Category: zerohedge

Authored by Karl Grossman via Counterpunch.org,

If Donald Trump gets his way on formation of a Space Force, the heavens would become a war zone. Inevitably, there would be military conflict in space.

The Outer Space Treaty of 1967 which designates space as the global commons to be used for peaceful purposes—and of which Russia and China, as well as the United States, are parties—and the years of work facilitating the treaty since would be wasted.

If the U.S. goes up into space with weapons, Russia and China, and then India and Pakistan and other countries, will follow.

Moreover space weaponry, as I have detailed through the years in my writings and TV programs, would be nuclear-powered—as Reagan’s Star Wars scheme was to be with nuclear reactors and plutonium systems on orbiting battle platforms providing the power for hypervelocity guns, particle beams and laser weapons.

This is what would be above our heads.

Amid the many horrible things being done by the Trump administration, this would be the most terribly destructive.

“It is not enough to merely have an American presence in space, we must have American dominance in space,” Trump said at a meeting of the National Space Council this week.

“Very importantly, I’m hereby directing the Department of Defense and Pentagon,” he went on Monday, “to immediately begin the process necessary to establish a Space Force as the sixth branch of the armed forces; that is a big statement. We are going to have the Air Force and we are going to have the Space Force, separate but equal, it is going to be something.”

The notion of the U.S. moving into space with weaponry isn’t new.

It goes back to the post-World War II years when the U.S. government brought former Nazi rocket scientists from Germany to the U.S.—mainly to the U.S. Army’s Redstone Arsenal in Huntsville, Alabama—to use “their technological expertise to help create the U.S. space and weapons program,” writes Jack Manno, who retired last year as a professor at the State University of New York/Environmental Science and Forestry College, in his book Arming the Heavens: The Hidden Military Agenda for Space, 1945-1995.

 “Many of the early space war schemes were dreamt up by scientists working for the German military, scientists who brought their rockets and their ideas to America after the war,” he relates. “It was like a professional sports draft.”

Nearly 1,000 of these scientists were brought to the U.S., “many of whom later rose to positions of power in the U.S. military, NASA, and the aerospace industry.” Among them were “Wernher von Braun and his V-2 colleagues” who began “working on rockets for the U.S. Army,” and at the Redstone Arsenal “were given the task of producing an intermediate range ballistic range missile to carry battlefield atomic weapons up to 200 miles. The Germans produced a modified V-2 renamed the Redstone….Huntsville became a major center of U.S. space military activities.”

Manno writes about former German Major General Walter Dornberger, who had been in charge of the entire Nazi rocket program who, “in  1947, as a consultant to the U.S Air Force and adviser to the Department of Defense…wrote a planning paper for his new employers. He proposed a system of hundreds of nuclear-armed satellites all orbiting at different altitudes and angles, each capable or reentering the atmosphere on command from Earth to proceed to its target. The Air Force began early work on Dornberger’s idea under the acronym NABS (Nuclear Armed Bombardment Satellites).”

For my 2001 book, Weapons in Space, Manno told me that “control over the Earth” was what those who have wanted to weaponize space seek. He said the Nazi scientists are an important “historical and technical link, and also an ideological link….The aim is to…have the capacity to carry out global warfare, including weapons systems that reside in space.”

But then came the Outer Space Treaty put together by the U.S., Soviet Union and the United Kingdom. In the 2001 TV documentary I wrote and narrate, “Star Wars Returns.”

Craig Eisendrath, who had been a U.S. State Department officer involved in its creation, notes that the Soviet Union launched the first space satellite, Sputnik, in 1957 and “we sought to de-weaponize space before it got weaponized…to keep war out of space.”

Adopted by the UN General Assembly in 1966, it entered into force in 1967.  It has been ratified or signed by 123 nations.

It provides that nations “undertake not to place in orbit around the Earth any objects carrying nuclear weapons or any other kinds of weapons of mass destruction, install such weapons on celestial bodies, or station such weapons in space in any other manner.”

Atomic physicist Edward Teller, the main figure in developing the hydrogen bomb and instrumental in founding Lawrence Livermore National Laboratory in California, pitched to Ronald Reagan, when he was governor of California visiting the lab, a plan of orbiting hydrogen bombs which became the initial basis for Reagan’s “Star Wars.” The bombs were to energize X-ray lasers. “As the bomb at the core of an X-ray battle station exploded, multiple beams would flash out to strike multiple targets before the entire station consumed itself in in a ball of nuclear fire,” explained New York Times journalist William Broad in his 1986 book Star Warriors.

Subsequently there was a shift in “Star Wars” to orbiting battle platforms with nuclear reactors or “super” plutonium-fueled radioisotope thermoelectric generators on board that would provide the power for hypervelocity guns, particle beams and laser weapons.

The rapid boil of “Star Wars” under Reagan picked up again under the administrations George H. W. Bush and son George W. Bush. And all along the U.S. military has been gung-ho on space warfare.

A U.S. Space Command was formed in 1982.

“US Space Command—dominating the space dimension of military operations to protect US interests and investment. Integrating Space Forces into war-fighting capabilities across the full spectrum of conflict,” it trumpeted in its 1998 report Vision for 2020. It laid out these words to resemble the crawl at the start of the Star Warsmovies. The U.S. Space Command was set up by the Pentagon to “help institutionalize the use of space.” Or, as the motto of one of its units declares, to be “Master of Space.”

Vision for 2020states, “Historically, military forces have evolved to protect national interests and investments-both military and economic.” Nations built navies “to protect and enhance their commercial interests” and during “the westward expansion of the United States, military outposts and the cavalry emerged to protect our wagon trains, settlements and railroads. The emergence of space power follows both of these models. During the early portion of the 2lst Century, space power will also evolve into a separate and equal medium of warfare.”

“It’s politically sensitive, but it’s going to happen,” remarked U.S. Space Command Commander-in-Chief Joseph W. Ashy in Aviation Week and Space Technology (8/9/96):

“Some people don’t want to hear this, and it sure isn’t in vogue, but—absolutely—we’re going to fight in space. We’re going to fight from space and we’re going to fight into space…. We will engage terrestrial targets someday—ships, airplanes, land targets—from space.”

Or as Assistant Secretary of the Air Force for Space Keith R. Hall told the National Space Club in 1997: “With regard to space dominance, we have it, we like it and we’re going to keep it.”

The basic concept of the Pentagon’s approach to space is contained in The Future of War: Power, Technology & American World Dominance in the 2lst Century. Written by “arms experts” George and Meredith Friedman, the 1996 book concludes: “Just as by the year 1500 it was apparent that the European experience of power would be its domination of the global seas, it does not take much to see that the American experience of power will rest on the domination of space. Just as Europe expanded war and its power to the global oceans, the United States is expanding war and its power into space and to the planets. Just as Europe shaped the world for a half a millennium [by dominating the oceans with fleets], so too the United States will shape the world for at least that length of time.”

Or as a 2001 report of the U.S. Space Commission led by then U.S. Secretary of Defense Donald Rumsfeld asserted:

“In the coming period the U.S. will conduct operations to, from, in and through space in support of its national interests both on the earth and in space.”

Nuclear power and space weaponry are intimately linked.

“In the next two decades, new technologies will allow the fielding of space-based weapons of devastating effectiveness to be used to deliver energy and mass as force projection in tactical and strategic conflict,” stated New World Vistas: Air and Space Power for the 21st Century, a 1996 US Air Force board report. “These advances will enable lasers with reasonable mass and cost to effect very many kills.” However, “power limitations impose restrictions” on such space weaponry making them “relatively unfeasible,” but “a natural technology to enable high power is nuclear power in space.” Says the report: “Setting the emotional issues of nuclear power aside, this technology offers a viable alternative for large amounts of power in space.”

Or as General James Abrahamson, director of the Strategic Defense Initiative, put it at a Symposium on Space Nuclear Power and Propulsion, “without reactors in orbit [there is] going to be a long, long light [extension] cord that goes down to the surface of the Earth” to power space weaponry.

Thus nuclear power would be needed for weapons in space.

Since 1985 there have been attempts at the UN to expand the Outer Space Treaty of 1967 to prohibit not only nuclear weapons but all weapons from space. This is called the Prevention of an Arms Race in Outer Space (PAROS) treaty and leading in urging its passage have been Canada, Russia and China. There has been virtually universal backing from nations around the world for it. But by balking, U.S. administration after administration has prevented its passage.

Although waging war in space was hotly promoted by the Reagan and Bush administrations and ostensibly discouraged by the Obama administration and Clinton administration, all U.S. administrations have refused to sign on to the PAROS treaty.

In my book Weapons in Space, I relate a presentation I gave at a conference at the UN in Geneva in 1999 on the eve of a vote the next day on PAROS. I spoke about the “military use of space being planned by the U.S.” being “in total contradiction of the principles of peaceful international cooperation that the U.S. likes to espouse” and “pushes us—all of us—to war in the heavens.”

I was followed by Wang Xiaoyu, first secretary of the Delegation of China, who declared: “Outer space is he common heritage of human beings. It should be used for peaceful purposes…It must not be weaponized and become another arena of the arms race.”

The next day, on my way to observe the vote, I saw a U.S. diplomat who had been at my presentation. We approached each other and he said he would like to talk to me, anonymously. He said, on the street in front of the UN buildings, that the U.S has trouble with its citizenry in fielding a large number of troops on the ground. But the U.S military believes “we can project power from space” and that was why the military was moving in this direction. I questioned him on whether, if the U.S. moved ahead with weapons in space, other nations would meet the U.S. in kind, igniting an arms race in space. He replied that the U.S. military had done analyses and determined that China was “30 years behind” in competing with the U.S. militarily in space and Russia “doesn’t have the money.” Then he went to vote and I watched as again there was overwhelming international support for the PAROS treaty—but the U.S. balked. And because a consensus was needed for the passage of the treaty, it was blocked once more.

And this was during the Clinton administration.

With the Trump administration, there is more than non-support of the PAROS treaty but now a drive by the U.S. to weaponize space.

It could be seen—and read about—coming.

“Under Trump, GOP to Give Space Weapons Close Look,” was the headline of an article in 2016 in Washington-based Roll Call. It said “Trump’s thinking on missile defense and military space programs have gotten next to no attention, as compared to the president-elect’s other defense proposals….But experts expect such programs to account for a significant share of what is likely to be a defense budget boost, potentially amounting to $500 billion or more in the coming decade.”

Intense support for the plan was anticipated from the GOP-dominated Congress. Roll Call mentionedthat Representative Trent Franks, a member of the House Armed Services Committee and an Arizona Republican, “said the GOP’s newly strengthened hand in Washington means a big payday is coming for programs aimed at developing weapons that can be deployed in space.”

In a speech in March at the U.S. Marine Corps Air Station near San Diego, Trump declared:

“My new national strategy for space recognizes that space is a war-fighting domain, just like the land, air, and sea. We may even have a Space Force—develop another one, Space Force. We have the Air Force; we’ll have the Space Force.”

Bruce Gagnon, coordinator of the Global Network Against Weapons and Nuclear Power in Space, notes that Trump cannot establish a Space Force on his own—that Congressional authorization and approval is needed.  And last year, Gagnon points out, an attempt to establish what was called a Space Corps within the Air Force passed in the House but “stalled in the Senate.”

“Thus at this point it is only a suggestion,” said Gagnon of the Maine-based Global Network.

“I think though,” Gagnon went on, “his proposal indicates that the aerospace industry has taken full control of the White House and we can be sure that Trump will use all his ‘Twitter powers’ to push this hard in the coming months.”

Meanwhile, relates Gagnon, there is the “steadily mounting” U.S. “fiscal crisis…Some years ago one aerospace industry publication editorialized that they needed a ‘dedicated funding source’ to pay for space plans and indicated that it had come up with it—the entitlement programs. That means the industry is now working to destroy Social Security, Medicare, Medicaid and what little is left of the welfare program. You want to help stop Star Wars and Trump’s new Space Force. Fight for Social Security and social progress in America. Trump and the aerospace industry can’t have it both ways—it’s going to be social progress or war in space.”

As Robert Anderson of New Mexico, a board member of the Global Network, puts it:

“There is no money for water in Flint, Michigan or a power grid in Puerto Rico, but there is money to wage war in space.”

Or as another Global Network director, J. Narayana Rao of India, comments: “President Donald Trump has formally inaugurated weaponization of space in announcing that the U.S. should establish a Space Force which will lead to an arms race in outer space.”

Russian officials are protesting the Trump Space Force plan, “Militarization of space is a way to disaster,” Viktor Bondarev, the head of the Russian Federation Council’s Defense and Security Committee, told the RIA news agency the day after the announcement. This Space Force would be operating in “forbidden skies.” He said Moscow is ready to “strongly retaliate” if the US violates the Outer Space Treaty by putting weapons of mass destruction in space.

And opposition among legislators in Washington has begun. “Thankfully the president cannot do it without Congress because now is NOT the time to rip the Air Force apart,” tweeted Senator Bill Nelson of Florida.

“Space as a warfighting domain is the latest obscenity in a long list of vile actions by a vile administration,” writes Linda Pentz Gunter, who specializes in international nuclear issues for the organization Beyond Nuclear, this week. “Space is for wonder. It’s where we live. We are a small dot in the midst of enormity, floating in a dark vastness about which we know a surprising amount, and yet with so much more still mysteriously unknown.”

“A Space Force is not an aspiration unique to the Trump administration, of course,” she continued on the Beyond Nuclear International website of the Takoma Park, Maryland group, “but it feels worse in his reckless hands.”

via RSS https://ift.tt/2Kfr7mD Tyler Durden

While headlines distract the world’s investors with headlines of Trump and Xi exchanging trade-war shots – with Trump going big with tariff threats ($450bn) and China trying to play ‘good cop’ – something notable has been happening in the FX markets that few are paying attention to.

As we previously noted, there are 6 possible things that China can do at this time, in order of escalating severity:

1. China could de-escalate tensions by presenting a list of actions it will follow to reduce its significant trade deficits in services with the US. This could affect education service institutions, the local tourist industry, and entertainment. However, as the CFR’s Brad Setser writes, it increasingly looks like the Administration is putting China in a position where China cannot make concessions without appearing to cave – which most think China won’t do. Setser, not alone, has trouble seeing a de-escalation option if Trump goes through with the $200b

2. China will likely launch an economic subsidy for its economy in the form of further easing in financial conditions to offset any potential trade-drag. Some, such as Deutsche Bank have proposed that in order to offset the negative hit to its consumers, China will loosen policy such as tolerating the property and land market boom in tier 3 cities and cutting the RRR twice over the rest of this year to partly offset the potential drags. This would also involve a modest devaluation of the Yuan.

3. China could unleash differential treatment of local enterprises: as some have suggested, Beijing could simply opt not apply its “market access liberalization” policy recently announced. This could greatly disadvantage US firms greatly. Beijing could also engage in an aggressive crackdown on US firms operating in China (Apple), hinder border passage of US products (automotive), or pursue antitrust and monopoly allegations against US tech names (Micron).

4. China could also choose a diplomatic retaliation, and order Kim Jong Un to scuttle the recent agreement North Korea signed with the US, humiliating Trump by showing that it was Beijing all along who made the US-N. Korea summit possible and successful.

5. China could pick an aggressive route, and instead of a mild depreciation, it could aggressively pursue a weaker Yuan to boost trade competitiveness: which, ironically, is the catalyst behind much of the Trump administration’s animosity toward China. To achieve this, China would relaxing some of the capital control measures that have helped strengthen the renminbi in the past 2 years. That said, such a move would unleash sizable outflow demand, while boosting precious metals and cryptos. The US would also brand China a currency manipulator.

6. China, finally, could pick the nuclear option, and gradually or suddenly liquidate its Treasury holdings. This is a long-running worry by markets given China’s $1.2 trillion in Treasury holdings. In January, Bloomberg reported this was a possibility which was at the time denied by China State Administration of Foreign Exchange; however the recent liquidation of half of Russia‘s Treasurys was seen by some as a rehearsal for what would happen if Beijing decides to pursue this approach.

Having continued its tit-for-tat tariff threats (which implicitly China would lose), this week saw China, perhaps, take a step towards Scenario 1 – de-escalation – with Chinese trade officials have “quietly” approached the US to find a way to minimize punitive tariffs on Chinese goods.

But, as always, this appears to be a distraction as Scenario 5 – devaluation, seems to be accelerating quickly…

Offshore Yuan – having reached its strongest since August 2015’s sudden devaluation – has tumbled almost 5% in the last few weeks, breaking below its 200-day moving-average as PBOC ‘allows’ its currency to depreciate against the greenback.

So far, President Trump seems to have not noticed this devaluation, but the world’s speculators certainly have as the last week saw FX Speculators dramatically shift to a net bullish position (the most bullish since April 2017) with the greatest swing in positioning in history…

As Bloomberg notes, the net stance changed to a long of 134,925 contracts in the week through June 19, from a short of 22,084 the previous week. The move to a long position, the first this year, comes after a rally that’s seen the greenback climb by more than 5 percent since around the middle of April.

Meanwhile, as specs swing violently dollar bullish, they are also reverting to the old playbook of selling volatility – with the largest short VIX net position since the Feb XIV collapse…

As traders appear to be chasing momentum and the re-collapse of realized volatility…

The S&P 500 Index is flirting with its 11th straight day with a move of less than 0.5 percent in either direction. The streak is already the longest since November and is an indication that the calm of last year may be returning to equities after a bout of volatility back in February.

And piling-on to that apparently risk-on positioning in VIX, bond speculators remain in aggregate near record short across the Treasury market – undeterred by the ongoing collapse in the yield curve.

One thing of significant note is the dramatic unwind of the $4 trillion net short Eurodollar futures position as traders give up on their rate-hike bets en masse (now less than $3 trillion net notional short).

*  *  *

So to sum up – amid all the threats of trade tariffs and retaliations, Russia dumped half its Treasury holdings and China is now devaluing its currency – and speculators appear to be betting on that continuing (record spike in USD spec longs). However, while the last time a China devaluation sparked global chaos in every asset class (vol explodes, stocks plunge, Treasury yields tumble), it appears the same speculators think it’s different this time – being aggressively net short vol and massively net short Treasuries.

via RSS https://ift.tt/2tuvjry Tyler Durden

Authored by John Rubino via DollarCollapse.com,

As bubbles expand and hot money starts burning holes in corporate pockets, merger and acquisition deal terms begin to leave reality behind. Often one deal of such breathtaking size, scope and hubris is struck that – in retrospect – it heralds the end of the era.

The junk bond bubble of the 1980s, for instance, hit its apex with the December 1988 leveraged buyout of processed food conglomerate RJR Nabisco, which featured a prolonged bidding war by a Who’s Who of the corporate raider/LBO community. At $25 billion, it was seen as “staggering” at the time.

It was also the end of the bubble. In 1989 junk bonds began to default, junk powerhouse Drexel Burnham Lambert collapsed and its “junk bond king” CEO Michael Milken was imprisoned. In the recession that followed most of the bubble’s big players either retired in disgrace or found other ways to make money.

During the late 1990s dot.com bubble everyone became convinced that “new economy” companies (i.e., those related to the Internet) were orders of magnitude cooler and more valuable than old economy companies that made and managed physical things. The media variant of this idea held that content carried online was by definition better than that which was delivered via TV, radio or the printed page. America Online was the pioneer in digital media, and therefore preternaturally valuable. So it decided to use its “supermoney” shares to buy the old-school content of Time Warner for an astounding (even by today’s standards) $182 billion.

The timing couldn’t have been worse (or more on-point for this discussion). Within a couple of months the dot-com bubble burst, sending AOL stock down by a quick 70 or so percent. The NASDAQ, home to most of the previous decade’s tech icons, eventually fell by 80% (a huge drop for a stock index) and didn’t recover for another 15 years.

The 2000s didn’t have a single monster deal that defined its peak. But they made up for it with sheer quantity. The following chart shows 2007’s aggregate global M&A activity exceeding the 2000 peak — and then plunging by about two-thirds in the next two years as the banking system that had financed all those delusional deals nearly died.

Which brings us to the present, in which Disney and Comcast are throwing money at Fox:

Disney raises its bid for Fox to $71 billion

(CNN) – Disney just raised the stakes in the fight for 21st Century Fox.

The company sweetened its offer Wednesday — $71.3 billion for Fox’s movie studio, along with Fox’s regional sports networks and cable channels like FX and National Geographic.

That’s more than the $65 billion Comcast offered a week ago. Disney had initially bid $52.4 billion for Fox in December.

Fox described the Disney offer as superior, and the two companies entered into a merger agreement. But that doesn’t mean it’s a done deal. Rupert Murdoch, Fox’s executive chairman, said Fox is open to better offers.

21st Century Fox is the next big prize as the media industry consolidates to survive against competitors such as Netflix and Facebook. Last week, a judge signed off on AT&T’s purchase of Time Warner, the parent company of CNN.

That court decision paved the way for Comcast’s attempt to swipe Fox from Disney. Like AT&T, Comcast is a content distributor that wants to buy a content creator. AT&T’s win was seen by some as a green light for a Comcast-Fox partnership.

Disney CEO Bob Iger thinks otherwise. During a call with investors Wednesday, he pointed out that Disney has already been working with regulators for months.

“We believe that we have a much better opportunity — both in terms of approval, and the timing of that approval — than Comcast does in this case,” he said.

Iger added that Comcast may still have significant regulatory hurdles. The company isn’t just a cable provider, he said, but a broadband provider, too. That kind of ownership wasn’t addressed in the AT&T case.

Disney’s new offer is essentially the same as the first — just with a higher valuation for the Fox assets. But it comes with one key change designed to stave off Comcast’s all-cash offer: a provision that allows Fox shareholders to decide whether to accept their payment in cash or stock. The cash option shows that Disney, like Comcast, is willing to take on debt for Fox, one sign of how badly the company wants to win. “We’ve always indicated that our balance sheet was not only a financial asset, but we viewed it as a strategic asset,” Disney Chief Financial Officer Christine McCarthy told investors Wednesday morning. “If there were a compelling acquisition that we determined was worthy of us taking our leverage up, we would certainly consider that.”

Right now it looks like Disney will prevail, though here at “peak bubble” nothing is guaranteed and anything is possible. However it shakes out, the deal, immense though it is, won’t stand apart from the current crowd. Below are the top 10 M&A transactions of the 2010s prior to Disney/Fox. Note that Disney’s latest offer of $71 billion barely makes the list.

Which means? The size and scope of the recent M&A binge are so vast that, as in the 2000s, it’s hard for any one deal to define the era’s peak hubris. So this time around it might once again be aggregate numbers that matter. And they’re plenty big enough to ring the bell.

via RSS https://ift.tt/2twt2fr Tyler Durden

Given the bizarre outbursts and increasingly grandiose performance-related promises (even as his company’s Fremont factory has continued to struggle), many have speculated that Tesla CEO Elon Musk has been cracking under the pressure. In one sign that the pressures of running Tesla (not to mention SpaceX and Neuralink) have been weighing on the CEO, some have pointed out that he’s becoming increasingly vindictive toward anybody who doubts or questions him: for example, he recently spent $25 million of his own money on Tesla shares just to blow up a few shorts after tweeting threats of “unreal carnage”.

In a story that lays bare Musk’s obsession with his public image and his  inability to tolerate criticism or dissent from his employees or the media, Buzzfeed published a piece late Thursday that’s packed with alarming details, including the story of Musk’s meltdown during a conversation with regulators from the National Transportation Safety Board.

An outburst from Musk that ended the conversation prompted the NTSB to announce that Tesla would no longer be cooperating with the investigation. In a separate incident, Musk went “ballistic” during a conversation with the National Highway Traffic Safety Administration after a representative informed Elon Musk that the agency would be announcing an investigation into a May 2016 crash involving a Tesla Model S in Florida.

No one lectures Elon Musk. In April, the head of the National Transportation Safety Board discovered this after a call about his organization’s investigation into one of Tesla Motors’ autopiloted vehicles devolved into a heated exchange, leading the billionaire entrepreneur to hang up on the federal regulator. That fiery interaction eventually leaked to the press and ricocheted around the internet as further evidence that Musk was losing it.

[…]

For example, in June 2016 the National Highway Traffic Safety Administration had contacted Tesla as a courtesy heads-up that it would be announcing an investigation into a May crash that killed the driver of a Model S sedan on Autopilot. It was the kind of call that, at most companies, would require executive restraint and sensitivity. Musk was not originally supposed to be on the call with NHTSA officials, Tesla’s general counsel, and the head of its Autopilot team, but chimed in as the conversation got underway. It was unfair that NHTSA was targeting his company, he said, noting that skeptics would just use the public investigation as evidence that Tesla was in trouble.

After failing to convince the government officials to keep their investigation private and forgo their announcement scheduled for the next day, Musk went ballistic and embarked on a profanity-laced tirade. He threatened to sue NHTSA for what he saw as unfair scrutiny and then abruptly disconnected the phone, leaving the people left on the line shocked.

“I couldn’t believe it,” said a former Tesla employee familiar with the call.

Musk’s recent behavior isn’t a deviation: It’s more or less how he’s always acted around his employees. 

But the thing is: None of this is new for Musk. He has always been the architect of his own image and has long run roughshod over journalists and his own communications team alike. In interviews with BuzzFeed News, nine people who previously worked with Musk, and who requested anonymity to preserve their personal and professional relationships, said that while the level of scrutiny on the CEO may be new, his behavior is not. What we are seeing is less a crack in his well-being than his facade. It is Elon unbound.

His short temper has “long been legend” inside Tesla and SpaceX, according to Buzzfeed. The only thing that’s changed, they say, is that Musk’s profile – and the company’s share price – has risen.

What’s changed is simply that Musk’s profile has risen while his staff’s ability to keep him in check has waned. As pressure continues to mount and Musk sheds the executives who once provided advice and insulation, he’s no longer just the Mars-bound genius with a promising electric car company. Depending on who you ask, he’s an icon, an environmental champion, or an attention-hungry micromanager, wielding Steve Jobs–level influence in 240-character Twitter diatribes, occasional public appearances, or mocking conference calls with analysts. But no matter which Elon you choose, it’s become more apparent that there’s no one who can rein him in.

Musk’s inability to let go of anything remotely negative spouted by his critics and the media makes working on his communications staff – whether at Tesla or at SpaceX – a waking nightmare.

This obsession with the media makes working in communications under Musk, whether at Tesla or SpaceX, an unpredictable and grueling gig. Multiple former staffers recalled being kept up late or woken up in the middle of the night because Musk was upset about a headline or an article. Two other former senior employees described Musk as notoriously thin-skinned. “He’ll read an obscure critical post by, like, some Belgian blogger at 3 in the morning and he’ll wake up people on the comms team and demand this person be crushed,” one former employee said. “It’s all utterly disproportionate in response.”

If you’re thinking that some of Musk’s tendencies – particularly his treatment of the media – sound familiar, well, former Musk employees would agree. Several of Buzzfeed‘s sources independently compared working for Musk with working in the Trump White House, the outlet said.

The lack of control and continual need to put out PR fires wore on professionals, even those who personally liked Musk and believed in the missions of Tesla and SpaceX. Tesla is known for a high rate of turnover, and some communications staffers only last a few months. Some have done multiple stints, though have left or were fired after clashing with the chief executive. Three people familiar with Musk’s communications team independently compared the pressure and publicity, and chaos of the job to working in President Donald Trump’s White House.

This has already been a rough week for Tesla. Musk has already had to downsize Solar City’s residential solar business and finish laying off 9% of Tesla’s staff (while continuing to deny that the company is having funding troubles). And this embarrassing Buzzfeed story is one more distraction for the mogul, who’s desperately trying to bring Model 3 production up to 2,500 cars a week by the end of June. If he fails at that task, we imagine there will be another round of outbursts as Musk continues his crusade against the Tesla bears and everybody else who doubts his vision.

via RSS https://ift.tt/2K6EtW8 Tyler Durden

President Trump started off his day in attack mode (as is almost ubiquitous these days), exclaiming that “The Russian Witch Hunt is Rigged,” and how poll number show Americans rapidly losing faith in the ‘Russia collusion’ narrative. All of which explains their sudden shift to a new narrative – hitler-like separation (and caging) of poor desperate illegal immigrant children from their loving caring illegal immigrant parents.

While the media has been loathed to admit it – the separation policy is not a hitler-confirming Trump decision, it has been in place for many years and, as Trump tweeted, Obama faced similar headlines (though somehow was not compared to Hitler and lambasted in the media)…

Drudge Report “OBAMA KEPT THEM IN CAGES, WRAPPED THEM IN FOIL” We do a much better job while at the same time maintaining a MUCH stronger Border! Mainstream Fake Media hates this story.

— Donald J. Trump (@realDonaldTrump) June 23, 2018

Then took direct aim at The Democrats lack of a solution…

It’s very sad that Nancy Pelosi and her sidekick, Cryin’ Chuck Schumer, want to protect illegal immigrants far more than the citizens of our country. The United States cannot stand for this. We wants safety and security at our borders!

— Donald J. Trump (@realDonaldTrump) June 23, 2018

But as The Automatic Earth’s Raul Ilargi Meijer explains so eloquently below, the pedophastry and bigoteering of politicians everywhere (ably assisted by a subservient liberal media) has enabled ‘fake news’ to become fact in an ever-increasing divergence from reality.

The two most viral photographs of the ‘Trump Separation Scandal’ have now been debunked, or at the very least been proven to have been used ‘out of context’. This is a dangerous development, as are the reasons to use them the way they have been. Both pictures are of children who had not been separated from their mothers at all. But both were used to depict just that: a child being taken away from its mother.

What’s dangerous about this is, first, that those who spread the narrative regardless of the truth may next permit themselves to use images from entirely different locations or times to make their point. Yes, children have been taken from parents at US borders. And attention for that is warranted, very much so. But playing loose with the facts turns those facts into a mere narrative in which nobody can tell fact from fiction anymore.

First, a week ago already, I saw this on RT: Debunked: Viral Image Of Crying, Caged Toddler ‘Detained By ICE’ Not What It Seems

A distressing image of a crying toddler locked in a barred cage after purportedly being detained by US immigration officials has gone viral – but despite online claims, it does not actually depict what has been alleged. The image, which shows a little boy crying in a cage as he looks out between its bars, was shared by activist journalist and undocumented migrant Jose Antonio Vargas as a comment on the Trump administration’s immigration crackdown on families.

In the same thread, Vargas admitted that he came across the photo on a friend’s timeline and was still looking for the original source. Nevertheless, the snap quickly went viral with Vargas’ post garnering more than 23,000 retweets and many others sharing the image across their own social media accounts.

Vargas explained that he shared the photo because when he was detained by ICE in McAllen, Texas in 2014, he encountered children who were locked up there. “It wasn’t okay then; it’s not okay now,” he wrote, adding that he’s been outraged about the incident for years.

It has since emerged that the picture was in fact not from a detention facility at all, and instead was taken at a protest against Trump’s immigration policies held on June 10 outside Dallas City Hall. The demonstration organized by Brown Berets de Cemanahuac was held to call out the policy of family separation and confining undocumented children.

Ergo: an activist journalist and undocumented immigrant makes it look as if a picture depicts something that in reality it did not. Note also that the article says he wanted to comment on the Trump immigration crackdown, because he has memories of the Obama immigration crackdown, when he saw children locked up. But then, hey, that’s social media, right? Anyone can say anything.

It’s different, though, when TIME Magazine uses such politics. And its editor-in-chief defends the use of the picture by saying it was the most visible symbol of something, even though he knew full well that the photo didn’t depict that something. That’s a mighty slippery scale. If they could have achieved the same effect with a picture of a overripe banana taken in the Pacific in the 1950’s, they probably would have used it. It’s the effect that counts, not the facts.

Fact-Check: Was Migrant Girl On US Border Taken From Mother? Unfounded

Two photos that went viral on social media depict scenes that are not directly related to the family separations taking place on the US-Mexico border since early May. The most prominent, of Honduran two-year-old Yanela Varela crying inconsolably, has become a global symbol of the separations – helping to attract more than $18 million in donations for a Texas non-profit called RAICES. The photograph was taken on June 12 in McAllen, Texas by John Moore, a Pulitzer Prize-winning photographer for Getty Images.

An online article about the picture, published by Time Magazine, initially reported the girl was taken from her mother, but was subsequently corrected to make clear that: “The girl was not carried away screaming by US Border Patrol agents; her mother picked her up and the two were taken away together.” Time Magazine nonetheless used the image of the sobbing child on its cover, next to an image of President Trump looming over her, with the caption “Welcome to America”. The head of Honduras’ Migrant Protection Office Lisa Medrano confirmed to AFP that the little girl, just two years old, “was not separated” from her family.

The child’s father also said as much. Denis Varela told the Washington Post that his wife Sandra Sanchez, 32, had not been separated from their daughter, and that both were being detained together in an immigration center in McAllen. Under fire for its cover – which was widely decried as misleading including by the White House – the magazine said it was standing by its decision. “The June 12 photograph of the 2-year-old Honduran girl became the most visible symbol of the ongoing immigration debate in America for a reason,” Time’s editor-in-chief Edward Felsenthal said.

[ZH: And here’s the corrected version:]

pic.twitter.com/NXZYgiw10t

— Paul Joseph Watson (@PrisonPlanet) June 23, 2018

Nassim Nicolas Taleb, of black swans and Fragility, has found the appropriate term for this ‘phenomenon’, and explains why it works so well that TIME apparently doesn’t care about the damage to its reputation caused by using photographs for such purposes.

Pedophrasty, Bigoteering, and Other Modern Scams

Pedophrasty Definition: Argument involving children to prop up a rationalization and make the opponent look like an asshole, as people are defenseless and suspend all skepticism in front of suffering children: nobody has the heart to question the authenticity or source of the reporting. Often done with the aid of pictures. [..] Pedophrasty is effective as it provides arguments to strike before the evidence is formed. People are moved into “doing something” Pedophrasts prey on our maternal (and paternal) instincts.

Pedophrasty has its most effects on actors, journalists and similar types who are intellectually insecure, deprived of critical judgment, and afraid of being classified as violators of some norm of political correctness. For instance, pedophrasty has been commonly used in the Syrian war by such propagandists as Julian Roepke continuously supplying the German public with pictures of dead children. Or the various lobbies hired by Saudi Barbaria (and allies), such as the Middle East Institute in Washington DC, to promote Sunni Islamist policies under the cover of “think tanks”.

The Nayirah testimony: a false congressional testimony by 15-year-old girl who provided only her first name, Nayirah (she turned out to be the daughter of the Kuwaiti ambassador to the U.S.) was a bit responsible into tipping the US into the war. Nayirah claimed that she had witnessed Iraqi soldiers take babies out of incubators a Kuwaiti hospital, and leave the babies to die. Nobody dared to question the veracity of her claims.

That’s what is dangerous: seeing a photo of a child in distress makes people halt their critical thinking. That’s also why such photos are used. They help build a narrative that doesn’t have to be factual to shock people. But at that point TIME becomes a fiction magazine; it’s where it leaves journalism behind.

The narrative also depends to a large extent on the singularity of Trump’s brutality compared to other presidents and nations’ leaders. It seeks to single him out as being extremely cruel. That narrative will fall to pieces going forward, and not only because the stories behind the photos have now been exposed.

First, here’s a look at what happened under earlier US presidents, in this case Obama, published by the ACLU in May 2018:

ACLU Obtains Documents Showing Widespread Abuse Of Child Immigrants In US Custody

Documents obtained by the American Civil Liberties Union featured in a new report released today show the pervasive abuse and neglect of unaccompanied immigrant children detained by U.S. Customs and Border Protection. The report was produced in conjunction with the International Human Rights Clinic at the University of Chicago Law School.

“These documents provide a glimpse into a federal immigration enforcement system marked by brutality and lawlessness,” said Mitra Ebadolahi, ACLU Border Litigation Project staff attorney. “All human beings deserve to be treated with dignity and respect regardless of their immigration status — and children, in particular, deserve special protection. The misconduct demonstrated in these records is breathtaking, as is the government’s complete failure to hold officials who abuse their power accountable. The abuse that takes place by government officials is reprehensible and un-American.”

The report is based on over 30,000 pages of documents dated between 2009 and 2014.

Then, what other ‘leaders’, who express their ‘disgust’ and worries at the Trump separation policies do at home. The Guardian yesterday:

Theresa May’s Brutal Family Separations Would Make Trump Blush

[..] as a British citizen I cannot, in good faith, reassure myself with that time-old mantra that we are somehow more civilised and less cruel or brutal than our cousins across the pond. Nor do I think that condemnation from our government can carry any real currency. Since long before anybody had heard the words “Make America great again”, splitting up families has been official policy in Theresa May’s Home Office – and it has been carried out with a brutality and on a scale that would make even President Trump blush.

The Children’s Commissioner has found that at least 15,000 children growing up in the UK live without a parent because the right of British citizens to reunite with a foreign spouse is limited by an unreasonable income threshold, an impossible complicated application system fraught with Home Office errors, and no legal aid for families to challenge incorrect decisions.

And the Sydney Morning Herald from December 2017:

Australia Is Wilfully Damaging The Health Of Children On Nauru To Make A Point – And It Is Appalling

When we visited Nauru as paediatric specialists three years ago, we were asked to see 30 of the 100 children being detained on the island. Among them was a six-year-old girl who had tried to kill herself and a two-year-old boy with such severe behaviour problems a doctor had prescribed anti-psychotic medicines. Their parents were in despair. They had fled persecution, trying to save their children from harm, but had ended up imprisoned on a remote island, without hope.

We left with the view that these were the most traumatised children we had ever consulted on, far worse than children we had seen in Australia, Africa, Asia or Europe. Three years later, 43 of those children remain on the island. Officially they are now free to move around, but reports of attacks by locals show Nauru is not safe and so they remain in the “Regional Processing Centre”.

In 2014, the Australian Human Rights Commission reported that children at this centre were deeply traumatised psychologically, and had even been abused. Their detention was harming them. When Australia introduced mandatory detention in 1992, it took 10 weeks on average to process an application for refugee status. Now it takes years. As the numbers of children in detention fall, the length of time in detention rises. This is deliberate: wilfully damaging children’s health to deter others from seeking asylum.

See, what TIME Magazine and others do, using pictures of crying children regardless of their actual context, may make for an initially appealing narrative, but in the end their approach only distracts from what really matters. Which is that children need to be with their mothers (and preferably fathers).

Just reporting the facts on this is not only enough, it’s the only way to report on it. Once you start making up stuff, you’re done, and the truth is done.

US immigration laws are clearly not working; so change them. ICE is a terrible organization that has attracted far too many sociopaths. Close it down. Child abuse as a tool to instill fear has been an international political tool for a very long time. Those are the things that should be making headlines. Turning this into yet another anti-Trump narrative, using crying children as shortcuts to people’s emotions, doesn’t work, or not for long.

This is not about Trump. Trying to make it about him is not going to help those children. And that’s what you want, right? Right?

via RSS https://ift.tt/2lwdQLP Tyler Durden

Russian foreign ministry Maria Zakharova on Wednesday expressed alarm over President Donald Trump’s order for the Pentagon to “immediately” establish a “space force” as an independent service branch. She informed reporters that Moscow is closely examining Washington’s plan to weaponize outer space.

Russian Foreign Ministry spokeswoman Maria Zakharova addressing reporters on Wednesday. (Source: Albert Dzen/TASS) 

Here is the moment when President Trump announced plans for his new space force:

During a press conference Monday, Donald Trump said, “we must have American dominance in space. Very importantly, I am hereby directing the Department of Defense and Pentagon to immediately begin the process necessary to establish a Space Force as the Sixth Branch of the Armed Forces.”

Pres. Trump calls for establishment of a “space force as the sixth branch of the armed forces.”

“When it comes to defending America, it is not enough to merely have an American presence in space. We must have American dominance in space.” https://t.co/NkJuIoyFEp pic.twitter.com/1b4w6NGDTC

— ABC News (@ABC) June 18, 2018

“We’ve taken note of the US president’s instruction given to the Chairman of the Joint Chiefs of Staff to pull the military space force out of the Air Force and to convert it into a separate branch,”Zakharova said. “What makes this piece of news most alarming is the purpose of the instruction was described in very clear terms – dominance in space.”

Zakharova told reporters this confirms that Washington “is hatching plans for putting weapons in space with a view to the possibility of conducting combat operations there.”

“It’s not just guesses. It’s the understanding of the realities. Naturally, we keep the closest watch on Washington’s intentions and analyze the likely effects,” Zakharova said.

“A military buildup in space, in particular, after the deployment of weapons there, would have destabilizing effects on strategic stability and international security.

“Russia takes a fundamentally different position and attaches priority to using and exploring space exclusively for peaceful purposes,” Zakharova said.

“Over the past few years, we put forward a number of initiatives for preventing a space arms race. We are determined to push ahead with pro-active work along these lines geared to obtaining specific results.”

Zakharova warned that Washington could trigger the next evolution of the Cold War, however, this time, it could be in the heavens.

“For instance, take its wish to achieve monopoly on nuclear weapons,” she said.

“At a certain point, all this resulted in the toughest nuclear arms race and terrible escalation of tensions in the international scene. We are urging Washington to display common sense and avoid repeating mistakes made in the past.”

“As for those who wish to know more about Russia’s military-space force, I’d like to stress that its nature is purely defensive,” Zakharova said. “Our country is not interested in tackling any tasks in space with the use of attack weapons.”.

Released on October 2017, the US Army’s Training and Doctrine Command, or TRADOC, drafted a new strategy for how US ground forces will operate, fight, and campaign successfully across multiple domains – space, cyberspace, air, land, maritime – against all enemies in the 2025-2040 timeframe.

As we mentioned in last year’s report, Washington is gearing up for decades of hybrid wars starting around 2025. So, President Trump’s executive order creating the sixth military branch [space force] comes as no surprise, as the build-up towards the next World War has undoubtedly startled Russia.

via RSS https://ift.tt/2IiDc8J Tyler Durden

Authored by Ron Paul via The Mises Institute,

Introduction: Where We Are

It’s a fallacy to believe the US has a free market economy. The economy is run by a conglomerate of individuals and special interests, in and out of government, including the Deep State, which controls central economic planning.

Rigging the economy is required to prevent market forces from demanding a halt to the mistakes that planners continuously make. This deceptive policy can last only for a limited time. Ultimately, the market proves more powerful than government manipulation of economic events. The longer the process lasts, the greater the bubble that always bursts. The planners in charge have many tools to perpetuate confidence in an unstable system, but common sense should tell us that grave dangers lie ahead.

Their policies strive to convince the unknowing that the dollar is strong and its status as the world’s reserve currency is secure, no matter how many new dollars they create of out of thin air. It is claimed that our foreign debt is always someone else’s fault and never related to our own monetary and economic mismanagement.

Official government reports inevitably claim inflation is low and we must work harder to increase it, claiming price increases somehow mystically indicate economic growth.

The Consumer Price Index is the statistic manipulated to try to prove this point just as they use misleading GDP numbers to do the same. Many people now recognizing these reports are nothing more than propaganda. Anybody who pays the bills to maintain a household knows the truth about inflation.

Ever since the Great Depression, controlling the dollar price of gold and deciding who gets to hold gold was official policy. This advanced the Federal Reserve’s original goal of demonetizing precious metals, which was fully achieved in August 1971. Today, even though the official position of all central banks is that gold is not money, central bankers constantly rig the dollar price of gold, pretending the dollar is stronger than it really is. Just as the market overrode the artificial price of $35 per ounce in the 1970’s, today’s price will soar when the dollar is dethroned as the king of the world’s currencies.

In the rigged financial system, stock and bond prices are kept artificially high for the wealthy on Wall Street. To do this, interest rates have to be kept below market rates—which is a major contributing factor to gross economic distortions and financial bubbles.

The false belief setting the stage for an economic crash is the doctrine of “deficits don’t matter,” endorsed universally in the nation’s capital, has been going on for decades. We are destined to soon find out that deficits do matter, and matter very much. Denying economic truth and common sense for long periods of time always ends badly.

If one were to listen only to the MSM recite government economic reports, concerns for the future would be minimal. Low unemployment rates, negligible inflation, no hot war going on, and the US remains the wealthiest and militarily the most powerful nation in history.  Are the worriers justified in their concerns?

There are a lot of them yet the Fed doesn’t seem to be concerned, but then again it has never warned of trouble ahead, even when a major correction was at our doorstep. This is either because the Fed chairmen don’t know any better, or they don’t want to panic the people into preparing for a crisis by knowing the truth. My guess is that it’s both.

One thing for sure is that middle class America is not of much concern to the money managers. What occupies their minds is how to protect Wall Street from any financial crisis that might arise. The monetary elite are alert as to who will be blamed, and the Fed in particular, must be protected.

Since 1987, it’s been the responsibility of the Plunge Protection Team (the president’s Working Group on Financial Markets) to protect Wall Street from sudden and severe corrections in the stock and bond markets.

There are four powerful agencies that secretly can do just about anything they care to do to protect the monetary elites. They are: the Federal Reserve Bank, the US Treasury Department, the Securities and Exchange Commission, and the Commodity Futures Trading Commission. It’s my opinion that the Treasury’s Exchange Stabilization Fund, which was funded by gold confiscated in 1934 by FDR at $20 per ounce and immediately repriced at $35, is still “legally” permitted to be engaged in the gold market and foreign exchange rates.

The key individuals, involved in any rescue operation during a financial crisis, are the Fed Chairman, the Treasury Secretary, the Chairman of the SEC, and the CFTC. We can be assured that they were quite active in the financial crisis of 2007 and in the years of quantitative easing failures that followed. Today’s amazing stock market “success” (as of January 2018) is especially interesting since there is a net outflow of funds from the market. This means that the PPT has been successful in delaying the major correction that is required.

Abnormally low interest rates permit buybacks, mergers, and direct intervention in purchasing stocks and bonds by the PPT or by its allies around the world, with funds clandestinely provided by the Fed, to prop up the market and manipulate the gold price. There’s good reason the financial elite hysterically oppose an audit of the Fed.

If more people knew how fragile the economy is and what is required to hold things together, there would be a lot less optimism. But the bigger question is: Do people accept the government’s favorable reports on the state of the nation’s economy?

Even the mediocre GDP reports overstate economic growth. Since 2008, government debt has grown much faster than GDP, which some claim supports the notion that the more debt the Congress runs up, the better off the economy will be, rather than admitting there’s been no overall growth.

The increase in prosperity has been limited to the already wealthy. It is true that the rich are getting richer and the middle class is being wiped out. Belief in this fiction is limited, and the seriousness of the problem, that more than half the population now realizes, explains the anger and frustration the people feel. Debt may make one feel wealthier on the short term but it is not wealth.

There are many reasons why Americans should be deeply concerned. Evidence readily exists that our prosperity and our liberties are threatened. Our bipartisan foreign policy of interventionism is needlessly driving us toward a major military conflict. In the last several decades, the US has  engaged in constant military conflict remaking the Middle East and elsewhere. Whether it’s a Republican or Democrat administration, the policy remains the same— an obsession to constantly aggravate Russia, China, Iran, North Korea, Syria, Iraq, and Afghanistan. One of these days we can expect the victims of our interventions in their internal affairs, to declare “enough is enough” and gang up against us. The American people will likewise get tired of financing our senseless warmongering policies and demand that they stop.

Our economy is burdened with multiple problems: unsustainable government deficits at all levels; unfunded liabilities; student loan debt; stagnant wages; lingering consequences of the Fed’s QE policy; gross mal-distribution of wealth which generates huge social conflicts; a broken educational system; a breakdown of the family unit affecting all races and classes; and excessive dependence on government benefits and special interest privileges— all of which contribute to anger, frustration, and concern for the future.

Corruption in government is epidemic. Few people believe the lies our officials tell us and most Americans know that the truth-tellers, i.e. the whistle-blowers, are punished, while the criminals in government are rewarded. Commissions, special investigations, and prosecutors are set up to investigate government malfeasance, but instead are used to cover up mistakes and political crimes and never to seek the truth.

Economic conditions, our disastrous foreign policy, and the worsening moral chaos all justify the disillusionment of the American People. Polls show more than 70% of Americans believe the sinister Deep State is in charge of running our government, not our elected leaders.

Because of the dangerous financial situation in which we find ourselves, many people now recognize that it’s caused by the massive debt that results from excessive government spending on war and welfare. It’s becoming common knowledge that this constant spending beyond our means could not occur without the Federal Reserve accommodating congressional spendthrifts with endless monetary inflation. This is why the call for monetary reform is getting louder. These dangers prompt a growing number of people to plan for an alternative monetary system. This is good news.

The reason deep concern about monetary policy is so important, is that it acknowledges how our current political system is failing. It confirms that the policy of central economic planning, inflationism by central bankers, the swollen welfare/warfare state, the casual acceptance of deficit financing, and corporatism has failed. Though it is self-evident, the politicians remain in denial. The constant and outrageous petty partisan fights that dominate the news, distracts from the failure of the current policies, which both parties endorse. They’re “all Keynesians now.”

The struggle is simply over power and whose special interests are being served. The issue of authoritarianism versus voluntarism is never considered. The constant political noise we’re exposed to avoids dealing with the significance of monetary policy. The main purpose of the Federal Reserve is to finance an immoral and unworkable system. Much can be achieved with a better understanding of how the monetary system works. A growing interest in market-driven competing currencies and sound money offers an opportunity to challenge the relationship of fiat money and government tyranny.

The Case for Gold 

For years, as a Member of Congress, I supported the principle of competing currencies in the market place, offering legislation that would eliminate the Fed’s monopoly control of monetary policy. This included removing sales and capital gains taxes on silver and gold, if the market chose to use them as money. The fraud of counterfeiting US currency, as is routinely committed by the central bank, would be prohibited. This is consistent with Hayek’s proposal for the denationalization money, “an idea whose time has come.” 

The beneficiaries of the current fiat system will vigorously resist such a plan. Control over money has been cherished, for thousands of years by all forms of governments, in collusion with bankers. This partnership has been destructive to the middle class while enriching the well off. The unfairness of a fiat monetary system frequently has led to dangerous social and political upheavals. Our current system is drifting in that direction and has prompted the current interest in monetary reform.

There are several major efforts being made to replace the fiat dollar with gold or cryptocurrencies, while other countries are making plans to challenge the dollar as the world’s reserve currency.                         

The collapse of the Bretton Woods Agreement in 1971 created monetary chaos the following decade, with gold going from $35 per ounce to an astounding $800. Very high price inflation of 15% and interest rates as high as 21% resulted, along with a very weak dollar. In 1980 Congress enacted legislation directing a commission be set up to study the role of gold in the monetary system.  President Carter signed the bill into law and the “Gold Commission” met in 1981. I was a member of that 17 member commission, which was stacked against gold supporters 15 to 2. The establishment easily won the “debate” to continue and massively expand the fiat dollar standard, guaranteeing that the problems we now face would be much worse.

My dissenting views, co-signed by Lewis Lehrman, were published in the book “The Case for Gold.” The only positive outcome was the Commission’s recommendation that the US Treasury mint gold and silver eagles. This was another significant step away from FDR’s 1933 executive order that made it illegal for American citizens to own gold. Legislation passed in 1975 nullified that E.O.

The world now, under very different circumstances, is once again considering official use of gold in the monetary system. A growing consensus agrees that a world-wide monetary crisis is fast approaching and once again the importance of gold as money is being discussed. Those who benefit from the fiat dollar standard are not pleased with this renewed interest in gold, nor with the possibilities that blockchain technology may provide a nongovernment alternative to the current system of money and banking. The principle of gold as money has been acknowledged for thousands of years and is not going to be ignored any time soon.

The current financial chaos brought back the debate over the exact role gold should play in the international monetary system. There are many signs that various governments are considering using gold as an alternative to the fiat dollar. China for the past three years has been a net seller of dollar denominated assets and a major importer of gold. It is making an effort to popularize a gold Yuan to be used in place of the dollar in international oil transactions. China may well have more clout in this endeavor than is generally realized. Other countries like Russia, India and Brazil are cheering the Chinese on and are net purchasers of gold. The US, picking a fight in a senseless trade war with China, only adds to that country’s resolve to stand up to our domineering attitude.

Provoking China with threats over sea lanes isn’t necessary and provides no benefit. China has near monopoly control over rare earth minerals, which, if needed by other countries, can be used as leverage against us in a trade or currency war with them. China has an advantage of being a creditor nation, while we are the world’s largest debtor nation. As conditions deteriorate this will become a big problem for us and aid China and others in their efforts to implement an alternative currency to the dollar.

We’re in a precarious position with China, and the importance of gold is going to be more beneficial to them than to us when the monetary crisis hits. We will no longer be in the driver’s seat in world financial matter as we have been in the past 100 years.

Just figuring out exactly where physical gold sits and who actually owns it is a challenge. It is believed that essentially all the gold discovered in human history still exists somewhere. It’s durability and universal attractiveness are what throughout the ages, has qualified it as the most unique and desired commodity to be used as money. Approximately 190,000 tons have been mined to date: all of this gold would fit into a cube 23 yards on each side.

Already the approaching currency crisis has prompted some countries to repatriate their gold from the safe havens chosen during the various crises that occurred in the 20th Century. US vaults were especially popular during the various wars in Europe. The effort today by some countries to get their gold back reflects a growing loss of confidence in the dollar and America’s stature around the world to be the “keeper of last resort.” Our weak financial condition is not being ignored. Government spending and huge deficits are unsustainable and we’re starting to pay a price for it.

There is now a growing awareness of a problem in locating gold, identifying exactly who the owners are, and determining how much of it has been loaned out without its rightful owner’s knowledge. This is now acknowledged as a common practice. The effort to return some gold has not gone smoothly. Delays and excuses are common. Germany, Italy, Hungary, Austria and the Netherlands are asking that their gold be returned from the countries where it has been stored.

The current Treasury Secretary, Steven Mnuchin, was curious enough about gold to visit Fort Knox, in Kansas, something only two other Treasury Secretaries had bothered to do. He joked that: “I assume the gold is still there,” but added that “the gold was safe.” This is something nobody can be sure of since the last audit was in 1953.

During the Gold Commission hearings in 1981, I proposed that we request an audit of US gold holdings. The request was defeated 15 to 2. I suspect that access to this gold is available only to the “Deep State” and not to the American People from whom it was taken at $20 per ounce.

Central bankers are coy about gold’s importance as a monetary metal. Former Fed Chair Benjamin Bernanke, at one of our hearings, claimed flatly that gold was not money.  When I pressed Bernanke on why, then, do central banks hold gold, he declared that after a long pause that it was merely “tradition.” He had no interest in my suggestion that the gold could be sold off to the American people if it’s not money. The point is that due to today’s impending crisis, many governments are now accumulating more gold—while others are holding onto what they have with the expectation it will once again be used in the monetary system.

Even former Chair Alan Greenspan has had an on-again off-again favorable relationship with gold. Basically, when working within the establishment he was anti-gold, but as a private citizen he has been much more sympathetic. This is what he had to say about gold in 1966, in his frequently quoted article, Gold and Economic Freedom: “…gold and economic freedom are inseparable …government deficit spending under a gold standard is severely limited.” And more: “The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit” (by the Federal Reserve). He closed his article with a couple truisms: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no store of value…Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process.”

In private, I asked Greenspan about this article and surprisingly he said that he had just recently reread it and still totally agreed with it. When I met with him I had an original copy of the article (from The Objectivist Newsletter) with me, which he agreed to autograph. While signing it, I asked if he’d like to add a disclaimer. He said there would be no need for that. Since leaving the Fed, he has said a few things that were slightly favorable to gold. We must remember though, it’s what people do, not what they say, that reflects the “Truth Standard.” That’s what counts.

Paul Volcker became Chairman of the Fed on August 7, 1979. His responsibility was to end the economic debacle of the 1970s that resulted from the breakdown of the Bretton Woods monetary system, established in 1945 after WWII. Ironically Volcker was involved in Nixon’s decision to close the gold window and thus usher in the fiat dollar standard which we now find is on its last legs. At the time, he was the Undersecretary for Monetary Affairs under Treasury Secretary John Connally.

The task of reversing the 15% inflation rate and interest rates of 21% was not an easy one. Volcker was well aware of the political consequences of ratcheting down money growth in a weak economy. During this time, gold had reacted predictably by going from $35 per ounce in 1971 to over $800 in 1980. But since the gold price reflects dollar confidence, or the lack thereof, this was annoying to Volcker. He declared that gold, and those who “speculated” in it, were the enemy. Actually, the gold price was a helpful indicator since once the money supply growth was restrained the gold price drifted back to $300 per ounce. Volcker had a tough job, but the problem was created by the Fed and the failure of the Bretton Woods pseudo-gold standard—both of which caused the financial crisis of the 1970’s. It was the absence of an honest gold standard that was the problem. Gold was not the enemy.

During this period of turbulence Chairman Volcker invited me to a private breakfast with him and his aide. Lew Rockwell, my chief of staff at the time, accompanied me. Lew and I, along with Volcker’s staffer, arrived first.  When Volcker arrived and before any greetings were exchanged, he immediately went to his aide and with some urgency asked: “What’s the price of gold”? In reality what he was asking: “How’s the dollar doing? The price was somewhere in the $700 range. It impressed me how important the gold price was to him. We had a cordial breakfast, which dealt with some legislation he was anxious for me to support. Volcker, although part of the establishment, came across as decent and respectful.

Since leaving the Fed Volcker has indicated that he’s open to the proposal for a new Bretton Woods type arrangement. He’s always favored a rule-based system. I believe he now recognizes, due to the mess we’re in today, we need some central bank rules that incorporate gold. This is a break with the narrative, and shows that even central bankers are concerned that the current system needs reformed. It shouldn’t be difficult to convince any reasonable observer that Bretton Woods was a complete failure— and its replacement, the fiat dollar standard, has caused a much greater world-wide crisis than we faced in the 1970’s.

In a private conversation I had with then president Ronald Reagan, about 10 years after the breakdown of the Bretton Woods Agreement, he stated flatly that: “any time a great nation went off the gold standard it no longer would remain great.” This has turned out to be an appropriate statement, since our “greatness” has been on the wane for quite some time.

Thoughts on the History of Gold and its Moral Significance

Throughout history, governments have defrauded their people by debauching the currency. Gold was required time and again to restore confidence in currencies and to reestablish economic order. If history is any guide, gold will play a significant role in the monetary system again. This will be met with stiff resistance from those who are currently in charge of the monetary system, and from some of those who are offering cryptocurrencies as an option. The option to use gold or cryptocurrencies requires that governments permit legal competition to their money monopoly. That will not be achieved easily.  

When it comes to competing currencies, gold with its very long history, has an edge over the recent efforts to devise a currency using blockchain technology. Gold must first be understood if it’s to be challenged by advanced technology. Understanding the role of government in monetary affairs, something that has existed throughout history, is also required. This is true regardless of whether the replacement for the fiat dollar system is precious metals, modern technology, or both.

The special nature of gold, its beauty and usefulness, has been recognized from the beginning of time, even before it was used in trade. The first evidence of a written language was approximately 3400 BC. There’s evidence that Egyptian pharaohs valued gold in a special manner, as it was used in religious ceremonies and incorporated in the ancient pyramids as early as 3000 BC. Purifying gold by smelting was accomplished as early as 3600 BC by the Egyptians. This enhanced its beauty and value, inviting its use in art and jewelry.

It took a long time before the first international gold standard was established by King Croesus of Lydia in 564 BC. This sequence of events is important for understanding the difference between a market developed commodity money and a government fiat system. Some modern day anti-gold economists argue that because Croesus arbitrarily chose to make the first coins out of gold, others followed until it became a common practice. They claim that if he had picked any other metal it would have sufficed as money of choice; at least until the fraud of fiat money could be established.

This is essentially the argument Bernanke made when he dismissed gold as a monetary metal, arguing that central banks held gold merely out of “tradition.”  Of course, that is complete nonsense. Even before gold coins were minted, gold was eagerly sought after and was used in trade and for estimating value. This was awkward because there was no identifiable unit of account and retail transactions were done with barter. When coins of dependable weight and purity were introduced, it tremendously enhanced retail transactions, domestically and internationally.

Interestingly, one of the first things Croesus did was to pass a law prohibiting private citizens from minting their own coins. Gold, by its very nature as a precious metal, was chosen by the marketplace as natural money. Croesus did not pronounce gold as money by edict. The market did it when the people recognized the special characteristics that a commodity must have to function efficiently as money. Over the centuries various commodities have been used as money, many times on a temporary basis in times of emergency, but gold and silver have survived as the precious metals of choice to be used in providing a sound currency.

Whether it’s been tobacco, beads, sea shells, bronze, copper, salt, stones, alcohol, tea, or various grains tested as money, their usefulness was quite limited compared to precious metals. It was soon understood that for a currency to be efficient, it must serve as a standard of value.

Direct barter was very inefficient as a means of exchange, yet it lasted for thousands of years while greatly restraining the advancement of civilization. Replacing bartering with commodity money gave a great boost to productivity and the standard of living of average citizens. Like most great discoveries, the idea of sound money was challenged by governments. Rulers want to control money as a way to secure wealth and maintain power. It started with King Croesus when he monopolized the world’s first coinage 2600 years ago, and it continues today with the Federal Reserve clinging to its authority to manage the worldwide fiat dollar system, even though it has caused havoc with our current financial system.

In time, it was acknowledged that lugging heavy bags of gold around for larger purchases was impractical and that substitutes for the precious metals would be helpful. Though great benefits were achieved from this change, it invited abuse and counterfeiting of the certificates representing claims to actual metals. Even before the introduction of promissory certificates, impure and false weight coinage was known to be us

Counterfeiting

Man’s yielding to immorality and temptation has been with us from the beginning of time, and it has always been a concern when dealing with the issue of money. Biblical history is explicit in advocating morality and honesty in all weights and measures. For hundreds of years alchemists searched for the philosopher’s stone, hoping to convert lead into gold among other ambitions. They were more like early chemists and didn’t qualify as a typical modern-day counterfeiter. But their motivation to produce gold showed how they considered it the number one choice to be used as money.

Egyptian Arabs in the 7th Century were active in this effort to convert lead into gold. It was not just to have more gold money; they saw gold as something very special and even spiritual, with many potential uses. If they had been successful it would have diminished the benefits of gold as money due to its naturally limited supply. The alchemists believed that it was the “perfect metal” in general, while all other metals were deemed inferior. It was believed that gold had medicinal benefits, which turned out to be true in modern times. It’s interesting that most of the great religions recognized this uniqueness as did the kings and pharaohs. The Magi, in recognizing Jesus as a newborn King, brought gold as a gift to celebrate his birth. It’s this special attitude that also made gold, for thousands of years, the most acceptable of all items used as money.

Gold and silver frequently are mentioned in the Bible as money. From Genesis to Revelations there are 417 references to gold and 320 to silver. Their rarity and beauty were instrumental in achieving this special attention that helped promote them as monetary metals.

Although gold was used in religious ornaments and recognized as something special and superior to other metals (and thus became money), it also motivated crime and corruption. Wars have been fought over gold throughout recorded history. And power struggles have been resulted over gold stores needed to pay the expenses of armed conflict. Christ was motivated to throw the corrupt money changers out of the temple, showing his contempt for dishonest dealing in money.

Even today we see various countries, fearful of a major financial crisis, compete in many ways for the world’s gold. Government and insiders rig gold and silver prices to serve their special interests, which is currently still a common practice. In spite of a constant effort by the so-called monetary experts to de-emphasize the importance of gold as universal money, by holding down the market price of gold for their benefit, it only works in the short term. Market prices always prove superior to all government wage and price controls, even if it takes time and an underground market to sort out real value.

The earliest mentions of honesty in money and the significance of gold as money were recorded three to four thousand years ago in the Torah, the first five books of the Bible written by Moses, which recognizes that gold and silver were early examples of money. Since it represented a weight of a precious metal, the admonition for “honest weights and measures” was spelled out early and often in the Bible. Not using an honest weight in any commodity transaction was considered theft. Today, the deliberate debasement of our currency by monetary authorities is theft, and equivalent to counterfeiting. Our Founding Fathers saw counterfeiting as a serious crime, deserving the death penalty.

Reasons why Gold and Silver Became the Premiere Money

It has been estimated that primitive bartering was used as early as 100,000 years ago. The importance of commodity money, especially gold and silver, started about 6,000 years ago; a comparatively new discovery. Gold and silver, due to their special qualities, were chosen early on as the money of choice to replace barter and facilitate more efficient trading of goods and services. Though gold was accepted quite naturally over time as superior to barter, we have discovered the reasons why and the unique significance of this process only over time.

Precious metals were voluntarily chosen as money by the people and were not designated as such by government force. Very early on though, once the importance of money became obvious, governments took control of those metals.

Today, the characteristics of a commodity that make it acceptable as money are generally agreed upon. When these characteristics are abandoned and government, for nefarious reasons, forces a fraudulent substitute on the people, a fiat currency is established. It is then no longer a commodity money convertible into something tangible.

There are specials characteristics of gold (and silver) that satisfied the people looking for the most practical metal to be used as money.

1) Beauty; sought after for ornaments and jewelry.

2)Easy to identify; not difficult for the average person to recognize.

3) Limited supply; work and effort required to increase the supply, independent of the government.

4) Easily divisible; can produce coins of precise weights.

5) Portable; convenient to use in small retail trade.

6) Durable; most gold ever mined is still in existence.

7) Precise definition; by weight and quality.

8) Difficult to counterfeit.

9) Tangible; when confidence is questioned in a monetary substitute, its authenticity can easily be checked by converting it into gold or silver or whatever substance was promised. This characteristic is the brake that limits the ability of money managers to debase the currency. History shows that the temptation to gain wealth and power without work and effort is overwhelming and must be enthusiastically guarded against.

10)Morality; gold may be the best choice for a sound monetary system but it is limited by the moral stature of those who guarantee the system, whether they are in or out of government.

Closely related to the characteristics of commodity money, that took years to precisely identify, are its functions that need to be understood. There are three main functions that should be fulfill:

1) A store of value.

2) A unit of account to serve as a standard of value, and

3) A medium of exchange.

A store of value makes money useful and conveys confidence that its purchasing power will not be arbitrarily diminished by the creation of additional units out of thin air by government authorities. Ships have sunk, laden with gold and silver coins, only to be recovered hundreds of years later with the purchasing power of the gold or silver coins intact. This does not happen with fiat currencies. A 30 year US bond, by contrast, loses value because the dollar is a fiat currency rather than a sound currency.

A well-defined unit of account, by weight and quality, becomes the yardstick for measuring economic value. The purchasing power of each unit can fluctuate, but the definition of the particular unit should be rigid. The supply and demand for the monetary unit affects prices, just as the supply and demand for the product or service being purchased does. This understanding precludes the practical use of bimetallism, which attempts to fix the ratio of gold to silver.

A practical medium of exchange is the most important function for a commodity used as money. Hundreds of different items have been tested over the centuries and their efficiency as money depended on the circumstances that existed at any one particular time. Water in a desert may be superior to a gold coin. Emergency conditions that exist with a war or a natural disaster may provide a temporary incentive to use different commodities as money.

The monetary choice should always be made by the people themselves and not imposed or prohibited by the government. Fraud in dealing with the monetary unit should never be tolerated. Promises that substitutes or certificates issued for a currency are backed by a commodity mean nothing if there is no guarantee of convertibility. When there is no guarantee, a commodity backed currency becomes a fiat currency. That is what occurred with the breakdown of the Bretton Woods Agreement in 1971. The dollar then became a pure a fiat currency which ushered in the current and worst ever, worldwide currency and financial crisis.

The Ultimate Consequences of Fake Money

Various types of fiat currencies have been used for centuries and they have all ended badly. They not only present a danger to economic prosperity, but they undermine liberty as well.

The current dollar standard is the largest fiat system the world has ever seen. Since 1971, when the dollar became a 100% fiat currency, gross distortions in the international financial and political system have resulted. Since the current environment has been built on false information, generated by monetary and interest rate manipulation and made worse by sub-prime lending, the amount of worldwide debt and mal-investment have reached record highs. Natural market forces always require the liquidation and correction of the excesses that the central economic planners cause by monetary manipulation. If sound economic growth is ever expected to return to the world economy, the excesses of the past 17 years must be dealt with. The problems that will come with this adjustment are huge, and will be both economic and geopolitical. How long and painful the correction is depends on government policy, and how serious we are about instituting sound money.

Paper money never lasts for long periods of time.

Commodity money like gold and silver can last for thousands of years.

Fiat money is institutionalized by government, which guarantees its mismanagement.

Fractional reserve banking and its shortcomings are close companions of fiat money and inflation.

Creating money out of thin air is a politician’s delight and a powerful tool for incumbents. Paying for extravagant spending can be delayed for long periods of time and the beneficiaries don’t pay; innocent victims do.

Deficits are facilitated by the Fed’s willingness to monetize them, which would be impossible with a commodity defined currency.

Subprime interest rates add to the problem of a central bank assuming it knows how to fix rates better than the market place.

Fiat money opens the doors for government spending that the endless numbers of special interest groups lobby for. This is the reason both conservatives and liberals never challenge the Fed. Both sides have their reasons for spending and neither side shows any concern for deficits.

Being able to create money out of thin air guarantees that spending will rise, government will grow, deficits will grow, and the nation’s wealth will shrink.

The longer the fiat system lasts, the greater will be the sacrifice of liberty which will be maintained with a deception of reality.

Under a fraudulent monetary system, debt in real terms becomes impossible to pay and the required debt liquidation can be accomplished only by debasement of the currency.        

Fake money rewards the special interests most closely associated with money managers: The Deep State, the military industrial complex, Wall Street, and the many beneficiaries of government spending.

Unfair distribution of wealth is a characteristic of a fiat monetary system and is seen today in its extreme, with the three richest people in the US owning more than the bottom 50% of world’s population.

This is not a new phenomenon and always leads to social and civil strife. Authoritarians and demagogues promote tyrannical solutions to an unnatural inequality that was largely facilitated by dishonest money, false promises, ignorance of economics, and loss of love for liberty.

Fiat money abhors morality and creates an immoral society. It requires rejection of a convertible commodity standard, and can be enforced only with powerful legal tender laws.

Economic bubbles are creatures of fiat currencies and central bank manipulation of the money supply and interest rates.

A fiat currency eliminates a definable unit of account which is needed for sound economic calculation.

A world run using fiat currencies, each defined by its relationship to the US dollar as the world’s reserve fiat currency, guarantees that competitive devaluations, trade imbalances, and trade wars will occur.

Economic conditions fueled by fiat currencies make wars, black markets, and bartering all more likely. Legitimate substitutes and other monetary commodities are not fiat money.

Anyone who thinks that peace and prosperity are worthy goals must reject fiat currencies.

Recovering from the damage caused by a fiat currency is much more difficult than rejecting        the temptation to initiate a fiat currency as the unit of account in the first place.

Honest money is a required ally of LIBERTY

Are Cryptocurrencies the Answer?

(Analysis is political, economic, historic; not an assessment of blockchain and distributed ledger technology).

Gold and silver imperfectly served our monetary needs from our early history until 1971, when the last official link of the dollar to gold was severed. Even with the intervals of suspension and abuse, the importance of dollar convertibility was acknowledged, though under Bretton Woods, it was reserved only for foreign holders of dollars. This pseudo-gold standard failed to restrain the Federal Reserve from excessively creating dollars at will, and it accommodated Congress’s march toward the welfare-warfare state, financed by deficits. Predictably, this process led to the total collapse of the Bretton Woods Agreement and ushered in the era of the fiat dollar and its reign as the reserve currency of the world. This literally has provided a license to steal for the US government, and has ushered in the current financial crisis. The dollar is in the process of being dethroned from its special status and the turmoil of finding a replacement has begun.

Will precious metals return to serve as the foundation to a new system, or will the recently developed concept of cryptocurrencies participate in a new monetary order? The proper course is to make certain that free people in the marketplace make the choice whether the use cryptos, absent the dictates of government and central banks. This process requires the rejection of the use of force and fraud for any chance of achieving success.

Competition in seeking an efficient monetary unit is required in deciding whether or not modern technology, using the blockchain concept, can create a currency that will challenge the historic acceptance of precious metals as money. A decision of this magnitude will take a significant amount of time to achieve a consensus.

In the event of a total economic collapse, spontaneous use of various dollar substitutes likely would occur. This adaptation has been used throughout history, especially during wartime and other emergency conditions. Let’s hope our leaders come to their senses before we have a Venezuela-like crisis— when the necessary reforms can be accomplished more smoothly, in an environment of legalized competing currencies. The marketplace is quite capable of sorting out the advantages and disadvantages of cryptocurrencies and precious metals. The biggest challenge will be to get the government out of the way to allow this choice.

It’s conceivable that cryptocurrencies, using blockchain technology, and a gold standard could exist together, rather than posing an either-or choice. Different currencies may be used for certain transactions for efficiency reasons. The desire for storage and speed can make a difference in choosing a currency. It appears that decentralized ledger technology will also be useful outside the sphere of digital currencies. A combination of gold and crypto will prove to be a lot more achievable than getting people to adapt to a totally new concept of money.

Privacy will always be a concern to those who seek to avoid constant surveillance by the state, even when it’s for many reasons other than taxes. Retail trade, under primitive conditions associated with a currency crisis, will lend itself to using tangible precious metals in preference to a digital cryptocurrency requiring active networks. Large transactions, at greater distances, may best be served by a proven and trusted cryptocurrency however.

The greatest challenge will be satisfying the need to provide a currency with a precise definition of the unit of account. It cannot be arbitrary, or confidence will not be achieved with any substitute or proposed reform of the dollar. It was because a determined effort to maintain a precise definition of the dollar was abandoned in 1971 that the dollar became fiat and ushered in the financial/debt crisis that the world now faces.

The challenge today is to look to the knowledge accumulated over thousands of years about the nature of money and apply it to modern day technology. A workable currency must convey confidence because that’s critically important to the average person. A guarantee that the monetary unit can be easily and reliably exchanged for something of real value is crucial.

Throughout history all currencies, though they were made popular in the market place, inevitably were taken over by government or a banking entity. Since that will continue, every effort must be made to keep the management of the monetary system out of the hands of government officials. Hopefully, modern technology will help keep financial transactions private. Cryptocurrencies are designed to keep business activities anonymous, yet transparent, with blockchain technology that permits rapid transmission and storage of information.

Because of the aggressive nature of government taxing authorities, with the power they wield due to the guns they carry, they will have the upper hand in ignoring our 4th Amendment rights. This we know is just as true under a commodity standard of money. In the midst of economic and political chaos or a severe currency crisis, simple barter and exchange of precious metal coins could end up serving as the ultimate survival tool. Long term reform of the monetary system needed in order for society to survive is another matter.

After a very long period in monetary history, primitive bartering was steadily replaced with precious metal coinage and the use of substitutes. More rapid forms of communications, used in domestic and international trade, tremendously improved monetary transactions over the centuries. Supporters of cryptocurrencies and blockchain technology are optimistic that such technology will provide faster communications and more efficient record keeping with modern-day distributed ledger technology. The goal is to keep all transactions both transparent and anonymous without paying bank transaction fees. Adapting to the regulators and the taxing authorities, while curtailing illicit expansion of the currency supply, will prove to be a challenge.

For society to advance to the point of accepting a truly denationalized monetary system, a significant amount of energy will be required to rein in the power of government authoritarians. A modern day currency needs an enlightened attitude about what the proper role for government ought to be in a civil society.

Technological advances over the past two centuries were vital in eliminating the cumbersome system of monetary exchange that existed with barter, and problems making direct trades with precious metals without the benefit of substitutes. Technological advances permitted rapid transfers of monetary assets over great distances.

Many changes have occurred since prehistoric times when human exchanges were done on foot or with assistance from animals and carts. Water was transported by sailing ships, for the purposes of exchange and barter for goods, even before precious metals were used as money. For thousands of years these exchanges were slow and inefficient.

Travel for the purpose of fighting wars and trading, remained tedious and slow up until the beginning of the industrial age in the early 19th century. Sailing across the Atlantic in the 18th century and the early part of the 19th, using only wind power, would generally take six weeks. Business transactions and financial activities across the Atlantic in that period were carried out at a snail’s pace.

The steam engine changed all of that. During almost the whole 18th century many inventors experimented with steam power. It was first used for pumps that provided tremendous assistance in the mining industry. The 19th century was a different matter. Steam power initiated the Industrial Revolution, along with dramatically increasing the speed of travel, financial transactions, and trade. This, along with the use of monetary substitutes redeemable for actual gold, spurred international trade. Instead of lugging heavy bullion around the world, the use of certificates with a guarantee of convertibility was a great benefit to trade. But the speed of travel, by land or sea, continued to place limits on trade and economic growth.

The time to cross the Atlantic, after the advent of steam boats in the first half of the 19th century, was reduced from six weeks to a little over one week. But the transmission of information relating to financial transactions was about to become much faster.

A huge technological development occurred in 1844 that revolutionized the transmission of information. This benefitted news reporting, affected vital military strategies, and dramatically improved the transfer of financial information and monetary assets.

Sending a message via the electric telegraph was successfully accomplished for the first time on May 24, 1844, between Samuel Morse in Washington DC and Alfred Vail in Baltimore, Maryland. The memorable message: “What Hath God Wrought?” was quite appropriate and accurately reflected the huge significance of the age in which mankind was entering.

Up until that time, transmission of general information and monetary instruments was tediously slow and cumbersome. The world became much smaller with this invention. The Western Union Telegraphy Company successfully laid a transcontinental telegraph line in 1861. The first successful cable to cross the Atlantic happened in 1866. The spread of this technology worldwide was swift, dramatically changed the speed of all communications, and was especially beneficial in the area of banking and commerce. In 1871 Western Union started an amazingly successful business of wiring money to almost any place in the world. This represented an astounding improvement over sailboats, steam ships, and railroads. In the not too distant past, it took weeks to cross complete financial transactions across the Atlantic. This time was reduced to days and suddenly to minutes, and greater efficiency was yet to come.

The unbelievable sudden improvement in communication speed that was accomplished with the electric telegraph has not yet been matched. However, the quality and choices in transmission technology has continued to make astounding progress.

Dr. Gary North makes an interesting comparison of travel time for information. He points out that from the time of Christ to the inauguration of the electric telegraph, it went from 1.25 miles per hour to 186,000 miles per second. Even with many magnificent technological improvements in the 20th Century, none can compare to the degree of speed improvement that the telegraph achieved. This invention was a major historic event and its speed is relatively fixed to the speed of light. Although speed of transmission was no longer the issue, improvements to the quality and flexibility of electronic communication brought about miraculous developments which continue to this day.

Up until the age of the electric telegraph, the invention of the printing press in 1454 stood out as the greatest human achievement for spreading and preserving information.

It didn’t take long for telephone technology, developed in latter part of the 19th Century, to push the telegraph aside. In the 20th Century, new technology constantly became available that improved information transmission. The telephone was followed by the radio, television, fax machines, and the internet, all to be used for enhancing the quality of transfer and storage of information relating to all matters: social, medical, aeronautical, railroads, military, and financial.

The particular “vehicle” or “process” used for these improvements varied by wavelength, and complicated electronics and were recognized as tools to be used to facilitate the transmission of information.

Economic value came from entrepreneurs who provided marketable services to the public, like AT&T and Western Union, using telegraph technology. One could not own a unit of “telegraph technology,” or radio or TV waves. We can’t get a piece of the action by buying a “unit” of internet transmission. To participate financially in modern day internet technology, we have to invest in companies like Facebook or Google. The technical vehicle or process that permitted fantastic technology to be developed, technology like electricity and the telegraph, cannot be bought and sold like a share of AT&T stock.

A value for transmission service can be determined, but that is different than buying and selling a tangible asset.  If a technological process like emailing can’t be bought and sold, it cannot be used as a unit of account and would not qualify as money. One cannot monetize, with any precision, the activity that uses technology, but a service, like credit card transactions, can be provided for a fee. Services, financial assets, and money are each different from one another.

We can use technical science for advancing civilization, but no one can “own” it. As valuable as wheel technology was, no one ever bought and sold this technology as a piece of property. The question that can only be answered by the market place is whether or not blockchain technology is just another great scientific breakthrough, or can it, in combination with cryptography, become a functional currency? The basic question boils down to this: Do all new currencies need to be based on something tangible?

It appears that blockchain and distributed ledger technology, like all workable scientific discoveries, is innovative and has a fantastic future in multiple areas for efficiently transferring, storing, and securing information. It is not considered “tangible,” in the classical definition of a monetary unit. Time will tell if the modern ideas on crypto money will be adaptable to the old line of thinking about the nature of money.

Being able to wire money, as early as 1871, did not make the electric telegraph a currency— yet the technology used was the greatest invention up until that time for transmitting financial information and money, worldwide. The telegraph can best be described as a valuable “tool” in commercial transactions.

Speed and efficiency of transmission of information remains a challenge for both cryptocurrencies and banking transactions. According to Simon Black, banks have been caught flatfooted and are feverishly competing with the use of distributed ledger technology and cryptocurrencies. The development of advanced systems like the “New Payments Platform,” is being done and tested in a few banks in Australia. In the US, work is being done on an advanced program called “Real-time Payment” (RTP) system in hopes of replacing the commonly used, much slower process-  the ACH (Automated Clearing House).

An interesting question: how will all this technology affect the calculation of prices if the velocity of money soars, when fears are driven by runaway inflation? When the end stages of a fiat currency become evident, and all confidence is lost, chaos ensues and the need for reform becomes obvious. The need to carry bags of paper money around and spend it as quickly as possible to protect against a rapid depreciation and rampant price increases may never occur.  Knowing how to convert rapidly depreciating fiat money into a sound currency, of reliable value and in a way capable of storing that value, is crucial. Obviously, being prepared before the crisis gets out of control is preferable to watching and waiting until it’s too late to act.

Many people are already in the process of doing just that. An Egyptian billionaire recently put one half of his $5.7 billion into gold to protect from what he sees coming. As time goes on and the unraveling of the economy accelerates, a lot more people will be seeking protection from the monetary crisis.

Summary

Investors and politicians worldwide are waking up to the fact that the current economic system of debt and fiat money is unsustainable, and are quietly and secretly preparing for the worst. Governments will do what they always do in a financial crisis: protect insiders and those close to the Deep State.

Average middle-class citizens, already suffering from the corrupt monetary system, are scrambling to find the best way to protect their wealth and safety in these challenging times. Understanding how we got ourselves into this mess is key to preparing for the tough times that lie ahead.

All fiat currencies are self-limiting since they are based on fraud and are equivalent to counterfeit. Unfortunately, they can last for prolonged periods of time, only making the economic distortions much greater.

Prior to the establishment of the Federal Reserve in 1913, the US did reasonably well recognizing gold and silver as legal tender as the Constitution mandated. The Fed was started for various reasons, none of which included maintaining a sound currency backed by gold or silver. The fiat dollar did not arrive immediately after the Fed was established. It came seductively and slowly in a planned strategy between 1913 and 1971.

The dollar became a total fiat currency on August 15th 1971, the day Richard Nixon, by executive order, severed all links of the dollar to gold. This ushered in the radical and dangerous Age of Fiat, which solidified the American Empire and dollar hegemony. This con-game has been going on for nearly 50 year and the concern now is about when and how this house of cards comes down-not if.

Early on, the handwriting on the wall was recognizable when control of the monetary system was turned over to the Fed and its bank allies to operate in secret. Even at its inception, many recognized that the Deep State would be sure to protect their profits and pass their losses onto the people, and that in the long run a central bank would be devastating to our economy.

It didn’t happen overnight, but in the past 100 years we have inexorably marched toward the disaster which we now face. The climatic end to the fiat dollar standard is now on the horizon.

Major events occurred along the way warning us of the dollar’s vulnerability. FDR’s confiscation of gold from the American people in 1933 by executive order was a recognition of our bankruptcy. By this act the US government refused to honor its commitment to pay gold for the gold certificates it had issued.

After WW 2 further attempts were made to institute a global fiat currency, and the US dollar was the currency of choice. The Bretton Woods agreement created a pseudo-gold standard that was destined to fail, as Henry Hazlitt predicted at the time.

August 15th, 1971 confirmed that the fiat dollar would reign for the foreseeable future. Nixon’s order denying the convertibility of the dollar to gold to foreign holders concluded our declaration of technical bankruptcy, commenced by FDR in 1933. This act by Nixon should be known as an atrocious “act of infamy” for the world’s monetary system, from which we continue to suffer.

The problems that we now face are the predictable consequence of this experimental system of fiat money. It has been supported by an economic and political philosophy that promoted the odd idea that “printing” unlimited amounts of money and ignoring the dangers of debt creates wealth. This effort to establish a utopian society, managed by a benevolent US empire, was well received by many patriotic Americans. These well-laid plans for a permanent “guns and butter” economy have failed, and the piper is now demanding payment.

The unwinding of history’s largest financial bubble is now upon us, and presents many dangerous unknowns. As it evolves the seriousness of the challenge, not yet realized by most people throughout the world, will become readily apparent. Venezuela gives us an idea of what may be in store for those who are unprepared. Due to the return of primitive bartering in Venezuela, a haircut has been calculated to be worth five bananas and two eggs. Barter, to some degree, always returns whenever a nation’s money managers destroy the currency.

What will the scenario be like when the debt bubble bursts and dollar supremacy is challenged? What can we do about it? When will it happen? What is the biggest fear? Will it be limited to one or two countries? How long will the crisis last?

Unfortunately there are no precise answers to these questions. No one can anticipate and prepare for every possible problem that might arise.

We all must make an attempt to financially protect ourselves and our families and know who our true friends are. Providing for personal safety should be high on our list of concerns. There is no single answer for achieving these goals, as our circumstances vary from one to another. However, there are some facts to be aware of.

A government that bankrupts a country and destroys its currency will not provide for the economic needs of the people. Any promise to do so, should not be believed. Likewise, a bankrupt government, cannot provide physical safety. All government efforts will be designed to cling to power, by expanding it. Paying attention to the current catastrophic mess in Venezuela, gives us a hint as to what will happen, if we don’t wake up and change our ways.  That’s worth working for, but the odds are very slim that the American people are going to demand that the politicians in Washington quit supporting the welfare/warfare state.

The most important responsibility is to restore a love and understanding of liberty. It was the failure and desire of our government officials to protect liberty that caused this crisis. Without restoring the people’s liberty, survivalist efforts will not be enough to achieve peace and tranquility within the United States.

Our government did not hesitate to “steal” the gold savings of American citizens in the midst of the Great Depression, which was a consequence of Federal Reserve policy. This move kept it illegal to own gold in the US for the next 42 years. And today, there’s even less respect by our government for liberty than there was in the 1930’s.

We should do whatever we can to protect ourselves, our families, and our wealth, but we must remember that without liberty our greatest threat will come from our own government. Look at what has been lost since our leaders announced that we are in a permanent “Global War on Terrorism.” While our “foreign enemies” have been created by design, our “domestic enemies” have proliferated and present an existential threat to our freedom as we know it.

Let me offer some suggestions for what we should be doing to reform or change the system.

Striving for a voluntarist society should be our goal. This can be accomplished by:

• Legalizing competing currencies.

• No sales or capital gains taxes on money.

• No tolerance of fraud.

• Repealing legal tender laws.

• Auditing the Fed; with an eye to abolishing it.

• Expose the evil of fractional reserve banking for the fraud that it is.

Be aware, that anyone who promotes a cashless society is not a friend to freedom of choice in monetary affairs. I’m hoping that blockchain technology will not be a tool that advocates of the “value added tax” can use to enhance the power of the state to collect taxes. Technology experts will need to deal with this concern and reassure us or find an answer to prevent it. 

Also:

• Audit the Pentagon, the CIA and all foreign expenditures.

• No more bailouts of private or government entities.

• To get through the crisis consider real estate, precious metals, and crypto ownership.

• For some, expatriation may be an option.

But none of this is of any value if the government, at will, is allowed to expand its authoritarian rule and control our every move, every expression, every thought, and everything we own.

The most important investment we can make is to do whatever is humanly possible to protect the liberty of all persons. This is the responsibility of every one who has discovered the magical value of living in a free society.

The time has come for us to get engaged in the struggle to reignite an interest in the principles that motivated the Colonists to separate themselves from the British Empire.

We can start by talking about the necessity of a sound currency and the danger of central banking. The fact that Italy, not exactly the champion of laissez-faire economics, is talking about a parallel currency to compete with the euro may be telling us something.

We too, should make every effort to legalize competition to the US dollar and participate in the great debate over the fiat dollar, precious metals and crypto-blockchain technology. It may sound like only a concern about “money,” but it has everything to do with living in a free and prosperous society. Let the competition begin.

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New Jersey’s Democratic Governor Phil Murphy is floating a plan to increase taxes on buying and selling guns by up to 2,400%, according to guns.com.

Murphy estimates that the state will take in an additional $2 million in revenue from the tax, which would include raising handgun purchase permits from $2 to $50, and firearms ID cards required to own a gun or buy ammunition from $5 to $100. Permits to carry a handgun would skyrocket from $50 to $400.

In comparison, neighboring Delaware and Pennsylvania charge fees for carrying of $65 and $20 respectively. 

Such taxes, of course, would disproportionately affect the poor – as rich gun owners can simply pay up for personal protection. Given that the average salary of a New Jersey armed security officer is $19.42 an hour, Murphy’s plan puts those who need to carry for their jobs under increased financial burden. 

In a public signing ceremony for a six-pack of gun control measures last week, Murphy slammed what he characterized as the low fees of firearm licensing in New Jersey. “We must please responsibly increase the fees for gun licenses and handgun permits,” he said. “It’s long past time we did this. The last time these fees were increased was 1966.” –Guns

Gun dealers would also be affected by the change – with the cost of retail licenses to increase 10-fold from $50 to $500, while manufacturer licenses would jump from $150 to $1,500. The ATF charges similar fees of $200 and $150 respectively. 

Murphy has rolled back several pro-gun reforms backed by the outgoing Chris Christie (R) administration, while shutting out Second Amendment groups and repeatedly blaming the gun lobby for the state’s violent crime. He’s also appointed a “gun czar,” attorney Bill Castner.

“Bill Castner will play an active role in enhancing the coalition and will help our administration to advance new common-sense gun measures and potential avenues for legal challenges to stop the scourge of gun violence,” said Murphy, adding “Leading the force for gun violence protection to build safer communities and protect families at the state level is of the utmost importance, and I am confident that Bill will generate ideas and solutions that will save lives.”

Murphy’s attorney general last week warned a number of gun parts makers they could face civil action for selling unfinished lowers and frames in the state and has been ordered by Murphy to publish a running “shame” list of firearm trace data. –Guns

So for those living in New Jersey and other states with high taxes on guns; the 2nd Amendment gives you the right to bear arms, if you’re rich enough to pay for it.

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Authored by Simon Black via SovereignMan.com,

In the year 6 AD, the Roman emperor Augustus set up a special trust fund known as the aerarium militare, or military treasury, to fund retirement pensions for Rome’s legionnaires.

Now, these military pensions had already existed for several centuries in Rome. But the money to pay them had always been mixed together in the government’s general treasury.

So for hundreds of years, mischievous senators could easily grab money that was earmarked for military pensions and redirect it elsewhere.

Augustus wanted to end this practice by setting up a special fund specifically for military pensions.

And to make sure there would be no meddling from any government officials, Augustus established a Board of Trustees, consisting of former military commanders, to oversee the fund’s operations.

Augustus really wanted this pension fund to last for the ages. And to keep a steady inflow of revenue, he established a 5% inheritance tax in Rome that would go directly to the aerarium militare.

He even capitalized the fund with 170,000,000 sesterces of his own money, worth about half a billion dollars in today’s money.

But as you can probably already guess, the money didn’t last.

Few subsequent governments and emperors ever bothered themselves with balancing the fund’s long-term fiscal health. And several found creative ways to plunder it for their own purposes.

Within a few centuries, the fund was gone.

This is a common theme throughout history… and still today: pension funds are almost invariably mismanaged to the point of catastrophe.

We’ve written about this topic frequently in the past. It’s one of the biggest financial catastrophes of our time.

Congress has even formed a committee that’s preparing for massive pension failures.

And here’s another, very recent example: the city of Wilkes-Barre, Pennsylvania is deep in the red with its police pension fund.

According to the Pennsylvania state auditor, the pension was 65.7% funded in 2011, i.e. the fund had enough assets to pay about two-thirds of its long-term obligations.

Now, that alone should have been enough to sound the alarm bells.

But by 2013, two years later, the fund’s solvency rate had dropped to 49.7%. And by 2015, it was just 38.5%.

Incredible. 38.5%. At that level, there’s simply no chance the city will ever be able to meet its obligations to retired police officers.

A few years ago, city politicians took notice of this enormous funding gap and tried to take some small steps to patch it up.

Specifically, the city proposed excluding an officer’s overtime in the calculation of his/her pension benefit.

It was a small change and certainly wouldn’t solve the bigger problem. But it would at least buy the fund a few more years of solvency.

So naturally the union sued.

And earlier this month a Pennsylvania court ruled against the city, i.e. Wilkes-Barre must continue calculating pension benefits the old way.

This helps no one; it only accelerates the demise of an already insolvent pension.

Oh, and it’s not just their police pension either. Wilkes-Barre’s pension for firefighters is hardly better off, just 46.1% funded.

Unfortunately, these pension problems aren’t unique to Wilkes-Barre. City and state pension funds across the country… and the world… are in similar, dire straits.

The city of San Diego has a $6.25 billion shortfall on obligations promised to current and retired employees.

The State of New Jersey has $90 billion in unfunded pension liabilities.

And of course, Social Security has unfunded liabilities totaling tens of trillions of dollars.

The situation isn’t any different in Europe.

Spain’s Social Security Reserve Fund has been heavily invested in Spanish government bonds for several years– bonds that had an average yield of NEGATIVE 0.19%.

You read that correctly.

Unsurprisingly, Spain’s pension fund is almost fully depleted.

The United Kingdom has trillions of pounds worth of unfunded public pensions.

Even conservative Switzerland has a public pension that’s only 69% funded – a seemingly fantastic number by today’s dismal standards.

Last year, the Swiss government proposed a plan to save its pensions, asking to increase the retirement age for women by one year (from 64 to 65, the same as men), and increase VAT by 0.3%.

But the plan was rejected by Swiss voters in a national referendum– the third time in 20 years that pension reform failed to pass.

And that’s really the key issue here: pension plans are almost universally toast.

Most of the time, politicians just ignore the problem and try to kick the can down the road to the next administration.

But occasionally they try to do something to help.

Yet whenever they do… voters reject the plan. Or the union sues. Or something else happens that prevents much-needed reforms from passing.

This merely accelerates the inevitable: these pensions are going bust.

I’m not trying to be sensational– these are mathematical realities echoed by the officials who oversee these funds.

For Wilkes-Barre’s police pension, it’s the Pennsylvania State Auditor who says the program is only 38.5% funded.

With Social Security, it’s the United States Secretary of the Treasury who says the program’s trust funds will soon be depleted.

Social Security even provides a date, like the expiration on a carton of milk, after which Social Security will go bad.

These warnings are all publicly available information, not some wild conspiracy theory. And that’s really what they are: warnings.

At this point, continuing to believe that these pensions will be solvent forever is completely ludicrous.

The only rational option is to take matters into your own hands. For example:

– Start saving more. You’d be shocked at what an enormous difference it can make to save an extra $1,000 per year when compounded over several decades.

– Learn to be a better investor. Averaging an additional 1% annual return for your retirement savings can add up to hundreds of thousands of dollars over the course of 20-30 years.

– Consider a more robust retirement structure like a Solo 401(k) or self-directed SEP IRA that allows you a greater breadth of investment options– everything from real estate to crypto to private equity.

– And it may even be possible to stash $50,000+ per year in self-employment “side” income, (selling products on Amazon, driving for Uber, etc.) into that retirement account.

The signs are clear… anyone depending on social security or a pension for their retirement is in trouble. It’s time to take this issue into your own hands.

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The accelerating demise of Subway, the world’s largest sandwich chain, will one day be just another case study of how to run a once-magnificent business empire into the ground, as Americans quickly abandon five-dollar footlongs.

The New York Post recently uncovered new knowledge about the 52-year old sandwich chain, which has been in a sales slump since 2016, has hired the infamous consultant Bain & Company to “professionalize operations and position the company for a future sale.”

You may remember in the 2012 presidential election cycle, the abundance of campaign ads focusing on former Republican presidential candidate Mitt Romney, who co-founded Bain & Company, detailing the firm’s destructive path of stripping companies of wealth.

The truth about Subway’s fate, well, the capitalist vultures who ‘eat the carcass’ of companies are circling above – waiting to dive into their next feast: footlongs.

Take, for example, the 2005 leverage buyout of Toys ‘R’ Us via Bain Capital, KKR & Co., and Vornado Realty Trust. It has been 13 years since the group of private equity firms loaded up on Toys “R” Us with debt to take it private; however, the plan did not work too well, and the company ceases to exist.

Toys ‘R’ Us filed Chapter 11 bankruptcy protection in the U.S. on September 2017, and at the end of 1Q18 — announced that U.S. operations of the company were, after 70 years, going out of business and liquidated all 735 locations across the country.

What do the world’s largest toy store and restaurant chain have in common? Well, you guessed it, likely similar fates as the walk down Wall Street is not so random, after all.

While neither Subway, nor Bain, would confirm the reports, the New York Post cites two Subway insiders who confirmed the news of a restructuring plan, then the eventual sale of the company.

The recent downturn in Subway has sparked internal feuds with management, along with many of its struggling franchises.

Last month, Chief Executive Suzanne Greco, the sister of Fred DeLuca, the co-founder of the company, retired after 45 Years.

Trevor Haynes was named interim CEO. The Post said Haynes is on a listening tour of stores and franchise owners across America.

“I think hiring Bain signifies that the board needs a professional business organization to give advice so it can change its downward trend,” one Subway insider said.

“They are running out of options that might positively impact the company.”

For the first time in its 52-years of operation, the company contracted in 2016, shuttering 359 US locations, which was the most significant retrenchment in its history. In 2017, the company closed another 800+ U.S. locations, as details emerged that some one-third of shops in the U.S. could be unprofitable.

Same-store sales in May 2018 declined 3 to 4 percent y/y, according to John Gordon of Pacific Management Consulting.

The story gets worse, as consumer traffic collapsed 25 percent from 2012 to 2017, stated a November 2017 internal Subway memo.

Subway insiders told the New York Post that a recent $4.99 foot-long sandwich promotion failed to attract new customers, which was seen as an uncreative last-ditch effort to stabilize rapidly declining sales. In return, the failed promotion severely cut the margins of franchisees, sources explained.

“It’s business as usual, $4.99 and no imagination,” the source added.

“The promotion doesn’t work well in my stores,” one New York store owner told the New York Post. The shop owner has closed four of 10 stores over the last couple of years.

Subway’s 10-person board is comprised of the founder’s two children, who do not want to run the day to day operations and would like to see the company stabilize before the eventual sale, the source said.

“This [hiring someone like Bain] should have been done when Fred was dying,” Gordon said. “The system is worse off now than it was three years ago.”

A Subway spokeswoman said: “The shareholders have expressed their intentions to the employees of the company that they are investing in the future of the company, committed to the company and have no intentions of selling.”

Brand and crisis expert Dan Hill warned there is no hope left in turning around the failing brand from past PR nightmares.

“Subway’s derailment is attributed to many factors including the face of their brand being convicted of child pornography,” Hill, CEO of Hill Impact says, adding that he believes “there may be no way to get its sales back to where they were,” but it will be interesting to see what Bain can do.

As mentioned above, Bain Capital has a knack for throwing large retailer chains into bankruptcy. While that does not seem imminent for Subway, the accelerated demise of the sandwich shop has now been confirmed, with Bain’s vultures circling above ready for the kill.

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