Whitman has always been viewed as a poet of the people, in contrast to the pretentious dandies from academia who have controlled official American culture for much of our history. He wrote of workmen, farmers, sailors, soldiers, lovers, criminals, and prostitutes.

In the text of the first edition of Leaves of Grass, he wrote of himself as, “Walt Whitman, an American, one of the roughs, a kosmos, disorderly, fleshly, and sensual, no sentimentalist, no stander above men or women or apart from them, no more modest than immodest.” He had discovered a great secret, one that is known to everyone who is young at heart: that the free individual, always potentially a “kosmos,” stands at a much higher level in the scale of creation than any man-made collective.

Thus was Whitman a hero to the Beatniks of the 1950s who tried to rediscover an authentic American voice in the streets and on the roads and highways of this great land. The spirit of Whitman was surely present through the rebellion of the 1960s, when America’s young men and women rose up and fought the Establishment to stop the Vietnam War and bring civil rights to racial minorities.

The Establishment fought back with a vengeance and, through the most egregious betrayal in history, reduced the world’s greatest industrial democracy to the pathetic shadow of its former self we are today.

The first thing the Establishment did was destroy the industrial job base by shipping millions of good jobs to China and other Third World nations, where slave laborers could be forced to churn out consumer products at a fraction of the cost of similar work done by American workers.

Acting through the CIA and organized crime, the Establishment flooded the cities and college campuses with illegal drugs in order to rot the minds and souls of our youth.

They dumbed down education to the point where young people who graduate today know little and can do less of a practical nature. Vocational training is dead. A high school graduate is worth virtually nothing in the job market, and most college graduates are semi-literate and self-absorbed, without any real backbone, skills, or initiative. Many high school and college graduates are drug addicts or alcoholics.

They turned the economy over to thieves from Wall Street and created a military machine that turns youth into murderers and assassins whose job it is to conquer the world for the fat cats of global capital.

They ruined the arts, literature, and music through crass commercialization, making it almost impossible for any real original creativity to be produced or communicated. The one bright light in this darkness is the internet, which is being threatened by commercial suppression of freedom of expression by the ambitions of big communications companies. Thank goodness too for the rare creative genius like Michael Moore who has the courage to hold up a mirror to this deeply diseased society.

Then they wrecked people’s health with processed food and constant inducements to a sedentary lifestyle while pumping us full of dangerous vaccines and prescription drugs. They drummed it into everyone’s head that we are basically weak, ill, helpless creatures who can only survive by taking pills and making constant trips to doctors, hospitals, and clinics.

They induced us to fight over our possessions and freedoms in law courts with the aid of greedy lawyers in front of rapacious judges who have built up the largest prison population in the world.

They pulled money and credit out of the inner cities and rural areas leaving those segments of the nation and their populations to rot.

The list could go on and on and on.

Today we are in the midst of not just a recession but a terminal depression. Getting the banks to lend again so people can buy homes at what are still over-inflated prices or so they might compete with immigrants to get construction jobs through building of more useless office buildings or military bases is not a recovery. The “greening of America” is a myth. There is no resurgence of alternative energy investment or new public infrastructure apart from a few highway projects.

American family farming is practically dead and is under a new assault from speculators who are undercutting prices and forcing foreclosures. The local manufacturing sector never came back after the calamitous decline produced by the Paul Volcker recession of 1979-1983, when interest rates were deliberately raised to over 20 percent to kill off family-owned businesses so that global corporations could step in and take over. Since then we had the “Reagan Revolution” when the banks took over the economy, the Clinton dot.com bubble of the 1990s which crashed in 2000, and the George W. Bush/Alan Greenspan housing bubble which blew up in 2008. Now Main Street lies shattered and shuttered as a result of the crimes and treacheries of the last 30 years.

True, there is a rebellion brewing, including a monetary reform movement that has attacked the power of the Federal Reserve, as well as a few progressive voices that call for a much larger economic “stimulus” than the Obama administration has seen fit to implement.

But is there any practical plan on the part of either political party or organized movement to restore America to what it once was–a place where ordinary people could live, work, learn, and flourish? The answer is a resounding “No.” Not a chance. And “Change You Can Believe In” hasn’t changed a thing. All it has done has been to produce another financial bubble, this time using huge amounts of public debt through the sale of U.S. Treasury bonds. Business is not growing and jobs are not coming back. The only thing that has gone up has been the meeting of military recruitment quotas.
This latest bubble will fail too, because money created through lending to float the prices of assets is not wealth. Rather wealth consists of goods and services produced by labor applied to natural resources. Those who provide the labor must be recompensed fairly.

So what is to be done? The answer is that nothing can or will be done, if by that you mean whether a political savior is going to come along to rescue our nation and its people from destruction.

In fact, what they are planning is to continue to throttle and enslave us with a predatory financial establishment and a military policy that is preparing the groundwork for World War III. The war will be fought with American troops against Russia and China, after which China will take over as the world’s policeman while this country disappears from the face of the earth. It’s the ultimate plan of the New World Order, the ones American politicians, financiers, military leaders, and academics bow down to.

It is time for each and every individual who values his or her own life along with the creative potential of the human spirit to begin to work with others to create a new nation and world. The government isn’t going to do it for us. Please believe me. This is not a system that can be reformed. It is a system that must be replaced. And it must be replaced by the ordinary working men and women who have been crushed, used, and abused during the past ugly half-century.

Americans, get to work. Call your friends and family together today and begin to figure out what to do. Start with 15 minutes of prayer and meditation. You will be shown the way from within yourselves. My own view is that setting up local currency systems, as many communities are now doing, is a good place to start.

Even if the stock market can be shored up by more government borrowing for “stimulus” spending, it’s a temporary reprieve, because nothing can bring back the consumer purchasing power that was lost when the banks stopped pumping money into the economy through out-of-control mortgage lending. We simply no longer have the job base for people to earn the income they need to live.

The underlying cause of the crisis is in fact the debt-based monetary system, whereby the U.S. ruling class long ago sold out our nation and its people to the international banking cartel of which the Rockefeller and Morgan interests have been the chief representatives for over a century. It was lending on a previously unheard of scale for overpriced assets to people and businesses unable to repay that created the bubbles that burst in 2008, not only in the housing market but also in such areas as commercial real estate, equities, commodities, and derivatives. It was an explosion that reverberated throughout the world.

The Obama administration’s response to the crisis has been to print Treasury bonds both for the financial system bailouts and the sputtering Keynesian stimulus that so far has gone substantially into military infrastructure. This bond bubble is what I have referred to as “Obama’s Last Picture Show.”

Government debt is fundamentally inflationary. For a generation, the U.S. dollar has been inflating at an increasing rate, with the economy being kept in a growth posture by selling our debt instruments abroad or allowing foreigners holding dollars to purchase property and other assets on our own soil. The website EconomyinCrisis.org reports that in 2007, the most recent year for which data are available, “foreign entities spent $267.8 billion to acquire or establish U.S. businesses.”

Foreigners are spending their dollars as fast as possible, because they are now plummeting in value. It’s increasingly clear that sooner rather than later, the dollar will be dumped by foreign purchasers of bonds, particularly China, and possibly even the oil-producing nations.

These nations know full well that bonds denominated in dollars can never be completely repaid, even if the bonds can be rolled over into fresh debt. It’s this dynamic that is dragging the U.S. economy to the cliff, because real economic growth stopped long ago when our manufacturing jobs were exported. This is because most of the growth since Ronald Reagan was elected president in 1980 has been only on paper through financial bubbles. This included the dot.com bubble of the Clinton years that blew up in 2000-2001.

Now, after the Treasury bond bubble of 2009, there is nothing left in America to inflate. With so many jobs gone, the American family home was the last thing of value we owned.

So the air is going out of the tires. Americans who are struggling to work for a living are passive spectators as their jobs, savings, health insurance, pensions, and homes continue to erode in value or even disappear. Last Sunday the Washington Post reported a massive crisis in state and local government pensions. Reporter David Cho wrote, “The financial crisis has blown a hole in the rosy forecasts of pension funds that cover teachers, police officers and other government employees, casting into doubt as never before whether these public systems will be able to keep their promises to future generations of retirees.”

So what, if anything, can be done about it?

Well, the first thing an intelligent physician does is diagnose the disease. Thomas Greco, in his new book The End of Money and the Future of Civilization (Chelsea Green: 2009) , outlines the increasingly familiar story of how things got so bad, and he tells it as well as anyone has ever done. His style is precise and sometimes academic. Behind it, though, is a passion for truth and the type of rock-solid integrity that refuses to sugar-coat a very bitter pill.

More than that, Greco writes about how to change what has gone wrong. His credentials as an engineer, college professor, author, and consultant are impeccable. His book is among the most important written in this decade. It is truly a book that can alter the world and, if taken seriously, give large numbers of people a practical way to survive the gathering catastrophe.

But unlike most commentators, what Greco offers is not another phony prescription for what the financiers and government should do for us, whether through “restarting” lending or another round of stimulus spending. Rather it’s what we should do for ourselves, and could do much better, if we understood what to do and if big banking and big government just got out of the way.

As I said, at the root is the monetary system, whose failure cannot be understood without a history lesson. So Greco writes about the struggle between banking and democracy that took place in the 1790s when the ink on our new national constitution was barely dry.

It was Alexander Hamilton, the first secretary of the treasury, who compromised the new nation, through what he admitted was “corruption,” by giving the wealthy speculators in Revolutionary War bonds the benefit of federally-sponsored redemption and then by establishing the First Bank of the United States. This early drift toward elitist rule was opposed by Thomas Jefferson, James Madison, and others who figured in the creation of what later became the Democratic Party.

Greco writes: “While Jefferson favored a stronger union than that which emerged under the Articles of Confederation, he was vehemently opposed to the reconstruction of monarchic government on the American continent.” Hamilton had said frankly that the British monarchy was the best system of government known to man. Part of the monarchic system was the Bank of England, which Hamilton copied when setting up the First Bank.

But Jefferson, who repudiated Hamilton’s elitist platform, was elected president in what was then called “The Revolution of 1800.” Congress refused to renew the Bank’s charter by a single vote when it was up for renewal in 1811.

But the Second Bank of the United States was chartered in 1816 due to the government debt left behind from the War of 1812 against Great Britain. Thus was set up what became known as the “Bank War.”

It was President Andrew Jackson who dethroned the bankers from power by pulling government funds out of the Second Bank in 1833. Greco writes that in Jackson’s view: “The ‘Bank War’ was a contest for rulership—would the United States be governed by the people through their elected president and representatives, or by an unelected financial elite through their central bank instrument?”

The modern takeover began in earnest during the Civil War when Congress passed the National Banking Acts in 1863-64 which mandated use of government bonds as bank lending reserves, thereby creating a direct linkage between bank profits and the debt the government was starting to load on the shoulders of taxpayers.

The nation’s fate was sealed with the passage of the Federal Reserve Act in 1913. The deal was that the bankers would control the currency, and thereby the nation’s economy, while the government would be provided with an unlimited amount of inflated dollars to fight its wars.

The bookkeeper’s trick of creating money out of thin air, charging interest for its use, then forcing it down the throats of weaker nations by threat of violence, is what has allowed the Anglo-American empire, since the founding of the Bank of England in 1696, gradually to conquer the world. Though President Woodrow Wilson signed the Federal Reserve Act into law, he saw what that action meant. Greco cites Wilson as writing: “There has come about an extraordinary and very sinister concentration in the control of business in the country…. The great monopoly in this country is the monopoly of big credits.”

Among other ill effects, the system has ruined the value of the currency. The inflation caused by large issues of bank-created loans is seized upon by the government which goes along because inflation reduces the cost of its deficits. Investors buy Treasury bonds denominated in Federal Reserve Notes then watch their value evaporate over time. In fact Federal Reserve Notes have lost over 95 percent of their value since they were first introduced.

Moreover, it’s additional inflation caused by bank-generated interest that drives up the costs of goods and services, forcing everyone in the economy to try to defend themselves by raising their prices to the max. Greco spells this out too, which almost every economist in the world, with the exception perhaps of Australia’s James Cumes, overlooks.

Bank interest has other tragic effects. It was high interest rates, for instance, that destroyed the Idaho potato industry. A farmer from that region told me at a conference a few years ago that when interest rates skyrocketed in the early 1980s, he asked the president of one of the Federal Reserve Banks why they did it. The answer was they were “ordered” to raise interest rates by the international banking system.

Make no mistake, it’s the banking system, facilitated by the Fed, not unwary borrowers, who brought on the collapse of 2008.

Now, in 2009, the bankers, mainly those in the U.S., have so shattered the world economy by debt mounted on debt that there may be no reprieve except the creation of a slave society based on rule by the rich over the masses of whatever peons should happen to survive the downturn and its tragic effects on employment, health, the food and water supply, and even our ability to cope with climate change.

The political establishment, expressing itself in pronouncements by organizations like the Council on Foreign Relations, see a future, not of economic democracy or increased financial pluralism, but consolidation of world currencies into a small number overseen at the top by the world’s financial oligarchy. Citing the writings of Benn Steil, the CFR’s Director of International Economics, Greco writes: “The ostensible plan is to reduce global exchange media to three—one each for Europe, the Americas, and Asia. One might reasonably suppose that at a later stage, those three would be combined into one currency also under the control of the global banking elite.”

Greco concludes: “The New World Order is upon us.”

With ample justification, he even goes apocalyptic, citing The Book of Revelation in demonstrating the import on a spiritual plane of the elitist takeover: “And he causeth all, both small and great, rich and poor, free and bond, to receive a mark in their right hand or in their foreheads: And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name.” (Revelation 13: 16-17)

But is it really the end, or is there a new world waiting to be born? Greco thinks so. He speaks of the end of an era when unlimited economic growth fed by massive influxes of debt-based money is no longer sustainable. He writes: “That our global civilization cannot continue on its current path seems evident….But I think our collective consciousness is beginning to change. We are becoming aware of limits and are reaching that part of our evolutionary program that says, ‘Stop!’”

Part of the awareness of how to stop must focus on the institutions responsible for the crisis. Greco praises Ron Paul for calling out the Federal Reserve in the 2008 presidential campaign. He cites a statement Paul made to Federal Reserve Chairman Alan Greenspan in a 2004 hearing where Paul told Greenspan that the power of the Fed “challenges the whole concept of freedom and liberty and sound money.” Thus Paul and other monetary reformers, though largely ignored by the mainstream media and political establishment, have made it clear that change must start with what really lies at the bottom of elite control: how money is made and who makes it.

Unfortunately, few progressive economists, including Paul Krugman, Joseph Stiglitz, and Robert Reich comprehend the monetary causes of today’s disasters. Instead of demanding reforms that would make money the proper servant of a sustainable economy, most call for more stimulus spending; i.e., more government debt, along with “reform” of a financial system that is corrupt down to its very DNA.

So do we really need the bankers’ fake currency, today backed by nothing but a federal deficit of $12 trillion and growing by the day?

Greco says we don’t, and this is what his book about. But it’s not about doing without the necessities of life, or heading for the hills with a gun and backpack. Nor is it about important efforts at macro-level monetary reform like those of the American Monetary Institute, Congressman Dennis Kucinich, or advocates for a basic income guarantee. Rather it’s about individuals, groups, and communities taking control of the monetary system at the grassroots level and creating an entirely new basis for trade than bank-owed debt.

Greco writes about “a new paradigm approach to the exchange function.” The solution, he says, “is to provide interest-free credit to producers within the process of mutual credit clearing. That is the process of offsetting purchases against sales within an association of merchants, manufacturers, and workers. It will eventually include everyone who buys and sells, or makes and receives disbursements of any kind.”

Greco is one of the world’s leading experts in describing alternative or complementary currencies. These are self-regulating systems that facilitate “reciprocal exchange,” not using government legal tender but which are still allowed under the currency laws so long as taxes are not evaded.

Greco discusses the large and growing worldwide “LETS” movement—Local Exchange Trading Systems, like the Ithaca HOURS system in Ithaca, New York. He describes the Swiss WIR Bank, the longest-running credit clearing system in the world, with over 70,000 members. He writes about the national and international barter exchanges that involve over 400,000 businesses trading at an annual level of $10 billion.

Greco also describes the world-famous Mondragon Cooperatives from the Basque region of Northern Spain. Started by a Roman Catholic priest in 1941, the Mondragon system, he says, is “the hub of what is probably the most successful and progressive social cooperative economy in modern history.”

He also tells the inspiring story of the Argentine trading clubs—the trueques—which, when used with “provincial bonds” issued by regional governments, rescued that country during the 2001 economic collapse brought on by the collusion between the Argentine government and the International Monetary Fund.

Credit clearing is not new. Greco traces it to the medieval European fairs. These exchanges are like banking clearing houses. The world’s largest is the automated clearing house—ACH—operated by the Federal Reserve.

But as Greco points out: “The clearing process need not be restricted to banks; it can be applied directly to transactions between buyers and sellers of goods and services. The LETS systems that have proliferated in communities around the world use the credit clearing process, as do commercial trade exchanges. Credit clearing systems are, in essence, clearing houses—but their members are businesses and individuals instead of banks.”

Alternative currency and trading systems, says Greco, are the wave of the future. Even though most only mount up to partial local successes, they show what can be done. Greco likens these efforts to the Wright Brothers’ first flight that covered 120 feet. They show, he says, that the potential exists for local, regional, then national and international money-free exchanges that eventually could be joined by a single web-based trading platform. This could eventually get rid of the corruption of debt-money altogether.

Chapter 16 of the book is about “A Regional Economic Development Plan Based on Credit Clearing” that shows the potential. Greco writes, “The credit clearing exchange is the key element that enables a community to develop a sustainable economy under local control and to maintain a high standard of living and quality of life.”

This would be a real revolution. What can governments do to help? Perhaps only by removing, as Greco recommends, the privileged position of bank debt-money as legal tender. Instead, let bank money compete with market-based alternative currencies and credit exchanges, if it can.

Greco’s book is a how-to-do-it manual that updates and expands on his previous books, Money and Debt: A Solution to the Global Crisis, New Money for Healthy Communities, and Money: Understanding and Creating Alternatives to Legal Tender. Greco also operates a website that offers advice and support to worthwhile community initiatives.

My own view is that no one should wait to see who takes the lead in creating the monetary and credit-clearing systems of the future. The time is now. There is no more reason to delay. If the people of the world do not join together in this kind of action, they can likely kiss their economic future and perhaps their livelihoods good-bye. The controllers of the world, those with the big money, the ones who run the banking systems, who own the global corporations, and who finance politicians like Obama, the Bushes, and the Clintons, are now poised in their blindness to extinguish the light of democracy on the planet for good.

Greco is implying that the power of the elite is not only dated but illusory. Thus the way to proceed is not just to oppose them. If they are opposed, they’ll do what they always do, which is to roll out the SWAT teams, the military in the streets, the tear gas, the sound cannon, the concentration camps, the Patriot Acts, the torture chambers, because that is all they know, and it’s what they do best.

The money monopoly translates into a monopoly on violence on an ascending scale. We know that the U.S. sells more weapons abroad than any other nation, and we know that it is war above all that makes the bankers rich.

So let them have their weapons and wars. With all due respect to those brave enough to protest, it’s time for people simply to walk away and set up their own economic and monetary systems as a prelude to a rebirth of humanity as ethical beings in sustainable communities of choice.

The keys, says Greco, are simple: “Promote the establishment of private complementary exchange systems—and use them. Buy from your friends and neighbors wherever possible. Contribute your time, energy, and money to whatever moves things in the right direction.”

Greco also recommends that the unit of exchange for alternative currencies be based on the value of commodities—not necessarily gold or silver, which bankers and governments manipulate, but those commodities readily available within a trading system. State and local governments should do everything possible to protect, encourage, nourish, and participate in these systems.

The irony is that what may appear on the surface to be technical changes in how the exchange of goods and services takes place can have such profound effects. The answer is that systems of exchange reflect entirely different perceptions of the world. Bank-money exchange reflects and creates a system of elite control and human slavery. Reciprocal credit exchange reflects and creates a democratic system on a level monetary playing field.

The difference points to the fact that such reform is, above all, a spiritual endeavor. Thomas Greco has devoted decades to this quest and is one of its foremost visionaries. In an Epilogue he writes: “We will either learn to put aside sectarian differences, to recognize all life as one life, to cooperate in sharing earth’s bounty, and yield control to a higher power—or we will find ourselves embroiled in ever-more destructive conflicts that will leave the planet in ruins and avail only the meanest form of existence for the few, if any, who survive.”

It’s a vision we can all strive to embrace.

It is not difficult to come up with methods to solve today’s economic crisis through monetary reform. Many of us are doing it. The key, as I have been writing for the past several years, is to treat credit as a public utility, not the private property of the world’s financial elite.

If we truly adhered to this concept, we would be able to see that a debt-based monetary system, where money only comes into existence through bank lending, can succeed only in isolated circumstances when a growth bubble outpaces the ability of the public to pay interest charges for the privilege of having money to spend and thereby to survive.

Whenever the growth bubble fails, as we have seen over the last three years, the system crashes, the financiers pick up assets for pennies on the dollar, and the cycle starts again. It seems haphazard and unpredictable, but we all know that the system was designed this way and that only the wealthy profit in the long run.

The rich use governments, through which they control politicians, bureaucrats, and covert operatives, to protect and enhance their power. Democracy is subverted. Once the rich have their host country firmly under control, they branch out to the rest of the world. The key then becomes the use of financial power to control the world’s resources through trade and currency manipulation and the management of legal codes and institutional rulemaking.

If social classes within the host country or foreign nations victimized by financial hegemony should happen to rebel, police and military forces are deployed to crush the rebellion. Educational systems and the mass media are employed to brainwash civilian populations by keeping them docile and compliant. A host of methods are employed, including false-flag terrorist events, to instill fear in the population and keep them beholden to the authorities for protection. Because the financial elite are parasites who kill their hosts, they must constantly ensnare new victims.

The foregoing is a complete picture of the present world situation. The last two hundred years have been marked by the march toward world conquest by the money-masters through the Anglo-American military-financial-intelligence colossus, combined with their bought-and-sold allies from the privileged classes of subservient nations.

The outcome was in some doubt during the 1970s in the aftermath of the Vietnam War. But beginning with the Reagan Doctrine in the 1980s, where a decision was made to gobble up the world one small country at a time, the march forward resumed. The 1990-91 Persian Gulf War, the carving up of Yugoslavia later in the 1990s, and the conquest of Iraq and Afghanistan most recently have brought the Western alliance to the borders of Russia. The attack now continues through the Caucasus region, even as Iran and Pakistan are being isolated.

It may be controversial to say that Russia is the target. Why might this be so? It’s because the financial takeover by the West in the 1990s didn’t work. An independent Russia has made a comeback. They have a lot of nuclear weapons and know how to use them. The collapse of the Soviet Union, leaving the U.S. “the world’s only superpower,” created a far more perilous imbalance than most people are aware of. It’s an imbalance that has caused Western military planners—for instance with NATO—to dangerously overreach.

The big question geopolitically is whether China can be induced to stand with the West. This was the objective of the effort beginning around 1971 under President Richard Nixon’s “Opening to China” to incorporate China into the Western financial system. But today China increasingly seems to be standing alone, with the makings of a self-sufficient banking and industrial complex—and a stable currency—that is defying Western attempts at control.

Will there be an “oriental surprise?” Will China reach a point where it makes an irreversible decision to side with Russia or stand against the West? No one knows. Henry Kissinger wrote in the Washington Post on August 19, 2009, that keeping China as a friend to the West is essential for the “New World Order.” And yes, he used those words—this is not a big secret. The winds of change are also blowing in Japan, where the pro-American ruling party has just been voted out.

Personally, I find this struggle for world domination repugnant—the complete triumph of the rule of materialism and violence. As Rodney King said, “People, I just want to say, you know, can we all get along?” Indeed, why can’t we see that life on earth, as Pope Benedict XVI recently pointed out in his encyclical Caritas In Veritate, is a gift from God to man, a gift that bestows on all of us the duty to treat each other fairly and with compassion?

So, in the face of the current world horror, what chance do monetary reformers have to be heard?

The answer, I believe, is that we are being heard. My mind goes back to 2003, only six years ago, when Stephen Zarlenga came to my office at the U.S. Treasury Department in Washington, D.C., where I had booked him to give a presentation based on his book, The Lost Science of Money. Later I worked with Steve on his first draft of the American Monetary Act. The time came when Steve began to meet with Congressman Dennis Kucinich, briefing him and others in Washington on monetary ideas.

So much has happened since then. So many more people have become aware of the evils of the debt-based monetary system. We have seen Congressman Ron Paul ignite a national storm of revulsion against the Federal Reserve System. There is now even hope that the American Monetary Act might be introduced on the floor of Congress.

But it is also perfectly obvious that this is only a start. The start, however, has been made, though there’s a long way to go.

We’ve had promising starts before. Back in the latter part of the 19th century, the American public were far more attuned to ideas of monetary reform than at any time since. There was then a Greenback Party that elected members of Congress and ran candidates for president. The Populist Party understood monetary issues and the importance of a flexible and expansive currency. Henry George became the leading author of the day with his reformist ideas based on the principle that the earth was a commons from which all have a right to benefit.

But then, when the international bankers finally succeeded in taking over the country through the passage of the Federal Reserve Act of 1913, the curtain fell. It wasn’t an iron curtain; it was a red velvet curtain, such as graced the windows of the rich financiers of the age who benefited. These financiers started two world wars to consolidate their dominion. They may yet start a third. The Reagan Doctrine may have made it inevitable.

But I do not believe the warmongers will have the last say. Even if they bring down upon us another world catastrophe, those who believe in the better side of humanity will eventually win, because our cause is just and our ideas are based upon truth. Without monetary reform there can never be economic democracy. But with it perhaps the chief cause of war can be eliminated: the unjust distribution of wealth among people and nations, where some get far too much and many get nothing.

I strongly support the American Monetary Act, the movement for a basic income guarantee, and proposals supporting citizens’ dividends such as those of the Social Credit movement or the ones already in place through programs like the Alaska Permanent Fund. Even if such measures are not immediately implemented, the effort to promote them serves the purpose of educating millions of people.

Our present responsibility is getting the word out that there is indeed a far better way to do things and that real change is possible. That money and credit can empower people, not just enslave them. That debt is unnecessary when credit is viewed as a public utility. That technology when properly distributed can free people for higher intellectual and spiritual pursuits, not just eliminate jobs and force millions of people into bankruptcy and starvation. That, as Henry George and his successors have made clear, resources are for everyone, not just a few.

I have come up with my own proposal for immediate relief that I call “The Cook Plan.” One of the worst myths of our time is that for government to spend money it can only collect that money ahead of time through taxes or by borrowing. “The Cook Plan,” instead, would have the government print and distribute vouchers in the amount of $1,000 a month to any adult resident who applied.

The vouchers could be spent on necessities of life such as food, housing, clothing, transportation, or communication. They would then be deposited in a series of community savings banks and used to capitalize low-interest lending to individuals, students, small businesses, and family farms. The backing for the vouchers would be the new economic production they would engender at the grassroots level of every community.

This measure alone would take a giant step toward bringing about a healthy U.S. and world economy at the level of “We the People,” rather than the fruitless and hypocritical attempt to create “recovery” through bank lending and government deficit spending. “The Cook Plan” has met a positive response from around the world during the several months since I proposed it.

My views, while economically sound, have a spiritual basis. I believe in God, and I believe that man was created in the image of God. I believe that a world where we love our neighbor as ourselves and implement this love through social and economic policy is not just a dream, that it is the only practical way to live.

I believe in the family of man and the responsibility of man to be a good steward of the earth and the environment. I believe financial tyranny has done its best to destroy these values. But I see an upsurge of desire and commitment among people for a new day, a truly democratic society, and a life on earth that is organized and conducted sanely, compassionately, and wisely.

Those who attend such events as the American Monetary Institute’s 2009 conference understand all this. Together we will continue to work toward our ideals, no matter what disasters may intervene. It will take time and hard work, but we and those who come after us shall prevail.

Wexler’s statement continued by stating that, “The committee will investigate many of the outrageous policies of the Bush Administration to unearth and expose what happened during the past eight years…. We must take a hard look at what went wrong in the last eight years. We must continue to peel back the veil of secrecy that the previous Administration used as cover to undermine our system of checks and balances, and establish a clear line between what is necessary for our security and what is unlawful government intrusion and a violation of our civil liberties.”

Wexler is not the only member of Congress to announce his attention to call out the Bush administration on its abuses. Senator Patrick Leahy wants to set up a “Truth Commission,” whose mission, as described in Time, would be “to investigate the politicization of prosecution in the Justice Department under former Attorney General Alberto Gonzales; the wiretapping of U.S. Citizens; the flawed intelligence used to justify the invasion of Iraq; and the use of torture at Guantanamo and so-called black sites abroad. Leahy’s commission is to be modeled after one that investigated the apartheid regime in South Africa.”

The trouble is that congressional investigating committees rarely amount to anything. An example was the 1976 House Select Committee on Assassinations, set up to investigate the killings of President John F. Kennedy and Dr. Martin Luther King, Jr. The committee met largely in secret, withheld much of its evidence from the public, and, while it said both assassinations likely involved conspiracies, stated no government agencies were parties to them. The latter point has been disputed by independent researchers both before and since.

Another example was the National Commission on Terrorist Attacks on the United States, a.k.a, the 9/11 Commission. While the commission concluded that failures of the CIA and FBI allowed the attacks to occur, it failed to look at any possibility of complicity by those agencies or the Bush administration. Members of the commission later said government officials lied to them and impeded the investigation.

It’s possible, of course, that any committees set up to investigate Bush, Cheney, at.al., will have better luck, but will they examine the questions that really matter? Neither Wexler nor Leahy mention reopening the 9/11 case. And neither mentions the event that may be just as momentous—this is the “financial 9/11”; i.e., the 2008 collapse of the U.S. financial system.

I’d like to find out, for instance, how the 9/11 terrorist attacks were connected with the extraordinary movement of massive amounts of funds within and outside the Federal Reserve and U.S. banking system that led to a huge growth in the M3 monetary supply before the Federal Reserve stopped reporting M3 data in 2006. Such a link has been suggested in some internet reports.

I’d also like to know how and why Federal Reserve Chairman Alan Greenspan colluded with the Bush White House to suddenly start pumping massive amounts of credit into the housing bubble from 2001-2005 and what instructions went out to Comptroller of the Currency, the Securities and Exchange Commission, and other federal regulators to prevent the abuses in the subprime mortgage market from being investigated.

Then I’d like to know why the Bush Administration, including Secretary of the Treasury Henry Paulson, claimed no one foresaw the crash of the financial system in October 2008, why the demand was suddenly made to Congress for over $700 billion in bank bailouts, and what the role of Paulson and the host of other former Goldman-Sachs executives working for the Bush administration had in setting the stage for the crash and profiting from it. And why is current Secretary of the Treasury Timothy Geithner doing virtually the same as Paulson did in throwing money at the banks while the economy sinks deeper in recession?

Of course neither Wexler nor Leahy intends to examine any of these issues. Which is why their calls for investigations make good political theater, may put a few minor players on the hot seat, but, in the big picture, will be a complete waste of time. A better course would be a Special Prosecutor. But the Obama administration has given no indication of doing this either.

We hear a distant tune reminiscent of America’s high and lonely places and the sound of a dry wind blowing. It’s March 2010 in the tiny West Texas town of Anarene. Nothing much happens here any more. The last business shut down a couple of years ago. It was a cement plant that went broke after the housing bubble burst and the banks stopped lending. The kids out of high school drive their jalopies from one end of Main Street to the other past boarded-up storefronts.

Some of the grown-ups carpool to low-wage jobs in a city 50 miles down the road. The elderly have had their Social Security eaten up by the high price of food but still get by on Spam and Kool-Aid. There used to be a movie theater, but it too closed a few months ago. Not a single person went to the Last Picture Show.

But there is change in the air! President Barack Obama, who was elected president a couple of years ago, is in the middle of his fiscal year 2010 budget. The 2009 budget had a deficit of $1.75 trillion, a number no fool could even have imagined before the crash of 2008. The projection for 2010 is $1.17 trillion, due to the government’s hopes for an economic recovery. But the jury is out on whether a recovery will ever happen.

Some say the banks are starting to lend again, though no one at the Anarene State Bank knows anything about it. Some say the city down the road is getting a plant to make blades for those new wind turbines. The Anarene high school got funding for an adult training course on writing resumes. The Nightly News says, “America is coming back.”

I wish!

So what is really going on here?

Well, President Obama’s 2009 budget has attracted a lot of attention. $1.75 trillion? That’s not federal spending. That’s new federal debt!

A good measure of fiscal policy is federal government tax revenues. Revenues for 2009 are projected at $2.19 trillion, off 13 percent from a year ago, due to the recession. With the huge bank bailouts and Obama’s $787 billion economic recovery program, 2009 expenditures are estimated at $3.94 trillion, an increase of 33 percent over 2008.

Then there’s the interest taxpayers must pay on the national debt, which will likely reach $600 billion in 2009. Of course almost 100 percent of all new federal debt is financed by foreigners, mainly China.

But don’t worry, the recovery program will succeed, and the economy will start growing again. THE GOVERNMENT PROMISES! Obama’s budget forecasts such a strong upsurge in economic activity by the end of 2009 that the net for the year will be GDP growth of 1 percent. (Yes, that’s what it says.)

Is it a contradiction that the government is conducting “stress tests” on the nation’s banks in which it is predicting that the recession will last at least until 2011 to see if those banks are strong enough to weather the storm? Yes, it is a contradiction. Even the Federal Reserve does not see recovery coming as quickly as Obama’s budget. Neither do any economists. The budget is not an honest document.

It gets worse. The budget says growth will then continue as far as the eye can see—the projections go out to 2019, when we’ll have a GDP of $22.86 trillion, 61 percent higher than 2008. Happy days will be here again!

So go back to sleep, America. It’s official. The recession we are in right now will end soon and is the last one ever.

This means that the financial industry will soon be fixed, plenty of good jobs will be available, climate change and drought will be overcome, the government budget will be right-sized, and America and the world will be content and at peace. All because of the decisions being made by the Obama administration and approved by Congress during these few critical weeks we’re in the middle of right now.

But there are a whole swarm of flies in the ointment. I’ll mention just two.

One is that according to University of Massachusetts economist Thomas Ferguson, who spoke at last weekend’s Eastern Economic Conference national conference in New York, the Bush/Obama bank bailouts alone will cause a permanent addition of interest payments on the national debt of $100 billion a year forever. That means every American will pay, during the course of his or her lifetime, over $20,000 to rescue the banks from their bad loans. To put that number in perspective, it equates to 2-1/2 years of tuition at a state university that instead will be paid to the government of China or a similar foreign investor.

Yes, America, that is what your elected government just decided you will do.

Another is that the U.S. has had virtually no real economic growth since the early 1970s, because since then we’ve lived in a bubble economy. Look it up. Most of our industrial output has been flat or has declined. Whole industries, such as steel, are shadows of their former greatness. The automobile industry is on life support. We’ve imported huge amounts of foreign capital by selling them our real estate and businesses. As stated on the Economy in Crisis website:

The United States now no longer controls many of its domestic industries. Over the last 10 years alone foreigners have spent $1.2 trillion to acquire more than 8,000 key US companies. Already as of 2002, foreigners owned fully 20 percent of American manufacturing. In many high-tech and defense-related industries, the proportion is far higher. Such US industries as mining, cement, publishing, engine and power transmission equipment, rubber and plastics, and sound recording and motion pictures are now largely foreign owned. Even in industries like pharmaceuticals, chemicals, industrial machinery, transportation equipment, electronics, metal industries, and coal and petroleum industries, foreign ownership has recently become very high.

Until the last year, the biggest growth industry within the U.S. had been the financial sector, producing profits of over $500 billion as late as 2006. In other words, the U.S. has replaced working for a living with the manipulation of money and the extraction of interest, either by lending it or by brokering the lending and investment by foreigners. In order to enrich themselves, the financiers, with a lot of help from the government, created the merger/buyout bubble of the 1980s, the dot.com bubble of the 1990s, and the housing/equity/hedge fund/derivative bubble of the 2000s.

All this time, the federal, state, and local governments have tried to keep up by taxing every financial transaction they can get their hands on, including by raising property taxes on the inflated value of family homes. But now, with the last of the bubbles deflating, the tax base is vanishing. So governments, along with the private sector economy, which has been living on capital gains in the absence of job income for all but the very rich, have gone into the tank as well.

President Barack Obama’s economic recovery program, along with the budget just released, is an attempt to substitute a federal government bubble for the failed private sector ones. Like the private sector bubbles, this one is also based on debt. This is because debt is the only way anyone in the U.S. can any longer think of when it comes to creating a national money supply. It includes the president’s proposed $5 billion federal infrastructure bank for lending to state and local governments. This bank will probably offer better interest rates than the bond markets, but it’s still debt.

There was a time in U.S. history when other ways were known to create money; for instance, during the Civil War, when Congress authorized the Lincoln administration to spend Greenbacks directly into existence. The banks hated the Greenbacks, of course, so they got Congress to pass the National Banking Acts of 1863-64, which were the prelude to the Federal Reserve Act of 1913. Today, Greenback-type funding for the federal government is one of the chief provisions of the American Monetary Act drafted by the American Monetary Institute.

Another way to introduce debt-free money into the economy is through a dividend, such as the Alaska Permanent Fund, which in 2008 paid every resident $3,269 tax-free out of the state’s resource revenues. There is no good reason why such a dividend could not be paid by every state or by the federal government.

Greenbacks and programs like the Alaska Permanent Fund are part of what I call Dividend Economics. It’s why I’ve proposed the “Cook Plan,” which would be a system of vouchers for the necessities of life in the amount of $1,000 a month for any adult citizen who applied. A smaller amount would be provided as an allowance for children.

The vouchers would be taxed like any other income and would supplement other entitlements such as unemployment compensation, Social Security, etc. But taxes would be low for those who would use the vouchers as a main source of income. Under the plan, the vouchers would then be accepted as deposits at a new network of community savings banks that would lend at one percent interest to consumers, students, small businesses, local manufacturing establishments, and family farms.

This would introduce over $2.5 trillion of debt-free money into the economy over the next year, because under the “Cook Plan,” the dividend would be paid directly by the U.S. Treasury without borrowing or taxation. It would not be inflationary, because it would replace money from public bank lending and would result in new goods and services being created within the U.S. producing economy. In fact, we would see a renaissance of local and regional economic activity that would eventually transform the national economy as well.

You may ask, should we just be “giving away money?” My answer is that if the banks can create trillions of dollars in credit out of thin air for lending, why can’t the government create it for the people? The same goes with the trillions the government is borrowing to pay to the banks to reinflate the bubble economy. Give it to the people instead. Look at Obama’s economic recovery program that equates to $225,000 for each new job it hopes to create and probably won’t. Give that to the people too. Let them use the money as a dividend to live on during this emergency and create new jobs as well.

Right now there is nothing further from the minds of President Obama and his advisers than such ideas. That’s why his new bubble budget is America’s Last Picture Show.

Too bad neither the president, nor Vice President Joe Biden and Speaker of the House Nancy Pelosi applauding on the podium behind him, nor the jubilant Democrats with their solid majorities, nor the grumpy Republicans slouching in the minority across the aisle, know what they are doing as economic extinction stares the United States of America in the face.

Yes, it’s that bad. The day after the speech the Dow-Jones dropped to 7,271, almost 50 percent off its October 2007 high, with no bottom in sight. According to the Washington Post, the Big Three automakers are now facing a “bottom-up” collapse of their component supply lines if their vast network of suppliers doesn’t receive new federal loans within a week. Worldwide the situation is just as bad. The U.N.’s International Labor Organization reports:

“What began as a crisis in finance markets has rapidly become a global jobs crisis. Unemployment is rising. The number of working poor is increasing. Businesses are going under.”

President Obama’s speech was long on resolve but short on substance. He assured the nation:

“We will rebuild, we will recover, and the United States of America will emerge stronger than before.”

But accomplishing this depends entirely on one thing: more federal deficit spending to serve as the economic engine in an economy where bank lending has dried up because businesses and consumers can no longer repay their loans.

Unfortunately, the deficit is approaching the breaking point.

During fiscal year 2009 the U.S. Treasury is on-track to pay over $500 billion just in interest payments to finance the already-existing debt. New debt this year will likely exceed a trillion dollars. The total debt burden on the economy as a whole could reach $70 trillion by 2010, with annual interest payments for individuals, households, businesses, and all levels of government likely to reach $3 trillion out of a $14 trillion GDP that is now in sharp decline.

Financing the deficit continues to depend on whether China will still purchase Treasury bonds. This is why Secretary of State Hillary Clinton said frankly during last week’s trip to China : “We are relying on the Chinese government to continue to buy our debt.”

But at least President Obama is trying. He knows the economy can only recover if growth is rekindled. So he is focusing on the creation of jobs that translate into real worker income. But can he reverse a generation of job outsourcing and income stagnation? I don’t know of anyone who believes he can. Will the Republican nostrum of tax and spending cuts do anything? You jest. Not when unemployment is approaching Great Depression levels.

But neither President Obama, nor his Democratic supporters or Republican antagonists, should feel badly about what is happening. This is because the system they have been given to work with was designed to fail. The U.S. was saddled long ago with a debt-based monetary system, whereby the only way money can be introduced into circulation is through bank lending. It was the system that was instituted in 1913 when Congress gave away its constitutional power over money creation to the private banking industry by passing the Federal Reserve Act.

It was then that the catastrophe we are now facing became inevitable. It took nearly a century to get here but it finally happened. We should have known it was coming when Federal Reserve-created bubbles replaced economic growth from our disappearing heavy industry, starting with the recession of 1979-83. We could have seen it coming when the dot.com bubble collapsed in 2000-2001, and Fed Chairman Alan Greenspan worked with the George W. Bush administration to substitute the housing bubble for a real recovery.

The day of reckoning is here. So don’t worry, Mr. President. It’s not your fault. When the collapse takes place the international bankers who will take over might even let you keep your job.

Dear Dr. Stiglitz:

I have just finished reading your article published on Alternet.org entitled, “Is the Entire Bailout Strategy Flawed? Let’s Rethink This Before It’s Too Late.”

With all due respect, I believe you have missed the point of what is going on within the U.S. economy, which causes your proposed solutions to be similarly flawed.

The purposes of this letter are to delineate my objections to what you have written, to bring our differences before the public, and to challenge you to a debate when I visit New York City on February 27-March 1, 2009.

You state that, “America’s recession is moving into its second year, with the situation only worsening.” But you then say, “The hope that President Obama will be able to get us out of the mess is tempered by the reality that throwing hundreds of billions of dollars at the banks has failed to restore them to health, or even to resuscitate the flow of lending.”

You thereby imply that the economic crisis is due to problems within the financial sector and that it would be a good thing to “resuscitate the flow of lending” without challenging why that lending became such a huge factor in our economy.

I say: The problem does not lie with the financial sector except that the debt-based monetary system acts as a parasite on the producing economy, resulting in the vast overhang of debt that can never be repaid. “Resuscitating the flow of lending” will do no good, because the collapse of consumer purchasing power due to job outsourcing and income stagnation has made it impossible for people to pay their debts. Most of this debt now needs to be written off and our producing economy restored as our chief source of wealth.

You say of the government’s bailout actions late last year: “Then there was the hope that if the government stood ready to help the banks with enough money — and enough was a lot — confidence would be restored, and with the restoration of confidence, asset prices would increase and lending would be restored.”

I say: In making this observation you may be correct, but you fail to challenge the policy whereby asset price inflation, in the absence of real economic growth, has become an ersatz economic driver. Throughout your writings you have ignored the fact that the government and the banking system have deliberately created financial bubbles to shore up the economy, engender profits, and maintain tax revenues. This is what the Federal Reserve under Alan Greenspan did in collusion with the Bush administration to create a recovery when the Dot.com bubble was collapsing in 2000-2001. None of your proposals would revitalize the producing economy or restore consumer income. You seem to be mainly trying to re-inflate the asset-financial bubble in your own way.

You say: “The underlying problem is simple: Even in the heyday of finance, there was a huge gap between private rewards and social returns. The bank managers have taken home huge paychecks, even though, over the past five years, the net profits of many of the banks have (in total) been negative. And the social returns have even been less — the financial sector is supposed to allocate capital and manage risk, and it did neither well. Our economy is paying the price for these failures — to the tune of hundreds of billions of dollars.”

I say: It is true that bank manager salaries and bonuses are obscene, but the way you characterize “social returns” is shortsighted. You speak of bank profitability falling short even though, since the financial deregulation of the 1980s and 1990s, the banks have become the nation’s chief growth industry, with profits as late as 2006 of over $500 billion. Further, the financial sector doesn’t really “allocate capital.” What it does is skim the cream off the top of the producing economy by financing consumption and facilitating the most irresponsible types of speculation in the real estate, equity, hedge fund, and derivative markets. For example, up to 97 percent of futures contracts comes from bank loans irrespective of whether such lending has any benefit for consumers or producers. The banks allocate capital primarily for their own benefit, which I believe you recognize, but we now need to find alternatives to a monetary system based on bank-created debt, not just try to get it running again while ignoring the disasters that have befallen working men and women and their families.

You say, in regard to the ongoing government actions: “But even were we to do all this — with uncertain risks to our future national debt — there is still no assurance of a resumption of lending. For the reality is we are in a recession, and risks are high in a recession. Having been burned once, many bankers are staying away from the fire.”

Again, you speak favorably of a “resumption of lending” as resolving the problem. I say: What you are proposing is simply to shore up our debt-based monetary system without addressing the facts that our manufacturing jobs have been exported to China and other low-cost labor markets, our automobile industry is collapsing due to the failure of consumer demand, wages and salaries have stagnated for two decades, workers have not shared in productivity increases, and the total societal debt load on a GDP of $14 trillion is now approaching $70 trillion. These are the problems that must be addressed, not getting the banks to lend again when people can’t pay off the debts they already have.

You say: “What’s the alternative? Sweden (and several other countries) have shown that there is an alternative — the government takes over those banks that cannot assemble enough capital through private sources to survive without government assistance…Inevitably, American taxpayers are going to pick up much of the tab for the banks’ failures. The question facing us is, to what extent do we participate in the upside return?”

I say: Having the government run the banks instead of the private sector will not restore the economic fundamentals of a weak economy. Availability of bank credit does not by itself lead to greater production of goods and services. What it should do is make the liquidity available for the production-consumption cycle to work smoothly. The idea that a deregulated financial sector should be given precedence over all the other economic sectors is the essence of the supply-side, trickle-down philosophy that began during the Reagan years and has catastrophically failed.

You say: “Eventually, America’s economy will recover. Eventually, our financial sector will be functioning — and profitable — once again, though hopefully, it will focus its attention more on doing what it is supposed to do.”

I say: Please tell us exactly HOW America’s economy will recover. Will it recover after real unemployment, including “discouraged workers” hits 20 percent, which it is likely to do over the next few months? Will it recover after millions of more people have their homes foreclosed? Will it recover after the automobile industry dies? What exactly is your prescription? If you don’t have one, I would ask you to consider what I am proposing in my paper: “A Bailout for the People: Dividend Economics and the Basic Income Guarantee.” In that paper I put forth what I am calling the “Cook Plan.” This consists of a $1,000 a month payment per capita made by the government through a system of vouchers for necessities that are then deposited in a new series of local community savings banks that would lend at one percent interest for small business, local manufacturing, and family farming. The vouchers would be a dividend, distributed as each citizens’ fair share of our amazing productive economy without recourse to government taxation or debt. The dividend would provide income security, eliminate poverty, and result in a renaissance of local and regional economic activity, and it would start to act immediately, not “eventually.”

On Friday, February 27, 2009, I will be in your hometown of New York City presenting the “Cook Plan” at the 8th Congress of the U.S. Basic Income Guarantee Network and the Annual Convention of the Eastern Economic Association. That evening I will present the program at a Town Hall meeting in connection with President Obama’s series of citizens’ forums at Nola Studio B, 244 West 54th St., 11th floor in Manhattan, at 8 p.m.

On the evening of Saturday, February 28, I am free, and would be glad to meet you to debate these ideas at a location of your choosing.

Respectfully,

Richard C. Cook

WESTERN DRIVE TOWARD WORLD DOMINATION

The horrors of the George W. Bush administration may only have been one chapter, though it was the actions of Bush and his cronies—starting with 9/11— which removed all doubt that the intent of the Western ruling class is to dominate the world by any means possible.

Behind this intent are the people David Rockefeller famously identified at a 1991 meeting of the Bilderberg Group, when he said: “The supra-national sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.” No one needs conspiracy theories when the perpetrators are this blatant.

Rockefeller and his internationalist associates have not just made untold fortunes. They have also immeasurably damaged the nation our forefathers created and which offered them the freedom to become rich and powerful. Ironically, it was John D. Rockefeller, Jr., who restored the Virginia colonial capital in Williamsburg where on May 15, 1776 the Virginia Convention instructed their delegates in Philadelphia to enter a motion for independence.

But 1776 was another era, when our ancestors really believed that “all men are created equal” and that “life, liberty, and the pursuit of happiness” were “inalienable rights.” Today, the globalist financiers are trying to shore up the world’s failing financial institutions. But they are doing nothing to stem the slide into a worldwide depression that is starting to destroy the livelihoods of huge numbers of people.

MIS-DEFINITION OF CREDIT A ROOT CAUSE OF THE CRISIS

What this really means is that the financial controllers are robbing the world of the peace and prosperity that could be in reach through economic democracy and the fair distribution of resources. It would not be that difficult for us to engage in mindful cultivation of the Earth’s bounty in order to provide a decent living for all.

It could be done by changing the way money is created–from the debt-based system where credit is introduced only through bank lending to grassroots systems of credit creation advocated by the monetary reform movement. This could be done if credit were treated as a public utility, like clean air, water, or electricity, not the private property of the financial elite. Two good examples of this movement are the ideas of Social Credit based on providing citizens’ dividends similar to the Alaska Permanent Fund and the American Monetary Act of the American Monetary Institute that advocates direct payment by government for public expenditures as with the Civil War Greenbacks. .

It is the mis-definition of credit that allowed the banks to create the massive speculative bubbles in housing, commercial real estate, equity and hedge funds, commodities, and derivatives that have exploded. These bubbles can never be re-inflated, no matter how many trillions of dollars the government injects into the failed trickle-down system. The bubbles cannot be re-inflated because the public cannot afford to repay the loans they are ultimately based on. Consumer purchasing power is spiraling downward practically by the day as jobs disappear.

The banking system and the military machine work hand-in-hand, because the financial system is so unbalanced and exploitative that it can only be maintained through brutal force, both within and among nations.

LESSONS OF HISTORY

The mailed fist of Western military might is the embodiment of the drive toward global dominance that goes back at least to the 15th century. It was then that the emerging nations along the Atlantic coast of Europe—Spain, Portugal, France, the Netherlands, and England—began to send armed soldiers abroad on sailing ships bristling with cannon. The purpose? To conquer the territory and secure the wealth of older cultures which lacked the military means to defend themselves.

These swashbucklers were bolstered by two ingredients essential to any such large-scale undertaking. One was a source of money to finance the enterprise, and the other was an ideology that could be used to assuage the nagging of conscience which naturally arises whilst taking the lives and stealing the property of fellow human beings.

The first requirement—money—was initially met by looting the indigenous cultures of the Americas of their gold and silver, then using it to capitalize the fledgling banking system. Similar looting has continued until today.

Stops along the way included the British takeover of the fabled wealth of India, the plantations of America being worked by slaves dragged from Africa, the Chinese Opium Wars, and the Anglo-American conquest of the Middle East and its oil. Facilitating the mayhem was creation of the fractional reserve banking system overseen by the Bank of England, founded in 1694, and the Federal Reserve, which dates to 1913.

The second need was for an ethnocentric religion–Christianity–that justified the killing and enslavement of non-believers who in most cases had never even heard of it before. This was satisfactorily met by the Christian churches which adopted the geopolitical exigency that white men who worshiped at their altars were entitled to rule the Earth.

The nations so fortunate as to find themselves in the forefront of progress acquired the wherewithal to add to their wealth through an ideology based on exclusive ownership of the fruits of science and technology. As the Industrial Revolution developed, the only choice seemed to be control of the means of production either by the capitalist elite or the totalitarian state.

The white man’s greed propelled them into countless wars of aggression around the globe along with two fratricidal wars—World Wars I and II. In these wars tens of millions of were slain. These calamities left standing the greatest white Western nation of all—the United States.

This was both just and natural, since it was the U.S. with its melting pot that blended denizens of all the warring European nations, including the Jews who arose from the Khazar region of Russia and, moving to the West, came to dominate high-finance.

The U.S. enjoyed the size, resource wealth, and geographic situation—North America being a natural fortress—to serve as headquarters for what is now the final assault on the regions still not entirely subdued—namely the giant mainland nations on the continent of Asia. Along the way, America’s minority races, most notably its African-Americans, demanded and were granted at least a semblance of equal rights under the law. To their credit, many Jewish-Americans were instrumental in securing the victories of the civil rights movement.

THE SCENARIO FACING BARACK OBAMA

So Barack Obama was elected. Now president-elect, he has stepped into a scenario where the actors in the drama—the generals, arms merchants, and spies who do the dirty work—are poised for the final step in the scenario. This could go so far as instigating a Third World War to be launched against Russia and China. The military planners are preparing for it.

A flanking movement is going on in space through NASA’s new manned lunar program aimed at setting up what could be a military base at the Moon’s south pole. Russia and China, along with the European Space Agency and India, are competitors in the race to colonize the Moon and use it for military advantage.

This culminating phase of world disorder began in earnest with the Reagan military build-up in the 1980s and the “Reagan Doctrine” of proxy-wars against supposedly left-leaning nations, including the funding of Osama bin Laden’s Islamic mujaheddin who fought against the Soviets in Afghanistan.

Reagan took the first steps toward weaponizing space through his Strategic Defense Initiative—“Star Wars”—program announced in 1983. This failed when the Air Force’s test platform—the space shuttle—was grounded after the Challenger disaster of January 28, 1986. (Richard C. Cook, Challenger Revealed: An Insider’s Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age)

In 1991, the Soviet Union broke apart, with George H. W. Bush taking advantage of the confusion by launching an attack on Iraq. But there was unfinished business in Europe. Yugoslavia was a Slavic nation with ties to Russia. Presto, during the Clinton administration the Serbs were identified as engaged in “ethnic-cleansing,” and through 38,000 bombing sorties by NATO over a 78-day period, the Balkans were re-Balkanized and the bankers who ran the European Union were able to move in for the takeover of that sorrow-filled region.

With the Balkan front secured, the military under George W. Bush next used the 9/11 attacks as an excuse to invade Afghanistan and—again—Iraq. Israel was along for the ride, though it is often difficult to tell which of the two—the U.S. or Israel—is the pilot and which the co-pilot.

By the end of the Bush administration, Obama, in his presidential campaign, was calling for escalation of the conflict in Afghanistan, possibly intended by the script writers as a flanking movement to cut off Russia from Iran. This appears to be the start of the final Western assault on South Asia. Pakistan in particular is now high on the list of U.S. targets, with Obama saying he will send in U.S. forces whenever warranted.

WILL THEY START WORLD WAR THREE?

The Muslims of Pakistan were once among the most highly cultured people on Earth. But the West never gave up on control of the Indian Subcontinent, even after independence. The British had adopted a divide-and-conquer strategy by supporting the 1946 partition between India and Pakistan, and Pakistan’s aspirations were destroyed in the 1970s when the Western intelligence agencies attacked the great nationalist modernizer, Zulfikar Ali Bhutto. They did this by instigating a fundamentalist revolt, followed by a military coup by Pakistan’s U.S.-backed generals.

Now, with the recent attacks on Mumbai by Islamic assailants and India refusing to relinquish Kashmir, Pakistan and India can be managed separately, even as India becomes more dependent on the U.S. for nuclear technology. Iran, which is being surrounded, will likely soon find that its number has finally come up.

It is unclear the extent to which South Asia can and will maintain its self-determination. But once the region is controlled, the war against Russia and China can start in earnest. However, a parallel attempt is being made to absorb Russia through rapprochement between it and the E.U. If this feint succeeds, the wealth of Siberia may fall into the hands of the Western bankers without a shot ever being fired, though the European financiers will enjoy a clear advantage in reaping the spoils over the Americans. Such an attempt to bring Russia under Western financial control took place in the 1990s but failed when Putin took over.

Today, military planners likely assume that China, the West’s great bogeyman for the 21st century, will be backed into a corner. But the Chinese, who know that a strong economy sooner or later will translate into military power, grow stronger all the time. Of course the inscrutable Russians may have surprises up their sleeves. They may not be holding tight to all those nukes for nothing.

Some might object that the Western military planners, especially those within the U.S., are skating on thin ice due to the financial crisis. But the crisis has not stopped the war effort. It is funneling more of the wealth into the hands of the bankers than ever before, thereby enriching the ones who are in charge and providing them with increased material security from which to rule. U.S. military leaders have lobbied for budget increases, and Obama appears poised to accommodate them. Because investors are flocking to Treasury securities as a save haven from stock market losses, there is no shortage of borrowed money.

Granted, the financial crisis has reduced the income security of huge swaths of people both in the West and the developing nations and has put them ever deeper in debt. But the stressed population desperately needs jobs so will continue to provide cannon-fodder for the military and willing minds and hands to work in the defense factories and think tanks. Obama’s plan to pump money into infrastructure spending may help, but even a $600 billion stimulus is only $2,000 per capita and will take time to show results. This too is a deficit spending program based on money borrowed through the banking system.

OBAMA’S DILEMMA

Is there any way Barack Obama can do anything substantive to resolve the crisis?. As Australian author Omna Last recently wrote on his website and gave permission to reprint:

In 2008 Barak Obama appeared from the wings, front-stage in the midst of the American melodramatic psycho-drama. He was also half-Negro and half-white. A majority of Americans were so fed up with the rule of the white-man-machine, they were willing to vote in a half-black man as president. The question was: would he have the integrity and strength of character not to compromise his principles? Would he be able to break through the ruling white-man paradigm and start an American dialogue with the rest of the world, and leave behind its incredible blind arrogance that permeates right through the culture, resulting in a subconscious belief that America’s manifest destiny is to be the arbiter of the world’s tastes, immorality and non-values?

And would he be able to take advantage of the wisdom and strength provided by his black genes to bring a new ruling hybrid dispensation to the world? Would he be the symbol for a new type of Earth person – a true planetary representative? Would the ruling white secret brotherhood allow him to use his presidential power?

Or would they need to worry? As a senator, Obama voted to renew the Patriot Act, supported the death penalty, affirmed Bush’s secret surveillance of the American people, and called for a cut in the corporate tax rate. He wanted to expand the war in Afghanistan, failed to call for a reduction in defense spending, and, as a tool of the Zionist lobby, was insisting that Iran even stop enriching uranium. Obama’s selection of Rahm Emanuel as White House chief of staff is a signal that Obama is either incredibly naive or has been forced by his minders to play ball with the devil.

Obama is probably an idealistic, courageous man, who persuaded a majority of Americans to believe in their own better natures. Obama’s place at the pinnacle of official power lifts a veil that has obscured the world for a thousand years. It signifies the end of white supremacy, imperialism, racism. Every tribe and race of people, just as with each animal species, has something unique to add to the genetic and cultural brew of humanity. Although Obama was supported and promoted as a tool of the insider establishment, it may be that he will turn his back on the sleaze of his secret backers and try to institute a new paradigm. Perhaps Barack Obama is a symbol of a change in the wind, and the emergence of a new kind of man – an Earth man – one who encompasses many facets of the jeweled organism that is this planet.

Zawahiri issued a tape declaring Obama to be a House Negro. Was Obama a naïve fool, who had been set up to sup with the devil? He is probably a good man, but naive and misguided, probably with more ambition than good sense. The chimera of power, of rubbing shoulders with the insiders of the money-power-tree had been the bait. Had the new brown fish been reeled in to shine as front-man for the men of the purveyors of an old wine in a new bottle? Was a bright new label to placed on the old bottle of American capitalism, a wine already turned sour in 1929 – but in 2008 turned quickly from unfettered free market capitalism to the secret cartel’s intervention in every pie?

An incredibly clever game had been played. As Russia in 1917 had been secretly taken over by a Jewish financier-backed conspiracy, so in 2009 the wheels that had been set in motion by Greenspan in 1987 had been geared up. The Zionization of America was no longer a banker’s wet dream. It was now possible…people tracked by computer chip…the masses in permanent debt, desperate and afraid. Or would Obama prove to be a man of the quality of Jack Kennedy? Would he stand up to the amorphous establishment? Would he change their hearts and minds, just by the power of his convictions?

WHAT THE CONTROLLERS LEAVE OUT

Good questions. Only time will tell. The only thing that seems to be left out in the conniving of the financial controllers and the plans they are calmly working out on their underground supercomputers is consideration of what really is the objectively conscionable way for us to behave as human beings on this planet.

Perhaps at the cellular level the controllers have the nagging suspicion that maybe there really is a God who is not entirely comfortable with a world civilization based on exploitation, pollution, and a mad compulsion to force society to engender enough “growth” to outrace the exponential increase of compound interest.

Perhaps the controllers fear that the billions of people on Earth who are not white Western males of Judeo-Christian extraction might also have a place in His/Her heart. Perhaps Obama, despite all the compromises he has made, makes them feel a little bit uncomfortable.

The stated objectives are to find ways to stabilize and reduce speculation in the financial markets and make financial transactions more transparent, more efficient, and more international in scope. But this is also a revolt by the nations of the world against over-reliance on the U.S. dollar as the world’s reserve currency. What we are likely to see over time is a multi-currency regime that includes the Euro and one or more Asian currencies as well.

But the conference will not address the real causes of why the world is heading into a global recession or why the U.S. economy in particular is in such dire straits. Nor will the meeting result in redress of the staggering level of bankers’ criminality abetted by the U.S. government in the creation of the financial bubbles whose collapse is underway.

The real problem is that the world is locked into a debt-based financial system run by the world’s banks, where the only way currency can be entered into circulation is through lending. It’s been massive amounts of completely irresponsible lending which have leveraged the bubbles against much smaller amounts of tangible value.

The GDP of the entire world is $55 trillion. This is dwarfed by speculative lending in the derivatives markets of ten times that amount–$525-$550 trillion. No nation has clean hands in this travesty. The governments of the world and the central banks have allowed it to come into being.

Within the U.S., reliance on money-creation through bank lending has been the problem since the creation of the Federal Reserve System in 1913. At that point the U.S. monetary system was privatized. The case has been the same with all the other nations which have private banking systems that control their central banks. The granddaddy is the Bank of England which dates from 1694.

The creation of the Federal Reserve System marked the start of a century of world war. This is hardly a coincidence. Indeed, the central banking system encourages wars and lives off them, because it is war and the threat of war that is most profitable to a system where the more money governments borrow the more profits the banks make.

All this started with World War I, which was largely financed by the British, French, German, and the U.S. banks. Events have continued in that vein through today, where the nations of the world are armed to the teeth and global finance capitalism tries to increase its control everywhere to the detriment of workers, national economies, and the environment.

To try to fix the crisis through bailing out the system, we are now seeing in the U.S. and Europe levels of government borrowing that have not been experienced since World War II. The purpose is to recapitalize a financial system that has destroyed itself through its own greed and folly. But all this does is defer the bill to future generations who have to pay the enormous compounded interest charges this borrowing entails. Interest on the national debt in the 2009 federal budget is over $500 billion. Every man, woman, and child in the nation is a victim of this crime.

The situation is so bad that many people believe the U.S. may even be in danger of defaulting on its gigantic national debt sometime in 2009.

Meanwhile, the failed financial system is dragging down the world’s producing economy with it, and the bailouts won’t change that situation. Combined with the financial crash has been a collapse in consumer “demand.” In other words, consumers, who are maxed out on their credit, no longer can borrow enough to keep the wheels of the economy turning.

But the reason they must borrow for consumption is that earnings are not sufficient for people to buy what they need to live. This is why in the U.S. there has been an outcry, including with the Obama campaign, for new government job-creation programs. Every day there is another proposal by progressives for new government spending, which, of course, will have to be financed by even more government debt.

So when are we going to learn how to introduce purchasing power without debt? How did we ever come to believe that the only way to create money is through a bank inventing it out of thin air? In the past few weeks we have had a number of Nobel-prize winning economists chip in with their suggestions of what to do, but none have addressed the obvious question of what the alternatives may be to bankers’ debt-based currency.

If we look at history, we see other ways governments have used their powers to create money. Indeed, until the Federal Reserve Act of 1913, the U.S. was a kind of laboratory of alternative methods of money-creation.

If we go back to colonial days, the American colonies used a variety of means to introduce currency into circulation. In Virginia, plantation owners received tobacco certificates when they deposited their product at public warehouses. The certificates then circulated as currency.

In Pennsylvania the government ran a land bank which paid cash to land-owners for liens on property. The interest paid for the costs of government without any taxation of citizens.

In Massachusetts, Pennsylvania, and elsewhere, governments spent paper money directly into circulation. The money received value by then being accepted by those governments, after it circulated within the economy, in payment of taxes.

Other forms of currency were Spanish dollars, Indian wampum, and IOUs. There was also a flourishing barter trade.

The system worked. By 1764, the American colonies formed one of the most prosperous trading regions on the planet. When asked why, Benjamin Franklin said it was because of colonial scrip—i.e., their paper money. When the British Parliament outlawed it through the Currency Act of 1764, an economic depression followed. It was the underlying cause of the Revolutionary War.

During that war, the Continental Congress issued the famous Continental Currency. What likely caused that money to inflate was extensive British counterfeiting, not being used to excess by our national government.

Once the nation became independent, a U.S. mint was founded so individuals could bring in gold or silver and have it stamped into coinage free of charge. New discoveries as with the California and Yukon gold rushes or better methods of extraction from ores resulted in economic booms. From then until coinage lost its value after the Federal Reserve System was established, precious metals were a major part of the U.S. monetary system that included not only coinage but also gold and silver certificates.

In 1791 and again in 1816 Congress passed legislation for the First and Second Banks of the United States. These banks were duplicates of the Bank of England whose purposes were to fasten on the U.S. the same type of debt-based monetary system that was the driving force for the British Empire. Presidents Thomas Jefferson, James Madison, Andrew Jackson, and Martin van Buren were among those who saw these banks as a Trojan Horse for financier tyranny. The split between pro- and anti-bank forces was the origin of the two-party system within the United States.

When Jefferson became president in 1800 he refused to borrow from the bank and balanced the federal budget for eight consecutive years by cutting military expenditures. Andrew Jackson took similar action in 1833 when he withdrew federal funds from the bank and paid off the entire national debt. It was recognized back then that fiscal responsibility was an effective means for keeping the government out of the control of the bankers and their political friends.

When the Civil War broke out in 1861, President Abraham Lincoln refused to borrow from the banks. Instead he financed the war through income and excise taxes, sale of war bonds directly to citizens, and issuance of the famous Greenbacks. This came about in 1862 when Congress authorized the government to spend $450 million in paper Greenbacks directly into circulation. Congress also introduced tangible value into the economy by what was then the very wise policy of transferring huge amounts of public land to the railroads and to citizens under the Homestead Act.

During the late 19th century, ordinary citizens were not so stunningly ignorant of the politics of money as they are today. People recognized the Greenbacks for having saved the union. A Greenback Party was formed that elected representatives to Congress and ran candidates for president.

Greenbacks remained in circulation, and as late as 1900 still made up a third of the nation’s monetary supply, along with coinage, gold and silver certificates, and national bank notes. Also, many other business entities, including the “company stores” owned by mining companies, issued their own paper scrip that was part of the circulating currency. For example, in a pamphlet on monetary reform written by American poet Ezra Pound in the 1930s was an illustration of paper money his grandfather issued from his lumberyard in Michigan in the late 1800s backed by board-feet of lumber payable on demand! Of course barter trade continued and still exists today among industrial firms.

But the bankers were on the move. In 1863 and 1864 Congress passed the National Banking Acts which drove the extensive system of state-chartered banks, including some owned by state governments, out of existence. By the early 1900s, the power of the bankers had coalesced under the New York banking trust led by the J.P. Morgan and Rockefeller financial interests.

The bakers struck in 1913 just before the Christmas recess when many Congressmen had already left Washington for the holidays. The Federal Reserve Act had actually been written by bankers from Europe who were allied with the Rothschild interests. Congressman Charles Lindbergh, Sr., father of the aviator, called the Act “the legislative crime of the ages.” Later President Woodrow Wilson, who signed the Act, said he had “unwittingly ruined my nation.”

But the deed was done. The Federal Reserve System created the first major financial bubble through World War I spending, followed by a depression, then created and burst the stock market bubble whose collapse started the Great Depression in 1929. President Franklin D. Roosevelt took over credit creation through low-cost government lending in the 1930s but had to use World War II to achieve full employment because by then the government was totally locked into the Keynesian tax-and-borrow credo of public finance.

The bankers began their comeback in the 1950s and consolidated their power in the 1970s under the heading of “monetarism,” which is the philosophy of trying to control the economy through raising and lowering of interest rates. This travesty—which is really institutionalized usury—is as familiar to us today as the water a fish swims in. We don’t even notice it. Yet it’s this system that has ruined the world. Ever since the 1970s, every period of economic growth in the U.S. has been a bank-created bubble followed by a crash and a recession.

We had the inflation of the 1970s created by the government-induced oil prices shocks, followed by the Paul Volcker crash of 1979-83 when the Federal Reserve raised interest rates above twenty percent and caused the biggest downturn since the Great Depression.

During the later Reagan years we had the merger-acquisition bubble followed by the recession that brought Bill Clinton to office in 1992. Then we had the dot.com bubble of the mid- to late-1990s that ended with the crash of 2000-2001.

Next, instead, of rebuilding an economy that had been devastated by export of our best manufacturing jobs to China and other cheap-labor countries, the Federal Reserve under chairman Alan Greenspan, with assistance from the George W. Bush administration, created the biggest bubble economy in history, with the housing, commercial real estate, equity, hedge fund, derivatives, and commodities bubbles all blowing up at the same time and leaving us with the mess we are in today.

What has happened during the Bush administration has been the greatest crime against the public interest in U.S. history. Its effects are only starting to be evident.

Of course in the face of so many disasters, the credit markets have imploded, and governments don’t know what to do except recapitalize and restructure them but without taking action to address the deep systemic problems with the producing economy. And while the Europeans may have blown the whistle on U.S. excesses through the G20 meeting, this country still faces disaster.

Yes, Wall Street is killing Main Street, and no one has come up with an answer except suggestions for the bailouts and some New Deal-type programs in an environment that is much worse even than in the 1930s. For one thing, most of what we consume today is produced abroad. For another, family farming has been ruined. In a pinch, our nation could no longer even feed itself.

But the amazing thing is how easy it would be to salvage the situation if the government took the simple step of treating credit as what it really is—a public utility like clean air, water, or electricity, not the private property of the banking system. In fact the banking system and the politicians they own have stolen and abused this fundamental piece of the social commons.

Banks have no legal right to work against the public interest. Every single bank that has ever existed has operated under a public charter. The Constitution gives Congress—i.e., the people’s representative government—authority to regulate interstate commerce. It also gives Congress the right and responsibility to control the monetary system.

So why doesn’t Congress do it? Why does Congress sit passively and stare when Federal Reserve chairmen such as Alan Greenspan or Ben Bernanke sit before them and mumble nonsense about markets and interest rates and inflation and the rest of a made-up system whose main result is to funnel the wealth of the economy upwards into the hands of the financial elite?

In my writings, I have advocated several measures Congress could take immediately to remedy the catastrophe we are facing:

   1. Congress could authorize direct expenditure of government funds for legitimate public expenses, as was done with the Civil War-era Greenbacks. Contrary to bankers’ propaganda, the Greenbacks were not inflationary then and would not be inflationary now, because they would be backed by tangible economic production of goods and services. What has been inflationary has been the debt-based currency which, since it was introduced in 1913, has caused the dollar to lose 95 percent of its value. Greenback-type spending is contained in the proposed American Monetary Act, developed by the American Monetary Institute.

   2. Congress could authorize a national infrastructure bank that would be self-capitalized and would lend money into existence to state and local governments at zero percent interest. Legislation for such a bank has been introduced by Congressman Dennis Kucinich.

   3. Congress could authorize dividend payments to citizens as advocated by the Social Credit movement founded by Major C.H. Douglas of Great Britain decades ago as a means of monetizing the net appreciation of the producing economy. Dividends exceeding $1,000 a month could be issued from a national dividend account without recourse to taxation or borrowing. Such a concept is related to the Alaska Permanent Fund which paid over $3,200 to each state resident in 2008 and to the concept of a basic income guarantee advocated by proponents of the negative income tax in years past.

   4. Congress could utilize dividend payments once they were spent, possibly in the form of vouchers for necessities of life like food and housing, to capitalize a new network of community savings banks that would provide low-cost credit to home purchasers, students, small business people, and local farms.

I worked in the U.S. Treasury Department for 21 years and learned first-hand the history and operations of public finance in the U.S. I have seen the disastrous results of the debt-based financial system and how it has driven our nation, government, and people into bankruptcy. I have also seen how these simple measures of monetary reform would be easy to implement and would begin to turn the situation around within weeks or months.

All it takes is political will and a determination to challenge the death-grip the financial elite has had on our economy for a century.

We can be quite certain that these vital issues will not be addressed by the summit of the G20 meeting in Washington today. If anything, these meetings are likely to render the grip of private finance on the peoples of the world even tighter than before.

But sooner or later change must come. For the immediate future people could fight back by doing everything possible to get out of debt, convert their cash reserves to tangible holdings, and start their own local currency and barter systems. But for real change, a monetary revolution is required.

* From remarks by Richard C. Cook at George Mason University, Fairfax, Virginia on November 15, 2008.

INTRODUCTION

World war or world peace is the blunt choice that will face either Barack Obama or John McCain when one of them is elected president of the United States on Tuesday, November 4, 2008.

For a major eruption of violence to be averted, the new president must deal positively with the reappearance of Russia on the world stage, the emergence of China as an economic force, and the aspirations of all the nations on earth for a decent and secure way of life.

Making matters much more dangerous are the ongoing financial crisis, along with what appears to be the start of a worldwide economic recession of as yet undetermined depth and duration.

It is Europe, not the U.S., from which proposals are emerging for a transformative approach to the most compelling issues. But will it be enough?

THE DISASTROUS PRESIDENCY OF GEORGE W. BUSH

In December 2000, at the time the U.S. Supreme Court was intervening in the disputed vote count in Florida to name Republican George W. Bush president over Democrat Al Gore, the stock market began to crash. The “dot.com” bubble, based largely on foreign investment in internet companies and technology stocks, deflated. By the time Bush was inaugurated in January 2001, signs of a recession were appearing.

This did not prevent the Bush administration from initiating a $450 billion tax cut for the upper income brackets that Congress approved in March 2001. A similar cut was subsequently enacted in May 2003.

On September 11, 2001, the World Trade Center’s Twin Towers in New York City were attacked by airplanes flying into them, followed that morning by an air attack on the Pentagon in Washington, D.C.

Terrorists from Al Qaeda, an organization of Islamic extremists associated with the Afghan mujaheddin, and a Saudi figure, Osama bin Laden, alleged to be their leader, were blamed. The wealthy bin Laden family had close ties to the U.S. and the Bush family.

Within a few weeks, the Bush administration pulled a battle plan from the shelves of the Pentagon and invaded Afghanistan. The object was to wrest control of that nation from the Taliban, supposedly Al Qaeda collaborators. A new U.S. Asian land war had begun.

In March 2003, the Bush administration added to the Afghan action the second invasion of Iraq in the past thirteen years, following the “Shock and Awe” aerial attack. The assaults on Afghanistan and Iraq, with torture of prisoners, use of depleted uranium weapons, and killing of civilians, was methodical and brutal.

Americans who had opposed the Vietnam War in the 1960s and 70s were appalled at how history was repeating itself. The public was subjected to a relentless barrage of pro-war propaganda by square-jawed military talking heads

Behind the scenes were the international financial and oil interests who stood to benefit from the removal of Iraqi president Saddam Hussein as an independent actor in the Middle East. Financiers like David Rockefeller, who had founded the Trilateral Commission and was one of the “internationalist” leaders of what had come to be called the “New World Order,” tended to remain in the shadows, but their presence was palpable.

Rockefeller had reportedly expressed his world view in a statement at a 1991 meeting of the Bilderberg Group:

“The supra-national sovereignty of an intellectual elite and world bankers is surely preferable to the national auto-determination practiced in past centuries.”

With respect to most of the U.S. military actions after World War II, especially the ones after Ronald Reagan was elected president in 1980, an argument could be made that the internationalists were using the U.S. military as their personal global police force.

Even so, the Neocons—“new conservatives”—who had rushed to the forefront after September 11, 2001, working chiefly through Secretary of Defense Donald Rumsfeld and Vice-President Richard Cheney, seemed to be a more radical element than the officials who had been in charge during the Clinton years, when the U.S. and NATO went to war against Serbia. Many of the Neocons were Jewish, with strong ties to Israel.

In 1997 the Neocons had created the Project for a New American Century, which advocated a new invasion of Iraq, and published a statement that positive change might result from a “catalyzing event—a new Pearl Harbor.” Later this was interpreted as possibly having foreshadowed the 9/11 attacks.

President George W. Bush justified the Iraq invasion by claiming that the regime of Saddam Hussein possessed weapons of mass destruction. Later this claim proved to be a lie.

To many the attack was a simple act of aggression. Kofi Annan, Secretary General of the U.N. said of the invasion on September 16, 2004, “I have indicated it was not in conformity with the U.N. charter. From our point of view, from the charter point of view, it was illegal.” The U.S. paid no attention to Annan’s misgivings.

The U.S. attack on Iraq was not without controversy, even among the international elite. According to Daniel Estulin, writing in his breakthrough book, The Bildergerg Group, the Europeans at the 2001 Bilderberg Conference summoned Donald Rumsfeld and blasted him for prematurely planning an attack on Iraq that year. But by 2003, says Estulin, they were prepared to endorse it. Still, the U.S. had far less active support from other nations than with the 1991 invasion of Iraq under George W. Bush’s father.

WARS ARE NOT CHEAP

Starting in 2001, the Bush administration had increased the frequency of White House meetings with Alan Greenspan, chairman of the Federal Reserve, who lowered interest rates by 550 basis points from January 2001 to June 2003. This succeeded in floating the U.S. economy through injecting a huge amount of cash into what came to be called the “housing bubble.”

It’s consumer spending that keeps the U.S. economy running, but ever since the 1980s, when we began to export so many of our manufacturing jobs, family income had stagnated. It has been established by researchers, and documented as well by Daniel Estulin, that at a certain point the financial elite made the momentous decision that the U.S. would be de-industrialized. According to one account, this decision had been a topic of discussion in meetings in China, after Nixon’s visit there in 1972, that were held among David Rockefeller, Secretary of State Henry Kissinger, and Chinese Premier Chou En-Lai.

When Rockefeller and Columbia University professor Zbigniew Brzezinski—later President Jimmy Carter’s national security adviser—formed the Trilateral Commission in 1973, the plan to turn the U.S. into a financial/service economy instead of the world’s greatest industrial democracy seemed to become a key objective. How well this program succeeded is shown by statistics from the website Economy in Crisis:

· From 1978 to July 2008, more than 16,613 U.S. companies were sold to foreign corporations.

· The steel, publishing, textile, machine tool, automobile, and electronics industries declined sharply.

· By 2006 American manufacturers suffered a twenty-two percent structural cost disadvantage compared to overseas competitors through taxes, health and pension benefits, litigation, regulation, and unequal environment protection.

· In 2006, $1 in $4 of US consumption on manufactured goods went immediately and directly to imports.

· In 2007 China alone exported over $321 billion in goods to the United States compared to the $62 billion in goods we exported to them. The U.S. trade deficit, estimated to exceed $800 billion in 2008, is costing $1.5 million per minute in remittance to foreign companies.

· Three million high-paying manufacturing jobs were lost between 2000 and 2005 alone. The U.S. lost 63 thousand jobs just in February of 2008.

· Foreign manufacturers operating in the U.S. accounted for over twenty percent of our exports and manufacturing assets, and a large percentage of our employment in 2006.

· As of December, 2007, the U.S owed fifty-three percent of its debt to foreign countries and other international interests. This is 25.5 percent of our total national deficit, and we finance nearly 100 percent of all new borrowings from foreign interests. Our competitors are now our bankers.

· High-paying goods-producing industries have lost net employment over the past twenty-seven years, while lower paying non-tradable services-providing employment has doubled.

· In 2004, China and India graduated a combined 950,000 engineers versus 70,000 in the U.S. The United States ranks near the bottom of science/math proficiency

Beginning around 1991-92, with cheap credit now flowing from the Federal Reserve System, home prices soared. The money from new mortgages and home equity loans became a virtual “cash cow” for families strapped for cash.

The federal government had already been taking steps during the 1990s to ease mortgage credit so that more families could purchase homes. But after 2001, many more loans were based on fraudulent mortgage applications, where brokers exaggerated borrower incomes. ABC News later reported that during this period risk analysts at Washington Mutual, one of the nation’s largest banks, were told to ignore high risk loans because lending had to be maximized. Those who objected were disciplined or fired.

On Wall Street, banks that wrote mortgages began to offload them by packaging them into mortgage-backed securities that were sold around the world as bonds to banks and investors. Risk analysts at the leading credit-rating agencies, such as Standard and Poor’s, Moody’s, and Fitch, gave their highest ratings to mortgage-backed securities whose risks were later acknowledged to be grossly underestimated.

Also, mortgage companies, with Alan Greenspan’s endorsement, began to offer more Adjustable Rate Mortgages (ARMs), loans that would reset at higher rates in future years. Mortgage brokers fed the growing bubble by telling people they should buy now, because housing prices would keep going up and they could resell at a profit before their ARMs escalated.

As a result of the bubble, large amounts of money began to flow into the economy, not only from mortgages and home equity loans, but also from capital gains on the resale of inflating property. Meanwhile, in the world of investment securities, the Securities and Exchange Commission reduced the amount of their own capital investors were required to bring to the table, resulting in a large increase in bank leveraging of speculative trading. This fed additional bubbles in the equity, hedge fund, derivatives, and commodities markets. The SEC also eliminated most of its Office of Risk Management through budget cuts.

According to an April 2008 Washington Post article by New York governor Elliot Spitzer, state attorneys-general who wanted to investigate allegations of mortgage fraud were blocked from doing so by the Office of the Comptroller of the Currency within the U.S. Treasury Department. There was no federal agency charged with regulating mortgage fraud to take up the slack. Spitzer made these charges just before he was forced to resign from office over a sex scandal disclosed by a leak of FBI investigative documents.

Thus it appeared that a major part of U.S. economic growth was tainted by outright criminality, with collusion from the highest levels of the U.S. government, the Federal Reserve System, and the financial industry. But the housing and investment bubbles generated enough economic activity and tax revenues through 2006 to allow the Bush war policy to be implemented.

George W. Bush was reelected in 2004 at the height of the bubbles. By 2005, the housing bubble alone was accounting for half of all U.S. growth and yielding substantial tax revenues to all levels of government. Still, the Bush administration was running huge budget deficits from expenditures on the increasingly-expensive wars in Afghanistan and Iraq.

Congress approved funding for the Afghan and Iraqi wars even after the Democratic Party regained majority control in the 2006 elections. The funding also allowed for the start of construction in Baghdad of the world’s largest U.S. embassy, as well as permanent military bases in Iraq.

During this time, an internal battle raged between the U.S. State Department, which wanted to implement a plan to rebuild Iraq’s civilian infrastructure, and the Defense Department, which was mainly interested in military occupation. Defense won out.

L. Paul Bremer, former U.S. foreign service officer and managing director of Kissinger and Associates, was named occupation director. But the Iraqi economy and physical infrastructure were shattered. Two to three million Iraqi civilians were killed, injured, or driven into exile.

The housing bubble began to collapse when the Federal Reserve raised interest rates by 425 basis points from June 2003 to June 2006. In January 2006, Ben Bernanke replaced Alan Greenspan as Fed chairman. Greenspan had been chairman for nineteen years during which the largest financial bubbles in world history were created.

This sequence of events led some to contend that the Federal Reserve had both deliberately created the housing bubble, then deliberately destroyed it. Hundreds of millions of people around the world, including U.S. homeowners and foreign investors, ultimately were trapped in the Greenspan/Bernanke pincers.

By 2007, the federal government’s debt was over $9 trillion and reached $10.3 trillion by October 2008. It was now obvious that a serious economic downturn lay ahead. By 2007, signs of a recession loomed, as homeowners who had signed up for “subprime” and ARM mortgages began to default.

By 2008 the number of home foreclosures would exceed four million. The mortgage-based bonds sold through Wall Street brokerage houses to U.S. and foreign investors, began to prove worthless. They had proliferated around the world as virtual time-bombs in investment portfolios.

By August 2008, foreign investors, such as the Bank of China, were becoming increasingly involved in the crisis. Reuters ran a story that Chinese banks planned to stop investing in U.S. markets, which the Chinese government denied, but the threat remained.

If the Chinese and other Asian exporting and petroleum-rich nations pull out, the days of “dollar hegemony,” where the dollar constitutes the world’s reserve currency, providing almost unlimited funding for the U.S. commercial and military empire, will be over.

THE BUSH ADMINISTRATION HITS A WALL

By the first presidential primary elections of 2008 in Iowa and New Hampshire, the campaign to select the next president of the United States was underway. The eight-year George W. Bush presidency would be ending within a year.

By now the Bush years seemed to exemplify the most grievously wrong-headed aspects of U.S. foreign and domestic policy since the election of Ronald Reagan in 1980. The 2008 election will mark the end of an era, though no one knows for sure what will come next.

What has to be questioned are an economy that has been downgraded from one based on industry to a service economy structured around finance, an aggressive military policy with U.S. forces engaged around the world, and trade and fiscal deficits as far as the eye can see.

With all this going on, the Bush White House has brought the world’s most powerful nation to a point of crisis, possibly even to the brink of catastrophe.

In retrospect it can be seen that U.S. military occupation of the Middle East, focusing on Iraq and involving extensive collaboration with Israel, was an extension of the century-long attempt by the Anglo-Americans to control the region’s fossil fuel resources.

But the nation of Iraq and its people had been crushed in the meantime. Even if the U.S. were to withdraw combat forces at some time in the future, the permanent military bases it plans to leave behind will be islands in a sea of hostility. Today even these bases are in jeopardy, as Iraq’s elected government pressures the U.S. to commit to a complete withdrawal by 2011.

Iran has clearly been strengthened by U.S. action to destroy Sunni power in Iraq and has been emboldened by the successes of Hamas in Palestine and Hezbollah in Lebanon in standing up to the Israelis. U.S. intentions to attack Iran have evoked strong opposition among Europeans and can be seen to have enhanced the influence of Russia and China, since Iran is now an observing member of the Shanghai Cooperative Organization.

After initial successes in Afghanistan, U.S. forces have become bogged down in protecting the capital of Kabul, where President Hamid Karzai rules under virtual siege, while the Taliban have come back to contest control of the countryside. The U.S. has resorted to bombing sorties which often kill civilians and has begun to escalate the war by sending raiding parties into neighboring Pakistan.

After the 1991 collapse of the Soviet Union, the U.S., acting through NATO, moved aggressively to extend its influence into the former Soviet republics and surround Russia with nations friendly to the West. The former Soviet Union and Soviet satellite states that joined NATO were Estonia, Latvia, Lithuania, the Czech Republic and Slovakia (formerly part of Czechoslovakia), Bulgaria, and Romania.

The European members of NATO have not yet agreed to extend invitations to the Ukraine and Georgia after those nations expressed interest following establishment of pro-Western governments, though a communiqué after the 2008 NATO summit in Bucharest indicated membership would be forthcoming.

But the NATO façade may have cracked, as shown by a recent trip by German Chancellor Angela Merkel to St. Petersburg for meetings with Russian President Dmitri Medvedev.

According to a report by George Friedman:

The central question on the table was Germany’s position on NATO expansion, particularly with regard to Ukraine and Georgia. Merkel made it clear at a joint press conference that Germany would oppose NATO membership for both of these countries, and that it would even oppose placing the countries on the path to membership. Since NATO operates on the basis of consensus, any member nation can effectively block any candidate from NATO membership. The fact that Merkel and Germany have chosen this path is of great significance. Merkel acted in full knowledge of the U.S. view on the matter and is prepared to resist any American pressure that might follow.¹

Also by 2008 the U.S. was losing influence with the former Soviet republics of Central Asia—Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan—which had joined with Russia and China in the SCO. In central and south Asia, as well as Africa, nations have been unwilling to act as hosts for new U.S. military bases.

The U.S. had been losing ground in Central Asia and elsewhere even before Georgia invaded its former province of South Ossetia on August 8, 2008.

The invasion of South Ossetia by Georgia’s forces, armed and trained by the U.S. and Israel, was crushed so decisively by the Russians as to be a major embarrassment to the Bush administration. According to Georgian president Mikheil Saakashvili’s former defense minister Irakly Okruashvili, Saakashvili carried out the attack despite warnings from the U.S. that they could not come to his aid militarily.²

Okruashvili faulted the U.S. for not being sufficiently critical of Saaksashvili in the months leading up to the attack. From this report it is unclear whether the U.S., while trying to keep Georgia in its orbit as a pathway for natural gas pipelines, was trying to goad Russia into a major military confrontation, though such a scenario seemed possible. Of course the U.S. media and politicians blamed only Russia for the conflict.

In Latin America, the Hugo Chavez regime in Venezuela has begun to forge an alliance with Russia, even to the point of announcing a plan for joint naval maneuvers in the Caribbean. Chavez is also acting as an inspiration to populist movements elsewhere in South America, including those in Bolivia and Ecuador.

Announcements by Vladimir Putin, now the Russian prime minister, that Russia is opposed to a unipolar world were reminiscent of the 1970s, when President Richard Nixon and Russian General Secretary Leonid Brehznev met as equals to forge the policy of détente. Putin created a sensation on February 10, 2007, at the 43rd Munich Conference on Security Policy, when he said:

“What is a uni-polar world? No matter how we beautify this term, it means one single center of power, one single center of force, and one single master.”

Speaking of the U.S., Putin said:

The United States has overstepped its borders in all spheres—economic, political and humanitarian—and has imposed itself on other states.…Local and regional wars did not get fewer, the number of people who died did not get less but increased. We see no kind of restraint – a hyper-inflated use of force.…[The U.S.] has gone from one conflict to another without achieving a fully-fledged solution to any of them.

Putin clearly has rejected the one-world aspirations of the Western financial elite which acts through U.S. military power. After the Georgian crisis, Dmitry Medvedev, Putin’s successor as president, reiterated:

The world must be multipolar. Single polarity is unacceptable. Russia cannot accept a world order in which any decisions will be made by a sole nation, even such a serious one as the United States. Such a world order will be unstable and fraught with conflicts.

Where did the European Union (EU) fit in after the Georgia debacle? Clearly the Europeans were not passive spectators to a U.S.-Russian standoff. European leaders moved quickly to negotiate a cease-fire in Georgia followed by withdrawal of Russian troops.

The more the EU acts as a bloc, the more it seems that a new nationalist entity has come into existence, complete with its own Euro-based currency. The European population wants peace, prosperity, justice, and to be left alone. They particularly do not want to be dragged into America’s wars. The EU has also taken the lead economically with a 2007 GDP of $16.8 trillion vs. $13.8 for the U.S. (IMF figures)

In the Middle East times are changing too. Israel, for instance, seems to be in social crisis. Though Jews are both leaving Israel and moving in, the population is stable but small. Of a population of 7.3 million, 5.5 million are Jewish Israelis. A substantial minority of non-Jews are imported laborers.

But Israel has a poorly-formed middle class. The gap in Israel between rich and poor is growing, as in the U.S., often with only minimum wage jobs available, even to military veterans. Also, common lands in the kibbutzim are being privatized, and residents reportedly are tending to withdraw from peripheral areas to settle around Tel Aviv for safety from strife with the Palestinians.³

Some Israeli politicians say that Iran, with its supposed nuclear ambitions, poses an “existential threat” to the nation. But there are reports that the U.S. has told Israel they will not be permitted to attack Iran on their own.

ECONOMIC COLLAPSE

If the Bush administration is being challenged in the foreign policy arena, in the area of macroeconomics it may have been checkmated.

As stated previously, the financial crisis deepened in the late summer of 2008 when China and the other nations of the world that had been floating the U.S. fiscal and trade deficits by their purchase of public and private securities became alarmed. This was in reaction to Wall Street’s issuance of the huge amount of “toxic” debt from mortgage-backed securities that were now collapsing in value as the housing bubble imploded.

Analyst William Engdahl has stated that the financial meltdown was secretly planned in order to weaken the European banking system. Engdahl wrote:

“As one senior European banker put it to me in private discussion, ‘There is an all-out war going on between the United States and the EU to define the future face of European banking.’”

The start of the recession and the decline of purchasing power by consumers who can no longer borrow quantities of money also means that the U.S. will cease as the customer of last resort whose purchases conveniently float the world economy. The Japanese, sitting on billions of U.S. dollars in their bank accounts, are reportedly furious that U.S. consumers might no longer support the abundant lifestyle of the world’s richest nation.

The dollar is so shaky that some nations are reducing their dollar reserves and turning to other currencies. Talk has been rampant about a worldwide shift to a multi-currency regime, possibly including the Euro, the Yuan, the Yen, and even the Ruble. In March 2007 the Governor of China’s Central Bank Zhou Xiaochuan announced:

“China will diversify its $1 trillion foreign exchange reserves, the largest in the world, across different currencies and investment instruments, including in emerging markets.”

The U.S. Council on Foreign Relations is supporting the movement to a multiple currency regime in its journal, Foreign Affairs. Though the federal government denies any concrete plans, the so-called Amero has been mentioned as the currency of a hypothetical North American Union made up of the U.S., Canada, and Mexico.

Meanwhile, the Bush administration, led by Secretary of the Treasury Henry M. Paulson, working in league with Federal Reserve Chairman Ben Bernanke, has begun to introduce gigantic amounts of publicly-backed credit to rescue the exploding financial system.

As recently as 2006, the U.S. financial industry earned over $500 billion in profits—an astronomical sum. Some hedge fund managers were earning $1 billion a year. Now Wall Street is a disaster scene, with financial firms losing over 200,000 jobs in a year and major investment banks going bankrupt.

Also, the two quasi-governmental mortgage guarantee agencies, Fannie Mae and Freddie Mac, have failed. Despite their lavishing $175 million in the last decade on buying influence from Congress, the government has fired their executives and is taking the two agencies over in a conservatorship. The government also took over insurance giant AIG.

When, on September 23, 2008, Henry Paulson asked for $700 billion dollars to purchase bad debt from U.S. and foreign banks without any oversight or guarantee of success, Congress revolted, with the House of Representatives rejecting the proposal in an initial vote. They did so because their constituents were enraged with the terms proposed by the Bush administration for a gigantic giveaway of taxpayers’ money.⁴

U.S. taxpayers could now be finding themselves on the hook for possibly trillions of dollars of debt liabilities due to Wall Street mismanagement and fraud. Both the Securities and Exchange Commission and the Federal Bureau of Investigation have begun belated criminal investigations. Americans on “Main Street” and their representatives in Congress remain horrified.

Some say the capitalist era is over. The financiers and stock brokers have run rampant in the 2000s under President George W. Bush. They’ve been called, only half-jokingly, “The Masters of the Universe.”

But their excesses have been encouraged by the Bush administration, the Federal Reserve, and the government’s regulatory agencies, which have combined to facilitate an explosion of leveraged speculation in the housing, hedge, equity, commodity, and derivative markets. More shocks undoubtedly lie ahead.

By September 2008, as the bubbles were starting to blow up, the greatest financial crisis since the Great Depression was underway. Despite initial opposition, Congress caved in to pressure from Bush and the bank lobbyists and approved a revised version of Paulson’s plan. According to reports, including a statement on the floor of the House of Representatives by Rep. Brad Sherman (D-CA), members of Congress were threatened with a declaration of martial law to keep public order if the measure failed.

The Treasury Department has started to float new bond issues to raise money to buy the bad mortgage debt, not only from U.S. banks but from foreign investors as well. Meanwhile the stock market is continuing to decline and by October 10 had lost almost forty percent of its value in a year. Over $8 trillion in wealth had vanished from U.S. markets, including the retirement savings and dividend income of tens of millions of people. On October 24, the Dow Jones closed at 8,378.95 vs. 14,198.1 on October 11, 2007.

At the same time, rising prices of oil, food, and other commodities have begun to produce another era of global stagflation, similar to the 1970s, though oil prices have fallen recently. Still, the U.S. financial collapse is resulting in the onset of a worldwide recession that most commentators, including economists at the IMF, said could only get worse—possibly much worse.

Has the New World Order proved to be a parasite that killed its host? Maybe in the U.S. it has. By early October 2008, millions of Americans had been crushed by debt and were losing their homes to foreclosure, tent cities of the homeless were springing up, unemployment claims were soaring, and factory orders were plummeting.

The credit crisis is combining with shortage of consumer purchasing power to cause commerce to shut down at a time when stores should be increasing inventory for the Christmas season. Most of the major chain stores are closing unprofitable retail outlets, throwing thousands of employees out of work.

With the financial system crashing it was only a month from the presidential election, when it would be up to the next president—either Barack Obama or John McCain—to deal with these calamities. Other than a small “stimulus” tax rebate in the spring of 2008, nothing had been done by the Bush administration to rebuild the weakened U.S. producing economy or help the rank and file consumer.

Whose fault was it? David Rockefeller had clearly been the leader during past decades of the “intellectual elite and world bankers” who would replace the old-fashioned nation-state and whose legacy the U.S. was now reaping. Rockefeller had been quoted as saying at the United Nations on September 23, 1994:

“This present window of opportunity, during which a truly peaceful and interdependent world order might be built, will not be open for too long. We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order.”⁵

Intended or not, the “major crisis” had arrived.

Rockefeller may have been a kind of “Emperor of the West,” but he is now 93 years old. Yet he has successors who are now running things. Henry Paulson is the most visible. Also prominent are the heads of the largest banks who are being featured regularly in news reports, such as Jamie Dimon, CEO of the banking colossus J.P. Morgan Chase.

Washington Mutual Bank had run short on ready cash during the credit crisis, so Dimon’s bank was able to acquire its $307 billion in assets for only $1.9 billion. Commentators said it was a “fire sale.”

William Engdahl writes:

The Paulson plan is now clearly part of a project to create three colossal global financial giants—Citigroup, JP MorganChase and, of course, Paulson’s own Goldman Sachs, now conveniently enough a bank. Having successfully used fear and panic to wrestle a $700 billion bailout from the U.S. taxpayers, now the big three will try to use their unprecedented muscle to ravage European banks in the years ahead.

THE 2008 ELECTION

When the financial crisis struck during the week of September 22, it was only six weeks before the presidential election. Democrat Barack Obama shot up in the polls, because voters perceived him as more likely than Republican John McCain to deal effectively with the situation.

Obama, with a Kenyan father and a white American mother, was the first African-American to run for the presidency of the U.S. on a major party ticket. To many it was a shock that Obama had defeated such a formidable opponent as Hillary Clinton, wife of former president Bill Clinton, in the Democratic primaries.

Now Obama was the beneficiary of the bad economic news. In American politics, Democrats, with their New Deal heritage and the semi-prosperity under Clinton in the 1990s, are viewed as being more in touch with the economic problems of ordinary citizens. Also, the Democrats’ income policies have generally favored the working and middle classes more than the rich, and Obama was promising to repeal the Bush tax cuts that benefited mainly the upper brackets.

Further, the incumbent party—in this case the Republicans—is more likely to be viewed as responsible for the current economic situation, good or bad, and McCain had consistently allied himself during his long Senate career with the financial deregulation dating from the Reagan years that was now proving disastrous.

McCain had just finished saying in a speech, “The fundamentals of our economy are strong,” but on Wednesday, September 24, he changed his tune. Now, he said, he was suspending his campaign and would return to Washington, D.C., to help solve the crisis. The Democrats howled with derision at this seeming act of political hypocrisy which showed, they said, how desperate McCain had become to maintain credibility.

Clearly the campaign had now changed—or had it? Until the financial crisis, both Obama and McCain had been extremely cautious in putting forth proposals, trying more to avoid saying anything the media could criticize than to suggest fundamental economic changes. Also, Obama’s presidential campaign had received huge contributions from Wall Street.

Both men had been presenting themselves as populists, the friends of the middle class. McCain emphasized tax reduction and limitations on government spending as means of economic growth. Obama spoke in favor of job creation, including five million new jobs from “green energy”—solar and wind power, etc. He also promised to cut taxes for those earning less than $250,000 a year.

But neither had been convincing as signs of an economic recession began to accelerate. Obama’s five million new jobs, for instance, were an intention, not a plan. But they were obviously needed. The financial emergency hit after job losses of 60,000 for August were announced.

Nor did either offer many specifics or explain how they could implement new federal programs in the face of the gigantic budget deficits being projected. CNN news commentator Lou Dobbs blasted them for delivering “poll-driven sound bytes” and failing “to even mention real economic issues,” like the overseas outsourcing of jobs.

Washington Post columnist David Broder accused the pair of “running from reality.” Broder added:

“The frustration that is growing stems from their mutual reluctance to talk candidly about the situation one of them will inherit. If either of them has a clue what to do to help stabilize this tottering economy, he is keeping it to himself.”

What was most clear about events was that the deregulation of the financial system that began in the 1980s now could be seen to have wrecked the U.S. economy. But neither Obama nor McCain proposed regulatory changes or sought in any way to challenge the machinations of the financial titans.

THE CANDIDATES TAKE NOTICE OF THE DEEPENING CRISIS

Housing and home ownership are among the key issues. During the housing bubble, the prices of homes inflated to two or three times their previous value. Now these prices have been collapsing, though homeowners still have to make payments in excess of what the homes were now worth. Critics have pointed out that the Wall Street bailout plan both Obama and McCain voted for was intended to keep home prices high, even if families have trouble making their mortgage payments and continue to lose their homes to foreclosure.

And mortgage payments are going up due to rising interest costs and the resetting of adjustable rate mortgages. On October 8, with the stock market still in free fall, the Federal Reserve cut interest rates for the banking system, but the rise in mortgage interest rates for consumers continued. It will be difficult for the Federal Reserve to cut rates further because this weakens the dollar and makes investments in the U.S. economy less attractive for China, Japan, and other foreign dollar holders.

Up to this point there has been scant mention of the fact that there had been no increase in the level of investment in the U.S. producing economy in thirty-five years. It is also a fact that with the rising level of unemployment and continued decline in the manufacturing job base, U.S. consumer purchasing power has caved in. And despite the financial bailouts, there is still no new economic engine to lead a recovery.

During the week of October 6, Obama continued to surge in the polls. Both McCain and his vice-presidential candidate, Alaska governor Sarah Palin, had performed poorly in the televised debates, and the projections of state-by-state counts in the electoral college showed Obama approaching enough votes to ensure victory. The election was now only a month away.

At this point the McCain campaign decided to “go negative” in criticizing Obama on “character issues,” with an unnamed “high-ranking campaign official” making the incredible admission to the New York Post that “if the campaign focused on the economy we would lose.” McCain’s team had already announced they were halting their campaigning in Michigan, perhaps the industrial state hit hardest by the economic downturn.

On the evening of Monday, October 13, Obama tried to seize the initiative through a major address in Toledo, Ohio, on a new economic recovery plan which included the following provisions:

• A tax credit of $3,000 per job for companies adding jobs in the U.S.
• Elimination of capital gains taxes on investments in small and start-up businesses.
• $25 billion of federal money for infrastructure projects.
• Tax cuts for workers, middle-class employees, and senior citizens.
• Extension of unemployment benefits.
• Penalty-free hardship withdrawals from retirement accounts.
• Allowing bankruptcy judges to modify mortgage terms for distressed consumers.
• A ninety-day foreclosure moratorium for financial institutions that participated in the congressional bailout plan.

But there was a glitch. Despite the variety of provisions and the obvious voter appeal, the plan would only provide a $50 billion stimulus to the economy, less than $175 per capita. The amount would be dwarfed by the estimated total of $1.5 trillion the federal government had committed to between March 16 and October 3 to rescue the financial system.

The rescue included financial institution bailouts and takeovers, costs due to bank failures, new mortgage insurance, and tax breaks added to the bailout bill. This largesse would have to be paid for by yet more government borrowing, with an unprecedented $1 trillion deficit looming for fiscal year 2009.

Obama made a serious misrepresentation about the nature of the additional deficit by claiming that the government’s $700 billion outlay in purchasing bad bank debt would be paid back when the loans the debt was based on were redeemed. But the reason the debt was bad in the first place was that it came from mortgages that homeowners were expected to default on. Not even the power of the federal government was going to squeeze blood from this turnip.

In Obama’s wake came a host of progressive commentators offering their own stimulus proposals to be financed by government debt as though it would be as easy as turning on a garden hose. An example was the $300-$400 billion plan put forth by Rutgers University professor Eileen Appelbaum who, like Obama, never mentioned the possibility of increasing overall tax revenues or curbing military spending as funding sources.

The day after Obama put forth his plan, McCain said he would offer $52 billion in tax cuts but no stimulus spending. He had campaigned against congressional “earmarks,” which were a type of budget appropriation for infrastructure projects proposed by representatives for their home districts. McCain viewed federal infrastructure spending as “pork,” making it a taboo which he could not break at this late stage of the game.

The day McCain made his proposal, the government announced that $250 billion of the Wall Street bailout would be used for the Department of the Treasury to buy shares in the nation’s largest banks. This followed similar action announced for British banks by Prime Minister Gordon Brown. The measure would restore some of the bank capitalization lost through loan defaults. U.S. banks would now be partially nationalized.

A few days later, the Federal Reserve announced it would take over a critical function of the commercial banking industry by using its emergency powers to fund day-to-day operations of U.S. businesses through the discount window of the Federal Reserve Bank of New York.

In spite of all this, the Federal Reserve, the IMF, and every commentator writing on the subject was still predicting a long and deep recession for both the U.S. and world economies. Around the world stock markets continued to fall.

Meanwhile, in foreign affairs, there has been a subtle movement among the U.S. establishment over the last three years away from Israel. Former president Jimmy Carter’s book, Palestine: Peace Not Apartheid, was a milestone. Also, Obama’s vice-presidential candidate Joe Biden reportedly told Israel they would have to live with a nuclear Iran.

The candidates made the required nods in the direction of Israel as a valued ally, but none spent much valuable air time on the topic. Jewish voters typically voted with the Democratic Party and were not seeing any reason to switch.

Obama still had a credibility problem, except it was with progressive voters.

In running after having served in the U.S. Senate for only four years, Obama had come out of nowhere to capture the imagination of younger and highly-educated voters sick of Bush’s wars. But far from being the peace candidate he seemed to be early in his election bid, now when he said he had opposed the Iraq War from the start, he clarified his position to mean that he only opposed it because the U.S. should have been focusing its military efforts more on Afghanistan and Pakistan.

He talked about “taking out Osama bin Laden,” referring to the 9/11 attacks seven years ago. But bin Laden hadn’t reliably been seen or heard from for years, and some doubt he is even still alive.

Obama also said, in accepting the Democratic Party nomination for president in Denver on August 28, that he would “truly stand up for Georgia” and “curb Russian aggression.” Later Obama called Russia’s actions “evil.” Biden referred in his acceptance speech to “Russia’s challenge to the free and democratic country of Georgia.” Obviously, these aggressive positions, based on falsehoods, could trigger a U.S.-Russian confrontation if pushed to their logical extremes.

McCain has been serving in Washington, D.C., in the House or the Senate, since 1983. He is a former Vietnam prisoner of war and the son and grandson of Navy admirals. He graduated from the U.S. Naval Academy in 1958 with a dismal ranking of 894 out of 899.

McCain is the favored candidate of the military-industrial complex and, with Alaska governor Sarah Palin as nominee for vice-president, the religious right-wing. He is also the one who would likely ensure continued record-setting oil company profits.

While Obama called for an oil windfall profits tax that could yield $15 billion a year in new federal revenue, McCain’s proposals “would deliver a $3.8 billion tax cut to the five largest American oil companies,” according to the Center for American Progress Action Fund. $1.2 billion of the cut would go to Exxon-Mobil, largely associated with the Rockefeller family.

McCain had tried to appeal to the Christian fundamentalist constituency by picking Sarah Palin as his vice-presidential running mate, though no candidate for that office ever had less experience at the national level. She said that the Iraq War was “God’s task,” while British Petroleum reportedly was a sponsor for her inauguration.

Many thoughtful people, including conservative commentator George Will, have been dissconcerted at the prospect of a McCain/Palin presidency. Will, with his typical patrician understatement, said McCain’s reaction to the economic crisis was “un-presidential” and “made some of us fearful.”

McCain also has a reputation for a bad temper and making snap judgments. The selection of Sarah Palin seemed like an example of the latter. McCain is the oldest presidential candidate in history and not of the best health. People have been looking at Sarah Palin in light of the terrifying prospects that such a seemingly clueless person could occupy the White House if McCain died in office.

If Obama had been in danger of losing the progressive wing of the Democratic Party by his unwillingness to separate himself sufficiently from the Bush administration’s militant foreign policy, events were still in his favor. By early October, with the highly unpopular bailout having been approved and the stock market continuing to sink, Obama remained calm in the televised debates and in campaign speeches.

For an outdoor speech in St. Louis, Obama drew 100,000 spectators. He has begun to look like a president-in-waiting, while McCain seems increasingly the man time has passed by.

But the next president could be faced with momentous decisions if he cares to make them. Events since the late 1970s showed how much the philosophy in U.S. ruling circles had moved away from President Richard Nixon’s concept of a multilateral world based on a balance of power to one of world conquest by an international order headed by the global financiers and enforced by a militant U.S. government.

Therefore it is difficult for many observers to be hopeful about seeing the U.S. take its place among a peaceful family of nations. Both candidates promised “change.” But would they change anything that really made a difference? Or would they just follow orders?

As the campaign entered its final month, it was Obama’s to lose. Still, many people believed that the real reason George W. Bush had won the 2000 and 2004 elections was due to campaign fraud in Florida and Ohio respectively and feared that something similar could happen in 2008.

Would the Republicans steal what was arguably one of the most important presidential elections in U.S. history? The New York Times reported on October 9:

“Tens of thousands of eligible voters in at least six swing states have been removed from the rolls or have been blocked from registering in ways that appear to violate federal law.”

The Obama campaign was even calling for appointment of a federal special prosecutor to investigate allegations of illegalities. As Obama continued to rise in the polls and McCain fell further behind, some said that if McCain did win the election, it could be done only through dishonest means.

If the Republicans do steal the election and elect McCain/Palin, a coalition of progressive activists led by David Swanson has pledged to take action. Swanson wrote:

If your television declares John McCain the president elect on the evening of November 4th, your television will be lying. You should immediately pick up your pre-packed bags and head straight to the White House in Washington, D.C., which we will surround and shut down until this attempt at a third illegitimate presidency is reversed.⁶

Then there were those who suspected that the 9/11 terrorist attacks had been carried out by elements within the Bush administration—or that they looked the other way and “allowed” the attacks to happen—and were afraid the Republicans would do something similar to arouse the fears of voters while McCain was staggering to apparent defeat.

Rumors that such an event was planned have been swirling for over a year. Such speculation, along with the fears about election fraud, shows just how much eight years of Bush and Vice-President Richard Cheney has alienated the public and how little the president and his party are trusted.

EUROPE WEIGHS IN

But no matter whether Obama or McCain is elected, the U.S. is part of a larger world where its credibility is in the gutter and where economic weakness has begun to remove its power of choice.

It has already been noted that it was foreign creditors, especially China, that appeared to be threatening to pull the plug on the U.S. government’s incessant borrowing which may have been the trigger that forced Henry Paulson to admit a crisis had hit by going to Congress for the financial rescue package.

Then with the election only two weeks away, it became clear that Europe had something different in mind than letting the U.S. return to its old ways of what might be called “Wild West” economics. After all, for several decades, U.S. politicians and businessmen had run all over the globe grabbing whatever they desired in order to support the world’s most wasteful and resource-intensive lifestyle.

At the same time as the U.S. was trying to shore up its failing—and flailing—financial industry, the nations of the EU have been taking actions to protect themselves. Except that the EU was focusing more on assuring solvency by increasing government control rather than the mindless “free-market” cash bailouts that Paulson and Bernanke were engineering. When in mid-October the Europeans weighed in, the U.S. stock market staged a single-day rally, with a gain of over 900 points in the Dow-Jones Industrial Average.

Over the past few years the sense has been building that the Europeans were becoming alarmed at the threat which U.S. misrule was posing to the world on a number of fronts, including 1) the breakdown of the world’s largest economy triggered by gross irresponsibility on the part of both the U.S. public and private sectors; 2) the overly-aggressive and failing U.S. military posture in the Middle East; and 3) U.S. refusal to address overriding international issues like resource conservation and global warming.

On October 18, the Canadian Globe and Mail reported on a recent meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel. The report said, “Nothing would be truly fixed, they believed, until there was a new world financial system in place, a new economic watchdog supervising the world’s economies.”

British Prime Minister Gordon Brown had written as much in a memo to the French and German leaders. The Globe and Mail report continued:

Europe had reached a consensus, at least superficially, on a solution that had not been attempted in sixty-four years: a major global meeting that would attempt to redesign the world-finance system. It was an acknowledgment, at a high level, that with the current crisis, the entire postwar economic system may have come to an end…. By Tuesday morning, the Americans were on board, at least as far as attending the proposed meeting — expected to be held in New York shortly after the November 4 presidential election. [Canadian] Prime Minister Stephen Harper, fresh from his re-election, said Friday he also supports holding the meeting. All the G8 industrialized nations have agreed to attend, at least on paper, and it is expected that China, Brazil and India will take part. While there’s no consensus on what the new financial order should be and there are signs of deeply divergent views, these countries appear at least willing to talk about a new international order at a meeting the three European leaders are calling Bretton Woods II, after the 1944 meeting that started it all.

The day before the Globe and Mail report, an article by Brown appeared in the Washington Post, where he wrote:

This is a defining moment for the world economy. We are living through the first financial crisis of this new global age. And the decisions we make will affect us over not just the next few weeks but for years to come. The global problems we face require global solutions.

Brown added that, “The next stage is to rebuild our fractured international financial system” and mentioned that the purpose was to “root out the irresponsible and often undisclosed lending at the heart of our problems.”

Perhaps what Brown has in mind was to act on behalf of Europe in rescuing the Western financial system from the excesses of those in the U.S. who have wrecked it. Brown concluded diplomatically:

“There are no Britain-only or Europe-only or America-only solutions to today’s problems. We are all in this together, and we can only resolve this crisis together. Over the past week, we have shown that with political will it is possible to agree on a global multibillion-dollar package to recapitalize our banks across many continents. In the next few weeks, we need to show the same resolve and spirit of cooperation to create the rules for our new global economy. If we do this, 2008 will be remembered not just as a year of financial crisis but as the year we started to build the world anew.”

The Globe and Mail article provided additional detail on the topics the summit would cover:

The document that Mr. Brown first made public on Wednesday morning …proposes a set of organizations — a ‘new international financial architecture for the global age’— that will monitor risks in the financial system and provide an early-warning system; determine global standards of regulation; supervise international corporations in their cross-border activities, protect markets from excessive activities of speculators; stamp out major conflicts of interest and set standards for pay and bonuses; internationalize accounting standards, and provide transparency in complex financial transactions.

Over the weekend, Sarkozy and European Commission President José Manuel Barroso met with President Bush at the presidential Camp David retreat in Maryland where they announced “a series of summits on addressing the challenges facing the global economy,” starting with one in the United States “soon after the U.S. elections.”

But Sarkozy sounded much more aggressive than Bush or other U.S. officials had been in curbing reckless “free-market” abuses. He told the press:

The president of the United States is right in saying that protectionism and closing one’s borders is a catastrophe. He is right to say that it would be wrong, catastrophic, to challenge the foundations of market economics. But we cannot continue along the same lines because the same problems will trigger the same disasters.

Sarkozy mentioned several areas where he might want to negotiate new regulations exceeding what the U.S. and Britain were looking for, including more stringent regulation of international banks, hedge funds, and credit-rating companies. According to press reports, he also said that world leaders should reconsider the rules governing offshore tax havens such as the Cayman Islands.

Sarkozy has also been reported as saying, “We want a new world to come out of this. We want to set up the basis for a capitalism of entrepreneurs, not speculators.” Another topic Sarkozy and other European leaders have mentioned is restoring the system of fixed currency exchange rates that the U.S. abandoned in 1972, an action which introduced an era of worldwide currency anarchy. He said that fixed, but flexible, exchange rates “should definitely be on the table.”⁷

Regarding any potential conflict with the U.S. over the upcoming summits, Sarkozy said after a meeting in Europe: “Europe wants it. Europe demands it. Europe will get it.”⁸

Finally, on October 23, the White House announced that President Bush would host the first summit on November 15 in Washington, D.C. The Washington Post reported that:

Sarkozy, British Prime Minister Gordon Brown, and others have signaled a desired to go much further in regulating markets than Bush seems inclined to do. Brown said yesterday that he wants greater cross-border oversight of banks and other financial firms, while Sarkozy called for much stricter government supervision of financial markets.

By now attendance had been expanded to include the entire G-20 which represents two-thirds of the world’s population. The G-20 includes Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, the United States, and the European Union.

Finally, at a meeting hosted by the Chinese on October 25 in Shanghai, Chinese Prime Minister Wen Jiabao confirmed the need for far-reaching measures. With Japanese Prime Minister Taro Aso, German Chancellor Merkel and French President Sarkozy in attendance, the attendees issued a statement which said they recognized “the need to improve the supervision and regulation of all financial actors, in particular their accountability” and agreed “to undertake effective and comprehensive reform of the international monetary and financial systems.”

Prior to this meeting, said Reuters:

The front-page commentary in the overseas edition of the People’s Daily said that Asian and European countries should banish the U.S. dollar from their direct trade relations for a start, relying only on their own currencies.

The era of American unilateralism is clearly on the verge of ending, but are we seeing the same configuration of nations that run the Trilateral Commission and the Bilderberg Group taking advantage of the crisis to further the New World Order agenda of total domination of the world by Western international finance?

And is this why smaller nations such as Iceland are seeing their currencies under attack from unknown sources? Other nations with shaky currencies are Poland, Hungary, Ukraine, Serbia, the Baltic states, Kazakhstan, Indonesia, South Korea, Argentina, Russia, Pakistan, and Brazil. Is someone trying to stampede these nations into seeking shelter under an umbrella belonging exclusively to the big Western banks?

And will such measures simply bind every nation on earth more stringently to the worldwide debt-based monetary system that has failed so spectacularly? Are we in fact seeing the stage now being set for the complete and final triumph of the global reign of usury?

And if the U.S. financial system is completely controlled by whatever supranational infrastructure is devised, will it then be subjected to the same type of neoliberal regime of austerity and privatization the IMF imposes on the nations it dominates? Will the “Washington Consensus” turn and devour its originator?

In a 1998 paper, World Bank analysts stated, “Crises are a window of opportunity.” (Dr. Richard Werner, Gang8 Yahoo Group) So was the financial crisis engineered at this stage of the U.S. political process to create what could be a global financial coup d’etat before the next president takes office?
Or is there a more benign interpretation of events? Is the older, wiser, and more mature civilization of Europe riding to rescue a world the U.S. has brought to the brink of destruction?

Whether it’s Obama or McCain who is elected president on November 4, that person will sit in attendance at the planned summits with the rest of the world presenting its case for change. Of course change there has to be. The U.S. owes the world a mountain of debt, as well as redress for its lawlessness.

Also, the possibility of a federal government debt default in 2009 is looming for a nation that has never been in such a precarious financial position. The days of the Wild West are indeed over. But what will come next?

WHAT SHOULD THE NEXT PRESIDENT DO TO FACE THE CRISIS?

Senior White House correspondent Helen Thomas said of Bush, “He is the worst president in all of American history.” The public shares Thomas’s view. By mid-October 2008, ninety percent of those polled said the nation was headed in the wrong direction.

Former President Jimmy Carter said something similar in the area of foreign policy: “I think, as far as the adverse impact on the nation around the world, this administration has been the worst in history.”

One thing is certain: the legacy left by President George W. Bush is indeed a kind of Armageddon. The challenges that will face the next U.S. president are almost beyond comprehension. They include war vs. peace and the ability of the world economy to function.

But with so many changes in the world, shouldn’t we have not just an economic “summit,” but a general framework for peace that would end hostilities in Afghanistan, Iraq, and the Eastern Mediterranean?

With respect to Russia, China, India and even the EU, the new president will doubtless be expected to embrace the politics of multilateralism in order to maintain a balance of power among the nations of the world. But shouldn’t a strong voice also be given to the nations of the Islamic region, as well as Africa, Latin America, and Australia/New Zealand?

By now it is abundantly clear that global finance capitalism cannot replace the nation-state. It should be just as clear that only a world of functional and prosperous nations can create an effective international federation as contemplated by the U.N. charter.

The Europeans seem to have an inkling of this, but will the world arrive at stability if Western bank-run finance is seen as the only viable economic system? How about a broader approach to prosperity that would help the people of every nation on earth, not just those who live off lending and interest? Is our planet condemned to the misrule of various forms of “trickle-down” economics forever?

The organization that should be the most concerned is the U.N., but where is the U.N. today? Obviously it is nearly dead as a positive and active force in the world. In a farewell address preceding his 2006 retirement as secretary-general, Kofi Annan discussed three major problems of “an unjust world economy, world disorder, and widespread contempt for human rights and the rule of law,” which “have not been resolved, but have sharpened” during his service.

This disintegration has taken place during the George W. Bush presidency. In a December 11 speech, Annan asked for the U.S. to return to President Harry Truman’s multilateralist foreign policy and to follow Truman’s belief that “the responsibility of the great states is to serve and not dominate the peoples of the world.”

Anther matter the new president should deal with is to get control of the U.S. military-intelligence network. He must reverse the Neocon takeover of the State Department engineered by Secretary of State Condoleezza Rice and halt the militarization of U.S. embassies resulting from escalation of the number of military staff assigned from the Department of Defense.

Another major question is whether the danger of U.S. government bankruptcy will result in reduced military expenditures. But will the war-mongers surrender the enormous portion of the U.S. government budget they are accustomed to consuming?

While the furor over the financial meltdown was raging in October, Congress quietly passed a staggering $611 billion defense authorization on top of $189.3 billion in “supplemental” funding for the Iraqi and Afghan wars. The Pentagon says its budget will increase by $450 billion over the next five years.

Both Obama and McCain voted to approve the defense authorization bill. Among the projects they funded was a truck-mounted microwave crowd-control weapon being developed by Raytheon for 2010 deployment.

To be used to control civilian demonstrators, each weapon will cost $5 million. Wouldn’t it be reasonable to ask the next president to explain why he thinks this weapon is needed?

Under another program the Defense Department will pay contractors a staggering $300 million “to produce news stories, entertainment programs, and public service advertisements for the Iraqi media in an effort to ‘engage and inspire’ the local population to support U.S. objectives and the Iraqi government,” according to a letter from Senator Jim Webb (D-VA) to defense secretary Robert Gates. This is enough money to pay 6,000 employees $50,000 per year. Maybe Obama and McCain should explain why they voted to approve this outrageous expenditure.

Neither is NATO expecting a benign outcome to the world crisis. Author Michael Collon reported in an article on “What Will the U.S. Foreign Policy be Tomorrow?”:

In January 2008, five former NATO generals presented a preparatory document for the NATO summit meeting at Bucharest. Their proposals reflect a terrifying possibility. And what gives weight to their document is that, up until recently, all of them held very high positions. General John Shalikashvili was U.S. Chief of Staff and Commander in Chief of NATO in Europe, General Klaus Naumann ran the German army and was president of the military committee of NATO in Europe, General Henk van den Breemen was Dutch Chief of Staff and Admiral Jacques Lanxade held the same post in France, while Lord Inge ran the General Staff and was also Chief of the Defence Staff of Great Britain.⁹

Collon described the document in a section entitled, “Five NATO Generals Prepare a World Government.” The document stated, “What the Western allies expect is the pro-active defense of their societies and their way of life maintained over the long term.” It continued, “The objectives of our strategy are to preserve the peace, our values, economic liberalism, and stability.”

“Economic liberalism” means market-oriented global finance capitalism under the control of the Western banking system.

The document also identified enemies, the chief one being China:

China is in a situation to wreak great harm on the US and the world economies, based on its enormous reserves in dollars….China is in a position to use finance to impose itself on Africa and acquire the capacity to utilize it on a much greater scale—if it so decides.

This statement by the general is mind-boggling. Hasn’t it been U.S. government policies that resulted in these dollars being paid to China? And isn’t the West talking out of both sides of its mouth in planning a world economic summit that includes China, while contemplating war against that nation?

Indeed, the rise and fall of the U.S. bubble economy cannot be understood unless the role of China is taken into account. This role is increasingly problematic in light of statements such as one made recently by Shi Jianxun, a professor at Shanghai’s Tongji University:

“The grim reality has led people, amidst the panic, to realize that the United States has used the U.S. dollar’s hegemony to plunder the world’s wealth.”¹⁰

Whatever agreements U.S. bankers and politicians may once have made with China for them to take over our manufacturing while we lived off financial profits have grievously backfired. Solving this conflict with China peacefully may be the next president’s greatest challenge. But decisions to the contrary may already have been made, with the president’s job being merely to carry them out.

FACING THE ECONOMIC CRISIS

Assuming that peace may yet prevail, we may hope that in facing the economic crisis, the next president will go beyond working with other nations in attempting to fix the financial system. No financial fixes will change the fact that a severe economic repression has arrived and that the producing economy of the U.S. and other nations have begun to spiral downward.

The possibility exists of enormous human suffering. In fact the suffering has already started, with bankers filing court actions that have led to uniformed policemen or even SWAT teams evicting large numbers of innocent people, often elderly, from their homes around the country. With the stock market crash, tens off millions of people are losing their hard-earned savings and retirement nest eggs.

The downward path to further human suffering is being prepared by mass media propagandists like the Washington Post’s Robert Samuelson, who argues that the hard times mean we must slash programs for the elderly and poor like Social Security, Medicare, and Medicaid. In an October 22 article Samuelson wrote:

I wish everyone a pleasurable retirement. But we need to overhaul our government retirement programs for the common good and not just the good of the elderly. We have already waited so long that there’s no way to do this without being unfair to someone — overburdening the young or withdrawing promised benefits from older Americans. The present financial crisis, by reducing retirement savings, has made a hard job even harder. Still, these federal programs began as safety nets for the needy; now they’ve become subsidies for living long, regardless of need.

“Subsidies for living long”? With columnists for prestigious newspapers advocating policies that border on genocide, it’s time to talk about real solutions.

The first thing to realize is that the money raised through taxes and borrowing from the future, which the politicians have thrown at their wars and financial bailouts, exists as real economic purchasing power. This means that it can be used for other purposes—for purposes that directly benefit the people of the nation who work for a living, send their children to school, and want to save for their old age.

The key to having money available for beneficial social purposes, rather than war and profits from lending, is that it should be issued directly by the government, not lent through the banking system which uses public debt as collateral.

The Democrats mention investment in U.S. infrastructure, though they do not provide details about how to pay for it except through more government deficit spending funneled through the Federal Reserve System. But what if we left the banks out of it for a change?

What would really help repair the damage to the collapsing U.S. domestic economy would be an uncompromising program of interest-free lending and grants for infrastructure development and an effort at restoring the nation’s manufacturing base, along with decent, well-paying jobs. Such a program would constitute a “New Deal for the 21st Century,” as spoken of by 2008 presidential candidate Dennis Kucinich (D-OH). Kucinich has introduced legislation for zero-interest infrastructure lending in the last two sessions of Congress.

The economic recovery program proposed by Barack Obama may be a step in the right direction, but the $25 billion infrastructure provision is pathetically small. Obama should be listening to Congressman Kucinich as much as to his own advisers and Wall Street campaign contributors.

Recently Kucinich released a sixteen-point plan that included infrastructure development, as well as implementation of the American Monetary Institute’s American Monetary Act, the most progressive piece of monetary reform legislation in U.S. history. It’s in the area of monetary reform that Obama could have the greatest impact, though there’s no indication it has crossed his mind.

One feature of the American Monetary Act is nationalization of the Federal Reserve, as was done with the Bank of England in 1946. The act would also provide for direct government expenditures for public purposes as took place in the 19th century with the Civil War Greenbacks. The Greenbacks helped fuel the U.S. economy until the early 20th century. Contrary to bankers’ propaganda, they were non-inflationary. By comparison, under the Federal Reserve System, the dollar has lost ninety-five percent of its value, most of this loss taking place since 1965.

An area of economic recovery that has been ignored is the disappearance in the U.S. of family farming. During the Great Depression, a majority of Americans still lived on farms, so at least could grow food in times of trouble.

Today, the dominance of agribusiness, inflated land prices, the high cost of credit, “free trade,” and NAFTA have taken away that ability. A nation that cannot feed itself locally is playing with fire. Who can say that famine could not arise even in developed nations during a general economic collapse?

DIVIDEND ECONOMICS

The one economic measure that has made a positive difference in 2008 was the federal government’s issuance to taxpayers of a tax rebate averaging $600 per recipient. The stimulus measure demonstrates how easy it is to spend money directly into the economy if the politicians want to do so.

Along these lines, the new president could institute ongoing cash stipends to citizens similar to the Alaska Permanent Fund. This year the Alaska state government made a payment to each resident of $3,269 from resource revenues. The American Monetary Act also contains a dividend provision, as does the platform for the Green Party.

But $3,269 is not enough. An annual citizens’ dividend of $1,000 per month has been proposed by Washington, D.C., analyst Stephen Shafarman, in his new book, Peaceful, Positive Revolution (Tendril Press, 2008).

A similar program leading to an annual basic income guarantee has been enacted by Brazil and was used in modified form by Argentina to recover from its economic collapse of 1999-2002. Shafarman is part of the U.S. Basic Income Guarantee Network, which has ties to its European counterpart, the Basic Income European Network (BIEN). For the author’s own description of a dividend-based economic model, see “An Emergency Program of Monetary Reform for the United States,” Global Research.

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A citizens’ dividend could work wonders in rebuilding the economy from the bottom up, including small business and local agriculture. To assure that dividends are spent for necessities, they could be issued as tax-free food, fuel, and housing vouchers from a government recovery account not dependent on taxation or borrowing. Rather the backing for the vouchers would be the productive potential of the economy.

This way, new economic production could be generated without bank loans. The vouchers, when spent, could be funneled into a network of community savings banks that would re-lend the money locally. (Richard C. Cook, “How to Save the U.S. Economy: The Cook Plan,” Global Research.)

By taking such steps to restore economic vitality, the U.S. might eventually overcome the delusion spawned by the New World Order and clung to by all the leaders of the Western nations that financial wealth has meaning apart from a nation’s producing economy. In continuing to maintain the fictitious belief in finance-based wealth without a robust producing economy to support it, the nations of the West have wandered down a cul-de-sac.

In 1896, William Jennings Bryan spoke at the Democratic National Convention, saying to the bankers and their tyrannical gold standard, “You shall not crucify mankind on a cross of gold.” Today mankind is being crucified on a banker’s promissory note.

Real wealth is created by human labor and ingenuity applied to the resources of the earth using energy that derives from nature. It is not created by bank loans. Credit has a role, but it should be treated as a public utility, like water, electricity, and clean air.¹¹

Today a new economic science is needed. Such a science would build on such historical movements as Distributism and Social Credit, both developed by British thinkers in the early 20th century and current as viable economic schools of thought in Canada, New Zealand, Great Britain, Australia, and elsewhere.

Distributism posits an alternative to both capitalism and socialism by arguing that the best economic system is one that provides ownership and autonomy to the maximum number of people. When the Social Credit concept of regular dividend payments as a means of monetizing future production potential is introduced as well, an entirely new monetary basis for economic democracy emerges.

A revolution in economics is needed. The future of the world is now at stake, particularly because it is obvious that the U.S.’s status as the world’s superpower is coming to an end. People know something is drastically wrong with a nation that relies more than any other on “market economics,” yet has the world’s largest prison population, a declining standard of living, decreasing life expectancy, an epidemic of drug and alcohol addiction, overwhelming debt, and so much domestic violence.

This is what turning over the nation to the financial elite has done. Will the next stage be an economic depression where millions more become homeless and people actually starve? If so, it all started when, in 1913, the financiers took over through the Federal Reserve System and created a monetary system based on usury, debt-based currency, and bank leveraging of speculation, combined with crony capitalism and criminal disregard of all legal and commonsense standards.

The politicians profited from this system which has now failed. The financiers and their enablers in the White House and Congress have driven a once-great nation off a cliff. Will the European solution of collective action to shore up the world’s debt-based monetary system make a difference? Or will it just lead to a new era of international financial looting, forced population reduction, and a more sophisticated police state than anything we have seen yet?

ECONOMICS OF THE SPIRIT

Maybe a New World Order really is needed. If so, shouldn’t it be one with a genuine spiritual basis leading to economic justice, not just a modification of the system we have today? Such a system based on economic justice was affirmed in a message to the author by an Australian author, Omna Last, who wrote:

But what if there was a truly representative world government…I do not mean a coercive world government imposing itself on the peoples of the world, but one that operated exactly as you suggest an American government should operate in helping to fulfill the potential in the lives of Americans? A government that provided free no-interest economic dividends to every nation of the world community? If the money was embezzled, used for corrupt purposes, or helped to destroy the world’s eco-system further, then that country would receive no free dividends for a period in the future.

In an article posted on his website on October 26, Omna Last wrote:

Earth is a temple. The money-changers have taken over the temple…. It is time to remove the money-changers from their positions as priests of the new religion of money…. Governments all over the world should be run by people in tune with their divine selves – their conscience, in tune with God, not in love with money and its power, but in love with the moral laws of the Universe.

Those with eyes to see knew the present crisis was coming long ago. That vision now has spread to more people. What is increasingly clear is that positive change, as opposed to the change that is just a drift to disaster, will only happen when people who love freedom demand it, work for it, and sacrifice for it. Will the next president of the United States facilitate such change or stand in its way?

1. George Friedman, “The Russian Resurgence,” www.Stratfor.com, September 18, 2008.
2. Brian Rohan, “Saakashvili “Planned S. Ossetia Invasion”: Ex-Minister,” Reuters, September 14, 2008.
3. Ian S. Lustick, “Abandoning the Iron Wall: ‘Israel and the Middle Eastern Muck’,” Middle East Policy, Vo. XV, No. 3, Fall 2008.
4. Richard C. Cook, “Mortgage Fraud: The Paulson Bailout Plan,” Global Research, September 23, 2008.
5. Berit Kjos, “The U.N. Plan for Global Migration,” News with Views, 2006.
6. David Swanson, “A McCain Win Will be Theft: Resistance Planned,” Global Research, October 20, 2008.
7. Bloomberg.com, October 6, 2008.
8. Christian Science Monitor, October 20, 2008.
9. Information Clearing House, October 12, 2008.
10. “U.S. Has Plundered World Wealth With Dollar,” Reuters, October 24, 2008.
11. Richard C. Cook, “Credit as a Public Utility: The Key to Monetary Reform,” Global Research.

When George W. Bush was named president by the Supreme Court in December 2000, the stock market had begun to decline with the bursting of the dot.com bubble.

In 2001 the frequency of White House visits by Alan Greenspan increased.

Greenspan endorsed President Bush’s March 2001 tax cuts for the rich. More such cuts took place in May 2003.

Signs of recession had begun to show in early 2001. The stock market crashed after 9/11. The U.S. invaded Afghanistan in October 2001 and Iraq in March 2003.

The Federal Reserve began cutting interest rates, and by 2002 a home-buying frenzy was underway. Fannie Mae and Freddie Mac went along by guaranteeing the increasing number of mortgage loans.

According to a mortgage broker this writer interviewed, word began to come down through the mortgage banks to begin falsifying mortgage applications to show more borrower income than borrowers actually possessed.

Banks that wrote mortgages began to offload them when Wall Street packaged them into mortgage-backed securities that were sold around the world as bonds to investors.

Risk-analysts at the leading credit-rating agencies, such as Standard and Poor’s, Moody’s, and Fitch, gave their highest ratings to mortgage-backed securities whose risks were later acknowledged to be grossly underestimated.

Mortgage companies, with Alan Greenspan’s endorsement, began to offer more Adjustable Rate Mortgages (ARMs), loans that would reset at much higher rates in future years.

Mortgage brokers fed the growing bubble by telling people they should buy now because housing prices would keep going up and they could resell at a profit before their ARMs escalated.

Huge amounts of money began to flow into the economy from mortgages and home equity loans and from capital gains on resale of inflating property.

Meanwhile, in the world of investment securities, the Securities and Exchange Commission greatly reduced the amount of their own capital investors were required to bring to the table, resulting in a huge increase in bank leveraging of speculative trading.

George W. Bush was reelected in 2004 at the height of the housing and investment bubbles. By 2005 the housing bubble was accounting for half of all U.S. economic growth and yielding huge tax revenues to all levels of government.

Despite the tax revenues from the bubbles the Bush administration was running huge budget deficits from expenditures on the wars in Afghanistan and Iraq.

ABC News reports that during this time risk analysts at Washington Mutual, one of the nation’s largest banks, were told to ignore high risk loans because lending had to be maximized. Those who objected were disciplined or fired.

State attorneys-general moved to investigate mortgage fraud but were blocked from doing so by orders of the Treasury Department’s Comptroller of the Currency. There was no federal agency that was charged with regulating mortgage fraud.

In February 2006, Ben Bernanke replaced Alan Greenspan as Federal Reserve Chairman and held interest rates steady. Homeowners began to default as ARMs reset.

The housing bubble began to collapse in 2006-2007, with the economy showing early signs of a recession and the stock market starting to decline by August 2007. Home prices began to plummet in most markets, with millions of homeowners owing more on their homes than their new appraisals.

Homeowners began to default, with over four million homes going to foreclosure from 2006-2008. In many cases, homeowners simply walked away, dropping off the keys to their houses at the bank.

The U.S. economy shed 60,000 jobs in August 2008. In a year, Wall Street had cut 200,000 jobs. State and local governments began to cut budgets and jobs.

The “toxic debt” from the collapse of the housing bubble brought about a full-scale crash of the U.S. financial system by September 2008. The stock market immediately fell, with 40 percent of its value — $8 trillion — now having been lost in a year. $2 trillion of the losses were in retirement savings.

The crash of the U.S. economy began to reverberate around the world with bankers and the IMF warning of an onrushing global recession.

Massive bailouts by the U.S. Treasury Department and the Federal Reserve failed to stem the tide of the crashing markets. By late October 2008 the recession has begun to hit in force.

As the situation worsened, big banks like J.P. Morgan Chase received government capitalization even as they were buying up banks that were failing. J.P. Morgan Chase paid $1.9 billion for Washington Mutual with assets of over $300 billion.

The U.S. government joined with the nations of Europe in planning a series of economic summits to explore global financial solutions. President Bush will host the first summit in Washington, DC, on November 15, after the U.S. presidential election.

The U.S. military shifted combat troops from Iraq to the U.S. to contain possible civil unrest.

Most major retail chains began to close stores and lay off employees even as the Christmas season approached.

The Washington Post reported on October 23, 2008: “Employers are moving to aggressively cut jobs and reduce costs in the fact of the nation’s economic crisis, preparing for what many fear will be a long and painful recession.”

Are they talking about the fact that the Western world is run by an international financial elite headquartered in London, the financial capitals of mainland Europe (such as Frankfurt, Hamburg, Amsterdam, Paris, and Milan), and, of course, New York City?

Are they mentioning at their cocktail parties that the financial elite exert control over the world’s population through the cartels that make up the world’s producing economies and through the civilian and military bureaucracies who work for the governments that kow-tow to them?

Of course they know that the most important cartels are those which control energy resources. And that of these, the commodity of central importance is oil. But is any of this helping them draw conclusions regarding the doubling of oil prices during the last year or about the largest oil company profits in history?

Also, they should be drawing the right conclusions from the fact that every private and pubic enterprise operates on the basis of a money economy, though it would be more accurate to call it a credit economy. This means that whoever controls the issuance of money and credit controls the world. And the world’s monetary systems function on the basis of money and credit being introduced into circulation through loans from the banking system, loans for which interest is charged. So what should that tell them?

In fact, they should be pointing out to each other and their TV viewers that the charging of interest for the use of money is a chain around the neck of everyone on earth. Further, that these cumulative interest charges are built into the price of every product that is manufactured or consumed. And that growth of debt means price increases too.

They should be honest in making it clear that the world is a master-slave society, that the slaves are those who borrow and pay interest, that the masters are those who collect the interest, and that this unjust system has existed in one form or another for thousands of years.

The candidates and delegates are talking about the aspirations of the American people and how everyone should have an opportunity to achieve their dreams. But if the United States were a free nation, they would also be talking about a financial system that destroys people’s dreams.

Unfortunately, the highest rung the candidates and delegates have been able to reach on the ladder of modern-day slavery is the need for more jobs—but they fail to note that jobs are not only the means by which people live, but also the instruments for them to pay the heavy burden of interest the masters of finance require.

What they won’t say is that the world economy is based on usury, something religions used to consider a crime (and which Islam still does). Usury is the charging of interest for the use of money. As the religions backed off from their prohibitions of interest, usury became just excess interest. But that’s not what the word really means.

So what have over two centuries of usury done to the United States?

The best answer ever given to that question was contained in a paper entitled “Revisiting U.S. Public and Private Debt” published in January 2005 by Dr. Bob Blain, Emeritus Professor of Sociology at Southern Illinois University. The paper updated an earlier study by Dr. Blain published for the United Nations Educational, Scientific, and Cultural Organization (UNESCO) in the International Social Science Journal, November, 1987, Paris, pages 577-591.

In his paper, Dr. Blain examined the growth of total public and private debt in the U.S. Total debt includes “the debts of governments (federal, state, and local), corporations, farmers, home mortgages, and consumer, commercial, and financial debts.”

In his analysis, Dr. Blain began with data from the Bureau of Economic Analyses of the United States Department of Commerce which covered the years 1916-1976. After that year the Bureau stopped publishing the data.

The figures showed that from 1916-1976, total U.S. debt grew from $82 billion to $3,800 billion ($3.8 trillion). But most of that growth was during the last 21 years, from 1955-1976, when it began to grow exponentially. Dr. Blain wrote, “The consistency of the pattern suggests that some imperative is at work, something that requires debt to increase.”

Dr. Blain found the answer by researching American history. He wrote: “Then I read G.R. Taylor’s 1950 book, Hamilton and the National Debt, which described the debate over Alexander Hamilton’s plan to fund the new economy with borrowed money.” He continued:

The most revealing account was a speech by the first congressman from Georgia, James Jackson, on February 9, 1790, in which he predicted that adoption of Hamilton’s funding plan would lead to the explosive growth of debt. Jackson said, ‘Though our present debt be but a few millions, in the course of a single century it may be multiplied to an extent we dare not think of.¹

From the very beginning, the U.S. had a monetary system based on borrowing and debt. First came the thousands of state chartered banks that began operating late in the Revolutionary War period and continued in one form or another until today. Then there were the two early central banks: the First Bank of the United States (1791-1811) and the Second Bank of the United States (1816-1836). Today’s national banking system began during the Civil War with the National Banking Acts of 1863-64. Then there is the system we are living under today, the Federal Reserve, chartered by Congress in 1913. Even during the times when the government has sold its debt directly to the public, as with war bonds, savings bonds, and Treasury notes and bills, that too has been money borrowed at interest.

Although there have been times in history when money entered into circulation other than through debt, such as with coinage and the Civil War greenbacks, those were exceptions and today are of little importance.

Dr. Blain estimated that from the time Alexander Hamilton placed the U.S. under a debt-based monetary system until today, the debt has compounded at 5.8 percent annually. The big problem with this system, he said, was “that no money was created to pay interest.” He continued:

Loans created only the principal. Interest had to be paid out of principal. So payment of interest reduced the money supply and slowed economic activity. Recovery could come only when new loans were taken out at least equal to interest paid.

Dr. Blain concluded, “As long as the money supply of a nation is created as debt costing interest, debt must grow by compound interest.” From a longer-range view, it’s a system that is constantly collapsing and that must constantly be bailed out.

Dr. Blain next sought to update his figures past the 1976 data from the Bureau of Economic Analyses. Turning to the Federal Reserve’s series on “Total Credit Market Debt Outstanding,” he found remarkably similar indicators.

He found that adding data from the Federal Reserve from 1945 to 2003 showed the “debt explosion” continuing. In 1945 total debt was $463.4 billion. In 2003 it was $44,967.7 billion ($45.0 trillion). When he projected the debt level for 2010, he arrived at a figure of $74.9 trillion. By this time the debt curve was climbing so steeply there would be almost a doubling of the amount of total debt in only nine years.

It might be argued that these figures do not take into account inflation. This is because lending at interest is the cause of inflation. The dollars still have to be repaid with interest. The problem occurs when economic growth, measured by GDP, does not keep up.

Looking at the growth of GDP from 1945 to 2003, the increase was from $223.1 billion to $10,987.9 billion, a factor of 49. But the debt ($463.4 billion vs. $44,967.7 billion) grew by a factor of 97, almost twice the rate of GDP growth. Thus the total debt burden on the economy has doubled from a ratio of 2:1 to more than 4:1 (though it was much less than that during the early days of the nation).

But with continued compound growth of debt and a slow- or no-growth state of the economy as we head into a recession, we are starting to see what Dr. Blain called an “acceleration to meltdown.” He wrote:

We are buying more and more in the same amount of time. Witness the efforts of people to get rid of their excess through yard sales, storage units, and big trash pickup days, and the massive size of what are euphemistically called landfills. While two billion people in the world lack basics such as clean water, food, and shelter, Americans throw away their microwave ovens, televisions, computers, refrigerators, furniture, and cars. Meanwhile, acceleration is applauded as increasing productivity. It’s like arguing that cancer is good because it grows.

These are the things the Democrats in Denver should be talking about, instead of going to so many parties. They should be making note that the U.S., to quote economists close to the Federal Reserve, is “functionally bankrupt.”

In fact, the debt this nation owes to the banks, to foreign creditors, and to each other can never be paid off. Further, one big reason for all of our fruitless military endeavors overseas may simply be to escape unpleasant economic realities at home. But this is pointless. Nothing creates more debt than war, as the bankers have always known.

The only solution is to adopt a monetary system that is not based on debt. Dr. Blain makes a couple of specific recommendations: 1) “Stop using percentage rates to calculate charges for the use of money”; and 2) “Congress must supply the economy with a money base that is debt-free and interest-free.”

The second point is a call for a new monetary system, not one based solely on lending by the banks or on government borrowing. One organization that has developed a blueprint for such a system is the American Monetary Institute (AMI), headquartered in Chicago. The director of the AMI is Stephen Zarlenga, author of a massive, groundbreaking work: The Lost Science of Money (AMI, 2002). Zarlenga’s assistant is Jamie Walton, a monetary reformer from New Zealand.

AMI will be holding its fourth annual conference in Chicago on September 25-28. Expected as keynote speaker is Congressman Dennis Kucinich, whose wife Elizabeth once worked as an intern at AMI. Dr. Bob Blain will be a featured speaker.

On the AMI website is a remarkable document, the American Monetary Act. The product of several years of work by Zarlenga and his network, which now includes a number of local chapters around the country, the American Monetary Act would replace today’s debt-based monetary system with one where the government spends or loans money directly into circulation.

Under the Act, the Federal Reserve would be retained as a national financial clearinghouse but would no longer be a bank of issue. The system would be overseen by a Monetary Control Board within the U.S. Treasury Department. The Act also includes a provision for a citizens’ dividend, similar in some respects to the Alaska Permanent Fund, which would inject desperately needed purchasing power into the economy without additional government debt or taxation.

Also promoting a citizens’ dividend, by the way, is Stephen Shafarman in his important new book, Peaceful, Positive Revolution (Tendril Press, 2008).

It’s the American Monetary Act the candidates and delegates in Denver should skip one of their parties to read, because it’s the only way any of their hopes for America can ever be realized. Says AMI’s Jamie Walton:

This is a crucial time. Things are happening. We have got some key media people talking and writing about our kind of reforms. The inertia is starting to yield. Things are starting to roll. The worsening conditions in 2009 will give us a once-in-a-lifetime chance to be heard above the propaganda.

1. Annals of Congress, Vol. I, February 1790, pp. 1141-2.

According to analyst Michael Hodges, average family income adjusted for inflation declined six percent from 1999 to 2005, and the drop has continued since then. With families no longer able to borrow on their shrinking home equity for purchasing power due to the collapse of the housing bubble, they have had to tap into their savings. According to Hodges, “As of summer 2007, savings were a negative 1.3 percent, an all-time low.” (Grandfather Economic Report, August 2008)

The government claimed that GDP grew during the 2nd quarter of 2008—hence no recession—admitting at the same time that the chief driver of growth was the economic stimulus rebates sent by the IRS to taxpayers. The rebates, however, were paid for by more government debt, with a $490 billion federal budget deficit projected for fiscal year 2009 that begins next month.

Whether even the paltry 2nd quarter growth at an annual rate of 1.9 percent was “real” is subject to debate. Since the U.S. began to lose its manufacturing economy, a long-term slide that began after the Vietnam War, all economic growth has been in the services and financial sectors.

The government counts any financial transaction that can be taxed as part of the GDP whether or not it results in the creation of goods and services of tangible value. Bizarrely, a transaction can add to GDP even if it is based on money that has been borrowed and must be repaid with interest in the future.

So this type of debt-based GDP growth can actually be destructive in the long-run. This has happened in the U.S., where total household, student, business, and government debt will soon be pushing $70 trillion against an annual GDP in 2007 of $13.8 trillion.

The best measure of economic health for working men and women in the producing economy is not GDP but rather M1. This is money available as immediate purchasing power from cash-on-hand, checking accounts, and NOW accounts.

M1 measures what can be bought today without a consumer being required to incur new debt. The amount of money available as M1 has fluctuated in the $1.3-$1.4 trillion range since December 2003. Growth in M1 has essentially been flat.

This means that even moderate inflation can result in erosion of consumer purchasing power. By this measure, the producing economy has been in a mild recession for four-and-a-half years. But according to the M1 Money Stock Forecast of the independent Financial Forecast Center, M1 was projected to fall from June to August of 2008 from 1.3883 trillion to 1.386 trillion.

Thus with inflation now running at close to ten percent, we have entered a period of stagflation potentially worse than the 1970s. And stagflation is nothing less than a weapon of mass destruction aimed at the livelihoods not only of the elderly and those on fixed incomes, but also on students, the unemployed, families, and almost everyone who has a job in the producing economy.

ARE THINGS REALLY THIS BAD?

Just before we left Washington, D.C., the Bush administration announced that it was expecting the largest federal budget deficit in history to be racked up in fiscal year 2009 starting September 1—$490 billion likely to be added to the national debt. This doesn’t even count the “supplemental appropriations” during the coming year which are the preferred method for off-budget financing of the Iraq War.

Exiting the Washington-Baltimore metropolitan area we passed the gigantic rows of glass and steel office towers along the interstate highway corridors. Further in the distance were rows of McMansions thrown up in what once were corn fields. Built for an automobile culture, the viability of both towers and houses has been stretched to the limit by $4 a gallon gas.

We drive through rural Pennsylvania and southern New York state. Homes and businesses look seedy, run down. What was once a vibrant and prosperous small-town culture in this part of the country seems exhausted. When we stop in Oneonta, New York, the prices at a local restaurant are out-of-sight, and only the Walmart seems bustling.

We eat sandwiches at a Subway where at the table next to us a young man with his elderly parents is holding a book on black magic. The headline on a copy of the New York Post says, “N.Y. for Sale.” The lead paragraph reads: “Warning of a looming economic calamity, Gov. Paterson yesterday called an emergency session of the state legislature—and raised the specter that New York may have to sell off roads, bridges, and tunnels to close a massive and still-growing budget deficit.”

Are things really this bad? Our cottage on the lake has internet service, and the next day I read the Washington Post’s lead headline: “U.S. Economy Grows at Solid Pace in 2nd Quarter.” The Post, despite its occasional liberal posturing on social issues, is the American Pravda, the closest thing we have to an official newsletter of the establishment elite.

But even the Post has to come clean a little, stating in its lead: “Much of the improvement came from the one-time bump from economic stimulus payments, raising prospects of weaker performance in months ahead.” Matters would have been worse, the Post notes, except that the weaker U.S. dollar has caused a rise in exports and foreign tourism, though the trade deficit remains horrendous, having hit $711.6 billion in 2007.

Of course the weakening dollar also makes it easier for foreigners to buy American businesses at fire-sale prices. This happened with the recent purchase of Anheuser-Busch by the Belgian company InBev, adding to the $2 trillion spent by foreigners to acquire American companies since 1978.¹

“SLOWDOWN” OR RECESSION?

The Post’s ambiguity over the condition of the economy reflects the chasm between the official government gloss on events and the actual daily experience of people who work for a living. According to the Bush administration, we are in a “slowdown,” not a recession. The GDP is still growing, they say, though at less than two percent annually.

Of course much of this “growth” reflects paper financial transactions, not the creation of wealth through production of new goods and services. But if someone makes money and the government can tax it, it’s part of the GDP.

A better measure is the actual amount of money available to working men and women for everyday expenditures. The Federal Reserve calls it M1, cash-on-hand or money held in checking or NOW accounts. In fact, M1 has not increased appreciably since late 2003, hovering at any given time between $1.3 and $1.4 trillion.

This means that for the producing economy, we have been in a recession now for almost four years, because the real value of M1 has eroded due to inflation. And it’s in the inflation statistics that the rift between the party line and daily experience is most striking.

According to the government, inflation is relatively low and has been for some time. The 2007 rate was calculated at about four percent, up from two percent in 2004. Yet we all know that the actual cost-of-living is skyrocketing. Gas costs twice as much as it did a year ago. The increase in food prices has been devastating to the family budget. Even with the bursting of the housing bubble, mortgages and rents are much higher than a decade ago, and the costs of medical care and higher education have continued to climb steadily. So what is going on?

It’s been well-documented that the government’s Consumer Price Index is not a true measure of what it takes to sustain life. For one thing, the methodology for measuring the CPI was changed in the 1990s to eliminate certain major items, such as the cost of home ownership. Other items, such as federal, state, and local taxes were never included. Finally, some items such as computer equipment have declined in price. So even though not everyone purchases such equipment in substantial amounts, the CPI is thereby moderated.

Why is this done? According to commodities analyst Danny Bannister:

Looking at it from the government point of view, there’s a strong political motivation to understate the CPI. By understating, it keeps COLA adjustments down on entitlements, which are at this point the largest part of the government’s budget. And by understating CPI, the government can minimize the inflationary impact on things such as rents, which are indexed to CPI, or wages, pensions and a whole list of ancillary costs to artificially keep inflation rates down. Bottom-line: the published CPI understates the real inflation rate.²

In fact the Federal Reserve has gone to exhaustive lengths to avoid even using the word “inflation,” which in Fed-speak often refers to upward pressure on wages and salaries rather than prices of products or commodities. Wages and salaries have been stagnant, with purchasing power steadily declining since the recession of 2000-2001. Instead, the primary source of new money within the consumer economy has been derived from capital gains due to the rise in housing prices that have now reversed.

The fact that consumers are going broke is recognized in a back-handed way by Fed officials such as Sandra Pianalto, president of the Federal Reserve Bank of Cleveland and a voting member of the Federal Open Market Committee. Pianalto said in a recent speech in Paris, “While sometimes devastating, these global relative-price pressures are not the same thing as inflation.”

As writer Colin Barr explains in a recent article in Fortune, the Fed is reluctant to identify “relative price pressures” as inflation because it does not want to make the current recession worse by raising interest rates. What is the Fed’s rationale? “It’s because,” Barr writes, “the Fed remains skeptical that high commodity prices will ripple through the economy, leading to broad price hikes and big wage increases.”³

Or, as Sandra Pianalto puts it, “As consumers spend more money for higher-priced petroleum and agricultural goods, they eventually have less money to spend on other goods and services. Other relative prices must then fall.”

In other words, “Fed to consumers: ‘drop dead.’” If you can’t afford gas and food, stop buying other items, because while the income of whoever is benefiting goes up, yours will not.

So what should you stop paying for? Maybe your mortgage payment, credit card debt, or student loans? If you can’t afford your real estate taxes, shouldn’t you sell your house—if you can find a buyer in a depressed market? If you are elderly and have to choose between food and medicine, maybe eat dog food?

Also quoted in Barr’s Fortune article is Warren Buffett, the billionaire investor, who is at least honest about it. According to Barr, Buffet has “fingered ‘exploding’ inflation … as the biggest risk to the economy. ‘I think inflation is really picking up,’ Buffett said on CNBC. ‘It’s huge right now, whether it’s steel or oil…We see it everywhere.’”

INFLATION AS CLASS WARFARE?

Then what is the cause of the inflation? On this subject, commentators are all over the map, often without citing any truly definitive data. Neither the government nor politicians offer any help at all, even as companies like Exxon-Mobil, BP, and Shell report quarter-after-quarter of record profits. What have we heard from John McCain or Barak Obama, for instance, on the subject? Answer: nothing.

So is it true, as Professor James Petras said in a recent article, that the causes are not accidental, but are “products of public policies which deeply affect markets, supply and demand, consumers, producers and speculators”? According to Petras, these policies result in “declining capitalist investment in the productive economy, the vast increase of capital flowing in the paper economy, the huge increases in profits and the grotesque salaries, bonuses and payoffs to senior executives, totally unrelated to ‘performance.’”⁴

In this respect, inflation is a wealth-transfer mechanism that benefits the already-rich. Petras continues:

In other words, in the contemporary economy, inflation benefits the wealthy because they pay their workers in deflated currency, while they can take advantage of inflation to further jack up prices and then income. [Thus] the upper classes have fortified their economic positions to take account of inflation through their power over prices, income and other compensations in a way that wage workers and people on fixed income and other vulnerable sectors cannot. Bankers protect their loans via adjustable interest rates. Monopoly resource owners jack up prices to retain profits. Wholesalers mark up prices to compensate for higher commodity prices. Large-scale retailers squeeze final consumers — the great majority at the bottom of the production and distribution chain.

Doubtless there is an impact from all these factors, though no one knows for sure how much. With regard to food prices, geopolitical factors deserve particularly deep scrutiny. Petras writes:

In Asia, particularly Pakistan, India, Indonesia, South Korea, Philippines, Nepal, Mongolia, and China, hundreds of millions of workers, peasants, artisans, and low-paid self employed workers, as well as housewives and pensioners have engaged in sustained mass protests as they experience a decline in the quality and quantity of food purchases as prices skyrocket. In Africa, hunger stalks the land and major food riots have occurred from Egypt through Sub-Saharan Africa to South Africa. In the Caribbean, Central and South America, food riots have led to the overthrow of regimes, mass protests, road blockages from Argentina, Bolivia, through Colombia, Venezuela and Haiti.

In Haiti, hungry people eat mud cakes laced with salt and a little margarine. As reported by Rory Carroll of the Guardian UK:

The global food and fuel crisis has hit Haiti harder than perhaps any other country, pushing a population mired in extreme poverty towards starvation and revolt. Hunger burns are called ‘swallowing Clorox,’ a brand of bleach. The UN’s Food and Agriculture Organization predicts Haiti’s food import bill will leap eighty percent this year, the fastest in the world. Food riots toppled the prime minister and left five dead in April. Emergency subsidies curbed prices and bought calm, but the cash-strapped government is gradually lifting them. Fresh unrest is expected.

According to relief workers in Haiti, mass starvation could begin in six to twelve months. Meanwhile, in our own country, traders have been making millions short-selling the declining U.S. stock market while some hedge fund managers made over a billion dollars last year. Their lobbyists have been battling in Congress to stop a move to raise the relatively low rate of taxation on their capital gains to the level of earned income. In other words, while ordinary people starve, Wall Street is doing just fine.

The situation in many developing nations is desperate in part because the International Monetary Fund, under the “Washington consensus,” required them to give up their subsistence agriculture in favor of crops raised for export by agribusiness, while the people who once supported themselves on family farms have had to migrate to urban slums. The Western corporate-owned press calls it “free market reforms.”

The devastation wreaked upon the world has been eloquently described by Dennis Brutus, a former South African activist, now Professor Emeritus at the Department of African Studies, University of Pittsburgh. Brutus writes:

When I was serving a sentence on Robben Island during the struggle to end apartheid in South Africa, I never suspected that the end of white minority rule in my home country would be the beginning of yet another struggle for justice — this time against the World Bank and the International Monetary Fund.

As architects of the global economy, the World Bank and the IMF have enormous power and shape the conditions of peoples’ lives around the world. That power has been used to create a global economy friendly to the interests of the wealthy and multinational corporations, but devastating to the lives of hundreds of millions of impoverished people.

I live now in the United States where people so far are relatively unscathed by the reordering of the global economy for the benefit of the very rich. I do not see the squatter settlements, the polluted rivers, the street children, and the elderly beggars that are all too visible in Africa, Asia, or Latin America. I am not saying, of course, that the poor in the U.S. don’t suffer from the ravages of the extremist global economic system – they do. Even the U.S. middle class is beginning to see their comfortable lives threatened by the concentration of wealth in fewer and fewer hands.

The IMF and World Bank, with the ‘structural adjustment programs’ (SAPs) they impose on indebted countries and their pro-corporate development projects, are the leading edge of oppressive globalization. The policies they have imposed in Africa, Latin America, and Asia have condemned people to stagnation, poverty, and death for twenty years, and those policies are now being adopted in the countries of Europe and North America too.⁵

IMF policies require governments to cut food price subsidies, restrict credit to farmers, and divert prime farmland to non-food export crops such as tobacco, coffee, and cotton in order to provide cheap bulk commodities to Western consumers. The victimized nations must then import wheat, rice, and other food products from outside. But prices for these food staples depend on world markets which they cannot influence, much less control.

Speaking of IMF’s directors and economists, Brutus writes:

Although some of them may have tricked themselves into believing that the neo-liberal economic model they defend is immutable, like a law of nature, most of them probably know that they are perpetrating a fraud of global proportions. Michael Camdessus, who retired after thirteen years as Managing Director of the IMF, told a group of U.S. religious leaders that he was willing to ‘sacrifice a generation’ in order to realize the so-called benefits of the macroeconomic model.

Camdessus, a Frenchman who headed the IMF for thirteen years, became a legend for the harshness with which he attacked the developing world’s national economies. Obviously his willingness to “sacrifice a generation” reflected the official program of the Western financial oligarchy, but today their targets extend well beyond the hapless victims of the Washington Consensus.

As Brutus indicates, the same policies are being applied to the inhabitants of the once-prosperous nations of Europe and North America as well. But doesn’t it really point to a worldwide regression to a neo-feudalist system where the rich will eventually lord it over a vastly-reduced population of debt-serfs? Is this the essence of the “New World Order” that the international elite have seemingly been planning in earnest since the Club of Rome began talking about overpopulation in the late 1960s?

At least the developing nations are now fighting back, with IMF lending running at a fraction of what it once did and some nations such as Venezuela dropping out altogether. Resistance is also being exhibited to similar policies of the World Trade Organization which likewise seeks to destroy tariffs and other trade barriers that developing countries might wish to use to protect their farmers and workers.

Just last week the “Doha Round” of WTO trade talks collapsed at Geneva when India and China led the way in refusing to alter their tariff and subsidy policies. According to the Center for Economic and Policy Research, the collapse was not surprising, “given the reluctance of India and other developing nations to sacrifice food security measures in the wake of the recent global spike in food prices.”

According to Deborah James, Director of International Programs for the Center for Economic and Policy Research, who had been observing the talks in Geneva, “The tariff cuts demanded of developing countries would have caused massive job loss, and countries would have lost the ability to protect farmers from dumping, further impoverishing millions on the verge of survival.”

NEW WORLD ORDER COUP D’ETÁT?

In looking for the tracks of the New World Order, we should also scrutinize the continuing assertion by the Western media that supply-and-demand is the controlling factor.

For instance, while the price of petroleum has doubled in the past year, there is no solid evidence that increased demand has caused this huge jump nor has the U.S. dollar declined in value to that degree. Within the U.S., gasoline utilization is stagnant. That of China has grown but not enough to cause such an increase, while worldwide more biofuel is coming on-line. And despite the “peak oil” scare, there are no obvious shortages in what is in the pipeline and ready to be refined and utilized today. This has led to surmisals that the price increases reflect activity in the commodities futures markets.

Despite the uncertainty, the Washington Post commenced a major week-long series on July 27 by declaring with absolute certainty that “cheap gas is gone forever.” So what does the Post know that we don’t? In fact none of the factors cited by the Post, including growth of the Chinese economy, can account for the aforesaid doubling of crude oil prices within a twelve-month window. By the Post’s own figures, world petroleum utilization has increased by only twenty-five percent in the last fifteen years.⁶

Further, in spite of its certainty that it knew the causes of the problem and that higher prices are here to stay, only two months earlier, on May 27, the Post ran a lengthy article entitled, “Skyrocketing Oil Prices Stump Experts.” Toward the end came this interesting statement: “’We see many of the essential ingredients for a classic asset bubble,’ said Edward Morse, chief energy economist at Lehman Brothers. Morse estimated that $90 billion has flowed into the biggest commodity indices in just more than two years, and more money has flowed into other exchanges, pushing up prices.”

So is oil is being used as a hedge by investors to protect their wealth at a time of uncertainty? Are the richest of the rich competing with each other to park their cash? It is known that among these investors are the oil companies themselves. Also, it is known that such commodity investments are often heavily leveraged by bank loans, often up to ninety-seven percent of investors’ capital. So the banks are in on it too.

But this type of trading seems to be more than just a hedge. Its content is political. Ethically, it is deeply anti-human, even criminal, because higher fuel prices make everything else cost more in a world where fuel is needed for all that is produced or sold. In fact it seems more like an assault by the rich on every living human being in the world, an assault that governments, under the hypnotism of neo-liberal free market fundamentalism á la Margaret Thatcher and Ronald Reagan, are unable or unwilling to fight.

And who, other than the oil companies, are these big investors?

On June 19, 2008, David Bario of the American Law Daily reported on an interview with Philip McBride Johnson, a former CFTC chairman under President Reagan. Johnson now heads Skadden, Arps, Slate, Meagher & Flom’s exchange-traded derivatives practice. He is not exactly a wild-eyed conspiracy theorist.

Regarding activity in the petroleum futures market, Johnson said:

The CFTC’s economists are saying that supply and demand seem to be driving this. But we have clients in the business that have experienced these markets for many, many years, and what I’m hearing from them is that they don’t see any change in the fundamentals of supply and demand.

Bario asked, “Is it a matter of institutional investors seeking shelter from the subprime crisis and the credit crunch?” Johnson replied:

I don’t know. But I do know that speculators as a class do not agree on anything, and yet there is almost unanimity of opinion these days — and the money to make the opinions matter. The fact that prices have been relentlessly trending up suggests a new type of market participant [with] a mentality that is traditionally more in line with investing in securities than trading in commodities. If enough of these wealthy people, or funds, or other entities with a lot of capital decide to flip out of securities for a little while and go into commodities, and they’re all looking for something that is going up, and you get enough billions of dollars thinking that way, then their wish comes true.

So again, who exactly are these “wealthy people, or funds, or other entities” that may be manipulating the market of the world’s most important substance? Surely government regulators must know. Aren’t they able to trace market activity to the players involved?

The answer, Johnson said, is no, they can’t:

The situation now is that the CFTC is sitting there looking at one screen, one piece of the picture, which is whatever is happening on the exchanges. Meanwhile, an increasing volume in dollars is taking place in the form of over-the-counter activity where no one can see it… there is still a blind spot with respect to the true over-the-counter activity that is going on, which represents billions and billions of dollars.

This trading in what the industry calls “dark pools” amounts to a third of all commodities activity, easily enough for the manipulators to remain hidden. It takes place outside the regular commodities exchanges, where trading activity is relatively transparent. And it applies not only to trading in petroleum futures but also food crops and other vital commodities.

And who is it that has allowed this secret trading to take place? Johnson:

“In 2000 Congress decided that there were certain kinds of high-end investors that were big enough and smart enough that they shouldn’t be constrained to do all their business on the exchanges.”

The United States Congress has constitutional responsibility to regulate interstate commerce in order to secure “the general welfare.” It is Congress that has enabled the richest of the rich to work behind the scenes in U.S. markets in exerting this stranglehold over whether much of the world’s population will live in relative prosperity or poverty, or, in countries like Haiti, even live or die.

Are we seeing the totalitarian dictatorship of the world’s financial elite being rolled out, with petroleum and food prices the primary weapon of a final coup d’etát against every national government on earth and their citizens? And if we knew who these “high-end investors” were, and who controlled them, wouldn’t we then understand who is in charge of the New World Order and for whom it really functions?

If we are wrong in deducing such a plot, there is an easy way for those under suspicion to disprove it. Those who are “big enough and smart enough” to be making so much money surely can live handsomely without these additional profits. Let them come forth, identify themselves, and donate their gains for worthwhile projects to benefit humanity.

Absent such a gesture, let them stand indicted.

UNSETTLING TIMES

Meanwhile, here in Vermont, home to a small but popular movement for the state to secede from the U.S., the local news reflects the unsettling times.

The Rutland Herald reports that the Vermont Milk Company, founded in 2006 with the goal of paying local dairy farmers more for their milk than would big out-of-state food corporations, is facing “huge increases” in the costs of fuel and credit and is laying off employees. The article notes that it takes the company 100 gallons of heating oil to make a single batch of ice cream.

On the state level, the government in Montpelier must cut $32 million from the fiscal year budget that began July 1. The Herald notes that, “Public safety and preparedness agencies like the Vermont State Police, Corrections, the National Guard, and Veterans Affairs will not be cut. Neither will debt service, which the state must pay.” Layoffs of state employees in other program areas will be considered.

One relatively inexpensive activity that will continue will be the Vermont “Wood Warms” program, “aimed at getting split cord wood into the sheds of low- and moderate-income Vermonters.” Jonathan Wood, commissioner of the Vermont Department of Forests, Parks, and Recreation is quoted as saying: “We used to be more reliant on our backyards and forests for fuel. I think we have to head back there in the future. We’re kind of going forward into the past.”

The classified section contains “Help Wanted” listings for a local economy that is struggling but still has a few openings for nurses, truck drivers, cooks, carpenters, and an occasional job as a teacher or administrator. But there is only one listing for industrial work, placed by a filament extrusion company.

But it’s oil that rules the world. On the Herald’s business page is an Associated Press report that the “Exxon-Mobil Corp. reported second quarter earnings of $11.68 billion Thursday, the biggest profit from operations ever by any U.S, corporation.”

Unfortunately, “the results were well short of Wall Street expectations.” Even with record profits the devils of the financial world were not satisfied, as Exxon-Mobil’s stock “slumped three percent.”

1. EconomyInCrisis.org
2. Michael Hodges, “Grandfather Economic Report,” July 2008.
3. Fortune, June 26, 2008.
4. James Petras, “Inflation and the Specter of World Inflation,” Dissident Voice, July 20, 2008)
5. Human Quest, May/June 2001.
6. Washington Post, July 27, 2008.

Finally even the politicians had to face the facts. Ever since the 1980s, when the economy was handed over for plundering to the banks and the Wall Street plutocrats, ordinary people had struggled just to survive.

Except for a handful of fabulously wealthy oligarchs, almost everyone else was drowning in debt. Prices of gasoline, food, and health care had continued to skyrocket. The housing bubble collapse had left whole cities of foreclosed homes only providing shelter to homeless people.

Overseas the U.S. had become a mockery, with the military fighting wars on every continent in a futile attempt to retain the hegemony of a U.S. dollar whose value had evaporated. The twilight of the American empire had arrived as the alliance of Russia, China, and India flexed its muscles.

Finally the American people had enough and elected a President with the guts to challenge the fundamental problem—a debt-based currency which subjected the population to slavery at the hands of the financial magnates who had ruled since the passage of the Federal Reserve Act in 1913.

The first thing the President did was declare a National Dividend—an immediate cash stipend to all citizens averaging $15,000 per person per year. It was like the Alaska Permanent Fund but much larger.

The Dividend was granted to everyone regardless of whether they were working or not. It was the rightful share of the entire population in the producing bounty of an industrial economy. It was the share the banks had been stealing for so long by putting everyone in debt just for the necessities of life.

Of course many who had been living in starvation conditions were happy to use their Dividend to live without working. This was to be expected. But for most, the Dividend provided a new lease on life.

People could finally begin to pay off their loans and start anew. Students could attend college again without being shackled to decades of debt. Families were no longer one illness away from financial ruin.

In rural areas, the family farms which had been wiped off the map by agribusiness made a comeback. The inner cities whose economies had been devastated once again saw small businesses flourish.

And along with financial security, joy and well-being were returning to a land that had been haunted for so long by greed and fear.

The National Dividend had saved America.

Cars are not allowed on the streets, so pedestrians, bicycles, and horse-drawn carriages enjoy a quiet dominion. Through the air wafts the faint odor of burning hardwood from wrought-iron stands, along with the age-old smell of manure.

I came back to Williamsburg after retiring from the federal government to stay with my eighty-four year-old mother for a while — she’s a former tour escort for the Restoration. I’d attended high school here, then earned a degree through the humanities honors program at the College of William and Mary. My favorite book was Plato’s Republic, once viewed as a manual for enlightened government in the Western world.

The other night I stood outside the low brick wall that surrounds the reconstructed colonial capitol building talking with one of the tour guides about the events of 231 years ago. He told how in the original building the Fifth Virginia Convention had voted 112-0 on May 15, 1776, to instruct the Virginia delegation at the Second Continental Congress in Philadelphia to enter a motion for independence. Thus Williamsburg always had a good argument for being the “real” birthplace of the United States of America.

After the state capital was moved to Richmond in 1780, the town declined. But important people still lived here. In April 1841, John Tyler was awakened by a horseman who had ridden up to his house on Nicholson Street to tell him he was president of the United States. Tyler had been the running mate of William Henry Harrison, who took sick on his inauguration day and died a few weeks later of pneumonia.

By the time of the Civil War, Williamsburg was little more than a shadow. The College of William and Mary shut down during the war when the professors and students joined the Confederate army. Later, when the school closed for lack of funds, former college president Benjamin S. Ewell rang the bell of the Wren Building once a year on the day classes would have started. Eventually William and Mary re-opened as a state teachers’ institution.

The low point came in 1900. The election board in Richmond noticed that Williamsburg had not sent any returns. They phoned the courthouse. Oh, there was an election? We forgot. The town fathers were suitably embarrassed. The newspapers began to call the town “Lotus-land.”

The story of how Williamsburg was rediscovered and restored by the joint efforts of the local Episcopal minister, Reverend W.A.R. Goodwin, and American industrialist John D. Rockefeller, Jr., is well-known.

Colonial Williamsburg has been around now for eighty years. It has struggled to keep up its visitation in the face of competition from Busch Gardens and Water Country, but still holds its own. Events like the Fourth of July celebration show that Williamsburg really is a critical piece of American lore.

But Williamsburg is still part of a larger world.

The big news here is that a recent study concluded that 50,000 more workers will be needed to work in the area’s tourist industry over the next decade. The trouble is that housing is so expensive there’s nowhere for them to live.

What will this well-off community with its hordes of comfortable retirees do? Pay them more than the minimum wage? Not likely, especially since Virginia is a “right-to-work” state with minimal union representation. Public or subsidized housing? Some, but nowhere near enough for such a large influx. Rent control? No way.

A related piece of news is that Ford’s Colony, a gated community west of downtown, will be using a parcel of land earlier earmarked for a school for new high density “workforce housing” for teachers, firemen, and the like. The starting price for a home? Only $215,000.

So the housing bubble and its aftermath have hit Williamsburg hard. My mother just got her 2008 tax assessment on the modest home she and my father built in 1963. Nationwide, housing prices have been going down during the last year, but not here. The city sent her a thirteen percent one-year increase on her assessment and property tax.

I sent the city manager’s office an e-mail asking what the city will be doing with the additional thirteen percent and what expenses they suggested my mother should cut back on. They sent a polite response that gave the obligatory bow to “market” forces — a euphemism for nationwide housing inflation — but did not answer my questions.

To be fair, Williamsburg’s tax rate is much lower than the surrounding cities, but the trend mirrors many other U.S. localities where the elderly and local natives are taxed out of their homes.

Meanwhile, President George W. Bush and Vice President Richard Cheney took time out from prosecuting their Iraq War to visit the Williamsburg area in connection with the celebration of the 400th anniversary of the founding of Jamestown. Queen Elizabeth II, monarch of our “coalition” partner in the Middle East, also paid a call.

Last November, the American voters elected a Democratic majority to Congress to stop the war. Now the new Congress has continued funding, including the largest U.S. embassy in the world which is being built in Baghdad. The U.S. military has built permanent bases in Iraq, where they have said they plan to stay as long as we’ve been in Korea — i.e., forever.

In its funding legislation, Congress also stipulated that to retain our “assistance,” the Iraqi government must pass a “hydrocarbon” law. This would provide U.S. and British oil companies with privileged contracts to tap the country’s gigantic oil reserves.

Bush’s rating in popularity polls now hovers around thirty percent. That of the new Democratic Congress is deservedly lower — twenty-five percent. Three-quarters of our population believe that America is going in the wrong direction.

Some of it is the war, but much is economics. Debt among Americans is at an all-time high, and jobs continue to be outsourced to China and other low-wage nations. Middle-class income is in decline. The lack of health insurance is a national scandal. Commentators warn of a possible recession or worse.

Also on the Fourth of July, the Washington Post reported that the individual managers of unregulated hedge funds which borrow huge sums from the banks to bet on the rise and fall of the economy are earning $1 billion a year. None of the leading candidates for either party for the 2008 presidential nominations seem to have good answers to any of these issues. But they are accepting huge sums of campaign contributions from the Wall Street high rollers. Mitt Romney must be setting some kind of record with twenty-six fund raisers on his staff.

Back in Williamsburg the long hot summer has begun. Tomorrow is another day of tourists, actors on the streets pretending to be eighteenth century personalities, the slow creak of carriages, and the clip-clop of horses’ hooves.

But maybe the spirit and energy of Thomas Jefferson, Patrick Henry, and George Washington still hover.

Jefferson once said that, “Every generation needs a new revolution.” Being in Williamsburg against the background of the ominous events elsewhere in the world makes me think that is not a bad idea. President Ronald Reagan had his revolution in the 1980s when he deregulated the financial industry and set forth the Reagan Doctrine of permanent military engagement in
third-world countries.

Today a new American revolution is overdue — one on behalf of the ordinary people who are fighting and dying for the oil companies in Iraq while so many of their brothers, sisters, and parents are seeing their way of life disintegrate at home.