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Is Bitcoin, Millennial’s “Fake Gold”?

Authored by Vitality Katsenelson via RealInvestmentAdvice.com,

I’ve been asked about Bitcoin a lot lately. I haven’t written anything about it because I find myself in an uncomfortable place in agreeing with the mainstream media: It’s a bubble. Bitcoin started out as what I’d call “millennial gold” – the young (digital) generation looked at it as their gold substitute.

Bitcoin is really two things: a blockchain technology and a (perceived) currency. The blockchain element of Bitcoin may have enormous future applications: It may be used for electronic contracts, voting, money transfers – and the list goes on. But there is a very important misconception about Bitcoin: Ownership of Bitcoin doesn’t give you ownership of the technology. I, without owning a single bitcoin, own as much Bitcoin technology as someone who owns a million bitcoins; that is, exactly none. It’s just like when you have $1,000 on a Visa debit card: That $1,000 doesn’t give you part ownership of the Visa network unless you actually own some Visa’ stock.

Owning Bitcoin gives you a right to … what, actually? Digital bits?

I can understand gold bugs and the original Bitcoin aficionados. The global economy is living beyond its means and financing its lifestyle by issuing a lot of debt. Normally this behavior would cause higher interest rates and inflation. But not when you have central banks. Our local central bankers simply bought this newly issued debt and brought global interest rates down to near-zero levels (and in many cases to what would have been previously unthinkable negative levels). If you think investing today is difficult, being a parent is even more difficult. I tried to explain the above to my sixteen-year-old son, Jonah. I saw the same puzzled look in his eyes as when he found out where babies come from. I also felt embarrassed, for my inability to explain how governments can buy the debt they just issued. The concept of negative interest rates goes against every logical fiber in my body and is as confusing to this forty-four-year-old parent as it is to my sixteen-year-old.

The logical inconsistencies and internal sickness of the global economy have manifested themselves into a digital creature: Bitcoin. The core argument for Bitcoin is not much different from the argument for gold: Central banks cannot print it. However, the shininess of gold has less appeal to millennials than Bitcoin does. They are not into jewelry as much as previous generations; they don’t wear watches (unless they track your heartbeat and steps). Unlike with gold, where transporting a million dollars requires an armored track and a few body builders, a nearly weightless thumb drive will store a dollar or a billion dollars of Bitcoin. Gold bugs would of course argue that gold has a tradition that goes back centuries. To which digital millennials would probably say, gold is analog and Bitcoin is digital. And they’d add, in today’s world the past is not a predictor of the future – Sears was around for 125 years and now it is almost dead.

A client jokingly told me that his biggest gripe with me in 2016 and 2017 was that I didn’t buy him any Bitcoin. I told him not so jokingly that if I bought him Bitcoin, he’d be right to fire me. Maybe I’m a dinosaur; but, like gold, Bitcoin is impossible to value. What is it worth? It has no cash flows. Is a coin worth $2, $200, or $20,000? But Wall Street strategists have already figured out how to model and value this creature. Their models sound like this:

“If only X percent of the global population buys Y amount of Bitcoin, then due to its scarcity it will be worth Z”.

On the surface, these types of models bring apparent rationality and an almost businesslike valuation to an asset that has no inherent value. You can let your imagination run wild with X’s and Y’s, but the simple truth is this: Bitcoin is un-valuable.

In 1997, when Coke’s valuation started to rival some dotcoms, bulls used this math:

“The average consumer of Coke in developed markets drinks 296 ounces of Coke a year. These markets represent only 20% of the global population.”

And then the punchline:

“Can you imagine what Coke’s sales would be if only X% of the rest of the world consumed 296 ounces of Coke a year?”

Somehow, the rest of the world still doesn’t consume 296 ounce of Coke. Twenty years later, Coke’s stock price is not far from where it was then – but on the way it declined 60% and stayed there for a decade. Coke, however, was a real company with a real product, real sales, a real brand and real tangible, dividend-producing cash flows.

If you cannot value an asset you cannot be rational. With Bitcoin at $11,000 today, it is crystal clear to me, with the benefit of hindsight, that I should have bought Bitcoin at 28 cents. But you only get hindsight in hindsight. Let’s mentally (only mentally) buy Bitcoin today at $11,000. If it goes up 5% a day like a clock and gets to $110,000 – you don’t need rationality. Just buy and gloat. But what do you do if the price goes down to $8,000? You’ll probably say, “No big deal, I believe in cryptocurrencies.” What if it then goes to $5,500? Half of your hard-earned money is gone. Do you buy more? Trust me, at that point in time the celebratory articles you are reading today will have vanished. The awesome stories of a plumber becoming an overnight millionaire with the help of Bitcoin will not be gracing the social media. The moral support – which is really peer pressure – that drives you to own Bitcoin will be gone, too.

Then you’ll be reading stories about other suckers like you who bought it at what – in hindsight – turned out to be the all-time high and who got sucked into the potential for future riches. And then Bitcoin will tumble to $2,000 and then to $100. Since you have no idea what this crypto thing is worth, there is no center of gravity to guide you or anyone else to make rational decisions. With Coke or another real business that generates actual cash flows, we can at least have an intelligent conversation about what the company is worth. We can’t have one with Bitcoin. The X times Y = Z math will be reapplied by Wall Street as it moves on to something else.

People who are buying Bitcoin today are doing it for one simple reason: FOMO – fear of missing out. Yes, this behavior is so predominant in our society that we even have an acronym for it. Bitcoin is priced today at $11,000 because the fool who bought it for $11,000 is hoping that there is another, greater fool who will pay $12,000 for it tomorrow. This game of greater fools is not new. The Dutch played it with tulips in the 1600s– it did not end well. Americans took the game to a new level with dotcoms in the late 1990s – that round ended in tears, too. And now millennials and millennial-wannabes are playing it with Bitcoin and few hundred other competing cryptocurrencies.

The counterargument to everything I have said so far is that those dollar bills you have in your wallet or that digitally reside in your bank account are as fictional as Bitcoin. True. Currencies, like most things in our lives, are stories that we all have (mostly) unconsciously bought into. (I highly encourage you to read my favorite book of 2015: Sapiens, by Yuval Harari.) Of course, society and, even more importantly, governments have agreed that these fiat currencies are going to be the means of exchange. Also, taxation by the government turns the dollar bill “story” into a very physical reality: If you don’t pay taxes in dollars, you go to jail. (The US government will not accept Bitcoins, gold, chunks of granite, or even British pounds).

And finally, governments tend to look at Bitcoin and other cryptocurrencies as a threat to their existence. First, governments are very particular about their monopolistic right to control and print currencies – this is how they can overpromise and underdeliver. No less important, the anonymity of cryptocurrencies makes them a heaven for tax avoiders – governments don’t like that. The Chinese government outlawed cryptocurrencies in September 2017. Western governments are most likely not far behind. If you think outlawing a competitor can happen only in a dictatorial regime like China’s, think again. This can and did happen in a democracy like the US. With Executive Order 6102 in 1933, US President Franklin D. Roosevelt made it illegal for the US population to “hoard gold coin, gold bullion, or gold certificates.”

However, nothing I have written above will matter until it does. Bitcoin may go up to $110,000 by the end of the 2018 before it comes down to … earth. That is how bubbles work. Just because I called it a bubble doesn’t mean it will automatically pop.

Senior DOJ Official’s Wife Worked At Oppo Research Firm That Produced “Trump Dossier”

In what looks to be another embarrassing blow to the FBI’s (already dubious) credibility, Fox News reported Monday night that the senior DOJ official who was demoted last week after allegedly trying to conceal his contacts with the firm that compiled the infamous “Trump dossier” has deep ties to the firm through his wife.

As it turns out, Nellie Ohr, the wife of disgraced DOJ official Bruce Ohr, was employed at Fusion GPS last year. Her term of employment overlapped with the period when the Trump dossier was being compiled. Though Fox was unable to discern the exact nature of her role at the firm, its reporters discovered that she has done extensive research on Russia-related topics for think tanks based in the Washington, DC area.

Ohr is the second senior DOJ official involved in the DOJ’s probe into Trump’s Russia ties to be demoted this year for suspected bias pertaining to the investigation. The other official, Peter Strzok, allegedly exchanged text messages expressing anti-Trump sentiments with another DOJ official with whom he was having an affair. And as if that weren’t enough to signal a conflict of interest, Strzok, it was revealed, possibly saved then-presidential candidate Hillary Clinton from prosecution by making a crucial change to the language in the now-infamous letter excusing Clinton for her suspected crimes. Specifically, Strzok changed language in Comey’s letter to “extremely careless” from the original language of “grossly negligent.”

House Republicans – led by Intel Committee Chair Devin Nunes – have spent the better part of this year investigating how the dossier – which is loaded with salacious and unverified claims about Trump – played into the DOJ’s decision to launch the probe that eventually morphed into the Mueller investigation.

A senior Justice Department official demoted last week for concealing his meetings with the men behind the anti-Trump “dossier” had even closer ties to Fusion GPS, the firm responsible for the incendiary document, than have been disclosed, Fox News has confirmed: The official’s wife worked for Fusion GPS during the 2016 election.

 

Contacted by Fox News, investigators for the House Permanent Select Committee on Intelligence (HPSCI) confirmed that Nellie H. Ohr, wife of the demoted official, Bruce G. Ohr, worked for the opposition research firm last year. The precise nature of Mrs. Ohr’s duties – including whether she worked on the dossier – remains unclear but a review of her published works available online reveals Mrs. Ohr has written extensively on Russia-related subjects. HPSCI staff confirmed to Fox News that she was paid by Fusion GPS through the summer and fall of 2016.

In a statement, Nunes said his committee “is looking into all facets of the connections between the Department of Justice and Fusion GPS, including Mr. Ohr,” which suggests that more details fleshing out the exact nature of his wife’s involvement with the dossier could be forthcoming in the near future.

While the DOJ has refused to release any information about Ohr’s role in the investigation, it’s notable that he was demoted shortly after Fox began asking questions about his dual responsibilities: Not only was Ohr responsible for supervising the DOJ’s organized-crime prosecutions, but he also held the position of deputy attorney general. That position came with an office on “Main Justice” – a floor in the DOJ building where many senior officials have their offices.

Watch the latest video at video.foxnews.com

According to Fox, Ohr’s office was situated just a few doors down from Deputy AG Rod Rosenstein, the official who is nominally in charge of supervising the Mueller probe. Rosenstein’s reluctance to provide information about the dossier to Nunes and his committee nearly led to him being subjected to a contempt of Congress order, along with FBI Director Christopher Wray, a Trump appointee who has nevertheless insisted that the bureau’s agents have acted fairly and professionally in carrying out their investigation into Trump and his associates’ ties to Russian entities.

Until Dec. 6, when Fox News began making inquiries about him, Bruce Ohr held two titles at DOJ. He was, and remains, director of the Organized Crime Drug Enforcement Task Force; but his other job was far more senior. Mr. Ohr held the rank of associate deputy attorney general, a post that gave him an office four doors down from Deputy Attorney General Rod Rosenstein.

 

The day before Fox News reported that Mr. Ohr held his secret meetings last year with the founder of Fusion GPS, Glenn Simpson, and with Christopher Steele, the former British spy who compiled the dossier, the Justice Department stripped Ohr of his deputy title and ousted him from his fourth floor office at the building that DOJ insiders call “Main Justice.”

 

The Department of Justice has provided no public explanation for Ohr’s demotion. Officials inside the Department have told Fox News his wearing of two hats was “unusual,” but also confirm Ohr had withheld his contacts with the Fusion GPS men from colleagues at the DOJ.

Nellie Ohr was described as a “Russia expert” at the Wilson Center, a Washington think tank where she was employed before joining Fusion.

A review of open source materials shows Mrs. Ohr was described as a Russia expert at the Wilson Center, a Washington think tank, when she worked there, briefly, a decade ago. The Center’s website said her project focused on the experiences of Russian farmers during Stalin’s collectivization program and following the invasion of Russia by Nazi forces in 1941. She has also reviewed a number of books about twentieth century Russia, including Reconstructing the State: Personal Networks and Elite Identity in Soviet Russia (2000), by Gerald Easter, a political scientist at Boston College, and Bertrand M. Patenaude’s The Big Show in Bololand: The American Relief Expedition to Soviet Russia in the Famine of 1921 (2002).

Unsurprisingly, Adam Schiff, the top-ranking Democrat on the committee refused to comment about Ohr specifically. Instead, he insinuated that Nunes was trying to deliberately discredit the DOJ, which, according to Schiff, did nothing wrong.

“I think there’s a hope that if they can impeach Christopher Steele, and they can impeach the FBI and DOJ, maybe they can impeach the whole Russia investigation,” Schiff told MSNBC in September.

Of course, nearly every shred of information pertaining to the dossier that’s been publicly revealed in recent months would appear to counter this claim. Back in September, it was revealed that the dossier was jointly financed by the Clinton campaign and the DNC. Then it was revealed that Mueller had managed to interview Christopher Steele, the agent in charge of assembling the document. But apparently that interview did little to help the investigation verify its claims (if it had, we probably would’ve heard about it by now).

These revelations followed months of stonewalling by both the bureau and Fusion GPS, the firm that hired Steele, a former MI6 agent who worked in Russia for years.

All of this would seem to support the notion that the Mueller probe is hopelessly compromised, because many of the staffers who’ve worked on the investigation have anti-Trump leanings.

The only question now is: Will this be the final straw that prompts Trump to fire Mueller and put an end to his witch hunt. Though, as we pointed out, Mueller’s decision to secure a guilty plea from Michael Flynn might ultimately help salvage his investigation by providing much needed cover.

Regardless, one thing is clear: These repeated lapses in judgment have seriously damaged the bureau’s credibility, as Nunes and several of his Republican peers have suggested.

CNN’s Chris Cillizza Pens Furious Screed After Sarah Sanders Suggests MSM ‘Purposefully Misleading’ People

Content originally published at iBankCoin.com

 
White House Press Secretary Sarah Sanders spit-roasted the MSM during Monday’s briefing – calling them out for recent #FakeNews, and suggesting that they were purposefully misleading the public.

“There’s a very big difference between making honest mistakes and purposefully misleading the American people. Something that happens regularly. You can’t say — I’m not done. You can’t say that it’s an honest mistake when you are purposely putting out information that you know to be false or when you’re taking information that hasn’t been validated, that hasn’t been offered any credibility and that has been continually denied by a number of people including people with direct knowledge of an incident. This is something that — I’m speaking about the number of reports that have taken place over the last couple of weeks. I’m simply stating that there should be a certain level of responsibility in that process.” -Sarah Sanders

Sanders was, of course, talking about three incidents “over the last couple of weeks.”

First, ABC reporter Brian Ross was suspended after he put out a report that Michael Flynn was prepared to tell special counsel Robert Mueller that then-candidate Donald Trump told him to contact the Russians, when in fact Trump told Flynn to do so after he’d won the election – a totally normal thing to do for an incoming administration. As a result, the Dow tanked 350 points before the story was corrected.

Trump called Ross a “fraudster” in response, and tweeted that anyone who lost money “based on the False and Dishonest reporting of Brian Ross” should hire an attorney and sue ABC.

People who lost money when the Stock Market went down 350 points based on the False and Dishonest reporting of Brian Ross of @ABC News (he has been suspended), should consider hiring a lawyer and suing ABC for the damages this bad reporting has caused – many millions of dollars!

— Donald J. Trump (@realDonaldTrump) December 3, 2017

The second bit of fabricated news was CNN’s report from last Friday that Donald Trump Jr. received documents from Wikileaks on September 4, 2016 before they had been officially released, when in fact, a random person emailed him a link to publicly available documents on September 14.

CNN corrected the report, issuing the following statement:

CNN originally reported the email was released September 4 — 10 days earlier — based on accounts from two sources who had seen the email. The new details appear to show that the sender was relying on publicly available information. The new information indicates that the communication is less significant than CNN initially reported.

Trump shot back, tweeting “Fake News CNN made a vicious and purposeful mistake yesterday. They were caught red handed, just like lonely Brian Ross at ABC News (who should be immediately fired for his “mistake”),” adding “Watch to see if @CNN fires those responsible, or was it just gross incompetence?” It is worth noting that Ross was not fired but rather suspended for 4 weeks.

Fake News CNN made a vicious and purposeful mistake yesterday. They were caught red handed, just like lonely Brian Ross at ABC News (who should be immediately fired for his “mistake”). Watch to see if @CNN fires those responsible, or was it just gross incompetence?

— Donald J. Trump (@realDonaldTrump) December 9, 2017

The THIRD piece of Fake News was when the Washington Post’s David Weigel put out a photo of Trump’s speech last weekend, hours before it started, with the quote “Packed to the rafters.”

The event was, in fact, packed to the rafters:

.@DaveWeigel @WashingtonPost put out a phony photo of an empty arena hours before I arrived @ the venue, w/ thousands of people outside, on their way in. Real photos now shown as I spoke. Packed house, many people unable to get in. Demand apology & retraction from FAKE NEWS WaPo! pic.twitter.com/XAblFGh1ob

— Donald J. Trump (@realDonaldTrump) December 9, 2017

Weigel apologized and deleted the FakeNews tweet: 

Sure thing: I apologize. I deleted the photo after @dmartosko told me I’d gotten it wrong. Was confused by the image of you walking in the bottom right corner. https://t.co/fQY7GMNSaD

— Dave Weigel (@daveweigel) December 9, 2017

Chris is Pissed

In response to Sanders’ admonishment, CNN Editor-at-large Chris Cillizza lashed out like an angry purse-dog, penning quite the screed over Sanders for going “way, way beyond the pale of the usual give and take between the White House and press corps.”

Cillizza addressed JUST ONE of the three #FakeNews controversies – that of Brian Ross,  suggesting Ross’s mistake wasn’t intentional by using a stupid Baseball analogy.

Nowhere in anything we know about Ross’ erroneous reporting is there even a whiff of intentionality. Where is the evidence that Ross purposely pushed out the Flynn-Trump report — knowing it was wrong — solely to make Trump look bad?

There is a massive difference between making an honest mistake — in this case trusting a source too much — and purposeful intent to deceive. A massive difference.

Think of it this way: I am up to bat with the bases loaded and my team down one run in the bottom of the ninth inning of the seventh game of the World Series. I strike out. Game over. My team loses.

If I tried my best to hit the ball but failed, that means one thing.
If someone paid me $50,000 to strike out anytime I was up in an important moment in the game, that’s something else altogether. It’s not even in the same, ahem, ballpark.

“It’s not even in the same, ahem, ballpark.”

This is why the left can’t meme, by the way. That was a terrible analogy and a stupid joke. Moreover, Sarah Sanders is well within her right to suggest that intentional misreporting or a failure to validate a claim has taken place. She doesn’t need proof to hold that opinion.

It’s also hilarious that Cillizza totally failed to include his own network’s massive retraction over the Trump Jr. Wikileaks debacle, when – just like the Brian Ross story – the implications of what the networks were asserting would have had a serious, material impact on world affairs – as evidenced by the Dow’s 350 point kneejerk meltdown before Brian Ross corrected his story.

Cillizza closes by saying “But, to suggest — or believe — that the mistakes made by the media, including CNN, are purposeful is beyond offensive to anyone who spends their days in this profession.”

Right – which is why three CNN employees admitted to Project Veritas that they think the Russia story is “Fake News” pushed for ratings.

CNN Producer John Bonifield was caught on camera saying:

I haven’t seen any good enough evidence to show that the President committed a crime.

I know a lot of people don’t like him and they’d like to see him get kicked out of office…. but that’s a lot different than he actually did something that can get him kicked out of office.

Meanwhile, CNN’s Van Jones said Russia is a “nothingburger.

 

Boy Chris, it sure seems like CNN employees have the very clear impression that the Russia story is Fake News being pushed intentionally to mislead the public for ratings.

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Ron Paul: Government Should Leave Bakers Alone

Authored by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Last week the Supreme Court heard oral arguments in the case of Masterpiece Cakeshop v. Colorado Civil Rights Commission. The case stems from the refusal of Masterpiece Cakeshop, a bakery, to bake a wedding cake for a same-sex couple. The bakery was found guilty of a civil rights violation and ordered to stop refusing to bake and design cakes because they are for same-sex weddings. The bakery was also required to file reports on the steps it takes to comply and whether it turns down any prospective customers.

The decision to force the bakery to change its business practices reflects a mistaken concept of rights. Those who support government intervention in this case view rights as a gift from government. Therefore, they think politicians and bureaucrats can and should distribute and redistribute rights. This view holds it is completely legitimate to use government force to make bakeries bake cakes for same-sex weddings since the government-created right to a cake outweighs the rights of property and contract.

This view turns the proper concept of rights on its head. Rights are not gifts from government, so the government cannot restrict them unless we engage in force or fraud. The bakery did not use force to stop any same-sex couple from getting a wedding cake. It simply exercised its right to decide who it would accept as a customer. No one would support private individuals forcing bakery employees to bake a cake at gunpoint, so why is it right for the government to do it?

Some people claim that forcing the bakery to bake the cake is consistent with libertarianism. The reason they make this claim is they view the bakery’s actions as rooted in bigotry toward homosexuals. But even if this were true, it would not justify government intervention. Bigots and others with distasteful views have the right to use their property as they choose. The way to combat bigotry is through boycotts and other means of peaceful persuasion.

Instead of considering whether Colorado has violated the bakery’s rights of property and contract, the Supreme Court is considering whether Colorado’s actions violate the bakery’s religious liberty. The argument for a religious liberty violation is based on the fact that the bakery owner’s refusal to bake the cake was rooted in his religious objection to same-sex marriage. Looking just at this argument means that a victory for the bakery would implicitly accept the legitimacy of laws dictating to whom private businesses must provide services, as long as an exemption is made for those with religious objections. This reduces property and contract rights to special privileges held by business owners with “sincere religious convictions.” It also allows judges, bureaucrats, and politicians to determine who is really acting on sincere religious convictions.

Just as business owners have the right to decide who to do business with, individuals have the right to form any arrangement they wish as long as they do not engage in force or fraud. This includes entering into what many consider unconventional or even immoral marriage contracts. What no individual has the right to do is use government to force others to accept his definition of marriage.

Even if the bakery wins in the Masterpiece Cakeshop case, its victory will only protect those businesses acting on a “sincere religious conviction.” Those who oppose forcing bakers to bake cakes and who support private business owners’ right to decide who to accept as customers should work to restore respect for everyone’s rights.

South Korea Asks US To Halt Joint Military Exercises Until Olympics End

North Korea may have successfully bluffed its way into getting the US to stop holding massive army drills with South Korea’s army.

According to the FT, South Korea has politely asked the US to “delay” joint military exercises until after the Winter Olympics, in order to lower the chances that North Korea takes provocative actions during the Pyeongchang Games, which Seoul wants to use to showcase the country’s development. The unexpected request means that Seoul will want to postpone the start of the annual spring exercises — called Key Resolve/Foal Eagle — until after the Paralympics, which end on March 18. And since the FT’s sources said the US was likely to accept the request, it means that Pyongyang has just succeeded in getting the US to bend to its demands that the US and South Korea stop conducting army drills on its border for at least three months.

In many ways a de-escalation in military tensions, whether won by Seoul’s clever diplomatic maneuvering which hopes to avoid a mushroom cloud in the middle of its games due to an errant Trump tweet, is a welcome development. Earlier this month, HR McMaster, US national security adviser, said the potential for war with North Korea was “increasingly every day” after Pyongyang last month tested the Hwasong 15, a long-range missile capable of hitting the east cost of the US — a move that came two months after it conducted its sixth, and most powerful, nuclear test.

Others agreed: Sue Mi Terry, Korea chair at the Center for Strategic and International Studies, told the FT it was understandable that Seoul would want a delay since it was “very worried” about the Olympics. She said a postponement might also help create the conditions for talks, since it would reduce the chance of North Korea taking the kind of provocative actions that have, so far, closed off the possibility of serious negotiations with Washington.

Bruce Klingner, a Korea expert at the Heritage Foundation, said the move was prudent given the nature of the Kim regime. “Its neighbours are fearful that defensive exercises or a sports event would be used as an excuse for a provocation or deadly attack,” said Mr Klingner.

While it may be sound diplomacy, Seoul certainly has a right to be paranoid: “The fear is not unfounded since Pyongyang destroyed a civilian airliner in 1987 in an attempt to derail the 1988 Seoul Olympics” Klingner said.

The decision is also good commerce: Seoul is worried that the current tensions on the peninsula will cool demand for the Pyeongchang Olympics and Paralympics, particularly since ticket sales have been weak, and are about to get much weaker now that Russia has been effectrively banned. Another reason for poor ticket sales is that China has banned tour groups from visiting South Korea since March, because of a dispute over an American missile defence system that Seoul allowed the US to install in the country earlier this year.

But the real reason behind South Korea’s request for the US to keep away may be far simpler: Seoul wants to rebuild bridges with its far more important, and closer neighbor, China.

One of the people familiar with the South Korean request said it was probably partly an effort to gain goodwill with China, in the hopes that Beijing would relax the travel restrictions. He added that China was looking for ways to restart de-nuclearisation talks, and that Beijing viewed some recent US actions, such as putting North Korea back on its list of state sponsors of terrorism, as an obstacle to those efforts.

 

“A delay in the exercise would be a prudent move to decrease tensions . . . as athletes and guests from around the global come to a South Korean city only 50 miles from the demilitarised zone,” said the person, who added that the need for major exercises was reduced because US and South Korean troops had done extensive training this year.

And since the US has yet to respond formally, there are two points of view: those who say a delay will not be a problem to the US, and obviously, an opposing camp who claim that such a delay would be risk.

Don Manzullo, president of the Korea Economic Institute in Washington, said that as long as the decision to delay the exercises was acceptable to US forces in Korea, there was “no reason why the exercises should not take place after the Olympics”.

But Evan Medeiros of Eurasia Group said delaying the exercises was a “very risky” move. “On the one hand, you want to work with your South Korean ally but, on the other hand, this dangerously validates North Korea’s claim that the exercises are a source of tension,” said Mr Medeiros, who was Barack Obama’s top Asia adviser. “The next step could be to shrink the exercises or cancel them all together.”

Such an outcome would be delightful to North Korea… and also China, which previously proposed a “freeze-for-freeze” arrangement where the US and South Korea would halt their joint military exercises in exchange for North Korea agreeing to stop missile and nuclear tests.

 While Washington has rejected that idea on the grounds that it would just give North Korea more time to keep developing its weapons programmes, using an optical diversion like the Olympics to concede to China and in the process de-escalate substantially, may be just what US generals quietly desire.

As the FT notes, the South Korean request comes as Joe Yun, the state department envoy for North Korea, is visiting Japan and Thailand for talks over the crisis on the Korean peninsula. General Vincent Brooks, the top US commander in South Korea, travelled to Washington last week to provide Congress with a classified briefing on North Korea.

Now if only Kim Jong-Un wouldn’t immediately launch an ICBM to celebrate this indirect US retreat, the de-escalation might have some chance of actually holding.