“We have no future because our present is too volatile. We have only risk management. The spinning of the given moment’s scenarios. Pattern recognition.” 

–William Gibson

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July 29, 2024 — Over the weekend, billionaire Elon Musk shared a deepfake video of Vice President Kamala Harris.

The post made it sound like she spoke about President Joe Biden’s “senility” and that she does not “know the first thing about running the country.”

The original tweet posted by X user MrReaganUSA indicated the video was a “parody” of a Kamala Harris campaign ad entitled “We Choose Freedom.” Musk’s retweet didn’t comment on whether the original post was a parody or not. He simply said, “This is amazing.”

Had it not been for Musk’s comment, the parody may not have attracted much attention. But as of this morning, Musk’s retweet had been viewed over 120 million times.

Another post this weekend, since removed, claimed the Harris campaign released a statement on Januray 21, 2021, saying: “These Trumpers, think we care about the constitution. We have the power now, it’s time to end this. They really don’t get (sic). We will block them in the courts, we will use federal law enforcement and the military. After Joe inflicts the death blow, I’ll take the reins. They will beg me for a loaf of bread.”

A reporter for Reuters has diligently gone through all of Ms. Harris’ social media from posts from January 21, 2021, as well as a one hour and eight minute speech she gave to the Democratic National Convention winter meeting that day and found no such statements made by the miraculously anointed front-runner for the 2024 Democratic nomination for president. She didn’t say that.

These two meanspirited deepfakes are about as believable as reports that Harris received donations from some 440,000 donors last week totalling $200 million dollars.

Oh, wait, according to NBC News, the reports of the Harris’ campaign’s early momentum are actually true and very believable.

As are the new polls that show Harris ahead of Trump by a small margin of error despite the fact the last time she polled in any primary, she only drew 1% of the Democratic electorate.

Ha.

Our small group of Grey Swan members have long anticipated AI and social media meddling with the election process. It’s hard to take any of this crotte seriously. And yet so many people do.

You can imagine the gaggle of Beltway lawyers (billing hundreds, thousands, of hours) trying to unravel who said what, when, and who should pay what to whom in damages.

The once-credible Rolling Stone reports a Democratic consultant still faces criminal charges of voter suppression and a $6 million Federal Communications Commission fine for deepfake audio calls in March of 2024 that used an altered version of Biden’s voice to discourage voters from participating in the New Hampshire presidential primary.

Late in 2023, early in the Republican primary race, the Ron DeSantis campaign shared AI-generated images of Donald Trump hugging infectious disease expert Anthony Fauci.

Even the Brookings Institute warned, as is their pompous academic wont, “generative AI content has the potential to turbocharge campaigns designed to undermine democratic discourse by making content higher quality, more substantively distinct, and easier to mass produce than past information campaigns launched both domestically and as part of foreign influence operations.”

The election in November will be long over, done and dusted, before the legal system has a chance to catch up with deepfakes. (Not that the lawyers mind.)

A fascinating distraction, if you let it be.

Meanwhile, against this backdrop of these fictitious weekend events, real movements are impacting your money.

The national debt, for example, quietly crossed $35 Trillion on Friday. Wolf Richter:

Since January 2020, the debt has ballooned by 50%. The economy has been growing rapidly since the trough in 2020. Yet trillions in new debt were whizzing by so fast they were hard to see, like, “Oh wow, there went another one I think.” We don’t even want to know what this situation will look like during the next recession. 

But we know one thing for sure, this is nuts:

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Richter admits this chart “is somewhat tongue-in-cheek because the debt in a vacuum is kind of meaningless,” but for context, does an apples-to-apples comparison of “the debt measured in ‘current dollars’, not adjusted for inflation.” Then compares it to the size of the economy (GDP) in “current dollars”, not adjusted for inflation.

You can follow Richter’s argument, right here. In short,

Since January 2020, current-dollar GDP grew by 31%. Inflation had a lot to do with it. Stimulus spending in 2020 and 2021 and then deficit spending over the past two years also had a lot to do with it. 

Over the same period, the debt grew by 50%. 

As current-dollar GDP grew 31% and the current-dollar debt grew by 50%, the burden ballooned.

The debt, in real terms, is growing faster than the economy. That’s not good. But you won’t hear about it from any of the people who want your vote to run the government.

The stock market, too, has entered its seasonal, summer doldrums.

After 38 record highs in the first 6 months of 2024, the S&P 500 has lost 2% over the past two weeks. Two trillion dollars in market cap have been wiped from the balance sheets of Magnificent 7 tech stocks in just 10 trading days.

The deepfakes and the election are going to dominate the news headlines through the summer pullback in the markets… then, as we’ve forecast, heat up even more through October.

Today, we continue with our co-author Bill Bonner’s series on America’s empire in decline.

The pattern of empire, Bill points out, is stark in contrast to the weekend’s rough and dirty news cycle.

Still recognizing the pattern – and where we are within – will undoubtedly help us be better informed, better investors, and may even give us a little peace of mind. Enjoy ~~ Addison

CONTINUED BELOW…

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CONTINUED…

Pattern Recognition… and Disconnect
Bill Bonner, Bonner Private Research

Those whom the gods would destroy are first driven mad

—Euripides

MarketWatch reported just after the assassination attempt on the former US president’s life:

Trump promises ‘massive tax cuts’ and an end to inflation in convention speech

‘I will end the devastating inflation crisis immediately, bring down interest rates and lower the cost of energy,” Trump said during his wide-ranging address. “We will drill, baby, drill,” he added, predicting that will “lead to a large-scale decline in prices.’

Hold onto your hats; it’s going to be a wild ride.

Anything could happen; but an end to inflation is unlikely.

In 1999, the US was master of itself, and the world. As late as 2008, it could still control its national debt and raise interest rates, if necessary, to cool inflation and protect the dollar.

But today, it is trapped.  The debt is six times bigger. It now controls us. The Fed can lower rates; it can’t raise them… or, not by much. And as the debt grows, so does the pressure not to fight inflation at all, but to welcome it… or even cause it. Inflation will be a policy choice.

The US government is the world’s largest debtor. Its debts are, of course, calibrated in dollars, a currency it just happens to control. By lowering rates (and printing money) it causes prices to rise, and reduces the real value of its own debt.

America has entered a ‘silly season.’ It has been on top of the world for so long… thus deprived of oxygen… it seems to have suffered a kind of brain damage. Its leaders say ‘crazy’ things… do silly things…

Stop inflation? Why not pay off the national debt too… and grow orchids on the moon?

But let us continue our brief history… we look at how we got where we are… how we became the world’s most powerful nation — ever. Then, we may see the rest of the pattern more clearly.

Among the critical enabling events, mentioned here often, was Nixon’s ditching of the gold standard.

Thereafter, politicians had almost unlimited power to raise money without discomfiting voters. Borrowing credit dollars — produced by the new money system — allowed the feds to spend money that had not yet been earned, let alone taxed.  Instead, it passed the bill to non-voters, the next generation, in the form of inflation.

It was this scammy financing that — in part — allowed another big enabling event. Ronald Reagan’s advisors — not including our friend David Stockman — convinced the Gipper that the Soviet Union was an existential threat to America. To protect the nation, Reagan abandoned his ‘conservative’ economics in favor of an activist agenda, financed on credit. And why not? Deficits didn’t matter; a debt crisis and inflation were far in the future.

Reagan’s administration added 160% to US debt… the third biggest presidential gain, following Roosevelt and Wilson.  But it wasn’t just the money that changed things, it was what happened to the money… and what it did to the USA.

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Most of the extra spending went to the military. From there, much of it went to the private sector firepower industry… and a substantial part of that was put to work paying lobbyists, politicians, ‘think tanks’ and universities to sing the praises of… yes, the firepower industry.

In effect, the warmongers, neocons, and big defense suppliers bought control of the government with money supplied by the US taxpayer.

The Reagan Administration also marked the beginning of a major political change. No longer a ‘conservative’ party that eschewed unnecessary spending, debt and overseas military adventures… the Republicans became activists, big spenders and world improvers. Instead of counterbalancing the Democrats’ Big Government plans, Republicans took the key elements – overspending at home and over-meddling abroad — for its own.

Today, the cost of the empire’s muscle is $1.3 trillion per year. Politically, it can’t be trimmed. Any politician who tries is marginalized.

The other big component is Social Security/Medicare. Mr. Trump has promised to cut taxes… but not cut a penny from either Social Security/Medicare… or from the military. So, the debt rises. And the government’s monetary and foreign policies must now be adapted… not for the benefit of the American people, but to accommodate the debt and the powerful special interests who benefit from it.

And now, if the pattern holds, America will sink further into debt and …and its capital – in stocks, bonds, and real estate – will become less valuable. ~~ Bill Bonner, Bonner Private Research

Sponsored By Grey Swan

Now that President Biden has been forced to retire by his own party, he wants to make other government lifers retire, too.

With apparently nothing else to do in the six months he has left in his presidency, Biden is in Texas today where he is expected to propose sweeping changes to the Supreme Court.

Biden will “argue that the current system of lifetime appointments for Supreme Court justices gives a president undue influence for decades,” The New York Times forecast this morning. “He will propose a process in which a president would appoint a justice every two years to spend 18 years on the bench.”

Not that these ambitions will go any further than his bid for a second term. If anything, he’s need Congress to go along with the plan. And they’re likely going to be waging AI induced faux campaigns of their own trying to extend their own lifetime appointments over the next several months.

“Now that I have honorably limited my government service to just 51 years,” Mary Katherine Ham mocked the sitting president on X this morning, “I think the proper limit for a position that is supposed to be lifetime should be 18 years. The rules start now!”

So it goes,


Addison Wiggin
Founder, The Wiggin Sessions

P.S.:  How did we get here?  For a complete review of the financial, economic, and political history of the United States from Demise of the Dollar through Financial Reckoning Day and on to Empire of Debt — all three books are available in their third post-pandemic editions.

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Empire of Debt: We Came, We Saw, We Borrowed is now available at Amazon and Barnes & Noble or if you prefer one of these sites:Bookshop.org; Books-A-Million; or Target.

Please send your comments, reactions, opprobrium, vitriol and praise to: addison@greyswanfraternity.com