Guest Post: Why Free Markets Are Incompatible with the Surveillance State

This guest post originally appeared on Lotus Rose’s substack. Views expressed belong solely to the original author of the view/opinion, and do not necessarily represent the views and opinions of RT4.

I started day trading in the Fall of 2020. My trades were for just a few dollars each—with commission-free trading, you can do that kind of thing. I was pleasantly surprised when I made a profit. Just pennies, mostly. But I had a system. The next year I was still cautious, but I invested more. What I loved about trading was that I could pick and choose my stocks. I passed over “sin” industries—tobacco, gambling, and weapons—in favor of green and socially responsible companies, and those with female CEOs. And somehow or other, I still made money.

Back then, we were in a bull market. The market had come back from the shock of the pandemic to reach record highs on an almost weekly basis. Specifically, we were experiencing what is called a “Goldilocks” economy: where unemployment and inflation remain low, and conditions are “just right” for sustained economic growth.

What changed in 2022?

Well, we have war in Ukraine and also runaway double-digit inflation.

So far, the market has been relatively resilient. We haven’t seen a crash—the tech-heavy NASDAQ is down about 12% since the beginning of the year, while the Dow and the S&P 500 have seen only modest corrections, in the range of 5 to 6%.

My gut tells me more shocks are coming. “Stagflation” is back, like a bad horror flick from the 1970s. While job openings exist for low-income, service-sector jobs, many of these will remain unfilled when people can no longer afford gas to get to work.

Personally, I don’t believe we will see a return to “Goldilocks” conditions until lawmakers restore fiscal sanity at the federal level. Here is why.

I finally finished my taxes two days ago. I’m not going to say they were easy, but at least they’re done. I even got a little bit of money back. I’m putting it into a high-yield CD and won’t be touching it until next year.

I am not one to complain about paying taxes. I was raised to be a dyed-in-the-wool Democrat, and now consider myself an Independent. I for one, am all for using federal tax dollars to build affordable housing—even if that means some billionaires get one less mansion, yacht, or private jet.

The problem is that’s not how our tax dollars—yours and mine—are getting used.

Just $3.2 billion (less than .05 percent of the 2022 federal budget) goes toward capital improvements for federally funded affordable housing. Meanwhile, the budget for Homeland Security is $52.3 billion—almost double what the Department of Justice gets. And that is only the part of the surveillance economy that we know about.

The United States has at least 17 different spying agencies, of which the CIA and NSA are only the most famous. We know their combined budget is more than $80 billion, but not much more than that.

The steep price tag is not the problem. The problem is that much of this spending is going towards spying on U.S. citizens. We don’t know how much—and we don’t know who exactly is being targeted. All we know is that virtually any electronic communication can and will be eavesdropped upon. Encryption won’t help you if there is spyware running on your phone or laptop, or if the service you are using can be backdoored with a judge’s warrant.

I learned about Sneak and Peek warrants earlier this year from Pat Eddington, a former CIA analyst now with the Cato Institute. Created under Section 213 of the Patriot Act, these warrants allow law enforcement officers to break into homes and remove property by stealth, without ever notifying the occupants. Their existence is not well publicized. Many Americans would be shocked to know that police can come and go through their private property with impunity.

Information is power. Excessive concentration of power breeds corruption and abuse. Big business often gets cozy with the intelligence sector—it happens every day, particular in the  technology and finance industries. The potential for blackmail, misinformation, fraud, harassment, and fabricated evidence is frightening and obvious. The state becomes the ultimate “insider.”

Our market system is founded on open and unfettered access to knowledge. The surveillance state consumes more than just our tax dollars. It renders the information made available to the public via the news media quaint and irrelevant.

Mass surveillance puts all of us in grave danger, and if left unchecked it will transform U.S. markets and exchanges from a vibrant ecosystem to a sterile oligopoly.

Who killed Goldilocks?

Unelected government employees, whose salaries are paid by you and me.


Lotus Rose is not a registered investment, legal or tax advisor or a broker/dealer. All investment and financial opinions expressed on
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