Derivatives turn the financial system into a casino. And the House always wins.
Photo Credit: Jean Lee/ Shutterstock.com
Cyprus-style confiscation of depositor funds has been called the “new normal.” Bail-in policies are appearing in multiple countries directing failing TBTF banks to convert the funds of “unsecured creditors” into capital; and those creditors, it turns out, include ordinary depositors. Even “secured” creditors, including state and local governments, may be at risk. Derivatives have “super-priority” status in bankruptcy, and Dodd Frank precludes further taxpayer bailouts. In a big derivatives bust, there may be no collateral left for the creditors who are next in line.
Shock waves went around the world when the IMF, the EU, and the ECB not only approved but mandated the confiscation of depositor funds to “bail in” two bankrupt banks in Cyprus. A “bail in” is a quantum leap beyond a “bail out.” When governments are no longer willing to use taxpayer money to bail out banks that have gambled away their capital, the banks are now being instructed to “recapitalize” themselves by confiscating the funds of their creditors, turning debt into equity, or stock; and the “creditors” include the depositors who put their money in the bank thinking it was a secure place to store their savings.
The Cyprus bail-in was not a one-off emergency measure but was consistent with similar policies already in the works for the US, UK, EU, Canada, New Zealand, and Australia, as detailed in my earlier articles here and here. “Too big to fail” now trumps all. Rather than banks being put into bankruptcy to salvage the deposits of their customers, the customers will be put into bankruptcy to save the banks.
Why Derivatives Threaten Your Bank Account
The big risk behind all this is the massive $230 trillion derivatives boondoggle managed by US banks. Derivatives are sold as a kind of insurance for managing profits and risk; but as Satyajit Das points out in Extreme Money, they actually increase risk to the system as a whole.
In the US after the Glass-Steagall Act was implemented in 1933, a bank could not gamble with depositor funds for its own account; but in 1999, that barrier was removed. Recent congressional investigations have revealed that in the biggest derivative banks, JPMorgan and Bank of America, massive commingling has occurred between their depository arms and their unregulated and highly vulnerable derivatives arms. Under both the Dodd Frank Act and the 2005 Bankruptcy Act, derivative claims have super-priority over all other claims, secured and unsecured, insured and uninsured. In a major derivatives fiasco, derivative claimants could well grab all the collateral, leaving other claimants, public and private, holding the bag.
The tab for the 2008 bailout was $700 billion in taxpayer funds, and that was just to start. Another $700 billion disaster could easily wipe out all the money in the FDIC insurance fund, which has only about $25 billion in it. Both JPMorgan and Bank of America have over $1 trillion in deposits, and total deposits covered by FDIC insurance are about $9 trillion. According to an article on Bloomberg in November 2011, Bank of America’s holding company then had almost $75 trillion in derivatives, and 71% were held in its depository arm; while J.P. Morgan had $79 trillion in derivatives, and 99% were in its depository arm. Those whole mega-sums are not actually at risk, but the cash calculated to be at risk from derivatives from all sources is at least $12 trillion; and JPM is the biggest player, with 30% of the market.
It used to be that the government would backstop the FDIC if it ran out of money. But section 716 of the Dodd Frank Act now precludes the payment of further taxpayer funds to bail out a bank from a bad derivatives gamble. As summarized in a letter from Americans for Financial Reform quoted by Yves Smith:
Section 716 bans taxpayer bailouts of a broad range of derivatives dealing and speculative derivatives activities. Section 716 does not in any way limit the swaps activities which banks or other financial institutions may engage in. It simply prohibits public support for such activities.
There will be no more $700 billion taxpayer bailouts. So where will the banks get the money in the next crisis? It seems the plan has just been revealed in the new bail-in policies.
All Depositors, Secured and Unsecured, May Be at Risk
The bail-in policy for the US and UK is set forth in a document put out jointly by the Federal Deposit Insurance Corporation (FDIC) and the Bank of England (BOE) in December 2012, titled Resolving Globally Active, Systemically Important, Financial Institutions.
In an April 4th article in Financial Sense, John Butler points out that the directive does not explicitly refer to “depositors.” It refers only to “unsecured creditors.” But the effective meaning of the term, says Butler, is belied by the fact that the FDIC has been put on the job. The FDIC has direct responsibility only for depositors, not for the bondholders who are wholesale non-depositor sources of bank credit. Butler comments:
Do you see the sleight-of-hand at work here? Under the guise of protecting taxpayers, depositors of failing institutions are to be arbitrarily, de-facto subordinated to interbank claims, when in fact they are legally senior to those claims!
. . . [C]onsider the brutal, unjust irony of the entire proposal. Remember, its stated purpose is to solve the problem revealed in 2008, namely the existence of insolvent TBTF institutions that were “highly leveraged and complex, with numerous and dispersed financial operations, extensive off-balance-sheet activities, and opaque financial statements.” Yet what is being proposed is a framework sacrificing depositors in order to maintain precisely this complex, opaque, leverage-laden financial edifice!
If you believe that what has happened recently in Cyprus is unlikely to happen elsewhere, think again. Economic policy officials in the US, UK and other countries are preparing for it. Remember, someone has to pay. Will it be you? If you are a depositor, the answer is yes.
The FDIC was set up to ensure the safety of deposits. Now it, it seems, its function will be the confiscation of deposits to save Wall Street. In the only mention of “depositors” in the FDIC-BOE directive as it pertains to US policy, paragraph 47 says that “the authorities recognize the need for effective communication to depositors, making it clear that their deposits will be protected.” But protected with what? As with MF Global, the pot will already have been gambled away. From whom will the bank get it back? Not the derivatives claimants, who are first in line to be paid; not the taxpayers, since Congress has sealed the vault; not the FDIC insurance fund, which has a paltry $25 billion in it. As long as the derivatives counterparties have super-priority status, the claims of all other parties are in jeopardy.
That could mean not just the “unsecured creditors” but the “secured creditors,” including state and local governments. Local governments keep a significant portion of their revenues in Wall Street banks because smaller local banks lack the capacity to handle their complex business. In the US, banks taking deposits of public funds are required to pledge collateral against any funds exceeding the deposit insurance limit of $250,000. But derivative claims are also secured with collateral, and they have super-priority over all other claimants, including other secured creditors. The vault may be empty by the time local government officials get to the teller’s window. Main Street will again have been plundered by Wall Street.
Super-priority Status for Derivatives Increases Rather Than Decreases Risk
Harvard Law Professor Mark Row maintains that the super-priority status of derivatives needs to be repealed. He writes:
. . . [D]erivatives counterparties, . . . unlike most other secured creditors, can seize and immediately liquidate collateral, readily net out gains and losses in their dealings with the bankrupt, terminate their contracts with the bankrupt, and keep both preferential eve-of-bankruptcy payments and fraudulent conveyances they obtained from the debtor, all in ways that favor them over the bankrupt’s other creditors.
. . . [W]hen we subsidize derivatives and similar financial activity via bankruptcy benefits unavailable to other creditors, we get more of the activity than we otherwise would. Repeal would induce these burgeoning financial markets to better recognize the risks of counterparty financial failure, which in turn should dampen the possibility of another AIG-, Bear Stearns-, or Lehman Brothers-style financial meltdown, thereby helping to maintain systemic financial stability.
In The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences, David Skeel agrees. He calls the Dodd-Frank policy approach “corporatism” – a partnership between government and corporations. Congress has made no attempt in the legislation to reduce the size of the big banks or to undermine the implicit subsidy provided by the knowledge that they will be bailed out in the event of trouble.
Undergirding this approach is what Skeel calls “the Lehman myth,” which blames the 2008 banking collapse on the decision to allow Lehman Brothers to fail. Skeel counters that the Lehman bankruptcy was actually orderly, and the derivatives were unwound relatively quickly. Rather than preventing the Lehman collapse, the bankruptcy exemption for derivatives may have helped precipitate it. When the bank appeared to be on shaky ground, the derivatives players all rushed to put in their claims, in a run on the collateral before it ran out. Skeel says the problem could be resolved by eliminating the derivatives exemption from the stay of proceedings that a bankruptcy court applies to other contracts to prevent this sort of run.
Putting the Brakes on the Wall Street End Game
Besides eliminating the super-priority of derivatives, here are some other ways to block the Wall Street asset grab:
(1) Restore the Glass-Steagall Act separating depository bankingfrom investment banking. Support Marcy Kaptur’s H.R. 129.
(2) Break up the giant derivatives banks. Support Bernie Sanders’ “too big to jail” legislation.
(3) Alternatively, nationalize the TBTFs, as advised in the New York Times by Gar Alperovitz. If taxpayer bailouts to save the TBTFs are unacceptable, depositor bailouts are even more unacceptable.
(4) Make derivatives illegal, as they were between 1936 and 1982 under the Commodities Exchange Act. They can be unwound by simply netting them out, declaring them null and void. As noted by Paul Craig Roberts, “the only major effect of closing out or netting all the swaps (mostly over-the-counter contracts between counter-parties) would be to take $230 trillion of leveraged risk out of the financial system.”
(5) Support the Harkin-Whitehouse bill to impose a financial transactions tax on Wall Street trading. Among other uses, a tax on all trades might supplement the FDIC insurance fund to cover another derivatives disaster.
(5) Establish postal savings banks as government-guaranteed depositories for individual savings. Many countries have public savings banks, which became particularly popular after savings in private banks were wiped out in the banking crisis of the late 1990s.
(6) Establish publicly-owned banks to be depositories of public monies, following the lead of North Dakota, the only state to completely escape the 2008 banking crisis. North Dakota does not keep its revenues in Wall Street banks but deposits them in the state-owned Bank of North Dakota by law. The bank has a mandate to serve the public, and it does not gamble in derivatives.
A motivated state legislature could set up a publicly-owned bank very quickly. Having its own bank would allow the state to protect both its own revenues and those of its citizens while generating the credit needed to support local business and restore prosperity to Main Street.
For more information on the public bank option, see here. Learn more at thePublic Banking Institute conference June 2-4 in San Rafael, California, featuring Matt Taibbi, Birgitta Jonsdottir,Gar Alperovitz and others.
Source: Ellen Brown | Alternet
Whenever discussion over North Korea arises in Western circles, it always seems to be accompanied by a strange mixture of sensationalism and indifference. The mainstream media consistently presents the communist nation as an immediate threat to U.S. national security, conjuring an endless number of hypothetical scenarios as to how they could join forces with Al-Qaeda and attack with a terroristic strategy. At the same time, the chest puffing of the late Kim Jong-iL and the standard fare of hyper-militant rhetoric on the part of the North Korean government in general seem to have lulled the American public into a trance of non-concern.
In the midst of the latest tensions with the North Koreans, I have found that most people are barely tracking developments and that, when confronted by the idea of war, they shrug it off as if it is a laughable concept. “Surely” they claim, “The North is just posturing as they always have.”
The high-focus propaganda attacking North Korea on our side and the puffer fish methodology on their side have created a social and political atmosphere surrounding our relations with the Asian nation that I believe places both sides of the Pacific in great danger. North Korea has the potential to become a trigger point for multiple economic catastrophes, and there are people in this world who would be happy to use such crises to serve their own interests.
The mainstream view being espoused by globalist-minded politicians and corporate oligarchs with an agenda is that North Korea is a nuclear armed monstrosity ready to use any subversive means necessary to strike the United States. The idea that the North is working closely with Al-Qaeda has been suggested in everything from White House briefings to cable news to movies and television. The concept of pan-global terrorist collusion and the cartoon-land “axis of evil” has been prominent in our culture since the Administration of George W. Bush. It has even been making a resurgence lately in the MSM, which presented countries like Iran, Syria And North Korea as the primary culprits interfering with the success of the U.N. Small Arms Treaty.
Of course, what remains less talked about in the mainstream is the fact that these nations refuse to adhere to the treaty because carefully placed loopholes still allow major powers like the United States to feed arms into engineered insurgencies. Why would Syria or any other targeted nation sign a treaty that restricts its own sovereign ability to trade while giving teeth to internal enemies trained and funded by foreign intelligence agencies?
The establishment brushes aside such facts and consistently admonishes these countries as the last holdouts standing in the way of a new world order, a worldwide socioeconomic cooperative and pseudo-Utopia. The path to this wonderful global village is always presented as a battle against stubborn isolationists, non-progressives who lack vision and cling desperately to the archaic past. The values of personal and national sovereignty are painted as outdated, decrepit and even threatening to the newly born world structure. The image of North Korea is used by globalists as a kind of straw man argument against sovereignty. North Koreans’ vices and imbalances as a culture are many; but this is due in far larger part to their communist insanity, rather than any values of national independence. It is their domestic hive-mind collectivism we should disdain, not their wish to maintain a comfortable distance as a society from the global game.
As far as being an imminent physical threat to the United States, it really depends on the scenario. The North Koreans have almost no logistical capability to support an invasion of any kind. The nation has been suffering from epidemic famine for well more than a decade.
To initiate a war outright has never been in the best interests of the North Koreans, simply because their domestic infrastructure would not be able to handle the strain. However, there is indeed a scenario in which North Korea could be influenced to use military force despite apprehension.
With the ever looming threat of famine comes the ever looming threat of citizen revolution. When any government is faced with the possibility of being supplanted, it will almost always lash out viciously in order to maintain power and control, no matter the cost. Sanctions like those being implemented by the West against North Korea today, at the very edge of national famine, could destabilize the country entirely. I believe the North would do anything to avoid an internal insurgency scenario, including attacking South Korea to acquire food stores and energy reserves, as well as other tangible modes of wealth.
North Korea’s standing army, obtained through mandatory two year conscription, is estimated at about 1.1 million active personnel; very close to the numbers active in the U.S. armed forces. But North Korean reserves are estimated at more than 8 million, compared to only 800,000 in the United States. If made desperate by economic sanctions, the North Koreans could field a massive army that would wreak havoc in the South and be very difficult to root out on their home turf. Asian cultures have centuries of experience using asymmetric warfare (the kryptonite of the U.S. military), and I do not believe it is wise to take such a possible conflict lightly, as many Americans seem to do. It is easy to forget that the last Korean War did not work out so well for us. At best, we would be mired in on-ground operations for years (just like Iraq and Afghanistan) or perhaps even decades. Like North Korea, we also do not have the logistical economic means to enter into another such war.
The skeptics argue that we will never get to this point, though, because North Korea has brandished and blustered many times before, all resulting in nothing. I see recent events being far different and more urgent than in the past, and here’s why:
1) The West needs to realize that North Korea is under new leadership. The blowhard days of Kim Jung Il are over, and little is known about his son, Kim Jong Un. So far, the young dictator has followed through on everything he said he would do, including the multiple nuclear tests that the West is using as an excuse to exert sanctions. To assume that the son will be exactly like the father is folly.
2) Many people claimed that North Korean threats to abandon the Armistice in place since 1953 were empty, yet they dropped it exactly as they said they would at the beginning of March.
3) The North has begun cutting off direct communication channels to the South, including a cross-border hotline meant to help alleviate tensions through diplomatic means.
4) The North has officially declared a state of war against the South. This has been called mere “tough talk” by the U.S. government, but the speed at which these multiple developments have occurred should be taken into consideration.
5) North Korea has just announced the reopening of a shuttered nuclear reactor used to render weapons grade materials.
6) The DPRK has suddenly locked down the Kaesong Industrial Zone; a region which holds manufacturing centers for both North and South Korea. Southern manufacturers operating there employ nearly 50,000 Northern workers. Nearly 1000 Southerners also work there. The arrangement generates approximately $2 billion a year for the North. The joint industrial zone has existed since 2000, and the North has never locked down access until this past week. The fact that the DPRK is willing to restrict this area and possibly lose a sizable income signals that the situation is not as “mild” as some would like to believe.
7) At the beginning of this year, silver purchases by the North from China surged. For the entire year of 2012, the government purchased $77,000 worth of precious metals. In the first few months of 2013, North Korea has already purchased $600,000 in silver. The exact size of the North’s precious metals stockpile is unknown. Though seemingly small in comparison to many purported metal holdings by major powers, this sudden investment expansion would indicate a government move to protect internal finances from an exceedingly frail economic environment. Metals are also historically accumulated at a high rate by nations preparing for war or invasionin the near term.
Again, all that is needed to instigate an event on the Korean Peninsula are tightened sanctions. The establishment knows this, though another Gulf of Tonkin incident (an openly admitted false flag event) may be on the menu as well.
Given that the chances of a shooting war are high if sanctions continue, it might be wise to consider the consequences of conflagration in Korea.
Dealing with a large army steeped in asymmetric and mountain warfare will be difficult enough. In fact, an invasion of North Korea would be far more deadly than Afghanistan, if only because of the sheer number of maneuver elements (guerilla-style units) on the ground. But let’s set aside North Korea for a moment and consider the greatest threat of all: dollar collapse.
As I have discussed in numerous articles, China, the largest foreign holder of U.S. debt, has positioned itself to decouple from the American consumer and the dollar. This is no longer a theoretical process as it was in 2008, but a very real and nearly completed one. Mainstream analysts often claim China would never break from the dollar because it would damage their export markets and their investment holdings. The problem is, China is already dumping the dollar using bilateral trade agreements with numerous developing nations, Australia being the latest to abandon the greenback.
China isn’t just talking about it; China is doing it.
The development of a decoupled China is part of a larger push by international banks to remove the dollar as the world reserve currency and replace it with a new global currency. This currency already exists. The International Monetary Fund’s Special Drawing Rights (SDR) is a mechanism backed by a basket of currencies as well as gold. The introduction of the SDR on a wide scale is dependent on only two things:
First, China has been designated the replacement consumer engine in the wake of a U.S. collapse. They have already surpassed the United States as the No. 1 trading power in the world. However, they must spread their own currency, the Yuan, throughout global markets in order to aid the IMF in removing the dollar. China has recently announced a program to sell more than $6 trillion in Yuan denominated bonds to foreign investors, easily fulfilling this need.
Second, China and the IMF need a scapegoat event, a rationale for dumping the dollar that the masses would accept as logical. A U.S. invasion of North Korea could easily offer that rationale.
While China has been playing the good Samaritan in relations with the United States in dealing with North Korea and has supported (at least on paper) certain measures including sanctions, China will never be in support of Western combat actions in the Pacific so close to their territory. The kind of U.S. or NATO presence a war with North Korea would generate would be entirely unacceptable to the Chinese, who do not need to respond using arms. Rather, all they have to do to get rid of us would be to fully dump the dollar and threaten to cut off trade relations with any other country that won’t do the same. The domino effect would be devastating, causing U.S. costs to skyrocket and forcing us to pull troops out of the region. At the same time, the dollar would be labeled a “casualty of war” rather than a casualty of conspiratorial global banking designs, and the financial elites would be removed from blame.
Ultimately, we should take the North Korean situation seriously not because of the wild-eyed propaganda of the mainstream media and not because they are “doing business with terrorists” or because they are a “violent and barbaric relic of nationalism,” but because a war in North Korea serves the more malicious interests of globalization. No matter what happens in the near future, it is important for Americans to always question the true motives behind any event and ask ourselves who, in the end, truly benefited.
Source: Brandon Smith | Alt-Market
The International Monetary Fund is an extortion financier’s outfit for a gang of exploiter banksters. The colonists of global mercantilism operate on extending credit with strings attached and assets targeted for attachment. Poor and underdeveloped economies beg for roll over extensions of old debt in an endless circle of currency debasement and resource transfer. So why anyone would get excited over a competing banking house, seems to escape implications within the news publications.
The Global Post describes in the article, BRICS countries to form new development bank.
“The bank is intended to fund development and infrastructure projects in BRICS nations and elsewhere. First discussed a year ago, it has been described as an alternative to the IMF and World Bank for developing countries.
Although the plan is the biggest announcement to come out of a summit of BRICS leaders in Durban, South Africa, where they signed an accord today, details such as how much capital the bank will have, its structure and its location have yet to be worked out.”
Would this development bank become simply a Chinese dynasty investment structure based upon the weight of their financial leverage within the system? Or would the union of eager modernizing countries really be the future formula for economic growth and wealth? On the surface the positive foreign reserves and lower indebtedness seem to answer a resounding yes, but look a little deeper.
Without specific details, the viability of such a scheme is unknown. The article, BRICS Seek to Cement Position in Global Economic Landscape, does not exactly envision a smooth maturation.
“The planned development bank “is feasible and viable,” leaders confirmed in a statement on Wednesday. Such a bank would “supplement the existing efforts of multilateral and regional financial institutions for global growth and development.”
However, officials speaking earlier during the summit admitted that various key details remain to be worked out before the proposed bank can become fully operational – a process that is expected to take years. For instance, disagreements have already surfaced among the BRICS on the specifics of the bank’s mandate, and how exactly the institution would be financed.”
The question, missing from the depths and significance of news analysis is whether a competing fund for international lending from a group of rival countries will improve on the sorry record of Western banking.
Venky Vembu from First Post in BRICS Bank is just a castle in the air, points out the infighting among participating partners.
“Analysts who attend the BRICS deliberations point out: ”By day they talk grandly of multilateral action to tip the playing field in favour of poorer nations, while by night they scheme shamelessly against each other, often in conjunction with their supposed economic oppressors in the West.” There is, he adds, virtually nothing that unites them other than resentment and suspicion of Western monopoly – not all of which is justified.”
Another viewpoint that brings the discussion down to earth is written by Ruchir Sharma in The Economic Times article, Brics summits are so last decade: All members are slowing down.
“All the Brics are slowing sharply. China’s economy has slowed from an average annual growth rate of 11% in the last decade to less than 8% in 2012. That has taken the wind out of economies that set sailBSE 0.56 % by selling raw materials to China, particularly Brazil and Russia, where GDP growth slipped to 1% and 3.5%, respectively, last year. Investors are heading for other destinations, and in dollar terms the Brics stock markets are trading 30-40 % below the peaks of the last decade. But, once again, the politicians are a step behind.
The Brics no longer look like a rising economic axis. On average, the growth rate of Brazil, Russia and South Africa is likely to be around 2.5% over the next few years, about the same pace as the US. That would be a terrible disappointment for these developing nations eager to catch up to the West, as their per capita income is much lower than that of the US. Owing in good part to the Brics slowdown, the US economy is now growing at the same pace as the global average for the first time since 2003, leading to stabilisation in its share in the world economy at around the long-term average of 23%.”
These foreign press items reflect a much different understanding from the news report on the BRICS announcement video, ‘Hegemonic corporations scared as BRICS plan bank to rival IMF‘.An optimistic projection that the global economy will generate sensible growth and prosperity because of BRICS leadership, is a stretch at best. This concern is certainly no endorsement of the existing Western debt created money-banking model. However, the power of the IMF and World Bank is based upon the military enforcement arm of the NATO machine.
The concept of central banking is immutably defined by the dominance of empire. The peaceful relinquishment of international finance to the BRICS is about as probable as a soft landing from the world debt bubble.
Evolving is a testing of world markets for a transfer to a different banking centercolossus. In order for that hypothesis to be even remotely possible, the world reserved currency status of the U.S. Dollar must be replaced with a basket of other currencies.
The BRICS countries have their own set of internal economic shortcomings. Much of their cash flow is export trade related. The collapse of global trade is the biggest risk that looms over a brighter future for especially undeveloped economies. Another quasi-IMF stratagem that presents a top down banking compliance is not an alternative to the existing fraud.
Looking for altruistic benefactors that are willing to finance capital requirements, from usury lenders is a fools dream. Setting off a turf war, results in collateral damage, for everyone. Financial conflict is predictable when business is based upon a destructive banking version for an imbalance in commerce obligations. A butting of heads between the BRICS, the EU and the USA is just as inevitable.
The politicians of the western world are coming after your bank accounts. In fact, Cyprus-style “bail-ins” are actually proposed in the new Canadian government budget. When I first heard about this I was quite skeptical, so I went and looked it up for myself. And guess what? It is right there in black and white on pages 144 and 145 of “Economic Action Plan 2013″ which the Harper government has already submitted to the House of Commons. This new budget actually proposes “to implement a ‘bail-in’ regime for systemically important banks” in Canada. “Economic Action Plan 2013″ was submitted on March 21st, which means that this “bail-in regime” was likely being planned long before the crisis in Cyprus ever erupted. So exactly what in the world is going on here? In addition, as you will see below, it is being reported that the European Parliament will soon be voting on a law which would require that large banks be “bailed in” when they fail. In other words, that new law would make Cyprus-style bank account confiscation the law of the land for the entire EU. I can’t even begin to describe how serious all of this is. From now on, when major banks fail they are going to bail them out by grabbing the money that is in your bank accounts. This is going to absolutely shatter faith in the banking system and it is actually going to make it far more likely that we will see major bank failures all over the western world.
What you are about to see absolutely amazed me when I first saw it. The Canadian government is actually proposing that what just happened in Cyprus should be used as a blueprint for future bank failures up in Canada.
The following comes from pages 144 and 145 of “Economic Action Plan 2013″ which you can find right here. Apparently the goal is to find a way to rescue “systemically important banks” without the use of taxpayer funds…
Canada’s large banks are a source of strength for the Canadian economy. Our large banks have become increasingly successful in international markets, creating jobs at home.
The Government also recognizes the need to manage the risks associated with systemically important banks — those banks whose distress or failure could cause a disruption to the financial system and, in turn, negative impacts on the economy. This requires strong prudential oversight and a robust set of options for resolving these institutions without the use of taxpayer funds, in the unlikely event that one becomes non-viable.
So if taxpayer funds will not be used to bail out the banks, how will it be done? Well, the Canadian government is actually proposing that a “bail-in” regime be implemented…
The Government proposes to implement a “bail-in” regime for systemically important banks.This regime will be designed to ensure that, in the unlikely event that a systemically important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants.
So if the banks take extreme risks with their money and lose, “certain bank liabilities” (i.e. deposits) will rapidly be converted into “regulatory capital” and the banks will be saved.
In other words, the banks will just be allowed to grab money directly out of your bank accounts to recapitalize themselves.
That may sound completely and utterly insane to us, but this is how things will now be done all over the western world.
Sometimes a “bail-in” can be done by just converting unsecured debt into equity, but as we just saw in Cyprus, often when there is a major bank failure a lot more money is required to “fix the banks” than can possibly be raised by converting unsecured debt into equity. That is when it becomes very tempting to dip into uninsured back accounts.
In fact, some European politicians are openly admitting as much. According to RT, the European Parliament will soon be voting on a new law which will make Cyprus-style bank account confiscation a permanent part of the solution when major banks fail throughout the EU…
A senior lawmaker told Reuters the Cyprus model may not be an isolated case, and is perhaps a future template in dealing with troubled European banks.
The new template is now likely to turn into a full-scale EU law, letting taxpayers off the hook in case a bail-out is needed, but imposing major losses on bigger savers on a permanent basis.
“You need to be able to do the bail-in as well with deposits,” said Gunnar Hokmark, member of European Parliament, who is leading negotiations with EU countries to finalize a law for winding up problem banks, Reuters reported.
“Deposits below 100,000 euros are protected … deposits above 100,000 euros are not protected and shall be treated as part of the capital that can be bailed in,” Hokmark told Reuters, adding that he was confident a majority of his peers in the parliament backed the idea.
The European Commission has written the draft of the law, which now awaits approval from eurozone member states and the parliament on whether and when it can be implemented. It’s been reported, the law is planned to take effect in the beginning of 2015.
Are you starting to understand?
The other day when I said that “The Global Elite Are Very Clearly Telling Us That They Plan To Raid Our Bank Accounts“, I was not exaggerating.
And for those in Cyprus with deposits of over 100,000 euros, the news just keeps getting worse and worse.
When the crisis first erupted, they were told that 10 percent of all deposits over 100,000 euros would be confiscated.
Then a few days later they were told that it would be 40 percent.
Now, according to the Washington Post, those with deposits over 100,000 euros at the second largest bank in Cyprus may lose as much as80 percent of those deposits…
A deal was finally reached in Brussels with other euro countries and the International Monetary Fund early Monday. The country’s second-largest bank, Laiki, is to be split up, with its healthy assets being absorbed into the Bank of Cyprus. Savers with more 100,000 euros ($129,000) in either Bank of Cyprus and Laiki will face big losses. At Laiki, those could reach as much as 80 percent of amounts above the 100,000 insured limit; those at Bank of Cyprus are expected to be much lower.
Sadly, the truth is that those people will be lucky to ever see any of that money ever again.
How would you feel if someone came along and wiped out your life savings so that banks that took incredibly reckless risks could be bailed out?
Needless to say, a lot of people in Cyprus are very, very angry right now. The following reactions from outraged depositors in Cyprus are from Sky News…
“They have stolen our money,” Milton Loucas told Sky News.
“I have been working for 60 years. I am 80 years old. I cannot work again for my living – they have cut the lot.
“Our money, our social insurance – they have cut them. How are we going to live?”
Another Cypriot, Stelios, came out of the bank empty handed.
“I tried to get my February wages and they gave me a piece of paper only,” he said.
“I have two children in the army and they asked for money – I don’t have money to give them.
“The Government didn’t pay anybody. My old parents didn’t get their pension.”
A lot of people have just had their entire lives turned upside down.
But there were some people that were told ahead of the crisis and were able to get their money out in time.
According to the BBC, foreigners pulled a whopping 18 percent of their money out of Cyprus banks during the month of February alone…
Information from the Central Bank of Cyprus released on Thursday showed that foreign depositors had already withdrawn 18% of their cash from the nation’s banks during February, before the current crisis hit home.
So how did they know to pull their money out and who told them?
In addition, branches of the two largest banks in Cyprus were kept open in Moscow and London even after all of the banks in Cyprus itself were shut down. So wealthy Russians and wealthy Brits have been able to take all of their money out of those banks while the people of Cyprus have been unable to. It is hard to even find the words to describe how unfair that is. The following is from a recent article by Mark J. Grant…
So let us then turn back to Cyprus and see why the Russians are not quite so upset as they were at the beginning of the crisis. The answer to this question is Uniastrum bank which is headquartered in Moscow. Eighty percent (80%) is owned by the Bank of Cyprus. After the crisis began and right up until the capital controls were implemented the bank wasopen for business with no restrictions upon withdrawals. So the crisis began, was all over the Press and the Russian depositors walked into the local bank and withdrew their money from Uniastrum, the Bank of Cyprus, or had it wired in from the other local Cyprus banks and it was then withdrawn. Problem solved!
At the same time Laiki bank and the Bank of Cyprus had operating branches in London. There were no restrictions there either so people could walk into those banks and withdraw their money as well. No restrictions at all right up until the time of the Capital Controls. In the meantime, in Cyprus, people and institutions could not get at their money so the Russians and many British took out their money, closed their accounts while the people in Cyprus were left high and dry.
The wealthy always seem to come out ahead somehow, don’t they?
Meanwhile, those in Cyprus with deposits under 100,000 euros are now dealing with some very stringent capital controls. In other words, there are some very tight restrictions on what they can do with their money. For example, the maximum daily cash withdrawal has been set at 300 euros. The following are some of the other restrictions that are in force right now…
As well as the daily withdrawal limit, Cypriots may not cash cheques.
Payments and/or transfers outside Cyprus via debit and or credit cards are allowed up to 5,000 euros per person per month.
Transactions of 5,000-200,000 euros will be reviewed by a specially established committee, with applications for those over 200,000 euros needing individual approval.
Travellers leaving the country will only be allowed to take 1,000 euros with them.
When the next great wave of the economic collapse strikes, capital controls and bank account confiscation will suddenly become “normal” all over the world.
So get prepared while you still can.
One thing that you can do is make sure that you don’t have all of your eggs in one basket. The following is what Jim Rogers recently told CNBC…
“I, for one, am making sure I don’t have too much money in any one specific bank account anywhere in the world, because now there is a precedent,” he said. “The IMF has said ‘sure, loot the bank accounts’ the EU has said ‘loot the bank accounts’ so you can be sure that other countries when problems come, are going to say, ‘well, it’s condoned by the EU, it’s condoned by the IMF, so let’s do it too.’”
The more places that you have your money, the more difficult it will be for “the powers that be” to loot it.
The global elite are fundamentally changing the game. From now on, no bank account on earth will ever be able to be considered “100% safe” again. This is going to create an atmosphere of fear and panic, and no financial system can operate normally when you destroy the confidence that people have in it.
Confidence is a funny thing – it can take decades to build, but it can be destroyed in a single moment.
None of us will ever be able to have confidence in our bank accounts again, and I fear that the next wave of the economic collapse may be closer than I had first anticipated.
Source: The Economic Collapse
Don’t be surprised when the global elite confiscate money from your bank account one day. They are already very clearly telling you that they are going to do it. Dutch Finance Minister Jeroen Dijsselbloem is the president of the Eurogroup – an organization of eurozone finance ministers that was instrumental in putting together the Cyprus “deal” – and he has said publicly that what has just happened in Cyprus will serve as a blueprint for future bank bailouts. What that means is that when the chips are down, they are going to come after YOUR money. So why should anyone put a large amount of money in the bank at this point? Perhaps you can make one or two percent on your money if you shop around for a really good deal, but there is also a chance that 40 percent (or more) of your money will be confiscated if the bank fails. And considering the fact that there are vast numbers of banks all over the United States and Europe that are teetering on the verge of insolvency, why would anyone want to take such a risk? What the global elite have done is that they have messed around with the fundamental trust that people have in the banking system. In order for any financial system to work, people must have faith in the safety and security of that financial system. People put their money in the bank because they think that it will be safe there. If you take away that feeling of safety, you jeopardize the entire system.
So exactly how did the big banks in Cyprus get into so much trouble? Well, they have been doing exactly what hundreds of other large banks all over the U.S. and Europe have been doing. They have been gambling with our money. In particular, the big banks in Cyprus made huge bets on Greek sovereign debt which ended up failing.
But what happened in Cyprus is just the tip of the iceberg. All over the planet major financial institutions are being incredibly reckless with client money. They are leveraged to the hilt and they have transformed the global financial system into a gigantic casino.
If they win on their bets, they become fabulously wealthy.
If they lose on their bets, they know that the politicians won’t let the banks fail. They know that they will get bailed out one way or another.
And who pays?
Either our tax dollars are used to fund a government-sponsored bailout, or as we have just witnessed in Cyprus, money is directly confiscated from our bank accounts.
And then the game begins again.
People need to understand that the precedent that has just been set in Cyprus is a game changer.
The next time that a major bank fails in Greece or Italy or Spain (or in the United States for that matter), the precedent that has been set in Cyprus will be looked to as a “template” for how to handle the situation.
Eurogroup president Jeroen Dijsselbloem has even publicly admitted that what just happened in Cyprus will serve as a model for future bank bailouts. Just check out what he said a few days ago…
“If there is a risk in a bank, our first question should be ‘Okay, what are you in the bank going to do about that? What can you do to recapitalise yourself?’. If the bank can’t do it, then we’ll talk to the shareholders and the bondholders, we’ll ask them to contribute in recapitalising the bank, and if necessary the uninsured deposit holders”
Dijsselbloem insists that this will cause people “to think about the risks” before they put their money somewhere…
“It will force all financial institutions, as well as investors, to think about the risks they are taking on because they will now have to realise that it may also hurt them. The risks might come towards them.”
Well, as depositors in Cyprus just found out, there is a risk that you could lose 40 percent (and that is the best case scenario) of your money if you put it in the bank.
Why would anyone want to take that risk – especially in a nation that is already experiencing very serious financial troubles such as Greece, Italy or Spain?
As if that was not enough, Dijsselbloem later went in front of the Dutch parliament and publicly defended a wealth tax like the one that was just imposed in Cyprus.
Dijsselbloem is being widely criticized, and rightfully so. But at least he is being more honest that many other politicians. His predecessor as the head of the Eurogroup, Jean-Claude Juncker, once said that “you have to lie” to the people in order to keep the financial markets calm…
Mr. Dijsselbloem’s style contrasts with that of his predecessor, Jean-Claude Juncker, Luxembourg’s prime minister, who spoke in a low mumble at news conferences and was expert at sidestepping questions. Mr. Juncker once even advocated lying as a way to prevent financial markets from panicking—as they did Monday after Mr. Dijsselbloem’s comments.
“When it becomes serious, you have to lie,” Mr. Juncker said in April 2011. “If you have pre-indicated possible decisions, you are feeding speculation in the financial markets.”
But Dijsselbloem is certainly not the only one among the global elite that is admitting what is coming next. Just check out what Joerg Kraemer, the chief economist at Commerzbank, recently told Handelsblatt about what he believes should be done in Italy…
“A tax rate of 15 percent on financial assets would probably be enough to push the Italian government debt to below the critical level of 100 percent of gross domestic product”
They are telling us what they plan to do.
They are telling us that they plan to raid all of our bank accounts when the global financial system fails.
And calling it a “haircut” does not change the fact of what it really is. The truth is that when they confiscate money from our bank accounts it is outright theft. Just check out what the Daily Mail had to say about the situation in Cyprus…
People who rob old ladies in the street, or hold up security vans, are branded as thieves. Yet when Germany presides over a heist of billions of pounds from private savers’ Cyprus bank accounts, to ‘save the euro’ for the hundredth time, this is claimed as high statesmanship.
It is nothing of the sort. The deal to secure a €10 billion German bailout of the bankrupt Mediterranean island is one of the nastiest and most immoral political acts of modern times.
It has struck fear into the hearts of hundreds of millions of European citizens, because it establishes a dire precedent.
And when you cause paralysis in the banking system, a once thriving economy can freeze up almost overnight. The following is an excerpt from a report from someone that is actually living over in Cyprus…
As it stands now, nowhere in Cyprus accepts credit or debit cards anymore for fear of not being paid, it is CASH ONLY. Businesses have stopped functioning because they cannot pay employees OR pay for the stock they receive because the banks are closed. If the banks remain closed, the economy will be destroyed and STOP COMPLETELY. Looting, robberies and theft are already on the rise. If the banks open now, there will be a massive run on the bank, and the banks will FAIL loosing all of its deposits, also causing an economic crash. TONIGHT there are demonstrations at most street corners and especially at the parliament building (just 2 miles from me).
Many are thinking that the ECB and EU are allowing Cyprus to fail as a test ground for new financial standards.
Just wanted all you guys to know the real story of whats going on here. Prayers are appreciated (although this is very interesting to watch) many of my local friends have lots of money in the banks.
Would similar things happen in the United States if there was a major banking crisis someday?
That is something to think about.
In any event, the problems in the rest of Europe continue to get even worse…
-The stock market in Greece is crashing. It is down by more than 10 percent over the past two days.
-The stock markets in Italy and Spain are experiencing huge declines as well. Banking stocks are being hit particularly hard.
-The Bank of Spain says that the Spanish economy will sink even deeper into recession this year.
-The latest numbers from the Spanish government show that Spain’s debt problem is rapidly getting worse…
“The central government’s interest bill surged 15 percent last year to 26 billion euros, while tax receipts slumped 21 percent. The cost of servicing debt represented 30 percent of the taxes collected at the end of December, up from 20 percent a year earlier.”
-The euro took quite a tumble on Thursday and the euro will likely continue to decline steadily in the weeks and months to come.
For a very long time I have been warning that the next major wave of the economic collapse is going to originate in Europe.
Hopefully people are starting to see what I am talking about.
As this point, the major banks in Europe are leveraged about 26 to 1, and that is close to the kind of leverage that Lehman Brothers had when it finally collapsed. As a whole, European banks are drowning in debt, they are taking risks that are almost incomprehensible and now faith in those banks has been greatly undermined by what has happened in Cyprus.
Anyone that cannot see a crisis coming in Europe simply does not understand the financial world. A moment of reckoning is rapidly approaching for Europe. The following is from a recent article by Graham Summers…
At the end of the day, the reason Europe hasn’t been fixed is because CAPITAL SIMPLY ISN’T THERE. Europe and its alleged backstops are out of money. This includes Germany, the ECB and the mega-bailout funds such as the ESM.
Germany has already committed to bailouts that equal 5% of its GDP. The single largest transfer payment ever made by one country to another was the Marshall Plan in which the US transferred an amount equal to 5% of its GDP. Germany WILL NOT exceed this. So don’t count on more money from Germany.
The ECB is chock full of garbage debts which have been pledged as collateral for loans. If anyone of significance defaults in Europe, the ECB is insolvent. Sure it can print more money, but once the BIG collateral call hits, money printing is useless because the amount of money the ECB would have to print would implode the system.
And then of course there are the mega bailout funds such as the ESM. The only problem here is that Spain and Italy make up 30% of the ESM’s supposed “funding.” That’s right, nearly one third of the mega-bailout fund’s capital will come from countries that are bankrupt themselves.
What could go wrong?
Right now, close to half of all money that is on deposit at banks in Europe is uninsured. As people move that uninsured money out of the banks, the amount of money that will be required to “fix the banks” will go up even higher.
It would be wise to try to avoid the big banks at this point – especially those with very large exposure to derivatives. Any financial institution that uses customer money to make reckless bets is not to be trusted.
If you can find a small local bank or credit union to do business with you will probably be better off.
And don’t think that this kind of thing can never happen in the United States.
One of the key players that was pushing the idea of a “wealth tax” in Cyprus was the IMF. And everyone knows that the IMF is heavily dominated by the United States. In fact, the headquarters of the IMF is located right in the heart of Washington D.C. not too far from the White House. When I worked in D.C. I would walk by the IMF headquarters quite a bit.
So if the United States thought that confiscating money from bank accounts was a great idea in Cyprus, why wouldn’t they implement such a thing here under similar circumstances?
The global elite are telling us what they plan to do, and the game has dramatically changed.
Move your money while you still can.
Unfortunately, it is already too late for the people of Cyprus.
Source: The Economic Collapse
Contrary to popular belief, Brussels is not the only major European capital which is away from the seacoast as well as devoid of a river. The Senne is a far cry from the similar-sounding Seine further south, however: it is a nasty, brutish, mercifully short waterway. By the mid-1800’s it had become so putrid and unstable that the city elders decided to cover it—the massive project was known as the voûtement de la Senne—and to build boulevards and public edifices on top. The city did not gain much in charm, but its denizens’ life expectancy was instantly improved. (Whether living a long life in Belgium’s capital is a blessing or a curse is a separate issue.)
There is an equally nasty but infinitely more brutish monstrosity in today’s Brussels that cannot be dealt with so neatly. The European Union today is like the “Socialist Community” under Leonid Brezhnev in his dotage: totalitarian yet inefficient, glorified by its self-serving nomenklatura yet unloved by its subjects, devoid of any unifying ideology beyond the worn-out phrases and platitudes parroted by the absurd men and repulsive women in dull suits.
For the reality of this “United Europe,” as it is today, let us be dryly empirical for a moment and look at a few EU-related news items reported on one day—Thursday, March 14, 2013:
- EU leaders gathered in Brussels for a two-day summit in an attempt to negotiate the dilemma between austerity and growth. Thousands of protestors from all over the 27 member nations converged outside the EU HQ.
- Eurozone employment dropped by 0.3% in the fourth quarter of 2012 compared with the third, despite the Christmas shopping season. Experts say the unemployment rate will remain above 11% until early 2018.
- European Central Bank (ECB) President Mario Draghi says that “generally unsatisfactory economic developments in Europe” will improve in the course of 2013, but only if governments implement austerity measures and structural reforms. His fellow-Eurocrat, EU-appointed Italian prime minister Mario Monti, nevertheless says he will have to ask his EU partners to grant Italy more “flexibility” in its budget deficit reduction targets.
- The troika of international lenders—the EU, the ECB, and the IMF—left Greece without resolving a dispute with the government in Athens over further budgetary cuts. In the meantime, Greek shipyard workers protested outside the development ministry and hundreds of Greek students blocked up the education ministry to protest cuts resulting from EU-imposed austerity measures.Unemployment in Greece is 26%, up from 24.8% in the third quarter of 2012. Among under-24’s it is 57.8%. The percentage of unemployed Greeks who have been looking for a job for more than one year is 65.3%.
- In Spain, eviction proceedings against defaulters have soared since 2007 to 450,000. The number of repossessions ending in evictions increased by 135% in 2012 from the year before, indicating worsening trends. Spanish retail sales dropped 10.2% in the year to January, continuing the decline of the past 31 months.
- Cyprus bailout talks are crucial to next stage of crisis, but deep divisions remain over how to manage a bailout. Without a cut in the €17bn cost, Cypriot sovereign debt will reach 145% of GDP, by far the highest in the eurozone except for Greece.
- President François Hollande has said that France won’t be able to cut the public deficit to the EU limit of 3% of GDP this year; it was more likely to reach 3.7%. Amazingly, German finance minister Wolfgang Schäuble subsequently corrected Hollande, saying not that he “hoped,” or “expected,” but that he was “sure that France would, like us, respect the rules” on the public deficit. (Perhaps Herr Schäuble knows a thing or two about France’s future finance policy that Monsieur le Président de la République does not!)
- Germany, meanwhile, smugly claims that its finances are the model for all humanity. Its 2014 budget plans, revealed on March 13, show the structural deficit dropping to zero. “With all modesty [sic!], this is a result of historic proportions,” economy minister Philipp Rösler declared on that occasion. “Germany is in the vanguard in Europe. Our success with a policy of growth-oriented consolidation is the envy of the world.” Ach, modesty—the quintessential German weakness…
This is but a quick selection on a randomly selected day—the day of this writing. The tenor and substance have not changed much in recent months and years; and things will likely change for worse—OK, with that oneenviable exception, perhaps—in the months and years ahead.
Unsurprisingly, anti-EU feeling is escalating all over the continent. On March 1, British Prime Minister David Cameron’s Conservative Party was beaten into third place in the Eastleigh by-election, in southern England, by a party that wants Britain to leave the EU. The UK Independence Party (UKIP) supporters were once described by Cameron as “fruitcakes, loonies and closet racists”—but they accounted for 28 percent of the vote in the traditionally Tory constituency. UKIP leader Nigel Farage declared the vote “a protest against an entire political class.” Under pressure from UKIP, Cameron had earlier promised to hold a referendum on Britain’s membership of the EU by the end of 2017 if he wins the next election, but many British Euro-skeptics see this as a mere ploy to deflect the threat from UKIP.
Marine Le Pen, who finished third in the French presidential election, also demands a referendum on France’s membership. On Mach 3 she declared that the FN wants France to leave the EU unless four reforms are agreed: the return to the franc; the abolition of the Schengen single-borderarea; the primacy of France’s economic interests over “Europe’s”; and the primacy of national law over EU law. Otherwise, Le Pen has promised to transform the European elections a year from now into a referendum for or against Europe. Having polled 18% of the vote in the presidential election last year, Mlle Le Pen has a solid base to build upon.
In Italy, two anti-austerity, anti-euro parties—led by Silvio Berlusconi and Beppe Grillo—captured over half the vote and paralyzed the political system. Berlusconi returned from the dead to take just over 29% of the vote, less than one half of one percentage point behind the first-placed Center-Left. Newcomer Grillo’s Movimento 5 Stelle (M5S, Five Star Movement), entirely created via the web outside the traditional party system, took just over 25% of the vote for the Chamber of Deputies—and demolished Italy’s balance of political forces. Pro-EU Monti’s coalition came fourth with a paltry ten percent.
Even in Germany, the apparent hegemon, there is little popular enthusiasm for the Euro-project. The recently-founded Alternative for Germany (AfD) is not even a political party yet, but expects to be a serious player come federal elections on September 22. It demands dissolution of the “coercive euro association,” an orderly end of the monetary union, and a referendum to decide if “the Basic Law, the best constitution that Germany ever had,” was violated to allow the transfer of sovereignty to the EU. Dr. Bernd Lucke—the AfD co-founder, economics professor and a life-long CDU supporter until he turned against Merkel in 2011 over her bailout policies—is adamant that Germany “has a government that has failed to comply with the law… and has blatantly broken the word that it had given to the German people.” With 14,000 paid members thus far, the AfD is respectable and distinctly upper-middle-class, with a higher concentration of PhDs than any party. Among its early supporters is Hans-Olaf Henkel, ex-president of the Federation of German Industry representing 100,000 businesses. Let it be added that as of now 26% of Germans say they would consider voting for a party committed to leaving the monetary union.
It will be a tough fight. Political, media and cultural elites in the leading countries of the Union are overwhelmingly pro-EU, pro-euro, pro-immigration, and vehemently opposed to any sign of national or ethno-linguistic coherence. If those elites have their way, there will be many more “Europeans” by the end of this century than today—some atheist, but mostly Muslim; some black, but mostly brown—but there will be precious few great-grandchildren of Europeans. The native populations are aborting and birth-controlling themselves into minorities. If Euro-elites have their way, disused churches will be converted into teeming mosques. Just over a decade ago, they refused to acknowledge Christian heritage as an element of European identity—but today they insist Islam is essential to that identity. Brussels rejects the notion that Europeans are defined by blood ties, collective memories, emotional bonds, culture, and kinship. Instead, “Europe” marches along the path of “civilization, progress and prosperity, for the good of all its inhabitants, including the weakest and most deprived… to deepen the democratic and transparent nature of its public life, and to strive for peace, justice and solidarity throughout the world…”
This is the mindset of 1792 and 1917 all over again. Its derivative expressions are foreseeable. The EU relentlessly encourages abortion, sexual deviancy, and population replacement as “basic human rights.” Its political process means the manufacture of ideologically correct outcomes as defined by the unelected Brussels machine, before the quasi-democratic machine of the European Parliament and the member countries’ institutions are set in motion. The preamble of the EU Charter on Human Rights claims to be “based on the principles of democracy and the rule of law” (implying the two were not in conflict), and concludes that “Enjoyment of these rights entails responsibilities and duties with regard to other persons, to the human community and to future generations.” Those rights are naturally demarcated by those who reserve the right to decide what exactly one’s obligations to “the human community” and “future generation” happen to be.
The true meaning of “the rule of law” is defined by the European Arrest Warrant, a hideous device created by the Lisbon Treaty, under which any citizen of a member country—or even a visitor from outside the Union—is liable to arrest and extradition at the behest of a judge in any other EU member country, under one of 32 categories of “crime.” Those offenses include murder, terrorism, as well as “racism and xenophobia.” The EU thus came to equate beliefs, opinions and sentiments with the worst of actual crimes, in the best tradition of Soviet and Nazi jurisprudence.
The workings of the machine are mainly in the hands of the European Commission (EC), whose members are appointed by the 27 prime ministers who make up the Council. The EC has the authority to create and impose policies, but it cannot be removed or held accountable by any electorate. Its duty is to uphold the interests of the Union as such: its members swear that they will discard any vestige of loyalty to any nation. The only EU institution that has any claim to democratic credentials is the European Parliament, the least powerful of the three key bodies.
How and why did the monstrosity get this way? Gradually at first, with a great deal of patience and cunning exercised by its visionary creators. In 1945 Western Europe was in ruins, a shadow of what it had been only four decades previously. The old, pre-1914 balance-of-power system had collapsed, and the interwar mechanisms of collective security were neither collective nor secure. The beginnings were seemingly pragmatic: the 1951 European Coal and Steel Community—as engineered by Robert Schuman—seemed like a sound idea, a plus-sum-game if there ever was one. But the upholders of Euro-federalism had a bigger fish to fry. From the outset they held that a sense of common history had to be developed, as well as a sense of an existing and growing common identity, to complement those early economic integration mechanisms. As Jean Monnet, the father of the project (and, significantly, a man never elected to a public office), admitted six decades ago, “Europe has never existed; one has genuinely to create Europe.”
Monnet and his disciples had a long way to go. The initial ideological basis for the project was de Gaulle’s distinctly non-federalist vision of l’Europe des patries. A concert of nation-states, brought together by a common interest, would seek the withering away of their old hostilities—with France and Germany leading the way—but all of them would retain their substance and identity regardless of the institutional arrangement. This was the “Europe” of the Six, a logical heir to the pragmatic Coal and Steel Community. Euro-integralists—notably Belgium’s prime minister Paul-Henri Spaak and Monnet himself—nevertheless kept their powder dry for a more opportune moment when the European Economic Community might be steered in the direction of a political union. De Gaulle and his immediate successor, Georges Pompidou, did not want that; and until the early 1970’s the institutional framework remained essentially the same.
Then came the notion of Europe’s unity in diversity, the reverse of the Europe of the Fatherlands. (In 2000 In varietate concordia was adopted as the official motto of the European Union.) The new concept coincided with the European Community’s expansion to the Nine, then to the Twelve. Its proponents claimed that Europe was not only a mosaic of cultures but an organic whole. The implication that this whole required a single source of decision-making authority gave rise to the method of European integration Monnet had advocated from the outset: a series of gradual yet regular transfers of small slices of national sovereignty—in ostensibly technical areas—from national capitals to Brussels. The Community apparat made a quantum leap toward this goal with the Single European Act (SEA, July 1987). It was a thorough revision of the 1957 Treaty of Rome, but in the direction of a super-authority rather than a superstate.
The distinction is essential. The standard Eurosceptic accusation that the Brussels machine is plotting the creation of a single federal state is incorrect. The people who run the Brussels machine have never wanted the end result to be a superstate modeled after the United States. In the context of pan-European federal statehood they would be held more accountable and would come under far greater public scrutiny than if they remained faceless and continued to operate from the corridors of the monstrous EU HQ at Barleymont. The strategy was for the states to be drained gradually of statehood and their power transferred to Brussels, but without the unwelcome trappings and limitations of statehood itself. Its guiding spirit was then-Commission PresidentJacques Delors, a French Socialist. From the SEA on, the EU became—in the words of British MEP Roger Helmer—“a slow-motion coup d’etat.” In addition to the creation of the eurozone 12 years ago, which has grown to 17 member-states since, the Schengen Agreement (1990), the Maastricht Treaty (1992), the Amsterdam Treaty (1998), the Treaty of Nice (2000), and the Treaty of Lisbon (2009) have transferred vast powers from national capitals to Brussels.
The era of Delors coincided with the rise of the Generation of 1968 to the positions of power. The activists had cut their hair, put on suits and ties, and discovered that it was more fruitful and comfortable to take the Gramscian long road through the institutions than to blow them up. The veterans of the hard-left era, like Catherine Ashton and Jose Manuel Barroso, still subscribe to the concept of permanent revolution, but it is wrapped into the open-ended evolution of the EU that they now control. The result is a European Union in a state of indeterminacy and permanent flux, a postmodern edifice within which the meaning of sovereignty is relativized and the separation of foreign and domestic policies blurred to the point of interchangeability. What all of these Euro-enthusiasts share—as John Laughland has noted—is a love of indeterminacy and permanent change, and a hostility to what they regard as inadequate, old-fashioned, and simplistic certainties of classical sovereign statehood.
Far from being the “capital of Europe,” Brussels is the regional HQ of the post-Christian anti-Europe, just as Washington DC has morphed into the global HQ of the same project. The goals of the project managers are the same because their degenerate minds are the same. They cannot be shamed into changing their ways through arguments or defeated through the ballot box any more than a malignant cancer can be arrested with aspirin. A stronger medicine is needed.
To paraphrase a bad man from a time much better than our own, écrasez l’infâme!
Throughout the colorful history of organized crime in the United States, periodic eruptions of inter-gang Mafia violence have dotted the criminal landscape. When turf wars broke out between competing crime families in major cities such as New York and Chicago, the combatants would conduct their warfare from unsavory redoubts such as abandoned warehouses or low-rent hotels and apartments. In such locations, the soldiers would spend their off hours sleeping on rented mattresses until the internecine conflicts had run their course; hence the expression “going to the mattresses.”
Well, there is another turf war going on, a worldwide one, one that threatens the entire economic and political landscape of the planet. It is between all the hard working savers on the planet and the ever greedy criminal bankers and their cohorts in government. The real big canary singing out an extreme danger warning to all traditional savers who wish to entrust their wealth to banks and other paper vehicles – stocks, bonds, etc., is the incredible emergency banking shutdown in the tiny island nation of Cyprus. Granted, Cyprus represents only .02% of the population of the European Union. Yet what is occurring there is the harbinger of great risk to traditional savers on every continent; and equally important, there are many more scary danger signs raising their ugly heads as well.
To recap for a moment, let’s briefly itemize the situation in Cyprus. Cyprus, like just about every other country on the planet, has for decades been politically committed to a socialist based economy. In this scenario, politicians have promised benefits to the various voting classes which have far exceeded their annual tax revenue. This has caused its government to continually accumulate deficits that have resulted in a very large national debt in relation to its GDP. This debt has been collateralized by sovereign bonds sold to and purchased by large banks in Europe and elsewhere. Now this debt has become so large the government of Cyprus can no longer afford to pay even the interest, let alone reduce principal. What happens at this juncture, is that a powerful international banking institution, in this case, the European Central Bank (substitute your favorite lender of last resort – the Federal Reserve, the IMF, the World Bank, etc., etc.), has agreed to come to the rescue of the cash strapped government and help it make its current annual debt payment.
However, this emergency funding comes with a draconian penalty for the trusting taxpaying savers. In this instance, the European Central Bank has cut a secret deal with the Cypriot government to raid the bank accounts of all the country’s bank depositors, between six and ten percent. This proposed robbery, if it comes to pass, will confiscate billions from citizens and non-citizens alike who have placed their trust in the security of Cyprus’s banks. What has resulted, of course, is riotous response throughout the nation and frantic sell-offs in world equity markets.
What is important to understand here, though, is that this same game plan has been occurring for several years now in many countries throughout the world. Here is the short list of some of the transgressions that unscrupulous governments, under pressure from their major bank lenders, have perpetrated, and continue to perpetrate upon unsuspecting savers.
October 2008 – Argentina’s leftist government, facing a gigantic revenue shortfall, proposes to nationalize all private pensions so as to meet national debt payments and avoid its second default in the decade.
November 2010 – Headline – Hungary Gives Its Citizens an Ultimatum: Move Your Private Pension Fund Assets to the State or Permanently Lose Your Pension – This is an effective nationalization of all pensions.
November 2010 – Ireland elects to appropriate ten billion euros from its National Pension Reserve Fund to help fund an eighty-five billion euro rescue package for its besieged banks. Ireland also moves to consider a regulatory move that compels some private Irish pension funds to hold more Irish government debt, thereby providing the state with a captive investor base but hugely raising the risk for savers.
December 2010 – France agrees to transfer twenty billion euros worth of assets belonging to its Fonds de Reserve pour les Retraites (FRR), the funded portion of its retirement system, to help pay off recurring social benefits costs. No pensioners are consulted.
April 2012 – Argentina announces that its Economy Ministry has taken an emergency loan from the national pension fund in the amount of $4.3 billion. No pensioners were consulted.
June 2012 – Treasury Secretary Timothy Geithner unilaterally appropriates $45 billion from US federal pension funds to help tide over US deficits for the remainder of fiscal year 2011.
January 2013 – Treasury Secretary Geithner again announces that the government has begun borrowing from the federal employees pension fund to keep operating without passing the approaching “fiscal cliff” debt limit. The move effectively creates $156 billion in borrowing authority from federal pension funds.
March 2013 – Open Bank Resolution finance minister, Bill English, is proposing a Cyprus style solution for potential New Zealand bank failures. The reserve bank is in the final stages of establishing a rescue scheme which will put all bank depositors on the hook for bailing out their banks. Depositors will overnight have their savings shaved by the amount needed to keep distressed banks afloat.
Ladies and gentlemen, this trend is JUST getting underway. Bank failures, sovereign bond collapses, and national government bankruptcy are just around the corner. Because of the interconnectedness of world debt markets and derivatives risk, counted in hundreds of trillions of dollars, the risk to traditional investment vehicles looms ever closer. We’re at critical eleventh hour crossroads where savvy investors need to head for “the mattresses” to protect their life savings. We may be biased but we strongly feel that the very surest and safest “mattress plan” in this extremely dangerous financial environment, is to invest in the one vehicle that has survived every crisis in recorded history, precious metals. When all else fails, gold and silver will be there to save you.
To learn more about the rewards of precious metals investing, including how to fund your existing IRA with gold or silver, call Liberty Gold and Silver seven days a week at 888.751.3330. To learn about the most generous referral program in the precious metals industry, please visit the Liberty Gold and Silver Referral Program.
We’re happy to spend as much time as you need to discuss the details with you.
Why is the global economy in so much trouble? How can so many people be so absolutely certain that the world financial system is going to crash? Well, the truth is that when you take a look at the cold, hard numbers it is not difficult to see why the global financial pyramid scheme is destined to fail. In the United States today, there is approximately 56 trillion dollars of total debt in our financial system, but there is only about 9 trillion dollars in our bank accounts. So you could take every single penny out of the banks, multiply it by six, and you still would not have enough money to pay off all of our debts. Overall, there is about 190 trillion dollars of total debt on the planet. But global GDP is only about 70 trillion dollars. And the total notional value of all derivatives around the globe is somewhere between 600 trillion and 1500 trillion dollars. So we have a gigantic problem on our hands. The global financial system is a very shaky house of cards that has been constructed on a foundation of debt, leverage and incredibly risky derivatives. We are living in the greatest financial bubble in world history, and it isn’t going to take much to topple the entire thing. And when it falls, it is going to be the largest financial disaster in the history of the planet.
The global financial system is more interconnected today than ever before, and a crisis at one major bank or in one area of the world can spread at lightning speed. As I wrote about yesterday, the entire European banking system is leveraged 26 to 1 at this point. A decline in asset values of just 4 percent would totally wipe out the equity of many of those banks, and once a financial panic begins we could potentially see major financial institutions start to go down like dominoes.
We got a small taste of what that is like back in 2008, and it is inevitable that it will happen again.
Anyone that would tell you that the current global financial system is sustainable does not know what they are talking about. Just look at the numbers that I have posted below.
The following is the global financial pyramid scheme by the numbers…
-$9,283,000,000,000 - The total amount of all bank deposits in the United States. The FDIC has just 25 billion dollars in the deposit insurance fund that is supposed to “guarantee” those deposits. In other words, the ratio of total bank deposits to insurance fund money is more than 371 to 1.
-$10,012,800,000,000 - The total amount of mortgage debt in the United States. As you can see, you could take every penny out of every bank account in America and it still would not cover it.
-$10,409,500,000,000 - The M2 money supply in the United States. This is probably the most commonly used measure of the total amount of money in the U.S. economy.
-$15,094,000,000,000 - U.S. GDP. It is a measure of all economic activity in the United States for a single year.
-$16,749,269,587,407.53 - The size of the U.S. national debt. It has grown by more than 10 trillion dollars over the past ten years.
-$32,000,000,000,000 - The total amount of money that the global elite have stashed in offshore banks (that we know about).
-$50,230,844,000,000 - The total amount of government debt in the world.
-$56,280,790,000,000 - The total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system.
-$61,000,000,000,000 - The combined total assets of the 50 largest banks in the world.
-$70,000,000,000,000 - The approximate size of total world GDP.
-$190,000,000,000,000 - The approximate size of the total amount of debt in the entire world. It has nearly doubled in size over the past decade.
-$212,525,587,000,000 - According to the U.S. government, this is the notional value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
-$600,000,000,000,000 to $1,500,000,000,000,000 - The estimates of the total notional value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
Are you starting to get the picture?
Every single day, the total amount of debt will continue to grow faster than the total amount of money until the day that this bubble bursts.
What we witnessed back in 2008 was just a little “hiccup” in the system. It caused the worst economic downturn since the Great Depression, but global financial authorities were able to get things stabilized.
Next time it won’t be so easy.
The next wave of the economic collapse is quickly approaching. A full-blown economic depression has already started in southern Europe. Unemployment is at record highs and economic activity is contracting rapidly.
The major offshore banking centers in Cyprus are on the verge of collapsing. It was just announced that they will now be closed until Tuesday, but nobody really knows for sure when they will be allowed to reopen. And there is already talk that when they do reopen that there will be strict limits on how much money people can take out.
And now the IMF is warning that the three biggest banks in Slovenia are failing and that a billion euros will be needed to bail them out.
The dominoes are starting to tumble, and the United States won’t be immune. In fact, the greatest financial problems that the United States has ever seen are on the horizon.
But you can just have faith that Ben Bernanke, Barack Obama and the U.S. Congress know exactly what they are doing and will be able to save us from the coming financial collapse if you want.
The mainstream media will provide you with all of the positive economic news that you could possibly want. They are giddy about the fact that the Dow keeps hitting all-time highs and they would have us all believe that we are in the midst of a robust economic recovery. You can listen to them if you want to.
But when you are tempted to believe that everything is going to be “okay” somehow, just go back and look at the numbers there were posted above one more time.
There is no way that the global financial pyramid scheme is going to be able to hold up for too much longer. At some point it is going to totally collapse. When that happens, will you be ready?
Source: The Economic Collapse
Excerpt from The Master Plan
“My father and his colleague’s findings were staggering. At first, I thought he might have been mistaken, but as I studied the facts, I noticed a subtle, methodical agenda weaving its way throughout the whole affair. After thoroughly examining all of the documents, I was forced to agree with his conclusions.
“Father’s reports contained photocopies of documents and maps that came out of the United Nations conferences and the Convention on Biological Diversity. It was categorized under a project entitled Agenda 21 and the subsection, Sustainable Development. Harsh policies restricting people’s rights and liberties were ratified through international agreements and treaties. Every member of the United Nations was bond by this agreement.
“What was happening in Africa was a mirror of what was taking place all over the world, especially America. After connecting all the dots, there was an obvious plan to reduce the world’s population, seize control of large landmasses, and confine humans to designated island areas.
“America is a nation with many states, yet united under one national head. Africa is a continent, with many independent, separate countries, and according to the United Nations report, the goal regarding Africa and the Middle East was to exploit their vast resources.
“Representatives from the International Monetary Fund (IMF) and the World Bank were sent to the heads of countries rich in natural resources. The process involved an offer to transform the country into the modern, 21st century. Repayment for these transformation loans were in the form of natural resources and taxable labor. If a country’s leader rejected the bank’s offer of eternal indebtedness, the CIA, MI6 or a like agency was used to overthrow the leader by whatever means necessary. If those attempts failed, NATO Peacekeeping Forces were deployed to defend the hired rebels and depose the nation’s leader.
“The international media always supported the rebel forces under the banner of democracy. So out of ignorance the public also supported the rebel forces and their supposed battle for freedom. The resisting leader was dethroned and replaced with a tyrannical shill for the international bankers whose sole intent was to exploit the country and the people. This was happening all over Africa and the Middle East.
“At this time, my father and I noticed government-instituted, United Nations family planning centers cropping up in surrounding towns. These family planners held town hall meetings and presented videos that strongly advocated vaccines, contraceptives, sterilization and abortions. These videos were mere propaganda pieces to convince the people to be a participant in the family planners’ program of infanticide. As an inducement, they offered medical supplies and food rations.”
“Why are you calling it infanticide?” I interrupted. “At least one organization was making a sincere effort to address the people’s needs.”
“Killing a three week old infant in the womb or a three year old child is infanticide, Lance.” she retorted. “They were teaching the women that a three years old child was no different than an unborn fetus, since both were unable to make knowledgeable decisions.
“With no questions asked, a mother could deliver her three years old child, or younger, to the United Nations Planners for termination,” Monique responded with disdain.
“Africans have always believed in large families, possessed strong family ties and heterosexuality relationships. Under normal conditions, Africans would never agree to be sterilized, and they certainly would not hand over their children to be murdered. With Africa a warzone, the family planners successfully targeted the hardest hit areas.”
“I see your point. Couldn’t your father or his associates intervene?” I probed.
“They tried,” she answered. “This was all part of the United Nations Agenda 21, population control program. But the African project, which was pure eugenics, was special; it was being assisted with funds from billion dollar tax-exempt foundations whose founders controlled large companies and held the purse strings of governments around the world. The sole objective was to reduce the world’s population. According to their own figures, they wanted to eliminate ninety percent of the population, with Africa and the Middle East their number one targets.”
“What was the world’s population at that time?” I asked.
“Oh, roughly eight and a half billion people,” she quipped.
“So we’re talking about five hundred million people left on the planet when they get through with us,” I countered.
“Yes, approximately five hundred million; but we found some foundations demanding it be reduced to one hundred million. With that small number of people on earth, they claimed, they would be able to procreate as they pleased, they would have the freedom to travel anywhere on the globe un-accosted by commoners, and the whole world would be their playground.”
“That is an awful lot of people to kill, and then bury,” I exclaimed.
“The documents my father discovered provided detailed accounts that every war within the past one hundred years was orchestrated to bankrupt the nations and reduce the population. And yet, war had not significantly decreased the population to their satisfaction.
“The United Nations World Health Organization (WHO) provided planning centers with clinics that administered vaccinations. These centers had a list of everyone’s name living in that vicinity. These centers were guarded by the military who administered server punishment to anyone who refused to be vaccinated. We soon discovered that most of the vaccines were laced with various diseases.
“Father began to advance his research, and his findings revealed documented proof that HIV, along with a number of other viruses had been engineered. Under the cloak of germ warfare, Congress funded a project to find a virus capable of deteriorating the human immune system. During the developmental stages, they grafted an assortment of animal viruses that had been mutated in monkeys and chimpanzees. These viruses were eventually cultured with human cells and ultimately injected into human genes. The final result was a number of very powerful, independent viruses commingled into one. What makes AIDS extremely difficult to eradicate, is the number of individual viruses constituting different strains. Father was also able to locate a patent for the cure of AIDS.
“The strain of AIDS introduced into Africa was far more infectious than strains found elsewhere. It was also discovered that the Negroid gene had a predilection to HIV. In some areas of the African continent, seventy-five percent of the people had tested HIV positive, and in other areas, as high as one hundred percent.
“We also learned that most incidents of HIV positive were not being transmitted through homosexual relationships or promiscuous sexual encounters as disseminated by the press. But instead, HIV, as well as other viruses and diseases were being transmitted through the forced immunization program. This was discovered when seven year old children were testing positive for HIV, yet neither parent was found to be HIV positive.
“Included in this genocide called Societal Cleansing was the culling of the genetically inferior, such as morons, misfits, the maladjusted and the aged. Senior citizens were terminated at fifty years old to prevent a financial and psychological burden on society. This also prevented senior citizen’s opposing and archaic views from being passed on to younger generations.
“The Environmental Protection Agency (EPA), was the agency chosen to administer this societal cleansing. This involved restructuring the cities of the world, protecting the ecology against the destructive forces of modern society and the implementation of social equity and the restructuring of life itself. This all fell under the UN Agenda 21’s Sustainable Development program.
“Broad and unbridled authority was given to the EPA to prevent humans from draining the earth’s limited resources. This monstrous plan included every facet of life. Man was considered the most dangerous, destructive, selfish and unethical creature on Mother Earth.
“The law enforcement agency to protect Mother Earth was called the Green Police; they had inclusive authorization to confiscate personal belongings, shut down businesses or operations, and kill anyone that interfered with their agenda.
“The EPA’s Agenda 21 manual, stated:
Global warming, the depletion of fuel, water, food, and the like, is the direct cause of human intervention. The real enemy is humanity itself. The damage people cause the planet is a function of demographics equal to the degree of development. The ecological crisis was really the population crisis. Cut the population by ninety-plus percent and you stop injuring the earth by an equal amount.”
With tongue-in-cheek, I interrupted, “I wonder if any of the UN leaders are willing to sacrifice their lives, or the lives of their children or grandchildren in order to save the earth from the blight of human existence?”
“Well,” she continued, “the presupposition is that Mother Earth has the capacity to regulate or heal herself under natural conditions. But the human species has developed technology to overwhelm the earth’s capacity to heal herself, and she is therefore doomed to destruction unless humans are stopped from their technological assault.
“They depict humans as zombies that must be exterminated to stop their destructive behavior to the earth. The association between human beings and zombies is particularly directed against those that reject Globalism and the Global Warming restructuring programs of the earth, its galactic surroundings, and all life forms are the controlling factors behind this thrust to reduce the population. Those that don’t believe in these programs are portrayed as none-human zombies that exist to consume all they can to satisfy only themselves. But the real reason for this push for population reduction is so that they can have the world as their playground.
“This environmental hocus-pocus merely provided justification for their claim that the population of the world was increasing too quickly, and in order to stabilize the population, at least 350,000 people a day had to be eliminated. Although I agree that the world is over populated, I do not believe killing 350,000 people a day is the solution to the problem.”
I quickly interrupted, “Monique, It’s a fact that the entire population of the world can live comfortably in the State of Texas on an acre per person. So, killing 350,000 people under the pretext of over population is insanity. They’ve purposely herded the masses into the major cities to create the illusion that we’re running out of space and resources, but we’re not. If they’re so bent on reducing the population, I suggest they start with themselves!”
“Most of their efforts,” she continued without comment, “were directed toward the United States. They attributed much of the earth’s devastation to Americans’ standard of living, such as industrialization and their usage of air and earth contaminating products. They claimed that one American burdens the earth more than twenty people from an undeveloped country. I thought it was strange that China was never mentioned, although they are the largest polluters on the planet; it might be due to the fact that they introduced the one child policy.
“It was through the land management policies under Agenda 21 that they confiscated the best areas of the countries and designated them under Biosphere Reserves and World Heritage Sites. All major ecosystems in a region were reserved. To protect these ecosystems, buffer zones were established around them. They defined a buffer zone as an area surrounding any property with restrictions on its use. During the mid-1990s, the United States president donated most of America’s National parks and lands under the Bureau of Land Management, National Rivers and Streams to the United Nations for protection.
“Likewise, the continent of Africa was charted and then divided into major ecosystems for reserve. These conterminous States were encompassed in core reserves with inner corridor zones, which created a wilderness network that dominated a region with human habitations being small islands. They designated a half of the continent as wilderness areas with another fourth as buffer zones. These stringent policies grossly restricted human activity. People lived on small islands communities, they could only travel on the thoroughfares connecting the island communities, and they could never trespass into the buffer zones since they protected the delicate ecosystems. This was being done under a religious hypothesis of protecting Mother Earth against the destructive actions of mankind.”
Purchase The Master Plan now.
© 2013 Al Duncan – All Rights Reserved
Source: News With Views
Will this be the last normal holiday season that Americans ever experience? To many Americans, such a notion would be absolutely inconceivable. After all, in the affluent areas of the country restaurants and malls are absolutely packed. Beautiful holiday decorations are seemingly everywhere this time of the year and children all over the United States are breathlessly awaiting the arrival of Santa Claus. Even though poverty is exploding to unprecedented levels, most families will still have mountains of presents under their Christmas trees. Of course a whole lot of those presents were purchased with credit cards, but people don’t like to talk about that. It kind of spoils the illusion. Sadly, the truth is that our entire economy is a giant illusion. The extreme prosperity that we have been enjoying has been fueled by debt, and any future prosperity that we will experience is completely dependent on our ability to go into even more debt. The total amount of debt in our economy is almost 10 times larger than it was just 30 years ago, but we don’t like to think about that too much. Most Americans are way too busy living the good life to be bothered with “doom and gloom”. Well, get ready to say goodbye to normal. As history has shown us, no financial bubble lasts forever, and time is rapidly running out for us.
You know that the hour is late when even mainstream news sources start publishing articles with titles such as this: “Will 2013 Mark the Beginning of American Decline?”
That article appeared on Bloomberg.com the other day, and it was written by Simon Johnson, a former chief economist at the International Monetary Fund. He is convinced that a day of reckoning is coming for U.S. government finances, and he seems resigned to the fact that we will not be ready when that day arrives…
“Sooner or later, it will be America’s turn to fall out of favor with investors and to see its own interest rates rise. It is hard to know when that day will come, or precisely what pressures the country will face.
Let me only venture one forecast: We will not be ready.”
Other analysts are far more pessimistic. For example, the following is what Gerald Celente said about the “bond bubble” during a recent interview with King World News…
Eric King: “Gerald, I wanted to take a look at this upcoming issue you have coming out. (In here it says,) ‘Bonds Away! The bond bomb is ready to explode … threatening to make the real estate and dot-com bubbles, and even the Great Recession, look like market corrections.’ Can you talk about that?”
Celente: “Yes. This piece is being penned by Dr. Paul Craig Roberts, the former Assistant Treasury Secretary under Ronald Reagan. And he is convinced that the bond bubble is about to burst. This cannot continue to go on the way it is. Everyone knows that the whole game is rigged, and so is this….”
“The whole game is rigged. It’s ready to go down, and Dr. Paul Craig Roberts believes it’s ‘Bonds Away’ in 2013 as the bond bubble explodes and brings about a financial disaster even worse than the Great Depression.”
Eric King: “He’s saying here it’s a road to financial collapse that we are going to head down when this thing bursts.”
Celente: “It is. Because the whole world is being propped up by these phony bonds and it’s going to collapse. It has to happen. Interest rates are going to start going up, and when they do the bond bubble explodes. You cannot keep interest rates at zero for this amount of time and expect anything other than disaster to follow.”
For much more on all this, you can listen to another excellent interview with Gerald Celente right here.
Our politicians just assume that we will be able to borrow trillions upon trillions of dollars far into the future at super low interest rates, but that is a very dangerous assumption.
As I noted the other day, the average rate of interest on U.S. government debt was 2.534 percent at the end of November. If that number just rose to where it was about a decade earlier we would be in a massive amount of trouble.
Back in the year 2000, the average rate of interest on U.S. government debt was 6.638 percent. If we were at that level today, the U.S. government would be paying out more than a trillion dollars a year just in interest on the national debt.
But our politicians just keep borrowing and spending as if we could do this forever.
From the time that George Washington was inaugurated (1789) to the time that George W. Bush was inaugurated (2001), the U.S. government accumulated about 5.7 trillion dollars of debt.
During the first four years of the Obama administration, the U.S. government accumulated about 5.7 trillion dollars of debt.
How can anyone support this kind of insanity?
You can see an excellent video demonstrating the vastness of our national debt right here. In the end, all of this debt will absolutely destroy the U.S. dollar, our economic system and the bright futures that our children and our grandchildren were supposed to have.
As if all of that was not enough to be concerned about, there is also the threat that Wall Street could implode at any time. Most Americans have no idea that Wall Street has been transformed into the largest casino in the history of the world. The “too big to fail” banks are the ringleaders, and the derivatives bubble hangs over our financial system like a “sword of Damocles” that could fall at virtually any moment.
Everything will remain fine as long as the spiral of derivatives that our bankers have constructed remains perfectly balanced. But if something happens and it becomes unbalanced and starts to collapse, the consequences could be unlike anything we have ever seen before.
A recent Zero Hedge article entitled “1000x Systemic Leverage: $600 Trillion In Gross Derivatives ‘Backed’ By $600 Billion In Collateral” detailed how there is barely any collateral backing up the hundreds of trillions of dollars of derivatives that are out there…
But a bigger question is what is the actual collateral backing this gargantuan market which is about 10 times greater than the world’s combined GDP, because as the “derivative” name implies all this exposure is backed on some dedicated, real assets, somewhere. Luckily, the IMF recently released a discussion note titled “Shadow Banking: Economics and Policy” where quietly hidden in one of the appendices it answers precisely this critical question. The bottom line: $600 trillion in gross notional derivatives backed by a tiny $600 billion in real assets: a whopping 0.1% margin requirement! Surely nothing can possibly go wrong with this amount of unprecedented 1000x systemic leverage.
Our entire economy has become a giant pyramid of debt, risk and leverage. At some point there is going to be a giant crash. When that happens, people are going to become very desperate.
When people become very desperate, they often accept “solutions” that they were not willing to consider previously.
We need to learn some lessons from history. This is exactly the kind of thing that happened back in the 1930s.
For example, an elderly woman named Kitty Werthmann is telling audiences what life was like in Austria back in the late 1930s…
“In 1938, Austria was in deep Depression. Nearly one-third of our workforce was unemployed. We had 25 percent inflation and 25 percent bank loan interest rates.”
“Farmers and business people were declaring bankruptcy daily. Young people were going from house to house begging for food. Not that they didn’t want to work; there simply weren’t any jobs.”
The Austrian people were really hurting and they were desperate for answers. When Hitler came to them with “solutions”, they were ready to embrace him with open arms…
“We looked to our neighbor on the north, Germany, where Hitler had been in power since 1933.” she recalls. “We had been told that they didn’t have unemployment or crime, and they had a high standard of living.”
“Nothing was ever said about persecution of any group – Jewish or otherwise. We were led to believe that everyone in Germany was happy. We wanted the same way of life in Austria. We were promised that a vote for Hitler would mean the end of unemployment and help for the family. Hitler also said that businesses would be assisted, and farmers would get their farms back.”"Ninety-eight percent of the population voted to annex Austria to Germany and have Hitler for our ruler.”
“We were overjoyed,” remembers Kitty, “and for three days we danced in the streets and had candlelight parades. The new government opened up big field kitchens and everyone was fed.”
Sadly, America is already starting to go down the same path in many ways. If you doubt this, you can read the rest of her account right here.
Right now, things are still relatively good in America. Yes, there are a whole host of economic numbers that look really bad, but what we are experiencing right now is nothing compared to the horrific economic pain that is coming.
When our economy finally crashes, nobody is going to be able to press a button and restore things to how they were previously. We will be told that we have to “adjust” and consider “new solutions” to our “new challenges”. Someday we will look back on the good life that we were enjoying in 2010, 2011 and 2012 and wish that we could go back to those days.
So enjoy the relative peacefulness and prosperity of these times while you still can. A horrific economic collapse is on the way, and once it strikes none of our lives will ever be the same.
Source: The Economic Collapse
Let no man or woman dare speak of a shadow government. The crony corruptocrats that make up the ruling elites of the world must maintain the illusion, that elected governments are based upon willful consent and have the legitimate authority to establish rules of conduct that their citizen are obligated to obey. For those regimes that maintain their grip of power by undemocratic means, the apologists for the international community give a wide berth of acceptance in order to maintain the appearance of individual national sovereignty.
In the essay, There Is No Conspiracy – Only Official Policy provides a study in power politics when a banana republic dares defy the moneychangers.
“The lesson for world leaders is you don’t cross the masters of power. But for Americans it is that a world run by the IMF never benefits us, the people. The enactment of the FTAA is just one more element in the grand scheme of global rule. There is no need to dapple in extraordinary theories; it is all in the open for everyone to see. The policy is clear – the nations of the world are mere colonies to the interests of the ruling elites. Citizens of countries and their elected leaders are mere subjects of the international community. Not exactly the revered Republic that we all owe allegiance, is it?”
The pattern of retribution against any tin horn leaders that refuse to succumb to the boot of the World Bank or the IMF is in plain sight. Just ask the mutilated and deceased Muhammad al-Gaddafi for testimony of the enforcement treatment one can expect for opposing the world financial plutocracy. While the imperium empire of drone warfare, targets governments that oppose the global hegemony, the behind the screens discord among varied vying factions often goes unnoticed.
The Constitution Society sees the nature of The Shadow Government differently from most popular interpretations of the power elite.
Some of the best indications that the Shadow Government is not centered in the financial sector are the things it has to do to finance itself. Shadow Government is expensive. We can identify the main sources of its revenue:
(1) Black budgets. This is the core of its operations, but is not enough to secure its control over the country and the world.
(2) Drug trade. It has seized control of the major part of the illegal traffic in addictive substances, in part by using the organs of law enforcement to eliminate competition, and by gaining control of the money and the ways it gets re-introduced into the economy.
(3) Raiding financial institutions. This is what was done with the S&Ls, and is being done, more slowly, with the banks. It involves several aspects: diversion of the funds, seizure of smaller institutions by a few large ones under Shadow Government control, with the seizure financed by the taxpayers, and acquisition under distressed prices of the assets of those institutions, many of which are well-positioned business enterprises that give the Shadow Government both control of the key enterprises in most business sectors and sources of revenue. The Savings & Loan raid was used to finance a major expansion of the Shadow Government. However, it is not a method that can be repeated.
(4) Public authorities. These are quasi-governmental enterprises that control substantial assets, often taxpayer-subsidized, without effective accountability. They include housing, port, energy, water, transportation, and educational authorities. To this might also be added various utilities, and both public and publicly-regulated private monopolies, like local telephone and cable companies. They are also a major source of government contracts.
(5) Government contracts. Major source of diverted funds, but must often be shared with others involved.
(6) Arms trade. Another major source of funds, both direct and diverted. But requires payoffs to local officials.
What this viewpoint ignores is that the tactics of subversive operations frequently demand undercover execution and plausible deniability. The methods of covert operations conducted by black bag operatives avoid the question; who really controls the intelligence agencies? It is a fatal error to reject the prevalent role of the money center institutions and central banks in the unified network of financial control and global integration.
A more perceptive breakdown by Richard Boylan Ph.D. offers a structural analysis of the secret “shadow” government.
In the Shadow Government five branches may be identified. These branches are: the Executive Branch, the Intelligence Branch, the War Department, the Weapons Industry Branch, and the Financial Department.
An analysis of the overall purposes of these five branches suggests that the overall purpose of the Shadow Government is to exercise covert control by:
1. Collecting comprehensive institutional and personal information
2. By establishing national and international policy independently of the established Government
3. By developing high-tech arms and equipment, and, with these, establishing small, specialized, highly mobile, elite military units to effect these covert policies, when need arises, without having to rely on the official (and “unreliable”) Armed Services, (whose subservience to the Shadow Government is reasonably suspect)
4. By developing an armed capability to repel any threat to the status quo, (including the uncertain ontological, social, and economic impacts of any revelation of the reality of UFO and extraterrestrial presence) through the development of a Star Wars/BMDO ground and space-based surveillance and SDI weapons network
5. By denying information compromising to the Shadow Government from all those outside “need-to-know” policy-making levels
6. By exercising control on the money supply, availability of credit, and the worth of money, through policy decisions made outside of the official Government
The essential political planetary threat that faces humanity is rooted in the globalist drive to accelerate their NWO plans for a neo-colonial feudal hierarchy. The New World Order Feudal Enslavement System outlines the plot. However, the elements that comprise the surreptitious functions and assignments of shadow government missions need to maintain a clandestine secrecy to be effective. Stealth practices often foster perpetual public ignorance.
Contrast this with maybe the best example of the most visible globalist institution that is used by the shadow elites as their private administration tool for worldwide compliance. The John Birch video U.N. and the United States | John F. McManuspresents the argument that Americanism is incompatible with the international community of collectivists that the United Nations is based upon.
The interminable public feuding in General Assembly sessions are sheer spectacle for the uninformed. The real dirty work is done behind the scenes through coerced implementation of programs like Agenda 21.The best way to come out of the shadows is to strip back the curtain. Effectiveness dictates that the banksters and corporatists use the dark art of intrigue and subterfuge to manipulate the systems of governance, which they put in place, to serve their own interests.
The destruction of the unique American experiment falls upon the treason of the ruling class. Human Depravity, James Madison, and The Founding Fathers explains the nature of the existential internal threat that destroyed the essence of the old Republic. Madison wrote:
“If we were all like angels, blameless and freely able to exercise perfect control, we would not need rules or regulations. Why, then, do we have so many laws and statutes? Because of man’s wickedness, for he is constantly overflowing with evil; this is why a remedy is required.”
When the shadow government usurps the stated original limited authorities and separations of powers, the citizens of the country are relegated to a menu entrée on the feasting table of the power elites. The globalism agenda is the objective of the shadow government. Participates need not be spooks or machinates. Those who influence the operations of the sub-rosa establishment may wear the garb of Illuminati or use the signals of secret societies, but most are pure button down internationalists.
The populace is viewed as useless eaters to the elites, who labor to drive a wedge between government and the ordinary man. The privileged oligarchs see themselves as the ennobled in the entitlement enslavement society of their creation. Keeping the masses dependent until the ultimate elimination of dissenters is the objective.
The specter of the shadow government has always been part of the inner conflict for national integrity. The difference at this time is that it is all pervasive. The United States has become a global empire designed to impose an internationalist monitory yoke around the neck of subservient serfs.
The money machine of shadow banking practiced by the Bank for International Settlements on Big Banks is a prime component of the definitive ruling elite comradeship. Governments are no longer sovereign entities. They function as subsidiaries of the global satanic New World Order conglomerate. The crony corruptocrats bury deep their crimes and give new meaning to being above the law. Without a widespread public awakening, the forces of wickedness will triumph.
Less we forget . . . “For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.” Ephesians 6:12
As chaos again envelopes Egypt, the revolution is evolving in new directions, along contradictory and confusing channels. It’s tempting to immediately support the “opposition” to the Muslim Brotherhood’s apparent “power grab,” but the situation in Egypt is more complex. The recent events in Egypt are not simply signs of a healthy revolution, they also include immediate dangers.
Making sense out of a constantly changing, frantic revolution involving millions of people involves unpeeling layers of outer turmoil until the inner motives of different interest groups are exposed. At bottom, the groups vying for power have economic interests at stake; asking “who benefits” is still the best way to navigate a revolution.
For example, in Egypt the freshly-formed “opposition” — to the democratically elected Muslim Brotherhood government — is a motley crew. After the President announced “emergency powers,” an opposition coalition formed, calling itself the “National Salvation Front,” consisting of different groups united with the ultimate aim to remove President Morsi from power (some members of the coalition revealed their actual motives when the President rescinded the emergency powers decree, but they retained their demand for him to immediately step down). Included in this coalition are sincere revolutionary youth, wealthy 1%’ers and western-backed bureaucrats, as well as “socialists”, unions, and even those with deep connections to the former Mubarak dictatorship like Amr Moussa, a former foreign minister under Mubarak.
The only thing that unites this group is their antagonism to the Muslim Brotherhood. But different groups within the opposition have different reasons for hating the Muslim Brotherhood. The revolutionary youth and socialists want a real democracy, both social and political, and correctly view a religious group in power as being inherently anti-democratic, since it automatically minimizes the rights of religious minorities, like the religious states of Saudi Arabia and Israel do.
However, others in the coalition are anti-Muslim Brotherhood for less virtuous reasons. Those who benefited from the former dictatorship simply want to be back in power where they controlled the government, using it as a giant money trough of parasitic corruption.
The other liberal and affluent groups in the opposition — those not connected to the former regime — aspire towards the same government money trough: they were excluded from state power by the Mubarak regime and now the Muslim Brotherhood dominates the state apparatus and all its perks. This exclusion from power is the real basis for many of these groups crying about democracy; they want a democracy with themselves in power.
In Egypt, the economic interests of different groups are consciously hidden behind religion and abstract notions of democracy. The very wealthy and corporations have no problem acting extra religious or especially democratic if it pushes their interests forward.
But to truly wield power during a revolution implies that you express the interests of the millions who crushed the Mubarak dictatorship. And although it’s true that the new opposition has led massive demonstrations in the streets, it’s also true that the Muslim Brotherhood has led much bigger demonstrations, a fact under-reported in the media.
Another ignored fact is that most people believe — including Egyptian opposition groups — that the Muslim Brotherhood will win the upcoming referendum vote, which is why the opposition is trying to prevent the referendum from happening by causing havoc in the streets, instead of waiting for a more democratic vote.
President Morsi has accused the organizers of these protests to be scheming towards a coup, and there’s likely more than a little truth in this (this was in part the reason he gave for granting himself emergency powers).
It’s certain that the former Mubarak officials in the opposition are thinking along these lines. Some have accused the military and police of provoking violence and intentionally not intervening in protests that killed several people and injured hundreds outside the presidential palace. Similar non-interventions during mob violence happened at a massacre at a soccer game where 75 died, and with attacks against Christian churches. The military are regulars at using such social crises to reclaim their powers via martial law and dictatorship. This threat is real and urgent in Egypt.
And although the Muslim Brotherhood has bent backwards trying to please the military, this can change quickly; the military has a weak allegiance to the Brotherhood and a long history of conflict. It would rather have military-associated politicians in power.
This isn’t to suggest that the Muslim Brotherhood is politically supportable. They’re not. They have been far too friendly to the military and other criminals associated with the former regime. Nor have they done anything to address the economic and social issues that were the real fuel of the revolution. Millions of people participated in the revolution because they wanted to improve their lives. This hasn’t happened. And things are about to get worse under the Muslim Brotherhood government.
For example, the Brotherhood government recently signed off on a loan from the U.S.-dominated International Monetary Fund (IMF), which, as history has repeatedly shown, proves disastrous for the working and poor people of the debtor country by forcing economic policies that favor rich investors at everyone else’s expense.
Moreover, the IMF usually demands privatization of public services that are directed toward helping the poor. One example of a common IMF attack on the public sector is the elimination of government fuel subsides, which lower the price of gasoline and oil used for cooking. This IMF policy has created mini-Arab springs in Jordan and Nigeria; and now Egypt’s IMF loan includes the same attached string. A report on Reuters explains:
“If the [Egyptian] government does begin cutting the [fuel] subsidy and publishes a timetable for its eventual removal — probably a minimum IMF demand — then we would expect
funds from the IMF and other donor organizations to provide Egypt with breathing space [to fund its government].”
At the same time, the IMF loan also helped insure that Egypt’s Mubarak-era miniscule taxes for the wealthy and corporations stay where they are, at 25 percent.
Thus, in one stroke of the pen — signing the IMF debt deal — the Muslim Brotherhood proved in practice that it will continue the economic policies of the wealthy-dominated Mubarak dictatorship.
This economic policy of free-market capitalism of the IMF is agreed to by all of the large anti-Brotherhood “opposition” groups, with the exception of the revolutionary youth and socialist organizations. This is more proof that for many of these groups, the battle for “democracy” is a shallow one, a thin shell of political democracy that doesn’t penetrate into the larger economic sphere. The best expression of this razor-thin democracy is the leader of the opposition coalition, Mohamed ElBaradei, who said that:
“The demands of the revolution were for social justice, freedom and dignity.”
Of course “social justice” is vague enough to be misinterpreted to not include jobs, good wages, adequate social services — the core economic demands of the revolution.
And although the economic voice of the majority of Egyptians is not currently being expressed by any of the main groups vying for power, the demands of working people will inevitably find their way into the larger struggle for power. Voices expressing these demands are already emerging in various parts of the country, where labor and community issues are coming to the forefront. For example, the Egyptian Federation of Trade Unions recently included in their demands:
- Re-form the Constituent Assembly with at least 50 percent of the members to be workers and peasants
- Guarantee trade union freedoms in the Constitution or the law
- Issue a new labor law guaranteeing workers’ rights
- Speed up the implementation of a law on minimum and maximum wages, and link these to rising prices
- Return of all workers to work who have lost their jobs
It has also been reported the important industrial city of Mahalla — known for its tradition of labor struggles — has declared itself “independent” from the government, and will be run by a “revolutionary council,” although details are still scarce.
Ultimately, the voice of the working Egyptians must be expressed if the revolution is to be pushed forward. However, an urgent question must still be answered immediately: Should the main demand of the opposition — for President Morsi to step down — be supported?
It seems that, at this time, the demand is premature, considering that there has been a recent election that overwhelmingly put the Muslim Brotherhood into power, and that even the opposition admits that the Brotherhood is likely to win its nationwide referendum vote (the large pro-government demonstrations seem to confirm this). The demand thus seems strangely at odds with the current political reality, and thus raises suspicions about some of those demanding it, especially the ex-Mubarak lackeys, who are likely using legitimate popular anger for the purpose of coup-making.
The opposition’s shallow version of democracy cannot be won by ignoring President Morsi’s recently won democratic election. The revolutionary youth in the anti-Brotherhood coalition should strive for an independent path for working people, far away from those associated with the last dictatorship and with those trying to tie Egypt’s economy to the short leash of the U.S. corporate-run IMF.
Among the long list of items bundled by consensus reality merchants under the banner of ‘conspiracy theory’, is a world without cash – where technocrats rule over the populace, and everything and anything is exchanged via plastic and RFID chips.
In this sterile and controlled Orwellian hi-tech society, the idea of cash being passed from hand to hand would be as archaic as the thought of carrying around a rucksack of tally sticks today.
Still, despite the incredible penetration of credit and debit card transactions into economic aggregate, and the boom in internet shopping, few will comfortably admit that a cashless society is nearly upon us. In part, it’s a natural denial by many fueled by the idea of our society is indeed on a collision course with the sort of dystopic impersonal future like that depicted in the 1970′s sci-fi film classic, ‘Logan’s Run’.
Cashless money is here, and growing rapidly.
Over the years, futurists and commentators alike seemed to agree that a cashless society would be a slow creep, and cash would automatically phase itself in simply by virtue of the sheer volume of electronic transactions that would gradually make paper less available and more costly to redeem and exchange. This is still true for the most part. What few counted on, however, was how the final push would take place, and why. Some will be surprised by these new emerging mechanisms, and the political and sinister implications they will ultimately lead to.
What’s the time frame on all this? Difficult to say, but what is certain is that the initial phases are already in motion…
Introduction of Parallel Currencies
There has been a lot made about the ‘cashless society’ in media, but this cannot fully happen until there is a cashless currency.
Every revolution needs a good crisis in order to germinate its seed. The cashless revolution is no different. It should be abundantly clear by now that the global financial meltdown has been engineered at every juncture of its unfolding by the very private central banks who expand and contract the money supply. A dollar or euro collapse will trigger a global economic crisis, which is a prime opportunity to introduce the next phase.
In the summer of 2012, at the height of the European Central Bank (ECB) ritualistic raping of the Greek economy, financial expert Max Keiser, alongside Mexican billionaire Hugo Salinas Price, traveled to Athens to promote the idea of a silver Drachma as a parallel currency to the ever-failing euro. In theory and in practice, this parallel currency was ‘sound money’ for individual Greeks and would allow them to retain some say in their financial destiny, and also allow them to accumulate real wealth. It should have caught on. But this great idea did not go down well with media moguls and technocratic elites loyal to their overlords in the ECB, Wall Street and the City of London. Still, too many people remain unaware of how money is created, entered into circulation and how their private central banks control inflation, and Greece is no different.
Watch this clip from Greek television:
The US dollar is pure fiat, but it does have a theoretical backer. It is an oil-backed currency – and for better of for worse, it’s on its way to losing its long-lived status as the world’s reserve currency. There are signals that China is moving towards a gold-backed currency and has already agreed to buy the majority of its oil supply from Russia off of the US dollar peg. This could mean two things: the US could be forced to fight a war to maintain dollar supremacy, or the dollar will begin to drop as the top dog. This shift will open up a window of opportunity for money masters to insert not only a brand new global currency, but also its universal cashless attributes as well.
Common sense and free market wisdom would expect to see a sound money option replace the current fiat disaster, but as we saw in Greece, a great solution was not taken up and straddled with the dysfunctional euro, that society will continue to pay the cost of that reality.
The euro crisis was a great opportunity to throw out the euro in favour of something that could create wealth, rather than debt. As the fiat currencies continue to slide downhill, globalist are preparing their solution behind closed doors.
Enter the Cashless Currency…
It’s arguable that we approaching the cusp of that US Dollar collapse, and perhaps a Euro implosion on the back end of it. Risks of hyper inflation are very real here, but if you control the money supply might already have a ready-made solution waiting in the wings, you will not be worrying about the rift, only waiting for the chaos to ensue so as to maximise your own booty from the crisis.
Many believed that the global currency would be the SDR unit, akaSpecial Drawing Rights, implemented in 2001 as a supplementary foreign exchange reserve asset maintained by the International Monetary Fund (IMF). SDRs were not considered a full-fledged currency, but rather a claim to currency held by IMF member countries for which they may be exchanged for dollars, euros, yen or other central bankers’ fiat notes.
With the SDR confined to the upper tier of the international money launderette, a new product is still needed to dovetail with designs of a global cashless society.
Among the many worries Ben Bernanke listed in his speech at the New York Economic Club last week was the emergence of Bitcoin. But don’t believe for a second that these digital parallel currencies are not being watched over and even steered by the money masters. Couple this latest trend with done deals by most of the world’s largest mobile networks this month to allow people to pay via a mobile ‘wallet’, and you now have the initial enabler for a new global electronic currency.
These new parallel cashless currencies could very quickly end up in pole position for supremacy when the old fiat notes fade away as a result of the next planned economic dollar and euro crisis.
Both Bitcoin and Ven appear on their surface to be independent parallel digital money systems, but the reality is much different. In April 2011, Ven announced the first commodity trade priced in Ven for gold production between Europe and South America. Both of these so-called ‘digital alternatives’ are being backed and promoted through some of the world’s biggest and most long-standing corporate dynasties, including Rothschild owned Reuters as an example, which should be of interest to any activist who believes that a digitally controlled global currency is a dangerous path to tread down.
The Electronic Deutsche Mark
Much is made of Germany’s prominent financial position within the EU, with a popular talking point being that, “Germany is carrying the majority of the load in ‘bailing out’ countries such as Greece in the south”. If the Euro is ‘heading south’ as many a financial commentator are claiming, then how would a country like Germany – or even the US Federal Reserve for that matter, hedge their bets with an impending currency collapse looming just over the horizon?
Economics professor Miles Kimball from the University of Michigan thinks he knows the answer:
“In short, for a smooth transition, a reintroduced mark needs to be an electronic mark. I recently made the case for the electronic dollar in a previous Quartz column, “E-Money: How paper currency is holding the US recovery back.” The trouble with paper money is that the rate of interest people earn on holding paper money puts a floor on the interest rate they are willing to accept in doing any other lending. For the US, I proposed making the electronic dollar the “unit of account” or economic yardstick for prices and other economic values, and having the Federal Reserve control the exchange rate between electronic dollars and paper dollars to make paper dollars gradually fall in value relative to electronic dollars during periods of time when the Fed wants room to make the interest rate negative.
In the case of Germany, there would be no need to reintroduce a paper mark along with the electronic mark, since the euro itself could continue in its current role as a “medium of exchange” for making purchases in Germany, alongside the electronic mark. A “crawling peg” exchange rate could be used to let the electronic mark gradually go up in value relative to the euro, without causing a huge rush into the mark, since with no paper mark other than the euro itself, interest rates in Germany could be close to zero when measured in euros, which would make them strongly negative in terms of marks.”
A dollar or euro crash could be the perfect storm for the introduction of a major global digital currencies, and this will do nothing but fast-track our entry into the new cashless society.
This past year’s Summer Olympic was a beta testing exercise for a number of new programs. We witnessed troops deployed en mass for the first time to marshal the international sporting event and new facial recognition technology tested to monitor its attendees. One of the chief sponsors of London 2012 Olympic was VISA, used the event as a springboard to launch its new ‘contactless payment’ technology, acclimatising the international public to making routine payments via smartphones. VISA now predicts that this new method will carry 50 per cent of its transaction volume by the year 2020.
Mastercard has also rolled out its own version called Paypass, andBarclaycard has already implemented its own mobile phone payment chip in 2011. It conceivable here, that a bank like Barclays could one day takeover a major mobile service provider in order to streamline the endless profits it could accrue from monopolising cashless payment facilities for its customers. A recent edition of Marketing Week further explains how this is program is being rolled out:
“Barclays launched Pingit this year, a mobile payment service that allows customers to send and receive money with a mobile phone number, which has sparked The Payments Council to work on a similar project. And the three leading mobile operators in the UK – EE, Vodafone and O2 – are working on a joint project under the name Weve, one of the aims of which is to develop standardised technology for ‘digital wallets’ on mobile.
These industry innovations reflect the changing attitude and behaviour by consumers to cashless payments. Barry Clark, account director at Future Foundation, which identified the trend towards a cashless society in its recent report into the changing face of payments, explains that this move towards digital is a “banking nirvana” for brands, since replacing cash with electronic payments takes high costs out of the system.”
These mobile enablers will effectively cover the small services and contractor’s market for the cashless society. In addition, digital payment terminals like iZettle and Square (created by Twitter co-founder Jack Dorsey), have brought in most small traders, including taxi drivers, plumbers etc, and street side retailers – meaning that the barrier for entry into the new cashless society has been effectively dissolved.
The Socialist ‘Oyster’
The darker aspect of a cashless society, is one which few are debating or discussing, but is actually the most pivotal in terms of scial engineering and transforming communities and societies. In London, the electronic touch payment Oyster Cardwas introduced in 2003, initially for public transport, and since that time the card has been co-opted to be used for other functions, as the UK beta tests the idea of an all-in-one cashless lifestyle solution.
Ironically, and alongside biometric chipping now in India, it’s the United States, supposedly the birthplace of modern capitalism, who is beta testing its own socialist technocracy. As the ranks of the poor and unemployed grow and dollar inflation rises in America, more and more people are dependent on traditional ‘Food Stamp’entitlements in order to feed their families. The US has now introduced its own socialist ‘Oyster’ to replace the old Food Stamp program. It’s called the ‘EBT’, which stands for “Electronic Benefit Transfer“, as a means of transferring money from the central government to people living below the poverty line. Advocate Mike Adams for Natural News describes it another way:
“EBT benefits have more than doubled during the Obama administration’s last four years, creating tens of millions of new dependents who now vote based almost entirely on who gives them the most handouts.
The purchase of vitamins is specifically prohibited by the EBT program. This is done as a way to keep EBT recipients sick and diseased while suffering from nutritional deficiencies, which is precisely what the federal government wants.
EBT cards create high-profit handouts to corporations, too: Pharmaceutical companies and the sick-care industry; Big Government which gets re-elected based on entitlement handouts; global banks which earn a percentage off every swipe; and even the processed junk food industry which preys upon nutritional ignorance of the poor.
In fact, for every dollar’s worth of food handed out to EBT recipients under the program, at least 50 cents is driven right into the profit coffers of wealthy corporations.”
Adams has pointed out the endgame here. Where collectivist technocrats are concerned, a global digital currency is not only a means for a centrally controlled economy, but also a centrally controlled society. And as Adams also pointed out, they can even control what you eat.
There’s also the small matter of the Verichip, or ‘class 2′ implantable medical devise, an RFID chip already set to be implemented through Obamacare. It will transmit medical records, bank accounts, keyless entry and much more. The technology could be a $100 Trillion industry over the coming decade.
Bottom line: We’ve got a big problem when the state can – and will cut-off your electronic financial lifeline should you fall foul of the system. No negotiations, no gray areas – and definitely no place for a free individual in this type of globalist system.
Social Networks Gradually Supplanting Real Communities
In 2011 Facebook launched its own virtual currency, which was taken up immediately by the games developer industry. Facebook created it’s own internal digital market overnight. If customers didn’t like it, they had two choices – jump ship, or stay in the biggest market place. That’s a lot of power to wield, and you can wield it if you have the big numbers.
A severe lack of choice in the world of online communities has unwittingly(or not) positioned Facebook to play the roles of not only data collector, but also as banker, retailer, archivist and governor.
As 2012 comes to a close, many people have certainly become, in one way or another, sans border citizens of the Facebook Nation. In the future, one corporation or cartel’s success in capturing a near global monopoly of membership to a particular online platform might give it the ability to dictate a digital economic mandate to both producers and consumer.
The digital data industry now claims in a recent study byfast.MAP, that consumer confidence in sharing personal information has risen. But the reality is that most people do not know which data is being used and to who it is being shared or sold to. Most users are unknowingly trading “access” to networks, as well convenient speed of registration – for data privacy. We do this on a daily basis now.
It’s a question of speculation at this point how deeply the new digital currencies will be integrated into social networking giants like Facebook, or Second Life - where users are already buying virtual property with virtual currency, but few can deny that the potential for consolidation in the early 21st century is already there.
History Will Repeat Itself
Whenever the status quo is seen as a failure, the architects of society will rarely allow the whole show to come to a grinding halt, for fear that new and non-centrally controlled organic systems of organisation will emerge. The ruling establishment will spare no opportunity to tell society this, over and over, making people truly believe that it is in their best interest to adopt whatever alternative is handed down to them. This is why, when faced with a crisis, society will almost always seek to implement a parallel alternatives, rather than rethink the whole system.
In 2008, the public had an opportunity to collapse the predatory banking system that has been trading insolvent and gambling on thin air. But the very same ruling establishment who engineered the crisis to begin with, masterfully presented their own solution as the remedy by establishing the precedent of the state bailing out any gambling losses incurred by the banking community.
In the end society relented, and with help of pro-banking political leadership on both sides of the Atlantic, they adopted the pre-packaged belief that a cluster of bloated and corrupt financial institutions were simply too big to fail. Aside from being a massive redistribution of wealth upwards into the hands of the speculative elite classes, this was merely a test by the establishment to see how far they could go in robbing the public, pushing up inflation, hoovering up real assets, robbing pension funds and enslaving taxpayers to generations of debt the bankers created – all in one swoop.
It has long been the dream of collectivists and technocratic elites to eliminate the semi-unregulated cash economy and black markets in order to maximise taxation and to fully control markets. If the cashless society is ushered in, they will have near complete control over the lives of individual people.
The financial collapse which began in 2007-2008 was merely the opening gambit of the elite criminal class, a mere warm-up for things to come. With the next collapse we may see a centrally controlled global digital currency gaining its final foothold.
The cashless society is already here. The question now is – how far will society allow it to penetrate and completely control each and every aspect of their day to day lives?
Source: Patrick Henningsen | 21stCenturyWire
The last Congo war that ended in 2003 killed 5.4 million people, the worst humanitarian disaster since World War II. The killing was directly enabled by international silence over the issue; the war was ignored and the causes obscured because governments were backing groups involved in the fighting. Now a new Congo war has begun and the silence is, again, deafening.
President Obama seems not to have noticed a new war has broken out in the war-scarred Congo; he appears blind to the refugee crisis and the war crimes committed by the invading M23 militia against the democratically elected government of the Democratic Republic of the Congo (DRC).
But appearances can be deceiving. The U.S. government has their bloody hands all over this conflict, just as they did during the last Congo war when Bill Clinton was President. President Obama’s inaction is a conscious act of encouragement for the invaders, just as Clinton’s was. Instead of Obama denouncing the invasion and the approaching overthrow of a democratically elected government, silence becomes a very powerful action of intentional complicity on the side of the invaders.
Why would Obama do this? The invaders are armed and financed by Rwanda, a “strong ally” and puppet of the United States. The United Nations released a report conclusively proving that the Rwandan government is backing the rebels, but the U.S. government and U.S. media cartoonishly pretend that the issue is debatable.
The last Congo War that killed 5.4 million people was also the result of the U.S.-backed invading armies of Rwanda and Uganda, as explained in the excellently researched book “Africa’s World War,” by French journalist Gerard Prunier.
In fact, many of the same Rwandan war criminals involved in the last Congo War, such as Bosco Ntaganda, are in charge of the M23 militia and wanted for war crimes by the U.N. international criminal court. The current Rwandan president, Paul Kagame, is a “good friend” of the U.S. government and one of the most notorious war criminals on the planet, due to his leading roles in the Rwandan genocide and consequent Congo War.
A group of Congolese and Rwandan activists have been demanding that Kagame be tried for his key role in the Rwandan genocide.
As Prunier’s book explains, the Rwandan genocide was sparked by Kagame’s invasion of Rwanda — from U.S. ally Uganda. After Kagame took power in post-genocide Rwanda, he then informed the U.S. — during a trip to Washington D.C. — that he would be invading the Congo. Prunier quotes Kagame in Africa’s World War:
“I delivered a veiled warning [to the U.S.]: the failure of the international community to take action [against the Congo] would mean that Rwanda would take action… But their [the Clinton Administration’s] response was really no response at all” (pg 68).
In international diplomacy speak, such a lack of response — to a threat of military invasion — acts as a glaring diplomatic green light.
The same blinding green light is now being offered by Obama to the exact same war criminals as they again invade the Congo.
But why again? The Democratic Republic of the Congo’s current President, Joseph Kabila, helped lead the military invasion during the last Congo war. As a good stooge, he delivered Congo’s immense mining and oil wealth to multi-national corporations. But then his puppet strings started to fray.
Kabila later distanced himself from U.S. puppets Rwanda and Uganda, not to mention the U.S. dominated International Monetary Fund (IMF) and World Bank. The IMF, for example, warned Kabila against a strategic infrastructural and development aid package with China, but Kabila shrugged them off. The Economist explains:
“…[The Congo] appears to have gained the upper hand in a row with foreign donors over a mining and infrastructure package worth $9 billion that was agreed a year ago with China. The IMF objected to it, on the ground that it would saddle Congo with a massive new debt, so [the IMF] is delaying forgiveness of most of the $10 billion-plus that Congo already owes.”
This act instantly transformed Kabila from an unreliable friend to an enemy. The U.S. and China have been madly scrambling for Africa’s immense wealth of raw materials, and Kabila’s new alliance with China was too much for the U.S. to bear.
Kabila further inflamed his former allies by demanding that the international corporations exploiting the Congo’s precious metals have their super-profit contracts re-negotiated, so that the country might actually receive some benefit from its riches.
The Democratic Republic of the Congo is home to 80 percent of the world’s cobalt, an extremely precious mineral needed to construct many modern technologies, including weaponry, cell phones, and computers. The DRC is possibly the most mineral/resource rich country in the world — overflowing with everything from diamonds to oil — though its people are among the world’s poorest, due to generations of corporate plunder of its wealth.
Now, a new war is underway and the U.N. is literally sitting on their hands. There are 17,500 U.N. peacekeepers in the DRC, not to mention U.S. Special Forces. The invading M23 militia has 3,000 fighters. What was the U.N.’s response to the invasion? The New York Times reports:
“United Nations officials have said that they did not have the numbers to beat back the rebels and that they were worried about collateral damage, but many Congolese have rendered their own verdict. On Wednesday, rioters in Bunia, north of Goma, ransacked the houses of United Nations’ personnel.”
If Obama and/or the U.N. made one public statement about militarily defending the elected Congolese government against invasion, the M23 militia would have never acted.
Human Rights Watch and other groups have correctly labeled the M23’s commanders as responsible for “ethnic massacres, recruitment of children, mass rape, killings, abductions and torture.”
But at the U.N. the Obama administration has been actively protecting this group. The New York Times continues:
“Some human rights groups say that Susan E. Rice, the American ambassador to the United Nations and a leading contender to be President Obama’s next secretary of state, has been far too soft on Rwanda, which is a close American ally and whose president, Paul Kagame, has known Ms. Rice for years. The activists have accused her of watering down language in a Security Council resolution that would have mentioned Rwanda’s links to the [M23] rebels and say she also tried to block the publication of part of a [U.N.] report that detailed Rwanda’s covert support for the M23.”
It’s likely that the Obama administration will jump into action as soon as his M23 allies complete their military objective of regime change, and re-open the Congo’s mineral wealth to U.S. corporations to profit from. There are currently talks occurring in U.S.-puppet Uganda between the M23 and the Congo government. It is unlikely that these talks will produce much of a result unless Kabila stands down and allows the M23 and its Rwandan backers to take over the country. The M23 knows it’s in an excellent bargaining position, given the silence of the U.N. and the United States government.
If the war drags on, expect more international silence. Expect more massacres and ethnic cleansing too, and expect the still-recovering people of the Congo to be re-tossed into massive refugee camps where they can again expect militia-sponsored killings, rape, starvation, and the various barbarisms that have accompanied this especially brutal war, a brutality that grows most viciously in environments of silence.
After all the hollow and uninspired elections that this country has suffered through over the past several decades, one might think that at some point long ago the American public would have finally struck a plateau of disenfranchisement; that we could sink no further into despondency, that there is a saturation limit to the corruption of our voting process. Unfortunately, there has been no such luck. I have to say that in all honesty I have never seen more people gut jumbled and disgusted with our electoral system than I have in 2012. Sure, there is still a hyper-gullible segment of the populous that continues to play the game, but even those idiots are beginning to admit that the choices offered are dismal at best, catastrophic at worst. The fog of the false Left/Right paradigm is starting to lift, and all that lay in its wake is a hoard of lost wide-eyed flabbergasted followers without a coattail or a talking point to cling to. Sudanese refugees have a better chance of survival than these people do…
Even in the more obvious of fraudulent past elections there was at least an attempt by the establishment to present a pageant of conflicting ideologies (George W. Bush vs. John Kerry comes to mind). There has always been the Democrat who pretends to be anti-war, or the Republican who pretends to be small government, or the Democrat who pretends to defend our right to privacy, and the Republican who pretends to be pro-2nd Amendment. But in 2012, even the theater of rhetoric has disappeared. Both primary party candidates seem to be sharing the same intestinal tract and the same teleprompter, and now, the average American is asking a new set of questions. They do not wonder how these men will change things for the better. Not at all. Instead, they wonder which one will do LESS DAMAGE while in office. This is the terrible reality we have come to understand in our society today. It is a sad awakening, but a necessary one.
As you read this now, the new President of the United States is being “chosen” or has been chosen. Whoever the “winner” happens to be is ultimately irrelevant. They do not count. They are mascots. Middle management cronies running through the motions to distract the masses while enacting the policies of their superiors. They are fry cooks serving greasy overpriced democracy with no real sustenance. What does matter, though, is what comes next. I’m sorry to say that the idea that one man will do less damage than the other is a naïve sentiment. Democrat? Republican? Obama? Romney? The crimes and calamities wrought will be exactly the same. Take a look into my crystal ball and see the future. Here is how the winner will destroy America…
1) He Will Continue The Policy Of Dollar Devaluation
Neither candidate has expressed any interest through the election or even before it to protect the value of our currency, and both candidates have supported steps towards quantitative easing and fiat printing in order to delay an inevitable national debt crisis. Both Romney and Obama have sung the praises of Ben Bernanke (Romney changed his tune just in time for his campaign, but who’s buying that?) and the private Federal Reserve despite the consistent failures of that despotic institution to produce any tangible economic results with their Keynesian methods.
The dollar will see a vast devaluation during the term of this candidate and a loss of world reserve status, leading to stagflation (a combination of the worst elements of deflationary and inflationary crises in the same event). Skyrocketing prices and crumbling unemployment will be the highlights of his presidency, because he will never take measures to reign in or dismantle the primary root cause of the problem; the Federal Reserve itself.
2) He Will Continue Extreme Government Debt Spending
Neither candidate has offered a practical or operable solution to the $16 trillion official national debt problem we now face, let alone the tens of trillions of dollars in entitlement obligations that the Treasury Department never talks about. A nation can only live off food stamps and credit for so long before it implodes like a wet paper sack. And this is exactly what we have become; an entire culture of debt addicts and money hounds searching for our next fix of foreign or central bank cash. The fact is, both Obama and Romney would INCREASE spending while using fiat injections to buttress an ever weakening economy in the name of “stability”. The new president will claim that if spending cuts are initiated, it will send the U.S. financial system into a tailspin and a “return” to recession conditions. This will of course be a lie. We have not left recession/depression conditions since 2008.
3) He Will Support And Expand On Wars In The Middle East
There is no such thing as a mainstream “anti-war candidate” in 2012. Not even a fake one. Obama’s measures of state violence and complete lack of respect for the sovereign internal matters of foreign nations surpass the madness of George Bush Jr. He has even gone so far as to assert that his office has the right to assassinate American citizens without trial, evidence, or due process of the law. Not only has he asserted the right to this power, he has used it! Romney’s position, hilariously, is that Obama has not gone far enough! Either way, the winner in 2012 is going to leap like a vile locust into new countries and unleash a plague of laser guided death. The next president WILL be a war hungry president.
4) He Will Lock Down The Web And Limit Internet Speech
Both Romney and Obama have expressed a desire to establish cybersecurity measures which include vast new governmental authority over the functions and operations of the internet. The ultimate goal? To gain legal precedence for the right to dictate web content, up to and including the ability to label any website a subversive threat to national security or a recruitment tool for “extremists”.
With the establishment spreading completely baseless accusation of cyberthreats coming from every corner of the globe (but mostly from Iran) it would seem that they are conditioning the public for a future encounter with a cyber event, and telling them who to blame when it occurs. The problem is, the most prominent cyber security threats to the internet in the past few years have come not from the Middle East, or Russia, or China, but the U.S. and Israel (Stuxnet anyone?). Keep this in mind when our new president blames the next cyber attack on a convenient political target and then uses the event as an excuse to regulate the web.
5) He Will Erase American Civil Liberties
This president will find a reason, or he will create a reason to diminish Constitutional protections including our right to trial and due process. Both candidates have offered unflinching support for the National Defense Authorization Act and its provisions for indefinite detainment. Neither man has ventured any sincere concerns over the broad nature of the language involved in the labeling of “terrorists” and “extremists”. Literally anyone can now be categorized as an enemy combatant and a threat to national security for almost any reason, and this appears to be the way Obama and Romney like it. That is to say, they both want totalitarian powers, or at the very least, they have made no effort to turn them down.
It is important to note that there has never been a government in history that sought out such powers and did not actually use them. Only a fool would assume his favorite elitist candidate in 2012 will not utilize the extreme authorities now amassed for the executive branch over the past decade.
6) He Will Embrace A Globalist Dynamic And Abandon American Sovereignty
Both Barack Obama and Mitt Romney are surrounded by “advisers” who are also members of the Council On Foreign Relations, an institution which openly calls for the dissolution of American sovereignty on a regular basis and the creation of a centralized global system dominating the financial, social, and political life of every nation in the world. With the economic stability of the U.S. on the verge of oblivion, it is very likely that a historic crisis will ensue during the first term of the next president, and that he will in response suggest a new global system as the solution.
This system has already been created, in part, by the IMF and World Bank in concert with member governments and revolves around the issuance of a new world reserve currency (Special Drawing Rights) as the centerpiece. I can guarantee with absolute certainty that the next president, regardless of who he happens to be, will promote an IMF rescue package coupling the dollar to the SDR and turning over full economic control of America to an international body. He will make it sound rational, reasonable, and even advantageous, but in the end, he will be selling the globalist snakeoil he was conscripted to sell before his election campaign ever started.
In 2012, it will not be about voting. It will not be about “winning”. It will not even be about getting to the next election. It will be about survival. As big a joke as the 2012 elections have become even to the generally unaware, I am not laughing. I do not need to look at the promises of either candidate. I do not need to weigh their half-assed quick fix policies. All I have to do is look at the current downward trend and understand that the president, whoever he may be, will continue it. If anything is to truly change, it will be because we as Americans finally walk away from the game, enacting our own solutions and our own opposition instead of handing over our power to sniveling errand boys wrapped in flags and expensive suits and self-rightousness every four years. 2012 is going to be the beginning of upheaval and renewal, for better or for worse, and it is certain that the guy in the White House into 2013, Republican or Democrat, is going to be a part of the problem, nothing more.
Source: Brandon Smith | Alt-Market
The West’s attempts to destroy the Iranian economy through heightened sanctions—including most imports, oil exports and use of banks for trade operations—is having its affect. According to Johns Hopkins University Professor Steve Hanke, Iran is facing hyperinflation, with a monthly inflation rate of nearly 70% per month and its national currency, the rial, plummeting in value against western currencies. Iran is the latest casualty to be placed on his Hanke-Krus Hyperinflation Index, which includes France (1795), Germany (1922), Chile (1973), Nicaragua (1986), Argentina (1990), Russia (1992), Ecuador (1999) and Zimbabwe (2007), countries which experienced price-level increases of at least 50% per month.
Hanke, relishing his role as the world’s expert on this nightmarish phenomenon, has “played a significant role in stopping more hyperinflations than any living economist, including 10 of the 57 episodes” on his Index. He writes that Iran has three options: spontaneous dollarization (people unloading rials on the blackmarket for dollars, as happened in Zimbabwe), official dollarization (the government withdrawing the currency in favor of dollars, as in Ecuador), or a currency board issuing a new domestic currency backed 100% by—you guessed it—dollars. Hanke insists that the foreign currency doesn’t have to be US dollars. Pitcairn Island, for instance, uses New Zealand dollars.
The inflation doctor admits vaguely that there are “foreign factors”, without a hint of criticism of not only the sanctions, but the active subversion of Iran through everything from support of Iranian terrorists, assassinations of leading scientists, right up to war (the US encouraged Iraq to invade Iran in 1980). He emphasizes “Iran’s complex system of subsidies, capital controls, and multiple exchange rates”, but most of all “massive overprinting of money”, though he complains that “the Central Bank of The Islamic Republic of Iran has not reported any such statistics for some time”. As if a country living through a state of emergency is likely to divulge such sensitive information.
He coolly dismisses consumers’ expectations influencing prices, since “fear surrounding military tensions is nothing new for Iranians”. Indeed, the US has been targeting Iran for destruction ever since it threw off its colonial chains in 1979—a dangerous example for other, especially Muslim countries. It is miraculous that Iran has done so well economically since the revolution, given the unremitting victimization it has experienced. One can only marvel at the stubborn courage it has shown to build an Islamic society in the teeth of opposition by the world empire and even by other Muslim nations allied to the empire.
We indeed may ask why Iran’s inflation rate has jumped so dramatically precisely in recent times. Of course, it is because of the sanctions. And why the sanctions? Is it really fears that Iran will develop a nuclear bomb, despite professions to the contrary and membership in the IAEA? No. Besides Iran’s role in inspiring the current ‘Islamic Reawakening’ in the Middle East, there is another very important reason, one which flies in the face of Hanke’s ‘three options’ for Iran.
Those ‘options’ all amount to one: accept US-dollar dictatorship. Iran has been trying to trade oil in non-US dollar currencies since 2008, when it opened its Oil Bourse. Iraq did this in 2000, and the US reaction was invasion—dollarization at gunpoint. The point of the sanctions today is a last-ditch attempt by the US to force Iran to comply with the US world order, as epitomized by continued acceptance of the US dollar as the world’s reserve currency.
Hanke insists it is not necessary for Iran to use US dollars as its substitute currency, which in any case would be ridiculous under the circumstances. However, the alternative of using, say, New Zealand dollars finesses the reality that all currencies are tied to the US dollar, as the de facto international reserve currency. This has been the case in reality since the 1930s, when the world abandoned the gold standard. Acknolwedging this fact, over 20 countries call their legal tender ‘dollars’.
Whether the government moves quickly to raise the white flag, as in Ecuador, or belatedly, as in Zimbabwe, or insists on printing pretty new paper scrip tied 100% to the US dollar through an exchange board, as did Argentina, merely confirms the obvious. In past cases, such as Chile, Nicaragua and Zimbabwe, the message was: your socialist policies are unacceptable. In Iran’s case, the message is: take dollars for your oil.
Hanke’s monetarist credo—printing money causes inflation—ignores the underlying causes of inflation. As he admits, Iranians have faced war fears for over three decades. The exchange controls and subsidies, “government monopolies, price controls, and Soviet-style economic planning”, which Hanke calls “wrong-headed”, are not the cause of inflation, but a way for the government to keep it under control. However, at a certain point, the “foreign factors” become so egregious that even such measures fail. That is what has happened now, as sanctions have created extreme pain for the average Iranian. Bare shelves and panic in the face of invasion threats means that the currency will devalue, however many rials the government prints.
This is what happened in Germany in 1922, when it was forced to export everything to buy the gold to pay the extortionate reparations. It ended by resorting to Hanke’s currency board and marks issued against gold, but the underlying cause—the extortion practiced by Britain and France—only ended when Hitler took power and canceled the reparations. The devastation cause by “foreign factors” led in that instance to the rise of fascism.
University of Missouri Professor Michael Hudson maintains that “every hyperinflation in history stems from the foreign exchange markets. It stems from governments trying to throw enough of their currency on the market to pay their foreign debts.” Canadian commentator Stephen Gowans calls it “warfare by other means”. Devaluing the enemy’s currency was used as a war tactic by Napoleon against the Russians and by the British against the American colonists.
A consideration of all the countries on Hanke’s Hyperinflation Index can trace similar real causes and real ways to end the underlying problem that led to hyperinflation in each case. Ecuador finally took control of its economy and reduced its foreign debt in defiance of the IMF under President Rafael Correa, and is today the most popular political leader in all of the Americas. That is what created political stability and ended the ever-present threat of inflation there. The same goes for Argentina under President Nestor Kirschner and Russia under President Vladimir Putin.
Hanke is like the doctor telling the patient who was shot that he must have his leg amputated immediately. He refuses to condemn the sanctions as a violation of human rights, targeting the Iranian people without cause. He wants to cut off the patient’s leg to save him, which he can do in a matter of hours. The Iranian government is trying to remove the bullet and use a strict regime of rehabilitation, something that requires patience and grit. There is no magic cure to solve inflation under these circumstances.
The possibility looms that the US will undertake yet another criminal invasion of a Muslim country, recapitulating its war crimes in Afghanistan and Iraq. The real analogy for Iran is wartime. During war, all countries ration scarce goods, and people unite and accept sacrifice in the face of the enemy. This is the only solution for Iran today unless it agrees to join the US-dollar denominated empire as a junior member. Hanke’s patient could well die under the ‘anesthesia’ of US-Israeli bombs, but the Iranian people are proud and will fight for their dignity till their dying breath. The worries about hyperinflation will then pale in comparison to the real “foreign factors”, and the US will face the revenge of history for its criminal actions.
Most countries are too afraid of the US wolf to stand up to it. There are exceptions. China, Russia, India and South Korea have not abandoned ‘the patient’. Egypt is establishing diplomatic and economic relations with Iran in defiance of the US. Hopefully other ‘Arab Spring’ countries will join Iran in pursuing a policy of justice for the Middle East, working together to undo the horrendous legacy of US imperialism in the region. Someday, ‘dollarization’ will be a shibboleth, consigned to the ‘ash heap of history’.
Eric Walberg writes for Al-Ahram Weekly http://weekly.ahram.org.eg/ and is author of Postmodern Imperialism: Geopolitics and the Great Games. http://claritypress.com/Walberg.html . You can reach him at http://ericwalberg.com/