Category: zerohedge

Authored by Jack Phillips via The Epoch Times,

Authorities in Maricopa County, Arizona, announced they will replace all voting machines following a Senate-ordered audit of the county’s 2020 election results.

The Maricopa County Board of Supervisors, which oversees elections in the county, issued a response to a letter sent by Arizona Secretary of State Katie Hobbs, saying the county “shares [her] concerns” that the integrity and security of the Dominion Voting Systems machines and ballots might have been compromised during the audit.

“Accordingly, I write to notify you that Maricopa County will not use the subpoenaed election equipment in any future election,” said the letter, dated Monday.

And in a news release, the county pledged to “never use equipment that could pose a risk to free and fair elections,” suggesting that the auditors may have compromised the machines.

Hobbs, a Democrat, had written to the county in May that she has “grave concerns regarding the security and integrity of these machines, given that the chain of custody, a critical security tenet, has been compromised and election officials do not know what was done to the machines while under Cyber Ninjas’ control.” Cyber Ninjas is the Florida-based technology firm that helped with the audit, which was authorized earlier this year by the Republican-controlled state Senate.

After the announcement from Maricopa County, several Republicans praised the move to do away with the machines—but not for the reasons offered by Hobbs or the county officials.

“No more machines,” wrote Republican state Sen. Wendy Rogers on Twitter, alleging in another tweet that the machines are easily compromised.

“Go back to the old way,” she also wrote in concurring with a tweet issued by GOP state Sen. Kelly Townsend.

Last week, the team overseeing the audit announced that both the paper examination and counting of the ballots were finished. Senate Majority Leader Karen Fann, a Republican, told The Epoch Times over the weekend said the team will meet within the next several days and will “formulate a plan and timeline moving forward,” with other officials suggesting the audit may be completed by the end of the summer.

Hobbs and Senate Republicans have gone back and forth in a war of words since the audit was proposed earlier this year, with the secretary of state characterizing it as a partisan operation designed to suppress voters and claimed auditors have operated with lax security.

But Republicans have disputed Hobbs’s and other Democrats’ assertions that the audit isn’t being done securely or professionally. Fann and other GOP senators have said the audit is necessary to restore the public’s confidence in the state’s election systems.

Alexander Kolodin, a lawyer who represents the Arizona GOP, told NTD that he believes the audit will uncover irregularities.

“Something went wrong,” he said on June 15, “because something goes wrong in every election.”

Meanwhile, if an audit reveals fraud, then there would be a referral to law enforcement authorities, Fann and other senators have previously said. And if fraud is revealed, according to her, they will focus on passing legislation to shore up any security flaws.

“If the audit illuminates that there’s [sic] vulnerabilities in X, Y, and Z parts of our election system, state legislatures can target those with a laser beam and fix X, Y, and Z parts of our election system,” Kolodin also said in the interview.

The Arizona state Senate turned over the Dominion machines to auditors to determine if any of the equipment was compromised, using a legislative subpoena issued in April to seize nine tabulating machines and 385 precinct tabulators. Dominion has categorically denied the allegations that their machines had any problems in Maricopa.

Other than the machines, the auditors, led by Cyber Ninjas, started reviewing some 2.1 million ballots at Phoenix’s Veterans Memorial Coliseum starting several weeks ago.

The Epoch Times has contacted the Fann’s office and Cyber Ninjas for comment.

India has long been known for being a strong source of demand for gold – not only for wealth preservation, but also for cosmetic and jewelry purposes.

But now it looks as though something else has caught the country’s eye: crypto.

This could mean that the mantra that Bitcoin is equivalent to digital gold could actually be catching on, Bloomberg noted this week.

Households in India own more than 25,000 tons of gold and, despite this, investments in crypto across the country grew from about $200 million to a stunning $40 billion over the past year, the report says. 

The demand flies in the face of “outright hostility toward the asset class” from the country’s Central Bank, the piece notes. There are now more than 15 million Indians buying and selling cryptocurrencies, compared to 23 million in the U.S. and 2.3 million in the U.K. 

One microcosm of the shift in demand is 32 year old Richi Sood. She put about $13,400 – some of which she borrowed from her family – into crypto instead of gold. After buying Bitcoin, Dogecoin and Ether, she cashed out part of her position to help her fund her startup company. She said: “I’d rather put my money in crypto than gold. Crypto is more transparent than gold or property and returns are more in a short period of time.”

Sood represents where much of the growth in India is coming from: people aged 18-35. “Indian adults under age 34 have less appetite for gold than older consumers,” Bloomberg wrote, citing data from the World Gold Council.

Sandeep Goenka, who co-founded ZebPay, said: “They find it far easier to invest in crypto than gold because the process is very simple. You go online, you can buy crypto, you don’t have to verify it, unlike gold.”

Keneth Alvares, who is 22 years old, said: “I think over time everyone is going to adopt it in every country. Right now the whole thing is scary with regulation but it doesn’t worry me because I’m not planning to remove anything for now.”

Part of the growth can be attributed to the country’s Supreme Court quashing a rule banning crypto trading by banking entities. This led to a trading surge, despite the fact that the country’s Central Bank shows “no signs” of embracing cryptocurrencies. 

Other countries like the U.K. have also cracked down on crypto, with the latter banning Binance Markets from doing regulated business in the country. 

This regulatory environment means that larger investors are less likely to talk openly about their holdings. Bloomberg spoke to one investor who owned more than $1 million in crypto; he said he is concerned about the prospect of retrospective tax raids. He has “contingency plans in place to move his trading to an offshore Singapore bank account” if a ban were to be enacted.

The smaller investor in India seems to be taking the regulatory environment in stride, however. Sood concluded: “I am flying blind. I have a risk-taking appetite, so I’m willing to take a risk of a ban.”

Authored by Wolf Richter via WolfStreet.com,

US Inflation is almost as hot as in Russia, but the Fed is still blowing it off…

Consumer price inflation in Russia is red-hot, having jumped 6.0% in May compared to a year ago, 2 percentage points above the Bank of Russia’s target of 4.0%.

Polls in Russia show that food inflation is a top concern, currently running at 7.4%.

But inflation in the US isn’t lagging far behind: The Consumer Price Index (CPI) jumped 5.0% in May.

Yet the central banks are on opposite tracks in their approach to inflation.

Federal Reserve governors keep jabbering about this red-hot inflation being “temporary” or “transitory,” and likely to disappear on its own despite huge government stimulus and the Fed’s huge and ongoing monetary stimulus, though some doubts are creeping in among a couple of them. So they’ll keep interest rates at near-zero until at least next year, and they’re still buying $120 billion a month in securities to push down long-term interest rates.

Russia has been on the opposite trajectory, “surprising” economists at every step along the way. This trajectory started on March 19 with a 25 basis point rate hike, to 4.5%, against the expectations of 27 of the 28 economists polled by Reuters, who didn’t expect a rate hike. On April 23, the Bank of Russia hiked its policy rate by 50 basis points, to 5.0%. On June 11, it hiked by another 50 basis points to 5.5%. The next policy meeting is scheduled for July 23.

Is a shock-and-awe rate hike next? Bank of Russia Governor Elvira Nabiullina is preparing the markets for this possibility – so it won’t be a shock, but just awe.

At the July meeting, the central bank “will consider” an increase in the range from “25 basis points to 1 percentage point,” she told Bloomberg TV in an interview.

“We see that inflation remains elevated” and that “inflation expectations are quite high,” she said.

The initial factors in this surge of inflation were the weakening ruble last year and commodity and food price increases. They alone might not require a monetary policy intervention, she said.

But now inflation expectations remain elevated, which creates second-round effects, she said.

“That’s why we see that inflation acceleration is not transitory, as in many other countries, but more persistent,” she said. “That’s why we think we should act with rate hikes.”

“We signaled to the markets [at the last meeting] that further policy rate increases can be necessary to curb inflation, and now we see it is warranted,” she said.

The economy has recovered quite fast, she said. Demand growth has been outpacing supply growth. And this gap creates additional inflation pressures, and in combination with elevated inflation expectations provide us the need to neutralize our monetary policy, she said.

“Now policy is still accommodative, if we compare the policy rate [5.5%] with the current inflation rate [6.0%] and with inflation expectations,” she said.

This is the school of thought that negative real interest rates – interest rates below the rate of inflation – are accommodative, or stimulative for the economy. Under this theory for the US, a neutral monetary policy would be with the Fed’s policy rates at least at 3.4% if based on core PCE and at 5.0% if based on CPI.

Nabiullina said that the magnitude of the rate hikes and the trajectory will depend a lot on the incoming data “because there are a lot of uncertainties now.”

The Bank of Russia wants to “prevent the accumulation of inflationary risks,” but it also wants the moves to be “predictable” for the markets because sharp unexpected increases of rates can create some difficulties for markets to adapt, she said.

Hence, the interview with Bloomberg TV. She’s clearly trying to prepare the markets for a hefty rate hike in July, perhaps a Brazilian-type rate hike of 75 basis points, or even a shock-and-awe full percentage point, while the Fed will continue to cling to its doctrine of the moment that this red-hot inflation in the US is just transitory and will dissipate on its own.

There are whole generations who never experienced this type of inflation, this type of destruction of the dollar’s purchasing power.

*  *  *

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It was a rough month for seven-time Superbowl champion Tom Brady, who top-ticked the recent collapse in bitcoin almost to the day with his “laser eyes” profile picture change, something he himself mocked yesterday when he tweeted “Alright the laser eyes didn’t work. Anyone have any ideas?”

Alright the laser eyes didn’t work. Anyone have any ideas? https://t.co/43WyShRxr2

— Tom Brady (@TomBrady) June 28, 2021

It retrospect, this was a rhetorical question because just one day later we learned that Tom Brady and his wife Gisele Bündchen – best known for demanding to be paid in euros top ticking the common currency ahead of its all time high in 2008 – have taken an equity stake in crypto exchange FTX (profiled most recently here) and will receive crypto as part of an endorsement deal with the crypto exchange, which includes a bonus that will be paid in crypto.

Stoked to partner with @SBF_Alameda and @FTX_Official as we continue building the future of crypto. I hear we’re headed to the moon? pic.twitter.com/BdReBkNfxg

— Tom Brady (@TomBrady) June 29, 2021

West Realm Shires Services, FTX Trading Limited and Blockfolio, three companies behind major global cryptocurrency exchange business FTX, announced Tuesday a long-term partnership with Brady and Bündchen.

BREAKING: @TomBrady to be paid in crypto.@FTX_Official will partner with Tom in an endorsement deal that will give Tom equity in FTX and a bonus that will be paid in crypto. pic.twitter.com/1cYCNBDD6J

— Blockworks (@Blockworks_) June 29, 2021

“It’s an incredibly exciting time in the crypto-world and Sam and the revolutionary FTX team continue to open my eyes to the endless possibilities,” Brady said in a statement. “This particular opportunity showed us the importance of educating people about the power of crypto while simultaneously giving back to our communities and planet.”

Both Brady, and Bündchen will serve as ambassadors for FTX, according to an announcement Tuesday reported Bloomberg. And while the cryptocurrency exchange declined to disclose their equity stake, but did say they will both receive an unspecified amount and type of crypto. Bündchen will also take on the role of FTX’s environmental and social-initiatives adviser, according to the release.

“Tom and Gisele are both legends and they both reached the pinnacle of what they do,” said Sam Bankman-Fried, 29, founder and chief executive officer of FTX, said in a phone interview. “When we think about what FTX represents, we want to be the best product that is out there.”

FTX, which unlike Coinbase operates outside the reach of US tax authorities and offers both cryptos and derivatives, has become one of the world’s largest crypto exchanges since its launch just two years ago. Bankman-Fried said he’s spoken with others in the past about possible partnerships, but something FTX always comes back to is, “How excited are they about it? How excited are we to deal with them?” When it comes to Brady and Bündchen, “they were both really into it.” Or maybe they were both just into the compensation they will receive for promoting it.

In any case, the duo knows how to play their role well, and Brady has been an advocate for cryptocurrencies for the past few months, notably emerging as a big supporter of bitcoin in May when he changed his Twitter profile picture to show himself with so-called laser eyes.

“This isn’t the first time that they’ve been involved in crypto, not the first time they’ve thought about it or even used it, which I think makes it a much more natural and authentic partnership,” said Bankman-Fried. “They’re examples of audiences we’d really like FTX to be the product for.”

We can only assume this remark was off the cuff: if the target FTX audiences is really multi-millionaire Superbowl winners and Perfect 10 models, it will have a hard time growing.

Bündchen expressed confidence that crypto adoption will continue to grow steadily, noting that the best part of the partnership for her was the technology’s environmental potential. “What attracted me most about this partnership was the potential to apply resources to help regenerate the Earth, and enable people to lead better lives, therefore generating real transformation in our society,” she said, clearly unaware of Elon Musk’s concerns about the electricity consumption of bitcoin.

As Bloomberg further notes, as part of a conversation with Bankman-Fried during a conference earlier this year, brady said he, his coaches and teammates had been talking about cryptocurrencies and their vacillating prices on a daily basis. “It’s on all of our minds because we’re very interested, we’re learning more and more about these emerging markets,” he said. “So I’m a big believer in it, I don’t think it’s going anywhere,” though he added there will “absolutely” be volatility.

Unlike Coinbase, FTX was founded with the goal of donating to charity and has earmarked more than $10 million so far to do so. FTX, Brady and Bündchen have all committed to annual multi-million dollar contributions for the duration of the partnership and Bündchen will play a role in choosing the charities. Her mandate will not be crypto-specific, Bankman-Fried said. She’s been “really involved in giving back basically her whole life and I think this is part of what appealed to her the most,” he said, adding that she’ll likely be working with the FTX Foundation“a fair bit.”

Meanwhile, FTX has fully grasped that to really succeed in the world of crypto it has to constantly be in the headlines and shamelessly self-promote and has done just that, cinching a pact with Major League Baseball earlier this month and renaming the Miami Heat’s National Basketball Association stadium to FTX Arena, the first NBA stadium deal from a crypto firm.

“A lot of what we’ve been looking at is what are the things that we can do that will really stand out and represent us well, fit our brand and really capture people’s attention,” said Bankman-Fried. “We’re going to be doing what we can to try to get news about FTX out there and get more eyeballs on it.”

Hours after the New York City’s Board of Elections released an updated ranked voting tally for the Democratic Primary which showed frontrunner Eric Adams’ lead shrinking considerably, BOE officials acknowledged a ‘discrepancy’ in the ballot count.

At issue: on the day of the primary, the BOE reported just under 800,000 votes with 96.6% of scanners reporting. On Tuesday, however, the tally was 941,832 votes – nearly 20% higher, according to PIX11.

We are aware there is a discrepancy in the unofficial RCV round by round elimination report. We are working with our RCV technical staff to identify where the discrepancy occurred. We ask the public, elected officials and candidates to have patience.

— NYC Board of Elections (@BOENYC) June 29, 2021

The new figures narrows Adams’ lead over former sanitation commissioner Kathryn Garcia to just 51.9% (368,898) to 48.9% (352,990) – while there are still 100,000 absentee ballots which need to be processed, and could tip Garcia over the top.

In response, Adams’ campaign fired off a statement questioning the count, and demanding an explanation for the “irregularities.”

“The vote total just released by the Board of Elections is 100,000-plus more than the total announced on election night, raising serious questions,” reads the statement. “We have asked the Board of Elections to explain such a massive increase and other irregularities before we comment on the Ranked Choice Voting projection.“

Eric Adams says “irregularities” in ranked choice voting results for the New York City mayor race raises “serious questions,” as absentee ballots could sway the election.

Eric Adams: 51.9% (368,898)
Kathryn Garcia: 48.9 (352,990)

Adams +15,908 (≈120k remaining) pic.twitter.com/0uqtIQnsqe

— Alex Salvi (@alexsalvinews) June 29, 2021

Liberals, in response, accused Adams of going ‘full Trump’ and spreading ‘the big lie’ – that the election isn’t as secure as advertised.

Seems pretty insulting to imply that Eric Adams is somehow following and copying Trump instead of making his own choices.

Seems desperately partisan to blame Trump for a Democratic NYC Mayoral candidate’s actions.

Why are so many liberals rooting for Garcia over Adams? https://t.co/WsksLgYgY2

— Glenn Greenwald (@ggreenwald) June 29, 2021

The first transgender woman has been crowned Miss Nevada in Las Vegas on Sunday and will compete for the Miss USA title in November, according to AP News. 

Leading up to the Miss Nevada pageant, Kataluna Enriquez, 27, won Miss Silver State USA in Nevada in late March. 

The 27-year-old winner had been competing in transgender pageants since 2016, while she was working as a model. She started competing in cisgender pageants at the beginning of last year. 

As the mother of a #trans child bearing witness to #KatalunaEnriquez making history in #LasVegas was incredible. This win and her journey to @MissUSA gives hope to the entire gender diverse community. Visibility and representation matter. pic.twitter.com/8ShmzZrjVp

— Krista Whitley (@SocialKrista) June 28, 2021

On Sunday, Miss Nevada USA’s Instagram account said, “Congratulations to our new Miss Nevada USA,” Kataluna Enriquez, adding that “history has been made.” 

In a post on Instagram, she wrote: “Huge thank you to everyone who supported me from day one. My community, you are always in my heart. My win is our win. We just made history. Happy pride.”

Enriquez beat 21 other competitors to represent Nevada in the Miss USA pageant held on Nov. 29.

She calls her victory “a celebration of women and diversity.” 

#LasVegas I present to you our new Miss Nevada USA: #KatalunaEnriquez 👑 Kataluna is the first #trans queen to go to #MissUSA but she did not win because she is trans. She won because she is a remarkable, talented, & poised woman. #TransIsBeautiful @Lavernecox pic.twitter.com/IChz0JMV41

— Krista Whitley (@SocialKrista) June 28, 2021

The win couldn’t come at a better time, as President Biden told Congress in his first joint address in April that “to all transgender Americans watching at home, especially the young people. You’re so brave. I want you to know your president has your back.”

His comments come amid a flurry of state bills targeting transgender people.

How ironic would it be if the pageant that was once owned by former President Trump crowned a biological male as Miss USA (and how appropriate)?

Once upon a time, Goldman Sachs was known as a powerhouse in the world of commodities, a status it attained following its acquisition of J Aron, the commodities brokerage that was once the home of former Goldman chieftains Lloyd Blankfein, Gary Cohn, Harvey Schwartz and others. But Goldman dumped most of its physical commodities business years ago at the start of what was to become a yearslong bear market in oil and other industrial commodities.

Now, after the bank’s strategists have repeatedly (and correctly) called the run-up in crude prices, the start of what the bank believes will become the next major commodities supercycle (with crude expected to eclipse $100 a barrel in the not-too-distant future), Bloomberg reports that the storied Wall Street investment bank is looking to expand its physical footprint in Dallas.

Though Dallas doesn’t have quite the same association with the energy industry as Houston, the notion that Goldman is expanding its physical presence in Texas, a state that’s closely associated with the American energy industry, is making is wonder whether GS is bucking the ESG trend and signaling that energy might be the next “big thing”.

Since the start of the pandemic, Goldman has been aggressively expanding its presence outside of New York. The bank is also looking to increase its headcount in Florida, leading what has become an exodus of major financial firms, including banks and many major buy-side players, to the Sunshine State.

It’s also notable that the bank is upping the headcount in low-tax states like Texas and Florida, while headcount has been flat in New York and Goldman’s other major satellite office in the US – its tower in Jersey City, NJ (another high-tax state).

According to Bloomberg, the Dallas office could become Goldman’s largest presence outside its Manhattan headquarters, part of CEO David Solomon’s plan to “rein in expenses” (read: taxes – though also rent and payroll).

The plan underscores how Chief Executive Officer David Solomon is seeking to reshape U.S. operations geographically as he looks to rein in expenses, placing thousands of jobs in cheaper locales. While the bank has been adding offices and workers for years in a number of strategic locations such as Dallas, the pandemic energized the effort, as managers learned how feasible it is to run businesses remotely.

“We continue to grow our presence in the Dallas area but cannot comment at this time on our future expansion plans,” said Maeve DuVally, a company spokeswoman.
 

Goldman has offices around the world, including “strategic” outposts Salt Lake City, Singapore, Warsaw and Bengaluru. Together, these offices already account for more than one-third of the firm’s 40.5K employees. Like many other companies on Wall Street, the bank also has been developing plans in recent months to expand in low-tax Florida, such as West Palm Beach, where it’s adding hundreds of jobs. Some senior executives have lobbied for an even bolder push there.

But as BBG points out, cutting costs isn’t Goldman’s only reason for opening a bigger office in Dallas. While costs are a driving factor, the Wall Street giant is reportedly “betting it will have advantages in recruiting, too. Not everyone wants to live in a densely populated financial capital such as New York. And it can be easier to lure and retain talent when there isn’t also a slew of major Wall Street banks mere blocks away.”

Dallas has increasingly become a financial hub. Charles Schwab relocated its headquarters to the affluent Dallas suburb of Westlake, where Fidelity also has a campus. Vanguard says it will open an office in the Dallas-Fort Worth area early next year. JPM has built up a campus in nearby Plano.

Motivations aside, it’s pretty clear that rising taxes in New York and New Jersey are helping to shift more jobs away from what has traditionally been America’s financial capital, as states with zero income tax like Texas an Florida beckon.

Last week, SoftBank founder Masayoshi Son made waves when he told shareholders and reporters assembled for SoftBank’s 41st annual meeting that he envisions himself as a “21st-century Rothschild”, explaining that while Rothschild provided the capital to finance the industrial revolution, he and SoftBank are providing the capital to finance the 21st century’s AI revolution. For emphasis, Son shared the following slide from one of SoftBank’s notoriously quirky presentations.

Of course, Son’s obsession with advancing AI technology via the firm’s venture capital investment portfolio has been a notoriously mixed bag – though Son’s returns from a handful of successful bets have helped cushion the firm’s losses from blunders like the eye-popping valuation it assigned to WeWork. Even Son joked during the meeting that some of his backers say they like him “very much” as an entrepreneur, but not as an investor.

Well, in what appears to be the latest setback for SoftBank’s AI efforts, the company has just suspended production of Pepper, a humanoid robot that was me of Son’s favorite pet projects at the conglomerate. According to Bloomberg, the suspension comes as the robot, priced at $1,790 apiece, failed to make an impact with consumers. Inventory has gotten pretty backed up, and it could take a while for the company to clear it – if that ever happens. The suspension might not be permanent, as SoftBank left open the possibility that it might restart production if sales start to pick up. Only 27K Peppers were ever produced.

SoftBank is now in talks with its French robotics unit about potentially reducing headcount at the unit, which employs 330, according to BBG.

Marketed as ‘the first machine endowed with emotions’, SoftBank pushed Pepper aggressively in markets including the US and Japan, promising the gadget was sophisticated enough for tasks usually handled by clerks, receptionists and translators.

Although the robot is capable of expressing human-like body language like maintaining eye contact and engaging in limited small talk, it never caught on. Now, it looks like Pepper (assembled by Taiwanese iPhone-maker Hon Hai Precision Industry Co.) is destined to join Honda’s soccer-playing ASIMO and Sony’s QRIO as the latest impractical Japanese-designed robots that never caught on.

While Pepper was apparently equipped with the ability to perform some clerical work, the biggest complaint fielded by SoftBank was that it couldn’t vacuum, making it, in theory, less useful than a Roomba.

SoftBank has apparently already learned from this failure: it’s already marketing a more practical robot called Whiz which cleans floors for businesses (like an industrial Roomba). The Whiz robot has more “sophisticated” movements than Pepper, according to BBG.

Still, it’s success isn’t guaranteed. And at this point, we can’t help but wonder how much more money Masayoshi Son will sink into AI and robotics investments that, while certainly interesting, aren’t necessarily useful for commercial purposes.

Authored by Jonathan Turley,

As we wait for the final cases from the Supreme Court this week, Monday was confined to orders of the Court, including the granting and denial of review of cases. One of the cases that was declined was Standing Akimbo, LLC v. United States. That is hardly news on a Court that rejects most petitions for a writ of certiorari. However, this denial was accompanied by an opinion from Justice Clarence Thomas who slammed the current federal policy on marijuana as “a half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana.” 

He is, of course, correct.

The current position of marijuana criminalization is incomprehensible and conflicted. However, the criticism from one of the Court’s most conservative members was particularly notable. The timing is also notable. This week, the Mexican Supreme Court decriminalized recreational use of marijuana.

The case derived from the United States Court of Appeals for the Tenth Circuit and involved a medical-marijuana dispensary, Standing Akimbo, LLC, which was under investigation by the IRS for improper deductions for business expenses arising from a “trade or business” that “consists of trafficking in controlled substances.” 26 U.S.C. § 280E. Peter Hermes, Kevin Desilet, Samantha Murphy, and John Murphy refused to verify their tax liabilities because they feared criminal prosecution.  The Tenth Circuit upheld the district court decision in favor of the IRS and its authority to conduct the audit.

Thomas noted that in 2005 a fractured divided court ruled Gonzales v. Raich, 545 U.S. 1 (2005), that the federal government could rely on interstate commerce authority to enforce prohibition against cannabis cultivation even when it took place wholly within California.  The Court rationalized that this “fungible commodity” was part of “comprehensive legislation to regulate the interstate market ” and that “exemption[s]” for local use could undermine this “comprehensive” regime. Thus prohibiting any intrastate use was, according to the Court, “‘necessary and proper’” to avoid a “gaping hole” in Congress’ “closed regulatory system.”

Now however there is widespread legalization of the possession and sale of marijuana, a trend that we have been following with a massive market emerging across the country.  There is also massive public support for legalization that has been building for years.

That has all led to our current nonsensical federal system that criminalizes marijuana while tolerating its sale. That brought Thomas back to Raich and the fact that the opinion now seems facially ridiculous in its logic. Thomas noted “Whatever the merits of Raich when it was decided, federal policies of the past 16 years have greatly undermined its reasoning. Once comprehensive, the Federal Government’s current approach is a half-in, half-out regime that simultaneously tolerates and forbids local use of marijuana.”

Thomas noted that the federal authority rests on what is not something of a myth that leaves citizens both confused and at risk:

“This contradictory and unstable state of affairs strains basic principles of federalism and conceals traps for the unwary though federal law still flatly forbids the intrastate possession, cultivation, or distribution of marijuana…the Government, post-Raich, has sent mixed signals on its views.”

Thomas noted that the federal government continues to claim the authority while simultaneously saying that it will not enforce it. For its part, Congress has tried to curtail enforcement through budget limits: “Given all these developments, one can certainly understand why an ordinary person might think that the Federal Government has retreated from its once-absolute ban on marijuana,. One can also perhaps understand why business owners in Colorado…may think that their intrastate marijuana operations will be treated like any other enterprise that is legal under state law.”

Thomas notes that the “petitioners have found that the Government’s willingness to often look the other way on marijuana is more episodic than coherent.”

Thomas is right.  It is surprising that the case could not garner four votes to allow review. It would have made for an excellent platform to reconsider Raich. As a result of the decision, citizens and businesses will be left to languish in this muddled legal and regulatory status. Marijuana remains a criminal substance tolerated by the federal government and actively supported by many states.

For those of us with libertarian tendencies, legalization of cannabis has long been a cause célèbre. However, even for those who have not held this view, I cannot imagine that the currently self-contradictory position of the federal government is tolerable. Of course, the Court may be hoping that Congress acts to correct this glaring contradiction. The preference is always for the political branches to address such questions with sweeping social and political consequences. However, the patience of the Court may be running short for Congress to show a modicum of responsibility and reason in decriminalizing cannabis.

Notably, the Mexican Supreme Court previously tried to force its own Congress to act with an April 30th deadline to legalized recreational use of marijuana. A bill passed one house but languished in in the Senate. In its decision, the Court again urged its own Congress to act “in order to generate legal certainty.” As it stands, citizens are protected in their recreational use but the government still criminalizes the production and transportation of the product.

Our Court does not dictate such deadlines but the Thomas opinion shows the same growing impatience with our politicians who want to support cannabis use but lack the courage to decriminalize the product on the federal level. I am surprised that none of his colleagues joined Thomas in this opinion. I expect, however, that his statement of frustration is shared by others on the Court and this is a shot across the bow for both Congress and the White House.

Real Vision senior editor Ash Bennington welcomes Real Vision interim managing editor Samuel Burke and Tommy Thornton of Hedge Fund Telemetry to the Daily Briefing to discuss Bitcoin’s rebound and market sentiment as delta variant fears grow. Thornton shares his bullish outlook for Bitcoin and potential explanations for its recent bounce from 6-month lows. In addition, Burke provides a unique perspective on European lockdowns and investor opinions as the delta variant of Covid-19 continues to spread.