Posts Tagged ‘Bitcoin’

 

A major international police operation to bust child predators involved police sharing child pornography with over a million unsuspecting online subscribers for a year after investigators took control of the dark web’s largest child abuse forum. Though hundreds of pedophiles were arrested after the site was shut down, the police sting involved undercover officers sharing extremely disturbing content and encouraging followers to engage in sexual acts with children. But police say it was worth it.

A new report reveals that Australian police were running the largest pedophile and child pornography forum on the internet for a year as part of a joint initiative between Australian, European, and Canadian police as well as the US Department of Homeland Security to track down the site’s administrators and child porn producers. Over the weekend the Norwegian newspaper VG published its bombshell investigation which confirmed that between October 2016 and September 2017 a special police task force based in Queensland, Australia was able to quietly hack the site “Childs Play” which had reached over a million registered accounts and had thousands of active users.

Queensland police at Taskforce Argos, including investigator Paul Griffiths (pictured). Image source: Kinsa.net

The task force was able to identify the site’s top tier administrators, leading to hundreds of international arrests and criminal investigations, but not before crossing what critics see as a significant ethical line: to expose those behind the site, police themselves posted child pornography and facilitated what was essentially a pedophile online meet-up.

The site has existed since April 2016 on the dark web, which made it next to impossible to identify users and administrators as the dark web operates based on layers of encryption which ensures complete anonymity. Not only did the forum include over one hundred active producers of child pornography who would daily post videos and images, but even more disturbingly involved a smaller inner circle who shared child torture videos.

Among this inner circle were Childs Play administrators ‘Warhead’ and ‘Crazymonk’ – later revealed to be 26-year old Canadian Benjamin Faulkner and 27-year old Tennessee native Patrick Falte, according the VG report. Both had previously worked as internet security professionals and were active technical support providers for pedophilia related internet sites – the two had initially met, for example, through a website called the the “Pedo Support Community.” The Australian child abuse task force had begun tracking the two by assembling profiles of their previous digital footprints in relation to child abuse related chat on the open web.

Source: Norway’s VG

Faulkner (Warhead) for example, had in 2012 posted the following to a chat forum under his previous online identity, CuriousVendetta:

A little about myself to establish credibility here: My name is CuriousVendetta, and I work as a JR forensics consultant and penetration tester for an IT security firm. On the side, I do what I can to cause general mischief on the internet with a few friends of mine…

At the pool is where I am free, and where I can generate my fantasies. I have more girls in my ‘fan club’ than I can even count.

Faulkner was working as a youth swimming instructor in the small Canadian city of North Bay in Ontario and though it appears some parents had become suspicious of his proclivities, no police reports were ever filed. Patrick Falte had lived all his life with his parents a half an hour outside of Nashville and was the more advanced technical expert of the two. Both Warhead and Crazymonk as administrators of the Childs Play dark web forum had promised subscribers increased security measures. For example users knew that should

Warhead, the site’s leader, ever miss one of his routine postings to the community which involved a message stamped with a pornographic image, it would be a signal that the community had been infiltrated by police.

But police did infiltrate the community and took it over, partly due to mistakes made by the administrators. The forum transacted in Bitcoin – common for the dark web – but Crazymonk had his bitcoin wallet linked to his personal email address, making it easy for the US Department of Homeland Security to locate him. Other mistakes which helped police included both site leaders posting identifying information in various on the open web which helped investigators build profiles for the two. From there police not only began monitoring the pair – even installing tracking devices on their vehicles – but were also able to observe all communications and postings on the site through a backdoor. It was soon understood that the two would occasionally drive for over 10 hours to meet multiple times a year. After months of monitoring, the two met in person at a usual spot

in Manassas, Virginia, where one of Childs Play’s users had regularly offered the men his 4-year old daughter to rape while being video taped.

It was in Manassas that US federal agents finally made the arrest, but only after the 4-year old had already been raped in a Virginia home. Authorities told VG that they had no way of knowing of the rape beforehand, citing online messaging as not indicative of that information. The video tape would later be used to convict Faulkner and Falte, who were given life sentences for both the rape and running the site. After the arrests, the Australian task force, known as Argos, then moved in to assume the identities of the arrested site administrators. Investigators studied the pair’s online language styles and characteristics, eventually posting an admin message so that users wouldn’t get suspicious, which of course required the child pornography image stamp.

The site’s server was located in Australia, which was important to the international investigation as Australian law gives police broad leeway to commit crimes in

pursuit of investigations, especially in relation to catching child pornographers. Task force Argo’s officers not only uploaded the image, thereby convincing subscribers that nothing was wrong, but according to VG issued the following message to the community:

“I hope that some of you were able to give a special present to the little ones in your lives, and spend some time with them. It’s a great time of year to snuggle up near a fire, and make some memories.”

Police, while running the site, also continued to share images and videos while undergoing their year-long investigation which identified numerous video producers as well as consumers of the content. For example the task force posted a video of an eight-year-old girl being raped only two weeks after taking over the forum, which was viewed 770,617 times, according to the report. Such extreme police tactics, which authorities argue was necessary to rescue victims and put predators behind bars, have outraged some of the victims’ families.

VG reporters were able to speak to a mother of one the victims whose video was used by police as part of the operation: “My daughter

should not be used as a bait… It is not right for the police to promote these images,” she said. But police investigators told VG in response to criticism that, “There is definitely a balance between what we want to achieve and how we go about it.” And added, “Eventually we get to the point where it isn’t worth running the forum any more. But as long as we’re identifying victims, producers and abusers, we will keep running it.”

A similar investigation by the FBI in 2015 of a site significantly smaller than Child’s Play’s size made 870 arrests and rescued 259 children after agents kept it online for just two weeks. The FBI came under fire for actively sharing, promoting and facilitating the transfer of thousands of images and videos. But the Australian task force ran a site which was over five times the size and content volume for close to a year.

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Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?

Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports.

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters,

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

And today, as The Wall Street Journal reports, in an effort to circumvent U.S. sanctions, Venezuela is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy said.

 

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”

There is no major market reaction for now – a modest bid to Bitcoin and some weakness in EUR and Gold (seems someone wants this to look like nothing).

However, as Nomura debt analyst Siobhan Morden warns:

“You can say whatever you want for your domestic propaganda and make it look like you’re retaliating against the U.S…. This political posturing will only be to their detriment.”

So what happens if Europe also sanctions Venezuela? Will Rubles or Yuan… or Gold be the only way to buy Venezuela’s oil?

* * *

This decision by the nation with the world’s largest proven oil reserves comes just days after China and Russia unveiled the latest Oil/Yuan/Gold triad at the latest BRICS conference.

It’s when President Putin starts talking that the BRICS reveal their true bombshell. Geopolitically and geo-economically, Putin’s emphasis is on a “fair multipolar world”, and “against protectionism and new barriers in global trade.” The message is straight to the point.

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.

Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.

The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.

RC – via the Russian Central Bank and the People’s Bank of China – have been developing ruble-yuan swaps for quite a while now.

Once that moves beyond the BRICS to aspiring “BRICS Plus” members and then all across the Global South, Washington’s reaction is bound to be nuclear (hopefully, not literally).

Washington’s strategic doctrine rules RC should not be allowed by any means to be preponderant along the Eurasian landmass. Yet what the BRICS have in store geo-economically does not concern only Eurasia – but the whole Global South.

Sections of the War Party in Washington bent on instrumentalizing India against China – or against RC – may be in for a rude awakening. As much as the BRICS may be currently facing varied waves of economic turmoil, the daring long-term road map, way beyond the Xiamen Declaration, is very much in place.

* * *

Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3…2..1…!

CA.L- How unfortunately hilarious this is…

Or take the right to vote. In principle, it is a great privilege. In practice, as recent history has repeatedly shown, the right to vote, by itself, is no guarantee of liberty. Therefore, if you wish to avoid dictatorship by referendum, break up modern society’s merely functional collectives into self-governing, voluntarily co-operating groups, capable of functioning outside the bureaucratic systems of Big Business and Big Government.

 

-Aldous Huxley, in Brave New World Revisited (1958)

The single event that changed my life more than any other was TARP, aka the banker bailouts. The unfairness, extreme greed and selfishness with which the status quo bailed out financial criminals while leaving the public high and dry changed me forever. When it comes to shaping American history, it is equal in importance to the attacks of 9/11.

As someone who grew up privileged, I never really questioned the criminality of the status quo system. Like so many others who are beneficiaries of the ways things are, there’s no much incentive to look behind the curtain. Nevertheless, the banker bailouts shook me to my core and opened my mind in ways that no other event could. At the time, I was happily earning a very large income at a young age while doing absolutely nothing to benefit society. As such, I couldn’t contemplate why government officials were putting so much money and energy into bailing out people like me, while ignoring everyone else. It felt irrational, unethical and dirty. I wrote about all this for over a year while still working in the financial sector, before concluding that it was time to part ways in early 2010. Even back then, I was incessantly warning that tremendous anger from the banker bailouts would ultimately bubble to the surface and create the sort of backdrop in which authoritarians, demagogues and fascists thrive.

The following years have felt like a tremendous rollercoaster ride. My emotions have vacillated significantly from pessimism to optimism, and now reside in a bizarre state in which the two inhabit an uncomfortable coexistence. I’ve previously defined the monumental struggle of our time as: Liberty and Decentralization vs. Authoritarianism and Centralization. For example, I noted in the post, The Comcast/Time Warner Merger and the War Between Centralization and Decentralization:

 Until recent years, the struggle between the forces of “centralization” and “decentralization” was more of a full on slaughter-fest than an actually battle or war. As Americans sat there blissfully asleep for decades, every facet of our lives has been carefully consolidated into the hands of a smaller and smaller group of corporations, and hence individual executives. This trend is undeniable in everything from food, banking, media and everything in between.

Myself and many others saw the financial crisis of 2008 as a gigantic wakeup call. The disasters caused by powerful financial institutions and the greedy people that ran them should have been used as a rallying cry to break these institutions up. To recognize the dangers of too much power in one particular place. This is especially important in something as crucial as banking. However, as we are all painfully aware, this is not what happened. Rather, the institutions were bailed out, the industry consolidated even more than it was before, and the perpetrators of the crisis emerged from it even more wealthy and powerful.

My personal focus on this website has been to expose the unique dangers presented by centralization in the financial industry and the monetary system. However, many others are dedicated to the equally important and disturbing trends in other industries.

In the years since the financial crisis, there have been many positive signs which have inspired in me a long-term optimistic view. One of the most encouraging events of this time period has been the creation and success of the crypto-currency network Bitcoin. Some of the smartest minds on the planet are now dedicated full time to pursuing Bitcoin-related projects, and its mere existence has inspired millions across the globe and opened minds to the unbridled explosion of human creativity that emerges from decentralized systems.

 Unfortunately, the 2016 Presidential season and the related violence and divisiveness has made me considerably more pessimistic about the near-term. In that regard, this post was inspired by something I read earlier today from John Whitehead of the Rutherford institute. Here it is in full:
 “A standing military force, with an overgrown Executive will not long be safe companions to liberty.”—James Madison

 

America is a ticking time bomb.

 

All that remains to be seen is who—or what—will set fire to the fuse.

 

We are poised at what seems to be the pinnacle of a manufactured breakdown, with police shooting unarmed citizens, snipers shooting police, global and domestic violence rising, and a political showdown between two presidential candidates equally matched in unpopularity.

 

The preparations for the Republican and Democratic national conventions taking place in Cleveland and Philadelphia—augmented by a $50 million federal security grant for each city—provide a foretaste of how the government plans to deal with any individual or group that steps out of line: they will be censored, silenced, spied on, caged, intimidated, interrogated, investigated, recorded, tracked, labeled, held at gunpoint, detained, restrained, arrested, tried and found guilty.

For instance, anticipating civil unrest and mass demonstrations in connection with the Republican Party convention, Cleveland officials set up makeshift prisons, extra courtrooms to handle protesters, and shut down a local university in order to house 1,700 riot police and their weapons. The city’s courts are preparing to process up to 1,000 people a day. Additionally, the FBI has also been conducting “interviews” with activists in advance of the conventions to discourage them from engaging in protests.

 

Make no mistake, the government is ready for a civil uprising.

 

Indeed, the government has been preparing for this moment for years.

 

2008 Army War College report revealed that “widespread civil violence inside the United States would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.” The 44-page report goes on to warn that potential causes for such civil unrest could include another terrorist attack, “unforeseen economic collapse, loss of functioning political and legal order, purposeful domestic resistance or insurgency, pervasive public health emergencies, and catastrophic natural and human disasters.”

Subsequent reports by the Department of Homeland Security to identify, monitor and label right-wing and left-wing activists and military veterans as extremists (a.k.a. terrorists) have manifested into full-fledged pre-crime surveillance programs. Almost a decade later, after locking down the nation and spending billions to fight terrorism, the DHS has concluded that the greater threat is not ISIS but domestic right-wing extremism.

Meanwhile, the government has been amassing an arsenal of military weapons for use domestically and equipping and training their “troops” for war. Even government agencies with largely administrative functions such as the Food and Drug Administration, Department of Veterans Affairs, and the Smithsonian have been acquiring body armor, riot helmets and shields, cannon launchers and police firearms and ammunition. In fact, there are now at least 120,000 armed federal agents carrying such weapons who possess the power to arrest.

Rounding out this profit-driven campaign to turn American citizens into enemy combatants (and America into a battlefield) is a technology sector that is colluding with the government to create a Big Brother that is all-knowing, all-seeing and inescapable. It’s not just the drones, fusion centers, license plate readers, stingray devices and the NSA that you have to worry about. You’re also being tracked by the black boxes in your cars, your cell phone, smart devices in your home, grocery loyalty cards, social media accounts, credit cards, streaming services such as Netflix, Amazon, and e-book reader accounts.

All of this has taken place right under our noses, funded with our taxpayer dollars and carried out in broad daylight without so much as a general outcry from the citizenry.

It’s astounding how convenient we’ve made it for the government to lock down the nation.

We’ve even allowed ourselves to be acclimated to the occasional lockdown of government buildings, Jade Helm military drills in small towns so that special operations forces can get “realistic military training” in “hostile” territory, and  Live Active Shooter Drill training exercises, carried out at schools, in shopping malls, and on public transit, which can and do fool law enforcement officials, students, teachers and bystanders into thinking it’s a real crisis.

The events of recent years—the invasive surveillance, the extremism reports, the civil unrest, the protests, the shootings, the bombings, the military exercises and active shooter drills, the color-coded alerts and threat assessments, the fusion centers, the transformation of local police into extensions of the military, the distribution of military equipment and weapons to local police forces, the government databases containing the names of dissidents and potential troublemakers—have all conjoined to create an environment in which “we the people” are more distrustful and fearful of each other and more reliant on the government to keep us safe.

Of course, that’s the point.

The powers-that-be want us to feel vulnerable.

They want us to fear each other and trust the government’s hired gunmen to keep us safe from terrorists, extremists, jihadists, psychopaths, etc.

Most of all, the powers-that-be want us to feel powerless to protect ourselves and reliant on and grateful for the dubious protection provided by the American police state.

 

Their strategy is working.

 

The tree of liberty is dying.

 

There will be no second American Revolution.

 

There is no place in our nation for the kind of armed revolution our forefathers mounted against a tyrannical Great Britain. Such an act would be futile and tragic. We are no longer dealing with a distant, imperial king but with a tyrant of our own making: a militarized, technologized, heavily-financed bureaucratic machine that operates beyond the reach of the law.

 

The message being sent to the citizenry is clear: there will be no revolution, armed or otherwise.

 

Anyone who believes that they can wage—and win—an armed revolt against the American police state has not been paying attention. Those who wage violence against the government and their fellow citizens are playing right into the government’s hands. Violence cannot and will not be the answer to what ails America.

 

Whether instigated by the government or the citizenry, violence will only lead to more violence. It does not matter how much firepower you have. The government has more firepower.

 

It does not matter how long you think you can hold out by relying on survivalist skills, guerilla tactics and sheer grit. The government has the resources to outwait, out-starve, outman, outgun and generally overpower you.

 

This government of wolves will not be overtaken by force.

 

Unfortunately, we waited too long to wake up to the government’s schemes.

 

We did not anticipate that “we the people” would become the enemy. For years, the government has been warning against the dangers of domestic terrorism, erecting surveillance systems to monitor its own citizens, creating classification systems to label any viewpoints that challenge the status quo as extremist, and training law enforcement agencies to equate anyone possessing anti-government views as a domestic terrorist.

 

What the government failed to explain was that the domestic terrorists would be of the government’s own making, whether intentional or not.

 

By waging endless wars abroad, by bringing the instruments of war home, by transforming police into extensions of the military, by turning a free society into a suspect society, by treating American citizens like enemy combatants, by discouraging and criminalizing a free exchange of ideas, by making violence its calling card through SWAT team raids and militarized police, by fomenting division and strife among the citizenry, by acclimating the citizenry to the sights and sounds of war, and by generally making peaceful revolution all but impossible, the government has engineered an environment in which domestic violence has become inevitable.

What we are now experiencing is a civil war, devised and instigated in part by the U.S. government.

 

The outcome for this particular conflict is already foregone: the police state wins.

 

The objective: compliance and control.

 

The strategy: destabilize the economy through endless wars, escalate racial tensions, polarize the populace, heighten tensions through a show of force, intensify the use of violence, and then, when all hell breaks loose, clamp down on the nation for the good of the people and the security of the nation.

 

So where does that leave us?

 

Despite the fact that communities across the country are, for all intents and purposes, being held hostage by a government that is armed to the teeth and more than willing to use force in order to “maintain order,” most Americans seem relatively unconcerned. Worse, we have become so fragmented as a nation, so hostile to those with whom we might disagree, so distrustful of those who are different from us, that we are easily divided and conquered.

 

We have been desensitized to violence, acclimated to a military presence in our communities and persuaded that there is nothing we can do to alter the seemingly hopeless trajectory of the nation. In this way, the floundering economy, the blowback arising from military occupations abroad, police shootings, the nation’s deteriorating infrastructure and all of the other mounting concerns have become non-issues to a populace that is easily entertained, distracted, manipulated and controlled.

 

The sight of police clad in body armor and gas masks, wielding semiautomatic rifles and escorting an armored vehicle through a crowded street, a scene likened to “a military patrol through a hostile city,” no longer causes alarm among the general populace.

 

We are fast becoming an anemic, weak, pathetically diluted offspring of our revolutionary forebears incapable of mounting a national uprising against a tyrannical regime.

 

If there is to be any hope of reclaiming our government and restoring our freedoms, it will require a different kind of coup: nonviolent, strategic and grassroots, starting locally and trickling upwards. Such revolutions are slow and painstaking. They are political, in part, but not through any established parties or politicians.

 

Most of all, as I make clear in my book Battlefield America: The War on the American People, for any chance of success, such a revolution will require more than a change of politics: it will require a change of heart among the American people, a reawakening of the American spirit, and a citizenry that cares more about their freedoms than their fantasy games.

You may read the above and think he’s being overly negative, but as someone who spends all his time analyzing what’s happening, I think his assessment of the situation is 100% accurate. The American public is by and large being successfully manipulated into cheering on its own slavery, as it remains focused on why other Americans are the enemy instead of seeing the status quo system as the rightful problem.

To hammer the point home, let’s revisit a passage from my recent post, If Senseless Violence Continues, America Will Be a Total Police State in No Time:

 While we don’t know who the police murderers in Dallas were, or their motivations, we do know one thing. Their actions will unquestionably have several very counterproductive and dangerous outcomes.

 

1. Further divide the country in general.

2. Further the already wide distrust between the police and the general public.

3. Increase the likelihood of more violence, and the eventual imposition of a total police state in America.

 

Either the people who committed the murders had the above goals in mind, or they were just stupid, violent criminals who didn’t have the meager sophistication necessary to understand the extremely negative implications of their actions.

 

Unfortunately for us, the horrible massacres that occurred in Dallas are exactly the sort of thing that the status quo wants to see. It further divides the public and it creates a justification for more militarization of the police, more surveillance and less civil liberties. Guess who’s going to be most negatively impacted by all of that? Black people, poor people, and the disenfranchised generally.

 

Anyone who thinks senseless violence will solve the issues of oppression in America doesn’t understand America or the status quo. Executing police in a premeditated manner gives the establishment credibility, and solidifies its support amongst the silent majority as well as the upper classes. The marginalized cannot win a battle if that’s the case. Period, end of story. If you think otherwise, you’re in for a rude awakening.

It’s been eight years since the financial crisis and look at our choices for President. An ego-maniac with authoritarian tendencies and zero respect for civil liberties/the Constitution and a neocon, war criminal, Wall Street-owned corporatist in liberal sheep’s clothing. Unfortunately, this is how far we’ve progressed politically in the near decade since the status quo bailed out the privileged and crushed everyone else.

So what does this mean? It means we are in for a very real struggle in the near-term. Both Donald Trump and Hillary Clinton are unabashed authoritarians who worship at the altar of state power and centralization. If I’m right and the real battle of our time is between decentralization/liberty and centralization/authoritarianism, neither one of these candidates offer anything for us in the freedom camp. Unless some sort of miracle occurs, the next President will be someone who strongly believes in the centralization of power and will push with all of his or her might to further aggregate power in the office of the executive and in themselves. The negative macro trends will continue.

All that said, I don’t want to end this post on a negative note. I think the real thing that’s missing from the equation is too many good, talented people are doing nothing. I’m not trying to be judgmental here. I personally had the ability and resources to quit my job and do what I do. I didn’t have a family at the time and didn’t have to provide for anyone else. That’s not the point. You don’t have to do what I did to make a difference and influence people. You don’t have to quit your job and fight the status quo with every breath you take. Life doesn’t need to be seen as an all or nothing endeavor in everything you do. Nevertheless, I think it’s important to consider the following (as an aside, I try to ask myself these questions all the time).

Think about your everyday life. What are you doing to push forward the decentralization of power and unite people? How are you being potentially divisive in life, and how can you bring people together as opposed to tearing others down? If you were brought up privileged and financially well off, you arguably have a greater responsibility to society. What are you doing to give back? Is it sufficient? Is what you do for a living accretive or extractive to society? What are you doing to make the world a better place than you found it? If nothing, why not?

While there are plenty of fortunate people out there doing jobs merely to chase cash and stroke their ego, the vast majority of people genuinely have major financial commitments and therefore have no choice but to stay in spiritless, soul-sucking jobs. I get that. For people in the former group, I ask you to consider the fact that you have one life to live and this battle is an existential one. If you can dedicate your talents and creativity to something positive, consider doing so. If you are in the latter group, I understand that providing for your family is of the utmost importance, but that doesn’t mean you can’t make meaningful contributions in smaller ways, even if it’s as simple as trying to be less divisive and more self-reflective. As Gandhi noted:

 “If we could change ourselves, the tendencies in the world would also change. As a man changes his own nature, so does the attitude of the world change towards him. … We need not wait to see what others do.”

But even this is not enough. We need to heed the words of Huxley in 1958:

 “If you wish to avoid dictatorship by referendum, break up modern society’s merely functional collectives into self-governing, voluntarily co-operating groups, capable of functioning outside the bureaucratic systems of Big Business and Big Government.”

We can’t rely on politicians and we can’t rely on hope. We need to rely on the power of our own actions coming together to ultimately make the world a better place. The window of opportunity is now and the world needs you. All of you.

For more on what I believe to be the monumental battle of our time, see:

Networks vs. Hierarchies: Which Will Win? Niall Furguson Weighs In

Ex-CIA Officer Claims that Open Source Revolution is About to Overthrow Global Oligarchy

The Comcast/Time Warner Merger and the War Between Centralization and Decentralization

One year ago, this website was the first to observe that when combined with its offshore Belgium-held holdings, China was first slowly then fast liquidating its Treasury holdings, an observation which led us to correctly predict that China would proceed to devalue its currency, which it did shortly after. Sure enough, shortly thereafter it became common knowledge that the PBOC, owner of the world’s biggest foreign-exchange reserves and largest offshore holder of US Treasuries, had burnt through 20% of its inventory since 2014, dumping about $250 billion of U.S. government debt and using the funds to support the yuan and stem capital outflows.

As it turns out, China wasn’t selling only Treasuries. According to a Bloomberg analysis when peeking deeper at the TIC data, while China’s sales of Treasuries have slowed, its holdings of U.S. equities are now showing steep declines as Beijing proceeds to liquidate a substantial portion of its US equities.

This means that in addition to oil exporting nations such as Saudi Arabia, whose liquidation of US stocks we also predicted back in 2014 when we commented on the death of the Petrodollar, the “other” big seller of US equities has been found: China’s stash of American stocks sank about $126 billion, or 38%, from the end of July through March, to $201 billion. “That far outpaces selling by investors globally in that span – total foreign ownership fell just 9 percent. Meanwhile, China’s U.S. government-bond stockpile was relatively stable, dropping roughly $26 billion, or just 2%.”

While it will come as no surprise that China is desperate to procure US dollars to keep its currency balanced as it intervenes now on a daily basis from prevent the USDCNY from soaring above 6.60 and “punish” those who are selling the Yuan, the observations confirms that China’s central bank remains under pressure to raise dollars and smooth the yuan’s depreciation. Only instead of selling Treasurys it has decided to sell stocks. “The equities reduction reminds investors that while China’s $1.4 trillion trove of Treasuries dwarfs its other foreign assets, it has accumulated enough U.S. stocks to influence global markets.”

“Selling some of its equities is a reasonable way of raising the cash needed to finance the big drawdown in reserves,” said Brad Setser, a former deputy assistant secretary for international economic analysis at the Treasury.

There is just one problem: what happens if the capital outflows persist and China runs out of US reserves to sell? Because judging by Vancouver real estate prices, and of course the relentless surge in bitcoin, China’s capital outflow is only just beginning… not to mention China’s $30 trillion in deposits, which dwarf any potential PBOC firewall.

Bloomberg also notes, that while the amount China unloaded is a sliver of the $23 trillion U.S. equity market, it’s significant when compared with holdings of other big investors. The largest American mutual fund, the Vanguard Total Stock Market Index Fund, oversees about $373 billion.

The Treasury doesn’t break down its data into private and official holdings. Yet China’s capital controls limit the candidates capable of amassing such a hoard of U.S. equities. Also, private Chinese ownership of foreign stocks remained stable in 2015, signaling that the selling originated from an official source, SAFE data on international investments indicate.

 

Given that China’s private holdings of equities abroad are smaller than the nation’s U.S. holdings as reflected in the Treasury tally, “one can reasonably infer that SAFE, whose reserve assets are not included separately in the net international investment position, holds many of the equities,” Setser said.

Why did China switch from selling bonds to stocks? There are various explanations: one is that the IMF warned China to preserve a substantial liquidity buffer above $1 trillion in holdings ahead of what may be even more volatile times. Another is that Jack Lew told China in no uncertain terms to stop selling US paper during the Shanghai Accord. Also, according to Bloomberg, “wwitching to selling stocks allows the PBOC to retain safer, more liquid assets such as Treasuries that it can unload easily in times of turmoil. Two rounds of declines in the yuan in the last 10 months spurred market volatility worldwide and led investors to monitor China’s reserves as a measure of how much of its war chest the country was burning through to combat capital flight.”

 Dumping equities may prove to be a savvy move, considering that the S&P 500 Index has gone 13 months without a new high on a closing basis. China, which more than doubled its holdings of U.S. stocks during the bull market that began in 2009, wouldn’t be alone among government-affiliated sellers of investments abroad. Sovereign funds from Qatar to the United Arab Emirates and Russia have been liquidating assets since crude began tumbling in 2014.

But a bigger question is what is the message that China is sending to the world by now liquidating stocks over bonds.

“The Chinese, or other people for that matter, are taking the view that sitting in U.S. equities is presumably quite risky, and I’m not surprised they’re shifting,” said Fredrik Nerbrand, global head of asset allocation at HSBC Bank Plc in London. “This seems like more of a generation of cash more than anything else, and probably a de-risking of their portfolio.”

The problem for the Fed is what will happen if and when everyone else decided to tag alone with China in continuing the Great Unrotation from stocks to bonds, as the last attempt by the Fed to herd investors out of bonds and into stocks fails.

What will Yellen do then?

Contributors wishing to use the Bitcoin digital currency faced a threat from scammers but the illegal site was quickly shut down.

Only hours after the worst terror attack on US soil since 9/11, scammers took to Twitter to defraud bitcoiners by profiteering from the killings at the Pulse Nightclub that left 49 dead and 53 injured. A fake Twitter account claiming to be the nightclub was suspended on Monday afternoon after calling for Bitcoin donations to buy bottled water and Oreo cookies.

The scammers tricked hundreds of ordinary people by using the handle @PulseOrlandoUSA, attaching the account to various hashtags associated with the tragedy, and building the account’s profile by attaching thousands of fake followers to draw attention following the attack.

The Twitter account directed people to a shortened web address to make donations, but a few savvy social-media users noticed that the web address linked to an unrelated six-month old domain desifreemovies.net that featured a fake registration address in California.

Most people arriving to the site quickly ascertained that it was a scam, mostly based on grammatical errors on a plain HTML page adorned with clearly fraudulent Amazon Prime links. The page suggested that if people had trouble with the links they should instead send Bitcoins to a specified address. According to the cryptocurrency tracking site Blockonomics, the scammers came away with just 0.04293381 bitcoins ($30 USD) before the website was shut down.

The actual Orlando Pulse Nightclub GoFundMe has raised some $3.7 million in support of the survivors and victims’ family members following the horrific attack. Disney World has announced that it will donate an additional $1 million to aid with recovery, counseling, and funeral services. The page is hosted by Equality Florida, the state’s lesbian, gay, bisexual, and transgender (LGBT) civil rights organization.

At this hour, according to the website BitcoinWisdom, a single Bitcoin is valued at approximately $688, with the cryptocurrency seeing renewed interest from individuals seeking to sidestep national currency controls in a series of countries currently facing economic strife.