Kofod’s Race Through the Gate

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Scroll down about a quarter to “The Race Through the Gate.”

David Galland

Dear Readers,

One of the more noxious platitudes foisted upon the public by our increasingly Orwellian government is “See Something, Say Something.”

This saying, of course, differs in no material way from the sort of propaganda utilized in all the fascist states that have come before.

While this notion of spying on fellow citizens hasn’t yet resulted in the active enlistment of a Stasi-like network of sharp-eyed matrons and meddlesome old coots embedded in apartment buildings and on each city block to dutifully report goings-on to the authorities “for national security,” can that be far behind?

But that’s not what has gotten sand under my saddle this week. No, what has irked me to the point of distraction – not to mention triggering some angry mutterings as I stomp around the house – could be considered the exact opposite of that trite trope.

What I’m referring to is the modus operandi of Americans today to see something but say nothing.

More specifically, this week the US government made it clear that they effectively have decided to adopt a new and very dangerous interpretation of one of the core principles of the US Constitution, and apparently nobody cares.

I am referring to a presentation earlier this week by United States Atty. Gen. Eric Holder at Northwestern University’s law school. Reading from prepared remarks – meaning his words were not a flub-up – Holder explained the rationale the government is now using when ordering the killings of American citizens. And I quote…

Some have argued that the President is required to get permission from a federal court before taking action against a United States citizen who is a senior operational leader of al Qaeda or associated forces. This is simply not accurate. “Due process” and “judicial process” are not one and the same, particularly when it comes to national security. The Constitution guarantees due process, not judicial process.

It is important when reading this sort of thing to separate the inconsequential historical anecdotes – the “here and now” elements of no lasting importance – from the language related to setting long-term precedence. To assist you in that regard, I will now repeat Holder’s statement, with the anecdotal elements redacted.

Some have argued that the President is required to get permission from a federal court before taking action against a United States citizen who is a senior operational leader of al Qaeda or associated forces. This is simply not accurate. “Due process” and “judicial process” are not one and the same, particularly when it comes to national security. The Constitution guarantees due process, not judicial process.

Simply put, what the administration is now claiming as standard operating policy is that it can formulate certain procedures on an ad-hoc basis and call it “due process.” Provided their functionaries follow that process, the government is free to do virtually anything, in this instance, kill citizens.

Note also that Holder doesn’t make a distinction between targeting US citizens here versus abroad. This is a blanket statement.

When I initially read Holder’s remarks, I was sure there would be a massive outpouring of popular indignation, outrage even. And I confess to hoping that maybe, just maybe, this would be the final straw to get the citizenry off their couches to put an end to this long step down the path of fascism.

But there was barely a peep. No cries for Holder’s resignation, or for Obama’s impeachment, either of which would have been entirely appropriate in a nation where the citizenry hadn’t already been cowed.

It was also telling that even though Holder’s declaration of the administration’s coup against the constitution was delivered at a law school, the audience didn’t rise to their feet in shock but rather waited politely for him to conclude his remarks before rewarding him the obligatory applause. Given that these were students of the law and so should know better, I can only conclude that even though they saw something – in this case the ungloved hand of fascism – they decided to say nothing.

That could be, perhaps, because of another law recently passed by Congress with an overwhelming 388-3 majority. I refer, of course, to the Federal Restricted Buildings and Grounds Improvement Act of 2011, otherwise known as the Trespass Bill.

John Whitehead of the Rutherford Institute writes intelligently on the bill. Some snippets… emphasis mine.

The Trespass Bill (the Federal Restricted Buildings and Grounds Improvement Act of 2011) creates a roving “bubble” zone or perimeter around select government officials and dignitaries (anyone protected by the Secret Service), as well as any building or grounds “restricted in conjunction with an event designated as a special event of national significance.”

Current law makes it illegal to enter or remain in an area where certain government officials (more particularly, those with Secret Service protection) will be visiting temporarily if and only if the person knows it’s illegal to enter the restricted area but does so anyway. The bill expands current law to make it a crime to enter or remain in an area where an official is visiting even if the person does not know it’s illegal to be in that area and has no reason to suspect it’s illegal.

In other words, you can be minding your own business some place when a member of the elite enters, and his or her mere presence sucks you into their federally protected “bubble” where a single false move, intentional or otherwise, can end up very badly.

You can read the full article here.

There is, as I always try to point out, much nuance in all of this. But stepping back to view the larger picture reveals what Holder’s remarks so clearly confirm – the nation has now crossed the line separating a constitutional democracy from a fascist state.

On flying into JFK last weekend and watching a friend who is wonderful in all ways separated from her children in order to go through a pat-down by one of dozens of TSA personnel, most of whom were standing around in groups chatting collegially (maybe about their phat compensation), I felt compelled to turn to my own kids and say, “I hope that someday your generation will forgive our generation for leaving the world in this condition for you.”

Of course, I am not alone in seeing the signs of fascism cropping up on an almost daily basis. But at this point the masses are literally too scared to say something, other than perhaps in quiet whispers behind closed doors.

Even when the level of fascist control over society is as blatant as was in evidence earlier this week when a group of very average citizens gathered to peacefully protest a new law passed by the state of Virginia requiring women to submit to a government-mandated ultrasound before being allowed to have an abortion. Fellow Casey editor and Virginia resident Doug Hornig reports on the action…

“What happened here is that there was a protest against the bill at the state capitol, which of course is off limits for such actions. A SWAT team moved in with full riot gear – there was a long line of them decked out with opaque visors, tasers, batons, rifles, dogs, etc. Deployed against about 500 middle-aged women and aging hippie guys. Now there’s a threat to the public order. This is one chilling video. If you want to cut to the chase, forward to about the eight-minute mark…”

Note that the state police standing watch over this very pedestrian and entirely constitutional exercise of free speech were armed with machine guns, once again a clear indication of just how far the nation’s controlling classes – federal, state and local – have goose-stepped onto the path of fascism.

Sadly, with Pandora’s box kicked wide open by 9/11, feeding into the natural tendencies of the praetorian class to exercise its might, there is no painless way to go back. Rather, you have to expect that things will only get worse, especially if there is another “event” that gives the authorities license to put into action all of the clampdown plans implemented since 9/11.

Which brings me to an article by technology specialist and ex-military officer Pete Kofod, whose articles dissecting the nature of fascism and the growing praetorian class we have previously published.

As an aside, over the last half a year or so, Pete took some time away from his busy schedule as the owner of a company specializing in cloud computing solutions to create a truly unique five-day training program to help individuals and executives harden their lives against modern threats. More on that course in a moment, but first Pete’s article.

The Race Through the Gate

By Pete Kofod

Envision two horses racing toward a gate that is only wide enough to allow one to pass through. Now imagine that the horses are wearing blinders preventing them from seeing each other, virtually oblivious to their competitor in their quest to get to through the gate as quickly as possible.

The suspense and uncertainty of such a race, were it held, would certainly qualify it as an exciting albeit rather twisted spectator event. Hopefully the competition will end innocently with a clear winner, but a more frighteningly possibility is that it ends with horses and riders horribly injured. As with so much of that which is attributed to fate, the absolute outcome of whether the race ends smoothly or in bloody chaos will depend on even the most trivial component – a divot in the ground, a bird flying across a horse’s path, a hesitation at the starting gun.

Furthermore, the determining cause often ends up being well within what is referred to as “the margin of error,” which in more common vernacular means that the victory could have gone either way. In systems engineering, this is referred to as a race condition.

More specifically, a race condition refers to a situation in which the output of a system is highly dependent on the timing and sequence of parallel inputs. If the inputs are independent of each other, a highly unstable environment often develops, yielding an extremely unpredictable result.

An example of a race condition involves the tale of the young newlywed couple facing cash shortages at the end of the month. While awaiting the electronic deposit of her paycheck, the wife writes a check to pay for unexpected automotive repair. Unaware of this fact, the husband writes a check to pay for groceries, confident that there is enough money in the bank. Should their paychecks clear first, all is well and disaster is averted. On the other hand, if their paychecks do not get deposited in time, a series of bounced checks will result in inconvenience, embarrassment as well as a myriad of fees charged by the respective bank and vendors. The outcome of the race is not known until insufficient-funds notices start showing up in the couple’s mailbox.

The Cultural Race Condition

While it may be a simplification of the circumstances faced, it can be said that the world is currently experiencing a “cultural race condition,” pitting the forces of liberalization against an increasingly desperate establishment. The upheaval being observed is no natural ebb and flow of power transitions. Rather, for reasons that will be further explored, the dramatic changes witnessed are occurring at a pace so rapid that existing social and political structures are unable to reach new positions of equilibrium.

In Lane Number One – The Establishment

By definition, it is the objective of the establishment to preserve the status quo. Often presented from a position of benevolent paternalism, preserving the status quo is traditionally accomplished through the creation of boundaries that are invisible until they are touched. These “electronic dog fences” are marketed by the established state and corporate powers as being for the benefit of society. Regardless whether financial, physical, cultural or informational in nature, in an attempt to keep up with shifting societal tides, new controls are regularly introduced and implemented by the establishment, even though most of the populace may be oblivious to that reality.

A key control technique is to establish boundaries beyond the interest or perception of the masses. This accomplishes two objectives. One is that the control measure will be perceived by the majority as arcane and largely irrelevant to their personal condition. After all, if a restriction is placed in the realm beyond the daily vicissitudes of life, why bother expending significant intellectual energy debating its validity?

The second and more powerful consequence is that it facilitates the marshaling of the majority against “the fringe.” Consider the expression, “If you have done nothing wrong, you have nothing to hide.” This argument is invariably used by the individual who is not impacted by the boundary established.

An example would be the issue facing American citizens regarding foreign financial holdings. Reporting requirements and sanctions imposed for noncompliance stipulated by the US Treasury against non-US banks has made it exceedingly difficult for US citizens and residents to open bank accounts outside the United States. As most Americans have not given thought to such matters, most will dismiss the topic as a matter of concern only to the financial elite. Many in fact support such restrictions, even though, for all intents and purposes, they represent de facto capital controls. The electronic dog fence in this instance is beyond the “roaming range” of the majority and therefore is not perceived as a boundary.

And in Lane Number Two…

Occasionally, the establishment will be caught off guard by significant and empowering changes sweeping society. These changes, typically caused by technological innovations, extend the masses’ awareness, interest and influence into realms previously considered under the uncontested control of the establishment. Naturally, this results in conflict as the establishment redoubles its efforts to maintain control.

An instructive case is the debate surrounding the SOPA and PIPA legislation put forth by the US Congress at the end of 2011. The purported argument for the legislation was to protect intellectual property – primarily digital content distributed over the Internet. While reasonable people can debate the principles and logistics surrounding the issue of intellectual property, this legislation overstepped by trying to grant the State very broad privileges to shut down Internet sites even for allegations of intellectual property infringements. Without delving into the technical and legal details, it is important to note that the legislation received so much pushback that the entire affair was dropped. Well, not really, as it turns out – more on that momentarily.

The case is interesting on several fronts, starting with how it demonstrates that an issue – in this instance, intellectual property – can rapidly morph from being a fairly esoteric discussion point into an almost explosive national issue. Simply, the establishment failed to recognize in advance that the roaming range of the masses had already increased, leaving the government feverishly behind and rushing out a clumsy attempt to install new electronic dog fences.

As for my somewhat cryptic comment above, you may find it interesting that the US government unilaterally shut down dozens of web sites the day after SOPA and PIPA were abandoned by the US Congress. It appears that SOPA and PIPA represented an optional formality.

Back to the point, on one side of the horse race, we have the establishment, which is working constantly to contain and control knowledge, thought and action. On the other, we have the unexpectedly empowered masses who are increasingly aware of, and resistant to, the government’s attempts to curtail their ability to think and act freely.

The cultural race condition is afoot.

Communication Constructs as Agents of Change

As mentioned, this cultural race condition, and the social instability manifested thereby, does not represent a traditional generational changing of the guard. Rather, the world is facing a communications-driven cultural shift on a scale not seen in five hundred years, a shift that has come about from the invention and adoption of game-changing technology.

The last time the world experienced a similar shift was in the middle of the fifteenth century with the advent of Gutenberg’s moveable type print. Gutenberg’s invention is credited with being the catalyst of the Renaissance, the Age of Enlightenment, the Reformation as well as the Scientific Revolution and expansion of learning to the greater populace. The existing establishment of the period, largely centered on the Catholic Church, saw its authority erode in political, scientific as well as religious matters. These historical movements were accompanied by significant social upheaval and unrest.

Today we are seeing a shift of similar significance. In the current instance, the catalytic technology is of course the Internet, enabled by the introduction of microprocessor-based computing. While most will agree that the Internet represents a revolutionary technology, to fully appreciate its transformative power, we need to consider it in the context of the three laws of the network.

The Three Laws of the Network

The First Law of the Network is Sarnoff’s Law, named after David Sarnoff, the founder of NBC. Sarnoff’s Law states the power of the network is directly proportional to its number of participants. This law applies to a traditional broadcast environment, regardless of medium. The model is defined by a single producer of content serving an arbitrary base of information consumers. Under Sarnoff’s Law, information flows only in one direction, which fundamentally leaves no distinction between the Gutenberg print press, newspapers, radio and broadcast television. Logistical efficiencies and the speed that information can be distributed are certainly factors to be considered, but fundamentally they all represent a one-to-many relationship.

The Second Law of the Network is Metcalfe’s Law, named after Bob Metcalfe, inventor of Ethernet and co-founder of the technology firm 3Com. Metcalfe’s Law states that the power of the network is directly proportional to the square of the number of participants. In this model, every participant in the network is both a consumer and producer of information. It is the many-to-many relationship that is its distinguishing characteristic. Email is an example of Metcalfe’s Law – a network with two email addresses represents a single connection. As additional email participants are added to the network, the power of the network grows geometrically.

The Third Law of the Network is Reed’s Law, named after David Reed, an accomplished computer scientist with the Viral Communications Group in the MIT Media Lab. Reed’s Law states that when a network reaches a certain size, further growth achieves power far greater than that described by Metcalfe’s Law because the contributions of subgroups within the network become an increasingly significant component of the overall network. This can be summed up as a “many many-to-many” arrangement. Perhaps the most prominent example is Facebook. As of December 2011, Facebook had 845 million users. The power of Facebook, however, does not lie primarily with the user count, but rather with the innumerable groupings that are formed within the Facebook community.

Twitter provides another prominent example of a network governed by Reed’s Law. During the infamous Mumbai attacks on November 26, 2008, a very clear picture of the events emerged within five minutes via Twitter. And Twitter continued to provide detailed, real-time updates of all phases of the event. Traditional broadcast and cable media were never able to get in front of the story.

Reed’s Law allows for complex information to be formed, processed and distributed almost in real time, pushing the bottleneck of information to the very source, virtually eliminating the challenges of distribution as a road block. In addition, it allows for value to be added throughout the process.

Goodbye Gutenberg, So Long Sarnoff

It can be reasonably postulated that mass media began with Gutenberg’s invention in the middle of the fifteenth century. From the first copy produced by Gutenberg’s printing press to broadcast and cable television, information distribution and the power that lay therein was governed by Sarnoff’s Law. With the advent of interactive media, largely driven by the Internet, Sarnoff’s Law has given way to media being governed by Metcalfe’s Law and recently Reed’s Law. This in turn has resulted in an erosion of the establishment’s ability to maintain tight control over both medium and message. That erosion is central to the social unrest we are witnessing in the beginning of the 21st century.

If history is any guide, in the end the establishment will lose in its attempt to retake control; however, no organism forgoes its position without a struggle. As traditional institutions are likely to become unstable, and in some instances collapse, it becomes increasingly critical that each of us prepare plans and build resources to better weather coming periods when social institutions experience acute disruptions.

Making it Through the Bumpy Ride

In looking back on the social and political consequences of Gutenberg’s revolutionary innovation, the positive impact on Western civilization can hardly be overstated. The invention marked the end of the Dark Ages, a ten-century period beginning with the fall of the Roman Empire during which virtually no progress was made and the human condition was generally dismal. That the invention proved to be a monumental step in the advancement of mankind was, however, of little consolation to the people caught up in the extreme violence and volatility of that period. Religious, scientific and cultural pioneers often faced personal and professional attacks and frequently paid for their leadership with their fortunes and lives. William Tyndale is remembered for translating the Bible into English. It was a “crime” for which he paid with his life.

Today Egypt, Libya and Syria are but the most obvious examples of violent social unrest; unrest fueled by the paradigm shift of the Internet and Social Media. The yet unproven advances in the human condition many expect to see materialize in these places provide little relief to those who will lose their property, livelihood and lives during the transition. In the process of greater advances, it is easy to become collateral damage. Volatility impacts “bystanders” as much as active participants during social upheaval.

“Keep Your Head Down and Your Powder Dry”

While Oliver Cromwell’s famous admonition should always be considered sage advice, it is especially warranted during periods of widespread volatility. Today that advice should be considered in the context of ensuring personal safety, safeguarding financial resources and maintaining access to current information that either provides immediate actionable guidance or helps establish an emerging trend that can be used for predictive analysis.

This is an iterative process, demanding regular if not continuous vigilance against existing and emerging threats. This requires committing to continuously seeking trustworthy sources of information. Fortunately, Reed’s Law, and technology based on it, allows for rapid cross-pollination of ideas. Focused sources of information can be rapidly processed and reassembled to help in making specific decisions, a concept that is called content “mash-up.”

It is inadequate to exclusively rely on monolithic traditional information sources, such as those still operating under Sarnoff’s Law, many of which are unduly influenced by the establishment and so are no longer to be fully trusted.

Final Thoughts

The first of the three alleged Chinese curses proclaims “May you live in interesting times.” By every measure, it would seem that we do. The period just ahead will be defined by opportunity seized and opportunity lost. How you personally make out during the transition will largely be a function of your willingness to remain current with the societal transformations taking place. In other words, only by dedicating a portion of just about every day to assemble relevant and timely information will you be able to properly assess and manage your exposure to risk.

The steps you should take to protect yourself include:

Understand and participate in social media. It will initially serve as an early warning system to opportunities, threats and risks. In time, it may be the only warning system. Stay on top of it. While contributing is optional, participation is becoming mandatory.

Recognize that social unrest can happen anywhere, including “here.” During social unrest, the government is not your friend. Their objective is to restore their order. Think Katrina. Diversify your life, including physical and financial assets, so you can safely sit out the mayhem. Start planning now. There may come a time when it is too late.

Assess your geographical environment as it applies to your physical safety. Large metropolitan areas and economically marginal communities can quickly descend into upheaval should basic life support systems fail. Develop the skills to protect yourself, your family and your property.

Recognize the increased significance of your digital life and take meaningful steps to protect it. Governments will increasingly seek to control and monitor your digital life. Develop and maintain the skills to protect your digital identity – it is inextricably linked to your physical and financial well-being.

Don’t go it alone. There are a lot of complexities afoot in the world today, and trying to process all this information on your own is almost impossible. By teaming up with other individuals you know and trust, and sharing resources, you can enhance awareness and improve your capabilities in planning should the sorts of serious changes that we could see come to pass during this transitive period.

These are but a few steps you can take that will serve you well and likely put you ahead of your peers. By keeping your head on swivel and regularly updating your fall-back plans, you can get on with enjoying your life, create value in your chosen field of endeavor and not worry about becoming the horse that doesn’t make it through the gate.

Pete Kofod is the founder and president of Datasages (www.datasages.com), a technology services firm that offers cloud computing and strategic technology services to various private organizations. Before entering the technology sector, Pete served with the US Military, both in the United States and abroad, where he forged many close friendships that still thrive today.

Pete is a property owner at La Estancia de Cafayate in Argentina and enjoys a variety of outdoor activities including tennis, skydiving and hiking. His most recent adventure is pursuing his private pilot’s license. Pete is married and homeschools his two children.

Pete’s latest initiative involves creating Theia Global, an organization dedicated to helping individuals and business executives manage modern threats. Pete can be reached at contact@datasages.com.
Pete’s Course

David again. I wanted to say a bit more about Pete’s course. Last year, while at one of the owners’ gatherings in Argentina, Pete shared with me his long study and interest in identifying proven methodologies to plan and prepare for the threats present in modern times.

The basic concept revolves around creating a foundational plan to protect your assets, your data and privacy, even your personal security against the most obvious current threats, then continuing to create cascading contingency plans should something occur to render your initial plan insufficient.

To put this into context, let’s say that as inflation protection you have invested a certain percentage of your portfolio in gold, but one day it becomes apparent that the government is preparing to confiscate gold “in the national interest.” Most gold owners wouldn’t have a specific back-up plan in place; Pete would.

Or, to be more dramatic, most people have failed to even contemplate the potential consequences of another 9/11-level attack – or even widespread Arab Spring-type protests fueled by social media – let alone plan to avoid the consequences on your business or your life of a government backlash that could literally shut down transportation, the Internet and worse. In other words, if today’s softer, gentler form of fascism becomes dramatically less so, most people would be caught completely unprepared – very much not the case with anyone familiar with Pete’s methodologies.

I was so impressed with Pete’s understanding of the process of actively preparing for the unknown and unknowable that I asked him if he would present his methodologies in a workshop at our upcoming Casey Research Recovery Reality Check Summit in Weston, Florida, April 27 and 29 (registrations are going fast).

It’s also why I was so happy to learn that in the months following our discussion in Argentina, Pete put his interest into action by organizing a five-day, hands-on training course at the famous Virginia International Raceway.

The focus of the Foundation training program is to provide you with a foundational course in how to effectively plan for and protect yourself and your family against modern threats.

Specifically, over the period of June 11-15, Pete, assisted by a hand-picked team of instructors, will teach you everything you need to know to enhance your personal-protection skills, understand and deploy best practices in cyber-security and privacy, and diversify internationally.

Reviewing the schedule, what this entails is a confidence-boosting mix of skill-building in everything from protecting your privacy and data from online threats (you’ll leave with the necessary software installed), to firearms (with instruction by former members of the highly trained Delta Force), to evasive driving (taught by instructors to the Diplomatic Security Service, the best in the world), to internationally diversifying your assets and your life (with specific steps and contacts for establishing overseas accounts, second residencies and passports). Pulling it altogether are interactive lessons designed to leave you with a solid understanding of how to plan for pretty much any contingency.

In any event, I have reserved my spot, and there are only a total of 27 slots available, so if you are interested, you might want to do so yourself. Now, I have to warn you that at $7,900 per registration this course is not inexpensive, but compared to the value of what you are trying to protect, it’s almost inconsequential. And, as Pete explained it to me, the costs of putting on the program are extremely high, therefore the price tag… because the fee is all-inclusive, meaning it covers your hotel room, all meals, transport from the Raleigh-Durham airport, a high instructor-to-student ratio (with some of the best instructors in the world), all equipment and even evasion cars that invariably take a beating during the real-life training.

In any event, I’m a big fan of Pete and think that he is completely right in his thinking that taking five days out of all the days in your life to get prepared, and to learn to build plans to ensure you always stay prepared, makes a lot of sense. Details on the course, which goes up in price on April 20, can be found here.

Added Thoughts on the Race Condition

Before moving on to other matters (sorry, I appear to be running a bit long today), I want to quickly follow up on the key point of Pete’s article. Namely the establishment’s well-documented fear that social media will be turned against it, just as it was in Egypt, Libya, Tunisia and elsewhere.

The power of social media was once again made clear by a recent campaign against a small-time warlord, Joseph Kony, mounted by the Invisible Children organization with the specific purpose of targeting him for arrest or summary execution, therefore setting “a precedent for international justice” (in their words).

Even though the video you can watch was only uploaded about a week ago, it has already received almost 53,000,000 views – accomplishing the goal of making Kony enemy #1, with his face splashed across all the world’s media outlets. Want to bet that we will soon learn that Congress is calling for special hearings to decide what to do about the guy? Or that political candidates will soon be calling for drone strikes?

All well and good, but don’t kid yourself – the power elite is watching these developments with much the same frame of mind as a tourist on a walking safari watches a pride of lions from what they hope is a safe distance.

Think about it. That 53,000,000 people could be moved to not only watch the Kony videos, but that a vocal subset of that number then organized in the equivalent of flash mobs in schools and communities to lend their active support to his downfall… around the globe and all in the space of about a week, has got to be eye-opening to the powers-that-be.

In one real sense, social media provide global access to the equivalent of a societal nuclear bomb. All that’s required to set one off are the modest skills necessary to deploying it.

So, how long do you think it will be before a major Western government – maybe even the US, or specific US politicians – become the target?

Want to see a really cool straw in the wind? Check out these videos put together by the folks at MTV. They are a stunning condemnation, and an effective warning, against the encroaching police state in the US.

Those videos show there might yet be some hope for the next generation. So far, they have only pulled 480,000 views on YouTube, but who knows – maybe they’ll catch on. (And, yes, please pass this along so others can watch them, too.)

But if you are a member of the praetorian class whose job is to protect the status quo, the powerful potential of social media to effect political change – quickly and even violently, if you take what’s going on in the Middle East as an example – has to be very concerning.

So, I think that Pete’s got it completely right – that the race is on, and that it has the very real potential to get quite ugly before whatever comes next makes it across the finish line.

While vigilance is required to not get caught on the wrong side of things, there’s also a big upside in all of this. That’s because it’s just a matter of time now – certainly within the lives of most of us, judging by the speed of adoption of the relevant technology – that we are going to see a new paradigm in government, one that tosses over the equivalent of government operating on the outdated model of Sarnoff’s Law, to one based on something closer to Reed’s Law.

Which brings me to a great quote that Doug Casey used in closing out the just-released edition of The Casey Report…

When you see that trading is done, not by consent, but by compulsion.
When you see that in order to produce, you need to obtain permission from men who produce nothing.
When you see that money is flowing to those who deal, not in goods, but in favors.
When you see that men get richer by graft and by pull than by work, and your laws don’t protect you against them, but protect them against you.
When you see corruption being rewarded and honesty becoming a self-sacrifice – you may know that your society is doomed.
–Ayn Rand, 1958

Society as we know it is doomed, and as Holder’s speech so chillingly revealed, it is degrading quickly. That raises the possibility that the new media are going to turn their guns on the status quo in the near future.

While I was fairly derisive in my critique of Occupy Wall Street, and I stand by my observations, I suspect that given the widely distributed nature of the media, what’s next will almost certainly be a derivation of the mindset of the people behind that movement. Which is to say highly socialistic in nature, with all the attendant consequences for the economy in general and for those of us who value individualism most highly.

In that we really can’t foresee how things are going to unfold from here, you might as well go happily about your life – just don’t forget to make like the ant in the Aesop’s famous fable and prepare for the transition that’s now under way.

(Ed. Note: As just referenced, the March edition of The Casey Report – our big-trend analysis with specific investment recommendations to play those trends – was published last night. You can read it today, and for the next ninety days, without any risk or obligation.)

Moving right along, I want to share some observations on inflation from a UK-based correspondent who has granted me permission to repost the following on the condition that he remains anonymous.

Inflation in the UK

By Anonymous (no, not that Anonymous)

Some observations, and some more comprehensive answers to your questions.

I’m guessing that by now you’ve realised that I live in something of a bubble.

But it can also be helpful, because I notice things that might otherwise be perceived as incremental changes by other people. I also don’t cook, so I rarely go to supermarkets. In fact, I’m not allowed in the kitchen, except to make tea and go to the fridge.

But during my recent sojourn in London, I was forced to fend for myself, and so the anecdotal evidence of rampant inflation in the UK piled up.

To clarify:

IMHO: We have a published rate of inflation (3.6%) that bears about the same relationship to reality as the published rates of inflation in Argentina. Part of the problem is that the pound sterling has been devalued by about 30%, and we are so dependent on imports.

UK Inflation Rate Falls to 3.6% in January

The fish I paid £8.99 a kilo for a year ago is now selling for £14.00-£18.00 a kilo (the same fish, in a supermarket, not a posh fishmongers).

Four years ago, I bought a white mohair throw from The White Company. It was very nice and cost about £60. Recently, I saw another one, a silk blend, in the same shop. As I am fond of soft, fuzzy, comforting things and it was about twice the size, I thought I’d have that as well. It was £250. Now, I don’t know of any mohair shortages, and last I checked the silkworms were working for less money, not more. By all accounts, it should have been… um… £120? Call it £150. But not £250. Both imports, by the way.

Onwards to public transport, the only real way of getting around London with any efficiency. The last time I rightfully recall buying a Transport for London Travelcard, it cost £5.50. Last month, it was £8.40.

BBC: London Tube and Bus Day Travelcards Rise By up to 74%

I don’t make any of this 3.6% (the published rate of inflation). Not even compounded.

In fact, when I go out, I’ve been looking for things that have increased by only 4%. Can’t find any. Not our energy bills. Food is an easy 30%. Transport and petrol, well, see above and below.

No deflation.

David again.

The disconnect between government’s inflation statistics and reality is, of course, not just a UK or Argentine phenomenon – but pretty much universal. According to ShadowStats (whose founder and president, John Williams, is also on the faculty for our Recovery Reality Check Summit), the real rate of inflation in the US at over 6% is better than twice the official rate. But that’s no surprise to anyone – not when even a modest dinner out for two costs $75 to $100.

This disconnect tells me two distinct things:

Governments are unafraid of deliberately trying to deceive the public.
But they are very much afraid of getting real about inflation, as that risks shacking politician-friendly loose monetary policy. As they should be, because once interest rates start rising – as they absolutely will when higher rates of inflation are widely recognized – the economic and political backlash will be devastating.

Of course, the game can only last for so long. Precious metals are just one of a number of tools you can use as part of your portfolio preparations – but even if you only use that, you will be well ahead of the crowd. Which, for the most part, still doesn’t understand the role gold and silver play in preserving capital over a long period of time.

Friday Funnies


ArcelorMittal Steel, feeling it was time for a shakeup, hired a new CEO. The new boss was determined to rid the company of all slackers.

On a tour of the facilities, the CEO noticed a guy leaning against a wall. The room was full of workers, and he wanted to let them know that he meant business. He asked the guy, “How much money do you make a week?”

A little surprised, the young man looked at him and said, “I make $400 a week. Why?”

The CEO said, “Wait right here.” He walked back to his office, came back in two minutes, and handed the guy $1,600 in cash and said, “Here’s four weeks’ pay. Now GET OUT and don’t come back.”

Feeling pretty good about himself, the CEO looked around the room and asked, “Does anyone want to tell me what that goofball did here?”

From across the room a voice said, “Pizza delivery guy from Domino’s.”

Stupid Humor – The Family Tree of Vincent Van Gogh

His dizzy aunt ———————————————– Verti Gogh
The brother who ate prunes——————————- Gotta Gogh
Brother who worked at a convenience store —— Stop N Gogh
The grandfather from Yugoslavia —————————– U Gogh
His magician uncle ——————————– Where-diddy Gogh
His Mexican cousin —————————————- A Mee Gogh
The Mexican cousin’s American half-brother ———— Gring Gogh
The nephew who drove a stage coach ————— Wells-far Gogh

The constipated uncle ————————————- Can’t Gogh
The ballroom-dancing aunt ——————————– Tang Gogh
The bird lover uncle ————————————– Flamin Gogh
An aunt who taught positive thinking —————— Way-to-Gogh
The little bouncy nephew ———————————– Poe Gogh
A sister who loved disco ————————————– Go Gogh
Niece who travels the country in an RV — Winnie Bay Gogh

Five Rules to Remember in Life

This has been attributed to John Wayne, but that might just be Internet fiction. Even so, the sentiments are pretty good.
1. Money cannot buy happiness but it’s more comfortable to cry in a Mercedes than on a bicycle.
2. Forgive your enemy, but remember the bastard’s name.
3. Help someone when they are in trouble, and they will remember you when they’re in trouble again.
4. Many people are alive only because it’s illegal to shoot them.
5. Alcohol does not solve any problems, but then again, neither does milk.

What Causes Arthritis?

A drunk, who smelled of liquor, sat down on a subway next to a priest. The man’s tie was stained, his face was plastered with red lipstick, and a half-empty bottle of gin was sticking out of his coat pocket.

He opened his newspaper and began reading. After a few minutes, the man turned to the priest and asked,

“Say, Father, do you know what causes arthritis?”

The priest replied, “My son, it’s caused by loose living, being with cheap, wicked women, too much alcohol, contempt for your fellow man and lack of a bath.”

The drunk muttered in response, “Well, I’ll be damned,” then returned to his paper.

The priest, thinking about what he had said, nudged the man and apologized. “I’m very sorry. I didn’t mean to come on so strong. How long have you had arthritis?”

The drunk answered, “I don’t have it, Father. I was just reading here that the Pope does.”

MORAL: Make sure you understand the question before offering the answer.

And Finally…

Comments on Karzai and International Women’s Day

The same UK correspondent quoted above sent me the following one-line note and a link yesterday, which I also thought worth sharing.

Today, of all days… happy ‘International Women’s Day’…

Ottawa Citizen: Hamid Karzai endorses Afghan edict that ‘women are secondary’

David again.

So, here we have the US and its coalition engaged in a war in Afghanistan costing untold hundreds of billions of dollars and who knows how many lives… all in support of a primitive society that actively suppresses roughly half of its population.

To put this situation in proper perspective, imagine, if you will, what sort of reaction the US and other developed countries would have to the news that some country’s government had decided to take away the rights of a large swath of the population – maybe anyone with dark skin – refusing them the vote and allowing the other half to effectively enslave them, to beat them, even rape them with impunity? And to add to their humiliation, what if they also forced the oppressed to wear ridiculous outfits – small tents, actually – to hide their visages from the rest of the public?

Do you think there’d be a little outrage?

While I don’t like any of the big religions, Islam strikes me as particularly messed up. At the risk of someone declaring a fatwa on my ass, am I the only one that finds it positively stupefying that tens of millions of people still follow a cult that is firmly rooted in primitive superstitions?

To my point of view, following the dictates of Islam and all of these primitive cults is no different than dancing around fires, shaking dried bones in gourds to ward off evil spirits. Or worse, tossing girls into volcanoes to appease angry gods, except in the case of Islam the sacrifice for the women lasts a lifetime.

And before the rest of you get all high and mighty, consider your own religions. For instance, maybe those Catholics among us can explain why women aren’t allowed to be priests?

Face it, pretty much all the world’s religions treat women like second-class citizens, though thankfully, most aren’t quite so violent in their suppressions as the Muslims.

Personally, I’d love to see all these cults close up shop – but that’s not going to happen in our lifetimes. That they have already lasted over 2,000 years clearly demonstrates how difficult it is for cultural roots to be stamped out.

Instead, while world leaders talk about social fairness and send supportive messages for initiatives such as International Women’s Day and all that, when it comes to actual policy, they’ll continue to turn a blind eye to religious abuses.

As an aside, I’m betting that if I wrote that last bit while sitting in the UK, where the political correctness related to speaking about religious customs is running rampant, I’d run a very real risk of getting arrested… that is if the Muslim’s didn’t get to me first.

For anyone whom I may have offended, please don’t waste your time or mine by sending me your angry letters or threats – just look to the bottom of this page where the unsubscribe button is located.

Interview with Bud Conrad

Earlier I mentioned that the latest edition of The Casey Report was just released. In that edition, Casey Research Chief Economist Bud Conrad tackles the matter of Greece in his article, Greece Is a Goner, Now What? While you’ll need to take us up on our no-risk trial subscription to read Bud’s comprehensive analysis of the situation, and how to invest to take advantage, earlier this week he covered some of his big-picture views on the euro situation, taxes, the Fed and gold in an excellent interview with Jim Puplava of the Financial Sense Newshour. You can listen to it here.

And with that, I will bid you all farewell for the week, thanking you as I do for spending some time with us this week, and for being a Casey Research subscriber. Next week, I’ll be at the Harvest events at La Estancia de Cafayate; I look forward to seeing a number of you there.

Until next time!

David Galland
Managing Director
Casey Research


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