Economic Articles from 2018
US Dollar Dominated Financial System Will Fall Apart
by Michael Krieger
Posted June 3, 2018
First, it’s crucial to understand that at the very core of our global economy is a financial system dominated by the U.S. dollar. The USD is a fiat currency directly backed by nothing, the supply of which can be arbitrarily altered and manipulated by a group of unelected bureaucrats in charge of the Federal Reserve. This money system represents the most powerful tool of centralized power on planet earth.
The USD is unique in that it grants the U.S. the “exorbitant privilege” of having a national currency which at the same time serves as the global reserve currency. This was solidified toward the end of World War 2 with the Bretton Woods agreement, and was accepted because the U.S. agreed to offer sovereign nations holding dollars a right to exchange these dollars for gold at a fixed price. This fell apart in 1971, but was shortly replaced with an unofficial “petrodollar” system, which allowed the USD to remain the world reserve currency despite no longer being redeemable in gold. More…
Blackstone, BlackRock or a Public Bank for California’s Money?
by Ellen Brown
Posted June 3, 2018
California needs over $700 billion in infrastructure during the next decade. Where will this money come from? The $1.5 trillion infrastructure initiative unveiled by President Trump in February includes only $200 billion in federal funding, and less than that after factoring in the billions in tax cuts in infrastructure-related projects. The rest is to come from cities, states, private investors and public-private partnerships (PPPs). And because city and state coffers are depleted, that chiefly means private investors and PPPs, which have a shady history at best.
There is an alternative. California’s pools of idle funds cannot be spent on infrastructure, but they could be deposited or invested in a publicly owned bank, where they could form the deposit base for infrastructure loans. California is now the fifth-largest economy in the world, trailing only Germany, Japan, China and the United States. Germany, China and other Asian countries are addressing their infrastructure challenges through public infrastructure banks that leverage pools of funds into loans for needed construction. More…
Seizing the Public Banking Moment
by Matt Stannard
Posted June 1, 2018
The free market has failed as a governing paradigm of material life. Whatever the case for local markets in their specific context, large-scale competition and hierarchy are destructive, trauma-inducing conditions for people and the planet. For centuries, people have pushed back against those competitive and hierarchical models, advocating and experimenting with more cooperative and ecologically holistic economic visions.
One of those visions is financial democracy: public or community control of the financial system itself. Recognizing that the generation and value of money are artificial, and that how we pay for things is fundamentally a political question, advocates of financial democracy see banking – the power to lend money and to create value through the act of lending – as an enormous power. Such power should be democratic, not autocratic. More…
by David Korten
Posted May 30, 2018
We might wonder how such self-destructive injustice could happen in a world governed by democratically elected governments. The answer is simple and alarming. Our world is not governed by democratically elected governments. It is ruled by global financial institutions in the service of financial speculators who exchange trillions of dollars daily in search of instant unearned profits to increase the fortunes — and the power— of the richest people on the planet. They bring down governments that displease them, and buy and sell other corporations as if they were commodities.
The most powerful institutions on the planet, global financial markets and the transnational corporations that serve them, are institutional creations of Imperial Civilization. Dedicated to growing the consumption of Earth’s real wealth to grow the financial assets of the rich, they convert real capital into financial capital to increase the relative economic power of the owning class, while depressing the wages of those who produce real value through their labor. More…
Triffin Warned Us
by Lance Roberts
Posted May 29, 2018
In 1944, the United States and many nations made a deal at the crossroads in Bretton Woods, New Hampshire. The agreement, forged at a historic meeting of global leaders, has paid enormous economic benefits to the United States, but due to its very nature, has a flawed incongruity with a dear price that must be paid.
In 1960, Robert Triffin brilliantly argued that ever-accumulating trade deficits, the flaw of hosting the reserve currency and the result of Bretton Woods, may help economic growth in the short run but would kill it in the long run. Triffin’s theory, better known as Triffin’s Paradox, is essential to grasp the current economic woes and, more importantly, recognize why the path for future economic growth is far different from that envisioned in 1944.
We believe the financial crisis of 2008 was likely an important warning that years of accumulating deficits and debts associated with maintaining the world’s reserve currency may finally be reaching their tipping point. More…
China Invades Saudi Oil Realm: PetroDollar Kill
By Jim Willie CB
Posted May 24, 2018
Further Chinese investment across the Arab oil region is extremely evident, and in considerable volume. The extent, range, and depth has never been seen before. It extends from Algeria and Libya in North Africa to Iraq and Kuwait in the land mass, to United Arab Emirates in the Gulf region. The diversification includes port construction, oil production, building refineries, stakes in concessions, and provision of drill equipment. Such is without precedent.
In typical Chinese manner, they sow the seeds of commerce, which produce jobs and economic growth, leading to more wealth and a better standard of living. The US approach for too long has been to foment discord, to sell weapons, and to observe economic destruction, with resentment in residue. In the process of the Chinese invasion into the petro fields, the US and European firms are gradually seeing encroachment on their turf, which had been securely held for decades. But they still have significant presence.
It is easy to see that each Arab nation will be nudged into accepting RMB payment in oil shipments. They must comply with the wishes of their investment partner. The end result will be the death of the Petro-Dollar defacto standard by a thousand dragon cuts. It is assured. The demise will be slow at first, then occur suddenly. More…
Speaker Ryan Dives In to Save NAFTA
by Lori Wallach
Posted May 21, 2018
Against all odds, the North American Free Trade Agreement (NAFTA) renegotiations launched by the Trump administration in August 2017 were heading towards an outcome that could have generated support from Democrats in Congress, unions, and Public Citizen. NAFTA’s job outsourcing incentives and investor-state dispute settlement (ISDS) regime were on their way out. The timeline to finish talks for a vote to occur this year was looming in June, due to the requirements of Fast Track negotiating authority.
That includes elimination of investor-state dispute settlement, which makes it less risky and cheaper for corporations to outsource jobs. ISDS empowers multinational corporations to sue governments before a panel of three corporate lawyers. These lawyers can award the corporations unlimited sums to be paid by taxpayers, including for the loss of expected future profits over claims that domestic laws violate their NAFTA rights. The decisions are not subject to outside appeal.
The system operates like free risk insurance subsidizing outsourcing. Already under NAFTA nearly $400 million has been paid to corporations after attacks on environmental and health policies. In a sign of panic that the NAFTA countries were poised to agree, corporations launched a big dollar MSNBC and Fox ad campaign in defense of ISDS. More…
The Oligarchs’ ‘Guaranteed Basic Income’ Scam
by Chris Hedges
Posted May 20, 2018
A number of the reigning oligarchs—among them Mark Zuckerberg (net worth $64.1 billion), Elon Musk (net worth $20.8 billion), Richard Branson (net worth $5.1 billion) and Stewart Butterfield (net worth $1.6 billion)—are calling for a guaranteed basic income. It looks progressive. They couch their proposals in the moral language of caring for the destitute and the less fortunate. But behind this is the stark awareness, especially in Silicon Valley, that the world these oligarchs have helped create is so lopsided that future consumers, plagued by job insecurity, substandard wages, automation and crippling debt peonage, will be unable to pay for the products and services offered by the big corporations.
The oligarchs do not propose structural change. They do not want businesses and the marketplace regulated. They do not support labor unions. They will not pay a living wage to their bonded labor in the developing world or the American workers in their warehouses and shipping centers or driving their delivery vehicles. They have no intention of establishing free college education, universal government health or adequate pensions. They seek, rather, a mechanism to continue to exploit desperate workers earning subsistence wages and whom they can hire and fire at will. The architects of our neofeudalism call on the government to pay a guaranteed basic income so they can continue to feed upon us like swarms of longnose lancetfish, which devour others in their own species. More…
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