Russia Warns Obama: Global War Over “Bee Apocalypse” Coming Soon

05/31/2013

http://www.eutimes.net/2013/05/russia-warns-obama-global-war-over-bee-apocalypse-coming-soon/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheEuropeanUnionTimes+%28The+European+Union+Times%29&utm_content=Yahoo%21+Mail

By EU Times

The shocking minutes relating to President Putin’s meeting this past week with US Secretary of State John Kerry reveal the Russian leaders “extreme outrage” over the Obama regimes continued protection of global seed and plant bio-genetic giants Syngenta and Monsanto in the face of a growing “bee apocalypse” that the Kremlin warns “will most certainly” lead to world war.

5-31-2013 12-02-35 PM

According to these minutes, released in the Kremlin today by the Ministry of Natural Resources and Environment of the Russian Federation (MNRE), Putin was so incensed over the Obama regimes refusal to discuss this grave matter that he refused for three hours to even meet with Kerry, who had traveled to Moscow on a scheduled diplomatic mission, but then relented so as to not cause an even greater rift between these two nations.

At the center of this dispute between Russia and the US, this MNRE report says, is the “undisputed evidence” that a class of neuro-active insecticides chemically related to nicotine, known as neonicotinoids, are destroying our planets bee population, and which if left unchecked could destroy our world’s ability to grow enough food to feed its population.

So grave has this situation become, the MNRE reports, the full European Commission (EC) this past week instituted a two-year precautionary ban (set to begin on 1 December 2013) on these “bee killing” pesticides following the lead of Switzerland, France, Italy, Russia, Slovenia and Ukraine, all of whom had previously banned these most dangerous of genetically altered organisms from being used on the continent.

Two of the most feared neonicotinoids being banned are Actara and Cruiser made by the Swiss global bio-techseed and pesticide giant Syngenta AG which employs over 26,000 people in over 90 countries and ranks third in total global sales in the commercial agricultural seeds market.

Important to note, this report says, is that Syngenta, along with bio-tech giants Monsanto, Bayer, Dow and DuPont, now control nearly 100% of the global market for genetically modified pesticides, plants and seeds.

Also to note about Syngenta, this report continues, is that in 2012 it was criminally charged in Germany for concealing the fact that itsgenetically modified corn killed cattle, and settled a class-action lawsuit in the US for $105 million after it was discovered they had contaminated the drinking supply of some 52 million Americans in more than 2,000 water districts with its “gender-bending” herbicide Atrazine.

To how staggeringly frightful this situation is, the MNRE says, can be seen in the report issued this past March by the American Bird Conservancy (ABC) wherein they warned our whole planet is in danger, and as we can, in part, read:

“As part of a study on impacts from the world’s most widely used class of insecticides, nicotine-like chemicals called neonicotinoids, American Bird Conservancy (ABC) has called for a ban on their use as seed treatmentsand for the suspension of all applications pending an independent review of the products’ effects on birds, terrestrial and aquatic invertebrates, and other wildlife.

“It is clear that these chemicals have the potential to affect entire food chains. The environmental persistence of the neonicotinoids, their propensity for runoff and for groundwater infiltration, and their cumulative and largely irreversible mode of action in invertebrates raise significant environmental concerns,” said Cynthia Palmer, co-author of the report and Pesticides Program Manager for ABC, one of the nation’s leading bird conservation organizations.

ABC commissioned world renowned environmental toxicologist Dr. Pierre Mineau to conduct the research. The 100-page report, “The Impact of the Nation’s Most Widely Used Insecticides on Birds,” reviews 200 studies on neonicotinoids including industry research obtained through the US Freedom of Information Act. The report evaluates the toxicological risk to birds and aquatic systems and includes extensive comparisons with the older pesticides that the neonicotinoids have replaced. The assessment concludes that the neonicotinoids are lethal to birds and to the aquatic systems on which they depend.

“A single corn kernel coated with a neonicotinoid can kill a songbird,” Palmer said. “Even a tiny grain of wheat or canola treated with the oldest neonicotinoid — called imidacloprid — can fatally poison a bird. And as little as 1/10th of a neonicotinoid-coated corn seed per day during egg-laying season is all that is needed to affect reproduction.”

The new report concludes that neonicotinoid contamination levels in both surface- and ground water in the United States and around the world are already beyond the threshold found to kill many aquatic invertebrates.”

Quickly following this damning report, the MRNE says, a large group of group of American beekeepers and environmentalists sued the Obama regime over the continued use of these neonicotinoids stating: “We are taking the EPA to court for its failure to protect bees from pesticides. Despite our best efforts to warn the agency about the problems posed by neonicotinoids, the EPA continued to ignore the clear warning signs of an agricultural system in trouble.”

And to how bad the world’s agricultural system has really become due to these genetically modified plants, pesticides and seeds, this report continues, can be seen by the EC’s proposal this past week, following their ban on neonicotinoids, in which they plan to criminalize nearly all seeds and plants not registered with the European Union, and as we can, in part, read:

“Europe is rushing towards the good ol days circa 1939, 40… A new law proposed by the European Commission would make it illegal to “grow, reproduce or trade” any vegetable seeds that have not been “tested, approved and accepted” by a new EU bureaucracy named the “EU Plant Variety Agency.”

It’s called the Plant Reproductive Material Law, and it attempts to put the government in charge of virtually all plants and seeds. Home gardeners who grow their own plants from non-regulated seeds would be considered criminals under this law.”

This MRNE report points out that even though this EC action may appear draconian, it is nevertheless necessary in order to purge the continent from continued contamination of these genetically bred “seed monstrosities.”

Most perplexing in all of this, the MRNE says, and which led to Putin’s anger at the US, has been the Obama regimes efforts to protect pesticide-producer profits over the catastrophic damaging being done to the environment, and as the Guardian News Service detailed in their 2 May article titled “US rejects EU claim of insecticide as prime reason for bee colony collapse” and which, in part, says:

“The European Union voted this week for a two-year ban on a class of pesticides, known as neonicotinoids, that has been associated with the bees’ collapse. The US government report, in contrast, found multiple causes for the collapse of the honeybees.”

To the “truer” reason for the Obama regimes protection of these bio-tech giants destroying our world, the MRNE says, can be viewed in the report titled “How did Barack Obama become Monsanto’s man in Washington?” and which, in part, says:

“After his victory in the 2008 election, Obama filled key posts with Monsanto people, in federal agencies that wield tremendous force in food issues, the USDA and the FDA: At the USDA, as the director of the National Institute of Food and Agriculture, Roger Beachy, former director of the Monsanto Danforth Center. As deputy commissioner of the FDA, the new food-safety-issues czar, the infamous Michael Taylor, former vice-president for public policy for Monsanto. Taylor had been instrumental in getting approval for Monsanto’s genetically engineered bovine growth hormone.”

Even worse, after Russia suspended the import and use of an Monsanto genetically modified corn following a study suggesting a link to breast cancer and organ damage this past September, the Russia Today News Service reported on the Obama regimes response:

“The US House of Representatives quietly passed a last-minute addition to the Agricultural Appropriations Bill for 2013 last week – including a provision protecting genetically modified seeds from litigation in the face of health risks.

The rider, which is officially known as the Farmer Assurance Provision, has been derided by opponents of biotech lobbying as the “Monsanto Protection Act,” as it would strip federal courts of the authority to immediately halt the planting and sale of genetically modified (GMO) seed crop regardless of any consumer health concerns.

The provision, also decried as a “biotech rider,” should have gone through the Agricultural or Judiciary Committees for review. Instead, no hearings were held, and the piece was evidently unknown to most Democrats (who hold the majority in the Senate) prior to its approval as part of HR 993, the short-term funding bill that was approved to avoid a federal government shutdown.”

Source: www.eutimes.net

 Comprehensive List Of Politicians Accepting “Bribes” From Monsanto

http://www.pakalertpress.com

The amounts allocated under official provisions to candidates in support of their House or Senate election campaign are by no means large.

What is striking, however, is that the contributions are spread out and include a large number of both Republicans and Democrats.

Whoever wins, Monsanto has the support of the White House, the Senate and the House, not to mention key appoints in the US Department of Agriculture (USDA and the Food and Drug Administration (FDA).

“While there are numerous points of overlap between Monsanto and the United States Government under the Obama administration, the three most important connections are that of Michael Taylor, Roger, Beachy, and Islam Siddiqui—all three of these Monsanto affiliates were appointed to high level positions within the government by the Obama administration.”

House

Barrow, John (D-GA) $2,500

Bishop, Sanford (D-GA) $5,000

Boehner, John (R-OH) $10,000

Braley, Bruce (D-IA) $5,000

Camp, Dave (R-MI) $5,000

Cantor, Eric (R-VA) $10,000

Clay, William L Jr (D-MO)$10,000

Cleaver, Emanuel (D-MO) $5,000

Conaway, Mike (R-TX) $2,000

Courtney, Joe (D-CT) $4,500

Crawford, Rick (R-AR) $2,500

Fincher, Steve (R-TN) $8,000

Gardner, Cory (R-CO) $7,500

Goodlatte, Bob (R-VA) $4,500

Graves, Sam (R-MO) $5,000

Griffin, Tim (R-AR) $1,000

Guthrie, Brett (R-KY) $1,000

Hanabusa, Colleen (D-HI)$5,000

Hannemann, Mufi (D-HI) $1,000

Hartzler, Vicky (R-MO) $3,000

Holden, Tim (D-PA) $1,000

Huelskamp, Tim (R-KS) $2,500

Hultgren, Randy (R-IL) $2,500

Jenkins, Lynn (R-KS) $2,500

Johnson, Timothy (R-IL) $3,000

King, Steven A (R-IA) $2,500

Kingston, Jack (R-GA) $7,000

Kinzinger, Adam (R-IL) $3,500

Kissell, Larry (D-NC) $5,000

Labrador, Raul (R-ID) $2,000

LaMalfa, Doug (R-CA) $1,000

Landry, Jeff (R-LA) $1,000

Latham, Tom (R-IA) $10,000

Loebsack, David (D-IA) $5,000

Long, Billy (R-MO) $2,500

Lucas, Frank D (R-OK) $10,000

Luetkemeyer, Blaine (R-MO)$5,000

Lungren, Dan (R-CA) $1,000

McIntyre, Mike (D-NC) $1,000

Neugebauer, Randy (R-TX)$1,000

Noem, Kristi (R-SD) $1,000

Nunes, Devin (R-CA) $3,500

Owens, Bill (D-NY) $2,000

Peterson, Collin (D-MN) $10,000

Rogers, Hal (R-KY) $7,500

Rokita, Todd (R-IN) $5,000

Roskam, Peter (R-IL) $1,000

Schilling, Bobby (R-IL) $3,000

Schock, Aaron (R-IL) $5,000

Shimkus, John M (R-IL) $5,000

Simpson, Mike (R-ID) $10,000

Smith, Adrian (R-NE) $5,000

Stutzman, Marlin (R-IN) $5,000

Thompson, Bennie G (D-MS)$10,000

Thompson, Glenn (R-PA) $1,000

Upton, Fred (R-MI) $5,000

Valadao, David (R-CA) $2,500

Wagner, Ann L (R-MO) $10,000

Walden, Greg (R-OR) $1,000

Walorski, Jackie (R-IN) $2,500

Womack, Steve (R-AR) $1,000

 Senate

Akin, Todd (R-MO) $3,500

Baucus, Max (D-MT) $1,000

Berg, Rick (R-ND) $10,000

Blunt, Roy (R-MO) $10,000

Boozman, John (R-AR) $5,000

Casey, Bob (D-PA) $2,500

Chambliss, Saxby (R-GA) $5,000

Fischer, Deb (R-NE) $5,000

Gillibrand, Kirsten (D-NY)$1,000

Grassley, Chuck (R-IA) $2,000

Hirono, Mazie K (D-HI) $1,000

Johanns, Mike (R-NE) $1,000

Klobuchar, Amy (D-MN) $5,000

Landrieu, Mary L (D-LA) $1,000

McCaskill, Claire (D-MO)$5,000

McConnell, Mitch (R-KY) $10,000

Moran, Jerry (R-KS) $2,500

Nelson, Ben (D-NE) $13,000

Rehberg, Denny (R-MT) $2,000

Risch, James E (R-ID) $3,500

Roberts, Pat (R-KS) $9,000

Stabenow, Debbie (D-MI) $8,000

Thompson, Tommy G (R-WI)$5,000

Wicker, Roger (R-MS) $1,000

Wilson, Heather A (R-NM)$2,500

Source:  govtslaves

10 13 11 flagbar


The Revolution Was

05/29/2013

http://mises.org/daily/2726#4

 OLDDOGS COMMENTS

This is not an introduction to the article; it is a proclamation of excellence in historical journalism, and something that every American must read, study, and contemplate; for without the knowledge obtained herein, you will be a burden on your country, and an ignorant person. This is true whether you have a PHD., a GED., or nothing. Take it from an excessive compulsive old reader, it doesn’t get any better than this.

By Garet Garrett

[This essay was first published as a monograph in 1938, now republished in Ex-America, copyright Caxton Press.]

5-29-2013 10-48-27 AM

There are those who still think they are holding the pass against a revolution that may be coming up the road. But they are gazing in the wrong direction. The revolution is behind them. It went by in the Night of Depression, singing songs to freedom.

There are those who have never ceased to say very earnestly, “Something is going to happen to the American form of government if we don’t watch out.” These were the innocent disarmers. Their trust was in words. They had forgotten their Aristotle. More than 2,000 years ago he wrote of what can happen within the form, when “one thing takes the place of another, so that the ancient laws will remain, while the power will be in the hands of those who have brought about revolution in the state.”

Worse outwitted were those who kept trying to make sense of the New Deal from the point of view of all that was implicit in the American scheme, charging it therefore with contradiction, fallacy, economic ignorance, and general incompetence to govern.

But it could not be so embarrassed, and all that line was wasted, because, in the first place, it never intended to make that kind of sense, and secondly, it took off from nothing that was implicit in the American scheme.

It took off from a revolutionary base. The design was European. Regarded from the point of view of revolutionary technique, it made perfect sense. Its meaning was revolutionary and it had no other. For what it meant to do, it was from the beginning consistent in principle, resourceful, intelligent, masterly in workmanship, and itmade not one mistake.

The test came in the first one hundred days.

No matter how carefully a revolution may have been planned there is bound to be a crucial time. That comes when the actual seizure of power is taking place. In this case certain steps were necessary. They were difficult and daring steps. But more than that, they had to be taken in a certain sequence, with forethought and precision of timing. One out of place might have been fatal. What happened was that one followed another in exactly the right order, not one out of time or out of place.

Having passed this crisis, the New Deal went on from one problem to another, taking them in the proper order, according to revolutionary technique; and if the handling of one was inconsistent with the handling of another, even to the point of nullity, that was blunder in reverse. The effect was to keep people excited about one thing at a time, and divided, while steadily through all the uproar of outrage and confusion a certain end, held constantly in view, was pursued by main intention.

The end held constantly in view was power.

In a revolutionary situation, mistakes and failures are not what they seem. They are scaffolding. Error is not repealed. It is compounded by a longer law, by more decrees and regulations, by further extensions of the administrative hand. As deLawd said in The Green Pastures, that when you have passed a miracle you have to pass another one to take care of it, so it was with the New Deal. Every miracle it passed, whether it went right or wrong, had one result. Executive power over the social and economic life of the nation was increased. Draw a curve to represent the rise of executive power and look there for the mistakes. You will not find them. The curve is consistent.

At the end of the first year, in his annual message to the Congress, January 4, 1934, President Roosevelt said, “It is to the eternal credit of the American people that this tremendous readjustment of our national life is being accomplished peacefully.”

Peacefully if possible — of course.

But the revolutionary historian will go much further. Writing at some distance in time he will be much less impressed by the fact that it was peacefully accomplished than by the marvelous technique of bringing it to pass not only within the form but within the word, so that people were all the while fixed in the delusion that they were talking about the same things because they were using the same words. Opposite and violently hostile ideas were represented by the same word signs. This was the American people’s first experience with dialectic according to Marx and Lenin.

Until it was too late, few understood one like Julius C. Smith, of the American Bar Association, saying,

Is there any labor leader, any businessman, any lawyer or any other citizen of America so blind that he cannot see that this country is drifting at an accelerated pace into administrative absolutism similar to that which prevailed in the governments of antiquity, the governments of the Middle Ages, and in the great totalitarian governments of today? Make no mistake about it. Even as Mussolini and Hitler rose to absolute power under the forms of law … so may administrative absolutism be fastened upon this country within the Constitution and within the forms of law.

For a significant illustration of what has happened to words — of the double meaning that inhabits them — put in contrast what the New Deal means when it speaks of preserving the American system of free private enterprise and what American business means when it speaks of defending it. To the New Deal these words — the American system of free private enterprise — stand for a conquered province. To the businessman the same words stand for a world that is in danger and may have to be defended.

The New Deal is right.

Business is wrong.

You do not defend a world that is already lost. When was it lost? That you cannot say precisely. It is a point for the revolutionary historian to ponder. We know only that it was surrendered peacefully, without a struggle, almost unawares. There was no day, no hour, no celebration of the event — and yet definitely, the ultimate power of initiative did pass from the hands of private enterprise to government.

“In a revolutionary situation, mistakes and failures are not what they seem. They are scaffolding.”

There it is and there it will remain until, if ever, it shall be reconquered. Certainly government will never surrender it without a struggle.

To the revolutionary mind the American vista must have been almost as incredible as Genghis Khan‘s first view of China — so rich, so soft, so unaware.

No politically adult people could ever have been so little conscious of revolution. There was here no revolutionary tradition, as in Europe, but in place of it the strongest tradition of subject government that had ever been evolved — that is, government subject to the will of the people, not its people but the people. Why should anyone fear government?

In the naive American mind the word “revolution” had never grown up. The meaning of it had not changed since horse-and-buggy days, when Oliver Wendell Holmes said, “Revolutions are not made by men in spectacles.” It called up scenes from Carlyle and Victor Hugo, or it meant killing the Czar with a bomb, as he may have deserved for oppressing his people. Definitely, it meant the overthrow of government by force; and nothing like that could happen here. We had passed a law against it.

Well, certainly nothing like that was going to happen here. That it probably could not happen, and that everybody was so sure it couldn’t made everything easier for what did happen.

Revolution in the modern case is no longer an uncouth business. The ancient demagogic art, like every other art, has, as we say, advanced. It has become in fact a science — the science of political dynamics. And your scientific revolutionary in spectacles regards force in a cold, impartial manner. It may or may not be necessary. If not, so much the better; to employ it wantonly, or for the love of it, when it is not necessary, is vulgar, unintelligent, and wasteful. Destruction is not the aim. The more you destroy the less there is to take over. Always the single end in view is a transfer of power.

Outside of the Communist Party and its aurora of radical intellectuals, few Americans seemed to know that revolution had become a department of knowledge, with a philosophy and a doctorate of its own, a language, a great body of experimental data, schools of method, textbooks, and manuals — and this was revolution regarded not as an act of heroic redress in a particular situation, but revolution as a means to power in the abstract case.

There was a prodigious literature of revolutionary thought concealed only by the respectability of its dress.

Americans generally associated dangerous doctrine with bad printing, rude grammar, and stealthy distribution. Here was revolutionary doctrine in well-printed and well-written books, alongside of best sellers at your bookstore or in competition with detectives on your news-dealer’s counter. As such, it was all probably harmless, or it was about something that could happen in Europe, not here. A little Communism on the newsstand like that might be good for us, in fact, regarded as a twinge of pain in a robust, somewhat reckless social body. One ought to read it, perhaps, just to know. But one had tried, and what dreary stuff it had turned out to be!

To the revolutionary this same dreary stuff was the most exciting reading in the world. It was knowledge that gave him a sense of power. One who mastered the subject to the point of excellence could be fairly sure of a livelihood by teaching and writing, that is, by imparting it to others, and meanwhile dream of passing at a single leap from this mean obscurity to the prestige of one who assists in the manipulation of great happenings; while one who mastered it to the point of genius — that one might dream of becoming himself the next Lenin.

A society so largely founded on material success and the rewards of individualism in a system of free competitive enterprise would be liable to underestimate both the intellectual content of the revolutionary thesis and the quality of the revolutionary mind that was evolving in a disaffected and envious academic world. At any rate, this society did, and from the revolutionary point of view that was one of the peculiar felicities of the American opportunity. The revolutionary mind that did at length evolve was one of really superior intelligence, clothed with academic dignity, always sure of itself, supercilious and at ease in all circumstances. To entertain it became fashionable. You might encounter it anywhere, and nowhere more amusingly than at a banker’s dinner table, discussing the banker’s trade in a manner sometimes very embarrassing to the banker. Which of these brilliant young men in spectacles was of the cult and which was of the cabal — if there was a cabal — one never knew. Indeed, it was possible that they were not sure of it among themselves, a time having come when some were only playing with the thought of extremes while others were in deadly earnest, all making the same sounds. This was the beginning of mask and guise.

The scientific study of revolution included, of course, analysis of opportunity. First and always, the master of revolutionary technique is an opportunist. He must know opportunity when he sees it in the becoming; he must know how to stalk it, how to let it ripen, how to adapt his means to the realities. The basic ingredients of opportunity are few; nearly always it is how they are mixed that matters. But the one indispensable ingredient is economic distress, and, if there is enough of that, the mixture will take care of itself.

The Great Depression as it developed here was such an opportunity as might have been made to order. The economic distress was relative, which is to say that at the worst of it living in this country was better than living almost anywhere else in the world. The pain, nevertheless, was very acute; and much worse than any actual hurt was a nameless fear, a kind of active despair, that assumed the proportions of a national psychosis.

Seizures of that kind were not unknown in American history. Indeed, they were characteristic of the American temperament. But never before had there been one so hard and never before had there been the danger that a revolutionary elite would be waiting to take advantage of it.

This revolutionary elite was nothing you could define as a party. It had no name, no habitat, no rigid line. The only party was the Communist Party, and it was included, but its attack was too obvious and its proletarianism too crude; and moreover, it was under the stigma of not belonging. Nobody could say that about the elite above. It did belong, it was eminently respectable, and it knew the American scene. What it represented was a quantity of bitter intellectual radicalism infiltrated from the top downward as a doctorhood of professors, writers, critics, analysts, advisers, administrators, directors of research, and so on — a prepared revolutionary intelligence in spectacles.

There was no plan to begin with. But there was a shibboleth that united them all: “Capitalism is finished.”

There was one idea in which all differences could be resolved, namely, the idea of a transfer of power. For that, a united front; after that, anything. And the wine of communion was a passion to play upon history with a scientific revolutionary technique.

The prestige of the elite was natural for many reasons, but it rested also upon one practical consideration. When the opportunity came a Gracchus would be needed. The elite could produce one. And that was something the Communist Party could not hope to do.

Now given —

  1. the opportunity,
  2. a country whose fabulous wealth was in the modern forms — dynamic, functional, nonportable,
  3. a people so politically naïve as to have passed a law against any attempt to overthrow their government by force — and,
  4. the intention to bring about what Aristotle called a revolution in the state, within the frame of existing law —

Then from the point of view of scientific revolutionary technique, what would the problems be?

They set themselves down in sequence as follows:

  • The first, naturally, would be to capture the seat of government.
  • The second would be to seize economic power.
  • The third would be to mobilize by propaganda the forces of hatred.
  • The fourth would be to reconcile and then attach to the revolution the two great classes whose adherence is indispensable but whose interests are economically antagonistic, namely, the industrial wage earners and the farmers, called in Europe workers and peasants.
  • The fifth would be what to do with business — whether to liquidate or shackle it.

(These five would have a certain imperative order in time and require immediate decisions because they belong to the program of conquest. That would not be the end. What would then ensue? A program of consolidation. Under that head the problems continue.)

  • The sixth, in Burckhardt’s devastating phrase, would be “the domestication of individuality” — by any means that would make the individual more dependent upon government.
  • The seventh would be the systematic reduction of all forms of rival authority.
  • The eighth would be to sustain popular faith in an unlimited public debt, for if that faith should break the government would be unable to borrow; if it could not borrow it could not spend; and the revolution must be able to borrow and spend the wealth of the rich or else it will be bankrupt.
  • The ninth would be to make the government itself the great capitalist and enterpriser, so that the ultimate power in initiative would pass from the hands of private enterprise to the all-powerful state.

Each one of these problems would have two sides, one the obverse and one the reverse, like a coin. One side only would represent the revolutionary intention. The other side in each case would represent Recovery — and that was the side the New Deal constantly held up to view. Nearly everything it did was in the name of Recovery. But in no case was it true that for the ends of economic recovery alone one solution or one course and one only was feasible. In each case there was an alternative and therefore a choice to make.

What we shall see is that in every case the choice was one that could not fail:

  1. to ramify the authority and power of executive government — its power, that is, to rule by decrees and rules and regulations of its own making;
  2. to strengthen its hold upon the economic life of the nation;
  3. to extend its power over the individual;
  4. to degrade the parliamentary principle;
  5. to impair the great American tradition of an independent, Constitutional judicial power;
  6. to weaken all other powers — the power of private enterprise, the power of private finance, the power of state and local government;
  7. to exalt the leader principle.

There was endless controversy as to whether the acts of the New Deal did actually move recovery or retard it, and nothing final could ever come of that bitter debate because it is forever impossible to prove what might have happened in place of what did. But a positive result is obtained if you ask, Where was the New Deal going?

The answer to that question is too obvious to be debated. Every choice it made, whether it was one that moved recovery or not, was a choice unerringly true to the essential design of totalitarian government, never of course called by that name either here or anywhere else.

How it worked, how the decisions were made, and how acts that were inconsistent from one point of view were consistent indeed from the other — that now is the matter to be explored, seriatim.

Problem 1: To Capture the Seat of Government

There was here no choice of means. The use of force was not to be considered. Therefore, it had to be done by ballot. That being the case, and the factor of political discontent running very high, the single imperative was not to alarm the people.

Senator Taft says that in the presidential campaign of 1932, “the New Deal was hidden behind a program of economy and state rights.”

That is true. Nevertheless, a New Dealer might say, “How could we tell the people what we were going to do when we ourselves did not know?” And that also may be true — that they did not know what they were going to do.

Lenin, the greatest theorist of them all, did not know what he was going to do after he had got the power. He made up plans as he went along, changed them if they did not work, even reversed them, but always of course in a manner consistent with his basic revolutionary thesis. And so it was with Hitler, who did it by ballot, and with Mussolini, who did it by force.

There was probably no blueprint of the New Deal, nor even a clear drawing. Such things as the A.A.A. and the Blue Eagle were expedient inventions. What was concealed from the people was a general revolutionary intention — the intention, that is, to bring about revolution in the state, within the form of law. This becomes clear when you set down what it was the people thought they were voting for in contrast with what they got.

They thought they were voting for less government, not more; for an end of deficit spending by government, not deficit spending raised to the plane of a social principle; and for sound money, not as the New Deal afterward defined it, but as everybody then understood it, including Senator Glass, formerly Secretary of the Treasury, who wrote the money plank in the Democratic Party platform and during the campaign earnestly denounced as akin to treason any suggestion that the New Deal was going to do what it did forthwith proceed to do, over his dramatic protest.

The first three planks of the Democratic Party platform read as follows:

We advocate an immediate and drastic reduction of governmental expenditures by abolishing useless commissions and offices, consolidating departments and bureaus, and eliminating extravagance to accomplish a saving of not less than twenty-five per cent in the cost of the Federal Government. …

We favor maintenance of the national credit by a federal budget annually balanced on the basis of accurate executive estimates within revenues, raised by a system of taxation levied on the principle of ability to pay.

We advocate a sound currency to be preserved at all hazards and an international monetary conference called on the invitation of our government to consider the rehabilitation of silver and related questions.

Mr. Roosevelt pledged himself to be bound by this platform as no president had ever before been bound by a party document. All during the campaign he supported it with words that could not possibly be misunderstood. He said,

I accuse the present administration [Hoover’s] of being the greatest spending administration in peace time in all American history — one which piled bureau on bureau, commission on commission, and has failed to anticipate the dire needs or reduced earning power of the people. Bureaus and bureaucrats have been retained at the expense of the taxpayer…. We are spending altogether too much money for government services which are neither practical nor necessary. In addition to this, we are attempting too many functions and we need a simplification of what the federal government is giving to the people.

This he said many times.

Few of the great majority that voted in November, 1932 for less federal government and fewer federal functions could have imagined that by the middle of the next year the extensions of government and the multiplication of its functions would have been such as to create serious administrative confusion in Washington, which the president, according to his own words, dealt with in the following manner:

On July eleventh I constituted the Executive Council for the simple reason that so many new agencies having been created, a weekly meeting with the members of the Cabinet in joint session was imperative…. Mr. Frank C. Walker was appointed as Executive Secretary of the Council.

Fewer still could have believed that if such a thing did happen it would be more than temporary, for the duration of the emergency only; and yet within a year after Mr. Roosevelt had pledged himself, if elected, to make a 25 percent cut in federal government by “eliminating functions” and by “abolishing many boards and commissions,” he was writing, in a book entitled On Our Way, the following:

In spite of the necessary complexity of the group of organizations whose abbreviated titles have caused some amusement, and through what has seemed to some a mere reaching out for centralized power by the federal government, there has run a very definite, deep and permanent objective.

Few of the majority that voted in November 1932 for an end of deficit spending and a balanced federal budget could have believed that the president’s second budget message to Congress would shock the financial reason of the country, or that in that same book, On Our Way, he would be writing about it in a blithesome manner, saying,

The next day, I transmitted the Annual Budget Message to the Congress. It is, of course, filled with figures and accompanied by a huge volume containing in detail all of the proposed appropriations for running the government during the fiscal year beginning July 1,1934 and ending June 30,1935. Although the facts of previous appropriations had all been made public, the country, and I think most of the Congress, did not fully realize the huge sums which would be expended by the government this year and next year; nor did they realize the great amount the Treasury would have to borrow.

And certainly almost no one who voted in November 1932 for a sound, gold-standard money according to the Glass money plank in the platform could have believed that less than a year later, in a radio address reviewing the extraordinary monetary acts of the New Deal, the president would be saying, “We are thus continuing to move toward a managed currency.”

The broken party platform, as an object, had a curious end. Instead of floating away and out of sight as a proper party platform should, it kept coming back with the tide. Once it came so close that the president had to notice it. Then all he did was to turn it over, campaign side down, with the words

I was able, conscientiously, to give full assent to this platform and to develop its purpose in campaign speeches. A campaign, however, is apt to partake so much of the character of a debate and the discussion of individual points that the deeper and more permanent philosophy of the whole plan (where one exists) is often lost.

At that the platform sank.

And so the first problem was solved. The seat of government was captured by ballot, according to law.

Problem 2: To Seize Economic Power

This was the critical problem. The brilliant solution of it will doubtless make a classic chapter in the textbooks of revolutionary technique. In a highly evolved money economy, such as this one, the shortest and surest road to economic power would be what? It would be control of money, banking, and credit. The New Deal knew that answer. It knew also the steps and how to take them, and above all, it knew its opportunity.

It arrived at the seat of government in the midst of that well-known phenomenon called a banking crisis, such as comes at the end of every great depression. It is like the crisis of a fever. When the banks begin to fail, pulling one another down, that is the worst that can happen. If the patient does not die then he will recover. We were not going to die. The same thing had happened to us before, once or twice in every twenty years, and always before the cure had brought itself to pass as it was bound to do again.

In his inaugural address, March 4, 1933, the president declared that the people had “asked for discipline and direction under leadership”; that he would seek to bring speedy action “within my Constitutional authority”; and that he hoped the “normal balance of executive and legislative authority” could be maintained, and then said,

But in the event that Congress shall fail … and in the event that the national emergency is still critical … I shall ask Congress for the one remaining instrument to meet the crisis — broad executive power to make war against the emergency, as great as the power that would be given to me if we were in fact invaded by a foreign foe.

It is true that people wanted action. It is true that they were in a mood to accept any painkiller, and damn the normal balance of authority between the executive and legislative authority. That was an emotional state of mind perfectly suited to a revolutionary purpose, and the president took advantage of it to make the first startling exposition of New Deal philosophy. Note his assertion of the leadership principle over any other. Discipline under leadership. Note the threat to Congress — “in the event that Congress shall fail.” But who was to say if the Congress had failed? The leader, of course. If in his judgment the Congress failed, then, with the people behind him, he would demand war powers to deal with an economic emergency.

The word emergency was then understood to mean what the dictionaries said it meant — namely, a sudden juncture of events demanding immediate action. It was supposed to refer only to the panic and the banking crisis, both temporary.

But what it meant to the president, as nobody then knew, was a very different thing. Writing a year later, in his book, On Our Way, he said,

Strictly speaking, the banking crisis lasted only one week…. But the full meaning of that word emergency related to far more than banks; it covered the whole economic and therefore the whole social structure of the country. It was an emergency that went to the roots of our agriculture, our commerce, our industry; it was an emergency that has existed for a whole generation in its underlying causes and for three-and-one-half years in its visible effects. It could be cured only by a complete reorganization and measured control of the economic structure. It called for a long series of new laws, new administrative agencies. It required separate measures affecting different subjects; but all of them component parts of a fairly definite broad plan.

So, what the New Deal really intended to do, what it meant to do within the Constitution if possible, with the collaboration of Congress if Congress did not fail, but with war powers if necessary, was to reorganize and control the “whole economic and therefore the whole social structure of the country.” And therein lay the meaning — the only consistent meaning — of a series of acts touching money, banking and credit which, debated as monetary policy, made no sense whatever.

The first step, three days before the new Congress convened, was an executive decree suspending all activities of banking throughout the country. Simply, every bank was shut up. The same decree forbade, under pain of fine and imprisonment, any dealing in foreign exchange or any transfer of credit from the United States to any place abroad, and that was to slam the door against the wicked rich who might be tempted to run out.

The second step was an act of Congress, saying, “Acts of the President and Secretary of the Treasury since March 4, 1933, are hereby confirmed and approved.”

That made everything legal after the fact: and it was the first use of Congress as a rubber stamp. The same act of Congress provided that no bank in the Federal Reserve System should resume business except subject to rules and regulations to be promulgated by the Secretary of the Treasury, gave the president absolute power over foreign exchange and authorized the federal government to invest public funds in private bank stock, thereby providing banks with new capital owned by the government. And that was the act that authorized the president to require people to surrender their gold. Congress did not write any of these acts. It received them from the White House and passed them.

The third step was a decree by the president requiring all persons and corporations whatever to divest themselves of gold and hand it over to the government. The law authorizing him to do that had fixed the penalty of noncompliance at a fine equal to twice the value of the gold. The executive decree added the penalty of imprisonment.

In view of further intentions not yet disclosed it was imperative for the government to get possession of all the gold. With a lot of gold in private hands, its control of money, banking, and credit could have been seriously challenged. All that the government asked for at first was possession of the gold, as if it were a trust. For their gold as they gave it up people received paper money, but this paper money was still gold-standard money — that is to say, it had always been exchangeable for gold, dollar for dollar, and people supposed that it would be so again, when the crisis passed. Not a word had yet been said about devaluing the dollar or repudiating the gold standard. The idea held out was that as people surrendered their gold they were supporting the nation’s credit.

This decree calling in the gold was put forth on April 5. There was then an awkward interlude. The Treasury was empty. It had to sell some bonds. If people knew what was going to happen they might hesitate to buy new Treasury bonds. Knowing that it was going to devalue the dollar, knowing that it was going to repudiate the gold-redemption clause in its bonds, even while it was writing the law of repudiation, the government nevertheless issued and sold to the people bonds engraved as usual, that is, with the promise of the United States Government to pay the interest and redeem the principal “in United States gold coin of the present standard of value.”

The fourth step was the so-called Inflation Amendment attached to the Emergency Farm Relief Act. This law made sure that the Treasury need not be caught that way again. It forcibly opened the tills of the Federal Reserve Bank System to three billions of Treasury notes, authorized three billions of fiat money to be issued in the president’s discretion, and gave the president power in his own discretion to devalue the dollar by one-half.

The fifth step was the act of repudiation. By resolution June 5, 1933, the Congress repudiated the gold redemption clause in all government obligations, saying they should be payable when due in any kind of money the government might see fit to provide; and, going further, it declared that the same traditional redemption clause in all private contracts, such, for example, as railroad and other corporation bonds, was contrary to public policy and therefore invalid.

The sixth step was a new banking act giving the federal government power to say how private banks should lend their money, on what kinds of collateral and in what proportions, and the arbitrary power to cut them off from credit with Federal Reserve Banks. This arbitrary power to cut them off from credit was a stranglehold, and it was gained by changing one little word in the country’s organic banking law. From the beginning until then the law was that a Federal Reserve Bank “shall” lend to a private bank on suitable security. This word was changed to “may.” Thus a right became a privilege and a privilege that could be suspended at will.

The seventh step — and it was the one most oblique — was to produce what may be described as monetary pandemonium. This continued for six months. To understand it will require some effort of attention.

When by the Inflation Amendment the dollar was cut loose from gold it did not immediately fall. That was because, in spite of everything, it was the best piece of money in the whole world. Well then, when the dollar did not fall headlong of its own weight the government began to club it down, and the club it used to beat it with was gold.

In the president’s words the procedure was like this:

I am authorizing the Reconstruction Finance Corporation to buy newly mined gold in the United States at prices to be determined from time to time after consultation with the secretary of the treasury and the president. Whenever necessary to the end in view we shall also buy or sell gold in the world market. My aim in taking this step is to establish and maintain continuous control. This is a policy and not an expedient.

Each morning thereafter the Treasury announced the price the government would pay for gold in paper dollars, one day 30 paper dollars for one ounce of gold, the next day 32 dollars, two days later 34 dollars, and so on; and not only the newly mined gold in this country but anybody’s gold anywhere in the world. Thus day by day the president and the Secretary of the Treasury determined the value of gold priced in American paper dollars, or the value of American paper dollars priced in gold, which was the same thing; and how they did it or by what rule, if any, nobody ever knew.

The spectacle of a great, solvent government paying a fictitious price for gold it did not want and did not need and doing it on purpose to debase the value of its own paper currency was one to astonish the world. What did it mean? Regarded as monetary policy it made no meaning whatever. But again, if you will regard it from the point of view of revolutionary technique, it has meaning enough.

One effect was that private borrowing and lending, except from day to day, practically ceased. With the value of the dollar being posted daily at the Treasury like a lottery number, who would lend money for six months or a year, with no way of even guessing what a dollar would be worth when it came to be paid back? “No man outside of a lunatic asylum,” said Senator Glass, “will loan his money today on a farm mortgage.”

But the New Deal had a train of federal lending agencies ready to start. The locomotive was the Reconstruction Finance Corporation. The signal for the train to start was a blast of propaganda denouncing Wall Street, the banks and all private owners of capital for their unwillingness to lend. So the government, in their place, became the great provider of credit and capital for all purposes. It loaned public funds to farmers and home owners to enable them to pay off their mortgages; it loaned also to banks, railroads, business, industry, new enterprise, even to foreign borrowers.

Thereby private debt was converted into public debt in a very large and popular way. It was popular because the government, having none of the problems of a bank or a private lender, with no fetish of solvency to restrain it, with nothing really to lose even though the money should never come back, was a benevolent lender. It loaned public money to private borrowers on terms and at rates of interest with which no bank nor any private lender could compete; and the effect was to create a kind of fictitious, self-serving necessity. The government could say to the people, and did say to them: “Look. It is as we said. The money changers, hating the New Deal, are trying to make a credit famine. But your government will beat them.”

In a fireside chat, October 22, 1933, the president said,

I have publicly asked that foreclosures on farms and chattels and on homes be delayed until every mortgagor in the country shall have had full opportunity to take advantage of Federal credit. I make the further request, which many of you know has already been made through the great Federal credit organizations, that if there is any family in the United States about to lose its home or about to lose its chattels, that family should telegraph at once either to the Farm Credit Administration or to the Home Owners Loan Corporation in Washington requesting their help. Two other great agencies are in full swing. The Reconstruction Finance Corporation continues to lend large sums to industry and finance, with the definite objective of making easy the extending of credit to industry, commerce and finance.

The other great lending agency to which he referred was the one that dispensed federal credit to states, cities, towns, and worthy private organizations for works of public and social benefit. In the same fireside chat he urged them to come on with their projects. “Washington,” he said, “has the money and is waiting for the proper projects to which to allot it.”

Then began to be heard the saying that Washington had become the country’s Wall Street, which was literally true. Anyone wanting credit for any purpose went no longer to Wall Street but to Washington. The transfer of the financial capital of the nation to Washington, the president said, would be remembered, as “one of the two important happenings of my Administration.”

What was the source of the money? Partly it was imaginary money, from inflation. Largely it was the taxpayer’s money. If the government lost it the taxpayer would have to find it again. And some of it, as the sequel revealed, was going to be confiscated money. By this time the New Deal had got control of the public purse. The Congress had surrendered control of it by two acts of self-abnegation. One was the Inflation Amendment and the other was an appropriation of $3,300,000,000 put into the hands of the president to do with what he liked as the architect of recovery.

All through the commotion of these unnatural events one end was held steadily in view, and that was a modern version of the act for which kings had been hated and sometimes hanged, namely to clip the coin of the realm and take the profit into the king’s revenue.

The eighth step was the act of confiscation. At the president’s request the Congress, on January 30, 1934, passed a law vesting in the federal government absolute title to all that gold which people had been obliged to exchange for gold-standard paper dollars the year before, thinking as they did that it was for the duration of the emergency only and that they were supporting the nation’s credit. They believed the statement issued at the time by the secretary of the Treasury, saying, “Those surrendering the gold of course receive an equivalent amount of other forms of currency and those other forms of currency may be used for obtaining gold in an equivalent amount when authorized for proper purposes.” Having by such means got physical possession of the gold, it was a very simple matter for the government to confiscate it. All that it had to do was to have Congress pass a law vesting title in the government.

The ninth and last step was to devalue the dollar. In his message to Congress asking for the law that confiscated the gold, the president said, “I do not believe it desirable in the public interest that an exact value be now fixed.” Nevertheless, on January 31, 1934, the day after the act of confiscation was passed, he did fix the exact value of the dollar at 59 per cent of its former gold content. The difference, which was 41 cents in every dollar of gold that had been confiscated, was counted as government profit and took the form of a free fund of two billions in the Treasury, called a stabilization fund, with which the president could do almost anything he liked. Actually it was used to take control of the foreign exchange market out of the hands of international finance.

Control of money, banking, and credit had passed to Washington. Thus problem number two was solved.

The reason for giving so much attention to it is that it was the New Deal’s most brilliant feat; and certainly not the least remarkable fact about it was the skill with which criticism was played into making its fight on false and baited ground. Each step as it occurred was defended, and therefore attacked, on ground of monetary policy, whereas the ultimate meaning was not there at all.

Consider first the logical sequence of the nine steps; consider secondly that if national recovery had been the end in view many alternative steps were possible, whereas from the point of view of revolutionary technique these nine were the imperative steps and the order in which they were taken was the necessary order. Then ask if it could have happened that way by chance.

Not even a New Dealer any longer maintains that the four steps directly involving gold, namely, the seizure of it, the repudiation of the government’s gold contracts, then the confiscation of the gold, and lastly the devaluation of the dollar, were necessary merely as measures toward national recovery. In the history of the case there is no more dramatic bit of testimony than that of Senator Glass, formerly Secretary of the Treasury, who in April, 1933, rose from a sick bed and appeared in the Senate to speak against the Inflation Amendment. He said,

“I wrote with my own hand that provision of the national Democratic platform which declared for a sound currency to be maintained at all hazards…. With nearly 40 per cent of the entire gold supply of the world, why are we going off the gold standard? With all the earmarked gold, with all the securities of ours they hold, foreign governments could withdraw in total less than $700,000,000 of our gold, which would leave us an ample fund of gold, in the extremist case, to maintain gold payments both at home and abroad…. To me the suggestion that we may devalue the gold dollar 59 per cent means national repudiation. To me it means dishonor. In my conception of it, it is immoral…. There was never any necessity for a gold embargo. There is no necessity for making statutory criminals of citizens of the United States who may please to take their property in the shape of gold or currency out of the banks and use it for their own purposes as they may please. We have gone beyond the cruel extremities of the French, and they made it a capital crime, punishable at the guillotine, for any tradesman or individual citizens of the realm to discriminate in favor of gold and against their printing press currency. We have gone beyond that. We have said that no man may have his gold, under penalty of ten years in the penitentiary or $10,000 fine.”

And when the “gold cases” went to the United States Supreme Court — the unreconstructed court — the judgment was one that will be forever a blot on a certain page of American history. The Court said that what the government had done was immoral but not illegal. How could that be ? Because the American government, like any other government, has the sovereign power to commit an immoral act. Until then the American government was the only great government in the world that had never repudiated the word engraved upon its bond.

Problem 3: To Mobilize by Propaganda the Forces of Hatred

“We must hate,” said Lenin. “Hatred is the basis of Communism.” It is no doubt the basis of all mass excitement. But Lenin was not himself the master propagandist. How shall the forces of hatred be mobilized? What are the first principles? These are questions that now belong to a department of political science.

The first principle of all is to fix the gaze of hatred upon one object and to make all other objects seem but attributes of that one, for otherwise the force to be mobilized will dissipate itself in many directions.

This was expounded by Hitler in Mein Kampf, where he said, “It is part of the genius of a great leader to make adversaries of different fields appear as always belonging to one category. As soon as the wavering masses find themselves confronting too many enemies objectivity at once steps in and the question is raised whether actually all the others are wrong and their own cause or their own movement right…. Therefore a number of different internal enemies must always be regarded as one in such a way that in the opinion of the mass of one’s own adherents the war is being waged against one enemy alone. This strengthens the belief in one’s own cause and increases one’s bitterness against the attackers.”

How in a given situation to act upon this first principle of strategy is a matter to be very carefully explored. You come then to method and tactics, studies of the mass mind, analysis of symbols and slogans, and above all, skill of manipulation.

Lasswell and Blumenstock, in World Revolutionary Propaganda, define propaganda as “the manipulation of symbols to control controversial attitudes.” Symbols they define as “words and word substitutes like pictures and gestures.” And the purpose of revolutionary propaganda “is to arouse hostile attitudes toward the symbols and practices of the established order.”

It may be however that people are so deeply attached by habit and conscience to the symbols of the established order that to attack them directly would produce a bad reaction. In that case the revolutionary propagandist must be subtle. He must know how to create in the mass mind what the scientific propagandist calls a “crisis of conscience.” Instead of attacking directly those symbols of the old order to which the people are attached he will undermine and erode them by other symbols and slogans, and these others must be such as either to take the people off guard, or, as Lasswell and Blumenstock say, they must be “symbols which appeal to the conscience on behalf of symbols which violate the conscience.”

This is an analytic statement and makes it sound extremely complex. Really it is quite simple. For example, if the propagandist said, “Down with the Constitution!” — bluntly like that — he would be defeated because of the way the Constitution is enshrined in the American conscience. But he can ask: “Whose Constitution?” That question may become a slogan. He can ask: “Shall the Constitution be construed to hold say it is.” And that creates an image, which is a symbol. He can ask: “shall the Constitution be construed to hold property rights above human rights?” Or, as the president did, he may regretfully associate the Constitution with “horse-and-buggy days.”

The New Deal’s enmity for that system of free and competitive private enterprise which we call capitalism was fundamental. And this was so for two reasons, namely: first, that its philosophy and that of capitalism were irreconcilable, and secondly, that private capitalism by its very nature limits government.

In Russia capitalism, such as it was there, could be attacked directly. The people were not attached to it in any way. In this country it was very different. Americans did not hate capitalism. They might criticise it harshly for its sins, most of which were sins of self-betrayal, but its true symbols nevertheless were deeply embedded in the American tradition; and, moreover, a great majority of the people were in one way or another little capitalists. To have said, “Down with capitalism!” or, “Down with free private enterprise!” would have been like saying, “Down with the Constitution!” The attack, therefore, had to be oblique.

In his first inaugural address, March 4, 1933, the president said,

Values have shrunk to fantastic levels; taxes have risen; our ability to pay has fallen; … the withered leaves of industrial enterprise lie on every side; farmers find no market for their produce; the savings of many years in thousands of families are gone. More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return…. Yet our distress comes from no failure of substance…. Nature still offers her bounty. Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because the rulers of the exchange of mankind’s goods have failed, … have admitted their failure and have abdicated. Practices of the unscrupulous moneychangers stand indicted in the court of public opinion, rejected by the hearts and minds of men…. They know only the rules of a generation of self-seekers…. Yes, the moneychangers have fled from their high seats in the temple of our civilization. We may now restore that temple to the ancient truths. The measure of that restoration lies in the extent to which we apply social values more noble than mere monetary profit.

There was the pattern and it never changed. The one enemy, blamable for all human distress, for unemployment, for low wages, for the depression of agriculture, for want in the midst of potential plenty — who was he? The moneychanger in the temple. This was a Biblical symbol and one of the most hateful. With what modern symbol did this old and hateful one associate? With the Wall Street banker, of course; and the Wall Street banker was the most familiar and the least attractive symbol of capitalism.

Therefore, capitalism, obliquely symbolized by the moneychanger scourged out of the temple, was entirely to blame; capitalism was the one enemy, the one object to be hated. But never was it directly attacked or named; always it was the old order that was attacked. The old order became a symbol of all human distress. “We cannot go back to the old order,” said the president. And this was a very hateful counter symbol, because the old order, never really defined, did in fact associate in the popular mind with the worst debacle in the history of capitalism.

It was never the capitalist that was directly attacked. Always it was the economic royalist, the brigand of the skyscrapers, the modern Tory — all three hateful counter symbols. The true symbols of the three competitive systems in which people believed were severely let alone. The technique in every case was to raise against them counter symbols. Thus, against the inviolability of private property was raised the symbol of those who would put property rights above human rights; and against all the old symbols of individualism and self-reliance was raised the attractive counter symbol of security.

To bring hatred to bear upon the profit motive there were two techniques. One was to say, as the president said in his first inaugural, that social values were more noble than mere monetary profit, as if in any free scheme you could have social gains without plenty of mere monetary profit; the other was to speak only of great profits, as if in a free profit and loss system you could have little profits and little losses without big profits and big losses.

It is not unnatural for people to think envious thoughts about large profits, and envious thoughts are very easy to exploit, as every demagogue knows. But no government before the New Deal had ever deliberately done it. In a homecoming speech to his Duchess County neighbors, in August, 1933, the president explained why it had seemed necessary for the New Deal to limit personal liberty in certain ways. It was to make all men better neighbors in spite of themselves; and as if this were no new thing he said,

Many years ago we went even further in saying that the government would place increasing taxes on increasing profits because very large profits were, of course, made at the expense of the neighbors and should, to some extent at least, be used for the benefit of the neighbors.

Large profit as such becomes therefore a symbol of social injury, merely because it is large; moreover, it is asserted that large profit had long been so regarded by the government and penalized for that reason.

Of all the counter symbols this was the one most damaging to the capitalistic system. Indeed, if it were accepted, it would be fatal, because capitalism is a profit and loss system and if profits, even very large profits, are socially wrong, there is nothing more to be said for it. But it was a false symbol, and false for these three reasons, namely: first, there is no measure of large profit; second, large profits are of many kinds and to say simply that large profits are “of course made at the expense of the neighbors” is either nonsense or propaganda, as you like; and, in the third place, the history is wrong.

When the federal government many years ago imposed a graduated income tax — that is, taxing the rich at a higher rate than the well-to-do and taxing the poor not at all, the idea was not that large profits or large incomes were gained at the expense of one’s neighbors, not that the rich were guilty because they were rich. The idea was to impose taxes according to the ability to pay. The well-to-do could afford to pay more than the poor and the rich could afford to pay more than the well-to-do, and that was all.

What made it all so effective was that this was the American people’s first experience with organized government propaganda designed “to arouse hostile attitudes toward the symbols and practices of the established order” — and that, if you will remember, was the most precise definition of revolutionary propaganda that Lasswell and Blumenstock could think of in their scientific study of World Revolutionary Propaganda.

Problem 4: To Reconcile and Attach to the Revolution the Two Great Classes Whose Adherence Is Indispensable, Namely, the Industrial Wage Earner and the Farmer, Called in Europe Workers and Peasants

This is the problem for which revolutionary theory has yet to find the right solution, if there is one. The difficulty is that the economic interests of the two classes are antagonistic. If you raise agricultural prices to increase the farmer’s income the wage earner has to pay more for food. If you raise wages to increase the wage earner’s income the farmer has to pay more for everything he buys. And if you raise farm prices and wages both it is again as it was before. Nevertheless, to win the adherence which is indispensable you have to promise to increase the income of the farmer without hurting the wage earner and to increase the wage earner’s income without hurting the farmer. The only solution so far has been one of acrobatics. The revolutionary party must somehow ride the seesaw.

In Russia it was the one most troublesome problem. The peasants understood at first that there was to be a free distribution of land among them. When the Bolshevik regime put forth its decrees to abolish private property and nationalize the land the peasants went on taking the big estates, dividing the land and treating it as their own; and for a while the government had to let them alone. To have stopped them at once would have hurt the revolution. And when at length the government did come to deal with the peasants as if they were its tenants, whose part was to produce food not for profit but for the good of the whole, the revolution all but died of hunger.

The American farmer was a powerful individualist, with a long habit of aggressive political activity. His complaint was that his relative share of the national income had shrunk and was in all reason too little. This was from various causes, notably, (1) the worldwide depression of agriculture, (2) the low level of farm prices in a market where competition acted freely, and (3) the relative stability of industrial prices in a market that enjoyed tariff protection against world competition. Everything the farmer sold was too cheap; everything he bought was too dear. What he complained of really, though he did not always put it that way, was the economic advantage of the industrial wage earner.

The New Deal was going to redistribute the national income according to ideals of social and economic justice. That was the avowed intention. And once it had got control of money, banking, and credit it could in fact redistribute the national income almost as by a slide rule. The trouble was that if it gave the farmer a large share and left the wage earner’s share as it was it would lose the support of labor. And if it used its power to raise all prices in a horizontal manner, according to the thesis of reflation, the economic injustice complained of by the farmer would not be cured.

The solution was a resort to subsidies. If the prices the farmer received were not enough to give him that share of the national income which he enjoyed before the worldwide depression of agriculture, the difference would be made up to him in the form of cash subsidy payments out of the public treasury. The farmer on his part obliged himself to curtail production under the government’s direction; it would tell him what to plant and how much. The penalty for not conforming was to be cut off from the stream of beautiful checks issuing from the United States Treasury. The procedure was said to be democratic. It is true that a majority of farmers did vote for it when polled by the federal county agents. The subsidies were irresistible. More income for less work and no responsibility other than to plant and reap as the government said. Nevertheless, it led at once to compulsion, as in cotton, and it led everywhere to coercion of minorities.

The total subsidy payments to farmers ran very high, amounting in one year to more than eight hundred million dollars. And beside these direct subsidy payments, the government conferred upon the farmer the benefit of access to public credit at very low rates of interest with which to refund its mortgages.

Actually, the farmer’s income was increased. That was statistically apparent. Whether his relative share of the national income was increased, beyond what it would have been, is another matter. On the whole, probably not. For when the New Deal had done this for the farmer it had to do the equivalent or more for labor, and anything it did to increase labor’s share would tend to raise the cost of everything the farmer bought. There was the seesaw again.

What the New Deal did for labor was to pass a series of laws the purpose of which was to give organized labor the advantage in its bargaining with the employer. As these laws were construed and enforced they did principally three things. They delivered to organized labor a legal monopoly of the labor supply; they caused unionism to become in fact compulsory, and they made it possible for unions to practice intimidation, coercion, and violence with complete immunity, provided only it was all in the way of anything that might be called a labor dispute. The underlying idea was that with this power added to it, together with a minimum wage and hour act that made overtime a way of fattening the pay envelope, organized labor could very well by its own exertions increase its share of the national income enough to equal or to overcome the farmer’s new advantage. And this organized labor proceeded forthwith to do.

But there was at the same time an indirect subsidy to organized labor much greater than the direct subsidy paid to the farmer. Federal expenditures for work relief, amounting in the average to more than two billions a year, must be regarded as a subsidy to organized labor. The effect was to keep eight or ten million men off the labor market, where their competition for jobs would have been bound to break the wage structure. Thus union labor’s monopoly of the labor supply was protected.

Both the subsidies to agriculture and those to labor came out of the United States Treasury, and since the money had to be borrowed by the government and added to the public debt, you would hardly say the solution was either perfect or permanent. But from the point of view of revolutionary technique, that did not matter, provided certain other and more important ends were gained. What would those other ends be? One would be the precedent of making the federal government divider of the national income; another would be to make both the farmer and the union wage earner dependent upon the government — the farmer for his income and union labor for its power. Neither the farmer who takes income from the government nor the union wage earner who accepts from the government a grant of power is thereafter free.

Problem 5: What to Do with Business — Whether to Liquidate or Shackle It

There was a director of the budget who was not at heart a New Dealer. One day he brought to the president the next annual budget — the one of which the president afterward said, “The country, and I think most of Congress, did not fully realize the large sums which would be expended by the government this year and next, nor did they realize the great amount the Treasury would have to borrow.”

At the end of his work the director of the budget had written a paragraph saying simply and yet in a positive manner that notwithstanding the extraordinary activities indicated by the figures and by the appropriations that were going to be made, the government had really no thought of going into competition with private enterprise.

Having lingered for some time over this paragraph the president said, “I’m not so sure we ought to say that.”

The director of the budget asked, “Why not, Mr. President?”

The president did not answer immediately, but one of his aides who had been listening said, “I’ll tell you why. Who knows that we shall not want to take over all business?”

The director of the budget looked at the president, and the president said, “Let’s leave it out.” And of course it was left out.

It may have been that, at that time, the choice was still in doubt. Under the laws of Delaware, the government had already formed a group of corporations with charter powers so vague and extremely broad that they could have embraced ownership and management of all business. They were like private corporations, only that their officers were all officers of the government, and the capital stock was all government owned. The amount of capital stock was in each case nominal; it was of course expansible to any degree. Why they were formed or what they were for was never explained. In a little while they were forgotten.

Business is in itself a power. In a free economic system it is an autonomous power, and generally hostile to any extension of government power. That is why a revolutionary party has to do something with it. In Russia, it was liquidated; and although that is the short and simple way, it may not turn out so well because business is a delicate and wonderful mechanism; moreover, if it will consent to go along it can be very helpful. Always in business there will be a number, indeed, an astonishing number, who would sooner conform than resist, the quislings of capitalism. Neither Hitler nor Mussolini ever attempted to liquidate business. They only deprived it of its power and made it serve.

How seriously the New Deal may have considered the possibility of liquidating business we do not know. Its decision, at any rate, was to embrace the alternative; and the alternative was to shackle it.

In his annual message to Congress the president said,

“In the past few months, as a result of our action, we have demanded of many citizens that they surrender certain licenses to do as they please in their business relationships; but we have asked this in exchange for the protection which the State can give against exploitation by their fellow men or by combinations of their fellow men.

Not even business would be asked to surrender its liberties for nothing. What was it going to receive in exchange? Protection against itself, under the eye of the Blue Eagle.

That did not last. The Blue Eagle came and went. Gen. Hugh Johnson, the stormy administrator of the NRA, said afterward that it was already dying when the Supreme Court cut off its head. Yet business was not unshackled. After all, one big shackle for all business was clumsy and unworkable. There were better ways.

Two years later the president was saying to Congress, “In thirty-four months we have built up new instruments of public power.” Who had opposed this extension of government power? He asked the question and answered it. The unscrupulous, the incompetent, those who represented entrenched greed — only these had opposed it. Then he said, “In the hands of a people’s government this power is wholesome and proper. But in the hands of political puppets, of an economic autocracy, such power would provide shackles for the liberties of the people.”

There, unconsciously perhaps, is a complete statement of the revolutionary thesis. It is not a question of law. It is a question of power. There must be a transfer of power. The president speaks not of laws; he speaks of new instruments of power, such as would provide shackles for the liberties of the people if they should ever fall in other hands. What then has the government done? Instead of limiting by law the power of what it calls economic autocracy the government itself has seized the power.

Problem 6: The Domestication of the Individual

This was not a specific problem. It was rather a line of principle to which the solution of every other problem was referred. As was said before, in no problem to be acted upon by the New Deal was it true that one solution and one only was imperative. In every case there was some alternative. But it was as if in every case the question was, “Which course of action will tend more to increase the dependence of the individual upon the federal government?” — and as if invariably the action resolved upon was that which would appeal rather to the weakness than to the strength of the individual.

And yet the people to be acted upon were deeply imbued with the traditions and maxims of individual resourcefulness — a people who grimly treasured in their anthology of political wisdom the words of Grover Cleveland, who vetoed a federal loan of only ten thousand dollars for drought relief in Texas, saying, “I do not believe that the power and duty of the general Government ought to be extended to the relief of individual suffering…. A prevalent tendency to disregard the limited mission of this power should, I think, be steadfastly resisted, to the end that the lesson should be constantly enforced that though the people support the Government the Government should not support the people…. Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our National character.”

Which was only one more way of saying a hard truth that was implicit in the American way of thinking, namely, that when people support the government they control government, but when the government supports the people it will control them.

Well, what could be done with a people like that? The answer was propaganda. The unique American tradition of individualism was systematically attacked by propaganda in three ways, as follows:

Firstly, by attack that was direct, save only for the fact that the word individualism was qualified by the uncouth adjective (rugged) and (rugged individualism) was made the symbol of such hateful human qualities as greed, utter selfishness, and ruthless disregard of the sufferings and hardships of one’s neighbors;

Secondly, by suggestion that in the modern environment the individual, through no fault or weakness of his own, had become helpless and was no longer able to cope with the adversities of circumstances. In one of his fireside chats, after the first six months, the president said, “Long before Inauguration Day I became convinced that individual effort and local effort and even disjointed Federal effort had failed and of necessity would fail, and, therefore, that a rounded leadership by the Federal Government had become a necessity both of theory and of fact.” And, Thirdly, true to the technique of revolutionary propaganda, which is to offer positive substitute symbols, there was held out to the people in place of all the old symbols of individualism the one great new symbol of (security.)

After the acts that were necessary to gain economic power the New Deal created no magnificent new agency that had not the effect of making people dependent upon the federal government for security, income, livelihood, material satisfactions, or welfare. In this category, its principal works were these:

  • For the farmer, the AAA, the FCA, the CCC, the FCI, the AMA, and the SMA, to make him dependent on the federal government for marginal income in the form of cash subsidies, for easy and abundant credit, and for protection in the market place;
  • For the landless, the FSA, making them dependent upon the federal government for a complete way of life which they did not always like when the dream came true;
  • For union labor, the NLRB, making it dependent on the federal government for advantage against the employer in the procedures of collective bargaining, for the closed shop, and for its monopoly of the labor supply;
  • For those who sell their labor, whether organized or not, the FLSA-WHD (minimum wages and minimum hours), making the individual dependent on the federal government for protection (1) against the oppressive employer, (2) against himself lest he be tempted to cheapen the price of labor, and (3) against the competition of others who might be so tempted. Thus for better or worse the freedom of contract between employee and employer was limited.
  • For the unemployed, to any number, the WPA, making them directly dependent on the federal government for jobs, besides that they were kept off the labor market;
  • For the general welfare and to create indirect employment, the PWA, causing states, cities, towns, counties, and townships to become dependent upon the federal government for grants in aid of public works;
  • For home owners in distress, the HOLC, making them dependent on the federal government for temporary outdoor employment, rehabilitation, and vocational training, besides that these too, were kept off the labor market;
  • For bank depositors, the FDIC, making them dependent on the federal government for the safety of their bank accounts;
  • For the investors, the SEC, making them dependent on the federal government for protection against the vendors of glittering securities;
  • For the deep rural population, the REA and the EHFA, making them dependent on the federal government for electrical satisfactions at cost or less;
  • For those who live by wages and salaries the SSB, making them dependent on the federal government for old-age pensions and unemployment insurance; also for stern protection against the consequences of their own personal thriftlessness, since half of what goes into the social security reserve fund is taken out of their pay envelopes by the government, whether they like it or not, the government saying to them, “We will save it for you until your winter comes.” And since there is no saying anything back to the government this becomes compulsory thrift.

No individual life escaped, unless it was that of a desert rat or cave dweller.

It was thus that the hand of paternal government, having first seized economic power, traced the indelible outlines of the American Welfare State.

In the welfare state, the government undertakes to see to it that the individual shall be housed and clothed and fed according to a statistical social standard, and that he shall be properly employed and entertained, and in consideration for this security the individual accepts in place of entire freedom a status and a number and submits his life to be minded and directed by an all-responsible government; thustly surrendering independency for dependency.

When New Dealers speak in one breath of a welfare economy and with the next breath bitterly denounce pressure groups, it may seem that they involve themselves in an ironical dilemma. It is easy to say, “What would you expect, since you have made division of the national income a matter of political bargaining where before it had been always a matter of economic bargaining?”

Yet they are right, the New Dealers. In the welfare state pressure groups, representing willful political action, cannot be tolerated. They will have to be suppressed at last, because in the welfare state, the government cannot really guarantee social security until it goes to the logical end, which is to ration the national income in time of peace just as all goods and satisfactions are rationed in time of war.

Problem 7: To Reduce All Rival Forms of Authority

The attack on this problem was progressive, with changing features, but the strategy throughout was consistent. The principal forms of rival authority were these four:

  1. The Congress,
  2. The Supreme Court,
  3. Sovereign States, and,
  4. Local Self-Government, for which we may take the symbol to be the County Court House.

The Congress is the lawmaking power. Under the Constitution, which is the supreme organic law, there is no federal lawmaking power but the Congress. What it represents is the parliamentary principle in free government.

It is the function of the Supreme Court, representing the judicial principle, to interpret the laws when the question is raised whether or not an act of Congress is contrary to the supreme organic law, which is the Constitution, and which only the people can change. NOT SO!

It is the function of the president, representing the executive principle, to execute the laws.

Lastly, each state in the Union has certain sovereign rights; these are rights which in the beginning no state was willing to surrender to the federal government.

Such is the form of the American government. The idea was that it should be a government of law, not a government of men.

In the special session called by the president to launch the New Deal, the Congress for the first time was under the spell of executive leadership and embraced the leadership principle. It did not write the New Deal laws. It received them from the White House, went through the motions of passing them, engrossed them, and sent them back to the president. That was called the rubber stamp Congress. So long as it was content to keep that role everything was lovely. In the book On Our Way the president wrote, In the early hours of June sixteenth, the Congress adjourned. I am happy once more to pay tribute to the members of the Senate and House of Representatives of both parties who so generously and loyally co-operated with me in the solution of our joint problems.

Loyalty of the lawmaking power to the executive power was one of the dangers the political fathers foretold. In that special session the Congress had surrendered to the president its one absolute power, namely, control of the public purse; also in creating for the New Deal those new instruments of power demanded by the president, it delegated to him a vast amount of lawmaking power — so much in fact that from then on the president and the agencies that were responsible to him made more law than the Congress. The law they made was called administrative law. Each new agency had the authority to issue rules and regulations having the force of law. After that for a long time nobody knew what the law was or where it was, not even the government knew, because the law might be a mimeographed document in the drawer of an administrator’s desk. When this confusion became intolerable a rule was made that all pronouncements of administrative law should be printed in a government publication called The Register. That was some improvement, because then if you wanted to know what the law was it was necessary, besides consulting the statute books, only to search the files of The Register.

In the next regular session of Congress, the spell began to break, and ever since, with increasing anxiety, it has been running after the power and prestige it surrendered. But the minute it began to do that, all the New Deal’s power of propaganda was turned against it, in derision, belittlement, and defamation; and in every struggle over principle it was adroitly maneuvered into the position of seeming to stand against the people for wrong reasons, on mere pretense of principle. The attack upon Congress was designed both to undermine the parliamentary principle and to circumscribe the political rights of people.

It is a long story, but well summarized in the report of a special committee of the House of Representatives appointed to investigate un-American activities. It said,

The effort to obliterate the Congress of the United States as a co-equal and independent branch of our government does not as a rule take the form of a bold and direct assault. We seldom hear a demand that the powers with which Congress is vested by the Constitution be transferred in toto to the executive branch of our government, and that Congress be adjourned in perpetuity. The creeping totalitarianism by which we are menaced proceeds with subtler methods. The senior United States Senator from Wyoming has called attention to the work of men who “in the guise of criticizing individual members of Congress are actually engaged in the effort to undermine the institution itself.” Many of the efforts to purge individual members of Congress are based upon an assumption which reflects discredit upon the entire legislative branch of government. That assumption consists of the view that the sole remaining function of Congress is to ratify by unanimous vote whatever wish is born anywhere at any time in the whole vast structure of the executive branch of Government down to the last whim of any and every administrative official…. Over a large part of the world today democracy has been long dead. Political processes which once assured the common man some degree of genuine participation in the decisions of his government have been superseded by a form of rule which we know as the totalitarian state. The essence of totalitarianism is the destruction of the parliamentary or legislative branch of government. The issue simply stated is whether the Congress of the United States shall be the reality or the relic of American democracy.”

No one can have forgotten the bitterness of the struggle over the New Deal’s attempt to pack the Supreme Court after it had killed the Blue Eagle. Nor can anyone who saw it forget the spectacle of C.I.O. strikers, massed in Cadillac Square, Detroit, intoning with groans the slogan prepared by New Deal propagandists: “Nine old men. Nine old men.” That was collaboration.

At this point, the president suffered his first serious defeat. The Congress would not pass his court-packing law. It did not dare to pass it. Public opinion was too much aroused. Nevertheless, it was possible two years later for the president to boast that he had won. Vacancies on the bench caused by death and retirement enabled him to fill it up with justices who were New Deal–minded, and so at last he did capture the judicial power.

Reduction of the sovereign power of states was accomplished mainly in four ways, as follows:

One, by imposing federal features on the social security systems of the states and making the administration of old-age pensions and unemployment insurance a function of the federal government;

Two, by enormous grants in aid out of the federal Treasury to the states on condition in every case that the states conform to federal policies, the state governments, under popular pressure to accept federal funds because they looked like something for nothing, finding it very difficult to refuse;

Three, the regional design for great federal works and the creation of regional authorities like the T.V.A., with only a trivial respect for the political and property rights of the overlaid states, and,

Four, by extreme and fantastic extensions of the interstate commerce clause.

The Constitution says that the Congress shall have the power “to regulate commerce with foreign nations, among the several states, and with the Indian tribes.” That is the famous clause. Commerce among the several states is of course interstate commerce. Now, when the New Deal undertook to regulate wages or hours or labor conditions in the nation, it did not write a law saying that such should be the minimum national wage or such the minimum national day’s work, nor that the rules of the National Labor Relations Board should govern all employee-employer relations throughout the nation. Not at all. It could hardly say that without first tearing up the Constitution. What it did say was that only such goods as were produced under conditions that conformed to the federal law — only those and no other — should be permitted to move in interstate commerce. And then the New Deal courts stretched the definition of interstate commerce to the extreme of saying that the federal government may regulate a wheat farmer who feeds his own wheat to his own chickens, on the ground that if he had not raised his own wheat he would have had to buy wheat for his chickens and buying it would be in the way of interstate commerce; or, that the federal government may regulate the hours and wages of elevator operators, janitors, and charwomen in a Philadelphia office building because some of the building’s tenants are engaged in interstate commerce.

On the reduction of local self-government, hear the governor of Kansas. He was visiting Iowa and made a speech in Des Moines. Twenty years ago, he recalled, the county — for example, the one in Kansas where he began to practice law — offered an almost perfect example of responsible self-government.

We were able, I believe, to do a reasonably good job of local government. In meeting and solving our problems we looked to the state government very little and to the national government not at all. The citizens of the county knew who their elected officers were. They came and talked with us frequently. We knew their difficulties. We dealt with them across the desk, over the counter, and sometimes down at the corner drug store. They had definite opinions about the affairs of the county. They spoke their minds freely and they registered their approval and disapproval directly at the polls on the second Tuesday of the next November. There was no doubt and no uncertainty about it.

Now, that has been a matter of only about twenty years — a short time indeed in the history of people. But in that twenty years there has taken place a most astonishing change. The court house is the same. The theoretical structure of county government is unaltered. But in practical operation the picture now is very different. Federal agencies are all around us. There is scarcely a problem presented to the county officials of today which is not either directly or indirectly involved with implications and issues related occasionally to state, but more often to federal, regulation. There are federal offices in the basement and in the corridors on the second floor. Except during the regular term of court there are extra employees of some federal agency in the court room. A couple of federal auditors or investigators are usually using the jury room. The whole warp and woof of local government is enmeshed in the coils of bureaucratic control and regulation.

And that is only the story so far as county government is concerned. You know that parallels could be drawn in our cities, in our educational districts, and even more clearly in our state capitals. Let me cite just one example. In 1874 the western part of Kansas suffered a very severe calamity in the form of a horde of grasshoppers. Our state was young, only thirteen years old. The ravages of the grasshopper threatened the livelihood of many of the settlers. Upon that occasion, the governor called a special session of the legislature. It met, considered the problem and enacted proper legislation for relief and aid … and a disaster was averted.

If that same situation should occur today, we all know what would happen. It would take practically a photo finish to determine which would land first — the grasshoppers or a horde of federal agents. The state and the county would have absolutely and exactly nothing to say about it. The policy, the means, and the method of dealing with the problem would all be determined in Washington, D.C. The benefits, all from the federal treasury, in such manner and such form as Washington should dictate, would come to the farmers without their scarcely knowing what it was about — and we take it for granted. The other day a great number of farmers in my state did receive federal checks, and dozens of them were wondering what in the world they were for, as they knew of no payment that was due under any of the existing programs in which they were participating.

Problem 8: To Sustain Popular Fair in a Spiral Increase of the Public Debt

This problem has its greatest importance in the first few years. Ultimately, the welfare state outgrows it because the perfect welfare state must in the end ration the national income, and, when it does that, money comes to be like coupons in a wartime ration book. At first, however, the government must borrow heavily. In order to transfer wealth from the few to the many — wealth in the modern forms, so largely imponderable and nonportable — it must be able to borrow and spend, and unless people who have savings to lend believe in the public credit and trust it, the government cannot borrow. If it cannot borrow in order to spend, the revolution will be bankrupt in the preface. That is why in the second and third months, with the Treasury empty, the New Deal was obliged to sell government bonds under the false promise to pay the interest and redeem the interest in gold dollars — a promise it was preparing to repudiate.

Well, the rest is simple because the method was simple.

For a while, and to the limits of credulity, the New Deal kept saying it was going to balance the federal budget — honest to goodness it was, and anybody who said to the contrary belonged to darkness. In July of the first year the president said, “It may seem inconsistent for a government to cut down in regular expenses and at the same time to borrow and to spend billions for an emergency. But it is not inconsistent, because a large portion of the emergency money has been paid out in the form of sound loans which will be repaid to the Treasury over a period of years; and to cover the rest of the emergency money we have imposed taxes to pay the interest and the installments on that part of the debt.”

If true, that would mean a solvent government with a balanced budget; but it wasn’t true.

At the beginning of the second year, going to the Congress with a budget that stunned all old-fashioned ideas of public finance, the president blandly postponed a balanced budget for two years, and said afterward to the people, “Nevertheless, the budget was made so clear that we were able to look forward to the time, two years from now, when we could hope the government would be definitely on a balanced financial basis, and could look forward also to the commencement of reduction of the national debt.” And that was the end of that line.

The second line was a resort to the European device of double bookkeeping. There were two budgets. The one representing the ordinary expenditures of government was balanced. The other one, representing extraordinary expenditures, for recovery and so on — that one would have to be regarded separately for a while. It would be balanced when recovery had been really achieved and when the national income could stand it. That was the line for several years.

The third line was the idea of the investment state. The governments continued deficit spending, with enormous additions to the public debt, was not what it seemed. Actually, whether you could account for it physically or not, the debt was balanced by assets. The government was investing its borrowed funds not only in the things you could see everywhere — beautiful and socially useful things that were not there before; it was investing also in the health and welfare and future happiness of the whole people. If there was any better investment than that, or one likely in time to pay greater dividends, what was it? In a while, that line wore out, and although it was never abandoned, it was superseded.

The fourth line was a doctrine invented and promulgated by New Deal economists — the doctrine of perpetual unlimited public debt. What difference did it make how big the debt was? It was not at all like a debt owing to foreign creditors. It was something we owed only to ourselves. To pay it or not to pay it meant only to shift or not to shift money from one pocket to another. And anyhow, if we should really want to pay it, the problem would be solved by a rise in the national income.

Many infuriated people wasted their time opposing this doctrine as an economic fallacy. But whether it was a fallacy or not would be entirely a question of the point of view. From the point of view of what the New Deal has called the fetish of solvency it was a fallacy. But from the point of view of scientific revolutionary technique, it was perfectly sound, even orthodox. From that point of view, you do not regard public debt as a problem of public finance. You think of it only in relation to ends. A perpetual and unlimited debt represents deficit spending as a social principle. It means a progressive redistribution of wealth by will of government until there is no more fat to divide; after that comes a level rationing of the national income. It means in the end the cheapening of money and then inflation, whereby the middle class is economically murdered in its sleep. In the arsenal of revolution, the perfect weapon is inflation.

(And all of that was before the war, even before the beginning of the defense program.)

Problem 9: To Make Government the Great Capitalist and Enterpriser

Before coming to regard the problem, let us examine a term the economists use. They speak of capital formation. What is that? It is the old, old thing of saving.

If you put a ten-dollar bill under the rug instead of spending it, that is capital formation. It represents ten dollars’ worth of something that might have been immediately consumed, but was not. If you put the ten-dollar bill in the bank, that is better. Hundreds doing likewise make a community pool of savings, and that is capital formation. Then thousands of community pools, like springs, feed larger pools in the cities and financial centers. If a corporation invests a part of its profit in new equipment or puts it into the bank as a reserve fund, that is in either case, capital formation.

In a good year, before the war, the total savings of the country would be ten or twelve billions. That was the national power of capital formation. These saved billions, held largely in the custody of the banking system, represented the credit reservoir. Anybody with proper security to pledge could borrow from the reservoir to extend his plant, start a new enterprise, build a house, or what not. Thus, the private capital system works when it works freely. Now regard the credit reservoir as a lake fed by thousands of little community springs, and at the same time assume the point of view of a government hostile to the capitalistic system of free private enterprise. You see at once that the lake is your frustration. Why? Because so long as the people have the lake and control their own capital and can do with it as they please, the government’s power of enterprise will be limited, and limited either for want of capital or by the fact that private enterprise can compete with it.

So you will want to get rid of the lake. But will you attack the lake itself? No; because even if you should pump it dry, even if you should break down the retaining hills and spill it empty, still it would appear again, either there or in another place, provided the springs continued to flow. But if you can divert the water of the springs — if you can divert it from the lake controlled by the people to one controlled by the government, then the people’s lake will dry up and the power of enterprise will pass to government. And that is what was taking place before the war; notwithstanding the war, that is what still is taking place.

By taxing payrolls under the social security law of compulsory thrift and taking the money to Washington instead of letting the people save it for themselves; by taxing profits and capital gains in a system that is, or was, a profit and loss system; by having its own powerful financial agencies with enormous revolving funds, the Reconstruction Finance Corporation being incomparably the great banking institution in the world; by its power to command the country’s private bank resources as a preferred borrower, and by its absolute ownership of more than twenty billions of gold, which may be one-half of all the monetary gold in the world, the federal government’s power of capital formation became greater than that of Wall Street, greater than that of industry, greater than that of all American private finance. This was an entirely new power. As the government acquired it, so passed to the government the ultimate power of initiative. It passed from private capitalism to capitalistic government. The government became the great capitalist and enterpriser. Unconsciously business concedes the fact when it talks of a mixed economy, even accepts it as inevitable. A mixed economy is one in which private enterprise does what it can and government does the rest.

While this great power of capital formation was passing to the government, the New Deal’s economic doctors put forth two ideas, and the propagandists implanted them in the popular imagination. One was the idea that what we were facing for the first time in our history was a static economy. The grand adventure was finished. They made believe to prove this with charts and statistics. It might be true. No one could prove that it wasn’t, because all future belongs to faith. The effect of this, of course, was to discourage the spirit of private enterprise.

The other idea was that people were saving too much; their reservoir was full and running over, and they were making no use of their own capital because the spirit of enterprise had weakened in them. There was actually a propaganda against thrift, the moral being that if the people would not employ their own capital the government was obliged to borrow it and spend it for them.

Conclusion

So it was that a revolution took place within the form. Like the hagfish, the New Deal entered the old form and devoured its meaning from within. The revolutionaries were inside; the defenders were outside. A government that had been supported by the people and so controlled by the people became one that supported the people and so controlled them. Much of it is irreversible. That is true because habits of dependence are much easier to form than to break. Once the government, on ground of public policy, has assumed the responsibility to provide people with buying power when they are in want of it, or when they are unable to provide themselves with enough of it, according to a minimum proclaimed by government, it will never be the same again.

All of this is said by one who believes that people have an absolute right to any form of government they like, even to an American welfare state, with status in place of freedom, if that is what they want. The first of all objections to the New Deal is neither political nor economic. It is moral.

Revolution by scientific technique is above morality. It makes no distinction between means that are legal and means that are illegal. There was a legal and honest way to bring about a revolution, even to tear up the Constitution, abolish it, or write a new one in its place. Its own words and promises meant as little to the New Deal as its oath to support the Constitution. In a letter to a member of the House Ways and Means Committee, urging a new law he wanted, the president said, “I hope your committee will not permit doubt as to Constitutionality, however reasonable, to block the suggested legislation.” Its cruel and cynical suspicion of any motive but its own was a reflection of something it knew about itself. Its voice was the voice of righteousness; its methods therefore were more dishonest than the simple ways of corruption.

“When we see a lot of framed timbers, different portions of which we know have been gotten out at different times and places, and by different workmen … and when we see those timbers joined together, and see that they exactly make the frame of a house or a mill, all the tendons and mortises exactly fitting, and all the lengths and proportions of the different pieces exactly adapted to their respective places, and not a piece too many or too few … in such a case we find it impossible not to believe that … all understood one another from the beginning, and all worked upon a common plan or draft, drawn up before the first blow was struck.” – Abraham Lincoln, deducing from objective evidence the blueprint of a political plot to save the institution of slavery


Garet Garrett (1878–1954) was an American journalist and author who was noted for his critiques of the New Deal and US involvement in the Second World War. See his books in the Mises Store. See his articles on Mises.org. Permission to reprint granted by Caxton Press, which continues to own the copyright to this essay. Comment on the blog.This essay was first published as a monograph in 1938.See also, “Who Is Garet Garrett?”

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The Revolution Was 
Jan 26 2008 byGaret Garrett

The March
Jan 24 2008 byGaret Garrett

The Church of Keynes 
Dec 27 2007 byGaret Garrett

Tragedy in the Language of Political Economy 
Nov 07 2007 byGaret Garrett

The Rule of Planned Money 
Oct 02 2007 byGaret Garrett

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World Bank Insider Blows Whistle on Corrupt Federal Reserve

05/27/2013

 http://www.thenewamerican.com/economy/economics/item/15473-world-bank-insider-blows-whistle-on-corruption-federal-reserve

 By  Alex Newman

A former insider at the World Bank, ex-Senior Counsel Karen Hudes, says the global financial system is dominated by a small group of corrupt, power-hungry figures centered around the privately owned U.S. Federal Reserve. The network has seized control of the media to cover up its crimes, too, she explained. In an interview with The New American, Hudes said that when she tried to blow the whistle on multiple problems at the World Bank, she was fired for her efforts. Now, along with a network of fellow whistleblowers, Hudes is determined to expose and end the corruption. And she is confident of success.
Citing an explosive 2011 Swiss study published in the PLOS ONE journal on the “network of global corporate control,” Hudes pointed out that a small group of entities — mostly financial institutions and especially central banks — exert a massive amount of influence over the international economy from behind the scenes. “What is really going on is that the world’s resources are being dominated by this group,” she explained, adding that the “corrupt power grabbers” have managed to dominate the media as well. “They’re being allowed to do it.”

According to the peer-reviewed paper, which presented the first global investigation of ownership architecture in the international economy, transnational corporations form a “giant bow-tie structure.” A large portion of control, meanwhile, “flows to a small tightly-knit core of financial institutions.” The researchers described the core as an “economic ‘super-entity’” that raises important issues for policymakers and researchers. Of course, the implications are enormous for citizens as well.

Hudes, an attorney who spent some two decades working in the World Bank’s legal department, has observed the machinations of the network up close. “I realized we were now dealing with something known as state capture, which is where the institutions of government are co-opted by a group that’s corrupt.” She told The New American in a phone interview, “The pillars of the U.S. government — some of them — are dysfunctional because of state capture; this is a big story, this is a big cover up.”

At the heart of the network, Hudes said, are 147 financial institutions and central banks — especially the Federal Reserve, which was created by Congress but is owned by essentially a cartel of private banks. “This is a story about how the international financial system was secretly gamed, mostly by central banks — they’re the ones we are talking about,” she explained. “The central bankers have been gaming the system. I would say that this is a power grab.”

The Fed in particular is at the very center of the network and the coverup, Hudes continued, citing a policy and oversight body that includes top government and Fed officials. Central bankers have also been manipulating gold prices, she added, echoing widespread concerns that The New American has documented extensively. Indeed, even the inaccurate World Bank financial statements that Hudes has been trying to expose are linked to the U.S. central bank, she said.

“The group that we’re talking about from the Zurich study — that’s the Federal Reserve; it has some other pieces to it, but that’s the Federal Reserve,” Hudes explained. “So the Federal Reserve secretly dominated the world economy using secret, interlocking corporate directorates, and terrorizing anybody who managed to figure out that they were having any kind of role, and putting people in very important positions so that they could get a free pass.”

The shadowy but immensely powerful Bank for International Settlements serves as “the club of these private central bankers,” Hudes continued. “Now, are people going to want interest on their country’s debts to continue to be paid to that group when they find out the secret tricks that that group has been doing? Don’t forget how they’ve enriched themselves extraordinarily and how they’ve taken taxpayer money for the bailout.”

As far as intervening in the gold price, Hudes said it was an effort by the powerful network and its central banks to “hold onto its paper currency” — a suspicion shared by many analysts and even senior government officials. The World Bank whistleblower also said that contrary to official claims, she did not believe there was any gold being held in Fort Knox. Even congressmen and foreign governments have tried to find out if the precious metals were still there, but they met with little success. Hudes, however, believes the scam will eventually come undone.

“This is like crooks trying to figure out where they can go hide. It’s a mafia,” she said. “These culprits that have grabbed all this economic power have succeeded in infiltrating both sides of the issue, so you will find people who are supposedly trying to fight corruption who are just there to spread disinformation and as a placeholder to trip up anybody who manages to get their act together.… Those thugs think that if they can keep the world ignorant, they can bleed it longer.”

Of course, the major corruption at the highest levels of government and business is not a new phenomenon. Georgetown University historian and Professor Carroll Quigley, who served as President Bill Clinton’s mentor, for example, wrote about the scheme in his 1966 book Tragedy And Hope: A History Of The World In Our Time. The heavyweight academic, who was allowed to review documents belonging to the top echelons of the global establishment, even explained how the corrupt system would work — remarkably similar to what Hudes describes.

“The powers of financial capitalism had a far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole,” wrote Prof. Quigley, who agreed with the goals but not the secrecy. “This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.”

But it is not going to happen, Hudes said — at least not if she has something do to with it. While the media are dominated by the “power grabber” network, Hudes has been working with foreign governments, reporters, U.S. officials, state governments, and a broad coalition of fellow whistleblowers to blow the entire scam wide open. There has been quite a bit of interest, too, particularly among foreign governments and state officials in the United States.

Citing the wisdom of America’s Founding Fathers in creating a federal system of government with multiple layers of checks and balances, Hudes said she was confident that the network would eventually be exposed and subjected to the rule of law, stopping the secret corruption. If and when that happens — even if it may be disorderly — Hudes says precious metals will once again play a role in imposing discipline on the monetary system. The rule of law would also be restored, she said, and the public will demand a proper press to stay informed.

“We’re going to have a cleaned-up financial system, that’s where it is going, but in the meantime, people who didn’t know how the system was gamed are going to find out,” she said. “We’re going to have a different kind of international financial system…. It’ll be a new kind of world where people know what’s going on — no more backroom deals; that’s not going to keep happening. We’re going to have a different kind of media if people don’t want to be dominated and controlled, which I don’t think they do.”

While Hudes sounded upbeat, she recognizes that the world is facing serious danger right now — there are even plans in place to impose martial law in the United States, she said. The next steps will be critical for humanity. As such, Hudes argues, it is crucial that the people of the world find out about the lawlessness, corruption, and thievery that are going on at the highest levels — and put a stop to it once and for all. The consequences of inaction would be disastrous.

Alex Newman, a foreign correspondent for The New American, is currently based in Europe. He can be reached at anewman@thenewamerican.com.

Related articles:

Fed Manipulations in the Crosshairs

After Gold Crash, Experts Point to Central Bank Manipulation

Media Gatekeepers Limit Debate

Bretton Woods

Funding of Bretton Woods II by George Soros Exposed

BRICS Regimes Forge New World Bank, Call for Global Currency

The Emerging Global Fed

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Ranting Andy Hoffman on the Bullish Case for Physical Gold and Silver

05/27/2013

http://www.thedailybell.com/29135/Anthony-Wile-Ranting-Andy-Hoffman-on-the-Bullish-Case-for-Physical-Gold-and-Silver

 With Anthony Wile

The Daily Bell is pleased to present this exclusive interview with Andy Hoffman.

Introduction: Andrew (“Andy”) Hoffman, CFA joined Miles Franklin as marketing director in October 2011. For a decade, he was a US-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his focus has been entirely on precious metals, and since 2006 has written free missives regarding gold, silver and macroeconomics under the moniker “Ranting Andy.” Prior to joining the company he spent five years working as an investor relations officer or consultant to numerous junior mining companies. An archive of Andy’s “RANTS” can be found on the Miles Franklin Blog.

Daily Bell: Hello again, Andy. Let’s jump right in..

Andy Hoffman: It’s always a pleasure to speak with one of the bestalternative media outlets!

Daily Bell: What’s going on with gold?

Andy Hoffman: As the END GAME of fiat currency collapse approaches, we have seen the most concerted “Cartel” attempts yet to suppress PAPER gold and silver prices. I have been an expert on this topic for eleven years; and NEVER has it been so blatant. Just look at these graphs of what I call “THE 2:15 AM” and tell me if you think something nefarious is NOT going on…

5-26-2013 11-43-38 AM

The GLOBAL economy is at its LOW POINT since 2008’s Global Meltdown I, which is why the FedECB, and BOJ have led the most maniacal money printing efforts to date. And thus, the PM “canary in the coal mine” has been attacked, via the most blatant “operatives” yet – such as the April 12th and 15th “ALTERNATIVE CURRENCIES DESTRUCTION.”

Daily Bell: Are we embarked on another downward leg?

Andy Hoffman: At current prices, PMs are as oversold and undervalued (relative to global MONEY PRINTING) as at any time in history and such fundamentals will only grow more bullish each day. Moreover, the PHYSICAL and PAPER markets are starting to separate. Thus, it’s difficult to believe there’s much downside here; certainly in “DOLLAR-PRICED GOLD.”

Daily Bell: Is gold finished as a wise investment?

Andy Hoffman: I have never considered my PHYSICAL gold and silver (all I own) to be “investments.” They are MONEY; or otherwise, INSURANCE. Given the increasing risks of a collapsing global economy and maniacal market manipulation, I have SCREAMED for years for people to avoid “PAPER PM Investments” like mining shares and ETFs. Given those factors, who knows what PAPER PM Investments will do? However, PHYSICAL gold and silver have lasted as money for 6,000 years; and certainly won’t lose that distinction amidst the broadest, most intense MONEY PRINTING ORGY in world history.

Daily Bell: Why are gold and silver so controversial now among some investors?

Andy Hoffman: They are not controversial at all. The “evil troika” of Washington, Wall Street/London and the MSM have combined to vilify it since the gold standard was abandoned in 1971, but particularly since the dollar’s purchasing power really started plunging at the turn of the century. “TPTB” will fight gold and silver to the death; as it represents the greatest threat to theirhegemony. However, as always, they will lose.

Daily Bell: Wall Street and central bankers seem to hate gold and silver. Why?

Andy Hoffman: Bankers benefit the most from fiat currency regimes, as THEY receive the free government money (and bailouts), NOT us. In this particular regime, bankers have taken over governments (just look at where the past five or six Treasury secretaries came from), and thus, they REALLY have a lot to lose if gold and silver reassert their historical roles as money.

Daily Bell: Is gold just another commodity? How is it different?

Andy Hoffman: Yes, it’s a “commodity” in that all gold is alike. But that’s where the definition ends; as in gold’s role as MONEY, it has no peer (other than silver). In that world, it is the FIAT CURRENCIES that are commodities; printed out of thin air, for free.

Daily Bell: Do gold and silver track other commodities or do they tend to go their separate ways?

Andy Hoffman: TPTB want you to believe they move with other commodities, certainly when they are falling. However, over time the only “commodities” gold and silver consistently correlate with are themselves – and perhaps, platinum.

Daily Bell: Are stocks and bonds safer than gold these days?

Andy Hoffman: LOL. What happened to stocks in 2000 and 2008? Of course, with the President’s Working Group on Financial Markets (i.e, the “PPT”) supporting stocks and the Fed supporting bonds (via QE) while the Exchange Stabilization Fund (i.e, the “gold Cartel”) attacks gold, it may seem so in the short term. Come back a few years from now and ask that same question.

Daily Bell: Should people just invest in stocks now? Or bonds?

Andy Hoffman: Sure, why not buy stocks amidst the worst economic conditions of our lives, at the highest P/E ratios I have seen in my 24-year Wall Street career, not to mention, bonds with all-time low yields amidst all-time high (and rising) inflation. Don’t worry; the government couldn’t possibly screw their market-support operations up.

Daily Bell: When will gold and silver rebound, if ever?

Andy Hoffman: “If ever”? Quite the harsh sentence for the ONLY asset that has ever survived as MONEY throughout history. For all I know, the PAPER price will go down further; but the harder the Cartel pushes, the stronger the (ALREADY ALL-TIME HIGH) PHYSICAL demand will get. That said, the “commercials” have been aggressively covering shorts for months so clearlythey are positioning themselves for higher prices. That said, I care not whenthey turn, as I KNOW they eventually will – probably much sooner than most think.

Daily Bell: Are gold and silver still in a bull market?

Andy Hoffman: Of course. They have risen for 12 straight years, and the fundamentals (and valuations) have NEVER been more bullish. But the REAL question should not be whether or not gold and silver are still in a bull market but alternatively, do you believe FIAT CURRENCIES’ bear market is ready to turn around. Sorry if it sounds patronizing, but ROFLMAO.

Daily Bell: Should people understand that their positions in gold and silver are not going to gain much in the near term?

Andy Hoffman: If you are talking about “PAPER PM Investments,” as I said, they could go to ZERO or rise sharply (although I believe their upside is limited by the inevitable nationalizations and windfall profit taxes that will come with higher gold and silver prices. However, as for PHYSICAL, I KNOW they will soar over time but have no clue what they will do in the short-term. Nor do I care, as I plan on holding them until a new gold standard is inevitably created.

Daily Bell: Have gold and silver been manipulated down by the powers-that-be?

Andy Hoffman: I think I answered that pretty sufficiently. However, for those who want more PROOF, please read my daily, FREE newsletter atmilesfranklin.com.

Daily Bell: There is unhappiness in the gold community over the refusal of some to speak out over perceived gold manipulation. Where do you stand on the matter?

Andy Hoffman: I have spoken out more than perhaps anyone on the planet, standing tall with the likes of Bill MurphyEric Sprott and others. The mining companies are too mainstream to address this all-important issue, as are “analysts” on Wall Street whose very existences are threatened by the PM bull. It will remain that way until the Cartel is overwhelmed and fiat currencies collapse – which I ASSURE you, they will.

Daily Bell: Is it necessary to take a position on manipulation or just to deal with the consequences?

Andy Hoffman: Not understanding the manipulation handicaps your efforts to PROTECT yourself and realize the LIE financial markets are. The world’s best investors make it their business to understand ALL relevant factors; and in today’s precarious world, NONE are as serious – and far-reaching – as gold and silver suppression.

Daily Bell: Where do you stand on the euro these days? Is it terminal?

Andy Hoffman: The Euro was DOA, and after just 13 measly years is on the verge of collapse: 20+ countries with 20+ agendas just doesn’t work, particularly when they are essentially all amidst economic free fall.

Daily Bell: How about the dollar? What’s going on?

Andy Hoffman: The US economy is at its lowest point since 2008 notwithstanding endless PROPAGANDA to the contrary. Yippee, the Fed fostered another housing bubble whilst Main Street collapses. The dollar is burdened by more debt than any currency in history, and Obama‘s “plan” is toonly increase debt by $5+ trillion over the next decade. What do you think the dollar’s purchasing power will do over this period, not against the “Euro” or “Yen” but REAL ITEMS OF VALUE?

Daily Bell: China is doing yuan swaps. Is that undermining the dollar?

Andy Hoffman: You bet it is. They, too, have a FIAT currency. But they also have the world’s largest stash of gold (though they haven’t yet admitted it) as well as a trade surplus and a strong financial position. In time – through their own trials and tribulations – the Yuan will likely be the world’s strongest currency.

Daily Bell: What do you think of the BRICs generally? Are BRIC currencies a challenge to the dollar?

Andy Hoffman: Yes, as a group. That said, each has its own individual problems and ALL are amidst very weak (and weakening) economic conditions. In time, these emerging economies will usurp the West but it will take quite a bit of time.

Daily Bell: Will we see a global fiat currency soon as national and regional currencies fail?

Andy Hoffman: Don’t understand the questions. As currencies fail, we will see increased movement toward a new GOLD STANDARD.

Daily Bell: What would a global currency look like and is it necessary?

Andy Hoffman: I have no idea, other than that it will be GOLD BACKED. When FIAT currencies fail, people will want something REAL for their good and services. ONLY gold and silver have filled this role over time.

Daily Bell: Do you think the IMF will take over as the world’s central bank? Is that a good idea?

Andy Hoffman: LOL, the IMF are a bunch of Western buffoons, on their way out as the world’s power base shifts East. They are unelected bureaucrats, funded by the very same bankrupt Western nations that are dying. And by the way, such “funding” is simply PAPER money.

Daily Bell: The BIS and IMF want central banks to cease their easing, apparently. Is that wise?

Andy Hoffman: I’m not sure what the BIS’s position is, but the IMF has ABSOLUTELY NOT; in fact, it’s pleading for the opposite per the two articles below…

Exiting QE could ‘undermine the recovery’, IMF warns

IMF Tells Central Europe to Spend More

The BIS is the “Central bank’s central bank,” essentially in their pocket in the first place. Thus, I could not care less what they have to say, as they are essentially a handful of unelected white-collar criminals whose job is to maintain a status quo in which they remain rich and powerful – and you don’t.

Daily Bell: What is the ultimate outcome of central bank easing? A healthier economy?

Andy Hoffman: Central banks easing can ONLY result in inflation; nothing more, nothing less. PRINTING MONEY has absolutely ZERO merit unless you’re one of the bankers receiving it. It will DESTROY the world, as fiat currency is by definition a Ponzi scheme – that is, it MUST grow larger to survive.

Daily Bell: Do QE programs accomplish their goals or are they ultimately destructive?

Andy Hoffman: I think I just answered that one in spades!

Daily Bell: Should central banks cease to be so economically proactive?

Andy Hoffman: Only if they want the ENTIRE GLOBAL ECONOMY to have an immediate, terminal heart attack – a la 2008, but 1,000 times worse. When the world has ALL-TIME HIGH debt, ALL-TIME LOW interest rates and DYING economies, taking the “bailouts” away will cause sure economic DEATH.

Daily Bell: Should central banks cease to exist entirely?

Andy Hoffman: Absolutely, 1,000% yes. They are the root of ALL of today’s financial evils and are making said situation worse each day.

Daily Bell: Should we return to a gold standard? Should it be state run or market based?

Andy Hoffman: Yes, of course. ONLY gold and silver can restore a sound economic system, as they have proven throughout history. Regarding the second question, I’ll leave it to readers to guess my answer but I’ll give you a hint – EVERYTHING the government touches, it destroys.

Daily Bell: And if it is market based, wouldn’t that simply single a generalized currency competition? Would gold and silver win such a competition as they have in the past?

Andy Hoffman: There is no way to know “how” a new system would be structured, as so much economic (and hopefully not military) destruction will come before we get there. That said, it WILL be backed by REAL MONEY – end of story.

Daily Bell: What should investors do now?

Andy Hoffman: What I have told them for the past eleven years. EXIT THE SYSTEM in every way possible, and prepare for the inevitable, worldwidecurrency collapse. Financially, the ONLY way to do this is to buy PHYSICAL gold and silver, and keep it OUT of the system.

Daily Bell: Soros is reportedly buying mining stocks. Is that a wise idea?

Andy Hoffman: I have been perhaps the LOUDEST opponent of “PAPER PM Investments” on the planet for the past two years. The Cartel WILL destroy everything in its path – and the higher PM prices go, the more risky the already near-dead mining sector will get. So no, I advise saving your wealth in PHYSICAL PMs, not investing it in speculative, tainted stocks.

Daily Bell: Should people sit tight and wait for a trend to assert itself?

Andy Hoffman: The TREND of fiat currency purchasing power destruction has been ongoing since the second the gold standard was abandoned in August 1971; or better yet, the second the Fed was created in 1913. That TREND will NOT stop until the dollar – and other, global fiat currencies – are destroyed.

5-26-2013 11-44-13 AM

Daily Bell: Any other points you want to make or references you want to mention?

Andy Hoffman: Only that my JOB as Marketing Director of Miles Franklin is to promote Precious Metals ownership but my PASSION is to help people PROTECT themselves.

Daily Bell: Thanks again for your time.

DAILY BELL AFTERTHOUGHTS

 

We admire Andy Hoffman’s candor and passion about gold. He is a good proponent of the historical virtues of the yellow metal. We probably disagree with him about investing, however, and the necessity of a full-fledged withdrawal from the markets.

In our view, one does not necessarily have to remove all funds from securities markets on the supposition there is going to be an imminent collapse. In fact, it is unclear whether or not a collapse is imminent. And even if a collapse IS to come, there are surely possibilities to make money selling short, in the near-term anyway (unless one believes a final catastrophe is due tomorrow).

What one does with additional funds is another issue. Perhaps significant additional resources should be added with profits via the purchase and delivery of physical gold and silver, as Andy advocates. But if one is a savvy studier of security markets and has the emotional equipment and mental acuity to take advantage of the current volatility, there are probably profits to be made, and people are making them.

So here at The Daily Bell  we will not argue for a full-scale withdrawal from all types of investments unless one is convinced that tomorrow the globalist system of fiat investing is about to topple.

A caveat to our perspective would be that no one can truly know when a system like this is going to implode once and for all. Yes, this is a valid concern and those who are convinced that a final unraveling is going to come sooner rather than later are obviously not well-advised to participate in a system that they believe is faced with imminent doom.

Those who are not so alarmed and believe they can cope with the current volatility and obvious dysfunction that now exists will carefully position certain funds, acutely aware, nonetheless, of abiding and emergent risks. But there ARE people making money in these markets, especially given the current level of volatility. No one ever said it would be easy.

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Who Really Runs the World?

05/25/2013

 Conspiracies, Hidden Agendas, and the Plan for World Government

http://www.newdawnmagazine.com/articles/who-really-runs-the-world-conspiracies-hidden-agendas-the-plan-for-world-government

 By Andrew Gavin Marshall

5-24-2013 10-17-39 AM

 So, who runs the world? It’s a question that people have struggled with since people began to struggle. It’s certainly a question with many interpretations, and incites answers of many varied perspectives.

Often, it is relegated to the realm of “conspiracy theory,” in that, those who discuss this question or propose answers to it, are purveyors of a conspiratorial view of the world. However, it is my intention to discard the labels, which seek to disprove a position without actually proving anything to the contrary. One of these labels – “conspiracy theorist” – does just that: it’s very application to a particular perspective or viewpoint has the intention of “disproving without proof;” all that is needed is to simply apply the label.

What I intend to do is analyse the social structure of the transnational ruling class, the international elite, who together run the world. This is not a conspiratorial opinion piece, but is an examination of the socially constructed elite class of people; what is the nature of power, how does it get used, and who holds it?

A Historical Understanding of Power

In answering the question “Who Runs the World?” we must understand what positions within society hold the most power, and thus, the answer becomes clear. If we simply understand this as heads of state, the answer will be flawed and inaccurate. We must examine the globe as a whole, and the power structures of the global political economy.

The greatest position of power within the global capitalist system lies in the authority of money-creation: the central banking system. The central banking system, originating in 1694 in England, consists of an international network of central banks that are privately owned by wealthy shareholders and are granted governmental authority to print and issue a nation’s currency, and set interest rates, collecting revenue and making profit through the interest charged. Central banks giveloans to both governments and industries, controlling both simultaneously. The ultimate centre of power in the central banking system is at the Bank for International Settlements (BIS), in Basle, Switzerland; which is the central bank to the world’s central banks, and is also a private bank owned by the world’s central banks.

As Georgetown University history professor Carroll Quigley wrote:

[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences. The apex of the system was to be the Bank for International Settlements in Basle, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations.1

The central banks, and thus the central banking system as a whole, is a privately owned system in which the major shareholders arepowerful international banking houses. These international banking houses emerged in tandem with the evolution of the central banking system. The central banking system first emerged in London, and expanded across Europe with time. With that expansion, the European banking houses also rose and expanded across the continent.

The French Revolution resulted with Napoleon coming to power, who granted the French bankers a central bank of France, which they privately controlled.2 It was also out of the French Revolution that one of the major banking houses of the world emerged, the Rothschilds. Emerging out of a European Jewish ghetto, the Rothschilds quickly rose to the forefront in banking, and established banking houses inLondon, Paris, Frankfurt, Vienna and Naples, allowing them to profit off of all sides in the Napoleonic wars.3

As Carroll Quigley wrote in his monumental Tragedy and Hope, “The merchant bankers of London had already at hand in 1810-1850 theStock Exchange, the Bank of England, and the London money market,” and that:

In time they brought into their financial network the provincial banking centres, organised as commercial banks and savings banks, as well as insurance companies, to form all of these into a single financial system on an international scale which manipulated the quantity and flow of money so that they were able to influence, if not control, governments on one side and industries on the other.4

At the same time, in the United States, we saw the emergence of apowerful group of bankers and industrialists, such as the Morgans, Astors, Vanderbilts, Rockefellers, and Carnegies, and they created massive industrial monopolies and oligopolies throughout the 19th century.5 These banking interests were very close to and allied with the powerful European banking houses.

The European, and particularly the British elites of the time, were beginning to organise their power in an effort to properly exert their influence internationally. At this time, European empires were engaging in the Scramble for Africa, in which nearly the entire continent of Africa, save Ethiopia, was colonised and carved up by European nations. One notable imperialist was Cecil Rhodes who made his fortune from diamond and gold mining in Africa with financial support from the Rothschilds,6 and “at that time [had] the biggest concentration of financial capital in the world.”7

Cecil Rhodes was also known for his radical views regarding America, particularly in that he would “talk with total seriousness of ‘the ultimate recovery of the United States of America as an integral part of the British Empire’.”8 Rhodes saw himself not simply as a moneymaker, but primarily as an “empire builder.”

As Carroll Quigley explained, in 1891 three British elites met with the intent to create a secret society. The three men were Cecil Rhodes, William T. Stead, a prominent journalist of the day, and Reginald Baliol Brett, a “friend and confidant of Queen Victoria, and later to be the most influential adviser of King Edward VII and King George V.” Within this secret society, “real power was to be exercised by the leader, and a ‘Junta of Three.’ The leader was to be Rhodes, and the Junta was to be Stead, Brett, and Alfred Milner.”9

The purpose of this secret society, which was later headed by Alfred Milner, was: “The extension of British rule throughout the world, the perfecting of a system of emigration from the United Kingdom and of colonisation by British subjects of all lands wherein the means of livelihood are attainable by energy, labour, and enterprise… [with] the ultimate recovery of the United States of America as an integral part of a British Empire.” [Emphasis added]10 Essentially, it outlined a British-led cosmopolitical world order, one global system of governance under British hegemony. Among key players within this group were the Rothschilds and other banking interests.11

After the 1907 banking panic in the US, instigated by JP Morgan, pressure was placed upon the American political establishment to create a “stable” banking system. In 1910, a secret meeting of financiers was held on Jekyll Island, where they planned for the “creation of a National Reserve Association with fifteen major regions, controlled by a board of commercial bankers but empowered by thefederal government to act like a central bank – creating money and lending reserves to private banks.”12

It was largely Paul M. Warburg, a Wall Street investment banker, who “had come up with a design for a single central bank [in 1910]. He called it the United Reserve Bank. From this and his later service on the first Federal Reserve Board, Warburg has, with some justice, been called the father of the System.”13President Woodrow Wilson followed the plan almost exactly as outlined by the Wall Street financiers, and added to it the creation of a Federal Reserve Board inWashington, which the President would appoint.14

Thus, true power in the world order was held by international banking houses, which privately owned the global central banking system, allowing them to control the credit of nations, and finance and control governments and industry.

However, though the economic system was firmly in their control, allowing them to establish influence over finance, they needed to shape elite ideology accordingly. In effect, what was required was to socially construct a ruling class, internationally, which would serve their interests. To do this, these bankers set out to undertake a project of establishing think tanks to organise elites from politics, economics, academia, media, and the military into a generally cohesive and controllable ideology.

Constructing a Ruling Class: Rise of the Think Tanks

During World War I, a group of American scholars were tasked with briefing “Woodrow Wilson about options for the postwar world once the Kaiser and imperial Germany fell to defeat.” This group was called, “The Inquiry.” The group advised Wilson mostly through his trusted aide, Col. Edward M. House, who was Wilson’s “unofficial envoy to Europe during the period between the outbreak of World War I in 1914 and the intervention by the United States in 1917,” and was the prime driving force in the Wilson administration behind the establishment of the Federal Reserve System.15

“The Inquiry” laid the foundations for the creation of the Council on Foreign Relations (CFR), the most powerful think tank in the US and, “The scholars of the Inquiry helped draw the borders of post World War I central Europe.” On May 30, 1919, a group of scholars and diplomats from Britain and the US met at the Hotel Majestic, where they “proposed a permanent Anglo-American Institute of International Affairs, with one branch in London, the other in New York.” When the scholars returned from Paris, they were met with open arms by New York lawyers and financiers, and together they formed the Council on Foreign Relations in 1921. The “British diplomats returning from Paris had made great headway in founding their Royal Institute of International Affairs.” The Anglo-American Institute envisioned in Paris, with two branches and combined membership was not feasible, so both the British and American branches retained national membership, however, they would cooperate closely with one another.16 They were referred to, and still are, as “Sister Institutes.”17

The Milner Group, the secret society formed by Cecil Rhodes, “dominated the British delegation to the Peace Conference of 1919; it had a great deal to do with the formation and management of the League of Nations and of the system of mandates; it founded theRoyal Institute of International Affairs in 1919 and still controls it.”18

There were other groups founded in many countries representing the same interests of the secret Milner Group, and they came to be known as the Round Table Groups, preeminent among them were the Royal Institute of International Affairs (Chatham House), the Council on Foreign Relations in the United States, and parallel groups were set up in Canada, Australia, New Zealand, South Africa and India.19

These were, in effect, the first international think tanks, which remain today, and are in their respective nations, among the top, if not the most prominent think tanks.

In 2008, a major study was done by the University of Philadelphia’s International Relations Program – the Think Tanks and Civil Societies Program – which sought to analyse and examine the most powerful and influential think tanks in the world. While it is a useful resource to understanding the influence of think tanks, there is a flaw in its analysis. It failed to take into account the international origins of the Round Table Group think tanks, particularly the Council on Foreign Relations in the United States; Chatham House or the Royal Institute of International Affairs in London; the Canadian Institute of International Affairs, now renamed the Canadian International Council; and their respective sister organisations in India, South Africa, New Zealand and Australia. Further nations have since added to this group of related think tanks, including Germany, and a recently established European Council on Foreign Relations. The report, while putting focus on the international nature of think tanks, analysed these ones as separate institutions without being related or affiliated. This has, in effect, skewed the results of the study. However, it is still useful to examine.

The top think tanks in the United States include the Council on Foreign Relations, (which was put at number 2, however, should be placed at the number 1 spot), the Brookings Institution, (which was inaccurately given the position of number one), the Carnegie Endowment for International Peace, RAND Corporation, Heritage Foundation, Woodrow Wilson International Centre for Scholars, the Center for Strategic and International Studies, and the American Enterprise Institute, among others.

The top think tanks in the world, outside of the United States, are Chatham House (sitting at number one), the International Institute for Strategic Studies in the UK, the German Council on Foreign Relations, the French Institute of International Relations, the Adam Smith Institute in the UK, the Fraser Institute in Canada, the European Council on Foreign Relations, the International Crisis Group in Belgium, and the Canadian Institute of International Affairs.20

In 1954, the Bilderberg Group was founded in the Netherlands. Every year since then the group holds a secretive meeting, drawing roughly 130 of the political-financial-military-academic-media elites from North America and Western Europe as “an informal network of influential people who could consult each other privately and confidentially.”21

Regular participants include the CEOs or Chairmen of some of the largest corporations in the world, oil companies such as Royal Dutch Shell, British Petroleum, and Total SA, as well as various European monarchs, international bankers such as David Rockefeller, major politicians, presidents, prime ministers, and central bankers of the world.22 The Bilderberg Group acts as a “secretive global think-tank,” with an original intent “to link governments and economies in Europe and North America amid the Cold War.”23

In 1970, David Rockefeller became Chairman of the Council on Foreign Relations, while also being Chairman and CEO of Chase Manhattan. In 1970, an academic who joined the Council on Foreign Relations in 1965 wrote a book called Between Two Ages: America’s Role in the Technetronic Era. The author, Zbigniew Brzezinski, called for the formation of “A Community of the Developed Nations,” consisting of Western Europe, the United States and Japan. Brzezinski wrote about how “the traditional sovereignty of nation states is becoming increasingly unglued as transnational forces such as multinational corporations, banks, and international organisations play a larger and larger role in shaping global politics.”

So, in 1972, David Rockefeller and Brzezinski “presented the idea of a trilateral grouping at the annual Bilderberg meeting.” In July of 1972, seventeen powerful people met at David Rockefeller’s estate in New York to plan for the creation of another grouping. Also at the meeting was Brzezinski, McGeorge Bundy, the President of the Ford Foundation, (brother of William Bundy, editor of Foreign Affairs) and Bayless Manning, President of the Council on Foreign Relations.24 In 1973, these people formed the Trilateral Commission, which acted as a sister organisation to Bilderberg, linking the elites of Western Europe, North America, and Japan into a transnational ruling class.

These think tanks have effectively socially constructed an ideologically cohesive ruling class in each nation and fostered the expansion of international ideological alignment among national elites, allowing for the development of a transnational ruling class sharing a dominant ideology.

These same interests, controlled by the international banking houses, had to socially construct society itself. To do this, they created a massive network of tax-exempt foundations and non-profit organisations, which shaped civil society according to their designs. Among the most prominent of these are the Carnegie Corporation, the Ford Foundation, and the Rockefeller Foundation.

The “Foundations” of Civil Society

These foundations shaped civil society by financing research projects and initiatives into major social projects, creating both a dominant world-view for the elite classes, as well as managing the other classes.

These foundations, since their establishment, played a large part in the funding and organising of the eugenics movement, which helped facilitate this racist, elitist ideology to having enormous growth and influence, ultimately culminating in the Nazi Holocaust. From then, the word “eugenics” had to be dropped from the ideology and philanthropy of elites, and was replaced with new forms of eugenics policies and concepts. Among them, genetics, population control and environmentalism.

These foundations also funded seemingly progressive and alternative media sources in an effort to control the opposition, and manage the resistance to their world order, essentially making it ineffective and misguided.

The Rockefeller Foundation was established in 1912, and immediately began giving money to eugenics research organisations.25 Eugenics was a pseudo-scientific and social science movement that emerged in the late 19th century, and gained significant traction in the first half of the 20th century. One of the founding ideologues of eugenics, Sir Francis Galton, an anthropologist and cousin to Charles Darwin, wrote that eugenics “is the study of all agencies under social control which can improve or impair the racial quality of future generations.”26 Ultimately, it was about the “sound” breeding of people and maintaining “purity” and “superiority” of the blood. It was an inherently racist ideology, which saw all non-white racial categories of people as inherently and naturally inferior, and sought to ground these racist theories in “science.”

The vast wealth and fortunes of the major industrialists and bankers in the United States flowed heavily into the eugenics organisations, promoting and expanding this racist and elitist ideology. Money from the Harriman railroad fortune, with millions given by the Rockefeller and Carnegie family fortunes were subsequently “devoted to sterilisation of several hundred thousands of American ‘defectives’ annually, as a matter of eugenics.”27

In the United States, 27 states passed eugenics based sterilisation laws of the “unfit,” which ultimately led to the sterilisation of over 60,000 people. Throughout the 1920s and 30s, the Carnegie and especially the Rockefeller Foundation, funded eugenics research in Germany, directly financing the Nazi scientists who perpetrated some of the greatest crimes of the Holocaust.28

Following the Holocaust, the word “eugenics” was highly discredited. Thus, these elites who wanted to continue with the implementation of their racist and elitist ideology desperately needed a new name for it. In 1939, the Eugenics Records Office became known as the Genetics Record Office.29 However, tens of thousands of Americans continued to be sterilised throughout the 40s, 50s and 60s, the majority of which were women.30

Edwin Black analysed how the pseudoscience of eugenics transformed into what we know as the science of genetics. In a 1943 edition of Eugenical News, an article titled “Eugenics After the War,” cited Charles Davenport, a major founder of eugenics, in his vision of “a new mankind of biological castes with master races in control and slave races serving them.”31

A 1946 article in Eugenical News stated that, “Population, genetics, [and] psychology, are the three sciences to which the eugenicist must look for the factual material on which to build an acceptable philosophy of eugenics and to develop and defend practical eugenics proposals.” As Black explained, “the incremental effort to transform eugenics into human genetics forged an entire worldwide infrastructure,” with the founding of the Institute for Human Genetics in Copenhagen in 1938, led by Tage Kemp, a Rockefeller Foundation eugenicist, and was financed with money from the Rockefeller Foundation.32

Today, much of civil society and major social projects are a product of these foundations, and align with various new forms of eugenics. The areas of population control and environmentalism are closely aligned and span a broad range of intellectual avenues. The major population control organisations emerged with funding from these various foundations, particularly the Rockefeller foundations and philanthropies.

These organisations, such as the Rockefeller and Ford foundations, funded major civil society movements, such as the Civil Rights movement, in an effort to “create a wedge between social movement activists and their unpaid grassroots constituents, thereby facilitating professionalisation and institutionalisation within the movement,” ultimately facilitating a “narrowing and taming of the potential for broad dissent,” with an aim of limiting goals to “ameliorative rather than radical change.”33

Two major organisations in the development of the environmental movement were the Conservation Foundation and Resources for the Future, which were founded and funded with money from the Rockefeller and Ford Foundations, and helped “launch an explicitly pro-corporate approach to resource conservation.”34 Even the World Wildlife Fund was founded in the early 1960s by the former president of the British Eugenics Society, and its first President was Prince Bernhard of the Netherlands, a founding member of the Bilderberg Group.

While the environmental movement positions people as the major problem for the earth, relating humanity to a cancer, population control becomes a significant factor in proposing environmental solutions.

In May of 2009, a secret meeting of billionaire philanthropists took place in which they sought to coordinate how to “address” the world’s environmental, social, and industrial threats. Each billionaire at the meeting was given 15 minutes to discuss their “preferred” cause, and then they deliberated to create an “umbrella” cause to harness all their interests. The end result was that the umbrella cause for which the billionaires would aim to “give to” was population control, which “would be tackled as a potentially disastrous environmental, social and industrial threat.” Among those present at the meeting were David Rockefeller, Jr., George Soros, Warren Buffet, Michael Bloomberg, Ted Turner, Bill Gates, and even Oprah Winfrey.35

Conclusion

At the top of the list of those who run the world, we have the major international banking houses, which control the global central banking system. From there, these dynastic banking families created an international network of think tanks, which socialised the ruling elites of each nation and the international community as a whole, into a cohesive transnational elite class. The foundations they established helped shape civil society both nationally and internationally, playing a major part in the funding – and thus coordinating and co-opting – of major social-political movements.

An excellent example of one member of the top of the hierarchy of the global elite is David Rockefeller, patriarch of the Rockefeller family. Long serving as Chairman and CEO of Chase Manhattan bank, he revolutionised the notion of building a truly global bank. He was also Chairman of the Council on Foreign Relations, a founding member of Bilderberg and the Trilateral Commission, heavily involved in the family philanthropies, and sits atop a vast number of boards and foundations. Even Alan Greenspan, in a speech to the Council on Foreign Relations, said that David Rockefeller and the CFR have, “in many respects, formulated the foreign policy of this country.”36

In another speech to the Council on Foreign Relations, then World Bank President James Wolfesohn, said in 2005, in honour of David Rockefeller’s 90th birthday, that, “the person who had perhaps the greatest influence on my life professionally in this country, and I’m very happy to say personally there afterwards, is David Rockefeller.” He then said, “In fact, it’s fair to say that there has been no other single family influence greater than the Rockefeller’s in the whole issue of globalisation and in the whole issue of addressing the questions which, in some ways, are still before us today. And for that David, we’re deeply grateful to you and for your own contribution in carrying these forward in the way that you did.”37

David Rockefeller, himself, wrote, “For more than a century ideological extremists at either end of the political spectrum have seized upon well-publicised incidents such as my encounter with Castro to attack the Rockefeller family for the inordinate influence they claim we wield over American political and economic institutions. Some even believe we are part of a secret cabal working against the best interests of the United States, characterising my family and me as ‘internationalists’ and of conspiring with others around the world to build a more integrated global political and economic structure – one world, if you will. If that’s the charge, I stand guilty, and I am proud of it.”38

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Make Way for the Killers and the Great Tax Haven Roundup

05/22/2013

http://www.thedailybell.com/29130/Catherine-Austin-Fitts-Make-Way-for-the-Killers–the-Great-Tax-Haven-Round-Up

By Catherine Austin Fitts

There are no scandals in Washington. There is simply a turnover. We are preparing for an escalation of the global financial war. The old team is simply being told to step aside. Make way for the killers.

When G-7 concluded their emergency meeting in London last weekend, they announced that they were going to target tax havens. What does this mean? After months of G-7 central banks buying mortgage bonds and equities, the hunt for capital is on. Of course, we knew the tax havens were in the crosshairs already – only intelligence agencies can dump out the kind of leaks we have been seeing over the last month leading up to the G-7 meeting.

However, the seriousness of the capital moves underway were underscored by the swiftness with which a “scandal” was trumped up and ready to go at the IRS, with headlines on Monday morning, the leadership was out on Wednesday and a new acting from OMB in at the IRS on Thursday. Wonder who the new commissioner will be? That is being sorted out now. It will be someone masterful at legal warfare – “lawfare.”

A serious attack on the offshore havens, sufficient to direct $20-30 trillion in the direction that the G-7 wish it to go will also require the right kind of leadership at DOJ. Yes, Holder is certainly willing to play ball – he has done a perfectly adequate job supplying guns to the Mexican drug cartels and beating up on the Swiss. However, someone with international experience who is a lot meaner and trusted in certain congressional quarters is preferred. After all, asserting jurisdiction over $32 trillion is one amazing squabble.

Remember, whatever equity markets get that capital will have their P/E’s head up, which means they can go buy up everyone whose stock is trading in the markets that don’t get the capital. Backed by the capital accessed through the financial coup d’etat, think of the acquisition binge that is coming.

And, of course, there will be more taxes to keep government operations and corporate profits rolling. And the central banks will get some relief. The ballooning of their balance sheets has become more than uncomfortable.

So expect the drums to pound on about AP reporters and various trumped up malfeasance until Holder is out. Holder has targeted others in this way for Mr. Global. Now it is his turn to head into the doghouse.

We could see the seriousness of the new capital drive – both in what rolled out this week in Washington and the speed at which it rolled out. There is far more underway than just the targeting of tax havens.

Time magazine published a trial balloon saying that the federal government will require mandatory retirement accounts. If true, this is surely good for billions more into the securities markets over the next decade (more here). I would say trillions, but the middle class and small businesses that will fund it are already going to be squeezed trying to fund Obamacare.

Then the House passed a bill requiring the SEC to promulgate the regulations for the JOBs Act by October 31st. Mark my word, crowdfunding envisioned by the JOBs Act will be designed to kickstart a new bull in the US equity markets, just like first time homebuyers kickstart the housing market. No doubt, lots of entreprenuers funded with crowdfunding may pay off their student loans and buy their first home as well (More Here).

Then Google announced we could all e-mail money from your Google wallet by simply clicking the dollar sign in our gmail. Imagine what this functionality could do for crowdfunding portals. Add entrainment technology, and the estimate of $3 billion in crowdfunding flows in the first year will be way too conservative.

If a serious attack on the tax havens is in the works, the moves of capital will be unprecedented. The question of global uninsured deposits could be an ongoing drama – perhaps explaining the enormous shifts of precious metalsout of the ETFs and the improvement in the real estate markets. Someone is looking to get out of insecure bank deposits and into tangibles. However, imagine what could happen if numerous jurisdictions are forced to sell their precious metals the way that Cyprus was. We are now in a world where all asset classes can take turns in the doghouse – and they can do so at lightening speed with little warning.

The G-7 is extending and tightening up their jurisdiction. They are planning very significant shifts. This is BIG.

Let’s see what unfolds this coming week. As I did last week, I will focus on these events in Money & Markets on Thursday’s Solari Report.

Catherine Austin Fitts began her career on Wall Street and eventually rose to managing director and member of the board of the firm Dillon, Read & Co. Inc. In 1989, she was appointed Assistant Secretary of Housing − Federal Housing Commissioner in the first Bush administration. Following this appointment, Catherine became president of The Hamilton Securities Group, an investment bank and financial software developer based in Washington, DC. She is currently the managing member of Solari Investment Advisory Services, LLC.

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Washington Signals Dollar Deep Concerns

05/18/2013

 http://www.paulcraigroberts.org/2013/05/18/washington-signals-dollar-deep-concerns-paul-craig-roberts/

 By Paul Craig Roberts

Over the past month there has been a statistically improbable concurrence of events that can only be explained as a conspiracy to protect the dollar from the Federal Reserve’s policy of Quantitative Easing (QE).

Quantitative Easing is the term given to the Federal Reserve’s policy of printing 1,000 billion new dollars annually in order to finance the US budget deficit by purchasing US Treasury bonds and to keep the prices high of debt-related derivatives on the “banks too big to fail” (BTBF) balance sheets by purchasing mortgage-backed derivatives. Without QE, interest rates would be much higher, and values on the banks’ balance sheets would be much lower.

Quantitative Easing has been underway since December 2008. During these 54 months, the Federal Reserve has created several trillion new dollars with which the Fed has monetized the same amount of debt.

One result of this policy is that most real US interest rates are negative. Another result is that the supply of dollars has outstripped the world’s demand for dollars.

These two results are the reason that the Federal Reserve’s policy of printing money with which to purchase Treasury bonds and mortgage backed derivatives threatens the dollar’s exchange value and, thus, the dollar’s role as world reserve currency.

To be the world reserve currency means that the dollar can be used to pay any and every country’s oil bills and trade deficit. The dollar is the medium of international payment.

This is very helpful to the US and is the main source of US power. Because the dollar is the reserve currency, the US can cover its import costs and pay for its cost of operation simply by creating its own paper money.

If the dollar were not the reserve currency, Washington would not be able to finance its wars or continue to run large trade and budget deficits. Therefore, protecting the exchange value of the dollar is Washington’s prime concern if it is to remain a superpower.

The threats to the dollar are alternative monies–currencies that are not being created in enormous quantities, gold and silver, and Bitcoins, a digital currency.

The Bitcoin threat was eliminated on May 17 when the Gestapo Department of Homeland Security seized Bitcoin’s accounts. The excuse was that Bitcoin had failed to register in keeping with the US Treasury’s anti-money laundering requirements.

Washington has stifled the threat from other currencies by convincing other large currencies to out-print the dollar. Japan has complied, and the European Central Bank, though somewhat constrained by Germany, has entered the printing mode in order to bail out the private banks endangered by the “sovereign debt crisis.”

That leaves gold and silver. The enormous increase in the prices of gold and silver over the last decade convinced Washington that there are a number of miscreants who do not trust the dollar and whose numbers must not be permitted to increase.

The price of gold rose from $272 an ounce in December 2000 to $1,917.50 on August 23, 2011. The financial gangsters who own and run America panicked. With the price of the dollar collapsing in relation to historical real money, how could the dollar’s exchange rate to other currencies be valid? If the dollar’s exchange value came under attack, the Federal Reserve would have to stop printing and would lose control over interest rates.

The bond and stock market bubbles would pop, and the interest payments on the federal debt would explode, leaving Washington even more indebted and unable to finance its wars, police state, and bankster bailouts.

Something had to be done about the rising price of gold and silver.

There are two bullion markets. One is a paper market in New York, Comex, where paper claims to gold are traded. The other is the physical market where personal possession is taken of the metal–coin shops, bullion dealers, jewelry stores.

The way the banksters have it set up, the price of bullion is not set in the markets in which people actually take possession of the metals. The price is set in the paper market where speculators gamble.

This bifurcated market gave the Federal Reserve the ability to protect the dollar from its printing press.

On Friday, April 12, 2013, short sales of gold hit the New York market in an amount estimated to have been somewhere between 124 and 400 tons of gold. This enormous and unprecedented sale implies an illegal conspiracy of sellers intent on rigging the market or action by the Federal Reserve through its agents, the BTBF that are the bullion banks.

The enormous sales of naked shorts drove down the gold price, triggering stop-loss orders and margin calls. The attack continued on Monday, April 15, and has continued since.

Before going further, note that there are position limits imposed on the number of contracts that traders can sell at one time. The 124 tons figure would have required 14 traders with no open interest on the exchange to sell all together in the same few minutes 40,000 futures contracts. The likelihood of so many traders deciding to short at the same moment at the maximum permitted is not believable. This was an attack ordered by the Federal Reserve, which is why there is no investigation of the illegality.

Note also that no seller that wanted out of a position would give himself a low price by dumping an enormous amount all at once unless the goal was not profit but to smash the bullion price.

Since the April 12-15 attack on the gold price, subsequent attacks have occurred at 2pm Hong Kong time and 2 am New York time. At this time activity is light, waiting on London to begin operating. As William S.Kaye has observed, no entity concerned about profits would choose this time to sell 20,000 to 30,000 futures contracts, but this is what has been happening.

Who can be unconcerned with losing money in this way? Only a central bank that can print it.

Now we come to the physical market where people take possession of bullion instead of betting on paper instruments. Look at this chart from ZeroHedge.http://www.zerohedge.com/news/2013-05-16/gold-demand-one-chart-physical-vs-etf The demand for physical possession is high, despite the assault on gold that began in 2011, but as the price is set in the non-real paper market, orchestrated short sales, as in the current quarter of 2013, can drive down the price regardless of the fact that the actual demand for gold and silver cannot be met.

While the corrupt Western financial press urges people to abandon bullion, everyone is trying to purchase more, and the premiums above the spot price have risen. Around the world there is a shortage of gold and silver in the forms, such as one-ounce coins and ten-ounce bars, that individuals demand.

That the decline in gold and silver prices is an orchestration is apparent from the fact that the demand for bullion in the physical market has increased while naked short sales in the paper market imply a flight from bullion.

What does this illegal manipulation of markets by the Federal Reserve tell us? It tells us that the Federal Reserve sees no way out of printing money in order to support the federal deficit and the insolvent banks. If the dollar came under attack and the Federal Reserve had to stop printing dollars, interest rates would rise. The bond and stock markets would collapse. The dollar would be abandoned as reserve currency. Washington would no longer be able to pay its bills and would lose its hegemony. The world of hubristic Washington would collapse.

It remains to be seen whether Washington can prevail over the world demand for gold and silver. Can the dollar remain supreme when offshoring has deprived the US of the ability to cover its imports with exports? Can the dollar remain supreme when the Federal reserve is creating 1,000 billion new ones each year, while the BRICS, China and Japan, China and Australia, and China and Russia are making deals to settle their trade balances without the use of the dollar?

If the consumption-based US economy deprived of consumer income by jobs offshoring takes a further dip down in the third or fourth quarter–a downturn that cannot be masked by phony statistical releases–the federal deficit will rise. What will be the effect on the dollar if the Federal Reserve has to increase its Quantitative Easing?

A perfect storm has been prepared for America. Real interest rates are negative, but debt and money are being created hand over foot. The dollar’s demise awaits the world’s decision how to get out of it. The Federal Reserve can print dollars with which to keep the bond and stock markets high, but the Federal Reserve cannot print foreign currencies with which to keep the dollar afloat.

When the dollar goes, Washington’s power goes, which is why the bullion market is rigged. Protect the power. That is the agenda. Is it another Washington over-reach?

About Dr. Paul Craig Roberts

Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. His latest book, The Failure of Laissez Faire Capitalism and Economic Dissolution of the West is now available.

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