Posts Tagged ‘Third World War’
Wars: Uncanny connections to Sovereign public debts
The direct connections among exorbitant levels of accumulated public debts and wars have been recognized for centuries, on black and white.
We witnessed that war is one of the preferred defaulting mechanisms on outrageous contracted debts, particularly when the creditor nation is weaker militarily.
In the last two centuries, the world witnessed 320 defaulting decisions by debtor nations.
Is it a coincidence that the last two centuries experience as many wars?
If you compare the two graphs of dates on defaulting and the timing of subsequent wars then, you realize that there are direct interrelations between the two factors.
1. In 1770, (England sovereign debts amounted to 140% of its GNP)
Adam Smith wrote: “At a level of accumulation of national debts, there are no examples that the debts have ever been repaid. Public revenues were always freed to be spent, but never to paying off any debts. Governments prefer to default, occasionally admitting the debts, occasionally pretending to have paid off debts, but always incurring a real debt.”
2. In 1716 France, after the monarch Louis 14, was totally bankrupt:
The Scottish John Law convinced the French Regent to issue paper money covered by gold for easy circulation of money and internal trade. To entice the public into accepting paper money, interests were added, secured by a special perpetual fund called the “General Bank“.
This bank was to be supplied by financial resources converging from the America’s colony of greater Louisiana. The Mississippi Company, (later renamed the “Western India perpetual company“), was collecting indirect taxes for France. Speculation by French nobility transformed the central bank into a machine for printing worthless paper money and the collection from Louisiana stopped to converge to France.
In 1748, Montesquieu in “Of the spirit of laws” wrote:
“There are a few financial specialists disseminating the concept that public debts multiply wealth and increase circulation of money and internal trade. Facts are, the real revenues of the State, generated by the activities of industrious citizens, are transferred to idle classes. The consequences are that we make it more difficult on the industrious citizens to produce profit and worst, extending privileges to the passive classes.”
In 1781, Jacques Necker, France minister of finance, proclaimed that “There can be no peace in Europe unless public debts are reduced to the bare minimum: Public debts are sources for increasing the military capabilities designed for destructive activities; and then more debts are accumulated for the reconstruction phase. A devilish cycle that is anathema to prosperity and security.”
Necker was the first financial official in France to present a transparent statement sheet of all the revenues and expenses for the budget and he encouraged the French monarchy to emulate England by submitting complete budged so that investors and lenders be informed of the financial situation and be encouraged to considering France as a viable country to invest money in.
At the time, England had replaced Holland as the financial center of the world and the central Bank of England was already established.
All indicate that trends in growing sovereign debts in the richer and developed nations are not going to change till 2014.
In that year, it is expected that Japan public debts (mostly internal) will reach 250% of its GNP, Italy 130%, England 100 %, the USA 100% (or $20 trillion, the interest alone representing 400% of its fiscal yearly revenues), France 95%, and Germany 90% of GNP. The US will have to reimburse $850 billion in 2012 and finance one trillion.
The emerging States and most of Latin America countries are experiencing steady drop of their public debts to an average of 40% of GNP by 2014.
My question is: If almost all States have incurred public debts then, who are the creditors?
China economy has saved 2.5 trillion and Brazil and Turkey less than 500 billion. All these savings cannot cover the amount of necessary public debts required by the debtor nations.
Fact is, world finance is functioning on worthless paper money and other financial tools transmitted here and there to give the illusion that the system is functioning.
So far, the IMF and the World Bank are controlled by the G8 who can withdraw at will from these supposed to be international financial institutions. This situation of relying on magical financial illusions cannot persist for long.
A third World War will be created intentionally by superpowers in order to starting from scratch before establishing sustainable financial institutions, rules, and regulations.
If you carry a credit card at an interest rate of over 20% then, you know that the principal could never be paid since the credit limit is 50 times your real annual income in order to finance a purposeful inflationary policy to give the illusion that the ratio of public debts to GNP is being reduced.
Not only 20% interest rate is exorbitant, but adding unpaid monthly installements to the principal is what all ancient customs forbade.
For example, if people of “independent means”, called rentier in French, could invest in a productive businesses generating profits of over 20% they would not have lent their money. It is imperative that payments on interest should not last more than 7 years and further monthly payments automatically directed to paying off the principal.
Thomas Jefferson recommended, and then imposed his view when he became President to the new Independent America, that loans should never be contracted out by States for longer than 19 years so that future generations do not have to suffer decisions of the living ones.
As life expectancy is increasing, I suggest that Constitutions should force governments and official institutions to restrict the life of any loan to be 5 years shorter of the lower number of the average life expectancy or the age of retirement of citizens in the creditor nation.
Anyway, if the loan is a private one, the lender should be able to enjoy his placement while alive and not suffer from defaulting decisions.
Note: Reviewing the history of public debts since antiquity, the consequences of incurring huge public debts are the same: Whether the dept is contracted out to a person (the monarch) and the debt is cancelled once the individual is dead, or the public debt is shouldered by a sustainable “immortal” entity such as a State, the weaker creditor will be punished.
The militarily weaker creditor will suffer now or later; it is a matter of delayed punishment for loaning a more powerful debtor whether voluntarily or after coercion.
More Copper Reserves for China
Posted by: adonis49 on: April 30, 2009
More Copper Reserves for China (April 30, 2009)
The price of copper was forecasted to fall 20% this year in this economic recession but it increased 50% instead: China is willing to pay around $5,000 the ton of copper instead of buying more US Treasury Bonds. China has purchased 375,000 tons of copper in March and increasing each month. The Chinese Central Bank governor Xiaochuan view the US financial famine to a black hole since the US is about to print more dollars to paying the Chinese State, thus practically devaluing the US currency and reselling the Chinese more hot air. The Chinese are not about to re-value the Yuan before the US and the European Union restore credibility and confidence in the financial system.
Among the many industrial usage of copper is the manufacture of hybrid engines in cars that China is putting in its market. Italy has been promoting hybrid cars for a while and many more gas stations are filling methane gas. Methane does not emit carbon dioxide. The driver would start and accelerate on regular gas and then shift into methane combustion. As a matter of fact, the Green Peace advocates regards the European Union policy of selling carbon dioxides permits to the heavier polluters is not reducing the CO2 in the atmosphere. For example, Germany has reduced its polluting energy consumption by 15% by relying on Aeolians, solar panels, and biomass; thus, Germany would sell 15% reduction in pollution to Poland and Slovenia that are still relying on coal.
I read in a post the following information: 62% of the World’s copper is used for the production of small denomination coins such as the penny. 84% of small denomination coins are classed by the World’s Governments as missing – it is presumed that members of the public have stashed the coins as savings. On average, each person in the World has stashed $22.34 worth of copper in small denomination coins.
Goldman Sachs predicts that the GNP of China will surpass Japan by 2010 and the USA before 2030. India will surpass Japan by 2030 and become third after the USA. Brazil will be fifth after Japan in 2030.
China is using its two trillion dollars surplus to accumulating reserves in aluminum, zinc, nickel, titanium, indium and rhodium so that it may resume its industrial acceleration once the current crisis is stabilized. This policy of purchasing minerals instead of US Treasury Bonds is compatible with China recommendation of creating an international banknote indexed on the prices of a basket of raw materials as was proposed by John Maynard Keynes at Bretton Woods in 1944; the “bancor” of Keynes was based then on 30 raw materials.
I suggest in a previous post “The Third World War is Tolling” the folowing:
“First, the developed States have to agree on another tangible standard (like gold) for currencies. Gold would not do because the US has abolished it in 1967 because all the gold in the world could not sustain the huge amount of paper dollars circulating or intended to circulate around the world. The alternative is a basket of depleting minerals that are essentials for manufacturing and production. The processed minerals do not have to be rare but very essentials for development. The US can agree to this idea since it has huge reserves in many important minerals.
Second, all the States that can account for at least 3% of all curency circulation should join an “International Money Printing Council” with tight control and monitoring creteria. Any combined States with over 40% of cash money shares in the global market should have a veto power.
Failing a convincing and sustainable agreement for monetary stability the Third World War is altready in the planning stage as the easiest and quickest way out of that morass. Only in major wars do printed money with no tangible backing has mythical values. No, the next region for the war scene is not Iran: no European or US soldiers want to fight in this “cursed region”. It won’t be Afghanistan: if Afghanistan was worth it then Bush Junior would not have invaded Iraq before stabilizing Afghanistan. It won’t be North Korea: it is bordering China. The batlefield will not be in any area bordering Russia. It won’t be the Congo River zone: no Western soldiers is about to step in this infested and contagious disease plagued region with AIDS consuming 30% of the population. The next world war is in Sudan, this continent/State rich in oil and all kinds of minerals”.
Actually, Sudan is the focus of investment for China in the last two decades.
Adonis Diaries 