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We are all going public: Privacy rules, tax shelters and the future history of art

Nonfungible tokens, or NFTs, exchanges will need to navigate conflicting aims for the required transparency and the desired anonymity.

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Nonfungible tokens, or NFTs, exchanges will need to navigate conflicting aims for the required transparency and the desired anonymity.

After a banner year of 2021 for individual object sales through nonfungible tokens (NFTs), 2022 is poised to be the year of MetaFi. A recap of Beeple, Christie’s, Visa and endless aping-in celebrities hardly feels necessary, except to point out that we seem to be standing on (or perhaps have already crossed over) a fundamental precipice. While the rocket-propelled ascent of NFT prices will not continue forever, numerous voices have predicted that a mature tech stack for discovering, vetting, valuing, trading and protecting collections of digital assets will soon emerge, without a crash.

But these optimistic takes may even be selling the area short. Namely, the premise of the “NFT-Fi” sector is to create value through liquidity, but it has remained an unstated assumption that this liquidity would be confined fundamentally to the world of crypto itself. While it is still early days, those boundaries may be eroding, and we may all need to open our meta-apertures even wider. In this regard, Switzerland stands out among numerous countries that have only started to pilot experiments with central bank-backed digital currencies (CBDCs). The confederacy of cantons, home to both Davos and Art Basel, is known for its rich history of innovation in both creative and financial assets, and its moves are worth tracking closely.

At the end of last year, the Six Digital Exchange (SDX), the digital entity of the SIX Group, the financial services company that operates the infrastructure of the Swiss national stock exchange, considered opening up their exchange to NFTs. This possible move dovetails with the advancement of a major experiment with CBDC. Taken together, these early steps will lend credence and endorsement to both digital currencies and the NFT secondary market, integrating many kinds of digital holdings more closely into the fabric of Swiss finance, itself.

To say that the international regulatory perimeter of tokenized assets is inchoate or poorly understood would be a wild understatement. Legal ambiguity, bad actors, technology failures, public panics and more can undermine the smooth functioning of digital marketplaces, with the potential for spillover impact on the conventional markets magnified by their growing imbrication. Recent hand-wringing over the identity exposure of the Bored Apes creators as well as revelations from the multibillion-dollar Bitfinex hack attests to the already enormous stakes of calibrating the needs for personal privacy and public disclosure.

As Web3 enters territory that blurs the line between not only physical and digital goods but also between private and public exchanges, it is imperative to consider how legal frameworks (and the path of least resistance through them) have shaped the analog version of this world that the crypto-forward future hopes to supplant.

Related: Will regulation adapt to crypto, or crypto to regulation? Experts answer

Fully grappling with these questions is far beyond the scope of a short article. But for the present discussion, we would like to briefly highlight the question of digital privacy as a nexus between art, law and economics. Based on tactics pioneered in Switzerland coincident with the rise of global finance in the 19th century, fine art has become a central means of moving assets through the shadows and edges of international law. This backdrop, poorly understood by those who are outside of the art industry, constitutes an enormously important context for the coming collision of international privacy laws, global digital art and the promise of a publicly verifiable blockchain.

The coming collision of public scrutiny and digital privacy

Regulators have been busy filling in the gaping holes left exposed by the vertiginous adoption, or in the case of Switzerland, legitimization of tokenized assets. But of course, any ambiguity in enforcement will ultimately undermine the smooth functioning of tokenized marketplaces, now with potential spillover impact on the world’s conventional markets.

Any updated government policy aimed at striking a balance between social interests and individual privacy could have rippling effects on investors, auction houses and art collectors. The General Data Protection Regulation (GDPR), one of the world’s toughest pieces of legislation on data privacy, has fast become the world’s blueprint for leveraging fines as a way to amplify the pain of breaches. Yet, records show that privacy breaches remain ubiquitous on a global scale. Penalties for violations of the European Union’s privacy law have soared nearly sevenfold in the past year. Data protection authorities have meted out $1.25 billion in fines over breaches of GDPR since early 2021, which was up from about $180 million a year earlier. Perhaps this coincides with the views of legal scholars who argued that monetary sanctions do not necessarily lead to better compliance and ultimately better data protection for individuals.

Related: Concerns around data privacy are rising, and blockchain is the solution

Why does it matter in the world of crypto? For one, until global legal authorities manage to catch up with the fast-moving cryptocurrency freight train (which they probably cannot), collisions with existing regulatory regimes are bound to occur. Lest we forget, cryptocurrency relies on a public ledger or a blockchain, which is used to maintain participants’ identities in an anonymous form, cryptocurrency balances, and a record book of all transactions executed. One can conveniently draw parallels between a blockchain and the use of Swiss numbered accounts, which was once used to maintain confidentiality thereby sidestepping any Internal Revenue Service’s oversight. These accounts were relics of the 80s before the rollout of the deferred prosecution agreement to forbid pervasive tax evasion.

What makes cryptocurrency unique — the ability to maintain a high level of anonymity and privacy — runs contrary to other tenets of data privacy law. A convenient example is the “right to forget” enshrined under the GDPR, but the immutable nature of the blockchain means it is nearly impossible for any given individual to exercise such a right. The law gives individuals the right to rectify inaccuracies in their personal data, and blockchain technology might make this right functionally impossible to exercise.

In the event that NFTs contain any traces of personal information — such as provenance for an NFT work — these bits of data may be caught by the long arm of extraterritorial law. And conversely, a well-established right to privacy could serve as a shield behind which all sorts of devious actors can operate. Such has been the historical norm of the art world for well over a century.

In the shadows of the freeport

In the pre-COVID, pre-BAYC moment, the biggest open secret in the art world had to do with the storage of art in “freeports,” specially demarcated economic zones exempt from most, if not all, taxation. While the exact scope of the practice is of course impossible to determine, serious investigative journalists have estimated that more than one million global works sit in such jurisdictional limbo. Predictably, one of the world’s largest and most valuable artwork storage freeport facilities sits in Geneva — a New York Times article reported that this single tax shelter housed more than a thousand Picasso works, as well additional objects produced by Old Masters including Da Vinci and Renoir. Important paintings by these eminent figures might fetch tens or hundreds of millions at auction.

Related: Minting, distributing and selling NFTs must involve copyright law

The practice of storing art objects and other valuable commodities within trading ports to skirt the edges of tax liabilities has been developed and refined by Swiss innovators, entrepreneurs and con artists for well over a century. The basic idea extrapolates from the well-established concept of a non-territorial treaty port for trans-shipment. While the Geneva freeport has been used to store grain, coffee and other goods bound to and from destination throughout Europe since its founding in 1888, it has increasingly found itself as a tax-advantaged repository at the crux of the global art trade. Old Masterworks procured at the original Art Basel, for decades the unchallenged clearinghouse for fine object d’art, could be left almost on site to appreciate in value and be resold without any tax on gains. More villainous possibilities, such as the trade-in of looted artifacts or exchange of dirty money for clear art, linger in the murky darkness. Such practices have been fostered by a deep-rooted cultural and legal framework of financial non-disclosure.

The time has changed

The new, Web3-powered chapter is now being written before our eyes in real time. While the United States’ biggest freeport recently closed after just two years in operation — COVID-19 pandemic and other factors seem to have withered the interest in the deluxe storage of objects — the Singapore-based Le Freeport, a new offering from the team behind the Geneva facility, held a major NFT exhibition to close out 2021. The exhibition featured nearly three dozen works by artists ranging from Beeple to Andy Warhol, and strikingly, only was for sale.

Such mostly non-sale exhibitions have been used to cultivate prestige around a work, a prestige that can later be used to justify inflated appraisals for regulatory arbitrage. And just this week, the U.S. Treasury flagged NFT sales as a new front in the global war on money laundering — as anonymous transactions may permit the trade of dirty money for clean art, which may then be resold, or soon, listed on a public stock exchange. One struggles to imagine a more perfect mechanism for obfuscating such transactions than the GDPR, nor a more respectable venue for disposing of such newly “cleaned” assets on a public stock exchange.

Importantly, financial regulatory frameworks create paths of least resistance–loopholes designed into the system, thin enforcement mechanisms, and opportunities for regulatory arbitrage have all funneled capital and its associated cultural products into one direction or another. As we have argued elsewhere, the advent of the serial-style work of Pop Artists such as Jasper Johns and Andy Warhol was equal parts aesthetic innovation and tax evasion. The recognized achievements of Land Art, media art and 1980s painting were all made possible by matching ingenuity on the right and left sides of the balance sheet.

What will come of the collision of newly empowered privacy law, non-sovereign wealth and newly unshackled crypto-creativity will perhaps only be known in time. But as the world’s legacy and decentralized systems for art and money grow more interconnected, the stakes of success and failure continue to grow more vertiginous by the day.

This article was co-authored by Michael Maizels and Adam Au.

The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Michael Maizels, an art historian by training, is a technology researcher with Pilot44, a boutique innovation consulting firm in San Francisco, and is also affiliated with the metaLAB, a think tank and creative design studio at Harvard University. His new book on financial innovation in modern art history will be out from the University of Michigan in September.
Adam Au is an attorney and international data privacy expert based in Hong Kong. He is currently general counsel & company secretary of a public health company, and is a regular contributor to the South China Morning Post on topics at the intersection of technology and international law. He holds an economics degree from Brown, a law degree from Oxford and an MBA from MIT Sloan.

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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The Coming Of The Police State In America

The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now…

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The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now patrolling the New York City subway system in an attempt to do something about the explosion of crime. As part of this, there are bag checks and new surveillance of all passengers. No legislation, no debate, just an edict from the mayor.

Many citizens who rely on this system for transportation might welcome this. It’s a city of strict gun control, and no one knows for sure if they have the right to defend themselves. Merchants have been harassed and even arrested for trying to stop looting and pillaging in their own shops.

The message has been sent: Only the police can do this job. Whether they do it or not is another matter.

Things on the subway system have gotten crazy. If you know it well, you can manage to travel safely, but visitors to the city who take the wrong train at the wrong time are taking grave risks.

In actual fact, it’s guaranteed that this will only end in confiscating knives and other things that people carry in order to protect themselves while leaving the actual criminals even more free to prey on citizens.

The law-abiding will suffer and the criminals will grow more numerous. It will not end well.

When you step back from the details, what we have is the dawning of a genuine police state in the United States. It only starts in New York City. Where is the Guard going to be deployed next? Anywhere is possible.

If the crime is bad enough, citizens will welcome it. It must have been this way in most times and places that when the police state arrives, the people cheer.

We will all have our own stories of how this came to be. Some might begin with the passage of the Patriot Act and the establishment of the Department of Homeland Security in 2001. Some will focus on gun control and the taking away of citizens’ rights to defend themselves.

My own version of events is closer in time. It began four years ago this month with lockdowns. That’s what shattered the capacity of civil society to function in the United States. Everything that has happened since follows like one domino tumbling after another.

It goes like this:

1) lockdown,

2) loss of moral compass and spreading of loneliness and nihilism,

3) rioting resulting from citizen frustration, 4) police absent because of ideological hectoring,

5) a rise in uncontrolled immigration/refugees,

6) an epidemic of ill health from substance abuse and otherwise,

7) businesses flee the city

8) cities fall into decay, and that results in

9) more surveillance and police state.

The 10th stage is the sacking of liberty and civilization itself.

It doesn’t fall out this way at every point in history, but this seems like a solid outline of what happened in this case. Four years is a very short period of time to see all of this unfold. But it is a fact that New York City was more-or-less civilized only four years ago. No one could have predicted that it would come to this so quickly.

But once the lockdowns happened, all bets were off. Here we had a policy that most directly trampled on all freedoms that we had taken for granted. Schools, businesses, and churches were slammed shut, with various levels of enforcement. The entire workforce was divided between essential and nonessential, and there was widespread confusion about who precisely was in charge of designating and enforcing this.

It felt like martial law at the time, as if all normal civilian law had been displaced by something else. That something had to do with public health, but there was clearly more going on, because suddenly our social media posts were censored and we were being asked to do things that made no sense, such as mask up for a virus that evaded mask protection and walk in only one direction in grocery aisles.

Vast amounts of the white-collar workforce stayed home—and their kids, too—until it became too much to bear. The city became a ghost town. Most U.S. cities were the same.

As the months of disaster rolled on, the captives were let out of their houses for the summer in order to protest racism but no other reason. As a way of excusing this, the same public health authorities said that racism was a virus as bad as COVID-19, so therefore it was permitted.

The protests had turned to riots in many cities, and the police were being defunded and discouraged to do anything about the problem. Citizens watched in horror as downtowns burned and drug-crazed freaks took over whole sections of cities. It was like every standard of decency had been zapped out of an entire swath of the population.

Meanwhile, large checks were arriving in people’s bank accounts, defying every normal economic expectation. How could people not be working and get their bank accounts more flush with cash than ever? There was a new law that didn’t even require that people pay rent. How weird was that? Even student loans didn’t need to be paid.

By the fall, recess from lockdown was over and everyone was told to go home again. But this time they had a job to do: They were supposed to vote. Not at the polling places, because going there would only spread germs, or so the media said. When the voting results finally came in, it was the absentee ballots that swung the election in favor of the opposition party that actually wanted more lockdowns and eventually pushed vaccine mandates on the whole population.

The new party in control took note of the large population movements out of cities and states that they controlled. This would have a large effect on voting patterns in the future. But they had a plan. They would open the borders to millions of people in the guise of caring for refugees. These new warm bodies would become voters in time and certainly count on the census when it came time to reapportion political power.

Meanwhile, the native population had begun to swim in ill health from substance abuse, widespread depression, and demoralization, plus vaccine injury. This increased dependency on the very institutions that had caused the problem in the first place: the medical/scientific establishment.

The rise of crime drove the small businesses out of the city. They had barely survived the lockdowns, but they certainly could not survive the crime epidemic. This undermined the tax base of the city and allowed the criminals to take further control.

The same cities became sanctuaries for the waves of migrants sacking the country, and partisan mayors actually used tax dollars to house these invaders in high-end hotels in the name of having compassion for the stranger. Citizens were pushed out to make way for rampaging migrant hordes, as incredible as this seems.

But with that, of course, crime rose ever further, inciting citizen anger and providing a pretext to bring in the police state in the form of the National Guard, now tasked with cracking down on crime in the transportation system.

What’s the next step? It’s probably already here: mass surveillance and censorship, plus ever-expanding police power. This will be accompanied by further population movements, as those with the means to do so flee the city and even the country and leave it for everyone else to suffer.

As I tell the story, all of this seems inevitable. It is not. It could have been stopped at any point. A wise and prudent political leadership could have admitted the error from the beginning and called on the country to rediscover freedom, decency, and the difference between right and wrong. But ego and pride stopped that from happening, and we are left with the consequences.

The government grows ever bigger and civil society ever less capable of managing itself in large urban centers. Disaster is unfolding in real time, mitigated only by a rising stock market and a financial system that has yet to fall apart completely.

Are we at the middle stages of total collapse, or at the point where the population and people in leadership positions wise up and decide to put an end to the downward slide? It’s hard to know. But this much we do know: There is a growing pocket of resistance out there that is fed up and refuses to sit by and watch this great country be sacked and taken over by everything it was set up to prevent.

Tyler Durden Sat, 03/09/2024 - 16:20

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