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oftwominds-Charles Hugh Smith: The Dollar and the Deep State

oftwominds-Charles Hugh Smith: The Dollar and the Deep State.

If we consider the Fed’s policies (tapering, etc.) solely within the narrow confines of the corporatocracy or a strictly financial context, we are in effect touching the foot of the elephant and declaring the creature to be short and roundish.

I have been studying the Deep State for 40 years, before it had gained the nifty name “deep state.” What others describe as the Deep State I term the National Security State which enables the American Empire, a vast structure that incorporates hard and soft power–military, diplomatic, intelligence, finance, commercial, energy, media, higher education–in a system of global domination and influence.

Back in 2007 I drew a simplified chart of the Imperial structure, what I called the Elite Maintaining and Extending Global Dominance (EMEGD):

At a very superficial level, some pundits have sought a Master Control in the Trilateral Commission or similar elite gatherings. Such groups are certainly one cell within the Empire, but each is no more important than other parts, just as killer T-cells are just one of dozens of cell types in the immune system.

One key feature of the Deep State is that it makes decisions behind closed doors and the surface government simply ratifies or approves the decisions. A second key feature is that the Deep State decision-makers have access to an entire world of secret intelligence.

Here is an example from the late 1960s, when the mere existence of the National Security Agency (NSA) was a state secret. Though the Soviet Union made every effort to hide its failures in space, it was an ill-kept secret that a number of their manned flights failed in space and the astronauts died.

The NSA had tapped the main undersea cables, and may have already had other collection capabilities in place, for the U.S. intercepted a tearful phone call from Soviet Leader Brezhnev to the doomed astronauts, a call made once it had become clear there was no hope of their capsule returning to Earth.

Former congressional staff member Mike Lofgren described the Deep State in his recent essay Anatomy of the Deep State:

There is another, more shadowy, more indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The subsurface part of the iceberg I shall call the Deep State, which operates according to its own compass heading regardless of who is formally in power.

The term “Deep State” was coined in Turkey and is said to be a system composed of high-level elements within the intelligence services, military, security, judiciary and organized crime.

I use the term to mean a hybrid association of elements of government and parts of top-level finance and industry that is effectively able to govern the United States without reference to the consent of the governed as expressed through the formal political process.

I would say that only senior military or intelligence officers have any realistic grasp of the true scope, power and complexity of the Deep State and its Empire.Those with no grasp of military matters cannot possibly understand the Deep State. If you don’t have any real sense of the scope of the National Security State, you are in effect touching the foot of the elephant and declaring the creature is perhaps two feet tall.

The Deep State arose in World War II, as the mechanisms of electoral governance had failed to prepare the nation for global war. The goal of winning the war relegated the conventional electoral government to rubber-stamping Deep State decisions and policies.

After the war, the need to stabilize (if not “win”) the Cold War actually extended the Deep State. Now, the global war on terror (GWOT) is the justification.

One way to understand the Deep State is to trace the vectors of dependency. The Deep State needs the nation to survive, but the nation does not need the Deep State to survive (despite the groupthink within the Deep State that “we are the only thing keeping this thing together.”)

The nation would survive without the Federal Reserve, but the Federal Reserve would not survive without the Deep State. The Fed is not the Deep State; it is merely a tool of the Deep State.

This brings us to the U.S. dollar and the Deep State. The Deep State doesn’t really care about the signal noise of the economy–mortgage rates, minimum wages, unemployment, etc., any more that it cares about the political circus (“step right up to the Clinton sideshow, folks”) or the bickering over regulations by various camps.

What the Deep State cares about are the U.S. dollar, water, energy, minerals and access to those commodities (alliances, sea lanes, etc.). As I have mentioned before, consider the trade enabled by the reserve currency (the dollar): we print/create money out of thin air and exchange this for oil, commodities, electronics, etc.

If this isn’t the greatest trade on Earth–exchanging paper for real stuff– what is?While I am sympathetic to the strictly financial arguments that predict hyper-inflation and the destruction of the U.S. dollar, they are in effect touching the toe of the elephant.

The financial argument is this: we can print money but we can’t print more oil, coal, ground water, etc., and so eventually the claims on real wealth (i.e. dollars) will so far exceed the real wealth that the claims on wealth will collapse.

So far as this goes, it makes perfect sense. But let’s approach this from the geopolitical-strategic perspective of the Deep State: why would the Deep State allow policies that would bring about the destruction of its key global asset, the U.S. dollar?

There is simply no way the Deep State is going to support policies that would fatally weaken the dollar, or passively watch a subsidiary of the Deep State (the Fed) damage the Deep State itself.

The strictly financial arguments for hyper-inflation and the destruction of the U.S. dollar implicitly assume a system that operates like a line of dominoes: if the Fed prints money, that will inevitably start the dominoes falling, with the final domino being the reserve currency.

Setting aside the complexity of Triffin’s Paradox and other key dynamics within the reserve currency, we can safely predict that the Deep State will do whatever is necessary to maintain the dollar’s reserve status and purchasing power.

Understanding the “Exorbitant Privilege” of the U.S. Dollar (November 19, 2012)

What Will Benefit from Global Recession? The U.S. Dollar (October 9, 2012)

Recall Triffin’s primary point: countries like China that run trade surpluses cannot host reserve currencies, as that requires running large structural trade deficits.

In my view, the euro currency is a regional experiment in the “bancor” model,where a supra-national currency supposedly eliminates Triffin’s Paradox. It has failed, partly because supra-national currencies don’t resolve Triffin’s dilemma, they simply obfuscate it with sovereign credit imbalances that eventually moot the currency’s ability to function as intended.

Many people assume the corporatocracy rules the nation, but the corporatocracy is simply another tool of the Deep State. Many pundits declare that the Powers That Be want a weaker dollar to boost exports, but this sort of strictly financial concern is only of passing interest to the Deep State.
The corporatocracy (banking/financialization, etc.) has captured the machinery of regulation and governance, but these are surface effects of the electoral government that rubber-stamps policies set by the Deep State.

The corporatocracy is a useful global tool of the Deep State, but its lobbying of the visible government is mostly signal noise to the Deep State. The only sectors that matter are the defense, energy, agriculture and international financial sectors that supply the Imperial Project and project power.

What would best serve the Deep State is a dollar that increases in purchasing power and extends the Deep State’s power. It is widely assumed that the Fed creating a few trillion dollars has created a massive surplus of dollars that will guarantee a slide in the dollar’s purchasing power and its demise as the reserve currency.

Those who believe the Fed’s expansion of its balance sheet will weaken the dollar are forgetting that from the point of view of the outside world, the Fed’s actions are not so much expanding the supply of dollars as offsetting the contraction caused by deleveraging.

I would argue that the dollar will soon be scarce, and the simple but profound laws of supply and demand will push the dollar’s value not just higher but much higher. The problem going forward for exporting nations will be the scarcity of dollars.

If we consider the Fed’s policies (tapering, etc.) solely within the narrow confines of the corporatocracy or a strictly financial context, we are in effect touching the foot of the elephant and declaring the creature to be short and roundish. The elephant is the Deep State and its Imperial Project.

The State is a Parasite on Society | The Daily Sheeple

The State is a Parasite on Society | The Daily Sheeple.

Paul Joseph Watson
February 15th, 2014


The state forbids murder, yet organizes murder on a colossal scale.

The state punishes theft, yet engages in the rampant looting of society’s productivity through taxation at the barrel of a gun.

The state is not necessary for the survival of society, the state is a parasite on society.

The state is the ultimate anti-social, anti-society entity ever visited upon humanity.

Delivered by The Daily Sheeple

Contributed by Paul Joseph Watson of Infowars.

oftwominds-Charles Hugh Smith: The Real State of the Union: The Erosion of Community

oftwominds-Charles Hugh Smith: The Real State of the Union: The Erosion of Community.

The Central State and its core directives, central planning and ever-widening control of every aspect of life, is eroding the human essential: community.

Rather than the rah-rah phoniness of the President’s State of the Union speech,which was predictably filled with Soaring Rhetoric ™ and promises of more central planning and state expansion, let’s consider the real state of the union.

Two related truths are self-evident: that community is essential to human progress, communication, development and well-being, and that the current global systems of the central state (socialism) and cartel-state capitalism (capitalism) actively dismantle community.

These basics inform the view that the only way forward is a community-based economy that recognizes and restores community as the foundation of human life.
On the most fundamental survival level, if humans were isolated, solitary hunter-gatherers, humans would likely have gone extinct long ago, as we simply aren’t as capable as our competitors. If the species did endure, it would be equivalent to other solitary Great Apes–small in number and isolated to small pockets where it could survive.

Our dominance (“success” if you prefer) as a species flows directly from our social nature and the development of ways to spread better techniques, i.e. knowledge and cooperation, via spoken and eventually written language.

Yes, opposable thumbs boosted our toolmaking abilities and year-round fertility boosted our reproduction rates, but these advantages would be marginal were we a species of isolated individuals. Indeed, the fundamentals of sociobiology support the notion that human longevity results partly from the genetic advantages
bestowed by grandparents, i.e. a generation of elders who can aid in child-rearing and serve as a repository for experiential knowledge/wisdom that would be lost to short-lived species.

In our current system, the impersonal state replaces the core value created by participating in community with welfare checks; there is no need to bother cooperating and working with others once the state provides the basics of life.

A similiar dynamic is implicit in corporate capitalism, which assumes that large corporations dedicated to pursuing profit wherever such profits might be greatest can successfully replace communities with corporate “communities” of workers and supervisors.

In The Strange Disappearance of Cooperation in America (submitted by correspondent Cheryl A.), The author proposes that social cooperation waxes and wanes with wealth inequality: as inequality rises, so too does polarization. People become less cooperative and socially engaged as polarization increases.

The correlation between loss of community and wealth inequality is only the first step. This sociological perspective misses the political point, which is the structure of our centralized state-dominated economy leads to both wealth inequality and the loss of community from the same dynamic: the substitution of the state/corporation as the organizing/controlling structure for society, displacing community.

Want to Reduce Income/Wealth Inequality? Abolish the Engine of Inequality, the Federal Reserve (January 28, 2014)

Our state-cartel system creates aimless armies of unemployed people who receive just enough from the state that the incentive to rebel is eroded, but this does not fill the gap left by the destruction of community with anything positive or fulfilling: it simply maintains the void via bribery.

The entire notion that corporations pursuing maximization of profit for their shareholders can organize society to benefit everyone is nonsensical; how could organizations dedicated to reaping profits replace multi-layered communities that meet needs that cannot necessarily be commoditized for a profit?

Longtime correspondent Bart D. cogently summed up these issues:

“When boiled down to real world conditions, for a society and economy to operate sustainably and successfully, people have to do things for and with each other, and BE SEEN to be doing it.

From an evolutionary perspective a community would form the basis of the economy in which individuals lived their lives. Each participant would have known, in social terms, every other participant to some degree.
In such a ‘traditional’ system, individual participants were heavily incentivised to be valued by others. Being valued for your good works and deeds increased your chances of having other individuals help you out when you were individually unable to support yourself for some reason (sickness, old age, personal disaster).

In economies of small and local scale you really strived to have others feel they owed you something based purely on their sense of fairness and conscience, because people interacted economically and socially with the same people. This creates a pool of good will that functions as ‘social security’ (This has since been transmuted into the Frankenstein of ‘debt’ and ‘taxes’ both of which are grudging rather than volunteered.)

That type of interaction has been and is continuing to be eroded away in the modern economic system that seeks desperately to separate social relationships from economic relationships.

Thus we have the disconnect between small business taxpayers and welfare recipients that sets up the perfect conditions for corporatocracy and the bizarre ever-expanding debt economic models of the west.

What the architects of these current systems have lost sight of is that the illusion they created by pumping free credit into the system only works on some parts of the economic system and at the cost of GREATLY undermining the social component of the system.”

Richard Dawkins makes much the same point in this interview published in The New Republic:

“Now, there is another kind of altruism that seems to go beyond that, a kind of super-altruism, which humans appear to have. And I think that does need a Darwinian explanation. I would offer something like this: We, in our ancestral past, lived in small bands or clans, which fostered kin altruism and reciprocal altruism, because in these small bands, each individual was most likely to be surrounded by relatives and individuals who he was going to meet again and again in his life. And so the rule of thumb based into the brain by natural selection would not have been, Be nice to your kin and be nice to potential reciprocators. It would have been, Be nice to everybody, because everybody would have been included.”

This is not to suggest there isn’t a role for the state and profit-seeking organizations in society or the economy; it is simply to state the obvious that the wholesale replacement of community by the state has eroded an essential of human life that cannot be filled by impersonal states and corporations. States and corporations cannot “fix” what’s broken with the model of state-cartel capitalism/socialism because the model itself is the problem.

This essay was drawn from Musings Report 46 (2013), one of the weekly reports sent exclusively to subscribers and major contributors (i.e. those who contribute $50 or more annually).

We the People… » Golem XIV – Thoughts

We the People… » Golem XIV – Thoughts.

The fact that the phrase sounds antique should warn us of the scale of our folly. We have lost, given away, pawned the power we once claimed. We have ceased to be who we once were. Or at least who we claimed and hoped to be – The People. Now who are we? The Consumer?  The Unemployed. The Unwanted?  ”We, the Unwanted” does not have the same ring about it does it? And yet that is what we are fast becoming. It is time to chose. Sit in front of your television or computer screen and let it sooth you, until one day you too find you have have become one of the unheard, unlamented, Unwanted. Or reach out to others and grasp hold.

It is surely time that we re-assert what the phrase “We, The People” once meant. It is symbolic I know. But symbols are powerful. And the powerful fear them.

For too long now we have been supine, docile and cowed. There have been sputterings of resolve when a million people took to the streets to oppose the War in Iraq. But the rulers of the day ignored us and ‘the people’ simply went home vaguely disquieted, perhaps a little hurt at being ignored but mainly just confused as to what to do next – if anything.

For decades now we have let others have the initiative, let others define what was acceptable and legitimate. When it was never their position to do so. This must stop.

Once, a certain people declared, “No taxation without representation.” It was and still is a simple idea. You may not tax me unless you represent my interests. Only those with my interests in mind may ask me for taxes. Today that definitiion of democracy has withered and been quietly replaced by another similar sounding but actually radically different version – I would say perversion – of democracy. Today we are taxed by people who represent every interest but ours. They are still representatives but not of our interests. Democracy has now become a kind of opera – more and more lavish in direct proportion to its separation from ordinary people and their lives.  Every four or five years we get to chose between two teams who represent some interest which is not ours. They may represent the interests of bankers, or global corporations, or militarists and the industrial complex which gets rich from their adventures, or some other grouping within the machinery of the State, or the intersts of a powerful global 1% – whatever interest they serve it is never yours and mine. For those who will clamour and say the Democrats or Labour or La Gauche represent the interests of the labour unions, WAKE UP!  It’s been decades since that was even partially true. Labour under Blair and Brown was Thatcherism by another name and ignored a million people who said very clearly and en masse, that the Bush/Blair war was unjust, illegal and unwanted. The Democrats under Obama followed the same financial and economic ideology as Bush, even chosing the same people to run things, and was as warlike and arrogant as well. Change? Tell it to a moron. He might believe you.

Democracy is broken. No one represents us. We are allowed only to chose between different teams of The Entitled who, once chosen, ignore us completely. The whole idea of a mandate has mutated. Once that idea meant that a government could do what it had said it would do when it was trying to win our votes. Beyond those things, it had to consider ‘The People’.  Today all parties consider that being elected means to be handed absolute power to do whatever they feel like doing, whatever they can ram through the tattered remains of accountability and oversight.

Elected dictatorship in installments is what we have today.  And when each installment, no matter the different names and colours of the teams, is almost indistinguishable from the last, what is representative democracy if not a street parade of oversized cartoon characters and their pantomimed arguments. Are we not amused?

If we do not speak up soon we will find when we finally do, nothing is heard but grunting and bleating. We are, to borrow a phrase from the brilliant Roberto Callaso, already walking through a vast slaughter house. And those who run it have no good intent.

It is past time when we must revivify what We the People means. We must stop reacting like frightened animals and take the initiative.We cannot allow those who presume to rule over us to continue to tell us what ‘must’ be done and to over-rule all debate by  insisting ‘there is no alternative.’ We must state what We the People will accept and what we won’t, what we regard as legitimate and what is not. It is for us to decide these things not them. It may seem like just words and on one level of course it is. But it was only words when it was said the first time. What those words did the first time and can do again, is to stop our rulers’ proclamations always being against a blank and passive background. Simply by declaring what We will and won’t tolerate or accept we force their proclamations to appear as what they are – aggressive, partisan and debateable.

You might say that it will still be just words and that blood would still have to be spilt upon the ground before their point had force. Which may be true. But still, simply by re-stating that there IS a “We the People” we take a stand, and are heard.


So here is my suggestion, for what it might be worth – What matters is that we state what WE will and won’t accept, what WE do and do not recognize as legitimate. What matters is how many of us sign. It does not matter that we may not all agree or that we may have differing lists. What matters is that they are not so different, that we can all stand together, and all take back what is ours – the power to DECIDE for ourselves what powers we lend and what powers we do NOT.

We the People:

Will not accept taxation for the purpose of paying off, even temporarily, private banking or other financial debts.

We will not accept the rulings of international arbitration panels on which our interests are not represented and which are convened on the basis of Bilateral Investment Treaties about which we were not consulted.

We will do not recognize the right of bond holders of ANY standing to be given seniority over the tax payers and people of a nation. We will NOT bail them out.

We reserve the sovereign right to decide in the event of another finacial crisis, who does not get paid, whose wealth is anulled. It is not for the unelected market and its experts to tell us.

We, the people do not accept the right or authority of private or unnaccountable State organizations to collect, hold or use private data gathered by any means that the law and courts have not specifically and publically granted.

We do not accept the legitimacy of any private law enforcement body.

We do not accept that there is any justification for secret or unaccountable bodies to hold any power over us. We simply do not recognize they have any legitimacy.

We will not tolerate military actions taken in secret without any parliamenary and public accountabilbity and permission.

We reserve the absolute right to hold to public and legal account any leader who takes actions which disregard the above. No elected official is above the law and no leader has the power to aquit those the courts have proceeded against.

No organization is above or outside the law.

We the People do not accept that any organization is too big to prosecute or too big to fail. Any organization that becomes so or remains so depsite this clear instruction, and then fails, forfeits its entire worth to the public purse at a post bankruptcy price.

I offer this as a start only. Others will no doubt be better informed and able to formulate a far clearer, better and sharper declaration.

If they do, I would like to sign it and offer it to as many others as technology will permit me to reach, for them to consider signing. The internet gives us this chance, to put up a document that any number of ordinary people can chose to sign. People might wish to have a seperate version for each Nation. Or, in a global world, perhaps we need to remain together as the global 99%. What matters is that enough of us sign so we can really say with a single voice – WE THE PEOPLE serve you notice that we are back!

oftwominds-Charles Hugh Smith: Pimping the Empire, Progressive-Style

oftwominds-Charles Hugh Smith: Pimping the Empire, Progressive-Style.

Supporting the central state to protect your favored cartels is simply pimping for the Empire.

The central illusion of both Left (so-called Progressives) and Right (so-called conservatives) is that the Central State’s essentially unlimited powers can be narrowly directed to further their agenda.

(I say “so-called” because the “Progressives” are not actually progressive, and the “Conservatives” are not actually conservative. Those labels are Orwellian double-speak, designed to mask the disastrous consequences of each ideology’s actual policies.)

Let’s begin by stipulating that ideology, any ideology, is an intellectual and emotional shortcut that offers believers ready-made explanations, goals, narratives and enemies without any difficult, time-consuming analysis, study or skeptical inquiry. This is the ultimate appeal of ideology: accepting the ideology relieves the believer of the burdens of analysis, skeptical inquiry, uncertainty/doubt and responsibility: all the answers, goals and narratives are prepackaged and mashed together for easy consumption.

This is one of the core messages of Erich Fromm’s classic exploration of ideology and authoritarianism, Escape from Freedom.

And what is the essential foundation of authoritarianism? A central state. This is not coincidental.

What few grasp is the teleology of the centralized state: by its very nature (i.e. as a consequence of its essentially unlimited powers), the central state is genetically programmed to become an authoritarian state devoted to self-preservation and the extension of its reach and power.

The central illusion of Progressives is that an all-powerful central state will not become a self-serving expansive empire, but will be content to wield its vast powers to protect its favored cartels/monopolies and distribute money skimmed from the citizenry to Progressive constituencies such as public unions, healthcare and education.

This is an absurd fantasy. Once you give a central state essentially unlimited power to stripmine income and wealth from its citizens, create and/or borrow essentially unlimited sums of money, protect private (and politically powerful) cartels from competition and project military, financial and diplomatic power around the globe, the state will pursue Authoritarianism and Empire as a consequence of possessing those powers.

You can’t cede unlimited, highly concentrated powers to the central state and then expect the state not to fulfill its teleogical imperative to protect and extend its powers. The state with unlimited powers will be ontologically predisposed to view any citizen that seeks to limit its expansion of power as an enemy to be suppressed, imprisoned or marginalized.

The state with unlimited powers will be ontologically predisposed to protecting its powers by cloaking all the important inner workings of the state behind a veil of secrecy, and pursuing and punishing any whistleblowers who reveal the corrupt, self-serving workings of the state.

The state with unlimited powers will be ontologically predisposed to view any other nation or alliance as a potential threat, and thus the state will pursue any and all means to distrupt or counter those potential threats.

The state with unlimited powers will be ontologically predisposed to create and distribute propaganda to mask its self-serving nature and its perpetual agenda of extending its powers, lest some threat arise that limits those powers.

Democracy and a central state with unlimited powers are teleologically incompatible.

Progressives worship the central state and cede it essentially unlimited powers because they want that state to be powerful enough to impose their agenda on others and reward their constituencies.

But it doesn’t work that way. Once you cede unlimited, highly concentrated power to the central state, you get an authoritarian empire that is driven to protect itself from any threat at all costs–including democracy, though the state may maintain a facade of carefully managed “democracy” as part of its propaganda machinery.

You cannot have a state with essentially unlimited power and not end up with cartel-capitalism. So-called Progressives defend their favored cartel-fiefdoms of healthcare and education (and the “conservative” banking and defense cartels, too, to insure banks fund their campaigns and to protect their political flank with a “strong on defense” carte blanche to the National Security cartels), yet these cartels are busy bankrupting the nation and destroying the very programs Progressives claim to hold dear.

You can’t have it both ways, Progressives: if you support a central state with essentially unlimited power to protect and fund your constituent cartels, you end up with self-liquidating cartel-capitalism, a state bent on protecting itself from the uncertainties/risks of democracy and a global Empire that is teleologically driven to expand its reach and power by any and all means available.

Once you choose to cede essentially unlimited powers to the central state, all decisions after that are made in service of the state. The idea that the state can be limited to helping the needy is illusory.

The only legitimate duties of the state are limited: 1) protect the commons from destruction and exploitation; 2) protect the citizenry from exploitation or oppression by those with superior power or resources; 3) maintain transparency in all governance and 4) maintain a system of sound money.

The so-called Progressives will learn what the teleology of the state means in the real world when the state comes after them. Once you cede unlimited power to the central state, any attempt to limit that power marks you as an enemy.

War at Home: Covert action against U.S. activists.

Supporting the central state to protect your favored cartels and protect your political power over the state’s tax revenues is simply pimping for the Empire. You can call it “progressive,” but it’s still pimping for the Empire.

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