1.What does “The Great Divergence” in human history refer to? "The Great Divergence" in human history refers to the large inequality among the world, which startedfrom 19th century with the Industrial Revolution.The inequality is driven by the Modern Economic Growth, embodied in per capital income、productivity、living standard、technology progress、institution progress and so on. “The Great Divergence” causes a series of traps between developed countries and developing countries，along with the rapid progress of technology and institutions in the world.
文章已发布于文库，请移步讨论。 https://bbs.pinggu.org/thread-3591765-1-1.html To impress you with Economics’ imperialism, Ifeel like introducing a few papers ofeconomichistorywhich most peopleconfuse with history of economic thoughts. If I were asked how economicscontributes to thestudy of history, my answer would be: economics sheds light on how history persists. Enjoy! The "African Dummy"in the title refers to a "discriminating"identificationstrategythat when dealing with observations on countries, economistsalways add anindicator variable of Africa tothe regressors. Itreflects the fact that Africaneconomiesare consistentlylagging the performance of the rest of world. What is the reason for that? What’s unique on the Africa continent in history? The onlyanswerappears slave trade. But through which specific channel did the slave trade operate to reduce Africa’s productivity? Nathan Nunn and Leonard Wantchekon’s paper, The Slave Trade and the Origins of Mistrust in Africa , discussed one possible channel-mistrust. Their main argumentis that individuals that belong to an ethnic group from which more slaves were taken during the trans-Atlantic slave trade exhibit lower levels of trust today.The s econdary channelis thatindividuals living in areas from which moreslaves were taken exhibit lower levels of trust today. They have individualsurvey data on contemporary level of trust and the slave data is from Nunn’s another paper (2008).Then the estimationis to regress measures of the individual's trustonmeasures of slave exports for the ethnicity to which the individual belongs. But reverse causality is likely: moreslaves were taken from populations that were less trusting at the beginning (and thus less trusting today) . One solution is IV estimate. They use distance from the coast as an instrument for slave trade, a similar strategy to Nunn’s previous study (2008). Butit seems to me that the exclusion restriction is not satisfied. The other solutionthey came up with is an inspiration. They did a falsification test based on the logic thatif their story is correct, we should find no influence of distance from the coast on trust in locations other than Africa. Of course the results survived.
Goodbye Petrodollar, Hello Agri-Dollar? Submitted by Tyler Durden on 11/24/2012 09:50 -0500 Brazil China CPI Demographics ETC Fail France Germany India Iran Italy Japan LatAm Netherlands Purchasing Power Reality Reserve Currency Savings Rate Trade Deficit Unemployment United Kingdom When it comes to firmly established, currency-for-commodity, self reinforcing systems in the past century of human history, nothing comes close to the petrodollar: it is safe to say that few things have shaped the face of the modern world and defined the reserve currency as much as the $2.3 trillion/year energy exports denominated exclusively in US dollars (although recent confirmations of previously inconceivable exclusions such as Turkey's oil-for-gold trade with Iran are increasingly putting the petrodollar status quo under the microscope). But that is the past, and with rapid changes in modern technology and extraction efficiency, leading to such offshoots are renewable and shale, the days of the petrodollar "as defined" may be over. So what new trade regime may be the dominant one for the next several decades? According to some, for now mostly overheard whispering in the hallways, the primary commodity imbalance that will shape the face of global trade in the coming years is not that of energy, but that of food , driven by constantly rising food prices due to a fragmented supply-side unable to catch up with increasing demand, one in which China will play a dominant role but not due to its commodity extraction and/or processing supremacy, but the contrary: due to its soaring deficit for agricultural products, and in which such legacy trade deficit culprits as the US will suddenly enjoy a huge advantage in both trade and geopolitical terms. Coming soon: the agri-dollar . But first, some perspectives from Karim Bitar on CEO of Genus, on what is sure to be the biggest marginal player of the agri-dollar revolution, China, whose attempt to redefine itself as a consumption-driven superpower will fail epically and very violently , unless it is able to find a way to feed its massive, rising middle class in a cheap and efficient manner. But before that even, take note of the following chart which takes all you know about global trade surplus and deficit when narrowed down to what may soon be that all important agricultural (hence food) category, and flips it around on its head. Karim Bitar on China: Structurally, China is at a huge disadvantage as it accounts for 20% of the world’s population, but only 7% of arable land. Compare that with Brazil which has the reverse of those ratios. What that does for a country like China is to incentivise the adoption of technification. Let’s look at their porcine market, which represents 50% of global production and consumption. In China, to slaughter roughly 600 mn pigs per year, which is about six times the demand in the US, they have a breeding herd of about 50 mn animals. In the US, the comparable number is only about 6 mn so there is a huge productivity lag. Owing to its structural disadvantages, China is much more focused on increasing efficiency. For that, it needs to accelerate technification. So, we’re seeing a whole series of government incentives at a national level, a provincial level and a local level, focusing on the need to move toward integrated pork production because that’s a key way to optimise total economics, both in terms of pig production, slaughtering, processing and also actually taking the pork out into the marketplace. The Chinese government is important as a customer to us because of its clarity of vision on food security. It has seen the Arab Spring, and it is cognisant of the strong socio-political implications of higher food prices. Pork prices could account for about 25% of the CPI, so it knows it can be a major issue. It’s because of all these pressures, that China is more focused on responding to the food challenge. It’s a sort of a burning platform there. ...Take milk production in China and India. China is basically trying to leapfrog and avoid small-scale farming by adopting a US model. In the US, you tend to have very large herds. Today about 30% of US milk production is from herds of 2,000 plus, and we expect that to reach 60% within the next five years. Today in China, there are already several hundred dairy herds of over 1,000. However in India, there’ll be less than 50. The average dairy herd size is closer to five, so it’s very fragmented. So the reality is that a place like China, because of government policies, subsidies and a much more demanding focused approach to becoming self-sufficient, has a much greater ability to respond to a supply challenge rapidly. The problem for China, and to a lesser extent India, however one defines it, is that it will need increasingly more food, processed with ever greater efficiency for the current conservative regime to be able to preserve the status quo, all else equal . And for a suddenly very food trade deficit-vulnerable China, it means that the biggest winners may be Brazil, the US and Canada. Oh and Africa. The only question is how China will adapt in a new world in which it finds itself in an odd position: a competitive trade disadvantage, especially its primary nemesis: the USA. So for those curious how a world may look like under the Agri-dollar , read on for some timely views from GS' Hugo Scott-Gall. Meaty problems, simmering solutions What potential impacts could a further re-pricing of food have on the world? Why might food re-price? Because demand is set to rise faster than supply can respond. The forces pushing demand higher are well known, population growth, urbanisation and changing middle class size and tastes. In terms of economic evolution, the food price surge comes after the energy price surge, as industrialisation segues into consumption growth (high-income countries consume about 30% more calories than low income nations, but the difference in value is about eight times). Here, we are keenly interested in how the supply side can respond, both in terms of where and how solutions are found, and who is supplying them. We are drawn towards an analogy with the energy industry here: the energy industry has invested heavily in efficiency, and through innovation, clusters of excellence, and access to capital has created solutions, the most obvious of which are renewable energy and shale. The key question for us is, can and will something similar happen in food? It’s hard to argue that the ingredients that sparked energy’s supply-side response are all present in the food supply chain. In food, there’s huge fragmentation, a lack of coordination, shortages of capital in support industries (infrastructure) and only pockets of isolated innovation. We suspect that the supply-side response may well remain uncoordinated and slower than in other industries. But things are changing. Those who disagree with Thomas Malthus will always back human ingenuity. As well as looking at where the innovators in the supply chain are (from page 10), and where there are sustainably high returns through IP (e.g., seeds, enzymes etc.), we need to think about the macro and micro economic impacts of higher food prices, and soberingly, the geo-political ones. Slimming down Could the demand destruction that higher energy prices have precipitated occur in food? There are some important differences between the two that make resolving food imbalances tougher. Food consumption is very fragmented and there is less scope for substitution. Changing eating habits is much harder than changing the fuel burnt for power. And, ultimately, food spend is less discretionary that energy, i.e., the scope for efficient consumption is more limited and consumers will not (and cannot) voluntarily delay consumption, let alone structurally reduce it. This means that higher food prices, especially in economies where food is a greater portion of household spending, will lead to either lower consumption of discretionary items or a reduced ability to service debt (with consequent effects on asset prices). When oil prices spiked in the late 1970s, US consumers spent c.9% of their income on energy vs. an average of 7% over the previous decade. And yet, the total savings rate rose by c.2% as they overcompensated on spending cuts on other items. 2007-09 saw a similar phenomenon too. Even the most cursory browse through history shows that high food costs can act as a political tinderbox (so too high youth unemployment), and we believe there is a degree of overconfidence with regard to the economic impact of food prices in the West: food costs relative to incomes may look manageable, but when there is no buffer (i.e., a minimal savings rate) then there are problems. Food spend as a percentage of total household consumption expenditure is a relatively benign 14% in the US, versus c.20% for most major European nations and Japan. This rises to c.40% for China and 45% for India. Of course, as wages rise, the proportion of food within total consumption expenditure falls, but that is only after consumption hits a ceiling. Currently, India and China consume about 2,300 and 2,900 calories per capita per day, compared to a DM average of about 3,400. If the two countries eat like the West, then food production must rise by 12%. And if the rest of the world catches up to these levels then that number is north of 50%. The scramble for Africa’s eggs In terms of ownership of resources, food, like energy, can be broken into haves and have-nots. While there are countries that have been successful without resources, it is quite clear that inheriting advantages (in this case good soil, climate and water) makes life easier. But that, of course, is only half the battle; what is also required is organisation, capital, education and collaboration to make it happen. Take Africa. It has 60% of the world’s uncultivated land, enviable demographics and lots of water (though not evenly distributed). Basic infrastructure, consolidation of agricultural land and minimal use of fertilisers and crop protection could do wonders for agricultural output in the region. But that’s easier said than done. Several African economies also need better access to information, education, property rights and access to markets and capital. Put another way, it needs better institutions. If Africa does deliver over the coming decades, rising food prices will alter the economics of investing in the region. The next scramble for Africa should be about food (while it is about hard commodities now and in the late 19th century it was about empire size). Fertiliser consumption has a diminishing incremental impact on yields, but Africa (along with several developing economies elsewhere) is far from touching that ceiling. Currently, Africa accounts for just 3% of global agricultural trade, with South Africa and Cte d'Ivoire together accounting for a third of the entire continent’s exports. But if the world wants to feed itself then it needs Africa to emerge as an agricultural powerhouse. Higher up the production curve is China, which has been industrialising its agriculture as it seeks to move towards self sufficiency. Power consumed by agricultural machinery has almost doubled over the last decade, while the number of tractors per household has tripled, driving per hectare output up by an average of more than 20% over the same period. Even so, in just the last 10 years China has gone from surplus to deficit in several meat, vegetable and cereal categories. So a lot more needs to be done, and a shortage of water could also prove to be an impediment, especially in some of its remote areas. The power of the pampas With significant surpluses in soybeans, maize, meat and oilseeds, Brazil and Argentina have led the Latin American continent in terms of food trade. Current surpluses are 6x and 3x 2000 levels, versus only a 30% increase in the previous decade, and are rising. A key impediment to boosting exports is infrastructure. Food has to travel a long way just to reach the port, and then further still to reach other markets. Forty days is possibly acceptable for iron ore to reach China on a ship from Brazil, but that would prevent several perishable food items from being exported. And hence, solution providers in terms of durability, packaging, refrigeration and processing will be in demand. Also, while you could attribute a lot of the agricultural success of LatAm economies to good conditions, they have also benefitted from the adoption of agricultural innovation. For instance, more than a third of crops planted in the region are as seeds that are genetically modified, versus more than 45% in the US and about 12% in Asia. Genetically modified crops are not new. They provide solutions to some of the most frequent constraints on agricultural yields (resistance to environmental challenges including drought and more efficient absorption of soil nutrients, fertilisers and water) or add value by enhancing nutrient composition or the shelf life of the crop. And while the adoption of GM crops and seeds is far from wholehearted, particularly in Europe, it’s most certainly a key part of the solution in economies that are set to face a more severe food shortage. The last mango in Paris? Europe’s deficit/surplus makes for interesting reading. Seventeen of the 27 EU countries face a food trade deficit, and yet, the EU overall recorded a surplus (barely) in 2010 for only the second time in the last 50 years (see chart). Broken down further, the UK is the largest food importer, followed by Germany and Italy, while the Netherlands and France lead exports thanks to their very large processing industries. If Europe’s future is one of relative economic decline, then reduced purchasing power when bidding for scarce food resources is an unappetising prospect. Therefore, it needs all the innovative solutions it can muster, or import substitution will have to increase. It’s important to note that being in overall surplus or deficit can mask variety at the category level, i.e., Europe is a net importer of beef, fruit vegetables, and corn, while its exports are helped by alcohol and wine specifically. Japan, in particular, is very challenged. It is the only country in the preceding table to show a deficit in every single food category. We conclude our trip around the world in North America. Large-scale production, access to markets, a home to innovation and favourable regulation has meant that the US (and Canada) continues to dominate some of the key agricultural resources such as soybeans, corn, fodder, wheat and oilseeds. Put this self sufficiency together with the medium-term potential for energy self sufficiency and relatively good demographics (better than China), and a rosier prognosis for the US, versus the rest of the Western world and parts of Asia, begins to fall into place. Agri-dollars on the rise Before we conclude, we need to devote a few lines to the geo-political and macro economic consequences of higher food prices. It’s likely that countries will act increasingly strategically to secure food supply, and that protections (e.g., high export tariffs) may well rise. It is also likely that there are special bi-lateral deals to access stable and secure food supply. This could obviously damage the integrity of the WTO-sponsored system. Another consequence might be the emergence of agri-dollars , in the same way that petro-dollars emerged in the 1970s. This may seem far fetched (the value of the world’s energy exports is US$2.3 tn compared to US$1.08 tn for agriculture) but it’s important to think through the consequences. The big exporters, especially those with the scope to grow their output, may well have sustainable surpluses that can be reinvested into their economies (or extracted by a narrow part of society). Similarly, the consequence of being a net importer will be an effective tax on consumption: disposable income in the US would jump if oil was US$25/bbl. As we have said, we would expect the big gainers of a meaningful rise in food prices in real terms to be Brazil, the US and Canada, while Japan, South Korea and the UK would face challenges. The top chart is important: look how China’s surplus has turned to deficit. What will happen if the Chinese middle class swells as it is expected to? And that’s the rub; what we have been used to in terms of food’s importance is set to change. How food moves around the world is likely to change, and the flow of currency around the world will also likely be impacted. Average: 3.59091 Your rating: None Average: 3.6 ( 22 votes) Tweet Login or register to post comments 19969 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Guest Post: The Smartest Investment Of The Decade Guest Post: Very Few People Understand This Trend... Lessons In Fiat Reality: "Why I Learned To Trade Less And Love The Farm" Guest Post: Two No-Brainer Ways To Play Rising Food Prices Rogers: "Volume Is Not Going To Come Back. We've Had A Great 30 Years. That's Finished!"
by Joshua Aizenman, Ilan Noy Looking at recent banking crises, Gourinchas and Obstfeld (2012) have identified domestic-credit booms and real currency appreciation as the most significant predictors of future banking crises in both advanced and emerging economies 1 . An optimistic conjecture is that countries that previously experienced banking crises will tend to be more cautious. Efficient and fast adjustment of the public and the financial sectors to financial risks may reduce the probability of future banking crises. Yet, delayed adjustment of the public and the financial sectors –kicking the can down the road – may imply that past crises do not affect the probability of future crises. Increased likelihood of banking crisis? In Aizenman and Noy (2012), we examine the evidence and, intriguingly, failed to find efficient learning from past banking crises. A past occurrence of a banking crisis, on average, does not reduce and may even increase the probability of future crises 2 . We also study the determinants of banking crises depth, finding that for middle-income countries, higher de jure capital account openness is associated with lower likelihood of a banking crisis, lower ratio of non-performing loans during the crisis, and higher levels of forgone output in the crisis’ aftermath. Yet, we find no evidence that the history of previous exposure of the banking sector to systemic crisis episodes seem to matter. History and banking crises We estimate the probability of occurrence of a banking crisis using a panel cross-country dataset for banking crises based on the newly updated banking crises database of Laeven and Valencia (2012). We use data for 1980-2010 for all countries for which the required data is available 3 . For control variables, we rely on previous recent research 4 . In addition, we add two controls. First, the history of banking crises for each country –a binary indicator of whether a banking crisis occurred in the previous decade –and, second, a similar measure of the history of currency crises 5 . Because the occurrence of the crisis will affect all of these variables, they are included in the specification with a one-year lag. Differences between high- and middle-income countries A noteworthy observation is that once we include the data from the most recent years, the frequency of banking crises is not any different between high- and middle-income country samples, as shown in Figure 1. Historically, though, the middle-income countries were more exposed to banking crises. For the high-income sample (28 countries), the estimated model appears to be moderately useful in predicting banking crises. We find that a previous experience with banking crises increases the likelihood of another one occurring. For the middle-income country sample (74 countries), the banking history coefficient is positive and significant (though about half the size as for the high-income sample). In the middle-income sample, history-of-currency-crises variable also increases the likelihood a banking crisis (half as large as the banking crisis coefficient). We also find that higher banking liquidity decreases the likelihood of a banking crisis, while a pre-crisis credit expansion increases it 6 . Figure 1 . Descriptive statistics for panel dataset Note : Standard deviations are in brackets, and the number of observations are in square brackets. The current crisis Focusing on 2008-2010, the estimated model provides strong predictive power. The banking-history variable is positive and significant, as with the longer time period sample, but with a larger coefficient. The same is true for the de facto exchange rate regime index, and our measure of credit expansion. What determines banking crisis magnitude? We also investigate the determinants of banking crises magnitude, relying on the newest version of the banking crisis dataset (Laeven and Valencia 2012), where the authors also include three variables measuring the depth of the crisis: The output loss, measured as deviations of GDP from a calculated trend. The fiscal costs, measured as a percentage of GDP. The peak non-performing loan (NPL) level reached, measured as % of total loans 7 8 . For our control variables, we rely on Hutchison et al. (2010) and Angkinand (2009). Results We find that higher GDP growth before the crisis is associated with fewer non-performing loans. Higher capital account openness de jure is associated with lower levels of NPLs and higher levels of economic disruptions, as measured by forgone output. For the fiscal cost proxy of the crisis, the only significant (and positive) coefficient is the IMF program participation indicator. We also find no evidence that the history of previous banking crises matters for the depth of the current crisis being experienced. Regulators playing catch-up A possible explanation for our failure to detect a learning process from past banking crises is that regulators and policymakers are learning, but at a speed that does not catch up with the dynamic evolution of modern banking. The regulator is frequently preparing to prevent the last crisis, and not the future one. as the contours of future vulnerabilities are fuzzy. In these circumstances, a possible remedy may call for slowing down the diffusion of financial innovations, treating them as risky until proven otherwise. This cautious attitude may call for more stringent leverage and reserve ratios, and blocking the introduction of financial innovations that may be ‘too clever by half’ for users and for regulators. Too big to fail? A more troublesome interpretation is that too much political clout upheld by the financial system may cut the resources available to the regulator, and their ability to impose policies that are deemed too costly for and by the financial system. This concern arises especially in the context of the ‘too big to fail’ doctrine, where the private rents associated with excessive risk taking by the banking systems require adversarial relationships between the regulators and the private banking system. In these circumstances, policies aiming at curtailing the political clout of big financial institutions may help. Yet these policies may be hard to implement in countries dominated by few large financial players with cozy associations with the political process and with large conglomerates. We interpret our results as consistent with a differential sectoral adjustment to crises hypothesis. The private sector, by virtue of its harder budget constraints, adjusts faster, whereas the government adjusts at a slower pace following a crisis. The financial sector may find itself in between the two. The ‘too big to fail’ doctrine associated with large banks provides them with a softer budget constraint, delaying the day of adjustment; for some, delaying bankruptcy. Occasionally, the separation between banks and the public sector is murky, further delaying necessary adjustments of the financial sector.
A Matter Of Trust – Part Two This is Part 2 of my three part series on trust. Part 1 addressed the history of bubbles and busts and the role trust plays in these episodes. In the end, truth is what matters. “Trust starts with truth and ends with truth.” - Santosh Kalwar Hundred Year Bust “Debasement was limited at first to one’s own territory. It was then found that one could do better by taking bad coins across the border of neighboring municipalities and exchanging them for good with ignorant common people, bringing back the good coins and debasing them again. More and more mints were established. Debasement accelerated in hyper-fashion until a halt was called after the subsidiary coins became practically worthless, and children played with them in the street, much as recounted in Leo Tolstoy’s short story, Ivan the Fool .” – Charles P. Kindleberger – Manias, Panics, and Crashes The Holy Roman Empire debased their currency in the early 1600s the old fashioned way, by replacing good coins with bad coins. Any similarities with the U.S. issuing pennies that cost 2.4 cents to produce and nickels that cost 11 cents to produce is purely coincidental. I wonder what the ancient Greeks would think of our Olympic gold medals that contain 1.34% gold. The authorities have become much more sophisticated in the last one hundred years. Digital dollars are so much easier to debase. The hundred year central banker scientifically manufactured bust relentlessly plods towards its ultimate conclusion – the dollar reaching its intrinsic value of zero. "It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." – Henry Ford Henry Ford made this statement decades before the debasement of our currency entered overdrive. The facts reflected in the chart above should have provoked a revolution, but the ruling class has done a magnificent job of ensuring the mathematical ignorance of the masses through government education, mass media propaganda, and statistical manipulation of inflation data to obscure the truth. Mainstream economists have successfully convinced the average American that inflation is good for their lives and deflation is dangerous to their wellbeing. There are economists like Kindleberger, Shiller and Roubini who have brilliantly documented and predicted various bubbles, despite being scorned a ridiculed by the captured mouthpieces for the oligarchs. But even these fine men have a flaw in their thinking. They can see speculative manias spurred by irrational beliefs and delusional thinking, but are blind to the evil manipulations of bankers, politicians, and corporate titans. They believe that humans with Ivy League educations can outsmart markets and through the fine tuning of interest rates, manipulation of the money supply and provision of liquidity through a lender of last resort, can control the financial system and avoid panics. Kindleberger understood the dangers, but still concluded that the Federal Reserve lender of last resort was a desirable entity which would be a benefit to the smooth functioning of the economic system and people of the United States. “I contend that markets work well on the whole, and can normally be relied upon to decide the allocation of resources and, within limits, the distribution of income, but that occasionally markets will be overwhelmed and need help. The dilemma, of course, is that if markets know in advance that help is forthcoming under generous dispensations, they break down more frequently and function less effectively. The dominant argument against the a priori view that panics can be cured by being left alone is that they almost never are left alone. The authorities feel compelled to intervene. In panic after panic, crash after crash, crisis after crisis, the authorities or some “responsible citizens” try to bring the panic to a halt by one device or another. The learning has taken the form of discovering the desirability and even the wisdom of a lender of last resort, rather than relying exclusively on the competitive forces of the market.” -– Charles P. Kindleberger – Manias, Panics, and Crashes Kindleberger’s reasoning seems to be that since egomaniac busy bodies in power always interfere in markets in order to convince voters they care; it is desirable to institutionalize this intervention. Book smart academics always think they can outsmart the markets and correct the errors caused by the flaws endemic across all humanity. Well-meaning brainy economists like Kindleberger, Shiller, and Stiglitz easily identify the irrationality of human nature in creating havoc with our economic system, but somehow conclude that human constructs like the Federal Reserve, tinkering with interest rates, controlling money supply, and applying fiscal stimulus can be managed to the benefit of the American people. This is a foolish notion and has been proven to be disastrous for the majority of the American people. Why wouldn’t the same human flaws that lead to booms and busts manifest themselves in the actions of bankers and politicians selected to manage and control our economic system? Therein lays the problem and the need for a true free market method of dealing with our human frailties. The false storyline of Democratic socialism versus Republican free market capitalism is nothing more than propaganda talking points designed to keep the non-critical thinking public distracted from the looting and pillaging of the nation’s wealth by our owners – the wealthy powerful elite who have captured our political, economic and financial system. The “solution” to create a private central bank has created more crises than it has prevented. When examining Kindleberger’s list of manias, panics and crashes, you will note that prior to 1913 almost all of these crashes occurred over the course of two years or less. The creation of the Federal Reserve was supposedly in response to the 1907 panic, created by J.P. Morgan, who then nobly came to the rescue of the banking system. He then secretly led the effort to create a central bank that would function as the lender of last resort during future panics. Forbes magazine founder B.C. Forbes later described the meeting that hatched the malevolent plan for the creation of a banker controlled Federal Reserve: “Picture a party of the nation’s greatest bankers stealing out of New York on a private railroad car under cover of darkness, stealthily riding hundreds of miles South, embarking on a mysterious launch, sneaking onto an island deserted by all but a few servants, living there a full week under such rigid secrecy that the names of not one of them was once mentioned, lest the servants learn the identity and disclose to the world this strangest, most secret expedition in the history of American finance. I am not romancing; I am giving to the world, for the first time, the real story of how the famous Aldrich currency report, the foundation of our new currency system, was written.” The American people should have been alarmed that a small group of powerful bankers designed the Federal Reserve and it was passed into law in the dead of night on December 23, 1913 with 27 Senators not even in Washington D.C. to vote on the bill. Something done this secretively never leads to a positive outcome. It is beyond question the creation of a private lender of last resort has not ended the boom and bust cycles of our economic system, but it has intensified and protracted them. The Great Depression, which was precipitated by Federal Reserve easy money policies during the 1920s, Federal Reserve missteps in the early 1930s, and FDR driven government intervention in the markets, began in 1929 and did not truly end until 1946. The easy money Federal Reserve policies during the 1970s, along with Nixon’s closing the gold window, and commencement of our welfare/warfare state, led to a prolonged crisis from 1973 through 1982. The Federal Reserve easy money policies in the late 1990s and early 2000s, along with the repeal of Glass Steagall, belief that bankers could be trusted to regulate themselves, and capture of regulators, rating agencies, and politicians by Wall Street, has led to two prolonged epic busts between 1999 and 2009, with the biggest bust still coming down the track. Putting our trust in a secretive society of bankers has worked out exactly as expected, with bankers and their cronies becoming obscenely wealthy, while the average person has seen 96% of their purchasing power inflated away since the Federal Reserve’s inception. The illusion of prosperity through debt and inflation does not change the fact that the inflation adjusted wages of blue collar manufacturing workers are lower today than they were 40 years ago. Luckily for your owners, 98% of Americans don’t know or care what the term “inflation adjusted” means. As long as they can keep buying stuff with one of their 15 credit cards, life is good. Ignorance is bliss. The debate regarding whether markets should be allowed to correct themselves or be saved by the authorities has transcended the centuries. Kindleberger poses the dilemma succinctly: “There is of course much truth in these contentions, and some danger in coming to the rescue of the market to halt a panic too soon, too frequently, too predictably, or even on occasion at all. The opposing view concedes that it is desirable to purge the system of bubbles and manic investment but that a deflationary panic runs the risk of spreading and wiping out sound investments that may not be able to obtain the loans necessary to ensure survival.” - Charles P. Kindleberger – Manias, Panics, and Crashes The lack of historical understanding and politically correct education doled out in public schools perpetuates the myth that Herbert Hoover was a do nothing non-interventionist that allowed the Great Depression to worsen because he refused to intervene. The truth is that FDR just continued and expanded upon the massive intervention begun by Hoover. It was Hoover, not Roosevelt, who commenced the policy of piling up huge deficits to support massive public-works projects. After declining or holding steady through most of the 1920s, federal spending soared between 1929 and 1932, increasing by more than 50%, the biggest increase in federal spending ever recorded during peacetime. Public projects undertaken by Hoover included the San Francisco Bay Bridge, the Los Angeles Aqueduct, and Hoover Dam. His description of the advice of his Treasury Secretary has been passed down to the ignorant masses as his actual policy. But it’s another false storyline propagated by the mainstream media. “The leave-it-alone liquidationists headed by Secretary of Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: ‘Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.’ He insisted that, when the people get an inflationary brainstorm, the only way to get it out of their blood is to let it collapse. He held that even panic was not altogether a bad thing. He said: ‘It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.” – Herbert Hoover In retrospect, Andrew Mellon’s advice, if followed, would have resulted in a short violent collapse, with a true recovery within a year or two (aka Iceland). This exact scenario had played out over the prior three centuries, as detailed by Kindleberger. The monetary intervention, tariffs, mal-investments, price controls, intimidation of businesses, and overall interference in the markets kept a true recovery from happening. Unemployment was still 19% in 1938, after years of stimulus. It wasn’t until 1946 that the U.S. economy started a real recovery, and that was due in part to the rest of the world being left in a smoldering ruin. Based on the catastrophic results over the last hundred years, you would think the non-interventionist view on markets would be gaining traction. But, the interventionists gain even more power as they propose and implement more resolutions to the disasters they created with their previous solutions. The belief in the wisdom and ability of a few men to control the levers of a $70 trillion world economy for the good of the many is staggering in its naivety and basis in delusion. “Experts” can barely predict tomorrow’s weather, this month’s unemployment rate, the value of Facebook stock, or the next $5 billion snafu from the Prince of Wall Street – Jamie Dimon. But, we trust that Ben Bernanke, his fellow central bankers, and bunch of political hacks like Geithner know how to micro-manage the world economy. Kindleberger understood exactly the risks in having an institutionalized lender of last resort: “One objection to helping either the borrowing banks and industry or lending to capitalists abroad was that it made both less prudent. In the insurance area this effect is called “moral hazard.” It is a strong argument for letting a financial crisis recover by itself, provided one is willing to take a long term view and worry equally, or almost equally, about a future financial crisis, as opposed to the present one. It requires a low rate of interest for trouble.” - Charles P. Kindleberger – Manias, Panics, and Crashes And there is the rub. It is a rare case when faced with an immediate crisis that a leader will step back and assess the long-term implications of the short-term solutions which will avert or delay the crisis at hand. The present-day economic situation around the world is a result of no one ever worrying about a future financial crisis, because it was never a good time to bite the bullet and accept the consequences of our mistakes and failures. The solution for the last thirty years has been to kick the can down the road. This is how you end up with $100 trillion of unfunded liabilities, with the bill being passed on to future unborn generations. When you combine this lack of leadership, courage and forethought with the fact that Federal Reserve governors are appointed by partisan political hacks, you produce a deadly potion for the trusting American populace. You end up with spineless weasels like Arthur Burns, who was bullied into easy money policies by Trick Dick Nixon, with the result being out of control inflation and a stagnating economy for ten years. You end up with a once staunch proponent of a currency backed by gold – Greenspan – turning into a tool for the Wall Street elite and rescuing them from their folly and extreme risk taking with other people’s money. You get a former Bush White House toady like Bernanke whose only solution to every problem is to fire up the helicopter and drop gobs of cash into the clutches of his Wall Street puppeteers. Whenever human nature is allowed to interfere with and tinker with the free market economic process, miscalculation, error, over-confidence, desire to please, self-interest, greed, and hubris lead to disaster. Those who scorn the notion of a currency backed by gold are believers in the false premise that highly educated arrogant men are smarter than the markets and are capable of making the right decisions that will benefit the most people. These are the same people who prefer the actual results since Nixon closed the gold window in 1971 to be obscured, miss-represented and ignored. In 1971 total credit market debt outstanding was $1.7 trillion. Today it stands at $54.6 trillion, a 3,200% increase in the 40 years since there were no longer immediate consequences for politicians over-promising, Wall Street over-lending, consumers over-borrowing and central bankers over-printing. The GDP of the U.S. was $1.1 trillion in 1971, with consumer spending only accounting for 62% and capital investment accounting for 16%. Today, GDP is $15.6 trillion with consumer spending accounting for 71% and capital investment only 12%. Trade surpluses of the early 1970s are now $600 billion annual deficits. Total debt to GDP has surged from 155% in 1971 to 350% today. The illusion of prosperity has been built on a mountain of debt with an avalanche imminent. The truth is that human beings cannot be trusted to do the right thing. We are weak and susceptible to irrational and short-term thinking that now imperil our entire economic system. Did the gold standard prevent booms and busts prior to 1913? No. Since we are human, booms and busts cannot be prevented. Did the gold standard prevent politicians and bankers from making foolish self-serving short-term decisions that would have long-term negative consequences? Yes. A currency backed by nothing but the hollow promises of liars, swindlers and racketeers is destined to fail. Gold functioned as an alarm bell that revealed the machinations and frauds of politicians and bankers. It can be trusted because it has no ulterior motives, no ego, no desire to be loved, and no plans to run for re-election. It is an inconvenient check on do-gooders, warmongers, inflationists, and Keynesians. That is why it will never be embraced by either party or any central banker. It’s too truthful. Kindleberger’s fears regarding the moral hazard of rescuing those who have taken excessive risk have been fully realized ten times over. The maestro – Alan Greenspan – should have his picture next to the term moral hazard in the dictionary. His entire reign as savior of American crony capitalism was marked by his intervention in markets to protect his bosses on Wall Street. His solution to every crisis was to lower interest rates and print mo money: 1987 Crash, Savings Loan crisis, Gulf war, Mexican crisis, Asian crisis, LTCM, Y2K, bursting of internet bubble, 9/11. The Greenspan Put guaranteed the Federal Reserve would always come to the rescue with unlimited liquidity to prop up stock prices. Investors increasingly believed that in a crisis or downturn, the Fed would step in and inject liquidity until the problem got better. Invariably, the Fed did so each time, and the perception became firmly embedded in asset pricing in the form of higher valuations, narrower credit spreads, and excess risk taking. The privatizing of profits and socialization of losses continued and accelerated under Bernanke. These helicopter twins talked a good game, but their game plan only had one play – print money. Those Ivy League educations have proven to be invaluable. The Federal Reserve’s last shred of credibility and illusion of independence has been obliterated by their increasingly blatant backstopping of recklessly criminal Wall Street banks and secretive machinations with Washington politicians and foreign central bankers. Bernanke has lied to the American public, encouraged accounting fraud by Wall Street banks, overstepped his legal authority in purchasing toxic assets from Wall Street banks, been involved in the manipulation of LIBOR, screwed senior citizens and all savers with his zero interest rate policy, and used quantitative easing as a method enrich Wall Street at the expense of the general public that bear the heaviest burden of higher food and energy prices. The Bernanke Put is the only thing keeping a clearly overvalued stock market from crashing today. But delaying the inevitable through easy money policies will only exacerbate the pain of the ultimate crash. Bernanke is caught in a liquidity trap and his one weapon of choice is shooting blanks. Bernanke along with his banker and politician cronies have crossed the line of lawlessness in their futile efforts to retain their power and wealth. Jesse eloquently describes how a few evil men have captured our economic and political system: “The Fed is now engaged in a control fraud, and what appears to be racketeering in conjunction with a few big investment banks. They may have entered into it with good intentions, but they seem to have been turned towards deceit and corruption. This is not an historical event, but an ongoing theft in conjunction with a number of Wall Street banks, and politicians whom they have paid off through a corrupt system of campaign financing and influence peddling. This is nothing new in history if one reads the un-sanitized version. But people never think it can happen today, that somehow yesterday things were different, as if one is looking at some distant, foreign land. This is a facet of the illusion of general progress. We are now in the cover-up stage of a scandal, similar to Watergate when the White House was stone-walling. The difference is that the corruption and capture of the government is much more pervasive now, and includes a significant portion of the mainstream media, so meaningful reform is difficult. Most of what has transpired so far has been designed to distract and placate the people in their righteous anger. The Fed deceives the Congress and the public, turns a blind eye to glaring conflicts of interest, and is essentially debasing the currency while transferring the wealth of the nation to their cronies. And still the regulators do not enforce the laws they have, and Washington drags its feet while accepting buckets of cash from the perpetrators.” - Jesse Putting our trust and faith in a few unelected bureaucrats and bankers, who use their obscene wealth to buy off politicians in writing the laws and regulations to favor them has proven to be a death knell for our country. The captured main stream media proclaims these men to be heroes and saviors of the world, when they are truly the villains in this episode. These are the men who unleashed the frenzy of Wall Street greed and pillaging by repealing Glass Steagall, blocking Brooksley Born’s efforts to regulate derivatives, encouraging mortgage fraud, not enforcing existing regulations, and creating speculative bubbles through excessively low interest rates and making it known they would bailout recklessness. They have created an overly complex tangled financial system so they could peddle propaganda to the math challenged American public without fear of being caught in their web of lies. Big government, big banks and big legislation like Dodd/Frank and Obamacare are designed to benefit the few at the expense of the many. The system has been captured by a plutocracy of self-serving men. They don’t care about you or your children. We are only given 80 years, or so, on this earth and our purpose should be to sustain our economic and political system in a balanced way, so our children and their children have a chance at a decent life. Do you trust that is the purpose of those in power today? Should we trust the jackals and grifters who got us into this mess, to get us out? “This story is the ultimate example of American’s biggest political problem. We no longer have the attention span to deal with any twenty-first century crisis. We live in an economy that is immensely complex and we are completely at the mercy of the small group of people who understand it – who incidentally often happen to be the same people who built these wildly complex economic systems. We have to trust these people to do the right thing, but we can’t, because, well, they’re scum. Which is kind of a big problem, when you think about it.” - Matt Taibbi - Griftopia Thus concludes Part 2 of my three part series on trust. Part 1 addressed our bubble based economic system and Part 3 will document a multitude of reasons to not trust bankers, politicians, government bureaucrats, corporate chieftains, or the mainstream media, while pondering the unavoidable bursting of our debt bubble and potential consequences. Join me at www.TheBurningPlatform.com to discuss truth and the future of our country. By James Quinn quinnadvisors@comcast.net James Quinn is a senior director of strategic planning for a major university. James has held financial positions with a retailer, homebuilder and university in his 22-year career. Those positions included treasurer, controller, and head of strategic planning. He is married with three boys and is writing these articles because he cares about their future. He earned a BS in accounting from Drexel University and an MBA from Villanova University. He is a certified public accountant and a certified cash manager. These articles reflect the personal views of James Quinn. They do not necessarily represent the views of his employer, and are not sponsored or endorsed by his employer. 2012 Copyright James Quinn - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors. James Quinn Archive 2005-2012 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis Forecasting online publication. Only logged in users are allowed to post comments. Register/ Log in The Market Oracle is a FREE Financial Markets Forecasting Analysis web-site. (c) 2005-2011 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. 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Americans Are Being Prepared For Full Spectrum Tyranny Totalitarian governments, like persistent forms of cancer, have latched onto the long history of man, falling and then reemerging from the deep recesses of our cultural biology to wreak havoc upon one unlucky generation to the next. The assumption by most is that these unfortunate empires are the product of bureaucracies gone awry; overtaken by the chaotic maddening hunger for wealth and power, and usually manipulated by the singular ambitions of a mesmerizing dictator. For those of us in the Liberty Movement who are actually educated on the less acknowledged details of history, oligarchy and globalized centralism is much less random than this, and a far more deliberate and devious process than the general unaware public is willing consider. Unfortunately, the final truth is very complex, even for us… One cannot place the blame of despotism entirely on the shoulders of globalists. Sadly, the crimes of elites are only possible with a certain amount of complicity from subsections of the populace. Without our penchant for apathy and fear, there can be no control. That is to say, there is no power over us but that which we give away. We pave the road to our own catastrophes. In the end, a tyrant’s primary job is not to crush the masses and rule out of malevolence, but to obtain the voluntary consent of the citizenry, usually through trickery and deceit. Without the permission of the people, subconscious or otherwise, no tyranny can survive. As with the oppressive regimes of the past, America has undergone a dramatic transformation, heavy with fear and ignorance. Our tradition of elections has been corrupted and negated by the false left/right paradigm, and the leaderships of both defunct parties now seek only to elevate a select minority of men bent on globalization. Our Constitutional liberties have been dismantled by legal chicanery. Our principles have been diluted by intellectual games of rationalism and moral relativism. Our country is ripe for conquest. Americans battle over whose side is most to blame; Democrat or Republican, while ironically being disenchanted with both entities. For some people, the thought of holding each party equally accountable, or accepting that they are essentially the same animal, never crosses their minds. While this irrelevant farce of a debate rages on, the true culprits plotting the demise of our Republic gain momentum, and implement policy initiatives that the public should and must take note of. In the past year alone, many blatant steps towards the Orwellian gulag have been openly administered. A carnival of peddlers and freaks and greasy popcorn overwhelms our senses, but the stench of this cheap circus still tickles our noses, and if we use our eyes for even a moment, certain dangerous trends reveal themselves. Here are just a few recent events that bear a dire warning; the ultimate assault on freedom in this nation grows near… Acclimation To Subservience Every totalitarian state worth its salt has its own goon squad. The Nazi’s had the “Brownshirts”, the Soviets had the “Militsiya” and the “Voluntary People’s Brigade”, the Communist Chinese have the “Chengguan”, etc. In America, however, all tyrannical measures are given innocuous bureaucratic labels to mislead and distract the masses. In this country, we have the Transportation Security Administration… The TSA has become the most hated alphabet agency in the U.S. in perhaps the fastest time on record. It has violated the personal rights of more people on a daily basis in my view than the IRS, DEA, and the ATF combined. Clearly, this slobbering demon child of the Department of Homeland Security is being molded for something quite terrible and grand. When confronted by the public on the use of irradiating and intrusive naked body scanner technology, the agency responded by allowing their blue handed ghoul army with to molest our nether-regions. When confronted by state and local governments on their absurd tactics, the TSA threatened economic blockades and airport shutdowns. The organization then began expanding its jurisdiction to bus and train stations and even our highways when it introduced the VIPR program and implemented random roadside checkpoints in Tennessee last year. But, this behavior is nothing compared to what is next on the horizon: a compromise… Beware of government agencies bearing gifts. The TSA along with the International Air Transport Association has announced a new methodology of “less intrusive” passenger screening measures, in order to address the concerns of the public over pat downs and irradiating naked body scanners. This SOUNDS like a step in the right direction, and a proper response to the grievances of the citizenry. Instead, it turns out to be a refined example of totalitarianism in motion, and a perfect lesson in how the masses can be duped into handing over their inherent freedoms. Revamped security protocols call for biometric data collection, including fingerprint and retina scans, and a tunnel which combines multiple detection systems into one area (who knows how radioactive this will end up being): http://travel.usatoday.com/flights/story/2012-06-19/Faster-better-airport-security-checkpoints-not-that-far-off/55693916/1 The mainstream article above makes this development sound like a win/win scenario for everyone, painting biometric data collection as a matter of convenience, but it also reveals the true design of the system; to illicit voluntary subservience: “The key to speeding up checkpoints and making security less intrusive will be to identify and assess travelers according to the risks they pose to safety in the skies. The so-called riskiest or unknown passengers would face the toughest scrutiny, including questioning and more sensitive electronic screening. Those who voluntarily provide more information about themselves to the government would be rewarded with faster passage…” They enforce destructive anti-personal rights policies then pretend to acquiesce by replacing them with a technocratic nightmare grid which requires the cataloging of our very genetic essence in order to function. The only remaining injustice left would be to apply this grid to the rest of the country outside of the airports and train stations, which I assure you, they plan to do. Militarization Last week, I covered the disturbing use of armored vehicles (APC’s or urban tanks) in open training regiments on the streets of St. Louis by the U.S Army, despite the fact that all of their exercises could have easily been accomplished on any number of military bases across the country. The action is an obvious attempt to condition the American populace to the sight of military units operating in a policing capacity: http://www.alt-market.com/articles/866-military-tanks-on-st-louis-streetsbut-why I received multiple letters from current serving military who stated that in all their years in the armed forces they had never seen such a brash mishandling of public relations or an overstepping of bounds when it came to the restrictions of Posse Comitatus. It was encouraging to hear from military men and women who did not agree with or condone this kind of psyop activity on the part of our government. Though the St. Louis event is not isolated, I believe it does represent an escalation. Remember the controversy over the Mayor of Toledo and his refusal to allow 200 Marines to conduct urban combat drills on the public streets of his city in 2008? The media clamored to crucify this public official; one of the few who had any sense whatsoever in his head: http://voices.yahoo.com/toledo-mayor-faces-backlash-ousting-marines-896105.html Or the tactical exercises using helicopters and combat troops over LA and Chicago early this year? http://www.lapdonline.org/newsroom/news_view/50045 http://chicago.cbslocal.com/2012/04/17/city-black-hawk-helicopter-flights-were-just-a-training-exercise/ During each one of these events, city officials and local media attempted to inoculate the public with claims that they were “simply exercises”. This argument misses the point entirely. Whether or not these are “exercises” is not the issue. The issue is that this training could be done ON BASE. Using public streets and running drills within cities is absolutely unnecessary given the vast resources already available to the military, unless, of course, the goal is to BE SEEN by the public and to influence them to view the sight of armed troops around them as “normal”. Add to this the fact that many of these military training exercises are being conducted in tandem with local police department, and you have a recipe for the utter militarization of our society, turning peace officers into combat soldiers, and combat soldiers into law enforcement mechanisms; a juxtaposition that will soon lead to unmitigated disaster. Arms Race Against the People? When a country is quietly preparing for war, the first signs are usually revealed by a disclosure of armaments. If stockpiling is taking place without a warranted threat present from a legitimate enemy, there is a considerable likelihood of aggression on the part of that nation. America has gone well beyond the psychological process of militarization and has begun the extensive arming of particular agencies whose primary purpose revolves around the domestic. The DHS, for instance, placed an order for over 450 million rounds of hollowpoint .40 cal ammunition in April of this year: http://rt.com/usa/news/dhs-million-point-government-179/ And it placed an order for over 7000 new semi-automatic combat rifles chambered in .223 (5.56 by 45mm NATO) immediately after: https://www.fbo.gov/index?s=opportunitymode=formid=d791b6aa0fd9d3d8833b2efa08300033tab=coretabmode=list= While local police through federal programs (like the 1033 Program) are being given millions of dollars in free military equipment, including body armor, night vision equipment, APC's, aircraft, first aid supplies, weapons, surveillance equipment, Kevlar helmets, gas masks and filters, vehicles, etc.: http://www.ogs.state.sc.us/surplus/SP-1033-index.phtm http://www.wired.com/dangerroom/2012/06/cops-military-gear/all/ All of this equipment, though issued to state agencies, is still heavily tracked and regulated by the federal government, making it clear that these “gifts” come with strings attached: http://www.newsherald.com/articles/program-103291-state-law.html And finally, new FAA regulations will soon allow the dispersion of tens of thousands of predator drones with armament capability in the skies of the U.S. over the course of the next few years: http://www.washingtontimes.com/news/2012/feb/7/coming-to-a-sky-near-you/ http://articles.latimes.com/2011/dec/10/nation/la-na-drone-arrest-20111211 Now, anyone with any logic would ask who it is that the government is arming itself and local police to fight against? Al Qaeda? Let’s not be nave… The passage of the NDAA and its provisions for the indefinite detainment of ANY person, even an American citizen, under the laws of war has ended the debate over government intent in terms of domestic action. FBI Director Robert Mueller’s admission that he “did not know” if assassination programs would be used against American citizens also heaped evidence on the matter. The bottom line? Our government wishes to label and treat citizens as enemy combatants. Of course they would then organize armaments to follow through on their policy. Pulling The Trigger All despotic systems have another distinct similarity; they each began with a series of trigger events which opened the door to tighter controls over the population. The most immediate trigger event for the U.S. is the looming peril of a collapsing economy followed by inevitable civil unrest. With the EU currently in debt shambles, global markets are on the verge of a considerable breakdown. The Federal Reserve response will be predictable; QE3 and massive stimulus all around to mitigate the crisis. This time, though, the go-to Keynesian quick fix will not work in the slightest. In fact, it will make matters more untenable by placing the world reserve status of the dollar at risk. Everything that has happened so far in the markets this year has been easy to foresee. Alt-Market predicted the economic slowdown around the world and the collapse of overall demand using the Baltic Dry Index as a gauge back in January: http://www.alt-market.com/articles/540-baltic-dry-index-signals-renewed-market-collapse We also predicted the accelerated turmoil in the EU in light of the recent election results in France and Greece: http://www.alt-market.com/articles/765-economic-alert-if-youre-not-worried-yetyou-should-be If alternative economic analysts can predict these developments despite the manipulated statistics spewed out by the government every month, then I think the government and our central bank has a tremendously transparent view of what is coming down the road in terms of financial distress. I believe the establishment is very well aware of a potential crisis event, economic or otherwise, that is barreling down upon the U.S. I believe the evidence shows that they are preparing for this eventuality in a command and control fashion, without alerting the public to the coming implosion. I believe they will use the despair that flows forth from the fiscal wreckage as an excuse to institute martial law. Call it "crazy". Call it “conspiracy theory”. Call it “coincidence”. Call it "fear mongering". Whatever you like. I find it far more insane to shrug off the strange and twisted behavior of our power structure, and simply hope that it’s all irrelevant to the future. Whenever I run into starry eyed historical romanticists who look back in astonishment at the tyrannies of the past and wonder out loud, “How could those people have not known where their country was headed?!!”, I think of where we are today… Average: 4.866665 Your rating: None Average: 4.9 ( 60 votes) Tweet Login or register to post comments 19809 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Is It That Time Again? Military Conducting Training Exercises In And Around Boston Congress to Vote Next Week on EXPLICITLY Creating a Police State Live Feed From Occupy Wall Street Libyan Oil Fully Liberated On News Gaddafi Dead Guest Post: NDAA Protests End In Ironic Swarm Of Arrests
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