Charles Hugh-Smith: Deep State and the Dollar

[don]

I have been studying the Deep State for 40 years, before it had gained the nifty name "deep state." What others describe as the Deep State I term the National Security State which enables the American Empire, a vast structure that incorporates hard and soft power--military, diplomatic, intelligence, finance, commercial, energy, media, higher education--in a system of global domination and influence.

Back in 2007 I drew a simplified chart of the Imperial structure, what I called the Elite Maintaining and Extending Global Dominance (EMEGD):





At a very superficial level, some pundits have sought a Master Control in the Trilateral Commission or similar elite gatherings. Such groups are certainly one cell within the Empire, but each is no more important than other parts, just as killer T-cells are just one of dozens of cell types in the immune system.

One key feature of the Deep State is that it makes decisions behind closed doors and the surface government simply ratifies or approves the decisions. A second key feature is that the Deep State decision-makers have access to an entire world of secret intelligence.

Here is an example from the late 1960s, when the mere existence of the National Security Agency (NSA) was a state secret. Though the Soviet Union made every effort to hide its failures in space, it was an ill-kept secret that a number of their manned flights failed in space and the astronauts died.

The NSA had tapped the main undersea cables, and may have already had other collection capabilities in place, for the U.S. intercepted a tearful phone call from Soviet Leader Brezhnev to the doomed astronauts, a call made once it had become clear there was no hope of their capsule returning to Earth.

Former congressional staff member Mike Lofgren described the Deep State in his recent essay Anatomy of the Deep State:

There is another, more shadowy, more indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The subsurface part of the iceberg I shall call the Deep State, which operates according to its own compass heading regardless of who is formally in power.

The term “Deep State” was coined in Turkey and is said to be a system composed of high-level elements within the intelligence services, military, security, judiciary and organized crime.

I use the term to mean a hybrid association of elements of government and parts of top-level finance and industry that is effectively able to govern the United States without reference to the consent of the governed as expressed through the formal political process.

I would say that only senior military or intelligence officers have any realistic grasp of the true scope, power and complexity of the Deep State and its Empire.Those with no grasp of military matters cannot possibly understand the Deep State. If you don't have any real sense of the scope of the National Security State, you are in effect touching the foot of the elephant and declaring the creature is perhaps two feet tall.

The Deep State arose in World War II, as the mechanisms of electoral governance had failed to prepare the nation for global war. The goal of winning the war relegated the conventional electoral government to rubber-stamping Deep State decisions and policies.

After the war, the need to stabilize (if not "win") the Cold War actually extended the Deep State. Now, the global war on terror (GWOT) is the justification.

One way to understand the Deep State is to trace the vectors of dependency. The Deep State needs the nation to survive, but the nation does not need the Deep State to survive (despite the groupthink within the Deep State that "we are the only thing keeping this thing together.")

The nation would survive without the Federal Reserve, but the Federal Reserve would not survive without the Deep State. The Fed is not the Deep State; it is merely a tool of the Deep State.

This brings us to the U.S. dollar and the Deep State. The Deep State doesn't really care about the signal noise of the economy--mortgage rates, minimum wages, unemployment, etc., any more that it cares about the political circus ("step right up to the Clinton sideshow, folks") or the bickering over regulations by various camps.

What the Deep State cares about are the U.S. dollar, water, energy, minerals and access to those commodities (alliances, sea lanes, etc.). As I have mentioned before, consider the trade enabled by the reserve currency (the dollar): we print/create money out of thin air and exchange this for oil, commodities, electronics, etc.

If this isn't the greatest trade on Earth--exchanging paper for real stuff-- what is?While I am sympathetic to the strictly financial arguments that predict hyper-inflation and the destruction of the U.S. dollar, they are in effect touching the toe of the elephant.

The financial argument is this: we can print money but we can't print more oil, coal, ground water, etc., and so eventually the claims on real wealth (i.e. dollars) will so far exceed the real wealth that the claims on wealth will collapse.

So far as this goes, it makes perfect sense. But let's approach this from the geopolitical-strategic perspective of the Deep State: why would the Deep State allow policies that would bring about the destruction of its key global asset, the U.S. dollar?

There is simply no way the Deep State is going to support policies that would fatally weaken the dollar, or passively watch a subsidiary of the Deep State (the Fed) damage the Deep State itself.

The strictly financial arguments for hyper-inflation and the destruction of the U.S. dollar implicitly assume a system that operates like a line of dominoes: if the Fed prints money, that will inevitably start the dominoes falling, with the final domino being the reserve currency.

Setting aside the complexity of Triffin's Paradox and other key dynamics within the reserve currency, we can safely predict that the Deep State will do whatever is necessary to maintain the dollar's reserve status and purchasing power.

Understanding the "Exorbitant Privilege" of the U.S. Dollar (November 19, 2012)

What Will Benefit from Global Recession? The U.S. Dollar (October 9, 2012)

Recall Triffin's primary point: countries like China that run trade surpluses cannot host reserve currencies, as that requires running large structural trade deficits.

In my view, the euro currency is a regional experiment in the "bancor" model,where a supra-national currency supposedly eliminates Triffin's Paradox. It has failed, partly because supra-national currencies don't resolve Triffin's dilemma, they simply obfuscate it with sovereign credit imbalances that eventually moot the currency's ability to function as intended.

Many people assume the corporatocracy rules the nation, but the corporatocracy is simply another tool of the Deep State. Many pundits declare that the Powers That Be want a weaker dollar to boost exports, but this sort of strictly financial concern is only of passing interest to the Deep State.

The corporatocracy (banking/financialization, etc.) has captured the machinery of regulation and governance, but these are surface effects of the electoral government that rubber-stamps policies set by the Deep State.

The corporatocracy is a useful global tool of the Deep State, but its lobbying of the visible government is mostly signal noise to the Deep State. The only sectors that matter are the defense, energy, agriculture and international financial sectors that supply the Imperial Project and project power.

What would best serve the Deep State is a dollar that increases in purchasing power and extends the Deep State's power. It is widely assumed that the Fed creating a few trillion dollars has created a massive surplus of dollars that will guarantee a slide in the dollar's purchasing power and its demise as the reserve currency.

Those who believe the Fed's expansion of its balance sheet will weaken the dollar are forgetting that from the point of view of the outside world, the Fed's actions are not so much expanding the supply of dollars as offsetting the contraction caused by deleveraging.

I would argue that the dollar will soon be scarce, and the simple but profound laws of supply and demand will push the dollar's value not just higher but much higher. The problem going forward for exporting nations will be the scarcity of dollars.

If we consider the Fed's policies (tapering, etc.) solely within the narrow confines of the corporatocracy or a strictly financial context, we are in effect touching the foot of the elephant and declaring the creature to be short and roundish. The elephant is the Deep State and its Imperial Project.

[lektrode]

Re: Charles Hugh-Smith: Deep State and the Dollar

guess the question becomes: if a 'strong dollar' really is the goal, wont that require much higher interest rates and how will that affect the ability to pay interest on the 17trillion debt

would seem the only way out, is what EJ talks about; 20% inflation for 5 years or so

or something sets-off the next quantum leap in econ activity - in the productive sector.

[leegs]

Re: Charles Hugh-Smith: Deep State and the Dollar

Isn't this, the EMEGD, pretty much what Reggie has been describing in his posts here?

[Woodsman]

Re: Charles Hugh-Smith: Deep State and the Dollar

Isn't this, the EMEGD, pretty much what Reggie has been describing in his posts here?

Reminds me of it too. So does the latest from Greenwald.

[don]

Re: Charles Hugh-Smith: Deep State and the Dollar

The old line in the 50s and 60s was the only reason the Communist Party USA still (barely) functioned was because most of its members were FBI agents.

Acceptance of any of today's media/movements/think tanks at face value is naive. Infiltrated, co-opted, created out of whole cloth - that's the norm. We get what we can. There is no purity . . .

[don]

Re: Charles Hugh-Smith: Deep State and the Dollar

Reminds me of it too. So does the latest from Greenwald.

from Zerocred:

In the annals of internet conspiracy theories, none is more pervasive than the one speculating paid government plants infiltrate websites, social network sites, and comment sections with an intent to sow discord, troll, and generally manipulate, deceive and destroy reputations. Guess what: it was all true.

And this time we have a pretty slideshow of formerly confidential data prepared by the UK NSA equivalent, the GCHQ, to confirm it, and Edward Snowden to thank for disclosing it. The messenger in this case is Glenn Greenwald, who has released the data in an article in his new website, firstlook.org, which he summarizes as follows: "by publishing these stories one by one, our NBC reporting highlighted some of the key, discrete revelations: the monitoring of YouTube and Blogger, the targeting of Anonymous with the very same DDoS attacks they accuse “hacktivists” of using, the use of “honey traps” (luring people into compromising situations using sex) and destructive viruses. But, here, I want to focus and elaborate on the overarching point revealed by all of these documents: namely, that these agencies are attempting to control, infiltrate, manipulate, and warp online discourse, and in doing so, are compromising the integrity of the internet itself." Call it Stasi for "Generation Internet."

Greenwald's latest revelation focuses on GCHQ’s previously secret unit, the JTRIG (Joint Threat Research Intelligence Group).

Among the core self-identified purposes of JTRIG are two tactics: (1) to inject all sorts of false material onto the internet in order to destroy the reputation of its targets; and (2) to use social sciences and other techniques to manipulate online discourse and activism to generate outcomes it considers desirable. To see how extremist these programs are, just consider the tactics they boast of using to achieve those ends: “false flag operations” (posting material to the internet and falsely attributing it to someone else), fake victim blog posts (pretending to be a victim of the individual whose reputation they want to destroy), and posting “negative information” on various forums. Here is one illustrative list of tactics from the latest GCHQ document we’re publishing today:


Other tactics aimed at individuals are listed here, under the revealing title “discredit a target”:



Then there are the tactics used to destroy companies the agency targets:



Critically, the “targets” for this deceit and reputation-destruction extend far beyond the customary roster of normal spycraft: hostile nations and their leaders, military agencies, and intelligence services. In fact, the discussion of many of these techniques occurs in the context of using them in lieu of “traditional law enforcement” against people suspected (but not charged or convicted) of ordinary crimes or, more broadly still, “hacktivism”, meaning those who use online protest activity for political ends.

The title page of one of these documents reflects the agency’s own awareness that it is “pushing the boundaries” by using “cyber offensive” techniques against people who have nothing to do with terrorism or national security threats, and indeed, centrally involves law enforcement agents who investigate ordinary crimes:



Greenwald's punchline is disturbing, and is sure to make paradnoid conspiracy theorists crawl even deeper into their holes for one simple reason: all of their worst fears were true all along.

No matter your views on Anonymous, “hacktivists” or garden-variety criminals, it is not difficult to see how dangerous it is to have secret government agencies being able to target any individuals they want – who have never been charged with, let alone convicted of, any crimes – with these sorts of online, deception-based tactics of reputation destruction and disruption.

The broader point is that, far beyond hacktivists, these surveillance agencies have vested themselves with the power to deliberately ruin people’s reputations and disrupt their online political activity even though they’ve been charged with no crimes, and even though their actions have no conceivable connection to terrorism or even national security threats. As Anonymous expert Gabriella Coleman of McGill University told me, “targeting Anonymous and hacktivists amounts to targeting citizens for expressing their political beliefs, resulting in the stifling of legitimate dissent.” Pointing to this study she published, Professor Coleman vehemently contested the assertion that “there is anything terrorist/violent in their actions.”

At this point Greenwald takes a detour into a well-known topic: Cass Sunstein. Who is Cass Sunstein? Recall: "Obama Picks Cass Sunstein (America’s Goebbels?) To Serve On NSA Oversight Panel."

Government plans to monitor and influence internet communications, and covertly infiltrate online communities in order to sow dissension and disseminate false information, have long been the source of speculation. Harvard Law Professor Cass Sunstein, a close Obama adviser and the White House’s former head of the Office of Information and Regulatory Affairs, wrote a controversial paper in 2008 proposing that the US government employ teams of covert agents and pseudo-”independent” advocates to “cognitively infiltrate” online groups and websites, as well as other activist groups.

Sunstein also proposed sending covert agents into “chat rooms, online social networks, or even real-space groups” which spread what he views as false and damaging “conspiracy theories” about the government. Ironically, the very same Sunstein was recently named by Obama to serve as a member of the NSA review panel created by the White House, one that – while disputing key NSA claims – proceeded to propose many cosmetic reforms to the agency’s powers (most of which were ignored by the President who appointed them).

But while until now there was speculation that Sunstein's policies had been implemented, there was no proof. That is no longer the case:

... these GCHQ documents are the first to prove that a major western government is using some of the most controversial techniques to disseminate deception online and harm the reputations of targets. Under the tactics they use, the state is deliberately spreading lies on the internet about whichever individuals it targets, including the use of what GCHQ itself calls “false flag operations” and emails to people’s families and friends. Who would possibly trust a government to exercise these powers at all, let alone do so in secret, with virtually no oversight, and outside of any cognizable legal framework?

What is perhaps most disturbing is the level of detail these modern day Stasi agents engage in, paradoxically proposing social subversion without realizing they themselves would be susceptible to just that. And all it would take is one whistleblower with a conscience:

Under the title “Online Covert Action”, the document details a variety of means to engage in “influence and info ops” as well as “disruption and computer net attack”, while dissecting how human being can be manipulated using “leaders”, “trust, “obedience” and “compliance”:






The documents lay out theories of how humans interact with one another, particularly online, and then attempt to identify ways to influence the outcomes – or “game” it:




Greenwald's conclusion is spot on:

These agencies’ refusal to “comment on intelligence matters” – meaning: talk at all about anything and everything they do – is precisely why whistleblowing is so urgent, the journalism that supports it so clearly in the public interest, and the increasingly unhinged attacks by these agencies so easy to understand. Claims that government agencies are infiltrating online communities and engaging in “false flag operations” to discredit targets are often dismissed as conspiracy theories, but these documents leave no doubt they are doing precisely that.

Whatever else is true, no government should be able to engage in these tactics: what justification is there for having government agencies target people – who have been charged with no crime – for reputation-destruction, infiltrate online political communities, and develop techniques for manipulating online discourse? But to allow those actions with no public knowledge or accountability is particularly unjustifiable.

So the next time you run into someone in a chat room or a message board who sounds just a little too much like a paid government subversive... it may not be just the paranoia speaking.

[shiny!]

Re: Charles Hugh-Smith: Deep State and the Dollar

It's only a matter of time before (among other things) innocent citizen's lives are re-written to prove they are tax evaders, followed by the requisite confiscation of their assets.

[Woodsman]

Re: Charles Hugh-Smith: Deep State and the Dollar

It's only a matter of time before (among other things) innocent citizen's lives are re-written to prove they are tax evaders, followed by the requisite confiscation of their assets.

Waiting on Caligula.

[leegs]

Re: Charles Hugh-Smith: Deep State and the Dollar

It's only a matter of time before (among other things) innocent citizen's lives are re-written to prove they are tax evaders, followed by the requisite confiscation of their assets.

I really don't think that kind of thing is the main issue or problem.

I generally am inclined to buy into the view of things as described in the original article, as I have been similarly inclined to give some credence to what Reggie had to say. Surveillance is not about listening to individuals' conversations, not even to catch them plotting crimes or whatever, its about monitoring the communication in order to see what affect the propaganda is having and how to better tailor it. Similarly it's not about stealing money and possessions from citizens, it's about controlling them.

The interesting thing is to ponder what is the motivation of the Deep State, if it exists as described in these articles. IMO it's not about money and wealth so much, that might be a byproduct, but those things are certainly not the main motivation. To the extent money is a motivation, it's not about increasing tax revenue by framing people as tax evaders!

So what is the driving motivation behind the Deep State, and the people that make it up? I presume that there is a big helping of 'we're doing God's work', a feeling that they are doing good things, keeping the country safe and prosperous. Beyond that its power for power's sake, it's being involved in interesting work (hell yeah launching memes on Facebook and observing how they propagate would be interesting, just like being a scientist developing nuclear weapons was no doubt very interesting), it's perpetuating the organism/organization, etc.

[shiny!]

Re: Charles Hugh-Smith: Deep State and the Dollar

I really don't think that kind of thing is the main issue or problem.

I generally am inclined to buy into the view of things as described in the original article, as I have been similarly inclined to give some credence to what Reggie had to say. Surveillance is not about listening to individuals' conversations, not even to catch them plotting crimes or whatever, its about monitoring the communication in order to see what affect the propaganda is having and how to better tailor it. Similarly it's not about stealing money and possessions from citizens, it's about controlling them.

The interesting thing is to ponder what is the motivation of the Deep State, if it exists as described in these articles. IMO it's not about money and wealth so much, that might be a byproduct, but those things are certainly not the main motivation. To the extent money is a motivation, it's not about increasing tax revenue by framing people as tax evaders!

So what is the driving motivation behind the Deep State, and the people that make it up? I presume that there is a big helping of 'we're doing God's work', a feeling that they are doing good things, keeping the country safe and prosperous. Beyond that its power for power's sake, it's being involved in interesting work (hell yeah launching memes on Facebook and observing how they propagate would be interesting, just like being a scientist developing nuclear weapons was no doubt very interesting), it's perpetuating the organism/organization, etc.

You make some interesting points; perhaps we'll both be proven right. Your scenario now, mine at the endgame. These tools were probably developed for the purposes you stated. But because they can be used to re-write people's lives, destroy reputations and subsequently take property, they will be used to do that.

When governments amass tools that can be used against its citizens, it's only reasonable to expect that they will use them. Why do gun owners fear gun registration laws? Because they are always the precursor to gun confiscation, no matter how much the proponents of registration promise it will never be used for that purpose. Traffic cameras were first proposed to stop red light runners but now the technology has expanded and cameras are everywhere to track our movements.

Our government in the U.S. is supposed to serve only by the consent of the governed. Somewhere along the line we forgot who is the master and who is the servant. Now our government wants to exist for its own sake. When it needs more money than it can obtain through taxation, it will take its citizen's property by hook or by crook. But that will come later. And I agree, that's a minor use for these tools of social control.

[shiny!]

Re: Charles Hugh-Smith: Deep State and the Dollar

Reddit has censored this story (zerohedge):

Reddit Censors Big Story About Government Manipulation and Disruption of the Internet

The moderators at the giant r/news reddit (with over 2 million readers) repeatedly killed the Greenwald/Snowden story on government manipulation and disruption of the Internet … widely acknowledged to be one of the most important stories ever leaked by Snowden.


Similarly, the moderators at the even bigger r/worldnews reddit (over 5 million readers) repeatedly deleted the story, so that each new post had to start over at zero...

[LazyBoy]

Re: Charles Hugh-Smith: Deep State and the Dollar

It's on r/worldnews now. Maybe the bad press got to them, or maybe the original site wasn't news-y enough.

[Slimprofits]

Re: Charles Hugh-Smith: Deep State and the Dollar

Reddit has censored this story (zerohedge):

One provider of noise (ZH) attacking another.

[Slimprofits]

Re: Charles Hugh-Smith: Deep State and the Dollar

It's on r/worldnews now. Maybe the bad press got to them, or maybe the original site wasn't news-y enough.

From the ZH thread:

Wed, 02/26/2014 - 06:43 | 4479399 ThisIsBob The front page of Reddit this morning has two stories on this with over 3,000 comments. Both stories posted yesterday.

How effective! Soviet and East German censors would be proud!

[Slimprofits]

Re: Charles Hugh-Smith: Deep State and the Dollar

Very amusing, Don. The existence of Sunstein's awful book, Nudge, now makes a heck of a lot more sense.