Where finance and media intersect with reality


In the Blind Spot (NFTs, Off-Balance Sheet Wars, Knights)


This edition of the Blind Spot Wrap was compiled by Izabella Kaminska (IK) and Dario Garcia Giner (DGG).

Econ, Business & Finance etc:

  • The Tony Blair Institute of Tech Policy has announced their intention to develop public policy recommendations for UBI using a network of CBDC’s.
  • The British pound slumps to its worst level since 1985.
  • I pen a long thread (with my usual typos and literals) pondering whether the biggest untold story of modern warfare is the fact that since WW2 most war has been transferred off sovereign democratic balance sheets much the way shadow banking transferred financial risk off-balance sheet.

    While I’m not a geopolitical expert, the hunch that underpins this assessment is the idea that (as usual) an overly restrictive regulatory response to a global shock (in this case WW2), rather than serving to quash the underlying threat only served to obfuscate it. And it did this by normalising the modern day proxy war phenomenon. In doing so, the potential negative consequences of such wars for domestic societies were totally underpriced/under appreciated by the system.

    I further contend that the modern day reluctance of sovereign states to formally declare war on each other – even when a state of war is clearly going on – represents a type of window dressing purposefully architected to delay the on-balance recognition of “an active state of war” by the domestic democratic system. This is not dissimilar to the reluctance of markets to formally declare that a default has occurred.

    Why does this happen? Because on-balance sheet recognition of a war or a write down of any sort goes hand in hand with the need for direct democratic oversight and approval of that war (with all the social disorder consequences that brings with it). If there is concern domestic populations won’t be prepared to socialise the risks and costs of such wars — then the incentive to maintain the war as an off balance sheet proxy activity continues.

    But as with the circumstances leading up to the global financial crisis… this amounts to a privatisation of offshore conflict waged under the colours or “standard” of a US guarantee system. In exactly the same way, the outsized profits of such wars (if they are successful) end up being absorbed by a small number of private sector beneficiaries, while the cumulative costs of successive failures go towards building up mass systemic implications for the public purse/state. If a broad systemic failure does occur (as may be occurring now) there is eventually the same sort of pressure for the public rather than private entities to absorb the outsized externalities as there was with the GFC. Only then does the true cost and risk of all these off balance sheet wars fought without full democratic or international community recognition, become fully understood.

    This I suspect is where we are now. The point where domestic populations are once again being asked to pick up the bill for the consequences of actions that were never approved by them. In this case that amounts to the systemic failure of past proxy wars fought in their name without their full recognition. The dilemma they face is the same one they faced with the GFC. If they don’t make the necessary wealth sacrifices voluntarily, they risk ceding control to the “enemy” and/or civil disorder and collapse. (What systemic failure represents this time round, however, is not mass default of badly assessed assets but rather the failure of off-balance sheet wars to standardise the global system according to Western terms as hoped. Call it the write down of territories previously thought of as open for doing business on our terms.)

    At this point, the public either absorbs that cost by bailing out all the private war profiteers of the past, turning their wars into “our war”, or it doesn’t. If it does, the mother of all war declarations will have to be made. The implicit will then finally be made explicit – and the public will be violently knocked out of a decades-long slumber of ignorance about the externalities of Western actions abroad. If, however, the public rejects such a war via a formal democratic process, the consequences for US/Western supremacy will be clear.

    A multipolar concord will then have to be struck with the East, the Middle East and Russia in a way that gives way to their respective (and potentially non “liberal”) cultural/political ways while abandoning hopes for a liberal world order under the former Western regime.

    On the domestic front, there would also have to be a transfer of power and wealth from the old order responsible for imposing these imperialistic externalities on the system to a new order prepared to operate on multipolar terms.

    If, however, the public rejects such a war outside of a formal democratic mechanism, the implications for the domestic power structure could be even more signifiant.

    This time round it wouldn’t just be Wall Street getting occupied by the people, it would be the entire government apparatus and military industrial complex too — all in the context of civil breakdown and disorder.

    In both scenarios the powers that be inevitably end up losing their footing. Does that mean the power structure will go to ever greater lengths to ensure the public has no choice but to back them? I would think so. Hence why formal recognition of the true state of affairs will be delayed to the last moment possible. Hence too why the system will turn to ever more manipulative psychological techniques and propaganda to repress full public recognition of the true state of affairs and/or to ensure that if it does occur the costs of backing a total war will be deemed as worth it.

    What’s the geopolitical equivalent of QE in such circumstances? Probably some sort of opium for the masses akin to the metaverse or actual pharmaceutical measures to dampen the impact of the real world evisceration of living standards.

    If that fails to pacify the masses, the descent by the powers that be to more authoritarian techniques to repress protest and dissent is not out of the realms of possibility.  – IK

  • ISIS are using NFTs to help push their message.

    I have always said the NFT market is better thought of as an attention/advertising market that resembles a patronage system for ideological goals. You can read my original thoughts about this here.

    What this broadly means is that the value of an NFT is not in its status as a collectible. It’s in its capacity to seed a meme, style or message that encourages many duplicates to propagate through the system. Some might say it is a public art donation by those who want to ensure the cultural and artistic class is focused on making and spreading their preferred digital art forms (from a stylistic, ideological or promotional perspective).

    Like the Medici before them, those buying NFTs become patrons of the art form that suits their political objectives and ideology best.

    How this works in practice is simple.

    Want Christian iconography and messaging to propagate through the system rather than more progressive alternatives? All you need do is spend $1m on an NFT of an artist’s rendering of a “Bored Saint” which then sets an open market price for all sorts of derivatives at similar price levels.

    The creation of the Bored Saint market then encourages the world’s digital artists to abandon renderings of Bored Apes (whose valuation is collapsing) in favour of the more wholesome Christian alternative. Hey presto, Christian saints go viral on the internet, supporting your Christian propaganda objectives. – IK

Geopolitical Pivots:

Mass Casualties

Spook News:

Below the Equator:

  • In a sign of difficult things to come, Chileans have rejected a new referendum this Sunday – impacting the three-year campaign to overhaul politics in the South American country by Premier Gabriel Boric. The new constitution was supposed to help reform taxation, pension and labour systems in the country to boost national social services.

Spiritual Affairs:

From the “Fake News” Zone:


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