ted Cruz, and ultimately, for Donald Trump's 2016 campaign. It is told in even greater depth by Kaiser in her book Targeted. Chapter 13 is easily the most important part of the book. There, the reader will learn how “psychographics” was turned into a political campaign weapon.

Consider how “Openness” is described in the OCEAN model:

“Openness to Experience is characterized by imagination, intellectual curiosity, an appreciation for art and beauty, flexibility, tolerance for ambiguity, non-conformity, and a broad range of interests. Communication with individuals high in Openness to Experience should involve being open to new ideas, encouraging intellectual discussions, providing opportunities for learning, embracing creativity and innovation, being flexible and adaptable, sharing diverse perspectives, appreciating aesthetics, and respecting their need for personal space.”

Now read the email from the Berenson case again (emphases added):

“[] Andy Slavitt suggested they had seen data viz that had showed [Berenson] was the epicenter of disinfo that radiated outward to the persuadable public.”

A member of the “public” interacting with Berenson (and others) will need to be labeled as “persuadable” for that larger public to be segmented for this kind of “data viz.” Exactly how was this segmentation done? Was some firm contracted by the government to “scrape” social media to feed the psychographic analytics needed for this sort of segmentation? Was a successor firm to Cambridge Analytica, or were any of the people known to have been involved tapped to provide the needed historical information? We should know enough from The Great Hack and Kaiser’s book to see why these questions must be asked. (Ahem... Paging Dr. Schellenberger...)

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Back to Lamont Vice Bantam Books

Reprising: The Bantam Books case revolves around what amounts to coercion by the government. The Lamont case revolves around “labeling” publications as “communist propaganda” and then creating friction between the publisher and the reader. While the record in Murtha v. Missouri is haunting, in the oral arguments before SCOTUS, we can see how tenuous the link is between aggressive speech, anger, and vulgarity on the one hand and “coercion” on the other. SCOTUS will look for some reasonably objective test or standard lower courts can apply to determine when government “requests” cross the line into coercion. Murtha v. Missouri has left the Justices wallowing in a shallow pool of subjectivity. The volume of instances in the record does not change that unfortunate reality.

In contrast, in Lamont v. Postmaster General, the implementation of a law passed by Congress “...impose[d] on the addressee an affirmative obligation which amounts to an unconstitutional limitation of his rights under the First Amendment.” The rights being spoken of here are not the speaker’s rights but those enjoyed by the “addressee”—the recipient of the publication. The First Amendment right invaded here is the right of the hearer.

The whole point of the “data viz” in the Berenson case reveals a clear effort to block the path between him as a writer and the public as readers. This came in the blunt form of canceling his Twitter account. It can also come by suppressing how posts are made visible to the public based on a government characterization (i.e., “disinformation”). This is not a shallow pool of subjectivity. Rather, it is an observable behavior by the government or private organizations acting at the government’s behest. These actions are intended to interrupt the path between a writer and his readers. They are easily understood as the digital age’s version of invading the public’s right to receive publications.

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The facts in Missouri v. Biden are easily understood as the digital age’s version of invading the public’s right to receive publications.

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If litigated from the Lamont precedent, the Justices should have no problem devising a suitable test. If the government's request (direct or indirect) is to label content (a “post” is also a noun, and as such a node in a data visualization) such that its availability to the public is inhibited in a manner it would not have been without the government’s request, the government is invading the public’s right to receive publications. A straightforward analogy can be drawn by having the 1960's Postmaster General arbitrarily “label” a publication “communist propaganda” and asking today’s tech platform to “label” a social media post “disinformation.”

Missouri v. Biden and the body of reporting done on the Twitter Files (and now what are being called the Facebook Files) show that these requests include the government flagging posts as potentially violating a platform’s Terms of Service. It has also recommended changes to the Terms of Service to turn an otherwise compliant post into a non-compliant one. The Biden administration characterizes this as using the “bully pulpit.” But that would involve asking for the administration’s message to be carried alongside messages with which the administration disagrees. As long as such “bully pulpit” requests do not cross the Bantam Books line into coercion, no First Amendment right is being invaded.

However, that is not the facts of the case, as they were found at trial in Missouri v. Biden. The administration went beyond the bully pulpit in seeking to “label” content it disagreed with so that the public would not be able to engage with it. Any governmental effort to attach a label to privately created content to suppress the public’s ability to engage with it can easily be argued to be pretextual to inhibiting the public’s right to engage with the speaker's ideas. As such, it should be considered an unconstitutional infringement of the “right to receive publications” under Lamont v. Postmaster General.

Unfortunately, that wasn’t the argument brought before SCOTUS in Murtha v. Missouri.

I must admit that I watched every episode. It was reasonably well-written (if way too obvious), well-cast (I have an academic background in religion, and Tim Daly as religion professor Henry McCord was excellent), and just all-around worth watching.

Back then, it reminded me of The West Wing - which was also a “must-see” for me - even though I didn’t drink its political Kool-Aid. Being old enough to remember all of this, I can tell you the point of a series like this is to project an image the producers want you to see when you look at a certain analogous real-world politician.

And this brings us to the recently released Netflix series The Diplomat.

Before explaining just enough (I will not spoil it for those who have not watched it yet), it is interesting to note that Allison Janey - who burst onto the TV drama scene in The West Wing - will be joining the cast of The Diplomat for Season 2, where she will be rejoining West Wing creator Debora Cahn.

The storyline goes like this: Katherine “Kate” Wyler (played by Keri Russell) is a career diplomat and is hoping for an appointment in Kabul. Instead, the President asks her at the last minute to be the U.S. ambassador to the UK. Unbeknownst to her, the current female Vice President is about to be part of a scandal and will soon resign. The President's team is looking at picking Wyler and wants his team to surreptitiously vet her for the VP position.

Just as soon as Wyler settles in, a British aircraft carrier is struck by a small boat loaded with explosives (in much the same way as the USS Cole was struck in October 2000). Fingers are pointed at Iran, but Wyler believes it was a rogue Russian figure (a naked play on Yevgeny Prigozhin and the Wagner Group). The entire first season is devoted to Wylers’ heroic attempt to talk the situation down from escalating into WW III.

And, of course, the undercurrent of the whole affair is positioning Wyler to replace the current VP on the upcoming re-election ticket. As far as TV drama goes, it really is outstanding and entertaining. I have left a few crucial details out, so you'll have to watch it for yourself. But trust me... Watch it on a weekend because you’ll binge it and be left hanging - and looking forward to Season 2.

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And now - the ultimate August surprise?

And here is where some very recent reporting in Substack publications Public and Racket comes into play.

Public

Reporting on humanity, civilization, and the environment.

By Michael Shellenberger

Racket News

Regular news and features by award-winning author and investigative reporter, Matt Taibbi.

By Matt Taibbi

Matt Taibbi, Michael Schellenberger, and Alex Gutentag are reporting on the existence of a 10-inch binder of documentation gathered by Kash Patel and a team of investigators working for then-House Intelligence Committee chairman Devin Nunes. Apparently, the information in the binder shows a weaponization of the “Five Eyes” intelligence program to seek compromising information on people associated with the Trump campaign in 2015-2016. President Trump - immediately before leaving office - apparently declassified the information in the documents.

Back in 2022, it was already clear that diplomats and/or officials from both the UK and Australia were involved in “Crossfire Hurricane” - the 2015-2016 FBI investigation into Trump and his campaign. At that time, the CIA’s Chief of Station in the UK was Gina Haspel - who Trump would later nominate as CIA Director as Mike Pompeo moved from the CIA to the State Department.

As Kash Patel recently noted, if such an operation were to be conducted in the UK, it would need to be approved by the Station Chief - then Haspel. As Taibbi et al. report, it was Haspel - as CIA Director - that slow-rolled the declassification of the information in the 10-inch binder. There are two crucial aspects to this: First, the classification system exists by Executive Order. There are laws concerning how classified information is handled. But what, exactly, is “classified information” is defined in Executive Order 13526. Because it is an Executive Order, the ultimate arbiter of what is and is not “classified” is the President.

As for declassifying previously classified information, Trump famously claimed: “There doesn’t have to be a process, as I understand it. You’re the president of the United States, you can declassify just by saying it’s declassified, even by thinking about it.” Trump’s Attorney General, Bill Barr, also famously asserted Trump’s claim was “absurd.”

The problem is that both are right; absurd does not mean illegal. There is a formal process by which classification markings are struck through as a result of declassification. But these processes arise from the Executive Order and apply to those under the Executive to whom are delegated the appropriate Executive authorities. There is no process encumbering the President in his (or her) determination that information in documents is to be declassified.

Secondly, the Executive Order expressly forbids either classifying information or failing to declassify information because it would reveal either illegal or embarrassing conduct. And if Haspel, as Chief of Station, approved the use of Five Eyes “source and methods” against Trump’s campaign staff, her not recusing herself in the process of declassifying the information in this 10-inch binder appears clearly in violation of EO 13526.

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The fear of a second term

The New York Times recently reported on a general fear and anxiety over what Trump’s return for a second term might mean. It seems a big part of the fear is having everything about this sordid mess revealed by way of declassification. So, how can this be avoided?

Enter Gina Haspel - “The Diplomat.” The former Chief of Station in the UK. Dropping the absolute disaster that is Kamala Harris in favor of Haspel on the Democratic ticket for 2024 would be an election season surprise for the ages. It would also be a stroke of absolute genius. Trump would immediately not be running against Joe Biden - everyone would see right through the reality that Biden will resign the office after being re-elected and Haspel - Trump’s CIA Director - becomes President!

Damn!

I mean, really, here are Russell and Haspel:

They almost look like each other!

If you haven’t watched it yet, watch The Diplomat on Netflix! Remember, set aside a weekend day. Trust me; you’ll binge it. Then tell me I’m wrong!

On the stage right (left of the table as one views the screen) were Michael Every and Brent Johnson. I am familiar with Every of Rabobank from his frequent commentaries. I was not so familiar with Johnson. Stage left was Jim Rickards and Bob Murphy. Similarly, I have read Rickards’s work but was unfamiliar with Murphy. Kudos to Adam Taggart for his excellent moderation.

My hot take on the overall discussion can best be captured from the response to my question - which was the last one posed to the panel. (It is at about 2:41 in the video):

Every went first, and he clearly has lived (or lives) in Singapore. (Listen to what he says at 2:47. He’s got this part right. I have extended family in both Singapore and Kuala Lumpur.) But he didn’t quite catch the point I was making when he objected that the Singapore Dollar was not pegged to the USD. I said its monetary policy was pegged to the USD. Every accurately stated that Singapore uses the exchange rate of the Singapore Dollar against a secret basket of currencies. Those currencies and their respective weights are a state secret. Ultimately, however, Singapore measures the value of its “reserves” in USD - which goes to this whole question about the USD’s status as the world’s main reserve currency. The point here is to notice that regardless of whether a currency is actively “pegged” to the USD, it is largely irrelevant if the supply and demand of the currency is managed by buying into or selling from reserves valued in USD.

This goes to a fundamental reality about economics, markets, and finance. Consider:

What you see depends on your perspective. For as smart and experienced as Every (and Johnson) are, I wonder if they have ever thought of extrapolating from a concept like a “crowded trade” to reflect on the risks of a “crowded perspective.” Think about this guy on the left and imagine market pros like Every and Johnson are alongside him, insisting it is a six. And then there are people like me opposite them saying: “Really?”

Why Singapore is the Canary in the Coal Mine

I’ll get back to this matter of perspective at the end. Just note how uncomfortable it can be to realize two people can look at the same thing at the same time, see something completely different, and both be right and wrong - at the same time. If the value of the Singapore Dollar is managed against other currencies by managing reserves valued in USD, I am sorry… as a matter of monetary policy, the Singapore Dollar is effectively pegged to the USD.

But this wasn't really my main point. When you look at Singapore’s tiny size and abject lack of natural resources, this chart should be quite surprising.

What is the Monetary Authority of Singapore (MAS) doing as the third largest buyer of gold? The answer can be found in a two-part series by Channel News Asia.

As for the series, this is the best available explanation of what these things called “reserves” are. It is the best precisely because it is written and produced for people who are interested in the subject but do not have a professional background in finance. (Read: People who have not been propagandized by way of degrees and credentials into how to think about these things.)

The first part explains the mechanics of what Every described - how the exchange rate is maintained by buying into or selling from reserves. If Singapore is the third largest Central Bank buyer of gold, it is certainly selling something else. We do not need to know what they are selling. If they are selling for USD to then buy Singapore Dollars to defend its desired exchange rate band, the Federal Reserve is ultimately the counterparty here.

The second part is a spectacular review of the history of Singapore and how it accumulated its reserves. It is especially worth listening to the decision-making that happened during the Great Financial Crisis.

But let’s get back to gold… The thing that makes all of this so notable (and worth asking the question last night) is the outsized ranking Singapore has had of late in terms of the MAS buying gold - outsized vis-a-vis Singapore as an economy. If we understand that having reserves in various assets - all valued in USD - puts the Singapore Dollar at counterparty risk over and against the Federal Reserve, then it would seem this outsized place among gold buyers explains itself: The greater degree to which Singapore reckons its reserves against gold as a unit of measure (not just gold as valued in USD) is the degree to which it is positioned to pivot in the event the USD loses its preference as a trade reserve.

What money as the “nine” looks like

Every seems to get the underlying realities. I just do not understand why he does not see their implications. Singapore has to import practically everything. (Every makes this very point at about 2:43) This means that the consumer price for practically everything includes the price of the currency by which these things are bought. Stop and think for a moment: If you buy something from Europe, that something is priced in Euros. But you do not pay for it in Euros. The importer does, though. And the foreign exchange cost of those Euros is built into the USD price you pay here.

This reality puts the Singaporean consumer in a very vulnerable position. But to appreciate the vulnerability, we have to look at money differently - meaning we need to step away from an overcrowded perspective and realize what we think is a six might really be a nine.

Money - when looked at from the perspective of a society where consumers are highly vulnerable to the effect of currency exchange fluctuations - is how we convert our labor to our living before it is any of the traditional three things taught to us in school: a unit of measure (or account), a store of value, and a medium of exchange. These three features of money are the “six” in the meme above. Money as a means to convert one’s labor to one’s living is the “nine.”

Overseas Dollars (e.g., Eurodollars)

It is maddening that Johnson does not see this. He points to the Eurodollar market as an example of the strength of the USD. But, being in their deeply disadvantaged position, what does the MAS see? Its outsized buying of gold answers the question. As the USD gradually loses its preference, the incentive to maintain USD balances overseas declines as well. Those USD will be converted into some other preferred monetary unit, depending on market segments and their needs. This conversion means these dollars surge into the U.S. domestic money supply, which will drive a spectacular new round of inflation. This will, in turn, drive interest rates completely out of the control of the Federal Reserve. What does that, then, do to a grossly over-leveraged U.S. banking system?

Hint: Silicon Valley Bank. Only this will not be confined to the small and medium sized banks. And if the Federal Reserve System itself begins to fail, what of its bank notes (i.e., the USD)?

By significantly increasing its reserve allocations in gold, Singapore seems to be preparing a counterparty-risk-free defense of the Singapore Dollar as the means by which the Singaporean people convert their labor to their living. If they buy Singapore Dollars to defend its value, they are not buying Singapore Dollars with Singapore Dollars. So, if they are buying Singapore Dollars with USD, they have to draw on their USD (denominated) reserves in some way. But in a for-real, no-shit banking crisis, there will be no way for Singapore to know how much the real-term purchasing power of the USD (or any other fiat unit) they will get when they sell from their reserves in order to buy Singapore Dollars.

Rather than merely setting up a counterparty-risk-disadvantaged fiat hedge, Singapore may be seeing a day in the near future when there will be no fiat currencies left standing that are perceived to be competently managed. And if Singapore leverages its decades-long record of competence to actually back the Singapore Dollar with gold (and other metals like silver), then it really is game over for the USD as the world’s trade reserve monetary unit. Singapore - of all countries - will be best positioned to issue the world’s trade reserve currency.

Why the Courts Matter

As part of my question, I observed that Singapore is the only country with a judicial system based on English common law. I was shocked to hear Every actually appeal to Hong Kong. Does he actually think a dispute in a court under the Chinese Communist Party will be adjudicated as we would otherwise expect based on our traditions of common law? Yes, Hong Kong’s legal traditions stem from the English tradition. But does the CCP social credit system somehow not apply to Hong Kong and its courts? Please.

This is also why the Chinese Yuan will never be widely adopted as a trade reserve currency. To what court will counterparties appeal in the event of a dispute? If they take the matter to a U.S. court, the judgment will not be in Yuan but in dollars. (For a lesson in legal tender and the court system, see ZH coverage of the FTX bankruptcy, where the parties are disputing the point in time at which the market exchange rate between crypto “assets” and the USD will govern what customers recover - in USD of course.) So what, ultimately, is the point of settling trade in a currency unless you also trust the court system of the country that issues that currency? Hong Kong? Again, please. Russia? You gotta be kidding me. Brazil, India, South Africa?

The reliability of the U.S. courts seems to be a side to the preference for agreements settled in USD that few have noticed. Wouldn’t it be nice to have fiscal and monetary competence here as well?

And then there is Singapore.

Brent Johnson’s Take

As I was listening to the debate, I was really confused by what seemed to me to be Johnson’s persistent misrepresentations of points Rickards, in particular, was making. Then he made a comment on the side, and it all of a sudden became clear (at least as far as my opinion goes) what was happening.

Johnson mentioned in a side conversation about gold and portfolio allocation that he was fortunate to be able to manage the money of a small number of very wealthy clients. And, of course, they measure their wealth in USD. A turn of phrase came to mind I once heard Jerome Powell say (I have not been able to find a link, but similar things are said in Federal Open Market Committee meeting minutes and elsewhere in the financial press:

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When you talk to the people that matter on Wall Street, they talk their book; it’s just the way it is. - Jerome Powell

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The real possibility of the USD losing its preference as the world’s trade reserve currency is manifestly not in the fiduciary interests of Johnson’s client. And so he “talked his book.”

There were quite a few points he made that made no sense as he tried to talk right past the points Rickards was making. Here are a couple:

Johnson claims he can show charts that prove that when fiat currencies all encounter trouble, as far as comparative price pairs, the USD always rises. I could not help but laugh. Anyone old enough to remember the Great Financial Crisis should laugh every time a market pro even so much as breathes the words never or always. We were told the real estate market never collapsed across the country all at once. And then it did. The USD always rises in a crisis? Sure, until it doesn’t. But it was his appeal to charts that really caught my attention.

The X-axis on his chart will certainly be time. The Y-axis? If it is not gold or silver, it will have to be USD or some fiat against which he pairs the USD. What happens when all fiat units collapse under the same weight of bad debt? (I just love Wall Street’s opaque euphemisms - they call these “non-performing loans” or “junk bonds” - just anything other than what they really are - bad debt.) We are well past the time when the Fed (or the ECB or BOJ) can print money to paper over this burden. There is no runway left, not even with what little of the balance sheet the Fed has soaked up. This realization explains Singapore’s pivot to gold. Johnson wants to - no, needs to - pretend the fiat USD still has objective merit as a unit of measure at the Y-axis of his charts. And if it doesn’t, exactly what knowledge does he think those charts contain?

Where this really went off the rails to the point of offending me was Johnson’s (and, to a certain extent, Every’s as well) belief that U.S. military power ultimately is what will preserve USD hegemony. First, the emotional response: Will Johnson be signing up to fight? Does he have kids that will end up conscripted in a general mobilization? (I do - two boys in their mid-twenties.) It was absolutely shocking having to listen to him cavalierly assure the audience their wealth was safe in USD-denominated assets because he seemed to expect we would wage war if needed to defend USD hegemony. But let’s put aside the emotions. US military power has historically been naval combat power used to deliver expeditionary combat power (U.S. Marines) to secure our ability to trade freely - not to guarantee financial hegemony.

It was only when we decided to extort an “exorbitant privilege” from the House of Saud and that the USD was “…our currency, but your problem…” that the need to become a financial hegemon emerged. Johnson has not even come close to getting his head wrapped around what Vladimir Putin really just said (between the lines) to Tucker Carlson (and the rest of the West): “It’s our energy, but your problem.” Beyond needing to answer for exactly who will bear the burden of fighting, Johnson needs to explain - beyond occupying and ruling distant lands, as we have tried and failed numerous times (as Rickards tried to point out) - exactly how he sees the U.S. paying for the military power to secure financial hegemony once there is no one left to bail out fiat regimes? The best that can be said is Johnson’s historical education is sorely lacking; the history of money is the history of war, and the history of war is the history of money. King Charles I needed money to pay his soldiers to fight the Second Bishops War. He resorted to confiscating gold coins that had been minted from English merchants’ gold. What, exactly, does Johnson think the US will use to pay for the war needed to defend fiat USD hegemony in a full-on fiat crisis?

The Importance of Perspective

It probably bastardizes the quote, but someone once noted how hard it is for someone to comprehend something when his own living depends on him not understanding it. Every and Johnson spent almost three hours whistling past the USD’s grave. Beyond what I have tried to explain about seeing a “nine” above, here are a few other core differences in perspective when you haven’t spent your entire adult life in finance:

I have spent my career writing code and now run a cybersecurity business. In short, I am the kind of person guys like Every and Johnson depend upon to acquire data, bring them into context as information, and then provide useful mathematical analyses to produce a knowledge product. That knowledge then informs decisions about what to do with money over time.

At its simplest, this data-to-information-to-knowledge process produces a chart. There is an X-axis unit of time and at least one Y-axis unit used to measure value. One or more line series then expose value patterns over time that can be modeled into predictions. However, a problem emerges when there is a mismatch between the X and Y axes. And by mismatch, I mean the reasonably obvious reality that time is immutable. You cannot add to or subtract from a unit of time once that time passes. At the birth of the USD (the Coinage Act of 1792, for all intents and purposes), the USD enjoyed the same attribute - immutability. This was because the USD had a price by weight of silver. The US Eagle was equivalent to $10 and had a price in gold such that, as money, one unit of gold was equivalent to 15 units of silver. You could bring silver bullion to the Mint, and it would assay, melt, and strike it into USD coins for you. You could literally create USD, and the price to do so was measured in silver. Silver does not rust, and therefore, its weight does not dissipate. Silver (and gold) are immutable in terms of their weight. Then, having a weight-based price in gold and silver, the USD was a proxy for the metal and, as such, was also immutable as a unit of measure!

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Let’s pause here to note what it means to see a “nine” where Every/Johnson sees a “six.” The idea that gold and silver have a floating price in USD is the central conceit of this upside-down, 50-year-old Alice in Wonderland economy we have been propagandized into thinking is right side up.

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Back to Johnson and the supposition that his charts tell us something useful. The mismatch here is between the immutability of time as a unit of measure and the increasingly untethered supply of USD. Prior to the dot com crash in 2000, we had a semblance of sound monetary policy - which is to say the money supply had at least some reasonable tie to economic production. Then Clinton-Gingrich sowed the seeds for the irrational exuberance of the dot com bubble. From that point on, the USD money supply was increasingly divorced from any real economic production, and the reporting of the circulation of USD in the economy was increasingly divorced from the economic realities of converting one’s labor into one’s living.

But there that thing is - right there on the Y-axis of Johnson’s charts - the USD. Utterly lacking in any first principles, objective merit as a unit of measure to be paired with time to present value patterns such that we might discover knowledge in those patterns.

Let me leave with this. In 2005 Steve Jobs addressed the graduating class at Stanford. I put a saying from this speech on my email signature: Don’t be trapped by dogma, which is living with the results of other people’s thinking. Listen to the speech. In particular, listen to Jobs tell of dropping into a calligraphy class. All of a sudden, from the aesthetic perspective of typography, he sees the computer as something completely different than the rest - crowded into the engineering perspective as they were.

The rest, of course, is history.

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If you follow the news on Bitcoin and crypto, you know the Securities and Exchange Commission (SEC) recently approved a Bitcoin Exchange Traded Fund (ETF). Those who follow this subject closely know what this is. But for others - I liken them to people interested enough to listen in to a conversation when “overhearing” the subject of Bitcoin - this simply means a financial institution can set up a “company” of sorts to own Bitcoin and then sell “shares” of that company that you can buy in your investment/retirement account. I know this is probably rough and inexact. I do that on purpose in this blog. My audience is those interested enough to “overhear” but otherwise passively follow the conversation from the sidelines.

Also, in the news is some background on what seemed to be odd price activity in Bitcoin roughly corresponding to this SEC decision. FTX - the whole Sam Bankman-Fried (SBF) fiasco - is having its assets sold off to satisfy the debts it owes. That selling pressure on BTC is apparently the reason for the disconnect between the news out of the SEC (which it seems would have provoked buying) and the recent selling and the related downward price pressure.

The coinciding of all of this creates a teachable moment we must not let pass us by. There are some essential lessons here.

What, exactly, is an ETF?

The SEC’s website says this: “Exchange-traded funds (ETFs) are SEC-registered investment companies that offer investors a way to pool their money in a fund that invests in stocks, bonds, or other assets. In return, investors receive an interest in the fund.” (See here). Typically, there will be a separate corporate entity formed for each ETF. So, by saying “an interest in the fund,” I understand the SEC to be saying you are buying fractional ownership in the company.

This is extremely important. If you buy shares in a Bitcoin ETF, you are not buying Bitcoin. You are buying a company that has been created for the sole purpose of buying and selling Bitcoin in a manner that tracks the buying and selling of the ETF shares. Before the SEC’s approval, something similar - a “trust” - was the primary way to expose yourself to crypto as an investment without actually owning the “coin.” “GBTC” is the best-known, but the ticker can be misleading. “BTC” is the common shorthand for Bitcoin. But GBTC means “Greyscale Bitcoin Trust.”

GBTC is a wholly owned Digital Currency Group, Inc. (DCG) subsidiary. In an upcoming article, I’ll dig into this more, but suffice it to say here - merely as my opinion - that DCG is trying to build out a parallel financial system. A more detailed explanation will have to wait for that article, but a “Stablecoin” is a crypto unit managed to serve as a proxy for the U.S. Dollar by which money is moved between the legacy USD financial system and a parallel crypto financial system. The main reason for this is transactional friction arising from regulations in the legacy USD system. Move money from USD into a Stablecoin once, bear the regulatory burden once. Now, you can move in and out of crypto positions using a USD proxy rather than the USD - and be freed from the regulatory friction.

Never forget: You are buying a company…

Please take careful note of an SEC filing for GBTC found here (emphases added by me).

“Grayscale Bitcoin Trust (BTC) (the “Trust”) is a Delaware Statutory Trust that was formed on September 13, 2013 and commenced operations on September 25, 2013. In general, the Trust holds Bitcoin (“BTC”) and, from time to time, issues common units of fractional undivided beneficial interest (“Shares”) (in minimum baskets of 100 Shares, referred to as “Baskets”) in exchange for Bitcoin. The redemption of Shares is not currently contemplated and the Trust does not currently operate a redemption program.” […] The Trust currently has no intention of seeking regulatory approval to operate an ongoing redemption program. The investment objective of the Trust is for the Shares to reflect the value of Bitcoin held by the Trust, less the Trust’s expenses and other liabilities. […]

Roughly speaking, this means GBTC owns and holds Bitcoin in trust on behalf of the trust’s owners - who would be its shareholders. But note that last part: There is no “redemption program.” That is another way of saying you cannot “redeem” your shares for Bitcoin. Not even in this “trust” vehicle do you actually “own” Bitcoin. You “own” shares in “a Delaware Statutory Trust.” And that means you own shares in that company’s assets and liabilities.

…wholly owned by another company…

Continuing on from the above SEC filing, again with emphases added by me:

“Grayscale Investments LLC (“Grayscale” or the “Sponsor”) acts as the Sponsor of the Trust and is a wholly owned subsidiary of Digital Currency Group, Inc. (“DCG”). […] The Sponsor also acts as the sponsor and manager of other investment products including Grayscale Bitcoin Cash Trust (BCH) (Symbol: BCHG), Grayscale Ethereum Trust (ETH) (OTCQX: ETHE), Grayscale Ethereum Classic Trust (ETC) (OTCQX: ETCG), Grayscale Horizen Trust (ZEN), Grayscale Litecoin Trust (LTC) (Symbol: LTCN), Grayscale Stellar Lumens Trust (XLM), Grayscale XRP Trust (XRP), Grayscale Zcash Trust (ZEC) and Grayscale Digital Large Cap Fund LLC (OTCQX: GDLC), each of which is an affiliate of the Trust.”

… which is, in turn, owned by…

Continuing on, with emphases added:

“Authorized Participants of the Trust are the only entities who may place orders to create or, if permitted, redeem Baskets. Genesis Global Trading, Inc. (“Genesis” or the “Authorized Participant”), a registered broker-dealer and wholly owned subsidiary of DCG, is the only Authorized Participant and is party to a participant agreement with the Sponsor and the Trust. Additional Authorized Participants may be added at any time, subject to the discretion of the Sponsor.”

I’ll explain in my upcoming article why I believe Genesis Global Trading, Inc. is intended to be the crypto-system equivalent of a “Primary Dealer” like JP Morgan Chase (or any of the other twenty-or-so Primary Dealers).

And now, for the punchline:

“The custodian of the Trust is Coinbase Custody Trust Company, LLC (the “Custodian”), a third-party service provider. The Custodian is responsible for safeguarding the Bitcoin, Incidental Rights, and IR Virtual Currency held by the Trust, and holding the private key(s) that provide access to the Trust’s digital wallets and vaults. The Custodian Agreement is for an initial term of three years.”

And here is why FTX matters

Here is the lede on the Zero Hedge story; this time emphasis is in the original, except at the very end (where I add italics):

“Earlier this week we reported that the primary reason why bitcoin has been sliding ever since the arrival of bitcoin ETFs on Jan 10 - an event that had been lauded as very bullish for the crypto space but instead promptly sparked a bear market... has been the relentless liquidation of residual bitcoins by the bankrupt FTX estate which has been aggressively building up cash - and selling bitcoin into every market meltup - to maximize recoveries for stakeholders.”

You must not fail to ask: “building up cash” in what? “[S]elling bitcoin into every market meltup…” for what? “[T]o maximize recoveries [of what???] for stakeholders.”

Hang on - what, exactly, are “stakeholders?” Are these “shareholders?” Simply put: No. In a bankruptcy, the owners are left with nothing. The stakeholders are the creditors - those who lent money to FTX - not those who bought shares in FTX.

If you are well-read in this arena, you know what I mean (you’re probably saying: Well, duh!). Thank you for subscribing or reading, but you’re not who I write for. It is for those whose ears might perk up overhearing a conversation about crypto but who are not immersed in this world. This is a crucial teachable moment for them: You can buy shares (and be an owner) or bonds (and be a creditor) in a company like FTX. And when you buy bonds, you are not lending crypto - you are lending USD.

FTX’s Bitcoin holdings have primarily been sold into this recent upswing to build up the biggest possible USD cash position and then distribute that cash to FTX’s creditors. Again - the shareholder gets nothing!

But even more importantly, this is a lesson in legal tender. To, once again, oversimplify in the interest of clarity and to avoid specialty language, FTX went under because its interest obligations on its debts outstripped its income and assets. These debts are all contracts, and the obligations in these contracts are all measured in U.S. Dollars. The bankruptcy court cannot award the creditors a portion of these Bitcoins because Bitcoin is not recognized as legal tender for private debts. Consider Article I, Section 10 of the United States Constitution:

“No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title …”

Now I will write for the market/finance pro AND the passively interested!!! PEASE PAY ATTENTION: This teachable moment simply cannot be allowed to pass us by!

The United States Constitution was born from a civil tumult known as the Daniel Shays Rebellion. During the Revolutionary War, two things happened: The money issued to pay for the war effort caused inflation, and in many cases, the men who left their farms to fight were not paid their rightful salary (for which that extra money had been issued). Many went into debt trying to keep their farms and were victimized by unscrupulous debt collectors. These were the men - like Daniel Shays - who actually took up arms against several state governments.

Two things were missing here: One, there was no uniform set of bankruptcy laws that applied across the states. Two, there was no uniform manner in which payment of a debt was legally recognized as extinguishing that debt. There were other areas for improvement in the Articles of Confederation. Still, these weaknesses drove the then-Confederation known as the United States to the brink - and gave rise to the desire to “…ensure domestic Tranquility.”

FTX is a lesson in Legal Tender

This constitutional restriction on legal tender for payment of debts was initially designed to protect debtors and provide the foundation for uniform bankruptcy laws. And as long as the U.S. Dollar had a price in silver (not the other way around - please read my book for more detail), this worked exactly as designed. But when we decided to live in an economic Alice in Wonderland world where everything is upside down (e.g., silver and gold having a floating price in U.S. Dollars), we sowed the seeds for today’s crisis: This has now become an obstacle to those of us who have concluded the U.S. Dollar is bad money. The heart of the case I make in Liberty’s Silver Bullet: The Digital Liberties Amendment to the United States Constitution is crypto cannot ever be an alternative to the USD until and unless the USD loses its monopoly on legal tender for private debts. It must be understood that a state accepting Bitcoin for payment of state taxes is a public debt and is merely a token gesture with no real meaning.

Crypto is and will remain nothing more than a stateless, digital, foreign exchange play as long as we are not allowed to enter into a contract in which the obligation to pay is both measured in a cryptocurrency of our choice and adjudicated by the courts in that same crypto unit! At the end of the day, we are only free once we are free to decide we no longer accept USD as the tender by which our wages are paid!

As for Bitcoin ETFs: Buyer Beware!

Before you put money into a Bitcoin ETF, you must ask how the coins are held. Will it be like GBTC, where the coins are in the custody of a publicly traded exchange (e.g., Coinbase)? If so, make absolutely sure you follow the news on FTX. Toward the end of the Zero Hedge article, we learn (emphases added):

“The good news for bitcoin bulls is that FTX has almost nothing left to liquidate (not that its customers will even benefit: as a reminder, dozens of FTX customers are challenging a company proposal that would peg the value of their digital assets at the time the company filed bankruptcy, meaning they’d miss-out on a yearlong Bitcoin rally and rebound for other tokens.) FTX also doesn’t expect customers will be fully repaid, which means that almost all of the "cashing out" has been concluded.”

Once again, in the event of bankruptcy (or any other dispute that might end up in court), there is no other unit in which a court can award damages other than a unit recognized as a “Tender in Payment of Debts.” FTX is proposing to calculate its USD liabilities to its customers based on the value of its crypto assets on the date it declared bankruptcy. As long as the USD enjoys its monopoly on legal tender for payment of private debts, any contract in which obligations are measured in a crypto unit will simply not be adjudicated in that unit. The court will have to determine an exchange rate in USD and then order the debt to be extinguished by the tendering of payment in that amount of USD.

[UPDATE: 5:30pm 1/24/2024 - They’re all gone!]

This link currently accepts orders (as of 1/24/2024 12:24 PST). At $2,059.99 w/spot at $2,012.46 (12:53pm), this is spot + 2.3%. The 1% cash back from the Costco Visa makes this spot +1.3%. Simply unbeatable anywhere else.

From my previous post:

Buying one-ounce bars of gold at Costco is quite something, if for no other reason than why you buy anything at Costco… Great price points and a reputation for quality.

In the gold/silver market, there is what is called the “spot price.” It fluctuates over time, especially so in uncertain times. But it is easily discovered. If you see a one-ounce bar of gold for $2,099.00, you can quickly look up the spot price (~$2,051.00 at this moment) and simply divide spot by retail and subtract 1: (2,051 / 2,099) -1. A retail price of $2,099 is spot + 2.2% at this moment. Now, if you shop for bullion online and do the same math, you will see that spot + 8% is the ballpark market norm. If you have credit limit room on your Costco Visa, you get 2% cash back on all charges at Costco stores or Costco.com. (In an earlier post, I erroneously thought it was 3% for these gold bar purchases.) With room on the cash-back credit card and all other things being equal, it is possible to buy gold from Costco roughly at spot - something simply not possible elsewhere.

Check these links regularly

Beyond checking the jewelry case at your local Costco, here are three one-ounce products from Costco.com. When you click on each, wait a bit. You’ll see the graphic, but your browser will update if the product is unavailable. I’ll show a screen capture below for the first:

https://www.costco.com/1-oz-gold-bar-pamp-suisse-lady-fortuna-veriscan-new-in-assay.product.4000186760.html

[1/24/2024 UPDATE: This one is available as of 12:24pm] https://www.costco.com/1-oz-gold-bar-rand-refinery-new-in-assay.product.4000202779.html

[Watch this last one VERY CLOSELY over the next few weeks: Chinese New Year is coming soon!]

https://www.costco.com/1-oz-gold-bar-pamp-lunar-legends-azure-dragon-new-in-assay.product.4000219068.html

[UPDATE 12:36pm 1/24/2024: It looks like this product code is no longer carried. I was redirected to the product above and got a 404 not found response when trying to explicitly look up 4000219068.]

If the product is out of stock, you should see something like this:

If the browser does not show this, well, the race is on! You can only buy two, so get ‘em while you can!

Lastly - What about silver??? 1-800-774-2678

Costco’s U.S. customer service number is 1-800-774-2678. I called them the other day because, honestly, I would REALLY like to see 10 oz. silver bars instead of 1 oz. gold. Here is why:

1. It’s a more accessible price point. Spot silver right now is $23.13/oz. If we multiply by 10, that’s $231.30. If we tack on 3%, that’s $238.24. That, right there, is a Christmas or birthday gift for a young adult child (I have two sons, 24 and 26, respectively). I told the rep that a 10 oz. silver bar would fly off the shelves, unlike anything they had seen with gold.

2. Silver is far more important in the digital age than gold. This is because no element in the Periodic Table conducts electricity more efficiently than silver. You probably know that wires are usually copper. This is because copper, as an element, enjoys a “Goldilocks” sweet spot. It is relatively abundant and therefore cheap, but also conducts electricity quite well. But silver is still the best conduit for electricity. The industrial demand for silver will always be stronger than for gold.

3. Silver has an even stronger historical record as money than gold. The ancient Hebrew word for silver (כסף) is its word for “money.”

A final word about access to credit

Why buy gold and silver? And perhaps more importantly, why avoid coins and stick to bullion? Simple: Go to Google and use “bullion loans” (without the double quotes) as your search terms. Then read.

It is simple: If you own gold and silver, you can use it as collateral. Generally speaking, there will be a roughly 10% preference for bullion (e.g., bars bought from Costco) over coins (i.e., “numismatic”) gold/silver. Simply put, you can borrow more against gold/silver bars than against coins.

Honestly, folks, you might believe the government should have a wide range of authority to promote the common good. Traditionally, this might make you a “Liberal.” In my mind, that’s all good. You’re still my neighbor. As for me, I would rather the government be tightly constrained. Those limits are there to protect our individual liberty. I learned “conservatism” from my parents (who would be relatively “liberal” in today’s world). Government exists to do for us what we cannot otherwise do for ourselves - and to otherwise leave us the hell alone!

This isn’t so much about the “wealthy” protecting their wealth. This about you and me, who have the same thing - the work of our hands - protecting the value of our labor.

If you are interested in reading further, please consider reading this.

Buying one-ounce bars of gold at Costco is quite something, if for no other reason than why you buy anything at Costco… Great price points and a reputation for quality.

In the gold/silver market, there is what is called the “spot price.” It fluctuates over time, especially so in uncertain times. But it is easily discovered. If you see a one-ounce bar of gold for $2,099.00, you can quickly look up the spot price (~$2,051.00 at this moment) and simply divide spot by retail and subtract 1: (2,051 / 2,099) -1. A retail price of $2,099 is spot + 2.2% at this moment. Now, if you shop for bullion online and do the same math, you will see that spot + 8% is the ballpark market norm. If you have credit limit room on your Costco Visa, you get 2% cash back on all charges at Costco stores or Costco.com. (In an earlier post, I erroneously thought it was 3% for these gold bar purchases.) With room on the cash-back credit card and all other things being equal, it is possible to buy gold from Costco roughly at spot - something simply not possible elsewhere.

Check these links regularly

Beyond checking the jewelry case at your local Costco, here are three one-ounce products from Costco.com. When you click on each, wait a bit. You’ll see the graphic, but your browser will update if the product is unavailable. I’ll show a screen capture below for the first:

https://www.costco.com/1-oz-gold-bar-pamp-suisse-lady-fortuna-veriscan-new-in-assay.product.4000186760.html

https://www.costco.com/1-oz-gold-bar-rand-refinery-new-in-assay.product.4000202779.html

[Watch this last one VERY CLOSELY over the next few weeks: Chinese New Year is coming soon!]

https://www.costco.com/1-oz-gold-bar-pamp-lunar-legends-azure-dragon-new-in-assay.product.4000219068.html

If the product is out of stock, you should see something like this:

If the browser does not show this, well, the race is on! You can only buy two, so get ‘em while you can!

Lastly - What about silver??? 1-800-774-2678

Costco’s U.S. customer service number is 1-800-774-2678. I called them the other day because, honestly, I would REALLY like to see 10 oz. silver bars instead of 1 oz. gold. Here is why:

1. It’s a more accessible price point. Spot silver right now is $23.13/oz. If we multiply by 10, that’s $231.30. If we tack on 3%, that’s $238.24. That, right there, is a Christmas or birthday gift for a young adult child (I have two sons, 24 and 26, respectively). I told the rep that a 10 oz. silver bar would fly off the shelves, unlike anything they had seen with gold.

2. Silver is far more important in the digital age than gold. This is because no element in the Periodic Table conducts electricity more efficiently than silver. You probably know that wires are usually copper. This is because copper, as an element, enjoys a “Goldilocks” sweet spot. It is relatively abundant and therefore cheap, but also conducts electricity quite well. But silver is still the best conduit for electricity. The industrial demand for silver will always be stronger than for gold.

3. Silver has an even stronger historical record as money than gold. The ancient Hebrew word for silver (כסף) is its word for “money.”

A final word about access to credit

Why buy gold and silver? And perhaps more importantly, why avoid coins and stick to bullion? Simple: Go to Google and use “bullion loans” (without the double quotes) as your search terms. Then read.

It is simple: If you own gold and silver, you can use it as collateral. Generally speaking, there will be a roughly 10% preference for bullion (e.g., bars bought from Costco) over coins (i.e., “numismatic”) gold/silver. Simply put, you can borrow more against gold/silver bars than against coins.

Honestly, folks, you might believe the government should have a wide range of authority to promote the common good. Traditionally, this might make you a “Liberal.” In my mind, that’s all good. You’re still my neighbor. As for me, I would rather the government be tightly constrained. Those limits are there to protect our individual liberty. I learned “conservatism” from my parents (who would be relatively “liberal” in today’s world). Government exists to do for us what we cannot otherwise do for ourselves - and to otherwise leave us the hell alone!

This isn’t so much about the “wealthy” protecting their wealth. This about you and me, who have the same thing - the work of our hands - protecting the value of our labor.

If you are interested in reading further, please consider reading this.

LATEST: It was about 2pm PST when I posted this. It is 6pm… AAAAAAND… They’re GONE!

UPDATE: Today's spot is about $2,050. Costco is selling for $2,099. That's about spot + 2.3%!!! That's a great deal with free shipping! Use your Costco card, and I think you'll get 3% rewards!

Gold at less than spot? DAMN!

I’m gonna write some more about this later. But I thought I’d drop this quickly while they still have them.

Get it here.

It reminds me of the rodents in my vegetable garden… they just keep coming back. (I refuse to use harsh poisons… but I digress.)

The rodents are the tech CEOs who keep going on and on about AI. I really like what Elon Musk is doing with “X” but even he is contributing to the fear porn here. A big reason why I wrote Liberty’s Silver Bullet is to speak to this in every day, A, B, and C language - just as Thomas Paine deliberately sought to do a couple hundred years ago.

So let’s start by setting aside one form of AI - robotics. There are important questions about risks associated with “machine learning” - like when a self-driving car fails to properly recognize a jaywalking pedestrian. There are some really exciting things happening in medicine - like AI-assisted interpretation of colonoscopies and ultrasounds. In drug discovery, AI is being used to match available compounds to the genetic profile of a disease. So, what’s all this fear porn about?

Marketing 101 - Teach People How to Think

Part of the problem is we are hearing from the same people who are involved in for-profit efforts in this space. What you must understand about the tech industry is that being “first to market” is absolutely everything. The tech CEOs talking up worries about AI are also trying to be first to market with AI products. Of course, they want you to think about AI a certain way (i.e., worry about it). And they want to be the one “first to market” selling something to assuage your worry. It starts and ends with positioning their product for the benefit of their venture capital investors (or shareholders if they are already public).

The first way to defeat this fear-porn is to put AI in a historical context. Where the steam engine was once cutting edge, it gave way to the internal combustion engine (ICE). But both worked according to well-understood principles of mechanics. The people who worked on steam engines had to port their knowledge and skills over to the ICE. But both technologies were built on a common foundation.

Data - Bits and Bytes; Ones and Zeroes

AI is no different. Imagine an eight-lane road, and each lane is controlled by a stoplight (much like a toll booth) which is either red or green. Take a picture of the booths at any time, and you’ll see a mix of greens and reds. Let’s think of green as “1” - the lane is open. Red is “0” - the lane is closed. Without getting into the weeds of “Base 2” math (two symbols - “1” and “0”), there are 256 possible combinations of eight 1s and 0s. This is all a CPU does - it “gates” electrical circuits (lanes). Today’s CPUs can gate 64 circuits at the same time. 8x8=64 - thus the “64-bit” operating system.

The ICE was not sui generis - it was not something uniquely of its own kind. It was and still is the mechanics of transforming heat energy into the mechanical work of turning - just like the steam engine. Neither is AI sui generis; it is, and always will be, computation. Which means math. Operations with operators, operands, and results. And a computer cannot operate data it has not been provided.

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No, AI is not and cannot become sentient

And that means no, the robots are not coming to take over the world. Robotics will impact otherwise manual labor, and Large Language Models will transform “knowledge work.” But there will always be a place for labor between the producer and consumer. AI will require “changing places,” but otherwise, it will not be any more disruptive than going from the steam engine to the ICE.

What AI cannot ever do is wonder. AI can help discover potential drug candidates. It can even help with designing an experiment for those candidates. But it can never ask: “What is missing here?” If AI can only operate the data it is provided, it cannot wonder about data that might be missing.

The scientific method has produced vast human knowledge - these are the known knowns. Each scientific discovery then helps us ask different, better, and sometimes substantially new questions about our world - the known unknowns. But the scientific method always remains open to future new data, provoking scientists to wonder whether that new data might challenge what we once believed to be true - the unknown unknowns.

This wonder is how we, as humans, respond to the data we do not have. Computers simply cannot do this. Do not let the fear porn of the media or the sophisticated marketing efforts of tech companies fool you; AI is nothing without computational power. And computers cannot compute data that has not been provided.

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So, how to starve the beast?

If AI is just this mysterious, scary thing, it is tempting to want to kill this baby in its crib. Tech CEOs, in particular, reveal their lack of self-awareness as they incentivize a possible - and tragic - knee-jerk reaction against it. There is tremendous promise in AI - but only if we can properly “gate” the data it depends on.

There is only one way to do this. Practically all of the data fed into AI is originated from the behavior of individuals. Right now, we do not “own” this data. Even if the social media platforms claim they will delete “our information” if we decide to close our account, we have no control over what parts of that data have been fed in the meantime into other sets or graphs to be used for AI.

Not even copyright laws protect creators. Natural language processing can convert an article into entirely different forms of data and then break it into countless fragments to be reassembled with data from other sources and used for AI. The endpoint is not another article that can be compared to the original. There is no endpoint that is recognizable as evidence in the context of copyright law.

So we have to get as close to the origination of the data as possible. If you buy something with a credit card, the record of the transaction is data - and it does not belong to you. Check out a library book? Same problem. Driving to the department store? Do the police use license plate readers in your community? That data can be used to identify you, and it’s not your data. That video camera in the department store? It can likely use facial recognition to label you on the video. Nope. It’s not your data.

Solve this, and we solve the conundrum of AI. If we own - as in intellectual property rights ownership - those bits and bytes at their very point of origin, we can enforce the ultimate in “opt-in.” AI requires data to be brought into context with other data to create information. If we are able to govern exactly what contextualization is permitted for our data, we can then govern exactly what kind of machine learning is fed with our data. We can opt into contexts that genuinely advance humankind, and opt out of contexts that merely manipulate us for profit or power.

There is no route to this goal that does not go through amending the United States Constitution. Please read Liberty’s Silver Bullet. The journey of a thousand miles starts with the first step.

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Mark Twain once said: “History never repeats itself, but it does often rhyme.”

I will admit: we seem to be careening toward something terrible. But what I will not do is play the same fear-and-outrage game as the political-media Blob. They (meaning political and media consultants) know fear and outrage are how an audience is engaged and a voter is persuaded. And now, with data science, they have a finely tuned engine designed to keep us on edge and at each others’ throats.

We can put an end to this. But we must first understand how it is fed.

The history of war is the history of money…

…and the history of money is the history of war. It is not a coincidence that this sense of foreboding comes at the same time we are shocked at how much less is in our shopping cart. We are puzzled because the economic numbers we hear about are supposedly good. But then we look at our shopping cart and ask: How can this be?

But think about it: The money in your wallet serves a simple purpose - it converts your labor to your living. But there will be less “living” for the same amount of money in as little as a month. What is the logical thing to do? Spend what you have now while you know what it will buy you.

That makes the numbers look better than they really are. When you see a sudden surge of spending at the same time as the shopping cart has less and less in it, history tells you what comes next. And it isn’t pretty.

But again, I am not going to sell this book by appealing to fear and outrage. I am not selling a newsletter where I show you how to profit from the misery of others. This isn’t about prepping or why you should buy gold and silver (although I do discuss gold and silver concerning money as a way to convert our labor to our living).

We are Americans; we are not French. We need not riot. And we are most certainly not powerless in the face of our sense of dread. We just need to understand how two things work in our society - data and money. Then, we will understand what we can do about our sense of dread.

Liberty’s Silver Bullet

The online sample at Amazon.com will take you through Chapter One. Until October 31, you can buy the entire book for free. It is less than 100 pages - an easy read on an airplane if you’re traveling. If you do, please consider writing a review.

• ONE - Data & Money: The Foundations of Liberty in the Digital Age

• TWO - Artificial Intelligence: Its Promises and Dangers

• THREE - The Crypto Economy: Three Essential Elements

• FOUR - The Crypto Economy: Gold, Silver, & Money

• CALL TO ACTION: A Renewal of Our American Traditions

Liberty’s Silver Bullet: Get it Here on Amazon

FOR IMMEDIATE RELEASE

JULY 4^th 2023
SAN DIEGO, CALIFORNIA

In April 1933, August A. Busch, Jr. and Adolphus Busch III surprised their father, August A. Busch, Sr., with the gift of a six-horse Clydesdale hitch to commemorate the repeal of Prohibition of beer.

Realizing the marketing potential of a horse-drawn beer wagon, the company also arranged to have a second six-horse Clydesdale hitch sent to New York to mark the event. The Clydesdales drew a crowd of thousands on their way to the Empire State Building. After a small ceremony, a case of Budweiser was presented to former Governor Alfred E. Smith in appreciation of his years of service in the fight against Prohibition.

This hitch continued on a tour of New England and the Mid-Atlantic states, thrilling thousands, before stopping in Washington, D.C., in April 1933 to reenact the delivery of one of the first cases of Budweiser to President Franklin Delano Roosevelt.

Shortly after the hitch was first introduced, the six-horse Clydesdale team increased to eight. On March 30, 1950, in commemoration of the opening of the Anheuser-Busch Newark Brewery, a Dalmatian was introduced as the Budweiser Clydesdales’ mascot. Now, a Dalmatian travels with each of the Clydesdale hitches.

Today, the Budweiser Clydesdales continue to be an enduring symbol of our heritage, tradition, and commitment to quality.

We realize we have lost our focus on these values. Heritage and tradition are some of the most important things we share. Our desire has always been to create excellent products around which our customers can celebrate these values. It is important to us that these celebrations embrace the widest range of people in the communities we serve. We will not turn a blind eye to how people in often-marginalized communities suffer isolation and loneliness. People of all ages who have suffered gender dysphoria are only one part of these communities. We will not apologize for extending a warm invitation to them to celebrate heritage and tradition with us.

But we must apologize for failing to see something which was right in front of us. Our recent attachment to Dylan Mulvaney was intended to be that warm invitation to celebrate heritage and tradition. We accept Dylan’s story and life experience as authentic - even if it does not fit into the belief systems of many of us and our customers. As a country we have made great strides; the minstrel shows of old where a White person wears Black face and plays to racial stereotypes has rightly been banished from acceptable culture and entertainment. We do not believe Dylan intends her social media content to be such, but we cannot ignore the parallels observed by others. Such content appears to some to be “Woman-face” playing to certain female stereotypes.

We are better than this. Not just our company – all of us.

Our heritage and tradition are best protected by our customers as they enjoy ordinary conversation over great beer. It is important to us as a company that people like Dylan be invited to these conversations. But we also realize there are very few among us who stoke otherwise legitimate grievances to generate fear and outrage. We want to be known for selling great beer. We do not want to be associated with those who monetize our attention by keeping us angry and afraid. We are saddened by this trend. It makes it harder for ordinary people to have important conversations over a pint of great beer.

If you are among those few who have chosen to hijack real stories of loneliness and suffering, or racial discrimination, for political or financial gain, please do not buy our beer – any of it. We do not make it for those who would divide us. It is for those who wish to celebrate our heritage and traditions together.

If you believe with us that we should always seek to “form a more perfect union” – and that this means listening to the stories of those who have been marginalized, we humbly ask you to share one of our beers with a neighbor from the LGBT community.  Please invite them: “Tell me your story...” And if their story makes you uncomfortable, take another sip and say: “Tell me more...” Let us turn away from the media (and perhaps turn off our phones entirely) at least for the time it takes to get to know one another better.

If you find your tastes in beer changing as new and interesting craft beer comes to market, please tell us what you’d like to see from our brand lineup. The Budweiser Clydesdales stand for our commitment to quality. We renew that commitment to you today.

###

The first five paragraphs of this Press Release have been taken almost verbatim from https://www.anheuser-busch.com/about/clydesdale. It is a parody brought to you by Gina Roberts and John Horst of San Diego, California. Gina is a transgender woman, championship shooter, political conservative, and a Second Amendment advocate. John is a socially conservative Christian with a Master of Divinity (M.Div.) and seeks to serve the LGBT community as a Chaplain. Gina and John seek opportunities to build bridges between conservative Christian and local LGBT communities. Visit Gina at gwrgoc@gmail.com and John at @CraftBeerSnob (Twitter) and Thomas Paine’s Blog on Substack.