Unfortunately it is beyond us to speak in platitudes. We have many facilities, but that is not one of them.
Albeit there are those that do: We call it gobblygook, but it’s the language of diplomats, politicians, corporate titans and Wall Street. This time it’s the power councils of the G-7. Last month they told us they were going to rebalance an unbalanced world. There was no mention that they created the imbalance in the first place. They operate in an extension of greed and that is how these problems develop. This monstrosity is now to be refined and resurrected – which is going to be a long and arduous journey. This is not some benighted guest, but a scramble to see if our financials can be salvaged if it has to be.
They, G-7 saviors work in mysterious ways, speaking a ritualistic language that only the anointed can decipher. The neurotics deliberately allow for multiple interpretations, which is a cover and meant to confuse and to provide an avenue of escape if their plans go asunder.
This financial state of affairs is not unusual – it has been occurring over and over for centuries. Global imbalances have now been officially recognized as a major concern by the self appointed stewards of globalization. The alarm is loud and clear. Something has to be done and done quickly.
The elitists have devised a multifaceted program. It is to be a shared responsibility, that is there will be no assessment of blame. This rebalancing of world finances requires a realignment of global saving and investment flows; this identifies disparities between current account surpluses and deficits as the major source of global instability. The approach is to be designed to maximize sustained economic growth. This is a very tall order considering the absolute disarray of the international financial scene. We believe there is no way that can be accomplished without continued massive injections of money and credit with the resultant depreciation of currencies and a continued move into gold and silver as the only safe havens from the coming storm. Growth and perpetual power have become their only reason to be.
We do not believe they can be successful in this approach. Debt is already massive and tax cuts have served their purpose. Self-financing budget deficits only leave us with more unpayable debt as do tax cuts. We saw the product of the 1980s. The system could withstand the misuse then, but it cannot now. The structure is too badly damaged. Income inequalities are widening, not closing. Via free trade and globalization incomes are falling, or at least purchasing power is falling, in what once was called the Western Industrialized Word. This has not been offset with surging productivity, which has been a myth. Two to 2 1/2%-growth is all we can muster annually. Fervor and good intentions often don’t get the job done. Elitists are fooling themselves if they think they can save the financial system without major dislocation.
The foremost problem is easy to solve - the US current account deficit. You devalue the dollar 60% and the price of goods entering the US go up 40%. People will buy less. That deficit will be solved. US exports would drop 40% to 60% in price, but what goods? We have only 14% of our industrial capacity left. It would take years to rebuild industry in America and massive amounts of investment capital from transnational conglomerates, which will not be forthcoming unless wages in the US, Canada and Europe drop 75%. Thus, a 60% cheaper dollar is not going to be of that much benefit unless we erect tariff barriers. We are not going to get sufficient exports anyway, so why not offset the slave labor advantage of the third world and make people pay to sell into our markets as they have always done. That would cut back on imports and encourage manufacturing formation again. That slave labor has always been out there since the inception of our country and this is the way we have always handled it. As a result, the obscene profits of transnational conglomerates will plunge.
There is no conceivable way America and Americans can pay off their debt. Thus, there will have to be an adjustment - that is rather than bankruptcy. We’d make a deal with our debtors to accept 40 cents on the dollar. If this is to be shared responsibility then everyone can share in the pain. This solution should be acceptable because the alternative is economic collapse, which is in no one’s interest. We are all culpable – we have all participated. We would have limited economic growth, but the system could function. During this period of a number of years the world financial system could be purged. The excesses would be self-adjusting.
Unfortunately that is not what is going to happen. In their greed and pomposity the elitists plan to have it both way: growth and recovery. That will not and cannot happen. Frankly their program of recovering started in 1991. Rather than purge the system they then decided not too. 1995 began cheap money and credit – an artificially booming stock market. That was followed by even cheaper money and credit and a housing boom. The managing of markets cannot continue; they are too vast to effectively control. As far as we are concerned the best card has already been played. The tightening externally has begun. The carry trades are over and all that cheap money will be gone by the end of the year. That doesn’t mean that central banks are going to turn off the money spigot just yet. The planners are taking one step at a time, the easy steps first.
Our imports are 89% higher than our exports. We spend 37% of our income on goods. The devaluation of the dollar will have a self-adjusting effect and those figures will change dramatically no matter how much money and credit is in the system. That also means that those who export to us will feel financial pain as well. Today our consumption is 71% of GDP. The long-term average is 64.5% and the 25-year average if 67%. We have to and we will return to 64.5% and perhaps to 60%. That’s because of our giant personal debt. This devaluation will bring higher unemployment as well. Unemployment is not 4.6%; it is 13%. As we traverse this change unemployment will reach 35% if we do not have social dislocation, which is a distinct possibility, and then unemployment could be higher. Reduction of consumption and a 60% lower dollar mean higher inflation, unemployment and debt. It means a hyperinflationary depression if the Fed continues on its current course of creating money and credit at a 10% to 12% rate. Truly the worst of all worlds.
The pro-growth rebalancing G-7 strategy cannot work or have even a chance of working if the Fed’s supply-side policy insanity persists. Another fly in the ointment is that Iran’s oil bourse is opening and will soon trade oil in euros. This is another reason for nations to sell dollars and buy euros to buy oil. This will put consistent pressure on the dollar and eventually dethrone it as the world’s reserve currency.
The G-7 does not have any kind of an historical break through. They are in a state of panic. The move toward World Government isn’t going very well. Gold and silver are screaming and the demise of the dollar is underway. This is the way the conspiracy planned it, but it’s out of control and their wars are not working right. That’s because the task they left to George and the neocons has been a complete disaster. In addition, half the people on the planet know what they are up too. Their plan of “multi-lateral surveillance and consultation” is plain idiotic. The game is too far advanced. They cannot roll back what they put in motion. The IMF cannot even properly advise a single country with austerity never mind coordinate any multi-lateral effort. Besides the IMF was designed as a looting device, not a problem solver. How can the IMF come to grips with spillovers across nations that arise from imbalances of trade and capital flows when they heretofore have done virtually nothing right other than being a mouthpiece for US elitist interests? How could they possibly be conceptually involved in arbitrating the costs and benefits of a shift in US fiscal policy versus structural reforms in Europe, weighing in reserve management practices of the oil producers, Asian exporters and a myriad of other problems. Even if the IMF previously had been very successful they couldn’t solve these unsolvable problems.
Thus, the IMF will fail and be dispatched to the scrap heap of financial history where it belongs. There is no question that what the world’s elitists have done is unconscionable as the stewards of our planet. They have taken us to the financial edge via free trade and globalization and only a miracle, divine intervention, can save us from the fate these Satanists have ordained for us. In finality, China will not voluntarily revalue and when the market forces it too China will not be happy taking 60% losses. China has a weak internal banking system and losses such as these are sure to bring down their financial structure. They should have as well switched long ago to domestic consumption.
Globalization is an instrument of revolution - a method to form a New World Order. The elitists who set this in motion have lost control. The destruction to the western economies proceeds but none of the offsetting events are working for the Illuminists. They are going to get caught just as they did in the Venetian collapse of 1348. The G-7 and the IMF won’t solve anything; the problem is beyond their reach. Imbalances are not sustainable indefinitely. The plug has been pulled and most everyone is headed down the drain together. The exceptions will be those who have gold and can keep it.