Convid-19

“Born from the counterpropaganda and resistance efforts of World War I, modern-day Psychological Operations Soldiers use the power of influence to shape the global security environment and achieve United States national security goals..

PSYOP Soldiers typically operate in small, autonomous teams or with other Special Operations forces to develop relationships with a country’s civilian population, government figures and military and law enforcement agencies.

Experts in their field, they specialize in unconventional capabilities, cultural expertise, language proficiency, military deception and advanced communications techniques encompassing all forms of media.”

• Explanation of PSYOP (Psychological Operations) at the US army website.

Psychological operations have always been a part of war. Why throw blood and treasure, men and munitions, at each other if you can deprive the enemy of the will to fight before the two armies even meet ? Something of a cultural trend-setter for the time, Britain became adept at civilian-facing propaganda during World War One. In August 1914, David Lloyd George established a propaganda agency at Wellington House. The cream of literary talent was employed in the fight, including Sir Arthur Conan Doyle, Ford Madox Ford, G.K. Chesterton, Thomas Hardy, Rudyard Kipling and H.G. Wells. One of this group’s earliest creations was their Report on Alleged German Outrages of May 1915, which was translated into every major European language, and which carried sensationalist accounts of German atrocities for which there was never any independent evidence. Among its most notorious claims were those from a Belgian soldier who reportedly witnessed a mass rape by German soldiers in Liège, and from two civilians who claimed to have seen a German soldier impale a baby upon his bayonet as he marched past.

Before you read any further, read this . In this essay for the US magazine Tablet, the US lawyer and researcher Michael Senger makes a compelling case that China, in its handling of Sars-CoV-2, played the rest of the world like a piano, as part of a giant PsyOps hoax. In brief, the argument and timeline go as follows:

• Towards the end of 2019, Coronavirus emerges in Wuhan (whether bio-engineered or ‘natural’ barely matters any more)
• Panic and anger ensue throughout China
• In January 2020, the Chinese Communist Party (CCP) cracks down hard and locks down 57 million people in Hubei..
• ..but the Chinese authorities allow international travel from the region to continue..
• “Leaked” videos pop up on social media, including Facebook, Twitter and YouTube (all of which are blocked in China), of residents “spontaneously collapsing in the streets” and the authorities taking an appropriately hardline response
• International hysteria ensues
• “And then – success!”: in February, the CCP reports an exponential decline in coronavirus cases
• 9^th March – in a state of panic in the north, with fears of its health service being overrun, Italy becomes the first country outside China to lock down
• 12^th March – Chinese external advisors arrive to tell Italy to lock down more severely
• Between 11^th and 23^rd March, roughly 46% of tweets with the hashtag “#forzaCinaeItalia” (“Go China, go Italy”) and 37% of those with the hashtag “#grazieCina” (“thank you China”) come from bots
• On 13^th March, Boris Johnson – previously pursuing Sweden’s ‘herd immunity’ objective – and his social media team see suspicious feeds appearing on his Twitter account; the mainstream media amp up the sense of public alarm
• On 19^th March the CCP announces that their lockdown has eliminated domestic cases entirely
• On 23^rd March, Britain reverses course, and locks down
• Foreign governments are strongly recommended to follow China’s (and Italy’s, and Britain’s) lead, and to lock their own populations down to prevent the spread of the disease
• Governments and politicians that choose not to follow the lockdown route – notably in Sweden – are besieged by thousands of hostile, Chinese state-sponsored actors on social media
• Lockdown becomes the de facto western response to Coronavirus, with all the attendant economic damage. Many national health systems end up becoming almost entirely focused on dealing with, or testing for, Coronavirus, leading to widespread degradation of the quality of care for other life-threatening and far more prevalent conditions.

Michael Senger’s conclusions are particularly damning:

Within China, the CCP has pretended to believe its own lies only at its own convenience, reserving the right to use COVID-19 as a pretext for unrelated authoritarian whims—demolishing retirement homes, detaining dissidents and reporters, expanding mass surveillance, cancelling Hong Kong’s Tiananmen Square vigil and postponing its elections for one year. In Xinjiang, where over 1 million Uighurs are imprisoned, lockdowns have gone on since January and have involved widespread hunger, forced medication, acidic disinfectant sprays, shackled residents, screams of protest from balconies, crowded “quarantine” cells, and outright disappearances.

The most benign possible explanation for the CCP’s campaign for global lockdowns is that the party aggressively promoted the same lie internationally as domestically – that lockdowns worked. For party members, when Wuhan locked down it likely went without saying that the lockdown would “eliminate” coronavirus; if Xi willed it to be true, then it must be so. This is the totalitarian pathology that George Orwell called “double-think.” But the fact that authoritarian regimes always lie does not give them a right to spread deadly lies to the rest of the world, especially by clandestine means.

And then there’s the possibility that by shutting down the world, Xi Jinping, who vaulted through the ranks of the party, quotes ancient Chinese scholars, has mastered debts and derivatives, studies complexity science, and envisions a socialist future with China at its center, knew exactly what he was doing.

Then, if you can make the time, try and get to watch Jeff Orlofski’s new documentary The Social Dilemma (available on Netflix). Much of its content may not be new to you, but it performs the excellent service of reiterating the key message that when you pay nothing to use social media, the product on sale is you. And also that the output of social media is carefully and algorithmically optimised to control both your thoughts and your emotions. Because these firms are also adept gatherers of your data, in many respects they know more about you than you do yourself. If you choose to let them. (We (over-)use Twitter, but we don’t have anything to do with either Facebook or Instagram, for example. Use at your own risk.)

To some extent we have been here before. The cases of Zaosong Zheng and Dr. Charles Lieber, for example, suggest that China might have surreptitiously started an economic World War 3 as early as December 2019, just without telling the other combatants. Michael Senger’s scrupulously researched timeline gives extra heft to that thesis. (The only thing we would add to it, in the interests of full transparency, is Professor Neil Ferguson’s now infamous 16^th March 2020 forecast of more than half a million UK deaths if the virus’ spread was left unchecked – which we suspect will go down as the most damaging “advice” to any government ever issued in history.) But we welcome any alternative perspectives from readers that can account for where we’ve ended up as a nation. Since we’re dealing with PsyOps, confusion, rumour and state-sanctioned disinformation are all part and parcel of the debate – by every party involved. But as Michael Senger himself wrote on 16^th September 2020,

In March 2020, liberal democracy ground to a sudden stop. Like the Reichstag Fire of 1933, historians may never know how SARS-CoV-2 came about. For scientists, exploring its origins would be a rewarding endeavour if it weren’t precluded by the jackboot of Xi Jinping’s CCP.

But then we have to ask, Cui bono ? Who stands to benefit from a locked-down world ?

World economic activity is not necessarily a carefully balanced, zero sum game, in which every winner is offset by a loser, and vice versa. When sudden, global economic innovation or disruption occurs, entire sectors of the economy can just wither away, and never recover. The flurries of international lockdowns have done massive damage to the airline and hospitality sectors, for example – it seems unlikely that all the associated revenues and attendant profits have simply migrated to the likes of Zoom and Amazon. Not everyone will make it out of this room alive. Doubtless some Chinese businesses will also have been adversely affected by the country’s localised lockdowns. But it seems undeniable that in relative economic terms, China – which claims, implausibly, to have entirely dealt with Coronavirus domestically – is now in far better shape versus most of its western economic rivals, notably those in the Anglosphere (and particularly the UK, the US, Australia and New Zealand – all of which elected, for whatever reason, to lock down hard).

What we do know is that the UK, in both fiscal and economic terms, has been one of the biggest victims of lockdown in the world. Which makes Boris Johnson’s doubling down on economically destructive lockdown policies that much more unforgivable, given that so much of the science the government claims to be following remains disputed, not to say highly contentious. But if Michael Senger’s thesis is correct, neither Boris nor any other member of our government can ever apologise for their response to Coronavirus – because it will amount to an admission of having been conclusively hoaxed by the CCP at a terrible human and financial cost. Or perhaps there are other commercial forces at play..

To help understand even some of what’s occurred, just follow the money. Or as Charlie Munger puts it, show me the incentive and I’ll show you the outcome.

China has clearly moved to position itself as a new global leader while the US has hunkered down defensively into self-preservation mode. China’s expansionist Belt and Road Initiative may yet see it acting as a debt collector with the power to influence the politics and economics of those countries in its debt. In a piece for the Washington Post, columnist Josh Rogin writes of ‘How China is planning to use the Coronavirus crisis to its advantage’:

In Washington, there’s a lot of talk about how the coronavirus crisis could increase the push for more economic decoupling with China. But the Chinese government is thinking about it in exactly the opposite way. Beijing is preparing to use the crisis to advance China’s economic strategy against us. We better start taking notice.

China apart, cui bono ? You do not need to be much of a conspiracy theorist to see a web of potential conflicts of interest, not least monetary ones, at the heart of governments’ various responses to the emergence of Sars-CoV-2. Take our own government:

• Sir Patrick Vallance, the Chief Scientific Adviser to the British government, was previously with Glaxo SmithKline as head of drug discovery.
• In 2008, the London School of Hygiene and Tropical Medicine was awarded grant funding of over $46.4 million by the Bill and Melinda Gates Foundation and $12.7 million from other partners for research into treatment and prevention of malaria, tuberculosis and HIV/AIDS. The largest portion of that funding went to the ACT Consortium, a body of research institutions around the world that conducted research into treatment for malaria and of which the London School of Hygiene and Tropical Medicine was a member. The ACT Consortium received around $40 million. At the time, the director and Principal Investigator of the ACT Consortium was Chris Whitty, now the Chief Medical Officer for England.
• The head of the UK’s Vaccine Task Force is the Honourable Kate Bingham. Although Kate admits that she isn’t a “complete expert” in vaccines, she does have the credentials of being married to Conservative MP for Hereford and South Herefordshire, Jesse Norman; prior to taking up the position she was Managing Partner at Schroder Ventures Health Investors, a biotechnology venture capital firm.
• Or take Dido Harding, who despite no obvious medical experience became head of the NHS Test and Trace programme. Perhaps her husband, Conservative MP John Penrose, can disclose why she was selected for the role.

This is not to say that any of these healthcare specialists (or Dido Harding) have acted in any way less than honourably, but merely to point out that sometimes the optics look dreadful – as they did when the Daily Telegraph pointed out last year that Vallance retained a £600,000 shareholding in the same company – GSK – that has been contracted to develop a Covid-19 vaccine for the government. At a time when the British people are becoming ever more uneasy about draconian lockdown measures and the resultant cost to the nation’s health and collective livelihoods, some transparency over government health sector appointments would be helpful. It would be reassuring to a concerned public to have more healthcare leadership from professional specialists with reputations like that of Caesar’s wife. We have seen enough by way of “jabs for the boys”.

Follow the money, too, in the form of what is happening with broad money (that is to say, bank credit and bank lending) – which will give us all a steer about the likely path of inflation, and therefore the ongoing necessity of retaining meaningful portfolio exposure to the likes of gold and silver and associated equity interests. The analyst and historian Russell Napier in his Solid Ground research note ‘The Train Now Arriving at the Finland Station – Discounting Regime Change’ points out that the situation facing commercial banks is completely different from the one they faced during the Global Financial Crisis. Back then, central banks conjured up money in the form of QE, which was given to the commercial banks in exchange for holdings of government bonds, and that money (or bank credit) was then provided to big savings institutions or large non-financial companies. In many cases those companies elected to hold large precautionary cash balances, and as a result most of the “new money” never actually circulated in the broader economy. The velocity of money did not raise, ergo we did not experience inflation in anything except asset prices.

This time round, as Russell points out, almost all the bank credit being created under European credit guarantee schemes, with the exception of Germany, is going to small and medium sized companies (SMEs). We are seeing a similar trend in the US, where the only driver of bank credit growth is the Paycheck Protection Program (PPP) which is restricted to smaller companies. Because SMEs are being disproportionately mauled by lockdown measures, they have a far greater propensity to spend it, if only to make payroll. As Russell puts it, “Money so disbursed by the government on such terms is like hot gravy, delicious when consumed quickly, and not to be left to congeal.”

So today in the US we have highly expansionary fiscal policy, a highly expansionary Fed, and broad money growth at the highest level ever recorded in peace time. In Europe, broad money in the Euro zone is already growing at double digit rates year-on-year, a level briefly exceeded in 2007, but otherwise not sustainably exceeded since 1982, when the Euro itself was not even a pipe dream. (As for the UK under the Johnson administration’s lockdowns, the phrase “basket case” springs to mind, with GDP likely to continue to wither on the vine while government spending goes through the roof. In terms of business survival, we like the Darwinian phrase “get big, get niche or get out”.)

The “necessary” costs of lockdown such as job support programmes are high enough. The ‘black economy’ aspects of lockdown and the massive potential for related abuse have so far been largely overlooked. During lockdown, a client of ours who runs his own business sent us the following text:

Spoke to my accountant. He told me to apply for the bounce back loan scheme even though I don’t need it.

It took me five minutes to apply for £50,000. And it will be in my account tomorrow. It’s ridiculous.

I’ve heard stories of people having old dormant companies applying three times on each one with plans to wind them up just before the end. The fraud must be tremendous.

Which is always the problem when governments write cheques with other people’s money. The tragedy of the Johnson administration is that a Conservative government has now imposed upon Britain a system of Big State socialism so breath-taking in its scope, and cost, that not even Jeremy Corbyn could have imagined it in his wildest fantasies.

So, conspiracy or cock-up ? We, along with Michael Senger (and also, en passant, the US hedge fund manager Kyle Bass) would suggest conspiracy on the part of the Chinese Communist Party, and cock-up by those western governments that misguidedly chose to follow them. Cock-up or, more precisely, lock-down. The enablers in the middle were the mainstream media, ghoulishly amplifying the core message of Project Fear 2.0, assisted by scientists who, as Professor Michael Levitt reminded us, have in many respects been an abject disgrace to their profession. This is not a mainstream view, because most mainstream participants in financial markets and the economy are too blinded by wanting to make money out of China to be able to see clearly the all too visible attendant risks of doing so. (For more on this theme, see for example the banks, Hollywood, and all large fund management groups.)

Modern history is replete with changes to the prevailing monetary system. In the last 100 years, investors have experienced a global gold standard, a gold exchange standard, the Bretton Woods Fixed Exchange system, a Floating Rate system and a Eurozone Fixed Rate system (the EURO). Whatever the precise nature of the successive monetary system heading our way, the mass governmental hysteria that has accompanied Coronavirus has certainly accelerated it. Already precarious state finances have been horribly impaired in the process – the UK government, for example, has decided to scrap the national rail franchise system, at a likely cost to the taxpayer of up to £12 billion. It’s symptomatic of the economic destruction wrought by the Johnson administration’s grotesque over-reaction to Coronavirus that £12 billion has now become a rounding error.

We have all been had. Perhaps you find the Chinese PsyOps theory of Coronavirus and lockdown implausible. We did, at first – probably out of a stubbornly patriotic sense that our politicians, our public sector and our mainstream media simply couldn’t be that malleable to foreign propaganda. But the facts in Michael Senger’s timeline – all of which are sourced and accredited – are indisputable.   So an early member of that Lloyd George propaganda mission, Sir Arthur Conan Doyle, in the guise of his creation, Sherlock Holmes, gets the last word for this week:

When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.

And as the money printer continues to go brrrrr, and as we asked last week, do you own enough gold ?

Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.

Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and specialist managed funds.