Cecil Rhodes' secret society for Anglo-Saxon global empire and Alex Jones--Master of Misdirection

Anyone viewing Alex Jones' video on Cecil Rhodes' secret society for world empire, is in danger of swallowing an unhealthy dose of misinformation.

The Colossus of Rhodes

To the sound of imperial marching music, the vid begins with the words:

Cecil Rhodes (1853-1902) was a key figure in the aims of the British Empire

Yeah, well literacy aint a strong point over at JonesReport.com.

But, yes, as the video conveys with a handful of visuals, Rhodes was an unscrupulous money-making animal, who played a key role in shaping British policy in southern Africa.

But he did not scheme alone.

Joe Chamberlain
British Colonial Secretary 1895-1903

It was the imperialist politician, Joe Chamberlain, British Colonial Secretary ( father of the better know Chamberlain of appeasement fame), whose complicity was essential to the instigation of the Boer war, a war that led to the consolidation of South Africa under British rule.

But, the JonesReport.com informs us:

Cecil Rhodes along with other British elites would have greater aims -- that of World Federation

Yikes, how terrrifically original of them. Or as Zbigniev Bzrezinski put it in the first sentence of his tract on geopolitics The Grand Chessboard, "Hegemony is as old as mankind."

But now the music changes to a minor key and an ominously repetitious spooky theme, as the text on screen informs us that Rhodes set up a secret society to pursue his goals.

A select few, including Lord Milner, William Stead and Lord Rothschild were in on the plan.

Warning folks -- conspiracy.

The group that gave birth to South Africa would now shape the entire World.

 Ha! A bold statement of what has not been demonstrated.

The next image:

Bill Clinton

Rhodes Scholar, 1968

Oxford.

Now, there's the evidence. Clinton went to Oxford, had his brains washed by those devious Brits, and, hey, the Brits are still running the World.

LOL.

But there's more:

Secretly, Rhodes also established the Round Table Group that pulled its select initiates from Oxford and Cambridge institutions

Actually, Rhodes did nothing of the kind. The organization of the Round Table Group was the work of Alfred Milner and associates in the period 1909-1913, years after Rhodes' death. The Round Table magazine, founded in 1910, was largely funded by Sir Abe Bailey. Rhodes money may have been used by the Round Table group, but not through the provisions of his will or via the Rhodes Trust, which established that devious scheme for the Rhodes Scholarships, which would bring students from around the World to study at Oxford University.

Rhodes, we are told, wished to:

federate the English-speaking peoples and to bring all the habitable portions of the world under their control

John Ruskin (1819-1900)

An understandable notion when Britain already ruled one quarter of the World's population, and dominated the world both financially and militarily. And it was an idea inspired by Rhodes Oxford mentor, John Ruskin, who, in a lecture that Rhodes transcribed by hand in its entirety, included the following admonition:

You, the undergraduates are] the possessors of a magnificent tradition of education, beauty, rule of law, freedom, decency and self-discipline but... this tradition [can] not be saved, and does not deserve to be saved, unless it can be extended to the lower classes in England itself and to the non-English masses throughout the world. If this precious tradition is not extended to these two great majorities, the minority of upper-class Englishmen will ultimately be submerged by these majorities and the tradition lost. To prevent this, the tradition must be extended to the masses and to the empire.

Rhodes, the JonesReport asserts, in his third will:

Left his fortune in the hands of Lord Rothschild--an instrumental partner in the quest to expand the British Empire. 

What the JonesReport does not mention is that Rhodes' third will became null and void as it was succeeded by other wills. The final will said nothing whatever about any endeavor to promote the expansion of the British Empire.

Then after more scary music in a minor key and the display of the Rothschild family escutcheon, the soundtrack reverts to drums and imperial marching music and a list of obscure Brits (Philip Kerr, Lionel Curtis, Steven Cox, David Evans -- you ever heard of 'em?) who sought to create a federation of English-speaking nations - -an idea that was firmly and promptly rejected by the newly independent dominions of Australia, Canada and New Zealand, and an idea that was surely not even mooted in India.

Ah, but (as the soundtrack returns to a repetitious motif in a minor key), these people are unknown because they were more effective

directing policy in the shadows

...through splinter groups like the Royal Institute on International Affairs (RIIA) and the Council on Foreign Relations (CFR).

In fact, there is no firm evidence that these organizations were funded by Rhodes. Certainly his final will made no such provision. Moreover, the CFR has no direct connection with the British RIIA and was funded by JP Morgan, a fact that reflects the intention of the British Rhodes-Milner Group which, after WW1, believed that their project for global governance could only be effected by the United States, and they sought, therefore, to encourage Americans to undertake that mission as their own.

As for the RIIA, it staggers on, like so many foundations, interest groups and think tanks, long since its useful life ended.

Known in Canada for more than half a Century as the Canadian International Council, it continues earnestly to discuss such vital topics as Canada's legacy in Afghanistan, Is Canada's international liberalism dead? and What role will the Great Lakes play in Canada's economic future.

Our local chapter of the CIC recently hosted The Honorable Flora MacDonald who addressed members on the following important matter: “UPDATE ON DEVELOPMENT IN BAMIYAN PROVINCE, AFGHANISTAN.”

Yes, a formidable and dangerous organization indeed, illustrated in the JonesReport.com video by shots of Lord Alfred Milner's Germanic mustache.

Then the image of Iain Curtis alongside the covers of the books he wrote: World War, Its Cause and Cure and the Capital Question of China -- a dangerous conspirator, obviously.

Curtis it was, the vid informs us, who hit upon the evil scheme of changing the name of the British Empire to The British Commonwealth of Nations. What is more, this monster, plotting secretly for global Anglo-Saxon hegemony, is exposed by the JonesReport.com of having:

decided that India must be given complete self-government.

LOL, indeed.

What this absurd video confirms is that Alex Jones is a liar and an Anglophobe.

He is also a master of misdirection. The narrative of Carroll Quigley's book, The Anglo-American Establishment, an account of the lives and work of those connected with Cecil Rhodes' secret society from which this video draws its information, ends in 1949 by which time Quigley considered the project, as a British undertaking, entirely defunct.

Quigley supported the aims of the Round Table Group, not because they promoted Anglo-Saxon world domination, but because they conformed with the ideals of 19th century liberalism: the liberalism that fought for the abolition of the slave trade, the abolition of slavery, and the spread of democracy and enlightenment, as exemplified by the plan for  the education of the Indian elite in preparation for independence, which was set forth in the famous memorandum on Indian Education by the great liberal historian, Thomas Macaulay. Cecil Rhodes, in short, wished to perpetuate and extend Western civilization.

Rhodes' scheme for the creation, under Anglo-Saxon leadership, of a World federation of democratic states, where the rule of law and the fruits of Western civilization would be enjoyed by all kinds and ranks of men, made sense at the time it was conceived. Then, Britain ruled a quarter of the World's population, and was by far the wealthiest and most powerful nation on earth.

But Britain has long since given place to America as the dominant World power and Anglo-Saxon domination of America is a thing of the distant past.

Today, America's elite takes its guidance on international affairs from an East European aristocrat, Zbigniev Bzrezinski, a German Jew, Henry Kissinger, and a mongrel elite of native born Jews and and other non Anglo-Saxon ethnics including the African-American Barak Obama.

One group that appears to have slight influence is the old WASP establishment, which is likely too squeamish about torture, trashing the constitution or following the Hitlerian policy of unbridled military aggression.

But blaming the US project for global hegemony, now under the direction of a group of Zionists, both Jewish and gentile, on the Brits is a neat piece of misdirection if you can get away with it.

Revised July 30, 2011

See also:

Alex Jones and Webster Tarpley: Propagating Looney Lies About the British Monarch

Some Links, July 12, 2011

David Cameron, and Elisabeth Murdoch’s birthday party, The Slog

Hackgate: Let’s forget the judgment issue, and look more closely at motive, the Slog

Hackgate, in Review, The Slog

Now Lets Get into the Blackmail Angle, Niqnaq

The Murdoch Empire and Its Nest of Vipers 

Hacking details of Royals and 9/11 Victims, The Motley Moose

Education Is More Than Instruction Andrew Jay Nock, LewRockwell.com

 Suspected US drones kills 38 in Pakistan Guardian

Taxing Wall St. down to size David Stockman, NYTimes

Multi-Billion-Dollar Terrorists and the Disappearing Middle Class James Petras, Global Research

Will Col Gaddafi outlast David Cameron? Con Coughlin, The Telegraph

Murdoch closes crime-tainted Sunday tab, opens new one with same staff

Wrinkled Rupe

On Thursday afternoon, James Murdoch told executives of NewsCorp, aka NewsCrap, the media company headed by his father, the wrinkled Rupert Murdock, aka Rupe the Poop, of the decision to shutter the 168-year-old British sex-and-scandal Sunday tabloid the News of the World.

The paper, the best selling publication in the NewsCrap empire, is at the center of a criminal phone-hacking scandal that has damaged the reputation not only of NewsCrap, but of Prime Minister David Cameron who hired the newspaper's now-in-custody former Editor, Andy Coulson, as the Conservative Party's Director of Communications.

"Under pressure to quell the scandal and preserve a lucrative deal for a pay-television company," the New York Times reports, "James Murdoch argued that closing the newspaper was necessary to restore respect to the company."

Respect. Respect? Who the hell respects Poop Murdoch's NewsCrap, publisher of Turn On TV, Xplicit XXX and Adult Nightly among more than a dozen other specialty porno channels offered, via Poop's B-Sky-B satellite service, along with The God Channel, Teachers TV and The Gospel Channel.

Can you say humbug, hypocrite, or son-of-a-bitch?

LOL.

But the real joke is this. Poop's gonna get your respect for NewsCrap by closing the News of the World, sales of 2.8 million, and replacing it with a Sunday edition of the Sun, aka the Wanker's Friend, sales of 2.8 million, assuming Sunday sales match weekday sales.

In other words, Poop and lil' Jimmy, Son-of-Poop, are gonna get your respect by changing the name of the News of the World to the Sunday Wanker.

LOL.

Then they think that wanker David Cameron, who they own, will have no trouble stick-handling their $12 billion deal to acquire sole ownership of the porn channel provider B-Sky-B around the political obstacles.

LOL.

But remember this. Lil' Jimmy and his Dad Poop, aren't just small-time pornographers. They play every side of the street, Porn, God squad, the Wall Street Journal, Fix News, the Times of London.

Yeah, these people are heavyweight sons-of-bitches. They make and break governments. And the Poops never saw a war for Israel, oil or world empire that they didn't like. Nothing like a war to boost newspaper sales.

Now, ex UK Prime Minister Gordon Brown says Murdoch's Sunday Times used 

con tricks to obtain bank details and legal documents relating to a flat he bought.

He also said he did not understand how The Sun, another Murdoch paper, obtained information that his son had cystic fibrosis, adding that when the tabloid splashed the news on its front page in 2006 he was left "in tears".

"I'm shocked, I'm genuinely shocked to find that this happened because of their links with criminals, known criminals who were undertaking this activity, hired by investigators who were working with the Sunday Times," he told the BBC.

 Looks like closing all the Murdoch papers will be necessary to "restore respect to the company."

LOL

Canadians in Afghanistan Died in Vain

Canadians soldiers in Afghanistan died in vain. So says Colin Kenny, former Chair of Canada's Senate Committee on National Security and Defense.

When 157 Canadian soldiers have died fighting for what was advertised as a just and important cause, one is reluctant to say that the war didn't make sense. I, like others, hesitated in saying that at the outset, waiting patiently for an explanation from two prime ministers -Martin and Stephen Harper -as to why it did.

That explanation never came. It was never attempted, because it would have been picked apart by anyone with the least bit of strategic insight, and it might even have been picked apart by the Canadian electorate.

Most extraordinarily, these statements appear in the National Post, the NeoCon warmongering paper that has never questioned any war for Israel, oil or global empire.

Well, if Senator Kenny lacked the guts to say what he believed to be the truth about the war before 157 Canadian soldiers died in Kandahar and countless others suffered life-long physical and mental injury, at least he has the honesty to acknowledge his error now. Or is it the moral cowardice that prevented Senator Kenny expressing his doubts about the strategic logic of the war at the time Canada entered into it that now compels him to join the critics? Who, after all, wants to engage in the humiliating task of justifying a war that's been lost?

As for those of us who criticized the war from the outset, there is little satisfaction in seeing proof of the moral cowardice that lay at the root of this criminal war of aggression. For it has been evident throughout that it was only because members of the ruling elite lacked the moral courage to refute the lies that justified the war, for example, Stephen Harper's absurd claim that "they attacked us on 9/11," that such a war could have been launched in the first place or sustained for so long.

Well we'll take what satisfaction we can from this evidence of the moral cowardice of the ruling elite by drawing attention to some of the things we said during the conflict.

March 2 2006: Hey Folks: We're Just There as Good Ol' Canadian Peace Keepers

November 10, 2006: They should airmail tanks to Afghanistan

October 23, 2007: Making up the ranks of Canada's infantry

October 23, 2007:Canada's Afghanistan aid

David Cameron's Deeply Unpleasant Associates and the War to Save Libyans From Themselves

Aangirfan has an interesting post that touches on UK Prime Minister David Cameron's links with some deeply unpleasant people who worked for the deeply unpleasant pornographer Rupert Murdoch (aka Rupe the Poop).

But then the deeply unpleasant character of David Cameron's associates should be no reason for surprise, since David Cameron is a deeply unpleasant person in his own right, who can, with a straight face, justify bombing the crap out of Libya on the grounds that this is necessary for the protection of Libyans, even if that means killing them due to "technical problems of our weapons systems."

Yeah, it's nothing to do with the decision to drop high explosive from 40,000 feet, its just an unfortunate accident: a weapons system malfunction.

However, we in Canada should not feel morally superior to the Brits. More than 600 Canadian forces members and six Canadian CF-18 fighter bombers are engaged in the NATO led mission, which is headed by Canadian  Lt.-Gen. Charlie Bouchard.

And now they're the official opposition, slavering at the possibility of achieving office four year from now, the NDP, Canada's supposed party of conscience, gave unanimous support the extension of Canada's war on libya, while offering bullshit amendments against "rape as a weapon of war", a weapon that even Obama bin Lyin' said was only "potentially" being used by the Libyan army.

Well, at least the Green Party's only MP, Elizabeth May voted against war to install the Benghazi gang of al Qaeda terrorists, monarchists, Muslim fundamentalists and anti-black racists in power in Tripoli.

And more, much more, here about Mr. Cameron's deeply unpleasant friends at NewsCrap (Poop Murdoch, Prop.).

And this from the Daily Torygraph:

David Cameron is in the sewer because of his News International friends:

...We are talking about a pattern of behaviour here. Indeed, it might be better described as a course of action. Mr Cameron allowed himself to be drawn into a social coterie in which no respectable person, let alone a British prime minister, should be seen dead.

Rebekah Brooks and Andy Coulson: friends of the PM (Photo: BBC)

It was called the Chipping Norton set, an incestuous collection of louche, affluent, power-hungry and amoral Londoners, located in and around the Prime Minister’s Oxfordshire constituency. Brooks and her husband, the former racing trainer Charlie Brooks, live in a house scarcely a mile from David and Samantha Cameron’s constituency home. The two couples meet frequently, and have continued to do so long after the phone hacking scandal became well known.

 And

The Prime Minister cannot claim in defence that he was naively drawn in to this lethal circle. He was warned – many times. Shortly before the last election he was explicitly told about the company he was keeping. Alan Rusbridger – editor of The Guardian newspaper, which has performed such a wonderful service to public decency by bringing to light the shattering depravity of Mr Murdoch’s newspaper empire – went to meet one of Mr Cameron’s closest advisers shortly before the last election. He briefed this adviser very carefully about Mr Coulson, telling him many troubling pieces of information that could not then be put into the public domain.

Here's how the government of the deeply unpleasant David Cameron investigates charges against itself of crimes against humanity.

And a couple of good question from Craig Murray about the investigation of criminal wrong doing by friends of the deeply unpleasant David Cameron.

This just in: David Cameron's friend arrested "by appointment" (yes, Friday'll be fine, by then I should have deleted all my emails and other incriminating files) by police investigating phone hacking and corruption allegations.

Meantime, police investigate mass deletion of incriminating emails.

And, the New York Times reports, "Britain’s media regulatory agency, is expected to announce later in the day that it will consider the out of control journalistic practices in the newsroom of The News of the World as relevant in determining if Mr. Murdoch’s News Corporation would meet the “fit and proper” test for taking full ownership of BSkyB, as the pay-television company is known. LOL.

Afghanistan: They attacked us on 9/11, which is fortunate because the country is a mining treasure house ripe for exploitation

“Mining is the future for Afghanistan”: UK Special Representative

04 July 2011

UK Special Representative for Afghanistan and Pakistan, Mark Sedwill, UK Trade & Investment Asia Director, John Saville, and Afghanistan’s Minister of Mines, Mr Wahidullah Shahrani, co-chaired a mining symposium at Lancaster House on 30 June.

The Foreign Office-UKTI mining symposium focused on the opportunities for investment in the mining sector in Afghanistan, where much of the potential for the country’s long term economic development lies. Minister Shahrani estimated the value of its mineral resources such as deposits of iron ore, copper, gold, lithium and rare earth minerals, as well as undiscovered gas resources, to be three trillion dollars.

This film shows the progress being made on the ground in terms of building up the mining industry within Afghanistan. There are a number of profitable businesses which are growing rapidly thanks to the improvements in infrastructure.



As well as highlighting the opportunities, Minister Shahrani did not shy away from the challenges the country faced attracting sustainable investment.  He recognised that the key areas where challenges remained were obviously in infrastructure and security.

The Minister said that in the last nine years there had been significant development of railways and roads. This is benefiting the livelihood of local Afghans and assisting trade through Afghanistan. 

The Afghan Ministry of Mines has established a 7000-strong Mining Protection Unit, in addition to other national security forces.  Mark Sedwill, UK Special Representative for Afghanistan and Pakistan agreed with Minister Shahrani; he said, “Despite the significant risks, mining is the future for Afghanistan”.

Security in Afghanistan is improving all the time, although gains made by international and Afghan forces remain fragile.  Afghanistan is undergoing a gradual transition to Afghan-led security, which will be completed across the country by the end of 2014.

Source: UK Foreign and Commonwealth Office, via link provided by Mary on Craig Murray's  blog.

O Canada - the True North Strong and Free

Garth Turner reminisces on the creation of Ross Carlin's pop version of O Canada, which was performed on Parliament Hill on Canada Day 1992, with the Queen and a hundred thousand Canadians in attendance ...

Canada Strengthens Ties With Al Qaeda in Beghazi

Canadian Foreign Affairs Minister John Baird met this week with the leadership of Libya’s National Transitional Council, the rebel organization based in Benghazi that is claiming to be the “sole representative of all Libya.”

Despite media-friendly rhetoric about bringing “unity” and “democracy” to the country, the Council represents less than half of Libya’s 141 tribes and conducts all of its meetings in secret without keeping minutes of the proceedings. Critics note that the group’s leadership consists almost entirely of elitist, Arab, pro-Western businessmen with American Ph.D.s. Some of the NTC’s first official actions were to form a central bank to act as monetary authority over a country they do not control and to establish a corporation to make contracts with foreign governments for oil in rebel-held territories.

In an apparent attempt to give the insurgency more “legitimacy,” Baird declared the council Libya’s “best hope” for a democratic government, positing that “no government can be worse than the Gaddafi regime” before hastening to add that there will be challenges in the transition and that Libya is “not going to move from Gaddafi to Thomas Jefferson overnight.”

The visit comes after Canada’s precedent-setting move last week to officially recognize the NTC as the representative of the Libyan people, effectively affording it an equivalent diplomatic standing to the actual government of Libya. As former Middle East diplomat Louis Delvoie told the Toronto Star: “We’ve been sympathetic to revolutionary movements [before], but didn’t recognize them. Even though we had a well-established policy of opposing apartheid, we never recognized the African National Congress.” ...

Full text here.

London Telegraph: In Libya, the West and al-Qaeda on the same side

Asian Tribune: Benghazi, Prime Al Qaeda recruiting ground

Pravda: Proven Benghazi rebel links to Al Qaeda

Mathaba: Libyan rebels reported defecting to Gaddafi

... Many former rebels, including one I spoke to said, "'Look, we weren't happy with Gaddafi. But when we saw NATO, including Italy, our former colonial occupier, join this thing...[we thought], OK, he's a dictator, [and] we've had him around for over 40 years, but darn it, he's a Libyan nationalist, and he has given us the highest standard of living in Africa."



The second Roman occupation of Libya

Webster Tarpley reporting from Tripoli, Libya:

America's inflationary depression

American is in a depression, which means that demand for goods and services falls far short of potential supply. This in turns means mass unemployment and downward pressure on wages.

The depression would have begun early in the new century had the US Fed not enabled a frenzy of borrowing by dropping the Fed Funds rate from 6.5% in 2000 to a low of 1% three years later.

Bank deregulation, predatory lending, mortgage derivatives combined with Greenspan's injection of low interest stimulant, drove America's private indebtedness to an insane all-time high in excess of 300% of GDP.

Hooverville, 2011.

Then Greenspan's Fed drove a tank through the bubble it had created, imposing 17 consecutive increases in the Fed Funds rate, bringing it to a high of 5.25% in June 2006.

The result?

A property crash that destroyed the saving of many of America's middle class, and launched the Great American Depression of the 21st Century.

So how did the Fed react then?

Emergency low interests rates, obviously, to get the economy going again, which means a Fed Funds rate of essentially nothing (target 0-0.25%) and corporate borrowing for very close to nothing. Google, for example, just sold three-year notes with a coupon of 1.25%. (Quite a deal that, with real inflation running at maybe 10%.)

So if demand is depressed and the Fed has dropped interest rates to stimulate demand, how come there's inflation?

Inflation, technically, is a monetary phenomenon. It refers to an increase in money supply. The US money supply can be increased by Fed money printing.

Source: Shadow Government Statistics

This is sometimes known as quantitative easing, which sounds like the administration of a laxative.

Actually, what happens is this. The US Treasury prints up some bonds (well maybe the whole thing is digital now, but in the old days they printed bonds with fancy typography on nice paper with an elaborate water mark), which they hand over to the Fed. The Fed then writes the value of the bonds to the Government's account, using money the Fed does not have -- sometimes known as "ink money." The Government promptly spends the money, if it hasn't already done so, bombing brown people, feeling-up your crotch at the airport, etc.

Voila, extra money.

Jingle Mail: Source

This is not the most important source of new money, however. Banks and other financial institutions print their own money when they create loans. So when indebtedness expands, as during the Greenspan-induced bubble, money supply booms.

Now the reality of the depression is evident, money supply is contracting as borrowers, fearing for their financial future, desperately deleverage, either by paying down their debts or by walking away from them.

But if money supply is contracting, how come prices are increasing?

Because of the voracious demand of the very rapidly developing third world nations for raw materials, which is driving prices for oil, steel, copper, corn, rare earths and many other commodities sharply upward, and in turn, driving up prices of many other goods and services.

If money supply is contracting and rising prices are due to imported commodity price increases, why does the US Government not engage in greater deficit spending to stimulate the economy?

In times past, increased government spending could kick-start an economic recovery by increasing demand, which increased domestic production and hence incomes, which further increased demand, which created a sense of optimism that led to increased borrowing, which led to new investment and consumption, and so on until the next inflationary bust.

But in a globalized economy, tax cuts or other means to put money in consumers' pockets can raise spending while doing little to stimulate employment in a high-wage economy. Instead, the stimulus merely sucks in additional cheap products and services from the developing world, thereby increasing an already massive trade deficit.

True, if the US Fed were to flood the economy with newly printed money, recovery would result. Increased imports leading to a huge trade deficit would drive the dollar sharply lower, and this would stimulate exports, promote import-substitution, and raise the demand for labor.

So why won't the Fed do it?

A dollar devaluation sufficient to substantially revive America's manufacturing and tradeable services industries would most likely have to be in the 50 to 75% range.

Carried out over the course of a year or two, such a devaluation would generate a two- to threefold increase in prices of food, energy and imported manufactured goods, which would condemn millions of the elderly to an early death due to malnutrition, hypothermia or homelessness, as occurred in Russia following the collapse of the Soviet Union.

It would generate massive labor unrest, and it would turn the minds of many a middle-class saver to revolution.

And to the extent that economic stimulus restored the bargaining power of labor, wage hikes could stifle the recovery before it had begun. Only a persistent depression, it must have been decided, can grind down real wages to the point of international competitiveness.

Thus it is that Americans will likely face a combination of depression era unemployment, and continual inflation due to rising commodity prices and a gradual dollar devaluation achieved by intermittent rounds of money printing.

During these hard times, the corporate and financial sector will surely borrow overvalued US dollars at negative real interest rates and invest them in cheap currency areas such as China for repayment at 40 or 50 cents on the dollar when the dollar is fully devalued.

First revision at 5.30 PM, June 30, 2011
Second revision at 8.41 AM, July 1, 2011

Se also:
Why Economics Is Bunk and What That Means for the Economy
USA versus China: Wage Convergence, Wealth Divergence and Global Hegemony
US Economy: Expecting the Unexpected
USA Boom or Bust: The Next Decade
Why China Booms While America Slumps
China's Economy Already Larger Than America's

Launch code for the US strategic nuclear arsenal was all zeroes until 1977

USA versus China: Wage Convergence, Wealth Divergence and Global Hegemony

No US Currency, Please

Yesterday, I outlined a scenario whereby US wages might converge with those in China and other developing nations within ten years. The underlying assumptions were:

(1) That China's economy continues to grow by 10% a year and that, in line with the growth of the economy, Chinese wages rise by a factor of two to three over the next ten years.

(2) That inflation in America continues at around 10% a year, but that nominal wages remain flat, resulting in a cut in real wages of about two-thirds in ten years.

Not considered was America's roaring underground economy, where wages are already little better than those in the developing world.

Fueled by mass illegal immigration, with every indication of encouragement by the US Federal Government, the underground economy, which already accounts for 7% of US GDP, will increasingly impact wages and employment opportunities in the legal economy. One consequence will likely be elimination of minimum wage laws that deny the least skilled American workers access to the labor market. This, in turn, will help drive average wages lower.

If US incomes fall, so also will consumption, whereas, with rising incomes, Chinese consumption will grow.

If, when wages converge, consumption converges also, the rate in both countries would likely settle about midway between America's current rate of 60 to 70% of GDP and and China's 36% of GDP, or about 50% if GDP.

A fall in US consumption equal to 15% of GDP would, all other things being equal, imply a similar reduction in US GDP. However, as US wages converge with those of the developing world, a recovery in US manufacturing and the tradable services sector of the economy should be apparent.

By 2020, therefore, the American economy could be on track for renewed growth, with American firms competing with the newly developed nations on a level playing field so far as wages are concerned.

But by then, China's economy will be several times the size of America's, which calls in question the long-term feasibility of America's drive for global hegemony.

That question will be resolved by the ability of the United States to maintain a UN-led Western coalition.

A Western coalition for World governance was the goal of the British Rhodes-Milner group, who, in the aftermath of WW1, spearheaded the movement for the creation of the League of Nations.

The League, which lacked American participation, utterly failed in its mission.

Whether NATO, under US leadership, will do any better remains to be seen.

US Economy: Expecting the Unexpected

Not the 72 Virgins we were expecting. Source

Last Thursday, the Wall Street Journal reported "an unexpected increase in first-time filings for unemployment compensation."

It was not stated why this was unexpected, but according to a CNN poll conducted earlier this month, 48 per cent of Americans expect another Great Depression within a year. And it is likely that, of the other 52%, most fail to see the immediate future as absolutely rosy.

In assessing the outlook for the US economy, should one not, then, be expecting the unexpected?

This year China's economy overtook America's.

China's economy is growing at around 10% per year, America's real economy is stagnant or shrinking.

Corporate profits plus workers' wages are inversely related. Capital and technology thus flow from where wages are high to where wages are low.

Average wages are about $4000 per year in China, about $40,000 in America.

America and other developed nations will thus continue bleeding jobs, technology and capital to the developing world until wages equalize. So the big question is how long will that take? How long will Americans have to expect the unexpected, in terms of declining wages and job opportunities?

If China's economy is growing by 10% a year, real wages can grow at a similar pace, which means that they might double every seven years. At that rate it would take 21 years for wages in China to reach 80% of current American wages.

But if, while nominal wages in America are stagnant, real inflation in America is actually 10% annually, then American wages will decline by half in 7 years.

Shadow Government Statistics estimates real US inflation has been in the vicinity of 10% since 2008, and that the current trend as upward.

It is possible, therefore, that American and Chinese wages will be near convergence within ten years, from which we conclude that Americans had better expect the unexpected until about 2020. During the interim, they can expect continued near depression unemployment rates -- which will keep the lid on the demand for even nominal wage increases -- and a cut of something like 50% in real wages.

See also: USA Boom or Bust: The Next Decade

Motion Aftereffect Explained!

In an earlier post (Turtles All The Way Down: Deep Fractal Zoom), I noted that when I stopped the animated zoom on a Mandelbrot Set fractal, the stationary image appeared to shrink, and I asked if anyone knew why. Apparently, no one did, but now they do.

The motion aftereffect illusion, was known, apparently, to the ancient Greeks, but only now has anyone claimed to know its cause. In this week's Proceedings of the US National Academy of Sciences, Davis Glasser, Duje Tadin, James Tsui and Christopher Pack of the Montreal Neurological Institute, report that:

...25 ms of motion adaptation is sufficient to generate a motion aftereffect, an illusory sensation of movement experienced when a moving stimulus is replaced by a stationary pattern. This rapid adaptation occurs regardless of whether the adapting motion is perceived. In neurophysiological recordings from the middle temporal area of primate visual cortex, we find that brief motion adaptation evokes direction-selective responses to subsequently presented stationary stimuli. A simple model shows that these neural responses can explain the consequences of rapid perceptual adaptation. Overall, we show that the motion aftereffect is not merely an intriguing perceptual illusion, but rather a reflection of rapid neural and perceptual processes that can occur essentially every time we experience motion.

Although any motion, even motion so brief as to be imperceptible, can create an aftereffect, the magnitude of the aftereffect varies greatly with the stimulus. In the following video, the magnitude and persistence of the motion aftereffect seems to vary according to where the sequence is halted. One sees striking aftereffects on halting the motion between about 4 min 00 sec and 4 min 30 sec, and at many other places too.

USA Boom or Bust: The Next Decade

Hooverville of the 21st Century

Will the U.S. economy ever recover?

"I'm a huge bull on America" declared Warren Buffett in September 2010, while ruling out the possibility of a double dip recession.

But 48% of Americans think America is already entering the next great depression.

And they, according to Bill Bonner, are optimists who have failed to notice that America has been in a recession for the last ten years, with no sign of a letup for many years to come.

Who to believe?

Perhaps everyone's right.

Bonner appears to be correct in saying the US GDP has gained flip all in the last ten years.

Self-employment: USA 2011

Meantime, unemployment, homelessness, and outright poverty have become widespread features of the American economic landscape.

And as millions of the unemployed run out of unemployment benefits, while losing hope of reemployment, and as millions more illegal immigrants flood in, the outlook for tens of millions of Americans becomes increasingly grim.

But on the bright side, corporate profits have never been higher. Since the low of 2002, IBM's share price is up 300%, Apple's is up 3000% (yes that's right, three thousand percent), and even the Dow and Buffett's stodgy Berkshire Hathaway are up 50%.

So what is going on, and why?

Two words that I've never heard Warren Buffett use explain it: "outsourcing" and "off-shoring".

What these words mean for the American economy I have already discussed in Why China Booms While America Slumps. But the chief point is made in two sentences:

In 1993 Chinese wages were about 3% of those in America.

and since 1993,

Chinese manufacturing wages have been driven up only marginally, reaching US$134 per month in 2004 or just 4.9% of the US rate of US$2732 per month.

Here lies the answer to the dichotomy of view between Buffett and the common man.

As David Ricardo explained:

As the wages of labour fall, the profits of stock rise, and they be together always of the same value...

Cheap labor in China and throughout the developing world means mega profits for American business and poverty for a tens of millions of Americans, and the hardship for millions of Americans is made worse by minimum wage laws that prevent those with skills of limited value from competing on price with Asian, African or Middle-Eastern labor.

Corporate profits hit a record high in 2011

How will this end?

Two possibilities:

(1) Revolution.

(2) Wage equilibration in the tradable goods and services sectors of the economy between America and other Western economies, on the one hand, and the developing world on the other hand, which would mean a fully globalized economy with American living standards more or less matching those in Shanghai, Mumbai, Istambul and Cape Town.

The second alternative is clearly the objective of the ruling elite. So how will the transition be accomplished?

Wages, as Lord Maynard Keynes observed, are sticky on the downward side. Inflation is therefore almost certainly necessary to achieve the transition. This cuts real wages without lowering the dollar amounts paid in wages. It is achieved by printing dollars.

The printing press provides a technology that Ben Bernanke's Fed is proud to possess. We have seen QE 1, aka Money Printing 1, and QE 2. In due course expect to see QE 3, 4, 5 ...

As dollars spew out, the exchange value of the US dollar will fall. It has been falling for years, but now it should fall faster. The result should be a fall in the price of American exports in terms of other currencies and a rise in the cost of America imports in terms of dollars. The net effect should be a gradual restoration of American manufacturing with increasing exports and declining imports.

Trouble is, China, now the workshop of the World, is inflating as fast as Ben Bernanke can crank the press at the Federal Reserve. Net result? Chinese imports remain just as competitive in the American market as before.

What to do? Print even more US dollars.

This will be bad for China, since it will depreciate the hoard of dollars they have accumulated to prevent the Renmimbi from rising against the dollar. It'll serve them right.

Chart source: Shadow Government Statistics

But it will be good for many US equities, though not necessarily for those in the consumption sector, since American consumption is about to undergo a permanent decline.

And it will be very bad for those with cash.

Is gold an alternative?

Maybe.

But remember, gold is not money. No one is promising to pay the bearer any particular number of dollars for an ounce of gold.

The price of gold is the creation of market psychology. At six times the price of only a decade ago, the price of gold could crater anytime.

See also:
Why China booms while America slumps
America's inflationary depresssion

Sherlock Holmes And The Alderney Street Mystery

Gareth Williams

Winter Patriot has an extraordinary and extraordinarily readable fictionalized account of the extraordinary, unexplained 2010 murder of Welsh math wizz and cryptanalyst Gareth Williams. To quote from the preface to this book-length work:

On August 23, 2010, Metro Police entered a well-appointed flat at 36 Alderney Street, in the heart of London. In the flat they found an ensuite bathroom, in the bathtub they found a padlocked bag, and in the bag they found the body of Gareth Wyn Williams.

Williams, a brilliant mathematician from Anglesey, Wales, worked in Cheltenham for GQHC, Britain's domestic eavesdropping agency. He was living in London on a one-year secondment to MI6, Britain's Secret Intelligence Service, and the block of flats in which his body was discovered was an MI6 "safe house".

Apparently uninterested in potential national-security angles, the police immediately announced they were looking for clues to Williams' mysterious death in the details of his private life. But they didn't make much headway. A month after his body was found, they still hadn't determined the cause of death, although they had admitted the case was "complex" and "unexplained."

It seemed like a job for Sherlock Holmes and Dr. Watson.

Fortunately, they happened to be available.

The story begins here with: A letter from Anglesey.

As with any good detective story, most readers will remained puzzled until almost the last page as to how the author will manage to draw together the threads to achieve a convincing denouement. But in this case, the tension is heighten by the realization that this is a true story, but that the identify of the murderer(s) has never been established.

Despite the apparent difficulty, the trick is very neatly accomplished and without, apparently, laying the author open to a charge of libel.

It should be remembered, however, that although artistically well conceived, the identification of the murderers is based not on conclusive evidence but on the the author's imaginative reconstruction of events. Its validity must, therefore, be regarded as far from certain.

According to Winter Patriot's story, which is based on the accurate presentation of publicly available information, Gareth Williams was a remarkable straight-forward, if somewhat naive individual, with a strong sense of right and wrong. It is postulated that as an analyst dealing with intercepted communications of terrorist suspects, he realized that the police account of the liquid bomb plot was fraudulent.

Indignant at the unjust conviction of eight men for their alleged role in this phony plot, Williams in some unspecified way betrayed the British security apparatus. As a consequence, he also became a victim of the fake liquid bomb plot, being liquidated -- literally -- by his own employers.

This, however, is only one of many alternative scenarios, and not the most flattering to the memory of the victim.

An entirely different picture could have been painted on the assumption that Williams, who was seconded to the US to participate in secret work with the NSA, fell afoul of his US hosts who liquidated him and, sending a strong warning to his bosses, returned the body by diplomatic pouch to be dumped with contempt in the bath tub of an MI6 safe house.

Embarrassed, the Brits would have had no option but to execute a cover up, and did so with a story that was neither believable, nor perhaps, intended to be believed.

But that is one of a virtually unlimited number of alternative hypotheses. WikiSpooks offers half a dozen other more or less plausible accounts involving Russians, Israelis and sundry others.

The truth, however, is unlikely ever to be revealed. Williams was a spook and spooks, as Aangirfan reports, have a way of dying under strange circumstances.

Ha! But the game is still afoot.

As Winter Patriot points out (see comment), the story continues. Perhaps, by dint of Holmsean logic, the truth will yet emerge.

Oligarchs for Global Government

By Andrew Gavin Marshall

To say we were striving for a one-world government is exaggerated, but not wholly unfair. Those of us in Bilderberg felt we couldn't go on forever fighting one another for nothing and killing people and rendering millions homeless. So we felt that a single community throughout the world would be a good thing.

Denis Healey, 30-year member of the Steering Committee of the Bilderberg Group

The ‘Foundations’ of the Bilderberg Group

The Bilderberg Group, formed in 1954, was founded in the Netherlands as a secretive meeting held once a year, drawing roughly 130 of the political-financial-military-academic-media elites from North America and Western Europe as “an informal network of influential people who could consult each other privately and confidentially.” Regular participants include the CEOs or Chairman of some of the largest corporations in the world, oil companies such as Royal Dutch Shell, British Petroleum, and Total SA, as well as various European monarchs, international bankers such as David Rockefeller, major politicians, presidents, prime ministers, and central bankers of the world. The Bilderberg Group acts as a “secretive global think-tank,” with an original intent to “to link governments and economies in Europe and North America amid the Cold War.”

In the early 1950s, top European elites worked with selected American elites to form the Bilderberg Group in an effort to bring together the most influential people from both sides of the Atlantic to advance the cause of ‘Atlanticism’ and ‘globalism.’ The list of attendees were the usual suspects: top politicians, international businessmen, bankers, leaders of think tanks and foundations, top academics and university leaders, diplomats, media moguls, military officials, and Bilderberg also included several heads of state, monarchs, as well as senior intelligence officials, including top officials of the CIA, which was the main financier for the first meeting in 1954. ...

Read more

Barmy Blog Posts, No. 43: Cucumber Economics Predict Russia's Demise

US Astronaut, Tracy Caldwell, returned to Earth from the
International Space Station, courtesy of Russia's Space Agency.
Image source.

By a brilliant deductive process involving consideration of Russia's consumption of cucumbers, Craig Murray, former UK Ambassador to Uzbekistan, reaches the amazing conclusion that Russia is an economic basket case, which is in both relative and absolute decline, and more closely comparable with Nigeria than with a modern industrial economy.

His argument is this:

Russia has banned the import of Spanish cucumbers due to the E. coli contamination scare, thereby revealing that "Russia, which has a greater area of unforested potential arable land per head of population than any other major state, is highly dependent on vegetable imports."

This "astonishing" fact, says Murray, "is indicative of a huge malaise." Russia, he concludes, "is not a great power in decline. It is a third world country in decline."

Wow, the power of the diplomatic mind.

See how it ignores the trivial, the nukes, the ICBM's, the tens of thousands of miles of Russian-built pipelines upon which Western Europe depends for around one third of its oil and gas.

Observe its contempt for mundane practicality, the fact, for instance, that in spring, vegetable crops in Southern Europe are somewhat more advanced than in Asiatic Russia.

No, merely from Russia's refusal to consume toxic cucumbers, the future of world events inevitably flows.

But for those whose processes of thought follow a more prosaic path, here are comparative stats for Russia and the UK, which must be telling us something.

2010 ECONOMIC STATS (Source: CIA World Fact Book) Russian numbers followed by UK numbers in parenthesis.
************************************************************
GDP (PPP): $2.23 trillion ($2.173 trillion)
Labour force in industrial occupations: 31% (18.2%)
Investment rate as % GDP: 18.9% (14.4%)
GDP Growth 2010: 4% (1.3%)
Population below the poverty line 13% (14%)
External debt: $0.5 trillion ($8.9 trillion)
************************************************************

Related: 

CanSpeccy: Annoying Bureaucrats No. 23: British Library Security Officials

Mainstream Media Inversion of Reality: the Mumbai Massacre, Zionists and Nazis, Fukushima

An amazing report by James Corbett on the links between US intelligence and the man who plotted the Mumbai massacre (as posted by Aangirfan).

Also from Aangirfan, via Mr. Friend's blog, Kevin Barrett's interview with Lenni Brenner about the virtually unknown Nazi-Zionist collaboration during WW2, as evidenced by the book 51 Documents: Zionist Collaboration with the Nazis, which Brenner assembled and edited.

Lenni Brenner's 1983 book Zionism in the Age of the Dictators is available in PDF format here, and in HTML format here.

Here is Lenni Brenner's CounterPunch article, on the importance for the anti-war movement of understanding the nature of Zionism.

And Exerpts from the Play Perdition, based on Brenner's book Zionism in the Age of the Dictators, and a debate between Lenni Brenner, and the Zionist Martin Gilbert -- Winston Churchill's official biographer and a historian of the Holocaust -- and others.

In the debate, Brenner's Zionist critics accuse him of dancing on the graves of the dead and of being a self-hating Jew.

They say it is all lies that Zionist leaders collaborated with the Nazis in the extermination of one million Hungarian Jews in order to save themselves and a few thousand Jews allowed to emigrate illegally, and that in any case the Zionists had no other choice.

They also say that the Zionist leadership were face with the necessity of making intolerable decisions without time for reflection.

In other words, the Zionists were routed.

See also, Ezra Levant's article on George Soros, the Nazi Jew, who collaborated with the Nazis in dispossessing Jews before they were sent for extermination.

And one more link derived from the tireless research of Aangirfan:

Fukushima: It's much worse than you think, which -- if it's not a contradiction in terms -- is what we thought, since the media are careful to avoid the subject of Fukushima almost entirely, and governments are releasing little if any information on the radioactivity we are now eating and breathing.

Much of the info. about Fukushima that does leak out is aggregated at ENENEWS.COM

Economic Growth, Asset Markets and the Credit Accelerator

From Steve Keen's DebtWatch

By Steve Keen

Neoclassical economists ignore the level of private debt, on the basis of the a priori argument that “one man’s liability is another man’s asset”, so that the aggregate level of debt has no macroeconomic impact. They reason that the increase in the debtor’s spending power is offset by the fall in the lender’s spending power, and there is therefore no change to aggregate demand.
Lest it be said that I’m parodying neoclassical economics, or relying on what lesser lights believe when the leaders of the profession know better, here are two apposite quotes from Ben Bernanke and Paul Krugman.
Bernanke in his Essays on the Great Depression, explaining why neoclassical economists didn’t take Fisher’s Debt Deflation Theory of Great Depressions (Irving Fisher, 1933) seriously:

Fisher’s idea was less influential in academic circles, though, because of the counterargument that debt-deflation represented no more than a redistribution from one group (debtors) to another (creditors). Absent implausibly large differences in marginal spending propensities among the groups, it was suggested, pure redistributions should have no significant macro-economic effects… (Ben S. Bernanke, 2000, p. 24)

Krugman in his most recent draft academic paper on the crisis:

Given both the prominence of debt in popular discussion of our current economic difficulties and the long tradition of invoking debt as a key factor in major economic contractions, one might have expected debt to be at the heart of most mainstream macroeconomic models—especially the analysis of monetary and fiscal policy. Perhaps somewhat surprisingly, however, it is quite common to abstract altogether from this feature of the economy. Even economists trying to analyze the problems of monetary and fiscal policy at the zero lower bound—and yes, that includes the authors—have often adopted representative-agent models in which everyone is alike, and in which the shock that pushes the economy into a situation in which even a zero interest rate isn’t low enough takes the form of a shift in everyone’s preferences…

Ignoring the foreign component, or looking at the world as a whole, the overall level of debt makes no difference to aggregate net worth — one person’s liability is another person’s asset. (Paul Krugman and Gauti B. Eggertsson, 2010, pp. 2-3; emphasis added)

They are profoundly wrong on this point because neoclassical economists do not understand how money is created by the private banking system—despite decades of empirical research to the contrary, they continue to cling to the textbook vision of banks as mere intermediaries between savers and borrowers.
This is bizarre, since as long as 4 decades ago, the actual situation was put very simply by the then Senior Vice President, Federal Reserve Bank of New York, Alan Holmes. Holmes explained why the then faddish Monetarist policy of controlling inflation by controlling the growth of Base Money had failed, saying that it suffered from “a naive assumption” that:

the banking system only expands loans after the [Federal Reserve] System (or market factors) have put reserves in the banking system. In the real world, banks extend credit, creating deposits in the process, and look for the reserves later. The question then becomes one of whether and how the Federal Reserve will accommodate the demand for reserves. In the very short run, the Federal Reserve has little or no choice about accommodating that demand; over time, its influence can obviously be felt. (Alan R. Holmes, 1969, p. 73; emphasis added)

The empirical fact that “loans create deposits” means that the change in the level of private debt is matched by a change in the level of money, which boosts aggregate demand. The level of private debt therefore cannot be ignored—and the fact that neoclassical economists did ignore it (and, with the likes of Greenspan running the Fed, actively promoted its growth) is why this is no “garden variety” downturn.
In all the post-WWII recessions on which Lazear’s regression was based, the downturn ended when the growth of private debt turned positive again and boosted aggregate demand. This of itself is not a bad thing: as Schumpeter argued decades ago, in a well-functioning capitalist system, the main recipients of credit are entrepreneurs who have an idea, but not the money needed to put it into action:

“[I]n so far as credit cannot be given out of the results of past enterprise … it can only consist of credit means of payment created ad hoc, which can be backed neither by money in the strict sense nor by products already in existence…

It provides us with the connection between lending and credit means of payment, and leads us to what I regard as the nature of the credit phenomenon… credit is essentially the creation of purchasing power for the purpose of transferring it to the entrepreneur, but not simply the transfer of existing purchasing power.” (Joseph Alois Schumpeter, 1934, pp. 106-107)

It becomes a bad thing when this additional credit goes, not to entrepreneurs, but to Ponzi merchants in the finance sector, who use it not to innovate or add to productive capacity, but to gamble on asset prices. This adds to debt levels without adding to the economy’s capacity to service them, leading to a blowout in the ratio of private debt to GDP. Ultimately, this process leads to a crisis like the one we are now in, where so much debt has been taken on that the growth of debt comes to an end. The economy then enters not a recession, but a Depression.
For a while though, it looked like a recovery was afoot: growth did rebound from the depths of the Great Recession, and very quickly compared to the Great Depression (though slowly when compared to Post-WWII recessions).
Clearly the scale of government spending, and the enormous increase in Base Money by Bernanke, had some impact—but nowhere near as much as they were hoping for. However the main factor that caused the brief recovery—and will also cause the dreaded “double dip”—is the Credit Accelerator.
I’ve previously called this the “Credit Impulse” (using the name bestowed by Michael Biggs et al., 2010), but I think “Credit Accelerator” is both move evocative and more accurate. The Credit Accelerator at any point in time is the change in the change in debt over previous year, divided by the GDP figure for that point in time. From first principles, here is why it matters.
Firstly, and contrary to the neoclassical model, a capitalist economy is characterized by excess supply at virtually all times: there is normally excess labor and excess productive capacity, even during booms. This is not per se a bad thing but merely an inherent characteristic of capitalism—and it is one of the reasons that capitalist economies generate a much higher rate of innovation than did socialist economies (Janos Kornai, 1980). The main constraint facing capitalist economies is therefore not supply, but demand.
Secondly, all demand is monetary, and there are two sources of money: incomes, and the change in debt. The second factor is ignored by neoclassical economics, but is vital to understanding a capitalist economy. Aggregate demand is therefore equal to Aggregate Supply plus the change in debt.
Thirdly, this Aggregate Demand is expended not merely on new goods and services, but also on net sales of existing assets. Walras’ Law, that mainstay of neoclassical economics, is thus false in a credit-based economy—which happens to be the type of economy in which we live. Its replacement is the following expression, where the left hand is monetary demand and the right hand is the monetary value of production and asset sales:

Income + Change in Debt = Output + Net Asset Sales;

In symbols (where I’m using an arrow to indicate the direction of causation rather than an equals sign), this is:

This means that it is impossible to separate the study of “Finance”—largely, the behaviour of asset markets—from the study of macroeconomics. Income and new credit are expended on both newly produced goods and services, and the two are as entwined as a scrambled egg.
Net Asset Sales can be broken down into three components:

• The asset price Level; times
• The fraction of assets sold; times
• The quantity of assets

Putting this in symbols:

That covers the levels of aggregate demand, aggregate supply and net asset sales. To consider economic growth—and asset price change—we have to look at the rate of change. That leads to the expression:

Therefore the rate of change of asset prices is related to the acceleration of debt. It’s not the only factor obviously—change in incomes is also a factor, and as Schumpeter argued, there will be a link between accelerating debt and rising income if that debt is used to finance entrepreneurial activity. Our great misfortune is that accelerating debt hasn’t been primarily used for that purpose, but has instead financed asset price bubbles.
There isn’t a one-to-one link between accelerating debt and asset price rises: some of the borrowed money drives up production (think SUVs during the boom), consumer prices, the fraction of existing assets sold, and the production of new assets (think McMansions during the boom). But the more the economy becomes a disguised Ponzi Scheme, the more the acceleration of debt turns up in rising asset prices.
As Schumpeter’s analysis shows, accelerating debt should lead change in output in a well-functioning economy; we unfortunately live in a Ponzi economy where accelerating debt leads to asset price bubbles.
In a well-functioning economy, periods of acceleration of debt would be followed by periods of deceleration, so that the ratio of debt to GDP cycled but did not rise over time. In a Ponzi economy, the acceleration of debt remains positive most of the time, leading not merely to cycles in the debt to GDP ratio, but a secular trend towards rising debt. When that trend exhausts itself, a Depression ensues—which is where we are now. Deleveraging replaces rising debt, the debt to GDP ratio falls, and debt starts to reduce aggregate demand rather than increase it as happens during a boom.
Even in that situation, however, the acceleration of debt can still give the economy a temporary boost—as Biggs, Meyer and Pick pointed out. A slowdown in the rate of decline of debt means that debt is accelerating: therefore even when aggregate private debt is falling—as it has since 2009—a slowdown in that rate of decline can give the economy a boost.
That’s the major factor that generated the apparent recovery from the Great Recession: a slowdown in the rate of decline of private debt gave the economy a temporary boost. The same force caused the apparent boom of the Great Moderation: it wasn’t “improved monetary policy” that caused the Great Moderation, as Bernanke once argued (Ben S. Bernanke, 2004), but bad monetary policy that wrongly ignored the impact of rising private debt upon the economy.
Figure 5


The factor that makes the recent recovery phase different to all previous ones—save the Great Depression itself—is that this strong boost from the Credit Accelerator has occurred while the change in private debt is still massively negative. I return to this point later when considering why the recovery is now petering out.
The last 20 years of economic data shows the impact that the Credit Accelerator has on the economy. The recent recovery in unemployment was largely caused by the dramatic reversal of the Credit Accelerator—from strongly negative to strongly positive—since late 2009:
Figure 6


The Credit Accelerator also caused the temporary recovery in house prices:
Figure 7


And it was the primary factor driving the Bear Market rally in the stock market:
Figure 8



Read Steve Keen's complete blog post entitled "Dude, Where's My Recovery"

Controlling the Global Economy: Bilderberg, the Trilateral Commission and the Federal Reserve

Image: Infoguerilla

From global Research

By Andrew Gavin Marshall

This essay is Part 3 of "Global Power and Global Government," published by Global Research.

Part 1: Evolution and Revolution of the Central Banking System
Part 2: Origins of the American Empire: Revolution, World Wars and World Order

---

The Bilderberg Group and the European Union Project
 

In 1954, the Bilderberg Group was founded in the Netherlands, which was a secretive meeting held once a year, drawing roughly 130 of the political-financial-military-academic-media elites from North America and Western Europe as “an informal network of influential people who could consult each other privately and confidentially.”[1] Regular participants include the CEOs or Chairman of some of the largest corporations in the world, oil companies such as Royal Dutch Shell, British Petroleum, and Total SA, as well as various European monarchs, international bankers such as David Rockefeller, major politicians, presidents, prime ministers, and central bankers of the world.[2]

            Joseph Retinger, the founder of the Bilderberg Group, was also one of the original architects of the European Common Market and a leading intellectual champion of European integration. In 1946, he told the Royal Institute of International Affairs (the British counterpart and sister organization of the Council on Foreign Relations), that Europe needed to create a federal union and for European countries to “relinquish part of their sovereignty.” Retinger was a founder of the European Movement (EM), a lobbying organization dedicated to creating a federal Europe. Retinger secured financial support for the European Movement from powerful US financial interests such as the Council on Foreign Relations and the Rockefellers.[3] However, it is hard to distinguish between the CFR and the Rockefellers, as, especially following World War II, the CFR’s main finances came from the Carnegie Corporation, Ford Foundation and most especially, the Rockefeller Foundation.[4]

            The Bilderberg Group acts as a “secretive global think-tank,” with an original intent to “to link governments and economies in Europe and North America amid the Cold War.”[5] One of the Bilderberg Group’s main goals was unifying Europe into a European Union. Apart from Retinger, the founder of the Bilderberg Group and the European Movement, another ideological founder of European integration was Jean Monnet, who founded the Action Committee for a United States of Europe, an organization dedicated to promoting European integration, and he was also the major promoter and first president of the European Coal and Steel Community (ECSC), the precursor to the European Common Market.[6]

            Declassified documents (released in 2001) showed that “the US intelligence community ran a campaign in the Fifties and Sixties to build momentum for a united Europe. It funded and directed the European federalist movement.”[7] The documents revealed that, “America was working aggressively behind the scenes to push Britain into a European state. One memorandum, dated July 26, 1950, gives instructions for a campaign to promote a fully-fledged European parliament. It is signed by Gen William J Donovan, head of the American wartime Office of Strategic Services, precursor of the CIA.” Further, “Washington's main tool for shaping the European agenda was the American Committee for a United Europe, created in 1948. The chairman was Donovan, ostensibly a private lawyer by then,” and “The vice-chairman was Allen Dulles, the CIA director in the Fifties. The board included Walter Bedell Smith, the CIA's first director, and a roster of ex-OSS figures and officials who moved in and out of the CIA. The documents show that ACUE financed the European Movement, the most important federalist organisation in the post-war years.” Interestingly, “The leaders of the European Movement - Retinger, the visionary Robert Schuman and the former Belgian prime minister Paul-Henri Spaak - were all treated as hired hands by their American sponsors. The US role was handled as a covert operation. ACUE's funding came from the Ford and Rockefeller foundations as well as business groups with close ties to the US government.”[8]

            The European Coal and Steel Community was formed in 1951, and signed by France, West Germany, Italy, Belgium, Luxembourg and the Netherlands. Newly released documents from the 1955 Bilderberg meeting show that a main topic of discussion was “European Unity,” and that “The discussion affirmed complete support for the idea of integration and unification from the representatives of all the six nations of the Coal and Steel Community present at the conference.” Further, “A European speaker expressed concern about the need to achieve a common currency, and indicated that in his view this necessarily implied the creation of a central political authority.” Interestingly, “A United States participant confirmed that the United States had not weakened in its enthusiastic support for the idea of integration, although there was considerable diffidence in America as to how this enthusiasm should be manifested. Another United States participant urged his European friends to go ahead with the unification of Europe with less emphasis upon ideological considerations and, above all, to be practical and work fast.”[9] Thus, at the 1955 Bilderberg Group meeting, they set as a primary agenda, the creation of a European common market.[10]

            In 1957, two years later, the Treaty of Rome was signed, which created the European Economic Community (EEC), also known as the European Community. Over the decades, various other treaties were signed, and more countries joined the European Community. In 1992, the Maastricht Treaty was signed, which created the European Union and led to the creation of the Euro. The European Monetary Institute was created in 1994, the European Central Bank was founded in 1998, and the Euro was launched in 1999. Etienne Davignon, Chairman of the Bilderberg Group and former EU Commissioner, revealed in March of 2009 that the Euro was debated and planned at Bilderberg conferences.[11] This was an example of regionalism, of integrating an entire region of the world, a whole continent, into a large supranational structure. This was one of the primary functions of the Bilderberg Group, which would also come to play a major part in other international issues.

Interdependence Theory

 The theoretical justifications for integration and regionalism arrived in the 1960s with what is known as “interdependence theory.” One of its primary proponents was a man named Richard N. Cooper. Two other major proponents of interdependence theory are Robert Keohane and Joseph Nye. Interdependence theory and theorists largely expand upon the notions raised by Keynes....

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China To Establish US Colony?

The End of the American Dream reports that China intends to establish a 50-square-mile "special economic zones" just south of Boise, Idaho, complete with:

... manufacturing facilities, warehouses, retail centers and large numbers of homes for Chinese workers. Basically it would be a slice of communist China dropped right into the middle of the United States.

The State of Idaho is, apparently, keen to accommodate the proposed Chinese colony, which would be located in the heart of the state, just south of Boise, the state capital.

But no one should be surprised by this development. The logic of a One World Order, which is the objective of America's plutocratic elite, is the destruction of every nation on Earth, America being no exception.

America is no more for Americans than it is for illegal immigrants or for well-heeled Communist Chinese corporations.

So if you have the cash to buy 50 square miles in Idaho, then you're welcome to it. And if you buy 50 square miles in nearly every state of the Union, destroy most of America's industry in the process, drive the US unemployment rate ever upward, while wages sink to those of the third-world, feel free to go right ahead.

Oddly so it might seem, the Brits and French, with US backing and six fighter bombers from Canada, went to war with Libya to oust China's colony there, which means that keeping control of Libya's oil is more important to the imperial elite than keeping control of America's economy.

Which makes sense. How could anyone but the Chinese make money in Idaho? But Libya, obviously, is quite different. Stick a pipe in the ground and out comes one-hundred-dollar-a-barrel oil at virtually no cost at all.