As written in June 2000
 

On June 29, 1999 at about 3 am on BBC World Service Radio a reporter interviewed the chief economist at HFBC Bank in London, Stephen King (yes -- this is all true), who had an unpopular assessment of the present state of the US economy: some time around 2001 - 2002, the US economy would inevitably collapse. Daytime news broadcasts remain tranquil. The imminent collapse of the world economy, it seems, has not been a topic that an enterprising reporter might wish to persue. A cynic might say that BBC management requires a more up-beat feel, but we here at the Currency Center are not cynical.

What the world needs now is yet another prediction of calamity. Yet, a year on, King's prediction is right on the mark. He predicted a bubble "associated with strong growth and low inflation" combined with a dash of massive lack of investment in "products in savings" and interest rate hikes that are like a pea-shooter against the Godzilla of exponential growth. He even cited Greenspan's perceptive observation that "the party can't go on forever."

"I don't think there is any evidence," said Mr. King "to suggest that with one [interest] rate increase you have a problemÉ but after three or four rate increases, which is what we think will happen in the next 12 months, then you have a much bigger problem." For those of you who are living in mud huts, that's what has been going on lately -- and the same thing is happening in the UK.

I personally have not heard this prediction repeated, and King himself admitted that his viewpoint is not shared my many of his colleagues and he attributes this to their lax view of low inflation-- something that is seen as a good sign-- and their ignoring "asset price inflation" which he noted was present, in Cinemascope, in Japan just before their collapse. As it happens, Alastair Cooke, in an April 2000 broadcast of his "Letter From America," devoted considerable time to his friend's rent hike of 700% in New York City. How can we have low inflation if some prices are skyrocketing?, Cooke wondered and he talked to an economist who explained to him that certain things were out of the loop as regards inflation. . . like rent, and ahhh, real estate prices . . . which sheds some light on Kings' "asset price inflation." Real estate prices, it seems, do not figure in the calculations of inflation according to the Federal Reserve Board.

Add to this gonzo mix, a liberal dose of hucksters in the media selling "the largest uninterrupted ecconomic expansion in human history," while bearing in mind that Sinclair Lewis has already warned us that "Advertising is a valuable economic factor because it is the cheapest way of selling goods, particularly if the goods are worthless."

Today's question is: What will President (the media ALWAYS gets their way) George Dubya Bush's reaction be to this state of affairs as the rate increases continue and the inevitable becomes more obvious?
My guess is that he will do one of the following. . .
  1)   Declare war on some Non-WTO member nation
  2)   Start a school for ballroom dance and lasagna preparation in Aspen
  3)   Launch a national Pick Six Lottery backed by the FDIC
  4)   Push for a tax break for the over-the-$2mil/year crowd
  5)   Re-deregulate the Savings & Loan industry
 

If you forsee other possibilities, contact
World Center for Equivocal Currencies
Immediately
We Need To Know
Contact J. Walter Plinge at
b.ob@accesinternet.com
 
 

POST-MORTEM NOTES
 
 
 

1)  This article was written before Mister G. Dubya was "elected." I have never claimed to be clairvoyant. The winner of the presidency was announced by the US media when they, from the day of Bush's announcement to run, called him the "frontrunner."

2)  Item 1, 4 and 5 in the 'guess' department, above have already been implemented

3)  Asset price inflation is suddenly a concern of ICE (Institute Creditory Economics) whose website appered in Aug 2002. http://home.online.no/~mdaas/creditary/tasks.html
"Statement of Tasks: ICE wishes to study in depth a number of recurrent problems. These are. 1. Asset price inflation, a phenomenon which owes its existence to imprudent credit creation...."

4)  Monetary collapse is not an impossibility. It happened in Japan and it can happen to the USA. Others have suggested the same thing, such as . . .

In "The Crisis of Global Capitalism: The Open Society Endangered" (New York, Public Affairs, 1998), George Soros asserts, "To put the matter simply, market forces, if they are given complete authority even in the purely economic and financial arena, produce chaos and could ultimately lead to the downfall of the global capitalist system."
--

"The Future of Money: a new way to create wealth, work and a wiser world," by Bernard Lietaer, Century/Random House, 2001:
"Unless precautions are taken, there is at least a 50-50 chance that the next five to ten years will see a dollar crisis that would amount to a global meltdown."
--

"The globalization process, constrained by distinct limits, is a geographically uneven one. Consequently, policies based on such an uneven process could ultimately lead to the disintegration of the global economy. . . . These were among the views presented at a UNU/WIDER conference on TNCs in 1995, which have been published recently in book form."
http://www.twnside.org.sg/title/disinte-cn.htm
by Chakravarthi Raghavan
--
 

But the US economy didn't collapse as Mr. King predicted. Whats's the point here?
 

The best indication that King was right is the war in Afghanistan.
 
 

CREATION OF MONEY
 
 

"After we were attacked on September 11, Bush ran out and said we got to spend $50 to $100 billion dollars to save our economy."
            From: http://www.infowars.com/palast.htm
            Transcript of Interview of Greg Palast
            Enron & IMF Plan for Total Slavery of the World
            Alex Jones Radio Show, March 4, 2002

"Interestingly, President George W. Bush [...] demanded that the U.S. Congress adopt a $50 billion scheme to spend the United States out of recession."
            Greg Palast
            from an ATTAC e-mail
            http://attac.org

"If President Bush has his way, total military spending for 2003 will reach $396 billion, an $87 billion  increase from January 2001."
            Frida Berrigan,  <BerrigaF@newschool.edu>
           http://www.worldpolicy.org/projects/arms
            What's Driving the Military Budget? 19 Mar 2002
            Institute for Public Accuracy <instpa@pacbell.net>

And most tellingly.......

"Even before  September 11, Secretary of Defense Donald Rumsfeld advocated a revised  military budget with a total spending increase of $52 billion."
            JAMES M. CYPHER, jamesc@csufresno.edu
           http://www.dollarsandsense.org/2002/cypher0102.htm ....
            Institute for Public Accuracy <instpa@pacbell.net>

.  .  .  .

You see a common thread here? The US needs to create money. Did anyone ask Mr. Rumsfeld what his particular need for $50b prior to 9-11 when there were no enemies on the map, and the Pentagon has been telling Congress for the past 25 years NOT to fund more stealth bombers? Doesn't it seem a little, well, odd?

And then there's this: The money so nececary to "fight terrorism" isn't being spent on the claimed war.
    "But this spending spree has little to do with  fighting the war on terrorism. About one-third of the $68 billion allocated  for weapons procurement will pay for Cold War systems with no relevance to  the current war. This includes an additional $12 billion for Joint Strike  Fighter, F-22 and Super Hornet fighter plane programs. On the campaign  trail, Bush repeatedly said the U.S. did not need all three systems."
            Frida Berrigan, (cited above)
 
 

And that's the whole point. The money isn't going to the "war on terrorism" The whole subject here is the CREATION OF MONEY and the war is secondary. The war is the excuse to create new money - pure and simple.  Stephen King was correct, The US economy was about to collapse, but they found a workaround: murdering Asians.

If you have been paying attention at all recently, you might have noticed that the US has little money to spend on social programs (they have been gleefully hacking them for 20 years) no money for cleanup of toxic sites, or regulation of polluters or environmental rapists. No money for medicaid, schools, or infrastructure maintainence. No money to study the effects of pesticides on health, or radio waves' relationship to cancer. But endless sums to spend on war.

Is that ok with everyone? Oooop, sorry. You aren't allowed to vote on that.
 
 

Thoughts?

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