The Perfect War

Issue #95, Volume #3

Why The War With Iran Won’t End

Inside today’s Daily Journal…

Essay: The Perfect War Inflation runs (super) hot A highly leveraged stock market Consumers continue to feel money pain Chart Of The Day… Hudson Pacific Properties Today’s Mailbag

At the very beginning of the Iran War, I told you the following: Whatever the media tells you about what’s happening, do not believe it.

Instead, I said the only thing you can know for certain is that the truth is always the first casualty of war: whatever the administration is claiming is a lie.

And, just as I predicted, we’ve now seen President Trump declare victory more than a dozen times.

• March 9: “I think the war is very complete, pretty much”

• March 11 (at a Kentucky rally): “We’ve won. … We won the – in the first hour, it was over”

• Early April: “Total and complete victory. 100%. No question about it.”

• May 1: “War was terminated” (while claiming victory in a Florida speech)

• June 9: “You’re really gonna win this over the next two weeks when we declare total victory.”

We won’t know the truth about why Trump launched this war (it wasn’t nuclear missiles, those were destroyed a year earlier) for probably a decade. And that’s only if the war ends by then. It may not. Most Americans still don’t understand: this war has been going on since Operation Ajax in the 1950s. And Iran is winning.

But before we get those details, I’ve got to show you something you probably don’t know about how the American military became heavily involved in the Middle East in the first place. I’m begging you… pour yourself a cold snack… and take the time to read this bit of history that they’ll never teach in our schools.

Remember George Bush – the first one?

Remember “a thousand points of light” and “this aggression will not stand”? And do you remember “read my lips, no new taxes” – the phrase that won him the election in 1988?

In November 1990, two years after the election, George H.W. Bush signed the Omnibus Budget Reconciliation Act. The law raised the top individual income tax rate from 28% to 31% and raised the alternative minimum tax, payroll taxes, and excise taxes. The “read my lips” pledge was now officially dead. And the Republican base was furious.

Bush – much like Trump today – needed a war.

The wealthy sheiks of Kuwait, exiled in Saudi Arabia and Washington following the 1990 Iraqi invasion of their country, also needed a war. They had a country to get back, and the only military on Earth capable of getting it back for them belonged to a U.S. president who had to convince a Democratic-controlled Congress to authorize the largest American military deployment since Vietnam.

But how could Bush get this done? His party didn’t control Congress. And his popularity was at an all-time low.

He made a call to “The Powerhouse” – to the most powerful man in Washington, D.C.

His name was Robert Gray.

Gray got his start as White House appointments secretary and then became a cabinet secretary, under President Dwight Eisenhower in the 1950s. He was one of the very few (and maybe the only) openly homosexual senior government officials. He built his power base in Washington by befriending first ladies.

When John F. Kennedy was elected, Gray left the White House to run the Washington office of Hill & Knowlton, the largest public relations firm in the world. He managed that office for 20 years. Then he became the communications director of Ronald Reagan’s 1980 presidential campaign and co-chairman of Reagan’s inaugural committee.

Once Reagan was elected, Gray became the most powerful lobbyist in D.C. and one of the most powerful political operators in history. He took office space in Georgetown’s old brick power plant on the Potomac River. The address on his letterhead read:

Robert Gray
Gray & Company
The Powerhouse 
Washington, D.C.

In June 1986, Hill & Knowlton acquired Gray & Company for $21 million. Gray became worldwide chairman of Hill & Knowlton Public Affairs. In the 1980s and into the early 1990s, he was the power behind the throne in Washington.

When the Kuwaitis wanted their country back, they knew who to call.

Hill & Knowlton’s filings under the Foreign Agents Registration Act shows the Kuwaiti government channeled $11.9 million over six months through a front group called Citizens for a Free Kuwait. Of that, $10.8 million went to Hill & Knowlton in fees. But I always heard from senior Republicans that the total figure paid to Gray was around $50 million.

What is not disputed is what Gray did with the money. Gray and his team figured out exactly how to manipulate the American people. They commissioned the Wirthlin Group – Reagan’s old polling firm – to conduct a $1 million focus-group study of American voters. The objective was simple. Identify the message that would move the American public toward war fastest.

The answer came back: atrocity. Specifically, dead babies.

To move Congress into authorizing the president’s war, Gray needed to present evidence of Iraqi atrocities at a media-packed congressional hearing. The trouble was, Gray wasn’t a member of Congress. Nor were the Democrats likely to help.

So he just invented his own congressional hearing.

Gray’s “hearing” took place on October 10, 1990, before the “Congressional Human Rights Caucus.” The hearing looked exactly like a real congressional committee proceeding. The witnesses raised their right hand and gave testimony. The chairman of the committee, a sitting congressman, ran the meeting.

But it was all theater.

It was not a congressional committee at all. These were legislators, but they had no subpoena power and no statutory authority. It was simply a made-up group called the Congressional Human Rights Foundation. It was founded in 1983 by Representative Tom Lantos, Democrat of California, and Representative John Edward Porter, Republican of Illinois. The entire thing was an invention of Robert Gray.

The foundation’s office space and its staff worked inside Hill & Knowlton’s Washington, D.C., headquarters. The foundation’s telephones were answered by Hill & Knowlton’s switchboard. And in the weeks after the Iraqi invasion of Kuwait, Citizens for a Free Kuwait – Hill & Knowlton’s $11.9 million client – donated $50,000 to the foundation.

At the foundation’s phony congressional hearing, there wasn’t any discussion of Iraqi’s historically accurate contention that Kuwait was rightfully the 19th province of their country. These claims trace back to Ottoman times, when Kuwait was part of the Basra province. Iraqi leaders (including before Saddam Hussein) had made similar claims in 1932 and 1961.

Instead, they heard from a 15-year-old girl. Rep. Lantos identified her only by an alias. He told the assembled cameras that her identity had to be protected because her family was still in Kuwait and would face Iraqi reprisal if her identity were known.

She said:

Mr. Chairman and members of the committee: My name is Nayirah, and I just came out of Kuwait. While I was there, I saw the Iraqi soldiers come into the hospital with guns. They took the babies out of the incubators. Took the incubators and left the children to die on the cold floor. It was horrifying.

Her oral testimony ran four minutes. The written version distributed in the Hill & Knowlton media kit specified “15 babies.” In the weeks that followed, that figure was inflated, endlessly, in the press. By December 19, 1990, Amnesty International ratified a figure of 300 babies dead. Some accounts climbed to 312. President George H.W. Bush repeated the incubator story at least 10 times in the weeks between October 10, 1990, and the congressional war vote.

Other politicians picked up the theme. Rep. Henry Hyde of Illinois said:

Now is the time to check the aggression of this ruthless dictator, whose troops have bayoneted pregnant women and have ripped babies from their incubators in Kuwait.

Seven U.S. Senators cited the incubator atrocities on the Senate floor in the debate over the resolution authorizing the war.

On January 12, 1991, the Senate voted 52 to 47 in favor of the Authorization for Use of Military Force Against Iraq Resolution. The air war began on January 17, 1991.

We went to war because the Kuwaiti’s paid Robert Gray millions. And he, in turn, paid those congressmen a lousy $50 grand.

Everything was a lie.

The girl from Kuwait had hardly been in the country. She was Nayirah al-Sabah, the daughter of Saud Nasir al-Sabah, the Kuwaiti Ambassador to the United States. She had grown up in Washington, D.C. She had been coached for her testimony by a Hill & Knowlton vice president named Lauri Fitz-Pegado.

When Kuwait itself later commissioned Kroll Associates to investigate the affair, Nayirah told Kroll she had never been a hospital volunteer. She had “stopped by for a few minutes.” She had seen one baby outside its incubator “for no more than a moment.”

The witness who corroborated her at the United Nations Security Council, identified to the public as a Kuwaiti physician, was Dr. Ibraheem Behbehani, head of the Kuwait Red Crescent. He was a dentist. He had never set foot in the maternity ward.

In March 1991, with the war won, ABC News correspondent John Martin went to Kuwait. He interviewed the doctors and nurses who had stayed at Al-Adan Hospital through the occupation. No baby had been pulled from any incubator. No incubator had been stolen. No mass killing of newborns had occurred.

Amnesty International withdrew its 300-baby figure. John Healey, the executive director of Amnesty International USA, accused the Bush administration of opportunistic manipulation of the international human rights movement.

There were never any consequences for any of the actors involved in manufacturing the lie. Rep. Lantos kept his seat until his death. Rep. Porter also kept his. Robert Gray remained worldwide chairman of Hill & Knowlton Public Affairs. Lauri Fitz-Pegado was appointed by President Bill Clinton in 1994 as director general of the U.S. and Foreign Commercial Service.

When Robert Gray retired in the early 1990s, he bought the grandest remaining 1920s mansion on Millionaire’s Row in Miami Beach. He renamed the house Villa Crono. Crono – Cronos – the Greek titan who castrated his father, Uranus.

I knew Gray because, starting around 2011, I rented Villa Crono for several winters. At the time Robert was in his 90s. The home was filled with 50 years of political trophies – none bigger than the war he started.

Since 1991, the United States has spent trillions of dollars and uncounted American lives on the wars that followed our initial foray into the Middle East. The 2001 invasion of Afghanistan. The 2003 invasion of Iraq. The 2011 intervention in Libya. The campaign against ISIS. And now the 2026 war with Iran. And yes, that’s when it all started. The American military presence in the Persian Gulf, before Gray took his Kuwaiti retainer, was essentially zero.

The reason the Iran war will not end is because Iran cannot defeat us. And we cannot defeat Iran. This is the perfect political operation – it’s a war neither side can win, that will cost trillions to continue fighting.

Much like global warming, it is a huge, unsolvable problem that the politicians can now use to terrify Americans and convince them to yield more and more of their sovereignty and their property to the State. The Iranian militia and their mullahs will, of course, do exactly the same.

Both of our governments now have the perfect enemy. And that’s how I know this war will not end.

Tell me what you think of today’s Journal: porterstansberrydirect@gmail.com

Good investing,

F. Porter Stansberry
Stevenson, Maryland

3 Things To Know Before We Go…

1. Inflation hit a three-year high in May as the Iran energy shock reached the pump. This morning, the Bureau of Labor Statistics (“BLS”) reported its consumer price index (“CPI”) rose 0.5% month-over-month and 4.2% year-over-year (“YOY”) – the hottest reading since April 2023 and a third straight monthly acceleration. Energy drove more than 60% of the gain, with gasoline up 40.5% from a year ago. Core inflation was calmer at 0.2%, though its annual rate still crept to a new cycle high of 2.9%. The bigger worry is that today’s CPI continues to follow the path of the 1970s – a first peak, a lull, and now a second leg higher.

2. Almost no one is trading stocks anymore. Options worth about $4 trillion changed hands daily in 2025, up 42% YOY, according to leading derivatives exchange Cboe Global Markets. S&P 500 options alone now top $3.5 trillion a day – more than the entire small-cap Russell 2000’s market cap. Single-stock options volume surpassed the underlying shares’ volume years ago. And trading volume in leveraged exchange-traded funds (“ETFs”) just hit a record of nearly $90 billion per day, 18x its 2016 level. In short, the stock market has quietly become a derivatives market.

3. Consumers are feeling the pressure of inflation and high rates. The percentage of Americans reporting they are financially worse off than a year ago surged to 43.6% in May – the highest reading since January 2023, signaling consumer exhaustion going forward. This reading never exceeded 20% from 2017 to 2019. If inflation and high interest rates persist, consumer sentiment will remain low, and the Fed may feel pressured to keep rates higher.

Chart Of The Day… Hudson Pacific Properties

In April, Marty Fridson recommended to Distressed Investing subscribers the 4.65% bonds maturing April 1, 2029, for Hudson Pacific Properties – a real estate investment trust (“REIT”) that operates office and studio space for the movie and entertainment industry in Los Angeles. The bond has increased 11% (plus interest) to $950 in the two months since that report was released.

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Mailbag

“My Portfolio Looks Like A Medieval Battlefield At Dusk”

Mark H. writes:

I’ve been reading your research since about 2003. Got a kick out of your comment about your portfolio yesterday. I’m in the same boat. I was up 42% at the end of 2025, up 23% at the end of February 2026. Today, because of the pullback in gold/silver, not so much. 

To quote Doug Casey from years ago, after a massive drop in precious metals prices: ‘My portfolio looks like a medieval battlefield at dusk.’

Have greatly appreciated your work.

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“Kudos And Thanks”

Chris S. writes:

Porter,

I’ve been reading your work on and off for many years. In fact, I just dusted off the old Pirate Investor’s Bible from my bookshelf the other day…

I think what you’ve been doing since the start of Porter & Co has been some of your best work yet. Your writing continues to be informative and entertaining, and among the clearest-headed thinking on investing and markets I find anywhere. You’re doing a great service for your audience!

I also recently read your latest book (in two days, which is about as fast as I ever read a book). Another entertaining, informative, and thought-provoking piece. My only criticism is that it seems a bit hyper-focused on the U.S. and somewhat downplays or ignores the rest of the world and certain optionality in that regard. I think I understand why, but this seems to be a missing piece of the puzzle.

I was also intrigued and pleased to learn about the recent launch of the Porter Portfolio Index ETF (PCPP), which looks like the “easy button” (at a modest fee) to implement the foundational strategies described in your book and other writings. I plan to allocate some funds there shortly, so thanks for setting it up.

Anyways, enough said, kudos and please continue your great work. We appreciate you!

Porter & Co. Comment: To get a copy of the book Chris S. refers to – 2029: The End Of America – click here. It’s quickly becoming a best-seller.

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“I Started Buying Puts On QQQ”

Larry D. writes:

Everything you said made sense – I agree 100%. I started buying puts on the QQQ last week

One put today moved 35 points – that is huge.

I appreciate your experience and knowledge. Keep giving it to us.

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