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#11032 From: AMI <ami@...>
Date: Sun Nov 5, 2006 5:26 pm
Subject: Good news twice
ami@...
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Dear Friends of the American Monetary Institute,

FIRST: We are going to have an election on Tuesday that should allow us to express our thoughts and desires on the direction we want our nation to move. I WANT TO URGE ALL OF YOU TO CAST YOUR VOTES. That represents real action and we need a culture of such action to be developed and strengthened in America. A lot is riding on it, not just for our citizens but for the whole world.

Don't fall into the trap of hating and dismissing your own government. As you read in Chapter 12 of The Lost Science of Money (see http://www.monetary.org/lostscienceofmoney.html) that attack on government was begun by Adam Smith himself in his attempts to keep England's MONEY POWER within the privately owned Bank of England, when others were proposing replacing it within the British Government (some of my speeches at our website describe this).

The fact is that our government, properly monitored, is the only thing that can stand between us and the thieving Enrons/Citibanks/Merrill Lynches of the world. You know about Enron, but probably did not hear that Citibank and Merrill lynch paid over a $ billion dollars to settle a lawsuit by the Enron Pension Fund, for their complicity in the Enron fraud. The one thing these crooks fear is an aroused citizenry.

SECOND - SOME MORE GOOD NEWS: The audio  CD's  from the AMI 2006 Monetary Reform Conference are ready and shipping. The sound quality is excellent; they are easy to listen to on your computer while you are doing working on papers or email. The whole conference - about 22 hours of talks by men and women on the cutting edge of monetary reform - are on 4 CD's, one for each day of the conference. The entire set is only $35 (Please add $5 for domestic shipping, $15 for foreign airmail).

We will send them to you as a gift, if you take this opportunity to become a Supporting Member of the American Monetary Institute, at the $48 or $75 (or higher level). Simply write Supporting Member on the CD order form, which is at http://www.monetary.org/2006schedule.html along with a list and description of the speakers on the CD's.

We have scheduled the next Monetary Reform Conference for September 27 - 30th, 2007 at Roosevelt University in Chicago. Make your plans to attend now. A notice goes out shortly. Details and costs are very similar to the 06 conference announcement still on our website. Theres an early registration discount form under the CD order form. $195 instead of the full $295 registration donation if postmarked by December 31.

Warm election day greetings to all of you. Be sure to vote, and make sure your vote gets counted.
Sincerely,
Stephen Zarlenga
Ami
P.S. I've attached the lates pamphlet, now in color, describing the American Monetary Act.



#11033 From: "Arno Mong Daastoel" <arno@...>
Date: Mon Nov 6, 2006 4:24 pm
Subject: Putin goes national on gas to Europe
arnomd
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Gunnar, Geoffrey and Chris M,
 
You may remember that in our 1998 meeting in London with Lvov, I promised to send him a resume of Norwegian oil policy, after telling him how the industry was developed under protection against the big oil and gas multinationals.
 
Well, the Russians are now paying back and praise the Norwegian oil policy.
 
However.
 
They have also restricted foreign access to Sthokman, Europe's largest gas field, by deciding to develop it themselves, since they now have enough capital to buy the expertise. The Norwegians companies Statoil and Hydro spent € 60 mill on getting a contract but only managed to squander their business secrets to the Russians.
;-))
 
Arno
 
 
 
 
Roser norsk oljepolitikk
 
President Vladimir Putins høyre hånd, Sergej Ivanov, roste avdøde Jens Chr. Hauge og Statoil da han møtte norsk presse i går. Dermed fortalte han at norske interesser ikke kommer inn på russisk sokkel.
(Først publisert: 02.11.06  Oppdatert: 02.11.06 kl. 00:01 )
HALVOR TJØNN

Forsvarsminister og visestatsminister Sergej Ivanov - her sammen med forsvarsminister Anne- Grete Strøm-Erichsen på pressekonferansen - gjorde det klart at Russland vil føre samme oljepolitikk som Norge.
( Foto: BJØRN SIGURDSØN / SCANPIX )
 
 
Ved siden av Ivanov, under pressekonferansen i Oslo Militære Samfund, sto hans norske vertskap, forsvarsminister Anne-Grete Strøm-Erichsen. Etter å ha snakket litt rundt det gode samarbeidet mellom Norge og Russland på det militære området, gikk Ivanov i egenskap av russisk visestatsminister over til det som opptok alle: Den russiske beslutningen om ikke å invitere norske selskaper med på utbyggingen av det enorme Stockmanfeltet i Barentshavet.
 
Måten Ivanov gjorde det på, var ved først å hylle motstandskjemperen og samfunnsbyggeren Jens Chr. Hauge, som døde tidligere i denne uken: - Han gjorde en fantastisk innsats i kampen mot den tyske okkupasjonen. Og så etter krigen var han med på å bygge opp Statoil, deres eget statsoljeselskap, fortalte han det norske pressekorpset.
 
- Takket være Jens Chr. Hauge fikk ikke utenlandsk kapital tilgang til energiressursene på norsk sokkel. Han, mer enn noen, ga Norge mulighet til å utnytte de enorme energiressursene på egen hånd, uten utenlandsk innblanding. Jeg har stor respekt for den norske energipolitikken, slo Ivanov fast.
 

Klart budskap.
Kilder i det norsk-russiske miljøet som Aftenposten var i kontakt med i går, slo fast at Ivanov neppe kunne vært klarere i sitt budskap:
 
Russland står nå i en stilling der landet hverken trenger utenlandsk kapital eller utenlandsk eierskap i energisektoren. Landet har enorme egne ressurser og kan bygge disse ut etter eget forgodtbefinnende. Dersom det oppstår teknologiske hindringer med å bygge ut Stockmanfeltet de nærmeste årene, kan dette prosjektet legges på is til fordel for de mange feltene på land i det nordlige Russland. Der vil det være utbyggingsoppgaver nok for russiske selskaper i mange, mange år fremover, blir det fremholdt.
 

Afghanistan.
......

#11034 From: "Geoffrey Gardiner" <geoffrey.gardiner@...>
Date: Mon Nov 6, 2006 7:26 pm
Subject: Re: Fw: Report on AMI2006 Monetary Reform Conference
geoffrey.gardiner@...
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Arno,
 
You are wholly right in your assessment.
 
AMI's supporters have ideas from the 1930s 'reformers'. I suppose, like them, their basic want is that all money shall be state debt only (and interest free), and they do not realise that that means no one else may borrow. They are obsessed and their minds therefore not amenable to reason.
 
Geoff
 
 
Original Message -----
Sent: Tuesday, October 24, 2006 6:23 AM
Subject: Re: [gang8] Fw: Report on AMI2006 Monetary Reform Conference

Geoffrey,
 
I have for some time been wondering about what I have seen as an overly statist tint to AMI's proposals, but I have ascribed this to my lack og comprehension of what they really want. I find it interesting that you have the same impression.
 
I am sure that this is done with the best of intentions, but my impression too has been that in the US there is a kind of nostalgia and longing for "the exotic", and therefore many think postwar social-democratic rule in Northern Europe was efficient. Several studies in the past decades has shown that it wasn't. In Norway there was a vaste of invested resources on a grand scale, not so unlike the neglect of common sense economic principles in the former USSR. Paradoxically, at the same time there was a neglect of the role of immaterial resources.
 
Yours,
Arno
 
 
 
----- Original Message -----
Sent: Wednesday, October 11, 2006 1:30 PM
Subject: Re: [gang8] Fw: Report on AMI2006 Monetary Reform Conference

'The Road To Serfdom' is being kept in good repair by the AMI.
 
They want to prevent the debts of any private organisation being made negotiable. How does one stop that happening without imposing a Communist/Nationa Soclialist system? Is it feasible?
 
At the moment primary credit can be created in the private sector. Very little primary credit to the state is negotiable because banks are reluctant to hold more state debt as assets than they have to. State debt is almost all funded. If one can make any sense at all of the AMI proposals they appear to be the system which ruled in Britain from about 1940 until about 1960. 80 per cent of bank assets were state debt. Banks referred to such lending as 'White Paper Loans', which means that the rules under which they were working had been published in a government paper, known in Britain as a 'White Paper', but not carried forward into legislation as it should have been. The system may therefore have been an informal one. Private credit creation over £10,000 (equal to £1,000,000 today) was controlled, however, by an Act of 1946, but not forbidden.
 
Of course such a system causes government debt to grow enormously, something the AMI does not appreciate for it states as its purpose not to increase the national debt. Some interest had to be paid, but this was cancelled out by inflation (12 per cent in 1948 when the interest rate on government debt was about 2.6 per cent), so effectively what the AMi wanted was achieved. One reason the interest rate was kept very low was there were huge debts to the 'Sterling Area' countries (almost four billion, equal to 200 billion today at least), especially  to India and Australia, and of course also to the United States and Canada. The British Government was happy to bilk foreigners, even friendly ones. As the state debt of the US is funded by foreigners, one can see that the secret agenda of the AMI is also to bilk foreigner creditors. Good thinking! The situation Roosevelt envisaged in his speech of May 22, 1939 no longer persists. He pointed out that the interest paid on the national debt was paid to the nation. That is no longer so true. Tom Paine was all for a national debt, but preferred it should be interest free (from Common Sense). So he moved from Britian, where on average every family was owed £18 (equal today to the average annual per capita income at least) by the state for its expenditure on defending the American Colonies, to the colonies themselves where the debt was a mere 18 pence. Did not do him much good. He died a pauper and rejected by his adopted country.
 
During the war period the majority of the investment needed by British war industries was provided by the Government, just as the AMI wants now. The system was reinforced after the war by wholesale nationalisation, of transport (road and rail), of steel making, of coal mining, and of the Bank of England, though the latter was only a nominal change.  A huge National Savings system was built up to sterilise government debt. Most personal banking was done through the Post Office (which held only government securities and paid 2.5 per cent interest) or Trustee Savings Banks, whose assets were also government loans, though some, such as the Birmingham Municipal Bank did some mortgage lending.
 
The National Savings movement became the biggest defrauder of the public there has ever been. Eventually even a government report admitted that to hold National Savings instruments was folly. The Enron swindle was peanuts by comparison. But there is nothing new about such fraud; it is the reason why in olden times state debt was 'monnaie faible'. Worst of all is to be a foreign creditor of a government.
 
Almost everything the AMI wants was achieved in wartime and postwar Britain. Did Britain benefit from its adoption of such extreme national socialism. The opinion of most is that it did not. Inefficiency was total. The activities of the Capital Issues Committee became a farce, though they continued until 1984. The very poor performance of an economy (which in 1964 still had the highest proportion of manufacturing workers in the world) was dire. Gradually there was a change of direction, and the equally damaging doctrines of monetarism appeared on the scene. The economy went from the frying pan into the fire. Total inflation from 1937 to present has reached at least 98 per cent, whereas in the days before state control of industry, the inflation rate long-term was negative.
 
Congratulations to the AMI for its skill presenting a communist/national socialist agenda in such skilful disguise to the US Congress.
 
'You can fool the people some of the time; you can fool all the people for some of the time; but you cannot fool all the people all the time.'
 
GWG


#11035 From: "James" <jcumes@...>
Date: Tue Nov 7, 2006 9:06 am
Subject: "America's Suicidal Statecraft"
cresscourt
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Dear Gang,
 
I would like to let you know that you can now order copies of "America's Suicidal Statecraft" on  www.Amazon.com, www.Abebooks.com, www.Alibris.com, www.Borders.com and www.Target.com
 
The book will be listed on  www.BooksinPrint.com and www.GlobalBooksinPrint.com in about 2 to 3 weeks.
 
I had understood that the retail price would be $US 29.99 but the publishers have now told me that in fact it will be ONLY $US 26.99, so everyone will be receiving a generous discount of $US 3 on every copy! (All of that looks like the way we've seen US statistics presented in recent years. The prospect of a massive budget deficit - say, of $500 billion - is leaked to the media and then, in due course, the public is given something to cheer about - "Hey, look, the deficit has turned out to be only $450 billion. The economy's booming! We're all going to be rich - or rocher!"  My apologies for being such a good, quick learner of all the wrong things.)
 
Since attachments are not allowed on the Yahoo Gang 8 forum, I am sending separately to some of you a photo of the book's cover and a document containing the blurb and the Table of Contents. If any others would like these attachments, please let me know.
 
"America's Suicidal Statecraft" is rather long - Arno calls it a "brick"! - but I hope you will find it worth the effort to get through the 600 or so pages.
 
Those pages cover a great deal of ground. A central feature is the contention that hikes in interest rates do not "fight" consumer-price inflation; on the contrary, they intensify it. This is a position that Geoffrey shares and on which he has done such distinguished work. The book also deals with such issues as privatisation with which Chris Meakin has been so intimately involved at the policy level over the years; and with the oil dilemma - or the cluster of dilemmas connected with oil and energy - to the consideration of which Chris Cook and Bill Engdahl have made such fine contributions. In trying to deal with the complex of issues with which the Bretton Woods twins have struggled, I have been conscious of the brilliant insights Gunnar has brought to all of us over the last thirty years and more.
 
I hope you will find some merit in what I have had to say in the book and that it might help in some small measure to resolve some of the economic, social, political and strategic dilemmas that contront all of us immediately and in the years ahead.
 
I will value any comments - favourable or brutally critical - which you may like to offer.
 
All best wishes.
 
 
James Cumes

#11036 From: Dirk Bezemer <d.j.bezemer@...>
Date: Tue Nov 7, 2006 9:23 am
Subject: Re: "America's Suicidal Statecraft"
p233369
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Dear Gang,

I am engaged in a discussion on inflation statistics.

The official statistics, and academic studies, seem to refute the idea
that the intro of the Euro caused a price ump. At the same time those
statistics are known to be unreliable and contradicted by much anecdotal
alevidence.

Gang, could you please help me compile the evidence, if there is, for
the idea that inflation statistics are seriously ureliable-  beyond the
normal margin of error -  or, perhaps, fudged to make for a better
picture? Either in the US or in Euroland.

James has drawn my attention to definition changes in the US
statistics.James, I have been searching but am afraid I lost that email.
If you can, could you resend please? Nothing on this could be found on
the internet (by me...)

thanks,

Dirk

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#11037 From: "James" <jcumes@...>
Date: Wed Nov 8, 2006 10:18 am
Subject: Re: "America's Suicidal Statecraft"
cresscourt
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Dirk, 
 
I've re-sent what are, I think, the main two messages I sent you on statistics previously.
I think most governments - and such authorities as the EU Commission - tailor their statistics to what they conceive to be a discreet - and sometimes not so discreet - polishing of their performance.
The American "polishing" has become more and more brazen. For example, Bush took to proclaiming the glory of his performance for the workers by highlighting the lowest unemployment rate in forty years or so, during the just-completed mid-term elections. The unemployment rate was said to have fallen to 4.4% while the heavily doctored statistics for new job creation showed that not enough jobs had been created in the last month even to keep up with the employment needs of an increasing population.
(Incidentally, there had been previous publicity about some 840,000 jobs which the statisticians said had been overlooked before and that had now been "found". The exact number, it was said, would be calculated later - after the elections. It's quite possible of course that they will be "lost" again when election fever is over.)
Any of these statistics are about as close as you can get to a complete farce without having the mob burst out laughing. In calculating the number of unemployed and the unemployment rate, for example, those men and women who have exhausted their unemployment insurance are, I understand, no longer counted as unemployed - even though in fact they still don't have a job or any prospect of getting one!!
I understand also that a "liberal" definition is given to what constitutes "employment". If a man or woman works just a few hours a week, he or she is regarded as employed. To be "unemployed" you need to lie around the whole time - and you are even then "employed" or at least not "unemployed" if your employment insurance has run out. The same thing applies if, after years of trying to find a job, you have at last given up looking for a job. You're taken off the jobless list, the employment rate goes up and the unemployment rate sinks to a record low 4.4%.
What is the real jobless rate? Who knows but if, in the US, it's not at least twice the official jobless rate, I'd be very surprised. (And many or most even of those who are fully employed are getting less in real terms that they were twenty or more years ago.)
A real rate of unemployment of that magnitude is an enormously heavy burden for any economy to carry - and the American economy has, for decades, been accumulating so many other burdens deriving from misconceived economic and financial policies that it needs to shed all the burdens it can.
What is the position in the EU?
I suspect that there's a bit more honesty in some of the EU statistics since they might be exposed to more critical examination; but I can't be sure of that. Where they are national, as distinct from EU numbers, the quality will vary greatly, I should think, from one country to another.
What about OECD? My experience has been that the OECD tells a story and paints a picture that is congenial for the particular member government. Numbers and analyses tend to be of a kind that, after discussions between OECD Paris and the particular capital, the latter agrees that it can live with - and all of us show a high sensitivity to anything that reflects on our government.
I hope that is of some help. A critical analysis of statistics on both sides of the Atlantic would be very helpful to a real understanding, by the "democratic public", of where we really stand on a lot of things.
 
 
 
James  
 
 
 
 
----- Original Message -----
Sent: Tuesday, November 07, 2006 10:23 AM
Subject: Re: [gang8] "America's Suicidal Statecraft"

Dear Gang,

I am engaged in a discussion on inflation statistics.

The official statistics, and academic studies, seem to refute the idea
that the intro of the Euro caused a price ump. At the same time those
statistics are known to be unreliable and contradicted by much anecdotal
alevidence.

Gang, could you please help me compile the evidence, if there is, for
the idea that inflation statistics are seriously ureliable- beyond the
normal margin of error - or, perhaps, fudged to make for a better
picture? Either in the US or in Euroland.

James has drawn my attention to definition changes in the US
statistics.James, I have been searching but am afraid I lost that email.
If you can, could you resend please? Nothing on this could be found on
the internet (by me...)

thanks,

Dirk

> Visit Your Group
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#11038 From: Dirk Bezemer <d.j.bezemer@...>
Date: Thu Nov 9, 2006 8:54 am
Subject: Re: "America's Suicidal Statecraft"
p233369
Send Email Send Email
 
Thanks, James - I am processing!

Dirk

  wrote:
> Dirk,
>
> I've re-sent what are, I think, the main two messages I sent you on statistics
previously.
> I think most governments - and such authorities as the EU Commission - tailor
their statistics to what they conceive to be a discreet - and sometimes not so
discreet - polishing of their performance.
> The American "polishing" has become more and more brazen. For example, Bush
took to proclaiming the glory of his performance for the workers by highlighting
the lowest unemployment rate in forty years or so, during the just-completed
mid-term elections. The unemployment rate was said to have fallen to 4.4% while
the heavily doctored statistics for new job creation showed that not enough jobs
had been created in the last month even to keep up with the employment needs of
an increasing population.
> (Incidentally, there had been previous publicity about some 840,000 jobs which
the statisticians said had been overlooked before and that had now been "found".
The exact number, it was said, would be calculated later - after the elections.
It's quite possible of course that they will be "lost" again when election fever
is over.)
> Any of these statistics are about as close as you can get to a complete farce
without having the mob burst out laughing. In calculating the number of
unemployed and the unemployment rate, for example, those men and women who have
exhausted their unemployment insurance are, I understand, no longer counted as
unemployed - even though in fact they still don't have a job or any prospect of
getting one!!
> I understand also that a "liberal" definition is given to what constitutes
"employment". If a man or woman works just a few hours a week, he or she is
regarded as employed. To be "unemployed" you need to lie around the whole time -
and you are even then "employed" or at least not "unemployed" if your employment
insurance has run out. The same thing applies if, after years of trying to find
a job, you have at last given up looking for a job. You're taken off the jobless
list, the employment rate goes up and the unemployment rate sinks to a record
low 4.4%.
> What is the real jobless rate? Who knows but if, in the US, it's not at least
twice the official jobless rate, I'd be very surprised. (And many or most even
of those who are fully employed are getting less in real terms that they were
twenty or more years ago.)
> A real rate of unemployment of that magnitude is an enormously heavy burden
for any economy to carry - and the American economy has, for decades, been
accumulating so many other burdens deriving from misconceived economic and
financial policies that it needs to shed all the burdens it can.
> What is the position in the EU?
> I suspect that there's a bit more honesty in some of the EU statistics since
they might be exposed to more critical examination; but I can't be sure of that.
Where they are national, as distinct from EU numbers, the quality will vary
greatly, I should think, from one country to another.
> What about OECD? My experience has been that the OECD tells a story and paints
a picture that is congenial for the particular member government. Numbers and
analyses tend to be of a kind that, after discussions between OECD Paris and the
particular capital, the latter agrees that it can live with - and all of us show
a high sensitivity to anything that reflects on our government.
> I hope that is of some help. A critical analysis of statistics on both sides
of the Atlantic would be very helpful to a real understanding, by the
"democratic public", of where we really stand on a lot of things.
>
>
>
> James
>
>
>
>
>   ----- Original Message -----
>   From: Dirk Bezemer
>   To: gang8@yahoogroups.com
>   Sent: Tuesday, November 07, 2006 10:23 AM
>   Subject: Re: [gang8] "America's Suicidal Statecraft"
>
>
>   Dear Gang,
>
>   I am engaged in a discussion on inflation statistics.
>
>   The official statistics, and academic studies, seem to refute the idea
>   that the intro of the Euro caused a price ump. At the same time those
>   statistics are known to be unreliable and contradicted by much anecdotal
>   alevidence.
>
>   Gang, could you please help me compile the evidence, if there is, for
>   the idea that inflation statistics are seriously ureliable- beyond the
>   normal margin of error - or, perhaps, fudged to make for a better
>   picture? Either in the US or in Euroland.
>
>   James has drawn my attention to definition changes in the US
>   statistics.James, I have been searching but am afraid I lost that email.
>   If you can, could you resend please? Nothing on this could be found on
>   the internet (by me...)
>
>   thanks,
>
>   Dirk
>
>   > Visit Your Group
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Attachment: vcard [not shown]

#11039 From: Dirk Bezemer <d.j.bezemer@...>
Date: Thu Nov 9, 2006 10:34 am
Subject: Re: "America's Suicidal Statecraft"
p233369
Send Email Send Email
 
Gang,

Stay informed on mainstream analysis of the US deficit at:

http://www.cesifo-group.de/portal/page?_pageid=36,102832&_dad=portal&_schema=POR\
TAL&item_link=forumindex1-05.htm

Good reading.

Dirk


>
>
>
>
>
Attachment: vcard [not shown]

#11040 From: "James" <jcumes@...>
Date: Fri Nov 10, 2006 8:49 am
Subject: "America's Suicidal Statecraft - The Self-destruction of a Superpower"
cresscourt
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America's Suicidal Statecraft
by James Cumes   

Buy this book
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Category: 

Political Science

Publisher:  Cresscourt Publishing Type:  Non-Fiction
Pages: 

632

ISBN:  141963819X Copyright:  6 November 2006




Civilisations die from suicide, not by murder.


                           Preface

“Civilisations die from suicide, not by murder" - Arnold J. Toynbee   

         In July 1969, when Neil Armstrong took his first steps on the Moon, his great leap for mankind was uniquely an American achievement. American vision and management, American science and technology, American finance and investment, American skill and diligence, American will, planning and dedication accomplished what was arguably the greatest human achievement of the 20th century – perhaps of all time thus far – and America and Americans stood alone as the only country and the only people who could have done it.

         Yet it came just at a point when, as the passing years have increasingly demonstrated, American power had begun to wane. In retrospect, what was a peak of human achievement at that time was also a peak in American power.

         In that same month, as a harbinger of the American decline, the Federal Reserve Board of the United States raised the rate of interest sharply to “fight” what was then, in the midst of the Cold War and the intensely hot Vietnam War, a comparatively modest inflation. In effect, that simple act of economic policy would put an end to what had been, up until then, an ever more spectacular set of achievements by the American people and their administrations.

         From that point on, the space race and much else besides became suspended or curtailed. The Apollo series was completed; but more than three decades have passed since then and Vietnam and the Cold War are history; but the grandeur of the American vision has faded whether for travel to the stars or realisation of human aspirations here on earth.

         In August 1971, just two years after the first Moon walk and the simultaneous interest-rate hike, the Nixon administration cut the dollar’s link with gold. The IMF’s “Gold Window” was closed. After a quarter century, the IMF ceased effectively to monitor, regulate and stabilise the world’s currencies. Currencies were allowed to float, some freely according to trade and monetary flows, some less freely through membership of a currency group and some through a peg to a major currency, usually the depreciating but still mighty American dollar.

         A month before Nixon closed the “Gold Window”, National Security Adviser Kissinger paid a sensational visit to Peking, presaging a visit by Nixon in February 1972. In between, the United Nations General Assembly once more debated which of Peking or Taiwan should occupy China’s seat in the Assembly and thus, even more importantly, its permanent seat on the Security Council. This time the Assembly voted for Peking. At last, twenty-two years after taking power at home, the Government of the People’s Republic of China took its rightful place in the United Nations.

         That was an epic victory for the People’s Republic; but, at that very moment, with stagflation under way and the Gold Window closed, an even greater victory was being prepared for it in the workshops of the economic and financial world.  In time, the interest-rate changes by the Fed in 1969, the closing of the Gold Window in 1971 and related economic and financial developments later would fundamentally transform the world economic environment and the balance, not only of economic power, but of political and strategic power as well.

         Having delivered a first oil shock in 1973, the decade of the 1970s ended with a second and bigger oil shock and even worse consumer-price stagflation, especially – though not only - in the United States. Inflation peaked at about 13.5% in 1980. The Fed raised its key interest rate to a peak of 18%. Intriguingly, those events nearly coincided with Deng Tsao Ping’s declaration in 1979 of a new and robustly capitalist economic policy for the People’s Republic of China. China would, Deng said, follow the Japanese economic model. “To get rich,” he added, “will be glorious.”

         Although he could not have known its miraculous potential at the time, Deng was destined to have the full, though largely inadvertent cooperation of the United States in accomplishing his economic objectives – and in “getting rich.” From the 1970s through to the present, United States policies have been steadily directed to building up, quickly and substantially, the economic strength of China, along with other countries in Asia. All the while, those same policies have drained the real life out of the American economy.

         After 1982, inflation in the United States fell to more normal levels, Reaganomics came into vogue and the United States began to challenge ever more robustly an ailing Soviet Union with the productive and innovative power of its economy and the might of its military technology. Less dramatically, in China, especially in the Hong Kong hinterland, infrastructure was being built and factories were going up. Production was getting under way that, in time, would supply markets all around the world – including especially the mighty consumer markets of the United States.

         United States inflation continued to moderate. The price of oil stabilised. From a peak of about $800 an ounce to which it zoomed in 1980, gold fell back to around $250. The United States irregular trade surpluses of the 1960s shrank to become deficits in most of the 1970s. In the 1980s, the deficits grew larger almost every year and became chronic. Reaganomics and the challenge of the Cold War put the budget into serious deficit. Though it received little public recognition, supply from overseas solved the problem of domestic inflation and the countries providing the supplies – including China to an ever-increasing extent – held their proceeds in dollars and so helped critically to settle both the American trade deficit and the American budget deficit. 


         That decade of the 1980s was a time of mounting economic and financial disequilibria; but, at its end, one historic political and strategic objective of the United States was realised: the Soviet Union collapsed and with it the Soviet empire. The satellite countries were freed. The United States became the world’s single, unchallenged superpower.

         However, again, if some trends were positive, other less positive developments were stirring in the background. From being the world’s greatest creditor country, the United States was slipping ever more heavily into debt. At some point in the late 1980s – while the Soviet Union was nearing its death-throes – the United States crossed the frontier from net creditor into net debtor territory.

         For more than a decade before that, Japan and the newly industrialising Asian Tigers had been supplying the American consumer market. American manufacturing had started to decline. Asian manufacturing took over and supplied American markets as well as markets around the world, with ever more sophisticated and high-quality products. Now, Chinese industrial development began to accelerate and, especially as the 1990s advanced, spread more intensively along the Pacific seaboard to serve foreign markets around the world.

         The high-tech boom of the 1990s saw the United States return, for a few years, to something like the innovative and entrepreneurial glory of its venture-capitalist past. Stock-markets boomed, entrepreneurs made fortunes overnight, real investment recovered something of its former vitality, the budget deficit transformed itself into a surplus and, for a while, between 1994 and 1997, even the trade account suspended its chronic downward plunge.

         Then, again, it all collapsed.

         Too much air had inflated too many market bubbles. Underlying trends in real investment, productivity and production were too weak. The stock-market boom burst. Fixed-capital investment slumped. Finance capitalism and the shift in domestic inflation to external trade deficits pushed the United States deeper into debt nationally and households into heavy borrowing to maintain their consumption levels. Unemployment increased and real wage levels stagnated or fell. People played more and more with fancy financial paper in what had become – through such obsessions as free markets, privatisation and globalisation – a casino-like, speculative American and world economy.        

         From being the world’s greatest creditor, the United States now became – ever more definitively – the world’s biggest debtor. By 2005, the national debt stood at about $8 trillion – around 60% of Gross Domestic Product – with 40% of it held by foreigners, including foreign governments and central banks. Household debt reached $2 trillion. Total national, corporate and household debt was now computed to be around $41 trillion or, some said, as high as $49 trillion. According to United States Treasury Department figures, President Bush borrowed, in his first five years in office, more money than all previous United States presidents together had ever done. The forty-two previous presidents borrowed a combined total of $1.01 trillion from foreign governments and financial institutions. By comparison, between 2001 and 2005 alone, the Bush administration borrowed $1.05 trillion – an all-time record and still rising, it is said, at $1 trillion every 18 months. The only ambiguously comforting consideration was that the real value of the American dollar had grown less each year so, in real terms, the debt was less. In turn, however, the sobering prospect was that the value of the dollar will continue to erode, probably at an accelerating pace especially, for example, in terms of gold, oil and other real commodities. 

         With debt of a magnitude few of us can readily conceive, with trade deficits of enormous proportions, with a gutted manufacturing sector and the ruthless reduction of the numbers of skilled factory workers, with a corporate culture that has lost its traditional dedication to real investment, productivity and production in favour of “ownership” and speculative enterprise, the United States appears to be moving rapidly along the road to ruin. The most forbidding of economic crises – with a variety of themes, aspects and complexities – seems to threaten just a short distance down that road from where we are now. If and when it arrives, a turmoil and misery to put the Great Depression of the 1930s to shame could afflict the American economy and the American people – and persist perhaps for a decade or more.

         But the menace goes much deeper even than that. The United States has not just participated, as one of the mob, in a malaise that has afflicted everyone, worldwide. Some, especially the Anglo-Saxon countries, have similar problems; but, while they and the United States have been slipping, some other countries have made unprecedented progress in developing their economies and advancing their influence and power in whatever area – economic, social, cultural, political and, most menacing of all, strategic. The United States has itself engineered both its own decline and the elevation of those who might be regarded as its actual or potential rivals. These include China which has, in the last two decades, moved rapidly up the ranks of high economic achievers to lie now fifth among the world’s biggest economies. Only the United States, Japan, Germany and possibly Britain are still ahead of the awakening giant. Given the great differences in rates of economic growth, China is likely to move into third position fairly soon and, not many years thereafter, push ahead of Japan, the country that Deng chose as his model back in 1979. Only the United States will then lie ahead – assuming that the American economy, with its several bubbles, does not collapse in crisis even earlier. If present disparate rates of growth continue, China will close the gap in Gross Domestic Product with the United States quite rapidly and, though we cannot give any date, will become the world’s number-one economy and will still be growing.

         Power accrues to those who know how to navigate efficiently on the stream of time. That efficiency is closely related to economic competence: the ability to manage and grow in real terms on the back of real investment, rising productivity and mounting production. Economic power nourishes other forms of power: political and strategic power in particular. Traditionally, conflicts tend to be related to changes in economic power and the status that economic power confers. The causes that precipitate the conflicts are varied but can include such crucial concerns as access to oil and other vital resources.

         On these bases, we could have ahead of us a world in turmoil as the mantle of the world’s single superpower falls from the shoulders of the United States and is assumed perhaps by China or a group of countries collaborating together. The Bush Administration has recently been talking to two of its closest allies, Japan and Australia, about the “containment of China”. In the same vein, it has been cosying up to India as a possible counterweight to China. Australia is dubious about “containment.” Japan seems more responsive; but any ideas of “containment” may now have passed their use-by date. If they were to be effective, they should have been a major influence on policy some time in the last twenty or thirty years when and after Nixon and Kissinger paid their visits to China. To mean anything, “containment” now can only imply a reversal of the American policies that have turned China into a candidate for “containment,” and those policies seem already to have done the job too well for their reversal to affect substantially the relative power positions of China and the United States now and, ever more importantly, in the ten, fifteen or twenty years ahead.

         The position of India is not so clear-cut. As a late starter, there may still be a rough chance that India can, in some way, be “contained” – whatever meaning may be given to that concept by those who espouse the policy. However, President Bush and his peripatetic Secretary of State seem not yet to have understood the reasons for the scale and speed of India’s and China’s growth and that they are essentially the same for both. To “contain” India therefore requires the reversal of the same American policies as those that have so miraculously transformed Chinese destinies. In Washington, policy seems not yet to have reached such a stage of thinking; but, in the light of the policy of “containment of China”, we may reasonably enquire: how soon will it be before the United States sees India and perhaps others as candidates for “containment” too? When it does, will the present policy of “cosying up” be enough? If India, instead of being “contained”, is conceived to be a “counterweight” to China, then the strategic reversal of the policies that made the latter powerful may need to be maintained to keep India on its path of rapid and substantial economic growth. The complexity of the developing power situation would seem to be too much for the present Bush administration and to be a rare challenge for whatever administration might succeed it. 

         The superpower challenge is of course only one of the challenges facing the United States and other countries around the world. United States policies – which have too often formed a model for others – have intensified almost every problem that humanity has designed or had thrust upon it: the environment, poverty, population growth, racial and religious conflict, commodity issues and the “limits to growth,” the dilemmas posed by failed states, the spread of disease, the plunder of the planet’s resources with ever more insatiable rapacity and so on. These issues are not only unresolved; they are, in essence though not in some of the empty rhetoric, comprehensively ignored and neglected. Vision has been lost. Enlightenment has vanished. Only more self-destruction – for the United States and, indeed, for all of us - seems to lie ahead. 

         America’s Suicidal Statecraft” is the story of these developments. It draws a picture of what has gone before, especially during the years since 1969; and suggests ways in which we might find a path out of our current dilemmas. The challenge that those dilemmas pose will be hard to meet. A “soft landing” for the world politically and strategically is as hard to guarantee as a “soft landing” for the American or world economy. However, the stakes are high for the future of humanity and, indeed, for the survival of life on the planet, as well as for individual countries; so high that the challenge is one that we must – as an absolute imperative – take up with all the energy and enlightened vision that we can muster.

 


Excerpt

"Central bankers everywhere have failed to see that interest-rate increases so raise costs and cut supply that, in most circumstances in modern economies and societies, they do not curb consumer-price inflation; on the contrary, they increase inflation and cause stagflation, as indeed they clearly did in the 1970s. Especially since the early 1980s, tight interest-rate policies in the United States and countries addicted to the American model have usually been followed by reductions in consumer-price inflation. However, the lower inflation has not been won through tight monetary policy; rather tight monetary policy has shifted or has coincided with a shift in inflation from domestic price rises to deficits in the balance of trade and payments. Moreover, fixed-capital investment and employment, as well as whole industries sometimes, have migrated overseas: they have been “outsourced” in a way that has gutted especially domestic manufacturing. The gusts of interest-rate changes have caused Schumpeter’s “gale of creative destruction” to be replaced with chronic gales of self-destruction of industry through a cluster of financial follies, damaging changes in corporate culture, the creation of a multitude of opportunities for the speculator, the promotion of self-indulgence for the consumer and the erosion of rewards for lower-income producers."

#11041 From: "Geoffrey Gardiner" <geoffrey.gardiner@...>
Date: Fri Nov 10, 2006 9:08 am
Subject: Inflation
geoffrey.gardiner@...
Send Email Send Email
 

Gardiner to Gang8, Michael Moore, and John Mills

 

The Bank of England has again raised interest rates in order to fight inflation. Did they cosider the following press release before doing so?

<<<<<

A three pence increase is on the way for a loaf as the price of flour rises for the second time in a few months.

The UK's largest independent miller ADM Milling said it was "regrettably" heading for its second hike since September, when its flour rose by £28.75 per tonne.

And industry experts said other millers were likely to follow suit.

An ADM Milling spokesman said: "With world wheat stocks being at the lowest level for 25 years, and with global consumption demand increasing, a continuation of upward wheat price costs seems inevitable.

"This is regrettably leading towards a further flour price increase in the next few months."

Anne Bruce, deputy editor of trade magazine British Baker, said it was "exceptionally unusual" for flour prices to rise twice within such a short space of time.

"It will inevitably mean that the price of bread will have to go up by around 3p for an 800g loaf and bakers which supply the supermarkets will have to negotiate with them to get a second price rise," she said.

"The usual situation is that flour prices go up after the harvest in August. Now they are being forced to put them up again. It is exceptionally unusual."

>>>>>>>

 

How can a rise in interest rates bring the price of wheat down? It must increase the cost of production as farming is a heavily capitalised industry and relies on borrowed capital.

At the same time the Treasury is paying farmers in Britain not to grow wheat. Huge areas of land are growing nothing but weeds as a result of a 'set-aside' policy.

I foresaw this situation and last year urged that every bit of land in Britain should be planted up.

Britain is in a very weak position in competing for world supplies of wheat as we have a huge trade deficit and the suppliying countries would have to lend us the money to buy their produce. I think they will prefer to sell their wheat to China in return for consumer goodies.

Another announcement yesterday was that Britain faces a milk shortage, and that in the country of Europe best endowed by nature for milk production. Why? Because pressure from sundry do-gooders, pseudo-environmentalists, and left-wing haters of farmers have made it uneconomic for British farmers to produce milk, and one milk producer is going out of business every week.

We face starvation in the not very distant future.

 

Geoffrey

 

 

 


#11042 From: "James" <jcumes@...>
Date: Fri Nov 10, 2006 10:16 am
Subject: Re: Inflation
cresscourt
Send Email Send Email
 
 
Geoffrey,
 
It is incredible that institutions of the quality and experience of the Bank of England should persist, as they have now done for decades, in interest-rate policies that are so ill-considered and destructive.
Your point on arable land and food production is also important and correct:
 
"...every bit of land in Britain should be planted up. Britain is in a very weak position in competing for world supplies of wheat ....Another announcement yesterday was that Britain faces a milk shortage, and that in the country of Europe best endowed by nature for milk production. Why? Because pressure from sundry do-gooders, pseudo-environmentalists, and left-wing haters of farmers have made it uneconomic for British farmers to produce milk, and one milk producer is going out of business every week.We face starvation in the not very distant future."
 
It is in this context that the couple of pages from "America's Suicidal Statecraft" in the attachment are relevant. We need to have much more vision and imagination in approaching the problems of food, population, arable land and hunger.
 
James Cumes 
 
 
----- Original Message -----
Sent: Friday, November 10, 2006 10:08 AM
Subject: [gang8] Inflation

Gardiner to Gang8, Michael Moore, and John Mills

 

The Bank of England has again raised interest rates in order to fight inflation. Did they cosider the following press release before doing so?

<<<<<

A three pence increase is on the way for a loaf as the price of flour rises for the second time in a few months.

The UK's largest independent miller ADM Milling said it was "regrettably" heading for its second hike since September, when its flour rose by £28.75 per tonne.

And industry experts said other millers were likely to follow suit.

An ADM Milling spokesman said: "With world wheat stocks being at the lowest level for 25 years, and with global consumption demand increasing, a continuation of upward wheat price costs seems inevitable.

"This is regrettably leading towards a further flour price increase in the next few months."

Anne Bruce, deputy editor of trade magazine British Baker, said it was "exceptionally unusual" for flour prices to rise twice within such a short space of time.

"It will inevitably mean that the price of bread will have to go up by around 3p for an 800g loaf and bakers which supply the supermarkets will have to negotiate with them to get a second price rise," she said.

"The usual situation is that flour prices go up after the harvest in August. Now they are being forced to put them up again. It is exceptionally unusual."

>>>>>>>

 

How can a rise in interest rates bring the price of wheat down? It must increase the cost of production as farming is a heavily capitalised industry and relies on borrowed capital.

At the same time the Treasury is paying farmers in Britain not to grow wheat. Huge areas of land are growing nothing but weeds as a result of a 'set-aside' policy.

I foresaw this situation and last year urged that every bit of land in Britain should be planted up.

Britain is in a very weak position in competing for world supplies of wheat as we have a huge trade deficit and the suppliying countries would have to lend us the money to buy their produce. I think they will prefer to sell their wheat to China in return for consumer goodies.

Another announcement yesterday was that Britain faces a milk shortage, and that in the country of Europe best endowed by nature for milk production. Why? Because pressure from sundry do-gooders, pseudo-environmentalists, and left-wing haters of farmers have made it uneconomic for British farmers to produce milk, and one milk producer is going out of business every week.

We face starvation in the not very distant future.

 

Geoffrey

 

----- Original Message -----
Sent: Friday, November 10, 2006 10:08 AM
Subject: [gang8] Inflation

Gardiner to Gang8, Michael Moore, and John Mills

 

The Bank of England has again raised interest rates in order to fight inflation. Did they cosider the following press release before doing so?

<<<<<

A three pence increase is on the way for a loaf as the price of flour rises for the second time in a few months.

The UK's largest independent miller ADM Milling said it was "regrettably" heading for its second hike since September, when its flour rose by £28.75 per tonne.

And industry experts said other millers were likely to follow suit.

An ADM Milling spokesman said: "With world wheat stocks being at the lowest level for 25 years, and with global consumption demand increasing, a continuation of upward wheat price costs seems inevitable.

"This is regrettably leading towards a further flour price increase in the next few months."

Anne Bruce, deputy editor of trade magazine British Baker, said it was "exceptionally unusual" for flour prices to rise twice within such a short space of time.

"It will inevitably mean that the price of bread will have to go up by around 3p for an 800g loaf and bakers which supply the supermarkets will have to negotiate with them to get a second price rise," she said.

"The usual situation is that flour prices go up after the harvest in August. Now they are being forced to put them up again. It is exceptionally unusual."

>>>>>>>

 

How can a rise in interest rates bring the price of wheat down? It must increase the cost of production as farming is a heavily capitalised industry and relies on borrowed capital.

At the same time the Treasury is paying farmers in Britain not to grow wheat. Huge areas of land are growing nothing but weeds as a result of a 'set-aside' policy.

I foresaw this situation and last year urged that every bit of land in Britain should be planted up.

Britain is in a very weak position in competing for world supplies of wheat as we have a huge trade deficit and the suppliying countries would have to lend us the money to buy their produce. I think they will prefer to sell their wheat to China in return for consumer goodies.

Another announcement yesterday was that Britain faces a milk shortage, and that in the country of Europe best endowed by nature for milk production. Why? Because pressure from sundry do-gooders, pseudo-environmentalists, and left-wing haters of farmers have made it uneconomic for British farmers to produce milk, and one milk producer is going out of business every week.

We face starvation in the not very distant future.

 

Geoffrey

 

 

 


#11043 From: "Kevin Donnelly ntl" <kevin.donnelly87@...>
Date: Fri Nov 10, 2006 12:16 pm
Subject: Re: Inflation
kevin.donnelly87@...
Send Email Send Email
 
Well, yes, of course, but the media generally seem to be in a state of denial.
I rang the Radio 5 phone-in programme yesterday.  Asked what point I wanted to make, I said that raising interest rates tends to increase inflation rather than reduce it.  Asked to explain further, I replied that in my days in industry, the cost of borrowing was a factor in calculating the price of biscuits just as labour and ingredients were, so that any increase in interest rates would increase factory gate prices, and therefore be inflationary.  Ergo...
Um, said the studio anchor man, I'll call my producer and ask him to give you a call.
I waited and waited for about half an hour, with my copy of Geoffrey's FT headline leaflet (bloodletting and fever) in front of me.  Nobody rang.
Radio 5 is on MW 909 693, and the UK phone number is 0500 909 693.  They like to hear from overseas callers.
    Kevin
----- Original Message -----
Sent: Friday, November 10, 2006 9:08 AM
Subject: [gang8] Inflation

Gardiner to Gang8, Michael Moore, and John Mills

 

The Bank of England has again raised interest rates in order to fight inflation. Did they cosider the following press release before doing so?

<<<<<

A three pence increase is on the way for a loaf as the price of flour rises for the second time in a few months.

The UK's largest independent miller ADM Milling said it was "regrettably" heading for its second hike since September, when its flour rose by £28.75 per tonne.

And industry experts said other millers were likely to follow suit.

An ADM Milling spokesman said: "With world wheat stocks being at the lowest level for 25 years, and with global consumption demand increasing, a continuation of upward wheat price costs seems inevitable.

"This is regrettably leading towards a further flour price increase in the next few months."

Anne Bruce, deputy editor of trade magazine British Baker, said it was "exceptionally unusual" for flour prices to rise twice within such a short space of time.

"It will inevitably mean that the price of bread will have to go up by around 3p for an 800g loaf and bakers which supply the supermarkets will have to negotiate with them to get a second price rise," she said.

"The usual situation is that flour prices go up after the harvest in August. Now they are being forced to put them up again. It is exceptionally unusual."

>>>>>>>

 

How can a rise in interest rates bring the price of wheat down? It must increase the cost of production as farming is a heavily capitalised industry and relies on borrowed capital.

At the same time the Treasury is paying farmers in Britain not to grow wheat. Huge areas of land are growing nothing but weeds as a result of a 'set-aside' policy.

I foresaw this situation and last year urged that every bit of land in Britain should be planted up.

Britain is in a very weak position in competing for world supplies of wheat as we have a huge trade deficit and the suppliying countries would have to lend us the money to buy their produce. I think they will prefer to sell their wheat to China in return for consumer goodies.

Another announcement yesterday was that Britain faces a milk shortage, and that in the country of Europe best endowed by nature for milk production. Why? Because pressure from sundry do-gooders, pseudo-environmentalists, and left-wing haters of farmers have made it uneconomic for British farmers to produce milk, and one milk producer is going out of business every week.

We face starvation in the not very distant future.

 

Geoffrey

 

 

 


#11044 From: "James" <jcumes@...>
Date: Fri Nov 10, 2006 1:14 pm
Subject: Re: Inflation
cresscourt
Send Email Send Email
 

 Kevin,

How does the old saw go?   A man or men, however gifted, if they are convinced against their will, are of the same opinion still.

On pages 233-4 of "America's Suicidal Statecraft", I have written -

      With the data tugging it in several different directions, the Fed seemed not to know what it should do and, paralysed by uncertainty, opted to sit tight and leave interest rates where they were. What was clear, although it was not noted in the Fed’s statement, was that, after seventeen hikes in interest rates over a two-year period, domestic inflation was higher than ever and the trade deficit persisted at record levels – around $65 billion for each of the  two months of May and June 2006 or around $800 billion a year. This appeared to demonstrate robustly - yet again - that, if you want to “fight inflation”, hiking interest rates is not the way to do it. 

Later on, on page 319, I added -

         Put another way, the fight against consumer-price inflation has been lost on all counts. Despite “a sequence of seventeen quarter point rises” in interest rates, the London Times wrote on 5 August 2006, “the Fed’s preferred measure of consumer inflation has risen to its highest level since 2002. Inflation is not dead.” Indeed, far from being dead and still less buried, inflation – as popularly understood – had robustly triumphed.

         Equally, there has not been much joy in terms of controlling asset-price inflation. Indeed, that form of inflation has flourished and has bounded upwards in scale, frequency, asset-type and complexity as never before. We now have many more bubbles than we could ever have counted – or imagined – in earlier periods. The consequences of their deflation are, in their potential, equally unprecedented. 

Sooner or later, reason must surely prevail; but it takes a staggeringly long time to do it.

 

 

James

----- Original Message -----
Sent: Friday, November 10, 2006 1:16 PM
Subject: Re: [gang8] Inflation

Well, yes, of course, but the media generally seem to be in a state of denial.
I rang the Radio 5 phone-in programme yesterday.  Asked what point I wanted to make, I said that raising interest rates tends to increase inflation rather than reduce it.  Asked to explain further, I replied that in my days in industry, the cost of borrowing was a factor in calculating the price of biscuits just as labour and ingredients were, so that any increase in interest rates would increase factory gate prices, and therefore be inflationary.  Ergo...
Um, said the studio anchor man, I'll call my producer and ask him to give you a call.
I waited and waited for about half an hour, with my copy of Geoffrey's FT headline leaflet (bloodletting and fever) in front of me.  Nobody rang.
Radio 5 is on MW 909 693, and the UK phone number is 0500 909 693.  They like to hear from overseas callers.
    Kevin
----- Original Message -----
Sent: Friday, November 10, 2006 9:08 AM
Subject: [gang8] Inflation

Gardiner to Gang8, Michael Moore, and John Mills

 

The Bank of England has again raised interest rates in order to fight inflation. Did they cosider the following press release before doing so?

<<<<<

A three pence increase is on the way for a loaf as the price of flour rises for the second time in a few months.

The UK's largest independent miller ADM Milling said it was "regrettably" heading for its second hike since September, when its flour rose by £28.75 per tonne.

And industry experts said other millers were likely to follow suit.

An ADM Milling spokesman said: "With world wheat stocks being at the lowest level for 25 years, and with global consumption demand increasing, a continuation of upward wheat price costs seems inevitable.

"This is regrettably leading towards a further flour price increase in the next few months."

Anne Bruce, deputy editor of trade magazine British Baker, said it was "exceptionally unusual" for flour prices to rise twice within such a short space of time.

"It will inevitably mean that the price of bread will have to go up by around 3p for an 800g loaf and bakers which supply the supermarkets will have to negotiate with them to get a second price rise," she said.

"The usual situation is that flour prices go up after the harvest in August. Now they are being forced to put them up again. It is exceptionally unusual."

>>>>>>>

 

How can a rise in interest rates bring the price of wheat down? It must increase the cost of production as farming is a heavily capitalised industry and relies on borrowed capital.

At the same time the Treasury is paying farmers in Britain not to grow wheat. Huge areas of land are growing nothing but weeds as a result of a 'set-aside' policy.

I foresaw this situation and last year urged that every bit of land in Britain should be planted up.

Britain is in a very weak position in competing for world supplies of wheat as we have a huge trade deficit and the suppliying countries would have to lend us the money to buy their produce. I think they will prefer to sell their wheat to China in return for consumer goodies.

Another announcement yesterday was that Britain faces a milk shortage, and that in the country of Europe best endowed by nature for milk production. Why? Because pressure from sundry do-gooders, pseudo-environmentalists, and left-wing haters of farmers have made it uneconomic for British farmers to produce milk, and one milk producer is going out of business every week.

We face starvation in the not very distant future.

 

Geoffrey

 

 

 


#11045 From: "Arno Mong Daastoel" <arno@...>
Date: Sat Nov 11, 2006 4:51 pm
Subject: Re: Inflation
arnomd
Send Email Send Email
 
Geoffrey,
 
Interestingly, this tool is omnipotent and should indeed be a study of the most knowledgeable experts on snake-oil remedies.
;-)
 
Across the North Sea, in Norway we still struggle with too LOW inflation, and the Bank of Norway again raised the interests rate. Why? To cool down the housing market. Newspaper headlines therefore read "Caught in the splits".
 
I once again would like to raise the issue that the consumer-price index does not include any elements of the asset-price inflation, where the cost of housing  indeed is one of the most important issues for most people, especially the young.
 
The effect here of an interests rate hike here though, is to lower asset prices.
In other words, the effect of a hike produce different effects on different markets.
Right?
 
Arno
 
 
 

#11046 From: "James" <jcumes@...>
Date: Sat Nov 11, 2006 6:58 pm
Subject: Re: Inflation
cresscourt
Send Email Send Email
 
Arno,
 
The effect here of an interests rate hike here though, is to lower asset prices.
In other words, the effect of a hike produce different effects on different markets.
Right?
 
Right!!
You need to distinguish between consumer-price inflation and asset-price inflation.
A hike in interest rates will tend - depending on its "severity" - to reduce asset-price inflation or inflationary pressures
and may kill it or them stone dead. Note that the housing asset-price bubble in the United States is rapidly losing its steam - or its air!
The effect of a hike on other real-estate markets is probably the same in underlying trend but each market seems to have its own particular characteristics, for example, in Japan, Britain and Australia.
At the same time as interest-rate hikes let air out of the asset bubbles, they intensify consumer-price inflation, which expresses itself either in domestic price rises or in deterioration in the external balances. That seems to have happened/is happening again in the United States at the moment. The housing bubble seems to be deflating rapidly and other bubbles might follow soon. Consumer-price inflation has risen since 2002, despite the long run of interest-rate hikes for about two years since - was it May? - 2004.
One interesting feature is that - though not always; it depends on the particular demographic and other circumstances - a speculative housing bubble will be accompanied by a collapse or at least a reduction in rents. The supply of housing units rises in excess of real - as distinct from speculative - requirements and the emergence of inventories can depress rents quite markedly. As a consequence, asset-price inflation brings about an actual decline in one of the important elements in the calculation of consumer-price inflation.
Nothing is absolutely simple, is it?
The trouble is that , not merely for years but for decades now, we - and the central banks - have tended to raise and lower interest rates in an eternal yo-yo financial dance.  The central banks predilection has been to RAISE interest rates at the drop of a hat and that has been an enormously debilitating recourse for economies like the United States and Australia for the past thirty-seven years.
Our economic strength has ebbed away.
However, in the last few years, the tendency of the Fed has been to raise interest rates but then, dismayed at what it has brought about, to lower them with a precipitateness that has caused a whole bunch of asset bubbles to form.
In addition, in all this, we have to bear in mind that the interest rate is one lever and easy credit is another. In recent policy in the United States, while the interest rate has been raised seventeen times in the last two years, credit has been handed out on a plate to just about everyone - including those who had no hope of affording it - for almost any useful or not-so-useful purpose.
Just as one thought, put briefly, the way to confront asset-price inflation is to watch and have some sort of effective pre-emptive control of credit flows. The "Window of Guidance" of the Japanese and the "Special Accounts" of the Australians were devices within this genre in the past. The way to control consumer-price inflation is quite different and consists of managing supply to harmonise with a demand which tends upward but which also needs constraint. In an open economy where this is not the effective approach - and the emphasis is on "effective" - the consumer-price inflation gets shifted into the external balances and results in a whole host of largely but not entirely speculative disequilibria. After all the years of misconceived policies, those disequilibria are now going to be desperately hard to correct without a painful transition probably all around the world. The intensity of the pain will probably vary from one economy to another; but my guess is that the misery, of one kind or another, will be virtually universal.
 
 
 
 
James
 
 
 
 
 
 
 
----- Original Message -----
Sent: Saturday, November 11, 2006 5:51 PM
Subject: Re: [gang8] Inflation

Geoffrey,
 
Interestingly, this tool is omnipotent and should indeed be a study of the most knowledgeable experts on snake-oil remedies.
;-)
 
Across the North Sea, in Norway we still struggle with too LOW inflation, and the Bank of Norway again raised the interests rate. Why? To cool down the housing market. Newspaper headlines therefore read "Caught in the splits".
 
I once again would like to raise the issue that the consumer-price index does not include any elements of the asset-price inflation, where the cost of housing  indeed is one of the most important issues for most people, especially the young.
 
The effect here of an interests rate hike here though, is to lower asset prices.
In other words, the effect of a hike produce different effects on different markets.
Right?
 
Arno
 
 
 


#11047 From: "Arno Mong Daastoel" <arno@...>
Date: Sun Nov 12, 2006 10:25 am
Subject: Re: Inflation
arnomd
Send Email Send Email
 
Yes, and when an interest hike lowers rents it also causes business costs to decline, thereby counteracting the increase in capital costs that the hike itself produced. The net effect would vary from company to company, depending e.g. on their circumstances of debt and rent. Stipulating the aggregated net effect is a matter far beyond my intuition.
;-)
 
>raise and lower interest rates in an eternal yo-yo financial dance.  ... and that has been an enormously debilitating recourse ... Our economic strength has ebbed away.
 
James, you are I suppose, referring not only to the resulting buildup and bursts of bubbles, but also to to the effects of the resulting lack of predictability and stability that business investements require? Good point.
 
>credit has been handed out on a plate to just about everyone ...
 
"Funny", it has been so for centuries - all around the globe.
- and once again this is a hot theme - also in Norway right now.
 
The irresponsibility of bankers almost makes me want to hug AMI and Stephen's suggestions.
;-)
 
 
> In an open economy ... inflation  ... results in .. disequilibria. ... hard to correct
 
I guess the lesson is that efficient markets in the long run need governance, however inefficient that may seem in the short run.
 
It seems to me that may economist and politicians are grasping for that simple tool that will fix all worries, a financial snake-oil - be that as mathematical models or as interest rate regulations.
- Instead of coming to grips with the reality that these matters require careful and continuous hands-on regulation by very competent, experienced and intuitive people.
 
Arno
 
 
----- Original Message -----
From: James
Sent: Saturday, November 11, 2006 7:58 PM
Subject: Re: [gang8] Inflation

Arno,
 
The effect here of an interests rate hike here though, is to lower asset prices.
In other words, the effect of a hike produce different effects on different markets.
Right?
 
Right!!
You need to distinguish between consumer-price inflation and asset-price inflation.
A hike in interest rates will tend - depending on its "severity" - to reduce asset-price inflation or inflationary pressures
and may kill it or them stone dead. Note that the housing asset-price bubble in the United States is rapidly losing its steam - or its air!
The effect of a hike on other real-estate markets is probably the same in underlying trend but each market seems to have its own particular characteristics, for example, in Japan, Britain and Australia.
At the same time as interest-rate hikes let air out of the asset bubbles, they intensify consumer-price inflation, which expresses itself either in domestic price rises or in deterioration in the external balances. That seems to have happened/is happening again in the United States at the moment. The housing bubble seems to be deflating rapidly and other bubbles might follow soon. Consumer-price inflation has risen since 2002, despite the long run of interest-rate hikes for about two years since - was it May? - 2004.
One interesting feature is that - though not always; it depends on the particular demographic and other circumstances - a speculative housing bubble will be accompanied by a collapse or at least a reduction in rents. The supply of housing units rises in excess of real - as distinct from speculative - requirements and the emergence of inventories can depress rents quite markedly. As a consequence, asset-price inflation brings about an actual decline in one of the important elements in the calculation of consumer-price inflation.
Nothing is absolutely simple, is it?
The trouble is that , not merely for years but for decades now, we - and the central banks - have tended to raise and lower interest rates in an eternal yo-yo financial dance.  The central banks predilection has been to RAISE interest rates at the drop of a hat and that has been an enormously debilitating recourse for economies like the United States and Australia for the past thirty-seven years.
Our economic strength has ebbed away.
However, in the last few years, the tendency of the Fed has been to raise interest rates but then, dismayed at what it has brought about, to lower them with a precipitateness that has caused a whole bunch of asset bubbles to form.
In addition, in all this, we have to bear in mind that the interest rate is one lever and easy credit is another. In recent policy in the United States, while the interest rate has been raised seventeen times in the last two years, credit has been handed out on a plate to just about everyone - including those who had no hope of affording it - for almost any useful or not-so-useful purpose.
Just as one thought, put briefly, the way to confront asset-price inflation is to watch and have some sort of effective pre-emptive control of credit flows. The "Window of Guidance" of the Japanese and the "Special Accounts" of the Australians were devices within this genre in the past. The way to control consumer-price inflation is quite different and consists of managing supply to harmonise with a demand which tends upward but which also needs constraint. In an open economy where this is not the effective approach - and the emphasis is on "effective" - the consumer-price inflation gets shifted into the external balances and results in a whole host of largely but not entirely speculative disequilibria. After all the years of misconceived policies, those disequilibria are now going to be desperately hard to correct without a painful transition probably all around the world. The intensity of the pain will probably vary from one economy to another; but my guess is that the misery, of one kind or another, will be virtually universal.
 
 
 
 
James
 
 
 
 
 
 
 
----- Original Message -----
Sent: Saturday, November 11, 2006 5:51 PM
Subject: Re: [gang8] Inflation

Geoffrey,
 
Interestingly, this tool is omnipotent and should indeed be a study of the most knowledgeable experts on snake-oil remedies.
;-)
 
Across the North Sea, in Norway we still struggle with too LOW inflation, and the Bank of Norway again raised the interests rate. Why? To cool down the housing market. Newspaper headlines therefore read "Caught in the splits".
 
I once again would like to raise the issue that the consumer-price index does not include any elements of the asset-price inflation, where the cost of housing  indeed is one of the most important issues for most people, especially the young.
 
The effect here of an interests rate hike here though, is to lower asset prices.
In other words, the effect of a hike produce different effects on different markets.
Right?
 
Arno
 
 
 


#11048 From: "James" <jcumes@...>
Date: Sun Nov 12, 2006 11:08 am
Subject: Re: Inflation
cresscourt
Send Email Send Email
 
Arno,
 
"...when an interest hike lowers rents..."
 
Generally, isn't it likely that a hike in interest rates will raise rents - or tend to start a trend towards rising rents?
When interest rates rise, building - whether residential or commercial - tends to be both more costly and more discouraged. Any existing bubbles tend to deflate. Initially - and depending on the vigour of the preceding boom - inventories of houses, shops etc might rise sharply for a time - thus temporarily lowering rents - and then, with the slide or slump in new construction, rents will tend to fall. With some time-lag, the slowdown in supply of houses, offices, shops, etc will move towards an equilibrium with demand.
Over what I suppose we can regard as a cycle, higher interest rates will kill the boom in houses etc, the prices of which will tend to fall, at least in real terms. (In nominal terms, they tend to be more resistant.)After any excess inventories have been exhausted, the level of rents will tend to move up, so that, over time, rents going up and house prices going down will move into a more "normal" or "characteristic" or stable relationship with one another.
The ideal situation would seem to be one in which you don't have interest rates going up and down like a yo-yo and where you don't get a series of bubbles and busts. Those bubbles and busts in building construction are part of the environment of excessive speculation that has done such damage to the real economy over the last thirty-seven years.
 
Is that so or am I talking a load of nonsense?


James    
 
 
 
 
 
----- Original Message -----
Sent: Sunday, November 12, 2006 11:25 AM
Subject: Re: [gang8] Inflation

Yes, and when an interest hike lowers rents it also causes business costs to decline, thereby counteracting the increase in capital costs that the hike itself produced. The net effect would vary from company to company, depending e.g. on their circumstances of debt and rent. Stipulating the aggregated net effect is a matter far beyond my intuition.
;-)
 
>raise and lower interest rates in an eternal yo-yo financial dance.  ... and that has been an enormously debilitating recourse ... Our economic strength has ebbed away.
 
James, you are I suppose, referring not only to the resulting buildup and bursts of bubbles, but also to to the effects of the resulting lack of predictability and stability that business investements require? Good point.
 
>credit has been handed out on a plate to just about everyone ...
 
"Funny", it has been so for centuries - all around the globe.
- and once again this is a hot theme - also in Norway right now.
 
The irresponsibility of bankers almost makes me want to hug AMI and Stephen's suggestions.
;-)
 
 
> In an open economy ... inflation  ... results in .. disequilibria. ... hard to correct
 
I guess the lesson is that efficient markets in the long run need governance, however inefficient that may seem in the short run.
 
It seems to me that may economist and politicians are grasping for that simple tool that will fix all worries, a financial snake-oil - be that as mathematical models or as interest rate regulations.
- Instead of coming to grips with the reality that these matters require careful and continuous hands-on regulation by very competent, experienced and intuitive people.
 
Arno
 
 
----- Original Message -----
From: James
Sent: Saturday, November 11, 2006 7:58 PM
Subject: Re: [gang8] Inflation

Arno,
 
The effect here of an interests rate hike here though, is to lower asset prices.
In other words, the effect of a hike produce different effects on different markets.
Right?
 
Right!!
You need to distinguish between consumer-price inflation and asset-price inflation.
A hike in interest rates will tend - depending on its "severity" - to reduce asset-price inflation or inflationary pressures
and may kill it or them stone dead. Note that the housing asset-price bubble in the United States is rapidly losing its steam - or its air!
The effect of a hike on other real-estate markets is probably the same in underlying trend but each market seems to have its own particular characteristics, for example, in Japan, Britain and Australia.
At the same time as interest-rate hikes let air out of the asset bubbles, they intensify consumer-price inflation, which expresses itself either in domestic price rises or in deterioration in the external balances. That seems to have happened/is happening again in the United States at the moment. The housing bubble seems to be deflating rapidly and other bubbles might follow soon. Consumer-price inflation has risen since 2002, despite the long run of interest-rate hikes for about two years since - was it May? - 2004.
One interesting feature is that - though not always; it depends on the particular demographic and other circumstances - a speculative housing bubble will be accompanied by a collapse or at least a reduction in rents. The supply of housing units rises in excess of real - as distinct from speculative - requirements and the emergence of inventories can depress rents quite markedly. As a consequence, asset-price inflation brings about an actual decline in one of the important elements in the calculation of consumer-price inflation.
Nothing is absolutely simple, is it?
The trouble is that , not merely for years but for decades now, we - and the central banks - have tended to raise and lower interest rates in an eternal yo-yo financial dance.  The central banks predilection has been to RAISE interest rates at the drop of a hat and that has been an enormously debilitating recourse for economies like the United States and Australia for the past thirty-seven years.
Our economic strength has ebbed away.
However, in the last few years, the tendency of the Fed has been to raise interest rates but then, dismayed at what it has brought about, to lower them with a precipitateness that has caused a whole bunch of asset bubbles to form.
In addition, in all this, we have to bear in mind that the interest rate is one lever and easy credit is another. In recent policy in the United States, while the interest rate has been raised seventeen times in the last two years, credit has been handed out on a plate to just about everyone - including those who had no hope of affording it - for almost any useful or not-so-useful purpose.
Just as one thought, put briefly, the way to confront asset-price inflation is to watch and have some sort of effective pre-emptive control of credit flows. The "Window of Guidance" of the Japanese and the "Special Accounts" of the Australians were devices within this genre in the past. The way to control consumer-price inflation is quite different and consists of managing supply to harmonise with a demand which tends upward but which also needs constraint. In an open economy where this is not the effective approach - and the emphasis is on "effective" - the consumer-price inflation gets shifted into the external balances and results in a whole host of largely but not entirely speculative disequilibria. After all the years of misconceived policies, those disequilibria are now going to be desperately hard to correct without a painful transition probably all around the world. The intensity of the pain will probably vary from one economy to another; but my guess is that the misery, of one kind or another, will be virtually universal.
 
 
 
 
James
 
 
 
 
 
 
 
----- Original Message -----
Sent: Saturday, November 11, 2006 5:51 PM
Subject: Re: [gang8] Inflation

Geoffrey,
 
Interestingly, this tool is omnipotent and should indeed be a study of the most knowledgeable experts on snake-oil remedies.
;-)
 
Across the North Sea, in Norway we still struggle with too LOW inflation, and the Bank of Norway again raised the interests rate. Why? To cool down the housing market. Newspaper headlines therefore read "Caught in the splits".
 
I once again would like to raise the issue that the consumer-price index does not include any elements of the asset-price inflation, where the cost of housing  indeed is one of the most important issues for most people, especially the young.
 
The effect here of an interests rate hike here though, is to lower asset prices.
In other words, the effect of a hike produce different effects on different markets.
Right?
 
Arno
 
 
 


#11049 From: Gunnar Tómasson <gunnar.tomasson@...>
Date: Tue Nov 14, 2006 12:39 am
Subject: Apres nous, le deluge - Anno 1972-2006
gunnar_tomasson
Send Email Send Email
 
 Dear Gang.
 
Here is something which I posted today on an Icelandic Internet forum - in translation.  The subject matter is Lawrence Summers' Los Angeles Times Opinion article, which James forwarded the other day. 
 
Nothing new in this for the Gang - but the stage would seem to be set for an economic and financial reckoning of sorts. 
 
Gunnar 
 
***
 
Summers:

There are no easy answers. The economic logic of free, globalised, technologically sophisticated capitalism may well be to shift more wealth to the very richest and some of the very poorest in the world, while squeezing people in the middle.

Comment: 
 
I agree with Summers - the problem is not easily resolved.  In fact I consider it beyond resolution so long as the "globalised, technologically sophisticated capitalism" as it has evolved after the end of the Bretton Woods system after 1970 commands center stage - I have just as long been of the view that developments in international financial markets during the past three decades are the equivalent of what I have termed "the structural disintegration of the international monetary system". 
 
It is self-evident that, concurrently, monetary feet of clay have been evolving under the world economy - for "structural disintegration of the international monetary system" cannot be separated from the ultimate collapse of the "globalised, technologically sophisticated capitalism" which has developed with amazing speed during the past thirty years or so. 
 
The Icelandic authorities are not the only ones to have treated the obvious precursors of the monetary fimbulvetur [stormy winter, three of which are held to herald the advent of Ragnarök or Twilight of the Gods in Icelandic Edda/Saga Myth - insert] which has been brewing as mere wind blowing by their ears [an Icelandic saying - insert] - academic economists, mainstream and monetarist alike, who welcomed the demise of the Bretton Woods system at the time, know only the kind of monetary economics which is the root of the problem ahead. 
 
The International Monetary Fund was established at the end of World War II with a mission of ensuring that mistakes in the field of monetary affairs analogous to those which caused the world depression of the 1930s would not be repeated. 
 
For the past thirty years, those who call the shots at the Fund have chosen to float sleeping to the mouth of the river of death [another Icelandic saying - insert] - the chances are that history will judge the "mistakes" in the field of monetary affairs in the 1930s to have been as mere child's play compared to the consequences thereof in the period ahead. 
 
The problem is not easily resolved - but necessity is the mother of invention. 
 
When "the structural disintegration of the international monetary system" has run its course, then - and only then - will the academic and political "leaders" who have served as godfathers to the Hrunadans [dance of collapse; yet another Icelandic term - insert] of the "globalised, technologically sophisticated capitalism" awake from a bad dream. 
 
I will let this suffice.

#11050 From: "Arno Mong Daastoel" <arno@...>
Date: Tue Nov 14, 2006 6:29 pm
Subject: MARTIN: The Power, the State and the Institution of Property
arnomd
Send Email Send Email
 
Sorry for the delay in passing this letter on to you.
I forgot.
If Uwe bothers to send this, it must be worth reading.
 
Arno
 
 
 
----- Original Message -----
Sent: Monday, August 28, 2006 10:27 AM
Subject: Hello

Hello, Arno,

thought the attachment maybe food for thought for your critical readers.

The original paper originated here:

http://www.iksf.uni-bremen.de/symposium/papers.html

Regretably the English version came late.

The best

Uwe


#11051 From: "James" <jcumes@...>
Date: Wed Nov 15, 2006 10:56 am
Subject: Re: Apres nous, le deluge - Anno 1972-2006
cresscourt
Send Email Send Email
 
 
Dear Gunnar,
 
You have put the situation dramatically - and therefore very effectively - as indeed you have done over the years.
There has certainly been a "structural disintegration of the international monetary system".
The blindness of so many to this "structural disintegration" is just another - enormously important - aspect of the obsession we have had for so long, not only to declare, suggest or imply that what is happening is no cause for alarm, but that it is actually the right and glorious way to proceed.
Floating currencies are a splendid thing. Speculation is good - good for our pockets and for our souls. As you say so powerfully -
 
"The International Monetary Fund was established at the end of World War II with a mission of ensuring that mistakes in the field of monetary affairs analogous to those which caused the world depression of the 1930s would not be repeated. 
 
"For the past thirty years, those who call the shots at the Fund have chosen to float sleeping to the mouth of the river of death [another Icelandic saying - insert] - the chances are that history will judge the 'mistakes' in the field of monetary affairs in the 1930s to have been as mere child's play compared to the consequences thereof in the period ahead."   
 
 
You and I have always had a very large measure of agreement on these issues. Consequently, I keep my fingers crossed and nourish hopes that you will find some merit in what I have to say in "America's Suicidal Statecraft", about the Bank and Fund, exchange rates, floating and fixed currencies, and the rest. Please let me know if you have any difficulty in getting a copy and I will arrange for one to be sent instantly to you.
 
I like to be optimistic but again I agree with you that "The problem is not easily resolved - but necessity is the mother of invention." That Icelandic "Dance of Collapse" may well be what we are in for.
 
 
 
James 
 
----- Original Message -----
To: Gang8
Sent: Tuesday, November 14, 2006 1:39 AM
Subject: [gang8] Apres nous, le deluge - Anno 1972-2006

 Dear Gang.
 
Here is something which I posted today on an Icelandic Internet forum - in translation.  The subject matter is Lawrence Summers' Los Angeles Times Opinion article, which James forwarded the other day. 
 
Nothing new in this for the Gang - but the stage would seem to be set for an economic and financial reckoning of sorts. 
 
Gunnar 
 
***
 
Summers:

There are no easy answers. The economic logic of free, globalised, technologically sophisticated capitalism may well be to shift more wealth to the very richest and some of the very poorest in the world, while squeezing people in the middle.

Comment: 
 
I agree with Summers - the problem is not easily resolved.  In fact I consider it beyond resolution so long as the "globalised, technologically sophisticated capitalism" as it has evolved after the end of the Bretton Woods system after 1970 commands center stage - I have just as long been of the view that developments in international financial markets during the past three decades are the equivalent of what I have termed "the structural disintegration of the international monetary system". 
 
It is self-evident that, concurrently, monetary feet of clay have been evolving under the world economy - for "structural disintegration of the international monetary system" cannot be separated from the ultimate collapse of the "globalised, technologically sophisticated capitalism" which has developed with amazing speed during the past thirty years or so. 
 
The Icelandic authorities are not the only ones to have treated the obvious precursors of the monetary fimbulvetur [stormy winter, three of which are held to herald the advent of Ragnarök or Twilight of the Gods in Icelandic Edda/Saga Myth - insert] which has been brewing as mere wind blowing by their ears [an Icelandic saying - insert] - academic economists, mainstream and monetarist alike, who welcomed the demise of the Bretton Woods system at the time, know only the kind of monetary economics which is the root of the problem ahead. 
 
The International Monetary Fund was established at the end of World War II with a mission of ensuring that mistakes in the field of monetary affairs analogous to those which caused the world depression of the 1930s would not be repeated. 
 
For the past thirty years, those who call the shots at the Fund have chosen to float sleeping to the mouth of the river of death [another Icelandic saying - insert] - the chances are that history will judge the "mistakes" in the field of monetary affairs in the 1930s to have been as mere child's play compared to the consequences thereof in the period ahead. 
 
The problem is not easily resolved - but necessity is the mother of invention. 
 
When "the structural disintegration of the international monetary system" has run its course, then - and only then - will the academic and political "leaders" who have served as godfathers to the Hrunadans [dance of collapse; yet another Icelandic term - insert] of the "globalised, technologically sophisticated capitalism" awake from a bad dream. 
 
I will let this suffice.


#11052 From: Gunnar Tómasson <gunnar.tomasson@...>
Date: Wed Nov 15, 2006 3:05 pm
Subject: Re: Apres nous, le deluge - Anno 1972-2006
gunnar_tomasson
Send Email Send Email
 
Dear James,
 
First, I checked out Amazon and Borders last week and your book was not yet available.
 
This morning I checked out Amazon again - the book is now available and I ordered a copy.
 
Look forward to reading it.
 
As for developments in world monetary affairs during the past three decades, it was a telling indication of things to come that no sooner had the Nixon Administration pulled the plug on the Bretton Woods System than ALL economists in the IMF's Research Department discovered the merits of floating exchange rates - the self-same system which ALL (as I recall it) previous research papers of the Research Department's economists had found wanting relative to the Bretton Woods arrangements.
 
Nor, to the best of my knowledge, have we heard ANYTHING recently from Paul A. Samuelson and Milton Friedman (both of whom were Newsweek columnists at the time and welcomed the advent of the post-Bretton Woods NON-system of world monetary arrangements) on the state of their brain child which by now is into its 30s.
 
Intellectual cowards, one and all.
 
Gunnar
 
----- Original Message -----
From: James
Sent: Wednesday, November 15, 2006 5:56 AM
Subject: Re: [gang8] Apres nous, le deluge - Anno 1972-2006

 
Dear Gunnar,
 
You have put the situation dramatically - and therefore very effectively - as indeed you have done over the years.
There has certainly been a "structural disintegration of the international monetary system".
The blindness of so many to this "structural disintegration" is just another - enormously important - aspect of the obsession we have had for so long, not only to declare, suggest or imply that what is happening is no cause for alarm, but that it is actually the right and glorious way to proceed.
Floating currencies are a splendid thing. Speculation is good - good for our pockets and for our souls. As you say so powerfully -
 
"The International Monetary Fund was established at the end of World War II with a mission of ensuring that mistakes in the field of monetary affairs analogous to those which caused the world depression of the 1930s would not be repeated. 
 
"For the past thirty years, those who call the shots at the Fund have chosen to float sleeping to the mouth of the river of death [another Icelandic saying - insert] - the chances are that history will judge the 'mistakes' in the field of monetary affairs in the 1930s to have been as mere child's play compared to the consequences thereof in the period ahead."   
 
 
You and I have always had a very large measure of agreement on these issues. Consequently, I keep my fingers crossed and nourish hopes that you will find some merit in what I have to say in "America's Suicidal Statecraft", about the Bank and Fund, exchange rates, floating and fixed currencies, and the rest. Please let me know if you have any difficulty in getting a copy and I will arrange for one to be sent instantly to you.
 
I like to be optimistic but again I agree with you that "The problem is not easily resolved - but necessity is the mother of invention." That Icelandic "Dance of Collapse" may well be what we are in for.
 
 
 
James 
 
----- Original Message -----
To: Gang8
Sent: Tuesday, November 14, 2006 1:39 AM
Subject: [gang8] Apres nous, le deluge - Anno 1972-2006

 Dear Gang.
 
Here is something which I posted today on an Icelandic Internet forum - in translation.  The subject matter is Lawrence Summers' Los Angeles Times Opinion article, which James forwarded the other day. 
 
Nothing new in this for the Gang - but the stage would seem to be set for an economic and financial reckoning of sorts. 
 
Gunnar 
 
***
 
Summers:

There are no easy answers. The economic logic of free, globalised, technologically sophisticated capitalism may well be to shift more wealth to the very richest and some of the very poorest in the world, while squeezing people in the middle.

Comment: 
 
I agree with Summers - the problem is not easily resolved.  In fact I consider it beyond resolution so long as the "globalised, technologically sophisticated capitalism" as it has evolved after the end of the Bretton Woods system after 1970 commands center stage - I have just as long been of the view that developments in international financial markets during the past three decades are the equivalent of what I have termed "the structural disintegration of the international monetary system". 
 
It is self-evident that, concurrently, monetary feet of clay have been evolving under the world economy - for "structural disintegration of the international monetary system" cannot be separated from the ultimate collapse of the "globalised, technologically sophisticated capitalism" which has developed with amazing speed during the past thirty years or so. 
 
The Icelandic authorities are not the only ones to have treated the obvious precursors of the monetary fimbulvetur [stormy winter, three of which are held to herald the advent of Ragnarök or Twilight of the Gods in Icelandic Edda/Saga Myth - insert] which has been brewing as mere wind blowing by their ears [an Icelandic saying - insert] - academic economists, mainstream and monetarist alike, who welcomed the demise of the Bretton Woods system at the time, know only the kind of monetary economics which is the root of the problem ahead. 
 
The International Monetary Fund was established at the end of World War II with a mission of ensuring that mistakes in the field of monetary affairs analogous to those which caused the world depression of the 1930s would not be repeated. 
 
For the past thirty years, those who call the shots at the Fund have chosen to float sleeping to the mouth of the river of death [another Icelandic saying - insert] - the chances are that history will judge the "mistakes" in the field of monetary affairs in the 1930s to have been as mere child's play compared to the consequences thereof in the period ahead. 
 
The problem is not easily resolved - but necessity is the mother of invention. 
 
When "the structural disintegration of the international monetary system" has run its course, then - and only then - will the academic and political "leaders" who have served as godfathers to the Hrunadans [dance of collapse; yet another Icelandic term - insert] of the "globalised, technologically sophisticated capitalism" awake from a bad dream. 
 
I will let this suffice.


#11053 From: "James" <jcumes@...>
Date: Wed Nov 15, 2006 4:44 pm
Subject: Re: Apres nous, le deluge - Anno 1972-2006
cresscourt
Send Email Send Email
 
Gunnar,
 
"Intellectual cowards, one and all."
 
How true that is.
You and very few others have shown courage. Let's hope that will, at some point, receive appropriate recognition.
I look forward - not without some trepidation - to hearing what you think of my book.
I know you will agree with some of it. We have discussed these issues for a long time and your views have been of great value to me and, I am sure, to many others.
However, in a book that runs to more than 600 pages, there will almost inevitably be some things with which you do not agree.
It will be fascinating to discover what they are - and how intense the disagreements turn out to be.
 
 

James
 
 
 
 
 
 
----- Original Message -----
Sent: Wednesday, November 15, 2006 4:05 PM
Subject: Re: [gang8] Apres nous, le deluge - Anno 1972-2006

Dear James,
 
First, I checked out Amazon and Borders last week and your book was not yet available.
 
This morning I checked out Amazon again - the book is now available and I ordered a copy.
 
Look forward to reading it.
 
As for developments in world monetary affairs during the past three decades, it was a telling indication of things to come that no sooner had the Nixon Administration pulled the plug on the Bretton Woods System than ALL economists in the IMF's Research Department discovered the merits of floating exchange rates - the self-same system which ALL (as I recall it) previous research papers of the Research Department's economists had found wanting relative to the Bretton Woods arrangements.
 
Nor, to the best of my knowledge, have we heard ANYTHING recently from Paul A. Samuelson and Milton Friedman (both of whom were Newsweek columnists at the time and welcomed the advent of the post-Bretton Woods NON-system of world monetary arrangements) on the state of their brain child which by now is into its 30s.
 
Intellectual cowards, one and all.
 
Gunnar
 
----- Original Message -----
From: James
Sent: Wednesday, November 15, 2006 5:56 AM
Subject: Re: [gang8] Apres nous, le deluge - Anno 1972-2006

 
Dear Gunnar,
 
You have put the situation dramatically - and therefore very effectively - as indeed you have done over the years.
There has certainly been a "structural disintegration of the international monetary system".
The blindness of so many to this "structural disintegration" is just another - enormously important - aspect of the obsession we have had for so long, not only to declare, suggest or imply that what is happening is no cause for alarm, but that it is actually the right and glorious way to proceed.
Floating currencies are a splendid thing. Speculation is good - good for our pockets and for our souls. As you say so powerfully -
 
"The International Monetary Fund was established at the end of World War II with a mission of ensuring that mistakes in the field of monetary affairs analogous to those which caused the world depression of the 1930s would not be repeated. 
 
"For the past thirty years, those who call the shots at the Fund have chosen to float sleeping to the mouth of the river of death [another Icelandic saying - insert] - the chances are that history will judge the 'mistakes' in the field of monetary affairs in the 1930s to have been as mere child's play compared to the consequences thereof in the period ahead."   
 
 
You and I have always had a very large measure of agreement on these issues. Consequently, I keep my fingers crossed and nourish hopes that you will find some merit in what I have to say in "America's Suicidal Statecraft", about the Bank and Fund, exchange rates, floating and fixed currencies, and the rest. Please let me know if you have any difficulty in getting a copy and I will arrange for one to be sent instantly to you.
 
I like to be optimistic but again I agree with you that "The problem is not easily resolved - but necessity is the mother of invention." That Icelandic "Dance of Collapse" may well be what we are in for.
 
 
 
James 
 
----- Original Message -----
To: Gang8
Sent: Tuesday, November 14, 2006 1:39 AM
Subject: [gang8] Apres nous, le deluge - Anno 1972-2006

 Dear Gang.
 
Here is something which I posted today on an Icelandic Internet forum - in translation.  The subject matter is Lawrence Summers' Los Angeles Times Opinion article, which James forwarded the other day. 
 
Nothing new in this for the Gang - but the stage would seem to be set for an economic and financial reckoning of sorts. 
 
Gunnar 
 
***
 
Summers:

There are no easy answers. The economic logic of free, globalised, technologically sophisticated capitalism may well be to shift more wealth to the very richest and some of the very poorest in the world, while squeezing people in the middle.

Comment: 
 
I agree with Summers - the problem is not easily resolved.  In fact I consider it beyond resolution so long as the "globalised, technologically sophisticated capitalism" as it has evolved after the end of the Bretton Woods system after 1970 commands center stage - I have just as long been of the view that developments in international financial markets during the past three decades are the equivalent of what I have termed "the structural disintegration of the international monetary system". 
 
It is self-evident that, concurrently, monetary feet of clay have been evolving under the world economy - for "structural disintegration of the international monetary system" cannot be separated from the ultimate collapse of the "globalised, technologically sophisticated capitalism" which has developed with amazing speed during the past thirty years or so. 
 
The Icelandic authorities are not the only ones to have treated the obvious precursors of the monetary fimbulvetur [stormy winter, three of which are held to herald the advent of Ragnarök or Twilight of the Gods in Icelandic Edda/Saga Myth - insert] which has been brewing as mere wind blowing by their ears [an Icelandic saying - insert] - academic economists, mainstream and monetarist alike, who welcomed the demise of the Bretton Woods system at the time, know only the kind of monetary economics which is the root of the problem ahead. 
 
The International Monetary Fund was established at the end of World War II with a mission of ensuring that mistakes in the field of monetary affairs analogous to those which caused the world depression of the 1930s would not be repeated. 
 
For the past thirty years, those who call the shots at the Fund have chosen to float sleeping to the mouth of the river of death [another Icelandic saying - insert] - the chances are that history will judge the "mistakes" in the field of monetary affairs in the 1930s to have been as mere child's play compared to the consequences thereof in the period ahead. 
 
The problem is not easily resolved - but necessity is the mother of invention. 
 
When "the structural disintegration of the international monetary system" has run its course, then - and only then - will the academic and political "leaders" who have served as godfathers to the Hrunadans [dance of collapse; yet another Icelandic term - insert] of the "globalised, technologically sophisticated capitalism" awake from a bad dream. 
 
I will let this suffice.


#11054 From: "Geoffrey Gardiner" <geoffrey.gardiner@...>
Date: Wed Nov 15, 2006 8:32 pm
Subject: Re: monopoly on the world's food supply
geoffrey.gardiner@...
Send Email Send Email
 
I would support Peter's analysis. it is very practical.
 
Geoffrey
----- Original Message -----
Sent: Monday, October 16, 2006 6:40 AM
Subject: Fw: [gang8] monopoly on the world's food supply

I forgot to forward this comment from Peter,
 
 
----- Original Message -----
Sent: Wednesday, September 27, 2006 10:35 PM
Subject: Re: [gang8] monopoly on the world's food supply

dear dirk,
i hope you will excuse me intervening. i feel there are a few points
missing, or not addressed, in your remarks. the particular passage to
which i am responding is this one:

> Second, do farmers really not have to use GM seed if it is made
> unprofitable for them, or if they wish not to use it for some other
> reason? In fact they do have to. In the new situation they can probably
> not compete anymore unless they use the new crop because innovations
> typically make the old product obsolete. As a producer, you follow the
> new technology or you exit. Again, this in itself is not necessarily a
> bad thing for society (although it may be hard on the farmer); but to
> suggest that farmers will have a choice goes against all we know about
> innovations.
>



I think you are missing part of the point here: or maybe i am
misunderstanding you? Farmers, in my experience, do not act as free
agents making simply rational choices. Their effective options are
constrained by a number of factors, most important of which are,
perhaps, access to credit, and access to public support mechanisms of
all kinds, not exclusively financial. So the effect of 'innovations' is
not simply due to their innovative nature.
Most Indian peasants technology-adoption choices, for instance, are
determined by the requirements of their moneylenders. And since the
credit is often extended by the agribusinesses themselves, then the
farmers effectively become a captive market for whatever products the
firm wishes to sell them. But the same is true in Europe too. Most
farmers I have met are enormously in debt, and their business plans have
to be approved by the bank. Some are also in debt to their suppliers. I
remember a French chicken farmer, operating batteries on a huge scale,
who only remained in business because his feed supplier was making him
loans to enable him to buy food to keep the chickens (temporarily) alive.
And in that situation, farmers are also subject to parallel pressure
from public bodies, which reinforces any innate tendency to conformism.
A friend who farms in the Drome went to an 'extension' evening organised
for organic farmers by the Departement a few years ago. The public
agronomists introduced three types of organic potato, one of which had
one kind of 'drawback', the second another. Result: the following year,
everybody was planting the third variety. This may be partly herd
instinct. But it also, IMO, a sign of a more immediately material
structure which makes independent thinking disproportionately 'expensive'.
Whether farmers are free to choose the non-majority (non-monopoly) seed
variety is therefore, IMO, open to question, if the people who sell the
monopoly seed have the capital to provide credit, and the visible
support of the state (not only for promotion, but also research). And
that is before we start looking at purely legal mechanisms which impose
an effective 'tax' on otherwise common goods, such as the French
prohibition on saving seeds from one year to the next. Whether such
markets are 'free' is, perhaps, a linguistic question. But what is clear
is that they will not produce rational decisions from the point of view
of any agent other than the agent who wields the monopoly power.
Some times I feel that free markets are a bit like Western civilisation,
as Ghandi would have said: they may seem like a very good idea, but I
see little evidence of them operating in any of the areas of life of
which I have direct experience, including agriculture. What we have
instead is the rhetoric of the free market serving as cover for
governments whose cumulative actions objectively serve to reinforce
private monopolies, rather than to undermine them. But then, perhaps any
theory of economics which refuses to define and analyse relations of
power as such (i.e. in non-quantitative terms) is unlikely to have much
genuine explanatory value?
Good wishes
Peter




#11055 From: "Geoffrey Gardiner" <geoffrey.gardiner@...>
Date: Thu Nov 16, 2006 6:31 pm
Subject: Re: Fw: Report on AMI2006 Monetary Reform Conference
geoffrey.gardiner@...
Send Email Send Email
 
Arno,
 
I do not expect to be able to see the book, but it must have been written before the publication of the Puteoli documents which reveal a Roman banking system very like our own. Members of the Imperial family made deposits with private bankers.
 
Geoffrey
----- Original Message -----
To: PGS
Sent: Wednesday, October 25, 2006 2:16 PM
Subject: Re: [gang8] Fw: Report on AMI2006 Monetary Reform Conference

Geoffrey,
FYI.
Arno
 
 
----- Original Message -----
From: PGS
Sent: Tuesday, October 24, 2006 10:45 AM
Subject: AW: [gang8] Fw: Report on AMI2006 Monetary Reform Conference

Arno,
 
let me throw in a short remark pertaining to the subject
of statism. As an avid reader of Stephen`s money book
I have recently discovered a brilliant study by Wilhelm Hankel
(you know one of the gang of four in Germany who have been
continuing their guerilla fight against the Euro system from
its inception) on the Roman empire world economy after Caesar
and Octavian. - Not a super-imperialism, but certainly kind of
a historical blueprint for what the American century was supposed
to become.
 
His investigations on the Roman monetary system based on
brushing again through the original sources and historical
reconstruction is most revealing.
 
"Caesar - Weltwirtschaft des Alten Rom" (ca 1986) is still obtainable
in archive bookstores.
 
There is no more illustrating description of state money without
any permission of private money creation.
 
Hankel describes and explains why this worked for three hundred
years and why it declined in the first hyper-inflation of history.
 
I would very much recommend this book to German-readers.
 
Regards
Peter
 
 
-----Ursprüngliche Nachricht-----
Von: Arno Mong Daastoel [mailto:amd@...]
Gesendet: Dienstag, 24. Oktober 2006 08:23
An: gang8@yahoogroups.com
Cc: Stephen Zarlenga; Frederick William Engdahl; PGS
Betreff: Re: [gang8] Fw: Report on AMI2006 Monetary Reform Conference

Geoffrey,
 
I have for some time been wondering about what I have seen as an overly statist tint to AMI's proposals, but I have ascribed this to my lack og comprehension of what they really want. I find it interesting that you have the same impression.
 
I am sure that this is done with the best of intentions, but my impression too has been that in the US there is a kind of nostalgia and longing for "the exotic", and therefore many think postwar social-democratic rule in Northern Europe was efficient. Several studies in the past decades has shown that it wasn't. In Norway there was a vaste of invested resources on a grand scale, not so unlike the neglect of common sense economic principles in the former USSR. Paradoxically, at the same time there was a neglect of the role of immaterial resources.
 
Yours,
Arno
 
 
 
----- Original Message -----
Sent: Wednesday, October 11, 2006 1:30 PM
Subject: Re: [gang8] Fw: Report on AMI2006 Monetary Reform Conference

'The Road To Serfdom' is being kept in good repair by the AMI.
 
They want to prevent the debts of any private organisation being made negotiable. How does one stop that happening without imposing a Communist/Nationa Soclialist system? Is it feasible?
 
At the moment primary credit can be created in the private sector. Very little primary credit to the state is negotiable because banks are reluctant to hold more state debt as assets than they have to. State debt is almost all funded. If one can make any sense at all of the AMI proposals they appear to be the system which ruled in Britain from about 1940 until about 1960. 80 per cent of bank assets were state debt. Banks referred to such lending as 'White Paper Loans', which means that the rules under which they were working had been published in a government paper, known in Britain as a 'White Paper', but not carried forward into legislation as it should have been. The system may therefore have been an informal one. Private credit creation over £10,000 (equal to £1,000,000 today) was controlled, however, by an Act of 1946, but not forbidden.
 
Of course such a system causes government debt to grow enormously, something the AMI does not appreciate for it states as its purpose not to increase the national debt. Some interest had to be paid, but this was cancelled out by inflation (12 per cent in 1948 when the interest rate on government debt was about 2.6 per cent), so effectively what the AMi wanted was achieved. One reason the interest rate was kept very low was there were huge debts to the 'Sterling Area' countries (almost four billion, equal to 200 billion today at least), especially  to India and Australia, and of course also to the United States and Canada. The British Government was happy to bilk foreigners, even friendly ones. As the state debt of the US is funded by foreigners, one can see that the secret agenda of the AMI is also to bilk foreigner creditors. Good thinking! The situation Roosevelt envisaged in his speech of May 22, 1939 no longer persists. He pointed out that the interest paid on the national debt was paid to the nation. That is no longer so true. Tom Paine was all for a national debt, but preferred it should be interest free (from Common Sense). So he moved from Britian, where on average every family was owed £18 (equal today to the average annual per capita income at least) by the state for its expenditure on defending the American Colonies, to the colonies themselves where the debt was a mere 18 pence. Did not do him much good. He died a pauper and rejected by his adopted country.
 
During the war period the majority of the investment needed by British war industries was provided by the Government, just as the AMI wants now. The system was reinforced after the war by wholesale nationalisation, of transport (road and rail), of steel making, of coal mining, and of the Bank of England, though the latter was only a nominal change.  A huge National Savings system was built up to sterilise government debt. Most personal banking was done through the Post Office (which held only government securities and paid 2.5 per cent interest) or Trustee Savings Banks, whose assets were also government loans, though some, such as the Birmingham Municipal Bank did some mortgage lending.
 
The National Savings movement became the biggest defrauder of the public there has ever been. Eventually even a government report admitted that to hold National Savings instruments was folly. The Enron swindle was peanuts by comparison. But there is nothing new about such fraud; it is the reason why in olden times state debt was 'monnaie faible'. Worst of all is to be a foreign creditor of a government.
 
Almost everything the AMI wants was achieved in wartime and postwar Britain. Did Britain benefit from its adoption of such extreme national socialism. The opinion of most is that it did not. Inefficiency was total. The activities of the Capital Issues Committee became a farce, though they continued until 1984. The very poor performance of an economy (which in 1964 still had the highest proportion of manufacturing workers in the world) was dire. Gradually there was a change of direction, and the equally damaging doctrines of monetarism appeared on the scene. The economy went from the frying pan into the fire. Total inflation from 1937 to present has reached at least 98 per cent, whereas in the days before state control of industry, the inflation rate long-term was negative.
 
Congratulations to the AMI for its skill presenting a communist/national socialist agenda in such skilful disguise to the US Congress.
 
'You can fool the people some of the time; you can fool all the people for some of the time; but you cannot fool all the people all the time.'
 
GWG


#11056 From: "Arno Mong Daastoel" <amd@...>
Date: Thu Nov 16, 2006 6:55 pm
Subject: Re: "America's Suicidal Statecraft
arnomd
Send Email Send Email
 
To put the matter of Churchill's emphasis on market access clearer I should have included the following praise by Winston for Italian and German Fascism, just a few years before the Fulton speech, and I could have included Spain as well:
 

"Of Italian Fascism, Italy has shown that there is a way of fighting the subversive forces which can rally the masses of the people, properly led, to value and wish to defend the honour and stability of civilised society.  Hereafter no great nation will be unprovided with an ultimate means of protection against the cancerous growth of Bolshevism." - Winston Churchill, 11th November 1938

 

"The German leader with the highest of praise for his accomplishments as no other foreign statesman ever received from an Englishman." - Winston Churchill, 4th, October, 1938

 

 "While all those formidable transformations were occurring in Europe, Corporal Hitler was fighting his long, wearing battle for the German heart.  The story of that struggle cannot be read without admiration for the courage, the perseverance, and the vital force which enabled him to challenge, defy, conciliate, or overcome, all the authorities or resistance's which barred his path.  He, and the ever increasing legions who worked with him, certainly showed at this time, in their patriotic ardor and love of country, that there was nothing that they would not dare, no sacrifice of life, limb or liberty that they would not make themselves or inflict upon their opponents." - Winston Churchill. Francis Nielson. 'Makers of War' p.101

 

"There must not be lacking in our leadership something of that spirit of the Austrian corporal who, when all had fallen into ruins around him, and when Germany seemed to have fallen into chaos, did not hesitate to march forth against the vast army of victorious nations and has already turned the tables decisively against them."

 

"In fifteen years that have followed this resolve, he has succeeded in restoring Germany to the most powerful position in Europe, and not only has he restored the position of his country, but he has even, to a very great extent, reversed the results of the Great War.... the vanquished are in the process of becoming the victors and the victors the vanquished.... whatever else might be thought about these exploits they are certainly among the most remarkable in the whole history of the world."

- Winston Churchill, 1935

 

".... and the achievement by which the tables have been turned upon the complacent, feckless and purblind victors deserves to be reckoned a prodigy in the history of the world and a prodigy which is inseparable from the personal exertions of life thrust on a single man....

Those who have met Hitler face to face in public, business, or on social terms, have found a highly competent, cool, well-informed functionary with an agreeable manner, a discerning smile and few have been unaffected by a subtle personal magnetism.

Nor is this impression merely the dazzle of power.  He exerted it on his companions at every stage in his struggle, even when his fortunes were in the lowest depths....

One may dislike Hitler's system and yet admire his patriotic achievement.  If our country were defeated I should hope we should find a champion as indomitable to restore our courage and lead us back to our place among the nations."  - Winston Churchill, 'Step by Step', p.143

 

 

But again, as in the 1946 Fulton speech, he saw other sides to the issue:

 

"Germany is too strong.  We must destroy her."  - Winston Churchill, November, 1936 to US General Wood

 

"This (the American declaration of war) is what I dreamed of, aimed at and worked for and now it has come to pass." - Winston Churchill, 15th February 1942

 

"Great Britain advances, leading France by the hand, to guarantee the integrity of Poland - of that very Poland which with hyena appetite only six months before, joined in the pillage and destruction of the Czechoslovak state." - Winston Churchill, The Second World War, Vol.1, pp. 311/312

 

 
----- Original Message -----
Sent: Thursday, November 16, 2006 7:40 PM
Subject: Re: [gang8] "America's Suicidal Statecraft

James, you asked for comments...
 
- so, a few minor points... so far (100 pages)....
 
VERY interesting themes !!!
 
- The references in the notes are written in an inconsistent form, different from note to note.
(Sometimes the author is noted, sometimes the title of the book sometimes both etc)
 
- p.102: You mention the peaceful transfer if power from Britain to America. Britain did not accept contenders such as Germany or Russia. You forget to mention two world wars + numerous other wars. Even the wars in South Africa were noting but rehearsals for the great showdown most informed people knew was forthcoming. It is generally known that WW I was a contest for markets etc, so let me quote Winston on WW II: "The war was not just a matter of the elimination of Fascism in Germany, but rather of obtaining German sales markets." - Winston Churchill. Fulton speech, March 1946
- p. 97: You mention 1979 two times, and I guess you mean 1969 the first time.
 
- p. 46: Precisely!!!
"When manufacturing moves abroad, engineering follows. R&D follows engineering, and innovation follows R&D. The entire economy drains away."
 
 
- p. 65-66. James, this is brilliant!
 
Re: "BOJ purchases of government debt "
 
Thanks for pointing to the fact that Fed chairman Bernake has seen the light!
Also, I am delighted by finally noticing the wisdom of George Bush in appointing this man.
;-)
 
We have discussed this policy many times on this list, and pointed to the possibility that inflation would be halted if "this policy of Bernanke" would be combined with the additional policy of channeling credit to productive purposes.
 
"BOJ purchases of government debt " also points to another issue, namely the ensuing status of this debt. State money followers argue that is no longer debt, but "money". I would still argue that it is both, but that such "debt to the public" in practice will not have to be repaid, unlike private debt.
 
 
From your book, America's Suicidal Statecraft, pages 65-66
 
    "Bernanke ended his Tokyo address with some intriguing conclusions on cooperation and interaction between fiscal and monetary policies and the financing of government spending.
    He said that, “Potential roles for monetary-fiscal cooperation are not limited to BOJ support of tax cuts. BOJ purchases of government debt could also support spending programs, to facilitate industrial restructuring, for example. The BOJ’s purchases would mitigate the effect of the new spending on the burden of debt and future interest payments perceived by households, which should reduce the offset from decreased consumption. More generally, by replacing interest-bearing debt with money, BOJ purchases of government debt lower current deficits and interest burdens and thus the public’s expectations of future tax obligations. Of course, one can never get something for nothing; from a public finance perspective, increased monetization of government debt simply amounts to replacing other forms of taxes with an inflation tax. But, in the context of deflation-ridden Japan, generating a little bit of positive inflation (and the associated increase in nominal spending) would help achieve the goals of promoting economic recovery and putting idle resources back to work, which in turn would boost tax revenue and improve the government’s fiscal position.”
    There is a great deal to be said for fiscal and monetary policies to be applied in tandem, one  reinforcing the other, rather than in isolation with one possibly working against the other. There is also much to be said for the financing of government spending through the central bank, rather than by adding to the burden of debt and payment of interest charges through the budget. What makes this especially intriguing, however, is that the suggestions were put forward by the – now - Fed Chairman and we do not yet know whether he will, in 2006 or later, face deflation in the United States and whether, in that event, he will reflect on and perhaps adopt the measures that he recommended to the Japanese back in 2003."
 

#11057 From: "Geoffrey Gardiner" <geoffrey.gardiner@...>
Date: Thu Nov 16, 2006 7:32 pm
Subject: Re: Fw: Report on AMI2006 Monetary Reform Conference
geoffrey.gardiner@...
Send Email Send Email
 
Kevin,
 
There is no difference whatsoever between Bradburies and modern banknotes. One can not issue them in unlimited quantities, but only to the level they are required by the public. Soddy was a great physicist but his understanding of monetary theory was far from satisfactory. But he did get people thinking and the long-term result is creditary economics.
 
After the Napoleonic Wars interest payments took up half the tax revenue. This was trivial ill compared with the deflation which followed, and it was deflation which also caused the serious problems of the 1920s and 1930s. Soddy's solution was that of the 1923 German government, a very effective cure for inflation but it destroyed all the savings of the people.
 
Geoff
----- Original Message -----
Sent: Thursday, October 26, 2006 6:32 PM
Subject: Re: [gang8] Fw: Report on AMI2006 Monetary Reform Conference

Dear Gang,
    Here in the UK we are about to commemorate the 20th anniversary of the Big Bang, the deregulation of the City of London financial markets which was supposed to be good for us all.  Generous to a fault, as I usually am, I have yet to see that much public good ensued.
    However I can see a huge surge in property prices which experts say is explained by "supply and demand", even for fairly basic ex-council houses going for many times their original construction cost. It occurs to me that this demand is fuelled by an apparently unlimited availability of finance, but which is not available to erstwhile borrowers on average incomes, even though the rules now seem to allow loans of up to five or six times the borrowers annual earnings, criteria unheard of before Big Bang.  Now I hear that 100% loans of ten or more times earnings loans are available from high street banks for selected applicants and suitable properties.
    The logic of such policies defeats me, while "explanations" such as "market forces" are also unconvincing.  However I do find encouragement in the words of Thomas A. Edison "It is absurd to say that our country can issue 30 million dollars in bonds and not 30 million dollars in currency. Both are promises to pay. But one promise fattens the usurer and the other helps the people".
    Maybe Edison was some kind of anarcho-syndicalist, which I am not, but his argument seems persuasive.  And of course the 1914 Bradbury notes were not BoE notes but were Treasury notes bearing the head of George V which gave them validation.  The Bradbury notes were legal tender until the mid 1920s before being quietly withdrawn.  Surely if they worked then they could work now?  Edison seemed to think that the US could issue 30 million dollars in currency.  Frederick Soddy eventually investigated the financial system of his own day and found it sadly inadequate.  The powers-that-be got their revenge its seems.  His Nobel prize for physics should have gained him also a knighthood, customary for such outstanding achievers, but he was overlooked, and his last years were clouded by a legal run-in with the Inland Revenue.  A friend who has read the Soddy archive at Cambridge tells me that it contains evidence for his case against the money men and the Inland Revenue story
    So I also find much encouragement in Geoffrey's words - 
'You can fool the people some of the time; you can fool all the people for some of the time; but you cannot fool all the people all the time.'
    Then this morning's Guardian (26 Oct) at the bottom of its leader page quotes a leader from the old Manchester Guardian for 26 October 1929, with an incisive comment on the foolish Gadarene rush of that time.  Somebody's dropping hints?
    (Sorry about the varying fonts, by the way.)
    Kevin

#11058 From: "Arno Mong Daastoel" <amd@...>
Date: Thu Nov 16, 2006 6:40 pm
Subject: Re: "America's Suicidal Statecraft
arnomd
Send Email Send Email
 
James, you asked for comments...
 
- so, a few minor points... so far (100 pages)....
 
VERY interesting themes !!!
 
- The references in the notes are written in an inconsistent form, different from note to note.
(Sometimes the author is noted, sometimes the title of the book sometimes both etc)
 
- p.102: You mention the peaceful transfer if power from Britain to America. Britain did not accept contenders such as Germany or Russia. You forget to mention two world wars + numerous other wars. Even the wars in South Africa were noting but rehearsals for the great showdown most informed people knew was forthcoming. It is generally known that WW I was a contest for markets etc, so let me quote Winston on WW II: "The war was not just a matter of the elimination of Fascism in Germany, but rather of obtaining German sales markets." - Winston Churchill. Fulton speech, March 1946
- p. 97: You mention 1979 two times, and I guess you mean 1969 the first time.
 
- p. 46: Precisely!!!
"When manufacturing moves abroad, engineering follows. R&D follows engineering, and innovation follows R&D. The entire economy drains away."
 
 
- p. 65-66. James, this is brilliant!
 
Re: "BOJ purchases of government debt "
 
Thanks for pointing to the fact that Fed chairman Bernake has seen the light!
Also, I am delighted by finally noticing the wisdom of George Bush in appointing this man.
;-)
 
We have discussed this policy many times on this list, and pointed to the possibility that inflation would be halted if "this policy of Bernanke" would be combined with the additional policy of channeling credit to productive purposes.
 
"BOJ purchases of government debt " also points to another issue, namely the ensuing status of this debt. State money followers argue that is no longer debt, but "money". I would still argue that it is both, but that such "debt to the public" in practice will not have to be repaid, unlike private debt.
 
 
From your book, America's Suicidal Statecraft, pages 65-66
 
    "Bernanke ended his Tokyo address with some intriguing conclusions on cooperation and interaction between fiscal and monetary policies and the financing of government spending.
    He said that, “Potential roles for monetary-fiscal cooperation are not limited to BOJ support of tax cuts. BOJ purchases of government debt could also support spending programs, to facilitate industrial restructuring, for example. The BOJ’s purchases would mitigate the effect of the new spending on the burden of debt and future interest payments perceived by households, which should reduce the offset from decreased consumption. More generally, by replacing interest-bearing debt with money, BOJ purchases of government debt lower current deficits and interest burdens and thus the public’s expectations of future tax obligations. Of course, one can never get something for nothing; from a public finance perspective, increased monetization of government debt simply amounts to replacing other forms of taxes with an inflation tax. But, in the context of deflation-ridden Japan, generating a little bit of positive inflation (and the associated increase in nominal spending) would help achieve the goals of promoting economic recovery and putting idle resources back to work, which in turn would boost tax revenue and improve the government’s fiscal position.”
    There is a great deal to be said for fiscal and monetary policies to be applied in tandem, one  reinforcing the other, rather than in isolation with one possibly working against the other. There is also much to be said for the financing of government spending through the central bank, rather than by adding to the burden of debt and payment of interest charges through the budget. What makes this especially intriguing, however, is that the suggestions were put forward by the – now - Fed Chairman and we do not yet know whether he will, in 2006 or later, face deflation in the United States and whether, in that event, he will reflect on and perhaps adopt the measures that he recommended to the Japanese back in 2003."
 

#11059 From: "James" <jcumes@...>
Date: Fri Nov 17, 2006 9:20 am
Subject: Re: "America's Suicidal Statecraft
cresscourt
Send Email Send Email
 
Thanks, Arno. It's good to know you've managed the first 100 pages. I hope the going gets easier and easier as you reach towards that formidable goal of 600!!
Thank you especially for your kind comments.
Your point on the notes may be well taken and I shall have another look at them. However, your reference - "Sometimes the author is noted, sometimes the title of the book sometimes both etc" - may be explained by my tendency to name the author and/or the book in the note only when it or they have not been specified in the actual text. Where the author and the book have already been identified in the text, the note might just specify the page from which the quotation has been taken. Thanks, Arno.
 
p. 102 - yes, of course, you are quite right. There's much more to be said on that topic. I suppose my only - lame - excuse is that I had to limit my references to world wars - and other wars - if only to avoid adding too much to what many will regard as an already excessive length; but your point is well taken.
 
p. 97 - no, 1979 is correct in both cases. The shift of domestic inflation to the external balances took place mainly after the runaway inflation in the United States in the late 1970s and early 1980s and the efforts of Volcker to kill it through dramatic hikes in interest rates. Earlier in the 1970s, of course, some high investment countries such as Japan and Germany had helped to meet the shortage of supply in the United States and, for example, the Anglo economies; but the Asian Tigers needed some time to "gear up". It was in 1979 that Deng announced his dramatic change in economic policy but naturally it took some years for China - and later India - to achieve any major status as providers of supplies to the shortage countries. So it was from 1979 onwards that the Asian Tigers came increasingly and unambiguously to be identified and then for China, especially from the 1990s onwards and India from still later, to join the goldrush to get themselves an easy - or relatively easy - haul of dollar "nuggets". (Note that although we tend naturally to highlight the haul of US dollar "nuggets", Australian, Canadian and New Zealand dollars provided some useful "nuggets" for what, in 1984, I called the "wildfire developing countries", that is, the Asian Tigers of that period, to be joined later by several others, including China and India.)
Thanks for your comments on pp. 46 and 65-6. They are very much appreciated.
I look forward to any further comments you may choose to make, Arno - to the extent of course that you have time.
Thanks again and all the best.
 
 
James
 
 
 
 
 
----- Original Message -----
Sent: Thursday, November 16, 2006 7:40 PM
Subject: Re: [gang8] "America's Suicidal Statecraft

James, you asked for comments...
 
- so, a few minor points... so far (100 pages)....
 
VERY interesting themes !!!
 
- The references in the notes are written in an inconsistent form, different from note to note.
(Sometimes the author is noted, sometimes the title of the book sometimes both etc)
 
- p.102: You mention the peaceful transfer if power from Britain to America. Britain did not accept contenders such as Germany or Russia. You forget to mention two world wars + numerous other wars. Even the wars in South Africa were noting but rehearsals for the great showdown most informed people knew was forthcoming. It is generally known that WW I was a contest for markets etc, so let me quote Winston on WW II: "The war was not just a matter of the elimination of Fascism in Germany, but rather of obtaining German sales markets." - Winston Churchill. Fulton speech, March 1946
- p. 97: You mention 1979 two times, and I guess you mean 1969 the first time.
 
- p. 46: Precisely!!!
"When manufacturing moves abroad, engineering follows. R&D follows engineering, and innovation follows R&D. The entire economy drains away."
 
 
- p. 65-66. James, this is brilliant!
 
Re: "BOJ purchases of government debt "
 
Thanks for pointing to the fact that Fed chairman Bernake has seen the light!
Also, I am delighted by finally noticing the wisdom of George Bush in appointing this man.
;-)
 
We have discussed this policy many times on this list, and pointed to the possibility that inflation would be halted if "this policy of Bernanke" would be combined with the additional policy of channeling credit to productive purposes.
 
"BOJ purchases of government debt " also points to another issue, namely the ensuing status of this debt. State money followers argue that is no longer debt, but "money". I would still argue that it is both, but that such "debt to the public" in practice will not have to be repaid, unlike private debt.
 
 
From your book, America's Suicidal Statecraft, pages 65-66
 
    "Bernanke ended his Tokyo address with some intriguing conclusions on cooperation and interaction between fiscal and monetary policies and the financing of government spending.
    He said that, “Potential roles for monetary-fiscal cooperation are not limited to BOJ support of tax cuts. BOJ purchases of government debt could also support spending programs, to facilitate industrial restructuring, for example. The BOJ’s purchases would mitigate the effect of the new spending on the burden of debt and future interest payments perceived by households, which should reduce the offset from decreased consumption. More generally, by replacing interest-bearing debt with money, BOJ purchases of government debt lower current deficits and interest burdens and thus the public’s expectations of future tax obligations. Of course, one can never get something for nothing; from a public finance perspective, increased monetization of government debt simply amounts to replacing other forms of taxes with an inflation tax. But, in the context of deflation-ridden Japan, generating a little bit of positive inflation (and the associated increase in nominal spending) would help achieve the goals of promoting economic recovery and putting idle resources back to work, which in turn would boost tax revenue and improve the government’s fiscal position.”
    There is a great deal to be said for fiscal and monetary policies to be applied in tandem, one  reinforcing the other, rather than in isolation with one possibly working against the other. There is also much to be said for the financing of government spending through the central bank, rather than by adding to the burden of debt and payment of interest charges through the budget. What makes this especially intriguing, however, is that the suggestions were put forward by the – now - Fed Chairman and we do not yet know whether he will, in 2006 or later, face deflation in the United States and whether, in that event, he will reflect on and perhaps adopt the measures that he recommended to the Japanese back in 2003."
 


#11060 From: "James" <jcumes@...>
Date: Fri Nov 17, 2006 12:12 pm
Subject: Re: "America's Suicidal Statecraft
cresscourt
Send Email Send Email
 
Arno,
 
In the piece below, Jacques looks at the imperial decline of the United States with a good deal of validity - but with a blindness to the fundamental economic and financial weakness of the United States that is so significant a part of the American decline.
It can be argued that, in "America's Suicidal Statecraft", I have over-emphasised the economic and financial aspects and have tended to pay too little attention to the sort of political and strategic points that Jacques is making.
However, you will find much, if not all and more of what there is in the piece below, spread through the pages of "America's Suicidal Statecraft".
Power tends to consist in a cluster of strengths: economic, social, political and strategic. They have to be effectively wrapped up together. Economic power alone is not enough; but the cluster will be lacking real integrity without it.
The Bush II Administration has totally failed to appreciate the economic situation in the United States - and would not want to confess it, even it did recognise the stark facts. It has nevertheless embarked on most ill-considered political and military adventures that have served to reveal unambiguously, to friends and rivals alike, just how meagre the power of the world's single superpower has become.
There are many substantial differences, but there are also many striking similarities between the demise of the Soviet Union and the decline of the United States. Both have involved clear elements of self-destruction. Both have presented themselves - and perhaps have genuinely deceived themselves - that they are not hollowed-out shells, right up to the point at which the Soviet Union fragmented and now at which the United States seems to be approaching its terrifying moment of truth.
Just one of many references linking the economic and the political/strategic in "America's Suicidal Statecraft", reads as follows -
 

         The political centre and right have become virtually a must if there is to be small government and low taxes. There is nowhere else for parties seeking power to go. But is what is called the political centre really and more accurately just an associate of the far right with the deeply deceptive characteristics that [American writer, Tom] Frank has suggested? Is this the centre that “New Labour” claims to occupy in Britain? Has the post-war, left-leaning “liberalism” in Australia now changed its spots to become a new right-wing conservatism based on that in the United States? If so, the variety of economic, social, political and strategic risks faced by the United States must be assumed also to confront other countries that have, in so many ways – deceptively, corruptly and/or fecklessly – adopted or slipped negligently into the American model.

         Two further crucial developments must be noted. The first is that several of the rapidly emerging and industrialising countries have retained elements of leftist tendencies or have returned to them. This applies to the Latin American countries and particularly to the largest of them, Brazil, and one of the most important – as a big-oil country on the American threshold - Venezuela. Even Cuba has become, to some, less outrageous and more acceptable, except in the United States.

         Much of the respect accorded governments is earned by the success of their policies especially in achieving economic growth and some greater measure of political and strategic independence. By these criteria, China has succeeded splendidly in the last twenty years, and so too, though so far to a lesser degree, has India. China still has nominally a communist government and certainly a government that intervenes and participates robustly in the economy. In those economic, financial and other matters that count in enabling the People’s Government in Beijing to hold on firmly to the reins of power, the government is not going to change. It will gently allow a little flexibility in the external value of its currency; but it is not going to allow its power to control that currency to be lost in a rampant and unpredictable free market. It has got where it is by maintaining control; unlike the United States, it is not going to throw that control – that sound economic management - heedlessly away.

         Against that background, the global position is far from being what it was in the dynamic Western countries in the quarter century after the Second World War. A precise return to those times, in national or global economic policies, is not practicable. However, the plethora of left-wing ideas then made for lively debates and it may be that a resumption of those debates, updated to meet present-day circumstances, may be possible and will almost certainly erupt if there is, in the next few months or years, the alarming sound of bursting bubbles in the United States as well as in other countries that have embraced the American economic – and political - model. The day of the right wing’s virtual monopoly of place and power may then be over and the financial oligarchy, though not eliminated, may be required to compete in a political market that is rather more “free” than it has been for a long, long time.

         A variety of political parties and political solutions may return, some of them perhaps emanating and globalising from China or India, Brazil or Argentina, perhaps even Russia. Ideas could well be precipitated by a major economic collapse of the kind of the Great Depression of 1929 to 1932. To the extent that changes are not forced upon us, such a collapse would leave no option but to seek around for and adopt policies, whether of the left or the right that might deliver us, in some degree if not perfectly, from our torments.

         The decadent electoral practices that have dogged the United States as well as the damaging policies of such groups as the neo-cons may be swept away in this scenario of economic collapse and there may be a general cleansing of the political stables that will enable the United States to return to its former glory as a dynamic economy and a more nearly exemplary democratic state. The type of government that might then prevail throughout the world might, hopefully, be one that is appropriate to a mixed economy, that is neither a Leviathan nor a Lilliputian but suited to its democratic tasks and able to confront those tasks efficiently and responsibly. A world that contains such governments should be able to tackle fundamental problems of the economy, peaceful change nationally and globally, the environment, poverty and, given the threats from so many directions, even the survival of the species. At the same time, such a world should be able to offer far greater opportunities for more equal negotiation among countries large and small, north and south, of whatever race or religion, than has been the case in recent decades.

 
 
 
James 
 
 
 
 
America Faces a Future of Managing Imperial Decline
Bush's failure to grasp the limits of US global power has led to an adventurism for which his successors will pay a heavy price
by Martin Jacques
 

Just a few years ago, the world was in thrall to the idea of American power. The neoconservative agenda not only infused the outlook of the White House, it also dominated the global debate about the future of international relations. Following 9/11, we had, in quick succession, the "war on terror", the "axis of evil", the idea of a new American empire, the overarching importance of military power, the notion and desirability of regime change, the invasion of Iraq, and the proposition that western-style democracy was relevant and applicable to every land in the world, starting with the Middle East. Much of that has unwound with a speed that barely anyone anticipated. With the abject failure of the American occupation of Iraq - to the point where even the American electorate now recognises the fact - the neoconservative era would appear to be in its death throes.

But what precisely is coming to an end? Neoconservatism in all its pomp conceived - in the Project for a New American Century - that, following the collapse of the Soviet Union, the world could be remade in the American image, that the previous bipolar world could be replaced by a unipolar one in which the US was the dominant arbiter of global and regional affairs. In fact, the Bush administration never came close to this. For a short time it did succeed in persuading the great majority of countries to accept the priority of the war against terror and seemingly to sign up for it: even the intervention in Afghanistan, in the aftermath of 9/11, elicited widespread acquiescence. But the US singularly failed to command a majority of states in support of the invasion of Iraq and garnered even less support when it came to global public opinion. It demonstrated its unilateral intent by ignoring its failure to gain assent within the UN and invading Iraq, but the subsequent failure of its Iraqi adventure has served only to reinforce its isolation and demonstrate the folly of its unilateralism. Its strategy in the Middle East - always the epicentre of the neoconservative global project - lies in tatters.

Elsewhere the neoconservative project was stillborn. North Korea was branded as part of the "axis of evil" but the US, in agreeing to the six-party talks as a way of handling the crisis on the Korean peninsula, tacitly admitted that it simply did not enjoy enough leverage to deal with the Kim regime. This was demonstrated more forcibly with its failure to prevent the recent nuclear test, and the US's subsequent dependence on China for seeking some means of engaging North Korea in dialogue. In fact China has now cajoled the US into accepting the need for it to do something it had previously resisted: entering into direct talks with North Korea, with China playing the role of honest broker. For all the neoconservative bluster, the US is simply too weak in east Asia - and China too strong - for it to be anything other than a secondary player in the North Korean crisis. It has been a striking illustration of the slow, remorseless decline of American influence in the region.

Meanwhile, in the region that it has dominated for well over a century, which it has traditionally regarded as its own backyard and in which it intervened with impunity throughout the cold war - namely Latin America - the US is now facing its bleakest ever situation, far worse than anything the Cuban regime represented during the cold war. The US is confronted with a formidable and well-resourced adversary in Chávez's Venezuela, and a continent in which the left has made extraordinary progress. The Bush administration, so far at least, has been quite unable to halt its growing isolation in Latin America and the left's onward march.

Even in the Middle East, the weakness of the neoconservative position has become increasingly evident in its handling of Iran, another member of the "axis of evil". As in the case of North Korea, the US, partly as a result of its preoccupation with the occupation of Iraq, in effect devolved negotiations over Iran's nuclear ambitions to the group of four consisting of Germany, France, Russia and the UK.

Although the west Europeans have been happy to do most of America's bidding, Russia has not and nor, it would appear, has China. Both are permanent members of the UN security council, and both are resistant to sanctions and the threat of military action. As a result, negotiations over Iran have been mired in something of an impasse. Of course, if the neoconservatives had felt strong enough, they could have forced the issue in a manner similar to their approach in Iraq. The point is that they did not. And now it would seem inconceivable that they can contemplate military action against Iran.

On the contrary, the tables appear to be in the process of being turned: the US, instead of seeking to isolate Iran, is now likely to need Iranian and Syrian support in helping to sort out the debacle in Iraq. Taken with the failure of the Israeli invasion of Lebanon and the continuing disaster of the occupied territories, we can see that the US is in retreat. Ever since 1956, it has been increasingly and formidably dominant in the region, with Israel riding pillion, and since 1989 it has been the overwhelming arbiter of events there. This year marks the beginning of the decline of American power in the Middle East, with untold consequences.

Here we can see the cost of Bush's adventurism for American imperial power. In failing to understand the inherent limits of US global power consequent upon deeper, though seemingly unrecognised, longer-term global trends, the Bush administration hugely overestimated American power and thereby committed a gross act of imperial over-reach, for which subsequent administrations will pay a heavy price. Far from the US simply conjoining its pre-1989 power with that of the deceased USSR, it is increasingly confronted with a world marked by the growing power of a range of new national actors, notably - but by no means only - China, India and Brazil.

Just six years into the 21st century, one can say this is not shaping up to be anything like an American century. Rather, the US seems much more likely to be faced with a very different kind of future: how to manage its own imperial decline. And, as a footnote, one might add that this is a task for which pragmatists are rather better suited than ideologues.

Martin Jacques is a visiting research fellow at the Asia Research Centre, London School of Economics

Guardian Unlimited © Guardian News and Media Limited 2006

----- Original Message -----
Sent: Thursday, November 16, 2006 7:40 PM
Subject: Re: [gang8] "America's Suicidal Statecraft

James, you asked for comments...
 
- so, a few minor points... so far (100 pages)....
 
VERY interesting themes !!!
 
- The references in the notes are written in an inconsistent form, different from note to note.
(Sometimes the author is noted, sometimes the title of the book sometimes both etc)
 
- p.102: You mention the peaceful transfer if power from Britain to America. Britain did not accept contenders such as Germany or Russia. You forget to mention two world wars + numerous other wars. Even the wars in South Africa were noting but rehearsals for the great showdown most informed people knew was forthcoming. It is generally known that WW I was a contest for markets etc, so let me quote Winston on WW II: "The war was not just a matter of the elimination of Fascism in Germany, but rather of obtaining German sales markets." - Winston Churchill. Fulton speech, March 1946
- p. 97: You mention 1979 two times, and I guess you mean 1969 the first time.
 
- p. 46: Precisely!!!
"When manufacturing moves abroad, engineering follows. R&D follows engineering, and innovation follows R&D. The entire economy drains away."
 
 
- p. 65-66. James, this is brilliant!
 
Re: "BOJ purchases of government debt "
 
Thanks for pointing to the fact that Fed chairman Bernake has seen the light!
Also, I am delighted by finally noticing the wisdom of George Bush in appointing this man.
;-)
 
We have discussed this policy many times on this list, and pointed to the possibility that inflation would be halted if "this policy of Bernanke" would be combined with the additional policy of channeling credit to productive purposes.
 
"BOJ purchases of government debt " also points to another issue, namely the ensuing status of this debt. State money followers argue that is no longer debt, but "money". I would still argue that it is both, but that such "debt to the public" in practice will not have to be repaid, unlike private debt.
 
 
From your book, America's Suicidal Statecraft, pages 65-66
 
    "Bernanke ended his Tokyo address with some intriguing conclusions on cooperation and interaction between fiscal and monetary policies and the financing of government spending.
    He said that, “Potential roles for monetary-fiscal cooperation are not limited to BOJ support of tax cuts. BOJ purchases of government debt could also support spending programs, to facilitate industrial restructuring, for example. The BOJ’s purchases would mitigate the effect of the new spending on the burden of debt and future interest payments perceived by households, which should reduce the offset from decreased consumption. More generally, by replacing interest-bearing debt with money, BOJ purchases of government debt lower current deficits and interest burdens and thus the public’s expectations of future tax obligations. Of course, one can never get something for nothing; from a public finance perspective, increased monetization of government debt simply amounts to replacing other forms of taxes with an inflation tax. But, in the context of deflation-ridden Japan, generating a little bit of positive inflation (and the associated increase in nominal spending) would help achieve the goals of promoting economic recovery and putting idle resources back to work, which in turn would boost tax revenue and improve the government’s fiscal position.”
    There is a great deal to be said for fiscal and monetary policies to be applied in tandem, one  reinforcing the other, rather than in isolation with one possibly working against the other. There is also much to be said for the financing of government spending through the central bank, rather than by adding to the burden of debt and payment of interest charges through the budget. What makes this especially intriguing, however, is that the suggestions were put forward by the – now - Fed Chairman and we do not yet know whether he will, in 2006 or later, face deflation in the United States and whether, in that event, he will reflect on and perhaps adopt the measures that he recommended to the Japanese back in 2003."
 


#11061 From: "Geoffrey Gardiner" <geoffrey.gardiner@...>
Date: Fri Nov 17, 2006 2:10 pm
Subject: Re: Inflation
geoffrey.gardiner@...
Send Email Send Email
 
Good try, Kevin, but it is like banging one's against a brick wall.
 
It is odd that the British media are so out of touch. The academics have latched onto the problem of what they call ' the cost channel of monetary policy', that is that high interest rates increase prices. The academic names to bandy around are Kreger, Sims, Barth and Ramey. Barth works for the FED.
 
Many thanks and best wishes,
 
Geoff
 
 
----- Original Message -----
Sent: Friday, November 10, 2006 12:16 PM
Subject: Re: [gang8] Inflation

Well, yes, of course, but the media generally seem to be in a state of denial.
I rang the Radio 5 phone-in programme yesterday.  Asked what point I wanted to make, I said that raising interest rates tends to increase inflation rather than reduce it.  Asked to explain further, I replied that in my days in industry, the cost of borrowing was a factor in calculating the price of biscuits just as labour and ingredients were, so that any increase in interest rates would increase factory gate prices, and therefore be inflationary.  Ergo...
Um, said the studio anchor man, I'll call my producer and ask him to give you a call.
I waited and waited for about half an hour, with my copy of Geoffrey's FT headline leaflet (bloodletting and fever) in front of me.  Nobody rang.
Radio 5 is on MW 909 693, and the UK phone number is 0500 909 693.  They like to hear from overseas callers.
    Kevin
----- Original Message -----
Sent: Friday, November 10, 2006 9:08 AM
Subject: [gang8] Inflation

Gardiner to Gang8, Michael Moore, and John Mills

 

The Bank of England has again raised interest rates in order to fight inflation. Did they cosider the following press release before doing so?

<<<<<

A three pence increase is on the way for a loaf as the price of flour rises for the second time in a few months.

The UK's largest independent miller ADM Milling said it was "regrettably" heading for its second hike since September, when its flour rose by £28.75 per tonne.

And industry experts said other millers were likely to follow suit.

An ADM Milling spokesman said: "With world wheat stocks being at the lowest level for 25 years, and with global consumption demand increasing, a continuation of upward wheat price costs seems inevitable.

"This is regrettably leading towards a further flour price increase in the next few months."

Anne Bruce, deputy editor of trade magazine British Baker, said it was "exceptionally unusual" for flour prices to rise twice within such a short space of time.

"It will inevitably mean that the price of bread will have to go up by around 3p for an 800g loaf and bakers which supply the supermarkets will have to negotiate with them to get a second price rise," she said.

"The usual situation is that flour prices go up after the harvest in August. Now they are being forced to put them up again. It is exceptionally unusual."

>>>>>>>

 

How can a rise in interest rates bring the price of wheat down? It must increase the cost of production as farming is a heavily capitalised industry and relies on borrowed capital.

At the same time the Treasury is paying farmers in Britain not to grow wheat. Huge areas of land are growing nothing but weeds as a result of a 'set-aside' policy.

I foresaw this situation and last year urged that every bit of land in Britain should be planted up.

Britain is in a very weak position in competing for world supplies of wheat as we have a huge trade deficit and the suppliying countries would have to lend us the money to buy their produce. I think they will prefer to sell their wheat to China in return for consumer goodies.

Another announcement yesterday was that Britain faces a milk shortage, and that in the country of Europe best endowed by nature for milk production. Why? Because pressure from sundry do-gooders, pseudo-environmentalists, and left-wing haters of farmers have made it uneconomic for British farmers to produce milk, and one milk producer is going out of business every week.

We face starvation in the not very distant future.

 

Geoffrey

 

 

 


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