The Deep State Is Even Scarier Than You Think

  • Suddenly, the deep state acknowledges its own existence
  • But what exactly is the deep state, anyway?
  • How America resembles Orwells 1984 — and East Germany
  • A brief deep-state history from Truman to Trump
  • The deep state raises the stakes for 2020. Brace for market impact.

“Thank God for the Deep State,” said John McLaughlin — who for a time was acting CIA director under the younger President Bush — last month during a panel discussion at George Mason University.

Barack Obama’s CIA director John Brennan, speaking on the same panel, freely acknowledged how “Mr. Trump has this very contentious relationship with CIA and FBI and the deep state people.”

How times have changed. As recently as a few months ago, anyone who spoke of the “Deep State” was dismissed as a conspiracist loon, to be outfitted with one of these…

Tin Hat

The establishment take on the “Deep State” — until October 2019.

But something about “Ukrainegate” has liberated the establishment to drop the pretense.

“Over the last three weeks,” said a New York Times story of Oct. 23, “the deep state has emerged from the shadows in the form of real live government officials, past and present.”

Guess we’ve always been at war with Eastasia, right?

(This won’t be our first Orwell reference today.)

But exactly what is the Deep State, anyway?

“The concept of the ‘Deep State’ was first applied to countries such as Turkey and Egypt,” writes Bill Bonner — who founded The Agora Companies more than 40 years ago.

“These were places where military-police-security insiders put screws to your thumbs, forcing you to do as you were told. Elections changed ruling parties and their leaders. But the real power was elsewhere.”

It was a former congressional aide named Mike Lofgren who first applied the term to the United States, in a 2014 essay for the Truthout website, and later a book.

“The Deep State is the story of our time,” writes Lofgren. “It’s the thin red line that runs through the war on terrorism, and a militarized foreign policy. Also the financialization and deindustrialization of the economy, and a social structure that has given us the most unequal income distribution in almost a century.”

As long as we brought up Orwell earlier, ponder the following…

Years before the term “Deep State” entered popular usage, we took note of a report by McClatchy Newspapers (Miami Herald, The Charlotte Observer, etc.) stating that the number of Americans with “access to classified material” numbers about 5 million.

The over-18 population of the United States is roughly 256 million. So just under 2% of American adults are privileged to have “access to classified material.”

In the Oceania of Orwell’s 1984, the Inner Party made up 2% of the population.

The Outer Party made up another 13%, and the rest were proles.

“Orwell’s division of labor and power,” observes journalist Sam Smith, “was almost precisely replicated in East Germany decades later, where about 1% belonged to the General Secretariat of the Communist Party, and another 13% being far less powerful party members.”

East Germany, with its infamous Stasi secret police, was the ne plus ultra surveillance state of the pre-internet era. Helluva model to be following in the “Land of the Free,” huh?

But don’t get us wrong: “The Deep State is not a homogenous or centrally controlled organization,” elaborates Bill Bonner.

“It is not a conspiracy of spooks, meeting in secret and plotting a takeover of the country. Instead, it includes hundreds of thousands of people who already run the country.

“It is a loose and tacit alliance of cronies, politicians, bureaucrats, consultants, experts, economists, lobbyists, the press, professors, the whole medical care complex and the military and its contractors.

“There are so many mansions in this house, the walls bulge and the nails pop. And the people who live in them have many different competing interests. But they have one single overriding common agenda — to shift power, status and wealth from the public to themselves.

“That is what makes them different from you and us: They can get richer only by making us poorer. And that, and only that, is the reason federal spending, debt and fake money go in only one direction — up.

“There are three legs to the Deep State stool,” Bill continues. “One controls the guns. Another seeks control over the voters. The third controls the money.

“The most powerful and dangerous of the three legs is the one Dwight Eisenhower warned about: the military-industrial complex. It’s gotten much more complex… and much more powerful… since Eisenhower outed it in 1961.

“The second leg is the politically correct, mostly culturally liberal, non-‘deplorable’ elite who dominate the universities, the media and the health, education and welfare complex.

“Wall Street is the third leg. It is not interested in politics. It is interested in money itself. But it knows that today’s fake money comes from politics, and it does its part, along with the rest of the Deep State, to keep it flowing.”

Donald Trump is not the first president to tangle with the deep state. We daresay the deep state has been defying the orders of elected presidents for more than 70 years.

Perhaps you’re familiar with Operation Paperclip — an effort by the U.S. Joint Intelligence Objectives Agency in the 1940s, bringing 1,600 German scientists and engineers to America. The aim — leveraging their knowledge to wage the emerging Cold War with the Soviet Union.

“Although he officially sanctioned the operation, President Harry Truman forbade the agency from recruiting any Nazi members or active Nazi supporters,” says the History Channel website.

“Nevertheless, officials within the JIOA and Office of Strategic Services — the forerunner to the CIA — bypassed this directive by eliminating or whitewashing incriminating evidence of possible war crimes from the scientists’ records, believing their intelligence to be crucial to the country’s postwar efforts.”

And that’s how it’s gone ever since. In 1960, Dwight Eisenhower had ordered the CIA to cease its U-2 spy flights over Soviet territory. CIA chief Allen Dulles ignored him, Gary Powers was shot down and plans for an Ike-Khrushchev summit were blown up.

Two episodes from the Reagan presidency are especially illustrative of how the Deep State works. We’ve related them both before, but not at the same time.

In early 1986, Reagan got a letter at the White House from the Soviet leader Mikhail Gorbachev. Gorbachev had been on the job less than a year, but he’d already begun his program of epic reforms. For his part, cold-warrior Reagan felt Gorbachev was a Soviet leader he could work with.

The letter proposed eliminating all nuclear weapons by 2000.

Reagan mused about upping the ante. “Why wait until the year 2000?” he asked his aides in the Oval Office.

The Deep State swung into action. “Secretary of Defense Caspar Weinberger and CIA Director William Casey, who had done their best to sabotage earlier nuclear treaties, were appalled,” wrote Jacob Weisberg in a 2016 Atlantic article. “Few others inside the Reagan administration took the idea of nuclear abolition seriously.”

The best Reagan and Gorby could pull off was eliminating a single class of nukes in contienental Europe, with the Intermediate-Range Nuclear Forces Treaty of 1987.

Which Donald Trump withdrew from this year, swayed by his own Deep State advisers.

The other story from the Reagan years was told by the late columnist Robert Novak.

Reagan appointed a U.S. Gold Commission early during his first term to investigate whether the United States should return to some sort of gold backing for the U.S. dollar. In the end, the Commission voted 15-2 against. (Rep. Ron Paul was one of the two dissenters.)

During his second term, Reagan granted a one-on-one interview to Novak at the White House. From Novak’s 2007 autobiography:

I asked Reagan: “What ever happened to the gold standard? I thought you supported it.”

“Well,” the president began and then paused (a ploy he frequently used to collect his thoughts), “I still do support the gold standard, but —” At that point, Reagan was interrupted by his chief of staff. “Now, Mr. President,” said Don Regan, “we don't want to get bogged down talking about the gold standard.””

“You see?” the president said to me, with palms uplifted in mock futility. “They just won't let me have my way.”

It was Donald Regan — the Merrill Lynch veteran who was Treasury secretary during Reagan’s first term — who stacked the U.S. Gold Commission with supporters of fiat money.

Speaking of banksters calling the shots, it’s not a stretch to say Wall Street dictated the makeup of Barack Obama’s Cabinet.

Somehow your editor missed this bombshell that emerged from WikiLeaks’ dump of John Podesta’s emails in 2016, when Podesta was chairman of Hillary Clinton’s presidential campaign. (And I don’t miss much.)

In October 2008, Podesta was soon to be co-chair of Obama’s transition team. He got an email from a Citigroup executive named Michael Froman with the subject line “Lists.”

The lists were of prospective Cabinet members. “These are the names to date that seem to be coming up as recommended by various sources for senior level jobs,” Froman wrote.

The list eerily anticipated the actual makeup of Obama’s Cabinet and senior aides. Rahm Emanuel as chief of staff. Eric Holder as attorney general. Robert Gates staying on from the Bush administration as defense secretary. Three names were floated as Treasury secretary — including the one who got the job, Timothy Geithner.

“This was Oct. 6. The election was Nov. 4,” wrote David Dayen at The New Republic. “And yet Froman, an executive at Citigroup, which would ultimately become the recipient of the largest bailout from the federal government during the financial crisis, had mapped out virtually the entire Obama Cabinet, a month before votes were counted.”

So the only difference in the Trump era, really, is how the Deep State’s subversion has come into the open.

The Deep State’s attitude was on display for all to see last week on the first day of the public impeachment hearings.

Diplomat Bill Taylor testified that “the official foreign policy of the United States was undercut” by the White House’s “irregular efforts.”

Ditto for the closed-door testimony of National Security Council aide Lt. Col. Alexander Vindman. He carped that Trump was “promoting a… narrative [that was] inconsistent with the consensus views of the interagency.”

(“The interagency.” That’s how these people talk…)

Back to Bill Bonner: “In other words, the generals, foreign policy experts, politicians and bureaucrat lifers (all aided and abetted by crony capitalists, campaign donors and lobbyists) have their own plans for stomping around the globe; they don’t want the White House butting in.”

Perhaps the most brazen deep-state ploy came in the pages of The New York Times last month — when a four-star retired Navy admiral and former head of U.S. Joint Special Operations Command, William McRaven, declared…

If this president doesn’t demonstrate the leadership that America needs, both domestically and abroad, then it is time for a new person in the Oval Office — Republican, Democrat or independent — the sooner, the better. The fate of our Republic depends upon it.

Can’t wait another year for an election to replace him? Or even a clunky impeachment procedure? Hmmm…

By now you get the idea: 2020 stands to be the most volatile election season since… well, 1860. The market impacts could include both manias and crashes — maybe at the same time in different asset classes. How should you prepare your portfolio?

That’s the topic of our special event, 2020 Survival Summit: Their No. 1 Money Move to Prepare for the 2020 Elections.

We’re barely 24 hours away now — it’s tomorrow night at 7:00 p.m. EST.

Bill Bonner is among our four distinguished guests. Tomorrow night, he’ll reveal Trump’s big mistake — and how he could have avoided it.

Also on hand will be our macroeconomic guru Jim Rickards. He’ll reveal what the deep state fears even more than Donald Trump.

The panel also features Agora Financial executive publisher Addison Wiggin and Rich Dad Poor Dad sensation Robert Kiyosaki. Your host is Peter Coyne, publisher of our Paradigm Press unit (and an aide to none other than Rep. Ron Paul before he joined us).

Drone Strikes Saudi Oil

Our four panelists have divergent opinions on many financial topics… but they’re all on the same page about the one thing you need to do to prepare for next year.

If you do nothing else before the end of this year, make plans to watch this event. It’s free to watch. There’s absolutely no obligation. You just need to sign up in advance so we know how many people to expect and we scale up enough bandwidth to accommodate everyone. Here’s where to go to secure your spot.

Best regards,

David Gonigam

Dave Gonigam
The 5 Min. Forecast

P.S. OK, this is three times in the last five weekday episodes of The 5 that we’ve tackled a single topic. We promise we’ll get back to our usual potpourri starting tomorrow.

But I think you’d agree the stakes are high enough next year that the deep state was worth a full-issue exploration today.

The deep state will figure big into our event tomorrow night, 2020 Survival Summit: Their No. 1 Money Move to Prepare for the 2020 Elections.

But this is the last reminder we’ll be sending you about it. It’s tomorrow night at 7:00 p.m. EST. If you want access, you need to act now.

Dave Gonigam

Dave Gonigam

Dave Gonigam has been managing editor of The 5 Min. Forecast since September 2010. Before joining the research and writing team at Agora Financial in 2007, he worked for 20 years as an Emmy award-winning television news producer.

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