Welcome to my world: yesterday I was ordered to provide a urine sample at a halfway house in the Bronx. The system is built on control; this is a "routine" event that can be mandated at any hour on any day.
The historian Beverly Gage, who has run the Grand Strategy course since 2017, says the university failed to stand up for academic freedom amid inappropriate efforts to influence the curriculum.
The Brady-Johnson Program in Grand Strategy is one of Yale University’s most celebrated and prestigious programs. Over the course of a year, it allows a select group of about two dozen students to immerse themselves in classic texts of history and statecraft, while also rubbing shoulders with guest instructors drawn from the worlds of government, politics, military affairs and the media.
But now, a program created to train future leaders how to steer through the turbulent waters of history is facing a crisis of its own.
Beverly Gage, a historian of 20th-century politics who has led the program since 2017, has resigned, saying the university failed to stand up for academic freedom amid inappropriate efforts by its donors to influence its curriculum and faculty hiring.
The donors, both prominent and deep-pocketed, are Nicholas F. Brady, a former U.S. Treasury secretary under Presidents Ronald Reagan and George H.W. Bush, and Charles B. Johnson, a mutual fund billionaire and leading Republican donor who in 2013 made a $250 million donation to Yale — the largest gift in its history.
Days after the 2020 presidential election, Professor Gage said, an opinion article in The New York Times by another instructor in the program calling Donald J. Trump a demagogue who threatened the Constitution prompted complaints from Mr. Brady.
Four months of wrangling over the program later, Professor Gage resigned after the university administration informed her that a new advisory board it was creating under previously ignored bylaws would be dominated by conservative figures of the donors’ choosing, including, against her strong objections, Henry A. Kissinger, the former secretary of state under President Richard M. Nixon.
Her resignation, which Yale has not yet made public, raises the question of where universities draw the line between honoring original agreements with donors and allowing them undue sway in academic affairs. It’s a question that can become turbocharged when colliding political visions, and the imperatives of fund-raising, are involved.
Since taking over the program, Professor Gage has expanded the syllabus to include grass-roots social movements, like the pro-democracy movement in Hong Kong and the civil rights movement in the United States. Until late last year, she said, she had received no criticism from the donors or the administration about the course’s direction.
In a statement, Yale’s president, Peter Salovey, offered praise for her teaching and scholarship. But the administration disputed her claims that Yale had given in to donor pressure.
Pericles Lewis, the university’s vice president for global strategy and vice provost for academic initiatives, said the university was simply adhering to its 2006 agreement with the donors, which Professor Gage had resisted.
“It wouldn’t have a controlling power,” he said of the board. “But I can understand why that would not be her cup of tea.”
What the administration sees as legitimate oversight, Professor Gage, who remains a tenured professor in the history department, sees as a sudden effort by the donors to establish “some form of surveillance and control” over the program.
“It’s very difficult to teach effectively or creatively in a situation where you are being second-guessed and undermined and not protected,” she said in an interview.
The Grand Strategy program was founded in 2000 by the Yale historians John Lewis Gaddis, a leading scholar of the Cold War, and Paul Kennedy, the author of “The Rise and Fall of the Great Powers,” along with the diplomat Charles Hill, a former aide and adviser to George P. Shultz and Mr. Kissinger.
The idea was to teach leadership through an eclectic curriculum of classic texts, case-studies and crisis simulations, incorporating thinkers and topics from Thucydides, Sun Tzu, and Machiavelli to the Cold War.
The course “arose out of the desire to reaffirm the power of the big idea,” the journalist Molly Worthen wrote in “The Man on Whom Nothing Was Lost,” her 2005 biography of Mr. Hill. “It came from the professors’ alarm at the rise of the ‘wonk,’ the Clinton-era policy expert with no concept of broad context.”
The course quickly drew admirers (and imitators) well beyond Yale, along with plenty of suspicion on the predominantly liberal campus, where some saw it as a cultish bastion of retrograde “great man” history.
In 2006, it was formally endowed with a combined gift of $17.5 million from Mr. Johnson and Mr. Brady. In a 2013 article in The Yale Daily News, Professor Gaddis said Mr. Brady had given a single directive: “Teach common sense.”
“Grand Strategy” is a capacious but slippery concept, one that has generated continuing debates about its meaning. In his 2018 book “On Grand Strategy,” Professor Gaddis defined it as “the alignment of unlimited aspirations with necessarily limited capabilities.”
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“Grand Strategy” is a capacious but notoriously slippery concept, one that has generated continuing debates about its meaning, and plenty of books.
Professor Gage, 49, has incorporated social movement strategy into the course. (In a recent essay, she described herself as someone who “was as likely to be a protester as a policymaker.”)She said she has sought to bring in a demographically, politically and intellectually diverse group of practitioners as teachers and guest speakers. Recent invitees have included the former defense secretary James N. Mattis; the conservative intellectual Yuval Levin; the civil rights lawyer Vanita Gupta, and the racial justice activist Heather McGhee.
Professor Kennedy said he supported the direction of the course under Professor Gage. “She is a very gifted leader and teacher,” he said.
Professor Gaddis echoed the sentiment, adding: “I don’t think the Yale administration has sufficiently insulated her. It is traditionally thought that the faculty determine the curriculum, and I think that’s how it should be.”
Professor Gage, who was recently nominated to the National Council on the Humanities, was renewed by Yale as program director in July 2020. (She is also a contributing writer for The New York Times Magazine and has written opinion pieces for The Times.) She described her previous relationship with the donors as supportive.
But she said the tone abruptly changed last November, a week after the presidential election, when Bryan Garsten, a Yale political scientist who teaches in the program, published an opinion article called “How to Protect America From the Next Donald Trump.”
The next day, Professor Gage received an email from Mr. Hill saying Mr. Brady had called “to grouse” about the article, “complaining that there was no grand strategy in it.” According to the email, which was viewed by The Times, Mr. Brady also said that “this is not what Charlie Johnson and I signed up for.” (Mr. Hill died last March, at 84.)
In a phone call with Professor Gage that day, Mr. Brady reiterated his view and began asking about the syllabus and practitioners. “It was strange, because none of that had changed much in the past three years,” she said.
Representatives for Mr. Brady, 91, and Mr. Johnson, 88, said they were unavailable for comment.
In another phone call, on Nov. 13, Professor Gage said, Mr. Brady lamented that the program isn’t “what it was.” When she pressed for specifics, he said she wasn’t teaching Grand Strategy “the way Henry Kissinger would.”
“I said, ‘That’s absolutely right. I am not teaching Grand Strategy the way Henry Kissinger would,’” she said.
Later that day, Mr. Brady sent her an excerpt from the 2006 donor agreement, outlining an outside five-member “board of visitors” that would advise on the appointments of the practitioners.
Professor Gage had never heard of this board, which had never been established. Dr. Lewis, the vice provost, told her he would look into it. Two weeks later, Dr. Lewis said he had confirmed details in the donor agreement, and Yale had a legal obligation to create the board.
Professor Gage wasn’t happy. But if it were created, she insisted to Dr. Lewis, it would need diversity across generational, ideological, methodological, racial and gender lines. And the donors could not be allowed to appoint its members.
Yale, she said, seemed to agree. What followed were nearly two months of back and forth, with Dr. Lewis sending along a string of suggestions — most of them Republicans or conservatives, Professor Gage said. She said she told him most would be fine, as long as the board had a diverse mix.
But in late February, things “started to head downhill.” she said. In a phone call, she said, Dr. Lewis told her that the donors were threatening to sue to reclaim the remaining Grand Strategy endowment. And it was suggested that Mr. Johnson’s $250 million donation might also be in doubt.
Dr. Lewis also said that Mr. Brady wanted a researcher whom he had previously commissioned to write a 2016 book about the program to observe class and report back.
On March 4, things came to a head. According to Professor Gage, Dr. Lewis told her that Mr. Johnson had what Dr. Lewis said was a mistaken impression that he could choose the board, and that he wanted to name Stephen J. Hadley, former national security adviser to George W. Bush; Thomas H. Kean, the former Republican governor of New Jersey; and Mr. Kissinger.
Professor Gage told him the board lacked the necessary variety, and that she objected to Mr. Kissinger. “He represents the opposite of the generational shift I have been trying to make,” she said in the interview.
The next week, Professor Gage said, Dr. Lewis said Dr. Salovey was moving ahead with a board including those three men. And it would not include anyone with social-movement expertise, because the donors didn’t want that.
That evening, she spoke with Dr. Salovey, who asked her to see things “from the university’s perspective,” as she recalled it, describing it as a donor-management situation that would likely settle down.
She told him that unless Yale came out more strongly in favor of academic freedom and in support of the current program, she would resign. Several days later, she did so, effective in December.
Dr. Lewis called Professor Gage “an outstanding historian and a great teacher.” But in an interview with The Times, he pushed back on the notion that Yale had been swayed by donor pressure. Aside from a strong desire for Mr. Kissinger, he said, the donors did not pick any board members, beyond wanting an international relations focus (which he called “the original remit of the program”).
Dr. Lewis said the donors had not relayed any political concerns about the board or the program. “The way they expressed to me, it was more about wanting to be sure the goal of international engagement and so on was there, and that we had distinguished practitioners,” he said.
As for the suggestion that Mr. Brady’s researcher might attend class and report back, Dr. Lewis said the thought was that it might be time for “an update” to her book, which was published in 2016 — an idea, he said, that he ruled out.
Asked about Professor Gage’s claim that Dr. Salovey informed her that he intended to include three people on the board she has been told Mr. Johnson wanted, a spokeswoman for Yale declined to comment. “We’re not going to confirm this level of detail about private conversations,” she said.
Dr. Lewis said he did not recall if Mr. Johnson’s $250 million donation came up. Nor did he recall any threats of legal action, though there had been discussion whether the remaining funds could be put to other uses “if for some reason we felt Grand Strategy had reached the end of its time.”
Despite those conversations, Dr. Lewis said there were no plans to discontinue the program, which he called “one of the jewels in the crown of the Yale curriculum.”
Professor Gage said that at a time when many people are concerned about the lack of political diversity at elite campuses, it was ironic that the Grand Strategy program had come under fire.
“This program really tried to be something that lots of people say they want universities to be: a place of open engagement across ideological lines,” she said.
One evening a few weeks ago, I was on a Zoom call with a bunch of academic, think tank and Fed economists for a Bitcoin discussion. A lot of names you’d know if you’re familiar with those circles, the most famous one being Paul Krugman (who, btw, I found to be charming, genuinely open-minded, and surprisingly humble about the entire enterprise of academic economics). I had been invited to be on the anti-Bitcoin ‘side’ of the discussion, but they needn’t have bothered. Because there was no pro-Bitcoin side.
Krugman led with a simple question – what’s the use case for Bitcoin? Not a theoretical thing, but an actual use of Bitcoin to solve a problem in the real world? – which led to an hour-long, extremely earnest and altogether unsatisfying conversation about financial transfers out of Venezuela, trade settlement and securitization on a blockchain, and Taylor Swift’s ability to control the scalper/resale market for her concert tickets.
All of which are real things. All of which are interesting things. All of which are good things. But none of which are what got 20 busy people on a Zoom call at 8 pm on a Thursday night.
None of which ARE Bitcoin.
Now, to be fair, there were no old-school Bitcoin maximalists on the call, or if there were, they were too intimidated to make an Austrian economics, hard money, neo-goldbug, Bitcoin-is-the-inevitable-global-reserve-currency argument in front of Paul Krugman. LOL.
But I finally couldn’t take it anymore.
Is this really why we got on the phone tonight? To talk about a novel form of digital rights management? To talk about payment transfers out of authoritarian third-world countries? Are these REALLY our questions about Bitcoin?
Answer: of course not. What got these academic, think tank and government economists on the phone that night was Bitcoin trading at $50,000. The question that everyone truly cared about, but a question that everyone danced around for the better part of an hour, was this: Is there any there there in the price of Bitcoin?
To which everyone, including the supposedly pro-Bitcoin contingent, said no. Not just no, but no, no, no. The price of Bitcoin was an illusion. The price of Bitcoin was the madness of crowds. The price of Bitcoin had no connection to any fundamental economic activity, just like gold had no connection to any fundamental economic activity, and thus – to this audience – could have no inherent value by definition.
I think this is very wrong. And I’ll tell you, like I told this Zoom call, why I think there is a lot of inherent value in Bitcoin.
Because Bitcoin is good art.
Or better yet, because Bitcoin is elegant and beautiful fashion, sitting at the intersection of art and commerce.
Most importantly, because owning Bitcoin has been an authentic expression of identity, an extremely positive identity of autonomy, entrepreneurialism, and resistance to the Nudging State and the Nudging Oligarchy.
I’ve been saying that Bitcoin is art for more than six years, from The Effete Rebellion of Bitcoin (Feb. 2015) to Too Clever By Half (Feb. 2018, my most popular note ever!) to Riding the Cyclone (June 2018) to The Spanish Prisoner (July, 2019), and it’s been a very frustrating place to be. Frustrating because public stances on Bitcoin are almost immediately turned into cartoons – either you’re the grumpy grandpa “Bitcoin is worthless!” cartoon or you’re the laser-eyed cultist “Bitcoin will be the world’s reserve currency!” cartoon, with no room in between.
The value-deniers, like the Zoom crowd the other night, think I’m agreeing with them when I say that Bitcoin is art. I’m not. The true-believers think I’m trolling them when I say that Bitcoin is art. I’m not. The creation of good art is – in my opinion – what we are put on this earth to do. It is our highest calling. It is my highest praise.
There is lasting value in good art, because it is a very scarce thing and it never gets used up.
Bitcoin is itself an NFT, a unique digital art work instantiated on a blockchain. It’s the most valuable NFT in the world. I don’t mean a Bitcoin, obviously that’s a fungible thing. I mean THE Bitcoin … the 21 million Bitcoins that make up the Bitcoin Project. The notion that Bitcoin would ever “go to zero” is ludicrous. Good art is always worth something. But how do we measure that something … how do we put a price on the value of good art at this particular moment in time? It’s a REALLY tough question.
There are no cash flows to art. There are no fundamentals to art. There is no “use case” to art.
There is only story. There is only narrative. There is only common knowledge– what everyone knows that everyone knows –about the value of art, common knowledge that emerges from our social interaction with story and narrative.
In every respect that matters, Bitcoin IS Epsilon Theory.
Our times require an investment and risk management perspective that is fluent in econometrics but is equally grounded in game theory, history, and behavioral analysis. Epsilon Theory is my attempt to lay the foundation for such a perspective.
So yes, I’ve been saying that Bitcoin is art for a long time now. But what I haven’t been saying – or at least not as loudly – is that bit about identity, and that’s the part that needs to be shouted today. So here it is again, this time a little louder …
Most importantly, owning Bitcoin has been an authentic expression of identity, an extremely positive identity of autonomy, entrepreneurialism, and resistance to the Nudging State and the Nudging Oligarchy.
Because the artistic Bitcoin identity I admire and value has been subverted by the neutering machine of Wall Street and the regulatory panopticon of the US Treasury Dept.
Because what made Bitcoin special in the first place is nearly lost, and what remains is a false and constructed narrative that exists in service to Wall Street and Washington rather than in resistance.
Yes, the Nudging State and the Nudging Oligarchy strike back. They always do when it comes to money. Not with imperial stormtroopers or legislative sanction, but with golden handcuffs and administrative surveillance.
It’s not that the State and the status quo institutionalization of capital – call it Wall Street, for short – have any desire to ban Bitcoin. Why would they do that? No, far better to accommodate and swallow Bitcoin, like they have every other financial “innovation” for the past 1,000 years. Far better to neuter the censorship-resistant and anonymity-preserving aspects of Bitcoin, and turn it into another gaming table in the Wall Street casino.
In my dystopian vision, Bitcoin isn’t banned or criminalized. Pfft. That’s a rookie, weak State move. No, I see a future where everyone buys Bitcoin. Where you are encouraged to buy Bitcoin. Where Bitcoin is sold to you morning, noon and night. Where normie economists get on conference calls late at night because they’re Bitcoin price-curious.
Except it’s not really Bitcoin.
Instead, it’s Bitcoin!TM — a cartoon version of the OG Bitcoin, either a Wall Street-abstracted representation of the price of Bitcoin or a government-painted version of Bitcoin in Dayglo orange. Either way — abstracted or painted — your Bitcoin!TM is trackable and traceable, fully KYC and AML and FBAR and SWIFT and every other US Treasury acronym-compliant. Either way, your Bitcoin!TM has all the revolutionary potential of a bumper sticker and all the identity signaling power of a small tattoo on your upper arm.
Bitcoin!TM doesn’t stick it to the Man … Bitcoin!TM IS the Man.
The abstracted version of Bitcoin!TM is a Wall Street specialty.
What is Bitcoin!TM in abstracted form? It’s a securitization or representation of Bitcoin ownership that promises the price appreciation of Bitcoin without the hassle of Bitcoin ownership. It’s a casino chip that represents the price of Bitcoin. Michael Saylor, for example, is only too happy to sell you a MicroStrategy casino chip. Or maybe you’d prefer to play on the Canadian crypto ETF felt? Or try your luck at the wheel of a Morgan Stanley private fund?
Why does Wall Street loooove abstracted forms? Because there are no fundamental limits to how many of these Bitcoin! TM casino chips Wall Street can sell. It doesn’t matter if all the OG Bitcoin HODLers keep on HODLing. It doesn’t matter if the vast majority of all the Bitcoins ever mined never get caught up in the Wall Street neutering machine. There are an infinite number of games that can be created around the price of Bitcoin as a reference point, just like there are an infinite number of bets that can be made on a football game. There are an infinite number of rehypothecations and derivative representations that can be made off the millions of margined Bitcoins that have already been captured by Wall Street-custodied accounts.
The only limiting factor on how many of these Bitcoin!TM casino chips Wall Street can sell is the effectiveness of the narrative they have created around Bitcoin itself, that Bitcoin is a “hedge against inflation” and a “store of value” that is uniquely positioned to “protect your portfolio” against “dollar debasement” because it is “hard money” immune to “money printer go brrrr”.
It’s rather artistic in and of itself, right? Selling an unlimited number of Bitcoin!TM casino chips off a meme slamming unlimited fiat money printing? Creating an unlimited number of entertaining market games and venues where we can use our Bitcoin!TM casino chips?
If these narratives and casino games sound familiar, it’s because this is exactly the same process of abstraction, securitization and leverage that Wall Street has been using for the past twenty years with precious metals.
What is the GLD ETF? It’s gold!TM. What is a unit in an ETF basket of gold miner stocks? It’s gold!TM. They and their many kin are securitizations of gold ownership that promise the price appreciation of gold without the hassle of gold ownership. They are casino chips that represent the price of gold.
I’m old enough to remember when people bought and sold gold coins in private transactions. I guess we’d call that peer-to-peer today. I’m old enough to remember when well-meaning people would have earnest conversations about gold as a reserve currency, just like well-meaning people today have those earnest conversations about Bitcoin. I’m old enough to remember how quickly those conversations died out after State Street launched GLD in 2004 and took in a billion dollars in a few days. Turns out people didn’t really want the grumpy grandpa identity of owning physical gold in some Mad Max world as much as they wanted gold!TM in their financial portfolios as an abstracted insurance policy against central bank error.
It’s exactly the same with Bitcoin!TM today.
You think “institutional adoption” is driven by a spirit of personal autonomy, entrepreneurialism, and resistance to the Nudging State and Nudging Oligarchy? You think Paul Tudor Jones and Mike Novogratz want to BITFD? LOL.
The ONLY difference to Wall Street between gold and Bitcoin is that gold!TM is tired and Bitcoin!TM is wired.
The king is dead. Long live the king!
This is the artistic genius of Wall Street – the creation of new product to trade and new assets to manage, all through the alchemy of securitization and leverage. This is Flow.
It’s like Ash said about the chest-bursting xenomorph in Alien – you may not admire the creature itself, but you gotta admire its purity. Unclouded by conscience, remorse, or delusions of morality. Yep, that’s Wall Street.
Ditto the US Treasury.
If there’s a Western governmental institution that is more unclouded by conscience, remorse, or delusions of morality than the US Treasury, I am unaware of what that institution might be. But unlike Wall Street, which is motivated by Flow, the US Treasury has an entirely different (but highly compatible!) goal.
The goal of the US Treasury is to see all of the money in the world.
That’s really all it is. That’s what Anti-Money Laundering (AML) regulations are all about. That’s what Know Your Client (KYC) regulations are all about. That’s what Report of Foreign Bank and Financial Accounts (FBAR) regulations are all about. That’s what the Treasury-led Society for Worldwide Interbank Financial Telecommunications (SWIFT) is all about. That’s what the Bank Secrecy Act (BSA) is all about. None of these programs are really about taxes. None of these programs are really about catching crooks or fighting terrorists. All of these programs are really about information for information’s sake regarding the greatest source of power in the world and the raison d’etre of every government on Earth: money.
The US Treasury is the Eye of
— a gigantic panopticon tower that sweeps the world with its unblinking gaze, seeking out the owners of power, i.e. money.
The US Treasury can’t see Bitcoin. It can, however, see Bitcoin! TM.
The giant all-seeing eye of the US Treasury is primarily built on two regulatory structures — the Bank Security Act (BSA) to compel transparency and reporting by financial institutions on their clients and themselves, and the Report of Foreign Bank and Financial Accounts (FBAR) system to compel transparency and reporting by individuals on their financial institutions and themselves. There are a dozen more acronyms and programs involved here, all overseen by Treasury’s Financial Crimes Enforcement Network (FinCEN), but to keep things simple I’m going to refer to all of this as the BSA/FBAR regulatory panopticon.
Everything in plain text in the next two paragraphs is regulatory policy as it currently stands with the BSA and FBAR. Everything in bold italics is a new policy proposed in the past few months and expected to go into effect shortly. Taken together, I think it will be clear how Treasury uses the combined BSA and FBAR instruments to mark your Bitcoin with a DayGlo orange fluorescent paint and create their highly visible version of Bitcoin! TM.
BSA — If you are in the business of money in any way, shape or form (what Treasury calls a “money transmitter”), and you do any of that business in the US, then you are subject to the Bank Secrecy Act. Note that this money transmitter designation and BSA jurisdiction explicitly includes peer-to-peer exchanges that work with self-hosted wallets. If you are subject to the BSA, then it is your affirmative obligation to collect complete identifying information regarding clients who transmit or receive more than $3,000 over your systems, and to collect and immediately report to Treasury complete identifying information regarding clients who transmit or receive more than $10,000 over your systems – including any cryptocurrency (“convertible virtual currency”) transmitted to or from a self-hosted wallet.
FBAR — If you are a US entity (citizen or resident, any type of US-registered corporate or trust structure, etc.) and you have any sort of account (banking, securities, custodial, etc.) with any non-US money transmitter, anywhere in the world, and at any time during the course of the year, you have in the aggregate across all accounts more than $10,000 in value in those accounts – including the value of any cryptocurrency holdings (“convertible virtual currency”) in those accounts – then it is your affirmative obligation to report complete identifying information regarding each of those accounts to the IRS in a Report of Foreign Bank and Financial Accounts (FBAR).
I think the intent here is crystal clear. Whatever rules were in place yesterday regarding transfers of dollars or rubles or pesos through US-touching money transmitters or by US entities … well, now those exact same rules are going to apply to Bitcoin. As soon as your virtual currency holdings land in any financial institution that cooperates with or does business in or is regulated by the United States … BAM! your Bitcoin is painted DayGlo orange and becomes the Treasury-preferred form of Bitcoin!TM.
When these regulations go into full effect, as I understand them, the only remaining safe harbor for keeping your Bitcoin hidden from the BSA/FBAREye of Sauron will be to maintain a self-hosted wallet that never connects with a money transmitter that does business in the US.
That’s a safe harbor for the moment, but ultimately nothing is safe from the Eye of Sauron. While 2019 guidance explicitly states that “a person conducting a transaction through an unhosted wallet to purchase goods or services on their own behalf is not a money transmitter”, and so is not subject to the Bank Secrecy Act directly, the December, 2020 proposed rule-making doc also included this doozy of a comment.
The Treasury Department has previously noted that “[a]nonymity in transactions and funds transfers is the main risk that facilitates money laundering.”
The Financial Action Task Force (“FATF”) has similarly observed that the extent to which anonymous peer-to-peer permit transactions via unhosted wallets, without involvement of a virtual asset service provider or a financial institution, is a key potential AML/CFT risk in some CVC systems.
FATF members have specifically observed that unregulated peer-to-peer transactions “could present a leak in tracing illicit flows of virtual assets,” particularly if one or more blockchain-based CVC networks were to reach global scale.
Importantly, as explained below, while data contained on some blockchains are open to public inspection and can be used by authorities to attempt to trace illicit activity, FinCEN believes that this data does not sufficiently mitigate the risks of unhosted and otherwise covered wallets.
That last paragraph doesn’t mince words. Even if the blockchain facilitating a crypto currency allows for “authorities” to trace transactions, “the risks of unhosted and otherwise covered [i.e., hidden from the Eye of Sauron] wallets” are too great to let stand. LOL. I think we all see where this is going.
The response I get from the Bitcoin and larger crypto community to what seems to me to be the clear intent and path of Treasury regulations is always this: well, good luck enforcing that!
Unfortunately, that’s the evil artistry of panopticons like the Eye of Sauron or Treasury’s BSA/FBAR regulatory structure: we are driven to willingly enforce their discipline on ourselves.
A panopticon is an institutional structure that creates a permanent feeling of being watched. Maybe you are and maybe you aren’t at any given moment. But you’re never sure that you’re NOT being watched. And if you ARE being watched, then you better ‘fess up and cooperate before you get your head stuck on an orc’s pike. Did I mention that the penalty for a willful failure to make an FBAR report was the greater of $100,000 or 50% of the unreported foreign assets?
Moreover, a panopticon structure allows you to see the behavior of others. And they of you. If the discipline imposed by the Watcher includes obligations to snitch — and that’s exactly what the Treasury requires here, with obligations on money transmitters to report on clients, and obligations on clients to report on money transmitters — a panopticon sets up a classic Prisoners Dilemma game, where the only equilibrium is for both the money transmitter and the client to volunteer information about the other.
Once you start looking for panopticons in our modern world, you will find them everywhere. And of course there’s an Epsilon Theory note on this.
“Transparency” has little to do with freedom and everything to do with control, and the more “radical” the transparency the more effective the control … the more willingly and completely we police ourselves in our own corporate or social Panopticons.
You’re not opposed to “transparency” are you? Why would you be opposed to “transparency” unless you have something to hide? You’re not a … a … terrorist-lover, are you?No, I didn’t think so.
It’s not just that Wall Street and the US Treasury dominate policy.
Far more perniciously, they also dominate narrative.
And that’s why I’m writing this note.
Frankly, I doubt that the policy battle can be won. This has been my view since I first started writing about Bitcoin, and nothing has happened to change my mind. On the contrary, Treasury’s moves to make crypto visible and controllable have happened faster than I thought they would. I mean, I’m hopeful that we are at least at some point of policy equilibrium with the proposed rule changes to BSA and FBAR, an equilibrium that will at least allow self-hosted crypto wallets to exist in peace. But hope, unfortunately, is not a strategy.
The inevitable result of financial innovation is that it ALWAYS ends up empowering the State. When too clever by half coyotes misplay the meta-game, that’s all the excuse the State needs to come swooping in.
Just as they did with Bear and Lehman in 2008. Just as they’re doing with Bitcoin today.
The systematic study of narrative, what we call the Narrative Machine, can be used for analysis, yes, but also as an active instrument to reclaim our autonomy of mind and our generosity of spirit.
Everything else is commentary.
I know you don’t believe me, but we’re going to change the world … you and me.
Bitcoin has been an authentic expression of identity, a positive identity of autonomy, entrepreneurialism, and resistance to the Nudging State and the Nudging Oligarchy.
It can be again.
Wall Street and Treasury are running a psyop with their creation of Bitcoin!TM, and it’s necessary to think about Bitcoin in those psyop/narrative terms if the goal is to preserve an active community with an identity of autonomy, entrepreneurialism, and resistance to the Nudging State and the Nudging Oligarchy in the context of Bitcoin specifically and crypto more generally.
That’s my goal, anyway.
I’m not in this for Bitcoin-as-global-reserve-currency. I’m not in this for Number Go Up. I’m not in this for “store of value” against that gosh darn “dollar debasement”. I’m not in this for Flow. I’m not opposed to any of those things, and I don’t think you’re a Bad Person if those are your things. They’re just not my things. I’m in this for Bitcoin as good art and the inspiration it provides to a community that shares my values and goals for making a better world.
Phase 1 of this anti-psyop campaign is to identify Schelling points (game solutions that people arrive at by default in the absence of direct communication … also called focal points) so that people who share this goal of community organization and narrative reclamation can find each other.
I think that one of these Schelling points is maintaining a self-hosted wallet and the capacity for peer-to-peer connections away from the Eye of Sauron.
Phase 2 of this anti-psyop campaign is to use the Narrative Machine to measure and visualize the narrative archetypes and story arcs of Bitcoin!TM. In exactly the same way that there are only, say, a dozen archetypal scripts for every TV sitcom episode ever filmed, or in exactly the same way that there are three acts to every modern movie screenplay, so is there an underlying structure and a finite number of underlying archetypes to the media coverage of every market entity.
We believe that we can measure these narrative structures and archetypes as they apply to Bitcoin!TM, and map those structural dynamics to market behaviors.
Seeing is believing, and I think there is no better way to prove the existence of Bitcoin!TM, in both its Wall Street-abstracted and its Treasury-painted form, than to show the psyop in action. I think this sort of analysis and visualization will get a lot of people who would otherwise be quick to dismiss our claims to take a fresh look at the ways in which we have been nudged.
Phase 3 of this anti-psyop campaign is simply to call things by their proper names. That starts with locating the value of Bitcoin in its elegant art and its ability (like all elegant art) to inspire great things away from the art itself. Yes, great things away from Bitcoin itself, so that even if Bitcoin!TM dominates financial markets (which it will), the story arc of Bitcoin doesn’t end there, but generates a thousand new initiatives to improve our world.
We don’t have to tell a story of price. We don’t have to tell a story of apocalypse. We don’t have to scold or “educate”.
We can tell an Old Story of autonomy of mind and generosity of spirit within a new context of Bitcoin and crypto.
You know, a couple of thousand years ago, a really smart guy — the most subversive, revolutionary guy you can imagine — had a good line. Render unto Caesar what is Caesar’s.
Bitcoin!TM definitely belongs to Caesar. It’s part of his game. But Bitcoin doesn’t have to be. It can be part of our game. Still. Again. And that will change everything.
