03 February 2016

Currency Wars and 'The Big Reset'

"We now have arrived at the point where it is not the banks, but the countries themselves that are getting in serious financial trouble. The idea that we can ‘grow our way back’ out of debt is naive.

The current solution to ‘park’ debts on to the balance sheets of central banks is just an interim solution. A global debt restructuring will be needed, as economists Rogoff and Reinhart recently explained in their working paper for the IMF. This will include a new global reserve system to replace the current failing dollar system, probably before 2020."

Willem Middelkoop, The Big Reset Part I

"The wealth of another region excites their greed; and if it is weak, their lust for power as well. Nothing from the rising to the setting of the sun is enough for them.

Among all others only they are compelled to attack the poor as well as the rich. Robbery, rape, and slaughter they falsely call empire; and where they make a desert, they call it peace."

Tacitus, Agricola, circa 98 AD

It is remarkable how similar my conception of this is in parallel, and has been in this vein for quite a long time, as it seemed to be the inevitable path given the financial situation and its history as I saw it as far back as 2002.

As you know, my thought arose out of a study of 'crashes' I started in 1996, which branched out to a broader study of the role of finance and money.

I think we are still in the 'negotiating' phase of this currency war as I have called it, rather than 'Big Reset.'

I find Middelkoop to be fascinating.  I obviously do not agree with everything he says.  For example, I do not attribute the fall or Rome to the debasement of their currency, which I see as a symptom of the real problem of a more general debasement.

Rome fell because its productivity shifted from 'real things' and innovations in war and engineering to colonialism and the manipulation of power, a kind of financializaton.  It brought a rule by terror and the exporting of tyranny which hollowed the best of their society out from the inside. This cycle of corruption and excess brought an increasingly horrible and self-referential ruling class into power,  people privileged by birth and by ruthless dishonesty, until the empire collapsed from the edges into the very heart of it.

In a very real sense, Rome died of a terminal lack of honesty, virtue, and merit.  The financial and the ruling class become as one without respect to productivity.  And this is ironic because as the Empire declined, the lip service of their leaders to the old standards of 'Roman virtue' become ever louder and more mockingly false.  People will blame the mob, but Rome died from the top down.

Bear in mind that the American President that is next elected will be the leader of the dollar cartel going into this critical time. I would not assume that their interests will be fully aligned with those of the greater majority of the American people.

Given our experience in global trade deals for example, I suggest that there is a very good reason to hope that the political establishment is overturned, and to be wary of the status quo of politics and business as they are now.

The 'privileged class' in the West have become dangerously isolated, unsympathetic to the condition of the people, and brazenly self-serving in their rationalizations for a long series of horrendous policy decisions.

The more 'flexible' this new currency is, the more disastrous the inequality of the distribution of the pain will be.   Giving this government great latitude in creating a new money out of nothing is like giving gangster the keys to the Treasury.  I do not think that anything could be more clear that the more power they obtain, the greater and more frequent the abuses of it will be.

Now is no time to give unqualified trust to an imaginary theory of benign plutocrats ruling with the wisdom and nature of angels.  And this is why I am so adamantly opposed to the utopian notion of willful moneyprinting without fear of consequence or harm.

At odds with this theory of immutable solvency, history has shown, over and over again, that this is a license for looting by the select few for themselves and their friends.  And we already have one foot on the edge of that abyss.

Money is power, and in times of general corruption power must be, even more than in normal times, transparent, held to accounts, and restrained by a broader consensus.

And to say we do not have this now is an understatement.     That does not imply that we swing to the other extreme and allow these same plutocrats to impose austerity for the many, and even more comforts and privileges for themselves.

A return to 'hard money' itself is no panacea as I have noted before, because a system that is broken and self-serving can turn every good thing to ill purposes.   Their power serves only itself.  How can anything good come from a system ruled by ambitious, pathological liars in the service of sociopaths and serial criminals who have no decency, no moral reckoning, no fear of punishment, and no shame?

And if history serves, those who attempt to turn a crisis to their personal advantage will soon find themselves tied to the back of a tiger they cannot control.  But unfortunately their greed for money and power exceeds not only their wisdom but their common sense as well, and the truly Big Money will not listen, even until the end.

But perhaps the courtiers and their servants will become duly concerned as they should be, because when it comes to it the plutocrats will throw them off the backs of their fleeing sleds as food for the pursuing wolves.  And above all they should know that this is the case with these empty shells of distorted humanity.

Reform, fair administration of justice, and transparency are the sine qua non.

It will be an interesting time, if history is any guide.

"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent. This pattern of government action shows up in all areas of government policy."

Dean Baker

"Most of them became wealthy by being well connected and crooked. And they are creating a society in which they can commit hugely damaging economic crimes with impunity, and in which only children of the wealthy have the opportunity to become successful. That’s what I have a problem with. And I think most people agree with me."

Charles Ferguson, Predator Nation

Tsar Nicholas II:   I know what will make them happy. They are children, and they need a Tsar! They need tradition. Not this!  They are the victims of agitators. A Duma would make them bewildered and discontented.  And don't tell me about London and Berlin. God save us from the mess they're in!

Count Witte:  I see. So they talk, pray, march, plead, petition and what do they get? Cossacks, prison, flogging, police, spies, and now, after today, they will be shot.  Is this God's will?  Are these His methods?  Make war on your own people?  How long do you think they're going to stand there and let you shoot them?  YOU ask ME who's responsible?  YOU ask?

Tsar Nicholas II:  The English have a parliament. Our British cousins gave their rights away. The Hapsburgs, and the Hoehenzollerns too. The Romanovs will not. What I was given, I will give my son.