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Findings & Forecasts 10/24/2012


Tech­noc­racy and the IMF: New Global Mon­e­tary System?

Beware of a new trial bal­loon being floated by the Inter­na­tional Mon­e­tary Fund, that is, “The Chicago Plan Revis­ited.”

According to British jour­nalist Ambrose Evans-Pritchard,

The con­juring trick is to replace our system of pri­vate bank-created money — roughly 97pc of the money supply — with state-created money. We return to the his­tor­ical norm, before Charles II placed con­trol of the money supply in pri­vate hands with the Eng­lish Free Coinage Act of 1666.

Specif­i­cally, it means an assault on “frac­tional reserve banking”. If lenders are forced to put up 100pc reserve backing for deposits, they lose the exor­bi­tant priv­i­lege of cre­ating money out of thin air.

The nation regains sov­er­eign con­trol over the money supply. There are no more banks runs, and fewer boom-bust credit cycles. [Emphasis added]

At a time when some ivory-tower econ­o­mists are pre­dicting the end of cap­i­talism, any talk of mon­e­tary reform by global banking orga­ni­za­tions is worthy of atten­tion, if not alarm. The IMF has been one of the pri­mary engines of glob­al­iza­tion, having worked in con­junc­tion with the World Bank and the Bank for Inter­na­tional Set­tle­ments for decades.

The IMF has now dug up the so-called “Chicago Plan” from the Uni­ver­sity of Chicago dating back to 1936, and is seri­ously studying it for modern application.

Beware. As Patrick Henry once stated, “I smell a rat.”

First, the Uni­ver­sity of Chicago was orig­i­nally cre­ated with a grant from John D. Rock­e­feller in 1890, and has long been an aca­d­emic vassal of Rock­e­feller inter­ests. In 1936 during the heat of the Great Depres­sion, leading econ­o­mists were looking for alter­na­tives to cap­i­talism and mon­e­tary theory. Tech­noc­racy, for instance, was one attempt to sug­gest an alter­na­tive eco­nomic system, during the same time period. Nei­ther Tech­noc­racy nor the Chicago Plan were suc­cessful at the time.

According to the IMF’s study,

“The decade fol­lowing the onset of the Great Depres­sion was a time of great intel­lec­tual fer­ment in eco­nomics, as the leading thinkers of the time tried to under­stand the apparent fail­ures of the existing eco­nomic system. This intel­lec­tual struggle extended to many domains, but arguably the most impor­tant was the field of mon­e­tary eco­nomics, given the key roles of pri­vate bank behavior and of cen­tral bank poli­cies in trig­gering and pro­longing the crisis.

“During this time a large number of leading U.S. macro­econ­o­mists sup­ported a fun­da­mental pro­posal for mon­e­tary reform that later became known as the Chicago Plan, after its strongest pro­po­nent, pro­fessor Henry Simons of the Uni­ver­sity of Chicago. It was also sup­ported, and bril­liantly sum­ma­rized, by Irving Fisher of Yale Uni­ver­sity, in Fisher (1936). The key fea­ture of this plan was that it called for the sep­a­ra­tion of the mon­e­tary and credit func­tions of the banking system, first by requiring 100% backing of deposits by government-issued money, and second by ensuring that the financing of new bank credit can only take place through earn­ings that have been retained in the form of government-issued money, or through the bor­rowing of existing government-issued money from non-banks, but not through the cre­ation of new deposits, ex nihilo, by banks.” [Emphasis added.]

I have long argued that the Fed­eral Reserve Bank, estab­lished in 1913, is a pri­vate cor­po­ra­tion whose pri­vate stock­holders were the major banks of that time period. The Fed was a super-lobby that would work directly with gov­ern­ment to orches­trate lending and col­lecting on an orderly basis. At that time, the banks did not “own” the var­ious nations of the world, so they could not sum­marily dic­tate public policy.

The Frac­tional Reserve system that cur­rently spans the globe was never intended to be a per­ma­nent solu­tion to wealth dom­i­na­tion. By def­i­n­i­tion from the start, the lenders would even­tu­ally wind up owning every­thing (all the resources) in society, and the frac­tional banking system would become obsolete.

The IMF is sug­gesting that the day of the Cen­tral Bank (the Fed included) may be over, and that the power of cur­rency cre­ation and issuance should instead be given to the state. This would lit­er­ally pull the rug out from under all the cen­tral banks of the world, requiring their untimely disbandment.

But, so what? Corporation’s change strategy all the time. If the cen­tral banks are essen­tially a ser­vice provider to their major con­stituent banks, then they will be useful only as long as they can pro­vide a ben­e­fi­cial ser­vice; there­after, they are discardable.

The orig­inal Chicago Plan and the Chicago Plan Revis­ited make no ref­er­ence to the eco­nomic system of Tech­noc­racy (also from the 1930’s) or the use of Energy Credits as cur­rency. How­ever, during the 1930’s and beyond, the Uni­ver­sity of Chicago has been a hotbed of Technocracy.

For instance, Pro­fessor Patricio Silva wrote In the Name of Reason: Tech­nocrats and Pol­i­tics in Chile that the so-called “Chicago boys” (Chilean econ­o­mists edu­cated at the Uni­ver­sity of Chicago) brought Tech­noc­racy to Chile where it sur­vived sev­eral changes of polit­ical power.

The “Chicago Boys” were edu­cated by Milton Friedman and Arnold Har­berger as the result of a State Depart­ment ini­tia­tive called the “Chile Project” that was orga­nized in the 1950’s and finan­cially spon­sored by the Ford Foundation.

Thus, I will sug­gest that the IMF’s new plan could be an impor­tant and nec­es­sary stepping-stone toward tying the issuance of cur­rency to energy policy instead of eco­nomic policy.

This link is not trivial. A state that arbi­trarily deter­mines the nec­es­sary level of cur­rency required to make its economy work must have some form of linkage to a non-political and more stable touch­stone. For many years, gold was such a touchstone.

While gold is not in the imme­diate pic­ture for mon­e­tary policy, energy is!

The United Nations has been pushing hard for a new global “Green Economy” that would replace the cur­rent “brown economy” based on fossil fuel and over-consumption in devel­oped nations.

“A green economy implies the decou­pling of resource use and envi­ron­mental impacts from eco­nomic growth… These invest­ments, both public and pri­vate, pro­vide the mech­a­nism for the recon­fig­u­ra­tion of busi­nesses, infra­struc­ture and insti­tu­tions, and for the adop­tion of sus­tain­able con­sump­tion and pro­duc­tion processes.” [Emerging policy issues, UNEP, 2010, p. 2] [Emphasis added]

If mon­e­tary cre­ation is handed back to the state, the above “decou­pling” could easily become a reality. Con­versely, as long as the cen­tral bank system imposes a frac­tional reserve system on global mon­e­tary policy, it cannot become a reality.

Again I say, Beware! The argu­ments for scrap­ping the Fed will sound appealing to everyone: no more boom/bust cycles, no more bankster rip-offs, etc. Just remember that the global elite do not exer­cise influ­ence in order to ben­efit anyone except themselves.

In this writer’s con­sid­ered opinion, the next phase of global dom­i­na­tion will focus on the direct con­trol of resources, rather than indi­rect own­er­ship via debt-based money.

Defla­tion vs. Spending

An economy grows when spending occurs for goods and ser­vices. There are three gen­eral sources of spending: Per­sonal, busi­ness and government.

Since I have been talking about credit defla­tion for sev­eral years now, it is worth noting again that the only escape from defla­tion is spending. When spending caves in, the economy caves in with it.

Since Fed Chairman Ben Bernanke was appointed by George Bush on Feb­ruary 1, 2006,  his pri­mary nemesis has been defla­tion, not infla­tion. As the credit melt­down pro­gressed, con­sumer and busi­ness spending fled, leaving gov­ern­ment spending the only pos­sible source of rescue. This became painfully obvious as lending/borrowing activity did not pick up after interest rates were dropped to almost zero.

Thus, the var­ious stim­ulus and Quan­ti­ta­tive Easing pro­grams were directed to get the gov­ern­ment to spend, and hence, we now have a $16 tril­lion national debt and vir­tu­ally nothing to show for it. The economy has not recov­ered, jobs have not returned and global sen­ti­ment has rad­i­cally shifted to a policy of fiscal austerity.

Since 2007, the Amer­ican con­sumer has been limping along while slowly descending into the eco­nomic abyss. Wages are down, unem­ploy­ment is higher and banks aren’t lending. People are trying to spin the real estate market uptick as some kind of bottom, but the activity is more like oxygen-starved koi sucking for air in a stag­nant pond.

The fol­lowing excerpt from the October 2012 McAl­vany Intel­li­gence Advisor) aptly describes the state of the average consumer:

…con­sumers are in the worst finan­cial shape they’ve been in since the Great Depres­sion. One recent report showed that credit card bal­ances for the indebted (people who carry a bal­ance each month) have dropped nearly $2,000, from $16,383 in March 2010 to $14,517 in March 2012. This sounds like Amer­i­cans are finally get­ting a grip on their finances. Hardly. If you look at credit card debt for all house­holds, the average has only dropped from $7,219 to $6,772.

That’s not the worst news, though. The reason for the decrease is not that Amer­i­cans are paying off their debt. Tim Chen wrote on (5/30/2012): “The reality of the sit­u­a­tion is much grimmer. In 2010, credit card com­pa­nies wrote off seri­ously delin­quent debts, declaring a huge chunk of money uncol­lec­table. America’s credit card debt dropped. The charge-off rate, which is the per­centage of dol­lars that have been clas­si­fied uncol­lectible, jumped to 10.7% — a 300% increase from 2006.

“After losing a gar­gan­tuan number of pay­ments, credit card com­pa­nies began to exer­cise shrewder dis­cern­ment in issuing finan­cial prod­ucts. With credit cards more dif­fi­cult to obtain, average debt con­tinued to fall.

“So, no. A decrease in credit card debt does not indi­cate height­ened finan­cial lit­eracy, a recov­ering job market, or smarter spending habits. It means the sit­u­a­tion was beyond repair and required an arti­fi­cial reduction.”

The truth of the matter is that the Amer­ican con­sumer is com­pletely tapped out on credit. This was true before the housing crunch, as most home­owners used the equity in their home as a piggy bank to main­tain bloated lifestyles. When home prices dropped, they went under­water in a hurry. [Emphasis added]

So, do the math. Con­sumer spending is not recov­ering. Gov­ern­ment spending will shift due to inter­na­tional and internal demands for aus­terity. Busi­nesses are already cur­tailing spending on cap­ital goods and ser­vices. Who is left to spend? No one.

This is where we stand as of today. On the first of Jan­uary, how­ever, the employed uni­verse of workers are going to see sig­nif­i­cantly higher taxes taken from their pay­checks, thanks to the sunset of the Bush Tax Cuts of 2001.

A family with a $100,000 income will lose about $3,000, or 3 per­cent, of their spend­able income. Con­sid­ering how tight bud­gets are already, that $3,000 loss rep­re­sents a dis­pro­por­tionate per­centage of dis­cre­tionary spending… and it’s going to be painful to many households.

Thus, the spiral down into defla­tion continues.

— —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  — –  Note: Addi­tional con­tent on this page is avail­able only to Pre­mium sub­scribers of Find­ings & Fore­casts.
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11 Responses to “Findings & Forecasts 10/24/2012”

  1. Rob Noble says:

    So basi­cally the cur­rent system is fin­ished so we have no choice but to start a new one. How con­ve­nient. So I sup­pose the elite will just abuse the new system into the ground and get even more filthy rich and come up with some­thing else a 100 years from now. Well good luck, might be harder to imple­ment than they think. Of course they just slip it in a little bit at a time. My thoughts are is the cur­rent system going to col­lapse too fast for them to grad­u­ally work into the new model? To me that’s what looks like is going on and that will result in com­plete chaos. Some say that’s the plan, I am not so sure if it’s just not the thief that’s got used to get­ting away with every­thing and has become so bold and greedy it thinks it can just do what it wants with no reper­cus­sions. We’ll see about all that.

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  2. Gloria Jean says:

    am sus­pi­cious that the IMF is coming up with some­thing that sounds so good …
    that is, some­thing that might get wide spread approval at first from critics of the cur­rent system, the FED and cen­tral banks

    Everyone knows that the cur­rent banking system we have is headed for a fall, including the powers that be, so some­thing has to be
    done so that people can still buy and sell things, right?

    State printed money? Okay, but WHO OR WHAT IS THE STATE?

    It is basi­cally GOVERNMENT. And SO WHO cur­rently, owns “gov­ern­ment?”
    (The wealthy still do it seems, and so basi­cally the banks do.)

    Con­gress and our two Pres­i­den­tial can­di­dates have BOTH
    been funded (or bribed) by the banksters. SO THEY are bought and paid for.

    So what would really change? Nothing much at first except frac­tional reserve lending.. and the FED.
    For the most part anyway. The banks are all in trouble anyway. They are looking for a way to
    wiggle out of the deep deep deep trouble they are in with all the short deriv­a­tive prob­lems they have.
    What would they do? All go bank­rupt and refuse to deliver the goods they have over sold?

    The CEO of city bank and the guy just up under him recently .… retired. (Left)– so some­thing big is going on there.

    SO if the wealthy own the gov­ern­ment (The State) and THE STATE starts printing the money,
    (Instead of the FED) then not much has really changed. Why? Because the United States of America is still a
    cor­po­ra­tion. The gov­ern­ment is still actu­ally working for a cor­po­rate entity. (It is not the real gov­ern­ment of the people.)

    THEY (The elite) are still in con­trol, and now they can make and enforce the laws via the alleged “gov­ern­ment”
    of the people which is really a gov­ern­ment of the corporation.

    They still con­trol the money because they still con­trol the gov­ern­ment and the laws.

    Total con­trol is, after all, what they want. Having the STATE print the money is not going to change much. It is
    an illu­sion that fools the people into thinking they are win­ning because the people still think they elect the
    gov­ern­ment. But they are wrong. Money rules the government.

    In order to put money into the hands of the people, the people have to have more con­trol of the gov­ern­ment,
    —which they don’t have. So money has to be taken out of pol­i­tics before it can work in favor of the people.

    We need a non-political mon­e­tary system.

    Here is a book I have been looking at, but have not fin­ished. It is a little hard to wrap my head around and understand.

    “Pri­vate Enter­prise money” non-political money system. by E.C. Riegel, 1944

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  3. Just remember the motto:“If it looks and sounds too good to be true, it almost cer­tainly is.“
    If the IMF is proposing a new mon­e­tary system, it is because the present system of Inter­na­tional Finance (Fiat Pri­vate Cur­rency) is totally bank­rupt and dis­cred­ited, and such a pro­posal, if it has any cred­i­bility, would almost cer­tainly be the only way the global banking system can save it own neck.
    I have done a fair amount of study of the theory of Social Credit which I believe has merit,
    and their are web­sites where the prin­ciple of Social Credit can be studied.
    Do the sug­gested pro­posals of a new global mon­e­tary system mean the end of the Roth­schild (Red Shield) global dom­i­na­tion of Inter­na­tional Finance?
    Can the Rothschild’s afford to be so gen­erous as to allow coun­tries to intro­duce and con­trol their own Sov­er­eign Cur­rency?
    Seeing is believing, but don’t hold your breath.
    How long will it be when we see the news headline:“America and Israel promise not to attack Iran or ini­tiate WW3? Dream on sucker!!!


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  4. Kent Mills says:

    So it’s very pos­sible that by pub­licly hating on The Fed, we’re actu­ally sowing the seeds of our own destruc­tion by set­ting up public sen­ti­ment for ANYTHING that replaces it. The Fed has never been as dan­gerous as the IMF. End the IMF! We think life is tough now — wait until the IMF con­trols and allo­cates resources!

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  5. Patrick Wood says:

    Well, people exer­cise wishful thinking in that if the Fed is removed from the pic­ture, somehow a more benev­o­lent insti­tu­tion will take its place. Not! Simply “hating the Fed”, as most Ron Paul fol­lowers are very good at, is naive and short-sighted.

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  6. DerekB says:

    Direct sov­er­eign con­trol of cur­rency just means a future rife with hyper­in­fla­tion. This is the ace in the hole for the largest debtors in the his­tory of the human race (Nation States). The modern day green­backer move­ment, led by hilar­i­ously inept char­la­tans like Ellen Brown, is growing serious steam. People still look at gov­ern­ment as a source of pros­perity, as irra­tional and false as his­tory demon­strates that to be.

    During the great bank runs of the 19th, 18th, and 17th cen­turies, Scot­land and Canada both stand out as shining exam­ples of why gov­ern­ments and cen­tral banks both are hor­rible ideas and lead to poverty — when cus­tomers are allowed to fully dis­crim­i­nate on which banks they use, and when banks are allowed to actu­ally issue their OWN money (or any other pri­vate party), the market auto­mat­i­cally rewards safe insti­tu­tions that hold full or nearly-full reserves. During the bank runs in Eng­land, not a single Scot­tish bank (who prac­ticed “bar­baric” bank prac­tices without a cen­tral bank or cen­tral cur­rency issuer) closed down — those depos­i­tors retained their savings.

    Even with “full reserves” of sov­er­eign cur­rency, the issue then becomes that the sov­er­eign insti­tu­tion will simply print up what­ever it needs to spend at any given time. There won’t BE a bond market, because bonds will not be nec­es­sary any­more, there­fore there will be nothing to drop like a stone in the face of prof­li­gate spending.

    @Patrick Wood — I can hate the fed all I want — all vio­lent monop­o­lies are a detri­ment to human progress. I would also hate the idea of a full state cur­rency monopoly as well. Pri­vate money is the only way to go — his­tory demon­strates it aptly.

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  7. Patrick Wood says:

    Thanks for taking the time to express your thoughts. My main point was, if Tech­noc­racy is what the elit­ists are pushing for then they will even­tu­ally replace the global debt-based cur­rency with some­thing com­pat­ible with Tech­noc­racy. Both are scary sce­narios, and nei­ther will be good for the common man.

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  8. I like fol­lowing these updates. It just adds that spe­cial some­thing to my afternoon.

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What is Globalization?

It is the col­lective effect of pur­poseful and amoral manip­u­la­tion that seeks to cen­tralize eco­nomic, polit­ical, tech­no­log­ical and soci­etal forces in order to accrue max­imum profit and polit­ical power to global banks, global cor­po­ra­tions and the elit­ists who run them. It is rapidly moving toward an full and final imple­men­ta­tion of Technocracy.

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What is Technocracy?

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Find­ings & Fore­casts 10/24/2012, 5.0 out of 5 based on 1 rating

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What is Smart Grid?

Smart Grid is the national and global imple­men­ta­tion of dig­ital and Wi-fi enabled power meters that enable com­mu­ni­ca­tion between the appli­ances in your home or busi­ness, with the power provider. This pro­vides con­trol over your appli­ances and your usage of elec­tricity, gas and water.

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Who is M. King Hubbert?

Hub­bert was a geo-physicist who co-founded Tech­noc­racy, Inc. in 1932 and authored its Tech­noc­racy Study Course. In 1954, he became the cre­ator of the “Peak Oil Theory”, or “Hubbert’s Peak” which the­o­rized that the world was rapidly run­ning out of carbon-based fuels. Hub­bert is widely con­sid­ered as a “founding father” of the global warming and green movements.

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Who is R. Buck­min­ster Fuller?

A pio­neer in global eco­log­ical theory, Fuller (1895 – 1984) was the first to sug­gest the devel­op­ment of a Global Energy Grid that is today known as the Global Smart Grid. Fuller is widely con­sid­ered to be a “founding father” of the global green move­ment, including global warming, Sus­tain­able Devel­op­ment, Agenda 21, etc.

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Is the Venus Project like Technocracy?

The Venus Project, founded by Jacque Fresco, is a utopian, modern-day iter­a­tion of Tech­noc­racy. Like Tech­noc­racy, it scraps cap­i­talism and pro­poses that “a resource-based economy all of the world’s resources are held as the common her­itage of all of Earth’s people, thus even­tu­ally out­growing the need for the arti­fi­cial bound­aries that sep­a­rate people.” The appli­ca­tion of tech­nology is the answer to all of the world’s prob­lems, including war, famine and poverty.

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