The Terrorism of Money and Debt
Every debt crisis in history since
Solon of Athens In the end we will have to look at all the ways people are terrorized to come up with a complete understanding of what is happening around the globe. As a lesson in terror lets look at some truly terrorizing numbers. The United States, would you believe, is 32 trillion in the hole (6.2 trillion federal debt, 1.5 local and state, 7.8 household, 7.0 business sector, 9.5 financial sector) and that is not counting un-funded Social Security, Medicare and Federal Pension Funds. With these moneys counted the numbers soar beyond the stratosphere into deep space. International financial markets move some $1.5 trillion round the world on a daily basis – $10 trillion a week, $45 trillion a month, $550 trillion a year; an amount 10 times greater than total world income and 25 times greater than total world trade. With the creation of debt
we can enjoy prosperity The control of money is the real power that exists in the world. It is normally thought to be the power of government, for without it, no government can exist. Yet that control is not shared equally at all between governments especially since the dollar became the world’s reserve currency (it never was shared equally in older days either). Even the US Federal Government has limited power in the face of the largest financial institutions and controllers in the world and the millions of investors who move money around the planet at their whim. It is obvious that too many people have made a religion out of money and the world reflects that fact. But anyone with any common sense knows that there is a limit to how much they can borrow without risking the integrity of their personal finance. For us individuals its not a great problem for when you or I get to a level of debt we can never get out of, we can declare bankruptcy -- clear the slate and start again. To a certain extent some of us can limit money’s control over our life. Unfortunately on a national and international level it is not so simple for bankruptcies on these levels threatens the very system itself. Credit card systems can stand a large percentage of individuals defaulting on their cards because they charge enough interest to cover their losses. But commercial banks are not as flexible and when individual loans to corporations or third world countries, which are numbered in the billions of dollars default, or even just threaten to do so, a fear and present danger is recorded around the world instantly. Politics is mostly about the distribution and control of wealth. Japan’s entire economy is caught in such a trap with its commercial banks holding on to about 400 billion in bad loans that they cannot clear through the system. Any questioning of their banks' integrity naturally could lead to a domestic economic disaster so it’s a problem that has been swept under the carpet for a decade, but it has not gone away. Their banks need to restructure but such a restructuring would produce shocks that would reverberate around the world. Japan as a nation holds nearly $3 trillion in dollar-denominated assets, many of them ultimately supported by the very deposits that would be withdrawn in a wholesale reorganization of Japanese banking. Those dollars have played an indispensable role in permitting the United States to swell its trade deficits far beyond the levels of most nations. That the Japanese, like so many other foreigners, are willing to keep their earnings from trade inside the United States banking system — what "holding dollars" literally means — helps the United States tolerate its deficits in both trade and debt accumulation. But this situation is precisely what restructuring in Japan threatens. If banks were forced to call in loans to pay off depositors Japanese companies would be forced to sell their dollars for yen. Real money and purchasing power would then leave the United States as the conversion weakened the dollar, forcing a rise in interest rates and import prices and further raising the risk of recession. The international financial sea is not calm, the fundamental issues are huge, the suffering already widespread, and much of the present prosperity false because large-scale debt formation has created basically fictitious money to buy real goods and services that must be paid for sooner or later. History records
that the moneychangers have used “If you ask me what is the worst thing in the world, I will say it is compound interest." President Obasanjo of Nigeria, commenting on the debt Nigeria faces: "All that we had borrowed up to 1985 or 1986 was around $5 billion and we have paid about $16 billion yet we are still being told that we owe about $28 billion. That $28 billion came about because of the injustice in the foreign creditors' interest rates.” Hillaire Belloc wrote, “A few pence lent out at usury some twenty centuries ago would amount now, at compound interest, to more wealth than there is in the whole world, which is a sufficient proof that usury is unjust and, as a permanent trade method, impossible.” This is probably why, 1300 years ago, Muhammad made it against his religion to charge interest on loans. It is possible to rape both people and entire nations in this fashion. Thomas Jefferson said, “If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.” Debt is the greatest of
all dangers to be feared. For the poorest countries, particularly in Africa, poverty, social tensions and environmental devastation are escalating as their economies drown in increasingly unmanageable levels of debt. Brazil's economy and way of life is threatened because of an international debt of 250 Billion, Argentina has already collapsed and the only hope is for international agencies to keep lending just to keep up with the illusion that they can recover. The international debt in the third world is like a heavy weighted stone that is pulling down their societies. Debt build-ups become more troubling when economic growth slows, and income declines. The United States borrowed their way through the marvelous Clinton nineties avoiding a loss of income or wealth by borrowing its way through everything. In the 1990s the federal government created $2.87 trillion of new debt, more than created in the nation's entire history prior to 1990. That’s a lot of money to borrow and even more to pay back. The world today is awash in a sea of debt, a monstrous situation that millions bail out of through bankruptcy if they can. Many millions more are enslaved and nations themselves have been subdued and their national sovereignty compromised through international lending organizations. Credit has been given out so freely and easily, corporations and consumers have borrowed heavily to the point of lunacy, and the American government is so many trillions in the hole it almost does not matter any more how many. This is now the foundation of America’s strength? Jefferson was right in his wisdom, and there are some American’s who would identify with what he is saying. But in our new global community his use of the word Americans can be transferred to all citizens of the world. In a truly global village what’s the real difference between people from different parts of the world? The United States
government has been able to create Only the fool cannot understand that the American government has no intention of ever paying down the debt and that it intends to keep borrowing, in the many ways available to it, until the entire financial system collapses, pretending as it does that this day will never arrive. In fact as the nineties came to a close many were thinking it was the end of the business cycle altogether and that the Dow would climb to 36,000. Nothing intelligent can explain the unashamed attitude the US government and society carries in borrowing so many trillions. This situation has been a long time in the making and has only recently gotten totally out of hand as the next extended down turn will bring to light. It mirrors a mindset and a temptation to take the easy way out of great and hard decisions. What can we expect from leaders and political people who we really do not know well. We know nothing at all about the quality of their consciousnesses, their inner drives; hunger for power, moral and ethical inner worlds remain a mystery until those aspects of self come up in lights during times of scandal. Our present form of capitalism has put too much money into too many irresponsible, shortsighted and selfish peoples control and this has created a situation that is just waiting to get out of hand. The wealth of any
imperial center requires Because the dollar is the worlds reserve currency and because of its political power, the Americans in 1973 left the Bretton Woods Agreement behind and established a floating exchange rate system, which provided a flexible and efficient monetary tool that enabled them to avoid the adjustments that would otherwise have been required by America's new situation as a debtor nation. In a system of fixed exchange rates and gold convertibility, the US would have been obliged, like every third-world country today, to pay for its indebtedness with a relative loss of sovereignty and highly unpopular domestic austerity measures. It has escaped all of this but it has not escaped the hate and envy such unfair measures have brought to the world. What usually happens to countries that run excessive trade deficits funded by large scale debt formation: foreigners lose confidence in these countries' currencies, interest rates rise, the economy goes into recession and, as people can't afford to buy so many imports, the trade deficit begins to close. The United States has escaped this fate so far but can it do so forever? This is an important question not just for Americans but also for the whole world because the US economy is the engine of the world sucking in the goods and services of the globe but paying for it by borrowing. Professor Lester Thurow explains: The fundamental mathematics is clear. To run a trade deficit, a country must borrow from the rest of the world and accumulate international debt. Each year interest must be paid on this accumulated debt. Unless a country is running a trade surplus, it must borrow the funds necessary to make interest payments. Thus the annual amount that must be borrowed gets larger and larger, even if the trade deficit itself does not expand. As debts grow, interest payments grow. As interest payments grow, debt grows. As time passes the rate of debt accumulation speeds up, even if the basic trade deficit remains constant. World Psychology Principle
of Economic Fairness Instead America was able to climb to a level of wealth never seen in human history with some individuals, like Bill Gates, gaining the wealth of nations. For sure the winners have nothing to complain about unless they want to consider the future of their children who will have to suffer with the results of such tremendous economic expansion and consumption; i.e., with environmental aspects that will not be pleasant for anyone. Everything is working out very nicely for the very rich; and those who are only near the top have managed recently to devise corporate schemes to steal what they don’t already have, as we have seen in Enron and other recent corporate scandals. The world is in rich peoples hands, but are they the hands we should be trusting? That such immense wealth and prosperity for some have come at a time when so many nations in the world have stepped into further poverty and debt is no coincidence. The policies of those who have the power and influence have been successful to help raise standards for many millions but at a terrible cost that the future will pay for. Many people, even with high incomes, have already noticed how over the past decades it takes more and more work to earn the same ‘real’ wages. Today husband and wife together struggle to make what the husband could alone three decades ago. To seek more than
enough through debt formation is Some people have compassion for what is actually happening and groups like the UN children's organization calls for the outright cancellation of all debt in the poorest third world countries. Sub-Saharan Africa as a whole is caught in an incredible debt trap. The governments spend more on servicing their more than $300bn debt than on the health and education of their children. Even Pope John Paul is in favor of canceling the debt to many third world countries. If done in a truly organized way it is possible that the international system would last longer, meaning that the Americans could evade a while longer the consequences of their own massive debt formation. But it goes against the gut reflex of fundamental capitalists even though there are plenty of presidents. In the 1800s, the United States defaulted on much of its development debt, as did Latin America and others during the crisis of the Great Depression. Large-scale debt formation has led to a new form of slavery, and in and of itself represents a form of terrorism that works insidiously behind the scenes. It has created a dangerously imbalanced world that is threatening the environment and all living beings that live in it. Somehow we need to extend
democratic principles The United States, by borrowing trillions has become consumptive and permissive in character, debt-dependent and much more of a government-dependent society than its founding fathers had in mind. A few years after Woodrow Wilson signed the 1913 Federal Reserve Act he wrote, ”I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men. We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world, no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men.” Benjamin Franklin was there before the revolutionary war and said, “There was abundance in the colonies, and peace was reigning on every border. It was difficult and even impossible, to find a happier and more prosperous nation on all the surface of the globe. Comfort was prevailing in every home. The people, in general, kept the highest moral standards, and education was widely spread." Franklin, visiting England and seeing all the terrible poverty there was asked by authorities in England how this could all be so, how could he explain the remarkable prosperity of the Colonies. Franklin replied: "That is simple. In the colonies, we issue our own paper money. It is called 'Colonial Script'. We issue it in proper proportion to make the goods pass easily from the producers to the consumers. In this manner, creating ourselves our own paper money, we control its purchasing power and we have no interest to pay to no one." (For a complete understanding of how this is possible and highly desirable see the following chapter on Usury.) The English bankers immediately took the necessary steps to have the British Parliament pass a law that prohibited the colonies from using their 'Script' money, and then ordered them to use only the Gold and Silver money that was provided in insufficient quantity by the English bankers. Then began in America the plague of debt-money. The first law was passed in 1751, and then completed by a more restrictive law in 1763. Franklin reported that one year after the implementation of this prohibition on Colonial Money, the streets of the colonies were filled with unemployed and beggars, just like in England, because there was not enough money to pay for the goods and work. The circulating medium of exchange had been reduced by half enabling England’s controlling class to bring the colonies back down to their level. Franklin said that this was the original cause of the American Revolution, not the tax on tea nor the Stamp Act, as it has been taught in history books. The bankers seem to have managed to have removed this from the schoolbooks, hidden it all from prying eyes. I quote these Americans to give them to the world; freedom fighters they were trying to initiate a new world system. Though they failed to control the forces of greed and selfishness their words belong now to the world and to those who are and will challenge the order that has brought the world to its current situation. It used to be that people used their religions to escape from their problems and that is perhaps why Marx said that religion is the opiate of the masses. But today we can see that borrowing is the popular and current method of the more wealthy peoples of earth to hide and escape from their problems. There are times when it makes sense to borrow money and there are times when it offers nothing more than a fix that heroin would. It is all too easy to get addicted to borrowed money. America has become a nation of 'debt-junkies,' living beyond their means and like drug junkies; they require larger and larger doses. We have recently seen the US Federal Reserve Board bringing the cost of borrowing money way down making it more tempting to borrow more money in the hopes of again saving the American economy through more debt formation. I do not think there is any doubt that if they had not done this the American economy would already hit the wall and gone into some kind of financial disaster. But Americans realized a boom in car and other big-ticket item sales as well as a booming housing market through historically low mortgage rates. But there is a point of no return, a point when the dose kills. As anyone who has had money freely passed in front of their noses, as millions have been with credit card companies these last two decades, or as third world leaders were when the banks came offering, its really hard to turn down ‘free’ money, no matter what the attached interest rates are. The heroin addict is no different, take the fix now and worry about tomorrow later. In the world of today tomorrow has arrived and the consequences have piled up to the moon which is only about 250,000 miles away. Pluto is only about 4 billion miles away. With an approximate total aggregate world debt of over 40 trillion there are probably not enough trees to cut to supply paper to print that much money on. We have traveled to such stupendous heights quickly, the real question becomes, is it possible to manage the fall? Or do we have to go into crisis and anarchy that has been seen recently in Argentina. So far, the strategy seems to have been to throw more and more money at the problem in the hope that it will go away—perhaps with the recognition that what is a lot of money for a country like Uruguay or Argentina, and now Brazil (which really needs about 100 billion to navigate through its present difficulties) is still a lot of money even for the international community. Debt induced economic implosions are unavoidable when debt gets out of hand. Many in the third world have experience on how the debt is killing the health of their society and their economies. Most know that IMF bailouts provide a brief respite for international investors but they are, even from the perspective of the wealthy, a short-term solution at best. Not only are bailouts a public-relations disaster, they leave countries with more debt and fewer options. The current crisis in Argentina testifies to the fact that the globalizers are fresh out of ideas on how to resolve this mess. There is simply no policy or set of policies that would allow Argentina to make payments on a $132-billion foreign debt, maintain enough dollar reserves to satisfy investors as to the stability of its pesos, and promote sufficient internal growth and stability to make business viable. World debt crisis must be accompanied
by Countries in the developing world repeatedly ask why, when the United States faces a downturn, does it argue for expansionary fiscal and monetary policy, and yet when they face a downturn, just the opposite is insisted upon. And Americans wonder why they are not loved in the world, and why some seek to knock them off their high horse. The Americans have great power imbedded in their institutions like the Federal Bank Reserve. If you think they are ignorant of and not in fear of the fact that any deep recession is life threatening to the American system, think again. Numbers are numbers, and they change very quickly when you get into the trillions. The interest on 30 trillion at only five percent is still 1.5 trillion per year. That’s a lot of money even for Bill Gates. America has been able to maintain a high standard of living at home by dipping into the planet's savings. Its allies could not question American policy without destabilizing the institutional fabric and the cold-war security system from which they derived many benefits. The burgeoning US deficit was funded for decades by Japan and Europe but now those areas of the world are having their own problems and their resolution, especially Japan’s present attempt to clean its banking system of that 400 billion in bad debt, has steep implications for the US. Though it is doubtful that the Japanese will find the political courage, such adjustment if they come will go against many American financial interests. Debt is tearing down schools, clinics
and hospitals It is known by the professionals in the field that the IMF has no future if it does not speak out forcefully about debt vulnerabilities when they are on the rise, and even more so if it cannot make debt sustainability a core condition for IMF financial assistance. Yet the IMF does not do these things for at the center, in Washington, New York, London, and other such places, debt vulnerabilities are routinely ignored on consumer, corporate, state and federal levels as a matter of principle and habit. The blind spot created at the center manifests out to the frontiers of the third world and the assumed position is always keep things going, keep things growing, always needing more and more for behind is a threat, and enormous one. Yet the first world does not want to see that they have actually been sucking the third world dry, importing both its resources and repressing their social and economic systems through financial slavery to improper debt formation on levels impossible to service. Forbidding foreign debt must be a
preliminary Inequalities in world trade impoverish naturally wealthy nations and regions of the world. The basic mindsets and beliefs of the wealthy west have been and are imposed on the rest of the world to protect and justify their laying claim to impoverished nation's wealth. J.W. Smith of the Institute for Economic Democracy said, “Wealth and power are based on inequalities of both external and internal trade, the rules of which have been fine-tuned for centuries. For the powerful to permit the establishment of equality in trades would be to immediately lose their massive accumulations of unearned wealth and their power.” Wars are politics by violent means. The fundamentals aren't all that great today as shock waves and doubts about corporate governance are hitting the bow of sensitive markets, undermining the basic trust that is essential for capitalistic and market economies to function properly. Economics in general are a reflection of the collective activity and interaction of human beings; it’s an aggregate of the oneness of it all. The long-range health and durability of any economic system is related to the quality of these activities and interactions, to the very fundamentals of life. From spiritual to political and ecological, eventually it all comes back to us in terms of economics that measures and mirrors human activity. Islamic terrorism is a little more
understandable
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