The Big History Behind January 6th, Part 2: Gold, Silver, and Cryptocurrency
This is Part 2 in a series. Listen to the audio version here.
Before Steve Bannon’s name was well-known in the realm of politics, he was known for intervening in the strange, cultish science experiment known as Biosphere 2. He was hired by Texas oil billionaire Ed Bass to help curb costs on the project as it was widely seen as getting out of control. In broad strokes, Biosphere 2 was a kind of “Burning Man” happening, but re-cast as science fair project set in the Arizona desert. Run by a collective of theater geeks, it arguably was as much a product of the counter-culture as it was any kind of scientific exploration. Its purpose? To discover the effects of climate change. Bannon was the perfect person to put a pin it, and in early 1994, he did.
In May 2001, former child actor Brock Pierce (First Kid, The Mighty Ducks), then aged 20, started a company called Internet Gaming Entertainment, or IGE. Pierce had found that he could “mine” virtual goods in games like EverQuest that could be sold to other players around the world who wanted a shortcut to success in the game. IGE helped popularize something important: selling intangible goods online for real money, at an arbitrary valuation.
Pierce knew he was onto something big, but he didn’t know how to scale it. He needed an army of freelance “miners,” preferably operating in markets where labor is inexpensive. After several years of trying unsuccessfully to scale, the company brought on the former Goldman Sachs investment banker of Biosphere 2 fame, Steve Bannon, who replaced Pierce as CEO.
On February 7, 2006, Bannon secured a $60 million investment in IGE from Goldman Sachs. $20 million went to Pierce, so he could take some capital off the table. The company went on to expand into selling goods for multiple games including World of Warcraft. When Bannon departed in 2012 to lead Breitbart News, the company floundered, with assets purchased by other firms.
But in 2009, others had figured out a way to sell a virtual good that wasn’t tied to video games. An anonymous inventor using the name Satoshi Nakamoto unleashed Bitcoin on the world. Brock Pierce went on to become a major investor in Bitcoin and other cryptocurrencies, and in 2020, he ran for president.
His campaign manager? None other than Cambridge Analytica refugee and Steve Bannon collaborator, Brittany Kaiser.
In 1933, the United States was in the grip of the Great Depression and in need of immediate intervention. Franklin Delano Roosevelt was inaugurated on March 4, 1933, and immediately set about implementing a program of spending — “The New Deal.”
The plan depended on the issuance of new currency (“printing” money, in effect) that could help un-stick the economy, stimulate purchases, help fund government jobs, and the like. Until that time, US currency had been backed by gold. Many businessmen felt that the New Deal was a recipe for disaster, and that devaluing the dollar by printing as many as we wanted was, in effect, a kind of theft.
In 1933, Maj. Gen. Smedley Butler, was approached by a man named Gerald MacGuire about the possibility of intervening to force Roosevelt to return to the gold standard, effectively terminating the New Deal programs. MacGuire attempted to recruit Butler for several months.
Butler blew the whistle, and testified to Congress that the plan, backed by a network of industrialists he believed was tied to the American Liberty League, was to raise an army of 500,000 “super soldier” veterans and stage a siege on Washington. Roosevelt would be forced to either accept a “Secretary of General Affairs” (who, in effect, would be the acting President)—or he would be killed.
There are multiple accounts of the plot, but it was generally believed to have been supported by executives from DuPont, J.P. Morgan, Goodyear, Anaconda Copper, and Bethlehem Steel — with ammunition supplied by Remington Arms company, a DuPont subsidiary. The plot was also allegedly supported by J. Howard Pew of Sun Oil, a longtime friend and supporter of Robert W. Welch, who would later found the John Birch Society.
Butler eventually told MacGuire, “If you get 500,000 soldiers advocating anything smelling of Fascism, I am going to get 500,000 more and lick the hell out of you, and we will have a real war right at home.”
Congress concluded that the plot was real, even if not close to being realized. Contemporary newspaper accounts largely gave the impression that Butler had manufactured the story. Subsequent historical investigation suggests otherwise.
On April 5, 1933, Franklin Roosevelt issued Executive Order 6102 which forbade the hoarding of gold coin, gold bullion, and gold certificates in the United States. This was foundational to the New Deal as it underpinned the primacy of the US dollar and did not allow for rich individuals to challenge it by keeping their assets primarily in gold. Wealth would need to be kept and transacted primarily in dollars. This was followed in 1934 by the Gold Reserve Act, which returned all gold certificates to the US Treasury.
In the late 1970’s, Texas oil barons William Herbert and Nelson Bunker Hunt were feeling the effects of the energy crisis and runaway inflation. Their cash wealth was being eroded annually by the ever-weakening dollar, and they wanted to safeguard their holdings.
So they decided they would try to corner the market for another precious metal: silver. The Hunts went all-in, transferring their holdings almost entirely to the metal. They were seen by many as crazy gamblers, even as others admired their resolve.
Ultimately their effort to corner the silver market failed due to a combination of market and regulatory shifts, but their connection to the John Birch Society (and its founder Robert Welch and then-president Georgia Rep. Larry McDonald) would lead them to other important developments.
In 1979, after helping Paul Weyrich found the Heritage Foundation in 1973, the Hunt brothers helped to fund Western Goals, the private intelligence agency founded by Maj. Gen. Jack Singlaub and Larry McDonald, and which was behind the Iran-Contra affair.
This is part two of a six part series that aims to provide historical context for the events that took place on January 6th. Please follow me on Twitter for subsequent updates as they become available. Media inquiries for features, podcasts, and the like may be directed via email. For additional details on this research, please see this exhaustive documentation.