Rodrigue Tremblay

The Federal Reserve, led by Chairman Ben Bernanke, can’t
further stimulate the economy through monetary policies that it
essentially has exhausted already. (David Stubbs/Reuters/CT)

“A More Than Questionable Bernanke Fed Monetary Policy.”

“If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered.” Thomas Jefferson (1743-1826), 3rd US President

“It is well enough that people … do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” Henry Ford (1863-1947), American automobile industrialist

“When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.” Frédéric Bastiat (1801-1850), French economist

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Rodrigue Tremblay

"I have a policy to prevent Iran from obtaining a nuclear weapon. And as I’ve made clear time and again during the course of my presidency, I will not hesitate to use force when it is necessary to defend the United States and its interests." - U.S. President Barack Obama, Sunday, March 5, 2012, speech to the pro-Israel lobby AIPAC (American Israel Public Affairs Committee)

“There are about 50 countries in the world that have the capability to produce a nuclear weapon if they chose to do so, making Iran far from unique but for its persistence as a thorn in the side of Israel and Israel’s powerful lobby in the United States.” - Philip Giraldi, Council for the National Interest

"The truth is there are very few members [of the U.S. Congress] who I could even name or could think of who didn't at some level participate in that [system of bribery and corruption in Washington D.C.]." - Jack Abramoff, professional lobbyist and onetime power broker for the elite of Washington, D.C. (during a CBS's 60 Minutes interview, Sunday November 6, 2011)

“I'm against very wealthy people attempting to or influencing elections. But as long as it's doable, I'm going to do it.” - Sheldon Adelson, casino magnate who has donated $11 million to Newt Gringrich's super PAC Winning Our Future, suggesting that he might give as much as $100 million to support the GOP presidential candidate.

The 2012 U.S. presidential election is the first one to be held under the new electoral financing rule decreed by a majority of one by the Roberts Supreme Court on January 21, 2010. With this fateful decision, the Roberts Supreme Court really changed the meaning of the Preambule of the U.S. Constitution that says “We the People of the United States, in order to form a more perfect Union...” and decided on its own to change it for “We, the rich corporations of America...”

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Rodrigue Tremblay

"I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs." ~ Thomas Jefferson (1743-1826), 3rd U.S. President.

Presently, one has the net impression that today's governments, both in Europe and in the United States, have their fingers plugging the holes in the financial dike, but fear that that the entire dam could collapse in the not too distant future with dire economic consequences.

Let's see if we can make sense of it all.

Let's say to begin that most financial crises are the direct result of unsustainable debt levels relative to income that need to be wrung out of the economic system. It has happened in the past (notably in 1873, in 1907 and in 1931, for example), and numerous times in developing countries, and it will undoubtedly happen again in the future. The process is more often than not always the same: some large banks, corporations, consumers or governments take on too much risky debt that becomes unsustainable when economic conditions change, thus launching the entire economy into a devastating process of debt deflation. Sometimes, it may take decades to overcome such a debt deflation and it usually creates an environment of economic stagnation when aggregate demand collapses.

What makes the current financial crisis so troublesome is not only that debt levels are historically high for some countries, but also because the usual instruments and procedures to reduce the debt burden, while doing the least damage to the real economy, have been rendered inoperative, due to a large extent, to the poisonous so-called financial “innovations” that have taken place since 1999 in the general climate of wholesale financial deregulation. As a consequence, financial debt in many countries creates a sort of financial black hole that siphons off money income and prevents it from being re-circulated back into the economy. This creates a serious deficiency of demand (when consumers spend less, when corporations postpone investments and when governments adopt austerity programs) that translates into low output growth, economic stagnation and high unemployment.

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Rodrigue Tremblay

“Men accept change only when it is a necessity, and they see a necessity only in a crisis.” ~ Jean Monnet (1888-1979), French political economist and statesman

Our world has become very complex, and, as a consequence, it is increasingly open to macro crises of huge proportions.

Indeed, what makes our time such a dangerous period, I think, is the fact that we are facing simultaneously at least five intractable worldwide crises that it will take years to solve or to outlive. They are a financial crisis that it will take at least twenty years to jugulate, an energy crisis that's looming on the not too far horizon and which threatens the very foundation of the economic prosperity of the last half century, a double-barreled demographic crisis of a magnitude never encountered during the entire history of humankind, a political crisis that is related to the ingrained inability of governments most everywhere to solve society's problems, and, as a general background, a moral crisis that corrupts most institutions and makes them ineffective in promoting the common good.

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Rodrigue Tremblay

The Parthenon is regarded as an enduring symbol of Ancient Greece and of
Athenian democracy. Modern Greece now is being destroyed by fascist EU.

Refusing to accept the obvious, i.e. an orderly default, would please Greece's banking creditors but will badly hurt its economy, its workers and its citizens.

On the 4th of July, the credit agency Standard & Poor’s called the country of Greece for what it is, i.e. a country in de facto financial bankruptcy.

No slight of hand, no obfuscation, no debt reorganization and no “innovative” bailouts can hide the fact that the defective rules of the 17-member Eurozone have allowed some of its members to succumb to the siren calls of excessive and unproductive indebtedness, to be followed by a default on debt payments accompanied by crushingly higher borrowing costs.

Greece (11 million inhabitants), in fact, has abused the credibility that came with its membership in the Eurozone. In 2004, for instance, the Greek Government embarked upon a massive spending spree to host the 2004 Summer Olympic Games, which cost 7 billion euros ($12.08 billion). Then, from 2005 to 2008, the same government decided to go on a spending spree, this time purchasing all types of armaments that it hardly needed from foreign suppliers. —Piling up a gross foreign debt to the tune of $533 billion (2010) seemed the easy way out. But sooner or later, the piper has to be paid and the debt burden cannot be hidden anymore.

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Rodrigue Tremblay
The New American Empire

"Sometimes people hold a core belief that is very strong. When they are presented with evidence that works against that belief, the new evidence cannot be accepted. It would create a feeling that is extremely uncomfortable, called cognitive dissonance. And because it is so important to protect the core belief, they will rationalize, ignore and even deny anything that doesn't fit in with the core belief." ~ Frantz Fanon (1925-1961), French psychiatrist, philosopher, revolutionary, and author, born in Martinique

"One must have a strong mind and a soft heart... The world is full of people who have a dry heart and a weak mind."
~ Jacques Maritain (1882 – 1973), French philosopher

"The Seven Blunders of the World are:

h without work;
2. Pleasure without conscience;
3. Knowledge without character;
4. Commerce without morality;
5. Science without humanity;
6. Worship without sacrifice;
7. Politics without principle."

~ Mahatma Gandhi (1869-1948), Indian political leader, ('Mahatma' means 'Great Soul')

This year in 2011, we will be 7 billion people sharing Planet Earth, most of the recent increase in world population originating in the developing world, as has been the case since 1950. We were 3 billion people in 1960 and we will be three times that in 2050, i.e. 9 billion people. That's a lot of people who will have to learn how to live together, if they don't want to perish together.

To show you how big the number '7 billion' is, just consider that if you were today to begin counting 1, 2, 3, etc., (at the pace of one number a second), it would take you some 115 years to reach the number 7,000,000,000 (seven with nine zeros).

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Rodrigue Tremblay
The New American Empire

The 1920′s German Inflation. Their money
became worthless. - The dollar's next?

"If once [the people] become inattentive to the public affairs, you and I, and Congress and Assemblies, Judges and Governors, shall all become wolves. It seems to be the law of our general nature, in spite of individual exceptions." ~ Thomas Jefferson (1743-1826), 3rd US President

"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered." ~ Thomas Jefferson (1743-1826), 3rd US President

[Corruption in high places would follow as] “all wealth is aggregated in a few hands and the Republic is destroyed.” ~ Abraham Lincoln (1809-1865), American 16th US President (1861-65)

"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it." ~ Frederic Bastiat (1801-1850), French economist

“Inflation made here in the United States is very, very low.” ~ Ben Bernanke, Fed Chairman, Thursday, February 10, 2011

Let us begin with some macroeconomic indicators of reference.

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Rodrigue Tremblay
The New American Empire

"Under a paper money system, a determined government can always generate higher spending and hence positive inflation." ~ Ben Bernanke, future Fed Chairman (in 2002)

“My thesis here is that cooperation between the monetary and fiscal authorities in Japan could help solve the problems that each policymaker faces on its own. Consider for example a tax cut for households and businesses that is explicitly coupled with incremental BOJ purchases of government debt – so that the tax cut is in effect financed by money creation. Moreover, assume that the Bank of Japan has made a commitment, by announcing a price-level target, to reflate the economy, so that much or all of the increase in the money stock is viewed as permanent.” ~ Ben Bernanke, future Fed Chairman (in 2002)

“The Fed, in effect, is telling the markets not to worry about our fiscal deficits, it will be the buyer of first and perhaps last resort. There is no need - as with Charles Ponzi - to find an increasing amount of future gullibles, they will just write the check themselves. I ask you: Has there ever been a Ponzi scheme so brazen? There has not.” ~ Bill Gross, PIMCO's managing director

On Wednesday, November 3rd, the Bernanke Fed announced that it stands ready to resume money printing to stimulate the economy through quantitative money easing, an euphemism for printing more dollars. Indeed, it intends to buy $600-billion of longer-term Treasury securities until the end of the second quarter of 2011, plus some $300 billion of reinvestments, on top of the some $1.75 trillion of various types of securities, many of which were mortgage backed securities, that it has added in 2009 to its balance sheet, currently standing at a total of $2.3 trillion. There could even be additional increases in newly printed money as the Fed intends to

"regularly review and adjust the program as needed to best foster maximum employment and price stability."

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Rodrigue Tremblay

“If ever a time should come, when vain and aspiring men shall possess the highest seats in Government, our country will be in need of its experienced patriots to prevent its ruin."
~ Samuel Adams (1722-1803), statesman, political philosopher, and one of the Founding Fathers of the United States, 1776

“America is addicted to oil.”
~ President George W. Bush, State of the Union address, 2006

“Let me be clear: BP is responsible for this leak; BP will be paying the bill.”
~ President Barack Obama, May 2, 2010

More often than not, the consequences of public policies, good or bad, are felt many years after they have been taken. The 2010 BP oil spill in the Gulf of Mexico is a good example. This disaster is, to a large extent, a consequence of the Bush-Cheney energy policy of 2001 and later.

After being ushered into power by a one-vote-majority Supreme Court decision, one of the first decisions made by the new Republican administration was to establish an Energy Task Force (the National Energy Policy Development Group) under the authority of oil-man Dick Cheney, former CEO of Halliburton (1995-2000). As some have asserted, chief deregulator Dick Cheney was not only a vice president but a genuine co-president in the split Bush-Cheney administration.

After some 106 days of mainly secret consultations and deliberations with the executives and interest groups representing the U.S. electricity, coal, natural gas and nuclear industries, with a pledge to keep secret the names of participating individuals, the Task Force's 163-page final report [.pdf] was sent to President George W. Bush on May 16, 2001.

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Rodrigue Tremblay

"It is well enough that people ... do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." ~ Henry Ford, American industrialist

"It seems to me that Europe, especially with the addition of more countries, is becoming ever-more susceptible to any asymmetric shock. Sooner or later, when the global economy hits a real bump, Europe's internal contradictions will tear it apart." ~ Milton Friedman, American economist

"The normal functioning of our economy leads to financial trauma and crises, inflation, currency depreciations, unemployment and poverty in the middle of what could be virtually universal affluence-in short ... financially complex capitalism is inherently flawed." ~ Hyman Minsky, American economist

I have spent some fifty years studying economic cycles and teaching international finance, but I had never seen the likes of what we witnessed and experienced over the last three years. That's because such financial crises seem to happen 60 to 75 years apart.

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