22-Misdirection

            A good magician uses misdirection to focus the audience’s attention away from the mechanics of the trick being performed. Politicians often do the same thing. It’s easier to get something done, for good or bad, if what you’re doing isn’t in the public spotlight.

            There are two examples today of this happening right in front of us. 

            In another Pencils essay in this group (14-Socialism) I discussed the contorted use of the term “socialism” to describe the progressive politics of Bernie Sanders, Zohran Mamdani and others. This redefinition of the term has left us with no way to describe the difference between this political ideology and classic socialism which involves government ownership of the means of production.

            We are distracted by “democratic socialism” which is really healthy capitalism funding social welfare programs to redistribute some of the private wealth. While both sides debate the merits and details of this, the current administration has taken major stakes in private companies, e.g. Intel. This is the dictionary definition of socialism and is a dangerous and destabilizing precedent which is anti-capitalist and anti-democratic. It directly aligns the interests of the companies with the interests of the government which is supposed to be regulating and policing them. Even Adam Smith, the inventor of the theory of free market capitalism a couple of hundred years ago, warned against this. 

            It will not go well for us. If you think there was too much corporate influence in government before, this is corporate influence on steroids. This is what the term socialism is supposed to mean. 

            What we’re focused on, democratic socialism, is just a debate within the bounds of a capitalistic democracy. You have to have robust capitalism to generate the wealth that you want to redistribute. The real danger—government ownership of private companies—is happening right in front of us, and we don’t have the language to recognize it because we’ve mis-applied the word for it. This genuine socialism is what has the potential to destroy the goose, capitalism, that is laying the golden eggs, social welfare. This is misdirection.

            This is why so many Americans with history from Latin America can’t live with Democrats using the word as they do. Latin Americans know the dangers of real socialism.

            Another example of political misdirection is the current debate over the new technology of cryptocurrencies. There is a disconnect between the popular dialogue and the reality. First, cryptos come in a wide variety of types, many of them with important practical uses as well as loads of them with no use at all. I’ll focus on the best known crypto, bitcoin. Bitcoin was designed to be—and seems to be becoming—an international store of value like gold. It’s sometimes called digital gold.

            Like gold, it’s not controlled by any one person or government, and its price is what the next person will pay for it, no less, no more. Bitcoin has been used by criminals to launder money internationally, but it contains functionality that can make this use very difficult. Here’s where misdirection comes in. 

            Perhaps you have heard that the US Government recently seized ~$15 billion of criminal assets in bitcoin from a scammer and human trafficker in Cambodia. 

            What is unique about this seizure aside from its size (I've heard it's the largest forfeiture of criminal funds in the history of the US) is that the funds are totally transparent to everyone. You and I can watch them. If someone withdraws them, we can see the date, amount, and address of the wallet they were withdrawn to. You can't do that with dollars. If they are in a bank account or a vault, only the bank and the owner (and sometimes the government) can actually see that account. If the funds are in cash or gold, no one but the criminals can see them.

            The wallet addresses where the bitcoins are held were made public. You can google them to find them. Here's a link to one of the wallets viewed through the blockchain explorer:

            https://www.blockchain.com/explorer/addresses/btc/bc1qeth6n6ryxexvkx34wnx3nuynun4474h3j0gkhw

            This shows all of the transactions that have ever occurred in this wallet. If the Federal government moves the bitcoin, we can see it. If the criminal tries to move the Bitcoin (if he still can), we can see it. So can anyone else in the world with a smartphone and a connection to the internet.

            This is pure democratic transparency. Someday, people will wonder how we managed global money without it.

            So, why is it so useful to criminals? The answer is nuanced. Bitcoin makes transferring money anywhere in the world quick and seamless. That’s good for criminals. Also, the criminals for years were technologically ahead of the cops. Now the cops are catching up.

            The main problem the police have now is that it's a big step from being able to see the transactions to knowing who is making them and where the money is coming from and going to geographically. It takes old-fashioned police work. The transparency of the transactions is a huge advantage to the police over the opacity of the banking system or cash, but effectively policing this stuff requires international cooperation. 

            That's the real damage the current administration is doing, not the promotion of Bitcoin, which nothing can stop. Criminals don’t want the cops talking to each other. Destroying relationships with allies makes this cooperation harder.

            Misdirection is focusing us on the fear of the new (cryptos) while the administration is destroying the international law enforcement cooperation that is needed to police them correctly. Just like they are focusing us on the "horrors" of the faux socialism of Sanders and Mamdani while they are creating real socialism by nationalizing private companies. We're letting them get away with it.

            We can fix this, but we have to see it for what it is. True socialism is not good for us. No one wants a country like that, neither Democrats nor Republicans. We need to stand up and say that. 

            The world problem of international money laundering didn’t start with bitcoin or this administration. The flow of international dirty money has always been bipartisan. One of the centers of the world for laundering and hiding large amounts of dirty money for the last couple of decades is South Dakota through their opaque trust laws, with a couple of other American states close behind. No one in any administration has done much about this. 

            We have to raise awareness of all this. Democrats have to make common cause with Republicans accusing Democrats while Democrats accuse Republicans. There's some dirt everywhere. 

            That doesn’t mean everyone is a crook. Far from it. That view plays into the hands of the crooks. It’s more misdirection. It’s a dangerous delusion to think that the only way to fix the system is to tear it down first. That's just wrong and delights the criminals. They thrive in chaos.

            We have to work together with people we mostly don’t agree with on the things that we can agree on. That is how democracy works. Misdirection keeps us from seeing the problems as they are and that most of us could agree to work on real ways to fix them.

Hugh Moffatt
Nashville, Tennessee
October 27, 2025