Findings & Forecasts 10/24/2012
Technocracy and the IMF: New Global Monetary System?
Beware of a new trial balloon being floated by the International Monetary Fund, that is, “The Chicago Plan Revisited.”According to British journalist Ambrose Evans-Pritchard,
The conjuring trick is to replace our system of private bank-created money — roughly 97pc of the money supply — with state-created money. We return to the historical norm, before Charles II placed control of the money supply in private hands with the English Free Coinage Act of 1666.
Specifically, it means an assault on “fractional reserve banking”. If lenders are forced to put up 100pc reserve backing for deposits, they lose the exorbitant privilege of creating money out of thin air.
The nation regains sovereign control over the money supply. There are no more banks runs, and fewer boom-bust credit cycles. [Emphasis added]
At a time when some ivory-tower economists are predicting the end of capitalism, any talk of monetary reform by global banking organizations is worthy of attention, if not alarm. The IMF has been one of the primary engines of globalization, having worked in conjunction with the World Bank and the Bank for International Settlements for decades.The IMF has now dug up the so-called “Chicago Plan” from the University of Chicago dating back to 1936, and is seriously studying it for modern application.
Beware. As Patrick Henry once stated, “I smell a rat.”
First, the University of Chicago was originally created with a grant from John D. Rockefeller in 1890, and has long been an academic vassal of Rockefeller interests. In 1936 during the heat of the Great Depression, leading economists were looking for alternatives to capitalism and monetary theory. Technocracy, for instance, was one attempt to suggest an alternative economic system, during the same time period. Neither Technocracy nor the Chicago Plan were successful at the time.
According to the IMF’s study,
“The decade following the onset of the Great Depression was a time of great intellectual ferment in economics, as the leading thinkers of the time tried to understand the apparent failures of the existing economic system. This intellectual struggle extended to many domains, but arguably the most important was the field of monetary economics, given the key roles of private bank behavior and of central bank policies in triggering and prolonging the crisis.
“During this time a large number of leading U.S. macroeconomists supported a fundamental proposal for monetary reform that later became known as the Chicago Plan, after its strongest proponent, professor Henry Simons of the University of Chicago. It was also supported, and brilliantly summarized, by Irving Fisher of Yale University, in Fisher (1936). The key feature of this plan was that it called for the separation of the monetary and credit functions of the banking system, first by requiring 100% backing of deposits by government-issued money, and second by ensuring that the financing of new bank credit can only take place through earnings that have been retained in the form of government-issued money, or through the borrowing of existing government-issued money from non-banks, but not through the creation of new deposits, ex nihilo, by banks.” [Emphasis added.]
I have long argued that the Federal Reserve Bank, established in 1913, is a private corporation whose private stockholders were the major banks of that time period. The Fed was a super-lobby that would work directly with government to orchestrate lending and collecting on an orderly basis. At that time, the banks did not “own” the various nations of the world, so they could not summarily dictate public policy.The Fractional Reserve system that currently spans the globe was never intended to be a permanent solution to wealth domination. By definition from the start, the lenders would eventually wind up owning everything (all the resources) in society, and the fractional banking system would become obsolete.
The IMF is suggesting that the day of the Central Bank (the Fed included) may be over, and that the power of currency creation and issuance should instead be given to the state. This would literally pull the rug out from under all the central banks of the world, requiring their untimely disbandment.
But, so what? Corporation’s change strategy all the time. If the central banks are essentially a service provider to their major constituent banks, then they will be useful only as long as they can provide a beneficial service; thereafter, they are discardable.
The original Chicago Plan and the Chicago Plan Revisited make no reference to the economic system of Technocracy (also from the 1930′s) or the use of Energy Credits as currency. However, during the 1930′s and beyond, the University of Chicago has been a hotbed of Technocracy.
For instance, Professor Patricio Silva wrote In the Name of Reason: Technocrats and Politics in Chile that the so-called “Chicago boys” (Chilean economists educated at the University of Chicago) brought Technocracy to Chile where it survived several changes of political power.
The “Chicago Boys” were educated by Milton Friedman and Arnold Harberger as the result of a State Department initiative called the “Chile Project” that was organized in the 1950′s and financially sponsored by the Ford Foundation.
Thus, I will suggest that the IMF’s new plan could be an important and necessary stepping-stone toward tying the issuance of currency to energy policy instead of economic policy.
This link is not trivial. A state that arbitrarily determines the necessary level of currency required to make its economy work must have some form of linkage to a non-political and more stable touchstone. For many years, gold was such a touchstone.
While gold is not in the immediate picture for monetary policy, energy is!
The United Nations has been pushing hard for a new global “Green Economy” that would replace the current “brown economy” based on fossil fuel and over-consumption in developed nations.
“A green economy implies the decoupling of resource use and environmental impacts from economic growth… These investments, both public and private, provide the mechanism for the reconfiguration of businesses, infrastructure and institutions, and for the adoption of sustainable consumption and production processes.” [Emerging policy issues, UNEP, 2010, p. 2] [Emphasis added]
If monetary creation is handed back to the state, the above “decoupling” could easily become a reality. Conversely, as long as the central bank system imposes a fractional reserve system on global monetary policy, it cannot become a reality.Again I say, Beware! The arguments for scrapping the Fed will sound appealing to everyone: no more boom/bust cycles, no more bankster rip-offs, etc. Just remember that the global elite do not exercise influence in order to benefit anyone except themselves.
In this writer’s considered opinion, the next phase of global domination will focus on the direct control of resources, rather than indirect ownership via debt-based money.
Deflation vs. Spending
An economy grows when spending occurs for goods and services. There are three general sources of spending: Personal, business and government.Since I have been talking about credit deflation for several years now, it is worth noting again that the only escape from deflation is spending. When spending caves in, the economy caves in with it.
Since Fed Chairman Ben Bernanke was appointed by George Bush on February 1, 2006, his primary nemesis has been deflation, not inflation. As the credit meltdown progressed, consumer and business spending fled, leaving government spending the only possible source of rescue. This became painfully obvious as lending/borrowing activity did not pick up after interest rates were dropped to almost zero.
Thus, the various stimulus and Quantitative Easing programs were directed to get the government to spend, and hence, we now have a $16 trillion national debt and virtually nothing to show for it. The economy has not recovered, jobs have not returned and global sentiment has radically shifted to a policy of fiscal austerity.
Since 2007, the American consumer has been limping along while slowly descending into the economic abyss. Wages are down, unemployment is higher and banks aren’t lending. People are trying to spin the real estate market uptick as some kind of bottom, but the activity is more like oxygen-starved koi sucking for air in a stagnant pond.
The following excerpt from the October 2012 McAlvany Intelligence Advisor) aptly describes the state of the average consumer:
…consumers are in the worst financial shape they’ve been in since the Great Depression. One recent report showed that credit card balances for the indebted (people who carry a balance each month) have dropped nearly $2,000, from $16,383 in March 2010 to $14,517 in March 2012. This sounds like Americans are finally getting a grip on their finances. Hardly. If you look at credit card debt for all households, the average has only dropped from $7,219 to $6,772.
That’s not the worst news, though. The reason for the decrease is not that Americans are paying off their debt. Tim Chen wrote on Forbes.com (5/30/2012): “The reality of the situation is much grimmer. In 2010, credit card companies wrote off seriously delinquent debts, declaring a huge chunk of money uncollectable. America’s credit card debt dropped. The charge-off rate, which is the percentage of dollars that have been classified uncollectible, jumped to 10.7% – a 300% increase from 2006.
“After losing a gargantuan number of payments, credit card companies began to exercise shrewder discernment in issuing financial products. With credit cards more difficult to obtain, average debt continued to fall.
“So, no. A decrease in credit card debt does not indicate heightened financial literacy, a recovering job market, or smarter spending habits. It means the situation was beyond repair and required an artificial reduction.”
The truth of the matter is that the American consumer is completely tapped out on credit. This was true before the housing crunch, as most homeowners used the equity in their home as a piggy bank to maintain bloated lifestyles. When home prices dropped, they went underwater in a hurry. [Emphasis added]
So, do the math. Consumer spending is not recovering. Government spending will shift due to international and internal demands for austerity. Businesses are already curtailing spending on capital goods and services. Who is left to spend? No one.This is where we stand as of today. On the first of January, however, the employed universe of workers are going to see significantly higher taxes taken from their paychecks, thanks to the sunset of the Bush Tax Cuts of 2001.
A family with a $100,000 income will lose about $3,000, or 3 percent, of their spendable income. Considering how tight budgets are already, that $3,000 loss represents a disproportionate percentage of discretionary spending… and it’s going to be painful to many households.
Thus, the spiral down into deflation continues.
No comments:
Post a Comment