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It’s A Trap! The Wave Of Repercussions As The Middle East Fights “The Last War”

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By Brandon Smith

Source: Activist Post

Few people are familiar with a little event around 1200 BC called the Bronze Age Collapse in the region known as the Levant (now known as the Middle East). Most folks are taught that history and progress travel in a straight line and that each generation improves upon the culture and innovations of previous generations. This delusion is constructed around a Smithsonian-influenced view of the past. In reality, history tends to go in a circle, or a spiral, with innovation leading to ease, ease leading to laziness and corruption, and corruption leading to weakness and collapse.

Over and over again, humanity reaches for Elysium on Earth only to be slapped back down. The survivors then build grass huts on top of the ruins of the old empires and they start over from scratch.  Why does the Bronze Age catastrophe matter?  Obviously, because history tends to rhyme.

The Levant at this time was rich with civilization and trade, composed of a host of kingdoms that represented the known world including the Egyptians, Babylonians, Minoans, Mycenaeans, Hittites, etc.  They had vast economic networks, agriculture, industry and written libraries. The proximity of the kingdoms allowed for such extensive trade relations that this period is often referred to by modern historians as the first “globalized economy” (sound familiar?).

What took centuries to build was destroyed in a single generation by a series of disasters. A “mega-drought” caused kingdoms without consistent water resources to lose agricultural production leading to widespread famine and disease (yes, the climate can and does change dramatically regardless of human carbon footprint). Trade was disrupted by internal disputes, and a mysterious invasion of a group of roaming raiders called the “sea people” is documented as a primary factor in collapse.

The Sea People attacked numerous kingdoms, but many of them were also refugees flooding into the region. They disrupted cultures and economies and dragged a number of empires into the dust. This all happened in less than 30 years. Sadly, because only the elites of these civilizations were able to read and write, languages and historical documentation were lost.

This initiated a dark age which lasted for centuries. Humanity was set back, essentially to zero, while scratching and surviving among temples and pyramids of past generations. They must have looked up at those decaying marvels of architecture from hundreds of years ago and wondered “What the hell happened to us?”

Not everything perished, of course. The Egyptian dynasties were in decline, but they managed to hold together far better than their counterparts across the Levant.  However, the event represented a setback to human knowledge that was detrimental. One might suggest that if the Bronze Age Collapse never occurred we might be a space borne species traveling the stars by now.

Then again, maybe these cultures were so corrupt that they needed to fail so that something better could be built in their place?

What does any of this have to do with the state of the Middle East today? The smart readers out there surely see what I’m getting at. The intricate relationships and trade mechanisms of the Bronze Age led to great wealth and prosperity, but they were terribly fragile. That same interdependency resulted in their demise as they tumbled like dominoes on top of each other.

The globalization and collectivist war mongering of today is leading to a similar worldwide implosion. Our irrational ties to foreign entanglements and economies could very well destroy civilization again. Consider what are we about to see as the Israel/Palestine war unfolds…

Multiple Nations Dragged Into The Conflict

If you were wondering what the “October surprise” was going to be, well, now you know.  I will make my position on this situation clear – I don’t care about either side.  I care about innocent civilians, but other than that the war is irrelevant.  I am an American and I care about America. The same goes for Ukraine and Russia. Their wars are not our wars, and I am highly suspicious every time our political leaders try to lure us into choosing a side when foreigners start shooting each other. To summarize:  All wars are banker wars.

The Israelis enjoy our money but they have a history of proven elicit operations to lure us into war (USS Liberty, anyone?). The Palestinians and most of the Muslim world despise the West and Christianity in general (and I don’t really care who started it, the fact remains that our cultures are completely incompatible and this will never change).  Just because we happen to find common ground on fighting back against the insane trans agenda does not mean I’m willing to accept draconian Sharia Law in my community.

Both sides use tactics that deliberately target civilians. I’m not talking about collateral damage like we saw in Iraq and Afghanistan, I’m talking about groups that are consciously and brazenly engaged in plans for genocide. Bottom line? There are no “good guys” to join with. It’s a complete sh*t show of ancient tribal nonsense that Westerners should stay away from.

For those who disagree, ask yourselves this – Are you truly willing to go pick up a rifle and fly to Israel or Gaza to fight and die for either side?  If so, then go do it and stop demanding others do it for you.  If not, then shut up.

But here’s what’s going to happen:  the establishment will seek to force Americans and Europeans into these wars regardless.  The corporate media and some political leaders are already suggesting that the recent full-scale attack on Israel was planned by governments outside of Gaza. Some are accusing Iran, and others accuse Lebanon. From the extensive amount of footage of the attack that I have examined, I have no doubt that someone other than the Palestinians orchestrated the event. The tactics were far too advanced and far too coordinated; the Palestinians have never been all that smart when it comes to military strategy.

Who drafted the attack is another question entirely. So far there are a lot of rumors but no hard evidence leading to any specific governments. Another big question is, how did the Palestinians manage to organize all of this and execute the invasion WITHOUT Israeli intel services knowing about it? Mossad is known to be one of the most intrusive and pervasive covert agencies in the world, yet they were caught completely off guard by this unprecedented attack?  I think not.

I’m reminded of the events of 9/11 and the strange series of intelligence failures that preceded it. I’m also reminded of the lies, propaganda and the reactionary response which led to two decades of meaningless war.

I’m going to call it here – in a couple of weeks we will hear reports that many of the soldiers involved in the incursion were NOT Palestinian. They will claim some of them are from Iran, Syria, Lebanon, etc. There will be intel that says Iran was a major backer of the plan (The Wall Street Journal already claims this is the case, but they have not provided any compelling proof, yet).

A US carrier strike group is on the way to the region now, and this is just the beginning. Europeans will be pressured to go to war, American conservatives in particular will be waterboarded with propaganda telling us that an “attack on Israel is an attack on the US.” It will be a lot like the rhetoric Neo-cons and leftists used during the initial invasion of Ukraine, but multiplied by a thousand. To be clear, both Biden and Trump have been rattling sabers and testing the waters of war, so don’t think that we can avoid this simply by voting.

Multiple Fronts

Israel is going to pound Gaza into gravel, there’s no doubt about that.  A ground invasion will meet far more resistance than the Israelis seem to expect, but Israel controls the air and Gaza is a fixed target with limited territory.  The problem for them is not the Palestinians, but the multiple war fronts that will open up if they do what I think they are about to do (attempted sanitization).  Lebanon, Iran and Syria will all immediately engage and Israel will not be able to fight them all – Hell, the Israelis got their asses handed to them by Lebanon alone in 2006.

This will result in inevitable demands for US/EU intervention.

East vs West

Depending on the extent of the Western reaction, the BRICS nations may be compelled to get involved. This may not be on a kinetic level, but there is a chance. Russia has strategic security treaties with Iran and Syria. China has numerous economic interests and influence in the region as the world’s largest importer/exporter.

These nations might retaliate with the same kind of financial warfare that the West used against Russia – with China and the BRICS cutting off the dollar as the world reserve currency. This would add to the crippling inflation we are already experiencing.

Terror Attacks And False Flags

If you thought things might be eerily quiet on the terrorism front lately, that’s now over. I would be shocked if we made it another six months without multiple attacks tied back to Islamic groups. Some of them will be real and some of them will be staged, and telling which is which will be difficult.

The thing is, wide open borders in the West have made this far more likely and the establishment knows it. In my opinion they WELCOMED IT. If they can get at least one crazy Muslim to shoot up a strip mall or blow up a football stadium, they will have all the leverage they need to con Americans into another ground war in the Middle East.  Do we need to “fight them over there so we don’t have to fight them here?”  That’s garbage thinking.  We should not be letting them over here in the first place.

Europe in particular is playing with fire. National governments and the EU have invited tens-of-millions of these people to their doorsteps and now they face a serious conundrum. There are Sharia Law communities all over Europe, there are millions of military-age Muslim men with every opportunity to do great harm. And, there are millions of woke leftists currently cheering them on, thinking that this is some form of “decolonization.”

Closure Of The Strait Of Hormuz, Skyrocketing Oil Prices

I have been warning about this scenario for many years; it was only a matter of time before tensions with Iran gave them a rationale to close the Strait Of Hormuz and shut down 30% of all oil exports from the Middle East to the rest of the world. Keep in mind, Europe is suffering from extensive energy inflation, in part because of the economic crisis and also because of sanctions against Russia.

Biden has been trying to hide inflation by dumping oil from the strategic reserves onto the market, but now those reserves are the lowest they have been since 1983.  Conveniently, this happened right before the strike on Israel. Our reserves are depleted as we go to war. Oil prices and gasoline prices will explode if Iran is implicated in the Israel attack. Iran will run a few giant oil tankers into the Hormuz, sink them, and make the strait impassable for months. Don’t be surprised of we see $200 per barrel oil next year, which will translate to around $7 per gallon gas or higher for much of the US.

A Push For A New Draft

Let’s be honest, current US recruitment numbers are a joke and the wokification of our military is making it weaker by the month. No American citizen with a legit warrior mindset or combat aptitude is going to join that circus freak show voluntarily. The establishment will try to regale conservatives and patriots with visions of “fighting the good fight for family and country” but most will not buy in. With attempts to ignite multiple fronts against Russia, China and the Middle East, they will start talking about a new draft system.

My belief is that this will fail miserably and would start a civil war rather than fill the ranks of the Army or Marines, but they may have a scheme to deal with this outcome…

Is This The Real Reason Why US Officials Are Encouraging The Migrant Invasion?

The reality is, America has its own invasion to deal with.  During the Bronze Age Collapse certain empires (like Egypt) survived using an odd tactic – instead of fighting off the invading hordes of refugees, nomads and sea people, they HIRED them and inducted them into important positions within their military. Corrupt authoritarian rulers ultimately found that they faced more of a threat from their own starving peasants than they did from the outsiders, so they joined with them to put down local rebellions.

This might not be as useful in Europe, but in America I wonder if this was the intention all along; to bring in millions of military-age foreigners with little sympathy for the existing culture, then in the midst of collapse and conflict offer them automatic citizenship and benefits if they join the military. Not on the small scale the federal government has going today, but on an enormous scale the likes of which we have never seen.

Maybe the plan was always to leave the gates open and allow illegals to stroll in so that they could act as a mercenary contingent to fight in foreign wars or fight against American citizens should rebellion arise…

Plan C

The timing of the conflict in Israel is incredibly beneficial to globalists, and this might explain Israel’s bizarre intel failure. Just as US and British leaders had prior knowledge of a potential Japanese attack on Pearl Harbor in 1941 but warned no one because they WANTED to compel Americans to fight in WWII, the Palestinian incursion serves a similar purpose.

The covid pandemic and mandates failed to get the desired result of a global medical tyranny. The war in Ukraine failed to get desired results as the warhawks’ demands for boots on the ground against Russia fell apart. Perhaps this is just Plan C?

The establishment seems particularly obsessed with convincing US conservatives and patriots to participate in the chaos; there are a number of Neo-cons and even a few supposed liberty media personalities calling for Americans to answer the call of blood in Israel. Some have described the coming conflagration as “the war to end all wars.”

I believe that the real war is yet to truly start, and that is the war to erase the globalists from existence. They want us to fight overseas in endless quagmires in the hopes we will die out. And when we do, there will be no one left to oppose them. It’s a predictable strategy, but its success is doubtful. Another interesting fact about the Bronze Age Collapse – the elites were some of the first groups to be wiped out after the system broke down.

America’s empire is bankrupt

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The dollar is finally being dethroned

Credit: JOEL PETT

By John Michael Greer

Source: UnHerd

Let’s start with the basics. Roughly 5% of the human race currently live in the United States of America. That very small fraction of humanity, until quite recently, enjoyed about a third of the world’s energy resources and manufactured products and about a quarter of its raw materials. This didn’t happen because nobody else wanted these things, or because the US manufactured and sold something so enticing that the rest of the world eagerly handed over its wealth in exchange. It happened because, as the dominant nation, the US imposed unbalanced patterns of exchange on the rest of the world, and these funnelled a disproportionate share of the planet’s wealth to itself.

There’s nothing new about this sort of arrangement. In its day, the British Empire controlled an even larger share of the planet’s wealth, and the Spanish Empire played a comparable role further back. Before then, there were other empires, though limits to transport technologies meant that their reach wasn’t as large. Nor, by the way, was any of this an invention of people with light-coloured skin. Mighty empires flourished in Asia and Africa when the peoples of Europe lived in thatched-roofed mud huts. Empires rise whenever a nation becomes powerful enough to dominate other nations and drain them of wealth. They’ve thrived as far back as records go and they’ll doubtless thrive for as long as human civilisations exist.

America’s empire came into being in the wake of the collapse of the British Empire, during the fratricidal European wars of the early 20th century. Throughout those bitter years, the role of global hegemon was up for grabs, and by 1930 or so it was pretty clear that Germany, the Soviet Union or the US would end up taking the prize. In the usual way, two contenders joined forces to squeeze out the third, and then the victors went at each other, carving out competing spheres of influence until one collapsed. When the Soviet Union imploded in 1991, the US emerged as the last empire standing.

Francis Fukuyama insisted in a 1989 essay that having won the top slot, the US was destined to stay there forever. He was, of course, wrong, but then he was a Hegelian and couldn’t help it. (If a follower of Hegel tells you the sky is blue, go look.) The ascendancy of one empire guarantees that other aspirants for the same status will begin sharpening their knives. They’ll get to use them, too, because empires invariably wreck themselves: over time, the economic and social consequences of empire destroy the conditions that make empire possible. That can happen quickly or slowly, depending on the mechanism that each empire uses to extract wealth from its subject nations.

The mechanism the US used for this latter purpose was ingenious but even more short-term than most. In simple terms, the US imposed a series of arrangements on most other nations that guaranteed the lion’s share of international trade would use US dollars as the medium of exchange, and saw to it that an ever-expanding share of world economic activity required international trade. (That’s what all that gabble about “globalisation” meant in practice.) This allowed the US government to manufacture dollars out of thin air by way of gargantuan budget deficits, so that US interests could use those dollars to buy up vast amounts of the world’s wealth. Since the excess dollars got scooped up by overseas central banks and business firms, which needed them for their own foreign trade, inflation stayed under control while the wealthy classes in the US profited mightily.

The problem with this scheme is the same difficulty faced by all Ponzi schemes, which is that, sooner or later, you run out of suckers to draw in. This happened not long after the turn of the millennium, and along with other factors — notably the peaking of global conventional petroleum production — it led to the financial crisis of 2008-2010. Since 2010 the US has been lurching from one crisis to another. This is not accidental. The wealth pump that kept the US at the top of the global pyramid has been sputtering as a growing number of nations have found ways to keep a larger share of their own wealth by expanding their domestic markets and raising the kind of trade barriers the US used before 1945 to build its own economy. The one question left is how soon the pump will start to fail altogether.

When Russia launched its invasion of Ukraine in February 2022, the US and its allies responded not with military force but with punitive economic sanctions, which were expected to cripple the Russian economy and force Russia to its knees. Apparently, nobody in Washington considered the possibility that other nations with an interest in undercutting the US empire might have something to say about that. Of course, that’s what happened. China, which has the largest economy on Earth in purchasing-power terms, extended a middle finger in the direction of Washington and upped its imports of Russian oil, gas, grain and other products. So did India, currently the third-largest economy on Earth in the same terms; as did more than 100 other countries.

Then there’s Iran, which most Americans are impressively stupid about. Iran is the 17th largest nation in the world, more than twice the size of Texas and even more richly stocked with oil and natural gas. It’s also a booming industrial power. It has a thriving automobile industry, for example, and builds and launches its own orbital satellites. It’s been dealing with severe US sanctions since not long after the Shah fell in 1978, so it’s a safe bet that the Iranian government and industrial sector know every imaginable trick for getting around those sanctions.

Right after the start of the Ukraine war, Russia and Iran suddenly started inking trade deals to Iran’s great benefit. Clearly, one part of the quid pro quo was that the Iranians passed on their hard-earned knowledge about how to dodge sanctions to an attentive audience of Russian officials. With a little help from China, India and most of the rest of humanity, the total failure of the sanctions followed in short order. Today, the sanctions are hurting the US and Europe, not Russia, but the US leadership has wedged itself into a position from which it can’t back down. This may go a long way towards explaining why the Russian campaign in Ukraine has been so leisurely. The Russians have no reason to hurry. They know that time is not on the side of the US.

For many decades now, the threat of being cut out of international trade by US sanctions was the big stick Washington used to threaten unruly nations that weren’t small enough for a US invasion or fragile enough for a CIA-backed regime-change operation. Over the last year, that big stick turned out to be made of balsa wood and snapped off in Joe Biden’s hand. As a result, all over the world, nations that thought they had no choice but to use dollars in their foreign trade are switching over to their own currencies, or to the currencies of rising powers. The US dollar’s day as the global medium of exchange is thus ending.

It’s been interesting to watch economic pundits reacting to this. As you might expect, quite a few of them simply deny that it’s happening — after all, economic statistics from previous years don’t show it yet, Some others have pointed out that no other currency is ready to take on the dollar’s role; this is true, but irrelevant. When the British pound lost a similar role in the early years of the Great Depression, no other currency was ready to take on its role either. It wasn’t until 1970 or so that the US dollar finished settling into place as the currency of global trade. In the interval, international trade lurched along awkwardly using whatever currencies or commodity swaps the trading partners could settle on: that is to say, the same situation that’s taking shape around us in the free-for-all of global trade that will define the post-dollar era.

One of the interesting consequences of the shift now under way is a reversion to the mean of global wealth distribution. Until the era of European global empire, the economic heart of the world was in east and south Asia. India and China were the richest countries on the planet, and a glittering necklace of other wealthy states from Iran to Japan filled in the picture. To this day, most of the human population is found in the same part of the world. The great age of European conquest temporarily diverted much of that wealth to Europe, impoverishing Asia in the process. That condition began to break down with the collapse of European colonial empires in the decade following the Second World War, but some of the same arrangements were propped up by the US thereafter. Now those are coming apart, and Asia is rising. By next year, four of the five largest economies on the planet in terms of purchasing power parity will be Asian. The fifth is the US, and it may not be in that list for much longer.

In short, America is bankrupt. Our governments from the federal level down, our big corporations and a very large number of our well-off citizens have run up gargantuan debts, which can only be serviced given direct or indirect access to the flows of unearned wealth the US extracted from the rest of the planet. Those debts cannot be paid off, and many of them can’t even be serviced for much longer. The only options are defaulting on them or inflating them out of existence, and in either case, arrangements based on familiar levels of expenditure will no longer be possible. Since the arrangements in question include most of what counts as an ordinary lifestyle in today’s US, the impact of their dissolution will be severe.

In effect, the 5% of us in this country are going to have to go back to living the way we did before 1945. If we still had the factories, the trained workforce, the abundant natural resources and the thrifty habits we had back then, that would have been a wrenching transition but not a debacle. The difficulty, of course, is that we don’t have those things anymore. The factories were shut down in the offshoring craze of the Seventies and Eighties, when the imperial economy slammed into overdrive, and the trained workforce was handed over to malign neglect.

We’ve still got some of the natural resources, but nothing like what we once had. The thrifty habits? Those went whistling down the wind a long time ago. In the late stages of an empire, exploiting flows of unearned wealth from abroad is far more profitable than trying to produce wealth at home, and most people direct their efforts accordingly. That’s how you end up with the typical late-imperial economy, with a governing class that flaunts fantastic levels of paper wealth, a parasite class of hangers-on that thrive by catering to the very rich or staffing the baroque bureaucratic systems that permeate public and private life, and the vast majority of the population impoverished, sullen, and unwilling to lift a finger to save their soi-disant betters from the consequences of their own actions.

The good news is that there’s a solution to all this. The bad news is that it’s going to take a couple of decades of serious turmoil to get there. The solution is that the US economy will retool itself to produce earned wealth in the form of real goods and non-financial services. That’ll happen inevitably as the flows of unearned wealth falter, foreign goods become unaffordable to most Americans, and it becomes profitable to produce things here in the US again. The difficulty, of course, is that most of a century of economic and political choices meant to support our former imperial project are going to have to be undone.

The most obvious example? The metastatic bloat of government, corporate and non-profit managerial jobs in American life. That’s a sensible move in an age of empire, as it funnels money into the consumer economy, which provides what jobs exist for the impoverished classes. Public and private offices alike teem with legions of office workers whose labour contributes nothing to national prosperity but whose pay cheques prop up the consumer sector. That bubble is already losing air. It’s indicative that Elon Musk, after his takeover of Twitter, fired some 80% of that company’s staff; other huge internet combines are pruning their workforce in the same way, though not yet to the same degree.

The recent hullaballoo about artificial intelligence is helping to amplify the same trend. Behind the chatbots are programs called large language models (LLMs), which are very good at imitating the more predictable uses of human language. A very large number of office jobs these days spend most of their time producing texts that fall into that category: contracts, legal briefs, press releases, media stories and so on. Those jobs are going away. Computer coding is even more amenable to LLM production, so you can kiss a great many software jobs goodbye as well. Any other form of economic activity that involves assembling predictable sequences of symbols is facing the same crunch. A recent paper by Goldman Sachs estimates that something like 300 million jobs across the industrial world will be wholly or partly replaced by LLMs in the years immediately ahead.

Another technology with similar results is CGI image creation. Levi’s announced not long ago that all its future catalogues and advertising will use CGI images instead of highly-paid models and photographers. Expect the same thing to spread generally. Oh, and Hollywood’s next. We’re not too far from the point at which a program can harvest all the footage of Marilyn Monroe from her films, and use that to generate new Marilyn Monroe movies for a tiny fraction of what it costs to hire living actors, camera crews and the rest. The result will be a drastic decrease in high-paying jobs across a broad swathe of the economy.

The outcome of all this? Well, one lot of pundits will insist at the top of their lungs that nothing will change in any way that matters, and another lot will start shrieking that the apocalypse is upon us. Those are the only two options our collective imagination can process these days. Of course, neither of those things will actually happen.

What will happen instead is that the middle and upper-middle classes in the US, and in many other countries, will face the same kind of slow demolition that swept over the working classes of those same countries in the late 20th century. Layoffs, corporate bankruptcies, declining salaries and benefits, and the latest high-tech version of NO HELP WANTED signs will follow one another at irregular intervals. All the businesses that make money catering to these same classes will lose their incomes as well, a piece at a time. Communities will hollow out the way the factory towns of America’s Rust Belt and the English Midlands did half a century ago, but this time it will be the turn of upscale suburbs and fashionable urban neighbourhoods to collapse as the income streams that supported them disappear.

This is not going to be a fast process. The US dollar is losing its place as the universal medium of foreign trade, but it will still be used by some countries for years to come. The unravelling of the arrangements that direct unearned wealth to the US will go a little faster, but that will still take time. The collapse of the cubicle class and the gutting of the suburbs will unfold over decades. That’s the way changes of this kind play out.

As for what people can do in response this late in the game, I refer to a post I made on The Archdruid Report in 2012 titled “Collapse Now and Avoid the Rush”. In that post I pointed out that the unravelling of the American economy, and the broader project of industrial civilisation, was picking up speed around us, and those who wanted to get ready for it needed to start preparing soon by cutting their expenses, getting out of debt, and picking up the skills needed to produce goods and services for people rather than the corporate machine. I’m glad to say that some people did these things, but a great many others rolled their eyes, or made earnest resolutions to do something as soon as things were more convenient, which they never were.

Over the years that followed I repeated that warning and then moved on to other themes, since there really wasn’t much point to harping on about the approaching mess when the time to act had slipped away. Those who made preparations in time will weather the approaching mess as well as anyone can. Those who didn’t? The rush is here. I’m sorry to say that whatever you try, it’s likely that there’ll be plenty of other frantic people trying to do the same thing. You might still get lucky, but it’s going to be a hard row to hoe.

Mind you, I expect some people to take a different tack. In the months before a prediction of mine comes true, I reliably field a flurry of comments insisting that I’m too rigid and dogmatic in my views about the future, that I need to be more open-minded about alternative possibilities, that wonderful futures are still in reach, and so on. I got that in 2008 just before the real estate bubble started to go bust, as I’d predicted, and I also got it in 2010 just before the price of oil peaked and started to slide, as I’d also predicted, taking the peak oil movement with it. I’ve started to field the same sort of criticism once again.

We are dancing on the brink of a long slippery slope into an unwelcome new reality. I’d encourage readers in America and its close allies to brace themselves for a couple of decades of wrenching economic, social, and political turmoil. Those elsewhere will have an easier time of it, but it’s still going to be a wild ride before the rubble stops bouncing, and new social, economic, and political arrangements get patched together out of the wreckage.

Showdown in Ukraine

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Hobbled US Turns to War to Preserve its Waning Primacy

By Mike Whitney

Source: The Unz Review

The future of humanity will be decided on a battlefield in Ukraine. That’s no exaggeration. The conflict between the United States and Russia will determine whether global economic integration will expand within an evolving multi-polar system or if the “rules-based order” will succeed in crushing any opponent to its Western-centric model. This is what’s taking place in Ukraine today, in fact, all of the recent government-prepared documents related to national security identify Russia and China as the greatest threats to US hegemony. For example, take a look at this brief clip from the 2021 Congressional Research Service Report titled Renewed Great Power Competition: Implications for Defense—Issues for Congress:

The U.S. goal of preventing the emergence of regional hegemons in Eurasia… is a policy choice reflecting two judgments: (1) that given the amount of people, resources, and economic activity in Eurasia, a regional hegemon in Eurasia would represent a concentration of power large enough to be able to threaten vital U.S. interests….

From a U.S. perspective on grand strategy and geopolitics, it can be noted that most of the world’s people, resources, and economic activity are located not in the Western Hemisphere, but in the other hemisphere, particularly Eurasia. In response to this basic feature of world geography, U.S. policymakers for the last several decades have chosen to pursue, as a key element of U.S. national strategy, a goal of preventing the emergence of regional hegemons in Eurasia.” (“Renewed Great Power Competition: Implications for Defense—Issues for Congress”, US Congress)

That sums up US foreign policy in a nutshell; “prevent the emergence of a regional hegemon” at all cost. Now check out this summary of the 2022 US National Defense Strategy by Andre Damon at the World Socialist Web Site:

These documents, which were not seriously discussed in the US media, make clear the fundamental falsehood that the massive US military buildup this year is a response to “Russian aggression.” In reality, in the thinking of the White House and Pentagon war planners, the massive increases in military spending and plans for war with China are created by “dramatic changes in geopolitics, technology, economics, and our environment.”

These documents make clear that the United States sees the economic rise of China as an existential threat, to be responded to with the threat of military force. The United States sees the subjugation of Russia as a critical stepping stone toward the conflict with China.” (“Pentagon national strategy document targets China”, Andre Damon, World Socialist Web Site)

These two excerpts are by no means a comprehensive summary of US foreign policy objectives, but they are a pretty effective thumbnail sketch. Bottom line: The war in Ukraine is not about Ukraine. America’s clearly articulated strategic objectives are as follows: To weaken Russia, topple its leader, take control of its vast natural resources and move on to containing China. Simply put, Washington’s escalating aggression in Ukraine is a Hail Mary pass aimed at containing emerging centers of economic power in order to preserve its waning position in the global order.

This is the geopolitical chess match that is being played behind the cover of “a war against Russia’s unprovoked aggression.” People should not be hoodwinked by that absurd deception. This war was concocted as a desperate attempt for the United States to defend its flickering global hegemony. That’s what Ukraine is really all about. It’s a clash between the warmongering western oligarchs who have a stranglehold on the US media and political establishment and the emerging economies that are using the market system to link their resources and manufactured goods to countries around the world through “high-speed” infrastructure and cooperative development.

So, the question everyone must ask themselves is this: Do you want to see more economic integration, lower prices, more shared prosperity and less war or another 80 years of onerous and arbitrary sanctions, color-coded revolutions, regime change operations, genocidal interventions and bioweapon warfare (Covid-19)? Which do you want?

Perhaps, you are one of the millions of Americans who believe that China is an enemy of the United States. Perhaps, you are also unaware of the role the US played in creating modern China. Here’s a question for you: Did the US and western corporations move their operations en masse to China to escape the high costs of production in the US?

answer– Yes, they did.

And, did they betray US workers because they didn’t want a fair wage to interfere with their excessive profit-making?

answer– Yep.

And, did they offshore their businesses, outsource their product manufacturing and do everything in their power to make themselves winners while robbing American workers of the opportunity of making a decent wage so they could put food on the table?

answer– They sure did.

Then who is actually responsible for the rise of China?

answer– Western corporations are responsible. If Americans want to blame someone, blame them!

But now the corporate mandarins and other elites are unhappy with China because China will not allow them to take control over their markets, financial system and currency as they have in America. So now these same cutthroat corporations want us to fight a war with the monster that they created?

Can you see that? Can you see that the relentless provocations against China have nothing to do with US national security or US interests. We are being led by the nose to fight and die for the cadres of voracious western oligarchs who have settled on China as the next target of their grand looting operation.

But let’s forget the past for a minute and focus on the future, after all, that’s what really matters, right?

Well then, which country has a more “positive vision” for the future: China or the United States?

Have you ever heard of China’s Belt and Road Initiative, the massive, multi trillion-dollar infrastructure plan that is the centerpiece of China’s foreign policy? It is the biggest infrastructure program in history and more 150 countries have invested in the plan already. It is a development-oriented project aimed at increasing connectivity through high-speed rail, shipping lanes and ports, skyscrapers, railroads, roads, bridges, airports, dams, power stations, and railroad tunnels. By increasing the speed of travel, China’s products and merchandise will get to markets faster generating greater prosperity for itself and for the other countries involved. And, keep in mind, the BRI will link countries around the world in a high-speed system that will not require its participants to follow a specific economic model dictated by Beijing. In other words, the Belt and Road Initiative is free market economics without the politics. It’s a “win-win” situation for everyone, a guarantee of mutual prosperity absent political manipulation, coercion or exploitation.

The venal oligarchs that run the US can’t even imagine a project of this scale or potential. In fact, they can’t even pony-up enough money to keep the trains on the rails in America. The profits these billionaire parasites extract from their activities invariably come from stock buybacks, tax evasion, and other sleight-of-hand, debt-layering ponzi-scams that benefit no one and merely shift more of the nation’s wealth into their own bulging bank accounts. Of course, ripping off the country would be bad enough, but now we see how this same class of miscreants have settled on public health as a means for amplifying their political power so they can impose repressive, police-state measures that greatly curtail the freedom of the entire population. In short, they want absolute social control and they aren’t going to let-up until they get it.

Where is the “positive vision” in this behavior?

There isn’t one. America used to be a country of ideas, ideals and vision. Now it is an oligarch-run detension center in which all hope for the future has been ruthlessly extinguished by a handful of mercenary billionaires.

At least, in the case of China, we can imagine a better, more prosperous world that is interconnected and more accessible to everyone. But what about the United States? Are we supposed to believe that fighting a war in eastern Europe is going to improve our lives? Are we supposed to believe that the only way “we can stay on top” is by pushing everyone else down? Are we expected to hate China and Russia even while our own government demonizes 80 million of us for voting for the wrong presidential candidate or for not supporting the terrorists who burn and loot our cities or for believing that the people in East Palestine are more deserving of our support and assistance than the Nazi stormtroopers in Kiev?

The fact is, our leaders cannot imagine devoting public resources to a giant interconnected infrastructure project like BRI, because that would mean less lucre for themselves. So, they’ve decided to destroy it just like they destroyed Nord Stream. Just read the press reviews on this groundbreaking project. Western journalists can’t find a ‘good word’ to say about it. A vast area in the center of America was fiendishly nuked with vinyl chloride, butyl acrylate and isobutylene, but the western media would rather criticize China’s ambitious BRI project than hold their paymasters accountable. Go figure.

The same rule applies to Russia. The Biden team and their wealthy allies don’t want closer relations between Germany and Russia because closer relations mean more prosperity for both countries, and Washington can’t have that, which is why they blew up the pipeline that was Germany’s lifeline to cheap fuel. That’s how Washington solved the problem. It pushed Germany and Russia down so the US could remain on top. Who doesn’t see this?

In contrast, the Belt and Road Initiative provides a positive vision for the future, which is an idea that the majority of the world supports. It puts us on a path to an interconnected world in which people can raise their standards of living, make a meaningful contribution to their communities, and enjoy their own culture and traditions without fear of being sanctioned, incarcerated or bombed to death. This is an excerpt from China’s Global Times:

The China-proposed Belt and Road Initiative (BRI) has already become a well-received international public good and an important platform for international cooperation…

“BRI transcends the outdated mentality of geopolitical games, and created a new model of international cooperation. It is not an exclusive group that excludes other participants but an open and inclusive cooperation platform. It is not just China’s solo effort, but a symphony performed by all participating countries….

Since the Belt and Road Initiative (BRI) was proposed in 2013, the initiative has always been development-oriented, and consistent efforts have been made to ensure that it is high-standard, sustainable and people-centered….

By August, China’s goods trade with countries participating in the BRI had reached around $12 trillion and the country’s non-financial direct investment in those countries surpassed $140 billion. … By the end of 2021, Chinese enterprises had invested $43 billion in the construction of economic and trade cooperation zones in BRI countries, creating more than 340,000 local jobs, official data showed…

China is open to other countries’ and regions’ participation in the BRI and is considering connecting with infrastructure initiatives proposed by other nations to provide more good-quality public goods for the world…. China hopes to join hands with all partners to advance the high-quality development … stressing that China aims to strive for global connection rather than fragmentation, for mutual opening-up rather than shutting doors, for mutual integration rather than zero-sum games. (“BRI remains open, inclusive for all, transcends the outdated mentality of geopolitical games“, Global Times)

What is the American-led project that rivals the Belt and Road Initiative?

There isn’t one. The US allocates over $1 trillion per year for lethal weaponry and war-making, and trillions more to bail out the Wall Street banksters, and trillions more to shut down all the businesses across the country that were forced to comply with the diktats of billionaire elites who wanted to inject the population with their toxic slurry, but zero for any global infrastructure project that would peacefully bring the world’s people closer together through commerce and recreation.

No one is saying that China is perfect, at least, I’m not. Nor do I want to live in China. I don’t. I’m an American and I plan to die here.

But I’m not blind. It’s easy to see that this war with Russia has nothing to do with “unprovoked aggression.” That is merely a smokescreen that’s being used to conceal the real objective, which is to preserve America’s global hegemony. What we need to do now, is honestly analyze ‘what is happening’; try to understand ‘why it is happening’, and, then, figure out what the outcome will be if the United States prevails. In other words, do we want to perpetuate an oligarch-controlled system that crushes Russia, contains China, starves Europe of the energy it needs, sabotages the Belt and Road infrastructure plan and reinforces the same failed policies that brought us Afghanistan, Libya, Syria and Iraq?

Do we want that? Do YOU want that?

The American people want their government to cooperate with other nations in order to create a more prosperous and peaceful world. They don’t want a new world order and they certainly don’t want a Third World War.

Prepare to Be Bled Dry by a Decade of Stagflation

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By Charles Hugh Smith

Source: Of Two Minds

The Great Moderation of low inflation and soaring assets has ended. Welcome to the death by a thousand cuts of stagflation. It was all so easy in the good old days of the past 25 years: just keep pushing interest rates lower to reduce the cost of borrowing and juice credit expansion ((financialization) and offshore industrial production to low-cost nations with few environmental standards and beggar-thy-neighbor currency policies (globalization).

Both financialization and globalization are deflationary forces, as they reduce costs. They are also deflationary to the wages of bottom 90%, as wages are pushed down by cheap global labor and stripmined by financialization, which channels the vast majority of the economy’s gains into the top tier of the workforce and those who own the assets bubbling up in financialization’s inevitable offspring, credit-asset bubbles.

To keep the party going, central banks and governments pushed both forces into global dominance: hyper-financialization and hyper-globalization. Policy extremes were pushed to new extremes: “temporary” zero-rate interest policy (ZIRP) stretched on for 6 years as every effort was made to lower the cost of credit to bring demand forward and inflate yet another credit-asset bubble, as the “wealth effect” of the top 5% gaining trillions of dollars in unearned wealth as asset bubbles inflated pushed consumption higher.

Corporate profits soared as credit became essentially free and super-abundant and globalization lowered costs and institutionalized planned obsolescence, the engineered replacement of goods and software that forces consumers to replace their broken / outdated products every few years.

Every economic lever was pulled to extend the vast profits generated by hyper-financialization and hyper-globalization. Currencies were manipulated lower to boost exports, cheap credit kept zombie companies alive, bridges to nowhere and millions of empty flats were built to boost jobs and profits, and so on.

At long last, all these gimmicks have reversed or reached marginal returns: they no longer keep inflation suppressed, asset bubbles inflating and profits expanding. The malinvestment of global capital will be revealed and the costs of the policy gimmickry will be paid by years of stagflation: high inflation, low or negative growth and endless debt crises as the reliance on cheap credit to boost profits comes home to roost.

It turns out that the inevitable offspring of hyper-financialization and hyper-globalization are inflation, credit crises and the undermining of national security as the self-serving goal of pushing corporate profits higher via globalization led to fatal dependencies on competing powers for the essentials of modern life.

Correcting these decades-long extremes will take at least a decade as long-suppressed inflation becomes endemic, supply-chain disruptions become the norm and capital has to be invested in long-term national projects such as reshoring and the engineering of a new more efficient energy mix–projects that will only be expenses for many years.

This demand for structural investments with no immediate profit payoff is what drove the stagflation of the 1970s, a factor I explain in The Forgotten History of the 1970s and The 1970s: From Rotting Carcasses Floating in the River to Kayak Races.

The gains will not even be measured by our current outdated economic metrics of GDP and profits. The gains will be in the national security of essential supply chains and production and in the relocalizing of jobs and capital, not corporate profits.

Our reliance on the endless expansion of credit, leverage and credit-asset bubbles will have its own high cost: the collapse not just of the current Everything Bubble but of the engines that inflated one bubble after another.

Central bank and state authorities are thrashing about cluelessly, as all their gimmicks are now problems rather than solutions. The current policy gimmicks laid the foundations for a decade or more of high inflation, low growth and credit crises as the phantom “wealth” of credit-asset bubbles evaporates.

This will drive a reverse Wealth Effect as the top spenders are crushed by the collapse of asset bubbles. Long-term trends in demographics (shrinking workforces and the skyrocketing population of elderly) and depletion of resources will add fuel to the inflationary / low growth / credit crises bonfires.

Gordon Long and I discuss all these mutually reinforcing trends in A Great Stagflation (36 min). This is the culmination of our decade of programs about all the policy gimmicks that were pushed to extremes to maintain the illusion of stability and growth–an illusion that’s evaporating as it makes contact with stagflationary realities.

The One Chart That Explains Everything

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Look at the chart above. The chart explains everything.

By Mike Whitney

Source: The Unz Review

It explains why Washington is so worried about China’s explosive growth. It explains why the US continues to hector China on the issues of Taiwan and the South China Sea. It explains why Washington sends congressional delegations to Taiwan in defiance of Beijing’s explicit requests. It explains why the Pentagon continues to send US warships through the Taiwan Strait and ship massive amounts of lethal weaponry to Taipei. It explains why Washington is creating anti-China coalitions in Asia that are aimed at encircling and provoking Beijing. It explains why the Biden administration is stepping up its trade war on China, imposing onerous economic sanctions on its businesses, and banning critical high-tech semi-conductors that are “are essential not just… for virtually every aspect of modern society, from electronic products and transport to the design and production of all manner of goods.” It explains why China has been singled-out in the US National Security Strategy (NSS) as “the only competitor with both the intent and, increasingly, the capability to reshape the international order.” It explains why Washington now regards China as its biggest and most formidable strategic adversary that must be isolated, demonized and defeated.

The chart above explains everything, not just the hostile diplomatic jabs that are designed to discredit and humiliate China, but also the openly belligerent policies that are aimed at Russia as well. People need to understand this. They need to see what is really going on so they can put events in their proper geopolitical context.

And what “context” is that?

The context of a Third World War; a war that was thoroughly-planned, instigated and (now) prosecuted by Washington and Washington’s proxies. That’s what’s really going on. The increasingly violent conflagrations we see cropping-up in Ukraine and Asia are not the result of “Russian aggression” or “evil Putin”. No. They are the actualization of a sinister geopolitical strategy to quash China’s meteoric rise and preserve America’s dominant role in the world order. Can there be any doubt about that?

No. None.

This is why we are experiencing the redivision of the world into warring blocs. This is why we are seeing the roll back of 30 years of Globalization and massive suppyline disruption. And this is why Europe has been thrust headlong into frigid darkness and forced deindustrialisation. All of these suicidal policies were concocted for one purpose and one purpose alone, to maintain America’s exalted spot in the global system. That is why all of humanity is presently embroiled in a Third World War; a war that is designed to prevent China from becoming the world’s biggest economy; a war that is designed to preserve US global primacy. Check out this excerpt from an article at the World Socialist Web Site:

An October 19 Financial Times article by Edward Luce, entitled “Containing China is Biden’s explicit goal,” sounded the following alarm: “Imagine that a superpower declared war on a great power and nobody noticed. Joe Biden this month launched a full-blown economic war on China—all but committing the US to stopping its rise—and for the most part, Americans did not react.

“To be sure, there is Russia’s war on Ukraine and inflation at home to preoccupy attention. But history is likely to record Biden’s move as the moment when US-China rivalry came out of the closet.”

Moreover, last week, a top Biden administration official indicated that the US was preparing new bans on China in key hi-tech areas. Speaking at the Center for a New American Security, Alan Estevez, the under-secretary of Commerce for Industry and Security, was asked if the US would ban China from accessing quantum information science, biotechnology, artificial intelligence software or advanced algorithms. Estevez admitted that this was already being actively discussed. “Will we end up doing something in those areas? If I was a betting person, I would put down money on that,” he said….

Luce concluded his Financial Times article cited above by declaring: “Will Biden’s gamble work? I’m not relishing the prospect of finding out. For better or worse, the world has just changed with a whimper not a bang. Let us hope it stays that way.”…(“Biden’s technology war against China”, World Socialist Web Site)

Once again, look at the chart. What does it tell you?

The first thing it tells you is that the hostilities we see in Ukraine (and eventually Taiwan), can be traced back to a fundamental shift in the global economy. China is growing stronger. It’s on a path to overtake the United States economy within the decade. And with growth, come certain benefits. As the world’s biggest economy, China will naturally become Asia’s regional hegemon. And, as Asia’s regional hegemon it will be able “to settle regional disputes in its own favor and to de-legitimize U.S. regional and global leadership.”

Can you see the problem here?

For nearly two decades, the US has oriented its foreign policy around a “rebalancing of forces” strategy called the “pivot to Asia”. In short, the US intends to be the dominant player in the world’s most populous and prosperous region, Asia. Can you see how China’s rise derails Washington’s plan for the future?

The United States is not going to let this happen without a fight. Washington is not going to let China muscle-it-out of the markets that it plans to dominate. That’s not going to happen. And if you think that’s going to happen, you’d better think again. The United States will go to war to avoid a scenario in which the US plays “second fiddle” to China. In fact, the foreign policy establishment has already decided that the US will engage China militarily for that very objective.

So, our thesis is simple; we think WW3 has already begun. That’s all we’re saying. The ructions we see in Ukraine are merely the first salvo in a Third World War that has already triggered an unprecedented energy crisis, massive worldwide food insecurity, a catastrophic break-down in global supply lines, widespread and out-of-control inflation, the steady reemergence of extreme nationalism, and the redivision of the world into warring blocs. What more proof do you need?

And it’s all economic. The origins of this conflict can all be traced back to the seismic changes in the global economy, the rise of China and the unavoidable decline of the United States. It is a case of one empire replacing the other. Naturally, a transition of this magnitude is going to generate tectonic changes in global distribution of power. And along with those changes will come more flashpoints, more devastation, and the looming prospect of nuclear war. And this is precisely how things are playing out.

So, how does the chart explain what is happening in Ukraine?

Washington’s proxy war in Ukraine is actually aimed at China not Russia. Russia is not a peer competitor and Russia does not have the economic wherewithal to displace the United States in the global order. NordStream, however, did pose a significant risk to the US by greatly strengthening Moscow’s economic relations with the EU and particularly with Europe’s industrial powerhouse, Germany. The Moscow-Berlin alliance—which was mutually beneficial and key to German prosperity—had to be sabotaged to prevent further economic integration that would have drawn the continents closer together into the world’s biggest free trade zone. Washington had to stop that in order to preserve its economic stranglehold on Europe and defend the dollar as the world’s reserve currency. Even so, no one expected the US to blow up the pipeline itself in—what appears to be—the greatest act of industrial terrorism in history. That was truly shocking.

In essence, Washington sees Russia as an obstacle to its “pivot” plan to encircle, isolate and weaken China. But Russia is not the greatest threat to US global primacy; not even close. That designation belongs to China.

The Third World War is being waged to contain China not Russia. What the war in Ukraine suggests is that—among foreign policy elites—there is general agreement that, The road to Beijing goes through Moscow. That appears to be the consensus view. In other words, US powerbrokers want to weaken Russia in order to spread US military bases across Asia. Ultimately, the military will be called upon to enforce Washington’s economic rule over its new Asian subjects. If that day ever comes.

We think it is extremely unlikely that Washington’s ambitious plan will succeed, but we have no doubt that it will be implemented all the same. Tens of millions of people are likely to die in a desperate attempt to turn-back the clock to the fleeting ‘unipolar moment’ and the equally short-lived American Century. It is a tragedy beyond comprehension.

Calm Before the Tempest?

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By Charles Hugh Smith

Source: Of Two Minds

Let’s start by stipulating the obvious: no one knows the future, and most of the guesses–oops, I mean forecasts–will be wrong. Arguing about the forecasts now won’t make any difference as to which ones are correct and which ones are wrong. Time alone will tell.

That said, here’s a scenario that fits the dynamics I see as most consequential: Core-Periphery and the demise of the waste is growth / financialization / globalization model as the reigning model of how the global economy should work.

Core-periphery dynamics are pretty simple: unraveling starts on the periphery and seeps toward the core. The core actually strengthens in the process as capital and talent seek havens where they’re treated well, and the core became the core by treating capital and talent well.

The periphery responds to the unraveling of financialization / globalization by tightening its grip on whatever capital and talent is still available, incentivizing the flight of capital and talent to the core.

A great many people think there are many core economies. In my analysis, there is only one, due to the qualifying requirements: 1) issues a reserve currency, i.e. not pegged to another currency 2) liquid global markets for securities, debt, commodities, etc., i.e. anyone anywhere can trade in size in the core markets 3) transparent market and governance mechanisms, i.e. no overnight devaluations, expropriations, capital restrictions, etc. 4) diverse economy not dependent on exports or imports for its well-being and 5) ease of flow: capital, talent, enterprises and employees all have essentially unlimited freedom of movement within the core.

We can argue about which nations qualify as core but it won’t change the outcome. Capital and talent will make their own decisions about risk, safety, exposure to devaluation and expropriation and where the odds of being treated fairly are highest. It’s a good exercise to put yourself in the shoes of a manager of a $10 billion fund and go through the decision tree of where to put this $10 billion to preserve its purchasing power first and foremost, and secondarily generate a return.

Would you really gamble $10 billion on a 15% return on the bonds of Timbukthree, whose currency has fallen 20% against the U.S. dollar this year? Or Timbukfour, which is dependent on exports of commodities in a shrinking global economy? Or Timbukfive, which is dependent on imports of commodities and exports of consumer goods in a shrinking global economy?? If you answer “yes,” you’re not actually playing like you are responsible for $10 billion.

As the periphery unravels financially, it also unravels politically and socially. Bordering states are at risk of destabilizing, and any entity with large exposure to the unraveling debt or markets starts unraveling, too. The destabilization spreads to second-tier nations whose exposure to the dynamics of unraveling are structural.

As all these dominoes fall, eventually those closest to the core also crumble, and then core itself is finally destabilized.

Humans have an interesting talent for adjusting to new circumstances, i.e. habituating to new conditions. Those households consuming 14,000 gallons of fresh water a month may well scream that they can’t possibly get by on 12,000 gallons, but then if circumstances change and all the water we have is what we can carry in buckets a kilometer over rough terrain, we find that we can live on the few gallons we can carry a kilometer.

The amount of waste in developed economies is beyond easy measure. It’s estimated 40% of all food in the U.S. is wasted. Energy, food and fresh water have been treated as if low cost and abundance were birthrights rather than brief explosions of excess. While we’re screaming about energy costs, empty buildings are brightly lit, water taps are left running and one individual per idling vehicle in a traffic jam frets about rising costs.

When the 1989 Loma Prieta earthquake closed the Bay Bridge across San Francisco Bay, the main artery between San Francisco and the East Bay, economic doom was predictably predicted. Yet people quickly managed via extra BART (subway) trains that rain beneath the Bay and carpools with four people per vehicle rather than one occupant.

Is it possible that all the predictable predictions of economic doom are somewhat exaggerated by the thrill of sensationalism and projections of past trends, as if people can’t possibly make consequential adjustments to their behaviors and consumption?

Systems have constraints, and so there are limits on what adjustments can be made without altering the structure, but in many cases, we’re far from reaching limits on basic conservation work-arounds.

Is it possible that things will prove less dire than currently expected? It seems little credence is being given to the potential to adjust to new conditions.

Is it beyond conception that the core actually strengthens for a length of time before the unraveling reaches it? In my crystal ball, it seems not just possible but likely. This will be the calm before The Tempest, when the unraveling reaches the core and structural changes are finally required.

Global Planned Financial Tsunami Has Just Begun

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By F. William Engdahl

Source: Global Research

Since the creation of the US Federal Reserve over a century ago, every major financial market collapse has been deliberately triggered for political motives by the central bank. The situation is no different today, as clearly the US Fed is acting with its interest rate weapon to crash what is the greatest speculative financial bubble in human history, a bubble it created. Global crash events always begin on the periphery, such as with the 1931 Austrian Creditanstalt or the Lehman Bros. failure in September 2008. The June 15 decision by the Fed to impose the largest single rate hike in almost 30 years as financial markets are already in a meltdown, now guarantees a global depression and worse.

The extent of the “cheap credit” bubble that the Fed, the ECB and Bank of Japan have engineered with buying up of bonds and maintaining unprecedented near-zero or even negative interest rates for now 14 years, is beyond imagination. Financial media cover it over with daily nonsense reporting , while the world economy is being readied, not for so-called “stagflation” or recession. What is coming now in the coming months, barring a dramatic policy reversal, is the worst economic depression in history to date. Thank you, globalization and Davos.

Globalization

The political pressures behind globalization and the creation of the World Trade Organization out of the Bretton Woods GATT trade rules with the 1994 Marrakesh Agreement, ensured that the advanced industrial manufacturing of the West, most especially the USA, could flee offshore, “outsource” to create production in extreme low wage countries. No country offered more benefit in the late 1990s than China. China joined WHO in 2001 and from then on the capital flows into China manufacture from the West have been staggering. So too has been the buildup of China dollar debt. Now that global world financial structure based on record debt is all beginning to come apart.

When Washington deliberately allowed the September 2008 Lehman Bros financial collapse, the Chinese leadership responded with panic and commissioned unprecedented credit to local governments to build infrastructure. Some of it was partly useful, such as a network of high-speed railways. Some of it was plainly wasteful, such as construction of empty “ghost cities.” For the rest of the world, the unprecedented China demand for construction steel, coal, oil, copper and such was welcome, as fears of a global depression receded. But the actions by the US Fed and ECB after 2008, and of their respective governments, did nothing to address the systemic financial abuse of the world’s major private banks on Wall Street and Europe , as well as Hong Kong.

The August 1971 Nixon decision to decouple the US dollar, the world reserve currency, from gold, opened the floodgates to global money flows. Ever more permissive laws favoring uncontrolled financial speculation in the US and abroad were imposed at every turn, from Clinton’s repeal of Glass-Steagall at the behest of Wall Street in November 1999. That allowed creation of mega-banks so large that the government declared them “too big to fail.” That was a hoax, but the population believed it and bailed them out with hundreds of billions in taxpayer money.

Since the crisis of 2008 the Fed and other major global central banks have created unprecedented credit, so-called “helicopter money,” to bailout the major financial institutions. The health of the real economy was not a goal. In the case of the Fed, Bank of Japan, ECB and Bank of England, a combined $25 trillion was injected into the banking system via “quantitative easing” purchase of bonds, as well as dodgy assets like mortgage-backed securities over the past 14 years.

Quantitative madness

Here is where it began to go really bad. The largest Wall Street banks such as JP MorganChase, Wells Fargo, Citigroup or in London HSBC or Barclays, lent billions to their major corporate clients. The borrowers in turn used the liquidity, not to invest in new manufacturing or mining technology, but rather to inflate the value of their company stocks, so-called stock buy-backs, termed “maximizing shareholder value.”

BlackRock, Fidelity, banks and other investors loved the free ride. From the onset of Fed easing in 2008 to July 2020, some $5 trillions had been invested in such stock buybacks, creating the greatest stock market rally in history. Everything became financialized in the process. Corporations paid out $3.8 trillion in dividends in the period from 2010 to 2019. Companies like Tesla which had never earned a profit, became more valuable than Ford and GM combined. Cryptocurrencies such as Bitcoin reached market cap valuation over $1 trillion by late 2021. With Fed money flowing freely, banks and investment funds invested in high-risk, high profit areas like junk bonds or emerging market debt in places like Turkey, Indonesia or, yes, China.

The post-2008 era of Quantitative Easing and zero Fed interest rates led to absurd US Government debt expansion. Since January 2020 the Fed, Bank of England, European Central Bank and Bank of Japan have injected a combined $9 trillion in near zero rate credit into the world banking system. Since a Fed policy change in September 2019, it enabled Washington to increase public debt by a staggering $10 trillion in less than 3 years. Then the Fed again covertly bailed out Wall Street by buying $120 billion per month of US Treasury bonds and Mortgage-Backed Securities creating a huge bond bubble.

A reckless Biden Administration began doling out trillions in so-called stimulus money to combat needless lockdowns of the economy. US Federal debt went from a manageable 35% of GDP in 1980 to more than 129% of GDP today. Only the Fed Quantitative Easing, buying of trillions of US government and mortgage debt and the near zero rates made that possible. Now the Fed has begun to unwind that and withdraw liquidity from the economy with QT or tightening, plus rate hikes. This is deliberate. It is not about a stumbling Fed mis-judging inflation.

Energy drives the collapse

Sadly, the Fed and other central bankers lie. Raising interest rates is not to cure inflation. It is to force a global reset in control over the world’s assets, it’s wealth, whether real estate, farmland, commodity production, industry, even water. The Fed knows very well that Inflation is only beginning to rip across the global economy. What is unique is that now Green Energy mandates across the industrial world are driving this inflation crisis for the first time, something deliberately ignored by Washington or Brussels or Berlin.

The global shortages of fertilizers, soaring prices of natural gas, and grain supply losses from global draught or exploding costs of fertilizers and fuel or the war in Ukraine, guarantee that, at latest this September-October harvest time, we will undergo a global additional food and energy price explosion. Those shortages all are a result of deliberate policies.

Moreover, far worse inflation is certain, due to the pathological insistence of the world’s leading industrial economies led by the Biden Administration’s anti-hydrocarbon agenda. That agenda is typified by the astonishing nonsense of the US Energy Secretary stating, “buy E-autos instead” as the answer to exploding gasoline prices.

Similarly, the European Union has decided to phase out Russian oil and gas with no viable substitute as its leading economy, Germany, moves to shut its last nuclear reactor and close more coal plants. Germany and other EU economies as a result will see power blackouts this winter and natural gas prices will continue to soar. In the second week of June in Germany gas prices rose another 60% alone. Both the Green-controlled German government and the Green Agenda “Fit for 55” by the EU Commission continue to push unreliable and costly wind and solar at the expense of far cheaper and reliable hydrocarbons, insuring an unprecedented energy-led inflation.

Fed has pulled the plug

With the 0.75% Fed rate hike, largest in almost 30 years, and promise of more to come, the US central bank has now guaranteed a collapse of not merely the US debt bubble, but also much of the post-2008 global debt of $303 trillion. Rising interest rates after almost 15 years mean collapsing bond values. Bonds, not stocks, are the heart of the global financial system.

US mortgage rates have now doubled in just 5 months to above 6%, and home sales were already plunging before the latest rate hike. US corporations took on record debt owing to the years of ultra-low rates. Some 70% of that debt is rated just above “junk” status. That corporate non-financial debt totaled $9 trillion in 2006. Today it exceeds $18 trillion. Now a large number of those marginal companies will not be able to rollover the old debt with new, and bankruptcies will follow in coming months. The cosmetics giant Revlon just declared bankruptcy.

The highly-speculative, unregulated Crypto market, led by Bitcoin, is collapsing as investors realize there is no bailout there. Last November the Crypto world had a $3 trillion valuation. Today it is less than half, and with more collapse underway. Even before the latest Fed rate hike the stock value of the US megabanks had lost some $300 billion. Now with stock market further panic selling guaranteed as a global economic collapse grows, those banks are pre-programmed for a new severe bank crisis over the coming months.

As US economist Doug Noland recently noted, “Today, there’s a massive “periphery” loaded with “subprime” junk bonds, leveraged loans, buy-now-pay-later, auto, credit card, housing, and solar securitizations, franchise loans, private Credit, crypto Credit, DeFi, and on and on. A massive infrastructure has evolved over this long cycle to spur consumption for tens of millions, while financing thousands of uneconomic enterprises. The “periphery” has become systemic like never before. And things have started to Break.”

The Federal Government will now find its interest cost of carrying a record $30 trillion in Federal debt far more costly. Unlike the 1930s Great Depression when Federal debt was near nothing, today the Government, especially since the Biden budget measures, is at the limits. The US is becoming a Third World economy. If the Fed no longer buys trillions of US debt, who will? China? Japan? Not likely.

Deleveraging the bubble

With the Fed now imposing a Quantitative Tightening, withdrawing tens of billions in bonds and other assets monthly, as well as raising key interest rates, financial markets have begun a deleveraging. It will likely be jerky, as key players like BlackRock and Fidelity seek to control the meltdown for their purposes. But the direction is clear.

By late last year investors had borrowed almost $1 trillion in margin debt to buy stocks. That was in a rising market. Now the opposite holds, and margin borrowers are forced to give more collateral or sell their stocks to avoid default. That feeds the coming meltdown. With collapse of both stocks and bonds in coming months, go the private retirement savings of tens of millions of Americans in programs like 401-k. Credit card auto loans and other consumer debt in the USA has ballooned in the past decade to a record $4.3 trillion at end of 2021. Now interest rates on that debt, especially credit card, will jump from an already high 16%. Defaults on those credit loans will skyrocket.

Outside the US what we will see now, as the Swiss National Bank, Bank of England and even ECB are forced to follow the Fed raising rates, is the global snowballing of defaults, bankruptcies, amid a soaring inflation which the central bank interest rates have no power to control. About 27% of global nonfinancial corporate debt is held by Chinese companies, estimated at $23 trillion. Another $32 trillion corporate debt is held by US and EU companies. Now China is in the midst of its worst economic crisis since 30 years and little sign of recovery. With the USA, China’s largest customer, going into an economic depression, China’s crisis can only worsen. That will not be good for the world economy.

Italy, with a national debt of $3.2 trillion, has a debt-to-GDP of 150%. Only ECB negative interest rates have kept that from exploding in a new banking crisis. Now that explosion is pre-programmed despite soothing words from Lagarde of the ECB. Japan, with a 260% debt level is the worst of all industrial nations, and is in a trap of zero rates with more than $7.5 trillion public debt. The yen is now falling seriously, and destabilizing all of Asia.

The heart of the world financial system, contrary to popular belief, is not stock markets. It is bond markets—government, corporate and agency bonds. This bond market has been losing value as inflation has soared and interest rates have risen since 2021 in the USA and EU. Globally this comprises some $250 trillion in asset value a sum that, with every fed interest rise , loses more value. The last time we had such a major reverse in bond values was forty years ago in the Paul Volcker era with 20% interest rates to “squeeze out inflation.”

As bond prices fall, the value of bank capital falls. The most exposed to such a loss of value are major French banks along with Deutsche Bank in the EU, along with the largest Japanese banks. US banks like JP MorganChase are believed to be only slightly less exposed to a major bond crash. Much of their risk is hidden in off-balance sheet derivatives and such. However, unlike in 2008, today central banks can’t rerun another decade of zero interest rates and QE. This time, as insiders like ex-Bank of England head Mark Carney noted three years ago, the crisis will be used to force the world to accept a new Central Bank Digital Currency, a world where all money will be centrally issued and controlled. This is also what Davos WEF people mean by their Great Reset. It will not be good. A Global Planned Financial Tsunami Has Just Begun.

The Real Threat to Democracy is Corrupting Wealth Inequality

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By Charles Hugh Smith

Source: Of Two Minds

Imagine a town of 1,000 adults and their dependents in which one person holds the vast majority of wealth and political influence. Would that qualify as a democracy? Now imagine that 100 of the 1,000 adults own 90% of all the wealth, collect 97% of all the income from capital and have virtually all the political power. How can a society in which 90% of the populace is decapitalized, disenfranchised and demoralized by political powerlessness be a democracy?

This is America: a kleptocratic autocracy that serves the few at the expense of the many, stripmining the bottom 90% under the guise of a fraudulent “democracy” in which only the few wield real power. Recall Smith’s Neofeudalism Principle #1: If the citizenry cannot replace a kleptocratic government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only.

That our elected government responds only to the super-wealthy and corporations has been well-established:Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens.

It’s also a fact that the top 10% get virtually all the gains from the nation’s capital, and this wealth is concentrated in the top 0.1%:Monopoly Versus Democracy: How to End a Gilded Age
Ten percent of Americans now control 97 percent of all capital income in the country. Nearly half of the new income generated since the global financial crisis of 2008 has gone to the wealthiest one percent of U.S. citizens. The richest three Americans collectively have more wealth than the poorest 160 million Americans.

Exactly how can a system of governance that is nothing but an invitation-only auction of political favors in which the top 0.1% own more than the bottom 80% be a functional democracy? The answer is it cannot. Politics and government have been reduced to protecting and enriching a neofeudal autocracy while claiming to serve the stripmined public.

This extreme concentration of wealth and power is not accidental; the government’s policies have generated this concentration of wealth which has hollowed out democracy. The super-wealthy didn’t siphon $50 trillion from those earning their living from labor on their own; government policies aided and abetted this vast transfer of wealth.

Trends in Income From 1975 to 2018: $50 trillion in earnings has been transferred to the Financial Aristocracy from the bottom 90% of American households over the past 45 years.

The catastrophic consequences of this systemic concentration of wealth and power are also well documented. For example, Human and nature dynamics (HANDY): Modeling inequality and use of resources in the collapse or sustainability of societies. Extreme inequality brings down societies, and America is now a society dominated by extreme inequality.

America is nothing but a vast moral cesspool that the public is told is a pristine pond of “democracy”. Self-enrichment is cloaked as “doing God’s work,” profiteering is sold as “value,” fraud is packaged as “finance” and rapacious monopolies are marketed as “enterprise.”

Institutions have become little more than rackets enriching insiders and the wealthiest few; they have lost moral legitimacy which is the fundamental foundation of democracy and a market-based economy.

As I explain in my new book Global Crisis, National Renewal: A (Revolutionary) Grand Strategy for the United States, moral legitimacy is the foundation of social cohesion. Once moral legitimacy has been lost, social cohesion unravels and the nation falls.

It wasn’t just bad luck that financialization and globalization hollowed out America’s economy and democracy and turned the bottom 90% into debt-serfs and tax donkeys; it was government policies implemented by elected officials and the appointed handmaidens of the super-wealthy. Virtually every major policy implemented by either party served the interests of the super-wealthy and corporations: tax cuts had trivial impacts on the bottom 90% while vastly increasing the wealth of the super-wealthy; the Supreme Court’s rulings in favor of corporate “personhood” and “free speech” (a.k.a. the best government we can buy), and the evisceration of the rule of law for corporate fraud, collusion and embezzlement (“too big to fail, too big to jail”).

The Federal Reserve’s free money for financiers distributes gains on the order of 20-to-1 in favor of the super-wealthy: $2 trillion in gains for the bottom 90%, $40 trillion for the top tier.

The list is long and painful proof that the elected government of the United States serves the interests of the top few–a reality masked by expert PR and partisanship.

Partisanship reflects a core structural dynamic: America is now a two-tier society and economy. If you’re an executive at a big Wall Street investment bank, you can rig markets and embezzle billions and you’ll never face any personal legal consequences such as being indicted, convicted and imprisoned. (Bernie Madoff’s conviction was a classic Soviet-style show trial to mask the fact that thousands of other white-collar criminals kept their ill-gotten gains and faced no consequences.)

But try being an employee at a local credit union and embezzle $5,000–a prison sentence is very predictable.

If a spoiled-rotten rich kid gets caught with drugs, Mommy and Daddy’s lawyer kicks into gear and gets a suspended sentence plea bargain. The kid from the bottom 90% gets a tenner in the Drug War Gulag. And so on.

America is also a regional two-tier economy/society. When a society kneels down and worships financialization and globalization, it gives all the political and financial power to the already-super-wealthy and corporations who get 97% of the gains from financialization and globalization.

Since the majority of already-super-wealthy and corporate managers reside in coastal metropolitan areas, the tide of new wealth flooding into the hands of the few boosts the economies of these select regions. The Brookings chart below may look like a chart of political polarization, and superficially that’s obvious: the 500 counties Biden won hold 70% of the nation’s GDP while the 2,500 counties Trump won hold 30% of the nation’s GDP.

The real polarization is economic-financial: there are two economies in America and there’s very little commonality in the two economies. One benefited greatly from financialization and globalization, and the other was hollowed out and brought to its knees by financialization and globalization.

Since income and political power flow to capital, the disparity / inequality far exceed the 70/30 split depicted in this chart. The chart showing the soaring wealth of billionaires is a more accurate reflection of inequality in America.

What’s missing from the 70/30 map is the staggering percentage of residents in the wealthiest 500 counties who are precariats living paycheck to paycheck, the ALICE Americans: Asset Limited, Income Constrained, Employed.

Is there any wonder that stripmined Americans who sense their powerlessness are attracted to virulent partisanship? The more extreme the pendulum swing of wealth-power inequality, the more extreme the political blowback.

America’s political class has no plan to reverse this destructive tide. Our leadership’s “plan” is something they know well first-hand: bribery and complicity: just send a monthly stipend of bread and circuses to all the disempowered, decapitalized households, urban and rural, so they can stay out of trouble and not bother the elites’ profitable pillaging of America and the planet.

The insurrection and coup happened long ago, when financialization and globalization hollowed out the real economy and disempowered the bottom 90%. When the whole rotten palace of corruption collapses in a putrid heap, look no further for the cause than the extremes of wealth-power inequality that rendered “democracy” a convenient facade for the stripmining of the bottom 90%.

Try to find a developing-world kleptocracy in which the top few collect more than 97% of the income from capital. There aren’t any that top the USA, the world’s most extreme kleptocracy. We’re Number 1.