Wednesday, November 14, 2018

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The American Charles Hugh Smith is probably the best analyst I have read about the socio- economic condition of his country. There are areas however in which this author would beg to differ.

As with many if not most people who hate Empire today, Charles sees it as being corrupt, socially rigid and if not in decline, ripe for decline. Charles writes; “The incestuous embrace of privilege and power by entrenched, socially isolated Elites characterizes failed states and brittle, doomed regimes throughout history”

And in another paper Charles brilliantly identifies “America’s Nine Classes: The New Class Hierarchy “.

There is a key mistake and gaping hole in his analysis however. He does recognize that the twofold top tiers of power in the US are the Oligarchy, which he defines as  the “Financial Aristocracy………….this small class is more or less the top .01% who owns a majority of the nation’s financial wealth. They essentially own the political machinery of the nation, writing the rules of legislation that is supposedly regulating their industries, taxes, etc.”

And The Deep State. In defining Deep State Charles first uses a quote from Mike Lofgren; “The Deep State is a hybrid association of elements of government and parts of top-level finance and industry that is effectively able to govern the nation without reference to the consent of the governed as expressed through the formal political process.

Then Charles goes on to add to that definition, with his own, which acts to both clarify and deepen it. “I describe the U.S. Deep State as the National Security State which enables a vast Imperial structure that incorporates hard and soft power–military, diplomatic, intelligence, finance, commercial, energy, media, higher education–in a system of global dominance. Membership in the Deep State class is not dependent on wealth so much as on relationships and power.”

Bingo. Great job Charles.

The key mistake here is that Charles gives the Deep State as number one in power and relegates the Oligarchy only to number two.

In the real world those rankings are reversed. Perhaps Charles just put this order in place without thinking about it too much. But as a financially very astute person Charles should know that people who receive a pay check, (as ALL do in Deep State) do what those who pay them, tell them to do. They are in the end, just the top of the top of people who work for a living.

The people with real power are those who write the checks, who hire and fire according to how well their workers, including Deep State workers) serve them.

Once the Oligarchs are placed at the top of the food chain, the question then arises, who are they and what to they want? Charles doesn’t even ask.

One reason Charles doesn’t ask is that as a real matter you cannot know who they are. And the reason for that is in this Red Pill Views post on “Why You Can’t Know Who Owns/ Controls Empire”. 

But while we may not know exactly who they are, we can take an educated guess that the Rothschild and Rockefeller families are amongst them. And by watching what their employees of Deep State have done in the past and are continuing to do, we can surmise that what these people want is a global government under their control.

David Rockefeller is so unafraid of push-back from the lower rungs of the American caste system, that he blatantly admits his agenda.

He writes; “the world is more sophisticated and prepared to march towards a world government. The supernational sovereignty of an intellectual elite and world bankers is surely preferable to the national autodetermination practiced in past centuries.”

And then David Rockefeller adds; “Some even believe we are part of a secret cabal working against the best interests of the United States, characterizing my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure–one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”

The failure of Charles’s analysis is that he has not sufficiently accepted and internalized these statements, plus what has been their effective implementation by American Deep State operatives in its foreign policy since World War 1, when David Rockefeller’s daddy ran the show.

What this means in fact, is that the United States itself, (today widely viewed at least by most of the rest of the world) as the center of Empire, is not only going to have that role stripped from it, but will lose its sovereignty as well, as will be true of all nation states.

The reason for this is that the new global government will be unlike any other past Empire. Those always had as a geographical center, the country or city or tribe(s) that made the conquests.

In today’s world there will be no comparable geographical center. That is because this is intended to be the first great Empire not created primarily by military force, but by global consensus as the UN is today a precursor. Of course there will need to be a bureaucratic and governmental center for the global government envisioned by the elites, but it will be very small, perhaps the size of Singapore today, or even smaller and physically far removed from any centers of police or military power.

What this means is that the Oligarchs who own/ control the United States today have no problem with putting in place economic- social and cultural systems that are made to fail. That is because all of America’s institutions are scheduled to go through a controlled demolition before the global government can be born.

In fact with the US, like an aging- rotting dinosaur in its way, the global government cannot be birthed.

This has endless implications. One of which is that the oligarchs rarely do things for money. They control the system of printing it, (central banks) and through their control of paper directives markets, most of the global economy.

Everything that the Elites do today is based on creating global conditions that will allow them to trigger a controlled worldwide disaster. That in turn will be intended to force all the nations of the world to cede their sovereignty and join the new global government, which will promise that it is the only way to end war, solve the global ecological crises and through worldwide cooperation in science, technology and economic synergies, eradicate poverty forever.

So when the US takes on debts that it can never repay, it is not supposed to ever repay them. It is simply a confidence game. The US dollar is only there to fulfill its role as a global hegemon until it is ready to be dumped. And when, not if, it is dumped that will clear the way for the global currency, step one towards creating the global government.

At a political level while Charles is correct that there are elites and class systems roughly analogous to what the United States has today, (all over the world) including within its newly declared Cold War 2 adversaries China and Russia, the difference is that in the vast majority of nations the elites understand that their power derives from the nation they rule over.

So people like Putin and Xi can be expected to, in the end seek to serve the best interests of their people and nation as they understand these interests to be.

The countries of Empire however are ruled over by a political class who are in fact owned- controlled by an interlocking group of supra national Oligarchs, and as such do not care at all about their countries or their peoples.

People like Obama, Cameron, Hollande, Harper, Abbot etc. either simply follow orders by those who pay to put them in power, or in the rare event that they are both curious and clever, they know that their country is gong to be destroyed as a nation state anyway. So why fuss over it?

This is the reason dear readers why the good guys today, (not in 1932) are going to be people fighting for their countries, (as old fashioned and problematic as that concept may seem), while those working for Empire are going to be fighting against nation states and all who champion them, while working overtly or covertly, knowingly or unknowingly for global government.

This why today, kind hearted people who want to put an end to global poverty and/ or the massive pollution that is killing the planet, and start or join Leftest or Green political parties, will find that these parties will ALWAYS be co-opted by the global Oligarchy. The Oligarchs view all types of idealistic internationalists as useful idiots. whose purpose whether they understand it or not, will be to help them to fulfill their objective of world government.

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The European Union and Euro were essentially created by Europe’s Mega Banks. These institutions were from day one designed to benefit them at the expense of the people of Europe. Given Europe’s belligerent history they were relatively easy to sell, because a “united” Europe promised permanent peace and cooperation between Euro States. The core countries that put the EU together were France and Germany.

The deepening fault lines throughout Europe can be seen pretty much everywhere except in Brussels and among Eurocrat politicians. For them it is business as usual. When fault lines open under the earth each is different. And so it is in Europe. The political parties in each country that have come to represent these fault lines are very different.

The rumblings under the European earth come from many distinctly different sources. There are those who oppose the common currency, (EURO), those who oppose the EU altogether, those who want to slow down immigration, those who want to throw all immigrants out, those who want to separate their region away from their country and those who are racists and bigots.

The racists and bigots, throw all immigrants out group, are toxic, and there are a lot of them. Until recently they have contaminated Euro Skeptic parties, limiting their popular appeal, as they scared most citizens, especially due to Europe’s fratricidal past.

This was a de facto victory for the mainstream political parties, fully owned by the Mega Banks. No matter which one party or coalition of them, would control a Euro government, it was always a victory for the Mega Banks.

The Euro Skeptic groups who are deeply rooted in bigotry are Golden Dawn in Greece and Geert Wilders Party for Freedom in the Netherlands.

Marine Le Pen in France broke from all of that. Using the National Front Party she inherited from her father, she converted it from being one based on a nationalism rooted in bigotry and racism, to one stripped of both, that concentrated itself on the problems of the French people that came from the Euro, the EU and an open immigration policy which she wants to restrict.

Marine correctly identified the EU and the Euro as the creations of Europe’s Mega Bankers and that these were the institutions at the root of the dis-empowerment and impoverishment of the people of France.

Because of the horrible economy in France, the non existent leadership of Mega Bank controlled flunky, French President Francois Hollande, and the fact that Marine has denounces bigotry and rejects bigots who try to align with her and her party, her popularity is soaring.

If there were an election tomorrow she might top the two Mega Bank owned parties, the Socialists and the Gaullists. Should the economic situation not improve in France, her party will probably be number one in the country.  A Le Pen presidential victory would mean the end of the Euro and the EU as it is structured presently.

While the EU might at one time have been a chalice for Europeans to place their collective idealism, today it is simply a creature of these Mega Banks. We know that those who own/ control them are pretty much the same people as those who own/ control Wall Street and London. That is because the flower of the Mega Bank controlled EU- Euro has been the European Central Bank (ECB) and it has functioned as a sister organization to the American Fed and the Bank of England, essentially draining wealth from ordinary people and handing it to the Mega Banks whom it really represents.

The Mega Bank controlled politicians of Europe work closely with the American Military Industrial Complex and are slavishly pro NATO, and pro Imperial global aggression. So as Washington has created a Cold War 2 against Russia and as it wants to drag Europe into it, it is these institutions, (the EU, ECB and Euro) that are at the heart of Europe’s darkness.

If Europeans want to extricate themselves they are going to have to attack that darkness at its roots.

While Marine wants to do it in France, up until now there has been no real voice to attack the EU- ECB -Euro, in the sister country that helped to create them in the first place, Germany.

The reason for that is that due to the Maastricht Treaty that created all of this in 1992, the power to control the Euro and the ECB was given to Germany. And German elites have been using that authority for their own benefit, and some of these benefits have trickled down to ordinary Germans. Even as the economies of Southern Europe have tanked Germany has done quite well thank you.

Because Germany has been doing so well Germans have been generally satisfied with Angela Merkel who has represented both the Euro Mega Banks along with German industry. That is until now.

As Washington has opened Cold War 2 against Russia on the Ukrainian front, it has enlisted Angie as its spokeswoman to lead the Germans into it.  Bloomberg’s headline is intentionally misleading here. The story is NOT about German industry being firm on Russian Sanctions. It is about Angie trying to sell them to German industry, whose leaders listened politely.

The problem is that participation in Cold War 2, is extremely harmful to both German Industry and the German economy which is slowing down now quickly. And as none of Germany’s three main Mega Bank controlled political parties, (the Christian Democratic Union, the Social Democratic Party and the Free Democrats) have responded to concerns of the German people, a new political party was born last year called Alternative for Germany (AfD).

This new party is taking off like a rocket. It is controlled by academic conservative economists, not politicians. And it is, (unlike the hapless German Left and Greens) anti Euro. And it is anti war as well. 

The AfD is however not anti EU. Because the AfD does not represent working class voters. it is not anti immigration, (even to slow it down) and it is conservative. It sees itself as a sister party to the British Conservatives of David Cameron.

Bernd Lucke, the party’s chief is a professor of economics at Hamburg University. His right-hand man is Hans-Olaf Henkel, former head of the Federation of German Industry and a financial columnist for Handelsblatt.

If you put all of what Lucke and Henkel know together about power politics in Europe into a thimble it would rattle. So how can these two hapless economists prove to be more dangerous to Euro elites than the German Left and Greens?

The reason is that the German Greens have been completely co-opted by the Mega Banks, Their angry pro NATO and pro Kiev stand against Russia is proof positive.

But the German left, (Die Linke) has waffled around in pure cluelessness. Up until now the left has been pro EU and pro Euro, which means whether they realize it or not pro Mega Bank.

Die Linke speaks out against capitalism, as if anyone cares and demands a better deal from the EU for working people. They also want German industry to bail out the poor people of Southern Europe. The German Left is anti war but is clueless that the nature of the EU itself will guarantee a Europe enmeshed in Cold War 2.

In other words the German left accepts the very structures that create poverty throughout Europe and will create war, simply demanding that they change in the name of Socialism. By doing this they become what every political elite love, which is just another group of reformers who by their actions de facto give credence to the system.

Finally Die Linke too seems to be smelling the future as opposed to always looking through the lens of the past, and is making anti Euro noises. Whether this will come to anything remains to be seen.

Lucke and Henkel, (AfD) on the other hand, as innocent as they may be and despite themselves, are in fact truly dangerous to Euro Elites. That is because while Lucke and Henkel may think that they can be anti Euro and not anti EU that is not possible. The European Central Bank cannot exist without the Euro. And the ECB and Euro are so inextricably linked to the EU, at least as it exists today, that it will collapse without them.

The EU’s economic problems, just like those if the US cannot be dealt with today without massive money printing. The Fed in the US can do this because it can buy nearly worthless debt paper from the Mega Banks and give them in return new printed cash, some of which does manage to filter down into the real economy.

The Fed can do this because it is inextricably linked to the US government itself. It cannot go “broke” because it can always create fresh cash to meet any debt obligation. And if anyone ever questions the quality of the Feds junk collateral, well in the end these debts like the debts of the US Treasury itself are the implicit debts of the American people.

But that is not the case with the ECB. Who is behind the trillions of Euros in bad debt that the ECB collects as collateral, in order to give freshly minted cash to Europe’s Mega Bankers?

The German people are afraid that it is them. And that is why they have never given the ECB the Carte Blanche it needs to print Europe out of its economic mess.

Now with Germany’s economy beginning to sputter, the country being dragged against its will into Cold War 2 and massive pressure being put on it through the Euro and the ECB, to accept being the creditors of last resort for all of Europe, the same storm clouds linger over Angie’s Christian Democratic Union and the other Mega Bank controlled parties in Germany that have long since broken into hurricanes over much of the rest of Europe.

The rising AfD is going to make it much harder for Angie to cave to Euro Elites and Wall Street and allow the ECB to print, print, print. If it doesn’t however the EU is on a road to nowhere. With only economic stagnation and recession in Europe’s future, new fault lines will break open throughout the continent and the ones that exist today will deepen and widen.

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One of the most important tentacles of Empire’s financial control of the world are its paper markets. Those are derivative markets with some real asset underneath them. In 2008 one real asset of one such paper market, (Collateralize Debt Obligations ) was people’s home mortgages, but there are other paper derivatives markets for shares of companies or bonds or most types of commodities among many other assets.

These markets are all about speculations on where the price of a real asset is going to go. These derivative markets are completely controlled by the Mega Banks. They use them for profit, but because of the tight linkage between the Mega Banks and Washington’s Deep State they use them for political purposes as well.

In these markets the Mega Banks can use up to 100- 1 leverage, which means borrowing enough so the bank can buy one hundred times more of an asset than they could with the already huge stocks of cash they have on hand. And given the fact that the major Mega Banks actually own the Central Banks like the US Fed, the amount of money available to them to drive markets any way they want them to go is virtually unlimited.

One of the key derivative markets that can be used by Washington policy makers is the FOREX. That is the one that, by again using massive leverage controlled by the invisible hand of central bank money printing, defines what currencies are worth internationally.

From the early ’80s onward it was Washington’s policy to destroy the American Union movement whose power was centered in skilled industrial jobs. In order to accomplish this the US wanted a strong dollar compared to Asian currencies. Weak Asian currencies meant low priced exports to the US, destroying the American production infrastructure of electronics, textiles, steel and much of the country’s manufacturing base.

Washington greased the skids for this to happen by actually creating tax incentives for US companies to take their production facilities to Asia. One result of this policy was massive trade imbalances first with Japan and then with China. These countries collected endless piles of US currency in exchange for the goods they produced at the expense of lost high paying US jobs.

These Asian countries did not mind this game. It was symbiotic. Japanese and then Chinese people started out dirt poor and were willing to forego buying things from abroad with their weak currencies, so they could have jobs, which although were at first for slave wages by Western standards, looked good to them compared to what they had before.

The goal of Washington and Wall Street however, to destroy the union movement and the US wage base has now been completed. Amongst all developed countries the US is now number one in low paying jobs.

Washington planners have decided to start a Cold War 2 against China and Russia. But China has a LOT of US dollars and Washington does not want them to collect many more. Using shale oil technology Washington is now giving incentives for US manufacturing to return home. 3D printing, robotized manufacturing plants and plenty of cheap US labor is doing just that.

The problem has been that the Chinese pegged their Renminbi to the US dollar. That nullified the the Mega Bank controlled COMEX and made it virtually impossible to drive the value of the Chinese currency up.

But Cold War 2 is doing just that. The US uses its financial system and currency for Geo political power. That was first made clear by Washington’s sanctions against Iran, where it tried to use its global hegemonic financial system to cut the country out of international trade. And Washington is now repeating that process with Russia.

This has not been lost on China, Russia or the other Brics. They are now in the process of trying to create a competitive International financial system based on the Chinese Renminbi, that Washington cannot use for political purposes. In order to accomplish this China must internationalize its currency, produce enough of it so that it can be bought and sold in large amounts all over the world. And that means that the Chinese central bank will lose its capacity to link their currency to the US dollar.

And that is EXACTLY what Wall Street wants. Once there are enough Renminbi abroad they can be traded on the Mega Bank controlled Forex with the usual endless leverage.

This has already been happening on a small scale as China’s currency has gone up by about 33% from its lows and its exports have dropped to a 9.4% yearly growth rate from a 20% growth rate in 2,000. Beijing is desperate to prevent any more strengthening of its currency. But there is going to be little that it can do to stop it.

The world is drowning in over $160 trillion in debt and economic forces everywhere are deflationary.

What every country, including the US wants to do now is cheapen their currencies so they can export, export and export some more. That is called the race to the bottom. No one is worried that their cheap currency will increase the costs of imports and thus create inflation.

So the goal of Washington now is to FORCE the Chinese currency up, so that their exports will be cut even more, (bye bye to cheap Walmart Prices and Dollar Stores). And unless Beijing forces imports to slow through legal or bureaucratic means, they will be forced to buy more cheap US, and coming soon cheap European products as well.

Washington wants the Chinese to use their cash on Western consumer products, (and by so doing drive their economies) rather than muscle up its military, or build a trading infrastructure (The New Silk Road) to the West, that will be beyond the control of the US Navy to stop.

Because of Washington’s aggression, China has little choice but to create an international reserve currency to compete with the dollar. To accomplish this it has been mining and buying gold to back its currency, a lot of it.

Washington actually likes that. They want China’s international Renminbi to be a hard currency a very hard currency. That way everything that China sells in dollar or Euro terms will be relatively expensive and their exports will collapse.

Normally Wall Street and Washington hate gold. It has been a traditional rival for Western currencies that are backed by nothing more than public trust. The Mega Banks paper derivatives markets always trash gold whenever they can. The problem is that the paper, (speculative) price of something is related to its underlying real cash price.

No matter how you play with leverage and speculation you can’t drive gold down to $1 per ounce, because everyone in the world would want to buy it and there are no real world sellers at that price.  During the 2000s with the rapid rise of buying power amongst Indians and Chinese, who both love gold as a long term holding, the Mega Banks’ paper markets could not push the price of gold down for any length of time.

But since China has been having to reinvent its economy away from Western dependence and growth levels have fallen, coupled with balance of trade problems in India that forced the government to cut back on gold purchases, the Mega Banks paper markets have been going crazy shorting and trashing gold.

Of course the reality of that, is that as the Mega Banks lower paper gold prices, the Asians are buying as much real gold as they can at these bargain basement prices, particularly the Chinese government, to support it coming International Renminbi. So physical gold is traveling from Western hands to Eastern hands.

Washington and New York do not seem to care about gold. The more gold the Chinese get, the stronger its currency is likely to get long term and that is indeed what Washington wants.

The only question is how much gold do the Americans have that they can ship Eastward? The US government claims to own over 8,000 metric tonnes of gold. But it has not allowed an independent audit of this gold for over 60 years.

And since World War 2 the US has been holding for safe keeping the gold of foreign countries. The Germans under massive grass roots pressure recently asked for their gold back and the US effectively said we can’t give it to them. The Germans asked to see their bars which are all marked and numbered.  The Americans showed them some bars, but with different markings and different numbers.

In the end the Germans simply gave up.

So how long America’s gold sales can continue remains to be seen. But unlike what many people think and perhaps counter-intuitively, the Americans want their gold to go to China and they want a strong global Renminbi sooner rather than later.

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People are getting poorer while stock markets keep going up in anticipation of coming profits based on expectations of a growing economy. Sometimes the markets accurately predict growth and profits, and the people who get in on the rising market early make a lot of money.

Sometimes of course people drive up stock prices anticipating a growing economy and growing corporate profits, and it don’t happen. In that case they have taken a long walk off a short pier. And they usually sell, sell sell and the markets drop, drop, drop.

Markets have been going way, way up for a long time now, but the global economy is not showing any real signs that good times are just around the corner.

And now The Organization of Economic Cooperation and Development, (OECD) has just revised downwards it estimate for global growth. In the US the OECD has dropped its growth forecast for 2014 from 2.6% to 2.1%. and warned investors about “risk assets” a euphemism for an overpriced stock market.

Even the 2.1% rate is to say it kindly optimistic. That is because growth is always factored as an after inflation figure. But governments all over the world fudge on their inflation figures pretending that they are lower than they in fact are.

There are many reasons for this. One of them is that governments frequently have to give an inflation raise to their own workers and to pensioners.

So manufacturing a formula that will give an artificially low inflation figure, is a way to cheat government workers and pensioners and for governments to hold on to a bit more money. But by subtracting an artificially now inflation figure from the economic growth of the nation, one gets an artificially high rate of growth. China is famous for doing this, but Washington is not far behind.

So the 2.1% growth figure in the US is mostly fantasy. Even with this low growth number however, jobs are being produced. That is because there has been a de facto lowering of the US wage base because new jobs are paying people 23% lower than their old jobs, and the vast majority of the new jobs are for temporary or part time work that allows employers to be able to stiff workers for social benefits which is a major, (if hidden) part of a pay package.

What the inflated 2.1% growth rate in the US means is that things are not going to improve anytime soon for working people. Unless they are in the top 30% of those with the skills the 1% want and need, people can expect to be able to get jobs, but at an ever decreasing real wage packet or they can stay at home, receive government transfer payments and let illegal immigrants do the jobs for under what is even the low minimum wage.

That is perceived as being good for stock investors because low wages lets them keep more of the profits their companies earn. But low wages also means working people don’t have the money to buy much. Less sales can result in lower profits.

Stock Investors have been betting more however on simple money printing, than on the real economy. As the real economy sputters, central banks print money and guess who gets that money?

No its not you or anyone you know. So don’t even think of going there.

The people who will actually receive the monies freshly printed in the name of the American people, will of course be the Mega Banks who just so happen to own the US Federal Reserve System to begin with. What a coincidence huh?

The Mega Banks then pretend that their follow the leader fashions of the day, are in fact high and very mathematical financial science. What the fashions of the day dictate of course is for them to put their freshly printed Federal Reserve money into stocks which of course inflates their price.

The US economy does not function in a vacuum. How well it does, especially its big multinational companies, who frequently get most of their earnings internationally is dependent on the Global Economy.

And guess what? The OECD report has just informed us that the Global Economy sucks. In Europe 2014 growth is going to come in at 0.8% nowhere near enough to create jobs for local people as well as immigrants. That guarantees high unemployment, falling real wages and social welfare systems breaking at the seams.

And that in turn if creating booming election numbers for anti immigration and anti EU policies. Not to mention Scotland either leaving the UK sooner or if not now later, with Catalonia wanting to do ditto out of Spain.

In Japan after the promised miracles of Abenomics, growth is scheduled to come in at 0.9%. The underlying reason for this is that in order to truly revitalize the economy Abe would have to deconstruct the terminally corrupt old boy system that defines Crony Capitalism for the rest of us, of Big Corporate- Banker interests, along with the Yakuza, (yeah the Japanese mafia) and the sclerotic mega bureaucracy which has truly run the country since the end of World War 2.

Japans tightly knit networks of nepotism, corruption and cronyism is the structural reason for its low growth and as Abe is an integral part of this system the chances that he is going to change any of it fundamentally is about ZERO.

Meanwhile we are told that the growth rate in China is still moving along at a brisk 7.5%. But the Chinese are the grand champs of printing out fantasy low inflation figures. So real growth is guaranteed to be much lower than 7.5%.

You can always tell what the reality is anyway by the commodities index. That is because if global production. (growth) is humming along commodities are in great demand, as you can’t produce much without them.

So what is happening with commodities? They have fallen to their lowest level since 2009. That means that the global recovery is a mirage and that growth in China is, like reports of world peace breaking out, highly exaggerated.

Well with crappy economies, the wage base of most people falling and not much hope anywhere, what can people do?

Well there is always war of course. That always manages to get the attention of most people.

How about a war with ISIS? Would you like that?

If not we who own/ control your politicians and your media, are going to bring back The Ukraine War Part 2. Will that grab your attention any better?

If not, don’t worry. We who rule over you are brewing wars all over the world, and soon there will be a new one to put on our media, that will compete with the sports and entertainment channels for your viewing satisfaction. So don’t ever believe that we aren’t thinking of what is best for you.

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Seventy percent of the people of the US are being systematically impoverished, but because almost none of them understand finance they have no idea how it is happening.

Many if not most Americans know that somehow the Mega Banks bare a major responsibility for the “bad economy”, but they don’t know how, nor do they know that all of this is happening with the collusion of their elected officials in Washington at the highest levels and on a bi partisan basis.

There is a wonderful woman named Ellen Brown, who unlike fakes like Elizabeth Warren has consistently stood up to her country’s parasitic banking system at its corrupt roots, as opposed to begging the criminals for better deals for student loans.

In this article Ellen brings up a crucial under the radar seismic change in the US banking system that is intended to bring American municipalities, with weak balance sheets to their knees so that financial markets, dominated by the Mega Banks can bleed them for high interest rates on their debts and if and when they can’t pay, buy up their public assets, like, parks, prisons, schools, sanitation services etc. for pennies on the dollar.

To understand this I need to back up to how the Mega Banks were bailed out during the financial crises in 2008. Many if not most of these banks were in fact bankrupt, because they had mortgage backed “assets” that had fallen to levels that were sometimes near to worthless. These “assets” were supposed to cover the banks debts like the monies they owed to depositors. And they didn’t.

In real capitalism these banks were in fact bankrupt, and would have been closed down, their shareholder’s (owners) stocks would have been valued at zero, the executives all fired with no severance package, (which you can’t get from a bankrupt institution) and the bank itself closed or sold on the open market. Naturally there would be civil and criminal investigations of the banks’ directors and executives as to determine liability, criminal and otherwise for the banks’ failures.

Of course these were all called “Too Big To Fail” banks by politicians like Bush and Obama and then they were bailed out at public expense. The bailouts came directly from the American people, (US Treasury) or it came from the Federal Reserve, (US Central Bank).

The Federal Reserve is privately owned, (as mortgage buyers Fannie Mae and Freddie Mac were) but is also a public institution. The president and congress appoint most of its ruling Junta, which is called the “Open Market Committee” to sound nice, although the Junta has nothing whatsoever to do with markets and all their meetings are held in secret.

What this amounts to is the same as with Fannie Mae, profits for the Fed are privatized, but should there be losses, the public will pay them. Since the Fed is the only institution in the US with the right to print money out of nothing, should it ever become “insolvent” it will simply print the money it needs to pay its debts. And that net- net would become an inflation tax that all people will have to pay on everything that they buy.

This then is how the Fed bailed out the bankrupt Mega Banks in 2009. It printed up money and “loaned” it to them at near zero interest rates. It took as “collateral”, (for these loans) their garbage mortgage based assets that had little market value. So like magic all of a sudden the banks had real money in their pockets as opposed to “assets” that were like bricks of fecal matter.

This created trillions of dollar of debts for the US Central bank that are not being recorded as a part of the national debt, as these debts are ostensibly “private”. When it is convenient to count the Fed as public, they call it that. When it is inconvenient they call it a “private” institution.

By giving banks real money in exchange for the “collateral” of bad loan portfolios and low quality bonds, the Fed de facto subsidizes banks with poor business models at the potential expense of the public which is now liable for the performance of this junk collateral.

But by buying low quality bonds the Fed also subsidizes businesses that need to sell such bonds. The reason is simple. It has to do with the supply demand equation of a bond. This would be a crude example.

Lets say that a weak company has to raise X amount of dollars and wants to sell bonds to raise it. In a true open market they might have to pay 10% interest on their bonds.

But if the Fed is willing to take half of these bonds as “collateral” from the Mega Banks, well the Mega Banks are now happy to buy them and with more demand for their bonds, (because the Fed will take them as collateral)  the market may only ask for a 5% interest return on the same bonds.

That would be a windfall for a weak company, as the amounts they have to pay for interest on their debts might well be the difference as to whether the company will survive and even thrive or die. In that way the Fed has acted to subsidize weak businesses as well as broken banks.

Of course this Fed subsidy does not apply to Mom and Pop businesses, only those big enough to be able to borrow money directly from the bond market.

And that is one of many institutional reasons why small businesses, (even if they have a better business model) are running uphill when they try and compete with businesses that have better access to capital markets. The big boys are de facto subsidized by the Central Bank.

This is one of many institutional reasons why the percentage of  Mom and Pop small businesses are at historic lows, (page 24). And this is one component of America’s collapsing middle class.

Up until now however the Fed has also taken Municipal bonds as collateral for printing money and handing it to its Mega Banks. And just as with businesses that has helped Municipalities get lower interest rates from the markets, as the Mega Banks are always buyers, because they have a “buyer” of last resort the Fed.

Well as per Ellen’s article that is now no longer the case. So without the same safety net that corporations have. municipalities now have to fend for themselves in bond markets controlled by sharks like Goldman Sachs, Citibank and JP Morgan. Rubbing their hands together in the fashion of Mr. Burn’s, (see the Simpsons) they will give impoverished cities like Camden, New Jersey “loans”, but at a price; blood sucking communities dry so that they have scant funding for police, fire, sanitation, education etc.

This would not only include cities that have already gone into bankruptcy like Detroit, San Bernadino and Stockton California, Harrisburg, Pennsylvania, but cities teetering on the edge of bankruptcy like Oakland and Fresno California, Providence, Rhodes Island, Newburgh New York and the list goes on and on.

Even cities that are today in reasonably good financial condition, will still feel the pinch, as interest rates on their bonds will go up and they will in turn need to make cut backs on library hours, sanitation pick ups and/ or social services for the poor and disabled and the list goes on.

The American people do need to understand that none of this was ordained by the Almighty. The US Central bank is OWNED by the very Mega Banks that stand to make windfall profits from its policies. The majority of the Junta, Janet Yellen and her den of thieves were appointed by none other than the Obamanation and then confirmed by congress.

The entire criminal institution of the Fed was created by a simple congressional law, (no it is not in the US constitution) and can be undone with a simple congressional law, anytime the supposed representatives of the American people want to pull this parasite off of their backs.

It is important that Americans do NOT blame the bankers, as did Occupy Wall Street. Bankers have always been leaches. They will suck the American people dry IF THEY LET THEM! The real blame is with the people whom Americans vote for, who are supposed to represent them, but in fact represent the banks.

Why do Americans vote for these people?

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Argentina wants to pay its foreign bond holders what it owes them.  Between 2005 and 2010 Argentina restructured its debts with 93% of its creditors on terms it could afford. The problem has been that a few Wall Street “vulture funds”, who bought Argentine bonds (7% of them) for pennies on the dollar, now want to collect in full.

After Argentina made its June 30th debt payment deposit, (in a New York bank) for the other 93% of its creditors, Buenas Aires was blocked from paying them by a a US Federal court, (steps away from Wall Street) as the judge demanded that Argentina first pay the vulture funds at 100 cents on the dollar.

Argentina’s president Cristina Fernandez de Kirchner has ordered that future payments on the debt will be paid through Argentina’s own central bank and under Argentine law.

Wall Street’s response has been to declare war on her country and try and make a run on Argentina’s central bank.

With limited dollars to support the local currency, the Argentine Peso has been depreciating fast and with it peso denominated inflation rates has sky rocketed. In order to not be impoverished with their peso savings, ordinary people and businesses are flooding the central bank with demands to buy dollars.

Runs on the dollar are frightening for ordinary Argentines as well, who have chosen to save their money in dollars. When they hear that the dollars are disappearing, they run to their local banks to withdraw all of the dollars they can.

But their local bank don’t have that many dollars. So they have to get them from Argentina’s central bank, further depleting the dollar reserves the country needs for vital international imports like medicines and oil.

Just when the Wall Street parasites looked set to put the pain on the people of Argentina, riding in to save the day has been China’s President Xi Jinping with a bailout loan of $11 billion. This loan is going to be given in tranches as currency swaps, Argentine Pesos for Chinese Renminbi.

The beauty of this is that due to the abject greed of Wall Street, Argentina is now joining the growing list of nations who will be doing business outside of the US dollar.

The greed of the Vulture Funds is even frightening the establishment on Wall Street. Due to them the other 93% of Argentina’s less greedy creditors, now stand a greater risk of default, where Argentina would say to hell with all of you and simply renounce all of her debts.

Although Argentina technically still owes foreign creditors $138 billion, that debt is unpayable. The British financial journal The Economist warns Wall Street that only $29 billion of it is under foreign law and that Argentina could well default.

That becomes easier as Buenas Arires is less and less dependent on the dollar denominated world and more integrated with China and the other nations of the BRICS.


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The first of this two part series is about the Immigration issue in the US. Tomorrow in Part 2 I will focus on the far more toxic and from a global stand point far more dangerous Immigration issue as it exists within Europe.

If there is a single issue that separates the true right and left, (who are not controlled by the Mega Banks and Corporations) it is immigrations. In the US it is all about numbers but there is a strong secondary theme, less amongst voters than amongst activists, that bitterly polarizes people along a Right – Left and Caucasian- Latino divide.

Due to the corporate banker control of the Democratic- Republican parties in the US, the people of the true right and true left have virtually no political representation. The Duopoly in power have long since taken control of each states electoral apparatus, pretty much assuring that no third part can ever gain traction especially at a national level. And anyone within the Duopoly who would espouse policies that would be against the interests of the Mega Banks & Corporations, and pro peace has always been squashed or minimized.

Any possibility in the US that the true right and true left can come together and form any type of coalition, has never gotten off the ground because of differing social policies, perhaps the greatest of which has been over immigrations.

Illegal undocumented workers make up 10% of California’s work force. The vast majority are paid well below the already rock bottom minimum wage of $7.25/ hour. They do not contribute, or contribute minimally to, (but then use) public services including health and education. This acts as a hidden tax on the rest of the 90% of the population who really do have to pay for it all.

What Americans get in return for de facto allowing these illegal, undocumented workers to stay, is dirt cheap labor. Big industries in California like agriculture, which without these workers would not be competitive, thrive and then pay taxes. And of course these workers keep prices down for consumers in the restaurant industry where they work as cooks, dish washers and bus boys. This also adds to profits for these businesses which then of course pay taxes.

Most illegals are happy as clams to get a a job at McDonald’s or Walmart and receive the US minimum wage of $7.25 per hour. That puts them in head to head competition with poor American workers, who cannot ask for more because they can easily be replaced by illegals. For these impoverished Americans, it is take the poverty wage or get lost. That is why so many are asking the state to intervene on their behalf and raise the minimum wage so that they can earn enough to pay the rent.

Of course Holder and the Obama Administration, who has as a real matter been waging war on the poor since he was elected, is treating these people as he did the Occupy Wall Street Protests with arrests and intimidation. In other words as criminals. If ten million or more illegals were not in the US work force, then due to the supply demand balance in the unskilled labor market, wages would have to rise on their own without the government needing to be involved.

But of course prices would likely rise somewhat at the Walmart and for fast foods as well.

Illegals also work in the construction industry, including state projects like road work where a de facto, we won’t ask, so you don’t have to tell attitude prevails relative to their status. Americans also then get cheaper houses, (lower costs for contractors) and/ or greater tax receipts based on the out-sized profits these same contractors make from way below market labor.

So Net- Net what do Americans think about allowing undocumented foreign workers to stay, and especially giving them “a path to citizenship”, knowing or they should know that saying yes is an engraved invitation for others to come?

Well they flap around in the wind depending on the days headlines. In January of 2013 an AP poll showed that by 62% to 35% Americans were for a path to citizenship for illegals.

But in April of this year a Washington Post poll showed that if a candidate were to support a path to citizenship a small plurality 38% would hold it against him or her, while 30% would like that position. But more importantly 29% wouldn’t care at all. Which means that most people are divided on this strongest of immigrations issues, (along with sending illegals home) that not only de facto accepts illegal immigrants but gives incentives for new ones to come as well.

The results of this among other structural disincentives to work is that a record numbers of people, (more than 92 MILLION) have dropped out of the labor force altogether. Who really wants to work for $7.25 if one can find their way onto a government transfer program? These 92 million people are not counted as “unemployed” in the governments fictitious unemployment figures of 6.1%. This is the lowest percentage of Americans out of the labor force since 1978.

Why would Americans be as sanguine as they are with 10 million or so undocumented illegals taking jobs at substandard wages, that they might otherwise have at a real wage? The answer is government transfer programs.

On one hand you have a coalition of businesses, Hispanic groups and people on the true left lobbying for a policy of what amounts to open borders. And on the other there are people, now long unemployed, accustomed to shrugging their shoulders over the issue, cashing their government check, cracking a cold one and turning on the wide screen. The permanent underclass.

While Immigrations policy in the US is frequently a bitter internal issue especially among the true right and true left, it has few international implications beyond Mexico and to a smaller degree nations of Central America.

Tomorrow Part 2, Bad Immigrations Policy in Europe, The Fallout. And how it may effect us all.

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Maybe most of you think that if you don’t pay off loans you have made, that you are a deadbeat? And if the bank doesn’t get its money back that it loaned to you, that it is an innocent victim of your irresponsibility?

Well that is what you have been propagandized to believe by the Mega Bank- Corporate state owned media. So if you have resisted thinking like that congrats. If not don’t worry, if someone repeats a lie often enough most will believe it, especially if its about a subject as arcane as finance capital.

In the real world if you want to borrow money from someone you should have a willingness and capacity to repay your debt. But the lender, (bank) is charging you money, (interest) to borrow. It is a business for them. They are not lending to you out of kindness. And as a part of their business they have to make a clear headed assessment as to whether you do indeed have the willingness and capacity to repay your debt.

If the deal goes down BOTH you and the bank are equally responsible. If you don’t repay your debts other people (and banks) won’t want to loan money to you again, unless maybe you have a lot of collateral and/ or you pay a very high interest rate to reward lenders for the risk they are taking lending to a known dead beat like you.

But in a true marketplace the bank, (lender) would also pay the price for its poor lending practices. If it were a bank and there were no deposit insurance, making such bad loans could cause a run on the bank as no one would want to deposit their hard earned dough in such a loser of a bank. They might never get their money back.

In a world of deposit insurance, a bad bank would have to pay more for their insurance. And when it wanted to borrow money themselves from the bond markets, they would have to pay a higher interest rate, making their business less competitive than a rival bank that made better loans. And that would probably reflect on the bad banks stock price as well, as who wants to own such a crappy bank?

True markets have checks and balances. But the Mega Banks don’t like them. Their goal is if things go wrong, if you don’t repay your loan, then the tax payer one way or the other will. And the Mega Banks get their flunkies in government to write the legal regulatory frame work for which, they virtually always win.  They are of course “too big to fail”.

Internationally there is a an institutional framework in place which effectively guarantee the loans they make to nation states. When things go south the Mega Banks benefit because the international Dollar-Euro based banking system will take their backs, as will agencies put together by the Mega Banks themselves, (with the support of flunky governments of course) like the IMF.

The system will function as a whole to make it very clear to a dead beat nation, (if they don’t pay) all of the terrible things that will happen to them. And the Mega Banks’ financial propaganda press will also read that nation the riot act. Below is such a hit piece from the Financial Times ending in the threat to Argentine President Cristina Fernandez de Kirchner   “She may be laughing now, but it will all end in tears,”

When a country can’t pay its debts, what the IMF arm of the Mega Banks wants from it, is to “restructure” the debt where the country pays a lower interest rate but over a much longer period of time.

That frequently turns its children into indentured servants from birth. And the IMF may also ask the debtor country to sell off at least some of its public assets, like its water, electrical or telecommunications companies to the Mega banks.

That is called a fire sale for the mega rich, at the expense of the people of the country who are made even poorer.

While Argentina has always gotten itself into a situation where it takes on more debt than it can ever hope to repay, it has frequently balked at falling completely into this trap. Since the mega banks are a monolithic system, (effectively a monopoly) Buenos Aires has been pretty much cut off from international financing.

Argentina has in the past tried to work out minimalist deals with the Mega Banks, while getting them to accept that they will not be repaid in full, stretching out the return of payments Buenos Aires will still make over time.

But the totality of its debts have always been too much for Argentina and then the same situation plays itself out, wash, rinse repeat.

Today it is happening with so called Vulture Funds, or financiers who bought Argentina’s debts for pennies on the dollar and then fight to get the whole of the debt back, (where they would make killer profits) through whatever intimidation they can bring to bear. In the past Argentina has made its debt payments into Bank of New York Mellon subjecting it to New York bankruptcy jurisdiction should it be unable to pay.

And that is what has happened. Not surprisingly a US Kangaroo bankruptcy court, just steps away from Wall Street, awarded the Vulture funds trying to loot whatever they could from the people of Argentina, pretty much whatever they asked for.

In response Argentina’s president, Cristina Fernandez de Kirchner, announced that her government was proposing legislation to bypass a ruling by the US Judge Griesa and would only deposit repayments to its creditors in Argentina’s own central bank, which of course is subject only to Argentine law. If the Vulture’s want court cases they can come to Argentina to go for them.

The reason that Argentina has again defaulted on its debt repayments is because they are having yet another financial crisis and are pretty much dead broke. If you are in Cristina’s shoes and have little money, who are you going to pay your own civil service workers, or debts to your own people or the vultures?

This is a great time for Cristina to teach Vulture Capital the taste of pain, that the people of Argentina have been suffering through for so many, many years and tell them where they can stick their IOUs.

In reality however the Mega Banks want her to do this. They have long since dumped off their Argentine portfolios to the Vultures. They no longer have much skin in the game.

And what the Oligarchs who own. control the Mega Banks REALLY want is an “international bankruptcy court”, controlled by them of course that will treat a national bankruptcy as if it were a corporation.  That would mean that any idiot country, (usually one ruled by bought out politicians) who would sign up with this court, after defaulting on a Mega Bank debt would then lose some part of their sovereign territory to the Mega Banks as repayment.

While this is obviously controversial, a massive or complete Argentine default would help the Mega Banks lobby for such an International Court of their very own.

Such a court would make it advantageous for Mega Banks to loan out more money than a country can ever hope to repay, so that the owners of the Mega Banks can make land grabs from a bankrupt country and gain many of the benefits of winning a war without having to fire a single shot.

Is there any way around this system of penury aimed at developing countries? Well the new International lending system being set up by the BRICS may indeed be a light through the darkness of Empire.


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Seemingly for decades the lying propaganda media in the US has tried to portray the economic life of Afro Americans as “improving”. It will always point to a rising black middle class and greater economic opportunities. The number of black faces on TV seems to also help with the illusion that America is more of a color blind society than it used to be.

If nothing else Ferguson ripped the fake mask off of the propaganda media’s portrayal of life for the average black family in America.

To its credit the Washington Post did do an article on racial inequality in America last year. No one seemed to pay much attention. Maybe it is because the newspaper didn’t publish it as a major article, but buried it as part of what they call “The Wonkblog”, or arcane facts for nerds.

What the study showed however, was that if anything has changed from an economic standpoint, over the past half century for Afro Americans relative to Euro Americans, it has been for the worse.

Income differentials have gone UP not down as has the differentials in household net worth. Not counting one’s house as a part of net worth, Euro American families had about $110,729 in 2010 twenty two times more than a typical Afro American family who had just $4,955.

And unemployment rate differentials have remained pretty much the same since they began keeping records, with Afro American official and unofficial unemployment being around double that of Euro Americans.

And 45% of Afro American children grow up in areas of concentrated poverty compared to just 12% of Euro American kids.

And of course the list goes on.

In my post yesterday I explain that poverty is certainly the number one issue in Ferguson.

But now we know just how much the problems of poverty and racism are intertwined in America.

And this also explains why, as bad as things have gotten economically for the bottom 70% of Americans since the great recession began in 2008, there has not been more popular push- back.

While things have surely gotten worse for Euro Americans since 2008 and horror stories abound, aggregate statistics hide the fact that African Americans have suffered proportionately far more.

Government transfer payments like Section 8 housing assistance, Food Stamps, Medicaid, Disability payments and other direct income transfers have acted to limit what would otherwise have been an even greater explosion of homelessness, hunger, sickness and death.

Up until now these transfer payments have seemed to have been enough to keep the population of the “new poor” relatively sanguine. That and probably because so many even dirt poor Afro Americans are proud and supportive of Barack Obama. Through him many had developed some hope that things were indeed changing

Ferguson tells us that that long honeymoon period is now over. The majority of African Americans may continue to support Obama on race alone, but he is now him, a rich guy with dark skin and they and their families are still stuck in grinding poverty, from which they see no way out.

Meanwhile those who own/ control Empire at this moment have their hearts set on putting a Republican war president in office in 2016.

The Republicans however have their hearts set on making whatever is bad for the poor today worse, like lowering or capping transfer payments. By doing that they can force poor people de facto onto the labor market, where they would have to accept whatever they could get, even if the pay was below the minimum wage.

The Republicans would like to de facto to bring the American wage base for unskilled and semiskilled workers down towards that of China.

Ferguson is telling us that due to the poverty that already exists, America is a powder keg ready to go off.

The .0001% who own/ control America don’t give a crap about the American wage base up or down. It has almost no meaning for their business or Geo Political models. What these families do need is a quiescent sheep like American population that will go along to get along.

So Furgeson may lead to a rethink on the part of the most powerful as to who they are going to run in 2016. They want a war president for sure, but they are also going to need a social liberal. 






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Until Empire pulled off its Kiev Caper, Vlad was effectively asleep. He had been madly in love with that most beautiful but dangerous of temptresses “Wishful Thinking”. He used to call the nations of Empire his “partners”, while they thought of him as their enemy, the most important target in the world for regime change.

Before the Ukraine, Vlad saw himself as being essentially neutral relative to the Obamanation’s declaration of a New Cold War against Beijing, through Washington’s massive naval buildup off China’s coast, increased military bases surrounding her and its huge and high powered rearmament of Japan.

Vlad assumed that Russia would be non alligned n this New Cold War, due to the country’s geographical position between China and Europe and because of Europe’s dependence on Russian gas, which would ostensibly function as an insurance policy against any real Empire aggression.

Beijing, knowing well that Empire liked to use the dollar, (and the financial derivatives that flow from it) as instruments of war, took control of China’s own internal credit market and created the Union Pay credit card.

Vlad sanguine and happy watching the Sochi Winter Olympics, basking in the glory that they were brought to Russia and only looking to protect them from “terrorists” was caught completely off guard when Empire made its big move to take the Ukraine for the EU and of course later NATO.

When Vlad reactively scrambled to at least prevent Geo Politically crucial Crimea from falling into NATO hands, Visa and Master card froze operations in Russia effectively shutting down the country’s internal credit markets.

Wake up time for Vlad. A lesson he will never forget.

Now Vlad is phasing out Empire’s Visa and Master Card and phasing in China’s Union Pay credit card, as Cold War 2 takes hold and the world polarizes between Empire and the newly married Moscow- Beijing axis.




Arman Matthews