“Op: a set of planned actions for a particular purpose.” ~ Merriam-Webster Dictionary
“You can’t solve a political problem with a financial product.” ~ Catherine Austin Fitts
This week Harry Blazer joins me for a Special Solari Report to discuss the dark side of the cryptocurrency revolution. Whether you choose to speculate in cryptocurrencies or not, make sure you understand their deeper nature as bubbles.
So Many Bubbles
I have lived through and cleaned up the financial engineering of many previous market bubbles.
I was one of many Wall Street associates involved in the NY fiscal crisis aftermath.
Next came the S&L debacle (sometimes called the financial side of Iran Contra) combined with the housing and real estate bubbles that resulted in a $500 billion federal bailout. I rode the pump up on Wall Street and rode the dump down as Assistant Secretary of Housing. I helped clean up as lead financial advisor to the Federal Housing Administration.
While the mortgage market was clearing the mess and laying the train tracks for the next mortgage bubble, we had an interim Tech Bubble.
I was at Ester Dyson’s conference for Silicon Valley elites in the Arizona desert in 1997, when venture capitalists started throwing millions at Internet start-ups. You need $500,000? No problem, as long as you agree to take $10 million instead, pump up the company, and do an IPO into the bubble.
Companies were set up that had zero chance of generating a profit. But you could finance some kid who did not know any better with $10 million and sell the shares to retail investors and pension funds at $100 million. So, who needed company profits? In the words of one of my Wall Street partners, “by the time it crashes, we’ll be out.”
Many companies that could have become real businesses became IPOed wrecks on the Internet stock pump and dump superhighway. Their time and work were sucked out by the bubble. Before it ended, they lost everything. They could earn some of the money back, but lost years and reputations were often not recoverable.
Then came the mother of all bubbles yet – the US-led global housing bubble. The US government, banking, and mortgage banking communities combined the fraud technologies they had created during the S&L debacle and turbocharged them with derivatives. And the rest is history.
The US government seized the databases I was designing to conform mortgage and equity market data to street level data in 1997. I started warning global investors in 1998 – in the USA, in Asia, in Europe – but no one listened until mortgage pump leader Goldman Sachs shorted the market in 2007, thus announcing that the pump was over and the dump had begun.
In the summer of 2008, shortly before Fannie Mae and Freddie Mac needed to be nationalized, my weekly appearance on a San Francisco Bay radio station was cancelled. A leading San Francisco investment manager then published an explanation of a $1billion loss on Fannie Mae stock – purchased only months before. The investment manager had done extensive due diligence. He did not mention, however, that the former Assistant Secretary of Housing had been on a leading local radio program at peak drive hours for years, warning them about the extent of the fraud.
Actually, it took longer for some folks to listen–one financial professional as late as 2012 told me they did not believe my warnings about the extent of the government and private mortgage fraud–despite more than $20 trillion of bailouts at a time when about $8 trillion could have retired all the single-family home mortgages in the country.
Then, of course, we know now that some $21 trillion is missing from the US government since the fiscal year 1998. What do those trillions have to do with corporate revenues and profits outperforming the US GDP during the period–by extreme percentages? One must ask whether the stock market reflects economic activity or a financial coup d’etat?
And what does a refusal of the government to balance its books have to do with cryptocurrencies? It’s simple – if I can print money from a central bank to finance the US government and then steal trillions – then I have all the money I need to pump a financial price – any financial price. Indeed, if I can source such a near infinite amount of capital, I can manage the equity and fixed income markets. If I can do that you know I can pump digital “0”s and “1”s.
Next Bubble or the Next Leg of the Financial Coup d’Etat?
Bottom line – I know a bubble when I see one. I also have respect for the skill of central bankers and US intelligence agencies to engineer a bubble, turning nothing into something and back into nothing. This sophisticated but practical alchemy belongs to people who really do control and manage financial markets and their intersection with organized crime on our planet Earth.
BUT – hold on to your hats – I have never seen a bubble engineered that has the potential to do as much damage and bring as much change as what may be ahead in the cryptocurrency market.
Take all the fraud and manipulation technologies that created the last housing bubble and turbocharge them all with a global smart phone market, entrainment technology, and subliminal programing and you could get the mother of all global bubbles. Especially if you are looking to create global digital currencies.
Mr. Global and the Vampire Squid have the freedom fighters prototyping their new digital currencies, sucking money out of the physical gold market (as the central banks keep buying) with young people proselytizing for a currency with no asset backing, and no deposit insurance or bank capital to protect the holder.
Too big to fail? No problem! Stick it to the holder all the time, every time. Note how the concept paper for Bitcoin was published two months after Lehman brothers went down.
I have been doing due diligence on blockchain technology, Bitcoin, and cryptocurrencies for several years. Finally over the last few months with the help of friend and ally Court Skinner, I completed most of my due diligence and then attended the Nexus Earth conference with Harry Blazer.
Bottom line? We are likely on the verge of a tsunami of cryptocurrency bubbles filled with financial and cyber fraud. Where this one goes is beyond bubble. Once innovations create blockchains and cryptocurrencies that can scale on an economic basis, we are off to the races with global digital currencies. Combined with cloud operations, this is the ultimate control system. With the “knowledge doubling curve” moving from a few years to daily, the people with access to this data and the latest in AI in software technology and quantam computing will have a mapping tool that can deliver the ultimate insider intelligence and near perfect control.
I just donated my outstanding Bitcoin holdings to the National Life Boat Association (we will need them), closed my exchange account and deleted my software wallet. The last thing I welcome is an avenue for anonymous transfers from alphabet players of the kind repeatedly used to try to frame me the last time around. Indeed since then due process from legal procedures has been removed for the “War on Terror.”
I personally want many honest bankers who practice “Know Your Customer” seated between me and the criminal intelligence elements engineering frauds – big and small. (This summer was a perfect example: See More Shadow Work: Bank Card Fraud)
Harry and I have a lot to say on the explosion in development of blockchain technology and the growth of speculative investments in the cryptocurrency markets – so it was time for a Special Solari Report. Whether you choose to speculate in cryptocurrencies or not, this is a phenomenon that it critical to understand. I have posted again my recommendations for the best links to help you understand both blockchain, cryptocurrencies and the latest industry.
Next week we will post a Special Solari Report on the taxation treatment for US taxpayers. If you are speculating in cryptocurrencies, I strongly recommend you read that as well. From what I see, there is an explosion of tax and regulatory violations in the cryptocurrency trading market. So make sure you are not manufacturing a “control file” as you trade.
Here it is!
Nexus: State of the Union
Catherine Austin Fitts – Blockchain & Cryptocurrencies, What About You?
Crypto Commentary: Both Sides of the Coin
Crypto Commentary: Heads Up!
Crypto Commentary: Theory vs. Practice
Crypto Commentary: First Installment
Related Solari Report: