The Fall of MICIMATT (The Military-Industrial-Congressional-Intelligence-Media-Academia-Think-Tank Complex):

The week ended on September 19, 2025, interesting news items to look at this week are:

1. The Fall of MICIMATT (The Military-Industrial-Congressional-Intelligence-Media-Academia-Think-Tank Complex): In a speech of less than 10 minutes, on January 17, 1961, President Dwight Eisenhower delivered his political farewell to the American people on national television from the Oval Office of the White House. Those who expected the military leader and hero of World War II to depart his Presidency with a nostalgic, "old soldier" speech like Gen. Douglas MacArthur's, were surprised at his strong warnings about the dangers of the "military-industrial complex." (Fig. 1).

It took a long 65 years to see the US Military-Industrial Complex finally collapse under its own weight in September 2025. A long 65 years because the beast in the intervening period has morphed to encompass a vast conglomerate of elite vested interests that has sucked the entire economies of the west dry and began auto-cannibalization. I am sure historians will devote reams of studies on the rise and fall of MICIMATT but here at this Blog I am primarily interested to identify directional changing markers and actionable positioning as a matter for self preservation.

John Connolly, the 61^st United States secretary of the treasury once said “The US Dollar is our currency but your problem” has candidly pointed out the absurdity of the present world system lies with American Exceptionalism. (Fig. 2).

American exceptionalism is the belief that the United States is either distinctive, unique, or exemplary compared to other nations. I have enunciated many times in this Blog, US could get away with a lot of bad behaviour only because of TINA (“There is No Alternative”). Now one by one, the facade of TINA is torn apart and the emperor is found naked.

(i) The Military-Industrial Complex (“MIC”): The May 7 2025 Pakistan-India air combat was a rude awakening to both buyers and sellers of advanced weapon systems. Pakistan was forbidden by US to use the F-16 she bought for self defense and the integrated Chinese J-10C, PL-15E, HQ-9 and ZDK-03 scored a perfect 6-0 against Europe’s best Rafale and other fighters. The final straw was when Israel struck Qatar last week and Qatar's air defense systems all went silent. (Fig. 3).

The overt ban and covert sabotage has done irreparable damage to the US-MIC. No country from this point, except may be US vassal states, would dare to put their trust to align with the US-MIC. The new realignment would naturally fall with the Global South and principally with China and Russia. The implication is more than just weapons trade and money flows because with weapon system purchases it will come with maintenance, training, cooperation and alliances.

(ii) Intelligence - Coming back to the attempted assassination of HAMAS negotiators in Doha, the fact that all HAMAS leaders escaped indicated there was a serious Mossad-CIA-Pentagon intelligence leak. (Fig. 4).

What was not commonly reported in Western MSM was all the HAMAS negotiators vacated the bomb site to another building but left their cell phones in situ.  (Fig. 5).

(iii) Media - We all know Tik Tok has threatened US Social Media giants like Facebook, Instagram and Youtube because Tik Tok does not politically censor its contents. Well after the Trump Xi phone call on Friday, Trump claimed there is a deal to Americanize Tik Tok, REALLY? Well the establishment mouth piece Politico does not think so. (Fig. 6).

(iv) Big Tech - This week Intel may be bailed out financially after US Government and Nvidia pumped billions into the company. (Fig. 7).

However it is no closer to be able to make high end chips in the same league as TSMC, Samsung or SMIC. In twisting Nvidia’s arms to invest in Intel, White House inadvertently slam shut a door for Nvidia against the world’s biggest semiconductor market - China. China has been user friendly to American Corporations but has been extremely cautious against fascist corporations. Previously China has declined Nvidia’s watered down H20 AI chips and this week Huawei just announced plans to roll out the world’s most powerful AI chip clusters. (Fig. 8).

All this is on the back of Huawei and SMIC will shortly mass produce 3nm chips without Western monopolistic controlled EUV Lithographic machines. (Fig. 9).

Unquestionably, TINA no more.

On another front, the jury is still out on AI modelling between various US and Chinese contenders. Herewith one of the newest technical analysis from the pros. (Fig. 10)

(v) The Simplistic View of the End Game: One of my favourite Fund Manager, Luke Gromen asks (my paraphrase) Who backs the Dollar Hegemony? The US Military. Who backs the US Military? The US Military-Industrial Complex. Who controls the supply chain to the Military-Industrial Complex? China with its rare earth, parts and components. Just three critical minerals which China has a near monopoly would mean (a) Germanium (90%+ controlled by China) - Pentagon’s estimate is 12,277 parts and components have to be sourced from China (b) Gallium (98%+)  - 11,351 parts and components are China dependent and (c ) Antimony (50%) - 6,335 parts and components are China dependent. Without rare earth and components and parts from China, US will not be able to produce, maintain and definitely not in scale, rockets, missiles, radars, stealth coating and her most advanced weapon systems. And US wants to target China as its number one adversary?

Last week a National Defense Strategy was tabled by Pentagon to deprioritise 'China threats,'  to focuses on Western Hemisphere. (Fig. 11).

It was Winston Churchill who said “America will always do the right thing - after exhausting all the alternatives”. (Fig. 12).

This time I am afraid it will be too late.

2. Follow The Money: May things have happened in less than 3 weeks in September. Let’s see how events have played out in the financial markets. (Fig. 13)

Silver (+8.61%), Gold (+6.87%), Bitcoin (+5.82%), S&P 500 (+2.97%), Shenzhen Composite Index (+2.76%), Copper (+1.48%), Euro (+0.44%), Rmb (+0.27%), DXY (-0.20%), GBP (-0.24%), JPY (-0.62%), Oil (-1.81%) and Ruble (-4.35%).

On the week after the long awaited Federal Reserve cut in Fed Funds rate of 25 basis points (with expectation of two more cuts within 2025), there was no jubilation in the US stock indexes but an acceleration into hard assets. The US Dollar Index witnessed further weakness but was salvaged by even worse performance in the British Pound and Japanese Yen.

Superficially, the Treasury Yield Curve behaved as is expected with a lowering of yield across the entire spectrum of maturities after the Fed rate cut. (Fig. 14).

What is hidden is US Treasury is still enjoying low rate notes and bonds issued in the period of QE and ZIRP. The average interest rate paid as of September 30, 2024 was a low of 3.32%. according to US Treasury Fiscal Data. As these low rate paper matures, interest rates to be paid will at least be 30% higher on a much bigger debt base. (Fig. 15).

In FY 2024/2025 interest expense plus mandatory payments like social entitlement programs, Medicare and Medicaid ran at about 80% of Federal Tax Receipts. With a continued $2 trillion budget, stock market AI valuation hyped into stratosphere and business disruptions by Trump tariff tantrums, I have previously stated and am maintaining my forecast that by end 2026 at the latest US will default or print to hyperinflation.

Every night the US money market is playing musical chairs on a scale of $2.9 trillion to square off banks and hedge funds that are short in funds - the SOFR inter-bank arrangement (Fig. 16).

Allow me to repeat the danger zone will be when SOFR to M1 approaches 30%. (Fig. 17).

There is also no redemption of the system using Stable Coins. The Genius Act and Stable Coins is a con game to benefit crony coin issuers. No substantial investor in their sane mind will part with their collaterizable assets in favour of a non-bankable token. Jim Richards said Stable Coin is just an unregulated money market fund. In the 2008 GFC, when the MM Funds broke the buck, the entire financial market seized up because assets in the MM Funds were corrupted by subprime papers fictitiously marked as investment grade. Stable Coins will be worst because there is no audit, no regulations and no prudential supervision whatsoever.

Let me conclude on a more optimistic note, tension between US and China should ease. After all  no nation is to be trusted farther than it is bound by its interests. (Fig. 18).

Matthew 5:25  Agree with your adversary quickly, while you are on the way with him, lest your adversary deliver you to the judge, the judge hand you over to the officer, and you be thrown into prison. 26  Assuredly, I say to you, you will by no means get out of there till you have paid the last penny.