I wrote a two part article series (find part 1 here and part 2 here) recently that I published on my Seeking Alpha private blog. The blog post - entitled A Solution For Creating Stable Economic Growth And Why We Will Never Implement It - was inspired by my sudden desire to think in terms of solutions to the dilemma we are in today as much as it was to find fault with the policies and solutions currently being implemented.
I wrote the two part series before reading the recently released Oxfam report that points out the following very troubling statistic: "The bottom half of the world's population owns the same as the richest 85 people in the world." Although my posts were not intended to focus on income inequality per se but rather offer the framework for a solution to the decaying economies of the world - the Oxfam report offers substantial empirical support for my own conclusions.
We are at a critical juncture today and most don't see it. We have two choices - either dismantle the current system that feeds the disparity or brace ourselves for a new world paradigm.
The two articles are long and as detailed as I could make them without actually writing a lengthy white paper on the subject matter (I may at some point actually write that paper). My goal in writing those articles was to set forth the problems we have today, why we have those problems and what I see as some of the solutions to those problems.
What surprised me was the complete lack of commentary on those two pieces as that is not what I typically experience. For instance my most recently published article - Why We Are Not OK And Not On A Sustainable Trajectory - inspired a lively discussion and a lot of commentary. That of course is what I want to see when I publish an article. I don't expect agreement and fully expect to have my views attacked by a certain percentage of my readers and I see that as a good thing as it informs me and my readers and is a useful method for gauging the sentiment of stock market participants - at least to the extent that SA readers are a decent proxy for the total body of stock market participants.
The two articles I wrote and posted on my private SA blog are - in my opinion - perhaps the most important and relevant pieces I have ever written for SA and surprisingly almost no one seemed inclined to offer support for my views or criticism. That puzzles me as my views on where we are and what we need to do to move to real economic growth are certainly radical views. I can only conclude that I really missed the mark this time and completely failed in my effort to communicate effectively.
That said I am willing to give it another shot - this time with a little less detail - as I think the message is important enough to justify another attempt. I am going to start by sharing with you a few excerpts from an article that Michael Snyder wrote recently entitled Top 1% Has 65 Times More Wealth Than The Bottom Half And The Global Elite Like It That Way.
Michael's article discusses the enormity of the disparity of wealth between those at the top of the wealth ladder and those at the bottom. The information came from the recently released Oxfam report referenced above. Here is what Michael had to say:
. . . . 85 extremely wealthy individuals have about as much wealth as the poorest 3,500,000,000 do. This shocking statistic comes from a new report on global poverty by Oxfam.
The Founding Fathers were very correct to be very suspicious of large concentrations of power. In the early days of the United States, the federal government was very small and the size and scope of corporations was greatly limited. Our nation thrived and a huge middle class blossomed.
Sadly, over the past several decades the pendulum has completely swung in the other direction. Today, our society is completely and totally dominated by big banks, big corporations and big government.
And of course this is also happening in virtually every other nation on the face of the planet. The global elite have rigged the game to send just about all of the rewards their way, and it is working.
Michael managed to say in less than 200 words what took me a thousand words to say so my hats off to him for a lucid presentation of the problem. Perhaps my verbose writing style is a little suspect here. I'll try to do better.
There are two key points here. The first is that the consolidation of power and wealth in the hands of a few is clearly demonstrable and the second is that the game is rigged in a way that sends all the rewards their way.
That second point is hard to accept for many as it suggests a conspiracy is afoot and most of us are not easily swayed into believing in cabals that are perpetuating schemes that promote their agenda to the detriment of the rest of us but the evidence is quite clear on the matter and how do I know that - they've told us so in public commentary. Here is a portion of a statement made by Nathaniel Rothschild back in 1912 that demonstrates the truth of that statement:
. . . . the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.
Synonyms for "inimical" include harmful, injurious, detrimental, deleterious, prejudicial, damaging, hurtful, destructive, ruinous and pernicious. Make no mistake - Rothschild knew what he was saying and he just didn't care. It was one of those "in your face" statements that says I am going to hurt you and there is nothing you can do to stop me.
Moving on - the evidence on the matter of heavily concentrated wealth at the individual level is well established by Oxfam but how about the banks and the international corporations. Here is what Pat Garofolo had to say on the matter of the big banks in 2012:
As the nation slowly ground its way out of the Great Recession, the biggest banks in the country (whose malfeasance played a large role in creating the downturn) grew even larger. According to data from the Dallas Federal Reserve, the largest 0.2 percent of all banks now control nearly 70 percent of all banking assets.
As of third quarter 2012, there were approximately 5,600 commercial banking organizations in the U.S. The bulk of these-roughly 5,500-were community banks with assets of less than $10 billion. These community-focused organizations accounted for 98.6 percent of all banks but only 12 percent of total industry assets. Another group numbering nearly 70 banking organizations-with assets of between $10 billion and $250 billion-accounted for 1.2 percent of banks, while controlling 19 percent of industry assets. The remaining group, the megabanks-with assets of between $250 billion and $2.3 trillion-was made up of a mere 12 institutions. These dozen behemoths accounted for roughly 0.2 percent of all banks, but they held 69 percent of industry assets.
In an article by Sarah Anderson and John Cavanagh entitled Top 200: The Rise of Corporate Global Power the authors make the following points on the matter of the international corporations:
- Of the 100 largest economies in the world, 51 are corporations; only 49 are countries (based on a comparison of corporate sales and country GDPs).
- The Top 200 corporations' combined sales are bigger than the combined economies of all countries minus the biggest 10.
- While the sales of the Top 200 are the equivalent of 27.5 percent of world economic activity, they employ only 0.78 percent of the world's workforce.
- A full 5 percent of the Top 200s' combined workforce is employed by Wal-Mart, a company notorious for union-busting and widespread use of part-time workers to avoid paying benefits. The discount retail giant is the top private employer in the world, with 1,140,000 workers, more than twice as many as No. 2, DaimlerChrysler, which employs 466,938.
Again one could argue that this is evidence that the rich are getting richer and the poor are getting poorer but that is no proof of a conspiracy and again I will point to the fact that it would be necessary to ignore a substantial body of evidence to the contrary to arrive at that conclusion. Consider these statements made by David Rockefeller:
We are grateful to the Washington Post, The New York Times, Time Magazine and other great publications whose directors have attended our meetings and respected their promises of discretion for almost forty years... It would have been impossible for us to develop our plan for the world if we had been subjected to the lights of publicity during those years. But, the world is now more sophisticated and prepared to march towards a world government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.
David Rockefeller, Bilderberg Meeting, June 1991 Baden, Germany
For more than a century, ideological extremists at either end of the political spectrum have seized upon well-publicized incidents to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. 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.
David Rockefeller Memoirs
Rockefeller talks of the last 40 years but I would suggest the implementation of this agenda has been in play for much longer. Here is the complete quote from Nathaniel Rothschild mentioned above:
The few who could understand the system (cheque, money, credits) will either be so interested in its profits, or so dependent on its favours, that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.
Nathaniel Mayer Rothschild, 1912
In fact it goes back even further than that. Here is what Mayer Rothschild said over 200 years ago:
Let me issue and control a nation's money and I care not who writes the laws.
Mayer Amschel Rothschild (1744-1812)
Or this quote from William Patterson over 300 years ago:
The bank hath benefit of interest on all moneys which it creates out of nothing.
William Paterson, founder of the Bank of England in 1694
I am struggling to decide who I want to quote and who I should exclude as there are so many who have weighed in on this. And it all boils down to this - there really are those out there in positions of power who really do want to create a New World Order and their vision of the New World Order is that we will have the ruling class - the global elitist bankers - and the peasant class and that necessarily means the elimination of the middle class.
And don't tell me that is just the delusional ranting of a conspiracy theorist. That couldn't be further from the truth. Here is how Wikipedia explains conspiracy theories:
A conspiracy theory is an explanatory proposition that accuses two or more persons, a group, or an organization of having caused or covered up, through secret planning and deliberate action, an illegal or harmful event or situation. In recent decades the term has acquired a derogatory meaning to some, and distinction should be made between the derisive use of the term and reference to actual, proven conspiracies. Different types of conspiracy theories have been distinguished, ranging from those merely based on a hunch to ones backed by evidence, and from localized, single-event conspiracies to pervading universal phenomena.
The online encyclopedia distinguishes between conspiracies based on hunch and those based on evidence. In this instance the evidence is substantial and clearly demonstrates that power is being concentrated in the hands of fewer and fewer people. It is also clear that there are those in that wealthy group that have a different vision of what the world should look like than the rest of us do and how do we know that - they have told us so in public commentary.
What is the system that Nathaniel Rothschild spoke of?
The system is not the Federal Reserve as so many seem to think. The system is the fractional reserve banking system that perpetuates the process of burying sovereign governments under massive debts to the detriment of the sovereign states and the people and to the benefit of the bankers.
Here is a very short list of those who understood the exorbitant advantage afforded those who held ownership positions in the fractional reserve banking configuration and railed against it: Thomas Jefferson, Benjamin Franklin, Napoleon Bonaparte, Otto Von Bismarck, Abraham Lincoln, Karl Marx, Leo Tolstoy, Henry Ford, Andrew Jackson, James Garfield, William McKinley, John Kennedy - well to recite the whole list is not practical or possible but suffice it to say the list is long. Here is one more - this time from renowned Harvard economist John Kenneth Galbraith:
The study of money, above all other fields in economics, is one in which complexity is used to disguise truth or to evade truth, not to reveal it. The process by which banks create money is so simple the mind is repelled. With something so important, a deeper mystery seems only decent.
I guess I do struggle with brevity but understand this - many a debate has been won by offering an overwhelming body of circumstantial evidence on a matter and it is my goal to win this debate if possible. And the facts are that there is a very, very long list of credible people who fully understood the exorbitant advantage afforded bankers under our current system.
So how would one implement this NWO plan?
The answer to that question is pretty simple - create money out of thin air by making a bookkeeping entry, loan that money out at interest to sovereign governments and repeat the process time and again until such point in time where the borrower is so burdened by the debt that he is at your mercy. Those who don't understand fractional reserve banking find it difficult to grasp this concept but as Galbraith stated it "is so simple the mind is repelled".
I explained the process in Part 2 of my article - A Solution For Creating Stable Economic Growth And Why We Will Never Implement It. I went through a series of transactions starting with a customer deposit and culminating with a loan made to a bank customer. The following is a T-account presentation of all the ledger entries:
(click to enlarge)
And this excerpt from the article walks you through an explanation of the impact of these entries:
When we started out the bank had $100,000 in assets and $100,000 in liabilities. Then the bank bought a bond with bank cash. We still had $100,000 in assets and $100,000 in liabilities. Then the Fed bought a bond from the bank. Still $100,000 in assets and $100,000 in liabilities. Then the bank made a loan to a customer. Now the bank has $200,000 in assets and $200,000 in liabilities.
What is particularly advantageous in this scenario is that the liabilities in this instance earn the bank a small service fee while the loan earns an interest rate - perhaps 3.5% if it's a prime rate loan. The bank can do this over and over again and the only limit is that the bank maintain a cash (reserve) balance of at least 10% of customer deposits. Under the example above the bank has $100,000 in cash and $200,000 in deposits so they have excess cash reserves of $80,000. If they make another loan then the banks interest earning assets jump to $300,000 and their excess reserves go to $70,000. The next time the banks interest earning assets go to $400,000 and their excess reserves drop to $60,000.
That process can be repeated over and over until the total bank reserves are equal to 10% of total deposits. In this example the bank could make one more loan bringing bank loans to $500,000 and bank cash to $50,000.
So what has taken place since the Great Recession? A rather clever ploy to expand bank assets and further indebt the middle class. Under the traditional approach the banks would have made loans to businesses and consumers and that money would have moved into the economy and fueled GDP growth. That is not what we did this time though - rather we embarked on a new agenda called QE.
Let's look at a chart to establish that QE never was intended to stimulate economic growth. The chart is the amount of Treasury and Agency Securities owned by banks and the amount of consumer loans owned by banks:
(click to enlarge)
What might shock the average reader is the substantial ramp higher in the bank ownership level of those assets that everyone knows the Fed is buying from the banks. How is it that the Fed's QE - a massive large scale asset purchase program - has still left the banks with significantly larger positions in these same assets after the start of QE than before?
I will try to explain but first recognize that both metrics represent debt that taxpayers are responsible for so if the goal of the NWO proponents was to further indebt us that goal has been achieved since the end of the recession. Equally important though is where the money goes that the fractional reserve bank system creates with each iteration of QE and it isn't into the broad economy.
When the Fed buys a Treasury bond from the banks the bank's reserves go up and their bond holdings go down. The next step is for the bank to buy a new bond to replace the one the Fed bought. When that takes place M2 expands as the money the bank spends moves from cash (reserves) to customer deposits (M2).
It is worth explaining that a little further. Actually when the bank buys a bond the money does move into M2 in that the money goes into someone's checking account and it does reduce that banks cash (reserve) account but in the aggregate bank cash (reserves) remained the same as the receiving banks cash account will be debited and its deposits account will be credited. The take away then is that in the aggregate bank cash (reserves) stayed the same but M2 and interest bearing bank assets increased in the aggregate.
But what happens to that new M2. Well, when the bank acquired the bond they bought an investment asset from a 3rd party. What will that 3rd party do with that new money though? The answer is to reinvest it in another investment asset and that is what we've seen - the new M2 has moved substantially into stocks.
Here is the point - if the banking system had expanded M2 in the traditional sense with loans that newly created money would have gone to consumers and businesses and they would have spent it boosting GDP. Instead with QE that money has simply fueled a push higher in equity valuations and done very little for economic growth.
The real point though is that the banks are creating money out of thin air and loaning it to us. That means the banks simply get more and more interest bearing assets and we - the taxpayer - get more and more debt to pay off. That is just not a good business model for the middle class or for economic recovery but it is a great business model if your ultimate goal is to control everything and everyone under a NWO regime.
Some will point out that we have seen real growth since the end of the recession and higher sales and profits prove that. I agree with that but it has nothing to do with QE and everything to do with deficit spending which has contributed roughly 6% per year on average to GDP since the end of the recession.
If you doubt the truth of that statement this chart which plots GDP alongside Gross Federal Debt should convince you:
(click to enlarge)
The truth is we are a debt driven economy and the correlation above between those two metrics validate that fact. There is simply no denying it and it is not a good thing for the people or the economy. At some point the debt becomes so oppressive that no further growth is possible. At that point the governments and therefore the people are effectively dependent on those who own the debt.
How do we fix it?
The answer to that question is to first recognize and understand the problem in the first place. Once enough of us understand the situation we are in we simply demand an end to the exorbitant advantage afforded the banks.
Here's what Michael Snyder said on the matter in the article referenced above:
The elite never actually want the pendulum to swing back in the direction of the "little guy". The elite are generally pleased with how the game is being played because they are winning.
Most people don't even realize that they are participants in a debt-based neo-feudalist system in which money is being used as a form of social control.
As I have written about previously, there is about 190 trillion dollars of debt in the world, but global GDP is only about 70 trillion dollars.
There is no way that all of this debt could ever be paid off at one time. It is mathematically impossible. Over time, all of this debt transfers the wealth of the planet away from us and to the global elite. If this game was allowed to go on long enough, eventually they would have nearly all of it.
And some would argue that we are already getting close to that point. A study by the World Institute for Development Economics Research discovered that the bottom half of the global population only owns approximately 1 percent of all wealth, and at this point about a billion people throughout the world go to bed hungry every night.
This is one of the reasons why I am so adamant about the fact that the Federal Reserve needs to be shut down. It is at the very heart of the debt-based system that we have in the United States, and over the past 100 years it has brought us to the brink of economic Armageddon.
Sadly, most Americans do not understand any of these things. They just assume that the debt-fueled prosperity that we have been enjoying will be able to go on indefinitely.
I agree with everything Michael said but would add the real problem is the constructs of the fractional reserve system and not the Fed. Ending the Fed wouldn't completely solve the problem as it is the ability of privately owned banks to create money by accounting entries and then loan it to governments that is the real problem.
At some point these bankers will simply tell us we are in over our heads, we owe them more than we can repay and they will solve our problem but on their terms. Here is an example of what I am talking about. Axel Weber of UBS explains the problem this week in Davos, Switzerland at the 44th Annual Economic Forum. Here is how the Irish Times explains Weber's comments:
The European Central Bank's review of the region's lenders may reignite concerns about banks later this year as some companies will probably fail the stress test, Swiss bank UBS chairman Axel Weber said.
The stress test "may trigger a comeback of some of the concerns about banks," which could lead to a re-emergence of risks for countries that may have to provide fresh capital to the lenders, Mr Weber said at a panel discussion at the World Economic Forum in Davos, Switzerland, today.
What did Weber say again? He said some banks will need "fresh capital". Where does the capital come from - sovereign governments. Who loans the already overextended sovereign governments the money. The banks who aren't in trouble such as Mr. Weber's UBS. How does UBS or any other bank raise the money to lend to the governments - they create it with a journal entry.
So back to the point - how do we fix the problem? The solution is really very simple - the sovereigns refuse to borrow the money from the banks and simply print it themselves. After all the only reason the banks in the United States are afforded the right to create money in the first place is because our political class in Washington conveyed that privilege to them a long time ago. This of course isn't a United States problem exclusively though so the same solution applies to all sovereign nations.
Implementing the solution
Again, the solution to the problem is simple - the government creates the money out of thin air instead of allowing the fractional bank system to do so. Who benefits - the consumer/tax payer. Who loses - the banks.
Some might suggest this could lead to high inflation but not if the M2 creation was formulaic and dependent on a combination of GDP and M2 velocity. Here is the formula:
M2 = (GDP/M2 velocity) x 1.05
Using the 3rd quarter of 2013 to arrive at the M2 cap the calculation would be as follows:
(16.9 trillion/1.57) x 1.05 = $11.3 trillion
As of the end of the 3rd quarter of 2013 the actual M2 level was $10.709 trillion meaning that the cap on M2 allowed for an increase of $600 billion.
Keep in mind the solution is fiscal stimulus but without the associated debt that accrues under the current system. The idea would be to get the extra $600 billion in the hands of consumers in order to increase aggregate disposable income. The distribution could be treated as a direct tax credit with each taxpayer receiving a pro-rata share of the disbursement - a decidedly different approach to fiscal stimulus that the one currently being employed. In 2012 the numbers of taxpayers totaled 239 million meaning the payout would be $2510 per taxpayer.
One needs to understand this point. M2 expansion is necessary to support growth so the question isn't whether we expand M2 but rather the transmission system that injects the increase in M2 into the system. The traditional approach has been through bank lending - in other words our economic growth was dependent on debt. It is so ingrained in us that we simply can't see any other way but there is another way and it is to simply distribute it equitably to everyone and what better way to do so than through a tax credit.
The banking system would undergo a major transformation under this scenario in that the fractional reserve provision would go away. Banks would still be required to maintain reserves equal to a percentage of deposit liabilities but they would no longer be able to create money through a bookkeeping entry.
The check valve would be controlled by the US Treasury and total money supply would be regulated through the tax system with tax credits issued periodically when M2 needed to be increased and tax increases being imposed when M2 needed to be reduced.
The overall tax burden would fall appreciably as fiscal stimulus would no longer be funded by credit and the national debt would in time disappear as US Treasuries were very, very slowly phased out. The reason I say very slowly is that retirement of Treasury debt would push M2 higher at a much faster rate than we would want and would necessarily produce unwanted inflation - not necessarily in consumer prices but in investment assets.
One way to deal with outstanding Treasury debt to avoid that unintended consequence is to convert all short term debt to 30 year terms as the short term debt matures. The new issues would be 30 year duration and set to fully amortize over the term with say a 6% interest rate. Annual payments to fully amortize $17 trillion in debt over 30 years would be roughly $100 billion a year.
To insure that this additional M2 expansion would be used to drive GDP the denominations could be very small - perhaps in the $5,000 to $10,000 range. That would attract small investors looking for income rather than large investors looking for capital appreciation. The income would be spent and work as a driver of GDP whereas those who currently hold Treasuries simply re-invest the cash in other investment assets and the increased M2 inflates and drives investment assets higher - not GDP.
Here's a novel idea - what would happen if a tax holiday were put in place for those in the lower income strata. The goal would be to reduce tax receipts by $1 trillion. The impact to GDP assuming M2 velocity of 1.5 is that the added disposable income would increase GDP by $1.5 trillion.
Applying the M2 expansion formula to GDP the new GDP would be $16.9 trillion + $1.5 trillion = $18.4 trillion. So the new M2 cap would be calculated as follows:
($18.4 trillion/1.5) x 1.05 = $12.9 trillion
The old M2 cap was $11.3 trillion so that would allow the government to add an additional $1.6 trillion into the system through tax credits. One could argue that the gap isn't being closed between government expenditures and government receipts with this strategy and that is true but does it really matter? After all the government debt level would remain flat as borrowing from the big banks in the name of the people would cease. And we would see more disposable income in the hands of those in the lower income strata and they would spend most of that money and in so doing push demand higher.
Admittedly this is a hard leap to make for most people but keep this in mind - personal income tax in a situation where the government doesn't borrow money takes on an entirely new role. Taxes in this paradigm are increased or decreased as needed to speed up or slow down GDP growth and to keep inflation in check - not fund an ever growing debt financed government spending machine.
Here is the elegance of such a scheme - the overall tax burden would fall for everyone and debt levels would still fall. Under the scenario above our debt to GDP ratio would drop by about 8% merely as a result of the $1 trillion tax holiday in the first year and about 10% in the second year.
Keep in mind the tax credits in no way impact government spending levels - they just impact government receipt levels and some provision would be needed in this new paradigm to define the appropriate level of government contribution to total GDP. Ideally we would set a ratio of public/private employment that expanded the private sector rate from current levels and contracted the government sector rate. Again a formulaic relationship would be established between public and private sector just as the M2 formula would establish the level of M2 expansion based on GDP levels and M2 velocity.
The primary argument against those who would oppose restoring the right to print money to the government and taking it away from the fractional reserve banks is that it would remove the checks and balances of the current system and produce massive inflation. My response to that is why would things be any different if the government held the reins of control instead of the banks?
The fact is the banks can and do produce periods of inflation and disinflation with an occasional period of deflation. The chart below demonstrates that fact:
(click to enlarge)
The most important element of the proposal offered here is the idea that M2 would be set at a level that is formulaic and printing of money in excess of the cap would be prohibited. M2 would need to be a little larger than the previous year to produce growth; a little smaller than the previous year to contract growth; and ideally M2 left unchanged from the previous year would produce a flat line on GDP.
The 1.05 multiplier would allow for an increase of just 5% and no more which should produce the desired GDP growth that would support an increasing population adequately. That said the tools would exist - and in a much simpler and direct form than is currently in place - to suppress inflation if it were to become problematic by simply raising the tax rate on income and in so doing reduce M2 and disposable income.
It is an incredibly simple concept and there is simply no reason to assume inflation would become more prevalent under this arrangement than under the current system. More importantly the almost immediate impact to M2 and GDP would be preferable to the system that is currently in place. Under the present system the only way to contract M2 and put the brakes on inflation is to deleverage. Deleverage in this sense means the banks must reduce the numbers of outstanding loans.
The banks typically have no appetite for deleveraging as it impacts their bottom line. There is a definite conflict of interest at work here between the banks desiring profits and the need to keep economic growth on a stable path without significant swings in inflation or disinflation.
As I noted at the beginning of this article my purpose here was to set forth a solution to our current problem. I've heard many rail against the Fed but few that offered an alternative solution. What I've offered here is the framework of a plan for a new paradigm of economic growth. It is simple but as Galbraith noted so is the system that is currently in place. What Galbraith said was this - "The process by which banks create money is so simple the mind is repelled."
One wonders at how such a simple system could be so widely misunderstood. More to the point - if the system is so simple then it should be easily understood and it would be if we actually attempt to do so. And once we do understand it we will no longer allow it to continue.
I have done my best to keep this discussion brief but the subject matter doesn't lend itself well to brevity. A more in depth discussion on these ideas can be found in the two part series mentioned at the beginning of this article. In those articles I also delved into the matter of the big corporations that have been allowed to grow unrestrained by our antitrust laws largely due to the views of Judge Robert Bork expressed in his book entitled the Antitrust Paradox.
Again for the sake of brevity I won't go into that in this article other than to share with you these comments:
Bork's focus was on price and at the exclusion of competition. On the surface it is hard to argue against the efficiencies of scale that allow mega corporations to offer goods and services at low rates but there is - as with most things - an unintended consequence that surfaces. In this case the unintended consequence is the impact on jobs and wages.
Redundancy it seems has some benefits in that if several companies are delivering the same dollar level of services that one company could deliver each of those companies needs to staff up in a way that is redundant and would not be necessary were those services being provided by just one company.
My point was this - the courts interpretation of antitrust laws in the last several decades has actually promoted the agenda of the international corporations and although that is good in one sense in that the courts have viewed low prices as the basis for their decisions it is bad in another sense in that it has increased productivity to the point where it has actually harmed society - a society that in the end is dependent on full employment.
I will close with this - I do believe their is an agenda being implemented and I do think a part of that agenda is a continuation of the cyclical bull/bear pattern we have seen since the turn of the century. I also agree with these comments from Zero Hedge in an article entitled This Is The Greatest Financial Market And Currency Manipulation Of All Times:
Consider the following headlines. They may have come at an unexpected timing, in the light of the economic recovery story, but they were for sure unavoidable:
- Federal Reserve Said to Probe Banks Over Forex Fixing (Bloomberg)
- Deutsche, Citi feel the heat of widening FX investigation (Reuters)
- HSBC, Citi suspend traders as FX probe deepens (Reuters)
- Metals, Currency Rigging Is Worse Than Libor, Bafin Says (Bloomberg)
The most remarkable event of the past week was the Federal Reserve investigating whether traders at the world's biggest banks have been rigging currency rates. According to Bloomberg, the Fed is probing whether traders shared information that may have let them manipulate prices in the $5.3 trillion-a-day foreign-exchange market for profit maximization (source).
Also during the past week, US Regulators have been examining traders at Deutsche Bank, Citigroup, and HSBC. On top of that, Germany's top financial regulator Bafin made a public statement, warning the manipulation of currency rates and precious metals prices could be worse than the Libor-rigging scandal. Bafin confirmed its firm is investigating currency trading, joining regulators in the UK, US and Switzerland (source).
These developments are significant and could mark a tipping point. Up until now, the currency and precious metals manipulation has been a topic associated with conspiracy theorists in the corners of the blogosphere. With regard to the signs of manipulation, Bafin's president Elke Koenig said that "It is understandable that the issue is causing such a public reaction. The financial sector is dependent on the common trust that it is efficient and at the same time, honest. The central benchmark rates seemed to be beyond any doubt, and now there is the allegation they may have been manipulated."
The interesting fact is that this news breaks out exactly at the time when most people are being trapped into the "economic recovery" news. With the markets hanging at the lips of the central bankers, it is fair to say that "the central banks are the markets." Frank Suess points out that, for several decades now, central banks around the world, with the US Federal Reserve in the lead, haven't allowed business and credit cycles to happen anymore. In fact, they have been fighting consistently every sign of recession with more money, resulting in a race to the bottom of world currencies.
It may be hard for readers to come to grips with the idea that there are those who would actually precipitate a market crash but I am not one of them. And I am more inclined than most to think the investigations into manipulation are disingenuous. I wouldn't rule out the idea that this whole matter of manipulation is being promulgated for the purpose of pricking the market bubble in equities and it would be entirely consistent with what must happen at some point to advance the NWO agenda.
Additional disclosure: I am long puts in PCLN, NFLX, AMZN and FB