Sanity May Yet Prevail
If you love this country like I do—despite its flaws and ridiculous deceptions—because of its tremendous capacity for improvement and renewal, this week offered a bit of hope. Worst-case scenarios are meeting with resistance, and we may actually make it into next year with enough institutions intact to pull ourselves out of our national and global tailspins. Let’s dive in.
What’s Happening Now
The big financial collapse promised by GOP disinfo operatives remains elusive. Steve Bannon, Mike Flynn, and various disinfo channels have been promising a financial collapse spurred by inflation sometime between Thanksgiving and mid-December. This would only be possible if they tried to engineer such a thing, and the most likely mechanisms they could use to do it are either shutting down the government or failing to raise the debt ceiling.
I’ve been raising the alarm on this for a while, mainly so that it received the attention it deserved. This week, Congress passed a continuing resolution that will fund the government through February 18. We can expect another standoff then, and very likely will see GOP attempt to shutdown the government, as their intent and chatter about this is persistent. But it’s a good thing we’re not shutting down the government right now, and it will give us more time to recover.
The debt ceiling still needs to be raised; Congress did pass a bill that will make it easier for the Senate to raise the debt limit with a simple majority vote, and eliminate the filibuster specifically for this vote. Several Republicans supported this measure, including Alabama’s Tommy Tuberville, who have said they will not vote to increase the debt ceiling.
Most now expect that both chambers will in fact raise the debt ceiling on Tuesday the 14th, however this will require that all Democrats vote to increase; no Republicans are expected to vote in favor.
Given that Senators Sinema and Manchin are “wildcard” Democrats, who take money from the cryptocurrency, MLM, and coal lobbies respectively, it’s plausible that this vote will not go as easily as people expect. I hope that’s not the case. Treasury Secretary Janet Yellen has issued a deadline of Wednesday, December 15 to avoid default, so any drama encountered on Tuesday will have to be resolved immediately, and also gives dissenters significant leverage. If we can get past December 15 and get the debt ceiling increase passed, we should have a few weeks of relative calm during which to regroup.
Biden meets with Putin, advising him of consequences for Ukraine invasion. Putin seems intent on invading Ukraine, and may be willing to pay the price to do it. As his military capacity and power at home wanes, Putin seems to be feeling the pressure to try to reassert the historical borders of the Soviet Union, especially in Ukraine. Consensus seems to be building that if he is going to invade, he’ll wait to do it when the ground is fully frozen, probably in a month or so. Given that a US financial collapse (which might otherwise give him cover) doesn’t seem to be in the cards, this timeline seems plausible. Though obviously he could decide to act at any time.
However, Putin may change course in the face of possible punishments, such as additional sanctions, cutting off the Nordstream 2 pipeline between Russia and Germany (which he badly wants) or possibly being cut off from the SWIFT payment network. While these would be damaging, Russia has been building alternative payment networks (after it faced threats of being cut off of SWIFT in 2014) and also can use cryptocurrencies to bypass regulations.
I think we should assume that Putin is sufficiently desperate to pursue at least Ukraine, if not also operations in the Balkans and the Baltics. Whether he continues to amass troops along the Ukraine border will be a clear indicator of his intentions.
Meanwhile, as certification of Nordstream 2 lags and it’s unlikely to become operational until springtime, it would seem that a Ukraine invasion may need to roughly coincide with the initiation of the pipeline, so these outcomes may be somewhat intertwined.
China tensions continue to simmer as Evergrande officially defaults. Steve Bannon continues to be laser-focused on “taking down the CCP”, and sees that project as innately linked to the global debt picture. This week, Evergrande officially defaulted on its debt; the implications of this are unclear, but real estate accounts for a significant portion of China’s economy and this is likely to have a rippling set of consequences that seem likely to bleed into the global financial situation.
Nicaragua this week decided to officially switch alliances from Taipei to Beijing. As a longtime friend of Russia, Nicaragua seems to be signaling a Russo-Sino alliance that may portend the shape of future conflict.
The United States announced a “diplomatic boycott” of the Beijing Olympics, which has been joined by a chorus of other voices calling for even more extreme measures. There are plenty of good reasons to sit out Beijing’s round of hosting this year in light of the country’s egregious human rights records. However, this again points to the February timeframe as being a time of heightened global tensions.
Sheldon Whitehouse continues his series on “The Scheme” to capture the Supreme Court and other organs of government. For the last several months, Senator Sheldon Whitehouse (D-RI) has been making speeches on the Senate floor about what he calls, “The Scheme,” or the long-running right-wing libertarian scheme to capture the US government by gaining control over the Supreme Court.
Whitehouse’s speeches dovetail nicely with work by authors like Nancy MacLean (Democracy in Chains), Jane Mayer (Dark Money), and Anne Nelson (Shadow Network). I’ve included a link to a playlist of all 10 installments of Whitehouse’s speeches above, the most recent of which he delivered yesterday.
Bitcoin has had a very, very bad month. Crypto-bros and libertarian hardliners have been absolutely certain that reports about inflation and increasing institutional adoption of Bitcoin will result in an ever-growing gravy train for early-adopters and HODLers. But, this seems to not be happening. Bitcoin is down about 26% in the last month, despite discouraging short term reports about inflation (such as one this morning reporting 6.8% inflation in November.)
However, other reports suggest that cryptocurrencies have provided a massive boon for White Supremacist networks in the United States and globally. While it is reasonable to think that non-state cryptocurrencies may form part of a complex global financial system if properly regulated, attempting to overthrow central banks is still a good ways off, and such efforts are facing headwinds.
Cryptocurrency executives testified this week before the House Financial Services committee, which was a milquetoast affair. The real issue that Congress needs to assess is the degree to which Tether is a Ponzi scheme, and if the so-called “stablecoin” may pose a risk to investors and the financial system as a whole. But, Congress will have to save that for another day it seems.
Meanwhile, I wrote a viral thread attempting to define modern libertarianism and show why and how it is connected to historical fascism. As cryptocurrencies become more widespread and the Austrian School economics baked into it more pervasive, people need to develop a better understanding of just what they’re looking at. But it’s hard to beat this tweet below for a concise understanding of what modern libertarianism is all about. 😉
What May Happen Next
It looks like we may have a fairly sane next few weeks—knock on wood. Putin is mulling his options, waiting for the ground to freeze. The debt ceiling remains a possible wildcard next week, but assuming McConnell will not let default occur, then that will get settled—somehow. Be prepared for drama on that starting Monday or Tuesday.
China seems content to simmer in an effort to salvage its olympic turn. And the Bitcoin Brigade seems to be somewhat in retreat. Elon Musk is saying stupid things. So is Jack Dorsey. But that’s background noise. Until I start hearing Steve Bannon launching a chorus of “all hell is about to break loose,” I think we’re likely okay. We may hear that start around the January 6th anniversary, or as we get closer to the next government shutdown deadline on February 18th.
In the meantime, let’s enjoy any peace we may get in the interim and hope this gives us a chance to do the hard work of repairing our democracy—like passing the pending voting rights legislation—possibly using the same filibuster-bypass strategy used for the debt ceiling vote. And I’ll be back next week with more audio episodes in my “Oil, Gold, Crypto and Fascism” series too!
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.
