← Autodidact Archive · Original Dissent · xmetalhead
Thread ID: 8370 | Posts: 7 | Started: 2003-07-23
2003-07-23 14:18 | User Profile
Weimar Republic
I have a theory that nations are like individuals. Those whose leaders are smart, strong and lucky prosper, and those whose leaders are stupid, weak and unlucky suffer or perish.
That's why it matters which leaders we choose. There are relatively few people in the United States who actually have the power to make important decisions.
The Constitution, for example, vests 100 percent of the power of the federal government in only 537 individuals ââ¬â one president, one vice president, 435 members of the House and 100 members of the Senate. Everybody else in the entire federal government operates on authority delegated to them by these 537 individuals. Actually, since most matters can be decided by a majority vote, a mere 269 individuals (51 senators, 218 representatives) can make most of the decisions.
Bald fact: If these people are idiots, a country can go to hell in a hurry. Key question: Does our present political system, in which leaders are chosen in campaigns dominated by money and marketing experts, provide us with the opportunity to choose wise leaders? Given the present situation, I fear not. The universal franchise in which any moron, no matter how ignorant, is given the right to vote is a prescription for disaster. We are looking more and more like the Weimar Republic of Germany that collapsed morally and economically in the 1920s and gave rise to Hitler and his Nazi Party.
If this happens to us, it will be consistent with the predictions of Oswald Spengler, who, in his book "The Decline of the West," predicted that what he called an age of money would be replaced by the age of Caesars just about around the turn of the century. He made that prediction prior to 1918. We today are living in the time frame of his predicted transition to dictatorships.
The quickest way to ruin a country is economically. Those dollars in our wallets are pieces of paper tied to nothing. They are a medium of exchange. What matters is not what the number is on the piece of paper, but the amount of goods and services that piece of paper can be exchanged for. That's called purchasing power. Inflation, whether gradual or hyper-, reduces the purchasing power and thus impoverishes everyone. It is the way that governments have historically robbed the people. In 1967, $1 would buy four or five gallons of gasoline; today, it won't even buy one. It isn't that the price of gasoline has gone up, but that the purchasing power of the dollar, eroded by years of inflation, has declined.
Hyperinflation would mean it would take a wheelbarrow full of currency to buy a loaf of bread. It would mean the ruin of practically all Americans, especially the middle class. All of sudden, a family's entire life savings wouldn't pay a month's rent. Massive poverty and even starvation would descend on the nation, and desperate people would start looking for a savior. Survival would become more important than democratic processes.
Now, here's a scary paragraph from an article by John Berthelsen in Asia Times. You can find it at www. atimes.com. He quotes an analysis done by an expert with Credit Lyonnais Securities Asia in Hong Kong by the name of Christopher Wood:
"Wood predicts that by the end of the decade there will no longer be a possibility that the world's central banks can control the situation, and there will be a truly massive devaluation of the dollar. 'The view here is that the U.S. dollar will have disintegrated by the end of this decade. By then, the target price of gold bullion is U.S. $3,400 an ounce.'"
This is predicted because of the massive trade deficits, massive federal deficits and massive personal debt that stupid politicians and citizens have accumulated. Since the target date is only seven years from now, we have only the 2004 elections to replace idiots with some smart people who might be able to head off this disaster.
é 2003 by King Features Syndicate, Inc.
[url=http://reese.king-online.com/Reese_20030723/index.php]http://reese.king-online.com/Reese_20030723/index.php[/url]
2003-07-23 15:49 | User Profile
Originally posted by xmetalhead@Jul 23 2003, 14:18 * *Weimar Republic
I have a theory that nations are like individuals. Those whose leaders are smart, strong and lucky prosper, and those whose leaders are stupid, weak and unlucky suffer or perish.
**
Of course you realize that Charley Reese is pretty much aligned with those theocratic despots who wants to turn America into another taliban style regime (without the good points for NAers).
Speaking off the weimar republic, I wonder if you realize that most paleo's think the weimar's decline was due to its secularism? I can hear the NAers recoil in horror - no, no, bring back the weimar - with the Reeperbahn and K-damm (in Hamburg and Berlin respectively). They're the only things that saved Germany from Christianity! :thd:
2003-07-23 17:47 | User Profile
Here's the article Charley quotes: [url=http://www.atimes.com/atimes/Asian_Economy/EG15Dk01.html]http://www.atimes.com/atimes/Asian_Economy...y/EG15Dk01.html[/url]
Asia fills her boots: dollar reserves skyrocket By John Berthelsen
At a time when the United States remains tightly focused on its domestic economic problems and its international military adventures of the past two years, Asia has been quietly running up an absolutely staggering surplus of US dollars.
By the end of 2003, according to JP Morgan Chase economists in Hong Kong, the combined countries of Asia are expected to hold an astonishing 70 percent of the world's currency reserves. In the past decade, they estimate, Asia has added US$1.2 trillion to its US dollar reserves as it runs up whopping trade surpluses with the rest of the world - principally the United States, whose annual trade deficit is expected to reach US$500 billion. Credit Lyonnais Securities Asia (CLSA) in Hong Kong put the Asian reserves even higher, at perhaps $1.5 trillion.
Is this a danger to the world economy? For many years, America's strong-dollar policy served the world and chiefly the United States very well. Their currencies cheap against the US dollar, Asian manufacturers profited by making relatively inexpensive exports and selling them in the United States at a healthy profit. In a kind cat-and-rat-farm analogy, in which the cats eat the rats, are skinned for their fur, and then are fed back to new rats, the Americans benefited by getting cheap goods that kept their consumer-led economy roaring. The financial communities benefited from the repatriation of those profits as the funds flowed back in a ceaseless waterfall into US stock markets, treasury and corporate bonds, money-market funds and other financial instruments.
But perpetual-motion machines don't work. The monumental scale of Asia's dollar reserves and the size of America's deficit are starting to make economists and strategists nervous. Wayne Godley, an economist at the Levy Economics Institute in New York, writes: "If the balance of trade does not improve, there is a danger that over a period of time the United States will find itself in a 'debt trap', with an accelerating deterioration both in its net foreign-asset position and in its overall current balance of payments (as net income paid abroad starts to explode). Such a trap would call imperatively for corrective action if it is not at some stage to unravel chaotically."
It has been widely reported that the US must take in about $1.3 billion a day - about $55 million an hour - in foreign investment to finance its overseas debt. If that river of money falters or dries up, the difference must be made up by an inexorable fall in the value of the US currency. Indeed, if it had stopped already, the fall in the US stock markets since equities began to lose their luster in 2000 would have been catastrophic.
Certainly, Asia has been on a buying spree in US securities of all types. Despite a three-year economic pause in the United States, Asians bought a record $201 billion worth of long-term US paper in 2002. That includes another record $97 billion in US government securities. Asian central banks, with their enormous overhangs of US dollars, are increasingly doing the buying.
Over the past months, US Treasury Secretary John W Snow has begun to try to talk the US dollar down. It had fallen by more than 25 percent against the euro, the Eurozone's common currency and the world's other reserve legal tender, before increasingly optimistic economic news and a rising stock market checked the dollar's fall. Although it has since risen against the euro by about 4 percent, many economists believe the dollar's precarious position will cause the slide to continue.
The currencies of Asia, however, have almost all remained firmly tied to the dollar, either through currency pegs, reserve boards or, as in the case of Japan, as governments have bought dollars to keep their currencies static and thus to preserve their terms of trade.
Despite the US attempts to talk the dollar down, Asian governments regard any negative changes in their trade balances as inimical to their economies. While supposedly loosening restrictions so that their consumers can participate in a demand-led consumer revolution, Asia in fact is more dependent on exports today than at any time over the past two decades.
China, whose share of exports in total gross domestic product (GDP) averaged 10.8 percent in 1985-89, now is producing exports at 28.4 percent of GDP. South Korea's exports were at 23 percent during the same period and now are at 54 percent of GDP. Hong Kong, then at 77.8 percent, is now at 153.5 percent of GDP. These figures are being repeated across virtually every economy in Asia. These exports continue to flow into the United States despite a three-year economic downturn that, if rationality were to prevail, should have slowed consumer purchases. The US Federal Reserve's easy-money policy and record cuts in interest rates, however, have kept consumers buying at a feverish pace, far too often on credit.
"So long as America continues to secure easy funding, there is no pressure on policymakers in Washington to do anything other than run super-easy policies to try to keep their own consumer credit cycle going," says Christopher Wood, global emerging-markets equities strategist for CLSA Hong Kong. "Like any profligate debtor, market discipline will only be imposed on America when foreign investors demand an interest-rate premium for owning dollars."
Wood tends to grow apocalyptic. "The current trend can continue for a while," he writes in his 110-page first-half 2003 overview of the world economy, published last month. "But the longer American excesses are financed, the more inevitable will be the ultimate collapse of the US paper-dollar standard that has been in place ever since Richard Nixon broke with Bretton Woods by ending the dollar's link with gold in 1971. The result will be a massive devaluation against gold of Asia's hoard of dollar-exchange reserves."
Japan's foreign reserves currently total $496 billion, followed by China at $310 billion and Taiwan at US$170 billion, according to figures compiled in April by the Hong Kong Monetary Authority. Hong Kong, with 7.5 million people, has reserves of $114 billion, nearly seven times the total money in circulation in the territory. Other Asian treasuries are similarly bulging with dollars.
In answer to statements by Treasury Secretary Snow that the country should let its currency float upward, China's central bank governor, Zhou Xiaochuan, said at the end of June that he sees no possibility that the yuan, which trades in a narrow band at about 8.28 to the dollar, would be revalued upward. Nor is there a possibility that it will rise against the currencies of any of its other major trading partners. China intends to eat everybody's lunch.
Confronting the prospect of additional economically difficult integration into the World Trade Organization, and faced with the task of creating tens of millions of jobs for its sacked state-owned-enterprise workers, China's leaders believe it is crucial to keep growth above 8 percent. Severe acute respiratory syndrome (SARS) took half a point off growth in March through June. President Hu Jintao and Prime Minister Wen Jiabao have demanded, under a policy statement called "Double Victory", that growth continue at the maximum possible rate. There is not the slightest intention to help the United States cure its trade-balance problem by either making US exports to China more attractive or raising the price of exports to the US.
Likewise, Japan, vainly attempting for the 13th year to export its way out of its economic quagmire, is keeping the yen within a range near 115 to the US dollar. Since the beginning of the year, the Bank of Japan is believed to have bought as much as $60 billion in US securities - $30 billion in March alone - to keep the yen where it is. Its purchases have been increasing at a record pace.
Asia does not have to follow this path, Christopher Wood of CLSA says. "Asian central banks could abandon their mercantilist policies. They could let their currencies rise, which is what would happen given Asia's high savings rates if market forces were allowed to prevail. This would in turn boost Asia's consumer demand cycle. This is also what should be happening from a theoretical standpoint, as satiated American consumers have already borrowed a lot and need to rebuild their balance sheets."
Then, turning truly apocalyptic, Wood predicts that by the end of the decade there will no longer be a possibility that the world's central banks can control the situation, and there will be a truly massive devaluation of the US dollar. "The view here is that the US dollar will have disintegrated by the end of this decade. By then, the target price of gold bullion is US$3,400 an ounce." That is roughly 10 times gold's current level. If that were to happen, Asia's holders of dollars would be forced to start selling them or see their own reserves collapse. If they start to sell them, the price of America's paper will fall even faster.
That is truly apocalypse now, or in 2010. Is it possible? The policymakers in the administration of President George W Bush in Washington are far more sanguine. They regard economists, often said to be the only field in which two individuals have shared the Nobel Prize for saying exactly the opposite things, to be basically irrelevant, and presumably by extension strategists. The administration, facing an election in a year and a half, and the Federal Reserve intend to keep the party going if they can.
2003-07-23 18:37 | User Profile
Leveller, thanks. Well it looks like we only have about 6.5 years left in this 'ol country so I guess we should start preparing.
Okie, I'm not understanding your post. I thought the Weimar Republic of Germany was infested with jews which of course led to it's decline and the rise of Hitler?
2003-07-23 19:11 | User Profile
Reese is good but it's not clear that Oswald Spengler applies anymore. Spengler had a gloomy outlook on states and nations; he thought they conformed to laws of history. But no national analysis can apply to multicultural empires like the former USSR or what the United States has become. We might be better off believing we've been taken over by Pod People.
2003-07-23 19:34 | User Profile
xmetalhead,
Okie, from the tone of his posts lately, has been talking to the big Jew in the sky.
Charley Reese, of course, as always is right on.
Spengler's the age of Caesars might more aptly be called the age Antichrist, in which America, ruled by ZOG, becomes the champion of Israel. The rise of the Jew in America, and the moral destruction they have wrought upon our society since the Second World War have been compared with the eschatological events told in the New Testament. These, as we know, are concerned with the coming of the Antichrist, which, as far as Christian fanatics are concerned, is not just a prophetetic prediction but an inexorable law.
-Z-
2003-07-23 20:41 | User Profile
You're welcome xm, I got the link from the [url=http://www.mises.org/blog.asp]mises weblog[/url]. It's worth checking out.