GLOBALIZATION

Globalization, Neoliberalism, Corporatism--jk

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Globalization, Neoliberalism, Corporatism--jk
Neoliberalism Assumption, a critique--jk
BANKS BLOODLESS COUP: global financial--Brown
Neoliberalism exposed, a sales tool of the globalizers--jk
Iran Opposes Globalization--Chomsky

Flooding the nation with credit
money-supply-us.jpg
the expansion of the money (debt) supply

This is a detailed examination of the globalization movement, which touches upon all of their important facets. It blends history and economic with analysis, and it limits normative, emotional, and moral content, for it seeks to inform rather than appeal to emotions.  However, the parallels to conditions that led up to the Great Depression entail a well-founded skepticism of the current economic course, and thus a cause to express concern. This paper is for those who want to know why things are “rotten in Denmark.”  For those not disposed to this topic, a briefer summation is found at http://www.skeptically.org/naw/id4.html

Fractional reserve, set at 10% by Federal reserve
fractional-reserve-lending-percents.jpg
$1 assets creates $9.7 dollars of debt

GLOBALIZATION -– NEOLIBERALISM -- CORPORATISM (complete)

Sunt lacrimae rerum—Virgil, there are tears for things (Bk. 1, line 462)

Jk -- 6/07 Updated 12/08, 5/09, 12/2, greatly expanded 12/12

1)     There is an evil afoot, unregulated corporate GLOBALIZATION; it is the mature form of monopoly capitalism.  Corporations are about profits.  Evolution opens the door to understanding the forces that shape species, behaviorism (including instincts) the door to understanding what shapes the behavior of organisms with a complex nervous system, and the corporate with their drive for profit maximization opens the door to understanding the political/economic evolution of the last 3 centuries.    Adam Smith, the British Economist, wrote in the 1776, “All for ourselves, and nothing for other people, seems, in every age of the world, to have been the vile maxim of the masters of mankind.”  Corporations have risen to global domination, led by those who control the money.  Like all power elites, they use emotions, reason, and self-interest to further their goals as masters of mankind on a global scale.

2)  To give the unfettered corporate system the dressing of “sound economic theory”, the corporate globalizers selected the economic theory developed by Carl Menger, Friedrich Hayek and others, called “the Austrian School”, which the globalizers renamed, deceptively neoliberalism.1  It is neither new nor liberal.  It is a theory supporting unregulated economics (laissez faire capitalism), like what existed prior to the Great Depression.  Big business has relentlessly pushed for government to function as it did in the 1920 when public service was minimal, regulations weak, and unions declining.[1]   Neoliberalism has been exhumed[2] by big business for they desire a return to the pre-Keynesian days of unfettered corporations (hereafter UC) on a global scale.  Neoliberal globalization changes are brought about through the global corporations whose concerted efforts shape government policies.  Armed with a global financial system and the armies of the NATO member nations, treaties for neoliberal globalization have been signed by the top 100 nations--measured by GDP.  These “free trade” treaties have produced economic monetary crises, declining median income, high unemployment, and ever increasing profits for the global corporations (especially banking).  Quality of life has suffered because there is a basic conflict between UC drive for increasing profits, and that of the public weal. 

3)      The foundation of this movement for financial globalization started when the US and our 44 allies in July of 1944 met in New Hampshire and set up the Bretton Woods System of monetary management.  This was done undoubted with the encouragement of the shadow governments[3] made up of the corporate giants, especially in the financial sector--hereafter simply referred to as “banking[4].  Bretton Woods Agreement’s chief feature are that each member country adopted a monetary policy that maintained the exchange rate by tying its currency to the US dollar, the establishment of the IMF (International Monitory Fund) to bridge temporary imbalances of payments, and the International Bank of Reconstruction and Development (IBRD) to finance reconstruction of European nations following WWII.  The US dollar was tied to fixed exchange rate of gold at $35/ounce.  This was ended in 1975, but the dollar still remained the medium of exchange.  Building on the Bretton Wood Agreement, by 1950 a number of other economic-political organizations were established to promote the global agenda of banking, including the WTO (World Trade Organization), the World Bank, the United Nations, and various international development organizations including the Organization of American States (OAS), the Organization for Economic Co-operation and Development (OECD).  Their long-term goal is to create a flat world (from a book title, The World is Flat by Thomas Friedman); thereby empowering corporatism on a global scale.   And in that flat world, will be created “a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole”—prof Carol Quigley, Georgetown University.   We have a global corporatist state. 

4)      Money talks:  In the US political contributions are just one of four tools used by the shadow government; treaties, control of credit, and the corporate media are the other three.  Each nation is tied into the global financial system.  The value of their currency is easily manipulated by the large corporations in the financial sector (hereafter simply called banking).  With their control of finance and currency, and the various financial organizations just mentioned, banking has “persuaded” resistant nations about the advantages of globalization and UC, and if still resisting, then eventually the US will send the Marines.  They also is also spin about virtues of unrestricted capitalism.  The globalizers promise developed nations cheap goods and more technocratic jobs; they promise the third world nations manufacturing jobs through exports tariff free to the developed nations and technocratic jobs based upon outsourcing by the developed nations.  They promised better pay, cheaper goods, a strong economy, and whatever else needed to sell globalization.   With these tools and the support of the corporate media, the globalizers in most nations have the support of the major political parties.[5]   They have no regard for the truth or the public weal.  The neoliberal policies haven’t delivered prosperity even though productivity is up over 45%.  Low wages continue in the third world and the developed nations are heading their way because of wage competition, these facts prove that neoliberalism is a sham.  Thirty years of crises is dozens of nations, and their failure to recover to pre-crises median wages also proves the case against them.  The truth is out; but they are too powerful, as of now, to be challenged.    

5)     The flat-world policies are packaged by the IMF and WTO as international treaties with acronyms such as NAFTA, AFTA, CEFTA, CISFTA, COMESA, GAFTA, GCC, SAFTA, SICA, TPP, and MEFTA (all singed by the US, Canada, India, and a host of other nations).  These free-trade treaties promote globalization with a neoliberal agenda including UC; and all of the largest 100 nations have signed.  In the NAFTA treaty, for example, there are 900 pages of clauses.  Among them are clauses requiring the overriding of national environmental, safety, drug, labor, commerce, and tariff laws; and NAFTA sets up their own treaty-court system to accomplish this!  These treaties mandate deregulations that open up the resources, the industries, the media, the utilities, the banking, and the very market places to foreign buy outs and foreign competition.  Global giants--fat in dollars from a grossly over-inflated stock market--enter to scope up the native competition, often at bargain prices.   With these free-trade agreements, the role of the state is remade for the corporate vultures.  Government functions are gradually being handed over to the corporations.  This list includes schools, social security, and health care, utilities, military, prisons, mail, port authority, disaster relief, and police.   The various barriers that protect local business, banks, workers, unions, and the environment are being removed.  Global and domestic corporations have a much different vision of government.  Bit by bit the business friendly government are implementing the treaty clauses.  This is a corporate takeover of government for the sake of profits; the voice of the people has been marginalized with the decline of unions.  Corporations--unlike people--are not subject to ethical constraints; their mandate is profit maximization.  Monopoly capitalism is fulfilling the observation of Adam Smith; “the cruel maxim of the rulers of mankind, “all for ourselves, and nothing for other people.  

6)     International Corporations have become the global masters and the shadow governments.  The US government has been gradually implementing the neoliberal, corporate vision for our society.  Witness the development of charter schools, paramilitary corporations, the corporate buying up of hospitals, the sell-off and deregulation of water and electricity, private prisons, private airport security, and the reduction in Social Security payments in real dollars; these are some important examples of the corporate takeover of government services.  This is happening to all the developed nations. 

7)    These flat-world (neoliberal) policies have resulted in the out sourcing of jobs, the flood of cheap tariff-free goods, the flood of foreign workers both documented and undocumented, the reduction in the pay for skilled and unskilled jobs, the marginalizing of unions, reduction in requirements for benefits to employees, the reduction in government social services, and a shift of the tax burden from corporations (many of whom have moved to tax-free heavens and avoid U.S. taxes) and the rich to the bottom 98%[6].  In the past 35 years US productivity has gone up over 45%; yet real wages (including benefits) have gone way down as has the standard of living.  Why aren’t workers getting a share of their increased productivity?  In 1950s the average job paid a living wage and thus there were very few working, married mothers.  Back then the financial sector made up 5% of corporate profits, today it is over 44%--a phenomena called financialization.  The 45% gain in productivity has been consumed by the financial and health care sectors.  In the US healthcare consumes 17% of GDP and accounts for over 30% of corporate profits[7].  These industries are maintained on the backs of workers, for there is no free lunch; they have gobbled up the gains made by increased productivity.  Through their media, the new Robber Barons[8] paint a rosy picture (and it is rosy for the power elite), but the facts thunder for the masses a different storm.      

8)    The old era of robber baron-corporations (head by CEOs like Rockefeller, Fitch, Gould, and Morgan)[9] has evolved into a much bigger global-corporate fish.  In the past developed nations, responding to corporate pressures, protected their corporations with tariffs, and carved up the third world into colonies.   Today the developed nations promote a new type of monopoly capitalism with open borders.  The business ethics hasn't changed, only the largest corporations (including banks) have a global presence.  Though the corporate media wants us to believe otherwise; however, the median standard of living, after reaching its peak around 1970, has declined in nearly all nations.  This decline results from neoliberal globalization with its UC and the pyramiding of income.  The U.S. now ranks 4th in GDP[10] per capita, yet is 92nd in distribution of key benefits (UN stats). 

9)    The US is the main military arm of the globalizers.  The Iraq war is about MEFTA (and related free-trade agreements)—opening up the entire Middle East to a foreign-corporate takeover.  Iraq is held up (like Libya and Afghanistan) as an example of what happens to nations who resist globalization.  There is a long list since WWI of US lead assaults against countries that have formed populist governments[11]--a similar list exists for Great Britain.  Populism is opposed to corporatism.  Economic sanctions are the other tool for change.  So far 13 Middle East nations have signed all or part of the MEFTA package of treaties, which Europe and the U.S. are parties to.   These Middle East nations have also signed other pro-globalization agreements (FTA, TIFA, BIT, WTO, GSP), which the developed nations are party to. 

10)    The burden of US militarism, with over 800 foreign bases, is the expenditure of over $700 billion annually (not counting veteran benefits, most of the current wars, and interest on debt financing our military budget).  These expenditures have resulted in a cut in social services with its social costs, and our increasing federal debt with payments of over $450 billion.  It has been a state of war since the start of Korea war, with no reduction in spending, as measured by percentage of GDP (it runs about 8%).  The US has been and is the tool of the globalizers.  Instead of a chicken in every pot, we have a base in every land (over 800).  Ours government has been hijacked by the globalizers. Their media blames governments around the world for crises, but corporations are the shadow government.  The US is not the world’s police promoting peace, as their corporate media wants us to believe, but rather the club which promotes globalization. 

11)    The cause of credit expansion is the shadow-government’s push for deregulation of banking which resulted in fundamental changes.  Among them are: a) the Federal Reserve policy[12] of currency (credit) expansion based on a 10% equity requirement, (see graph); b) permitting banks to invest in futures, derivatives, credit default swaps, and other highly leveraged instruments which have under a 5% equity stake; c) the need to make high-returns on loans and other investments has led to unsound loan policies and speculative investments.  To skirt reporting requirement investment banks used and set up non-bank financial intermediaries (termed “Shadow banking system”).  Most of the toxic housing loans have been bundled by the banks and sold to other institutions at 3% on the dollar.  World-wide speculative banking and shadow-banking bubbles burst in 2007.  Each developed nation, at the behest of representative of finance, bailed out the “institutions too big to fail.”  More debt is their short-term fix, a fix they profit from.  Their media gives only scraps & tidbits, and blames others for the financial morass they orchestrated.

12)    We have an odd form of currency (credit) inflation where most of the expansion of credit has gone into the financial markets.  Unfettered banking selects the financial instruments that gave a higher, secure return, and with expanded debt, it is the financial markets that yield the highest returns.  As these and like choice became inflated, they put some of their inflated currency into the hands of consumers, such as credit cards and mortgages.  The housing bubble, stock market dot-com bubble, and the development of highly leverage speculation are indicators as to how awash in dollars is (and was) the financial sector.  The stock market has risen from 1,650 in 1986 to 13,000 in 2012, and it would be much higher if the total number of stock had remained constant.  This increase in total value of the stock markets, including new issues, is over 20 fold since 1971, while consumer prices have jumped about 6 fold (using the cost of basic groceries) over the same period.  Speculation doesn’t build houses, grow crops, heal the sick, or education our people.  Our financial institutions have become casinos, and to have them as our shadow government is a poison that sickens society.  They with their corporate allies control not just government, but also the production of thought (schools and media):  they teach the morality of gamblers and robber barons.   Ask not what you can do for your people, but how much you can connive from them.[13]   

13)  The value of the dollar has dramatically fallen under Bush and Obama as debt expanded.  From 10/26/00 to 7/15/08, the dollar has depreciated against principle foreign currency the EURO by 48%.  With the current wave of crisis in Europe (Iceland, Ireland, Greece, Spain) the value of the Euro in November of 2012 is worth $1.30 US dollars.  The principle cause is the need to sell T-bills—the falling dollars entails more T-bills can be bought per Euro, the same for other currency.   And all currencies are falling against the consumer basket.  The 1935 nickel has the buying power of the 2007 dollar.  But on the gold standard the rate of inflation was that a nickel in 1812 could buy 10 cents of groceries in 1913.  In 2006 the total value of the EURO in circulation surpassed the USD.  U.S. prices rise because our inflation in general is greater than that of other currencies:  foreign goods and foreign resources thus take more dollars.  All currencies are loosing value, and income for the bottom 90% doesn’t keep pace with inflation.   

14)  Banks love debt; it is their main source of revenue, thus the shadow government’s push for expansion of debt.  As debt rises, so too does their income.  When banks acquire T-bills and treasury notes, it is counted as a secure asset and thus used to increase credit (debt) 10 fold under the fractional banking system.  The bank’s fixed assets and deposits are also used to meet their 10% reserve requirement.  Servicing government debt is now the second biggest item in our budget --$454 billion for 2010.[14]  And it is rapidly growing:  federal debt rose 6.1 trillion from 2002 to 2011, and the rate has been increasing.[15]  Those billions in interest payments were once available and used to stimulate our economy through providing social services such public works and funds for college education.[16]  Our nation is being bought up by global corporations made fat by our trade deficit ($817 billion in 06, and only $558 billion in 2011).  As debt rises, our banks own an ever increasing percentage of our assets.  We don’t own our house until it is debt free.  Banks also love debt because it is low risk, for in time of crisis they are bailed out.  Not bad gambling without the risk of loss.  Not one nation resisted the request of their banks in 2007; they were too big (powerful) to fail. 

15)  Banks love expanding the currency so much they have turned the reserve requirement into a fašade.  “Laws requiring banks and other depository institutions to hold a certain fraction of their deposits in reserve, in very safe, secure assets have been part of our nation’s banking history for many years” (79 Fed. Res. Bull, 589, 1993).  The requirement was to assure sufficient liquidity to prevent when there was a run on the bank for the bank to become short of funds.  Under the Roosevelt administration the Federal Reserve pegged this requirement at 40%.  Today it is set by them at 10.1% of deposits by households.  As of December 1990, CDs, savings, and time deposits not own by household are excluded from this reserve requirement.  Though supposedly the Federal Reserve is guarantor of last resort, in crisis it isn’t.  Though their assets are listed at $2.299 trillion as of 9/15/10, but it is not used to cover major liquidity short falls, as in 2007 when our government has filled that role.  The reserve requirement for a bank is met with cash in its volt and government securities deposited with the Federal Reserve.  The Federal Reserve Bank requires a report once every 2 weeks.  As a way of insuring sufficient funds on hand to meet demand, the crisis of 2007 demonstrated it inadequacy.  It is inadequate because banks are allowed to take highly leveraged positions.  Moreover the review of their books is a sham.  They are free to produce accounting statements as they see fit.  And the Feds as part of a global-banking system, follow the herd (or they will be at a “competitive disadvantage”).[17]  Many nations now don’t even have on their books a reserve requirement.[18]  

16)    Every developed nation has a very high total debt to GDP ratio (just what the banks want, since their income is dependent on total of the debt).  Moreover, when there is a crisis, they greatly increase by demanding  a much high interest rate on loans.[19]  In the U.S. debt is greater than our GDP ($16.3 trillion as of November 2012).  After removing from the total GDP the contribution of the financial sector, US debt is higher percentage than was held by those nations that have had an economic crisis in the last 2 decades (Mexico, Argentina 1995, Thailand, Hong Kong, Malaysia, South Korea Laos and the Philippines during the 1997 Asian Financial Crisis).  US debt is comparable to those of recent crisis countries in Europe (Iceland, Ireland, Spain, Portugal, and Greece).  As long as there are sufficient buyers for T-bills and Treasury notes interest rates stay low, but if global credit contracts or finds other options more attractive, then US interest rates must rise for to find buyers--as had happened to the nations in crises named above.  To avoid a second collapse like the Great Depression, banking demanded that the developed nation reflate their economies after the 2007 implosion—and each nation did.  Thus on a global scale, this reflation insured sufficient funds for global banking to continue the purchase of their government debt without raising the interest rates.  The expansion of secured notes permitted the 10 fold expansion of credit for US banking and greater depending on national regulations.  And for example in the US as credit expands an ever increasing payment on debt by the borrowers.  Today (December 2012) with the US over $16 trillion in debt, as it roles-over debt, a higher interest rate would soon bankrupt the US and precipitate a second great depression.  A crisis in the US would given its central role in banking is to large to be reflated at a higher interest rate.  As of now (Dec. 2012), those nations named above in crisis, and they can’t reflate at the current high interest rates they are required to float to sell their government debt.  The reflation of the 2007 to present of the collapse only delayed the day of reckoning.  It made a difference because interest rates remained low.  When they went up, like in the above nations, a fix of their economies with reflation is not possible.  An economy with double digit interest and high debt will go into a prolonged depression.[20]  Reflation was the treatment selected by the financial sector, now they have moved on to austerity when a new crisis occurs.  The conditions in Spain is the example to watch, for they have two of the largest global banks, Santander Central Hispano and BBV Argentaria.     

17)    In the pursuit of their short-term and global profits, the neoliberal globalizers had us revisiting 1920s.  Now it is like the interlude from 1929 to the spring rally of 1931.  It failed and the US economy took a second dive.  Our interlude, from 2007 until 201?, (in 2008, I predicted the collapse to occur in 2013) is not as severe as that of 1929 to 1931[21] because of the reflation, the pumping into the economy of trillions of debt based dollars. In addition, to keep banking afloat our government in 2008 had guaranteed 23.7 trillion of bad loans and speculative vehicles such as derivatives.  The loose-money policy created speculative frenzy in the financial sector, and also increased consumer, commercial, and government debts; it is the principle cause of the economic collapse of 1929 and of 2007.  The second major cause is the declining earned purchasing power of workers then and now.  Prosperity is built on the buy power of the people at the bottom of the economic pyramid.  Roosevelt built prosperity by putting money into the pock of those at the bottom.  The Obama and joint Congressional response was reflation--not changes in banking. Financialization with its shadow banking goes on essential as before the 2007 crash. The volume of shadow banking securities in the US is estimated at $25 trillion dollars, the same as in 2007.   Cancer of speculation is devouring the US economic and the industry basis for prosperity, while at the same time promoting economic imperialism by the global financial institutions.   

18)  The shift to global banking has harsh consequences for the 3rd world nations.  The United States’ transition to neoliberalism and global capitalism also led to a change in the identity and functions of international institutions like the IMF…. The IMF’s role was fundamentally altered after the floating exchange rates post 1971” at http://en.wikipedia.org/wiki/IMF.  This had particularly harsh consequences on the 3rd world (developing nations is a misleading phrase).  A shift occurred from that of promoting economic stability through oversight to promoting austerity in time of crisis.  No longer do they intercede to prevent currency raids that cause massive capital outflows.  In addition, the IMF negotiates conditions on lending and loans under their policy of conditionality…. The IMF does not require collateral from countries for loans but rather requires the government seeking assistance to correct its macroeconomic imbalances in the form of policy reform.  If the conditions are not met, the funds are withheld….  As Jeffrey Sach's work shows that the Fund’s [IMF’s] usual prescription is 'budgetary belt tightening’ to countries who are much too poor to own beltssupra.  The IMF is a global banking organization with nearly all its contributions coming from a few global banks whose headquarters are in 8 of the developed nations.  The loans go to poor nations since the interest rates on these loans are much higher.  Thus the IMF morality is that of the banks, profits and this entails repayment of the loans, the IMF’s primary concern.  Like with the Federal Reserve in the US, the IMF, though speaking of concern for prosperity, their actions are based on financial gains.   Through the power of global finance, “as of 2004, borrowing countries have had a very good track record for repaying credit extended under the Fund's regular lending facilities with full interest over the duration of the loan” supra.   The banks care not about “public spending on programs like public health and education actually means, especially in African countries….” supra.  These conditionalities run counter not only to quality of life but also to long-term economic growth, and political stability.  Mass response to austerity programs is the norm; for examples in 2012 are Egypt, Spain, Italy, Ireland, and Greece.  The main driving force behind the popular uprising in the Middle East has been discontent over the neoliberal makeover of their country.  Usually a broad coalition is formed of  religious fundamentalists, cultural conservatives, and the business, all who find elements of the neoliberal makeover a cause for them to standup and be counted against (it is a movement for democracy that our media rewrites).  Their old governments understand the power of the globalizers, their people don’t. 

19)  A new type of imperialism has developed out of the credit explosion.  IMF conditionalities, which are from the neoliberal rule book, play a key role.  The conditionalities require the sell-off of state ownership of businesses and they bar intervention in the market place.  They require cutting of public spending and increasing taxes,[22] this for a country in an economic crisis always increases severity of the down-turn.  The two types of policies one for the credit supplying nations and the other for the borrowers is an example of economic imperialism.[23] Thus while the developed nations refloated their economies following the 2007 crisis through credit expansion including hundreds of billions spent on public works (for example in the US the massive construction programs for highways and military bases); however, for the 3rd world governments spending was cut under the conditionalities of the IMF and WTO agreements.  One group of nations have the global banks, the other nations don’t.  (The UK, Germany, France, US, and Japan—in that order--have the largest banks--source The Banker Magazine).  The programs of the IMF and other affiliated institutions, they benefit the lenders while creating an economic straight jacket for the borrowers.  Columbia Professor Joseph Stiglitz[24] argues that the IMF has gotten away from its Keynesian roots following WWII and now reflects the goals of global banking.  He goes on to point out that the results of the neoliberal makeover of the borrower’s economy results in a decline in their standard of living; and the same is happening to the lender’s countries but at a slower rate.  This change he found very disturbing.  He is very critical of the banksters (a term revived from the Great Depression, first used in the 19th century).

20)   Given the rules and that there are two applications of the trade agreements, and that it is all scripted:  proof lies in the selective application of the treaty clauses.  The favored nations are a military force for globalization.  It is a script for the globalizing corporations and their executives, and in that script is a shift in the tax burden.  Corporate taxes are less than half of what they were under Eisenhower.   The U.S. now ranks 4th in GDP[25] per capita, yet is 92nd in distribution of key benefits (UN stats).  Moreover, in the IMF & WATO’s script is preparation for economic crisis as part of the plans of global finance according to Naomi Klein, in her book The Shock Doctrine (2008).  Her book’s themes are economic shock and vulture capitalism.  She points out that economic collapse provides unique purchasing opportunities for vulture capitalist corporations[26].  Like vultures the globalizers are looking for new countries to swoop down upon with a neoliberal makeover (economic shock) based in IMF conditionalities, and thereby get bargain-basement prices for the assets of the in crisis nation.  In her book she describes at length this process in Chile, Argentina, Russia, Iraq, and New Orleans after hurricane Katrina.  Riots and bloody repression usually occur during the shock phase of the economic collapse.  Her book ends with a description of how the power elite in this country are preparing for the riots that follow economic shock treatment.[27]  Since her book in 2008, we have witnessed the vulture globalizers with their shock treatment turn on member EU nations.  In 2012 the populace in Greece, Spain, Portugal, Italy, and Ireland responded to the austerity programs with mass demonstrations.  Demonstrations and national strikes have also occurred in the most prosperous EU nations (UK, France, and Germany) as the people see the writing on their walls and their governments slowly implement cuts in social service as the interest on debt mounts.  This is a natural progression of an economic system dominated by finance.  For the economy to expand, it requires fiat increase in credit, which requires increasing government debt, and thus increasing interest payments.  Eventually this leads to crisis.  It did in 1929 and again in 2007. 

21)  Since the banking community has no national loyalty, the process of currency raiding, tightening credit to create crisis and then jacking up the interest rates in time of crisis has spread to include the developed nations.  Banking creates crises at will by merely contracting credit through making it less affordable by raising the interest rates.[28]  Recent hits (2011-12) using raised interest rates have been Italy, Spain, Portugal, and Greece.  Blaming the banksters is supported by the evidence based on results.  The corporate press writings are essentially misleading, and the regulatory agencies are in bed with the banksters.  Banking regulations don’t provide insight, for like laws, don’t rely on the statute, but look to its enforcement.  Given this, only the highest placed insiders have a grasp of what is done and why, and they don’t go public.  Though Stiglitz has gone public[29] it is as a reformer who wishes that banking function as a public service bringing prosperity (their hype), rather than like a corporation maximizing profits.   His insider revelations are on 3rd world conditionalities.  The creation of crises is part of a pattern of corporate behavior, one which their international organizations promote.      

22)  Recent events are disturbing.  The power of the one too big to fail grows as through their organizations they regulate banking.  On point is the Basel I, II, & III Accords which promote a global financial system through a set of banking requirements.  The rules sounds like are a step forward, but considering the source, it isn’t.  Businesses do not regulate themselves for the sake of the public weal.  These Accords are held to be the cause of the current depression.  On November 1, 2007 the US Department of the Treasury approved the final rule implementation of Basel II.[30]   This resulted in a tightening of credit.  Paulson and Bernanke have repeatedly acted not in the public interest but for that of big banking.   Critics point out that they knew their policies would cause the global crisis of 2007.   

23)  What would happen if US government bonds interest rates increased to historical levels?   The average rate for government 10-year bonds is 7% (period from 1975 to 2012)?   Assume that the payment on government debt is at that interest rate, then the $15 trillion[31] owed would require an interest payment of $1.05 trillion (2010 interest payment portion of the federal budget is listed at $454 billion).  What would happen in a world crisis, or a major US crisis comparable to Greece?  In Greece government bonds sold on November 21, 2012 yielded 17.88%, down from 30% in June.  Moreover, as government interest rates goes, so too does the public and corporate interest rates, and they are several percentage points higher!  In the US the public debt is $11.45 trillion (Nov. 2012) and the corporate debt is similar, as to the total for state and local governments.  What would happen if these debts also were rolled over to new bonds with double digit interest rates?  The developed-nations economies are walking on the egg-shells of fiat credit expansion generating low-interest rates.

24)   At this point the record is too complex and too much occurs hidden from the public record, for JK to develop this analysis further.  Only an insider would know what the short-term strategies are.  Bernanke publicly is committed to expanding debt.  He has said that he won’t let deflation happen again.  He stated that deflation is always reversible under a fiat money system. ‘The US government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost. Under a paper-money system, a determined government can always generate higher spending and, hence, positive inflation’[1]”.  This approach is label the Bernanke Doctrine.   Did, for example, Spain not know of this fix?  There are limits to its application, and I aver that the US and EU key member nations are near those limits.

25)   Advice:  Be conservative about finance and debt.  The problem is that in a financial storm like that in Russia or Argentina there are no good choices.  Looking at percentages, every segment suffered, but for the power elite.  Liquid assets are best, for when properties hit bottom cash there will be great deals for rental properties.  Another move is to hedge risk by shorting stocks, a collapse of the market yields profits.  When a country is in a crisis, properties including business loose value.  Items sold on a world market with intrinsic value such as oil and platinum hold their value, and they are a hedge against inflation.  At the bottom of the depression is the time to buy property.  Like old age, falling median income cannot be avoided.  I can only hope that there will be a gradual decline rather than a crash like during the Great Depression. 

 



[1] Webster dictionary,  “Neoliberalism, a modern politico-economic theory favoring free trade, privatization, minimal government intervention in business, reduced public expenditure on social services, etc.”

[2] Once widely held for compelling reasons to be false and thus with few advocates, now because of corporate influence, it is the dominate economics theory taught in universities.  Criticisms of its basic tenets are found in the 3rd appended section. 

[3] Theodore Roosevelt on invisible government, New York Times 1917: These International bankers and Rockefeller-Standard Oil interests control the majority of newspapers and the columns of these papers to club into submission or rive out of public office officials who refuse to do the bidding of the powerful corrupt cliques which compose the invisible government”. 

4  As Napoleon noted, “The hand that gives is above the hand that takes.” Banks by their control of credit, they can bring on at will a recession or depression. As confirmed by Nathan Mayer Rothschild; I care not what puppet is placed on the throne of England to rule the Empire…. The man that controls Britain's money supply controls the British Empire. And I control the money supply.”  The majority of our founding fathers opposed to the power of finance, yet they set up a First National Bank.  Its charger ended under the opposition led by Andrew Jacks.  This struggle against a European like national banking system which controls credit, this has been dropped from our media.  Our history textbooks cast the events in a light favorable to the money lenders.  To correct this distortion of history, watch the documentary Money Masters. 

[5] Consider the changes in the Democratic Party in the US between 1960 and 1991, when its pro-business wing became dominate and had Bill Clinton selected to run for President.  Consider the Labor Party of the 1960s compared to Tony Blaire’s government.  Even the Green Party in Europe doesn’t oppose globalization. 

[6] Corporations now pay 12.5% of taxes, tariffs raise 2% of federal revenues, the remain 85.5% is from income tax.  In the 50s corporate taxes were over 40% of federal revenues.   

[7] At http://healthfully.org/index/id9.html you will find out about the corporate take-over of medical science and that half the drugs are not worth taking.  The 3 year increase in life since the 1970s has been based mostly upon an increase survival of heart attacks based on two clot-busting drugs.  The other drugs with very few exceptions make little, if any, different to longevity.  

[8] Robber Baron refers to the aristocrats who charged exorbitant fees for transport across their lands and waterways.  Later this term was applied during the 19th century (and still is) by extension to the business men who amassed great wealth and influence. 

[9] The corporate media wants us to think of people as the cause for corporate greed, but it is the structure of corporations with its review based on profits.  Things don’t change with a new CEO.  Their media also wants us to blame government for economic depressions and social injustice.  But it is the capitalist system that is at fault; it needs to be fixed.

[10] GDP is a deceptive measurement of national wealth since it includes the burden of the financial sector, speculative assets such as stock and futures, over-priced health care system, and other burdens such as the costs insurance, military consumption of production, the pyramid of assets by the few, etc.  A better measure would to measure the conditions of the median citizen as to health and material possessions.

[11] Populist governments are those who hold that their first duty is to serve the people.  They regulate corporations for this end, institute land reform, and often nationalize the nation’s mineral resources.  All this adversely affects global corporations.  An account of US regime changes is found in Steven Kinzer’s Overthrow: American Regime Change from Hawaii to Iraq.

[12] The Federal Reserve is not a government agency, but a charted corporation that is the central banking system of the US that conducts national monetary policy, supervises and regulates member banks, and serves as a depository institute.  There are 12 regional branch banks.  It is a corporation that has never been audited and is de facto above regulations.  It is at the heart of the problems, through the corporate media we are told that it is means for creating stability in the financial sector.  Don’t trust the rulers of mankind, their agenda is ever increasing share of the wealth. 

[13] A rework of ask not what your country can do  for you but what you can do for your  country—1961 inaugural address, Kennedy.   

[14] Relying on government figures (often the only accessible source) is like relying on Enron’s corporate financial statements.  The numbers are much worse than those figures, for they don’t include interest paid on borrowing on Social Security, and for the military. In 2008 real inflation was 13%, the government figure 3.8%.    Social security was NOT counted as a budget items as per federal law, Pub. L. 101-508, title XIII, Sec. 13301(a), Nov. 5, 1990, 104Stat. 1388-623.  SS has a separate payroll tax which goes into the Social Security Trust Funds.  As of April 2012, the intra-governmental debt was $4.8 trillion of the $15.7 trillion national debt.

[15] It has risen from $1 trillion in 1981 to 15 trillion in 2012, as banking has grown to 44% of corporate profits. 

[16] The mismanagement of social service is part of the neoliberal agenda of bankrupting, discrediting, and dismantling the Keynesian humane form of capitalism.  The Wrecking Crew by Thomas Frank, which details this process.

[17] Reserve requirements have been reduced in many major industrialized countries in recent years. Several countries now operate monetary policy in an environment in which reserve requirements are zero or so low that they are no longer binding on the behavior of depository institutions.  Federal Reserve Report, Kansas at https://www.kansascityfed.org/Publicat/Econrev/PDF/4q96Sell.pdf.  

[18] The Basel I, II, & III agreements have established reserve requirements.    These agreements also establish complex reporting requirements.  Given existing national regulations, these changes need the status of law by the effected countries.  In December of 2011 the Federal Reserve announced that it would implement substantially all of Basel III rules. Being an effort of the global banks to self- regulate, the net effect will be to strength their hold upon world finance.

[19] An analysis stands upon how well it accounts for the observed events.  If you are wondering why the banking shadow government permits the interest rate that they set through the Federal Reserve to be near zero, allow me to explain.  First to keep the markets up & from collapse there must be an every expanding debt/credit.  This is done through fractional banking:  in the US, for every dollar of T-bill owned, they create $10 of credit.  And it is on these other loans that they make most of their profits.  The low rates permits the expansion of government debt, and thus a 10-fold expansion of private debt. Second it makes their profits from shadow banking possible.  Third is the specter of civil unrest.  As T-bills and other debt matures, they are rolled over.  If the rate of interest doubles, within a couple of years, the portion of the US budge that pays interest on the debt will mushroom from its current $454 billion to nearly a trillion dollars/year.  Credit will tighten and public programs cut back.  This will create a crisis, which not only will cause civil unrest like in Spain and Greece, but would spread to a global crisis with numerous nations defaulting on their debt, or paying for it with highly inflated cheap dollars (as Germany did during the Great Depression).  Banking wishes to keep the current profitable state of affairs going for as long as possible. 

[20] The US under Nixon had double digit interest, and the economy crashed.  But with much lower state and federal debts, those figures did not suck the economy dry.  Reflation was used under Nixon to right the economy. 

[21] Under Hover’s there was a balanced budget, credit contracted, and GDP plummeted. 

[22] An exception is made for corporate taxes, which are instead cut.  

[23] In the last 2 centuries the big winners from imperialism has been business. 

[24] A Nobel Economics Laureate, Chairman of President Clinton’s Council of Economic Advisors, and former chief economist and senior vice president of the World Bank, he has over 40 honorary doctorates, and heads several international commissions.  In his book Freefall:  America, Free Markets, and the Sinking of the World Economy (2010) these points are made, in addition he describes at length the irrational, self-destructive drive of finance for short-term profits.  In his book “The Price of Inequality:  How Today’s Divided Society Endangers our Future, he expands on the social costs of neoliberalism, an issue raised in Freefall. 

[25] GDP is a deceptive measurement of national wealth since it includes the burden of the financial sector, speculative assets such as stock and futures, over-priced health care system, and other burdens such as the costs insurance, military consumption of production, the pyramid of assets by the few, etc.  A better measure would to measure the conditions of the median citizen as to health and material possessions.

[26] She is soft on banking.  Like others who have gone public in their criticism of globalization, the role of bank is so under stated.  I have come to believe not that they error from ignorance, but from a need to be heard.  Relying on corporate media and publish makes them vulnerable, and thus except for the libertarians, criticism of banking has been limited and marginalized.    

[27] Alex Jones, a libertarian, has documented this preparation in the DVD Fall of the Republic

[28]  Republican Congressman and Chairman of the US House Committee on Banking and Currency (from 1920 to 1931) Louis McFadden spoke on the Great Depression on the Federal Reserve, and the use of economic shock:  It was a carefully contrived occurrence:   international bankers sought to bring about a condition of despair, so that they might emerge the rulers of us all.  It is not our own citizens only that who are to receive the bounty of our government, more than 8 million of the stocks of this bank are held by foreigners.  Is there no danger to our liberty and independence in a bank that in its nature has so little to bind our bank to this country?  Controlling our currency, receiving our public money and holding thousands of our citizens’ independence would be more formidable and dangerous than a military power of our enemy.  Ben Bernanke confirmed that the Federal Reserve’s tight money policy is the main cause of the Great Depression (Economic Views).

[29]  He went public on a limited area, the conditionalities.  Stiglitz, with classified papers from the World Bank went public through revelations to Greg Palast in April of 2001.  For a description The Best Democracy Money Can Buy, Greg Palast, 2002, p. 49-53

[30]  Conveniently its full effects were felt by the Obama Administration.  As Richard Wolff (economics professor M.I.T.) points out, in the US instead of blaming banking and capitalism, the media persuades the people to blame its government.  Those elected contribute to this deception by wearing the mantel of responsibility and claim the ability to right the economic ship. 

[31] As of March 2012 “total marketable securities were $10.34 trillion while the non-marketable securities were $5.24 trillion. Most of the marketable securities are Treasury notes,” http://en.wikipedia.org/wiki/US_government_debt

outline of contents by paragraphs:
 

1    introduction, 3rd theory corporate maximization of profits:  all for ourselves. 

2   Austrian School economic justifies unfettered corporations their remake of government.

3    Bretton Wood System, shadow government, globalizing organizations, how UC spreads.

4    Neoliberal promise of jobs and prosperity BS.

5    Free-trade treaties, what they do.

6   US changes under these agreements—sell off of government.

7    Agreements affects upon jobs, social services, shift in tax burden

8   Robber baron era old and new.

9   MEFTA and wars for globalization.  

10   Cost of militarism and purpose

11   Shadow government push for deregulation of banking, its consequence (financialization of economy). 

12   Inflation consumer and stocks.  Effects of casino banking on society.

13   Falling currency

14   Banks love debt, rising debt, economic cliff, and government bail-out, the banks own us.

15   Fractional reserve requirement fašade, government through guarantees is in reality the lender of last resort.

16   World crisis and debt, reflation; not an option in the current 2012 crises in Spain, Greece, etc.   

17   Parallel to 1929 to 1933 our current state, reflation has made the interlude milder than that of 1929 to 1931.

18   IMF changed from a role for economic development to neoliberal conditionalities that result in impoverishment

19   Economic imperialism, conditionalities are counter to Keynesian roots of growth Joseph Stiglitz.

20   One sets of rules but two sets of applications.  Naomi Klein, The Shock Doctrine and economic decline

21   Contracting credit creates crisis turn on developed countries.   

22   Basel Accords, Bernanke and the 2007 crisis.

23   Cost of increased interest rate on US debt

24   End of road as to what happens next

25   Advice, precious metal, staying liquid