The US Is Not Abandoning Asia
By George Friedman and Jacob L. Shapiro
THE U.S. IS NOT ABANDONING ASIA / MAULDIN ECONOMICS
WHEN THE MONEY SUPPLY DRIES UP / CASEY RESEARCH INTERNATIONAL MAN
When the Money Supply Dries Up
by Jeff Thomas
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In 1944, the US had been the primary supplier for arms for the allies during World War II and, as such, exited the war with more wealth than any of the other nations that had entered the war earlier, draining their treasuries of money. Since payment was largely demanded in gold, the US held three-quarters of the world’s gold and therefore was in a position to call the shots with regard to the free world’s economic future.
At Bretton Woods, the US took advantage of this situation, setting up the World Bank and the IMF and declaring the dollar to be the default currency for all countries concerned. From that point on, the US was in the catbird seat, able to dictate economic terms to other countries and even to behave irresponsibly, eventually creating previously unheard-of levels of debt, thereby inspiring other nations to do their best to create their own debt in order to keep pace as best they could.
Eventually, of course, such irresponsible economics will cause any country, no matter how powerful, to collapse economically, no matter how many Keynesian economists such as Thomas Piketty, Paul Krugman, and Larry Summers declare otherwise.
Beginning in 1944, the US became the world’s foremost empire, for the strongest of reasons—it held the world’s wealth. This advantage led to a period of great power and, in the latter years, as the empire began to stumble economically under its own great weight, led to the creation of organisations and legislation designed to bring in new revenue, as the old forms of revenue declined.
In recent years, we’ve seen the rise of the extraordinary assumption that “money laundering” (the practice of protecting one’s wealth from rapacious governments), should be regarded as a crime. As such, “tax havens”—those jurisdictions that provide freedom from governmental usurpation—have also been vilified as being somehow criminal because they recognize the basic right of freedom to prosper.
Along the way, we’ve witnessed the creation of the Organisation for Economic Co-operation and Development (OECD), a euphemistic appellation that might rightfully be termed the “Organization for Forced Compliance with Arbitrary Taxation Diktat by Powerful Nations.” This US-led organisation has served to periodically threaten freer nations to comply with the less free nations, so that citizens in the latter group cannot escape being stripped of the fruit of their labours. In addition, the US has created the Foreign Account Tax Compliance Act (FATCA), which is ostensibly intended to enforce taxation of US citizens abroad, but which has been used almost entirely to bilk foreign banks that have US citizens as clients. (Again, the rules are arbitrary and ever-changing, and banks that fail to satisfy the US are fined enormous sums in a rather colossal Mafia-style shakedown.)
Along the way, the US has increasingly created legislation restricting the international movement of money by its people in addition to such a patchwork quilt of laws that every citizen is likely to break several laws each day, simply by existing normally.
All of this is taken for granted as a “given” by both Americans and those of us who view the US from afar. However, we rarely, if ever, take the time to reflect on the fact that, historically, this is nothing new. This is, in fact, quite the norm for an empire in decline. From the latter days of the Roman Empire, such practices (if in a less sophisticated form) have been implemented in order to have a last squeeze of the lemon before economic collapse takes place.
So, what then, in these many instances, has been the deciding factor that ends such draconian usurping of private wealth? Well, in fact, what tends to occur is that enforcement increases serially, right up until the moment when such enforcement can no longer be funded. Sooner or later, the amount that’s being bilked from those who are productive is insufficient to force them to continue to be bilked.
In ancient Rome, once the system had deteriorated to the point that the military was almost entirely mercenary, all that was needed was for the government to fail to provide full, regular payment to the troops. Once “the cheques began to bounce,” the military turned on their former benefactors. In addition to the cessation of enforcement, the military itself was now a threat to the leadership.
And of course, we have seen this in other empires since that time. Even with all the gold that Spain was pulling out of the New World in the 16th century, it wasn’t sufficient to pay for the excessive foreign military adventures of Philip II and eventually the coffers ran dry, collapsing his ability to even maintain control at home. When even the interest on the debt could not be serviced, the ability to maintain control not only ceased to advance—it went into reverse.
Whenever the ability to enforce draconian legislation goes into decline, the people of a nation suddenly realise that they’ve been living in fear of a paper tiger. It doesn’t take long before some people choose to defy the system. When they’re seen to succeed, others follow in droves.
So, what does this say of the US and its power? Well, as Doug Casey has been known to say, “Countries fall from grace with remarkable speed.” Quite so.
On an international level, this means that international leaders will be watching the economic decline of the US closely. Countries such as China and Russia have been loading up on precious metals in preparation for a collapse in fiat currency. In addition, they’ve created their own version of the World Bank, the Asian Infrastructure Investment Bank, and have been hard at work inking deals with other nations for international settlement in currencies other than the dollar.
Most people in the world today cannot remember a time before Bretton Woods, yet they may soon witness the Bretton Woods agreement becoming a dead duck.
But, if we extend this premise, we also should be questioning the other constructs of the postwar period that have become dinosaurs. What of the United Nations? This organisation was once meant to be a body for arbitration and world planning, but has in latter decades become a quagmire of bickering and gainsaying—with its decisions rarely being adopted by the nations in question. And yet the US alone pays some $8 billion annually to keep the UN afloat. Surely, when the world at large ceases its willingness to carry further US debt, the US government will jettison the expense for the UN before it cuts either its military spending or its entitlement programmes.
Similarly, NATO, which requires $2.8 billion annually (with only five of its 28 members currently meeting the recommended payments) would experience a similar fate.
With the above entities heading south, the Wolfowitz Doctrine, which has since 1992 been the basis of US aggression policy, would become unachievable.
In addition to the decline or cessation of the above international adventurism, enforcement of revenue pursuit in the guise of FATCA and OECD schemes would equally suffer from a loss of funding. It would not be a question of whether the empire still wished to squeeze the lemon more than ever before—it would. But once the funds to do so dried up, the US and EU would find themselves in the situation that we currently observe in Venezuela: The money to pay for the enforcement is simply not there anymore. The decline would begin with bounced cheques, followed by massive layoffs in the enforcement departments, followed by a decline in receipts, necessitating further layoffs, and continuing in a downward spiral.
At present, countless people live in fear of the present empires and their ever-increasing efforts at usurpation. However, as history shows, once debt has reached its nadir and begins its rapid fall, so does the empire’s ability to enforce draconian confiscations.
THE GLOBAL ECONOMY´S SURPRISING RESILIENCE / PROJECT SYNDICATE
The Global Economy’s Surprising Resilience
Jim O'Neill
THE THOMAS HOBBES PRESIDENCY / THE WALL STREET JOURNAL OP EDITORIAL
The Thomas Hobbes Presidency
Conservatives were outraged by Obama’s apologies. What about Trump’s slander?
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By Bret Stephens
First, the obvious: Had it been Barack Obama, rather than Donald Trump, who suggested a moral equivalency between the United States and Vladimir Putin’s Russia, Republican politicians would not now be rushing through their objections to the comparison in TV interviews while hoping to pivot to tax reform.
Had it been the president of three weeks ago who had answered Bill O’Reilly’s comment that Mr. Putin “is a killer” by saying, “We’ve got a lot of killers,” and “What do you think? Our country’s so innocent?” conservative pundits wouldn’t rest with calling the remark “inexplicable” or “troubling.” They would call it moral treason and spend the next four years playing the same clip on repeat, right through the next election.
In 2009, Mr. Obama gave a series of speeches containing passing expressions of regret for vaguely specified blemishes from the American past. Examples: “The United States is still working through some of our own darker periods in history.” And “we’ve made some mistakes.” This was the so-called Apology Tour, in which the word “apologize” was never uttered. Even so, conservatives still fume about it.
This time, Mr. Trump didn’t apologize for America. He indicted it. He did so in language unprecedented for any sitting or former president. He did it in a manner guaranteed, and perhaps calculated, to vindicate every hard-left slander of “Amerika.” If you are the sort who believes the CIA assassinated JFK, masterminded the crack-cocaine epidemic, and deliberately lied us into the war in Iraq—conspiracy theories on a moral par with the way the Putin regime behaves in actual fact—then this president is for you.
Only he’s worse.
For the most part, the left’s various indictments of the U.S., whether well- or ill-grounded, have had a moral purpose: to shame Americans into better behavior. We are reminded of the evils of slavery and Jim Crow in order not to be racist. We dilate on the failure in Vietnam to guard against the arrogance of power. We recall the abuses of McCarthyism in order to underscore the importance of civil liberties.
Mr. Trump’s purpose, by contrast, isn’t to prevent a recurrence of bad behavior. It’s to permit it. In this reading, Mr. Putin’s behavior isn’t so different from ours. It’s largely the same, except more honest and effective. The U.S. could surely defeat ISIS—if only it weren’t hampered by the kind of scruples that keep us from carpet bombing Mosul in the way the Russians obliterated Aleppo. The U.S. could have come out ahead in Iraq—if only we’d behaved like unapologetic conquerors, not do-gooder liberators, and taken their oil.
This also explains why Mr. Trump doesn’t believe in American exceptionalism, calling the idea “insulting [to] the world” and seeing it as an undue burden on our rights and opportunities as a nation. Magnanimity, fair dealing, example setting, win-win solutions, a city set upon a hill: All this, in the president’s mind, is a sucker’s game, obscuring the dog-eat-dog realities of life. Among other distinctions, Mr. Trump may be our first Hobbesian president.
It would be a mistake to underestimate the political potency of this outlook, with its left-right mix of relativism and jingoism. If we’re no better than anyone else, why not act like everyone else? If phrases such as “the free world” or the “liberal international order” are ideological ploys by which the Davos elite swindle the proletarians of Detroit, why sacrifice blood and treasure on their behalf? Nationalism is usually a form of moral earnestness. Mr. Trump’s genius has been to transform it into an expression of cynicism.
That cynicism won’t be easy to defeat. Right now, a courageous Russian opposition activist named Vladimir Kara-Murza is fighting for his life in a Moscow hospital, having been poisoned for a second time by you-can-easily-guess-who. Assuming Mr. Trump is even aware of the case, would he be wrong in betting that most Americans are as indifferent to his fate as he is?
The larger question for conservatives is how Mr. Trump’s dim view of the world will serve them over time. Honorable Republicans such as Nebraska’s Sen. Ben Sasse have been unequivocal in their outrage, which will surely cost them politically. Others have hit the mute button, on the theory that it’s foolish to be baited by the president’s every crass utterance. The risk is that silence quickly becomes a form of acquiescence. Besides, since when did conservatives reared to their convictions by the rhetoric of Winston Churchill and Ronald Reagan hold words so cheap?
Speaking of Reagan, Feb. 6 would have been his 106th birthday. Perhaps because he had been an actor, the 40th president knew that Americans preferred stories in which good guys triumphed over bad ones, not the ones in which they were pretty much all alike. Conservatives should beware the president’s invitation to a political film noir in which the outcome is invariably bleak.
Bienvenida
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Friedrich Nietzsche
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
Lao Tse
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
Warren Buffett
No soy alguien que sabe, sino alguien que busca.
FOZ
Only Gold is money. Everything else is debt.
J.P. Morgan
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Proverbio Chino
Quien no lo ha dado todo no ha dado nada.
Helenio Herrera
History repeats itself, first as tragedy, second as farce.
Karl Marx
If you know the other and know yourself, you need not fear the result of a hundred battles.
Sun Tzu
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
Paulo Coelho

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