WHY THE US ECONOMY WILL NOT RECOVER?
For some years I have been writing about the impending economic collapse
of the USA and the Anglo-Saxon nations. This economic collapse is now
unfolding. What will be the impact on the global economy, and can it
be saved?
The key reason why the world is facing this economic crisis is that some
nations have been spending far more than they earn, while others have
been accumulating large surpluses that can be invested in productive
enterprises providing a genuine return on capital. These imbalances
have created major distortions in the global economy with which the
world is now coming to terms. While thousands of words have been
written by economic analysts, this is the bottom line:
The fundamental cause of the current global economic crisis is that for
many years the Anglo-Saxon nations have been living way beyond their
income, relying on borrowing money from their creditor nations to cover
their trade and current account deficits. Our leaders have failed to
warn their people that we could not live on borrowed currency
indefinitely, and eventually we would be required to pay back the
borrowed currency. Yet still they fail to face up to facts and tell
the people that the Anglo-Saxon nations cannot continue maintaining
their extravagant lifestyle financed by borrowing from the rest of the
world.
Our political leaders seldom mention the reality of having to earn
export income to service their international balance of trade deficits.
They have convinced themselves that our trading partners will continue
to accept their printed money in return for their goods and services
purchased. With the global economy now slipping into a deeper recession,
the prospects of the Anglo-Saxon economies being able to trade their way
out of their current economic morass grow bleaker by the day, as the
export markets for goods and services from the Anglo-Saxon world
disappear, making it impossible to repay their foreign creditors with
anything but depreciating paper money.
Recently, Britain, the USA, Australia and New Zealand governments have
gambled by guaranteeing bank deposits to prevent a run on their banking
systems…and partly to maintain confidence with their overseas
creditors. They have created currency though the banking system to
maintain adequate liquidity for the financial markets to remain
operating, and have been willing to advance capital to the private
sector to finance loss-making companies and financial institutions.
What is not mentioned is that creating fiat currency to solve their
immediate economic problems will not solve the long-term financial
problems their nations face – it is like throwing fat on the fire, and
will only lead to a more serious collapse of their currencies and
economies.
These governments approach the current crisis by encouraging the
consumer to spend more to create demand for goods and services. Yet
already many people are already struggling with the cost of servicing
debt, and the only way out is to increase real incomes – something
that is difficult in a contracting market, with rising costs. For
governments to encourage their people to borrow and spend is like taking
an alcoholic to the bar, and paying for his drinks, telling him to get
drunk. As a result, they now run the risk of national bankruptcy,
defaulting on their international debt obligations.
Why has the world gotten itself into this economic crisis? Can the
Anglo-Saxon nations recover from this financial train wreck? The media
is filled with countless reports on the current economic crisis, what
has caused it, and what the solutions could be. Yet none of these
modern-day seers have been able to accurately answer the following
questions: What are the causes of this economic crisis, what are the
solutions, and what will happen?
Many are hoping that there will be a recovery in the markets that will
save us from a global economic collapse. Nearly all nations are
desperately trying to stimulate economic activity through a mixture of
government spending, borrowing, printing money and creating bank
credit. Yet nothing appears to be working as the economic news around
the world continues to worsen.
Meanwhile several nations, especially Japan and China have put in place
measures in an effort to stimulate their domestic economies. Those
countries, which have the reserves to do this, may need to withdraw
their investments from their Anglo-Saxon debtor nations to prop up their
domestic economies. This will greatly affect the English-speaking
nation’s ability to revive their economies, which have become
dependent on the inflow of capital from Asia to finance their banking
systems. This would result in the collapse of the Anglo-Saxon banking
system, unless they are nationalized by the governments who have
guaranteed the deposits. The Western Governments themselves run the
risk of becoming insolvent, and will be dependent on their Central Banks
to create more credit for their banking institutions, resulting in
debasing the value of the currencies.
Many governments around the world have increased the supply of their
currencies in a desperate attempt to save their economies from
unraveling, resulting in massive unemployment, corporate collapses,
government insolvencies, and personal bankruptcies. Will these
measures work? While to date there is little sign that this government
intervention has had any success, the amount of currency injected into
the banking system is expected to have some short-term impact in the New
Year. This will inflate paper asset values to prop up the collateral
for the banking system. However, the biggest impact will be on the value
of currency. Increasing the money supply without a corresponding
increase in goods and services will result in debasing the value of that
currency. Hyperinflation will quickly set in.
There may well be a sharp but short recovery in the New Year as this
flood of newly-created fiat currency finds its way into the consumer’s
pockets. Sadly, this recovery will only be short-lived as inflation
takes hold and these paper notes depreciate in value. The American
dollar as the world’s major reserve currency will no longer be
accepted in that role once inflation gains momentum and international
creditors lose confidence in the US economy. The dollar will quickly
spiral downwards in value to rival that of the Zimbabwe currency. The
collapse of the dollar will result in the disintegration of the American
society.
There has been a failure on the part of the Anglo-Saxon nations (with
the exception of Canada) in regard to addressing the cost of servicing
their large and growing external debt and current account deficits.
Inflating their currency supply will make it easier for those with
dollar debts to repay them, but in the process it will destroy the
confidence of their creditors who will suspend lending credits to cover
their deficits. This will see the collapse of the US dollar along with
several other currencies which run parallel to the USD in the global
economy.
What is occurring globally is a realignment of the major world economies
with a shift in wealth away from the crumbling Anglo-Saxon economies to
the Eurozone and the emerging Asian nations. What will this new
economic order mean to the world?
The Eurozone will be the region that will recover quickest. This region
is the world’s largest economy, and is able to create sufficient
volume of trade internally enabling it to recover more quickly from the
current recession than other economies. While most of the EU members
are creating stimulus packages, Germany is adopting a more conservative
approach, reluctant to inflate their money supply without an increase in
productivity, having lived through the consequences of hyper-inflation
in the past. It is Germany, the largest exporting nation in the world
and the largest economy in the EU, which is sitting on generous foreign
reserves. By taking a cautious approach, it will be in better position
to provide the pillars for a strong Euro.
There is no doubt that the export driven Asian economies will be
severely affected by the collapse of the US economy and will take
some-time to readjust by shifting to greater emphasis on trade within
Asia and developing their domestic infrastructure. Increasing
expenditure on the military is one option for those countries which have
the resources to do so. In particular Japan, Germany and China may
well decide to expand their defense budgets to create employment in
their manufacturing sector to replace income from their declining export
markets, to enable them to maintain their manufacturing base.
The outcome will be a new world economic order, dominated by the
Eurozone, lead by Germany. The new European power block will replace
the dominance the Anglo-Saxon nations have held on the global economy
for the last 200 years. The Euro is the only currency large enough to
replace the $US as the world’s reserve currency.
Modern-day economists who believed that they could defy natural economic
cycles through central bank and government intervention will be shown
that their theories have failed.
The Bible has given us specific economic laws that will ensure
prosperous, sustained communities where the wealth is shared with equity
and prosperity and can be in the reach of all mankind. In brief, these
laws require debts to be written off every 7 years, interest not to be
charged within domestic economies, investors to take equity investments
rather than lend money, and if land is used as collateral it is to be
returned to the original land owners after 50 years. Government and
welfare to be funded with a flat tax not exceeding 14% of income.
These economic laws have been provided to ensure we would have
prosperity and equal distribution of wealth. It would mean that the
parasitical banking system we have today would not be necessary.
Institutions that have emerged such as hedge funds, future trading,
derivates, and currency speculation would not have been able to develop
under such laws.
There will emerge a new world economic order from this crisis. There
will emerge a new EU based World Central Bank (modeled along the lines
of the ECB), which will restore global economic prosperity and order.
This new institution will replace the World Bank, the Bank of
International Settlements (BIS) and the IMF with the authority to
regulate the global economy and direct capital into productive
infrastructure ventures, rather than the Anglo-Saxon market-driven model
that allowed capital to have the freedom to speculate rather than
produce.
This will mean a much more regulated economy than that with which we
have become familiar, and many of the personal freedoms we now take for
granted will be denied. In particular the debt-ridden Anglo-Saxon
nations will be subjected to many regulations which will mean that the
people will be subject to virtual slavery.
The suffering of the people of Britain and the USA following their
economic collapse will be sudden and far worse than many can imagine.
Our people, who have had so much in the past, will find it very
difficult living in third-world poverty, where they do not know where
their next meal will come from, where there is a total break-down in law
and order, and there is a complete social anarchy. The curse being
bought upon the Anglo-Saxon people is a direct result of their rejection
of the Law of God.
The events now unfolding have historic significance. We are seeing the
emergence of a new world order that will enforce the promulgation of a
global economy, with one reserve currency. It will mean the end of
many of the freedoms we now take for granted. It will be a time of
great suffering for the Anglo-Saxon people as their economies collapse,
and they face starvation, poverty and wide-spread disease. It will be
the precursor for the time the Bible describes as the Great
Tribulation.
xxxxxxxxxxx bp
1 Jan, 2
--
Sean Gabb
Director, The Libertarian Alliance
sean@libertarian.
Tel: 07956 472 199
Skype Username: seangabb
http://www.libertar
http://www.seangabb
http://www.hampdenp
http://libertariana
Linkedin Details: http://www.linkedin
Wikipedia Entry: http://tinyurl.
FREE download of my book - "Cultural Revolution, Culture War: How Conservatives
Lost England, and How to Get It Back" - http://tinyurl.
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