Authored by Toby Young via DailySceptic.org,

If you haven’t signed the Free Speech Union’s petition urging the CEO of ITV not to fire Jeremy Clarkson, please do so now.

Meanwhile, Clarkson has written a blistering attack on the woke takeover of Britain in yesterday’s Sunday Times.

Here’s how it begins:

My son came over for a father-and-son pre-football supper the other day, and as he fussed over the Aga, making a particularly fine stir fry, we laughed about what innocuous word had been banned that day and who’d been cancelled. And then, after a pause, he said with a solemn face, “You do know there’s a war going on, don’t you?”

He wasn’t talking about Ukraine. He was talking about a full-on left-wing campaign to unstitch and burn the fabric of Britain. And the genius is that no one really knows that what they’re doing is serious. We laugh as they change the name of the Sir Francis Drake Primary School to something less slavey. We think it’s all a big joke. But it isn’t.

Think about what typically happens in a military operation and then look what the woke left has done here. It’s seized control of our television and radio stations to such an extent that last week Sophie Raworth said, on the BBC News at Six, with a straight face, “And over now to our LGBT and diversity correspondent …”

And TV drama? Unaffected? Right, and when was the last time you saw a fictional police force hunting a gang of Muslim extremists? It’s always the far right. And it’s the same story in comedy. Say anything you like about Boris or Rishi and the laughter track is turned up to 11. Make a joke about she/him pronouns or Greta Thunberg and they’ll blow a piece of tumbleweed across the stage.

In sport we sometimes have three women doing the punditry at a men’s football match, and if anyone remarks on this on Twitter, they are immediately singled out for the india-rubber treatment. And who’s doing the erasing? Who’s making the rules? That’s just it. We don’t have a clue. What we do know is that, having taken control of the television stations, without a shot being fired, they turned their attention, like any conquering army, to the schools. Here they went fully Pol Pot, doing a comprehensive year-zero job on the curriculum so that kids would know their parents were all racists. Apart from those with “unconscious bias”. Who were racists as well.

You probably think, because you don’t know this war is going on, that when you drop little Johnny off at the school gates he’s going to learn the nine times table that day. No, he isn’t. He’s learning that he might actually be a girl, which is why there are probably tampon dispensers in the boys’ lavatories.

With all this in place, they set about the police, and here they’ve done a tremendous job. Because, so far as I can tell, almost all the officers in the Met — apart from the terrifying number of sexual perverts — are now more wide awake than a frightened fox.

When some young people with green hair glue themselves to the road, large numbers of officers are dispatched to stand around looking at them. And they are only ever removed from the tarmac if they promise to go immediately to the nearest art gallery and throw some soup at a painting.

Has Clarkson been red-pilled by his recent punishment beating at the hands of the progressive thought police?

Worth reading in full.

Here’s Paul Joseph Watson’s take…

And don’t forget to sign the petition!

Days after widespread reports that Russia had erected Pantsir-S1 anti-air defense systems on top of some key buildings in Moscow, which triggered speculation that Russia is expecting more attacks from Ukraine on its soil, the Kremlin ramped up anti-air exercises outside Moscow.

The defense ministry confirmed in a Saturday statement, “In the Moscow region, a training session was held with the personnel of the anti-aircraft missile brigade of the Western Military District on repelling air attacks on important military industrial and administrative facilities.”

The combat exercise was centered on operation of a S-300 anti-aircraft missile system. “As they marched, soldiers repelled an attack by a mock enemy sabotage group on a military convoy,” the statement continued.

“Under the cover of a smoke screen, the air defense convoy was able to get out of the attack and continue fulfilling its tasks,” the defense ministry said in reference to the 150 soldiers that participated. 

Russia has suffered several drone attacks on its soil coming from Ukraine, including multiple strikes in past months on Engels military airfield in the Saratov region, which lies 600km deep inside Russia.

While Moscow itself hasn’t seen any such ariel strikes, there has been speculation that key facilities in the region have been hit with sabotage attacks – but this has remained unconfirmed from the Russian side, which is unlikely to admit such attacks when they do occur.

⚡️Another “Pantsir-S1” was placed on the roof of the Ministry of Internal Affairs in Moscow. pic.twitter.com/8mKzNF8CJY

— War Monitor (@WarMonitors) January 21, 2023

As Russian forces make gains this month in the east and south of Ukraine, particularly in the southern Zaporizhzhia region as well as near city of Bakhmut in Donetsk, it appears the Kremlin could be making preparations for possible counter-attacks directly on its soil, and as NATO countries deepen their involvement in the conflict.

Via The Cradle,

A Kurdish delegation representing the Syrian Democratic Forces (SDF) concluded a visit to Damascus on Friday after meeting with several representatives of the Syrian government over the prior few days, Lebanese newspaper Al-Akhbar reported.

The delegation was headed by the foreign relations chief of the Autonomous Administration of North and East Syria (AANES), Badran Jia Kurd, and arrived in the capital on January 17. According to the report, the last few meetings did not result in anything significant, but the “prevailing impression” is that both sides are willing to continue along the path of dialogue, despite US warnings.

“These are preliminary understandings between the two sides, on things such as Syrian territorial integrity, the national flag, and the presidency of Bashar al-Assad,” it states.

It adds that Washington has repeatedly warned the SDF “not to engage in bilateral dialogue with the Syrian government [and not to] think of any military solutions with it,” even if the reconciliation process fails. This is based on the “realization that any military solution [between the two] may turn into a war of a civil and ethnic nature,” it adds, which could be referring to a potential outbreak of direct clashes between Turkish and Kurdish ground forces, or even Syrian and Turkish ground forces.

Nonetheless, sources have told the newspaper that the overall atmosphere of the visit to Damascus and the Kurdish-Syrian talks were “positive,” particularly for the SDF, which reportedly appreciated Syria’s firm position not to go forward with reconciliation until there is a clear and official Turkish intent to withdraw its military forces from the country.

“There is a consensus between the two sides on the need to maintain the course of dialogue while searching for points of convergence to take advanced steps in the future,” the sources were quoted to have said.

In the aftermath of the 18 January meeting between US Secretary of State Anthony Blinken and Turkish Foreign Minister Mevlut Cavusoglu, the SDF has expressed renewed fear over Turkey’s long-promised ground offensive.

These fears were reinforced by the joint US-Turkish statement released shortly after the meeting, vowing the continuation of Washington and Ankara’s fight against “Daesh, PKK, Al Qaeda, and all other terrorist organizations and their extensions.”

The Kurdish fears have also been exacerbated by the Turkish military bombardment and a significant escalation of tensions in Ain al-Arab and other areas across northern Syria, beginning on January 13 and persisting onwards. As a result, the SDF bombarded a Turkish base and the positions of Turkish-backed militants on January 20.

Authored by Nick Giambruno via InternationalMan.com,

In the Middle Ages, the Catholic Church convinced the commoners to buy indulgences to alleviate their sins. And they made a fortune in the process.

Similarly, today, our overlords—the mainstream media, central bankers, and their political allies—are working overtime to convince the commoners to pay for their alleged climate sins.

Enter carbon credits, government-issued permits that grant you the privilege to emit a certain amount of carbon dioxide.

Although advocates promote them as a way to “save the environment,” in reality, carbon credits are nothing more than a devious mechanism to tax, regulate, and control you.

It’s not a coincidence that the most philosophically and ethically bent people are promoting them.

For example, at a recent World Economic Forum (WEF) meeting in Davos, participants revealed and touted an “individual carbon footprint tracker.” It will track where people travel, how they travel, what they eat, and what they consume.

Carbon accounting is already creeping into many places, like Google Flights.

A federal carbon tax is already a reality in Trudeau’s Canada, and it’s causing the price of food and other goods and services to soar. But Canadians haven’t seen anything yet—the federal carbon tax will triple by 2030.

In short, there’s a growing push to implement the carbon credit scam worldwide. And that’s not a coincidence.

Remember, central banks only exist to harvest wealth from the populace through inflation and redirect it to the politically connected, an insidious practice known as seigniorage.

Fiat currency is the usual mechanism central banks use to perpetuate this fraud. They get most people to run on a hamster wheel most of their lives chasing after confetti money they create with no effort.

However, there is a limit to this process.

For example, the governments in Venezuela and Zimbabwe have debased their currencies to such an extent that they are worthless. They have squeezed as much wealth out of their populations through seigniorage as possible.

Governments in the US, Canada, the EU, and others still benefit from seigniorage, but they sense they are not getting as much juice from the squeeze as they used to. Price increases are hitting multi-decade highs, and the US dollar, the euro, and other fiat currencies are quickly losing their luster.

In other words, central banks are debasing fiat currencies to the point where they can no longer extract as much seigniorage as they used to. That presents bankrupt Western governments with a big financial problem and is why they need to find a new way to harvest wealth from their citizens.

That’s where carbon credits come in. They’re the new mechanism of seigniorage designed to transfer wealth from you to the politically connected.

The idea is to get people to run on the hamster wheel chasing carbon credits, an artificial construct governments create with no effort.

Think of it like this…

Imagine if Tony Soprano forced everyone in his neighborhood to buy “breathing credits” from him, which grant you the privilege to breathe a certain amount of air. And that, naturally, it would cost Tony Soprano nothing to create as many of these “breathing credits” as he wanted. He could also hand them out to his friends and others who did favors for him, creating a corrupt patronage system.

This is basically what governments plan to do with carbon credits. Except they are also gaslighting you by telling you they are helping save the planet. Without that patina of propaganda—which the media, academia, and the rest of the establishment reinforce—there’s a good chance the people would revolt.

What To Do

The foundation is being laid to create a totalitarian system to track, control, and tax carbon—an element that touches every activity of human life.

Carbon credits are merely a way for governments, central bankers, and their allies to control the populace and secure continued seigniorage as the fiat currency system flounders.

It’s the biggest scam since the indulgences of the Middle Ages.

The good news is that there is still time to fight back. The bad news is that there isn’t much time.

The most effective thing the average person can do is to not store their life savings in fiat currencies and thus starve governments of seigniorage. That way, central bankers and their allies cannot use inflation to siphon off your monetary energy to fund the carbon credit system and other aspects of their nefarious agenda.

In other words, don’t put your life savings into something that someone else can create with little or no effort.

How do you go about doing that?

I just released an urgent report with three specific steps anyone can take today.

Click here to download the PDF now.

Authored by Caitlin Johnstone,

Critics of the US empire have spent months compiling mountains of evidence showing that the empire knowingly provoked the war in Ukraine. Supporters of the US empire have spent months posting dog memes and accusing strangers of being paid by Putin. It’s clear who’s in the right.

So does everyone else in the world get a vote on whether their lives should be risked in an offensive to control who governs Crimea? Or will the Biden administration just be making that call on behalf of all living creatures?

It’s so crazy how the fate of everyone alive and everyone who could potentially be born in the future is riding on the way two governments choose to navigate a conflict in Ukraine, just because those two governments have most of the world’s nuclear weapons. It’s like two people in a bar getting into a brawl that kills everyone in their city. Nobody else in the world gets a vote on the decisions being made that could kill everyone alive and end humanity forever; just a few people within those two governments and their militaries.

❖

The US empire is telling Moscow “I’m the craziest motherfucker around, I’ll keep ramping up the brinkmanship looking you right in the eye and daring you to use nukes,” while telling the rest of the world “I am the voice of sanity that you should all look to for leadership.”

One of the empire’s faces is the virtuous upholder of freedom and democracy, while the other face puts on an intimidating show of viciousness like a prisoner biting off someone’s cheek in the prison yard. At least one of those faces is necessarily lying.

❖

Literally the only reason mainstream westerners are fine with the US empire’s nuclear brinkmanship with Russia is because most don’t understand it, and those who do understand it don’t think very hard about it. They avoid contemplating what nuclear war is and what it would mean.

Whenever I touch on this subject I get a bunch of replies like “Yeehaw! That’s right bitch, we’re standing up to Putin!” They’re not approaching the subject with anything like the gravity they would if they understood what’s happening and had seriously thought about what could be. They don’t understand how horrifyingly dangerous it is that the empire is considering backing a Crimea offensive, and they haven’t sincerely contemplated what it would be like for every living creature to die horribly and for no one else to ever be born again for all of time.

Whatever position you have on this whole conflict, you should be approaching the possibility of nuclear annihilation with the most profound solemnity imaginable, because it is without exaggeration the single worst thing that could possibly happen. Take it seriously, or be silent.

❖

If a nuclear war between Russia and NATO erupts, the answer to the question “Was it worth it?” will be a decisive “No.” Not just for people like me, but for everyone, no matter how sympathetic they are to the western power structure and no matter how much they hate Russia. If their answer isn’t “no” immediately, it will be their answer in a matter of hours. If people don’t immediately understand the horror that’s been unleashed upon our world and how nothing could possibly have been worth it, they will understand it in short order.

❖

The term Mutually Assured Destruction was first coined by Hudson Institute’s Donald Brennan in 1962, but he used it ironically, spelling out the acronym “MAD” in order to argue that it’s insane to hold weapons that can cause armageddon. These games of nuclear chicken are insane.

The argument for nukes is that the threat of their use wards off the large-scale conventional wars we saw in WWI and WWII, but that only works if the fear of their use deters conventional attacks. The US empire is getting more and more brazen with its proxy warfare against Russia.

It used to be undisputed conventional wisdom that hot warfare against Russia must be avoided at all costs because they’re a nuclear superpower. Now the idea of backing full-scale offensives to carve off pieces of the Russian Federation is gaining widespread mainstream traction. This disintegrates the uneasy stability that MAD is theoretically supposed to create, because MAD assumes the other side won’t be crazy enough to launch conventional offensives against a nuclear superpower due to fear of rapidly spiraling escalation into full-scale nuclear war.

If you’ve got two people pointing pistols at each other, an exchange of gunfire might be avoided for fear of retaliation. But if one of the gunmen breaks the standoff by walking toward the other holding a knife in his other hand, odds are the other guy pulls the trigger.

❖

I hate it when I get people saying “I hope we do nuke ourselves off the map, we’re horrible.” It’s not okay for a few idiots to be playing games with every life on this planet. Just because you’re unhappy with life here doesn’t mean all the innocents around the world are, doesn’t mean the animals are, the bugs, the trees. Your disaffected feelings are not a valid reason not to fight this thing tooth and claw. Keep your omnicidal ideations to yourself.

❖

Westerners frame the idea of nations like Russia and China “attacking their neighbors” as though that’s somehow less moral than the US attacking nations on the other side of the planet who cannot possibly pose any threat to US national security. At least Russia can make an argument that its invasion of Ukraine was in its national security interests due to US/NATO militarization there, and China could make similar arguments if it ever attacks Taiwan. US wars are done solely to defend US planetary domination, not the US.

❖

Liberals are all about examining privilege except when it comes to western privilege. Then they’re more than happy to blow up everything and everyone for their belief in their inherent ideological superiority and their right to rule over every single country on earth.

❖

Facebook, Instagram and Whatsapp are no longer designating the neo-Nazi Azov Regiment as a “dangerous organization.” To be clear, nothing has actually changed about the Azov Regiment. It’s still the same people with the same ideology. All that changed is the Official Narrative.

For years and years, up until just last year, the mass media had no problem acknowledging that Ukraine has a Nazi problem and calling Azov neo-Nazis what they are. All that changed is we moved into an information ecosystem of aggressive war propaganda.

No amount of PR rebranding will magically transform Azov neo-Nazis into wholesome moderates. You can change Kentucky Fried Chicken to KFC, but it’s still the same stuff in the bucket.

*  *  *

My work is entirely reader-supported, so if you enjoyed this piece please consider sharing it around, following me on Facebook, Twitter, Soundcloud or YouTube, throwing some money into my tip jar on Ko-fi, Patreon or Paypal, or buying an issue of my monthly zine. If you want to read more you can buy my books. The best way to make sure you see the stuff I publish is to subscribe to the mailing list for at my website or on Substack, which will get you an email notification for everything I publish. Everyone, racist platforms excluded, has my permission to republish, use or translate any part of this work (or anything else I’ve written) in any way they like free of charge. For more info on who I am, where I stand, and what I’m trying to do with this platform, click here. All works co-authored with my husband Tim Foley.

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Authored by Paul Craig Roberts,

Tucker Carlson provides an excellent 12 minute report about the CIA’s removal of President Kennedy and President Nixon. I recommend that you watch it 2 or 3 times until it sinks in and forward it to all of your friends and relatives. There is nowhere else  you can get so much solid and important information in 12 minutes.

Carlson believes that Biden, no longer useful to the establishment, is currently undergoing removal.

I have reported the truth about the removal of Presidents Kennedy and Nixon from office for decades.  It was thrilling to me to see after a half century Tucker Carlson give the same explanations to such a large audience.  If Americans could only wake up and become involved it might be possible to save our country and the liberty of Americans.

President John F. Kennedy was murdered by the CIA and US Joint Chiefs of Staff once he realized that the government he headed was not the real government.  His predecessor President Eisenhower, a 5-star general, warned about the threat to democratic government posed by the military/industrial complex.  President Kennedy intended to do something about it while the president still had some power, but he was struck down before he could do more than fire CIA Director Allen Dulles and Joint Chiefs of Staff Chairman General Lyman Lemnitzer.  President Kennedy wasn’t able to get rid of General Lemnitzer, who transitioned to Supreme Allied Commander of NATO. Both Dulles and Lemnitzer are suspected of directing the plot against Kennedy’s life.

President Nixon was the best informed and best respected abroad president of any in US history.  He kept in touch with foreign leaders and was well informed about historical and current events.  But he also, like Kennedy and Trump, over estimated the power of the president.

Nixon incurred the wrath, as I once again reported on January 19 of the military/security complex with his arms control agreements with the Soviet Union and his opening to China.  The assassination of  President Kennedy was so obviously an in-house murder, covered up by the CIA’s media whores and the Warren Commission, that the CIA dared not murder a second president.  Instead, the CIA saw that one of its operatives was placed as a journalist at the Washington Post, a long-time CIA asset, never a newspaper, to head the “Watergate” investigation of President Nixon which was used to drive him from office despite Nixon being reelected by the largest margin in US history.

Donald Trump, being a real estate mogul, knew nothing of Washington or who really rules it.

By declaring his intention of normalizing relations with Russia, he blindly took on the CIA and the subterranean rulers of the US.  

And again the media was used to get rid of him:  “Russiagate,” two impeachment attempts, “January 6 Insurrection,” and now “Documents gate.”

The President isn’t even protected by the Secret Service.  As the tourist video clearly shows, the Secret Service men along the side of President Kennedy’s open limo in Dallas were called away by a Secret Service superior.  The video shows the resistance of one of the Secret Service agents to the order.  Once the Secret Service agents were removed, the video shows that Kennedy was killed from a bullet from in front that blew out the back of his head. The video shows his wife reaching out on the back of the limo to get the back of his blown away head.

Despite this clear cut undeniable evidence  the Warren Commission ruled that Kennedy was shot from behind by Oswald, the patsy that the CIA had lined up to take the blame. Before Oswald could talk or be questioned he was killed in police custody by Jack Ruby  (Jacob Leon Rubensein), a person whose presence is inexplicable,  who was permitted by the police to be armed next to Oswald.

The bulk of the insouciant American population fell for this most improbable of all accounts, but many intelligent people did not.  

So the CIA did not dare murder Nixon physically. They used their Washington Post asset to murder him politically, as they used media to get rid of Donald Trump.

Americans who think they live in a democracy are out to lunch. Americans, so easily fooled time and again, are the reason we have lost our country and the freedom and the hope that it once represented in the world.

How many Americans understand that they no longer live in a free country,  that they are the ruled subjects of they know not who? Voting is a cloak, a deception.  No one the people prefer can be elected to the office of president.  If, like Trump, he gets there unexpected, he is removed.

The founder of American civil liberty, Thomas Jefferson, warned us that freedom cannot exist more than 200 years before it has to be refreshed by bloody revolution. He overestimated the life of freedom.  

Over the course of my life the meaning of freedom has changed.  It no longer means what the Founding Fathers, today denounced as racists, meant, which was self-rule and freedom from oppressive government. Today freedom is the freedom of blacks to rob stores without prosecution,  the freedom of the government and its media whores to censor and suppress truth, free expression, and free association, the freedom of government to arrest and imprison people who exercise their civil liberties as “insurrectionists,” the freedom of government and its media whores to brand truth-tellers as “threats to democracy” who are guilty of spreading “misinformation,” the freedom to take away the medical licenses of doctors who saved lives by using medicines banned by Big Pharma’s treatment protocols.

People born in recent decades have no idea how off the wall this is to someone who lived in the real America in the past.  When my  generation passes, there will be no one alive who knows what America once was.

Covid supply chain snarls turned millions of Americans into “preppers” overnight. The run on toilet paper, food, guns, ammunition, and other essential items for survival pushed millions to consider preparedness for a crisis.

Remember all those old-school preppers? The media used to refer to them as “extreme” and even called them “tin-foil hat conspiracy” folks, but during the shutdowns, those folks were right, and the mainstream media got it wrong. 

The next shortage underway is eggs. Readers have seen our notes on supermarkets nationwide running out of eggs. The egg shortage is so severe that last week the US Customs and Border Protection reported that egg smuggling from Mexico erupted. 

And why is that? Well, a dozen Grade A eggs in the US have topped $4.25 at supermarkets. In Mexico, a 30 count of eggs is about $3.40. 

US egg prices have topped the national average gasoline per gallon price at the pump. 

As a result of the egg crisis, internet search trends on Google show Americans are panic searching where to find egg-laying hens for their backyard. 

The search trend “where to buy chickens near me” erupted to a near multi-decade high. 

“Buy chickens near me” searches explode across the US. 

Besides the Covid spike, “how to raise chickens” has spiked to levels not seen in a decade. 

Over the last several years, food insecurity has pushed many Americans to create ‘little backyard farms’- something their parents or grandparents did more than half a century ago. Living off the land was standard decades ago, but as metropolises sprung up, people relied more on a corporation (or even the government) to provide food. 

Soaring distrust in government and corporations had transformed many into preppers following the pandemic shutdowns when some supplies were impossible to find. People don’t want to be left empty-handed when the next crisis arises. This has led to a new generation of preppers and the normalization of being prepared. 

Authored by Michael Kern via OilPrice.com,

China expects to add 70 gigawatts (GW) of coal-fired power generation this year, up from 40 GW of capacity from coal installed in 2022, a report from the power sector’s group, China Electricity Council, showed.

The coal additions, however, will not be the biggest capacity increases in China in 2023, per the report quoted by Bloomberg.

Solar and wind will see massive growth in capacity additions this year, too, with solar power expected to add a huge 100 GW of capacity and wind—another 65 GW, China Electricity Council said.   

China’s electricity generation capacity from renewable sources is expected to jump above 50% for the first time this year. According to the power sector’s lobbying group, low-carbon electricity sources will account for over 52% of total power capacity in China by the end of 2023, up from 49.6% at the end of last year.  

After the end of the ‘zero Covid’ policy, China’s power demand is expected to jump by 6% in 2023, up from the 3.6% growth seen last year, according to the China Electricity Council.

Although renewable energy installations are set to jump, coal-fired capacity additions in China will also surge this year as Beijing has put more emphasis on energy security since the autumn of 2021 when power shortages crippled its industry.

In 2022, China said it would continue to maximize the use of coal in the coming years as it caters to its energy security, despite pledges to contribute to global efforts to reduce emissions.

In recent months, China has significantly boosted its coal production, following government orders. 

[ZH: how dare you!?]

China produced a record amount of coal last year, although output ended the year with a decline amid the latest surge in Covid infections. Total Chinese coal output for the year reached 4.496 billion tons, which was a 9-percent increase compared to 2021, according to official statistics data.    

California has experienced water shortages in recent years due to a combination of factors, including drought and increased demand. A parade of storms has eased a historic water crisis, replenishing reservoirs and increasing snowpack. 

The latest data from the official website of the State of California shows 97% of major reservoir levels are at normal levels for this time of year. This is great news following last summer when reservoir levels were dangerously low. 

Here’s a map of the major reservoirs. Most are at average levels, except for a few. 

Nearly a month of storms has also boosted the state’s vital snowpack in the Sierra Nevada Mountains. State data shows statewide snowpack levels are 126% above average levels for this time of year. We recently pointed out snowpack levels were at their highest in four decades. 

Only a small portion of California remained in extreme drought. The heavy rains and snow have eased drought conditions. 

The storms were part of a moisture conveyor belt over the Pacific Ocean called atmospheric rivers. This resulted in one of the wettest California winters on record. 

Much of California’s water comes from reservoirs and snowpacks. The deluge of storms has prevented the price of water trading on the Nasdaq Veles California Water Index from topping new highs. The contract currently trades at $1,020 an acre-foot, about 20% lower from the top of $1,282 recorded in September of last year. 

The rain and snow have been “very exciting,” Andrew Schwartz, lead scientist at the University of California, Berkeley Central Sierra Snow Lab, told CNN, though he remained “cautiously optimistic” for this summer. 

By Marcel Kasumovich, Head of Research for One River Asset Management

It’s normal, sort of. Digital asset markets are following a commodity boom, bust, recovery cycle. Investors are focused on the bust. The decline in inflation, bond yields, and the US dollar makes the downturn shallower. And inflation assets are leading the recovery. That’s not normal. 

Inflation Assets Leading the Not-Normal

“If you want two cups of coffee, save money and order both at the same time,” a student at the University of Freiburg famously quipped during Germany’s hyperinflation. That’s the inflation we worry about – pernicious, invisible tax. The recent surge in inflation is an inconvenience by historical standards. Periods of inflation lead people to shed currency for almost any real asset – even pianos were a hedge for Germans in the 1920s. That’s not now. But it’s also not never.

The pandemic brought a warning shot, a reminder that the saying “too much money chasing too few goods” still applies. Global inflation surged to 9% last year as bottlenecks emerged in all supply chains. Assets believed to hedge inflation performed dismally. Real assets – bitcoin, gold, lumber, land – crashed as inflation rose. Those assets didn’t “fail” in their roles. Real interest rates shot higher. And that’s the real driving force behind inflation assets.  

The evidence is obvious in investor behavior. There was a dash for cash as inflation rose, not real assets. Last quarter, Global Fund Managers reported the highest cash holding since 2001! The inflation tax was an afterthought. All other assets were rapidly deflating in response to the surge in rates. That is not an inflationary mindset. It’s conviction that policy will kill inflation, leaving real rates higher for a stretch of time. And it’s self-reinforcing.

Market expectations call for a cratering of inflation this year, to 2.33%. It’s also expected to stay there for a very long time, 2.19% in 2024 and an average of 2.29% in the next ten years. The consensus is centered on the idea that a recession will bring everything back to “normal.” And it is exactly how investors are positioned – long bonds, short equities, and long US dollar (Figure 1). Our own Macro Pulse confirms the consensus – it’s in recessionary territory.

But change is afoot. Downturns don’t last long, even brutal ones. They are usually fast, severe fractures. This one is slow and shallow. Our Macro Pulse has been in recessionary territory three of the past four months; the longest recessionary signal was nine months in the Great Financial Crisis. Market stabilizers are also emerging. Declines in inflation, bond yields and the US dollar are cushioning the downturn with mortgage and business surveys bottoming.  

Commodity markets provide the simplest connection to the cyclicality of digital assets. Doug Wilson, One River Digital PM, likens the downturn in digital infrastructure to a boom, bust, recovery cycle of energy markets. It’s a terrific benchmark. Bitcoin is a unit of energy. The boom saw Bitcoin trade miles above its marginal cost of production. That boom led to excess investment. The bust that followed is like an over-supplied commodity cycle.  

What does the recovery look like? Let’s benchmark the boom-bust-recovery cycle through the macro lens of recessions. Figure 2 shows median oil prices in the past 4 economic cycles. The most interesting observation – oil prices aren’t anywhere close to the downturns of the past. This is the “too few goods” side of the inflation equation. A long period of commodity underinvestment means that inflation assets don’t decline to the same degree in recession.  

It also means inflationary assets can lead in the recovery, counter to the consensus of a return to “normal.” But inflation assets are supposed to lag, not lead. It takes an extended period of strong demand to absorb excess capacity built in this expansion. Those are the assets soonest to bump up against capacity constraints and be demonstrated as short in supply. Cyclical forces are pulling down inflation, structural pressures may be less benign.

Digital asset markets are recoupling to macro forces. Inflation assets are leading this year and digital assets are rising with that tide. The differentiation within the digital ecosystem is telling. Base layers and scaling solutions are leading – Bitcoin and Ethereum are back to pre-FTX levels, Optimism scaling protocol has risen well above pre-FTX highs. DeFi protocols are lagging, most notably MakerDAO, as it wrestles with its strategic future pathway.

Market leadership is in the boring basics. We should pay attention. Bitcoin, Ethereum, Lightning, Optimism – base layers with scaling solutions for usable applications. We know that digital asset valuations are all about network effects. But investing in railways is pointless with no demand to ride them. Tokenization has been wildly successful in bridging traditional and digital worlds. That’s one trajectory of turning the boring into beautiful.