Welcome to the weekly mailbag edition of The Daily Cut.
This is where you put your most burning questions to the analysts here at Legacy Research… and we publish their responses.
Coming up, Legacy cofounder Bill Bonner tackles a big-picture question about the future of money and markets.
Every quarter, Bill sits down with his coauthor of The Bonner-Denning Letter, Dan Denning, to record a “State of the World” podcast. It’s normally available only to Bill and Dan’s lifetime subscribers.
But they’ve kindly agreed to share it here. So later in today’s dispatch, I’ll bring you an extract.
First, we turn to Legacy’s tech expert, Jeff Brown… and a topic that’s been filling up our reader mailbag – Big Tech censorship.
It’s a subject I took on in my January 11 dispatch, after Twitter (TWTR) banned Donald Trump for life.
Facebook (FB) CEO Mark Zuckerberg followed suit shortly after, banning Trump from Facebook and Instagram.
And Apple (AAPL) and Google (GOOG) removed social network Parler from their app stores for posts they say encouraged violence and crimes.
Regardless of your feelings toward Trump, I doubt you’re comfortable with the power a handful of Silicon Valley gazillionaires have over what information you see… and what you don’t.
We’ve gotten a ton of great feedback on this important subject from your fellow readers. Here’s a selection of their latest messages…
Reader comment: It’s wrong that Facebook and Twitter feel they have the right to censor the president, or anyone else. This is what China does to its people. It will be a slippery slope from here. It will have lasting effects on our freedoms. Where will it stop?
– Kathy B.
Reader comment: Your article was spot-on with what I was thinking and feeling about Big Tech censorship. It is very concerning indeed. Power breeds corruption, whether in the public or private sector.
– Brian D.
Reader comment: Deleting Trump’s hate speech, lies, and incitement to racists, anarchists, and ignoramuses is not censorship. It is a cautionary action to remove the rot that is destroying our civic life.
– Sharon B.
Reader comment: Should a handful of tech gazillionaires be the arbiters of what information you see and don’t see? I do not believe in monopolies. But I think America must understand the danger of unchecked speech and behavior.
Social media firms and government have been willing to allow the market to manage what information is seen – and there has been an enormous failure of both parties. Government must intervene with regulations that prevent hate speech.
– Jacquelyn R.
The assault on your freedom of speech has also been troubling Legacy’s tech expert, Jeff Brown.
He shared his concerns in the January 11 edition of his daily e-letter, The Bleeding Edge.
And on Monday, he appeared on Glenn Beck’s radio show to discuss the issue. In a wide-ranging conversation that covered everything from bitcoin to alien visitations, Jeff sketched out a future where blockchain tech will end Silicon Valley censorship.
Beck asked, “What can we do about it? Can we just build another internet?” Here’s Jeff’s response…
This is a very complex and interesting issue. We do have reason to be optimistic, but it won’t be easy.
Over the last few weeks, we learned quickly that Google and Apple basically have the ability to control the software applications that run on 99%-plus of all smartphones. If they want to censor a software application, they just remove it from their respective app stores. They can even automatically remove the application from our smartphones without us permitting them to do so.
Google (through Google Cloud), Amazon (through Amazon Web Services), and Microsoft (through Azure) control such a large percentage of cloud-based software hosting that they have the power to effectively shut down applications and remove websites from the internet.
Equally frightening is that wireless operators like Verizon, AT&T, T-Mobile and other internet service providers (ISPs) – like our local CATV companies – have the ability to block websites from being accessed. So even if a company moves its website off of the cloud services controlled by Google, Amazon, or Microsoft, the site can still effectively be shut down.
Worse still, all of the above companies often have perverse political, social, and monetary incentives for doing so.
Glenn asked about using a satellite internet platform to circumvent this chokehold that the tech elites have on the country. It is a possible solution.
Elon Musk has been outspoken against the politically motivated government controls used during the pandemic and this Orwellian censorship. That is why his satellite-based internet project – Starlink, which is part of SpaceX – would likely be censorship-free.
But the big problem is it wouldn’t scale.
If more than half the country tried to migrate to a satellite-based internet service, it simply wouldn’t work. There just isn’t enough capacity to handle the traffic.
The reality is we need the fiber-optic networks, hyperscale data centers, internet service providers, and cloud hosting services to push and pull our desired bits all over the world.
What’s the solution? Simply put, the next generation of the internet.
Right or wrong, we spent the last 20 years centralizing the internet in such a way that we gave complete control to a handful of powerful and very rich companies. And they apparently think they know best about what we should and should not see and read. They’ve abused that power.
It’s now time to take back the internet, rebuild it, and decentralize it in a way that doesn’t have the same chokepoints.
That’s precisely where blockchain technology comes in to help.
There are two projects that are perfect examples. They’re a glimpse of the next generation of our internet.
One is Handshake. Most of us wouldn’t have any reason to know this, but the internet’s “phone book” is controlled by one organization – the Internet Corporation for Assigned Names and Numbers (ICANN).
Basically, when we type in a website like www.brownstoneresearch.com, it translates that URL into a specific numerical address, which takes an internet browser to the right location. And ICANN has the ability to remove that translation so any website on Earth can no longer be found.
Handshake is an answer to this problem. It dismantles what ICANN does. It records the location of websites on a decentralized blockchain. That preserves the ability for users to view the content and information they want. It’s not consumer-friendly yet for the average user, but the tech works.
Another project is Inrupt. It’s the brainchild of Sir Tim Berners-Lee, who was one of the inventors of the World Wide Web back in 1989. He believes the internet is broken and has taken a terrible turn. He wants to fix it. So Inrupt has developed blockchain technology that allows consumers to control their online data.
It has developed “Pods” that contain a consumer’s data. They enable consumers to control who sees that data and who doesn’t. They also preserve that data even if a person moves off of one social media platform and onto another.
It simply isn’t realistic to rebuild the internet and all of its physical infrastructure. It doesn’t make economic sense, as it would take too long. And in the end, it would still be prone to the same problems.
That’s why these decentralized, blockchain-empowered approaches to returning the internet to what it was intended to be are so critical and so exciting.
Switching gears, Legacy cofounder Bill Bonner is an outspoken champion of what he calls “honest money” – a gold-standard system.
That’s the system the global economy ran on before 1971, when President Nixon pulled the plug on it.
Bill has been sounding the alarm about the dangers of the unbacked “paper” money system that replaced it since he began publishing financial newsletters back in the early 1980s.
He recently sat down with Bonner-Denning Letter coauthor Dan Denning to take a closer look at what the future holds for the U.S.-dollar-based financial system. Here’s an excerpt they’ve agreed to unlock from their subscribers-only “State of the World” podcast…
Dan: Since our beat is trying to put the big picture together, let me ask you a big-picture question.
Is the world getting more centralized, with bigger government and more rigged financial markets? Or are things breaking up into something a little more disorderly, but more decentralized, with all the effects that has on money and financial markets?
Bill: Well, the short answer is yes. Yes to all of the above. Because it’s clearly getting bigger. Government business is getting bigger. Consolidation is happening in a major, major way. Because fundamentally, the basis of our economy is shifting from a win-win economy to a win-lose economy.
The win-lose economy is caused by paper money that some people control, some people get, and some people don’t.
We saw earlier this month, for example, that [former Federal Reserve chairperson and incoming Treasury Secretary] Janet Yellen got $7 million, which is a lot of money, for just giving speeches [in 2019 and 2020]. By the way, I have a friend who heard those speeches, and they weren’t very good.
So why did she get the money? She got the money because she hands out the money. And it’s useful to have people like that if you’re in the banking industry.
Anyway, we have this shift, I think, that’s ongoing. It’s major. People don’t understand it because it’s too big.
What’s really happening is the economy is shifting from one where you make money by making things or providing services to other people… to an economy where you need to know the right people. Like Janet Yellen, because she’s got a printing press and can print a lot more dollars than you can make by making hamburgers or parking cars. So that’s where the money is.
This is not a short-term trend. It’s a megatrend. It’s been going on now since 1971. But it took a long, long time for the habits people had, for the ideas they had, to shake out.
There was a time when you could count on so-called conservative members of Congress, Republicans, to dig their heels in and say, “No, no, no. You can’t… We’ve got to have a balanced budget here. We’ve got to cut some of these programs. We’ve got to have some give and take here.”
But now, it’s all take, take, take. Because the Republicans have fundamentally retired. They’ve gone AWOL. They’ve decided they’re Big Government guys, too… because Big Government is where the money is.
The money has corrupted everything, in my opinion. And that’s why the answer to your question is things are getting bigger, because only a few control the money.
In a capitalist system, many people control the money. But a system that moves towards fake money and socialism is controlled by a few people, who control the printing press. They have a lot of power. They have a lot of say over where the money ends up. So naturally, things consolidate.
You can see that in our own government. We have all these counties and states on the border of bankruptcy. So where are they looking? Are they looking to the taxpayers to bail them out by giving them more tax money? Uh-uh. They’re looking to the federal government – because the federal government has a printing press and they don’t.
Eventually, of course, I think you’re right. And you point out there is a lot of movement in the other sense, too. Decentralization is also happening.
That’s happening because there are a lot of experiments. Think of all these decentralized money experiments that are going on – cryptos of all sorts and businesses starting up that we don’t know what in the heck they do. Often, they don’t make any money, and they don’t have any products, profits, sales, or employees. But those things are happening all the time.
And of course, all these foreign countries are experimenting – China, Iran, and Russia. All those countries the U.S. has sanctioned are trying to invent a whole new money system. Eventually, they will.
All these things are happening at once.
But for the moment, I think we need to remember that this is a period of consolidation of power and money in the hands of a few people who run the government. They are under the gun.
For them, there is a three-word motto that explains everything: Inflate or die. If they don’t keep inflating, they die. And they know that, so they’re going to inflate. Right now, they’re inflating Wall Street in a big, big way.
And they’re starting to inflate Main Street. They start with these checks for $600, $1,200. But pretty soon, it’s going to be bigger.
I’ll have more for you on the investment implications of central banks’ “inflate or die” mindset next week. As you’ll see, it’s going to cause the mother of all rallies in scarce assets – gold, bitcoin, art, collectibles, and so on.
Anything you can’t digitally print more of will have the wind at its back.
If you’d like to put a question to the Legacy experts, be sure to get in touch at [email protected].
Have a great weekend.
Regards,
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Chris Lowe
January 22, 2021
Bray, Ireland