Elaine Meinel Supkis
The present bank collapse can be traced back to 1971 and the day Nixon cut the gold peg for the dollar. And Bretton Woods II which tried an orderly collapse of the dollar in order to protect other currencies during the decline. This collapsed and we got the Floating Currency Regime instead. I prefer to go directly to the past to try to explain all this and how it has caused today's problems. The world's central bankers are so stunned by this mess, some of them are even calling for a return to the gold standard! This is amazing news that the media barely covers. This is because the US cannot return to the gold standard. This is a historic change, the end of the Floating Currency Regime is getting closer.
The move – unveiled simultaneously in the six states to maximise the show of unity – throws the full weight of the eurozone behind global efforts to stem the crisis.
The move gave a tremendous boost to bourses across Europe, lifting the Euro Stoxx index by 9.53pc in the biggest one-day rally ever.
The pan-European plan – totalling over $2 trillion, or £1.17 trillion – completes the third leg of a dramatic restructuring of finance across the Western world. Sovereign states have now absorbed the brunt of the credit risk in half the global economy.
"The greatest risk is inertia," said French President Nicolas Sarkozy, now basking in glory as the man who refused to give up after the first emergency summit of EU leaders ended in discord.
As China parks exactly the same amount Europe is pumping into the system to save the Floating Currency Regime, I figured it is time to revisit this whole business about how the Floating Currency Regime was launched, why it was launched and why it is a total and fatal failure. I happen to be one who believes that the gold standard performs an important function as a barrier to money creation and thus, can stop bubbles if applied correctly. But ONLY if the central bankers can't circumnavigate this barrier by fiat!
For WWI was the first attempt at this. England and France needed loans. France was fearful that Germany would again, reach Paris and maybe even overrun Paris so they moved their gold to the US which they figured, the Germans would never besiege. England kept its gold in London. Both had to go to the US for loans to fight this global war. The Russian Revolution caused chaos in global gold markets, of course.
The US did its first big gold swap in this time: the British got to hold their gold while 'swapping' it for loans via the Federal Reserve in the US. Paris couldn't do this because it was too risky. They had to transfer gold.
Fort Knox was built to hold this gold for the US Treasury while the Federal Reserve set up this deep bank vault in Manhattan to hold foreign gold for free while it was sitting there, being held for either swap deals or to protect it from the Germans.
Back to today's story from Europe: Sovereign states certainly have absorbed ALL of the risk in this global meltdown. The only thing left to deal with is the Derivatives Beast. It has happily munched away at all the rescue money and will probably eat up all the $2 trillion the French and Germans are throwing at this creature created by banking gnomes so they could pretend there was no risk and thus, they could lend with total impunity.
Alas, these rescue operations are NOT seeking a solution to the real problems. They are band aids over a gaping wound bleeding infinite red ink. The talk about infinite rescues using infinite money to restart the infantile buy-up/buy-out lending as well as global real estate inflation is a sign that nothing at all has been learned. The need to understand all aspects of this business is vital for the US since we are the ones sopping up not only most of the global debt production but also we are the ones running deepest in the red on every possible level. For us, this can be fatal. For the world, inevitable: the bankruptcy of the world's biggest empire.
Germany's rescue package totals €500bn, far bigger in per capita terms than America's scheme. The bulk is to guarantee interbank lending, while €100bn is for a stabilisation fund to recapitalise banks and cover losses – with strict pay limits for executives.
"We have placed the first foundation stone of a new financial order," said chancellor Angela Merkel, underlining that nothing would ever be the same again in banking.
She also warned that the US government's "massive support" for the Detroit car industry would create a major headache for Germany's producers, who are already struggling. BMW said yesterday that it would idle plants in Leipzig, Regensburg and Munich as demand fell.
OK: Europe is rescuing not only its own wretched, corrupt banking system but also the US. With one huge proviso: we cannot rescue ourselves! We are specifically supposed to let Detroit die, once and forever. So Germany and France can export their cars to the US! Toyota and Honda agree on this scheme. 0% financing is for THEM, not US!!!! This is what happens when a nation goes bankrupt: the creditors get to dictate terms.
I am warning everyone: the other parties in the IMF are our trade RIVALS. Europe and Asia are our RIVALS. We think of them as allies united in this battle with Islam, Russia, China, whatever. But they are really dire rivals in the darkest of wars: the economic development front as well as banking rivals. The 'New World Order' is when Europe replaces the US as the global ruler. This is the hope of the New Holy Roman Empire, the Fourth Reich.
The internal rivalries between Germany, France, England, Italy and Spain that characterized much of the last 1,000 years of European history are to be contained within the EU confederation and aimed mainly at dominating the planet that Europe brutally controlled via their military power, from 1500 to 1945. The short reign of the US will end with the US the recruiting ground and military arm of the European ruling elites. We will be, as Bush Sr. so happily said on 9/11/1991, 'The New World Order' with the US forces farmed out for a fee to fight for Kuwait, for example.
Italy's finance minister Giulio Tremonti said Rome would provide as much money "as necessary" to stabilise credit markets. Italy's plan includes the injection of up to €40bn in fresh capital into the banks on a "case by case" basis, through preference shares.
The Netherlands is offering a €200bn guarantee; Austria is putting up €100bn, as is Spain – as a "preventive measure". Debts issued before the end of next year will be guaranteed for five years under all the national plans.
Diplomats say the world owes a great deal to France's finance minister, Christine Lagarde. A former chair of the US law firm Baker McKenzie and a friend of US Treasury Secretary Hank Paulson, she has been a bridge between the EU and Washington, helping to end the transatlantic sniping that has damaged market confidence over the past year. The close co-operation is in stark contrast to the catastrophic rift in October 1931, when France set off a wave of US bank defaults by pulling its gold out of New York.
Interesting that an European newspaper mentions the 1931 French move to get its gold out of the US, thus changing the nature of the gold 'swaps' regime and destabilizing the dollar as well as the pound! In Paris, they built a huge bank vault that was totally secret. Then, with no warning, the French took advantage of the US/UK banking crisis to pull out their gold on good terms. This set off a collapse in the reserves held by banks based on this gold residing in the Federal Reserve vaults. This murky story is often glossed over when people talk about past banking failures.
But all banking failures are due to sudden changes in the value of reserves! The stated value of any reserve can cause a sudden failure in ability to lend if the value supporting loans drops below $0. The US has been running below zero for over a year now. And all attempts at fixing the system focuses mainly on creating some sort of reserve that is believable. A hopeless task, of course.
We are at the last stage of this process: US government debt is now the ONLY really solid 'reserve' left as the Federal Reserve sells or rather, gives away, Treasuries in return for useless 'assets' which no banker in their right mind considers to have any realistic future value at this point. But the Treasuries themselves are drawn up against the biggest pool of potential wealth on earth: the accumulated holdings, belongings and future earnings of the American People, themselves!
Germany ended its monetary hyper-inflation collapse very simply: the government declared that all things in Germany were now going to be RENTED TO THE BANKS via fiat. The new currency was called, 'Renten Mark' which was a huge change from 'Reichsmark.' Governments can do this! When Germany finally went bankrupt less than 10 years later, all Germans were bankrupt. This total bankruptcy was dealt with very severely: the rise of Hitler and fascism coupled with the open looting first, of the Jews, then of all of Europe.
Here is a story from last year, it is rather frightful to see how obvious all these things were last year and how little is being acknowledged today:
Alas, the Nobel committee that always gives the economics prizes to the Americans, gave it to Americans but not me. Sigh. But..the G7 European dwarves, led by Grumpy Germany, demanded the dollar go up in value. Depression Japan smirked. Russia is rich and Europe is very grumpy about this. Congress passed draconian war profiteering laws only it won't be enforced since they refuse to impeach Bush and Cheney, leaders of the profiteers. And Japan continues to cut itself away from the crashing American economy all the while, claiming they are depressed as hell which is why they have so much liquidity in the US but are removing it to...the Dragon, China and Russia. Sovereign wealth is liquid, not fozen at all.
[Last year's winners were computer geniuses who set up sophisticated systems to count votes or play money games] I am annoyed with today's prize because ever since these very clever computer whizzes came along, things have gotten much worse thanks to them. Are elections fairer? Do they reflect the will of the people? What is the point of all sorts of clever counting systems if all the democracies are utterly corrupted by money, the use of raw power, ballot box dumping or cutting people off the voting registers, coups, assassinations and international interference? The US election process is hopelessly corrupted at this point.
Then there is finances: using clever number crunching and charts, people can all do the same thing in exploiting WEAKNESSES within all systems. This causes the system with various weak points to bleed red ink or the weak part takes over and throws off the true nature of the intended system turning a system set up to be strong into hollowing it out and destroying the entire aparatus such as the entire banking system or the mortgage system or government bonds systems, etc. By pulling the levers and having computers spit out numbers, clever ghouls and demons can exploit every flaw in every system and then use it to fill their own bank accounts which are, naturally, all offshore at various former British Empire islands which now only swear fealty to Queen Elizabeth II. Well, we could have a Nobel Prize and give it to HER. She is nobility, after all. The Arab money kingdom of the UAE deserve a Nobel Prize, too. They are nobels! And all the tiny European prinipalities that survived WWI and WWII can also get the Nobel Tax Haven Prize. For they are all sitting right at the apex of the world's banking systems! They can write a theory paper about all this: 'How Daddy Got Me Rich By Running Pirate Coves On My Own Properties.'
All of this is causing Europe to revive talk about a Bretton Woods III. And France, a long-time believer in gold, is joining the charge initiated by the head of the British banking system. Both want a return to pre-WWI days. But that being impossible, they are settling for post-WWII regimes. In this, the US was the power that protected European banks and European powers that were utterly bankrupt. They, in turn, used this power to try to cling to their empires. The US was politically fed up with this and at first, via the creation of the UN, encouraged the loosening of imperial bonds.
But then, the Chinese revolution shook the US to its foundation! Fears that the victims of European imperial aggression would all go communist was tremendous. So the US chose to not only fix Europe's finances but preserve the European empires by fighting for them, not against them. This was a historic mistake of huge proportions. It drove the US directly into bankruptcy nearly immediately with the Vietnam War. Fighting 'communists' across the planet was very, very expensive. At first, the US complained about this. As we will see below. First, here is the Wikipedia entry about the second stage of this coup, the 'Nixon Shock' which occurred later that summer:
By the early 1970s, as the Vietnam War accelerated inflation, the United States as a whole began running a trade deficit (for the first time in the twentieth century). The crucial turning point was 1970, which saw U.S. gold coverage deteriorate from 55% to 22%. This, in the view of neoclassical economists, represented the point where holders of the dollar had lost faith in the ability of the U.S. to cut budget and trade deficits.
In 1971 more and more dollars were being printed in Washington, then being pumped overseas, to pay for government expenditure on the military and social programs. In the first six months of 1971, assets for $22 billion fled the U.S. In response, on August 15, 1971, Nixon unilaterally imposed 90-day wage and price controls, a 10% import surcharge, and most importantly "closed the gold window," making the dollar inconvertible to gold directly, except on the open market. Unusually, this decision was made without consulting members of the international monetary system or even his own State Department, and was soon dubbed the "Nixon Shock".
The surcharge was dropped in December 1971 as part of a general revaluation of major currencies, which were henceforth allowed 2.25% devaluations from the agreed exchange rate. But even the more flexible official rates could not be defended against the speculators. By March 1976, all the major currencies were floating—in other words, exchange rates were no longer the principal method used by governments to administer monetary policy.
Trichet Calls for Return to the `Discipline' of Bretton Woods
(Bloomberg) -- European Central Bank President Jean- Claude Trichet said officials reshaping the world's financial system should try to return to the ``discipline'' that governed markets in the decades after World War II.
``Perhaps what we need is to go back to the first Bretton Woods, to go back to discipline,'' Trichet said after giving a speech at the Economic Club of New York yesterday. ``It's absolutely clear that financial markets need discipline: macroeconomic discipline, monetary discipline, market discipline.''
Trichet suggested that slowing growth in the 15-nation euro region may curb inflation, paving the way for more rate cuts after the ECB reduced its benchmark by 50 basis points to 3.75 percent.
He indicated that recent market turmoil was partly a consequence of the deregulation that occurred after Bretton Woods' demise. That was triggered in 1971, when inflation forced the U.S. to abandon the dollar's peg to gold, an anchor of the system, heralding the era of floating exchange rates.
``The explosion of the first Bretton Woods in a way could be interpreted as a rejection of discipline,'' said Trichet.
That bastard! The Bretton Woods I collapse was caused by what? Eh? THE WAR IN VIETNAM AND THE COLD WAR! France, of all people, wants us to be 'disciplined'? Well, we can start by charging Europe maintenance fees for 60 years of free protection. I would set this at around $2 trillion. Sounds fair enough.
I found this video at You Tube that gives us some background in all this: Kennedy and his advisors discussing gold and how to deal with the huge overhead of our military/industrial complex and the attempts at patrolling the entire planet to prevent uprising against European invaders and their puppet regimes.
Rescuing France and England from Germany twice still isn't really covered here. But I will let that business slide for the moment. Here is an article I wrote last summer about the collapse of Bretton Woods I:
As banks see their 'value' vanish, they 'replenish reserves'. This is, as is usual these days, fancy talk that hides reality. What banks are doing is BORROWING MONEY FROM SOMEONE. Who has 'money'? As yesterday's story about Scrooge McDuck tells us in the opening song about the history of money, 'We all want more MONEY!' The cartoon also makes it clear, anything can be 'money'. For 'money' is a human affectation. It is a stand in for 'wealth'. Wealth, as always, is valuable things such as slaves, the ability to tax, harvest surpluses, gold, tools, domesticated animals, weapons, etc. To trade these things and especially to tax all these things, something has to be a stand-in for the accumulated value of these things.
When money was invented to perform this function, the first thing the taxmen discovered was, tax payers and debt payers always want to have more money. And this desire is greatest with the TAXMEN THEMSELVES. They want more money! To buy weapons, to bribe other taxmen in other kingdoms, to build pyramids and palaces. So everyone is united in one regard: they all want more money circulating. All except for one entity: savers. There is a 20% part of the population that is very strongly inclined towards saving money. We recognize these people because they save string, old rubber bands, etc. These people are the ones who make the entire concept of 'banking' possible.
Here is Nixon announcing the end of the gold peg:
This launched the communistic 'Wage/Price Control.' At first, it was to be a strict WAGE freeze. An event that is virtually never, ever mentioned in the news when talking about the history of US finances. I remember it vividly for I was denied a wage hike due to me gaining greater skills and working at a higher level! This was a harsh lesson. I was designated as one of the many people who were being force-fed inflation. The war tax was inflation and after the collapse of the Wage/Price regime meant we could all play catch-up but then the clever government kept income tax rates the same and didn't index to inflation. So if one got a pay raise, it simply shoved us all into higher tax brackets.
This meant, there was no escaping inflation's ravages. Nixon announced this destruction of our banking fundamentals during a long holiday weekend, of course, to stave off opposition. It was a unilateral coup, even more than the recent Goldman Sachs hijacking of our entire economic futures. Goldman Sachs stocks are soaring again, incidentally. They will pocket all the profits from this rescue.
As usual, the New York Times calls all this wrong:
The United States, as the dispatches from Rome indicated yesterday, seems gradually to be moving toward the first formal devaluation of the dollar since 1934.
I remember being infuriated by that headline back then! Not much impact? My parents were overseas when this first big devaluation happened. They suddenly couldn't use dollars in Europe! They had to be bailed out by transferring their currency into Switzerland and opening an account there!
The Fed chief back in 1971 assisted Nixon in this coup. Mr. Burns became our Federal Reserve chair in 1970. Here is his very first speech in Congress:
As a national resource, housing ranks high on both econoihic and social grounds» The construction of new homes and apartments absorbs the efforts of a major industry. The fortunes of this industry influence the course of production and employment in many other branches of the economy.
Even more importantly, the provision of decent housing for all families is among our most pressing needs, as Congress recognized in laying down a decennial goal for the production of new and rehabilitated housing. Besides the volume of housing production, the price and quality of available shelter are of vital significance. Prices of homes and rents have of late been rising rapidly, reflecting not only higher financing costs but also inflated prices of labor, land, and materials. If these costs are not brought under control., the quality of all housing will be bound to suffer.
1 assure you that the Federal Reserve Board is deeply concerned about the recent decline in production of housing and the further rise in costs of buying, financing, and operating new and existing dwellings.
Of course, housing is not the only economic sector in which spending is being restrained by tight credit conditions. As is well known, many State and local government units have had difficulty in selling bonds to finance their capital outlays. Funds for commercial construction have become increasingly hard to come by, and many projects have been delayed because their promoters were unable or unwilling to obtain financing at prevailing terms. Many business firms—small firms in particular--also have been unable to obtain all the credit they desired, especially as the ability of banks to lend has come under increasing constraint.
Even some very large corporations have announced cancellations or stretchouts of capital spending programs, at least partly because of the difficulty and cost of financing* It is the very essence of monetary restraint that many economic units find it difficult or impossible to carry through all of their spending plans. This is the way that total spending is curbed and an overheated economy cooled down to a manageable condition.
The Board is studying ways and means to lighten the burden of monetary restraint on the mortgage market without impairing the use of monetary policy in achieving national economic objectives. There is great need to focuss as we hope many will, on seeking out ways to increase the attractiveness of mortgage instruments to private investors-- to shift the flow of credit towards the housing market, and to lessen the cyclical impact of alternating tight and easy credit conditions on housing production and finance.
The Vietnam war was winding down as the US pretty much gave up all hope of winning it via bombing everyone to death. An iron law of economics is, when a war ends whether it be in victory or defeat, there is a recession. This is due to a fall in government military spending and the return of troops to the normal economy. No matter who is fighting, where, this always happens.
The baby boomers were just beginning to build families and everyone was clamoring for housing loans. And since the boomers were buying, there were more buyers than sellers. So prices went up. This being a capitalist society, supposedly, the banks should lend. But they couldn't lend more and more because of government debts that the government was now paying off rather than accumulating! Treasuries were not pouring into banks anymore. During the Vietnam War, the paper money we got from the banks said that the value was based on Treasury DEBTS. Not gold. No gold certificates have been issued since the collapse of this system in 1933.
But we still had SILVER certificates. They vanished during the Vietnam War.
So Burns had to figure out how to restart the housing markets yet also keep housing prices down. While lending cheap. This was, of course, utterly impossible. When the President, desirous for popularity, demanded the Fed drop interest rates, the Fed complied. Only the banks would not pass on these cheap loans to borrowers. We see that across the globe today. For example, the super-cheap .5% rates of Japan's central bank never ends up funding anything the Japanese workers want or need. So family building has collapsed. Namely, workers have pretty much given up, trying to build families and buy homes for their families. They are dying off, rapidly.
Not how, at the very dawn of our biggest bout of hyper-inflation in 100 years, the Fed and the President both wanted to redirect finances towards housing! This is NOT accidental: our present waves of hyper-inflation are based on the exact same political desire to make house loans much cheaper than they should be if we want a capitalized banking system. While we have wild war spending! The flood of Treasuries are NOT capitalizing our own banking system, by the way.
It just occurred to me, as I read this stuff, that the reason why our banks are grossly undercapitalized is due to the fact that nearly all of our Treasuries now flow overseas. As I showed yesterday in the CIA facts, the US has exported $12 TRILLION in Treasuries and other capitalization base finances! This is amazing and unprecedented. It is equivalent of Britain and France transferring ownership of their gold reserves to the US during WWI.
Here is Burns in another major speech one year later, in 1971, right before the two major Nixon speeches:
My major theme this morning will be the persisting imbalance in our international economic accounts. After considering that, I shall turn to the special problem of short-term capital flows, and conclude by discussing some of the policy actions that need to be taken by us and other countries to deal with these two problems.
Whichever of these concepts we may adopt, the practical conclusion is the same: a stubborn, persistent deficit has characterized our balance of payments. We should not, however, be misled by the staggering magnitude of the balance of payments deficit during the past year and a half. In 1970 the deficit on the official settlements basis reached $10.7 billion before allowing for the special drawing rights (SDRs) allocated to us, and the deficit has continued at an extremely high rate in the first five months of this year.
These recent deficits exceed anything we have hitherto experienced, but they also greatly exaggerate our true underlying condition. Thus, the official settlements deficit over the thirteen years from 1958 to 1970 averaged only slightly more than $2 billion per year. Moreover, the deficit on current account and long- term capital movements, while larger in 1970 than in immediately preceding years, has been for several years in the 2 to 3 billion dollar range. Of late, this underlying imbalance has been overshadowed by extraordinary short-term capital movements, and it is this that has made our balance of payments position appear much worse than it basically was in 1970—just as it made it appear much better than it basically was in 1968 or 1969.
HAHAHA. Literally 5 days before Nixon unilaterally ended the 100 year old gold peg, Burns was assuring everyone that all was well! The reports of the coming demise of the dollar was just mere hysteria. It was only due to some oddball business in international exchanges that was troubling us, no big deal! Nothing to worry about. This is typical of the gang that runs our nation: they are bald-faced liars who then spring their 'solutions' on us in a flash when they yell, 'Forget what I said 5 days ago! Things are in a CRISIS! We got to rush and fix it, fast! Give me all your future earnings! Thanks in advance.'
We saw this in September. They said over and over again, there was nothing wrong with the fundamentals. All was well. The disorders were temporary. Not to worry, dudes! Then, despite many of us online doomsters yelling about these very same things, the mainstream media joined the Bilderberger-based leadership in screaming, 'Its the end of the world! The sky is falling! Give us all your future earnings and let us have draconian powers and we will save you!'
This is why it pays to read musty, old speeches and put them into context with their own time frames as well as today. We learn to be very suspicious of these guys. And rightfully, so!
And look at the numbers! 'The sky isn't falling, just the dollar' business is amusing compared to the astronomical figures for today. The trade deficits back then, for an entire year, were at what ours are per DAY today! This is just astonishing. Back then, at least everyone was worried to death about this. Today, it is nearly totally ignored just like the budget deficits that frightened Burns back then are what we are now misspending PER DAY today! We are in an order of magnitude of worse condition today compared to back then.
And now, once again, helplessly, we watch as rising waves of inflation wash over our land.
As our deficits persisted through the 1960's, however, it became increasingly clear that further large deficits could prove troublesome to us and to other countries. For the counterpart of the persistent deficit has been a gradual erosion of the U.S. international reserve position.
Our reserve assets—which include, besides gold, our reserve claim on the International Monetary Fund, holdings of convertible foreign currencies, and more recently SDRs--declined fairly steadily from a level of about $25 billion in 1957 to less than $14 billion at the time of the gold crisis in the spring of 1968.
Since then our reserve assets at first rose somewhat; but they have fallen back more recently to the previous low point of 1968. In sharp contrast, U.S. liabilities to foreign central banks and governments have increased rather steadily in the postwar period. These claims on U.S. reserve assets grew from an average level of some $4 billion in 1949-51, to about $12 billion in I960. By the end of this April, they amounted to $31-1/2 billion,
While the restoration of general price stability is basic to the correction of our trade position, other measures that can improve our exports deserve consideration. The recent decision of the Administration to remove some of the restrictions on trade with mainland China might be followed up by some liberalization of trade with the Soviet Union. A proposal for establishing domestic international sales corporations, whereby taxes on earnings from exports may be deferred, has been put before the Congress. And so too have some proposals for strengthening the Export-Import Bank, such as providing it with increased program authority to extend loans, guarantees, and insurance. All these measures may prove helpful.
Burns should have thanked me for stopping the flow of funds to France and Germany in the spring of 1968. HAHAHA. I was one busy kid, running around Europe, making speeches and working hard to overthrow governments. I even wanted to do this in East Germany but was arrested and deported. This is how we turn the Wheel of History: even juvenile delinquents of 17 years of age can change the flow of wealth to the entire planet. This, by the way, is what our rulers fear. Bin Laden, another juvenile delinquent who grew up playing this international game of power, figured out how to use the system to turn history's wheel relentlessly and succeeded amazingly.
And don't tell me he hasn't done this. Pretending that our rulers were the ones is a false reading of history! They want STATUS QUO, not revolutions. They hate revolutions. They LOVE coups. Bush allowed Bin Laden to attack us with impunity so he could have a coup. It worked wonderfully. It allowed the rich to loot the US by running up gigantic military bills which we must pay or else.
Burns in 1971:
Second, foreign countries can and should undertake a significantly larger contribution to the defense of the Free World. The United States is not going to cast off its responsibilities for leadership in this area* But the nations of western Europe and Japan, where overseas military expenditures by the United States are ^ery large, now have strong economies and a capacity to contribute significantly more to the financing of the military shield from which they as well as we benefit. A more equitable sharing of the defense burden would require them to do so.
HAHAHA. Back then, the struggling US behemoth was desperate to be saved by 'allies'. These allies would take a light stab at this by arming themselves. But still, they demanded even MORE protection from the US and our own spending kept rising! Not only that, the traitors running America and funding our political elections were paying Congress to ignore the budget and spend ever more on the military. And to win elections, the Congress was very addicted to handing out tax boons and spending on social programs. So the deficits grew and grew and the US debt grew until it is now bigger than the next 5 countries' debts in total.
It is no accident that our military spending is bigger than the biggest 5 nations, too! These statistics are very much attached to each other. The Europeans didn't demand we leave Europe after Russia was 'defeated' by bin Laden and his buddies in Afghanistan. Yikes. No. NATO GREW. And the US and Europe used NATO today to attack former European colonies like Iraq and Iran. And 90% of the finances are still on the shoulders of the US, not on Europe. And we still have many troops stationed in Europe and expanded them into former Soviet countries! And have literally come to blows with Russia in the Caucasus mountains, a global flashpoint of tremendous danger.
Cooperative management of world reserves is the third area in which all the major countries need to take joint policy action. Looking to the long future, it is essential to maintain an adequate rate of growth in world monetary reserves and to ensure that there are no destabilizing shifts among countries holdings of gold, SDRs, and reserve currencies. The nations of the world took a significant step forward with the amendment to the IMF Articles of Agreement providing for the creation of SDRs. The recent rapid buildup of dollars in central bank re- serves should not divert us from prudent steps to increase the future role of SDRs in world monetary reserves.
Finally, we should continue to participate actively with other nations in discussions of ways in which the balance of payments adjustment process can be improved. The question of greater flexibility in exchange rates has been extensively discussed in the IMF and elsewhere in the past two years. Thinking has centered on the possible advantages of some widening of the margins for exchange rate fluctuations around their parities, of a "transitional float11 from an old to a new parity, and of smaller but more prompt changes in parities.
And pray tell, who exactly has expanded the world's monetary reserves? Who is creating 'growth in world monetary reserves' so banking can grow? WHO IS HU????
Why, the Chinese dragon! The fortress of Japan also has done this but Hu has done this more and better. And if Burns, our former Fed chief knew back in 1971 that it mattered a LOT who runs these reserves, why has the US run our own damn reserves at the pathetic and anemic rate of $60 billion during the time that Japan and China ran theirs up to over $3 trillion? Ah! The US back in 1971 thought we could control world FOREX reserves via the IMF! HAHAHA. The dreadful IMF that lends to bankrupt countries while ravaging them of all resources and future earnings?
So who, HU is the IMF today? Who, HU, is the world bank that has capitalization to lend? HAHAHA. Horrors! Arrest everyone who drove us so deep in debt! Gads. Even the madcap idiots who expanded our prison system can't build enough prisons to hold the people responsible for this mess! Not even slightly. Welcome to the New Soviet Union, the US prison-state!