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Washington Has Set The World On A Path To War
Paul Craig Roberts
Why is Washington so opposed to Crimean self-determination? The answer is that one of the main purposes of Washington’s coup in Kiev was to have the new puppet government evict Russia from its Black Sea naval base in Crimea. Washington cannot use the government Washington has installed in Ukraine for that purpose if Crimea is no longer part of Ukraine.
What Washington has made completely obvious is that “self-determination” is a weapon used by Washington in behalf of its agenda. If self-determination advances Washington’s agenda, Washington is for it. If self-determination does not advance Washington’s agenda, Washington is against it.
The Washington-initiated UN Security Council resolution, vetoed by Russia, falsely declares that the referendum in Crimea, a referendum demanded by the people, “can have no validity, and cannot form the basis for any alteration of the status of Crimea; and calls upon all States, international organizations and specialized agencies not to recognize any alteration of the status of Crimea on the basis of this referendum and to refrain from any action or dealing that might be interpreted as recognizing any such altered status.”
Washington could not make it any clearer that Washington totally opposes self-determination by Crimeans.
Washington claims, falsely, that the referendum cannot be valid unless the entire population of Ukraine votes and agrees with the decision by Crimeans. Note that when Washington stole Kosovo from Serbia, Washington did not let Serbians vote.
But overlook Washington’s rank hypocrisy and self-serving double-standards. Let’s apply Washington’s argument that in order to be valid any change in Crimea’s status requires a vote on the part of the population of the country that it departs. If this is the case, then Crimea has never been a part of Ukraine.
Under Washington’ s interpretation of international law, Ukraine is still a part of Russia. When Khrushchev transferred Crimea (but not Sevastopol, the Black Sea base) to Ukraine, Russians did not get to vote. Therefore, according to Washington’s own logic it is invalid to recognize Crimea as part of Ukraine. That also goes for other parts of Russia that Lenin transferred to Ukraine. Under the logic of Washington’s UN resolution, large parts of Ukraine are not legitimately part of Ukraine. They have remained parts of Russia, because Russians were not allowed to vote on their transfer to Ukraine. Thus, there is no issue about “Russia annexing Crimea,” because, according to Washington’s logic, Crimea is still a part of Russia.
Do you need any more proof that the Ukrainian crisis is made up out of thin air by schemers in Washington who created the entire crisis for one purpose–to weaken Russia militarily?
No one was surprised that the New York Times published on March 14 the warmongering rant, written by neoconservatives for John McCain, which described Washington’s aggression in Ukraine as Russia’s aggression. The US government overthrows an elected democratic Ukrainian government and then accuses Russia of “invading and annexing Crimea” in order to divert attention from Washington’s overthrow of Ukrainian democracy. There is no elected government in Kiev. The stooges acting as a government in Kiev were put in office by Washington. Who else choose them?
What surprised some was Rand Paul joining the hysteria. Rand Paul wrote his propagandistic rant against Russia for Time. Rand Paul claims, falsely, that Putin has invaded Crimea and that it is an affront to “the international community.” First of all, the decision of Crimea to leave Ukraine is a decision of the Crimean population and the elected government, not a decision by Russia. But, for the sake of argument, let’s take Rand Paul’s lie as the truth: Is “Vladimir Putin’s invasion of Ukraine a gross violation of that nation’s sovereignty and an affront to the international community” like Washington’s invasions of Iraq and Afghanistan, and Washington-sponsored invasions of Libya and Syria, and Washington’s ongoing slaughter of Pakistanis and Yemenis with drones, and Washington’s violation of Iran’s sovereignty with illegal sanctions, and Washington’s violation of Ukrainian sovereignty by overthrowing the elected government and imposing Washington’s stooges?
If Putin is behaving as Rand Paul ignorantly asserts, Putin is just following the precedents established by Clinton in Serbia, by Bush in Afghanistan and Iraq, and by Obama in Afghanistan, Libya, Syria, and Ukraine. Washington’s argument is reduced to: “We, the exceptional and indispensable nation can behave this way, but no other country can.”
As some Americans have misplaced hopes in Rand Paul, it is just as well that he revealed in Time that he is just another fool prostituting himself for the neoconservative warmongers and the military/security complex. If Rand Paul is the hope for America, then clearly there is no hope.
As I have been pointing out, the propaganda and lies issuing from Washington, its European puppets, New York Times, Time, and the entirety of the Western media are repeating the path to war that led to World War 1. It is happening right before our eyes.
The Fed Can Only Fail
The mind-boggling part about all this is that it’s not really all that hard to grasp.
Our collective predicament is simply this: Nothing can grow forever.
Sooner or later, everything must cease growing, or it will exhaust its environs and thereby destroy itself. The Fed is busy doing everything in its considerable power to get credit (that is, debt) growing again so that we can get back to what it considers to be “normal.”
But the problem is – or the predicament, I should more accurately say – is that the recent past was not normal. You’ve probably all seen this next chart. It shows total debt in the U.S. as a percent of GDP:
Somewhere right around 1980, things really changed, and debt began climbing far faster than GDP. And that, right there, is the long and the short of why any attempt to continue the behavior that got us to this point is certain to fail.
It is simply not possible to grow your debts faster than your income forever. However, that’s been the practice since 1980, and every current politician and Federal Reserve official developed their opinions about ‘how the world works’ during the 33-year period between 1980 and 2013.
Put bluntly, they want to get us back on that same track, and as soon as possible. The reason? Because every major power center, be that in D.C. or on Wall Street, tuned their thinking, systems, and sense of entitlement during that period. And, frankly, a huge number of financial firms and political careers will melt away if/when that credit expansion finally stops.
And stop it will; that’s just a mathematical certainty. It’s now extremely doubtful that the Fed or D.C. will willingly cease the current Herculean efforts towards reviving this flawed practice of borrowing too much, too fast. So we have to expect that it will be some form of financial accident that finally breaks the stranglehold of failed thinking that infects current leadership.
As a thought experiment, let’s explore the math a little bit to see where it leads us. After all, I did just say that a poor end to all of this is a “mathematical certainty,” so let’s test that theory a bit. I think you’ll find this both interesting and useful.
To begin, Total Credit Market Debt (TCMD) is a measure of all the various forms of debt in the U.S. That includes corporate, state, federal, and household borrowing. So student loans are in there, as are auto loans, mortgages, and municipal and federal debt. It’s pretty much everything debt-related.
What it does not include, though, are any unfunded obligations, entitlements, or other types of liabilities. So the Social Security shortfalls are not in there, nor are the underfunded pensions at the state or corporate levels. TCMD is just debt, plain and simple.
As you can see in this next chart, since 1970, TCMD has been growing exponentially and almost perfectly, too. (The R2 is over 0.99, for you science types):
I’ve pointed out the tiny little wiggle that happened in 2008-2009, which apparently nearly brought down the entire global financial system. That little deviation was practically too much all on its own.
Now debts are climbing again at a quite nice pace. That’s mainly due to the Fed monetizing U.S. federal debt just to keep things patched together.
As an aside, based on this chart, we’d expect the Fed to not end their QE efforts until and unless households and corporations once more engage in robust borrowing. The system apparently ‘needs’ this chart to keep growing exponentially, or it risks collapse.
Okay, one could ask: Why can’t credit just keep growing?
Here’s where things get a little wonky. But if you’ll bear with me, you’ll see why I’m nearly 100% certain that the future will not resemble the past.
Let’s start in 1980, when credit growth really took off. This period also happens to be the happy time that the Fed is trying to (desperately) recreate.
Between 1980 and 2013, total credit grew by an astonishing 8% per year, compounded. I say ‘astonishing’ because anything growing by 8% per year will fully double every 9 years.
So let’s run the math experiment as ask what will happen if the Fed is successful and total credit grows for the next 30 years at exactly the same rate it did over the prior 30. That’s all. Nothing fancy, simply the same rate of growth that everybody got accustomed to while they were figuring out ‘how the world works.’
What happens to the current $57 trillion in TCMD as it advances by 8% per year for 30 years? It mushrooms into a silly number: $573 trillion. That is, an 8% growth paradigm gives us a tenfold increase in total credit in just thirty years:
For perspective, the GDP of the entire globe was just $85 trillion in 2012. Even if we advance global GDP by some hefty number, like 4% per year for the next 30 years, under an 8% growth regime, U.S. credit would betwice as large as global GDP in 2043 (!)
If that comparison didn’t do it for you, then just ask yourself: Why, exactly, would U.S. corporations, households, and government borrow more than $500 trillion over the next 30 years? The total mortgage market is currently $10 trillion, so might the plan include developing an additional 50 more U.S. residential real estate markets?
More seriously, can you think of anything that could support borrowing that much money? I can’t.
So perhaps the situation moderates a bit, and instead of growing at 8%, credit market debt grows at just half that rate. So what happens if credit just grows by 4% per year?
That gets us to $185 trillion, or another $128 trillion higher than today – a more than 3x increase:
Again, What might we borrow (only) $128 trillion for, over the next 30 years?
When I run these numbers, I am entirely confident that the rate of growth in debt between 1980 and 2013 will not be recreated between 2013 and 2043. With just one caveat: I’ve been assuming that dollars remain valuable. If dollars were to lose 90% or more of their value (say, perhaps due to our central bank creating too many of them?), then it’s entirely possible to achieve any sorts of fantastical numbers one wishes to see.
Think it could never happen?
Conclusion (to Part I)
This is the critical takeaway from all of the math above: For the Fed to achieve anything even close to the historical rate of credit growth, the dollar will have to lose a lot of value. I truly believe this is the Fed’s grand plan, if we may call it that, and it has nothing to do with what’s best for the people of this land. Instead, it’s entirely about keeping the financial system primed with sufficient new credit to prevent it from imploding.
That is, the Fed is beholden to a broken system; not anything noble.
In Part II: The Near Future May See One of the Biggest Wealth Transfers in Human History, we dive fully into the logic why GDP growth is very unlikely to support the rate of credit expansion that the Federal Reserve wants (or, more accurately, needs). And what will happen if it indeed doesn’t? A lot of painful, awful things – but central among them is a currency crisis.
Amidst the ensuing unpleasantness will be an awakening within today’s hyper-financialized markets to the huge imbalance now existing between paper claims and ownership of real things. A massive wealth transfer from those with ‘paper wealth’ (stocks, bonds, dollars) to those owning tangible assets (the productive value of which can’t easily be inflated away) will occur – and quickly, too.
Suggesting the key objective for today’s investor is answering: How do I make sure I’m on the right side of that wealth transfer?
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