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Book Excerpt from Chapter Four

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AS FEATURED ON

The Financial Reckoning Day Arrives

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The traditional immunity of advanced countries like America

to a Third World-style crisis isn’t a birthright…we are

facing a serious day of reckoning.

 

-Robert Rubin, former U.S. Treasury Secretary

In early 1947, the IMF began operations and appointed Harry Dexter White as the new Executive Director.  Member nations pledged “credits,” which were really nothing more than monetary pledges to be backed up with taxation, and the IMF became a de facto world central bank with a nominally gold-backed paper standard.  This action allowed member nations to inflate their fiat currencies, and also allowed the IMF to act as the lender of last resort by restructuring loans against “credits” through the World Bank.  The backdrop of war and tragedy had presented an ideal opportunity for political insiders and bankers to advance their mechanism for a central banking authority.  As reported in the April 20, 1971 issue of The American Banker, Keynes had been lobbying for a World Bank several years prior to WW II, “…while White had been instructed by the U.S. Treasury only a week after Pearl Harbor to start drafting plans for an international stabilization fund after the war."   Such were the plans by forward-thinking globalists who have used the IMF and World Bank to advance their corporate/socialist agendas throughout the world since 1947.    

 

Thus, the second reason America became the dominant world economy after WW II was the fact that we could export our “dollar imperialism” and the equally important fact that we had no real trading competition.  Europe was in shambles, and the Far East was either communist or too impoverished to pose a threat to American hegemony.  The U.S. could set its own price on world markets, and the world had to pay in U.S. dollars.  But all of this started to change during the Nixon administration.  During WW II, the U.S. Treasury had accumulated vast gold reserves from nations as trade settlement for war expenses.  This was an important development for supporting the U.S. dollar as the new reserve currency around the world.  By the late 1960s, however, industrial economies in Japan and Western Europe were recovering from their war damages and started exchanging their excessive dollar reserves for gold payment.   This sell off was rapidly depleting the U.S. gold inventory.  

 

In 1971, U.S. dollars offshore – known as eurodollars – totaled more than $36 billion against $18 billion in U.S. gold reserves.  By late 1971, the Bretton Woods Agreement started breaking down from international pressure as France and several OPEC nations led the way in exchanging their eurodollars and petrodollars for gold.   President Nixon could not let these events continue, or the U.S. dollar would cease being the guarantor of the world’s monetary order.  On August 15, 1971, President Nixon finally signed an Executive Order which officially “closed the gold window” and suspended payment in gold for U.S. dollars.  This action was deemed only “temporary” by the U.S. Treasury which then devalued the dollar to $38 per ounce of gold in 1972 and then later to $42 in 1973.  But eventually the window was shut.  William Greider remarks:

Just as the United States was to use World War II to replace British imperialism with its own far-flung empire, so in the monetary sphere, the United States was now to move in and take over, with the pound no less subordinate than all the other major currencies.  It was truly a triumphant “dollar imperialism” to parallel the imperial American thrust in the political sphere.

Bureaucracy, reckless spending and political agendas have made us all vulnerable to fiscal bankruptcy and breakdown of our present political system, and these events may be closer than we imagine.  Many are convinced that our leaders are not only anticipating these critical developments, but that some of them have also been instrumental in causing them.  In his book, Financial Terrorism, John McManus refers to these individuals as powerful “insiders” who are working behind the scenes to create a New World Order.  “They are determined to use debt, deficits, and government control to destroy America’s might and ease us into their New World Order,” says McManus.   This is essentially the same group of individuals that have been responsible for creating the UN, IMF, World Bank, Export-Import Bank and drafting the GATT, WTO, GATS, NAFTA, CAFTA, and other trade agreements in recent years that help benefit their transnational corporate empires.

 

In 1950, during a U.S. Senate hearing, Establishment insider James P. Warburg (son of Paul Warburg) tipped his hand when he declared, “We shall have world government, whether or not we like it…and the only question is whether world government will be achieved by conquest or consent.”  In 1993, Henry Kissinger enthused that the NAFTA proposal (passed in 1994) was “not a conventional trade agreement, but the architecture of a new international system….the vital first step for a new kind of community of nations.”   In the same manner in which bankers and politicians exploited the Bank Panic of 1907 to create the Federal Reserve, and later the United Nations following World War II; they are now putting America in position to adopt some form of the Free Trade Area of the Americas (FTAA) trade legislation that will create a regional government in this hemisphere similar to the European Union.  The North American Union (NAU) initiative is seen as an important step in this overall effort to integrate Canada, the U.S. and Mexico into a common perimeter.    

     

America is currently on a path to financial ruin.  But the Fed, corporate insiders, and political leaders are standing by with their plan to restructure our political economy and steer us into their regional New World Order.  It is a desperate gamble, but it helps us understand why our standard of living among the middle class is being lowered in America and why our political leaders are completely indifferent to illegal immigration which is seen as an important step towards integration and becoming “a new kind of community of nations.”  As former White House Chief of Staff under Obama Rahm Emanuel once famously said, “You never want a serious crisis to go to waste.”

 

This kind of betrayal, lust for power and greed has already been discussed in this book and is not uncommon among the passions of unscrupulous men. Treasonous behavior has been repeated throughout all of history and our times are no different.  In this chapter we will take a deeper look into these political developments and economic issues that are threatening to reduce our nation to a Third World status.  The following facts, figures, and statistics will help put our current situation into perspective and should remove any doubt that our country is heading into a financial storm.

 

Scripting the Perfect Financial Storm 

 

There can be no better appreciation for our looming fiscal/political crisis than to understand our current account deficit with foreign nations and the declining value of the U.S. dollar.  Since World War II, America has experienced a long economic boom, and this has occurred for two important reasons.  First, in July of 1944, the U.S. dollar was established as the new reserve currency for international trade and commerce at a global conference held at the Mount Washington Hotel in Bretton Woods, New Hampshire.  Officially known as the United Nations Monetary and Financial Conference, this gathering was hosted by none other than Fabian socialists John Maynard Keynes and Assistant Secretary of the U.S. Treasury, Harry D. White (who was later exposed as a Soviet spy), and was attended by Establishment insiders, financiers and politicians.  The focus of this important meeting was the creation of the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development, commonly known as the World Bank located in Washington, DC.

 

The World Bank was created to assist war torn nations, while the IMF was implemented to maintain fixed exchange rates between national currencies. Central to this scheme was the requirement that all major world currencies would abandon their current exchange rates and any internal gold standard.  Current exchange rates would be pegged to the U.S. dollar which could be redeemed in gold at the official price of $35 per ounce.  This effectively removed the gold discipline for 16 major currencies and also replaced the British pound sterling as the premier currency in the post-war period.  Professor Murray Rothbard provides this comment:

America is at a significant crossroad in its history.  Domestically, we are drowning in a sea of red ink as public, private, and corporate debt now exceeds $50 trillion, and our annual budget deficit grows by billions each year. Entitlement programs, transfer payments, pension funds, fiscal liabilities and demographics threaten to bankrupt the Welfare State.  The sub-prime real estate implosion finally occurred as predicted in the previous edition of this book, and the U.S. is now in worse shape than before with wholesale mortgage fraud and bailouts of Wall Street and GSEs like Fannie and Freddie Mac.  Commercial banks are still highly leveraged in risky derivatives, state budgets are threatening a municipal bond collapse and the Fed has launched “QE” to postpone a sovereign debt default and a broader monetary crisis.  The middle class is reeling from higher taxes, inflation, job losses, persistent unemployment and stagnant wages.  Illegal immigration and terrorist threats continue daily as our nation sinks into moral degeneracy and culture wars.  

 

Internationally, our trade deficits widen by billions each month as manufacturing and other jobs are being exported overseas.  The U.S. dollar continues to weaken in international trading, and U.S. currency reserves and foreign bond liquidations could strategically collapse our economy.  As Alex Wallenwein, publisher of The Euro vs Dollar Currency War Monitor, signals, “Whatever the ultimate fate of the dollar will be, it already lies in the hands of foreigners….It is no longer in the power of the Federal Reserve or the U.S. government to reverse the fall of the dollar.”  Additionally, our military campaigns are costing billions and war drums are beating in the Far East and throughout the Islamic world.        

 

These macroeconomic and geopolitical forces are gaining momentum, and eventually they will pose a major systemic risk to our highly leveraged financial markets and crippled economy.  We should not in our own vain conceit and hubris think that America is immune from an economic or political collapse in the 21st century.  Our prolonged experiment with Keynesian economics is going to end badly.  And it will ultimately result in a serious day of reckoning, as noted by James Dale Davidson and Lord William Rees-Mogg in their book, The Great Reckoning:

One way or another, we expect a great reckoning.  A settling of accounts.  We expect the long economic boom and credit expansion that began with World War II to come to an end. The end, when it comes, will not only reveal the insolvency of many individuals and corporations, it may also bring bankruptcy to the Welfare State and widespread breakdown of authority within political economies.More than you may now imagine, you are vulnerable to financial, economic, and political collapse.

Similar to what the FDR administration had done 40 years earlier when he removed the convertibility of our domestic currency for gold specie, the Nixon administration now did on a global scale.  Political pressure and Keynesian monetary policy had finally conspired to demonetize gold, and fiat currency values would now be based on the shifting tides of human emotion, the momentary judgment of currency traders, and the collective wisdom of central bankers.  The U.S. would manage to maintain its dollar imperialism in foreign markets in this new system, but the dollar would be steadily discounted in value as a result of monetary inflation and open competition with other kinds of money.    

 

One of the initial reactions to the floating exchange policy was a dramatic 400% increase in the price of crude oil by late 1973.  The OPEC oil cartel, formed in 1960, had insisted that all crude oil contracts be invoiced in U.S. dollars for international trade.  OPEC leaders were nervous that their vast dollar surpluses – known as petrodollars – had already suffered inflationary losses prior to 1971, and they were anxious to hedge against further losses on currency markets.  This price hike was also seen as direct retaliation for U.S. support for Israel during the Yom Kippur War in October 1973 and was followed by an oil embargo, which lasted until March 1974.  Unable to redeem petrodollars for gold at the official price of $35 or $42 an ounce, OPEC nations soon entered the open market and helped bid the barbaric relic up to $850 an ounce by 1980 – an increase of 2023%.  This trend was also attributed to heavy gold acquisition in the U.S. after private gold ownership was restored to the American people in 1974.

Finally, by March 1973, exhausted and unable to keep the international bargaining alive, officials conceded that the old order was dead beyond resurrection.  The U.S. gold guarantee was permanently abandoned and so were the fixed exchange ratios among the other major currencies.  Henceforth, the dollar would find its own value in the currency markets….Fixed exchange rates were replaced by a system of “floating exchange.”  A dollar was still a dollar, but its international value would fluctuate daily, depending on the judgments by millions of economic players on what a dollar was really worth compared with other kinds of money.

END OF EXCERPT

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