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Global Elite Fears: Currency Wars and Deflation

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Find­ings & Fore­casts 05/29/2013

Sys­temic eco­nomic decline begets credit con­trac­tion, leading to defla­tion, cur­rency wars and finally, phys­ical war.

In 2002, one noted econ­o­mist wrote “Ignore the ghost of defla­tion.” Another stated that “Defla­tion is an overblown worry.”

On November 21, 2002, then-Fed Gov­ernor Ben Bernanke spoke to the National Econ­o­mists Club in Wash­ington, D.C. about “Defla­tion: Making Sure ‘It’ Doesn’t Happen Here. He started with this premise: “With infla­tion rates now quite low in the United States, how­ever, some have expressed con­cern that we may soon face a new problem – the danger of defla­tion, or falling prices.”

Now, of all people, Bernanke knew full well that the mea­sure of defla­tion is not falling prices, but rather the con­trac­tion of overall credit which may or may not prompt falling prices. The rest of his speech argued against falling prices but did little to address credit contraction.

Nev­er­the­less, he gave two prin­cipal rea­sons on why the U.S. would not expe­ri­ence defla­tion in coming years:

  1. The first was the “resilience and struc­tural sta­bility” of the U.S. economy itself.
  2. The second was the Fed­eral Reserve System itself.

With an apparent atti­tude of over­con­fi­dence, Bernanke then stated,

“I am con­fi­dent that the Fed would take what­ever means nec­es­sary to pre­vent sig­nif­i­cant defla­tion in the United States and, more­over, that the U.S. cen­tral bank, in coop­er­a­tion with other parts of the gov­ern­ment as needed, has suf­fi­cient policy instru­ments to ensure that any defla­tion that might occur would be both mild and brief.

“…Thus, as I have stressed already, pre­ven­tion of defla­tion remains prefer­able to having to cure it. If we do fall into defla­tion, how­ever, we can take com­fort that the logic of the printing press example must assert itself, and suf­fi­cient injec­tions of money will ulti­mately always reverse a defla­tion.[emphasis added]

In 2013, we can look back over the last 11 years to see how accu­rate Bernanke’s analysis was. The Fed’s easy credit poli­cies cre­ated the biggest housing bubble and sub­se­quent bursting since the Great Depres­sion of the 1930’s. It pushed its internal interest rates to near-zero, pumped tril­lions of dol­lars of liq­uidity into the banking system. Even though some eco­nomic improve­ment has been seen in the last three years (in cer­tain sec­tors, at least), our overall economy has sta­tis­ti­cally made very little progress.

Where has all of the Fed’s new money gone?

cash balances vs reserves

In the above chart, Zero Hedge shows the dis­tri­b­u­tion of QE money landing in small banks (blue), large U.S. banks (red) and for­eign banks (yellow). (The chart can be enlarged for better viewing) The cor­re­la­tion here is 100 per­cent! For all those who are shaking their fist at domestic banks like JP Morgan Chase, Bank of America, Cit­i­group, etc., they would be shocked to see that con­sid­er­able more didn’t ben­efit U.S. banks at all!

So, let me ask the ques­tion: Has Bernanke’s clan­des­tine bailout of (pri­marily) Euro­pean banks saved Europe? The answer, of course, is “No.” Europe is offi­cially in reces­sion again, with sev­eral coun­tries still on the verge of eco­nomic col­lapse and depression.

Thus, the tools that Bernanke thought the Fed had, were illu­sory. For all the bluster, jaw­boning and arm-twisting, the Fed has proven impo­tent on all levels of oper­a­tion. The defla­tion scare orig­i­nally pro­duced because of Japan during the 1990’s con­tinues unabated, and the global eco­nomic system is mea­sur­ably weaker and dys­func­tional today than in 2002.

Cur­rency Wars

Why would I bother to even bring this up? I believe these events are forcing the global elite to change tac­tics, if not strategy, to achieve their beloved “New World Order.” They are extremely wor­ried that market forces are stronger than their ability to manip­u­late, and that the end result could set them back by sev­eral decades.

What now con­cerns the elite the most is the expan­sion of cur­rency wars which have been enabled and exac­er­bated by dys­func­tional cap­ital flows as described above. His­tor­i­cally, cur­rency wars are the out­come of a shrinking economy where nation-states must com­pete for a dwin­dling share of the global economy. Fur­ther­more, cur­rency wars invari­ably pre­cede real wars, as was the case in both WWI and WWII. This is not lost on the global elite.

As the dollar has been ral­lying sharply higher in recent weeks, a host of arti­cles has appeared heralding the death of the dollar. One writer recently stated, “For years now, the col­lapse of the dollar has been in the cards.” He doesn’t say who owns the cards or who the dealer is. CNBC asks today, “Is the Dollar Dying? Why US Cur­rency is in Danger:” “The U.S dollar is shrinking as a per­centage of the world’s cur­rency supply, raising con­cerns that the green­back is about to see its long run as the world’s pre­mier denom­i­na­tion come to an end.

Let me set the record straight. The dollar is not dying. How­ever, the reason it is rising in value has nothing to do with some inherent good­ness in the U.S. economy or the color green. Rather, it has to do with cur­rency wars where other nations are trying to devalue their own cur­ren­cies at the expense of the dollar. They go down, we go up. All of the Fed’s efforts to drive the dollar down (Yes, the Fed would be a cur­rency manip­u­lator too) have failed, pri­marily because the Fed is not greater than the com­bined dozens of nations who des­per­ately want to devalue.

Fred BergstenThis leads us to examine a recent lec­ture by C. Fred Berg­sten, senior fellow and director emer­itus of the Peterson Insti­tute for Inter­na­tional Eco­nomics. Berg­sten was an orig­inal founding member of the Tri­lat­eral Com­mis­sion, and one of the prin­cipal early archi­tects of the “New Inter­na­tional Eco­nomic Order” that it espoused. Bergsten’s major con­cern is revealed in his paper’s title — “Cur­rency Wars, The Economy of the United States And Reform Of The Inter­na­tional Mon­e­tary System.” He con­cludes his lengthy talk by stating,

“I would like to close with a his­tor­ical foot­note from over 40 years ago that bears some resem­blance to where we stand today. Four days after the Nixon shocks of August 1971, their archi­tect John Con­nally asked four out­siders (I had left the gov­ern­ment a few months ear­lier) to spend most of a day with him and his top team, led by Paul Vol­cker, at the Trea­sury. He began by saying “you know what we have done, please tell us what we should do next” – at which point I really began to worry! He then per­son­ally led us through six hours of intense dis­cus­sion, during which I stressed the oppor­tu­ni­ties they had cre­ated for sys­temic reform – espe­cially moving to flex­ible exchange rates. It became increas­ingly clear that Con­nally did not have sys­temic goals in mind, how­ever, and he finally brought the ses­sion to a close with the fol­lowing state­ment: “I appre­ciate the advice from you gen­tlemen and want to share my own phi­los­ophy with you before we break up: the for­eigners are out to screw us and our job is to screw them first. Thank you and goodbye.”

“Having spent most of the pre­vious three years as Henry Kissinger’s deputy for for­eign eco­nomic policy, I thought I was fairly sophis­ti­cated about the ways of both Wash­ington and the world – but even I was stunned by Connally’s xeno­phobia (which I imme­di­ately con­veyed to Kissinger, who had not been aware of it, but that is another story). The rel­e­vance to today is of course that some of the for­eigners have again been screwing the United States (and much of the world), to use Connally’s col­orful ter­mi­nology. The choice, now as then, is whether to respond nation­al­is­ti­cally and uni­lat­er­ally or sys­tem­i­cally and mul­ti­lat­er­ally – or, as is most likely, a com­bi­na­tion of the two, hope­fully with a clear strategic deci­sion to use national actions to achieve global reform. Our goal must be to start resolving these cru­cial prob­lems by reforming the global system deci­sively before the arrival of the next John Connally.

“Addressing another vital issue of US national interest in which China also plays a cen­tral role, cyber­se­cu­rity, Pres­i­dent Obama used these words in his State of the Union mes­sage in Feb­ruary: “We cannot look back years from now and wonder why we did nothing!” I would submit that we should adopt the same atti­tude toward wide­spread cur­rency manip­u­la­tion, which vio­lates the most basic pre­cepts of the inter­na­tional eco­nomic system while destroying growth and jobs in our own economy and in numerous other coun­tries. The time for action has clearly come. It is time to declare war on the cur­rency wars. [emphasis added] [Ed. Note: Kissinger and Vol­cker ware also mem­bers of the Tri­lat­eral Commission]

The inten­sity of Bergsten’s con­cern is easily detected throughout his paper, but the derailing of his glob­alist agenda is the major point. Bergsten’s orig­inal and naive design for “flex­ible exchange rates” is being scut­tled by greedy, selfish and self-centered for­eigners who have imple­mented cur­rency wars against each other and the United States.

It is ironic that orig­inal mem­bers of the Tri­lat­eral Com­mis­sion had no problem pil­laging and plun­dering the world back in 1973, but when they get “screwed” (his word, not mine) by “some of the for­eigners” in 2013, it’s cause for national alarm. It is also ironic that while mem­bers of the Tri­lat­eral Com­mis­sion eschewed the Con­sti­tu­tion, the nation-state and national sov­er­eignty back then, they look to the same nation-state today for relief.

A large part of the global elite’s para­noia stems from their fear of global and uncon­trolled war. Along the lines of Schumpeter’s theory of Cre­ative Destruc­tion, regional and local con­flicts are con­trol­lable — and thus prof­itable — but unre­strained war ends up destroying the means of production.

Few, if any, Amer­i­cans would wish for war, but we should realize that if cur­rency wars are not con­tained, phys­ical con­flict will follow. While it may appear that we are lined with the global elite on cur­rency wars, our motives could not be fur­ther apart. We seek freedom and lib­erty: They seek global domination.

— —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  —  — –  Note: Addi­tional con­tent on this page is avail­able only to Pre­mium sub­scribers of Find­ings & Fore­casts.
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How to understand Globalization

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  1. Follow the money, follow the power
  2. Dis­cern illu­sion from reality, espe­cially with media outlets
  3. Listen to experts who offer a mean­ingful critique
  4. Study & verify sources and footnotes
  5. Apply lib­eral doses of common sense

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.

“Free Trade” is the cen­tral mantra. Glob­al­iza­tion is set against national sov­er­eignty, closed bor­ders, trade tar­rifs and any­thing that would restrict its goals and methods used to achieve them.

Glob­al­iza­tion pro­motes regional and global gov­ern­ment, a one-world eco­nomic system of trade and a form of fas­cism where global cor­po­ra­tions and their elite con­trol the poli­cies and direc­tives of indi­vidual gov­ern­ments.  

The orig­inal and pri­mary per­pe­tra­tors of modern-day glob­al­iza­tion number only in the 100’s, rep­re­sen­ta­tive of which, but not exclu­sively, are mem­bers of The Tri­lat­eral Com­mis­sion.

To under­stand the gen­esis of the Tri­lat­eral Com­mis­sion, read the tran­script of the 1979 radio show between Antony C. Sutton, Patrick M. Wood and George S. Franklin, Jr. — Coor­di­nator of the Tri­lat­eral Commission! 

 Where did Glob­al­iza­tion come from? The “New Inter­na­tional Eco­nomic Order” was the coinage of the Tri­lat­eral Com­mis­sion starting in 1973. This pur­pose was stated repeat­edly in its papers, jour­nals and conferences.

In 1991, Pres­i­dent George H.W. Bush, a member of the Tri­lat­eral Com­mis­sion, began to openly talk about the New World Order, which expanded the con­cept to include gov­er­nance as well as eco­nomic unity. Click on the movie to hear Bush in his own words!


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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 the Tri­lat­eral Commission?

Founded in 1973 by David Rock­e­feller and Zbig­niew Brzezinski, the Com­mis­sion set out to create a “New Inter­na­tional Eco­nomic Order”, namely, Tech­noc­racy. The orig­inal mem­ber­ship con­sisted of elit­ists (bankers, politi­cians, aca­d­e­mics, indus­tri­al­ists) from Japan, North America and Europe. Col­lec­tively, they have dom­i­nated and con­trolled trade and eco­nomic policy in their respec­tive coun­tries since at least 1974.

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What is Technocracy?

Tech­noc­racy is a move­ment started in the 1930’s by engi­neers, sci­en­tists and tech­ni­cians that pro­posed the replace­ment of cap­i­talism with an energy-based economy. Orig­i­nally envi­sioned for North America only, it is now being applied on a global basis. Authors Aldous Huxley and George Orwell believed that Tech­noc­racy would result in a Sci­en­tific Dic­ta­tor­ship, as reflected in their books, “Brave New World” and “1984″.

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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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