The Attack on The Dollar

I’ve been tracking extremist movements for the last several years and have found that much of our current conflict is being driven by the recurring tension between so-called “sound money” and “fiat currency.” This goes back over 100 years in the United States, and I’ve written and talked about this extensively.

A year ago it became clearer that the January 6th attack was in fact driven by extreme libertarian networks trying to advance a long-standing animus against the Federal Reserve and fiat currency. I won’t argue that case again here, as I’ve made it elsewhere and there are ample books about the John Birch Society, Ayn Rand, The Kochs, and the Council for National Policy—whose members organized and executed January 6th.

Now, however, we are seeing an increasing convergence of forces against democracies, central banks, and fiat currencies with noise around cryptocurrencies. Sunday’s Super Bowl was a grand demonstration of crypto hype, a spectacle last seen during the 1999–2000 dot-com bubble and bust.

But why now? And what does this have to do with Canada, Russia, and Hungary? Here’s a first pass at what seems to be going on.

The Assault on Canada

The attack on Canada so far has two prongs: first, challenge the government by trying to immobilize trade; second, try to assault the banking sector by challenging it with cryptocurrency. The illegal truck blockades have been driven largely by the (libertarian oriented) oil and gas industry. And the banking assault is being driven by libertarian forces aiming to paint Canada’s government as authoritarian.

The truckers first received donations, mostly from foreigners, via GoFundMe. This was quickly shut down. Then they switched to GiveSendGo, which was also quickly shut down, before being also hacked. They then began taking donations using Bitcoin, and in response the Trudeau government invoked the country’s never-before used Emergencies Act, which gave the government unprecedented authority over banking assets and information associated with not only the crowdfunding campaigns but also the cryptocurrency campaigns.

Just as the Trudeau government began to show signs of getting a handle on the problem, a new campaign emerged, allegedly on 4chan, to try to trigger a run on the banks, promoted largely by Russia-aligned Rebel News and its publisher, Ezra Levant. And another report shows that Russia has been consistently exploiting the truck blockades to “promote and legitimize anti-government narratives.” I also wrote recently how the Canadian attack is a mirror of the 1973 truck blockades in Chile that helped overthrow the Allende government.

We’re witnessing this conflict between the Western, libertarian, Gilets Jaunes, oil and gas networks against the Eastern establishment and a strong federal government. The goal is to stretch that conflict as far as it can go, and ideally break the government by either overthrowing or crippling it. All with support from Russia and the American far-right.

The goal, after somehow crippling the Trudeau government? Replace him with the crypto-friendly extreme libertarian Pierre Poilievre. How? Not important. How else besides magic was January 6th going to work? We’re dealing with the same mentality and the same kind of networked attack.

The Russia-China Alliance

Russia and China have become increasingly close in recent months. Economists have long speculated whether the two countries might join together to mount an attack against the dollar as the world’s reserve currency. A year ago, the thought seemed improbable, even as they telegraphed their plans. But it seems increasingly possible that Russia and China, each in their own way, may be trying to subjugate the dollar.

First, if Russia does invade Ukraine, the West will immediately start to impose sanctions against Russia and Putin’s oligarchs. China and Russia have already discussed plans for how they would work together to weather disconnection from the SWIFT banking network.

If this sanctions-protection strategy addresses the “legitimate” economy, then we need to look at private currencies like Bitcoin. Given that Bitcoin (and Ethereum) are functioning like highly speculative Ponzi-like instruments at present, it’s wise to look at them as weapons for destabilization.

Given a desire to use this weapon against adversaries, China and Russia would protect themselves—and that’s exactly what they’ve done. China has banned private cryptocurrencies and has created a digital yuan with hundreds of millions of users.

Russia, as usual, has been shaping its messaging to achieve specific effects against its adversaries. In January, the story was that Russia, too, would likely ban cryptocurrencies. However this past week that story was reversed when outlets reported that in fact Russia would not only not ban crypto, but would adopt a “roadmap” that would result in ultimately accepting it as official currency.

But there are asterisks. While crypto shills tried to suggest that Russia’s rejection of a ban amounted to an intention to adopt, measured assessments include the very real current restrictions:

• Operations >600K RUR (~8K USD) should be declared.
• Transacting crypto outside regulated sector will be prosecuted as a felony.
• Accepting crypto as tender will be prohibited & punished by fines.
• Crypto mining & other crypto aspects are not covered by this proposal.

If that’s what “adoption” looks like, it’s hard to imagine what a ban would resemble. However, these petty details didn’t stop Ponzi enthusiasts from trying to inspire an epic case of “America, you’re gonna miss out” FOMO in US tech and government policymakers. The same Anthony Pompliano wrote this week in a not-at-all-clichéd piece titled “Russia Is Playing Geopolitical Chess”:

Eventually every country is going to adopt bitcoin and the open payment system. The question is not whether it will happen, but rather the sequence of events that will play out. As with most innovative technology, those who have courage and conviction to invest earliest are rewarded with the largest benefit. This situation is no different.

Russia’s decision to treat bitcoin and crypto as currencies is a step down this path. It will be interesting to see how far, and how quickly, they go. The United States can’t afford to fall behind. We must be the leader on the global stage. We must act. The stakes are too high.

We must act! The stakes are too high! OK, bro. Real leadership requires forcefully rejecting foolish arguments like this, not “keeping up with the Joneses” all the way into a black hole—especially when the Joneses are your main geopolitical adversary. Meanwhile, crypto shills are celebrating Russia’s “smart” decision to adopt over China’s “dumb” decision to ban.

Russia has also blessed a new project run by Putin-pal Vladimir Potanin that would authorize tokens backed by real metals such as nickel and palladium, unlike Bitcoin which is backed by nothing (pedants will say it is backed by the energy, now gone, used to mine it). PR on the project, which provides “real” assets, is being handled by longtime Kremlin PR associate Denis Klimentov. Klimentov’s nephew started writing stories last year for the Washington Post, where he is an editor, about how the stock market isn’t “real.” Go figure.

Bottom line: both China and Russia have deployed cryptocurrencies against the West and insulated their own countries from the effects—China with an outright ban, Russia with mealymouthed “rules” (which can and will change at any time) that insulate their economy from effects of crypto, allow favored oligarchs to do what they like, and also to engage with China on their own terms.

And Russia should know what pyramid schemes can do to a society and to an economy. In the 90’s their economy was deeply harmed by a “currency” called MMM created by Sergei Mavrodi. It was a naked scam. And everyone knew it.

But it was possible for participants to make money with it, for a time, and they did. Until they didn’t. Obviously it ultimately imploded, but not before leaving devastation in its wake when it collapsed fully in 2016. The rules of MMM? Simple:

“There are no rules. In principle! The only rule is no rules. At all! Even if you follow all of the instructions, you still may “lose”. “Win” might not be paid. Without any reasons or explanations. And in general, you can lose all your money. Always remember about this and participate only with spare money. Or do not participate at all! Amen. :-))”

Who could possibly conceive a more perfect attack on a nation of temporarily embarrassed millionaires?

The Sedition Caucus

If you thought January 6th was fun, check out the bipartisan collection of US politicians that are trying to attack the dollar. In the Senate, Senators Sinema, Blackburn, and Lummis have launched the “Financial Innovation Caucus” (translated: crypto nonsense caucus). Just today, Roll Call called Lummis the “Senate’s Queen of Crypto.”

Speculation that something is wrong with Senator Sinema can be explained by her close ties to the cryptocurrency industry. Senator Lummis has been a massive crypto shill and sported laser-eyes until the recent rout of Bitcoin’s price. Senator Blackburn has also been a vocal crypto proponent, citing China to provoke FOMO in May 2021:

The Caucus is timely for a number of reasons, including growing regulatory focus on digital assets from U.S. federal agencies like the Federal Reserve Board of Governors and the Securities and Exchange Commission, as well as efforts already underway by foreign governments to create digital currencies. China, in particular, has already launched a digital yuan in certain cities, with the hope that ultimately it will increase China’s influence in international finance.

In fairness, there is also chatter among this crew about a “digital dollar”—comparable to a digital yuan or digital ruble; a Central Bank Digital Currency (CBDC) pegged to the existing dollar instead of competing with it. The House’s Congressional Blockchain Caucus has similar aims, and isn’t small:

And the overlap with the January 6th Sedition Caucus is not insubstantial. At a minimum Mo Brooks, Lauren Boebert, Matt Gaetz, Warren Davidson have all expressed support for the insurrection. And the rest are generally pushing to replace the dollar, where they can, with private crypto schemes.

And there are enthusiasts at the state level too. Arizona State Senator Wendy Rogers has been vocal about her support not only for crypto currency replacing the dollar, but also for the illegal Canadian truck blockades, and even blocking the Super Bowl, which fortunately did not materialize. Rogers also introduced a bill to make Bitcoin legal tender in Arizona.

Colorado Governor Jared Polis just announced a plan to allow taxes to be paid with Bitcoin by the end of the summer, a test for many of what constitutes a legitimate currency. This is a direct assault on the dollar and an attempt to pump up the value of Bitcoin.

For pedants, I want to emphasize that yes, there are legitimate uses of “blockchains,” particularly permissioned, non-public, non-currency use cases, and yes, there may even be uses for so-called “stablecoins” and CBDC’s. For normal people, what’s important to note here is that there is a substantial undercurrent of support among US represented officials for an attack on the dollar.

This perfectly aligns with the goals of our adversaries, and US politicians who support undermining the dollar represent a second, more nefarious phase of the January 6th attack.

Why does cryptocurrency exist?

Modern cryptocurrencies can trace their ideological origin back to 1933 when Franklin Roosevelt, after being president for just a month, was forced to halt the hoarding of gold with Executive Order 6102.

Wealthy industrialists, upset with the new president’s plans for the New Deal, began hoarding gold, thus greatly constraining the government’s ability to pay for New Deal programs — which of course was their stated goal. Why? They were concerned about inflation and the effect that “newly printed money” would have on their wealth. Sound familiar?

Gold bugs never forgave FDR for what they called the “gold confiscation act,” and the wound sat festering for decades. Indeed, alternative interpretations of the New Deal—that Roosevelt didn’t do the right thing, and that indeed Hitler and Mussolini were the ones that got it right, informed books like “Three New Deals” and “The Forgotten Man,” favorites of libertarian crypto promoters Peter Thiel and Balaji Srinavasan.

But no book has been more influential than The Sovereign Individual by anti-tax advocate James Dale Davidson and Lord William Rees-Mogg. Published in 1997 with the subtitle “How to Survive and Thrive the Collapse of the Welfare State” it posits a new era where national sovereignty is replaced with individual freedom, taxes are eventually eliminated due to competition, and services are replaced with private contracts. In short, a kind of libertarian fantasyland where fiat currency (and the evil central bankers that run it) go away and are replaced with “digital cash” — or what would later be called “cryptocurrency.”

This book was a deep influence on Thiel and Musk, and informed their vision for PayPal. Thiel described it as “the most influential book ever written.” High praise, indeed.

We are now engaged in a networked conflict between the “fiat currency” world we have known until now, and the new world of cryptocurrency, and it is challenging us to face it head on, as Trudeau has just done. How that will play out remains to be seen, but this is a central front in the emerging global conflict that involves Canada, the United States, Russia, and China. And in fact it is arguably the central front in this new global war—what many pundits are calling, for better or worse, “World War III.”

The dollar, with its status as the world’s reserve currency, is the currency in which oil is priced, and which all nations keep on hand. But this status gives the United States a special advantage: we can gain access to oil and energy simply by authorizing dollars. China and Russia would like to challenge that advantage. Economists argue over how feasible that is, but it’s definitely the subject of persistent chatter.

What Is To Be Done?

Trudeau’s government has already realized the threat that cryptocurrencies pose and has invoked the Emergencies Act. The White House released a statement in January that they would soon issue an Executive Order to demand regulation of cryptocurrencies as a national security matter. Governments are waking up to what’s going on — but is it too late?

In the 1850’s, private currencies sprang up in the American west, and were issued by “Wildcat Banks” that frequently suffered runs or vanished, leaving scrip-holders with worthless paper. There were dozens of these “currencies” and they posed a real risk to stability of the local economies using them. Eventually, new laws were enacted that heavily taxed these currencies, effectively ending them.

We could do the same thing with cryptocurrencies today. Since the primary danger is the distraction and harm caused by large scale Ponzi schemes, the simple way to end them is to impose high costs on the flow of dollars into cryptocurrencies. This can be done here by taxing exchanges by US citizens at a high rate — just as was done to end Wildcat Banking. It would not take long for a Ponzi scheme to collapse if there was a 90% tax on placing new funds into it, and people would quickly seek the exits. Those who stayed in longest would be penalized most.

President Biden should pursue this policy via Executive Order, just as Roosevelt did with Executive Order 6102, which may also require a declaration of war based on current US law. However, given that we are already engaged in an ongoing hybrid war between NATO and Russia, this is likely also an appropriate response.

Of course, many people will object to this on either strategic or procedural grounds, arguing that these measures are too extreme, or that this time it’s different. Flatly, that’s just wrong, and dithering is how you lose a war. And if we want to lose, we will fail to act against this obvious threat now.

What Else Is At Stake? Oil.

The war for crypto is ultimately about the war for the Arctic. Russia is seeking long term-land based dominance of Eurasia, along with China, in a land-based alliance designed to challenge the naval-based alliances of the West. (Not my opinion — this is straight out of Dugin’s Foundations of Geopolitics.)

By ignoring and even acclerating global warming, Russia can open up Arctic shipping routes that bypass the Suez canal. And it can help provide Russia and its partners access to Arctic oil, currently difficult to access.

But we should also be careful not to reduce this conflict down to the old saw “so they could get the oil.” This is a much more complex situation than that. Putin has several other motivations as I’ve discussed previously, including the reunification of the Rus people in Ukraine and Russia, the restoration of the Russian and Soviet empires, the subjugation of the west, the crushing of the EU, NATO, and the very idea of Western democracies.

Cryptocurrencies help Russia achieve this by latching onto extant anti-institutional, illiberal factions in the West, connecting them together in common cause, and pushing them, through the use of network effects towards a shared goal. As early crypto investor Roger Ver has said:

“If you remember the original ‘Alien’ movie, the alien goes inside of the person, and it’s like inside the person’s chest, and it’s growing and growing and growing, and then all of a sudden it pops out of the chest,” Ver said. “I see cryptocurrencies like that for the traditional banking system and legacy financial systems. They’re growing inside and they’re going to integrate directly with them, but at some point they’re just going to pop out and everything’s going to be crypto.”

Historians used to describe this global network of illiberal propertarians as the fascist international. Today, it has come to be known simply as ‘web3.’

We’ll Feel This

President Joe Biden told Americans this week, “you’re going to feel this,” with regards to the conflict in Ukraine. Putin is not simply trying to illegally invade his neighbor, he is seeking a full geopolitical realignment and a shift to a multipolar world power structure. How successful he can be remains to be seen, but there is no doubt that a lot of harm and change may come in the attempt. And Americans will most definitely feel this.

This is a hybrid war consisting of all manner of manipulations, especially information and financial attacks, which are increasingly inseparable. Here are some signals about what may affect us in the United States:

• Economist Paul Krugman is increasingly seeing parallels between the cryptocurrency market and the subprime mortgage crisis, which disproportionately affected financially vulnerable people.
• Crypto exchanges are increasingly the source of FINCEN Suspicious Activity Reports (SARs), suggesting an acceleration of potentially criminal activity on crypto platforms.
• FDIC has said that crypto-related risks are one of their top priorities for 2022.
• Chainalysis reports that North Korea is using stolen cryptocurrency to fund its rogue nuclear missile development program. In this manner, crypto investors are directly funding the government of a hostile foreign power.
• Southern Poverty Law Center reports that cryptocurrency has “revolutionized the white supremacy movement.” It is well known that cryptocurrency has proven useful for funding extremists, insurrectionists, and now illegal truck blockades.
• There is a rising chorus among crypto advocates that the purpose of crypto is to “challenge the state” and is driving a growing “divide in society” because “manipulation of money is manipulation of people.” A growing call for secession among propertarians may form the basis for civil war, as it did in 1861.

• Robert Breedlove, a prominent Bitcoin advocate, is calling it “non-lethal warfare” and outlines its advantages over kinetic war. That Bitcoin bros are aligning with Russia in this conflict should be very worrisome.
• There is growing concern over celebrity involvement in the NFT bubble, which seems to be powered mostly by fraudulent wash trades, for example Melania Trump buying her own hat. This may serve to undermine popular confidence in legitimate financial markets and ultimately harm individual investors, which could lead to civil unrest.

• When cryptocurrency markets collapse, people currently radicalized into the market may move on to more violent forms of radicalization. The longer we wait to address this radicalizing schism, the greater the likelihood of violence when it collapses. This makes crypto-radicalization an effective long term instrument of hybrid warfare and is a good reason why China and Russia have tried to isolate themselves from its effects; we have not.

• Much has been made of the crypto “community,” but this is a sign of trouble ahead. Cryptocurrencies are attracting a disproportionate number of people with various kinds of social uncertainty who are seeking belonging and identity. Crypto can provide this, but at the expense of transmuting “technology” into a more spiritual, Jihad-like endeavor. Listen to this Twitter Space and compare it to radicalizing self-actualization cults from the 1970’s. This is hard to differentiate from Jonestown, Heaven’s Gate, or NESARA cults.
• As has been widely discussed, cryptocurrency enables fraud (like the recently publicized $3.6 billion hack), organized crime, and money laundering. However, I rank this as significantly less of a risk than the hybrid warfare risks associated with network effects, financial destabilization, and societal radicalization.
• Crypto advocates are actively trying to ‘capture’ the US government and push it past a point of no return, where no US politicians will dare regulate it because either they have a financial interest in not doing so, or are concerned they will lose votes.
• This week the United States advised that Zerohedge, the popular finance-focused site aimed at anarcholibertarians, is a Russian propaganda outlet. Zerohedge has been cultivating a crypto-friendly audience for years and is part of the hybrid information-financial attack we are facing.
• The US is discussing creating a “digital US dollar” (Central Bank Digital Currency), but faces significant opposition from private currency issuers as they cite legitimate privacy and ownership concerns about government control of digital currencies. This dilemma is a known and intentional part of the crypto strategy; the aim is to corner governments and give them only bad options where private schemes may possibly win out, or be hard to crush.

• There is an increasing drumbeat that crypto-currency is an “anti-war” technology because it constrains government in their ability to undertake large scale projects (like war, or climate-mitigating investment in renewable energy). This is anti-democratic because it removes all control over money from the democratic process and places it exclusively into private hands. It’s an attempt to influence control over government by removing all power to make any decisions about money.
• Hungary’s central bank, as Russia’s strong ally, is beginning to promote the adoption of cryptocurrencies across the EU.
• Edward Snowden, who at this point can only be characterized as an organ of the Kremlin, tweeted on February 16 that “Bitcoin is a continuation of politics by other means,” aping Clausewitz.
• There are cultural undercurrents that speak to the gold (crypto) vs. fiat tension. Last week an artist, Niclas Castello a.k.a. Norbert Zerbs, funded by Austrian investor Klemens Hallmann, placed a $11.7 million gold cube in Central Park, followed by a cube-adorned dinner with Wall Street financiers. The same day Russia announced its “crypto roadmap,” a money printing facility in Clermont-Ferrand, France (a hotbed of Gilets Jaunes activity) caught fire; Russia’s RT was on the scene to amplify it to the world, and the crypto world approved.
• The crypto ecosystem is propped up by Tether, an apparently fraudulent “stablecoin” that has had trouble proving it is backed by the dollars it claims to have in reserve. Tether has served to pump up the price of crypto assets by driving interest whenever the price falls. This helps drive the Ponzi scheme and creates ever increasing fragility.
• Lastly, cryptocurrencies use an inordinate amount of energy and are extremely slow, expensive, and hard to use. These are common arguments against cryptocurrency and valid long term critiques, but are perhaps less relevant in the context of an accelerating hybrid war.

We are all about to be pulled into Putin’s hybrid war on the geopolitical status quo, and we will all be asked to take sides. Americans who elect to push into crypto are, whether they like it or not, advancing Putin’s goals and helping Xi undermine the dollar. Many cryptocurrency enthusiasts know this and are wittingly supporting the attack. Others simply don’t understand why this is the case, and want to either deny the facts, or pretend it is otherwise.

Over the course of the coming months and years, our response to cryptocurrency will determine the course not only of world events but of the American experiment. This could spark a propertarian schism such as we saw in 1861, or it may be moderated through sound policy. The future of the world is in the balance and will be determined not only by the actions of leaders like Biden, Putin, and Xi, but of how populations of all countries decide to govern themselves. This is about so much more than Ukraine.

We need to decide whether to go all in on anarchocapitalist libertarian schemes that empower gas and oil interests and our adversaries, or embrace the democratic ideals upon which this country was founded.

We’re interested in the major historical trends that shape current events. Tips? Ideas? Drop us a line via email or Twitter DM. Please note: this analysis is historical and political in nature; it is not intended as financial advice and should not be taken as such. If you enjoy my work, please consider making a donation to World Central Kitchen, to support their work feeding people in times of need.

For an even deeper dive, check out my series, The Big History Behind January 6th and my audio series Oil, Gold, Crypto, and Fascism: How We Got Here and How to Fix It.