Assertion: We Already Live Under A One World Government

[FaninAma]

Support for assertion: Control of a nation's economy is essentially control over that country itself. I do not think it can be disputed that the various central banks around the world, in conjunction with the IMF, are able to control every detail of the economies of all of the countries in the world from currency rates to investment preferences to social policies(i.e. tax policies) individual governments institute. If you do not agree to the plan they propose the IMF and the central banks simply take down your currency.

There are over $200 trillion worth of derivatives in the world most of which are under control of the central banks or their member national and regional banks. I think it is not incomprehensible to think that this amount of leverage would allow the central banks and central planners to control all and any financial markets from currency markets to equity markets to bond markets to commodity markets.

Finally, there is little to no transparency in the system. However, sometimes when they want the private market sheep to support their plans they will telegraphic their actions as they have done with the Quantitative Easing programs. "Do not fight the Fed"=Invest in equities. Buy a home.

I think one-world economic control has been achieved serptitiously and without protestation from the governments around the world. The John Birch Society was right but even they underestimated the efficiency at which this process occured.

[KantoSooner]

Fanin, Good Lord! Calm down! The sky is not falling/fallen/going to fall anytime soon. Some points:

1. Read Fukuyama's The End of History and The Last Man. His point is that serious philosophical political debate is over. We won. There are no serious challengers to some sort of representative democracy paired with a market economy. Really there aren't. There are some socialists out there, but even they pay homage to the general system, they just want a bit more government thrown into the mix.
So, there's that. In that sense, we are all singing from the same sheet music. First time in human history.

So, yay us: the US model won and is now, more or less, what everyone on the planet agrees is the way to go.

2. The post WWII world was largely built by....wait for it....us. All the Bretton Woods institutions, the UN, the IMF, the Worldbank and so forth and so on. We built 'em. And, bless their little hearts, our diplomats kicked unholy butt: they built 'em with bias in favor of .... US and our style of government and economy.
So, when we talk of these entities as though they are some sort of misty things out in the night, going 'bump', remember: they are us. Sure, the UN can be annoying, we had to make the game at least partly fair, but, in balance the thing is massively rigged in our favor. And why not? Were we supposed to set up a world safe for Facism in the wake of a war against it?

3. Your assumption that there is some sort of centralized control and precise levers with which some group of 'governors' can steer the planet is belied by observed facts. We are witnessing the Japanese gerrymander their currency in a breathtaking way. More than a 50% devaluation in five years. (If memory serves) And there's no response, from anyone? Well, maybe the Japanese are running the show. Except their economy has sucked so bad that their people are too depressed to even breed. They're committing national suicide. Doesn't sound like the results that God-like control of the world would generate, no?
The Euroweenies? Their little corner of paradise is sucking wind and has for a looong time. China? Really? Mortgaging their air and water for another five years or so of 7% GNP growth? That's owning the world?

4. So who is 'in control'?
Try this concept: no one.
That's about where I come down on the issue. No one has the ability to 'control' much beyond their immediate reach. Not Bernanke, not Mr. Yen, not Angela Merkel. The system is a pretty good one and runs pretty well with little tweaks and nudges here and there, but there is no Great and Powerful OZ. Not even an OZ by committee.
And thus, there is no group, corrupt or benign, 'running things'. If you want to know why things tend to go the way they do, read the foundational documents of those post WWII institutions, it's all in there, mostly. And in pretty clear English (oh, yeah, we biased the world that way, as well. And thank God! pre-WWII, you were expected to speak French if you wanted to be taken seriously in international affairs).

If you want to go hunting for a cabal of hidden men ruling the world, go right ahead. I spent a certain amount of time doing that in pursuit of writing about US diplomacy. Never could come up with much of anything that would even remotely demonstrate the reality of that premise.

[FaninAma]

Kanto, you make a persuasive argument however, the pairing of democracy with a market economy is a viable model only as long as the electorate stays tuned in. Once the voters turn over major decisions to a small group consisting of powerful financial institutions and their front men the democracy part of the relationship ceases being anything more than a front to legitimize the plutocrats' decisions and actions that direct the world's economies in the direction they want them to go. Do you really think the general electorate would allow the Federal Reserve to devalue our currency in a way that benefits banks and the Wall Street elite to the detriment of retirees and those on fixed incomes?

I am very suprised that you really believe there is any control or input by the electorate or their elected represenatives in making important economic decisions and policy.

There is very little input by Congress on Federal Reserve policy hence there is very little control over markets especially when you throw in the massive amount of leveraged weapons at the disposal of central banks and the IMF or do you think $200 trillion in derivatives is a necessary, democracy promoting instrument?

[soonercruiser]

This is one where the Bushs' are AT FAULT!

[StoopTroup]

I think I realized all of that when I met the Head of the Fed in KC. He gave our College Class a really nice speech and was really nice and answered all of our questions. Best Day of my life as far as Economics and the Federal Banks are concerned. I was initially pretty frustrated and angry with some of his answers but once you realize how they control things, if you pay attention you can tell how things are gonna go.

It's pretty obvious they are not working to help the GOP see the Sequestration happen. They think it's a bad idea and so do I.

I can see why some folks are upset.

[XingTheRubicon]

If you're upset about modest cuts in the increases of any part of our federal budget...



That attitude combined with our contraction recovery; this should end pretty well.

[KantoSooner]

There is very little input by Congress on Federal Reserve policy hence there is very little control over markets especially when you throw in the massive amount of leveraged weapons at the disposal of central banks and the IMF or do you think $200 trillion in derivatives is a necessary, democracy promoting instrument?

Fanin, Who do you think selects the heads of central banks? The fact that we don't have direct democracy or that a committee of congressmen does not fix an interest rate in no way reduces their ultimate control over those who do handle those tasks on a daily basis. That's representative democracy writ large.
I am no great fan of derivatives, simply because I think that they are opaque and that the people investing in them have no freaking idea what they are putting their (and their companies') money into. On the other hand, derivatives are really nothing new. 'Commercial paper' was an excellent way for governments to fund themselves and to allow the economy to grow beyond the pretty silly restrictions of precious metal supplies. Tighten up disclosure and restrict banks from investing in them and voila, the problem disappears.
As I understand your argument, there is some group of monied individuals who, through their wealth, have usurped all important power. My reply is that, though the seriously wealthy have disproportionate power (and always have), they are neither all powerful, nor are they monolithic in their interests, nor do they persist as a group over time, nor do they possess tools that permit them to control much of anything in the macroeconomy with any degree of precision and thus are no fundamental threat to a republican society.

[FaninAma]

Kanto, we'll just have to agree to disagree about the amount of control voters have over the FED or even how much their elected politicians have over the Fed for that matter. Hell, it was only recently that the Fed was forced to disclose any of its operations during the 2008 meltdown to Congress. No further information has been forthcoming. No detailed audit of their operations has ever been conducted.

Concentrating that much economic power and total control over the currencies of the world in a small group of bankers' hands without ANY oversight is a great safeguard against abuse of that power.....don't ya think?

[putting on my tinfoil hat] I assume you recall what JFK tried to do with the Fed via executive order right before he was assasinated and that one of LBJ's first actions was to negate that executive order after he was sworn in.[/removes tinfoil hat]

[KantoSooner]

I think the failures in our banking system have more to do with:

1. A lack of transparency in products caused by an utter failure of our regulatory bodies to do their jobs.

and

2. Leeming-like behaviour on Wall Street itself.

than in any cabal of plutocrats. I think you vastly underestimate the power of both voters and elected officials. Mind you, they have to figure out what they want, organize, and most importantly, stick with it over at least, I'm guessing here, 2-3 election cycles to have an impact. But it can be had. And then I think you overestimate the power and precision of actions taken by and under the control of the 'central banker' types. I am a 'structuralist' rather than an 'instrumentalist' if you want to use the polisci-speak. Wasn't always so, but I spent several years looking at the Rothchild business empire and what was most shocking was how slipshod the thing looked over time. They are pretty much the gold standard of 'winning big' over time and pretty much rigging the world to run to their advantage. (In a cold blooded way, the idea of financing both sides of various wars is magical.) And even in the most generous estimation, they end up getting the result they want and that they try to create around 50.5% of the time. If, after hundreds of years of trying to get it right, at times controlling the central banks of multiple countries WITHIN THEIR OWN FAMILY, they are only able to do a little better than breaking even, then I submit that the game is not controllable.

[FaninAma]

The last thing I would accuse the Federal Reserve and fractional banking system of is being efficient so I am not suprised that the Rothchild "enterprises" are not a well-oiled machine. I would propose that the reason is that it is hard for any organization that large to be very efficient.

I would probably view the Federal Reserve and other world central banks with less suspicion if they would open up their books and allow full audits of their operations. You seem to trust those invested with a lot of power to be honest and always acting in good faith. I have the opposite view. And power without oversight is especially concerning to me.

We will see how benevolent these organizations are as their death grip on the world's currencies starts to slip. I fully expect military intervention if any country(or goup of countries) challenges the US dollar as the reserve currency unless the world banking system has decided to make the change themselves.

The currency wars are heating up. Devaluation of a nation's currency is the name of the game today. The question you have to ask yourself is who benefits the most from currency devaluation. My opinion is it is those who own the most assets(stocks , commodities, mortgages) and those who peddle debt. Who does it hurt? The poor, those who cannot put their assets at risk(seniors, retirees) and those who are ultimately responsible for underwriting the debt(current and FUTURE taxpayers.)

[KantoSooner]

Full disclosure is nice, but we also want to encourage full anf frank discussions between, for instance, Fed Governors. I don't want their discussions dumbed down into the media circus that are congressional hearings. So, we'll differ on that front.


Regarding devaluation, that's an interesting aspect to this whole thing. If you define 'devaluation' as the relative decrease in value of one nation's currency against that of another or against all others, then the key becomes the exposure of the devaluing nation's populace to international trade and investment. So, to take some random examples. If our currency were to be devalued, imports would go up in effective cost. Like oil and Mercedes Benz's and molybdenum. Our exports, however, would become relatively cheap on the world market. Things like wheat, soy beans, aircraft, services, and fine chemicals. Further, international investors would get whacked in their US holdiings...but would be interested in getting back into the US market on the cheap when they thought the shift was nearing its end. Same deal in real estate. And there's the debt market. Foreign holders would be whacked super hard, domestic holders, not so much.

I view devaluation as something of messy way out of debt, so long as we are not running a big trade deficit. And, guess what, as we import less and less oil, we go from trade deficit to surplus.

I don't think it's the poor who get hurt nearly so much as those who can not isolate themselves from international trade. Because devaluation is largely neutral within a country, unless that country can not survive without imports, then its potentially devastating. We can do pretty well without imports, and, as our price competitiveness improves, we can export like hell.

To maintain faith in our market's fairness, we can't be seen to openly gerrymander the exchange rate, but the market will do it for us, sooner or later if we continue to run a deficit.

So, I'm not against allowing natural devaluation to occur, and it is a way to see improvement in our jobs picture, screw the foreign holders of our debt (without hurting the domestic ones Yay) and cut our overall indebtedness.

Downside: longterm a big shift in the dollar probably hastens the fall of the dollar as the global reserve currency and that has insulated us against inflation since the 1940's. But, there is already a move afoot to use the Euro more and even Malaysia has pioneered use of a gold backed certificate of deposit. So a lot of canny traders are moving to a market basket reserve approach. And it's been happening for 20 plus years. All without headlines, much less military action. It's as simple saying that you are going to split your bond holdings from 100% T bills to say 80% T bils and 20% German Govt bonds, for example. No big deal.

China can't play because they won't let their currency float, so no one knows it's actual value. Japan's Yen is too small and so forth.

But having our currency overvalued, as it most surely is today, helps no one here other than those who import goods.

[Jacie]

So we are all under Chinese control?

[KantoSooner]

Nope. And things are fixing to get notso hotso for the Chinese.

[pphilfran]

I am in the Kanto camp...

[FaninAma]

The devaluation of currency is seen on the domestic front as well as international markets and the problem with the devaluation as it relates to the trade balance is a problem in and of itself because what is happening now is that devaluation has become an international competition to gain trading advantages and it has fueled the early to mid stages of a currency war which will be self-perpetuating.

I don't understand how you can make the claim that currency devaluation doesn't hurt the poor. The poor have the lowest margin of tolerance for erosion of the purchasing power of the little money they take in. How can erosion of the purchasing power of what little they have not be harmful?

And why now is the Fed embarking on such a drastic manipulation of interest rates? I know it has been tried before but nothing coming close to the scale of the program they are involved in now. Why is massive manipulation of the currency rates and bond markets now a good thing when it flies in the face of "free" markets? How are they going to promote market growth in an environment of escalating debt?

The Fed knows its biggest weapon(and curse) is the ability to cause inflation. They have now grown confident(or smug) enough that they can micro-manage that inflation and direct it to specific areas of the economy amd markets. Right now they are directing it toward the equity markets and inflating the value of equities because they think that is in our best interest. In the meantime they are manipulating natural market forces that would have probably led to a consolidation of the debt issue. Would it have been painful. Yes, certainly. But by encouraging the debt accumulation cycle to continue and accelerate they have guaranteed that the consolidation(collapse) will be many more times painful.

Ther is no way that economies burdened by this much debt will ever find a way to grow enough to shrink as a percent of the GDP. It will just continue consuming more and more of the GDP and economic activity of the country. Even at current historically low interest rates the cost of servicing the national debt will grow to 900 billion dollars by the end of the decade.

So, in the meantime the poor and middle class get poorer(widening income distribution gap) the rich acquire more assets with the benefit of cheap money. And those who peddle debt really do well.

[KantoSooner]

"How can erosion of the purchasing power of what little they have not be harmful?"

Answer: So long as your country produces, domestically, the necessities of life, the poor are not affected by devaluation because what they buy is produced locally and is unaffected by currency valuations. A dollar is a dollar is a dollar. You're not stuck buying wheat for Rubles or Pounds Sterling that are suddenly much more expensive in dollar terms. This is not the case in many nations that must buy their necessaries on the international market.

"Why is massive manipulation of the currency rates and bond markets now a good thing when it flies in the face of "free" markets? How are they going to promote market growth in an environment of escalating debt?"

Answer: That's a real good question. They've kept rates low because, essentially, that's the only tool they have to encourage some sort of economic activity. When all you have is a hammer, all problems look like nails. Ultimately, I see no way to alleviate the problem of escalating debt but some form of inflation/devaluation. $X dollars of debt need to be made less valuable and thus easier to pay off. One way to do that is to make dollars less valuable. At least internationally.

"So, in the meantime the poor and middle class get poorer(widening income distribution gap) the rich acquire more assets with the benefit of cheap money. And those who peddle debt really do well. "

Answer: Yes and no. Debt, so long as you have the ability to service it, will likely become less onerous, due to inflation/devaluation. Hard assets, like property, will inflate and do okay. Financial products probably not so much. What is whacking the poor and middle class are a paucity of low skill jobs, which might be partially helped by a cheap dollar, and a lack of economic activity, again, something that might be helped by a weak dollar.

The real downside to an intentional devaluation is hinted at in your opening paragraph - if it becomes a competitive thing. So long as we can positiion it as a great humiliation to the US and weep and wail in the streets about how Obama and the nasty Republicans have mismanaged our economy until the Smart Europeans and Prudent Asians have had to knock our hat off and tank our currency, then all will be well. They'll walk around all happy at America's embarassment, and we'll get the benefits of devaluation without the costs and will essentially be able to 'export' a big portion of our debt. If it turns into a 'beggar thy neighbor' thing, then everybody, everywhere, gets screwed. Thus, I don't think it has to end badly for us, but it's an awfully high risk to bear for an inability to restrain spending through a normal budgetting process.

[FaninAma]

Kanto, your observations are very interesting and thought provoking. The problem I have regarding the loss of purchasing power by the poor is that I think it is impossible to isolate the effects of currency devaluation on a regional basis. Yes, the USD that strengthens against foreign currency will help the poor purchase good made in other countries but with the global markets we operate under I don't see any country ever allowing their currency to rise against other currencies like we saw the USD do in the 1990's. the Euro may fit the bill but I would counter that their inability or refusal to devalue their currency is deepening the recession gripping the EU. Additionally, commodities are sold on a global market now and this has been exhibited by the world-wide rise in prices of food, energy and industrial metals. You will not ever be able to isolate the most vulnerable in the country from this global effect.

The Chinese benefitted enormously from keeping their xurrency artifically low but I think the days of a country being able to unilaterally do that are over.

I think the Fed has been so agressive with their QE policies that they have left themselves very little room to operate if another unforseen economic or political calamity occurs and that concerns me. The biggest weapons in their arsenal should be saved for severe emergenices not to stave off natural economic cycles.

[KantoSooner]

Fanin, Agree that the fed has shot their bolt, pretty much. Maybe they had to, but still it leaves one nervous.

As far as China being unable to isolate their currency? They're doing it right now, with no signs of stopping any time soon. And they aren't alone. The Chinese simply set an exchange rate by fiat and they're done. The Japanese allow the Yen to float, but then screw with the system to move it around. Many countries around the world have fixed exchange rates. There's nothing particularly noteworthy about it. That said, no big country other than China does so and you won't get respect at the big boy banking table if your currency doesn't float, but still...

As to isolating an entire economy or parts thereof, you are correct that once you engage in trade you're never truly isolated. However, take the case of US food prices (a not unimportant consideration for the poor). They're going up this year, but mostly because of the drought. The inputs into farming and ranching are all pretty well contained inside the US and thus are not terribly volatile due to devaluation. Land, fertilizer, water, electricity, fuel etc are all things that are mostly supplied from within the country and are increasingly so. Of course international competition can help to drive that, like if the Chinese were to say, 'Damn, American corn is cheap this year, let's buy a bunch,' but in terms of overall consumption, food pricing is mostly driven by domestic factors. I would argue that much of the rest of a 'basic' market basket of products would be as well. The argument is not that there would be no impact but that the impact would be modest and not the devastation that countries such as Zimbabwe have suffered.

[FaninAma]

China is the country that, IMO, ignited the currency war by refusing to allow the yaun to float on the open market.

The fractional banking system requires the unending accelerating expansion of debt for the sytem to avoid collapse. There was a mathematical formula I saw used to exhibit how this expansionary credit system worked and it revealed that at the endpoint the expansion of of debt would turn exponential and even parabolic. That is totally unsustainable. So either people like Bernanke are stupid and don't realize this or they understand what is happening and are cowards or sellouts to the mega-banks for not stepping in and alerting the country to this danger.

I personally think there is some hybrid system that would work better. I support a system where newly created money and debt is tied to some sort of asset backing...not necessarily precious metals. But there has to be a way to prevent the banks from having complete control over the creation of new money and debt because greed and lack of political will will always take over.

[KantoSooner]

Controls are pretty easy: Let the system crash once in a while. Like most other aspects of capitalism, greed must be balanced by fear. Just like moose herds are not healthy in the absence of wolves, so our economy can not be healthy unless some people get crushed once in a while. And the worst people to protect from crushing are the big, precisely because they have disproportionate influence.
We missed a perfect chance to inject sanity and health into our economy in 2008/9 when Bush AND Obama got scared and saved a bunch of braindead investment bankers who'd been 'doing lunch' and screwing their secretaries instead of minding their shops. I far prefer some mechanism in which we have no human beings trying to figure out what the 'right' valuation might me. Let a market figure it out.

Re, China, meh. China's only doing what almost everybody else has done at one point or another. Read British econ papers from the 1860-1900 period and how they fulminate against us damned Yankee cheaters. WE were the ones violating patents and playing nasty with our currency back then. At some point, the Chinese'll pay the piper if they get too badly out of whack.

[FaninAma]

Controls are pretty easy: Let the system crash once in a while. Like most other aspects of capitalism, greed must be balanced by fear. Just like moose herds are not healthy in the absence of wolves, so our economy can not be healthy unless some people get crushed once in a while. And the worst people to protect from crushing are the big, precisely because they have disproportionate influence.
We missed a perfect chance to inject sanity and health into our economy in 2008/9 when Bush AND Obama got scared and saved a bunch of braindead investment bankers who'd been 'doing lunch' and screwing their secretaries instead of minding their shops. I far prefer some mechanism in which we have no human beings trying to figure out what the 'right' valuation might me. Let a market figure it out.

Re, China, meh. China's only doing what almost everybody else has done at one point or another. Read British econ papers from the 1860-1900 period and how they fulminate against us damned Yankee cheaters. WE were the ones violating patents and playing nasty with our currency back then. At some point, the Chinese'll pay the piper if they get too badly out of whack.

Exactly. Teach your kids to avoid debt like the plague. I understand there are some things worth going into debt for but don't allow your expectations to overwhelm your pocketbook.

The debt forgiveness concept has been around since the the Old Testament. Didn't they call it Jubilee? I think that shows you how far back these economic cycles have been playing out and it amazes me we have experts who think they are going to end them.

[StoopTroup]

When they changed the bankruptcy laws in this Country....people didn't pay attention and many like young people will sometimes do...speculated that it wouldn't happen to them. When people started losing jobs and getting out of School only to have a massive educational debt they can't pay....things got pretty ugly. The only relief I've seen for the Middle Class was in the form of Credit Card Companies abusing people with Loan Shark type of interest rates. If that hadn't happened...I'm not sure most people could have started paying down the debts they accrued.

I do agree with you though Fan. Kids need to pay cash and make sure they understand how to keep their Credit Ratings high so they can take advantage of good property investments if they can.

[FaninAma]

Stoop, it really pisses me off to see OU hawking credit cards to students outside football games on Saturdays. I don't think that is an appropriate fund raising activity for the university.

[SCOUT]

Stoop, it really pisses me off to see OU hawking credit cards to students outside football games on Saturdays. I don't think that is an appropriate fund raising activity for the university.
Way back when, I worked for a credit card bank that did this for other schools. The intent (make your own judgement about good or bad intent) was to allow college kids to establish credit before graduation. The limits on those cards used to be $250 or $500 for students. Not enough to get in trouble, but enough for kids to establish a credit history for when they have a job. That is all very old information. Consider it appropriately.

I should add that the University made hundreds of thousands of dollars for allowing this arrangement.

[StoopTroup]

Stoop, it really pisses me off to see OU hawking credit cards to students outside football games on Saturdays. I don't think that is an appropriate fund raising activity for the university.

Unfortunately they aren't the only ones doing it. I've seen so many Sports Venues doing it. When I see a crowd around it trying to get whatever freebie they are giving out, I feel the same way.

[FaninAma]

Way back when, I worked for a credit card bank that did this for other schools. The intent (make your own judgement about good or bad intent) was to allow college kids to establish credit before graduation. The limits on those cards used to be $250 or $500 for students. Not enough to get in trouble, but enough for kids to establish a credit history for when they have a job. That is all very old information. Consider it appropriately.

I should add that the University made hundreds of thousands of dollars for allowing this arrangement.

It may have started out as a benign policy but now with students accumulating tens of thousands of dollars worth of student loan debt I find it offensive for institutions of higher learning to allow themselves and their credibility to be used by the debt peddlers to ensnare young people with even more debt.