Elaine Meinel Supkis
In 1789, our first year under the new Constitution, Congress passed the first tariff, primarily for revenue purposes. Forbidden by the Constitution to tax exports (goods leaving the United States), Congress had power to tax imports (goods entering the nation).
*snip*
As a means of protection, however, they gained importance. Because of a sectional depression in the early 1820s, tariffs became the dominant issue. In the North, manufacturers and farmers alike favored such a tax. Agricultural prices had nosedived; wheat growers in Pennsylvania and sheep ranchers in Ohio went out of business in large numbers. Industrial workers lost jobs as textile and iron works factories closed.As these conditions prevailed, the Tariff Act of 1824 was passed, imposing duties on items not previously included and raising rates from 25 to 37 percent of the value of imported goods. Unlike previous tariff issues, this one restricted more goods on the basis of protection than of revenue.
As an advocate of the protective tariff, Senator Clay expressed a view that has been propounded generally throughout our history. To encourage home industry, he claimed, it was necessary to keep out foreign goods that competed with domestic industries.
Unloading their warehouses after the War of 1812, the British had been dumping goods in the American market below their cost, causing the shutdown of many factories. Only a tariff, claimed the Senator, could protect American workers and factories.
The global depression following the Napoleonic Wars was like all subsequent depressions which always follow on the heels of all major international struggles between great empires.
The fact that this always happens is something our ancestors were very aware of...they discussed this after WWII extensively and the moves by the US under Truman like the Marshall Plan and Bretton Woods I was an attempt by the US victors to try to avoid a post-war contraction.
Whether an empire wins or loses a war, these depressions always follow. Since this seems to be an iron rule in economic history, it should get more respect! Worse than this, if an empire slowly bleeds to death in colonialist wars that are futile and bring in very little loot, this causes really grinding depressions as the war spending uses up all available credit.
Russia and America's Cold War spending is a fine example of this. 'But the US didn't go into a depression after winning the Cold War,' people say in wonder. Ah! Something terrible happened after we won the Cold War! Not only are we being shoved into one confrontation after another with the very same determined fighters who fought the Soviet Union until it went bankrupt.
We also were savaged by global trade rivals who have utterly penetrated all our markets, depressed our wages and driven our entire economic system into deep debt.
Depressions are not when there is no lending. Depressions are when borrowers can't take on any more debt!
This seems rather simple, I would suggest. Just as small homeowners and small businesses can't soak up any more debt, so do countries. There is a set limit on the amount of debt one can accumulate. A noted feature of all bankruptcies is how the desperate business or individual would go restlessly about, seeking more and more loans. All, in a forlorn hope of using debt to pay debts and thus, put off the day of reckoning.
This never works. This is also why lenders charge people deep in debt higher points. The point spread is for the risk of bankruptcy.
'But haven't interest rates mostly dropped since Reagan?' people ask, justifiably.
This is where it gets most interesting: most sellers of goods will happily bankroll purchases so long as the buyer keeps buying. The US was the world's biggest creditor nation after WWI. For half a century, from 1914-1964, the US had to pull several major empires out of flames of their own making. These incendiary global ruler-wannabes were France, Germany, Italy, Britain and Japan.
Because we opposed the massive, growing empire of the Soviet Union, we generously rebuilt the industries and banking systems of our top trade rivals. We figured, this would make it harder for the communists to win power. We even allowed the French and British imperialists to continue ruling much of the earth! This was a very foolish foreign policy. Although many of these nations finally, and sometimes, very violently, overthrew their European rulers, the US insisted on propping up colonial governments which is why our creditor nation status vanished by 1964.
After that, we needed borrowing to keep our empire rolling. So our trade rivals began a reverse Marshall Plan: they would lend to us ONLY if we allowed them to flood our nation with their manufactured goods! And so the great deindustrialization of the US commenced.
Senator Webster, on the other hand, recognized that sections of this nation were witnessing an economic depression, but refused to concede that it was the result of imports. Instead he attributed it to a prosperity depends upon foreign trade.
Tariffs, he explained, would curtail international trade, and thus impair American prosperity. Goods are imported because they are needed, and if such goods can be obtained elsewhere it is to the nation's benefit to buy them at a lower price.
Let cheap labor outside the country produce goods more cheaply than inside it; labor could then turn to more useful endeavors.
The depression wasn't caused by the US. It was caused by Britain and France. Both tore apart all of Europe and France destroyed a huge swath of prime Russian real estate including burning down Moscow. This was very similar to the Mongol invasions that also destroyed huge parts of Russia.
The Spanish civil war against Napoleon ravaged the shattered remains of the once-great Spanish Empire. Spain ceased ruling the Seven Seas and England finally succeeded into this prime role. America was still basically a commodity source for England. The US was, like all English colonies, forbidden to manufacture goods and this is one primary reason for the revolution.
The Crown not only imposed import tariffs and taxes but EXPORT tariffs. Which is why Congress was anxious to end that practice. The only thing the English would LET INTO ENGLAND from the US was cotton and a few other important commodities needed desperately by industrialists in England. The South wanted this to grow but it was not making the US a stronger nation.
The Founding Fathers like Ben Franklin, realized that the budding industrial revolution was the key to future wealth. America needed to develop glass making capacity, for example. Not to mention, the iron industries, tooling industries and other things used by civilizations.
The English were very protective EXCEPT for cotton and other raw materials they needed badly. This is remarkably similar to a certain other island kingdom which is on the opposite side of Eurasia: Japan. Both have very similar histories and solutions to trade. Today, Japan operates 100% on the system set up by post-Napoleonic England.
The American South was very content with the third world-style economy they created. They loved slavery and I would suggest, still are much too fond of slavery's philosophical basis. Which is why Southern laws go far in preventing unionization and Southern Presidents are mostly anti-union including Bill Clinton. All Southern Presidents [Reagan struggled against this, he penned his name to the Plaza Accords, after all] are happy to allow a flood of imported goods.
Webster's argument was especially relevant to the Southern economy, which was largely dependent on one crop: cotton. Restriction of imports put Southern planters in a double bind.
England was the main market for their cotton, and high tariffs meant fewer English manufactured goods were imported -- and so, they could not buy as much cotton. And, if the people in the South could not buy inexpensive English goods, they had to pay higher prices for the same goods produced in New England.
Before long, other sectional issues would emerge that would gnaw at the very fabric of this nation. The great tariff debate was but a portent of a nation seriously divided and sectionalized.
England had us over a barrel, in other words: they would not buy cotton unless the US allowed a flood of English exports into domestic US markets! This is how they balanced their trade. Like Japan, they could not afford to have their commodity imports overwhelm their manufactured exports!
The US right now, imports a huge amount of commodities. One of the biggest being energy commodities. Oil and gas, in particular although we also import electricity from Canadian dams, for example. We are NOT balancing this with exports. Some time ago, I looked at IMF statistics on global trade and noticed that many oil exporting nations are importing mostly Asian, not American goods. The American goods share of oil exporter's markets has been dropping precipitously over the last three decades.
Both China and Japan import a lot of energy so they have been very energetic in expanding their market shares of OPEC nations. These same competitors also offer the US nearly unlimited credit so we can borrow money to buy oil and gas. This money then flows back to both China and Japan in the form of OPEC purchases of manufactured goods from Asia!
This is a cycle that drains the US of wealth. Now, let us go off to Asia for a while. It is always good to review some history! The Chinese have a very long and convoluted history when it comes to money. They are a very practical people and have no philosophical or religious biases against trying out various banking systems and trade processes. The one thing they try to focus on is simple: will it work? And work, meaning, it makes China itself more secure and wealthier.
First, here is a news story from this week, via the BBC:
Ten years ago, at a spot known locally as "Black Rock", two men diving for sea cucumbers came across a large pile of sand and coral. Digging a hole, they reached in and pulled out a barnacle-encrusted bowl. Then another. And another.
They had stumbled on the oldest, most important, marine archaeological discovery ever made in South East Asia, an Arab dhow - or ship - built of teak, coconut wood and hibiscus fibre, packed with a treasure that Indiana Jones could only dream of.
There were 63,000 pieces of gold, silver and ceramics from the fabled Tang dynasty, which flourished between the seventh and 10th centuries. The artefacts from the find are nearly 1,200 years old Among the artefacts was the largest Tang gold cup ever discovered and some of the finest Yue ware - a porcelain that the ancient Chinese likened to snow because of its delicacy.
The exceptional quality of the goods has led some scholars to suggest that these were gifts from the Tang Emperor himself. The bulk of the cargo was more homely, including 40,000 Changsha bowls, named after the Changsha kilns in Hunan Province, where they were produced.
*snip*
Its most likely destination was a place familiar to us for other reasons, the Iraqi port of Samara, or Basra as it is called today. In the 9th Century, Basra was one of the wealthiest cities in the world, with a prosperous merchant class hungry for Chinese luxury goods.
In 800 AD, the Islamic Revolution had already swept across all of the Middle East and Northern Africa as well as almost all of Spain when it finally was repelled by the Pyrenees mountains. Almost all of these lands were part of the Roman Empire. There was a lot of loot lying about.
The nature of gold and other loot is very simple: it tends to become dissipated over time if the central government loses control. As the weakening imperial government tries more and more desperate moves to regain control over wealth, it vanishes faster and faster. The most useless end point for gold is to be reburied in the earth in hidden places!
Yet, this is where it ends up, always. If a government flounders and fails. This is why gold hoards are still being dug up today, gold buried at the end of the Roman Empire. When the Islamic rebels swept across the land, they did this so fast, there was little time to bury the gold. Like the Mongols, they would force gold owners to cough up the location of this buried gold.
They then rushed off to China to buy manufactured Chinese goods! Both China and India were major manufacturing powers. Both also did exports but their main markets were domestic. We might ask why China even bothered with export markets so distant from China. Actually, the Chinese asked this all the time, too! This ship is curious to me. It carried some of the highest artistic creations of the Chinese.
Yet it also was filled with what the Chinese considered to be throwaway ceramics of the least artistic value! We know that China was viewed by Medieval rulers as a fabulous land filled with great treasures. But they also were worried about trade with China since China wanted very little from them...except for silver and gold.
There is this same mental split today. Many people think that the goal should be no trade, not balanced trade. No nation can be 'civilized' while being totally self-reliant because of the problem of distribution of earthly resources as well as climate conditions.The Ming dynasty began in 1368, and lasted until 1644 A.D. Its founder was a peasant, the third of only three peasants ever to become an emperor in China. He is known as Hongwu Emperor, and led the revolt against the Mongols and the Yuan Dynasty. He was constantly worried about conspiracies against himself, and despite the many moral homilies he gave, favored violence in dealing with any one suspected of plotting against him or associated with the conspirators.
The capital was originally located in Nanjing but the third emperor moved the capital to Beijing. As a result of his peasant origins, Hongwu created laws that improved the peasant life. He kept the land tax low, and kept the granaries stocked to guard against famine.
He also maintained the dikes on the Yellow and Yangtze Rivers. However, economically he lacked the vision to push trade. He supported the creation of self-supporting communities and, in a typically Confucian viewpoint, felt agriculture should be the country's source of wealth and that trade was ignoble and parasitic.
When Japan closed its door to global trade under the Shogun dictatorships, the people there became poorer and poorer and the condition of the peasants deteriorated. Even the warrior class lost wealth rapidly. At first, the Japanese dealt with this by elevating poorly-made goods into 'art'.
So a crude clay cup was seen as 'refined' in lieu of fine Chinese porcelain cups that were forbidden. This aesthetic continues in Japan, incidentally. It is actually quite clever and the 'less is better than more' attitude has some use in the modern world! There are so many tangents to wander off topic here...I have to watch my step!
As usual, the expansion of the money supply ran alongside trade expansion. England suffered from this as the empire expanded. The industrial revolution utterly swamped finance! The gold standard was dropped and then re-imposed repeatedly. I have a strong caveat with the author of this history: counterfeits don't cause inflation by themselves.Another accomplishment of the Ming was the building of the Great Wall. While Great Walls had been built in earlier times, most of what is seen today was either built or repaired by the Ming.
*snip*
From the very beginning of the Ming Dynasty, money was a problem. At first, paper currency was used. However, Hongwu did not understand inflation and gave out so much paper money as rewards that by 1425 A.D. the currency was worth 1/70 of its original value.This led to a return to the use of copper coins. The government did not make enough coins and counterfeiting became a problem. At this point, the provinces were required to mint their own coins. Unfortunately, some of them added lead to the coins, which depleted their value. Due to the abundance of counterfeit coins, their value again declined. This coin problem was amplified by an increasing need for money due to the growth of trade.
Although merchants and trade in general were looked down upon, China had established sea routes that were used for trade with Japan and south Asia. Starting in 1405 A.D., Zheng He began a series of seven naval expeditions that went as far as the east coast of Africa. These trips followed established routes and were mainly diplomatic. The last of these voyages was completed in 1433 A.D.
At this point, China was far ahead of the rest of the world in naval capabilities. Their ships could carry as many as 500 men. However, after the last voyage was completed none were ever again attempted. In fact, records of the trips were destroyed and shipbuilding was restricted to small-size vessels. As a result, China's coast was frequently attacked by pirates.
The economic conditions demanding more and more money to circulate faster and faster causes this! Money is anything people want it to be! If the value of money is restricted too much, people create new forms of money to make up for this! When governments get too restrictive, people will even re-invent paper money of various sorts or even use sea shells, sticks with whittled marks, whatever they can, as 'money'.
The battles between who controls finance, the goddess of Inflation or the goddess of Depression, has been going on since the beginning of the agricultural city-states in the Nile, Indus, Mesopotamian and Chinese river valleys 6,000 years ago. Matching agricultural surplus with official designations of value controlled by the state and then balancing that with trade: this is an ongoing story from the very start of the earliest civilizations.
One way of coping with trade is simple: invade the exporters! A nation can get loot and balance the government budgets and create more money via this simple but dangerous solution! For example, the stresses of the Great Depression drove Japan into subjugating trade partners in Asia and the Pacific. Attaching whole populations as slave labor also fixed the problems of labor overhead.
The reason opium caused an outflow of Chinese wealth was simple: the Emperors made opium production illegal except for medicinal purposes. The British didn't want to legalize opium in China. The Chinese didn't want British manufactured goods. China wanted one way trade in tea and other goods.The impact of the west was also felt for the first time in China. Great Britain especially was interested in trading with China for silk and tea. However, the British did not have anything that was easy to import to China until they began importing opium.
This was devastating to China. Many became addicted to opium, and land that had previously been used for food began to be used to produce opium. Also, a large amount of Chinese money left the country in payment for the opium. Finally, in 1839 A.D. the opium trade was abolished.
This set off a war with Great Britain that came to be known as the Opium Wars, and in 1842 A.D., China was forced to sign a treaty in which Great Britain received Hong Kong, and ports were opened to European trade.
The British needed to enforce trade in their own favor. The opium turned the Chinese into literal slaves. They were renown for their work ethic and the drugs made them inured to pain so they would literally work to death and were indifferent to weather or hunger. The 19th century saw lots of opium in the West. This is why the art from that period is very queer and dense. Thick design with lots of deep perspectives onto endless landscapes, the effect of floating or dying being very prominent.
Another topic one could endlessly talk about but must be avoided today. Opium caused Europeans to work less and less, not harder. This is a cultural trait, I guess. Maybe due to the liquor drinking habits of the Europeans.
For centuries, the Chinese traded their riches with Europe along the Silk Road and its many branches to the north. But the sea trade to the south was new in the 17th and 18th centuries, and the Chinese government feared that the westerners would corrupt the Chinese and perhaps even try to conquer China.
In 1760, the government established a set of regulations to control the foreigners and their ships. Canton was the only port open to strangers. All ships were required to stop first at Macao, a small settlement acquired by the Portuguese in 1557. Macao was about 65 miles south of Canton and 40 miles from Hong Kong.
There, foreign ships hired a pilot licensed by the Chinese government. The pilot had to acquire written permission (called a "chop") for the foreign ship to enter Chinese waters. The ships were examined, and finally with the guidance of a pilot, the vessel could proceed up the river to Whampoa, an island 13 miles below Canton. All ships had to anchor at Whampoa and could go no further.
It was not uncommon for a hundred ships to be anchored at once. Here the loading and unloading of cargoes took place. The sailors had to stay with the ship, and were only allowed on rare occasion to enter Canton for a day in the company of an officer.
The Japanese, the Tibetans, the Burmese, many rulers in Asia all reacted to the new European expansions the same way: they tried to restrict it as much as humanly possible. Usually, granting only one or two traders access to remote islands. The revolution in shipping hammered Asia very hard.
All attempts at restricting trade were dealt with very ruthlessly. The Europeans would kill anyone trying this. The only reason Japan was spared for a while was simple: the Japanese were dirt poor and their art was not appreciated much, its aesthetics were considered to be miserable due to the limitations for creating fancy stuff. But by 1860, all the Western nations were anxious to grab and pry open all possible markets no matter how poor or isolated. So the US moved against Japan with a display of naval power.
Gold restrictions cause depressions. Fiat currency causes inflation. Bernanke often mentions this as a passing interest. He firmly believes that we can never have a depression if a private bank simply makes money out of thin air as fast as possible.Cowry shells are believed to be the earliest form of currency used in Central China about 3000 to 4500 years ago.
In the Chinese writing system the characters for 'goods' (貨), 'buy/sell' (買/賣), 'monger' (販), in addition to various other words relating to 'exchange' all contain the radical '貝', which is the pictograph for shell.
*snip*
The Mongol Yuan dynasty (元, 1271-1368) also attempted to use paper currency. Unlike the Song dynasty they created a unified, national system that was not backed by silver or gold.The currency issued by the Yuan was the world's first fiat currency, known as Chao. The Yuan government attempted to prohibit all transactions in or possession of silver or gold, which had to be turned over to the government.
Inflation in 1260 caused the government to replace the existing paper currency with a new paper currency in 1287, but inflation caused by undisciplined printing remained a problem for the Yuan court until the end of the Dynasty.
We see very clearly, yet again, that this sort of inflation is useless in the long run. It simply causes everyone to stop selling to each other since the money they get diminishes the minute the transaction is made. Zimbabwe makes this very clear: stuff disappears from stores!
People have to scrounge for goods and pay in other ways. Weimar Germany made that very clear. Brazil went through this once where money was simply thrown away in despair since it bought nearly nothing, the governments always have to do the same thing: repuidate their own paper fiat currency and start all over again. I am including these two web sites that have an excellent overview about the history of Chinese money.
One of these sites is for coin buyers. Note how European coins changed drastically the use of 'money' within China. For China was never a major silver or gold producer before today. And they didn't raid all of North and South America to gain gold and silver like the Europeans [and then European settlers] did.
The flood of new metal coins flowed into China, changing relationships and the value of Chinese money. Chinese metal value was via weight and the purity was due to trust in gold or silver handlers who were basically the bankers for traders. The new coinage overwhelmed this system and ruined relationships.
During the Tang Dynasty (618-907) there was a growing need of metallic currency, but thanks to the familiarity with the idea of credit the Chinese were ready to accept pieces of paper or paper drafts. This practice is derived from the credit notes used by merchants for their long-distance trade.
Due to this lack of coins, also the dead had to change their habits of taking a coin with them to pay their passage to the other world. About the 6th century notes replaced coins as burial money. May we consider this as a real means of payment? Of course not, but it is remarkable that also here paper replaces very smoothly the copper coins that were used before.
At the end of the Tang period, traders deposited their values with their corporations. In exchange, they received bearer notes or the so-called hequan. Those hequan were a real success and the idea was exploited by the Authorities.
Merchants were invited to deposit henceforth their metallic money in the Government Treasury in exchange for official "compensation notes", called Fey-thsian or flying money. During the Song Dynasty (960-1276) booming business in the region of Tchetchuan likewise resulted in a shortage of copper money.
Some merchants issued private drafts covered by a monetary reserve which initially consisted of coins and salt, later of gold and silver. Those notes are considered to be the first to circulate as legal tender. In 1024 the Authorities confer themselves the issuing monopoly and under Mongol governement, during the Yuan Dynasty (1279-1367), paper money becomes the only legal tender.
During the Ming Dynasty (1368-1644) the issuing of notes is conferred to the Ministry of Finance. The long-term shortage of silver caused it to remain extremely rare and expensive in China; its price consistently remained at a higher level than its value in the western cultures- Roman, Byzantine and Persian. As a result of the persistent demand for the metal, silver began to be transported to China for profit making reasons, in particular by Persians and Arabians.
During the Tang Dynasty, this foreign silver may have been a major source of supply. In recent years, a large number of ancient foreign silver coins, the most common being Sassanian silver Drachms, have been excavated in Si-An, Xinjiang and other locations. During the Sung Dynasty domestic silver production increased significantly. In the Northern Sung, the annual national silver production varied from 210,000 to 880,000 taels (#1).
This increased supply of silver is confirmed by records of the tremendous amount of silver continuously paid to its opponents- the Liao, Western Xia and Jin -as tributes or war indemnities, and also by the use of silver as a trade medium both domestically and with these 3 countries.
The Sung Dynasty (Northern 960-1127, Southern 1127-1279) was distinguished by flourishing commercial activity and a dynamic economy during which some of the largest amounts of copper cash coins in Chinese history were cast and put into circulation. However, the low value of cash coins made high valued transactions unwieldy since the sheer volume of coins could not easily be transported or stored.
Before foreign silver coins came into existence, sycee in China had been circulated for more than 1,000 years and a purity assurance system had already been created.
Such a system was usually reliable for the Chinese; they only had to chop sycee infrequently. A Chinese sycee always carried the name chop of its makers; it had been the law during almost every dynasties for silversmiths to be responsible for the purity of sycee made by them.
Most of the time, therefore, the law and practice dictated that people who received sycee in payment could be sure of its fineness, and protected if it was found to be of inferior fineness. Moreover, Chinese sycee had derived different patterns- including shapes, weight and purity standard, in different regions of China.
People were not used to accepting sycee cast in a pattern of another place unless it was tested by their local assayers or melted down and recast. As a result, Chinese sycee got more assaying chops, but less of other forms of chopmarks. V. Cross-examination on the chopmarks of foreign silver coins and Chinese sycee During the late 16th century, the two southern coastal provinces of Kuangtung and Fujien were the pioneers in using foreign silver coins, and soon became the largest markets in China for imported silver coins because of their early exposure to outside trade.
Local sycee of these two regions was soon replaced by foreign silver coins. Very few sycee of these 2 provinces can be found today, but many of the surviving examples are chopmarked, and can be used for cross-examination between the sycee and various chopmarked coins.
During 1800-1900 AD This period covers the reign of Jia-Ching, Tao-Kuang, Hsien-Feng and Tong-Ze; the most difficult time of the Empire. Because of the continuing and dramatic increases of the import of Opium, sycee of better purity was shipped abroad as payment for the narcotic.
Foreign silver coins with less silver fineness were imported for domestic trade, which caused serious exchange loss to the Chinese. Older foreign silver coins had higher silver finenesses and were more welcomed by Chinese people and as a result, from about 1800, many contracts specified using Old Pillar Dollar (w/o bust of a King). The growing demand for opium meant that China was losing its silver throughout the first half of the 19th century.
As a result, the price of silver climbed, causing many people, including foreigners and natives, to try and take advantage of this by counterfeiting silver coins. Under such circumstances, using heavy and big chops and chopmarks, became customary, and was the most expedient, though primitive, method for the identification of counterfeited or inferior silver coins.
Coins, including Old Pillars, Portrait Dollars (those with busts of Carolus III, IV, Ferdinan VII) started being impressed on with big, rough and heavy chopmarks from around the time of the Opium War. Large numbers of foreign coins of earlier periods bear chopmarks in both smaller and bigger fonts, indicating they circulated in China for a long period, encompassing both stable and tumultuous periods ."
And here is a very old NYT story from April, 1915, concerning trade with China. The US demanded an 'Open Door' policy with China while the European powers wanted to carve out 'Spheres of Influence' in China.
WWI destroyed the ability of the European Emperors and Empresses to exclude the US from Chinese trade. The US wanted markets for our MANUFACTURED as well as commodity goods. Opening up Asia to our exports was a top priority. But at the same time, the US, like all of Europe, wanted trade barriers.
The destruction of these trade barriers has raised Asia very high and looking over history, one can say that this is probably history balancing out things over time. Europe and the US destroyed Asian societies but they, in turn, are using our own philosophies and economic dynamics in their own favor.
This is giving them all a great deal of satisfaction. Now, they are the creditor nations. And one Asian nation, China, is also a diplomatic and military power. One that can eventually rule the Seven Seas. A rule China spurned in the past, to its great loss. I doubt the Chinese will want to try that again.
And I am for world trade! I like world trade! But I dislike imbalance. And this is the key: we have to balance things even if others don't want this. We have to tell them firmly, 'Sorry, but we have to do this one way or another. This is the safest way.' And then we tax imports! We must do this. Just as China had the right to stop British opium. We can't be passive about this. We have to look always to the bottom line. During periods of protection, we have to upgrade and improve things!
As might be expected, the clearest view of whats been happening come from outsiders, people inside the system are part of the problem. It will take time to found a new generation of 'eco-economists' or maybe no economists!
Elaine, you are the best. And unlike say, Kunstler, you have good artistic judgement. Your drawings are full of life.
Posted by: ziff house | October 27, 2008 at 12:08 PM
Actually I am one of the few who understands perfectly, Elaine. I'm Zimbabwean after all! This is all just deja vu on a massive scale. The reason our currency and economy tanked was because Mugabe and his Dogs destroyed all our major exports. Simple as that.
I would weep for this place if weren't for all the stupid, cowardly sheeple who inhabit it.
Oh, and nice blog! You have a great knack for making complex concepts easy to understand. Keep it up.
Posted by: csurge | October 27, 2008 at 12:19 PM
So a crude clay cup was seen as 'refined' "in lieu of fine Chinese porcelain cups that were forbidden. This aesthetic continues in Japan, incidentally. It is actually quite clever and the 'less is better than more' attitude has some use in the modern world! There are so many tangents to wander off topic here...I have to watch my step! "
You are very wrong, it has been part of Confucius methodology of simplicity, You are changing perception. It wasn't only about objects, it was about how you carry yourself, and how you show yourself. You generalization (and incorrect at that) shows lack of depth and knowledge on the topic.
over all i like your blog, but sometimes you say things that just opposite of correct, which is why this is a blog. But still, making this kind of generalizations about things you don't know, don't make you sound very credible.
Posted by: Art | October 27, 2008 at 12:50 PM
Do you think China plans to have a silver-backed currency controlled by the Chinese Citizens, or a fiat currency controlled by the bankers?
Yah, that was rhetorical.
http://www.bollyn.info/home/articles/euhispol/how-zionists-control-britain/
"American support for Zionism has clearly been extremely detrimental for the United States of America, yet the support continues, without question. How does this happen?
MOSSAD SPIED ON HAIDER
Israel and the international Zionists control the political parties and news outlets in Europe as well, as the recent death of Austria's Jörg Haider reveals. Oddly, Haider, the leader of Austria's Freedom Party, allowed Peter Sichrovsky, a Jew, to serve as "secretary-general" of his supposedly anti-Zionist party. In 2005, the Times (UK) reported that Sichrovsky, the managing director of the party, had served as a spy for Israel's Mossad for five years. Three years later, after his party won parliamentary elections, Haider was suddenly killed in a very suspicious car accident.
“I wanted to help Israel and certainly did not do anything wrong,” Sichrovsky said. “It’s true, though, that I co-operated with Mossad until my withdrawal from politics in 2002.”
Sichrovsky admitted that he had spied for Mossad, a foreign intelligence agency, because he "wanted to help Israel." At the same time he maintained that he did nothing wrong. This is exactly how many Jews feel about supporting Israel, even when their actions involve breaking the laws of the nations they reside in.
Facing a criminal investigation and charges of spying for a foreign power, Sichrovsky quickly fled to the United States where he began a new career as "a businessman concerned with military co-operation between Israel and China." Sichrovsky's career with Mossad evidently continued after he left Austria."
Posted by: GK | October 27, 2008 at 02:14 PM
Gollum, like the Chinese, 'will be bank', eh?
Citigroup (C) Won't Make It (MarketWatch)
http://tinyurl.com/5gyynv
Goldman sought tie-up talks with Citi (Alphaville)
http://tinyurl.com/5ntbzn
Posted by: Blunt Force Trauma | October 27, 2008 at 02:34 PM
The markets are up (phonily) today as 12 regional banks recieved a hand out of $18 billion in ass-wipe. Anyone want to guess how short this rally will last? Of course this will save what, 1 of them?
Regional banks get over $18 billion (CNN)
http://tinyurl.com/5ojzud
Posted by: Blunt Force Trauma | October 27, 2008 at 02:41 PM
This is awesome. Benny's shooting blanks, er, going for ZERO. Who does he think he is? Japan?
Bernanke Battles `Big-Time' Economic Erosion With New Rate Cuts (Bloomberg)
'...Fed Chairman Bernanke and his colleagues may eventually have to drive the benchmark overnight rate close to zero to resuscitate the economy. The next installment comes Oct. 29 when, says Gramley, ``the Fed is going to cut rates a half percentage point.''
Full article:
http://tinyurl.com/5awwjb
Posted by: Blunt Force Trauma | October 27, 2008 at 02:46 PM
Would it be wrong to infer that "money", regardless of form (paper,metal,etc.), is basically an accepted representation of material goods? And therefore just a means to exchanged those material goods? I suppose that is why I have never understood why going back to the gold standard would solve anything. Sorry if the question seems simplistic but what am I missing here?
Posted by: Grok | October 27, 2008 at 03:03 PM
About art and the value of things: People assign values because they must. All cultures INCLUDING JAPANESE used gold-based backgrounds and highlights if they had the gold. When there is no more gold to be used this way, they create a new style that is whatever it must be, that being because there is no gold [or marble, etc].
The Japanese economic decline was very severe under the shoguns. If you look at photos taken by Europeans from 1860-1875, you see horrific poverty even up to the Shogun, himself! It is astonishing and awful.
Pre-black ships Japan is viewed in this romantic haze. But I assure everyone that if you showed up in court in 1750 with a gold cup, the cup would be recognized as very attractive and you might get killed if you didn't hand it over, fast.
And welcome to the Zimbabwean poster here! If you can give us any information, we would dearly love it.
Posted by: Elaine Meinel Supkis | October 27, 2008 at 03:09 PM
Another proof that the Japanese aesthetic for 'simplicity' was due to poverty, look at Japan today: anything but 'simplistic'. The higher artist types still cling to that notion but it is overwhelmed by things such as gold leaf bathtubs, etc.
Anyone looking at downtown Tokyo, they don't say, 'Oh, look at how quiet, simple and plain it is! HAHAHA. Quite the opposite! If you look at anime a lot, you see lots of extremely elaborate costumes, etc. Indeed, if you go back to the Shogun era, what did people go to look at?
Kabuki. Which was very colorful, dense and full of detail! The more, the better. Very loud. Much more so than European art at that time.
Posted by: Elaine Meinel Supkis | October 27, 2008 at 03:12 PM
Another great article today by Michael Hudson in Counterpunch. Once again covering much of Elaine's discussions (import/export, currencies, Japanese carry trade,etc.). Worth a look.....
http://www.counterpunch.org/
.
Posted by: Grok | October 27, 2008 at 03:28 PM
Elaine - Thanks for explaining the impact of trade imbalance. It is surprising (sure) that the main stream media never discuss it.
On the financial shows in the MSM, we get a bunch of "it's all about confidence in the markets" as if we can simply wish our problems away. Trade balance must become part of the dialogue.
They also make the economy look very complicated; and it can be complicated, but never bother educating people about the fundamentals like you do routinely.
And, our political candidates never mention trade balance - which should tell us that they are either corrupt or stupid or both.
I don't think any system can remain fair and transparent unless the people understand at least some basic fundamentals. Accountability is also needed and people should understand the need for generally accepted accounting principles.
***************************************
George_Kenney - Thread
Zionism is simply perpetual war propaganda. I think it is based on lies to control and enslave jews, christians, muslims, etc.
"Israeli-US ties: Shocking truths"
"At an international conference in London dubbed “Terrorism: Alternative global perspectives”, Alan Hart, the author of “Zionism: the Real Enemy of the Jews”, stated, “The United States is supporting Israeli-sponsored terrorism in the Middle East.”
"In his latest book, “Zionism: The Real Enemy of the Jews”, Hart expands on how such a collusion is leading to a clash between civilizations and how it could be prevented. He is a firm believer of the notion that what peacemaking needs above all else is some truth, “about many things but, especially, the difference between Zionist mythology and real history, and, the difference between Judaism and Zionism and thus why it is perfectly possible to be passionately anti-Zionist without being in any way, shape or form anti-Semitic.”
http://www.iraq-war.ru/article/179318
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Ron Paul interviewed on Lew Rockwell show yesterday. Good interview about Greenspan and our problems. He also explains some important basics.
Great 9 minute interview:
http://tinyurl.com/6h9p6e
Posted by: DrKrbyLuv | October 27, 2008 at 03:36 PM
I think the Asian pursuit of primitivism and simplicity is peripheral in the ethical system of Confucius. It is, however, central to the way of the Tao Te Ching.
The Chinese were not so much more scrupulous about following their own avowed attitudes than we are.
I much prefer primitivism. It will be of much utility in the our new Aquarian retro-industrial age.
Posted by: blues | October 27, 2008 at 03:42 PM
Blues,
It seems to me that the ultra-elite are hoping for primitivism as well (for us) as they implement a radical ultra-capitalism with them owning everything and everyone else barely alive substance farming, receiving $600 checks from the central dole or helping the machines feed their ultra factories.
Essentially a return to the dark ages of neo-feudalism.
This was always the method of the UK empire to keep all manufacturing there and all colonies were just feed commodities to them.
If you study the Civil War, you will see the SOUTH LOVED this and wanted to sell cotton commodities to the UK (grown by their slaves) and use the money to buy whatever they wanted from the UK SUPER EXPORTER.
The North (Benjamin Franklin) realized wealth came from factories and so wanted IMPORT RESTRICTIONS to protect the new US factories.
So the Civil war began to fight over who controlled THE DIRECTION OF TRADE.
The REAL WARS that empires fight are about flows of trade. IRAQ was to STOP the flow of OIL to INCREASE OIL PRICES.
AGHANISTAN was to INCREASE flow of HEROIN cash for speculative off shore investments.
The wars had the added advantage of entertaining the stupefied US public which we were really being INVADED by CHINESE, JAPANESE and GERMAN imports.
Posted by: GK | October 27, 2008 at 06:29 PM
Another example of China using cash to lock in energy supply (unlike the US that pays on the spot market): China may lend Russia $25 bln as part of oil deal
Posted by: RobG | October 27, 2008 at 06:37 PM
" Because we opposed the massive, growing empire of the Soviet Union, we generously rebuilt the industries and banking systems of our top trade rivals. We figured, this would make it harder for the communists to win power."
Communists gained a lot of organization and expertese resisting the Nazis. Then too, after WW II, Europe was smashed up and very poor. Once the Nazis had been removed, it was fertile ground for those communists to come to power.
I think that was the point of things like NATO, and the Marshall Plan. U.S. leaders knew that communists had come to power in Russia because of WW I. (in 1917) Their best efforts hadn't been able to dislodge Lenin once he'd consolidated power. So their moves seem logical in that context. Help Europe rebuild in order to discredit the communist movements, and simultaneously cement them into a military alliance. But the Marshall plan worked a bit too well. The European economies bounced back faster than was probably intended.
" We even allowed the French and British imperialists to continue ruling much of the earth! This was a very foolish foreign policy."
I wouldn't have said so. Certainly the U.S. wanted France to keep Vietnam. But I'd think that was an exception.
Britain pulled out of India right after the war. U.S. didn't bankroll Holland in Indonesia. As far as I know the plan was for U.S. to inherrit those European empires, but in a new, sort of neocolonial way. Let the natives use whatever flag they want, and pick their anthem, and so on. Let them be proud of their independence. Only if they interphere with our economic domination will we send in some marines to do regime change. (That had been the model in Latin America, yes? U.S. was used to it.)
Posted by: Steve | October 27, 2008 at 06:42 PM
RobG,
Currency attacks by the West are actually helping the Chinese to increase their foothold on resources that they need to kick start their domestic economy.
Next stop - Australia. Once Australia is down on its knees; China will step in to 'buy' what she needs in knock down prices. Last stop South America once Spain is down.
Posted by: OC | October 27, 2008 at 06:48 PM
GK,
You are very seldom wrong. I can't even point to one instance. You must be wrong about something.
Meanwhile, whatever...
Posted by: blues | October 27, 2008 at 06:56 PM
Does the appearance of an International Barter System indicate the "end of current financial system as we know it".
Thais to barter rice for oil with Iran
Thailand on Monday said it planned to barter rice for oil with Iran in the clearest example to date of how the triple financial, fuel and food crisis is reshaping global trade as countries struggle with high commodity prices and a lack of credit.
http://tinyurl.com/6bnf8e
Posted by: Jimmy | October 27, 2008 at 08:05 PM
Gork:
The Brits used wood tally sticks as money for a few hundred years.
Wood worked fine.
Rothschild said, "He who has the gold, makes the rules."
Guess who owns most of the gold?
Posted by: PLovering | October 27, 2008 at 08:41 PM
IRAQ was to STOP the flow of OIL to INCREASE OIL PRICES.
Sorry GK, you are 100% wrong about that, Iraq was to increase the oil price only, not to stop it. Oil cycles out inflation in the system thats obvious now. War will continue to rage to save this system.
RULE 1
Oil cycles out inflation
RULE 2
Drugs cycles out inflation
RULE 3
Gold and silver must constantly be hammered to remind people who actually wears the BIG PANTS AROUND HERE
BEAM ME UP!
ROW WELL 41 AND LIVE!
Posted by: Dutch Rower | October 27, 2008 at 08:51 PM
The wood tally sticks were contracts, not coins. But then, look at the old Chinese yuan I posted above: it is real. The money shows the actual building where one can redeem the money for supposedly gold!
Actually, the Koumintang used their own paper dollars to demand gold...FROM THE US!!! HAHAHA. General Stillwell was totally outraged by this and demanded the US government stop the Nationalist Chinese.
Posted by: Elaine Meinel Supkis | October 27, 2008 at 09:52 PM
Short History Of Money:
http://www.xat.org/xat/moneyhistory.html
Posted by: PLovering | October 28, 2008 at 12:35 AM
The picture posted above is the Gold certificate used after WWII when the KMT government is bankrupt.
They initially had the Yuan but when that is totally demolished, used GC above to demand physical gold from the population.
The GC, needless to say, in the end was not backed by equivalent gold, and they losed the civil war
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