My unpublished (100,000 word) book “The Financial Jigsaw”, is being serialised here weekly in 100 Issues by Peter J Underwood, author
Quote of the Week: “Be who you are and say what you feel, because those who mind don’t matter, and those who matter don’t mind.” – Bernard M Baruch
As we end this Chapter on National Economies it is worth reminding ourselves of the toxic effects of globalisation and financialisation:
“One of the big problems affecting national governments is the free movement of capital in our highly connected world. It has not been possible in the space allowed to describe fully how the international and global financial markets affect national economies. Here is an article worth reading which explains in more detail so as to better understand how the system of off-shore finance works.”
This essay focuses on the murky financial realm known as offshore finance. It shows that offshore finance is not solely about capital moving beyond the reach of states, but involves the rampant unbundling and commercialisation of state sovereignty itself. The video is well worth watching in its entirety.
https://www.resilience.org/stories/2019-02-13/offshore-finance-how-capital-rules-the-world/
“The defenders of globalization say that people have to be ready to adapt to this [financialisation] process, yet when adaptation means seeing a worsening of one’s standard of living, accompanied by a loss of social cohesion, it’s not surprising that frustration and discontent grow over time.”
https://consortiumnews.com/2019/05/22/the-euro-atlantic-populist-wave/
“Deprived of the ability to expand into ever new territories, the West will gradually sink into stagnation, poverty, and domestic disorder. At that point, the world will be in a state of a genuine bi-polar Cold War, a war of political and economic attrition whose outcome is currently impossible to predict.” https://southfront.org/next-economic-crisis-and-looming-post-multipolar-system/
Here is the link to last week: Issue 53
Now that Brexit will not be coming to a conclusion for months yet after three years, I will continue to provide weekly updates as events progress:
Brexit Update – 31st May 2019 – Voting results
The Brexit deadline remains 31st October 2019 and stays in place unless the next PM can get Parliament to agree a new exit plan. Let the battle for Tory leadership begin with Boris Johnson the preferred candidate at present. This war will continue, probably until the end of July so I will continue to monitor the battles as they progress because the next PM will be crucial to the outcome of Brexit. Boris is likely to be tough with the EU and threatens a No Deal Brexit on 31st October without a revised agreement. MayBot is a Remainer and has thus avoided a No Deal exit; Boris is a Brexiteer and will not be so easy with the EU. The EU is adamant at present that no further negotiation will be allowed, so we have an ongoing stand-off and impasse.
The EU parliament voting completed this week and as predicted the Brexit Party came out on top with 29 seats out of a possible 73 and is the largest national party in the parliament. The Tory party and Labour were humiliated and are re-grouping. The next test for the Brexit party will be the Peterborough by-election due on 6th June which should give an indication of how far they can go towards a general election at some time in the future.
“Now that the EU voting results are known, it might be worthwhile reminding ourselves of the history of the UK and EU membership – how it came about with connivance from the ruling elite in the form of the UK ‘Deep State’ (Chapter 6). “Decades ago the British deep state hatched a nefarious plot against the British people. The elite wanted to foist European unity on [to] an unwilling populace. The notion of the conceited Whitehall elite was that the peasants were stupid and the mandarins knew best.” And it is going on even today as the Remainers attempt every device to thwart Brexit – read on: https://theduran.com/uk-deep-state-plots-to-thwart-brexit/
I can only describe the current situation by another’s good words:
“Brexit keeps getting uglier — [last] week in particular — and it is tearing Britain apart as it has already torn Prime Minister Theresa May apart, who was forced to resign in tears and sobs [last] Friday or get ripped out by her roots. She staked her administration entirely on an endlessly failing attempt to create a Brexit without an exit.
Her government collapsed in pieces around her over the [last] week because her charade failed when her final attempt at getting a deal was shredded. Her latest and most significant defector, Leader of the House of Commons, Andrea Leadsom, brought May’s house down by writing in her resignation [last] Thursday … ‘I do not believe we will be a truly sovereign United Kingdom through the deal that is now proposed. A second referendum would be dangerously divisive … undermining our union. There has been such a breakdown of government processes… a complete breakdown of government t responsibility.’ Read on:
http://thegreatrecession.info/blog/you-know-things-are-falling-when/
Details of Parliament’s deliberations can be found here:
https://www.parliament.uk/business/publications/business-papers/commons/votes-and-proceedings/#session=29&year=2019&month=4&day=23 There are no records for this week as parliament is in recess until next week.
CHAPTER 10
NATIONAL ECONOMIES
“The budget should be balanced, the Treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed, lest Rome will become bankrupt. People must again learn to work instead of living on public assistance.” – Cicero, 55 BCE
The IMF’s currency delineated in ‘Special Drawing Rights (SDR)
There is no doubt that a common global currency for international trade will add stability to an individual nation’s trading ability but at the cost of revaluing their domestic currency in global currency units.
This process is already in place at the IMF which uses ‘special drawing rights’ (SDR) to account for each nation’s contributions according to their membership status. The SDR values each nation’s domestic currency against a basket of major currencies such that a standard measure of the value of each individual currency is obtained.
It is possible that the SDR system could form the basis of a global currency but there are many obstacles to be overcome before this will emerge as a solution to the current unstable financial environment.
The plan is to introduce a basket currency system as an alternative to the dollar as a world reserve currency, then slowly but surely phase out all sovereign currencies until the basket becomes a currency itself – the only currency.
Former World Bank Chief Economist Justin Yifu Lin seems to agree with this ideology, arguing that national currencies must be replaced with a supranational currency, and pointing out that no single currency has the strength to stand alone as a world reserve currency:
“I think the dominance of the greenback is the root cause of global financial and economic crises. The solution to this is to replace the national currency with a global currency…”
Note: displayed at the end of this book Part 1: From “The Economist” in 1988: A “Phoenix” arises from the ashes of a calamity reborn. What ashes are the elites expecting the new global currency to arise from?
It is also important to realise that ‘The Economist’ is not just any random financial publication; it is in large part owned by the Rothschild banking family and is based in the City of London financial centre. The Economist does not have to “guess” on the economic developments of the future, it does have valid insights on what might be planned for a Globalist future.
The Fed and others are using QE in an attempt stimulate the economy
The ten year period from the financial crisis in 2008 to 2018/9 has seen the Federal Reserve and other central banks continue to stimulate their economies with quantitative easing (QE) measures combined with the lowest interest rates in modern times.
The main objective is to combat the deflationary effects of the crisis and stimulate growth in the US economy enough to return world trade to its previous steady growth pattern. The QE process should not continue forever although some would say that an orderly withdrawal is not going to be easy and compatible with the stability of markets.
Even a slight hint of tapering of money printing by the Fed in July 2013 was met with market shocks and rising interest rates indicating how fragile the current markets are to any reduction in QE.
Nevertheless the growing mountain of bond issuance must be deployed and is distorting the operation of markets in general causing growing asset ‘bubbles’ around the world; stock and debt markets are priced well above what national economies can bear under the present poor economic conditions.
These bubbles tend to deflate suddenly and precipitate a crisis as we witnessed in 2008. This is the risk that financial and political elites recognise and are working to find solutions which will be compatible with price and market stability.
As usual America must lead the way because its economy represents 25% of global trade and the dollar is the major reserve currency used by over 60% of all parties to trade around the world.
It is not an exaggeration to view the Federal Reserve, with assets of $3.5 trillion (and falling), acting as the world’s largest financial intermediary. The Fed have been buying long-term obligations and financing short-term ones using its unique privilege of issuing the world’s reserve currency.
The beneficial effects of this process appear to be wearing off as piling on more debt is yielding less and less in economic returns, and thus growth, as well as increasing the risks of encouraging speculative distortions and inflationary potentials; this has given rise to a debate within the Federal Reserve Board itself.
QE is very much a unique experiment, the outcomes of which economists are unable to predict, although their economic models appear to be indicating the need for some serious adjustment. The simple truth is that banks have remained technically insolvent since 2008 and it is in this area that solutions must be found if the world is to return to a more stable economic base.
We know that trade relies on efficient banking and financial systems but as long as doubt remains of the eventual systemic default on commercial debts there can be no lasting stability within world markets.
Nation states are impotent in the onslaught of globalisation
It has become clear that the nation states alone, even the USA, are powerless to manage such a complex global financial system dependent as it is on multinational banks and corporations operating beyond national borders and local regulation.
Banks, in conjunction with central banks, have become a law unto themselves as so well illustrated by recent exposures of criminal fraud going unpunished. It appears that national boundaries are no barrier in a truly global financial system where market forces remain in charge and risks continually intensify until a sudden event triggers a dislocation of normal trade as happened in 2008.
Nothing has changed since then to minimise a reoccurrence of such a crisis and it is only a matter of time before the next catastrophe occurs on a global scale. These national economies are the last pieces of the global financial jigsaw which completes a final picture of a world in turmoil both political and economic.
But it doesn’t end here because the greatest influence on the ability of states to maintain stable economies is to do with the levels of economic risk which individual states will now bear. The next Chapters look at macroeconomics and economic growth in order to gain a rounded understanding of the jigsaw and what may be coming to all of us in the future.
Part 2 of this book will look at how a new, evolving world economic system affects individuals and how they can organise their affairs in such a way as to minimise the negative effects and take advantage of the many opportunities which inevitably will arise during times of global instability.
A free pdf of the Introduction to Part 2 is available by request to: [email protected]
To be continued next Saturday
