“Election Interference” for the 206th Time
Here We Go Again
If it’s presidential election season, it must be time for banner headlines about a really, really skeeeery foreign influence op…
If you missed the news… Yesterday the Biden administration took several steps to counter what it alleges to be “election interference” on the part of the Russian government. Most of those steps target the state-run English-language news channel RT.
The biggest of those steps is a Justice Department indictment of two RT employees, accusing them of “covertly” funding a digital media firm based in Tennessee to distribute ”hidden Russian government messaging” — with the alleged aim of boosting Donald Trump’s presidential campaign.
Neither the company nor its U.S. clients were named in the indictment, but it wasn’t hard to put two and two together. The outfit is called Tenet Media and its most prominent client is one of the most banal and obnoxious conservative “influencers” — Dave Rubin.
“If this was really some sort of ‘Russian influence’ operation they did a terrible job generating views,” tweets the independent political reporter Michael Tracey. “It seems like the ‘investment’ was more about duping gullible ‘content creators’ than about actually creating the content.”
Yep. For his part, Rubin and the others say they had no idea of any Russian connection. No comment yet from Tenet Media.
The whole thing is so much theater on the part of the Biden administration. Explains antiwar.com news editor Dave DeCamp: “The indictment charges the two Russians with conspiracy to launder money and a conspiracy to violate the Foreign Agents Registration Act (FARA), a law that requires individuals or entities engaging in lobbying or other activity on behalf of a foreign country to register as foreign agents with the DOJ.
“Since both Russians are based in Russia, the case is not expected to go to trial, making the indictment largely symbolic.”
If you’re a newer reader and wondering why we’re taking up this topic in a financial e-letter… well, several reasons.
To begin with, the nation’s leading business daily saw fit today to give the story front-page, above-the-fold treatment…
For The Wall Street Journal, the story takes precedence over a major acquisition by Verizon… and over U.S. Steel’s threat to shut down some of its factories if the feds nix the company’s takeover by Japan’s Nippon Steel.
More importantly, the whole “Russian interference” thing hits uncomfortably close to home here at Paradigm Press. Over the years, two of our colleagues have turned up on blacklists smearing them as Russian stooges.
Shortly after Election Day 2016, our former colleague David Stockman — best known as Ronald Reagan’s budget director — was one of about 200 writers and websites implicitly tarred by The Washington Post for boosting Moscow’s talking points.
The following year, our macroeconomic maven Jim Rickards turned up on a list of people who’d been interviewed on RT. Never mind that both Dick Cheney and Michelle Obama turned up on the same list!
The smears are risible. Both gentlemen are red-blooded American patriots. They just happen to criticize American institutions like the Federal Reserve and the big banks in ways that on occasion resemble the criticisms you encounter watching RT. (And Mr. Stockman is no Trump partisan; his latest book title is Trump’s War on Capitalism.)
In the eyes of the Establishment, their real crime is to criticize those institutions at all. How dare they undermine everyday Americans’ confidence in the abilities and motives of the power elite? (“Sowing discord” is the term you often encounter in corporate media.)
Laughable as the latest developments are, we’re getting used to this sort of thing.
It started in the 2016 campaign cycle when Russian-based internet troll farms circulated cheesy memes on Facebook. Not all of them were related to the election — and the stuff that was election-related wouldn’t change anyone’s mind about who to vote for…
Still, the “Russian meddling” narrative caught fire with the help of the “deep state” and corporate media. It couldn’t have been decades of misrule by the Clintons and Bushes and Obamas that galvanized an upswell of support for Trump: It had to be the Russkies!
By 2018, two-thirds of Democrats responding to a YouGov poll believed that Moscow actually “tampered with vote tallies” to get Trump elected — a claim so outrageous that even the Hillary-friendly “U.S. intelligence community” never went there.
If the consequences were no more serious than silly polling results, it would be one thing. But they’re not. Read on…
Dollar Destruction and Nuclear War (Good Times…)
The power elite’s animus toward Russia drove many of the deep-state policies that ultimately provoked Russia’s invasion of Ukraine — and all the disastrous financial consequences for the West that will follow.
To be sure, it was Vladimir Putin’s decision to invade. But that decision came only after the Biden administration refused to give Putin the time of day on his demands — that Ukraine stay out of NATO and that NATO missile bases be withdrawn from Poland and Romania.
Given Russia’s long history of invasions from the West — Hitler, Napoleon, the Poles, the Swedes — those demands were a reasonable starting point for negotiations.
Alas, it wasn’t to be. Two days after the invasion in February 2022, Washington and Brussels imposed unprecedented sanctions on Moscow — freezing the dollar- and euro-based assets of Russia’s central bank.
From that moment on, leaders of every government in the world that’s not a U.S. ally realized if it can happen to the Russians, it can happen to us too.
The dollar’s share of global currency reserves plunged from 55% in 2021 to 47% in 2022. Scads of dollars previously held overseas started flooding back home, helping drive inflation to heights unseen in over 40 years.
Meanwhile, central banks around the world started dumping their U.S. Treasuries — depriving Uncle Sam of an essential source of financing for his prodigious $35 trillion national debt.
Instead, central banks began loading up on gold at an unprecedented pace — a major reason the dollar price of gold has soared since the invasion from $1,800 to all-time highs over $2,500.
Of course, for me to even recite this history and tease out the consequences opens me up to those same charges of “sowing discord” and “amplifying Russian talking points.”
But then, I’m used to it by now. Eight years ago this month, I wrote for several days running about an elite conceit in Washington that everything bad in the world was Putin’s fault.
“Dave, curious to know why you are a Russophile,” a reader wrote. “Are you or your ancestry from Russia, or are you married to a Russian lass?
The answers, then and now, are no. Not a Russophile, although I’m partial to the music of Rachmaninov. No Russian blood. Ditto for my wife. Never visited Russia. Never owned any Russian stocks, either, other than perhaps some microscopic portion of a gold-miner mutual fund.
But I did reveal, in the interest of full disclosure, that I have an immense aversion to being vaporized in a nuclear war.
“Given the massive arsenals on hair triggers still possessed by Washington and Moscow,” I said, “U.S.-Russia relations are the paramount issue; the markets and the economy become rather secondary matters if the Earth is pockmarked with smoldering radioactive craters.”
But these days, even expressing concern about nuclear escalation and the fate of humanity is cause for suspicion.
And that’s even though Joe Biden, during one of his lucid moments, acknowledged that the risk of nuclear war is as high now as it was during the Cuban Missile Crisis of 1962.
Alas, he said that in a private gathering with rich donors — not in an address to the American people.
Nor do you hear Kamala Harris or Donald Trump talking about these issues on the campaign trail. Will the media bring them up during the debate next week? Dream on.
Enough for now. We still have the markets and the mailbag to attend to…
Two Speed Bumps on the Road to Rate Cuts
The stock market faces two more speed bumps on the road to Federal Reserve rate cuts this month.
Thirteen days from now, the Fed will embark on a new rate-cutting cycle — even though inflation by its own favorite measure still hasn’t come down to its 2% target.
The Fed has clearly shifted its attention from a falling inflation rate to a rising unemployment rate — and for good reason, says Paradigm’s Jim Rickards.
“Unemployment goes up during recessions and is usually a lagging indicator, meaning that a recession is already here before the rise in unemployment becomes noticeable to policy makers. The Fed will not admit it, but that’s what just happened.
“The U.S. economy is a much more powerful force than Fed interest rate changes or White House policy tweaks. It has its own dynamics that are not very amenable to Fed policy even if the Fed pretends otherwise.”
With that in mind, the Labor Department releases the August job numbers first thing tomorrow morning. The “expert consensus” on Wall Street is looking for 160,000 new jobs — barely enough to keep up with population growth.
A surprise to the downside could generate a nasty reaction in the markets: No longer would the Fed be lowering rates to engineer a “soft landing” in the economy. No, it would be lowering rates to stave off a recession — exactly the scenario Jim’s been anticipating all year.
Beyond tomorrow, there’s one more speed bump before the Fed meeting on Sept. 17–18 — and that’s the release of the official inflation numbers next Wednesday.
In the meantime, the major U.S. stock indexes are all in the red — the S&P 500 down over a half percent at 5,489.
Gold has edged back over $2,500; silver is back within 20 cents of $29. Bitcoin can’t catch a break, in danger of cracking below $56,000 for the first time in nearly a month.
Crude is showing little reaction to an announcement that the OPEC+ nations are delaying plans to step up production by two months. At last check a barrel of West Texas Intermediate is up only a half percent at $69.56. It’s the first time in eight months that crude has traded under $70.
Comic Relief (Sort Of)
This is the section of our daily dispatch where we try to find something humorous or quirky. Our main topic today reminds me of a meme that’s been going around for a few years…
Frankly, I’d just as soon include Trump in there. Trump contributed mightily to the current sorry state of affairs vis-a-vis Russia. (People forget, but he does have a track record in the presidency on which he can be evaluated.)
He tore up arms control treaties with Moscow. He permanently stationed U.S. troops on Russia’s borders. He sent lethal weaponry to Ukraine — a reckless step Barack Obama refused to take. Of course, no one on either side of the political divide wants to talk about these things, either.
Mailbag: “Full Faith in Our Government”
We didn’t plan it this way but we conclude today’s edition where it began — back to the whole “sowing discord” thing.
After our Labor Day edition following up on the Trump assassination attempt, one of our regulars wrote in to point out that the feds have determined that the shooter had no political motive.
Which is true, as far as it goes.
I replied that I’m not willing to take those findings at face value while the CIA possesses documents about the JFK assassination that it won’t release in full.
He wrote back: “I do appreciate your willingness to put my remarks in print. However, you prove the point that sometimes it is hard to admit making a mistake. Justifying your views based on an assassination attempt in the ’60s does not provide you cover.
“Our investigative techniques have improved a bit since JFK and I have the full faith in our government to find the truth.
“The lesson learned is do your homework, get the facts and refrain from knee-jerk opinions until you are satisfied that you have done your due diligence. You wouldn't be the first to fail at this process. Many politicians talk first and get the facts later, only to look foolish.
“As a type of journalist yourself, you have more of a duty to react more slowly and accurately than politicians who have pure power as their goal, not necessarily the truth. No one is perfect, it's a work in progress.”
OK… To be clear, I don’t have an opinion about whether the shooter had a political motive. I’m just saying I’m not willing to take the FBI at its word. This is an agency that overlooked obvious clues about the Oklahoma City bombing in 1995 and the Sept. 11 attacks in 2001. (Search “Coleen Rowley” for a refresher about the heroic 9/11 whistleblower.)
You say you have “the full faith in our government to find the truth.” I do not share that faith.
This is a country founded on the principle that those who seek out and exercise political power are to be viewed with suspicion because they seek out and exercise political power. They never deserve the benefit of the doubt.
And why, after the debacles of the 2008 financial crisis and COVID, would anyone want to give them the benefit of the doubt anyway?
