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Hi there,

Today in Wednesday Signal, we'll ask who you trust more with your (digital) money: Silicon Valley programmers or central bankers. We'll watch Democrats launch impeachment proceedings, check in on the rule of law in the UK, and ponder nuclear annihilation. Also: what's the Russian navy coming to when one of its ships is sunk… by a walrus?

Send us your love/hate mail here, and please consider sharing Signal with a friend. Thanks for reading!

Kevin Allison

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Hi there,

Today in Wednesday Signal, we'll ask who you trust more with your (digital) money: Silicon Valley programmers or central bankers. We'll watch Democrats launch impeachment proceedings, check in on the rule of law in the UK, and ponder nuclear annihilation. Also: what's the Russian navy coming to when one of its ships is sunk… by a walrus?

Send us your love/hate mail here, and please consider sharing Signal with a friend. Thanks for reading!

Kevin Allison

 

Who do you trust more with your money: Mark Zuckerberg or your country's central bank? It's not just a theoretical question: When Facebook launched its Libra digital currency project back in June, we predicted it would provoke a sharp response from governments.


Since then, regulators the world over have placed obstacles in the way of the Facebook-backed cryptocurrency – Germany and France recently said no dice to Libra in its current form; the G7 countries, US lawmakers, and Chinese bureaucrats have also voiced concerns. In fact, China has accelerated work on a digital renminbi in response to the Facebook project, while Sweden's central bank is gearing up to test an e-krona that could take the place of cash.

So why do governments in many countries want to muscle in on the virtual currency craze? And why should you care? Here are a few reasons:

To Gain More Control – By replacing hard-to-track cash with state-issued digital money, governments can more easily find out who is buying what from whom. That could help catch tax cheats and fraudsters, creating more government revenue that can be spent for the public good, and shake up how government technocrats track economic growth and inflation. But depending on how a sovereign digital currency was designed, it could also give the state a powerful new tool to help it spy on citizens. For some governments, that's not a bug, it's a feature.

To Stick it to the US – The Trump administration's liberal use of financial sanctions to pressure America's adversaries has led big US foes—and some frustrated allies—to voice support for the creation of new alternatives to the dollar-based global payment system. The dollar's global hegemony won't be broken overnight. That's because the US currency accounts for about 60 percent of an estimated $11 trillion of foreign exchange reserves, and much of the world's outstanding sovereign debt is denominated in dollars. (The total market value of all the world's cryptocurrencies, by contrast, is a mere $250 billion.) But for countries like Venezuela, Russia, Iran, China, and even some European allies, state-backed virtual currencies that bypass financial middlemen who depend on access to greenbacks might help chip away at this unique source of US power.

To Fend Off Silicon Valley – Ten years after the world's original cryptocurrency appeared, Bitcoin remains a niche product. But just a fraction of Facebook's 2.5 billion users would need to adopt Libra to make it a powerful force in global finance. Governments around the world are already concerned about the growing influence of the biggest tech companies over commerce and fake news. They don't want Mark Zuckerberg, or any other tech zillionaire, taking away their control of money, too.

Who's Going to Win? Facebook and Libra's other backers have raw numbers and technical skill on their side, but governments have some enormous advantages in this fight: They can pass laws that make it harder for companies to launch virtual currencies. Perhaps most importantly, they get to decide which currencies they will accept for payment of taxes. That could give government-issued virtual cash a built-in market that even the world's biggest social network might struggle to match.


 

 
 
 

Climate change will challenge humanity for generations to come. But today's young people are proving that they have the passion – and inspiration – to rise to the occasion. Young scientists around the globe are using Microsoft AI for Earth grants to expand our knowledge of the natural world, putting Microsoft cloud and AI tools in the hands of those working to solve global environmental challenges. Read more about the grantees and their work at Microsoft On The Issues.


 

 
 
 

Buckle Up, Impeachment is on! In a dramatic turn of events, Speaker Nancy Pelosi announced yesterday that the House of Representatives will formally open an impeachment inquiry of President Trump, claiming he had seriously "violated the Constitution" when he allegedly tried to coerce Ukrainian officials into investigating 2020 Democratic presidential front runner Joe Biden, and his son. Pelosi has heard calls for impeachment for months, but was reluctant to pull the trigger over concerns that the ensuing political circus could hurt the Democrats' 2020 election chances. But as even key moderate Democrats in swing districts came out in support this week, she chose to strike. If a majority in the Democrat-controlled House votes to indict (impeach) Trump for violations of the constitution, he would face a trial in the Senate where two-thirds of the body would need to vote to convict and remove him from office. That's an almost impossibly high hurdle in the GOP-controlled Senate. This process – perhaps the most momentous US political drama in a generation – is sure to be extremely divisive and unpredictable. Buckle up.


UK Rule of Law – Brexit has made British democracy and rule of law the subject of much debate in recent months, and jokes about the UK's political dysfunction have circled the globe. (Your Signal authors might have indulged in one or two.) Brexit supporters say the people have spoken, and that it's undemocratic to try to subvert their will. Brexit critics claim that a prime minister elected only by members of the ruling party wants to push the country toward an extreme form of Brexit that wasn't on the ballot in 2016. Parliament and prime minister(s) have been constantly at odds. But on Tuesday, the 11 justices of the UK's supreme court ruled unanimously that Prime Minister Boris Johnson had violated the law by shutting down parliament in a time of national crisis—and, crucially, the prime minister accepted the court's authority. Whatever one's view of Brexit, and however many crises follow, Tuesday was a good day for checks and balances and the rule of law.

Nuclear Annihilation – This simulation of a nuclear war between the US and Russia is worth a few minutes of your time, if you can stomach it. Developed by Princeton researchers based on "realistic nuclear force postures, targets, and fatality estimates," it shows, in mesmerizing yet horrifying detail, (and with exquisite sound design) how a conventional military conflict in Europe could spiral out of control, provoking a tactical nuclear exchange, and then an all-out nuclear war that kills or maims more than 90 million people in a matter of hours. It's a reminder that a generation after the end of the Cold War, there are still roughly 16,000 nukes pointed directly at military and civilian targets around the world, many of them ready to launch at a moment's notice. In addition, the demise of the Intermediate-Range Nuclear Forces Treaty between the US and Russia this year has put new tactical weapons in play, raising the risk of an accident or miscalculation that leads to catastrophe.

What We're Ignoring:

Russian Military Boasts — Ever ready to challenge (at least rhetorically) the superiority of the West and weapons, the Kremlin responded to attacks on Saudi oil refineries last week with a sales pitch for its own S-400 anti-missile systems. We're ignoring this Moscow bravado because a) there is no way Riyadh will anger the US as Turkey did by purchasing this Russian air-defense system, especially when the Saudis are on the front lines of escalating hostilities between the US and Iran, and b) a walrus just took out a Russian navy boat. Sure, it was filled with researchers from the Russian Geographical Society (who thankfully emerged unharmed), but still.


 

 
 
 

With impeachment proceedings now under way, Nancy Pelosi and Donald Trump are on a collision course. Puppet Regime once tried to help them talk through their issues. Watch it here.


 

 
 
 

16: On Monday, 16 Latin American countries endorsed economic sanctions on members of Venezuela's government as part of a growing effort to increase international pressure and oust its leader, Nicolas Maduro. The group – which includes Argentina, Colombia and Brazil – stopped short of support for a military intervention.


81: Public confidence in those who hold positions of power in the US is waning, with 81 percent of Americans agreeing that members of Congress act unethically "some" or "all or most of the time," according to a recent Pew poll. Over a third of those surveyed think that powerful people who behave unethically don't face serious consequences.

2 million: More than 2 million people in and around Harare, Zimbabwe's capital, were left without water on Monday after authorities cut off the taps, citing shortages of foreign currency to import treatment chemicals. This raises new fears about disease after a recent cholera epidemic and a longstanding drought that has devastated the country's crops.

16,000: US companies have lodged more than 16,000 requests for exemptions from the $200 billion in tariffs on Chinese goods that the Trump administration imposed last year. Of those, 63 percent have come from just one company, Minnesota's Arrowhead Engineered Products Inc., which imports car parts and other items now taxed with a 25 percent tariff that's set to rise next month.


 

 
 

This edition of Signal was written by Kevin Allison, with Willis Sparks, Gabrielle Debinski, and Leon Levy. Spiritual counsel from Alex Kliment and J. Robert Oppenheimer.

 

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