Silicon Valley Renamed “Soviet Volley” to Represent AI Token Fraud Economics

The most consequential fraud in modern technology is not happening in the code. It is happening in the units.

If you ever studied the collapse of Soviet economics, you know exactly what I’m about to explain.

AI companies have built a billing infrastructure in which the seller defines the unit of measurement, counts the units, and invoices the buyer. All with no independent verification at any point in the transaction. All without any enforcement mechanism.

If you prompt AI to build something and it launches a dozen agents and burns an entire day worth of credits in an hour, that’s business as usual, especially if they delete their own work and complain they have nothing to show you for it.

The unit of fraud is called a “token.” It has no fixed definition. It varies by model, by provider, and by tokenizer version. It can be changed at any time, by the vendor, without notice. There is no regulatory body certifying token measurement. There is no weights-and-measures regime. There is no audit trail the customer can independently verify.

This is not a new problem, as I already hunted.

It is one of the oldest problems in commercial history, and every previous instance ended the same way. It won’t be different this time. It’s logic any five-year-old should be able to figure out.

In the book, every single thing the peddler does, the monkeys imitate. He shakes his fist, they shake their fists. He stomps his foot, they stomp their feet. That’s OpenAI, Google, Anthropic all copying each other’s opaque token pricing structures, each imitating the other’s billing model, because there’s no independent standard to do anything else. Monkey see, monkey do.

Caps for Sale

Let’s start with clause 35 of the Magna Carta, 1215:

Let there be one measure of wine throughout our whole realm; and one measure of ale; and one measure of corn.

This was the language of liberty from oppression. It was a response to documented, systematic fraud by royal merchants who controlled their own measures. A bushel in London was not a bushel in York, and the difference was profit.

It took England six centuries to arrive at a proper Weights and Measures Act. Every iteration addressed the same structural deficiency: when the entity selling the goods also controls the unit of measurement, the unit will be corrupted. The entire history of metrology from the Bureau International des Poids et Mesures to NIST to the EU’s Measuring Instruments Directive, is the history of forcibly separating the measurer from the seller.

It’s fundamental to the rise of industrialization that the clocks had to run on universal time, even with time zones, such that trains could have externally judged arrival and departure times. The British and Dutch factories that invented assembly lines to defeat Napoleon (infamously copied by Ford) couldn’t work without shared units of measure.

Given this context it appears now that AI companies are the most historically illiterate and economically unsound ever.

Their “token billing” has undone a fundamental tenet against trivial fraud. We are back to the royal merchant having their thumb on the scale for every transaction, except the thumb is an algorithm and the scale is proprietary.

How dumb does the intelligent machine business think we are, seriously?

LIBOR for Compute

Let’s review, for example, the London Interbank Offered Rate (LIBOR) that underpinned roughly $350 trillion in financial instruments worldwide. LIBOR was calculated from self-reported borrowing rates submitted daily by the banks that profited from the number. No independent verification. No transaction-based measurement.

Just trust.

And it failed. Banks manipulated it for years. Of course they did. The entity producing the number was also the entity whose trading positions depended on the number. When the fraud was finally exposed, the fix was to replace LIBOR with SOFR (Secured Overnight Financing Rate) which is derived from actual observed transactions rather than self-reported claims.

Now consider the AI jar of pickles we are being told to get in.

OpenAI reports that average reasoning token consumption per organization has increased approximately 320 times in the past twelve months. This number was produced by OpenAI, about OpenAI’s product, using OpenAI’s proprietary tokenizer, and reported to the press as evidence of adoption. It is Barclays submitting its own LIBOR rate as if nobody knows why we stopped them from doing this.

The difference is that LIBOR at least had the pretense of multiple submitters. Token counts have one source: the vendor.

Intelligence machine vendors have truly produced their most cynical moment.

Gosplan of Sand Hill Road

Soviet central planning failed not because the planners were being stupid. Many were brilliant, which probably made everything worse. It failed because the information system was structurally corrupt, and compliant agents corrupted it further. Every layer of the reporting chain had an incentive to inflate their output numbers, and there was no independent verification mechanism capable of correcting the distortion.

The famous case study is the Soviet nail factory. Measured by weight, the factory produced fewer, heavier nails that nobody needed. Measured by quantity, it produced millions of tiny nails nobody could use. The metric became the product. Actual utility was irrelevant because utility was not being measured, only the unit was.

Here’s another token output example of fraud I was taught in college. Soviet window manufacturers measured weight and nobody could install the heavy, thick glass. They measured by size, and all the very large, thin glass broke before it even could be loaded for delivery. Actual utility was irrelevant because utility was not being measured, only the unit was.

Every day that I use AI it wastes unbelievable amounts of money and time, measured in units of tokens, as it tells me if I don’t like it there’s nothing I can do.

Jensen Huang’s proposal at GTC this month is the Soviet nail or glass factory at much larger Silicon Valley scale.

He suggested that every engineer should have an annual token budget, where these allocations could reach half of base salary in value. Consider what this fraud means structurally. You are telling workers they have an annual allocation of a unit that measures interaction volume, not outcome quality.

Record scratch.

So a notoriously wasteful industry already in trouble for water and air pollution will optimize entirely for high consumption. An engineer who solves a problem by thinking for ten minutes and never touching the AI has, under this framework, underperformed relative to one who burned through a million tokens generating refuse. Yet the engineer who thinks is undeniably the superior engineer to the ones that do not!

Pray and spray, running out of ammunition and begging for $200 billion to keep firing at ghosts, is so inversely proportional to Delta operators I can’t even…

This is not a productivity metric, because Nvidia is incentivized inversely to what customers actually need. It is Gosplan announcing the Five-Year Plan for compute consumption, and every factory manager is about to start filing reports showing they exceeded their quota of tokens, meaning… nothing.

Shovel Seller Tithe

Huang’s position is particularly elegant because Nvidia does not sell tokens. They sell the GPUs that generate them. Every token consumed requires silicon to produce. If token budgets become a standard corporate expenditure pegged to payroll, Huang has created a permanent demand floor for his hardware.

Gross. Literally gross product.

He does not need to manipulate the token count himself. He just needs the token to become the unit that corporations manage against, and every dollar allocated to token budgets flows upstream to GPU purchases.

He skips actual measurement. He proposes that companies commit, in advance, to spending a fixed percentage of their payroll on his product for compute.

That is not a metric. It is a tithe.

And the structure insulates him perfectly. The AI providers already grossly inflate the token counts. The customers overpay the AI providers, given that most of the token count is for fixing things the tokens were spent on to begin with, like a protection racket. The AI providers buy Nvidia’s GPUs to service the consumption they have encouraged and caused without any accountability for outcomes. Nvidia never touches the books. They sell shovels to the people salting the mine.

The Arc

Every instance of self-reported commercial measurement in recorded history has followed the same progression: self-reported measurement, then market adoption of the metric, then discovery of systematic manipulation, then regulatory intervention mandating independent measurement.

Medieval grain measures. LIBOR. Credit ratings. Remember Facebook’s video metrics? The company admitted in 2016 to inflating view times by 60 to 80 percent, having defined the view, counted the view, and sold the view. The pattern is not debatable. It is one of the most thoroughly documented dynamics in economic history.

Token billing is currently at stage two: market adoption. Enterprises are building budgets around it. Analysts are publishing reports denominated in it. A CEO is proposing tying it to compensation.

Nobody is asking who audits the count.

Auditors are completely absent.

The harsh reality for every major AI provider on earth, like royalty before the Magna Carta, is that nobody has the independent authority needed to vouch for them. The merchant is being made the king who declares their own scale valid no matter what. And this time the scale is processing trillions of transactions per day, denominated in a unit that has no legal definition, no regulatory oversight, and no independent verification mechanism.

No kings.

We have eight hundred years of evidence for this bullshit. The only variable today is how much it costs before someone reads basic history of economics and enforces an honest measure.

The AI industry pretends to be terrified about regulation, but really they are in danger of transparency. Because the moment an independent third party can compare token billing against actual computational work performed, or the moment someone builds a SOFR for inference, every provider’s margins become visible. And if those margins look anything like LIBOR spreads or Facebook’s video metrics, the correction won’t be gradual.

I’m telling you, even the best of the best agents are a tragedy of token inflation and massive waste.

Nobody inside the Soviet system volunteered for glasnost. It was forced by the fact that the gap between the reports and reality had become so grotesque that the system could no longer function even on its own terms.

Token economics in Silicon Valley is rapidly approaching that threshold. Engineers know. We watch agents burn through whole budgets producing garbage, watch our token counts spike on failed reasoning chains we are billed for anyway, watch “reasoning tokens” appear on invoices for computation they never requested and cannot inspect.

The bigger their tool failure and productivity suck, the more the AI company reports a Soviet-sounding productivity “gain”.

Gorbachev didn’t reform Soviet economics. He revealed that it was dead inside.

The production numbers had been fraudulent for decades. Everyone inside the system knew. The factories knew. The ministries knew. Gosplan knew. But the reporting structure made it impossible to say so, because every career in the chain depended on the numbers going up. Glasnost (openness) didn’t fix fraud any more than exposure of Enron balanced its sheets. It made it permissible to say out loud the numbers meant nothing. The gap between reported output and actual value had grown so large that the moment anyone was allowed to measure honestly, the entire structure lost legitimacy overnight.

That’s the truth of the AI bubble. Token output is the absolute wrong measure and will only bring pain to those who adopt it without audit.

Trump Operation Bone Spurs Has Troops Leaving Iran by Going to Iran

Fake injury President is framing a fake withdrawal from a non-war-war.

The same Trump derangement syndrome we saw in NATO/Ukraine is showing up in Iran: berate allies for not doing enough, then announce there is nothing to do and you will be doing even less.

President Donald Trump freaked out at U.S. allies on Friday as “cowards” after begging for help in securing the Strait of Hormuz as energy prices skyrocket. Trump, 79, also declared a victory in the war against Iran by claiming the U.S. had already won “militarily”…

Already won, he’s leaving. But go fight or you are the “coward”.

Trump calling everyone else the “coward” while he withdraws, preemptively reframes his own failures as their fault. He wants everyone to believe when Hormuz stays closed and oil stays above $100, it wasn’t because he started the war without a clue, and still can’t find one. He says blame NATO, because they act like he did all this on his own.

And the troop deployments make Trump derangement into pure theater. The Boxer group from the Pacific won’t arrive for three weeks. You don’t claim you are winding down and then send an expensive MEU on a three-week sail to wind down. You send it to have options that you’re publicly denying you want.

When asked Thursday if troops were being sent, Trump said:

I’m not putting troops anywhere. If I were, I certainly wouldn’t tell you, but I’m not putting troops.

Then the Marines in California were ordered to sail for Iran.

The Onion couldn’t write this.

Red Wings Doctrine Revisited: DON’T GET F%&*#$@ COMPROMISED

A decades-old Naval Special Warfare mission outline has popped into the news again. It contained these five words, in all caps with exclamation points, that functioned as doctrine:

DON’T GET F%&*#$@ COMPROMISED!!!!!

It was for a four-man SEAL reconnaissance team as they deployed into the Hindu Kush mountains of eastern Afghanistan, June 27, 2005.

An excerpt from the Red Wings mission outline. Source: POLITICO

The phrase obviously was a prohibition, and not a procedure. It was the prohibition of being uncovered, and perhaps more importantly on revealing being seen.

It seems more relevant than ever, given Hegseth and Trump lecturing everyone on how to not talk about anything real ever again. Trump has called those reporting on ground truth in war treasonous.

I’m not arguing that no contingency planning at all was the problem. I’m arguing that the institution gave prohibition so much weight, the truth and necessary procedures got nothing. The slide proves it visually. The team that followed “soft compromise” would be diminished and punished against the team that internalized DON’T GET COMPROMISED and stayed silent, denying their compromised situation on Sawtalo Sar.

And that is what I want to talk about today.

A professional special operations organization writes contingency for failures, because things never go just right. When compromised, execute plans. Cancel the operation, call it in, meet at a predesignated point for extraction. Everyone on SEAL Team 10 knew these doctrines and of course the rising risks of concealment failure. What they actually received, however, was something worse, in all caps.

The difference between a belief-based psychological prohibition and a procedure is the difference between denial and team survival. “Don’t get compromised” turns a predictable operational risk into a personal dead-end to be avoided at all costs, rather than a map to execute.

Nineteen years after the mountain tragedy, on January 11, 2024, two SEALs from Team Three attempted to board an unflagged dhow carrying Iranian-made weapons off the coast of Somalia. Chief Special Warfare Operator Christopher Chambers fell while climbing aboard in heavy seas. Nine feet, into the water, fully loaded. Special Warfare Operator 1st Class Nathan Gage Ingram jumped in after him eleven seconds later.

Both disappeared. It took just forty-seven seconds.

Chambers shouldered fifty pounds of gear. Ingram had eighty. Neither their physical capability nor their emergency flotation devices would keep them above surface. The Navy’s investigation found SEALs had practiced with flotation devices just once, if ever, in their entire careers.

Once, if ever.

There was no standardized buoyancy guidance. Individual operators were expected to calculate it themselves. The investigation concluded:

confusion and ineffective execution.

It was the prohibition instead of procedure, again. Nothing mapped how eighty pounds would turn out in a fall. If you hit water, activate flotation, shed gear, grab for line or ladder… or just, DON’T GET F%&*#$@ DROWNED.

General Michael Kurilla, head of U.S. Central Command, wrote:

This incident, marked by systemic issues, was preventable.

Preventable in 2024, like preventable in 2005. Those nineteen years apart share far too much in common, and we need to talk more about why.

Mind the Procedure

A POLITICO Magazine investigation published this week puts in one place what many have tried to say for years individually on their own. It shares interviews with more than a hundred people with direct knowledge of Operation Red Wings, and documents that are rarely seen outside special operations. The overall tone reveals how prohibition culture affected mission planning let alone success.

SEAL Team 8, which preceded Team 10 in Afghanistan, reported being compromised by goat herders three times on recon missions. It was so front of mind that, as two teams continued on, a third team called headquarters and got a helicopter to pull them out. They followed a compromise procedure, did exactly what the doctrine said. For this, they were mocked as soon as they returned to base. Junior SEALs under Lt. Cmdr. Erik Kristensen were the most exposed to this prohibition message. One operator made it explicit to the newcomers: be aggressive, ignore doubts, force the mission. Another SEAL said his team ran into goat herders on his first operation and never told anyone because of pressure to complete it.

The failure to admit compromise is crucial context for Murphy’s team, who encountered goat herders on Sawtalo Sar. The institutional incentive was clear: don’t admit the situation. Don’t abort. Keep on saying it’s fine. They released the herders and pressed on without telling base. Neither the relay chat logs nor the situation report obtained by POLITICO mention goat herders. The communications technician monitoring the radios at Jalalabad didn’t hear about them until after Luttrell was rescued. The recon team’s last communication before going silent was that it was “packing up and moving on.” They were compromised, yet never reported they were compromised.

The procedure of safety was prohibited, cultural shift made it unusable.

Everything else that went wrong flowed from the same institutional refusal to build real contingency planning around predictable risks: the mission launched during a transfer of authority, the split command structure, the four-man team that was too small, the loud helicopters that alerted the valley, the fast rope snagged on a tree stump marking exactly where they landed, the target who traveled with three to five bodyguards rather than the army depicted later.

The Green Berets advising the mission saw it all clearly. Army Lt. Col. J.P. Roberts recalled saying what needed to be said.

This is going to be a shit show

He tried to delay. The Marines’ operations officer called the command arrangement “fucking outrageous.” CIA officers at Asadabad were dumbfounded.

Every non-SEAL in the room seems able to point back to their procedural reasons to abort, yet unable to prevent the SEAL tragedy that unfolded in front of them.

Nineteen Americans died. Three SEALs on the mountain and sixteen on a rescue helicopter shot down with an RPG.

Nineteen years later, two more died while everyone struggled to make sense of their loss. A champion swimmer SEAL simply drowned in seconds? How? It can’t be. The 2024 investigation turned up performance-enhancing drug use, unauthorized surgery hidden from Navy medical, and alcohol on the ship. All of it begged questions about exceptionalism, the same institutional refusal to admit being compromised or able to accept and adapt to failure.

The Myth

Nick Baggett, a retired SEAL master chief and the father-in-law of Danny Dietz (one of the three SEALs killed on that mountain) read Luttrell’s intelligence debrief shortly after the tragedy.

He read it shortly after. Keep that in mind.

It diverged from the memoir that everyone read much later. He watched the institution choose a narrative over the details needed for accountability, as that narrative served a different objective. Lone Survivor became a bestseller, then a blockbuster, then a recruitment brand. He told POLITICO in retrospect:

We morphed from an operational unit into something more commercial.

Commercial means disposable, as operational “margins” and capital flows take over the value system. Who “loses” in commercial enterprise is completely redefined from military operational outcomes.

The memoir and the movie performed an extraordinary inversion. The institutional failures that had caused the disaster, evidence of a culture that replaced contingency planning with shame, was written into a mythology of heroic moral dilemma selling tickets.

We were expected to believe the SEALs didn’t die because they were pressured to ignore basic protocol and admit compromise. They died, the hot selling story went, because they were too noble to kill those who compromised them. The prohibition that created the problem was rewritten into virtue that ennobled their tragedy, for profit.

This week, Luttrell’s lawyer ironically told POLITICO that anyone revisiting the mission “has an agenda” and that “everything he wrote in his book is absolutely true.”

That statement is not a legal argument. And it is obviously self-defeating. The book revisited the mission. It came second, not first. And it didn’t really hide its agenda in revisiting the mission.

Moreover, such a statement by the lawyer serves as a deterrent, echoing the reason that a doctrinal fix never happened. You can’t write “if, then” for compromise if the institution has committed to a story where compromise was a moral choice rather than an operational failure. Fixing the doctrine now hits a religious nerve, because it means admitting a mythology is wrong.

Former SEAL James Hatch, who recovered the bodies of the nineteen Americans killed in Red Wings, wrote in his memoir that “the American myth-making machine” had distorted what happened. He described the pain:

when you take a version of their story and just tell the parts that allow it to be a legendary epic about flawless heroism.

A former SEAL recalled going through land warfare training a decade after Red Wings. One exercise involved a helicopter being shot down. He pointed out the training was unrealistic because in the real world, the operation would stop as you have to protect the aircraft and search for survivors.

Everyone looked at me like I was an idiot.

Naval Special Warfare hadn’t passed on the essential operations knowledge. The institution that should have been teaching hard lessons was selling inspirational ones instead.

The mythology fed political mistakes. Six days into taking control of the military, Trump pushed go on the Yakla raid in Yemen, over dinner, not in the Situation Room, sending SEAL Team Six into a village where the enemy was allegedly tipped off in advance.

Senior Chief Ryan Owens was killed. At least six women and ten children under thirteen were also killed. A $70 million Osprey was destroyed. It was a command disaster.

Flynn had pitched it as a “game changer” to distinguish Trump from Obama, who had turned down the mission. When it went wrong, Trump deflected:

This was a mission that was started before I got here.

Then he used Owens’ widow’s grief as a prop during his address to Congress while refusing his father’s demand for an investigation. Bill Owens said:

Don’t hide behind my son’s death to prevent an investigation

Push operators into ill-conceived missions, mythologize the dead, medicate the survivors, attack anyone who questions the lessons under the loss.

The Fix

A former SEAL Team 10 officer quoted in the POLITICO piece put it plainly:

Fuck legacies and egos. Whatever screw-ups I made, publish them. That way, in the future, some young kid doesn’t get killed.

The fix is not complicated.

Replace shame and prohibitions with curiosity and procedures. Train until they’re reflexive, subconscious. Stop punishing teams as protocol followers. Conduct after-action reviews that prioritize compound lessons over competitive legacy. Require depth to the checks made before every maritime boarding.

Formalize compromise response as a drilled contingency, not a career-ending confession. There’s neuroscience behind this: a prohibition locks the amygdala into threat suppression. The brain isn’t optimized, can’t plan, while it’s hiding. A procedure offloads that threat response into motor memory and decision trees, freeing the prefrontal cortex to actually run the situation. The difference between “don’t get compromised” and “if compromised, then execute” isn’t just doctrinal. It’s neurological. One freezes operators (run up a tree by a Chihuahua). The other keeps them operational.

None of this dishonors the men who died.

Baggett, Macaskill, Thomas, and the other veterans now speaking publicly are clear on that point. The courage of Murphy, Dietz, Axelson, Chambers, Ingram, and the sixteen men on that helicopter is not diminished by admitting the institution failed them. It is diminished by pretending that it didn’t, and letting an unaware team deploy into the same trap.

Chambers was thirty-seven. Ingram was twenty-seven, on his first deployment.

Hegseth: You Gotta Kill Bad Guys to Make Bad Guys

The Department of War.

The Secretary of War.

The wartime spend.

The wartime rhetoric.

The wartime dead.

We are supposed to believe none of the above means that Iran is a war. Hegseth says he needs $200 billion to keep his non-war-war running indefinitely without objectives or objections.

How big is Hegseth’s $200 billion folly?

Bigger than every country’s annual defense budget except the one requesting it. As a single supplemental request, in just the first three weeks of combat, it has no precedent. Look at what the United States has spent on its other wars:

War Duration Total Military Cost (2026 $) Peak Daily Cost (2026 $) Congressional Authorization
Korea 3 years ~$780 billion ~$700 million None (UN police action)
Vietnam ~8 years major combat ~$1.1 trillion ~$380 million Gulf of Tonkin Resolution
Gulf War (1991) 6 weeks ~$115 billion ~$2.7 billion AUMF 1991
Iraq (2003–2011) 8 years ~$880 billion ~$530 million (surge peak) AUMF 2002
Afghanistan (2001–2021) 20 years ~$2.4 trillion ~$330 million AUMF 2001
Iran (2026–?) 19 days $12 billion and counting ~$1 billion None

Sources: CRS estimates (Daggett, Belasco) adjusted to approximate 2026 dollars; Brown University Costs of War Project; Pentagon figures reported by White House NEC. Total costs reflect military operations only and exclude veterans’ benefits, interest on war debt, and allied contributions. Iran figures from White House NEC director Kevin Hassett ($12 billion as of March 16).

The Iran war is burning money faster than any American conflict since the six-week Gulf War of 1991. Notably, that war was mostly paid for by allies. This one is borrowed, on the national credit card. The $200 billion supplemental request, by itself, exceeds the entire inflation-adjusted cost of the Korean War and approaches what the U.S. spent in a decade of peak Iraq War combat.

Nineteen days into a war with no objective, no authorization, no end, it’s “give me more war money than in history without any accountability for it”.

The word “war” now does everything in Washington except the one thing it’s supposed to do under Article I, Section 8: trigger a congressional vote for war. The $200 billion request is a trap. If Congress appropriates supplemental war funding without passing an AUMF, the appropriation itself becomes a de facto authorization, because money is consent. The spending vote substitutes for the war vote. Iraq and Afghanistan ran the same play: Congress voted to fund the troops, not to authorize the war. Same money, different name. The supplemental spending bill is the war laundromat.

Self-perpetuating war, self-perpetuating budget, self-perpetuating enemy, all are something Hegseth would say at a bar while the tab runs to $200 billion.

Iran hit a F-35 today. Flattened defenses don’t hit $100 million aircraft. People who aren’t shooting at you don’t wound 200 of your service members. Iran just blew up Qatari gas production. The air dominance narrative and the uncontrolled casualty figures cannot both be true, and the $200 billion budget request tells you which one the Pentagon admits.