Cops Create Moral Hazard

Now that everyone’s been canceled for hate speech, even moderate opinions feel extremist. Julian Assange’s extradition is a crime against humanity, I might think, quickly followed by Shut up stupid brain, stop being so crazy!

Last week, intrepid investigative journalists discovered that predictive policing software disproportionately targets… exactly whom you’d expect.

The woke conclusion is that software is racist. But we’ve all seen the looting videos on Twitter, and the perps seem to sport a year-round tan.

Maybe it’s the laws that are racist. How come Purdue can peddle Oxycontin but I can’t deal crack cocaine? Why is it against the law to snatch a purse, yet perfectly legal for a cop to do the same under civil asset forfeiture? Why does the Chicago Board get to run a global gambling desk while Porgy and Bess can’t even shoot craps on their front porch?

Aside from racism, larceny laws create a huge moral hazard. I know that leaving a parked car in San Francisco is an invitation to smash-and-grab, yet here’s Louis Vuitton with a plate glass storefront, luxury goods on full display. What’s Fendi relying on for security — Societal norms? Starfleet force field?

Some years ago, a family friend had her little dog eaten by a coyote. Really traumatic experience, I’m sure. She feared her other dog was next, and begged The Department of Fish & Game to Do Something. The Department was unsurprisingly useless, as government agencies tend to be. The coyotes were here first, the wildlife officer said. They’re just trying to survive. You are responsible for securing your animals.

That’s what I think of when I see the CEO of Neiman Marcus petitioning Congress to do something about shoplifters. How bout some responsible risk management?

It wasn’t always like this. Look at old timey photos of people shopping. They’re puttin’ on the ritz just to go to Safeway. Back in the olden days, stores were private businesses enforcing private rules on private property, and could ban customers for any reason. Kinda like Twitter does today. Fancy clothes were necessary to ensure admission, a demonstration of spending ability. Then the Civil Rights Act came along and entitled everyone to full and equal accommodations, private property be damned. Proprietors put up signs declaring the right to refuse service – wishful thinking. That’s not how laws work, bigot.

This is where Amazon Go is the future. You know, those creepy automated grocery stores full of surveillance cameras. Amazon’s competitive advantage isn’t the cameras; it’s the fact that customers can’t enter the store without an Amazon Prime account. Instantly filter out the riffraff.

Every store needs to do this. Starbucks wouldn’t need to worry about derelicts shooting up in the bathroom if a loaded Starbucks card was required before entry. Nordstrom wouldn’t look like this if customers were required to have a minimum line of credit. Defund the police and bring back our Freedom of Association rights. One can hope, anyway.

Backed by the Full Faith and Credit of Tethers

Last month, Tether published a pie chart of its reserves, as part of an effort to get the NY Attorney General off their backs. (The other part was an $18.5 million fine.)

So Tether has paid its protection money and is free to continue printing stablecoins, as long as those stablecoins are fully backed by dollar reserves.

But there’s a catch: The “dollar reserves” can’t be actual dollars.

Banks don’t want Tether’s dollars because Tether’s customers are probably degenerates like me. Accepting Tether as a banking client would invite unwanted regulatory attention, Operation-Chokepoint-style. Even if Tether’s customers were in fact wholesome billionaires like Elon Musk, there’s too much “reputational risk”, according to JPMorgan. And that’s why Tether previously stashed its money with a Panamanian payment processor, where it was promptly stolen.

Apparently the new workaround is to turn the dollars into credit, like commercial paper and corporate bonds. But wait! A corporate bond isn’t a bearer asset — it still needs to be held by a bank or brokerage. That doesn’t do anything to reduce the risk of money laundering, it just adds an extra step.

Maybe the problem isn’t AML/KYC risk, but the fact that banks don’t want dollars. They’re not a public storage facility, they don’t want to store your fiat toilet paper. In theory, deposits can be turned into interest-bearing loans, but that already happened many times over and everyone who wants cash already borrowed it for cheap. (No, not you – I meant the Cantillon insiders.)

Maybe we’ll see more of this going forward, where it’s not enough to park your money and lose 2% to inflation each year. Your money must actively participate in the inflationary process by creating more credit.

Tether is now one of the world’s largest holders of commercial paper, or short term corporate debt. It’s practically a bank. Maybe Tether should use its dollars to buy bitcoin.

A Conspiracy Theory of Other Things

I’m old enough to remember when Black Lives Matter was genuinely subversive. After BLM protesters did some violence against police officers, the FBI issued a counterterrorism report: “Black Identity Extremists (BIEs) are influenced by a mix of anti-authoritarian, Moorish sovereign citizen ideology, and BIE ideology.”

That was 2017. Four years later, pretty much every major corporation has voiced support for these former “terrorists”. The fact that Congresscritters were kneeling in solidarity suggests that the ruling class is now in control of “BIEs”, but I can’t figure out how this group went from FBI watchlist to national religion. According to NYTimes, the sentiment shift happened in only two weeks.

In July 2019, the FBI removed the “Black Identity Extremists” designation to focus on white supremacy instead.

The FBI has a history of infiltrating activist organizations. The goal is to provoke violence, then use media collaborators to discredit a movement and justify legal action. They did it to the Black Panther Party, they did it to the KKK, they did it to Ross Ulbricht. See Also: COINTELPRO.

They even fedpoasted Cypherpunk Jim Bell when he was promoting prediction markets. All it takes is one high-profile ransomware attack to justify KYC/AML for all crypto, and then – oh wait.

Elon Musk’s renewable energy Mining Council is a head fake. The establishment is ready to embrace Bitcoin; it just needs to get mass surveillance in place first.

A Conspiracy Theory of Bitcoin

I’m a paranoid person. I should probably stop smoking pot, but it’s hard to get much else these days. Has anything been written about COVID’s effect on the availability of street drugs?

Anyway, Bitcoin thrives on paranoia. And a popular paranoiac concern is that the government, or the CIA, is out to destroy Bitcoin.

Bitcoin people point to Segwit2x and blocksize battles as evidence of attempted coup. That’s how the CIA overthrows foreign regimes, right? Fund some dissident groups, amplify civil unrest, prop up a puppet leader and bomb them into the stone age. ¡Viva la colour revolución!

But it’s shortsighted to think that the CIA wants to destroy Bitcoin. Why divide and conquer when you can commandeer?

The best way to control the opposition is to lead it ourselves. –Vladimir Lenin

Every society has dissidents, it’s human nature. Locking them up makes for bad PR; a smarter strategy is to hijack the message to further the objectives of the ruling class.

World peace and clean air were once anti-establishment goals. Hippie counterculture was a rejection of the military industrial complex. In the 1970s, oil interests promoted propaganda that transformed the message from “War is bad” to “Nukes are bad” to “Nuclear power is bad”, and we were all too stoned to notice. You can’t hug your children with nuclear arms, man.

California Governor Jerry “Moonbeam” Brown campaigned on clean energy, then closed the state’s nuclear power plants and reinforced dependence on foreign oil and gas to line his family’s pockets. It’s a testament to the power of propaganda that we still think of him as a climate leader1.

Railing against the establishment tends not to be a profitable venture, and eventually dissidents sell out and start shilling the message of their sponsors. That’s why child actress and propaganda vessel Greta Thunberg has gone from climate activism to protesting Nordstream to #FreeNavalny to backing the Farmers Protest in India.

Crypto anarchy is an easy message to hijack. Bitcoiners are the most economically rational humans in the world, by which I mean really effin’ greedy. We would sell our grandmothers if it meant stacking more sats.

Like Green Day selling Pepsi or Iggy Pop endorsing life insurance, Bitcoin will suffer feature creep to accommodate deep-pocketed investors. We want censorship-resistance, 21 million supply limit, privacy, fungibility, and renewable energy. Five demands, not one less!

And maybe Bitcoiners are ambivalent about renewable energy, but Elon Musk has so much money, and making him happy makes Number Go Up.

The message will transform from “Bitcoin is for everyone” to “Bitcoin is for everyone, as long as they agree to sustainability standards” to “Miners are private companies in a private council who can censor whomever they please, and if you don’t like it go start your own decentralized cryptocurrency!”

And that’s the conspiracy theory for today.

1. Jerry Brown’s father Pat Brown was governor before him, and passed “environmental” regulations to make the state dependent on Getty-owned oil leases after receiving bribes from Bill Newsom. Bill Newsom was attorney to J. Paul Getty. His grandson Gavin Newsom is the current governor of California, and Nancy Pelosi’s nephew. (source)

Never Argue with a Nocoiner

Has it been 2 months already? Nothing knocks me out of my drug-induced inertia like a Bitcoin bear market. Cuz I can’t afford drugs anymore.

More recently, a Bari-Weiss substack blogger accused me and Bitstein of “an expressed {sic} refusal to report anything negative” about Bitcoin.

It’s not so much a refusal to report, as a refusal to engage. Remember, Never Argue with a Nocoiner. Treat them as you would a child throwing a tantrum: Remain calm, validate their feelings, and let them wear themselves out. Don’t try to negotiate or argue, don’t reward the behavior with attention, and definitely avoid being seen with them in public.

Bitcoiners constantly underestimate Nocoiner obstinacy. It is 2021. If you see someone still spouting off about Bitcoin energy consumption, it should serve as a red flag like a well-dressed youth approaching your door with a Watchtower magazine. This is not someone to be reasoned with.

Debunking the latest Bitcoin FUD will just create a vacuum to be filled with even dumber FUD. This blogger wrote a screed about Bitcoin energy consumption only to have his misconceptions soundly dispelled by Nic Carter. The FUDster’s response?

That is a sequence of words that doesn’t make any sense in the English language. The type of thing that makes “Quantum cipher cracking” or “Death spiral” look downright reasonable.

If Bitcoin is toxic masculinity, then Nocoining is toxic femininity. By which I mean, emotional manipulation through sophistry. Before you accuse me of sexism, remember that this comment is no more sexist than Holthaus’s allegation that impeccable logic is masculine.

Nocoiners are too cowardly to fight their own battles, so they fling negative-sounding labels to exploit emotional triggers and shift public sentiment. It’s reputation destruction rather than rational debate.

Anyway, Bitcoiners are constantly discussing potential failure modes; it’s just that Nocoiners are too stupid to understand them. If my sober streak continues, we’ll discuss another one next week.