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The disequilibrium of the world

No powerful nation (huge trade) ever repaid its sovereign debt.

By Dr. Gustave Le Bon (Le desiquilibre du monde, 1924)

All modern warfare are as ruinous to the victors as to the vanquished.

The cost of the warfare is shared by all the people of the belligerent countries regardless of which State wins and who loses.

Rationally, the neighbouring nations have direct interest to associate in order to prevent the escalation of a situation of declaring war.

Fact is, it is the people who encourage the escalation to a state of war as the government start contemplating or discussing a military alternative.

As the war begins, the people realize too late that their initial emotional tendencies were wrong and they feel that they have to resume what they asked for.

In 1918, Germany barely paid a small fraction of its war indemnities. It purposely devalued its paper currency to almost zero and got away with repayment of war reparation.

England and the USA wanted Germany to go back to full production on its intact industrial infrastructure because they trade most with Germany big market.

The 12% tax on Germany export, which was paid to the Allied fund, was actually paid for by the importing people, or the victors.

A British minister had this to say:

“If Germany could repay its total debts of war reparation on exportation in the coming decades, Germany would become the main exporter in the world market. In the meantime, all the other nations, including the USA, would witness a sharp decline in their trade and the loss of their essential industries”

In 1945, Germany and Japan were the countries that enjoyed most of the investment by the USA in order to benefit from their economic recovery.

No powerful nation (huge trade) ever repaid its sovereign debt.

Only the weak and underdeveloped States are pressured to repay their debts.

The USA is by far the most indebted nation on earth, but just pay the ridiculous lowest interest rates.

Colonization was carried out on the basis of defaulting on a debt.

The USA invaded and occupied Cuba, the Philippines, Panama… in order to recover its debts from Spain.

The best maxim that could transform the world “Aid one another for your proper interest”

The global commercial and financial interdependence are the main barriers for a direct full fledge world war. Soft power is being applied to its hilt in order to avoid frontal conflict.

The main security for sustainable state of peace is in the psychological mind of the people.

And this mind has to be acquired by sustained refrain from exercising military warning dictated by the powerful States  on the weaker nations.

A mind-set for peace is a nurturing process that require long-term stable peaceful policies by diplomatic means and win-win business projects among the nations.

The Shadow Power always superseded real power of Empires.

Most empires acquired their standing power in the first decades of their expansion. Consider Rome, Arabic Empire, Mogul, Ottoman empire…

Later on, the internal strife that occurred in the Capital of an empire among the warring internal political groups didn’t disturb the peace and cohesion in the extended empire. This might have been due to slow communication facilities and valuable timely news.

It was the Shadow Power that sustained the standing power of an empire for a period.

The failed uprising and revolts against the central power were due to wrong timing.

When a uprising is declared, the internal disturbance in the capital is at an end which allowed dispatching a retaliatory expedition.

The news of an expedition on the move usually broke the spirit of the revolted forces and a major dispersion of the enemy set in.

This is tightly linked to the Shadow Power of prestige of the new leader of the empire: The leader enters an occupied city or land with show of force and military fanfare in order to impress upon the moral of the occupied people.

For example, when France occupied the German Ruhr impressive industrial complexes in order to secure war reparation after WWI, it did it timidly so that Not to disturb the normal life of the German. That was a capital error which encouraged the German to engage in mass civil disobedience and forced France army to withdraw shortly after.

Wealth Power is also connected a shadow power Not directly related to actual wealth.

If gold and silver can be readily transacted everywhere, the real sustainable wealth resides in the varieties of goods and services that can be readily traded in foreign markets. Good and services that most nations need and are willing to trade them with whatever wealth it has.

The USA and England had most of the reserves in Gold but refused to use this Shadow Power at the expense of the miseries of millions of their citizens for an entire decade.

The USA and England  had real wealth but their production were not readily traded in the world market since it takes time to revert from war production to civilian production.

They refused to trade their dominion on gold reserves in order to preserve their shadow wealth.

Minerals needed in industrialized nations might not be of significant interest to countries that failed to institute an industrial base.

Even hope has its own shadow power by contributing to increased birth rate (natality).

Feeling of confidence in a political system or currency have inherent shadow powers.

For example, after WWI, Germany had no capital or major gold reserve and its worthless paper money didn’t reach zero because of confidence in the resurgence of Germany economic recovery.

The German people didn’t succumb to miseries as did the USA and English people after the war. However, they felt shortages when Nazism came to power and started preparation for war production.

England export shrank to half and wanted badly the large German market to get back on its feet. This is the main reason that England fought ferociously to reduce Germany war reparation from 350 billion marks to 135 bn.

The real power was the availability of sources of energy, and coal was king while oil (diesel powered engines were beginning to make the break or die appearance in merchant and navy ships). The shadow power was in the sustainability of industrial production of needed products.

Germany invested its hard earned currencies in $ and Pounds in the USA and acquired enterprises that would ship essential materials and resources to Germany, and using German merchant ships.

The funds in Germany were scarce with an over inflated currency (a financial gimmick to pay off war reparation with sacksful of Marks), but the industries in Germany were booming and re-surpassed England in export, acquiring major world market as before the war.

In 1913, Germany exported 13 billion of marks, and was the second exporter behind the USA, even though it lacked Capital. Germany managed this feat within less than 2 decades due to an educational method that encouraged independent scientists.  England and France had accumulated the most of Capital.

Actually, England prepared and planned WWI since 1906 after it realized that it couldn’t compete with Germany. The strategy was to blockade all the import/export ports that Germany used.

France succumbed to England’s wooing for the next decade and contributed the largest land army in Europe.

Actually, the USA and England enjoyed a monopoly on exporting coal, but Germany extracted as much coal as England (300 million tons), while the US produced double that quantity. France mined 40 million tons when it needed 60.

It was the US that broke the monopoly of England (tripling the export price to nations lacking coal), this strategic good to industrial countries like Italy, Japan, Spain and France.

For example, England exercised its monopoly on rubber which forced the USA to occupy the Philippines and plant rubber trees.

The monopoly of England in the oil concessions in the 5 continent forced the USA to snatch most of these concession one at a time, starting in 1930 during its acute economic recession.

During WW2, the US and England bombed and destroyed Germany infrastructures (railroad junctions, airfields, military arsenals, and even entire cities). However, the Ruhr industrial complexes for steel and chemical productions were left intact.

Why? Because the US and England had invested in these companies and owned larges shares. And Germany got back quickly on the saddle after the war and hired thousands of foreign workers converging from Spain, Italy, Turkey, Greece…

Note: The theme of this post was inspired by the French Dr. Gustave Le Bon  “The disequilibrium of the world” (1924)




October 2022

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