Tsipras meets Putin – Obama Reducing America as Superpower
Brussel’s sheer stupidity in pushing Greece to pay debts nobody else honors is sheer madness. The proposal we set forth at theSolution Conference is far deeper than many realize at first sight. Eliminating government debt at the federal level will save Europe for with this sort of debt-equity swap, which precisely Putin is looking at now in Greece but with state assets, is ultimately the only way out. The problem with this immediate solution of a Russian bailout is that this does not alter the crisis that is underway. This is taking and Advil for the pain but not addressing what is causing the pain.
Still looking deeper, this meeting illustrates the decline and fall of not merely Europe, but that of the United States as well. The Obama administration with hindsight may be equivalent with the Roman Emperor Gallienus who destroyed the Roman Empire in 8.6 years. He accomplished that stunning goal by wiping out the CONFIDENCEin government. Obama is accomplishing the same process in what appears to be two terms of 8 years.
Just this past month the United States lost its role as the underwriter of the global economic system. Here we have Greece turning to Russia but we also have the entire global system established at Bretton Woods dominated by the US under siege – the IMF and World Bank. China’s effort to establish a major new institution and the failure of the US to persuade dozens of its traditional allies, starting with Britain, to stay out of this competing regime illustrates just how Obama has lost on every front. Now he has Israel turning against him as well. There is not much Obama has done which has gone right. The NSA is by no means protecting the people of the USA, it is trying to protect the government its people.
This meeting with Greece and Russia is far more important than meets the eye. It is illustrating the decline and fall of the West in fast motion. As for the majority of people unaware of the crumbling of the postwar establishment, they too will still be laughing when it all falls. When Saint Jerome, the great Latin translator of the Bible, heard the news of the Visigoths’ capture of Rome, he wrote “My tongue sticks to the roof of my mouth.” The shock was indeed registered in deafening silence empire-wide. This is what we are facing for the majority cannot even see that a change in trend is underway no less prevent it.
DEBT – BANKING – CURRENCY Panics
A number of emails have come in and all seem to be astonished that there is more than one type of financial crisis. Not even the famous Tulip Crisis was domestic. Tulips were also trading in London. It was the first speculation coming out of the Dark Ages as the middle-class developed. Capital poured into Holland from all over Europe. This was not just a Dutch domestic event that you could attribute to banks.
A Debt Crisis unfolds when government defaults, which has taken place many times throughout history. It is the Sovereign Debt Default that wipes out the bankers. Even the Medici had an internal code not to lend to governments for every banking institution from the 1200s up were destroyed by government defaults.
Banking crises have taken place when there is fraud. Merely lending money even leveraged will not cause a banking crisis. Asset values swing up and down and it’s the net movement between the currency and asset values that cause the problem like the silver to gold ratio. The drop in the Swiss peg suddenly raised the cost of mortgages to Greeks and Brits who denominated their debts in Swiss. Banking crisis due to outright fraud is what Andrew Jackson set in motion with destroying the central bank and state banks then issued money known as Wildcat Banking.
Then there is the currency crisis. This unfolds typically because governments have tried to fix the value of gold or silver. Bretton Woods collapsed for this reason just as the Swiss peg collapsed recently. Currency is the least understood because everyone looks to cause and effect scenarios that are only domestic – never international.
These are the three major categories. You cannot attribute every crisis to a failure of banking. The Long-Depression was cause by the US trying to over-value silver relative to gold. You cannot fix any two elements no matter what.
Fractional v Relationship/Transactional Banking
QUESTION: Marty, in your piece about banking are you suggesting that fractional banking is not the issue it is the shift from relationship banking to transactional that is causing the greatest damage?
Thanks
Bob
ANSWER: Absolutely. The difference between a Dark Age and Capitalism is the very fact that banks exist. The Dark Age after Rome was marked by the end of banking and private ownership. People sold themselves as serfs to gain protection. We can see without banking there was no real economy. What coins were produced during this period were just silver since gold vanished from the coinage by 500AD until the 13th century for about 600 years – the same 600 year gap we see in Japan. Nonetheless, the silver coins produced during this period are few and are rarely discovered more than 30 miles from where they were struck.
The hard-money people want fractional banking to end and harp about lending creates more money. They want to send society back into the Dark Ages and end everything from mortgages and credit cards and so we would return to walking around in sack cloth. I seriously doubt they even understand what they are preaching.
The panic does not take place because of fraction banking alone. Panics are the byproduct of everything combined from human nature to weather that causes crop failures and REAL inflation to develop driven by a shortage compared to demand. When there has been a crop failure, prices soar, yet money supply did not change. Wages returned from the Dark Ages because of the Black Death in the 14th century. With about 50% of the population reduced, suddenly there was a shortage of labor and lords offered to now pay people to work their land. Of course, with wages came taxes.
There are panics caused by the concentration of capital into one sector which then accelerates the prices of that instrument, but this is wrongly attributed to banking. This error in attribution assumes a one-dimensional world as always that money is created by fractional banking. This is just not true. If a building is $10 million, and two local citizens are involved in the sale and purchase, it is actually neutral to the domestic economy with the exception of some monetization of the appreciated value assuming it is being sold at a profit (deflationary if sold at a loss). However, if a foreign investor purchases that same building, they bring money into the domestic economy directly increasing the supply by the total amount.
Global capital flows are the concentration of capital from different countries into a single country just as the USA for 1929 and Japan for 1989. Sure there are those who blamed too much credit on the part of the local banks, but this does not hold true when you trace the capital flows. Attributing everything to merely fractional banking is rather myopic.The USA ended up with 76% or the world’s gold supply by the end of 1945 thanks to two world wars. That had nothing to do with fractional banking.
The danger that the New York bankers have introduced was changing the entire banking system from RELATIONSHIP toTRANSACTIONAL. Under the first, they lent you money but monitored your business and ability to repay. This imposed some rational constraints. Under the new TRANSACTIONAL banking model the NY Boys sold to repeal Glass Steagall, they became brokers, packaged loans, and resold them. They no longer cared about the borrower – it was driven simply by could they sell it.
There is the famous story of Andrew Mellon Areas where a man tried to borrow money to produce his invention of aluminum. He had no collateral and no bank would lend him a dime. He walked into Mellon’s bank and Mellon told him legally he could not lend him money from the bank on just an idea. Mellon said he believed in him and backed Charles Martin Hall, whose refinery grew into the Aluminum Company of America (Alcoa). Banking has allowed the efficient concentration of capital to further society. It is not all evil. Without banking we would still be serfs. Those who demonize fractional banking harp on money much be tangible because they cannot figure out the business cycle so they just want their money to always be worth the same, yet then want their wages to increase and their investments to appreciate simultaneously. You cannot have it both ways.
Far too many people blame banking and argue to end fractional banking as if they would somehow stop the business cycle yet the world would amazingly continue. This was the same goal of Karl Marx – defeat the business cycle. Sorry, a huge component of this is human nature. People will NOT BORROW without confidence. The stock market has NEVER peaked with the same interest rate twice. We get different highs and lows because people will borrow at 25% if they believe they will double their money. They will not pay 1% if they cannot see making even 2%. Hence, lower interest rates will not stimulate the economy and has never reversed a downtrend before its time.
There was only one politician who ever understood the swing between the value of money and the value of assets. That was Julius Caesar – (see Anatomy of a Debt Crisis).
FACTA & The Penalties
Americans are treated as simply the property of the state. The lines to resign American citizenship is at historic highs. The penalty for an American failing to notify the USA that they have an offshore account is a fine up to $500,000 and 10 years in prison. They also have a penalty. A non-willful failure to file is a $10,000 fine if you did not even know you violated something and if you did deliberately not file the fine jumps to $100,000 and they take 50% of the account. Then they treat each year as a separate violation and then take 50% of whatever you have each year so a few years and everything is theirs and now you own more than you ever had and go to prison so you will never be able to pay whatever they demand you owe. But hey, America is the land of the free – right!. They flipped this to be land where government is free to do whatever they like.
The ECM and the Interaction of a Complex Wave Structure
For the new readers is trying to grasp the significance of six waves, the entire structure of the universe is based upon cycles for this is how energy moves. This applies to absolutely everything without exception.
If you stand at the corner of a busy street and close your eyes, listen to the sound of a truck or car. If the sound is getting louder then it is moving closer to you. The frequency of the sound wave is shortening. If the sound is diminishing, then the wave is dissipating as the object moves away from you. This is how energy moves in a wave formation. The energy moving through water creates waves, but the water is not moving.
Now look at an electromagnetic wave. This is how light energy moves. Notice that the wave structure is complex. It is composed of two separate and distinct elements – electric and magnetic fields. It is the magnetic field that binds the electric element and keeps it withing a maximum and minimum range.
The Economic Confidence Model is constructed as a complex wave. We have the standard business cycle wave which is what we can call the electric component. This operates as an 8.6 frequency. The component which binds the maximum and minimum fluctuation of the business cycle similar to the magnetic field is volatility. The frequency here is based upon a unit of 6. This is a significant component to the fractal structure upon which the entire universe is designed.
When we look at the ice core evidence of the energy output of the sun, we can identify a base cycle, but notice the amplitude of that wave is not consistent. Therefore, the complexity of the wave is constructed from the interaction of two frequencies which are not identical.
It does not matter what data series we look at, everything moves in a complex cyclical wave structure. This clashes directly with the way mankind thinks in a linear manner. Even politics projects that vote for a particular candidate and he will reverse some cyclical element which is beyond the power of society.
The Schema Frequency is a pattern that overlays the interaction and dictates when the maximum and minimum will produce major rogue waves that almost appear out of nowhere.
There is interaction also between the different fractal levels. The grand or major level at the 309.6 scale shows that the current major trend is a PUBLIC WAVE. since the late 1700s into 2032.95. This has been the age of big government and the shift from Laissez-faireeconomics in which transactions between private parties are free from government interference such as regulations, privileges, tariffs, and subsidies. This is the primary difference between a PUBLIC andPRIVATE WAVE.
At the next fractal level down (51.6 year), the sixth wave is the opposite a PRIVATE WAVE. This is because as we go into the final high, people are starting to clash with the idea of big government. We are at the threshold of what could be a two component outcome. The first, is a return to Laissez-faire economics and the rejection of big government. When I was invited to China by the government, I was taken to a highly guarded installation that was monitoring everything in the country tracking price movement. There were 249 varieties of teas. They were observing, not interfering and this allowing the economy to spring to life. This was Laissez-faire.
So the last wave at the 51.6 year fractal level is the clash between big government trying to retain power from the 309.6 year level against the people trying to restore their freedom Laissez-faire at the 51.6 year level.