Preemptive Bailouts
Beginning in 2012 the Fed inverted its tactics in supporting elevated equity prices. Instead of waiting for pronounced selloffs to instigate inflationary bailouts, it began to preemptively intervene to support prices prior to any selloff, attempting to keep market volatility within a prescribed band. As the majority of trading volume is generated by algorhythmic systems which shut off and withdraw liquidity during any moderate spike in market volatility, air pockets in market prices can easily develop whereby a small sell off can spiral into a much larger one without any fundamental catalyst in sight. Preemptive intervention was implemented to prevent these air pockets from developing. As a consequence, whereas prior to these tactics, a rare but sharp selloff might take days or weeks to lure buyers back in, selloffs would now instead be met by an equally statistically rare rallies the within days.
With this new breed of “Greenspan Put” supporting markets and suppressed interest rates, the spread between the cost of debt and the cost of equity widened. What ensued was a major trend toward share buybacks at public companies with historic amounts of new debt. Because company executives are compensated through stock price appreciation, this three-fold support for a government policy of direct wealth transfer from Main St. to executives at public companies was taking place.
In the ensuing years, the policy took on a life of its own, growing into full-blown ideology, migrating out of the technicalities of equity price statistics and into the corporate board room, and from there into a larger statist/corporatist-sponsored propaganda and social trend known as “ESG.” So-called Environmental, Social and Governance priorities took center stage for corporations ahead of, and often at the expense of, serving the preferences and moral inclinations of their customers and clients. Over the course of a few years, we went from “the customer is always right” to “the propaganda is always right.”
As Lyn Alden cleverly observed, a country with a gold standard and persistent trade deficits will bleed off its gold reserves. A trade deficit-bound country backing its currency with claims against factory output and mortgage income will see its industrial and housing capacity similarly drawn off. In the American case, the experience was industrials moving abroad and housing prices rising persistently faster than GDP growth. With the central bank creating ever more claims to the nation’s remaining capital, and diverting those claims to its corporatist vassals, expanding inequality naturally arises. Every dramatic sell-off, every preemptive intervention, another excuse to ratchet away economic value from its Mainstreet owners to Wall St. and corporate insiders.
Originally, both the Tea Party and Occupy Wall St. shared populist undertones – the perfect bipartisan threat to the neo-monarchy being reinforced and aggrandized by that contemporaneous, historic inflationism. A bait and switch was called for. By inventing “systemic racism,” systemic financial risk could be concealed. The response in the form of ESG then serves to anchor the corporatist vassals to a neo-monarchist policy framework of preemptive bailouts.
By early 2020, the CCP pandemic served as a pretext to preemptively bailout ESG-centric companies in a fashion multiples larger than any prior bailout. By elevating and even doubling or tripling stock prices and making trillions available in direct stimulus to corporate balance sheets, corporate boards became even more richly rewarded for conforming to ESG prescriptions than by serving and ennobling their customers.
At the heart of ESG is another program, “DEI” or diversity, equity and inclusion. Major corporations, incredibly, now elevate DEI czars to C-suite levels. Long gone is support for the American values of universalism and excellence, and the socialist, neo-monarchist, corporate policies of uniformity, inequality and exclusion have naturally ensued. Vivek Ramaswamy’s exposition Woke Inc. details how the new cult of ESG is meant to prescribe how private corporations siding with a socialist, neo-monarchist ideology may commit cancellations against individuals and groups in ways the state is specifically prohibited from doing. What has emerged is a blatant fusion of corporation and government into a kind of corporatist fascism predicated on feudal cancellation and exclusion of the non-compliant.
Who needs a “green new deal” if the state can bribe banks with printed money to refuse loans to the non-green? Who needs a Reichstag Fire if the state can bribe media outlets to depict protests as Nazi occupations or to promote mass injections of risky, experimental gene therapies?
The unilateral and historic removal of the entire Russian financial system from the global system, which followed Canada’s impounding of the financial property of peaceful Canadian protestors, shows how ready and eager this fascistic cadre is to use its newly-minted levers of cancellation. Alex Gladstien’s exceptional account of the history of the modern US dollar system illustrates how a degenerating global financial system structured atop US debt pushes DC to any drastic measure to defend its inflationary despotism. ESG/DEI is merely the next narrative pretext excusing the strengthening of crony incumbent Cantillon insiders through monetary exclusionism, and thereby gain more allies in defense of the flailing eurodollar program. The might of US currency hegemony is being turned on the proponents of universalism and excellence.
Jeffrey Wernick and Dan Bongino’s Parallel Economies, named after the anti-communist strategy of Ivan Jirous in 1960’s Czechoslovakia, showcases the extreme validity of exit from the institutions which have been captured by cancellation ideologies:
“If it proves impossible legally to compel the ruling power to change the ways it governs us, and if for various reasons those who reject this power cannot or do not wish to overthrow it by force, then the creation of an independent or alternative or parallel [society] is the only dignified solution…”
And Jirous continues:
“[The parallel society] began in spontaneous acts of mutual self-defense in different parts of society. Those who take part are active people who can no longer stand to look passively at the general decay…rigidity, bureaucracy, and suffocation of every living idea or sign of movement in the official sphere. And because these people sooner or later recognized that efforts to bring about the slightest improvements in the official sphere were exercises in futility, it was only a matter of time before they said: Why not invest our talents, abilities, goodwill, and enthusiasm into something that no one will be able to corrupt, that we will be able to decide about ourselves in the end.”
Ivan Jirous, Parallel Polity
Parallelism in El Salvador
Parhelion Digital (formerly Thermahash) began in 2020 with this strategy in mind: how to fully exit from a repressive currency regime which deranges society for the sake of its perpetuation? Nothing other than Bitcoin, mined with reliable, high baseload geothermal energy independent from the grid, independent from the rising politics of repression and cancellation, independent from inflationary pressure in fuel stocks like natural gas, in multiple free jurisdictions, could be the foundation of the answer. El Salvador is one natural choice to deploy the strategy owing to its abundant geothermal capacity, tax free mining and digital asset trading, and budding efforts at multilateralism.
Freely admitting the grandiosity and yet-unspecified execution strategy, Nayib’s Bitcoin City represents much more than a low-tax haven for expats, it represents the possibility of a densification of a parallel society founded on universalism and excellence. His broader inclination to create multilateral relationships in a country long-inseparable from Washington DC, the Bitcoin law should not be thought of as reactionary pandering to the twitterverse, but instead as an expression of how to attract and serve the world’s largest economy. The transnational, diversified cadre of individuals motivated by universalism and excellence, which represents the population with the largest share of global GDP, have higher savings balances, incomes, and credit ratings, more portable skills, greater goodwill and qualitatively seek greater and deeper meaning in work and consumption choices. An alliance with this cadre is great for business.
The Charter Cities Institute notes how cities originally founded by colonial monopolies united them to the markets and trade networks of their mother country. In the same fashion, new communities like Bitcoin City and others will serve to integrate them with a transnational market and trade network populated with others of similar origins and values, supported by cryptographic legal architecture and money. Communities serving the Universalist and Excellence Market, the “UEM,” act as a Layer 1 of the parallel society. Decentralized financial and governance architecture is where this global population of universalist, excellence-admiring investors, entrepreneurs, developers and have begun to live and work.
As Charles Hoskinson describes, through the new digital architecture, capital market autonomy institutional governance are about to increase in a dramatic way. It’s the primary mission of Parhelion Digital to support exit into a globally decentralized parallel society on universalist moral grounds, and to serve the world’s most important and virtuous market. Join us for a sunset cocktail at El Zonte or Conchagua.
-RC
