LAS VEGAS – The Dow was more or less flat yesterday…
So, let’s return to the discussion you can’t have with your congressman, your mailman, or your barmaid.
It’s the important one.
It concerns what the Fed is really up to…
Dread and Denial
We have been connecting dots… bringing new readers into the conversation… and organizing our own thoughts.
Instead, we are ruled by a group of insiders we call the “Deep State” who pay little attention to the Constitution or the “will of the people.”
The term Deep State is not original to us. It was first coined to describe anti-democratic elements within the military, the intelligence services, the judiciary, and the mafia that controlled the real levers of power in Kemalist Turkey.
But it is being used more and more elsewhere, as people come to realize what is really going on in their own countries. (Today, we offer a neologism that is more descriptive.)
Your first reaction to the Deep State is likely to be denial or dread.
“It sounds impossible,” you might say. “How come I haven’t heard of this?”
Or: “How can we put a stop to this conspiracy?”
There’s nothing underhanded about it; most of it takes place in plain sight.
The reason you haven’t heard about the Deep State is another important dot we need to connect. To wit, there are facts. And there are myths, delusions, guesses, and opinions.
[Editor’s Note: You can see Bill’s new warning about the Deep State here.]
Gaming the System
True facts are those that would still be true no matter what you think.
You send a pale boy out to the beach; he’ll get a sunburn. Water boils at 212 degrees Fahrenheit at sea level, even if we are in a hurry for our morning eggs.
But apart from these “true facts,” everything else is subject to myth and imagination.
The myth of our constitutional republic, for instance, is so attractive that most people refuse to look beyond it. Not only that, but most of the people who really matter to politics – the trendsetters, the rich, the opinion mongers, and the hacks and hustlers who make the system work – are paid NOT to look behind the screen.
But the real world is not like the movies. And Washington is not what most people imagine. It is more like what you would expect than what you would hope for. We know there are always people who figure out how to game “the system.”
Even in the most absolute monarchy, the king is powerless without a legion of insiders, courtiers, counsellors, ambassadors, hangers on, chiselers, and other assorted cronies. These people collude to use the police power of government to their own advantage.
In pre-revolution France, for instance, privileged groups used their influence – and often brute force – to get assets that would provide them with income, or “rents.”
They were called “rentiers.” And they lived off the productive economy like fat ticks on a dog’s back.
In today’s France, there are plenty of rentiers, too… but they no longer wear powdered wigs.
The New York Times passed on a report yesterday that French president Francois Hollande’s personal hairdresser has been paid more than $10,000 a month for the last four years – roughly the same as the salary of a minister in his government. (See Featured Reads below.)
Everyone wants to get something for nothing. Everyone wants to be a rentier. And every society has them.
But a rentier is a parasite. And the more of them you have, the weaker the economy becomes… until it eventually succumbs to revolution, depression, war, or hyperinflation.
The Deep State is fundamentally a parasitic elite. Their main objective is to transfer wealth and power from the people who earn it to themselves.
That is why we propose to call the Deep State, instead, the “Parasitocracy.”
One of the major breakthroughs of the Parasitocracy in modern times was the money system announced by President Nixon in August 1971.
Interrupting the popular TV show Bonanza, Nixon made two major declarations.
The first was that, henceforth, wages and prices would be controlled. This was such a bomb that it completely blew away interest in the second one: that henceforth, the world would have a new money system.
Every jackass politician and blowhard commentator had an opinion on wage and price controls. But no one knew what to make of the new dollar.
The U.S. would no longer honor its promise to its foreign creditors to convert their dollars for gold at the fixed price $35 an ounce. But was that a bad thing?
Maybe a more flexible currency really would be good for the economy. Maybe we really shouldn’t let the French… who at the time were trying to convert their dollars for gold… to take away so much U.S. treasure. Who knew?
And now… 45 years later… we are just finding out…
By Jeff Brown, Editor, Exponential Tech Investor
June was an exciting month in the world of high-performance computing.
During the opening of the International Supercomputing Conference held in Frankfurt, Germany… China revealed its “Sunway TaihuLight” supercomputer.
China’s Sunway TaihuLight supercomputer
As it turns out, this comes as somewhat of an embarrassment to the United States on a few fronts…
The Sunway TaihuLight supercomputer is capable of operating at a speed of 93 petaflops. (A petaflop is a million times faster than a gigaflop, which is 1 billion floating operations per second.) That’s more than five times faster than the fastest supercomputer in the U.S. – the Department of Energy’s Titan – which operates at only 17.6 petaflops.
Not only does China have the fastest supercomputer on the planet… it also has the largest number of supercomputers and the largest combined computer processing power in the world.
What makes this incredible is that a mere 15 years ago, China had none of the top 500 supercomputers in the world. And the Sunway TaihuLight uses only China-produced semiconductors to achieve its world-record performance.
All this puts the United States in the position of playing catch-up.
In an effort to reclaim the top spot in supercomputing, the U.S. launched the National Strategic Computing Initiative last summer with the stated goal of reaching a performance level of an exaflop. (An exaflop is 1,000 times faster than a petaflop, or a billion billion floating operations per second.)
In the meantime, Oak Ridge National Laboratory (which houses the Titan) is preparing for the early 2018 delivery of a new supercomputer named Summit. It will be capable of operating at 200 petaflops.
This will be about twice as fast as China’s fastest computer (assuming it does not build an even better supercomputer before then).
One of the key companies behind the Summit’s capability is NVIDIA. And it should be a core holding of any serious technology investor.
NVIDIA’s Volta graphics processor units (GPUs) are used throughout IBM’s Summit as computing accelerators. Put simply, IBM’s Summit couldn’t achieve anywhere near the 200-petaflop performance without the support of NVIDIA’s GPUs.
Not Just a Matter of National Pride
Powerful supercomputers are not just a matter of national pride. They are an absolute necessity for technological advancement of society.
Complex problem-solving related to things like global climate, oceanography, cosmology, and very practical things, such as advanced materials design, medical research, genetics, and national security, all require this kind of computing power.
And with costs dropping exponentially – a single gigaflop that would have cost 8.3 trillion inflation-adjusted dollars in 1961 cost only $0.06 by 2015 – this is all possible.
The amount of progress made in computing in the last 50 years is absolutely extraordinary, but it is nothing compared to the progress that will be made in the next 10 years.
This is where some of the most exciting investment opportunities of our lifetimes will be found.
P.S. To hear more of Jeff’s insight on which small tech companies are set to skyrocket – and which supposedly safe blue chips are poised to collapse – register here for instant access to his free interview series with Amber Lee Mason.
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We’re on the Cusp of an Explosion in the Silver Price
Silver prices are about to hit a new all-time high, according to John Embry, the chief investment strategist at Sprott Asset Management. And a big driver of higher silver prices is ultra-low rates.
“Coiffeurgate” Scandal Hits French President
The new scandal to hit (balding) French president Francois Hollande is “coiffeurgate.” Hollande pays his hairdresser $10,000 a month out of the public purse… about the same as a government minister’s salary.
In Case You Missed It…
After correctly predicting that the Fed would not raise interest rates… and that Britons would vote to leave the EU… currencies expert Jim Rickards made a new prediction about gold.
Great feedback today on our Diary Special Edition about self-driving cars – “Throw Your Driver’s License Out the Window” – by tech expert and angel investor Jeff Brown…
There’s much interest in self-driving cars. But it will be years before the U.S. highways and byways will be converted to self-driving vehicles.
One doesn’t have to guess who will be most interested in the long-term… none other than our federal government. Think of how an Obamacare system would work for those who wish to drive on U.S. highways – everyone in the pool, and total control.
For sure, no personal test driving at 90-100 mph on U.S. highways. That will be reserved to what will become quaint race car driving on tracks built for such.
– Nat L.
And what do you think will happen to all of the current driving jobs when we become an autonomous vehicle society?
This sure seems like a positive step in terms of accident avoidance, lost time, and less vehicle congestion. But it will be a huge hit for the employment numbers. We will adjust. But there are numerous jobs moving toward automation in a society with a growing population.
– Brian B.
I’d like to hear some follow-up conversation from Jeff Brown concerning Tesla – especially his perspective on the (recent) departure of several high-level folks from that organization.
– Pat M.
Chris comment: In last week’s Q&A with Amber Lee Mason, Jeff gave his personal investment opinion of Tesla. He also covered Amazon, IBM, Apple, and seven other popular tech companies.
For instant access to the audio of that Q&A – and to be automatically registered for this week’s free online training session with Jeff – go here.