By Prof. James Petras

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17994

Global Research, March 8, 2010

The Obama Administration has heightened tensions with China through a series of measures which can only be characterized as major provocations designed to undermine relations between the two countries.  These provocations include political support for separatist movements, such as the US-funded theocratic-monk led Tibetan secessionists and the Washington-based Uyghur secessionists, as well as through the $6.4 billion-dollar advanced arms sales to Taiwan, a virtual protectorate of the US Navy.  President Obama has publicly met with and openly backed these separatist and secessionists groups, flaunting Washingtons refusal to recognize Chinas existing borders.  This is part of the US strategy of encouraging the physical break-up of independent nations, which are viewed as obstacles to its program of global military empire building.

In addition to continuing and escalating the hostile policies of his predecessor, the Obama Administration has exploited several other issues in order to rally American public opinion and mobilize overseas allies behind its confrontational posture.  First, the Obama Administration claims that Chinas currency (the Renminbi) is artificially undervalued to give Chinese exports an unfair price advantage, thus undercutting US manufacturing exports and costing millions of American jobs. And secondly, the Administration claims that, after the US had opened its domestic manufacturing market to Chinese firms, the Chinese would not reciprocate and open their financial sectors to Wall Street investment banks.

In retaliation for growing Chinese exports, Washington has raised protective tariffs on steel pipes and automobile tires, and issued Congressional threats of further protectionist measures.

The US has insists that other nations support its aggressive policy toward Iran, including imposing trade, investment and financial sanctions, supporting the provocative US naval build-up in the Persian Gulf and backing Israels bellicose threats to bomb Teheran.  In contrast, China rejects economic sanctions, in favor of negotiations, while increasing its trade and investments in strategic sectors of the Iranian economy.  In the United Nations Security Council, the US has exerted diplomatic and mass media pressure to force China to vote for a Zionist-authored proposal of wide-reaching sanctions against Iran.  Obama refuses to accept Chinas rejection of the US military-driven policy of regime change and the Chinese pursuit of free trade with Iran.

The US Administrations selective definition of self-determination includes giving support to secessionist ethno-religious regional movements in China, while, at the same time, invading and occupying independent states, like Iraq and Afghanistan, ordering missile attacks on other states, like Pakistan and Somalia, establishing over 700 military bases world-wide with extra-territorial jurisdiction and engaging in assassinations of its opponents abroad via the CIA and Special Forces.

In contrast, China is not at war and opposes military invasions of sovereign states.  China does not have overseas military bases and is menaced by the US policy of encircling Chinas frontiers with American bases in client states in Northeast, Southeast and Central Asia.

While US military occupation forces brutally violate human rights of millions of citizens in occupied or targeted countries, and threaten the civil rights of critical Americans with arbitrary rulings, secret trials and the suspension of habeas corpus, the Obama regime excoriates China for its prosecution of opposition activists.

The Obama regime has latched onto a conflict between a private US corporation, Google, and Chinese hackers, which it alleges are state sponsored, turning the issue into a major struggle for internet freedom at the level of state to state relations.  Despite the expanding presence of scores of US-owned IT companies in China, the Obama regime has raised the issue of internet censorship to the level of a major ideological confrontation.

Climate change is another source of aggravation between the states.  At the Copenhagen summit in December 2009, Obama rejected any formal agreement on the reduction of carbon emissions while deflecting criticism and blame on to China and other developing countries, which had agreed to informal substantive targets on CO2 reductions.

Of all these points of contention, the most serious is Washingtons financial, diplomatic and political support for ethnic secessionist groups in China, threatening the security and territorial integrity of the Chinese state. This paramount issue has re-awakened painful memories of earlier imperialist carving up of China, its rich port cities and territories and has  forced the Chinese authorities to consider retaliatory measures.

Imperial Policies:  At What Price?

The Obama regimes political and diplomatic provocations against China in pursuit of its military-driven empire, come at a very high real and potential price.  We cannot assume that China will remain a stoic punching bag for the US, absorbing territorial threats, economic pressures and gratuitous diplomatic insults without taking counter-measures especially in the economic sphere.

Chinas Crucial Role as US Creditor

Obamas provocative militarist posturing toward China endangers major US private and public economic interests, including Chinas financing of the burgeoning US debt.

China is the worlds largest and fastest growing investor in US securities.  According to a detailed study by the Congressional Research Service (CRS) (July 30, 2009), China holds a  vast amount of long-term treasury debt, US agency debt, US corporate debt, US equities and short-term debt estimated at over $1.2 trillion.  Chinas investment in US Treasury securities were used to help finance the economic recovery (such as it is).  If the Obama regime persists in its provocations, China may decide to unload a large share of its US securities holdings, inducing other foreign investors to also sell off their holdings (CRS op cit).  This would lead to a sharp depreciation of the dollar and force Washington to raise interest rates, which could drive the US into a deeper recession/depression.  Economists, who claim Chinese economic interests would suffer from such a sell off, overlook the fact that for Beijing, national sovereignty is more important than short-term economic losses, especially in view of US support for secessionist movements.  Moreover, the Chinese have a high rates of savings, huge foreign reserves and increasingly diverse markets and suppliers of essential commodities.  China is in a better position to absorb the shock of a decline in US economic relations resulting from American bellicosity than the debt-ridden, negative-saving, military-driven North American economy.

Foreign Direct Investments

Almost all of the 400 biggest US multi-national corporations, listed in Forbes, have major profitable investments in China, which are growing.  The Obama regimes increasingly confrontational position toward China puts these investments at risk.

US foreign investments in China far exceed the latters investments in the US, according to a report published by the UCLA Asian American Studies Center.  In 2006, Chinas foreign direct investment (FDI) in the US was $600 million, while US investments in China were $22.2 billion.  The Report goes on to state the complaints by many American businesses and politicians that China can invest in US companies with relative ease while China still tightly restricts access to Chinese markets and companies appear not to be borne out by the numbers.  The US government has, in fact, blocked several large scale investments by Chinese companies, including the multi-billion dollar purchase of an oil company (UNOCAL), an appliance company (Maytag) and computer company (3Com Corp).  Chinese investments in the US are not always profitable.  The Sovereign Wealth Fund (a Chinese government-run investment fund) lost over 50% of its $8 billion-dollar investment in the finance groups, Blackstone Group and Morgan Stanley, in less than a year.

The Obama regimes complaints about Chinas restrictive treatment of US companies fly in the face of economic reality.  The attacks are part of a political strategy of anti-Chinese propaganda to heighten the American publics antagonism against China and rally domestic support for any military confrontation. Even as US companies in China reap profits a thousand times greater than Chinese investments in the US, and the leading investment houses swindle Chinese sovereign investors of billions, the White House claims foul play!.

Chinas much-maligned policy of restricting financial takeovers by Wall Street firms was one of the reasons the US speculative collapse did not impact its economy.  And still Washington continues to attack Beijing on the issue of opening Chinese financial markets to Wall Street.

US  China Trade

The Obama regime has repeatedly raised the issue of Chinas undervalued currency, conveniently ignoring the fact that Chinas imports from the US are growing faster than its exports to the US.  Between 2006  2008 US annual exports to China grew 32%, 18%, 9.5%, while its imports of Chinese goods grew 18.2%, 11.7%, 5.1%.  Moreover top US exports included electrical machinery and equipment, power generation equipment, oil seeds and oleaginous fruits, aero-space products, optical equipment and iron and steel  a broad spectrum of American industrial products with high value-added, well-paying skilled employment and lucrative profits.

Moreover, the fact that US exports to China include a diverse array of manufacturing sectors and are competitive at the current exchange rate, suggests that the vast US trade deficit with China has less to do with Chinas currency policy and more to do with US public and private investment policies and the relative strengths of the productive forces of each economy.  In large part, the majority of exports from China to the US are the result of US multi-national corporate decisions to produce and sub-contract in China.  In other words, the trade deficit with China is directly related to US corporate global investment strategy, which, in turn, flourished after the US government liberalized it rules and deregulated US corporate conduct.  Liberal investment policies under the US government, and not Chinese unfair trade rules, are a major cause of the trade deficit.

The angry posture adopted by the Obama regime toward Chinas undervalued currency is a political ploy to deflect attention from its disastrous liberal economic policies and its support for the investment conduct of large US corporations.

The US annual trade deficit with China has grown almost four fold between 1999  2008, from $68.7 billion to $266.3 billion.  The growth of the trade deficit coincides with the massive shift of US investment from manufacturing to speculative financial, real estate and insurance activities.  In other words, the US re-directed its investment strategies from producing useful, quality commodities for domestic consumption and export to importing manufactured goods from abroad at a greater profit for the corporations.  The weakening of US productive capacity – its productive forces – was reflected in its declining competitive position and its deepening trade imbalances.  Given the tight relations between the White House and Wall Street, policy makers sought to blame Chinese monetary officials for an undervalued currency, rather than confront the bubble economy stimulated by the policies of the Federal Reserve and generated by the Wall Street investment houses, whose executives go on to occupy key economic posts in the US government and who provide substantial funding for electoral campaigns.

In those economic sectors where US investment has led to increased efficiency, like agriculture, the US has competed successfully.  China is the leading buyer of American soybeans and cotton  accounting for over half world sales of the former and between almost a third of the latter according to the U.S. International Trade Commission and the US Department of Commerce.

Trade, Credit, Investments versus Militarism and Speculation

Chinas economic relations with the US have been extraordinarily lucrative and favorable to the big US capitalists and the American government.  By purchasing low-interest US Treasury notes, China has financed US trade and budget deficits, which are the result of exorbitant military spending, multiple imperial wars and occupations, and unproductive speculative investments.  The US multi-nationals have reaped high rates of profit from their investments in China, profits far in excess of what they would have gained in the US, and many times more than what a few Chinese firms earn in the more restrictive US climate.  Important US economic sectors in aerospace, agro business, port facilities, transport and giant commercial retailers and importers depend on and profit from trade with China.  US speculators have been able to rake in huge profits from the Chinese Sovereign Funds by pumping and dumping speculative US stocks.

As Chinas dynamic growth and rate of consumer demand continue to race ahead of the US, American exports to China outpace its imports from China.

The growing political antagonism and reckless diplomatic actions against China taken by the White House and Congress serve to undermine the basic economic interests of a broad swath of US capitalist enterprises as well as the credibility of the US economy.  What is even more striking is that many of the charges leveled against Beijing, including its unfair treatment of investors and closed economy  apply with greater force to Washington.

The Paradox of Economic Gain and Political Hostility

The key to understanding this paradox of economic gain and political hostility lies in the fundamentally different political and economic structures and global strategies of the two countries.  The US economy has been driven by its financial and speculative capitalist classes, which in turn wield decisive political influence over state economic policy.  At the same time, the commercial capitalist class is more attuned to importing manufactured goods, rather than in long-term investment in research, development in the American manufacturing sector.  Neither commercial nor financial capital has a stake in stimulating US exports and in investing in the productive forces of the country.  The design and implementation of US global strategy is controlled by the civilian militarists and imperial ideologues, (especially the Zionists) in government and their counterparts in sectors of the military high command.

In contrast to the Chinese market-driven quest for global power, US imperialism is built around military conquest and appropriation of economic wealth.  The disproportionate influence exercised by the civilian militarists in the US government has resulted in a series of foreign wars, which have severely strained the US economy and led to a military definition of US global objectives.  Faced with Chinas growing economic relations and influence in Asia, Africa, Latin America and the Middle East and Beijings opposition to US military-driven imperial policies against Iran, the Washington has escalated its political provocations, diplomatic pressures and interference in Chinese internal affairs.  As these external pressures increase, Chinese public opinion turns more nationalistic, which in turn serves as a basis for US mass media charges of xenophobia and chauvinism on the part of the Chinese.  The irrational nature of the recent anti-China propaganda promoted by the US mass media is most evident in the shrill warnings of a Chinese military threat to Asian security, especially when  the US continues to expand its chain of military bases encircling China from South Korea, Japan, Philippines, Australia, Afghanistan and Central Asia.  China has neither military bases abroad nor naval fleets off the coasts of any US or allied territory.

The greater the US reliance on military force, brutal economic sanctions and outright blockades to overthrow regimes and extend its network of client regimes, the greater its hostility toward China, which is expanding its economic ties with US adversaries, such as Iran, Venezuela, Sudan, Nicaragua, etc.

The US has severely weakened its productive forces in the process of funding a global military machine. China, on the other hand, has sought to become a world power on the bases of the long-term, large-scale development of its productive forces, even in the face of US opposition.  At each and every turn, Washington has passed up enormous opportunities for the US economy from Chinas dynamic growth, booming market and overseas economic expansion, in favor of petty provocations.

Conclusion

Ultimately what we have is a conflict between two diametrically opposing political economic systems.

On the one hand, a United States military driven empire, which focuses on conquering Iraq, Afghanistan and Iran, backs the ambitions of a militarist Israel, seeks marginal client states in Latin America and militarizes Pakistan, Colombia and Mexico.

On the other hand, China deepens its economic ties with dynamic Asian countries; increases its oil links with Saudi Arabia, Iran, the Gulf States, Venezuela, Russia and Angola; displaces the US as the leading trading partner of Brazil, Argentina, Peru and Chile; and increases its trade and investment links with Southern Africa in minerals and related infrastructure projects.  The contrast is striking.

Chinas global economic expansion is confronted by US military encirclement, diplomatic provocations and a massive anti-Chinese propaganda campaign designed to deflect US public attention from the extreme imbalances in its domestic economy.  Instead of looking inward to understand why the US is declining, the Obama regime encourages the public to blame Chinas supposedly unfair trade policies, its restrictive investment policies, its manipulated currency rate and its tough response to secessionist movements funded by the US.

In the end the US will not resolve its budget deficits and trade imbalances, not to mention its endless imperial wars, by pandering to self-described divine rulers, like the Dali Lama, and provoking a dynamic economic power such as China.  Nor can Washington escape its profound economic imbalances by catering to Wall Street speculators and ignoring the decline of Americas productive forces. Drones, military surges and surrogate puppet armies engaged in endless wars are no match for the surging investments, robust developing markets and joint ventures linking China with the dynamic emerging economies of the world.

By Diana Johnstone

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17937

Global Research, March 4, 2010

Counterpunch – 2010-03-01

For Europes poorest countries, European Union membership has long held out the promise of tranquil prosperity. The current Greek financial crisis ought to dispel some of their illusions.

There are two strikingly significant levels to the current crisis. While primarily economic, the European Economic Community also claims to be a community, based on solidarity — the sisterhood of nations and brotherhood of peoples.  However, the economic deficit is nothing compared to the human deficit it exposes.

To put it simply, the Greek crisis shows what happens when a weak member of this Union is in trouble.  It is the same as what happens on the world scale, where there is no such morally pretentious union perpetually congratulating itself on its devotion to human rights. The economically strong protect their own interests at the expense of the economically weak.

The crisis broke last autumn after George Papandreous PASOK party won elections, took office and discovered that the cupboard was bare. The Greek government had cheated to get into the EUs euro zone in 2001 by cooking the books to cover deficits that would have disqualified it from membership in the common currency. The European Treaties capped the acceptable budget deficit at 3 per cent and public debt at 60 per cent of GDP respectively.  In fact, this limit is being widely transgressed, quite openly by France. But major scandal arrived with revelations that Greeces budget deficit reached 12.7 per cent in 2009, with a gross debt forecast for 2010 amounting to 125 per cent of GDP.

Of course, European leaders got together to declare solidarity.  But their speeches were designed not so much to reassure the increasingly angry and desperate Greek people as to soothe the markets  the real hidden almighty gods of the European Union.  The markets, like the ancient gods, have a great old time tormenting mere mortals in trouble, so their response to the Greek problem was naturally to rush to profit from it.  For instance, when Greece is obliged to issue new bonds this year, the markets can blithely demand that Greece double its interest rates, on grounds of increased risk that Greece wont pay, thus making it that much harder for Greece to pay.  Such is the logic of the free market.

What the EU leaders meant by solidarity in their appeal to the gods was not that they were going to pour public money into Greece, as they poured it into their troubled banks, but that they intended to squeeze the money owed the banks out of the Greek people.

The squeezing is to take the forms made familiar over the past disastrous decades by the International Monetary Fund: the Greek state is enjoined to cut public expenses, which means firing public employees, cutting their overall earnings, delaying retirement, economizing on health care, raising taxes, and incidentally probably raising the jobless rate from 9.6 per cent to around 16 per cent, all with the glorious aim of bringing the deficit down to 8.7 per cent this year and thus appeasing the invisible gods of the market.

This just might propitiate both the gods and German leaders, who above all want to maintain the value of the euro.  The financial markets will no doubt grab their pound of flesh in the form of increased interest rates, while the Greeks are bled by IMF-style shock treatment.

And what about that great theater of human rights and universal brotherhood, the European Parliament?  In that  forum everyone gets to speak for a carefully clocked 1, 2, or 3 minutes, but when it comes to the most serious matter, the budget, the authoritative voices are all German.

Thus the chairman of the EPs special committee on the economic and financial crisis, Wolf Klinz, has called for sending a high representative of the EU to Greece, an economies commissar to make sure the Greeks carry out the austerity measures properly.  The Greek crisis can allow the EU to put into practice for the first time its Treaty instruments concerning supervision of budgetary and economic policy.  Interest rates may go up because of risk, but there is to be no risk.  The pound of flesh will be delivered.

There was no such supervision of the financial fiddling which caused this mess.  The EU statistics agency Eurostat recently discovered and revealed that in 2001, Goldman Sachs secretly (but legally, protest its executive officers) helped the right-wing Greek government meet EU membership criteria by using a complicated currency swap that masked the extent of public deficit and national debt.  [See Andrew Cockburn and Marshall Auerback, on this site.] Who understands how that worked? I think it is fair to guess that not even Angela Merkel, who is trained as a scientist, understands clearly what went on, much less the incompetent Greek politicians who accepted the Goldman Sachs trickery. It allowed them to create an illusion of success  for a while.  Success meant being a member of the club of the rich, and it can be argued that this notion of success has actually favored bad government at the national level.  Belonging to the EU gave a false sense of security that contributed to the irresponsibility of incompetent political leaders.

Having euros to buy imported goods (notably from Germany) pleased rich consumers, while the euro priced Greek goods out of their previous markets.  Now the debt trap is closing. The traditional way out for Greece would be to leave the euro and return to a devaluated drachma, in order to cut imports and favor exports.  This way, the burden of necessary sacrifices would not be borne solely by the working class.  But the embrace of EU solidarity is there to prevent this from happening. German authorities are preparing to lay down the law to the Greeks, after reducing the income of their own working class in order to benefit Germanys export-oriented economy.

Austerity measures are the opposite of what is needed in a time of looming depression.  Rather, what is needed are Keynesian measures to stimulate employment and strengthen the domestic market. But Germany is firmly attached to the export model, for itself and everyone else (globalization).  For a country like Greece, which cannot compete successfully within the EU, exports outside the EU are crippled by its use of a strong currency, the euro.  Bound to the euro, Greece can neither stimulate its domestic market nor export successfully.  But it is not going to be allowed to extricate itself from the debt trap and return to its traditional currency, the drachma. Poverty appears to be the only solution.

There is discontent within the German working class at their countrys policies aimed at shrinking wages and social benefits for the sake of selling abroad. In an ideal social Europe, workers in Germany would come to the aid of workers in Greece by demanding a radical revision of economic policy, away from catering to the international financial markets toward building a solid social democracy.  The reality is quite different.

The Greek financial crisis exposes the absence of any real community spirit in the EU. The solidarity declared by the countrys EU partners is a solidarity with their own investments.  There is no popular solidarity between peoples. The EU has established a surrogate ideology of internationalism: rejection of the nation-state as source of all evil, a pompous pride in Europe as the center of human rights, giver of moral lessons to the world, which happens to fit in perfectly with its subservience to United States imperial foreign policy in the Middle East and beyond.  The paradox is that European unification has coincided with decreasing curiosity in the larger EU states about what happens to their neighbors.

Despite a certain amount of specialized training needed to create a Eurocrat class, the general population of each EU member is only superficially acquainted with the others.  They see them as teams in soccer matches.  They go on holiday around the Mediterranean, but this mostly involves meeting fellow tourists, and study of foreign languages has declined, except for English (omnipresent, if mangled). Mass media news reports are turned inward, featuring missing children and pedophiles ahead of even major political events in other EU member states.

Northern European media portray Greece practically as a Third World country, peripheral and picturesque, where people speak an impossible language, dance in circles on islands, and live beyond their means in their carefree way. The crickets in the Aesop fable, scorned by the assiduous ants.

Media in Germany and the Netherlands imply that IMF-style shock treatment is almost too good for them. The widening polarization between rich and poor, between and within EU member states, is taken for granted.

The smaller indebted countries within the EU are amiably designated by the English-speaking financial priesthood as the PIGS  Portugal, Italy (perhaps Ireland), Greece, Spain  an appropriate designation for an animal farm where some are so much more equal than others.

Diana Johnstone is author of Fools Crusade: Yugoslavia, NATO and Western Delusions (Monthly Review Press). She can be reached at diana.josto@yahoo.fr

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17922

Global Research, March 4, 2010

Project Censored – 2010-03-03

New research in the journal American Behavioral Scientist (Sage publications, February 2010) addresses the concept of State Crimes Against Democracy (SCAD). Professor Lance deHaven-Smith from Florida State University writes that SCADs involve highlevel government officials, often in combination with private interests, that engage in covert activities for political advantages and power. Proven SCADs since World War II include McCarthyism (fabrication of evidence of a communist infiltration), Gulf of Tonkin Resolution (President Johnson and Robert McNamara falsely claimed North Vietnam attacked a US ship), burglary of the office of Daniel Ellsbergs psychiatrist in effort to discredit Ellsberg, the Watergate break-in, Iran-Contra, Floridas 2000 Election (felon disenfranchisement program), and fixed intelligence on WMDs to justify the Iraq War.1

Other suspected SCADs include the assassination of Lee Harvey Oswald, the shooting of George Wallace, the October Surprise near the end of the Carter presidency, military grade anthrax mailed to Senators Tom Daschle and Patrick Leahy, Martin Luther Kings assassination, and the collapse of World Trade Center Building 7 on September 11, 2001. The proven SCADs have a long trail of congressional hearings, public records, and academic research establishing the truth of the activities. The suspected SCADs listed above have substantial evidence of covert actions with countervailing deniability that tend to leave the facts in dispute.2

The term conspiracy theory is often used to denigrate and discredit inquiry into the veracity of suspected SCADs. Labeling SCAD research as conspiracy theory is an effective method of preventing ongoing investigations from being reported in the corporate media and keep them outside of broader public scrutiny. Psychologist Laurie Manwell, University of Guelph, addresses the psychological advantage that SCAD actors hold in the public sphere. Manwell, writing in American Behavioral Scientist (Sage 2010) states, research shows that people are far less willing to examine information that disputes, rather than confirms, their beliefs . . . pre-existing beliefs can interfere with SCADs inquiry, especially in regards to September 11, 2001.3

Professor Steven Hoffman, visiting scholar at the University of Buffalo, recently acknowledged this phenomenon in a study There Must Be a Reason: Osama, Saddam and Inferred Justification. Hoffman concluded, Our data shows substantial support for a cognitive theory known as motivated reasoning, which suggests that rather than search rationally for information that either confirms or disconfirms a particular belief, people actually seek out information that confirms what they already believe. In fact, for the most part people completely ignore contrary information.4

Sometimes even new academic research goes largely unreported when the work contradicts prevailing understandings of recent historical events. A specific case of unreported academic research is the peer reviewed journal article from Open Chemical Physics Journal (Volume 2, 2009), entitled Active Thermitic Material Discovered in Dust for the 9/11 World Trade Center Catastrophe. In the abstract the authors write, We have discovered distinctive red/gray chips in all the samples. These red/gray chips show marked similarities in all four samples. The properties of these chips were analyzed using optical microscopy, scanning electron microscopy (SEM), X-ray energy dispersive spectroscopy (XEDS), and differential scanning calorimetry (DSC). The red portion of these chips is found to be an unreacted thermitic material and highly energetic. Thermite is a pyrotechnic composition of a metal powder and a metal oxide which produces an aluminothermic reaction known as a thermite reaction and is used in controlled demolitions of buildings.5

National Medal of Science recipient (1999) Professor Lynn Margulis from the Department of Geosciences at the University of Massachusetts at Amherst is one of many academics who supports further open investigative research in the collapse of the World Trade Center towers. Margulis recently wrote in Rock Creek Free Press, all three buildings were destroyed by carefully planned, orchestrated and executed controlled demolition.6 Richard Gage, AIA, architect and founder of the non-profit Architects & Engineers for 9/11 Truth, Inc. (AE911Truth), announced a decisive milestone February 19, 2010 at a press conference in San Francisco, CA. More than 1,000 architects and engineers worldwide now support the call for a new investigation into the destruction of the Twin Towers and Building 7 at the World Trade Center complex on September 11, 2001.7

Credible scientific evidence brings into question the possibility that some aspects of the events of 9/11 involved State Crimes Against Democracy. Psychologically this is a very hard concept for Americans to even consider. However, ignoring the issue in the context of multiple proven SCADs since World War II seems far more dangerous for democracy than the consequences of future scientific inquiry and transparent, fact-based investigative reporting. Anything short of complete, open discourse based on all the evidence about these critical issues in our society relating to the possible continuation of SCADs is simply a matter of censorship.8

Peter Phillips is professor of sociology at Sonoma State University, President of Media Freedom Foundation/Project Censored, former director of Project Censored, and coeditor of Censored 2010.

Mickey Huff is associate professor of history at Diablo Valley College, Director of Project Censored/Media Freedom Foundation, and co-editor of Censored 2010.

Notes

1 Lance deHaven-Smith, Beyond Conspiracy Theory: Patterns of High Crime in American Government, American Behavioral Scientist, Vol. 53, No. 6, (February, 2010): pp. 795-825. For more studies on SCADs and related issues see all articles for American Behavioral Scientist, Sage publications, Vol. 53, No. 6, (February, 2010), online at http://abs.sagepub.com/content/vol53/issue6/.

For more background reading on this subject with specifics on the controversial cases mentioned in this paragraph, see the following scholarly works: Robert Abele, The Anatomy of a Deception: A Reconstruction and Analysis of the Decision to Invade Iraq (New York: University Press of America, 2010); Bob Coen and Eric Nadler, Dead Silence: Fear and Terror on the Anthrax Trail (Berkeley, CA: Counterpoint, 2009); Daniel Ellsberg, Secrets: A Memoir of Vietnam and the Pentagon Papers (New York: Viking Adult, 2002); Steve Freeman and Joel Bleifuss, Was the 2004 Election Stolen? Exit Polls, Election Fraud, and the Official Count (New York: Seven Stories Press, 2006); Robert Griffith, The Politics of Fear: Joseph R. McCarthy and the Senate. (Amherst, MA: University of Massachusetts Press, 1987); David Ray Griffin, The Mysterious Collapse of World Trade Center 7: Why the Final Official Report About 9/11 Is Unscientific and False (New York: Olive Branch press, 2008); Mark Crispin Miller, Loser Take All: Election Fraud and the Subversion of Democracy, 2000-2008 (New York: Ig Publishing, 2008); Kenneth O’Reilly, Hoover and the Un-Americans: The FBI, HUAC, and the Red Menace (Philadelphia: Temple University Press, 1983); Robert Parry, Trick or Treason: The October Surprise Mystery (New York: Sheridan Square Press, 1993); William Pepper, An Act of State: The Execution of Marin Luther King (Updated) (New York: Verso, 2008); Sheldon Rampton and John Stauber, Weapons of Mass Deception: The Uses of Propaganda in Bush’s War on Iraq (New York: Tarcher and Penguin, 2003); selected works of Peter Dale Scott, including Deep Politics and the Death of JFK (1993, 1996), Drugs Oil and War (Lanham, MD: Rowman and Littlefield, March 2003), The Road to 9/11 (Berkeley: University of California Press, 2007), and The War Conspiracy: JFK, 9/11, and the Deep Politics of War (Ipswich, MA: Mary Ferrell Foundation Press, 2008); Norman Solomon, War Made Easy: How Presidents and Pundits Keep Spinning us to Death (New Jersey: John Wiley and Sons, Inc., 2005); Lawrence Walsh, Firewall: The Iran-Contra Conspiracy and Cover-up (New York: W.W. Norton & Company, Inc., 1997); Gary Webb, Dark Alliance: The CIA, The Contras, and the Crack Cocaine Explosion (New York: Seven Stories Press, 2nd Edition, 2003);

2 Ibid.

3 American Behavioral Scientist, Sage publications, February, 2010, Vol. 53, No. 6, online at http://abs.sagepub.com/content/vol53/issue6/. Specifically, see Laurie A. Manwell, In Denial of Democracy: Social Psychological Implications for Public Discourse on State Crimes Against Democracy Post-9/11, American Behavioral Scientist, Vol. 53, No. 6, (February, 2010): pp. 848-884.

4 How We Support Our False Beliefs, Science Daily (Aug. 23, 2009) online at http://www.sciencedaily.com/releases/2009/08/090821135020.htm. For the full study see Steven Hoffman, Ph.D., et al, “There Must Be a Reason: Osama, Saddam and Inferred Justification,” Sociological Inquiry, Volume 79 Issue 2, (2009): pp. 142-162.

5 Niels H. Harrit, Jeffrey Farrer, Steven E. Jones, Kevin R. Ryan, Frank M. Legge, Daniel Farnsworth, Gregg Roberts, James R. Gourley, Bradley R. Larsen, “Active Thermitic Material Discovered in Dust from the 9/11 World Trade Center Catastrophe,” Open Chemical Physics Journal, Vol. 2 (April 3, 2009): 7-31, online at http://www.bentham.org/open/tocpj/openaccess2.htm.

6 Lynn Margulis, Two Hit, Three Down, the Biggest Lie, Rock Creek Press, February 2010, Vol. 4, No. 2, p. 6, and online at http://rockcreekfreepress.tumblr.com/post/353434420/two-hit-three-down-the-biggest-lie

7 Richard Gage, AIA, Architects and Engineers for 911 Truth, Press Conference, February 19th, 2010, SF, CA, online at http://www.ae911truth.org/info/160. See the Conference announcement video online at http://www.youtube.com/ae911truth#p/c/891B0945A34D98F7/0/R35O_QQP8Vw

8 For more on issues of media censorship see Peter Phillips and Mickey Huff, eds., Censored 2010 (New York: Seven Stories Press, 2009).

Project Censored: http://www.projectcensored.org/

Daily News at: http://mediafreedom.pnn.com/5174-independent-news-sources

Validated News & Research at: http://www.mediafreedominternational.org/

Daily Censored Blog at: http://dailycensored.com/

Blog: http://mythinfo.blogspot.com/

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17948

Global Research, March 4, 2010

Stop NATO

So far this year the United States has succeeded in inflaming tensions with China and indefinitely holding up a new strategic arms reduction treaty with Russia through its relentless pursuit of global interceptor missile deployments.

On January 29 the White House confirmed the completion of a nearly $6.5 billion weapons transfer to Taiwan which includes 200 advanced Patriot anti-ballistic missiles. Earlier in the same month it was reported that Washington is also to provide Taiwan with eight frigates which Taipei intends to equip with the Aegis Combat System that includes the capacity for ship-based Standard Missile-3 interceptors.

The Aegis sea-based component of the expanding U.S. interceptor missile system already includes Japan, South Korea and Australia, and with Taiwan added China would be justified in being apprehensive.

On February 28 the U.S. House and Senate foreign affairs committees permitted the sale to Taiwan of missiles, helicopters and ships valued at about $6.4 billion despite weeks of protests from China. The U.S. Defense Department wants to sell Taiwan the most advanced Patriot anti-missile system.The system, valued at $2.8 billion, would add to Taiwans network of 22 missile sites around the country. [1]

Chinese Foreign Ministry Spokesman Qin Gang recently stated The responsibility for the current difficulties in China-U.S. relations [belongs] completely to the U.S. side for failing to recognize and respect Chinas core interests. [2]

If the proposed placement of U.S. missile shield components in Poland, the Czech Republic, Japan, Australia, South Korea, Alaska and elsewhere were explained by alleged missile threats emanating from Iran and North Korea, the transfer of U.S. Patriot Advanced Capability-3 (PAC-3) missiles to Taiwan  and, as was revealed in January, 35 miles from Russian territory in Poland  represents the crossing of a new threshold. The Patriots in Taiwan and Poland and the land- and sea-based missiles that will follow them are intended not against putative rogue states but against two major nuclear powers, China and Russia.

The PAC-3, one of the most comprehensive upgrade programs ever undertaken on an American weapon system, [3] is in theory a strictly defensive anti-ballistic missile system, targeting cruise and tactical ballistic missiles. However, it has seven times the range of its PAC-2 predecessor and with plans for a yet further major upgrade, the Missile Segment Enhancement, its operational capability will be doubled again. With a future range of some 300 kilometers, the PAC-3 would be able to intercept and destroy missiles over Chinese and Russian territory.

The English-language government newspaper China Daily published an article on February 22 called China circled by chain of US anti-missile systems, which observed that Quite a few military experts have noted that Washingtons latest proposed weapon deal with Taiwan is the key part of a US strategic encirclement of China in the East Asian region, and that the missiles could soon have a footprint that extends from Japan to the Republic of Korea and Taiwan. [4]

The article cites a Chinese air force colonel and military strategist as contending that China is in a crescent-shaped ring of encirclement. The ring begins in Japan, stretches through nations in the South China Sea to India, and ends in Afghanistan. Washingtons deployment of anti-missile systems around Chinas periphery forms a crescent-shaped encirclement.

Regular Pentagon military exercises in Mongolia, the Philippines, South Korea, Thailand and Cambodia as well as solidification of military ties with the nations of the Indian subcontinent  Pakistan, India and Bangladesh  are further cause for concern in Beijing.

The China Daily feature also quoted an expert in military affairs at the Institute of Political Science and Law as saying The US anti-missile system in Chinas neighborhood is a replica of its [the U.S.'s] strategy in Eastern Europe against Russia. The Obama administration began to plan for such a system around China after its project in Eastern Europe got suspended.

In fact the current U.S. administration has by no means abandoned plans to surround Russia as well as China with a ring of interceptor missile installations and naval deployments.

Last months revelations that Washington is going to station land-based interceptors in Bulgaria and Romania were followed by a report that in addition to the Patriot missile batteries that will be set up in eastern Poland next month The US is still looking to build missile silos in northern Poland and, even more alarming, The US is also interested in building longer-range missile silos near the Poland-Kaliningrad border. These would be capable of shooting down missiles from as far as 5,500 kilometers away. [5]

The distance between the capitals of Poland and Iran is less than 4,000 kilometers, so American missiles with a range of 5,500 kilometers are designed for other purposes. They could take in a broad stretch of Russia.

The above-cited Chinese feature noted in addition that the ring encircling China can also be expanded at any time in other directions.Washington is hoping to sell India and other Southeast Asian countries the Patriot Advanced Capability (PAC)-3 missile defense system.

The U.S. has had Patriot interceptor missiles deployed in Japan, South Korea and in Taiwan even before the planned delivery of 200 more to the third state.

Analysts say that China is closely monitoring US-India missile defense cooperation since any integration of India into the US global missile defense system would profoundly affect Chinas security. [6]

On February 24 Russian Lieutenant General Yevgeny Buzhinsky was paraphrased by one of his nations main news agencies as stating China could strengthen its nuclear capability in response to U.S. global missile defense plans.

Indicative of what reaction U.S. missile shield deployments in Chinas neighborhood could provoke, he said: At present, China has a very limited nuclear potential, but my recent contacts with Chinese military representatives indicate that if the United States deploys a global missile defense system, in particular in the Far East, China will build up its offensive capability. [7]

In response to U.S. insistence on supplying Taiwan with hundreds of Patriot missiles, Blackhawk helicopters and Harpoon missiles, on February 23 the Pentagon announced that China had delivered on its pledge to postpone military contacts with Washington by canceling scheduled exchanges, including a visit by Adm. Robert F. Willard, commander of U.S. Pacific Command, and visits to the U.S. by Chinas chief of the general staff, Chen Bingde, and a Chinese regional commander. [8]

A Russian commentary on March 2 placed the developments in stark perspective. The differences between the USA and China have gone so far that some time ago Beijing announced that all contacts with Washington in this field would be stopped.The visit to China by Pentagon Chief Robert Gates, which was set for the first half of this year, is also put into question. Besides, bilateral consultations on strategic security were also delayed on Beijings initiative. [9]

Another analysis from the same country added a historical dimension to the burgeoning crisis in U.S.-China relations.

This winter has been a cold one for China-US relations. So many serious disagreements between the two countries have not surfaced simultaneously for decades.In the past China and the US avoided taking harsh measures against each other serially, but evidently things have changed beyond recognition over the past several months. [10]

As mentioned above, the U.S. is implementing plans to replicate the interceptor encirclement of Russia in regards to China. Chinas sense of alarm and its governments response, then, can be expected to parallel those of Russia.

In late February Polish President Lech Kaczynski ratified a Status of Forces Agreement for American troops to be based at the Patriot missile battery near Russias Kaliningrad district.

All American and NATO claims to the contrary, Polands former Defense Minister Radoslaw Sikorski and the Polish president himself earlier admitted that they are not concerned about threats from Iran, but they are interested in establishing an American umbrella above Poland, thus trying to show that they see Russia as an aggressor and a threat to Poland.

According to the agreement, about 100 American soldiers will service up to eight US Patriot missile launchers [11] in an installation that will be equipped with elements allowing it to be integrated with the Polish defense system. [12]

Early last month General Nikolai Makarov, chief of Russias General Staff, warned that American interceptor missile plans jeopardize his nations national security and have sabotaged the finalization of a successor to the Strategic Arms Reduction Treaty (START), which has been in limbo since December 5.

Makarov said of the U.S. project, We view it very negatively, because it could weaken our missile forces. [13]

Echoing his fears over the fate of START talks, on February 19 Russian Deputy Foreign Minister Sergei Ryabkov said that Washingtons missile project in the most immediate sense is negatively influencing negotiations on a replacement to a Strategic Arms Reduction Treaty. [14]

Five days later Konstantin Kosachev, head of the State Duma committee for international relations, said If the connection between the strategic arms reduction treaty and missile defense is not exhaustively fixed by the sides in preparing the treaty this would automatically create obstacles for subsequent ratification of the document in the State Duma and create additional difficulties for further advance[s] in cutting strategic offensive weapons. [15]

The provocative decisions by the U.S. on missile deployments in Poland, Romania and Bulgaria since the expiration of the START last December lead to no other conclusion than the White House and the Pentagon intend the indefinite postponement if not the aborting of any comprehensive agreement to limit and reduce nuclear arms.

Russias permanent representative to NATO, Dmitry Rogozin, has recently voiced the concern that the U.S. still plans to base anti-ballistic missile facilities in Poland and the Czech Republic [16] in spite of statements by President Barack Obama and Secretary of Defense Robert Gates last September 17 that previous plans for both countries are being replaced by stronger, smarter, and swifter deployments.

The U.S. has not substituted the missile encirclement of Russia with that of China. It is conducting both simultaneously.

As it is doing so, the Pentagon announced on February 12 that A U.S. high-powered airborne laser weapon shot down a ballistic missile in the first successful test of a futuristic directed energy weapon, the U.S. Missile Defense Agency said. [17]

A Reuters report of the test launched from a base in California over the Pacific Ocean, one which has been touted as finally realizing the Ronald Reagan administrations plans for the Strategic Defense Initiative, popularly known as Star Wars, described its purpose: The airborne laser weapon is aimed atproviding the U.S. military with the ability to engage all classes of ballistic missiles at the speed of light while they are in the boost phase of flight. [18]

One of weapons manufacturers, the Boeing Company, issued a press release for the occasion which said in part: This experiment marks the first time a laser weapon has engaged and destroyed an in-flight ballistic missile, and the first time that any system has accomplished it in the missiles boost phase of flight.The laser is the most powerful ever installed on an aircraft. [19]

Northrop Grumman, another partner in the project (Lockheed Martin being the third), added: While ballistic missiles like the one ALTB [Airborne Laser Testbed] destroyed move at speeds of about 4,000 miles [6,500 km] per hour, they are no match for a superheated, high-energy laser beam racing towards it at 670 million mph [one billion kph]. [20]

The Pentagons Missile Defense Agency was no less enthusiastic about the results, stating The revolutionary use of directed energy is very attractive for missile defence, with the potential to attack multiple targets at the speed of light, at a range of hundreds of kilometres. [21]

The airborne laser weapon is mounted on a modified Boeing 747 commercial airliner. Its potential range is global.

Ten days later it was reported by the U.S. Army that the High Energy Laser Systems Test Facility at the White Sands Missile Range in New Mexico will receive a new laser weapon and The Army may soon blast missiles out of the sky with a laser beam. The weapon contains 100-kilowatt lasers that can rapidly heat a target, causing catastrophic events such as warhead explosions or airframe failures.

Pentagon officials said it has successfully worked in the laboratory and on the battlefield and now they want to begin shooting down missiles with it. [22]

Airborne laser anti-missile weapons will join the full spectrum of land, sea, air and space interceptor missile components to envelope the world with a system to neutralize other nations deterrence capacities and prepare the way for conventional and nuclear first strikes.

Notes

1) Bloomberg News, March 1, 2010
2) Bloomberg News, March 2, 2010
3) Wikipedia
4) China Daily, February 22, 2010
5) Warsaw Business Journal, March 2, 2010
6) China Daily, February 22, 2010
7) Russian Information Agency Novosti, February 24, 2010
Stars and Stripes, February 25, 2010
9) Voice of Russia, March 2, 2010
10) Roman Tomberg, Collapse of the G-2 Myth, or Stalemate in China-US Relations Strategic Culture Foundation, March 2, 2010
11) Russia Today, February 27, 2010
12) Polish Radio, February 28, 2010
13) Associated Press, February 9, 2010
14) Associated Press, February 19, 2010
15) Russian Information Agency Novosti, February 24, 2010
16) Voice of Russia, February 23, 2010
17) Reuters, February 12, 2010
18) Ibid
19) Defense News, February 12, 2010
20) Associated Press, February 13, 2010
21) The Guardian, February 12, 2010
22) MyStateline.com, February 22, 2010

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17881

Global Research, March 2, 2010

Web of Debt – 2010-02-28

In addition to mandatory private health insurance premiums, we may soon be hit with a mandatory savings tax and other belt-tightening measures urged by the Presidents new budget task force.  These radical austerity measures are not only unnecessary, however, but will actually make matters worse.  The push for fiscal responsibility is based on bad economics.

When billionaires pledge a billion dollars to educate people to the evils of something, it is always good to peer closely at what they are up to.  Hedge fund magnate Peter G. Peterson was formerly Chairman of the Council on Foreign Relations and head of the New York Federal Reserve.  He is now senior chairman of Blackstone Group, which is in charge of dispersing government funds in the controversial AIG bailout, widely criticized as a government giveaway to banks.  Peterson is also founder of the Peter Peterson Foundation, which has adopted the cause of imposing fiscal responsibility on Congress.  He hired David M. Walker, former head of the Government Accounting Office, to spearhead a massive campaign to reduce the runaway federal debt, which the Peterson/Walker team blames on reckless government and consumer spending.  The Foundation funded the movie I.O.U.S.A. to amass popular support for their cause, which largely revolves around dismantling Social Security and Medicare benefits as a way to cut costs and return to fiscal responsibility.

The Peterson-Pew Commission on Budget Reform has pushed heavily for action to stem the federal debt.  Bills for a budget task force were sponsored in both houses of Congress.  The Senate bill was narrowly defeated, and the House bill was tabled; but that was not the end of it.  In Obamas State of the Union speech on January 27, he said he would be creating a presidential budget task force by executive order to address the federal governments deficit and debt crisis, and that the task force would be modeled on the bills Congress had failed to pass.  If Congress would not impose fiscal responsibility on the nation, the President would.  It keeps me awake at night, looking at all that red ink, he said.  The Executive Order was signed on February 17.

What the President seems to have missed is that all of our money except coins now comes into the world as red ink, or debt.  It is all created on the books of private banks and lent into the economy.  If there is no debt, there is no money; and private debt has collapsed.  This year to date, U.S. lending has been contracting at the fastest rate in recorded history.  A credit freeze has struck globally; and when credit shrinks, the money supply shrinks with it. That means there is insufficient money to buy goods, so workers get laid off and factories get shut down, perpetuating a vicious spiral of economic collapse and depression. To reverse that cycle, credit needs to be restored; and when the banks cant do it, the government needs to step in and start monetizing debt itself, or turning debt into dollars.

Although lending remains far below earlier levels, banks say they are making as many loans as they are allowed to make under existing banking rules.  The real bottleneck is with the shadow lenders those investors who, until late 2007, bought massive amounts of bank loans bundled up as securities, taking those loans off the banks books, making room for yet more loans to be originated out of the banks capital and deposit bases. Because of the surging defaults on subprime mortgages, investors have now shied away from buying the loans, forcing banks and Wall Street firms to hold them on their books and take the losses.  In the boom years, the shadow lending market was estimated at $10 trillion.  That market has now collapsed, leaving a massive crater in the money supply.  That hole needs to be filled, and only the government is in a position to do it.  Paying down the federal debt when money is already scarce just makes matters worse.  When the deficit has been reduced historically, the money supply has been reduced along with it, throwing the economy into recession.

Another Look at the Budget Reform Agenda

That raises the question, are the advocates of fiscal responsibility merely misguided?  Or are they up to something more devious?  The Presidents Executive Order is vague about the sorts of budget decisions being entertained, but we can get a sense of what is on the table by looking at the earlier agenda of Petersons Commission on Budget Reform.  The Peterson/Walker plan would have slashed social security entitlements, at a time when Wall Street has destroyed the home equity and private retirement accounts of potential retirees.  Worse, it would have increased the social security tax, disguised as a mandatory savings tax.  This added tax would be automatically withdrawn from your paycheck and deposited to a Guaranteed Retirement Account managed by the Social Security Administration.  Since the savings would be mandatory, you could not withdraw your money without stiff penalties; and rather than enjoying an earlier retirement paid out of your increased savings, a later retirement date was being called for.  In the meantime, your mandatory savings would just be fattening the investment pool of the Wall Street bankers managing the funds.

And that may be what really underlies the big push to educate the public to the dangers of the federal debt.  Political analyst Jim Capo discusses a slide show presentation given by David M. Walker after the I.O.U.S.A. premier, in which a mandatory savings plan was proposed that would be modeled on the Federal Thrift Savings Plan (FSP).  Capo comments:

The FSP, available for federal employees like congressional staff workers, has over $200 billion of assets (on paper anyway). About half these assets are in special non-negotiable US Treasury notes issued especially for the FSP scheme. The other half are invested in stocks, bonds and other securities. . . . The nearly $100 billion in [this] half of the plan is managed by Blackrock Financial. And, yes, shock, Blackrock Financial is a creation of Mr. Peterson’s Blackstone Group. In fact, the FSP and Blackstone were birthed almost as a matched set. It’s tough to fail when you form an investment management company at the same time you can gain the contract that directs a percentage of the Federal government payroll into your hands.

What Fiscal Responsibility Really Means

All of this puts fiscal responsibility in a different light.  Rather than saving the future for our grandchildren, as the President himself seems to think it means, it appears to be a code word for delivering public monies into private hands and raising taxes on the already-squeezed middle class.  In the parlance of the International Monetary Fund (IMF), these are called austerity measures, and they are the sorts of things that people are taking to the streets in Greece, Iceland and Latvia to protest.  Americans are not taking to the streets only because nobody has told us that is what is being planned.

We have been deluded into thinking that fiscal responsibility (read austerity) is something for our benefit, something we actually need in order to save the country from bankruptcy.  In the massive campaign to educate us to the perils of the federal debt, we have been repeatedly warned that the debt is disastrously large; that when foreign lenders decide to pull the plug on it, the U.S. will have to declare bankruptcy; and that all this is the fault of the citizenry for borrowing and spending too much.  We are admonished to tighten our belts and save more; and since we cant seem to impose that discipline on ourselves, the government will have to do it for us with a mandatory savings plan.  The American people, who are already suffering massive unemployment and cutbacks in government services, will have to sacrifice more and pay the piper more, just as in those debt-strapped countries forced into austerity measures by the IMF.

Fortunately for us, however, there is a major difference between our debt and the debts of Greece, Latvia and Iceland.  Our debt is owed in our own currency  U.S. dollars.  Our government has the power to fix its solvency problems itself, by simply issuing the money it needs to pay off or refinance its debt.  That time-tested solution goes back to the colonial scrip of the American colonists and the Greenbacks issued by Abraham Lincoln to avoid paying 24-36% interest rates.

Economic Fearmongering

What invariably kills any discussion of this sensible solution is another myth long perpetrated by the financial elite — that allowing the government to increase the money supply would lead to hyperinflation.  Rather than exercising its sovereign right to create the liquidity the nation needs, the government is told that it must borrow.  Borrow from whom?  From the bankers, of course.   And where do bankers get the money they lend?  They create it on their books, just as the government would have done.  The difference is that when bankers create it, it comes with a hefty fee attached in the form of interest.

Meanwhile, the Federal Reserve has been trying to increase the money supply; and rather than producing hyperinflation, we continue to suffer from deflation.  Frantically pushing money at the banks has not gotten money into the real economy.  Rather than lending it to businesses and individuals, the larger banks have been speculating with it or buying up smaller banks, land, farms, and productive capacity, while the credit freeze continues on Main Street.  Only the government can reverse this vicious syndrome, by spending money directly on projects that will create jobs, provide services, and stimulate productivity.  Increasing the money supply is not inflationary if the money is used to increase goods and services.  Inflation results when demand (money) exceeds supply (goods and services).  When supply and demand increase together, prices remain stable.

The notion that the federal debt is too large to be repaid and that we are imposing that monster burden on our grandchildren is another red herring.  The federal debt has not been paid off since the days of Andrew Jackson, and it does not need to be paid off.  It is just rolled over from year to year, providing the full faith and credit that alone backs the money supply of the nation.  The only real danger posed by a growing federal debt is an exponentially growing interest burden; but so far, that danger has not materialized either.  Interest on the federal debt has actually gone down since 2006 — from $406 billion to $383 billion — because interest rates have been lowered by the Fed to very low levels.

They cant be lowered much further, however, so the interest burden will increase if the federal debt continues to grow.  But there is a solution to that too.  The government can just mandate that the Federal Reserve buy the governments debt, and that the Fed not sell the bonds to private lenders.  The Federal Reserve states on its website that it rebates its profits to the government after deducting its costs, making the money nearly interest-free.

All the fear-mongering about the economy collapsing when the Chinese and other investors stop buying our debt is yet another red herring.  The Fed can buy the debt itself  as it has been stealthily doing.  That is actually a better alternative than selling the debt to foreigners, since it means we really will owe the debt only to ourselves, as Roosevelt was assured by his advisors when he agreed to the deficit approach in the 1930s; and this debt-turned-into-dollars will be nearly interest-free.

Better yet would be to either nationalize or abolish the Fed and fund the government directly with Greenbacks as President Lincoln did.  What the Fed does the Treasury Department can do, for the cost of administration.  There would be no shareholders or bondholders to siphon earnings, which could be recycled into public accounts to fund national, state and local budgets at zero or near-zero interest rates.  Eliminating debt service payments would allow state and federal income taxes to be slashed; and the public managers of this money, rather than hiding behind a veil of secrecy, would be opening their books for all to see.

A final red herring is the threatened bankruptcy of Social Security.  Social Security cannot actually go bankrupt, because it is a pay-as-you-go system.  Todays social security taxes pay todays recipients; and if necessary, the tax can be raised. As Washington economist Dean Baker wrote when President Bush unleashed the campaign to privatize Social Security in 2005:

The most recent projections show that the program, with no changes whatsoever, can pay all benefits through the year 2042. Even after 2042, Social Security would always be able to pay a higher benefit (adjusted for inflation) than what current retirees receive, although the payment would only be about 73 percent of scheduled benefits.

Today incomes over $97,000 escape the tax, disproportionately imposing it on lower income brackets.  Projections over the next 75 years show that just removing that cap could eliminate the forecasted deficit.  When the Democratic presidential candidates were debating in the fall of 2007, Barack Obama and Joe Biden were the only candidates willing to seriously consider this reasonable alternative.  President Obama just needs to follow through with the solutions he espoused when campaigning.

The Mass Education Campaign We Really Need

What is really going on behind the scenes may have been revealed by Prof. Carroll Quigley, Bill Clintons mentor at Georgetown University.  An insider groomed by the international bankers, Dr. Quigley wrote in Tragedy and Hope in 1966:

[T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences.

If that is indeed the plan, it is virtually complete.  Unless we wake up to what is going on and take action, the powers of financial capitalism will have their way.  Rather than taking to the streets, we need to take to the courts, bring voter initiatives, and wake up our legislators to the urgent need to take the power to create money back from the private banking elite that has hijacked it from the American people.  And that includes waking up the President, who has been losing sleep over the wrong threat.

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and the money trust. Her eleven books include Forbidden Medicine, Natures Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are webofdebt.com, ellenbrown.com, and public-banking.com.

By Prof. Marc W. Herold

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17868

Global Research, March 1, 2010

Abstract.

Future U.S wars in the Third World will involve massive use of drones to police the  territory, employ local satrap[1][1] forces (like those of Karzais Afghan Army) and once the territory has been pacified sufficiently, the deployment of Government Ready-to-Rule (GRR) kits. The drones provide the critical and the weak link: critical insofar as they represent the ultimate American-style war where only the Others (opponents and civilians) die but weak insofar as this type of warfare only works against an opponent without any anti-drone/aircraft capability. In other words, this type of technological warfare can only be carried out upon weak opponents lacking independent industrial capacities (not against China, Russia, and India). This approach represents the culmination of disconnecting the delivery of deadly force  the rain of Hellfire missiles – upon the Others and incurring no human (physical or psychological  PTSD) costs. Or put in other terms, it represents the quintessential American way of solving problems with technological short-cuts, a military effort begun in 1942 with the Allied fire-bombing of German cities.[1][2] The current American war in Afghanistan is a harbinger of what is to come, Americas electronic, troop-less war.

Prophetically the first victims in 2010 of Obama in his Afghan war were a teacher in a government school, Sadiq Noor, and his nine-year old son, Wajid as well as three other persons.  Both were killed on Sunday night, January 3, 2010 in a U.S. drone strike involving two missiles fired into the home of Sadiq Noor in the village of Musaki, North Waziristan in Pakistan.[1][3] During January 2010, a record number of twelve deadly missile strikes were carried out on Pakistans tribal areas. Three Al-Qaeda leaders were killed and 123 innocent civilians.[1][4] During 2009, 44 U.S. drone strikes in Pakistan killed 708 people but only five Al Qaeda or Taliban; that is for each enemy fighter 140 civilian Pakistanis had to die.[1][5]

Those who pull the gray trigger to fire are located in Nevada, Kandahar, or Pakistan.[1][6] As Philip Alston points out, Young military personnel raised on a diet of video games now kill real people remotely using joysticks. Far removed from the human consequences of their actions, how will this generation of fighters value the right to life?[1][7] In early 2010, the U.S. Air Force had more drone operators in training than fighter and bomber pilots.[1][8]

Occupied Afghanistan. A U.S. Marine walks past Afghan youths near Khan Nashin,
Helmand, on December 4, 2009 (photo by Kevin Frayer, AP at
http://www.navytimes.com/xml/news/2009/12/ap_afghan_offensive_120509/120509_marines_afghanistan3_800.JPG, last accessed on February 25, 2010)

The Long Bloody History of Americas Resort to Technology in War: Six Episodes

The electronic battlefield represents the end stop in more than a half century (1942-2010) of the United States resorting to technology in order to save its troops yet indiscriminately inflicting horrendous casualties upon an opponents military and civilians.  

The first obvious use of technology which inflicted massive and indiscriminate civilian deaths was the firebombing of German cities during World War II.[1][9] The use of incendiary bombs against German cities initiated in March 1942 was adopted as a strategy because Allied bombing of German military targets was generally unsuccessful and very costly in terms of airmen lost.[1][10] The horrific tale is recounted in the classic account by Jorg Friedrich, Der Brand.[1][11] For example, the massive firebombing by U.S. and British air forces of Dresden on the night of February 13/14, 1945 illustrates the effects. At least 55,000 -250,000 persons perished within hours.

Dresden on the Morning After
Source: http://www.cityofsound.com/.m/photos/uncategorized/2007/10/29/dresden_aftermath.jpg (accessed February 21, 2010)

The British bomber Command attacked at night and U.S 8th Air Force Boeing B-17 Flying Fortresses followed up with three massive strikes the next day. A city known as Florence on the Elbe was reduced to rubble in hours. Eighty-five per cent of its buildings were destroyed.[1][12]

The second episode involves the use of atomic bombs on Japan in early 1945 as a means of pre-empting a U.S. invasion of the Japanese heartland which no doubt would have involved numerous U.S. casualties. Between February and August 1945, Jorg Friedrich reports in the cities of Dresden, Pforzheim, Wurzburg, Halberstadt, Kobe, Osaka, Nagoya, Yokohama, Tokyo, etc. a total of 330,000 people died in conventional aerial incendiary bomb attacks, an additional 300,000 perished in the two U.S. nuclear attacks upon Japanese cities carried out by Boeing B-29 Stratofortresses.[1][13] The total estimated death toll: in Hiroshima 100,000 were killed instantly, and between 100,000 and 200,000 died eventually; in Nagasaki about 40,000 were killed instantly, and between 70,000 and 150,000 died eventually.

The third episode involves the high-altitude carpet bombing of Cambodia during four years (March 18, 1969-August 15, 1973) by U.S. Boeing B-52 bombers. The intention was to disrupt supply routes of the North Vietnamese Peoples Liberation Army. The Americans unleashed a holocaust of 2,756,941 tons of bombs on more than 113,000 Cambodian sites during October 1965-August 1973 which killed over 150,000 rural Cambodians.[1][14] Owen summarized, civilian casualties in Cambodia drove an enraged populace into the arms of an insurgency that had enjoyed relatively little support until the [U.S.] bombing began.[1][15]

The fourth episode occurred some twenty years later when U.S. forces bombed Iraqis fleeing from Kuwait on the Highway of Death on February 26/27, 1991. The defenseless Iraqi forces were retreating and the column included Kuwaiti captives as well as civilians. Iraqi soldiers as well as Iraqi, Palestinian, Jordanian and other civilians piled into whatever vehicles they could commandeer, including a fire truck, and fled north towards Iraq. U.S. planes disabled vehicles at both ends of the convoy, creating a 7-mile long traffic jam. U.S. planes then began to bomb and strafe the entire line of some 2,000 vehicles for hours, killing tens of thousands of helpless soldiers and civilians while encountering no resistance and receiving no losses to themselves. The bombing was inspired by destroying as much Iraqi military equipment as possible before an eventual U.S ground assault upon Baghdad. The scenes of carnage on the road were seen by the international community as a turkey shoot and led to the wars quick end subsequently. The attacks violated the Geneva Convention of 1949, common article 3, which outlaws the killing of soldiers who “are out of combat,” not to mention the incinerated civilians.

Source: Iconic photos at http://iconicphotos.wordpress.com/2009/05/27/the-highway-of-death/ (accessed on February 21, 2010)

The fifth episode was the U.S. bombing of Afghanistan during October 7  December 10, 2001, upon which I originally reported and have continued to do.[1][16] U.S. air power and purchased satrap soldiers of the Northern Alliance were substituted for the use of numerous U.S. ground forces. The result was predictable: during three months about 2,600-2,900 Afghan civilians perished at the hands of U.S. forces whereas only 12 Americans died during October-December.[1][17] Again, technology in the guise of aerial bombing replaced U.S ground forces. The ratio of Afghan civilians killed per U.S. military casualty was an astonishing 230.

The sixth episode involves a chapter in Americas invasion/bombing o Afghanistan in 2001, the use of the Daisy Cutter bombs, another technological spectacle originally designed to create jungle clearings. On November 4, 2001, the U.S. upped the ante and dropped two BLU-82 sub-atomic bombs (equivalent to a tactical nuclear weapon) upon humans, on Taliban positions in northern Afghanistan.[1][18] The bombs destroy everything in a 600-yard radius, giving off a mushroom-like cloud and have an un-nerving effect upon the targeted troops. On November 23rd — a week into Ramadan — a third BLU-82 was dropped just south of Kandahar. A fourth was dropped in the Tora Bora campaign. A nightmarish progression had taken place:

It’s nightmarish to see that the U.S. is slowly desensitizing the public to the level of destruction taking place in Afghanistan. They have progressed from medium-sized missiles to Tomahawk and cruise missiles, to bunker-busting 2,000 lb bombs, then to [B-52] carpet-bombing using cluster bombs, and now the devastating daisy cutter bombs that annihilate everything in a 600-meter radius.[1][19]

Towards Americas Electronic, Troop-less Wars

For a year before 9/11, CIA-operated Predator surveillance drones flying over Afghanistan had occasionally picked up Bin Laden.[1][20] Even before the U.S. bombing campaign against Afghanistan started in October 2001, a CIA-operated RQ-1 Predator had crashed in Afghanistan on September 23, 2001. Such an inauspicious beginning was soon followed by another Predator crash on November 2, 2001 in Afghanistan, two more crashes during the week of January 21, 2002, and another crash on May 17, 2002 in the hills near the U.S. air base in Jacobabad, Pakistan. The big brother of the Predator, called the Global Hawk, fared even worse. Both of the $15 million U.S. Air Force-operated unmanned craft have crashed — the first on December 30, 2001, and the second on July 10, 2002, near another U.S. air base at Shamsi, Pakistan. The U.S. Air Force flew Predator drones out of its bases in Uzbekistan [near the Afghan border] and Pakistan (Jacobabad and Shamsi). Clear weather and the lack of Taliban anti-aircraft defenses allowed the drones to collect real-time imagery which was relayed to hovering strike aircraft.

The step from mere surveillance to offensive killing took place during in the summer of 2001 when some Predators were equipped with two of Lockheed’s Hellfire AGM-114 laser-guided anti-tank missiles ($45,000 apiece). By January 2003, four reported cases existed of the Predator-Hellfire combination being used. Two of these attacks resulted in the deaths of at least 13 innocent civilians. On February 4, 2002, a Predator Hellfire missile killed three Afghans scavenging for metal in the hills around Zhawar Kili, Paktia.[1][21] On May 6, 2002, a Predator fired a Lockheed missile at a convoy of cars in Kunar province, seeking to assassinate Gulbuddin Hekmatyar, but succeeded only in destroying a madrassah and killing at least 10 civilians nearby.

Move forward eight years to late 2009 when some would claim that unmanned aircraft used both for surveillance and for offensive strikes, are considered the most significant advance in military technology in a generation.[1][22] These killer drones will allegedly replace the need for U.S ground forces. A senior U.S. Defense official stated, The technology allows us to project power without vulnerability.[1][23] Much less than the B-17s who had to deal with Messerschmitts over Hitlers Germany or the B-52s which occasionally confronted MIGs over Indochina.

A drone in late 2009 staring down at a single house or vehicle kept constant watch on everything that moved within an area of 1.5 square miles. This year the capability will double to three square miles. In 2006, the USAF flew six drones at a time; in 2009, the number was 38 and the Air Force hopes to have 50 aloft simultaneously in 2011.[1][24]

Americas path to the electronic, troop-less war in Afghanistan follows upon three previous tactics. During 2004, the United States successfully pressured NATO allies to bear the fighting costs in Afghanistan. The aim was to spread the human and monetary costs felt in each nation. The effort proved eminently successful insofar as during 2004, U.S. military deaths amounted to 87% of foreign military casualties in Afghanistan but had fallen to 51% by 2006 remaining at about that share during 2007-8. But the restrictions put upon troops by NATO governments limited their combat role and by 2006, the Taliban were rapidly increasing their reach across Afghanistan. The U.S high command then resorted in the second phase (2006-8) to heavy use of air strikes. The predictable ensued: spiraling of Afghan civilian casualties (Table 1), drawing severe NATO criticism by early 2009. In May Obamas military decided to substitute increasing ground forces for air strikes  the McChrystal Interlude. 

The currently insufficient number of drones and control support systems has necessitated a temporary U.S. troop surge in Afghanistan  the McChrystal Interlude – while the local satrap forces and drone capability are built up.[1][25] The clear-hold-and-build effort in Helmand is a stop-gap measure in which U.S/NATO ground shock troops are surrogates for drones (and take casualties). But the image  recall America is the land which pioneered marketing  presented by the military-industrial-media-information complex (MIMIC) is one of strength. Endless spectacles of drones, Ospreys, Apaches, HiMARS, etc. are beamed into American homes by the MIMIC, a domestic shock-and-awe in the living rooms of America. At the same time, all photos of Afghans killed by U.S forces are suppressed here. The whole bromide is further marketed to the general public with endless displays of the Stars-and-Stripes, Support Our  Troops posters (even on the helmet of U.S. athletes at the Vancouver Winter Olympics), the militaristic rituals that intrude on most American social events, and prancing National Football League cheerleaders providing the necessary moral support for American occupation troops in Afghanistan.[1][26] Football cheerleaders in Afghanistan and media cheerleaders here in America.

Five Rams cheerleaders visited Marines of 2nd Battalion, 3rd Marine Regiment at the Forward Operating Base Delaram, Farah Province, Afghanistan, in September 2009. Photo posted Rams Cheerleaders are Gorgeous, Heavily Armed, Sportsby Brooks (October 23, 2009) at
http://sportsbybrooks.com/rams-cheerleaders-tote-goodwill-heavy-weaponry-26641 (last accessed on February 21, 2010)

The corollary is that during the McChrystal Interlude Orwellian Newspeak is deployed by the Pentagon and its media mignons (carried to the extreme with the embedded reporters in Afghanistan and cheerleaders outside, e.g., CBSs Lara Logan) which emphasizes the value of Afghan civilian lives. But, every effort is made to conceal the true toll of civilian casualties and the UNAMA implicitly participates in such effort. For example, in the current US/NATO offensive against Marja in Helmand, the medical coordinator of the Italian NGO, Emergency Lashkar Gah hospital, has claimed the NATO forces blocked the movement of wounded Afghan civilians to the Emergency hospital.[1][27] When some innocent Afghans die and such cannot be concealed we are treated during the McChrystal Interlude to a torrent of regrets, condolences, and a few thousand dollars of compensation are doled out to soften wars blow.[1][28]  Sorry or sincerest regrets for killing your family members and we promise to make changes[1][29]next please.

But in the countryside, midnight raids by mostly clandestine commando U.S. Special Operations forces and aerial onslaughts are increasing far away from the publics eyes.[1][30] Such Special Operations raids are carried out at night, killing and/or abducting villagers to secret U.S prisons dotting Afghanistan. According to a report filed by Gopal, the villagers in Zaiwalat, Maidan Wardak Province, with 300 people are afraid of the dark because of the ten middle-of-the-night raids during 2008-9 in which 16 people were killed.[1][31] These Special Forces operate outside of regular military channels. On February 21st, airborne Special Operations forces incinerated three mini-buses travelling on a road in Daikundi, Uruzgan. The result was 27-33 dead Afghan civilians including women and children. Almost two months earlier, U.S. Special Operations Forces had air-dropped into a village in 5he middle of the night in Narang district, Kunar, and proceeded to drag ten people from their homes (including eight school children grades 6-10, handcuff and execute them.[1][32] This has long been the practice of U.S. Special Forces in Afghanistan.[1][33]

Another news management tactic employed by MIMIC is to assert after a bomb or drone attack somewhere in the Muslim world that a top Al Qaeda or militant leader was killed as stated by an official anonymous source. Invariably, the top leader re-emerges and the account of slaughtered civilians makes its way into the back pages of a U.S newspaper. As Glenn Greenwald so cogently put it, framing the story this way ensures there is no attention paid to the radicalizing effect of these civilian deaths and our attacks for that country and in the region.[1][34] The future American war menu of drones-satraps-GRRs represents the end game of such concealed massacre and neocolonialism. Would any independent western reporter venture out into the Afghan killing fields and brave the rain of Hellfire missiles from U.S. drones? The menu will also conveniently cost much less monetarily to a massively indebted United States than what it currently spends to deploy 150,000 U.S. ground forces in Afghanistan.

Americas Afghan Civilian Casualties Conundrum during the McChrystal Interlude

The McChrystal Interlude is characterized by two costly outcomes: still many visible dead innocent Afghans (caused by the technological spectacle deployed by the U.S occupiers) and many U.S./NATO occupation (rather than coalition) force casualties (caused by the deadly duo  IEDs and suicide bombers). The civilians killed refer here only to those killed by US/NATO actions.  The relationship between these two counts is captured by the ratio of Afghan civilian deaths per dead foreign occupation soldier. Table 1 below presents monthly figures for the past year of the Obama regimen. More Afghan civilians died under the Obama clock in 2009 than under his predecessor, George W. Bush during 2008.

Table 1. The Relative Lethality for Civilians and Occupiers during the Bush and Obama Years

Sources: Afghan civilian deaths from Marc W. Herold, Afghan Victim Memorial Project data base and for foreign occupation troops from http://www.icasualties.org/oef/ .

Up through December 2006, before dying in combat, a foreign occupation soldier in Afghanistan will on average have participated in the killing of ten Afghan civilians.[1][35] During his first months in office, Obamas military was more deadly for Afghan civilians than his predecessor. As I noted in mid-2009,

Comparing this with the data for five monthsclearly demonstrates that even by the standards of the Bush administration, the Obama regime cares less about the well-being of Afghan civilians at least insofar as waging a clean war, that is, on the metric of civilian casualties, Obama fails.[1][36]

At the end of 2009, such failure is confirmed insofar as during the Obama year some 1,000 Afghan civilians perished as compared to 941 during 2008 under Bush. On the other hand, the announced metric of civilian casualties by McChrystal may have merely been for public consumption. But, the data in Table 1 also clearly displays that in terms relative to each other, fewer civilians are killed per foreign occupation soldier killed: in 2007, for every occupation soldier killed, 5 Afghan civilians were killed whereas in 2009 the figure was two.

In May 2009, close to 200 Afghan civilians had perished (Table 1), which caused alarm amongst NATO allies. Obamas new National Security team recognized that killing Afghan civilians fuels the Afghan resistance. A decision was made to cut back upon air strikes and rely more upon ground forces. In effect, the Obama regimen involved trading off US/NATO soldier deaths for fewer Afghan civilian ones in order to placate critical NATO members.[1][37] The following chart plots Afghan and occupiers forces deaths during 2009:

Source:  derived by the author

In July 2009, for the first time during Americas Afghan War, the number of foreign occupation soldiers killed exceeded the number of Afghan civilians killed by them (Table 1). The number of U.S. occupation soldiers killed during 2009 was 317, compared to 1455 during 2008. In addition, NATO reported that for every IED soldier death, there can be up to eight casualties, many with severe injuries including loss of limbs.[1][38] Predictably, Laura King of the Associated Press and a charter member of the U.S. medias MIMIC cheering squad, proclaimed in late August 2008 that Afghan civilian deaths decline under new U.S. tactics.[1][39] As Table 2 documents the July drop-off was short-lived. Moreover, the much-touted decline in air strikes ordered by McChrystal was temporary.

Veteran reporter, Kathy Gannon, with a record of independent reporting on Afghanistan going back to October 2001, noted that the Taliban fighting foreign forces in Marja are villagers.[1][40] She also provided rare details on victims of foreign forces there: Musa Jans home was hit by an aircraft around February 16th killing five occupants inside including children; Sayed Lal was outside in a field with a friend when he was shot by foreign soldiers. Assadullah, 22, was riding his motorcycle when the Americans fired at him shattering his arm; Abdul Hamid, 12, was in front of his home when raiding foreign forces arrived,

they were running and shooting. I tried to get back in my house, but they shot me in the leg, and there were more bullets, and they shot me again in the belly. Near me some other people fell into a canal. They called a plane and they bombarded.[1][41]

And this is supposed to be the McChrystal approach of protecting civilians.

For its part, the UNAMA lacks the ground capacity to accurately tally casualties and refuses to divulge disaggregated data in the way for example Iraq Body Count (or in other words, the UN offers merely faith-based figures). The UNAMA figures for 2009 exhibit an egregious underestimate of Afghans killed by foreign occupation forces. The following Table 2 contrasts the UNAMA count with my own:

Table 2. Afghan Civilians Killed by All Pro-Government Forces (PGFs) and Foreign Forces

Sources: UNAMA figures as reported in IRIN, Afghanistan: Over 2,000 Civilians Killed in First Ten Months of 2009, IRIN News (February 21, 2010) at http://www.irinnews.org/Report.aspx?ReportId=87003.

The UNAMA data captures less than 47-56% of Afghan civilians killed by foreign forces since their data includes civilians killed by Karzai satrap forces whereas mine only counts deaths caused by foreign occupation forces. Figures reported by the Afghan Independent Human Rights Commission are as flawed. For 2009, this organization stated that 606 Afghan civilians died at the hands of foreign troops.[1][42] As I have analyzed elsewhere such under-counting by the UNAMA is nothing new. In 2008,

one can safely assume that UNAMA captures only about 70 per cent of those counted by Herold.27 This serves to lessen U.S./NATO culpability and improve U.S./NATO performance on the metric of Afghans protected from violence.[1][43]

In 2008, the UNAMA captured about 70% of Afghans killed by foreign forces, but in 2009 the figure was under 40%, justifiably earning UNAMAs performance as being faith-based (or ideologically-inspired) counting. Sadly, western media uncritically go about citing such spurious figures, for example endlessly mentioning that Afghan civilian deaths caused by coalition forces have declined: naturally they have since the UNAMA missed only 30% of such deaths in 2008 but 60% in 2009!

To continue reading this article, please click here

By Paul C. Wright

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17903

Global Research, March 3, 2010

If you are one of the millions of Americans locked into long term debt service, your road to debt serfdom was likely paved by a mortgage, home equity loan, credit cards, or a combination of all three.

When the U.S. economy began to melt down in 2007 and entered a rapid period of decline in 2008, all eyes were fixed on the subprime mortgage crisis. Though the mortgage crisis, triggered by spurious lending practices and unprecedented risky investment bank practices, was undoubtedly the dominant factor affecting the American consumer in 2008, credit card debt and default was also making a contribution to the deteriorating economy and collapsing standard of living. As the subprime mortgage crisis accelerated, the increasing number of people falling behind on payments or defaulting on credit card debt was largely ignored by the media, with only a sporadic story or two being aired or printed by the major news outlets. Stories finally started receiving vastly more media attention in 2009 as the problem became too large to ignore. Credit cards, once a status symbol and the prized possession of the American consumer, had quickly become the bane of the American consumer. 

Credit cards, while omnipresent now, were not always widely used by consumers to make purchases. At one time the credit card was seen as a novel and trendy idea, with a limited number of cardholders who were in effect members of a special club. Now, credit cards are viewed as essential purchasing tools that everyone must have, for status, transactional ease, and even necessity in some instances. Many purchases, particularly those related to travel and lodging, absolutely require credit cards. The overwhelming majority of internet vendors require a credit card for the purchases. In essence, it is nearly impossible not to have a credit card in the 21 st century. The credit card has come a long way in its short history. 

Many people today may think that the credit card rapidly and dramatically transformed American society. In fact, it did not. The explosion of credit offers to adults and minors alike from the mid-1970s until the bursting of the credit bubble in 2008 may lead some to believe that the credit card was an overnight phenomenon. It was not. Credit cards did not burst onto the American financial scene in the same dramatic way that pre-packaged sliced bread did in the 1930s. They did not catch on with consumers in wildfire fashion after an enlightened Eureka moment as did 3Ms Post-Its, which were in high demand and selling all across the United States within three years of 3M figuring out how to mass produce them. Credit cards found their way more carefully and slowly onto the world stage and, nearly 60 years after their creation, contributed to one of the largest debt bubbles in history. This massive debt bubble, inextricably linked to the housing market bubble, began to unravel in 2007 and is now sending America into one of the worst economic downturns since the Great Depression.

This downturn threatens the prosperity of generations to come and will likely result in a permanent reversal of fortune for the United States unless it takes substantial steps to ensure the survival and relative prosperity of the middle class [1]  Americas largest socioeconomic group, and the engine that drives Americas economy through consumer spending. Since consumer spending accounts for about 70% of the U.S. economy [2] , and the middle class is responsible for the bulk of consumer spending, the U.S. will undoubtedly experience painful contractions for the foreseeable future. 

Though credit cards were slow to catch on after their creation in 1949, thirty years later Madison Avenue would be put to work to help drive the expansion of Americans use of the cards. There was a lot of money to be made by collecting fees for debt creation and debt service, and the largest banks wanted in on the action. Clever marketing campaigns led the public to believe that it could access luxury items and vacations that were once thought to be out of reach, and fueled a growing desire among many Americans to live life like the wealthy. People could purchase the 10-day Caribbean cruise or expensive diamond ring that was once restricted to those with higher income levels. People were starting to feel as if they could live like royalty as credit card marketing created the illusion that debt was equal to wealth. [3] People appeared to care more about how high their credit line was than how much debt they had. As a result, credit cards were soon at the heart of a new materialist culture that had people of widely varying income levels and ages going into debt to fuel their desire for more stuff. Debt drove a lucrative credit card industry which became even more lucrative for credit card issuers after it received favorable court rulings in 1978 and 1996. More on these rulings will be discussed later in this article. 

Americans debt trajectory rose rather gradually from the 1940s through the 1970s, but began to escalate much more quickly in the 1980s as the yuppie came to prominence in American popular culture. Yuppies (young, upwardly mobile professionals) became iconic in the 1980s as credit cards made more luxury products and services available to more people through the creation of debt. Yuppies were professionals in their 20s and 30s who found new wealth in a rising stock market – which was seeing a large influx of cash due in part to the growing prominence of 401k plans and mutual funds, which opened the financial markets to the public at large for the first time in history  and the rising use of credit. Additionally, those working in the upper echelon of corporate management saw an increase in corporate profits and high-level employee bonuses, which were made possible by increasing worker productivity and the corresponding flattening of wages [4] for mid-level, blue collar and non-professional workers. The rich were taking it all for themselves and letting the good times roll  and everyone who wasnt rich wanted to be or act as if they were rich. 

Interestingly, the yuppie was an odd sort of counterweight to the young hippie of the 1960s and 70s because they pursued money and status but in some ways adopted the socially liberal trait of the hippie. Hippies rallied against the traditional, conservative, stuffy, and elitist financial and cultural establishment, but yuppies, though young and socially open like hippies, became a part of the financial establishment. They were into money and materialism, but were more open to and less judgmental of new and different social experiences than their conservative parents were. Their passion for things and flings drove a cultural shift in the United States wherein it became ever-more important to prove your status to others. The proof came in the form of luxury cars, projection televisions, boats, remodeled kitchens, and extravagant vacations. 

The 1980s was the age of a paradigm shift in American politics. The U.S. transformed itself into a country where the profit motive supplanted the public good. Profit driven business had always been a trait of Americas political and economic culture, but when the profit motive of the 1980s was unveiled, it appeared to be more individualistic, more personal, more pervasive, and more accepted than at any time before. America moved away from the its traditional embrace of serving the public interest and even farther from the emergent communal ideals advanced by the 1960s and 1970s progressives, and whole-heartedly embraced a vibrant consumer culture and all the trappings that came with spending. The rise of the consumer culture had a direct correlation to the decline in Americans saving rate [5] , which would eventually put further strain on households some 30 years later. 

Saving money used to be a prudent exercise that was valued by society as a whole. In the 1970s and 1980s, America did not have a chorus of financial pundits on television encouraging citizens to be consumers and speculative investors. The conventional wisdom of the time was to always set aside ten percent of your income as savings. Prior to the rise of the consumer culture, Americans put a large amount of their money in the bank, and did so quite proudly. The savings would provide financial stability in case of a catastrophe, money for their kids to go to college, money for a vacation, and would serve as an extra cushion  on top of a pension  for retirement. Americans, from generation to generation, were encouraged to save and did. When they had to pay for something, they paid with cash. In cases where cash was not sufficient, they took out loans that were based installment credit, not revolving credit. The notion of paying for something with cash seemed to have become a foreign concept by the 1990s as the value of credit card debt reached new heights, and in dramatic fashion. In 2005, Americas 164 million credit card holders charged $2 trillion to their credit cards  amounting to $12,500 per credit card holder. [6] This contributed to massive consumer debt, which rose over seven times in 28 years – from $355 billion in 1980 to $2.6 trillion in 2008. [7] By 2008, consumer debt increased seven times, while the savings rate was seven times lower than in 1980. 

Clearly, banks and other financial institutions that issued credit cards benefitted from the public spending frenzy and made – and continue to make- billions of dollars on the fees and interest paid on credit card debt. [8] These institutions enlisted the help of Madison Avenue advertising agencies to come up with ads that appealed to the new consumerist mentality that came to dominate American culture in the 80s, 90s, and early 2000s. Commercial advertisements telling viewers that their credit card is accepted everywhere you want to be, became omnipresent as did commercials set to popular music such as the rock band Queens song, I Want it All, promising that if you want it all and want it now, you could in fact get what you want merely by swiping your credit card. These commercials broadly appealed to the new consumer mentality. It could be said that commercial advertisements appealed to the Id that Sigmund Freud defined in his psychoanalytic theory. The Id acts according to what Freud termed the pleasure principle, seeking immediate gratification by satisfying psychological needs without accounting for reason or reality. Americans were all too ready to be governed by the pleasure principle because parents and society at large had created an environment that was safe for a narcissistic, greedy, and self-serving new generation of young adults. Sadly for everyone, this culture has not held back in contributing to Americas economic downfall. The stories of financial strife that have begun to emerge are both shocking and horrific. 

With the rise of the consumer culture came depressing stories of people falling on hard times and becoming debt slaves to the credit card companies. Some consumers got so far into debt that they lost the ability to pay even the minimum required monthly payment. They lost their jobs, experienced a medical emergency, had to support other family members, or lost their homes, and soon fell into a debt spiral of despair. Credit card companies saw these people as great risks to their revenue streams and began to increase late fees and penalties for those carrying a balance over their credit line. They also raised interest rates two, three, and four times. This had the effect of worsening their ability to make payments and contributed to an increase in personal bankruptcy filings. [9] In order to keep bank share values as high as possible for large and wealthy investors, the banks had to find another source of revenue. They turned their sights on customers in good standing, who regularly paid their balances in full or made timely monthly payments. The best customers saw their interest rates rise, credit limits fall, and saw their creditors issue harsh terms for submitting payment even an hour late. In effect, customers who paid their bills on time, known as Deadbeats in industry parlance [10] , were going to subsidize those who fell behind and couldnt make payments. 

It is critical to understand the history and evolution of the credit card to appreciate fully where American households now stand. The worlds first credit card was invented in New York in 1949 when Frank X. McNamara of the Hamilton Credit Corporation created the Diners Club card after forgetting to bring his wallet to a Manhattan restaurant. Mr. McNamara figured that he could create a card that would eliminate the need for diners to carry around cash. What he did was create a cardboard, wallet sized card that members would pay an annual fee to carry and use at member restaurants and nightclubs in Manhattan. McNamara was able to sell restaurants on the idea by explaining to them that it would increase their repeat business. Within a couple of years, there were 20,000 Diners Club members. Credit cards were not used in significant numbers for another ten years after their creation – with the introduction of the American Express card. An interesting trait of the cards is that they were fee based and did not allow the card holder to carry a balance. 

Prior to the advent of credit cards, people either paid with cash or took out loans to fund their consumption habits. Those who are old enough to remember the 1970s will undoubtedly remember the prominence of lay-away programs that many large shops offered. Lay-away programs allowed families to go into a department store and make a down-payment on a particular product they wanted to buy. The buyer would not be able to take the product home that day, but they would lock in the price of the product on that same day. The store would hold the product in their storage area until the buyer made enough payments to cover the full price of the product. Then, the buyer could take the product home. Lay-away programs were extremely popular with low and middle income families and were widely used to make purchases for the Christmas holiday. 

After credit cards came into wider use in the 1960s, the issuing companies figured that they could expand their profits by increasing the number of credit card holders. To expand their business, credit card companies began to mass mail credit cards to households across the country in hopes that consumers would take to the new cards and generate new fees for the card issuing companies. Credit card terms were new to the public and Congress wanted to prevent the uninformed from unfair billing and credit practices. The first piece of landmark credit card legislation was passed in 1968 as the Consumer Credit Protection Act [11] – also known as the Truth in Lending Act. While the legislation served to force issuing companies to clearly disclose the terms of credit, it did not bar mass mailings of credit cards. Unfortunately for the consumer and credit card companies alike, fraud became widespread as many mass mailed cards were intercepted in the mail by criminals who would make unauthorized charges on the cards. Consumer complaints and disputed charges led Congress to eventually pass the Fair Credit Billing Act of 1974, the second major piece of credit legislation. This legislation, in part, required credit card companies to acknowledge consumer complaints and to correct errors within 90 days of a complaint being made. At the time, it was a major step forward in consumer protection law. 

Eventually, the practice of issuing revolving credit was introduced. Whereas before, credit card companies made their profits from charging fees, now they were charging interest on outstanding debt. The combination of annual fees and interest led to ever higher profits and the rise of the titans of the credit card industry  Visa and MasterCard. Both companies benefitted from new technology. For Visa, it was the creation of the electronic authorization system in 1973. For MasterCard, it was the security hologram designed to prevent fraud. 

The idea of revolving credit would eventually lead to consumer complaints, court battles, and additional reforms. The average interest rate charged by credit issuing institutions in 1974 was 17.20%. [12] These interest rates were considered to be usurious in many states. Citizens challenged banks that charged in excess of their states usury laws, and banks challenged the usury laws themselves. A landmark decision, the Marquette [13] decision, was issued by the Supreme Court in 1978, effectively barring states from applying usury laws to nationally chartered banks that issued credit cards. National banks were subject to federal, not state regulation, hence state usury laws did not apply  except for the usury law in the state in which the credit card issuing bank was located. Since South Dakota had eliminated its usury laws, freeing banks to charge whatever interest they saw fit to charge, many banks relocated their operations there. Credit card rate averages would remain in the 17% to 19% range until they began a steady decline in 1991. [14] Rates continued to fall, due to falling increased competition and decreased costs, until 2004 when they began to rise once again. 

Credit card companies scored another court victory in 1996 in the Smiley [15] case. In Smiley , the plaintiff argued that credit card late fees, in this case amounting to fifteen dollars, violated California state law. Citibank successfully argued that the fees were lawful under the National Bank Act. The Acts primacy over state law, combined with the Office of the Comptroller of the Currencys administrative decision that interest includes late fees and penalties [16] , meant that nationally chartered banks could set late fees as high as they deemed necessary without worrying about interference from the states. Soon thereafter, many late fees more than doubled, as did actual interest rates for consumers who made late payments. Some late fees went as high as $155. [17] The banks, some would say, were operating with impunity and the federal government backed their interests to the detriment of the public interest. 

With the door to enforcing stringent penalties wide open, credit card issuers came up with more creative ways in which to increase fees, penalties, and interest rates. One of the new methods was Universal Default – perhaps the most creative and unforgiving device ever designed to extract money from a credit card holder. Universal Default terms give an issuer the right to raise a card holders interest rate if the card holder is late paying any bill of whatever sort to any creditor. By early 2004, forty percent of banks had added universal default clauses to their terms and conditions. [18] 

These legal developments, while creating a groundswell of anti-credit card sentiment among consumer advocate groups, did not turn too many heads among the public at large until the bursting of the credit bubble and the wholesale collapse of the economy in 2007 and 2008. Still, not much attention was paid to the credit card problem until late in 2008, as most of the government and the media were focused on the subprime mortgage problem and increasing unemployment. Growing credit card defaults, bankruptcies, and other credit related horror stories finally made the news. Congress and the president seemed determined to take action. 

On August 20, 2009, a new law went into effect  at least two provisions of it did. The Credit Card Accountability Responsibility and Disclosure Act of 2009 [19] was signed into law on May 22, 2009, with the first two provisions of the law taking effect on August 20, 2009. The August 20 provisions immediately made important changes to the way credit card issuers conduct their business. First, issuers now have to provide 45 days notice of any significant changes in credit card terms  including an increase in interest rates. The 45 day period increases the previous 15 day notice period but also carries with it an option for the card holder to decline the rate increase, pay off the current balance in full at the current rate, and use the 45 days to find another card. [20] The other significant change taking effect was the requirement that issuers mail billing statements 21 days prior to the due date instead of 14 days prior to the due date. The new law also proscribed more restrictions to take effect in February, 2010, prompting several issuers to immediately raise interest rates, cancel accounts, and cut credit limits on their customer base, one of the critiques issued by several consumer advocates. [21] In fact, average credit card rates have already begun to rise with the average variable rate increasing from 10.69% in April 2009 to 11.22% in August of 2009. [22] 

Consumers will find additional relief with the February provisions having gone into effect. A White House Fact Sheet states that key elements of the new law include: bans on retroactive rate increases for existing balances due to any time, any reason, or universal default; the end of late fee traps, which include weekend payment deadlines, due dates that change each month, and deadlines that fall in the middle of the day; and the enforcement of fair interest calculation  meaning that credit card companies (1) must apply excess payments to the highest interest balance first, and (2) may not use the balance of a previous month to calculate the interest charges for the current month, a practice called double-cycle billing. [23] Additionally, institutions will have to get a consumers permission to process payments that will result in charges exceeding the consumers credit limit. 

All of these new provisions should work to benefit the average card holder and act as a counterweight to the nearly 60 year national trend of industry favorable legislation and court decisions. Still, the public should not assume that card issuers will not be looking for ways to work around the legal restrictions placed on them. One of the loopholes already identified pertains to the rule barring issuers from raising interest rates on existing balances. If a consumer has an introductory rate promotion or a variable rate on the card, the rule does not apply. [24] You can bet that many issuers will be moving consumers into variable rate accounts. We may see the number of fixed rate accounts disappear altogether. Several other loopholes will undoubtedly be exploited in the months and years ahead. The best armament a consumer can have is knowledge, yet the consumer must be willing and able to put that knowledge to good use. 

Paul C. Wright is an attorney, business consultant, and legal researcher who has practiced both military and civil law. His legal practice areas have included criminal, international, insurance, and consumer law.

Notes

[1] The term middle class strives for a sure-footed definition. For the purposes of this article, the lower end of the middle class is defined as households that earn more than the Federal Poverty Guidelines for the 48 contiguous states and the District of Columbia. This number in 2009 is $22,050 per year for a family of four. See The 2009 HHS Poverty Guidelines, United States Department of Health and Human Services , http://aspe.hhs.gov/poverty/09poverty.shtml Site visited 9/1/09. The upper limit of the middle class is defined as households whose income is less than the lowest annual income of households that are in the top 5%. In 2008 the upper limit for the middle class was $174,000 per year. For an interesting article on the debate on who should be characterized as middle class, see Cashell, Brian W., CRS Report for Congress, Who Are the Middle Class? Congressional Research Service, The Library of Congress , March 20, 2007. 

[2] Lahart, Justin, CNN/Money Senior Writer,  Spending our way to disaster – The consumer debt bubble in the United States could make the stock bubble seem like nothing , October 3, 2003, http://money.cnn.com/2003/10/02/markets/consumerbubble/ Site v isited 9/1/09. See also Baxter, Annie, Consumer spending accounts for two-thirds of U.S. economy, Minnesota Public Radio , October 30, 2008, Earlier this week, we learned that consumer confidence hit historic lows. That didn’t bode well for the economy, since more than 70 percent of it comes from consumer spending. http://minnesota.publicradio.org/display/web/2008/10/29/gdp_numbers_consumer_spending/ , Site visited 9/1/09. 

[3] Economist Michael Hudson points out that an odd logic has taken root in America wherein wealth is seen as the amount of debt that can be leveraged. Hudson, Michael, The New Road to Serfdom, An illustrated guide to the coming real estate collapse, Harpers Magazine , May 2006, p.39. Mr. Hudson goes on to chastise the neoliberal ideologues of international banking and finance who encouraged the metric wherein wealth is measured by the magnitude of debt obligations. Recovering from the Neoliberal Disaster, Why Iceland and Latvia Wont (and Cant) Pay the EU for the Kleptocrats Ripoffs, Global Research , August 17, 2009, http://www.globalresearch.ca/index.php?context=va&aid=14800 Site visited 9/2/09. 

[4] Wolff, Rick, Professor Emeritus at the University of Massachusetts, Class War, Monthly Review , http://www.monthlyreview.org/mrzine/wolff160909.html Site visited 10/8/09. 

[5] National savings went from 7.7% in the 1970s to only 3% by 1990. The savings rate plunged to 1% by 2004. Bonner, William and Wiggin, Addison, Empire of Debt, The Rise of an Epic Financial Crisis , (John Wiley & Sons, Inc., 2006) pp. 202, 287. The U.S. Commerce Department reported that Americans savings rate for all of 2006 was a negative 1%, meaning that not only did people spend all the money they earned but they also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than a negative 0.4% in 2005 and was the poorest showing since a negative 1.5% savings rate in 1933 during the Depression. Butler, Chuck, Savings Rate Reflects Depression, The Daily Reckoning , February 2, 2007, http://dailyreckoning.com/savings-rate-reflects-depression/ Site visited 9/2/09. 

[6] Credit Card Debt Statistics, Money-zine.com , 2008 http://www.money-zine.com/Financial-Planning/Debt-Consolidation/Credit-Card-Debt-Statistics/ Site visited 9/3/09. 

[7] Ibid. 

[8] In 2003, credit card companies collected $21.5 billion in fees from cardholders. More than half of this total, $11.7 billion, was in penalty fees. McGeehan, Patrick, The Plastic Trap, Soaring Interest Compounds Credit Card Pain for Millions, The New York Times , November 21, 2004, http://www.nytimes.com/2004/11/21/business/21cards-web.html?hp&ex=1101099600&en=70effacd11d42b21&ei=5094&partner=homepage Site visited 9/3/09. According to industry consultant Robert Hammer, penalty fees will exceed $20 billion in 2009. Martin, Andrew, Credit Card Industry Aims to Profit From Sterling Payers, The New York Times , May 19, 2009, http://www.nytimes.com/2009/05/19/business/19credit.html Site visited 9/3/09. 

[9] The number of bankruptcies filed in calendar year 2008 was 1,117,771. This number is over 31% higher than the total number of filings for calendar year 2007. See Bankruptcy Statistics, 2007  2008 Calendar Year Comparison, US Courts.gov , http://www.uscourts.gov/bnkrpctystats/statistics.htm#calendar Site visited 10/8/09. This number is slated to increase in 2009 to as much as 1,500,000, representing an increase of 34% over 2008. Tompkins, Al, Bankruptcy Filings Could Rise to1.5 Million This Year, Bankruptcy Statistics , June 5, 2009, http://www.bankruptcy-statistics.com/bankruptcy-filings-could-rise-to-15-million-this-year.html Site visited 10/8/09. 

[10] Op cit. (foot note 8) 

[11] 15 U.S.C. 1601. 

[12] The Federal Reserve Board, Report to Congress on the Profitability of Credit Card Operations of Depositary Institutions, July 2007, http://www.federalreserve.gov/boarddocs/RptCongress/creditcard/2007/default.htm Site visited 10/8/09. 

[13] Marquette National Bank of Minneapolis v. First of Omaha Service Corp , 43 U.S. 299, (1978). 

[14] Op. cit. 

[15] Smiley v. Citibank , 517 U.S. 735, (1996). 

[16] See , 96-13 OCC Interpretive Rules Updated, Codified in Regulation (12 CFR 7) 2/09/96, Federal Register: February 9, 1996 (Volume 61, Number 28) , Department of the Treasury, Office of the Comptroller of the Currency, Interpretive Ruling, Charging Interest at Rates Permitted Competing Institutions; Charging Interest to Corporate Borrowers, (Sec. 7.4001), http://www.occ.treas.gov/96rellst.htm . Herein, the Comptroller broadly defines interest as including numerical periodic rates, late fees, not sufficient funds (NSF) fees, overlimit fees, annual fees, cash advance fees, and membership fees . . . appraisal fees, premiums and commissions on insurance guaranteeing repayment, finders’ fees, fees for document preparation or notarization, or fees incurred to obtain credit reports. 

[17] Howard, Clark, Late fees on credit cards are skyrocketing, January 26, 2005, http://clarkhoward.com/liveweb/shownotes/category/7/40/ Site visited 10/8/09 . 

[18] Howard, Clark, Universal default clauses choking us up, January 23, 2004, http://clarkhoward.com/liveweb/shownotes/category/7/40/ Site visited 10/8/09 

[19] The act is an amendment to the Consumer Credit Protection Act, 15 U.S.C. 1601. 

[20] The Dallas Morning News Pamela Yip column, Upcoming credit card changes can help you take charge, McClatchy  Tribune Business News , Washington, August 15, 2009. 

[21] For an example, see Personal Statement by Elenoar Blayney, Credit Card Act of 2009 Could Spell Trouble for Consumers, PR Newswire , New York, August 13, 2009. 

[22] Silver-Greenberg, Jessica, New Credit-Card Rules Kick In, Business Week (Online) , August 21, 2009, http://www.businessweek.com/bwdaily/dnflash/content/aug2009/db20090820_401346.htm Site visited 10/9/09. 

[23] The White House, Office of the Press Secretary, Fact Sheet: Reforms to Protect American Credit Card Holders, President Obama signs Credit Card Accountability, Responsibility, and Disclosure Act, May 22, 2009. 

[24] Singletary, Michelle, Beware of loopholes in the new credit card law, The Washington Post , February 21, 2010, http://www.washingtonpost.com/wp-dyn/content/article/2010/02/19/AR2010021905991.html Site visited March 2, 2010.

By John Kozy

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17815

Global Research, February 26, 2010

Paul Volker has recently said, “Well, weve got a problem in governing in this country, our inability to deal with very large evident problems is apparent.”

Indeed we do, and the problem is not new. The problem became evident to many long before Mr. Volker’s term as Chairman of the FED, and he, along with many others, are complicit in perpetuating it.

There are two beliefs held by America’s powerful elite that make solving social problems impossible. In fact these beliefs exacerbate existing problems and continually create new ones.

Much of America’s political and economic communities hold the belief that government exists to promote private-sector business which will in turn use its ingenuity, expertise, and the profit motive to solve society’s problems, relieving the government of that responsibility. Politicians of both parties, more or less, have adopted this view. It accounts for the government’s unwillingness to tax corporations and the wealthy, for both the Congress’ ability to find money for corporations and war but rarely for people, and for the Republican assault on social programs, even social security. Republicans claim that all such programs should be privatized. Let the private sector handle social problems. It matters not that more than two hundred years of history proves the view to be misguided, perhaps something that Mr. Volker has come to finally recognize. No known instance of the private sector’s addressing and solving a social problem exists. Social problems abound in all societies that have from time to time adopted this view. Since the fall of communism in Bulgaria, unsolved murders have become epidemic, and look at what happened in Russia and Israel after they abandoned communism and socialism respectively. Crime and poverty have become widespread while billionaires have crawled from the woodwork.

The reason this always happens lies in another view held by the same elite: private-sector companies have one and only one responsibilitythe pecuniary interests of their stockholders. Private-sector companies have no social responsibilities. The chief proponents of this view are the late Milton Friedman and the Chicago school of economics, although the view is quite widespread and was formulated long ago. It is sophistically called economic freedom.

That these two notions are incompatible should be obvious. The first places the responsibility of solving social problems on the private sector and the latter removes that responsibility from the very same private sector. The result is that neither the private sector nor the government takes responsibility for the solution of the “very large evident problems” that Mr. Volker now recognizes.

But these notions also account for why the government’s stimulus packages are not working. The original stimulus that gave almost a trillion dollars to the investment and automotive communities has produced meager results. Now the administration is proposing a “jobs bill” that merely consists of giving small businesses that hire new workers tax breaks, which is just another instance of the government’s promoting private-sector businesses in an effort to solve a social problem. These programs are burglarious. The people are made to take on debt to pay for their own jobs.

There is much forthright criticism of these programs. See Obama’s disco-era jobs bill, but the Congress will pay no attention; the dogma will prevail, and the economic problem with all of its associated social problems will persist in greater or lesser form.

A number of pieces have appeared which describe the stimulus as a failure. Conn Carroll of the Heritage Foundation writes, “Congress does not have a vault of money waiting to be distributed. Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy. No new spending power is created. It is merely redistributed from one group of people to another. . . . Yes, government spending can put under-utilized factories and individuals to workbut only by idling other resources in whatever part of the economy supplied the funds. If adding $1 billion would create 40,000 jobs in one depressed part of the economy, then losing $1 billion will cost roughly the same number of jobs in whatever part of the economy supplied Washington with the funds. It is a zero-sum transfer regardless of whether the unemployment rate is 5 percent or 50 percent.”

But why Carroll and others like him fail to notice that the same thing happens when the government subsidizes private-sector business ventures is logically incomprehensible. Any subsidy comes from somewhere and goes somewhere else. All governments engage in the practice of transferring money from one group to another. From whom the money should be taken and to whom it should be given is the essential question. That it should be taken from the poorest and given to the richest is what contradicts all known moral principles and has provoked the common widespread opposition to the stimulus.

And the Wall Street Journal reports in The Stimulus Didn’t Work that “The data show government transfers and rebates have not increased consumption at all.” But only an economist would ever have expected it to. Birds won’t feed if the birdseed in sprinkled over the dog’s food. Transferring money to vendors does not increase consumption.

Job creation is the measure everyone seems to be looking at, but merely creating jobs is itself not helpful. Anyone who has looked at the way the unemployment rate is calculated knows that it is bogus. It is not mathematically possible for the number of jobs lost in a month to be greater than the number gained and have the unemployment rate drop. Two plus two never equals three. Furthermore, it is perfectly conceivable for a society to have full employment and widespread poverty. All that is required is sufficiently low wages. Widespread poverty is a social problem that is worse than unemployment. In fact, if merely reducing the unemployment rate were the goal, given the way the employment rate is calculated, the goal could be accomplished more quickly by just paying the unemployed enough to take them off the rolls of jobseekers. Some economists, Stiglitz for instance, have claimed that the reason employment is a lagging indicator is that wages are not reduced fast enough in economic downturns to stimulate it. But lowering wages creates rather than solves social problems.

The powerful elite in America who object to social programs for the people, otherwise known as entitlements, apparently don’t recognize that subsidizing the private sector is itself an entitlement. The private sector knows that it can expect these subsidies and feels it is entitled to them, and when some companies are deemed “to big to fail,” the entitlement becomes absolutely necessary. The result is that the government exists for the benefit of the private sector and not for the people. The private sector endures while the people perish. It results in the absurdity of the nation’s having thousands of empty houses while homeless families live on the streets along with their hungry children. See Suburban homeless: Rising tide of women, families. Is this how the greatness of America is to be measured? Is this how we want the world to view us? Is this the kind of world we want to live in?

So what is the upshot of all of this? There are only three logical possibilities.

• One is that the private sector be required to take on the responsibility for solving social problems, exacting severe penalties from those companies that don’t assume it.
• Another is that the government abandon the view that the private sector can or will solve social problems and assume that responsibility itself.
• The third is to do nothing, making clear that the government assumes the attitude of William H. Vanderbilt who said, “The public be damned!”

I suspect that those who make up America’s power-elite would prefer the last but lack Vanderbilt’s honesty. These people are, of course, evil through and through. But I wonder which alternative Mr. Volker would select, and whether he’s honest enough to even confront the issue. We’ll never know of course, for Mr. Volker along with everyone else in this elite class have adopted Pascal’s view that “the best defense against logic is ignorance,” and they maintain their ignorance by ignoring all critics.

John Kozy is a retired professor of philosophy and logic who blogs on social, political, and economic issues. After serving in the U.S. Army during the Korean War, he spent 20 years as a university professor and another 20 years working as a writer. He has published a textbook in formal logic commercially, in academic journals and a small number of commercial magazines, and has written a number of guest editorials for newspapers. His on-line pieces can be found on http://www.jkozy.com/ and he can be emailed from that site’s homepage.

By Paul Craig Roberts

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17821

Global Research, February 26, 2010

The Washington Times is a newspaper that looks with favor upon the Bush/Cheney/Obama/neocon wars of aggression in the Middle East and favors making terrorists pay for 9/11. Therefore, I was surprised to learn on February 24 that the most popular story on the papers website for the past three days was the Inside the Beltway report, Explosive News, about the 31 press conferences in cities in the US and abroad on February 19 held by Architects and Engineers for 9/11 Truth, an organization of professionals which now has 1,000 members.

I was even more surprised that the news report treated the press conference seriously.

How did three World Trade Center skyscrapers suddenly disintegrate into fine dust? How did massive steel beams in three skyscrapers suddenly fail as a result of short-lived, isolated, and low temperature fires? A thousand architects and engineers want to know, and are calling on Congress to order a new investigation into the destruction of the Twin Towers and Building 7, reports the Washington Times.

The paper reports that the architects and engineers have concluded that the Federal Emergency Management Agency and the National Institute of Standards and Technology provided insufficient, contradictory and fraudulent accounts of the circumstances of the towers destruction and are calling for a grand jury investigation of NIST officials.

The newspaper reports that Richard Gage, the spokesperson for the architects and engineers said: Government officials will be notified that Misprision of Treason, U.S. Code 18 (Sec. 2382) is a serious federal offense, which requires those with evidence of treason to act. The implications are enormous and may have profound impact on the forthcoming Khalid Sheik Mohammed trial.

There is now an organization, Firefighters for 9/11 Truth. At the main press conference in San Francisco, Eric Lawyer,the head of that organization, announced the firefighters support for the architects and engineers demands. He reported that no forensic investigation was made of the fires that are alleged to have destroyed the three buildings and that this failure constitutes a crime.

Mandated procedures were not followed, and instead of being preserved and investigated, the crime scene was destroyed. He also reported that there are more than one hundred first responders who heard and experienced explosions and that there is radio, audio and video evidence of explosions.

Also at the press conference, physicist Steven Jones presented the evidence of nano-thermite in the residue of the WTC buildings found by an international panel of scientists led by University of Copenhagen nano-chemist Professor Niels Harrit. Nano-thermite is a high-tech explosive/pyrotechnic capable of instantly melting steel girders.

Before we yell conspiracy theory, we should be aware that the architects, engineers, firefighters, and scientists offer no theory. They provide evidence that challenges the official theory. This evidence is not going to go away.

If expressing doubts or reservations about the official story in the 9/11 Commission Report makes a person a conspiracy theory kook, then we have to include both co-chairmen of the 9/11 Commission and the Commissions legal counsel, all of whom have written books in which they clearly state that they were lied to by government officials when they conducted their investigation, or, rather, when they presided over the investigation conducted by executive director Philip Zelikow, a member of President George W. Bushs transition team and Foreign Intelligence Advisory Board and a co-author of Bush Secretary of State Condi Mushroom Cloud Rice.

There will always be Americans who will believe whatever the government tells them no matter how many times they know the government has lied to them. Despite expensive wars that threaten Social Security and Medicare, wars based on non-existent Iraqi weapons of mass destruction, non-existent Saddam Hussein connections to al Qaida, non-existent Afghan participation in the 9/11 attacks, and the non-existent Iranian nukes that are being hyped as the reason for the next American war of aggression in the Middle East, more than half of the U.S. population still believes the fantastic story that the government has told them about 9/11, a Muslim conspiracy that outwitted the entire Western world.

Moreover, it doesnt matter to these Americans how often the government changes its story. For example, Americans first heard of Osama bin Laden because the Bush regime pinned the 9/11 attacks on him. Over the years video after video was served up to the gullible American public of bin Ladens pronouncements. Experts dismissed the videos as fakes, but Americans remained their gullible selves. Then suddenly last year a new 9/11 mastermind emerged to take bin Ladens place, the captive Khalid Sheik Mohammed, the detainee waterboarded 183 times until he confessed to mastermining the 9/11 attack.

In the Middle Ages confessions extracted by torture constituted evidence, but self-incrimination has been a no-no in the U.S. legal system since our founding. But with the Bush regime and the Republican federal judges, whom we were assured would defend the U.S. Constitution, the self-incrimination of Sheik Mohammed stands today as the only evidence the U.S. government has that Muslim terrorists pulled off 9/11.

If a person considers the feats attributed to Khalid Sheik Mohammed, they are simply unbelievable. Sheik Mohammed is a more brilliant, capable superhero than V in the fantasy movie, V for Vendetta.  Sheik Mohammed outwitted all 16 U.S. intelligence agencies along with those of all U.S. allies or puppets, including Israels Mossad. No intelligence service on earth or all of them combined was a match for Sheik Mohammed.

Sheik Mohammed outwitted the U.S. National Security Council, Dick Cheney, the Pentagon, the State Department, NORAD, the U.S. Air Force, and Air Traffic Control.

He caused Airport Security to fail four times in one morning. He caused the state-of-the-art air defenses of the Pentagon to fail, allowing a hijacked airliner, which was off course all morning while the U.S. Air Force, for the first time in history, was unable to get aloft intercepter aircraft, to crash into the Pentagon.

Sheik Mohammed was able to perform these feats with unqualified pilots.

Sheik Mohammed, even as a waterboarded detainee, has managed to prevent the FBI from releasing the many confiscated videos that would show, according to the official story, the hijacked airliner hitting the Penagon.

How naive do you have to be to believe that any human, or for that matter Hollywood fantasy character, is this powerful and capable?

If Sheik Mohammed has these superhuman capabilities, how did the incompetent Americans catch him? This guy is a patsy tortured into confession in order to keep the American naifs believing the governments conspiracy theory.

What is going on here is that the U.S. government has to bring the 9/11 mystery to an end. The government must put on trial and convict a culprit so that it can close the case before it explodes. Anyone waterboarded 183 times would confess to anything.

The U.S. government has responded to the evidence being arrayed against its outlandish 9/11 conspiracy theory by redefining the war on terror from external to internal enemies. Homeland Security Secretary Janet Napolitano said on February 21  that American extremists are now as big a concern as international terrorists. Extremists, of course, are people who get in the way of the governments agenda, such as the 1,000 Architects and Engineers for 9/11 Truth. The group used to be 100, now it is 1,000. What if it becomes 10,000?

Cass Sunstein, an Obama regime official, has a solution for the 9/11 skeptics: Infiltrate them and provoke them into statements and actions that can be used to discredit or to arrest them. But get rid of them at all cost.

Why employ such extreme measures against alleged kooks if they only provide entertainment and laughs? Is the government worried that they are on to something?

Instead, why doesnt the U.S. government simply confront the evidence that is presented and answer it?

If the architects, engineers, firefighters, and scientists are merely kooks, it would be a simple matter to acknowledge their evidence and refute it.  Why is it necessary to infiltrate them with police agents and to set them up?

Many Americans would reply that their government would never even dream of killing Americans by hijacking airliners and destroying buildings in order to advance a government agenda. But on February 3, National Intelligence Director Dennis Blair told the House Intelligence Committee that the U.S. government can assassinate its own citizens when they are overseas. No arrest, trial, or conviction of a capital crime is necessary.  Just straight out murder.

Obviously, if the U.S. government can murder its citizens abroad it can murder them at home, and has done so. For example, 100 Branch Davidians were murdered in Waco, Texas, by the Clinton administration for no legitimate reason. The government just decided to use its power knowing that it could get away with it, which it did.

Americans who think their government is some kind of morally pure operation would do well to familiarize themselves with Operation Northwoods. Operation Northwoods was a plot drawn up by the U.S. Joint Chiefs of Staff for the CIA to commit acts of terrorism in American cities and fabricate evidence blaming Castro so that the U.S. could gain domestic and international support for regime change in Cuba. The secret plan was nixed by President John F. Kennedy and was declassified by the John F. Kennedy Assassination Records Review Board. It is available online in the National Security Archive. There are numerous online accounts available, including Wikipedia. James Bamfords book, Body of Secrets, also summarizes the plot:

Operation Northwoods, which had the written approval of the Chairman [Gen. Lemnitzer] and every member of the Joint Chiefs of Staff, called for innocent people to be shot on American streets; for boats carrying refugees fleeing Cuba to be sunk on the high seas; for a wave of violent terrorism to be launched in Washington, D.C., Miami, and elsewhere. People would be framed for bombings they did not commit; planes would be hijacked. Using phony evidence, all of it would be blamed on Castro, thus giving Lemnitzer and his cabal the excuse, as well as the public and international backing, they needed to launch their war.

Prior to 9/11 the American neoconservatives were explicit that the wars of aggression that they intended to launch in the Middle East required a new Pearl Harbor.

For their own good and that of the wider world, Americans need to pay attention to the growing body of experts who are telling them that the governments account of 9/11 fails their investigation. 9/11 launched the neoconservative plan for U.S. world hegemony. As I write the U.S. government is purchasing the agreement of foreign governments that border Russia to accept U.S. missile interceptor bases. The U.S. intends to ring Russia with U.S. missile bases from Poland through central Europe and Kosovo to Georgia, Azerbaijan and central Asia. [see www.globalresearch.ca/index.php?context=va&aid=17709 ]  U.S. envoy Richard Holbrooke declared on February 20 that al Qaida is moving into former central Asian constituent parts of the Soviet Union, such as Tajikistan, Kyrgyzstan, Uzbekistan, Turkmenistan, and Kazakhstan. Holbrooke is soliciting U.S. bases in these former Soviet republics under the guise of the ever-expanding war on terror.

The U.S. has already encircled Iran with military bases. The U.S. government intends to neutralize China by seizing control over the Middle East and cutting China off from oil.

This plan assumes that Russia and China, nuclear armed states, will be intimidated by U.S. anti-missile defenses and acquiesce to U.S. hegemony and that China will lack oil for its industries and military.

The U.S. government is delusional. Russian military and political leaders have responded to the obvious threat by declaring NATO a direct threat to the security of Russia and by announcing a change in Russian war doctrine to the pre-emptive launch of nuclear weapons. The Chinese are too confident to be bullied by a washed up American superpower.

The morons in Washington are pushing the envelop of nuclear war. The insane drive for American hegemony threatens life on earth. The American people, by accepting the lies and deceptions of their government, are facilitating this outcome.

By F. William Engdahl

URL of this article: www.globalresearch.ca/index.php?context=va&aid=17788

Global Research, February 24, 2010

The decision of the US Federal Reserve to raise its key interest rate was definitely not a sign of confidence in the US economic recovery or a signal that Fed policy is slowly returning to normal as claimed. It was rather a signal of panic over the weakness in US Government bond markets, the heart of the dollar financial system.

Financial markets have reacted with jubilation, by buying dollars and selling Euros, at the decision by the Fed to raise rates for the first time since 2006 for its so-called Discount Rate, going from 0.5% to 0.75%. The Discount Rate is the interest rate charged for banks to borrow from the central bank. At the same time the Fed left its more important short-term Fed Funds rate unchanged and historically low — between 0.0% and 0.25%. In its official statement the Board of Governors said the rate move was intended to push private banks back into the private inter-bank borrowing market and away from reliance on Federal Reserve subsidized money which had been provided since the financial crisis began in August 2007.

The decision, in plain words, was framed so as to give the impression of a return to business as usual. At the same time, financial players like George Soros continue to speak openly about the fundamental weakness of the Euro. This has the effect of taking speculative pressure away from fundamentally worse economic and financial fundamentals within the dollar zone at the expense of the Euro. The reality is that the dollar world is anything but returning to normal.

Unsustainable deficits

The conservative President of the St. Louis Federal Reserve Bank, Thomas Hoenig recently warned in a little-reported speech that if the size of the Federal Budget deficit is not dramatically and urgently reduced, public debt will soon look like that of Italy or Greece, exceeding 100% of GDP. In a recent speech Hoenig noted, The fiscal projections for the United States are so stunning that, one way or another, reform will occur. Fiscal policy is on an unsustainable course. The US government must make adjustments in its spending and tax programs. It is that simple. If pre-emptive corrective action is not taken regarding the fiscal outlook, then the United States risks precipitating its own next crisis.

Translated into laymens language, that means savage cuts in Government spending at a time when real unemployment is running in the range of an unofficial 23% of the workforce, and the states are struggling to cut their own spending, as Federal dollars disappear.

In brief, the United States economy, though no one is willing to say so, is caught in a Third World-style debt trap. If the Government cuts the deficit, the economy sinks deeper into depression. But if it continues to print money and sell debt, buyers of US Treasury debt will at a certain point refuse to buy, meaning US interest rates could be forced severely high in the midst of depression conditionsequally catastrophic to the economy.

Bond boycott?

The second option, a boycott by buyers of US bonds, may have already begun. On February 11, the US Treasury held an auction of $16 billion worth of 30-year bonds and securities to finance its exploding deficits. In a little-reported feature of a sale which did not go well in terms of demand, foreign central banks reduced their share of purchases from a recent average of 43% of the total to a mere 28%. The largest foreign central bank buyers of US debt in recent years have been China and Japan. Secondly, it appears that the Federal Reserve itself was forced to buy the slack demand, some 24% of the total of bonds sold versus 5% only a month before.

The Federal deficit will reach an estimated $1.6 trillion in the current fiscal year that ends September 2010 and will continue next year and for at least another decade, above $1 trillion annually.

The situation will be further aggravated because the largest generation born after the Second World War, the so-called Baby Boom generation born between 1945-1966, has just begun retiring in huge numbers. That deprives the Federal Government of their Social Security tax revenues, which will now go from an asset in the Federal budget to a liability, as the Government must pay out their monthly retirement pensions. This will hugely aggravate the size of the deficits over the next decade and longer.

The highly-touted Clinton era Budget surplus was in reality not the result of anything done by Clinton or his Treasury Secretaries Robert Rubin and Larry Summers. Rather it was because of the deceptive practice of counting on the Social Security tax revenues from that generation as US Government surplus revenue during their peak earning years in the late 1990s. That tax inflow has now begun to turn into what will be a huge outflow over the next decade.

A new China syndrome

However, in the face of all this the White House seems to be implementing a series of foolish policies, with one action in direct contradiction to another. This is the case in terms of recent Washington behaviour towards China, the largest holder of US Government bonds, at least until this past month.

The Obama White House has recently approved punitive import tariffs on Chinese auto tires. Then it increased friction in relations with its largest creditor by announcing a provocative new arms sale of billions of dollars to Taiwan over strong Chinese protest. In addition, Secretary of State Hillary Clinton has meddled in internal Chinese Internet regulation by openly criticizing China for alleged censorship.

Then, as if to rub salt in a wound, despite further official Chinese protest, US President Obama officially met with the Dalai Lama in a Washington ceremony on February 18. Genuine concern for the well-being of Tibetan monks was not likely the reason. It was to signal heightened US pressure on China. Officially, to date, Beijing has reacted calmly, if firmly. Its real response, however, might be coming in a financial arena, not a political one, something that the ancient Chinese military philosopher, Sun Tzu, would have no doubt suggested.

It appears that the Chinese government has already begun to react to the ill-timed US pressures on China by boycotting US Treasury debt buying. In December the Chinese were net sellers of US Government bonds, selling more than $ 43 billion worth of US debt. Given its huge annual trade surplus from its export earnings, the National Bank of China currently holds reserves of foreign currencies and other assets, including gold, worth $ 2.4 trillion. At least 60% of that is believed to be in US Treasury and other Government-guaranteed debt, perhaps some $1.4 trillion. If China continues to dump US debt onto international financial markets, the dollar will plunge and a full panic will ensue in Wall Street and beyond.

To try to reverse this trend of boycotting US bond purchases by foreign central banks and others was likely the real reason that the Bernanke Fed now suddenly raised a key interest rate, despite the worsening of the domestic economy in real terms. They seem to be engaged in a colossal market game of bluff, trying to convince that the worst is over.

That Fed move, as well as recent hedge fund and Wall Street attacks on the Euro in the context of the Greek events, are looking more and more like covert economic warfare for the future survival of the US dollar as world reserve currency. As my latest book, Gods of Money: Wall Street and the Death of the American Century explains, US global power since 1945 has depended on having the dollar as undisputed world reserve currency and the US military as the worlds dominant power. If the dollar falls away, the over-extended military becomes vulnerable as well.

The Fed is in a desperate situation of trying to avert a full bond market selling panic that would trigger such a financial chain reaction collapse. This is why it raised one rate while leaving the more important Fed Funds rate at zero. Its a desperate bluff. So far the lemmings in the financial markets appear to have bought the trick. How long that will last is unclear.

As the Greek crisis is resolved and it becomes clear that the situation, however difficult, in Spain and Portugal and Italy are not about default, as their problems are no where near terminal, the prospects for the dollar and euro could change dramatically.

In this situation Chinas central bank holds major power to decide the possible outcome. One possible outcome of the growing global impasse is the prospect that the Peoples Bank of China will dramatically increase its purchases of gold and silver reserves. That, in turn, could serve China far better than buying more US debt, and serve as a basis to establish a future role of its currency in regional trade and international business independent of the dollar or the euro.

A golden opportunity

Chinas gold reserves until recently have been relatively low compared to the size of its reserves. Official Chinese central bank gold reserves were 1,054 tons as of March 2009, worth about $37 billion at today’s prices. That represents a mere 1.5% of its total reserves, and that is itself up by 76% since 2003. On average, international central banks hold about 10% of their reserves in gold. The German Bundesbank holds some 3,400 tons of gold, the second largest after the US Federal Reserve. To even get to that 10% level, China would have to buy more than $200 billion worth – about two years’ global mine output.

Silver is not a significant part of most countries’ reserves, but China is historically an exception, since in Imperial times before 1900 it was on a silver standard rather a gold standard, and so retained substantial silver reserves. One aim of the 1840s British Opium Wars against China was to drain the Chinese state of its entire silver currency reserves to the advantage of the British gold standard.

In 2001 and 2002 China was a major seller of silver, selling a total of 100 million ounces at its then-price of less than $5 an ounce. Since then, it has stopped selling silver. Last September 2009, the Chinese government passed a decree encouraging Chinese savers to buy silver, explaining that buying silver was a good deal since the gold/silver price ratio at 70-to-1 was historically very high, offering them convenient small-value ingots with which to buy it, and prohibiting the export of silver from China.

This was almost certainly a move designed to dampen stock-market speculation and reduce money supply growth, since bank deposits converted into silver would effectively be sterilized. What’s more, if the long-awaited Chinese banking crisis ever developed, the effect on the long-suffering Chinese public would be mitigated if people held substantial wealth in the form of readily negotiable silver ingots.

It’s likely that China is now a very large buyer of silver, possibly even more than gold. Thus, a selloff in People’s Bank of China holdings of US Treasuries could be offset by purchases of gold for its own account and of silver to supply to the Chinese public.

F. William Engdahl, author of Gods of Money: Wall Street and the Death of the American Century.