Archive for the ‘World News’ Category

Global Research
Patrick Martin
October 13, 2010

In its main editorial Sunday, the New York Times, the major voice of what passes for liberalism in America, openly defends the right of the US government to assassinate anyone it pleases. The only restriction the Times suggests is that the president should be required to have his selection of murder victims rubber-stamped by a secret court like the one that now approves 99.99 percent of all electronic eavesdropping requests.

The apologia for killing begins with a blatant lie about the US assassination program using missiles fired from CIA-operated drone aircraft flying along the Afghanistan-Pakistan border. The Times claims, citing official US government sources: “The drone program has been effective, killing more than 400 Al Qaeda militants this year alone, according to American officials, but fewer than 10 noncombatants.”

Actually, Pakistani government officials estimated the number of civilians killed by drone attacks in 2009 alone at more than 700, with an even higher figure this year, as the Obama administration has rained missiles and bombs on the Afghanistan-Pakistan border region.(See “US drone missiles slaughtered 700 Pakistani civilians in 2009” .)

A report in the Pakistani newspaper Dawn concluded, “For each Al-Qaeda and Taliban terrorist killed by US drones, 140 innocent Pakistanis also had to die. Over 90 per cent of those killed in the deadly missile strikes were civilians, claim authorities.”

The Times editors cannot be unaware of these well-established figures, since their own journalists have reported a civilian death toll from US missile strikes in Pakistan of some 500 by April 2009, and 100 to 500 more through April 2010. They lie shamelessly and deliberately in order to conceal the significance of their endorsement of such widespread killing.

The editorial claims that US drone missile attacks are legal under international law as self-defense, but this is flatly rejected by human rights groups and legal experts, except those who work as paid apologists for the CIA and Pentagon. The United States is not at war with Afghanistan, Pakistan, Yemen or Somalia, but US missiles have struck the territory of all these countries and annihilated their citizens.

In a 29-page report to the United Nations Human Rights Council in June, the UN Special Rapporteur on extrajudicial executions, Philip Alston, rejected the doctrine of “preemptive self-defense” employed by the Bush and Obama administrations, as well as the state of Israel, and declared that a targeted killing outside actual warfare “is almost never likely to be legal.”

In an accompanying statement, Alston pointed out the consequences if such a doctrine were to become universal. He declared: “If invoked by other states, in pursuit of those they deem to be terrorists and to have attacked them, it would cause chaos.”

The Times concedes, “it is not within the power of a commander in chief to simply declare anyone anywhere a combatant and kill them, without the slightest advance independent oversight.” The editorial argues that such arbitrary killings can be prevented through procedural safeguards of a purely cosmetic character.

These would include the Obama administration making public “its standards for putting people on terrorist or assassination lists,” limiting targets to “only people who are actively planning or participating in terror, or who are leaders of Al Qaeda or the Taliban”; capturing instead of killing, where possible; and “oversight outside the administration,” i.e., the aforementioned judicial review by a body like the Foreign Intelligence Surveillance Court. Yes, if only the Nazis had followed “proper procedures.”

In the mealymouthed language that has become typical of the Times as it provides “liberal” justifications for the crimes of US imperialism, the editors insist that in the case of US citizens, “the government needs to employ some due process before depriving someone of life,” adding that, “If practical, the United States should get permission from a foreign government before carrying out an attack on its soil.”

The Times editorial admits that in the much-publicized case of Anwar al-Awlaki, the US-born Muslim cleric now living in Yemen, the Obama administration has acted in a manner diametrically opposed to the procedure the newspaper claims to favor. Awlaki has been targeted for assassination, based on criteria that are secret and unreviewable. The Justice Department has gone to court to assert the “state secrets” privilege to quash a lawsuit brought by the American Civil Liberties Union, on behalf of Awlaki’s father, seeking to compel the government to justify or rescind its death sentence.

No evidence has been presented that Awlaki, a longtime publicist for Islamic fundamentalism, has engaged in actual terrorist actions. And as the Timesitself admits, “If the United States starts killing every Islamic radical who has called for jihad, there will be no end to the violence.” But the editors are nonetheless willing to place their confidence in the Obama administration, even to the point of giving it powers of life and death over citizens of the US and other countries alike.

The Times editorial reeks of cynicism. It advances arguments that convince no one, and are not intended to convince, only to provide a screen of words for a policy of imperialist barbarism and reaction. It is one more demonstration that, within the US financial aristocracy, there is no constituency whatsoever for the defense of democratic rights.

The open reactionaries like the Wall Street Journal and Fox News display their bloodlust unashamedly. The “liberals” like the Times prefer a dose of hypocritical moralizing and legalistic quibbling. The consequences for humanity are the same.


The Daily Bell
Staff Report
October 06, 2010

D. Strauss-Kahn

Germany Opposed To Unconditional IMF Safety Nets … Germany is opposed to the setting up of ‘global financial safety nets’ under the aegis of the International Monetary Fund, a Deutsche Bundesbank official said Tuesday. The official told journalists that the mechanisms proposed by the G-20 group of nations, would create moral hazard by obliging countries to provide unlimited liquidity without conditions in times of financial stress. The comments come as the German delegation prepares to fly to Washington DC for the autumn meetings of the IMF and World Bank … The IMF’s willingness to provide loans under the PCL to countries which, in its own words, “may not meet the FCL’s high qualification limits” appears to have raised hackles at the Bundesbank, which has consistently opposed any dilution of the IMF’s principles of only lending against strict commitments to sustainable fiscal and monetary policy. The initiative to expand such “safety nets” is part of the G-20’s efforts to make the international financial system more stable. It has been promoted by South Korea and has received some limited support from France and U.K. –

Dominant Social Theme: The world needs a central bank and the IMF is ready to be one.

Free-Market Analysis: As we have written plenty of times before, it’s startling to see how fast theAnglo-American power elite is willing to move now toward a more specific and comprehensive global governance. When we read this article, even just the beginning, it was obvious to us what was going on. And then we came to this sentence: “It means a de facto obligation to provide unlimited liquidity in euros…but the IMF is not a central bank for the world.” Exactly. Is there a sub dominant social theme in the article. Perhaps so: “Pushback will continue but the IMF’s expanded role is inevitable.

Indeed, the IMF is being cast in some places as an inevitable precursor to a world central bank. It need only graduate from SDRs to bancors and then expand its monetary authority. Of course we’ve covered this evolution in the past, but we didn’t take it very seriously. The world moves slowly and is a complex place. But as we’ve seen (and commented on) over the past year, the Anglo-American elite seems to have shed any inhibitions about moving slowly or deliberately toward global governance goals.

It is in a race of some sort, though who or what it is running from or towards is not clear. But in picking up the pace in a kind of mad dash toward some unseen finish line, it is abandoning at least a century of deliberate, promotional construction designed to bring Western citizens in line with its goals. We’ve written we have no explanation. Let’s say for argument’s sake there are 6,000 in the ranks of the Anglo American familial elite. That still leaves six billion people that one needs to “bring along” presumably. But convincing people seems about the last thing on the mind of elite these days so far as we can tell. In aggregate, it gallops madly forward, careening out of control, oblivious to obstacles, increasingly leaving a trail of ruin behind.

The bluntest and most alarming presentation we’ve read recently regarding the IMF comes from Germany’s powerful Spiegel magazine. This is ironic, given that the Germans, as we can see from our initial article excerpt above, are the lone power standing up to the IMF’s efforts to remake itself (with fairly blinding speed) into a global central bank. But it is this article we will spend the rest of our time analyzing. It deserves all of our attention – and yours, though trying to describe this article leaves one almost without words. It is so fulsome, so slavishly admiring, so … craven in its intention to please the powers-that-be that it is a truly remarkable example of a certain kind of journalism. It is available in its entirety (translated) online and we would urge anyone to read it. Here is how it begins:

Three years ago, the International Monetary Fund was irrelevant, an object of derision for all opponents of globalization. Under director Dominique Strauss-Kahn (above left) and as a result of the global economic crisis, the IMF has since become more influential — governing like a global financial authority. It is also putting Europe under pressure to reform.

The building that houses the headquarters of the global economy is a heavily guarded, 12-story beige structure in downtown Washington with a large glass atrium and water bubbling in fountains. The flags of the 187 member states are lined up in tight formation.

Visitors walking into the office building find the cafeteria on the right, where many meetings are held. There, experts in their shirtsleeves, their jackets draped over the backs of chairs, drink lattes out of paper cups and talk countries into crises or upturns. A little farther down the hallway is the Terrace, the IMF building’s upscale restaurant where the director receives official guests.

On a Tuesday afternoon in late September, as the first leaves are falling from trees outside, the director, wearing a blue suit and a blue tie, is sitting on a blue couch high up in his office at the headquarters of the International Monetary Fund (IMF), outlining his idea of a new world. Some of it already exists, in the form of a new world order established in September 2008 to replace the one that was collapsing at the time. The result wasn’t half bad — but it is robust?

There is nothing halfhearted in this voluminous portrait of Dominique Strauss-Kahn and the reinvention of the IMF. In the first four paragraphs descriptions like “global financial authority” and “new world order” and “new world” are strewn about with all the subtlety of an IMF bailout itself. The very next paragraphs read as follows:

‘The Money Is The Medicine’ … These are important times for humanity. The crisis has forced everyone to see many things from a new perspective. Now the IMF is preparing for its annual meeting on Oct. 8. Can it live up to expectations, and can it police the new global economic order and keep global banks in check? “You have to imagine the IMF as a doctor,” says Dominique Strauss-Kahn, the 61-year-old director of the International Monetary Fund. “The money is the medicine. But the countries — the patients — have to change their habits if they want to recover. It doesn’t work any other way.” He smiles benevolently as he says these things, his eyes disappearing behind small cushions of wrinkled skin.

Money is not medicine of course. The IMF, with its history of reducing middle classes around the world to ruin, is nothing like a doctor. After reading it, if one still believes in such a thing as freedom in the world, one wants to take a long bath. There is a brutal deliberateness about the language (assuming the translation is accurate), which must be calculated. From the next paragraphs:

The IMF, says Strauss-Kahn, warned the world about the collapse and about the American real estate bubble and its consequences, but “politicians don’t want to hear bad news.” And when the crisis arrived in the fall of 2008, as predicted, it took the old world — Europe, which always takes six months to make a decision — too long to react. That was the time when the world was laying the foundation for a new order.

The New World Order … There are two telephones to Strauss-Kahn’s left and two to his right. The room has high ceilings, beige carpet and white curtains. An old clock and books about Mexican painting stand on the bookshelf. The IMF’s director is sometimes referred to as DSK, which makes Strauss-Kahn sound like a three-letter brand like IMF or USA, and yet he speaks English with a soft French accent. DSK leans back in his chair, weighing his words, glancing at the audio recorder and smiling. The new world order? Well, let’s talk about it, he says.

There is no hesitancy here. If there was ever a literary coming-out party for elite intentions to create a one-world financial structure, it would seem to us to be this article. One hardly needs to read between the lines. Skimming from paragraph to paragraph is like being stabbed between the eyes. …

Countries like China and India are becoming important, countries with rising markets that have long been stable and are clearly powerful. Whenever he is in China or other parts of Asia, says Strauss-Kahn, the leaders there tell him that they have written off Europe for now. “They say they want a strong Europe, but there is always one part of the world that is lagging behind. They say that in the past it was them, and now it is Europe. It’s a shame, but the world can live without Europe.”

The new world could be a frightening place. The IMF director says: “The Europeans still believe they are the center of the world, but in reality this is not clear any longer. Currently, the question is whether Europe will remain a participant in a game with many players — that is not necessarily a given.”

The Rise of the G-20 … The United Nations will probably become less important; the organization is far too slow-moving and sluggish. And, if one understands DSK correctly on this point, the importance of the United States — that egomaniacal country which is incapable of action — will also decline. Of course, Strauss-Kahn would never speak in such terms, but he does point out that it was the United States that reacted to the 2008 crisis, not with a long-term view, but bank by bank. “They tried to solve Bear Stearns first, and then Fannie and Freddie, and really believed that each hurdle was the last one,” he says.

What will become important, however, is the G-20, that coalition of the strongest economies, the center of power in a new world. The G-20 gave the IMF $850 billion (€620 billion) and the mission to solve the crisis. What followed, says, Strauss-Kahn, was “the biggest global coordination ever.”

Does this mean that the IMF became the first post-crisis world government? … Strauss-Kahn stretches when he hears the question, and pauses for 20 seconds before responding. He is an elegant man, a white-haired Parisian with three deep furrows in his brow, who smiles slyly and flirtatiously. He is a ladies’ man, not particularly tall and even a little stooped.

Solving Global Problems … Sitting in his cool office, a room that smells of fresh flowers, he says: “No, no, the government has to consist of elected people, and that’s more like the G-20. But the reality is the G20 – or any other grouping – doesn’t operate like a government. Their willingness to work together was very strong during the crisis, but frankly I think it’s fair to say that it’s decreasing. The more leaders and finance ministers believe that the crisis is over – even if they are mistaken – the more they are concerned about their own problems and less so about coordination and consensus.”

In Strauss-Kahn’s view, the IMF should become an administrative unit of sorts for the G-20, an agency that “tries to find solutions for global and national problems,” and comes up with plans and create values. “In the end we aim at much more than just the right financial and economic policies. The ultimate goal, of course, is world peace through economic stability.” This is the way Strauss-Kahn views his organization, and the astonishing thing is that hardly anyone, with the exception of a lone professor in Boston, disagrees with him anymore.

All right. We’ll stop. What have we learned from the beginning of this truly remarkable article? (We hesitate to call it an article, for it’s more of an encomium a kind of ritualized praise-offering of the sort troubadours used to prepare for royalty.)

First … Europe is too slow and fragmented currently to compete in a world of dashing powers like India and China. Second … same thing with the United Nations, according to Strauss-Kahn (and the IMF is an arm of the UN). The United States itself, divided between its republican past and its authoritarian future has also given offense and is characterized as “egomaniacal.” Third … the legislative body of choice, this article seems to indicate, is going to be the G20, and the IMF will seek validation and credibility from it (along with funds) before proceeding on its mission which is to become the G20s “administrative unit.”

Reading this article, it is possible to visualize the Anglo-American elite as straining ponderously to take flight. It is attempting to shed in one convulsive effort, the painstaking paraphernalia with which it has encumbered itself in the past. The days of patiently building world government through the EU or the UN are OVER. The decision has been made. The G20 is now the vehicle of choice and the IMF will interpret its G20 mandate as it wishes to under the auspices of the kindly Strauss-Kahn who wants nothing more than to build “peace through economic stability.”

It is truly remarkable. Reading it (and it is a very long article) is like watching a beautifully crafted knife being withdrawn from its sheath with agonizing slowness and deliberateness. When you are finished, the knife is revealed to you in its all its gleaming fullness. It lies there in front of you, winking with malevolence. A little more:

Sitting in his office, surrounded by the scent of flowers, Strauss-Kahn prefers to talk about Europe’s sad future. “The European institutions,” he says, “were absolutely necessary and very useful for many reasons, but only in quiet times. … The crisis exposed very clearly the way the EU is working. There is, in my view, too much concern about domestic safeguarding and domestic problems rather than concern about the EU itself.

The result of that is that the recovery in Europe is lagging behind while the recovery in Asia, South America, the US and Africa is rather strong. I’m afraid that if the European countries don’t take the bull by the horns, they will be the part of the world with sluggish recovery. After building the Union and creating the euro, the European Union now needs to take a third step, which is more economic policy coordination and more fiscal policy integration, and so more centralization. But the system moves very slowly.”

He reaches toward the table, but there isn’t any water there. Everyone at the IMF drinks too little water and too much coffee. … Then he says: “You can’t have a monetary union without a reasonably coordinated fiscal policy. And you cannot make it work when neighbors make deals: If you’re nice to me, I’ll be nice to you — just as France and Germany did when they exceeded the 3 percent deficit limit. Europe needs rules, surveillance and sanctions. Sanctions should not be the suspension of voting rights. Who cares about voting rights? They have to be financial sanctions — payable not during a crisis, of course, but a few years later.”

In the end, DSK raves about China, Asia, dynamism and speed.

We bet Strauss-Kahn raves about China. There’s a country for you, only about half a century out from starving 50 million of its citizens deliberately. For Strauss-Kahn of course the efficiency of authoritarianism is far preferable to the tattered republicanism of the “egomaniacal” United States. But the real threats in this article are reserved for Europe, which he says over and over in various ways must become more “integrated” and “centralized” so that the system does not move so “slowly.”

Here’s how the authors describe how the article came about: “SPIEGEL’s journey of discovery into the world of the IMF lasted 10 weeks. It began in Washington, and then led to Hungary, Greece, Oslo, Brussels, Boston, New York City and back to Washington, where the Fund is headquartered, on the corner of H Street and Pennsylvania Avenue. In the beginning, the IMF didn’t even bother to refuse interview requests. The organization doesn’t simply open itself up to visitors; it has been criticized too much in the past. Then, Strauss-Kahn decided to open the doors, and from that point on there were no more barriers or taboos. The only rule was that most interviews were to be conducted off the record, and quotes had to be submitted for authorization.”

In normal Western journalism, as we are aware of it, no one submits quotes for “authorization” let alone a media complex as authoritative as Spiegel. You fact check quotes (it’s done all the time) but you don’t read them back verbatim. And you certainly don’t “submit them.” That’s just another part of the oddity of this article from our perspective. All we can think of is that, having decided to go through with it, the IMF, Strauss-Kahn and his shadowy elite handlers decided to make a full blown statement of intent.

Conclusion: Whether the article is a kind of emphatic trial balloon or a full-on proclamation of where the world is now headed – and at breakneck speed – time will tell. But what an article it is! And from our point of view a most disturbing one.

Campaign For Liberty
Lew Rockwell
August 6, 2010

You surely didn’t think that the governing elites would let this economic crisis pass without pushing some cockamamie scheme for control. Well, here is the cloud no bigger than a man’s hand, a revival of a 60-year-old idea of a global paper currency to fix what ails us.

The IMF study that calls for this is by Reza Moghadam of the Strategy, Policy, and Review Department, “in collaboration with the Finance, Legal, Monetary and Capital Markets, Research and Statistics Departments, and consultation with the Area Departments.” In other words, this paper shouldn’t be ignored.

It’s a long-term plan, but the plan has the unmistakable stamp of Keynes: “A global currency, bancor, issued by a global central bank would be designed as a stable store of value that is not tied exclusively to the conditions of any particular economy…. The global central bank could serve as a lender of last resort, providing needed systemic liquidity in the event of adverse shocks and more automatically than at present.”

The term bancor comes from Keynes directly. He proposed this idea following World War II, but it was rejected mostly for nationalistic reasons. Instead we got a monetary system based on the dollar, which was in turn tied to gold. In other words, we got a phony gold standard that was destined to collapse as gold reserve imbalances became unsustainable, as they did by the late 1960s. What replaced it is our global paper money system of floating exchange rates.

But the elites never give in, never give up. The proposal for a global currency and global central bank is again making the rounds. What problem is being addressed? What is so desperately wrong with the world that the IMF is floating the idea of a world currency? In a word, the problem is hoarding. The IMF is really annoyed that “in recent years, international reserve accumulation has accelerated rapidly, reaching 13 percent of global GDP in 2009 — a threefold increase over ten years.”

You see, monetary policy isn’t supposed to work this way. In their ideal world, the central bank releases reserves and these reserves are lent out, leading to a boom in consumption and investment and thereby global happiness forever (never mind the hyperinflation that goes along with it). But there is a problem. The current system is nationally based and so the economic conditions of one country turn out to have an influence on the borrowing and lending markets. Without borrowers and lenders, the money gets stuck in the system.

This is a short history of the last two years. By now, if the Fed had its way, we would be awash in money. Instead the reserves are stuck in the banking system. It’s like the whole of the population of the United States has suddenly been consumed by the moral advice: neither a borrower nor a lender be.

And why? Well, there are two reasons. Borrowers are just a bit nervous right now about the long term. They are watching balance sheets day by day, consumed with a weird sense of reality that had gone out the window during the boom times. Meanwhile, the bankers are just a bit risk averse, happier to keep the reserves in the vault than toss them to the winds of fate. They have the bank examiners breathing down their necks right now, and lending doesn’t pay well, not with interest rates being suppressed down to the zero level.

Under these conditions, yes, hoarding seems like a pretty good idea. What’s more, we should be very grateful indeed for this retrenchment. The idea of plunging back into another bubble seems rather shortsighted.

The IMF has a problem with this practice, though it doesn’t dwell on it. The problem is that this practice of maintaining high reserves is putting a damper on consumption and investment, prolonging the recession. The simple-minded solution coming from the high-minded eggheads at the IMF is to find some system, any system, that would push the money from the vaults into the hands of the spending public.

The rationale for the global currency and global central bank is that the reserves could always find a market in a globalized system, and would not therefore be so tied to the exigencies of a nationally based banking and monetary system.

An academic paper can wax eloquent for hundreds of pages about the advantages of a global system. It will lead to more stability, efficiency, and less politicization of money and credit. And truly, there is a point here: a real gold standard is always tending towards a global currency system. Different national currencies are merely different names for the same thing.

But there is a key difference. Under a gold standard, the physical metal is the limit and the market is the master. Under a global paper system, the paper provides no limit whatsoever and the politicians are the masters. So there is no sense of talking about the glories of globalization in the current context. A world paper currency and world central bank would heighten the moral hazard and lead to a global inflationary regime such as we’ve never seen. There would be no escape from political control at that point.

Every proposal of a drastic solution such as this always comes with a warning of some equally drastic consequence of failing to adopt the proposal. In this case, the IMF actually raises questions about the survivability of the dollar itself. “There has been a long-running debate speculating on whether the dollar could collapse,” says the paper. It raises the worry that if a run on the dollar materializes, central banks could attempt to race each other to dump it permanently.

But, the paper points out, many people wonder whether “good alternatives to the dollar exist.” And for this reason, it might be a good idea to cobble together such an alternative sooner rather than later.

There is probably more truth in that statement than most people want to grant. But the right alternative is not yet another and more global experiment in paper money inflation. God forbid. If we want an alternative to the dollar, there is one that could appear before our eyes if only we would let it happen. Private currencies traders the world over could, on their own, give rise to a new currency rooted in gold and traded by means of digital media. On many occasions over the last 20 years, such a system nearly came to be. But guess what? The government cracked down and stopped it. The governing elites have decided that there will be no currency reform unless it comes from the marble palaces of the monetary elites.

July 18, 2010


U.S. Treasury Secretary Timothy Geithner arrives to
testify about the U.S. economic policy towards China
during a hearing of the Senate Finance Committee on
Capitol Hill in Washington June 10, 2010.

(Reuters) – China should cut its holdings of U.S. Treasury securities when market demand is strong, a prominent economist said in remarks published on Monday.

Beijing reduced its Treasury holdings in May by $32.5 billion to $867.7 billion, but it actually bought a net $3 billion in long-term Treasuries and remained the largest single holder of U.S. government debt, the Treasury reported on Friday.

Yu Yongding, a former academic adviser to the central bank and now a professor with the Chinese Academy of Social Sciences, said Beijing should invest in assets denominated in other currencies as well as other financial instruments and real goods.

“Although assets in other currencies and forms are not an ideal replacement for U.S. Treasury bonds, diversification should be a basic principle,” Yu wrote in the China Securities Journal.

“When demand for U.S. Treasury securities is strong, it’s a rare opportunity for us to gradually pull back. That way, it will not have a big impact on prices and China will not suffer too much,” he said.

Zhang Monan, a researcher with the State Information Center, a think tank under the powerful National Development and Reform Commission, told the paper that China should invest more of its $2.5 trillion of foreign exchange reserves, the world’s largest stockpile, in hard assets such as gold.

The Dollar Vigilante
Jeff Berwick

“Bond Vigilante” – Definition: “A bond vigilante is a bond market investor who protests monetary or fiscal policies they consider inflationary by selling bonds, thus increasing yields.” – Wikipedia

“Dollar Vigilante” – New Term: ”A dollar vigilante is a free market individual who protests the government monopoly on money and financial policies such as fractional reserve banking and un-backed fiat currencies by selling those same fiat currencies in favor of other assets, often including gold and precious metals.”

Many people today don’t even realize it because anyone alive today has always lived under an artificial, non-free market financial system. No one even questions the fact that every country has a “central bank” and that every country outlaws any use of currency except for the one it produces.

But, in essence, this highly manipulated, centrally planned/communist system of world finance really began with the creation of America’s third central bank (the first two had previously collapsed or were outlawed) called The Federal Reserve on December 23, 1913. To this day many don’t realize it but the Federal Reserve is not a part of the American government. It is a privately owned, secretive banking cartel. We should note, however, that whether it is publicly or privately owned isn’t the crux of the problem. The problem is that ALL attempts to centralize banking are non-free market and will always result in a steady corruption of the system until it finally reaches collapse.

Louis McFadden, Chairman of the House Banking and Currency Committee in the 1930s stated, “Some people think that the Federal Reserve Banks are United States Government institutions. They are private monopolies which prey upon the people of these United States for the benefit of themselves and their foreign customers; foreign and domestic speculators and swindlers; and rich and predatory money lenders.”

In fact, the President of the US at the time of enactment of the Federal Reserve, Woodrow Wilson stated the following in regard to the Federal Reserve being created under his watch, “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.”

The scourge of a central bank was well known even in the days of the creation of the United States as Thomas Jefferson opined, “The central bank is an institution of the most deadly hostility existing against the principles and form of our Constitution. I am an enemy to all banks discounting bills or notes for anything but coin. If the American people allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.”

And, guess what Mr. Jefferson, the people of the US are now waking up to realize your prophecy has come true. For the first time in US history banks own a greater share of residential housing net worth in the United States than all individual Americans put together!

However, because America used to be such a bastion of free markets and even today still is partially-free it quickly became the most powerful and wealthy country in the world DESPITE having the Federal Reserve at the heart of their financial system.

That is, until August 15, 1971, when the issuing of debt money by the Federal Reserve had effectively bankrupted the US and then President Nixon was forced to announce that even foreign governments and central banks could no longer redeem their US dollars for gold.

And that was the beginning of the end and is, in fact, the reason why we are on the verge of a complete global financial implosion. What was started in 1913 with the creation of the Federal Reserve and the income tax managed to hobble along until it finally collapsed in 1971 with the end of the Bretton Woods system.

With that collapse, in 1971, every country in the world went off the gold exchange standard. This meant that all currencies were backed by nothing. Currencies that used to be directly convertible into gold at the request of the holder, at least at the central bank level, were finally just pieces of paper with pictures of famous dead people drawn on them.

Some may say that this system “worked” because it produced all of the amazing advances of the last century. However, it is much more precise to say that the system managed to work for that long precisely because the 20th century was the most amazing century in the history of human evolution and the countless technological advances enabled this fraudulent system to appear to work for a time.

But that time is nearly running out. After four decades of unbacked fiat currencies nearly every country in the world is now so indebted that it isn’t possible to ever pay back their debts. These debts were all enabled by this fiat currency system which enabled governments to print more and more money, which enabled more and more debt over time. As we said above, it appeared to work, until they all reached a point where even the interest payments on the debt will soon overtake the entire budgets of some countries, even including the United States.

The US government itself, in its official 2009 Financial Report ( states, “Absent a change in policy, the interest costs on the growing debt together with spending on major entitlement programs could absorb 92 cents of every dollar of federal revenue in 2019.”

You read that correctly, the US government itself has stated that by 2019 almost EVERY penny collected in taxes will go towards paying ONLY the interest on the debt and spending on the major entitlement programs (Social Security, Medicare etc).

And here is the worst part, this is a prediction by the US government who is always wrong and incessantly understates how bad things will get. It is our prediction, at The Dollar Vigilante (TDV), that the US will reach this state by no later than 2015 – even as soon as 2012. Our reasoning is that the US government predicts that tax revenues will continue to stay at the same level or grow over time. However, we believe that as soon as 2011 the US will be in the midst of such a great depression that tax revenues will basically collapse.

In fact, they are already in collapse. After the first big hit to the US economy in 2008, tax receipts in 2009 plunged. On a year-over-year basis, by the summer of 2009, individual tax receipts were down 22% from 2008 and corporate income taxes imploded by 57%.

The government managed to temporarily stave off complete collapse by creating an array of four-letter bailouts and guarantees tallying up to more than $12 trillion to date! But even this gargantuan printing of money, mostly enacted in 2008 and 2009 have provided next-to-no recovery and we will soon be entering the next stage of collapse – at which point the US government will see its income tax receipts not even meet its interest and entitlement obligations.

All this would be bad enough, but here is where it gets worse. Way worse.

Nearly every other western country in the world is at similar levels of debt and are all rocketing towards outright bankruptcy.

Greece was the first big one but nearly every other country in Europe, the UK, the US and Japan are all right behind them. Just look at this table below from the OECD. It shows debt as a percentage of GDP for various OECD countries. The official debts, the ones in red, are in and of themselves massive and unpayable. Yet total debts (the grey bars) which include unfunded liabilities such as pensions and health care dwarf even the official debts.

june 2010

It is already a foregone conclusion that Greece is insolvent yet the US itself is nearly in the same financial situation. As are the rest of the countries listed. And countless others, not even bothering to comment on individual states in the US like California and New York, which are also all insolvent.

So now it is just a matter of time and circumstance for each and every one of these countries to do one of the following: A) Declare bankruptcy and have their currency collapse or B) Hyperinflate their money supply so that all past debts become worth very little in today’s money – also something that will destroy their currency.

Some think this may occur over a decade or two. Here, at TDV, we think this will happen over the next few years.

Which brings us to our purpose and point in writing TDV: to help protect you from the coming world financial collapse with most of your assets in tact because the great majority of people will be wiped out by what is coming.

In coming issues we will go further in depth into what we expect to occur but, at the very least, we expect many western countries to enact currency controls which will make it so you will not be able to move your money out of the country. The governments will then do everything they can to stay afloat including cutting most entitlements including pensions which will leave countless elderly people in poverty – look forward to Granny and Grandpa moving back in with you! As well, any savings in banks will likely be taken over by the governments and forced into “buying” government debt. As this happens there will be a complete collapse of the western economies and will be great social unrest, which has already begun in places such as Greece.

There will be many ways to protect yourself – and this will be the main thrust of this newsletter – but time is running out on all of them. Transferring significant portions of your wealth from cash into precious metals is a high priority. As well, diversifying your wealth outside of your home country and the hands of your ravaging government and into a few different regions is also important. It is even highly recommendable to those who live in the countries in the worst financial condition (US, most of Europe, Japan) and who have the capability to prepare to leave your home country and head for some of the countries which may be least affected by the coming strife.

As well, investing into gold mining companies and even learning how to invest in private placements in these companies – something we will discuss in depth regularly here – will create a lot of wealth for those of you who may not yet have the assets or capability to expatriate and diversify your assets.

We will have thoughts, analysis and ideas on all of these strategies on an ongoing basis at TDV.

In closing, almost invariably, when faced with this information, many people respond with either disbelief or a desire to not think about the repercussions because it hurts too much. However, we don’t necessarily see the financial system collapse as being a bad thing. Not many people realize how many lives this system has destroyed and how much wealth and resources it has wasted. It was an artificial system of theft and deceit and was doomed since its inception but once it is gone we will see a time of rebirth for the world.

There will certainly be some interesting times between now and a rebuilding of the world’s financial system and TDV hopes to stay with you through the collapse, chaos and then into the brave new world that will soon be forged.