WE THE STATE WILL TAKE CARE OF YOU

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Posted on 13th November 2013 by Administrator in Economy |Politics |Social Issues

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Hugo believes the ruling class will retain their control and power by re-setting the world monetary system, with gold as part of the new system. I believe the ruling class will attempt this “solution” to their reckless destruction of the existing monetary system, but they will likely lose control and havoc, war, and revolution will occur before some new system is put in place. Solutions based on consensus and compromise DON’T happen in Fourth Turnings.  

The Siren-song of Welfare State

Hugo Salinas Price

Our world is run –  and has been run for some time now – by a relatively very small group of  individuals who have it in their power to manage, as they think, the economies  of nations. Managing the affairs of a nation implies making people behave in  ways in which they would not otherwise behave. National management of an  economy thus means making millions of individuals do what they wouldn’t do if  left to themselves.

There is not one  single national economy in the world today whose people are free to do as they  wish; it is not so much that people are forbidden to do what they think best,  as that their choices are being narrowed, day by day, to being able to do only  what is allowed.

One of the very first  choices which free individuals made thousands of years ago was the choice of  the money they would use in their exchanges of goods and services; after using  other substances such as salt, or copper, or sea-shells, they finally chose  gold and silver for use as money, because all humanity valued these metals above  all other substances, and consequently gold and silver were the most convenient  substances to use as money.

The fact that today  we are deprived of the possibility of using these metals as money indicates  that we are worse off than our ancestors who lived several thousand years ago.  We are forced to use fictitious money provided by our managers and masters. One  important consequence of using fiat money is that it inevitably leads to making  bad investment decisions.

It is clear that if  we are not allowed to do what we think best, anything else we do must be  second, or third, or fourth best for our interest, and anyone who takes second  best for what is in his interest, is incurring a loss. Our economic world has been so weakened and distorted by  accumulated losses and false investments that it is now beyond repair.

More than 7.3 billion  human beings live in today’s world, and except for those living in the jungles  or the deserts, not one of us can act freely to further his interest. We are  all of us incurring losses, whether we are conscious of this fact or not.

Add up all these  losses and mistaken investments and you have the present world, avoiding  bankruptcy and total collapse by skating over thin ice.

The idea that  national economies can and should be managed prevails throughout the world.  Thus, the world is being “managed” into instability; at some point an accident  will happen, and we shall fall through the thin ice into the deathly cold  water.

We are witnessing the  failure of efforts to restore “growth” to the economies of the West; China’s  economy appears to be headed for serious trouble in the near future; the  Japanese leadership is resorting to desperate measures to revive the economy of  Japan. The US is in the grip of an outlandish policy to monetize $85 billion  dollars a month out of nothing, and it is likely that the monetization will  soon increase in volume.

In 1956 the Soviet  premier Nikita Khrushchev uttered his famous prophecy, “We will bury you!” at a  reunion with Western diplomats.

His prophecy is  coming true, for there is precious little difference between a world of managed  economies, and a Socialist world. All Socialist economies are managed  economies, and all managed economies are on the way to becoming full-fledged  Socialist economies. The difference is that a “managed economy” sounds  acceptable, or even quite normal, to a large number of people, whereas the word  “Socialism” is repellent to many people. The words have changed, but not the  substance.

In the 1920’s,  Antonio Gramsci, an Italian intellectual, wrote about how political  institutions are supported by a hegemony made up of people who hold the same views and values. Since “the managed economy”  enjoys the support of a hegemony throughout the world today, we must understand  that Socialism is not some threat that vanished with the fall of the USSR; we are living in a world that is in the  process of becoming Socialist. Khrushchev was right!

Gramsci was a  dwarfish hunchback and in my opinion, he attempted to compensate for his  deformity by taking up Communism and applying his intellect to destroying the  world which regarded him as defective. He spent most of his last days in a jail  to which Mussolini consigned him and died an early death in 1937.

Gramsci’s method for  introducing Socialism was not by means of violent revolution, but by creating  the hegemony which would support Socialism. The hegemony would be created by  using the right words to gather popular support for Socialism. This is what we  are seeing today: people are satisfied with the concept of “the managed economy”  when what it really leads to is Socialism. Thus, the hegemony for Socialism is in  fact installed in the whole world.

We know what happened  to the Soviet Union: it collapsed in bankruptcy. The USSR, which deluded  intellectuals hailed as “the moral light of the world” while they turned blind  eyes to its mass starvations, its Gulags and the terror of its secret services,  turned out to be unsustainable. The difference between the Soviet Union and the  world today is only one of degree, not of essence. Our world awaits the same  collapse which overtook the Soviet Union.

It seems likely to me  that a new international monetary order will be implemented, either before or  after the final inevitable collapse of the present monetary system. It seems  probable, as of now, that any new monetary order will have to include gold in  some way. Gold will re-acquire importance, which will be reflected in a much  higher price for gold, incorporated into a new international monetary system.  The extraordinary accumulation of gold by China indicates that it is preparing  for this change, and this cannot be taking place without the consent of those  who dominate the West: the low price of gold is deliberately facilitating the  process of preparation for the coming change.

However, a return to  an unadulterated Gold Standard in conjunction with the re-introduction of the  system of Real Bills, as advocated by Antal E. Fekete, seems highly unlikely to  me. Such a change seems impossible, given that there is no hegemony, to use  Gramsci’s term, to support such a political move: it would be politically  impossible to institute such a system, because it would require discarding, at  enormous human cost, all the uneconomic structures which have been imposed upon  the world, as well as the elimination of the powerful group that now governs the  world through those structures. Those who rule the world are certainly not  going to reform themselves out of power; it would be a mistake to think  otherwise.

The official Chinese  news agency, Xinhua, has called for  the “de-americanization” of the world. What that implies is clear: the Chinese  intend to have a say in how the world is ruled.

As I interpret  reports, it seems to me that those who run China are quite unaware of the  problem of misallocation of resources which arises from three causes: a) a  fractional-reserve system of banking which expands fiat money credit beyond  real savings; b) a fiat-issuing central bank which “fixes” interest rates and c)  banking which indulges in mismatching maturities, by granting long-term credits  matched against supposedly sight liabilities to depositors. China applies these  conventional modern banking practices on a massive scale, proportionate to the  enormous population of China.

If China manages its  economy according to the same fallacious principles that prevail in the rest of  the world, what different, healthy measures could we expect from China, as a  leading power addressing the profound damage suffered by the world’s economic  structure during the past century?

The inclusion of gold  into a new international monetary order can only mean a re-distribution of the  power enjoyed by those who rule. This implies that gold will not return as  money used by individuals. The world will be told that the new monetary system  is “backed” by gold; individuals may buy and sell gold, but they will not have gold  in their hands as money. We shall  have a new monetary system which will instill renewed confidence, but which  will remain fundamentally flawed.

The use of gold in  the new international monetary system will be reflected in increased power over  the management of individual national economies.

The long-term outcome  – World Socialism – will remain the same, as long as the hegemony responds favorably to the familiar strains of the  siren-song: “Do not worry, do not strive; do not think for yourself; do not  attempt to provide for yourself and your dear ones; do as you are told and we –  the State – will take care of you.”

It may be some time  before humanity ceases to listen to that song.

1 Comments
  1. Administrator says:

    Comex Claims Per Deliverable Ounce Up Again To 62

    The setup for this year end looks interesting. Open interest for December itself has declined somewhat from last year, but the availability of gold for delivery at these prices has fallen quite precipitously. Rik Green has some things to say about this here.

    The standard manipulation play has been to hit the prices hard, and hope to shake out weak hands as well as pry more bullion from the ETFs which the bullion banks manage. This was done in early December 2011, and prices recovered their level by the end of January. In December 2012 the great price decline of 2013 was already underway, in a reaction to the denial of Germany’s request for the return of their nation’s gold.

    A conventional pricing action this December would set up a potential short squeeze into the new year that could prove to be impressive once it got going. And it might become uncontrollable should a run develop since it would also presumably increase the physical offtake in the broader markets. Wiser therefore to take some of the dirtier money off the table now, and let the market regain some of its equilibrium before the end of year.

    This is of interest only for those who look at markets in greater than two week increments, which is not one of Wall Street’s stronger suits. One should not underestimate the brazen audacity of the TBTF gang. They have been said to sell their customers very bad advice and deadly poisoned deals with near impunity, or haven’t you heard?

    So it is hard to say exactly how these things will be resolved since the greater physical market, the dog that is being wagged by the Comex tail, is still too opaque for reliable forecasting. But I do not see how this can end any way but messily, unless cooler heads prevail fairly soon.

    Let’s see what happens.

    Jesse

    13th November 2013 at 4:16 pm

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