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Robert Chapman / International Forecaster
Submittted by Don Stacey
Jan. 11, 2005

Asian central banks have been closely watching US policy makers, to make sure there is no change in their support of Asian exports to the US. These are the nations that have been buying dollar-dominated assets, mainly Treasury bills, notes and bonds to keep their currencies from appreciating and at the same time to support the dollar and the US economy, which is one of their largest customers. On the other hand, the possibility exists that Asian nations may decide their industrial development is well enough advanced and that they no longer need to support the dollar and suppress the appreciation of their own currencies. In the Asian mind, there is always the possibility that the US might change their trade agenda. Perhaps a move back to tariffs. It does not really matter what the reason is as the potential exists for policy makers in a few Asian countries to immediately direct a sale of the holdings of their US assets, and re-direct the proceeds to other countries or to domestic uses. Such a shift would send US interest rates straight up and the dollar straight down. Stocks, bonds and real estate would fall and global trade would contract dramatically. There would be a reconfiguration of political and military alliances away from the US. Unfortunately, that is already in progress due to the invasion and occupation of Iraq and Afghanistan. There is no longer time left to slowly and methodically rebalance the system. The US has a limit to how many exports they can absorb and how much more debt the consumer can assume. There is no chance Asia can export its way out of its problem-dependence on US imports. It is now the policy of the administration to allow the dollar to slowly fall in value. This, of course, increases US inflation, interest rates and currency volatility without substantially improving the deficit. This is not the 1970s and 80s, we do not export enough goods now to substantially improve the balance of trade and our current account deficit. We advocate tariffs, which would work relatively quickly and would trigger counter-tariffs that would negatively impact the global economy. In place of that, someone has to show us a better idea because everything the US has done thus far by the administration, Congress and the Fed has not and will not work. The advocating of a new Marshall Plan for the world economy is unworkable. It is just the creation of more debt. The system has to be purged of its excesses. That could be accomplished by boosting savings, paying off debt, curtailing barrowing, cutting the federal budget deficit and shifting priorities from excessive conspicuous consumption, which would bring the current account deficit into balance. We agree with that procedure, but we also realize it will usher in a world depression. At this stage, in order to solve the problem a worldwide depression is totally unavoidable. Does anyone really think Asia and others are going to voluntarily revalue their currencies by 40% and allow the US to renegotiate its debt with the world for say, $.40 on the dollar? Foreigners would take the full hit and the US rewarded for its profligacy. The other new factor is 80% of those outside our country dislike George, the neocons, and their perpetual wars for perpetual peace. Does anyone seriously think foreigners, already furious with US foreign policy, will revalue and impose partial debt forgiveness? Hardly. The rest of the world has not been taken in by the fantasy of terrorism. They may be many things, but they are not dumb. The imbalance of our world financial system has been 65 years in the making. We never came out of the depression of the 1930s; we just had one war after another and a resultant piling on of debt. The world monetary system has not been stable since then and the flight from a gold-dollar standard on 8/15/71 sealed the fate of the dollar and the world monetary system, which are essentially almost all fiats.

There is no balance in world trade today envisioned in textbooks. It is all one sided, we buy by printing money and issuing credit and they manufacture and sell to us taking fiat depreciating dollars in return. This has led to our agriculture having to be subsidized, our plants being moved out of the country and the remainder of our jobs being up for outsourcing. How can anyone with half a brain believe this can continue? The heart of our system is being ripped out. We are being destroyed. Does anyone get it? Don’t they realize we have no friends and it is now every man for himself? When are we going to consider self-preservation? It once was a native instinct in America, where has it gone. Look at the mess created by the elitists who run our country, our banks, Wall Street, insurance companies, transnational corporations and our politicians, almost all of who are bought and paid for. Corporate elitists know no bounds; anything goes. One corporate scandal after another dealt with by fines. No one goes to jail and they rejoin the game to commit the same acts again. The American people look the other way. They now expect endemic corruption. It is a way of life. The motto of our times, “I didn’t have sex with that woman.” Our disgusting society now devoid of morality, a society that condones abuse, rape, and torture by our government. Does it get any worse? We cannot spend our way to prosperity, nor can we steal our way to prosperity. We have been living in a false world for three generations. At the heart of this monstrosity is the privately owned Federal Reserve the main control instrument of the elitists. The creator of the capital. The misallocator of capital and the creator of asset bubbles. Today they have outdone themselves. Three asset bubbles at once, bonds, stocks and real estate. They should be cited for their total and complete ineptitude, unless of course, they have deliberately brought the US economy to its knees in order to force America to accept world government by their design, which is total human enslavement. If these are our risk managers, we may as well jump in a hole and pull the hole in after us. The Fed has lost control. Since 1989, they have been using what band aids they have left and they are just about out. They no longer effectively regulate monetary policy and our economy. Our economy is not in the hands of our debtors. The repo pool, M3 and bank lending are all stopgaps. The Fed has lost control and they are operating in the dark

Adding to our woes, we have George and the neocons in their madness creating one war after another. Another two years of this madness and we will have nuclear warfare; we will not have to worry about our financial system. There simply will not be one. It will be barter with gold and silver coins. The US has allowed Europe and Asia to form blocks, which have altered our ability to impose policy solutions. That has been by deliberate design by elitists in order to bring about world government. These blocks, free trade and globalization have been deliberately set in motion to relieve America as a world leader and render it to an equal or second-class position among nations.

Free trade and globalization is not the answer, it is the problem and now that there is no consensus because of US military adventurism, there can be no balancing. Nations are making other arrangements to protect themselves and they all are anti-American excepting England. The world is sick of being pushed around by Anglo American cartels backed by superior firepower and assassinations. We are responsible for a government run by elitists now out of control. The elitist edifice is collapsing and they do not know what to do to stop it. No matter how you cut it the bottom line is at best the American people, and those of the world are going to have a drastically reduced living standard, and that is the best-case scenario. America’s unsustainable indebtedness is coming to an end. This is something Americans are ill prepared for and it could have monstrous social ramifications. This indebtedness has forced America into a weakened state. Thus, our President on orders from other elitists is pursuing perpetual war to mask the financial deterioration we are mired in.

Robert Chapman / International Forecaster

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