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Pablo Solón, “‘Deglobalization’ Versus ‘Inclusive Growth'”

Pablo Solón, “‘Deglobalization’ Versus ‘Inclusive Growth'”.

The race of globalization is leaving the majority of the world’s population far behind.  According to UNICEF, the richest 20% of the population gets 83% of global income, while the poorest quintile has just 1%.1  This trend is getting worse.  A new UNDP report called “Humanity Divided” estimates that 75% of the world’s population lives in societies where income distribution is less equal now than it was in the 1990s,2 although global GDP ballooned in that time from US$22 trillion to 72 trillion.3

For developing economies in Asia, the Gini coefficient — which measures income inequality on a scale from zero to one where one is worst — rose from 0.33 in 1990 to 0.46 in 2010.4  Inequality corresponds with high social tensions and political instability — with the potential for violence and conflicts between groups — as well as increased economic uncertainty and lower investment.  It demolishes human rights for the vast majority, especially for vulnerable groups like women, children, and the elderly.

What causes inequality?  The UNDP states: “Specific aspects of globalization, such as inadequately regulated financial integration and trade liberalization processes, whose benefits have been distributed very unequally across and within countries, have played a significant role in determining the upward trend observed over the last decades.”

Globalization causes inequality for various reasons.  One is that trade and financial globalization has weakened the bargaining position of relatively immobile labor in relation to fully mobile capital, driving down wages.  The chief economist of the Asian Development Bank, in an article that argues that inequality jeopardizes economic growth, notes that, between the mid-1990s and the mid-2000s, labor income as a percentage of manufacturing output fell from 48 percent to 42 percent in China and from 37 percent to 22 percent in India.

The UNDP also says dependence on volatile capital flows made countries more vulnerable to economic and financial shocks that cause lowered growth and employment, both of which disproportionately affect the poor.

If globalization drives inequality, what are the remedies?  The usual list of recipes of UN agencies, the World Bank and IMF includes measures to stop tax evasion, more progressive income tax policies, incentives for foreign investment, conditional cash transfers, subsidies and credits for small businesses and agriculture, limited expansion of public investment and social safety nets.

Two key things are apparent in these “remedies.”  First, they talk about redistributing income but don’t address unequal access to sources of wealth, such as land or assets.  They also avoid mentioning examples of nationalizations that have reduced extreme inequality in some countries.

Second, they don’t deal with the process of globalization.  The most ambitious among them suggest some kind of regulation of speculative financial markets to minimize volatility.  The World Bank clearly states that measures to reduce inequality should not affect “free trade.”

The measures to combat inequality touted by international financial institutions ignore the structural causes of inequality.  Don’t be fooled by their fashionable new name: “inclusive growth.”  This idea repeats old remedies and is more concerned with profit than inequality.

If we care about reducing inequality, we must seek new solutions to the problem.  One approach is “deglobalization,” a proposal developed by Walden Bello and Focus on the Global South in response to the Asian financial crisis of 1997.

Focus on the Global South wrote:

Deglobalisation is not a synonym for withdrawing from the world economy.  It means a process of restructuring the world economic and political system so that the latter builds the capacity of local and national economies instead of degrading it.  Deglobalisation means the transformation of a global economy from one integrated around the needs of transnational corporations to one integrated around the needs of peoples, nations, and communities.5

For deglobalization, there is no “one-size-fits-all” model like neoliberalism or centralized bureaucratic socialism.  Instead, according to this scheme, diversity is expected and encouraged, as it is in nature.

Some key proposals of deglobalization to really address the relationship between globalization and inequality are:

  • Reorient national economies away from export production and toward production for the local market to fulfill basic human needs, relying primarily on domestic resources and employing technologies that enhance rather than destroy the community, the environment, and life itself.
  • Implement policies that redistribute the sources of income and wealth such as land, ensuring domestic control over key sectors of the economy and promoting communal access to basic services like water, health care, and education.
  • Provide more resources to rural areas to halt the migrations that increase inequality and rob local communities through resource grabbing.  This means expanding public services in rural areas and implementing tools to boost food sovereignty that have been developed by peasants and indigenous communities.
  • De-emphasize economic growth based on the recognition that this growth has limits.  Instead, we should maximize equity and redistribute what is available and possible without breaking the vital cycles of nature and overshooting the carrying capacity of the Earth.
  • Make strategic economic decisions subject to democratic choice, rather than leaving them to the market.  In other words, bring participatory democracy to the sphere of the economy.

The approach of deglobalization is still under construction.  It needs to be debated and joined with other ideas if we are to build viable alternatives to the flawed system we have today, the one that has caused explosive inequality.  But it certainly holds more promise than the empty claims of “inclusive growth.”

 

1  United Nations Children’s Fund (UNICEF), Global Inequality: Beyond the Bottom Billion — A Rapid Review of Income Distribution in 141 Countries, 2011.

2  United Nations Development Programme (UNDP), “Humanity Divided: Confronting Inequality in Developing Countries,” 29 Jan 2014.

3  See www.data.un.org.

4  Changyong Rhee, “Inequality Is the Real Threat to Asia’s Growth Miracle,” Financial Times, 8 May 2012.

5  Focus on the Global South, “The Paradigm: Deglobalisation,” 2003.


Pablo Solón is the current Executive Director of Focus on the Global South, a think tank based in Bangkok.  More information is atwww.focusweb.org.  Follow Solón on Twitter @pablosolon.

Pablo Solón, "'Deglobalization' Versus 'Inclusive Growth'"

Pablo Solón, “‘Deglobalization’ Versus ‘Inclusive Growth'”.

The race of globalization is leaving the majority of the world’s population far behind.  According to UNICEF, the richest 20% of the population gets 83% of global income, while the poorest quintile has just 1%.1  This trend is getting worse.  A new UNDP report called “Humanity Divided” estimates that 75% of the world’s population lives in societies where income distribution is less equal now than it was in the 1990s,2 although global GDP ballooned in that time from US$22 trillion to 72 trillion.3

For developing economies in Asia, the Gini coefficient — which measures income inequality on a scale from zero to one where one is worst — rose from 0.33 in 1990 to 0.46 in 2010.4  Inequality corresponds with high social tensions and political instability — with the potential for violence and conflicts between groups — as well as increased economic uncertainty and lower investment.  It demolishes human rights for the vast majority, especially for vulnerable groups like women, children, and the elderly.

What causes inequality?  The UNDP states: “Specific aspects of globalization, such as inadequately regulated financial integration and trade liberalization processes, whose benefits have been distributed very unequally across and within countries, have played a significant role in determining the upward trend observed over the last decades.”

Globalization causes inequality for various reasons.  One is that trade and financial globalization has weakened the bargaining position of relatively immobile labor in relation to fully mobile capital, driving down wages.  The chief economist of the Asian Development Bank, in an article that argues that inequality jeopardizes economic growth, notes that, between the mid-1990s and the mid-2000s, labor income as a percentage of manufacturing output fell from 48 percent to 42 percent in China and from 37 percent to 22 percent in India.

The UNDP also says dependence on volatile capital flows made countries more vulnerable to economic and financial shocks that cause lowered growth and employment, both of which disproportionately affect the poor.

If globalization drives inequality, what are the remedies?  The usual list of recipes of UN agencies, the World Bank and IMF includes measures to stop tax evasion, more progressive income tax policies, incentives for foreign investment, conditional cash transfers, subsidies and credits for small businesses and agriculture, limited expansion of public investment and social safety nets.

Two key things are apparent in these “remedies.”  First, they talk about redistributing income but don’t address unequal access to sources of wealth, such as land or assets.  They also avoid mentioning examples of nationalizations that have reduced extreme inequality in some countries.

Second, they don’t deal with the process of globalization.  The most ambitious among them suggest some kind of regulation of speculative financial markets to minimize volatility.  The World Bank clearly states that measures to reduce inequality should not affect “free trade.”

The measures to combat inequality touted by international financial institutions ignore the structural causes of inequality.  Don’t be fooled by their fashionable new name: “inclusive growth.”  This idea repeats old remedies and is more concerned with profit than inequality.

If we care about reducing inequality, we must seek new solutions to the problem.  One approach is “deglobalization,” a proposal developed by Walden Bello and Focus on the Global South in response to the Asian financial crisis of 1997.

Focus on the Global South wrote:

Deglobalisation is not a synonym for withdrawing from the world economy.  It means a process of restructuring the world economic and political system so that the latter builds the capacity of local and national economies instead of degrading it.  Deglobalisation means the transformation of a global economy from one integrated around the needs of transnational corporations to one integrated around the needs of peoples, nations, and communities.5

For deglobalization, there is no “one-size-fits-all” model like neoliberalism or centralized bureaucratic socialism.  Instead, according to this scheme, diversity is expected and encouraged, as it is in nature.

Some key proposals of deglobalization to really address the relationship between globalization and inequality are:

  • Reorient national economies away from export production and toward production for the local market to fulfill basic human needs, relying primarily on domestic resources and employing technologies that enhance rather than destroy the community, the environment, and life itself.
  • Implement policies that redistribute the sources of income and wealth such as land, ensuring domestic control over key sectors of the economy and promoting communal access to basic services like water, health care, and education.
  • Provide more resources to rural areas to halt the migrations that increase inequality and rob local communities through resource grabbing.  This means expanding public services in rural areas and implementing tools to boost food sovereignty that have been developed by peasants and indigenous communities.
  • De-emphasize economic growth based on the recognition that this growth has limits.  Instead, we should maximize equity and redistribute what is available and possible without breaking the vital cycles of nature and overshooting the carrying capacity of the Earth.
  • Make strategic economic decisions subject to democratic choice, rather than leaving them to the market.  In other words, bring participatory democracy to the sphere of the economy.

The approach of deglobalization is still under construction.  It needs to be debated and joined with other ideas if we are to build viable alternatives to the flawed system we have today, the one that has caused explosive inequality.  But it certainly holds more promise than the empty claims of “inclusive growth.”

 

1  United Nations Children’s Fund (UNICEF), Global Inequality: Beyond the Bottom Billion — A Rapid Review of Income Distribution in 141 Countries, 2011.

2  United Nations Development Programme (UNDP), “Humanity Divided: Confronting Inequality in Developing Countries,” 29 Jan 2014.

3  See www.data.un.org.

4  Changyong Rhee, “Inequality Is the Real Threat to Asia’s Growth Miracle,” Financial Times, 8 May 2012.

5  Focus on the Global South, “The Paradigm: Deglobalisation,” 2003.


Pablo Solón is the current Executive Director of Focus on the Global South, a think tank based in Bangkok.  More information is atwww.focusweb.org.  Follow Solón on Twitter @pablosolon.

Ukraine Crisis: Just Another Globalist-Engineered Powder Keg

Ukraine Crisis: Just Another Globalist-Engineered Powder Keg.

Wednesday, 05 March 2014 02:13 Brandon Smith

When one studies history, all events seem to revolve around the applications and degenerations of war. Great feats of human understanding, realization and enlightenment barely register in the mental footnotes of the average person. War is what we remember, idealize and aggrandize, which is why war is the tool most often exploited by oligarchy to distract the masses while it centralizes power.

With the exception of a few revolutions, most wars are instigated and controlled by financial elites, manipulating governments on both sides of the game to produce a preconceived result. The rise of National Socialism in Germany, for instance, was largely funded by corporate entities based in the U.S., including Rockefeller giant Standard Oil, JPMorgan and even IBM, which built the collating machines specifically used to organize Nazi extermination camps, the same machines IBM representatives serviced on site at places like Auschwitz. As a public figure, Adolf Hitler was considered a joke by most people in German society, until, of course, the Nazi Party received incredible levels of corporate investment. This aid was most evident in what came to be known as the Keppler Fund created through the Keppler Circle, a group of interests with contacts largely based in the U.S.

George W. Bush’s grandfather, Prescott Bush, used his position as director of the New York-based Union Banking Corporation to launder money for the Third Reich throughout the war. After being exposed and charged for trading with the enemy, the case against Bush magically disappeared in a puff of smoke, and the Bush family went on to become one of the most powerful political forces in America.

Without the aid of international conglomerates and banks, the Third Reich would have never risen to power.

The rise of communism in Russia through the Bolshevik Revolution was no different. As outlined in Professor Antony Sutton’s book Wall Street And The Bolshevik Revolution with vast detail and irrefutable supporting evidence, it was globalist financiers that created the social petri dish in which the communist takeover flourished.  The same financiers that aided the Nazis…

The two sides, National Socialism and communism, were essentially identical despotic governmental structures conjured by the same group of elites. These two sides, these two fraudulent ideologies, were then pitted against each other in an engineered conflict that we now call World War II, resulting in an estimated 48 million casualties globally and the ultimate formation of the United Nations, a precursor to world government.

Every major international crisis for the past century or more has ended with an even greater consolidation of world power into the hands of the few, and this is no accident.

When I discuss the concept of the false left/right paradigm with people, especially those in the liberty movement, I often see a light turn on, a moment of awareness in their faces. Many of us understand the con game because we live it day to day. We see past the superficial rhetoric of Republican and Democratic party leadership and take note of their numerous similarities, including foreign policy, domestic defense policy and economic policy. The voting records of the major players in both parties are almost identical. One is hard-pressed to find much difference in ideology between Bush and Barack Obama, for example; or Obama and John McCain; or Obama and Mitt Romney, for that matter.

When I suggest, however, that similar false paradigms are used between two apparently opposed nations, the light fades, and people are left dumbstruck. Despite the fact that globalist financiers shoveled capital into the U.S., British, German and Soviet military complexes all at the same time during World War II, many Americans do not want to believe that such a thing could be happening today.

In response, I present the crisis in Ukraine versus the crisis in Syria…

Ukraine Versus Syria

It seems as though much of the public has already forgotten that at the end of 2013, the U.S. came within a razor’s edge of economic disaster — not to mention the possibility of World War III. The war drums in Washington were thundering for “intervention” in Syria and the overthrow of Bashar Assad. The only thing that saved us, I believe, were the tireless efforts of the independent media in exposing the darker motives behind the Syrian insurgency and the bloodlust of the Obama Administration. The problem is that when the elites lose one avenue toward war and distraction, they have a tendency to simply create another. Eventually, the public is so overwhelmed by multiple trigger points and political powder kegs that they lose track of reality. I often call this the “scattergun effect.”

The crisis in the Ukraine is almost a carbon copy of the civil war in Syria, culminating in what I believe to be the exact same intent.

The Money

Money from globalist centers has been flowing into the Ukrainian opposition since at least 2004, when the Carnegie Foundation was caught filtering funds to anti-Russian political candidate Viktor Yushchenko, as well as to the groups who supported him.

The Ukrainian Supreme Court called for a runoff due to massive voter fraud and the rise of the pro-Western Orange Revolution, determining the winner to be Yushchenko over none other than Viktor Yanukovych. Yanukovych went on to win the 2010 elections, and the revolution returned to oust him this year.

It has been discovered that the current revolution has also been receiving funds from NATO and U.S. interests, not just from the State Department, but also from billionaires like Pierre Omidyar, the chairman of eBay and the new boss of journalist Glen Greenwald, the same journalist who is now famous for being the first to expose National Security Agency documents obtained by Edward Snowden.

Much of the monetary support from such financiers was being funneled to men like Oleh Rybachuk, the right-hand man to Yanukovych during the Orange Revolution and a favorite of neoconservatives and the State Department in the U.S.

The International Monetary Fund has also jumped at the chance to throw money at the new Ukrainian regime, which would prevent default of the country and allow the opposition movement to focus their attentions on Russia.

The revolution in Syria was also primarily driven by Western funds and arms transferred through training grounds like Benghazi, Libya. There is much evidence to suggest that the attack on the U.S. consulate in Benghazi was designed to possibly cover up the arming of Syrian rebels by the CIA, who had agents on the ground who still have not been allowed to testify in front of Congress.

After this conspiracy was exposed in the mainstream, globalist-controlled governments decided to openly supply money and weapons to the Syrian insurgency, instead of ending the subterfuge.

The ‘Rebels’

Some revolutions are quite real in their intent and motivations. But many either become co-opted by elites through financing, or they are created from thin air from the very beginning. Usually, the rebellions that are completely fabricated tend to lean toward extreme zealotry.

The Syrian insurgency is rife with, if not entirely dominated by, men associated with al-Qaida. Governments in the U.S. and Israel continue to support the insurgency despite their open affiliation with a group that is supposedly our greatest enemy. Syrian insurgents have been recorded committing numerous atrocities, including mass execution, the torture of civilians and even the cannibalism of human organs.

The revolution in Ukraine is run primarily by the Svoboda Party, a National Socialist (fascist) organization headed by Oleh Tyahnybok.  Here is a photo of Tyahnybok giving a familiar salute:

So far, the opposition in Ukraine has been mostly careful in avoiding the same insane displays of random violence that plagued the Syrians’ public image. It is important to remember though that mainstream outlets like Reuters went far out of their way in attempts to humanize Syrian al-Qaida. Their methods were exposed only through the vigilance of the independent media. With the fascist Svoboda in power in the Ukraine, I believe it is only a matter of time before we see video reports of similar atrocities, giving Russia a perfect rationalization to use military force.

John McCain?

I am now thoroughly convinced that John McCain is a pasty ghoul of the highest order. He claims to be conservative yet supports almost every action of the Obama Administration. He is constantly defending anti-Constitutional actions by the Federal government, including the Enemy Belligerents Act, which was eventually melded into the National Defense Authorization Act; NSA surveillance of U.S. citizens; and even gun control.

And for some reason, the guy makes appearances like clockwork right before or during major overthrows of existing governments. McCain was in Libya during the coup against Moammar Gadhafi.

McCain showed up to essentially buy off the rebels in Tunisia.

McCain hung out with al-Qaida in Syria.

And, what a surprise, McCain met with the Ukrainian opposition movement just before the overthrow of Viktor Yanukovych.  Here is a photo of McCain giving a speech to the opposition with none other than Neo-Nazi Oleh Tyahnybok standing over his left shoulder.

Why McCain? I have no idea. All I know is, if this guy shows up in your country, take cover.

Russia In The Middle

The great danger in Syria was not necessarily the chance of war with Assad. Rather, it was the chance that a war with Assad would expand into a larger conflagration with Iran and Russia. Russia’s only naval facility in the Mideast is on the coast of Tartus in Syria, and Russia has long-standing economic and political ties to Syria and Iran. Any physical action by the West in the region would have elicited a response from Vladimir Putin. The mainstream argument claims that the threat of Russian intervention scared off Obama, but I believe the only reason war actions were not executed by the White House and the globalists was because they didn’t have even minimal support from the general public. For any war, you need at least a moderate percentage of the population to back your play.

In Ukraine, we find the globalists creating tensions between the West and the East yet again. Russia’s most vital naval base sits in Crimea, an autonomous state tethered to the Ukrainian mainland. Currently, Russia has flooded Crimea with troops in response to the regime change in Ukraine. The new Ukrainian government (backed by NATO) has called this an “invasion” and an act of war, while Western warmongers like McCain and Lindsay Graham spread the propaganda meme that Russia made such a move only because Putin believes the Obama Administration to be “weak.”

Clearly, the idea here is to engineer either high tensions or eventual war between Russia and the United States. Syria failed to produce the desired outcome, so the Ukraine was tapped instead.

Energy Markets And The Dollar At Risk

In Syria, any U.S. led military action would have resulted in the immediate closing of the Straight of Hormuz by Iran, threatening to obstruct up to 30% of global petroleum shipments.  Foreign resentment could have easily led to the abandonment of the U.S. dollar as the petro-currency.  Both China and Russia implied the possibility of an economic response to American intervention, though they did not officially go into specifics.  In all likelihood, the dollar’s world reserve status would have been damaged irrevocably.

In the Ukraine, the chance of intervention has been countered with VERY specific threats from Russia, including a freeze on natural gas imports to the European Union through Gazprom, which supplies approximately 30% of the EU’s fuel.  In 2009, a temporary Ukranian pipeline closure led to widespread shortages across Europe.  While some in the mainstream claim that Russia’s influence over EU energy has “diminished” the fact is a loss of 30% of natural gas reserves for an extended period would inflate energy prices wildly and cripple the EU’s economy.

Another specific reaction given by Russia is the dumping of U.S. treasury bonds.  Russia’s bond holdings may not seem like much leverage, except for the fact that China has now publicly backed Russian efforts in the Ukraine, just as they backed Russian opposition to U.S. activities in Syria.  A dump of bonds by Russia would invariably be followed by a Chinese dump as well.  In fact, China and Russia have been setting the stage for a global dollar decoupling since at least 2008.   I have been warning for years that globalists and central bankers needed a “cover event”, a distraction or scapegoat imposing enough to provide a veil of chaos in which they could then destroy the greenback as the world reserve and usher in a global currency system.  The Ukraine crisis offers yet another opportunity for this plan to unfold.

The False Paradigm And The Globalist Chessboard

So far, I have outlined what appears to be a correspondence of conspiracy between Syria and the Ukraine and how each event has the continued potential to trigger regional conflict, dollar collapse, or world war. But is this conspiracy one-sided? Are only the West and NATO being manipulated by globalists to box in Russia and provoke a conflict? And what do globalists have to gain by sparking such disaster?

As with every other catastrophic fabricated war, the goal is the erasure of sovereign identity while consolidating economic, political and social power. It is not enough that global financiers dominate the banking industry and own most politicians; they want to transform the public psyche. They want US to ask THEM for global governance. This manufacture of consent is often achieved by pitting two controlled governments against each other and then, in the wake of the tragedy, calling for global unification. The argument is always presented that if we simply abandoned the concept of nation states and reform under a single world body, all war would “disappear.”

The question is whether Russia’s Putin is aware of the plan. Is he a part of it?  Are we seeing repeat theater of a puppet Russia versus a puppet NATO like that witnessed during the Cold War?

What I do know is that Putin has, a number of times in the past, called for global control of the economy through the IMF and the institution of a new global currency using the IMF’s Special Drawing Rights (SDR).

Loans from the IMF are what saved Russia from debt default in the late 1990s. And Putin has recently called for consultations with the IMF concerning Crimea. Remember, this is the same IMF that is working to fund his opponents in Western Ukraine.

Bottom line, if you believe in national sovereignty and decentralization of power, Putin is NOT your buddy. Once again, we have the globalists injecting money into both sides of a conflict which could morph into something nightmarish.  Putin wants global economic governance and consolidation under the IMF just as much as the supposedly “American-run” IMF wants consolidation.  Global governance of finance and money creation ultimately means global governance of everything else.

Is a war being created through the false paradigm of East versus West in order to pave the road for global government?  Are East/West tensions being exploited as a smokescreen for the final destruction of the dollar’s world reserve status?  It is hard to say if the Ukraine will be the final trigger; however, the evidence suggests that if a conflict occurs, regardless of who “wins” such a scenario, the IMF comes out on top.

Imagine you are playing a game of chess by yourself. Which side wins at the end of that game: black or white? The answer is it doesn’t matter. You always win when you control both sides.

 

 

 

 

 

You can contact Brandon Smith at:  brandon@alt-market.com

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The Final Swindle Of Private American Wealth Has Begun

The Final Swindle Of Private American Wealth Has Begun.

Wednesday, 05 February 2014 02:41 Brandon Smith

I began writing analysis on the macro-economic situation of the American financial structure back in 2006, and in the eight years since, I have seen an undeniably steady trend of fiscal decline.

I have never had any doubt that the U.S. economy as we know it was headed for total and catastrophic collapse, the only question was when, exactly, the final trigger event would occur. As I have pointed out in the past, economic implosion is a process. It grows over time, like the ice shelf on a mountain developing into a potential avalanche. It is easy to shrug off the danger because the visible destruction is not immediate, it is latent; but when the avalanche finally begins, it is far too late for most people to escape…

If you view the progressive financial breakdown in America as some kind of “comedy of errors” or a trial of unlucky coincidences, then there is not much I can do to educate you on the reasons behind the carnage. If, however, you understand that there is a deliberate motivation behind American collapse, then what I have to say here will not fall on biased ears.

The financial crash of 2008, the same crash which has been ongoing for years, is NOT an accident. It is a concerted and engineered crisis meant to position the U.S. for currency disintegration and the institution of a global basket currency controlled by an unaccountable supranational governing body like the International Monetary Fund (IMF). The American populace is being conditioned through economic fear to accept the institutionalization of global financial control and the loss of sovereignty.

Anyone skeptical of this conclusion is welcome to study my numerous past examinations on the issue of globalization; I don’t have the time within this article to re-explain, and frankly, with so much information on deliberate dollar destruction available to the public today I’ve grown tired of anyone with a lack of awareness.

If you continue to believe that the Fed actually exists to “help” stabilize our economy or our currency, then you will never find the logic behind what they do. If you understand that the goal of the Fed and the globalists is to dismantle the dollar and the U.S. economic system to make way for something “new”, then certain recent events and policy initiatives do start to make sense.

The year of 2014 has been looming as a serious concern for me since the final quarter of 2013, and you can read about those concerns and the evidence that supports them in my articleExpect Devastating Global Economic Changes In 2014.

At the end of 2013 we saw at least three major events that could have sent America spiraling into total collapse. The first was the announcement of possible taper measures by the Fed, which have now begun. The second was the possible invasion of Syria which the Obama Administration is still desperate for despite successful efforts by the liberty movement to deny him public support for war. And, the third event was the last debt ceiling debate (or debt ceiling theater depending on how you look at it), which placed the U.S. squarely on the edge of fiscal default.

As we begin 2014, these same threatening issues remain (along with many others), only at greater levels and with more prominence. New developments reinforce my original position that this year will be remembered by historians as the year in which the final breakdown of the U.S. monetary dynamic was set in motion. Here are some of those developments explained…

Taper Of QE3

When I first suggested that a Fed taper was not only possible but probable months ago, I was met with a bit (a lot) of criticism from some in the alternative economic world. You can read my taper articles here and here.

This was understandable. The Fed uses multiple stimulus outlets besides QE in order to manipulate U.S. markets. Artificially lowering interest rates is very much a form of stimulus in itself, for instance.

However, I think a dangerous blindness to threats beyond money printing has developed within our community of analysts and this must be remedied. People need to realize first that the Fed does NOT care about the continued health of our economy, and they may not care about presenting a facade of health for much longer either. Alternative analysts also need to come to grips with the reality that overt money printing is not the only method at the disposal of globalists when destroying the greenback. A debt default is just as likely to cause loss of world reserve status and devaluation – no printing press required. Blame goes to government and political gridlock while the banks slither away in the midst of the chaos.

The taper of QE3 is not a “head fake”, it is very real, but there are many hidden motivations behind such cuts.

Currently, $20 billion has been trimmed from the $85 billion per month program, and we are already beginning to see what APPEAR to be market effects, including a flight from emerging market currencies from Argentina to Turkey. A couple of years ago investors viewed these markets as among the few places they could exploit to make a positive return, or in other words, one of the few places they could successfully gamble. The Fed taper, though, seems to be shifting the flow of capital away from emerging markets.

The mainstream argument is that stimulus was flowing into such markets, giving them liquidity support, and the taper is drying up that liquidity. Whether this is actually true is hard to say, given that without a full audit we have no idea how much fiat the Federal Reserve has actually created and how much of it they send out into foreign markets.

I stand more on the position that the Fed taper was actually begun in preparation for a slowdown in global markets that was already in progress. In fact, I believe central bankers have been well aware that a decline in every sector was coming, and are moving to insulate themselves.

Is it just a “coincidence” that the central bankers have initiated their taper of QE right when global manufacturing numbers begin to plummet?

http://www.agweb.com/article/us_stocks_drop_as_manufacturing_gauge_falls_more_than_forecast_BLMG/

http://www.bloomberg.com/news/2014-02-01/china-manufacturing-gauge-falls-to-six-month-low.html

Is it just “coincidence” the taper was started right when the Baltic Dry Index, a global indicator of shipping demand, has lost over 50% of its value in the past few weeks?

http://investmenttools.com/futures/bdi_baltic_dry_index.htm

Is it just “coincidence” that the taper is running tandem with dismal retail sales growth reports from across the globe coming in from the final quarter of 2013?

http://www.businessweek.com/news/2014-02-04/euro-is-near-10-week-low-before-retail-sales-data-ecb-meeting

http://www.scmp.com/business/economy/article/1421025/no-christmas-cheer-hong-kongs-retailers

http://business.time.com/2013/11/14/walmart-sales-dip-as-low-income-americans-close-wallets/

And, is it just a “coincidence” that the Fed taper is accelerating right as the next debt ceiling debate begins in March, and when reports are being released by the Congressional Budget Office that over 2 million jobs (in work hours) may be lost due to Obamacare?

http://www.reuters.com/article/2014/02/04/us-usa-fiscal-obamacare-idUSBREA131B120140204

No, I do not think any of this is coincidence.  Most if not all of these negative indicators needed months to generate, so they could not have been caused by the taper itself.  The only explanation beyond “coincidence” is that the Federal Reserve WANTED to launch the taper program and protect itself before these signals began to reach the public.

Look at it this way – The taper program distances the bankers from responsibility for crisis in our financial framework, at least in the eyes of the general public. If a market calamity takes place WHILE stimulus measures are still at full speed, this makes the banks look rather guilty, or at least incompetent. People would begin to question the validity of central bank methods, and they might even question the validity of the central bank’s existence. The Fed is creating space between itself and the economy because they know that a trigger event is coming. They want to ensure that they are not blamed and that stimulus itself is not seen as ineffective, or seen as the cause.

We all know that the claims of recovery are utter nonsense. Beyond the numerous warning signs listed above, one need only look at true unemployment numbers, household wage decline, and record low personal savings of the average American. The taper is not in response to an improving economic environment. Rather, the taper is a signal for the next stage of collapse.

Stocks are beginning to plummet around the world and all mainstream pundits are pointing fingers at a reduction in stimulus which has very little to do with anything. What is the message they want us to digest? That we “can’t live” without the aid and oversight of central banks.

The real reason stocks and other indicators are stumbling is because the effectiveness of stimulus manipulation has a shelf life, and that shelf life is over for the Federal Reserve. I suspect they will continue cutting QE every month for the next year as stocks decline.  Will the Fed restart QE?  If they do, it will probably not occur until after a substantial breakdown has ensued and the public is sufficiently shell-shocked.  The possibility also exists that the Fed will never return to stimulus measures (if debt default is the plan), and QE stimulus will eventually be replaced by IMF “aid”.

Government Controlled Investment

Last month, just as taper measures were being implemented, the White House launched an investment program called MyRA; a retirement IRA program in which middle class and low wage Americans can invest part of their paycheck in government bonds.

That’s right, if you wanted to know where the money was going to come from to support U.S. debt if the Fed cuts QE, guess what, the money is going to come from YOU.

For a decade or so China was the primary buyer and crutch for U.S. debt spending. After the derivatives crash of 2008, the Federal Reserve became the largest purchaser of Treasury bonds. With the decline of foreign interest in long term U.S. debt, and the taper in full effect, it only makes sense that the government would seek out an alternative source of capital to continue the debt cycle. The MyRA program turns the general American public into a new cash stream, but there’s more going on here than meets the eye…

I find it rather suspicious that a government-controlled retirement program is suddenly introduced just as the Fed has begun to taper, as stocks are beginning to fall, and as questions arise over the U.S. debt ceiling. I have three major concerns:

First, is it possible that like the Fed, the government is also aware that a crash in stocks is coming? And, are they offering the MyRA program as an easy outlet (or trap) for people to pour in what little savings they have as panic over declining equities accelerates?  Bonds do tend to look appetizing to uninformed investors during an equities rout.

Second, the program is currently voluntary, but what if the plan is to make it mandatory? Obama has already signed mandatory health insurance “taxation” into law, which is meant to steal a portion of every paycheck. Why not steal an even larger portion from every paycheck in order to support U.S. debt? It’s for the “greater good,” after all.

Third, is this a deliberate strategy to corral the last vestiges of private American wealth into the corner of U.S. bonds, so that this wealth can be confiscated or annihilated? What happens if there is indeed an eventual debt default, as I believe there will be? Will Americans be herded into bonds by a crisis in stocks only to have bonds implode as well? Will they be conned into bond investment out of a “patriotic duty” to save the nation from default? Or, will the government just take their money through legislative wrangling, as was done in Cyprus not long ago?

The Final Swindle

Again, the next debt ceiling debate is slated for the end of this month. If the government decides to kick the can down the road for another quarter, I believe this will be the last time. The most recent actions of the Fed and the government signal preparations for a stock implosion and ultimate debt calamity. Default would have immediate effects in foreign markets, but the appearance of U.S. stability could drag on for a time, giving the globalists ample opportunity to siphon every ounce of financial blood from the public.

It is difficult to say how the next year will play out, but one thing is certain; something very strange and ugly is afoot. The goal of the globalists is to engineer desperation. To create a catastrophe and then force the masses to beg for help. How many hands of “friendship” will be offered in the wake of a U.S. wealth and currency crisis? What offers for “aid” will come from the IMF? How much of our country and how many of our people will be collateralized to secure that aid? And, how many Americans will go along with the swindle because they were not prepared in advance?

 

Rhyme and Reason: Why 2014 Doesn’t Have to be 1914 | The Diplomat

Rhyme and Reason: Why 2014 Doesn’t Have to be 1914 | The Diplomat.

In a recent Brookings Institution essay entitled “The Rhyme of History: Lessons of the Great War,” historian Margaret Macmillan argues that there are strong and haunting parallels between today’s geopolitical landscape and Europe of 1914. Pivoting off the well-know Mark Twain adage that history does not repeat itself, but does rhyme, Macmillan suggests that the one-hundredth anniversary of World War I encourages us to reflect on the “valuable warnings” of the past. The actual and potential conflicts in the year ahead are many, and some of the same structural forces that lead to the Great War a century ago will be prevalent in 2014.

Macmillan is an eminent historian (her book, Paris 1919 is a must-read), but analogies between 1914 Europe and the world today should not be drawn hastily. World War I continues to preoccupy scholars and pundits alike, in part because it was so destructive, and in part because there is still no consensus on why exactly it occurred. With the centennial of the conflict approaching, we can expect to see 1914 references made a great deal — particularly with respect to the power transition that is currently in progress in the Pacific —  but we should remain duly skeptical of this tempting parallel. Many of the conditions that were present in antebellum Europe do indeed prevail today.  Whether these forces actually raise the risk of war is far from established, however, and the expectation that they do may itself increase the chance of conflict.

In her Brookings essay, Macmillan identifies several conditions that were present in Europe before the Great War that, she argues, also raise the risk of conflict today.  The first of these conditions is globalization and its unintended consequences. In both 1914 and at present, there existed the common assumption that the world was becoming too interconnected to resort to war — conflict would be prohibitively costly. But, Macmillan points out, a hundred years ago as now, those who preached interdependence often ignored the fact that globalization can lead to job loss, foster intense localism and nativism, and provide a breeding ground for radical ideologies and movements (including those that employ terrorism). Globalization, Macmillan warns us, can also heighten interstate rivalries.

Related to this is a second trend — rising nationalism and sectarianism. Once trapped in interstate rivalries, leaders may seize upon nationalism and bitter historical enmity to appeal to their publics. In 1914, the predominant antagonisms were the Anglo-German and Russo-German rivalries; today they include Sino-American and Sino-Japanese competition.  Third, Macmillan reminds us that tightly-knit defensive alliances may encourage conflict or cause it to spread. In 1914, Germany saw itself as inextricably bound to Austria, as France did to Russia. Today, she warns, the United States could easily be drawn into war in either the Middle East or East Asia by its alliance ties.

Finally, Macmillan warns that “World Policemen” may be forced into retirement, leaving a vacuum of instability and uncertainty. By the early 20th century, the British clearly could not sustain the demands and costs of their empire. Likewise, Macmillan avers, the United States will not be able to preserve hegemony indefinitely. Even if it its reach is primarily confined to Asia, the most obvious challenge to U.S. influence will come from a rising China, and crises or conflicts may break out unless the dominant powers can establish a stable international order.

Macmillan is hardly the first to point to these conditions as potential precursors to conflict. With respect to China’s rise, analysts have argued frequently that Washington and Beijing’s national security interests put the two countries on a collision course. Some have gone so far as to insist that this clash is inevitable.  But in her comparison of the international conditions that preceded the Great War and those that prevail today, Macmillan fails to address one truly crucial question: Why did the forces of globalization, nationalism, interlocking alliances, and power transition combine to produce war in 1914 specifically?

The prevailing patterns that Macmillan identifies as historical rhymes may all be thought of as permissive conditions to conflict: these forces may have helped to pave the way to the Great War’s onset, but none alone was the immediate cause of war in 1914.  Moreover, these forces were almost certainly present in Europe prior to that fateful year. Why, then, did they not combine to produce a major war when Austria annexed Bosnia in 1908? Why did they not stoke the Balkan Wars of 1912 and 1913 and produce global conflagration then? If we are to accept that any specific set of conditions caused the First World War in 1914, we must also be able to explain why those forces did not produce war earlier or later, or why conflict could not have been avoided altogether despite their prevalence.

Indeed, in the copious literature on World War I, scholars have attempted to dissect these important counterfactuals. Some argue that the structural conditions that Macmillan identifies really did make a European conflict inevitable — interlocking alliances, the Anglo-German power transition, nationalism, and other factors meant that war would have occurred in 1915 or 1916 if it did not in 1914. But other analysts insist that the Great War was the immediate result of assassination of the Austrian Archduke Franz Ferdinand. If he had not been killed in Sarajevo on June 28, 1914 — or if he had been shot and lived — the great powers might have avoided war, not just in that year, but in perpetuity. If an idiosyncratic event like the Archduke’s assassination is the key to explaining the war, however, it is not clear how much credence we should give to other underlying factors. Macmillan’s background conditions for conflict may be insufficient to bring about a war, and indeed, may not even be necessary. And if this is true, then the parallels that can be drawn between the onset of the First World War and geopolitics today may be impoverished at best.

So is this a simple warning that decision makers should approach historical analogies with caution? It is that, but also more. Among the many causes of the First World War that international relations scholars have identified was the widespread belief in European capitals that a great power conflict was highly likely. Combined with prevailing military technologies and strategies of the time, this assumption led statesmen to think that they would be advantaged if they struck first, rather than waiting for an adversary attack that was sure to come in due course.  By overemphasizing historical parallels, we risk convincing ourselves that conflict is imminent, when in fact it remains eminently avoidable. If we were to combine Macmillan’s warnings about economic interdependence, nationalism, alliances, and power transitions, for example, it would be tempting to flag the next fracas over the Senkakus/Diaoyus, where all of these forces are clearly present, as the new Sarajevo. Combined with great power military strategies that may be escalatory, conflict anticipation via analogy could produce disastrous results indeed.

With the one-hundredth anniversary of the First World War fast upon us, and a power transition manifestly under way, Macmillan’s essay will certainly not be the last analysis to draw connections between 1914 and present-day geopolitics. Indeed, there is surely value in paying heed to the similarities and differences between the two eras. By listening anxiously for historical rhymes that portend major conflict, however, we risk deafness to the multitude of factors that make the challenges of the present day unique, and soluble far short of war. A rhyme, after all, is a correspondence of sound, but not of meaning.

Here’s to wishing the world a 2014 that is considerably more peaceful than the centennial it will mark.

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