The New World Order by Tim's Cruel World

"Godfather, If we buy guns, we can rob the banks,
but if we buy the banks .. we can rob the whole country."

The New World Order
by Tim's Cruel World, Partner to Cliff Küle’s Notes
3 February 2015 

Catherine Austin Fitts of The Solari Report was recently interviewed by Greg Hunter about her 2014 Annual Wrap Up. Her brief is wide-ranging and her coverage very interesting so I would like to make some comments about what I perceive as her and Solari`s world view.

The New World Order

I have often found that ruling classes are discussed as if they are more organized and coherent than they really are. This is often a form of shorthand designed to save time in conversation but the Gentle Reader may be left with the wrong impression. For example, Ms. Fitts discusses the U.S. as having certain objectives when in fact the policies discussed are a kind of sludge generated by a chorus of competing voices who continuously undermine each other in order to enhance their own power. The President and Congress, Globalists and the Tea party and so forth.

Likewise, she refers to Mr. Global, who is in fact the summation of a large number of individuals and organizations who come together and fall apart in constellations that are always shifting. At this point in time, Mr. Global wants to transfer wealth and employment to the developing world while reducing resource consumption elsewhere. Resultant arbitrage opportunities serve to concentrate economic benefits and control in fewer and fewer hands, which is the real objective once we get past a lot of rationalizing about efficiency and the environment. Increases in efficiency generated by freeing up world trade have benefited some workers in places like China, but have mostly been sopped up by the top 1% of the world economic pyramid.

This situation is very unstable as the masses in the First World have no vested interest in the globalization process. They get some cheaper imported goods at the price of losing many middle-class jobs. As Ms. Fitts puts it, labor is being deflated to balance monetary inflation. There are many exceptions to these generalizations but overall, the workers get less and the financial manipulators get more.

Collapse of Honesty and the Rule of Law

The Rulers of the 21st Century have taken a lot of short cuts along the way and have shown no great respect for the Rule of Law, or any need for accurate information. Trust is fundamental to the functioning of markets but financiers have found a way to monetize it by exploiting the long-term habits and assumptions of investors [CLIFF NOTE:  I believe this is Tim’s euphemistic way to say investors are being used and abused because they are willing to trust the authorities when they shouldn’t]. That is a one-way trip. After the 1929 crash, it took over thirty years before a new generation of investors appeared who would sink money into equities. The current situation is no different.

There is a complex relationship between governments and the world of finance. Elected officials want the public to believe things are better than they actually are so they understate increases in the cost of living and overstate job creation. Note that I don`t use the term inflation as different assets and instruments inflate and deflate at different times and rates.  Increases in employment that are being put forth in the U.S. as evidence of recovery are mostly based on estimates (see Birth/Death Model). The Media is not much help in this regard as any sensible commentary is buried in a mountain of promotion. The financial cable outlets have been suffering a considerable loss of viewership as individuals slowly wake up to the shortage of reliable content.

At the same time, financial firms often act to manipulate markets at the behest of government. In return, they are allowed to carry out said manipulations plus fraudulent acts of their own with a minimum risk of punishment. Very few persons have gone to jail as a result of the actions that resulted in the crisis of 2007-2008 and the succession of settlements and fines have actually been a form of taxation that will continue for a while yet. There is a great show put on, but much of the settlement cash vanishes in accounting manoeuvres while the rest goes to general revenue.

Ms. Fitts estimated that there has been a $40 trillion wealth transfer and I regard that number as good as any. Much of that is represented by a massive increase in that value of assets including equities, real estate and government debt instruments. The main limitation on this wealth is that it is far too large to be liquid. It can, however be used to take increasing control of all economies in the world. Companies are transferred by stock deals and exchanges of debt instruments just as effectively as with cash. Meanwhile, the securitization of bad debt is growing again since it is so very profitable. It is not that nothing has been learned; it is just that nothing has changed.

The United States and the New World Order

American policy has been to insert itself in the flow of events in Eurasia in order to remain dominant, while containing the rise of China. For example, the U.S. has no large direct interest in the oil fields of the Middle East as most of its oil comes from elsewhere. These supplies are vital to Europe and the East Asian powers and therein we find the lure. Before Saddam Hussein was overthrown, power in the region was roughly in balance with Iraq being a Sunni-dominated player keeping Shiite Iran from expanding south and west.

A somewhat disjointed set of policies by the U.S. and NATO has replaced dictators and oligarchs with nobody capable of assuming power and have left a trail of failed or failing states: Iraq, Libya, several in sub-Saharan Africa, Yemen, Syria, Afghanistan and arguably Pakistan and the Ukraine. Iran, Russia, China, the Saudis and the Gulf Emirs have either not been helpful or have been active in speeding up the mess. Iran is now in a position to move directly against the Saudis and Kuwait, as a large contingent of Revolutionary Guards now ensures the survival of the Shiite regime in Baghdad.

The New World Order Excluding the United States

Russia, China and Iran are leading examples of countries that would like to free themselves from the domination of the U.S. Dollar. China has to hold massive quantities of U.S. debt and the other two are currently subject to sanctions wielded by the Americans via their domination of the financial apparatus of the planet.

Mr. Global apparently wants to speed up a transition to more neutral forms of reserve currency. The Chinese are doing their part by making bilateral deals to do trade directly using their own currency.  Iran and Russia have been mastering the art of bypassing the sanctions. For example, India has been able to trade for oil using gold and rubles in place of dollars and get a discount in the process. A decline in the importance of the U.S. is bound to have a negative effect on U.S. power, but it will take years to develop.

It would appear that the Saudis are fed up with waiting for a direct military response from the U.S. and decided to crash the price of oil. This directly punishes Russia and Iran who are their rivals in the wars going on in Syria and Iraq. It is quite likely that many American officials are on board with this since the drop in oil revenue is a far more effective punishment than the other sanctions they have tried. It also benefits much of the U.S. economy at the expense of the oil industry who don’t have as many friends as they used to.

Gold and the Dollar

Ms. Fitts likes gold but does not feel that it will be a great investment till the price breaks out above $1550. I think it is important to remember that the American market in gold is only about 7% of the world total. In most other currencies, gold has broken out and has been a great investment. The key here is that we live in our own currencies and in Canadian dollars or Euros or Rupees or Yuan, gold is good and getting better.

Chaos as Policy

The U.S. dollar is crashing upward and this is just as much a symptom of growing chaos as the recent downward crash in oil. Countries are failing as a result of half-baked intervention. Trust in authority is declining in areas where it used to be rock-solid. This is a process that chips away at Power.
Ultimately, the power of America to influence the world and to remain powerful is rooted in its military superiority. Rome survived two centuries of hyperinflation and economic decline (280 – 492AD) and in the end, lost only the western third of the economy and population. It maintained military superiority over individual opponents and managed to go on to several resurgences after the currency was reformed. Great powers do not vanish overnight.

In Flyover Country, most people still believe in America and it is still possible to recruit loyal citizens for the Legions. This is America’s great strength, bolstered by superior organization and technology accumulated over time. Russia and China have had a lot of problems trying to build effective Aircraft Carriers and flight groups and a lot of issues with nuclear submarines. Eventually someone may succeed in these areas and others, but it will take a few more decades and a few wars for practice.
In the meantime, there is a great glowing Joker in the deck. Nuclear weapons are a genie that is definitely out of the bottle. The current great powers understand that nukes neutralize each other and can’t be used in the proxy wars that they wage against each other, but not everyone is motivated by the international regime of mutual understanding. North Korea is a regime based on what amounts to organized crime at the state level and expects their possession of the bomb to gain them a great deal of extortion money from America, Japan, and yes – China and Russia. This cannot end well.
The Pakistani weapons program was financed largely by the Saudis and it is strongly hinted that they have some of the devices. China sold IRBM’s to the Kingdom and recently updated them, which makes no sense whatever unless the Saudis intend to mount nukes on them. It also possible that Pakistani devices have been sold to whoever is willing to pay the price. This is a great, gaping hole in the current tattered garment of World Security.

Forgive Iran if they feel surrounded by hostile nuclear powers – Pakistan, Israel, Saudi Arabia, possibly Russia and definitely U.S. bases in the area. That is why they will never give up their development program, but will continue to stall and prevaricate.

Non-Executive Summary

I won’t comment at length on investment advice for individuals except to say that this is a time of increasing disorder and declining trust. Some things will develop slowly but others could come on quite quickly. We are in fact engaged in a world war, done a bit at a time in remote places, but the process has begun to bring down quite sizable states. As trust declines in government and in business, each person needs to become well-informed if only to protect themselves and their families.

 LINK HERE to the essay
or view on the Scribd below by enlarging it in the bottom right corner

1 comment:

Deepak Chopranski said...

Where is the snooze button on the alarm clock when you really need it! A Must Read!