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Why Bitcoin Is The Best Weapon Society Has Against Inflation And Wealth Inequality

Why Bitcoin Is The Best Weapon Society Has Against Inflation And Wealth Inequality

Authored by Martin Leo Rivers via Forbes.com,

For bitcoin enthusiasts, one of the most compelling things about the cryptocurrency is its ability to side-step.

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Why Bitcoin Is The Best Weapon Society Has Against Inflation And Wealth Inequality

Authored by Martin Leo Rivers via Forbes.com,

For bitcoin enthusiasts, one of the most compelling things about the cryptocurrency is its ability to side-step fiat monetary systems that dilute the value of cash holdings through inflation.

That isn’t anywhere near as complicated as it sounds. Put very simply, central banks grease the wheels of their economies by continually printing new money. A higher money supply makes it easier for companies to spend and service their debt. But there’s a catch: for every new dollar you add to the spending pool, the buying power of each individual dollar falls proportionally.

Again this is simpler than it sounds: changing the money supply doesn’t magically create wealth or value. If your economy is a nursery and your money supply is crayons, then doubling the number of crayons in the room doesn’t make the kids any richer. They all have twice as many crayons as they had before, so they all double the number they offer when bartering for toys, books and so on. In real terms, nothing has changed because the new supply of money is being evenly shared between everyone in the nursery.

Where things get more complicated – and where bitcoiners have rightly identified a need for a different, fairer system – is what happens when supply and distribution aren’t evenly matched?

Central bankers claim this isn’t a concern, because they contend that all the cash ultimately trickles down to the man on the street – be it through stimulus checks or higher wages or fatter pension funds or whatever other pathway they conjure up. In practice, of course, we know that simply doesn’t reflect reality.

In the real world, billionaires have, by far, been the biggest winners from covid-era money printing. They’ve taken their higher money supply (including vast sums of borrowed money, which is cheaper and easier to obtain when interest rates are low) and they’ve pumped it into inflation-beating asset classes such as the stock market, real estate, collectibles and so on. The middle classes have done the same, but on a smaller scale: building their savings during covid lockdowns and then allocating a healthy chunk of those funds to assets that have appreciated in value nicely.

Now consider the poor and the working classes. What little bonus cash they’ve received during the pandemic has either been spent on survival or stagnated. Unable to get on the property ladder, they can neither benefit from rising house prices nor start building equity by replacing rent (money that goes into someone else’s pot) with mortgage payments (money that goes into their own). Stock markets may, technically, be within their reach, but at a profound handicap due to high transaction fees and a limited understanding of investment strategies (the kind of knowhow that rich people simply pay someone else to worry about).

This imbalance results in one thing: inequality.

If you’re rich, you can take a higher money supply and use it to your advantage. If you’re poor, you really can’t. You’re stuck with whatever cash holdings you have in the new economy. And, as we know, the value of those holdings is actively being diluted through inflation. The more money is printed, the poorer you get.

Interest rates, of course, could save the day – if central banks wanted them to. When the interest rate rises above the inflation rate, any of us can grow the value of our cash simply by dumping it in a savings account. But policymakers don’t want this, because just about the only thing holding up the global economy right now is easy access to debt. As soon as the interest rate paid by borrowers increases, the shaky foundations of our covid-era economic recovery will collapse. Businesses and homeowners who binged on cheap loans will suddenly be unable to make repayments. Waves of bankruptcies and foreclosures will cripple the global economy.

Small wonder that central bankers – none of whom are working class, by the way – prefer the easy option of hammering poor people. “This might not be perfect,” they rationalize, “but everything seems to be stable and everyone I know is doing rather well!” That, in a nutshell, tells you why central banks are the biggest driver of wealth inequality.

So, what to do? Well, as long as central bankers and politicians are in the driving seat, there’s really no way of changing the direction of this economic journey. Those in power will always promote policies that advance their own personal interests, and they will do whatever is necessary to delay a global economic crash – even one that would, in the long-run, probably be good for society as it would precipitate structural reforms to the current, broken system.

If there is a solution, it would have to be an alternative monetary system that’s resilient to both inflation and central bank manipulation.

No prizes for stating the obvious there: civilization has aspired to have such a system for millennia. Trouble is, it’s never been that easy to build a monetary network that’s backed by no-one and yet protects the interests of everyone so convincingly that ordinary people will trust it with their life savings. Never, that is, until 2009, when the launch of the bitcoin monetary network gave the world its first taste of decentralized blockchain technology.

The boring bit

Convincing readers about the technical benefits of blockchain is a bit like convincing overweight people about the health benefits of dieting. The proof is in the pudding, as it were. And the average person on the street has no more inclination to become an expert in food science – the ‘how’ or ‘why’ a given diet is effective – than they do computer programming.

That said, you can’t understand the genius behind bitcoin without having at least a basic grasp of the revolutionary nature of blockchain technology – so here goes.

Trust is everything. I’ve already alluded to the fact that creating a monetary system from scratch is virtually impossible because money has no value unless enough people believe it has value. The easiest way to foster that belief is to get a government to pledge to uphold – or back – its value (think of that “promise to pay the bearer on demand” you see on banknotes). Another, more tenuous way is to come up with a universally appealing asset that has a fixed supply. Gold ticks this box nicely: it’s aesthetically attractive; it can’t be forged because of its unique density; and it can’t be manufactured by anyone, so there’ll only ever be as much gold on the planet as the planet already holds (shiny asteroids notwithstanding).

Then again, gold is a pain in the ass. It’s heavy, so it’s a burden to carry and transfer. It’s not easily divisible, so it’s hard to pay precise amounts with it. Not many people do their weekly shop with gold. But what if you could create a digital version of gold that weighs nothing, moves at the speed of light, and is divisible to the tiniest fraction of value. Sounds great. Also impossible. Until 2009.

If you only understand one thing about what blockchain technology does, let it be this: for the first time in history, blockchains give us genuinely immutable data.

That means the information contained within them cannot be changed. Ever. How they achieve this takes time to understand: it’s to do with the decentralized nature of the ledger, which lists all the transactions ever made on the blockchain and is secured by 1) the number of copies in existence (full nodes, all of which are cross-checked against each other); 2) the process through which new data is written (cryptographic encryption); and 3) the energy consumption of the network (the hashrate, which makes it impossible to overpower – or change the course of – the encryption process). I might have lost you there. But the end result isn’t difficult to grasp. Once you have immutable data, you have the ability to create autonomous digital money.

By ensuring that bitcoin’s transaction history can never be altered, mankind has created a digital asset that satisfies five of the criteria for money: it’s durable, portable, scarce, divisible and fungible (interchangeable). The final criteria – acceptability, or the willingness of people to conceive of bitcoin as real money – will be determined not by its technical traits but by humanity’s attitude towards it. In an increasingly digital age, the outlook is favorable.

Bitcoin’s detractors – and there are many; typically old, middle class people who’ve become very rich from the status quo – cite a different definition of money: that it must be embraced by society as a medium of exchange; a unit of account; and a store of value.

Bitcoin fails on all fronts, they say, as too few people use it on a daily basis, and the price is too volatile to measure or store value. Maybe so, today. But it’s also attained a market cap of $1 trillion in just 12 years. Is that not rather swift progress?

And what of the dollar and the other fiat currencies? Are they convenient mediums of exchange across international borders? Do they give us stable, predictable prices year after year? Most important of all, are they a store of value in an era of high inflation? If you’ve ever complained about the rising cost of living, you already know the answer.

Tyler Durden Mon, 11/22/2021 - 15:05

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Stocks

What Are the Advantages of Wind Energy and Solar Energy?

Wind power and solar power are considered the two primary choices for clean energy.As clean technologies, both solar energy and wind power significantly decrease pollution and have minimal operational costs. These are attractive reasons to make the switch

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Wind power and solar power are considered the two primary choices for clean energy.

As clean technologies, both solar energy and wind power significantly decrease pollution and have minimal operational costs. These are attractive reasons to make the switch to clean energy solutions — but there's certainly more to wind and solar energy than that.

Here the Investing News Network provides a brief introduction to wind energy and solar energy, from the advantages of renewable energy to the future outlook for these clean energy technologies.


What are wind energy and solar energy?


Putting it simply, wind energy is the process of using the air flowing through wind turbines to automatically generate power by converting the kinetic energy in wind into mechanical power.

Wind energy can provide electricity for utility grids and homes, and can be used to charge batteries and pump water. The three main kinds of wind power are broken down as follows by the American Wind Energy Association:

  • Utility-scale wind: Wind turbines bigger than 100 kilowatts that deliver electricity to power grids and end users via electric utilities or power system operators.
  • Distributed wind: Wind turbines smaller than 100 kilowatts that are used to directly provide power to homes, farms or small businesses.
  • Offshore wind: Wind turbines placed in large bodies of water, generally on the continental shelf.

Interestingly, wind energy can also be considered an indirect form of solar energy. That's because winds are widely described as being caused by the uneven heating of the atmosphere by the sun, the irregularities of the Earth's surface and rotation of the Earth.

Solar power is energy derived from the sun's rays and then converted into thermal or electrical energy.

According to the Solar Energy Industries Association, solar energy can be created in the following three ways: photovoltaics, solar heating and cooling and concentrating solar power.

  • Photovoltaics: Generates electricity directly from sunlight via an electronic process to power small electronics, road signs, homes and large commercial businesses.
  • Solar heating and cooling: Uses the heat generated by the sun to provide water heating or space heating and cooling.
  • Concentrating solar power: Uses the heat generated by the sun to run traditional electricity-generating turbines.

What are the advantages of wind energy and solar energy?


With the basics of wind and solar energy in mind, let's look at the advantages of these two clean energy sources.

As carbon-free, renewable energy sources, wind and solar can help reduce the world's dependence on oil and gas. These carbon fuels are responsible for harmful greenhouse gas emissions that affect air, water and soil quality, and contribute to environmental degradation and climate change.

Aside from that, wind and solar energy can give homeowners and businesses the ability to generate and store electricity onsite, giving them backup power when their needs cannot be filled by the traditional utilities grid.

For example, during California's most recent wildfire season, large-scale utilities companies such as PG&E (NYSE:PCG) shut off power to tens of thousands of people in an effort to prevent fires like those linked to downed power lines. In cases like this, solar energy generated onsite could not only help fight climate change, but also act as a reliable backup source of energy.

Solar panel installations are easy to do and can also create energy bill savings. In some regions, users may qualify for tax breaks or energy rebates if they produce excess energy that can be delivered to the utility grid. In Canada, there are at least 78 clean energy incentive programs available that offer a combined total of 285 energy-efficiency rebates and 27 renewable energy rebates.

Both solar energy and wind energy are on the path to becoming the world's most affordable sources of energy.

"Land-based utility-scale wind is one of the lowest-priced energy sources available today, costing 1-2 cents per kilowatt-hour (kWh) after the production tax credit," according to the US Department of Energy. "Because the electricity from wind farms is sold at a fixed price over a long period of time (e.g. 20+ years) and its fuel is free, wind energy mitigates the price uncertainty that fuel costs add to traditional sources of energy."

The price of harnessing the sun's power is dropping each year due to technology advancements. In fact, the cost of residential photovoltaic solar power has slid from US$0.50 per kWh in 2010 to US$0.128 per kWh in 2020, according to US Department of Energy figures. The US agency estimates that solar costs will fall further to US$0.05 by 2030. On a grander scale, utility photovoltaic costs already sat at only US$0.045 as of 2020.

Future outlook for wind energy and solar energy


Looking ahead for wind energy, the Global Wind Energy Council estimates that 435 gigawatts (GW) of new capacity will be added from 2021 to 2025. Government support will be a key driver, giving way to market-based growth.

"The world needs to be installing an average of 180 GW of new wind energy every year to limit global warming to well below 2°C above pre-industrial levels," state the report's authors, "and will need to install up to 280 GW annually from 2030 onwards to maintain a pathway compliant with meeting net zero by 2050."

As for solar energy, the International Energy Association's (IEA) World Energy Outlook 2021 report pegs solar as now cheaper than coal. Along with wind energy, solar energy is expected to make up 80 percent of the global electric energy market by 2030. "Since 2016, global investment in the power sector has consistently been higher than in oil and gas supply," explains the IEA report. "The faster that clean energy transitions proceed, the wider this gap becomes, and as a result electricity becomes the central arena for energy-related financial transactions."

Lux Research predicts that the transition from fossil fuels to renewable energy sources will be accelerated by several years due to the impact COVID-19 is having on energy markets all over the world.

The firm notes that economic relief packages contain trillions of dollars for renewable energy technology research and development, and for the deployment of low- and zero-carbon infrastructure. By 2025, Lux sees COVID-19 resulting in accelerated investment in energy storage and power-generation projects.

Ways to invest in wind and solar energy


There are many investment opportunities in the renewable energy markets.

For investors interested in wind energy, there is the First Trust ISE Global Wind Energy Index Fund (ARCA:FAN), which was created on June 16, 2008. It tracks 50 holdings, including wind energy giants Vestas Wind Systems (OTC Pink:VWSYF), Boralex (TSX:BLX) and Siemens Gamesa Renewable Energy (OTC Pink:GCTAF), to name a few.

Our list of renewable energy stocks on the TSX may also be worth considering.

This is an updated version of an article first published by the Investing News Network in 2018.

Don't forget to follow us @INN_Technology for real-time news updates!

Securities Disclosure: I, Melissa Pistlli, hold no direct investment interest in any company mentioned in this article.

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Spread & Containment

Gold Trends 2021: Price Sheds 6 Percent Following Record 2020

Click here to read the previous gold trends article. After soaring to an all-time high of US$2,058.40 per ounce during 2020, gold has faced headwinds in 2021.Values for the yellow metal started the year at US$1,898, but the level proved unsustainable…

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Click here to read the previous gold trends article.

After soaring to an all-time high of US$2,058.40 per ounce during 2020, gold has faced headwinds in 2021.

Values for the yellow metal started the year at US$1,898, but the level proved unsustainable and gold had sunk to US$1,700 — still its year-to-date low — by the end of the first quarter.

Positivity in the second quarter pushed the precious metal to its annual high in May, when the price touched US$1,903; however, it soon retreated to the US$1,760 range a few weeks later.


Since then, the currency metal has struggled to breach US$1,800, and many experts are pinning its price volatility on broader monetary issues. Read on for a look at trends that impacted gold in 2021.

Gold trends 2021: Key headwinds keeping the metal down


2021 gold price chart

Speaking to the Investing News Network, Brian Leni, editor of Junior Stock Review, explained that 2020’s pandemic response led to a massive expansion of global debt and was accompanied by low interest rates, “which the market knows is a recipe for disaster, but it keeps the ‘party’ going, so to speak.”

This environment facilitated gold’s 32 percent price increase between January and August of last year, and ultimately allowed the yellow metal to end 2020 up 21.18 percent from its January start of US$1,552.30.

“Over the last year, however, the gold price has drifted mostly downward,” Leni said.

“In my view, this isn’t because of any fundamental gold market reason. I think that negative price action is the market predicting or expecting the US Federal Reserve to raise interest rates to quell the rampant inflation that we have endured over the last 12 to 16 months.”

With economic stimulus winding down and growing uncertainty emerging around new COVID-19 variants, the Fed is in a precarious position.

“The problem for the Fed is twofold,” Leni said. “First, debt levels are so high that any significant interest rate hikes at this point could easily destabilize the market, causing a cascade effect around the world.”

He continued, “Second, the broader stock market is at all-time highs. Easy money, low interest and lockdowns have given the public more access or interest in the stock market than ever.”

The result is a delicate situation the Fed will have trouble balancing.

“If the Fed raises rates and begins its tightening process, I have no doubt that this will be negative for the broader stock market,” Leni noted. “It’s a big risk to many people’s savings, and the Fed knows it.”

Because of this, he thinks it will be challenging for the Fed to raise rates to the projected 0.25 or 0.5 percent amount in 2022 without causing a widespread ripple effect.

“Ultimately, an investment in gold is an investment in real money,” added Leni. “Real money that can’t be debased and is not simultaneously someone else’s liability.”

Gold trends 2021: ETF outflows preventing ​price growth


After dropping to a year-to-date low of US$1,700 in Q1 and rallying to this year's high point of US$1,903 in Q2, gold remained rangebound between US$1,700 and US$1,800 for most of Q3.

In addition to the factors mentioned by Leni, gold's flat price performance in the third quarter has been attributed to a 7 percent decline in investment demand from the exchange-traded fund (ETF) segment. This trend continued in October, when gold ETF holdings shed 25.5 tonnes.

"Global gold ETF holdings fell to 3,567 tonnes (US$203 billion) during the month — notching year-to-date low levels — as investor appetite for gold diminished in the ETF space following price declines in August and September," an October World Gold Council gold ETF report states.

In comparison to 2020’s record-setting 877 tonnes of inflows, so far 2021 has seen outflows of 269.1 tonnes and modest inflows of 87.6 tonnes. What's more, six of the last 10 months have registered net outflows in the gold-backed ETF segment. The ETF exodus has been attributed to investors adding more risk to their portfolios.

That said, Juan-Carlos Artigas, head of research at the World Gold Council, noted that 2021’s outflows seem disproportionate because 2020, especially Q3, was such a record-setting period for the gold ETF space.

However, he did point out that significant moves in the gold price tend to be influenced by the investment demand segment on a short- to mid-term basis. Looking longer term, overall demand from all segments — including jewelry, technology and bars and coins — is the price driver.

As investment demand shed 7 percent, or 831 tonnes, the gold price was further impacted by total mine production, which ballooned to 959.46 tonnes, up almost 90 tonnes from Q2’s 876.77 tonnes and significantly higher than the 842.72 tonnes mined in the first quarter.

All of gold’s headwinds combined in late September, forcing the metal to a six month low of US$1,726.10.

Gold trends 2021: Inflation threat gaining traction 


As new lockdowns began to emerge toward the end of the year, and stronger variants of COVID-19 started to be detected, some positivity in the broader markets began to erode.

This uncertainty benefited the yellow metal, which edged higher throughout October, starting the session at US$1,761 and ending the 31 day period at US$1,775.

“Gold price strength happened amid higher nominal yields: gold had been generally inversely correlated with nominal bond yields this year,” a November WGC report notes. “However, a rise in inflation expectations outweighed the move in nominal rates and resulted in lower real rates.”

As inflation began to exhibit signs of being more structural and less transitory in the fourth quarter, gold appeared to benefit from the looming uncertainty.

"If you look at the performance of interest rates versus gold over the last 20 years, as interest rates go up, gold sells off,” said Gareth Soloway, chief market strategist at InTheMoneyStocks.com, in early November.

"We haven't seen gold sell off, we've seen gold more chop sideways over the last couple of months as interest rates have gone up. And what that again tells us is that the market is starting to realize inflation is here, and big money is buying every single dip on gold. So I continue to be very, very bullish on gold over the longer term.”


Watch Soloway discuss where gold may go in the months ahead.

These factors are anticipated to be further heightened by changes in asset allocation, which have been fueled by historically low interest rates, pushing investors to add risk to their portfolios earlier in the year. “Because of that, investors are looking for ways to hedge some of that exposure, and that can be supportive of gold,” Artigas said.

By the end of November, gold had rallied to a 60 day high of US$1,803.20 ahead of December volatility courtesy of the Omicron variant, which hampered air travel and forced countries to reimplement quarantine-style protocols.

The spreading variant pushed markets lower during the first week of trading in December. However, gold also faced headwinds, retracting to the US$1,762 level before rebounding to the US$1,780 range.

Gold trends 2021: Industry waiting for a market correction


Despite gold's lackluster 2021 performance, those in the industry have a positive outlook for next year, with many suggesting that the Fed won't be able to stay in control for much longer.


Barisheff explains why gold is the best investment right now.

"The market is due for a major correction. What will cause it and when it will happen is anybody's guess — it could be tomorrow, it could be six months from now," said Nick Barisheff, CEO of BMG Group, who advises investors shed some of their risk when initial losses start to mount.

Rather than rushing to cash, a popular move amid market turmoil, he has other ideas. "Instead of taking your money off the table and going into cash … you go to gold (because cash is devaluing daily),” Barisheff said.

“Gold will at least hold its own and probably appreciate ... so by sitting it out in gold you can wait until the market finishes correcting and then buy back in.”

Don't forget to follow us @INN_Resource for real-time updates!

Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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Lessons From Pearl Harbour And Future Threats

Lessons From Pearl Harbour And Future Threats

Authored by Bill Blain via MorningPorridge.com,

“May God have mercy upon our enemies, because I won’t.”

On the 80th anniversary of Pearl Harbour, it’s worth asking could it ever happen…

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Lessons From Pearl Harbour And Future Threats

Authored by Bill Blain via MorningPorridge.com,

“May God have mercy upon our enemies, because I won’t.”

On the 80th anniversary of Pearl Harbour, it’s worth asking could it ever happen again? A conventional war over Ukraine is clearly a threat – but is it one the Russians would risk without first trying to significantly weaken the West’s resilience though a cyberstrike? As they sow, so would they reap.

Today is the 80th anniversary of Pearl Harbour. “A Day that will live in Infamy”, said President FD Roosevelt. It was the pivotal moment of the Second World War – the event that precipitated the US into the conflict. Many modern historians believe the administration was secretly relieved it happened – overcoming isolationists at a stroke. Although the death toll was lower than 9/11, Pearl Harbour still reverberates around the globe – don’t poke the hornet’s nest. There is nothing like this Morning’s quote above from General George S. Patton to sum up the American attitude to an unprovoked war.

Churchill said he slept “the sleep of the saved” on hearing the news, delighted the Arsenal of Democracy had finally joined the fight. He was right – whatever short-term reverses and stumbles subsequently occurred, the USA’s economic might and production capacity ensured final victory. It’s worth remembering America never declared war on Germany. The Reich declared war on America on Dec 11th – thus also reaping the Allied whirlwind.

We’re all familiar with the story of Japan’s mistake.

The Japanese simply didn’t understand America. They bet the farm on a quick devasting strike, hoping it would encourage the Americans to negotiate on embargos. They achieved a solid tactical win sinking 7 old Battleships, but it was a strategic disaster. They failed to cripple America by sinking the two American Aircraft Carriers on exercise close to the Islands, although they probably could have by adopting a more flexible approach to operational planning. American emerged pre-eminent from the conflict. Japan remains the only nation to have been nuclear bombed into submission.

Does Pearl Harbour hold many lessons for the modern age?

Later today Joe Biden will meet President Putin on the diplomatic equivalent of the Zoom call. Biden will warn about Russia’s troop build-up around Ukraine, while Putin will confabulate about Ukraine being a Nato thorn through Mother Russia’s heart.

It will be a poker game. Putin is betting the West will prove unwilling to sacrifice “boots-on-the-ground” defending an Eastern European nation that essentially was part of Russia for centuries. As is typical in today’s geopolitics, it all accompanied by fake news, misleading headlines, bots and outright misdirection – designed to persuade western audiences its hardly worth intervening.

The US intelligence services sound pretty certain Putin intends us to think he will make a play for Ukraine early in the new year. The units around the border can quickly be brought up to strength with reservists. However, defence analysts have pointed out Russia has limited economic resources, and even scarcer military ones, to sustain any conflict with NATO – should it go to Ukraine’s aid. The days of 8000 Soviet tanks and 57 divisions set to roll over the North German plane are history.

What if Putin has no intention of risking his precious military assets on recovering Ukraine? His best hope is persuading the West to let him have it. The troops on the border may be there as part of a maskirovka – the finely honed Russian strategy and art of deception. Let the enemy see one thing while doing something else.

Maybe the maskirovka is to cover joint action with China – the Ukraine being a front for something gruesome in Taiwan. Unlikely.

What else might it be? The threat of withholding gas from Europe? It would certainly cause misery, but with the ultimate consequence of bankrupting Russia if Europe permanently disengages as a purchaser. A move against the Baltics would be met by trip-wire Nato forces and harden European attitudes even more than a move against Russia.

Perhaps war by other means?

Asymmetric warfare is commonly understood as a bunch of Kalashnikov wielding tribesmen swamping a modern, trained army. A tad embarrassing, and an effective way to undermine apparent military credibility. Just because the Americans so decisively “advanced backwards” from Afghanistan has little bearing on Ukraine.

The other end of the military spectrum – hypersonic missiles able to take out US Carrier groups in the South China Seas and Drone Swarms set to clear the beaches of Taiwan are also unlikely. Ukraine is more likely to be conventional slog – should it come to that.

The threat is more likely to come from another vector.

The West’s critical vulnerability could prove our addiction to digitisation. Western Economies have gone fully digital, making them vulnerable as a prime cyberwar target. The Russians, as we know, are no slouches when it comes to cybercrime.

Yesterday I fired up my new company laptop for the first time. It takes longer to boot up because it’s got multiple new security features built in, plus dual factor authentication. I now use a 12 character password – which would take a normal computer decades to break. The delay is a momentary distraction, but its state of the art software keeps my data and the firm safe. Unfortunately, most UK banks are running code nearly as old as me, and I can pretty much guarantee many businesses are running programmes on a host of obsolete operating systems.

Could the Russians be planning a major cyberstrike to break the West’s resilience ahead of any move on Ukraine? Over the last few years they have attacked and brought down many of the key elements of Ukraine’s economy – and made it clear it was them, demonstrating their abilities. Power, transport and banking have all been attacked, serving notice they won’t hesitate to do it again.

If the Russians can add to the current coronavirus gloom and deepen the sense of foreboding about the stagflationary threat, then why not further break the resilience of the West, and deepen the sense of siege mentality by taking out hospitals, transport, power and mobile phones with targeted cyber-attacks? All of these attack vectors have been tried and tested.

We tend to think the West are the good guys when it comes to Cyberwarfare. As well as hacking into Hillary Clinton’s email, we’ve all read about the Ruskies trying to take out US pipelines and infiltrate Nuclear power stations. There is a great story how a Chinese cyber-warfare unit hacked their way into US oil rig systems by means of a back door via the internet menu of a local Chinese takeaway restaurant.  Cyber warfare has evolved fast.

But so have the Americans and Brits. Under Trump the Whitehouse made no secret it was hitting back at Russian systems. The most successful cyber attack of all time was under Obama’s watch: the Stuxnet worm in 2010, when the Americans and Israelis took out Iran’s nuclear processing ability, got the programme inside the computers and caused uranium refining centrifuges to spin out of control. Earlier this year, the Israelis did it again – taking out a newer layer of Iranian machines.

The Americans let the information on the attack leak out, apparently convinced Iran would never catch up in terms of its cyberwar abilities. How wrong they were. Iran took out Aramco just a few years later with a strike leaving an image of a burning American flag on every PC in the firm. Since then they’ve attacked banks and infrastructure across the US.

The cyberwarfare risks to markets are perhaps as great as a conventional attack. Crashing western banks could trigger a chain of defaults. Banks are effectively only as strong as their counterparties. Even if most banks have strengthened their cyber defences, even one banking default could spread all kinds of financial mayhem.

If the attack is made on soft-targets, hospitals and transport, the effects could make Covid look like a picnic. Taking out satellites and coms would be equally destructive.

The West is more vulnerable because we are now totally reliant on digital apps and function. If the Russians can collapse our system the damage will be greater than anything we can immediately inflict on them.

But, here’s the key lesson from Pearl Harbour. A cyberstrike may well cripple the West. It could prove a devasting tactical victory. Yet, it would ultimately prove a strategic defeat as you can bet the Americans and the West will get more than even over time.

Keep an eye on the Cyber space.

Tyler Durden Tue, 12/07/2021 - 16:45

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