Posted by: CS | January 31, 2013

The Second Great Depression: Time to Mug Our Creditors

The US economy shrinks. The UK economy enters a third dip in four years. In Spain, government spending cuts drive unemployment to 26%.

The Western nations, including Japan, cannot compete, for the reason stated in this video:

We cannot compete with four trillion Third Worlders earning pennies an hour.

We knew that back in 1994, once the General Agreement on Tariffs and Trade was signed. It meant either mass unemployment, at a rate that would lead inevitably to revolution, or the equalization of incomes between the West and the Rest.

Welcome to globalization and the New World Order.

But if living standards are so much higher in the First World than the Third, how is equalization to be achieved?

There are two possibilities. One is simply to slash wages: “Hey guys, next month your pay check will be halved, but consider yourselves lucky. Chinese workers doing the same job will still be earning only a fifth or a tenth of what you’ll be getting.

This, naturally, would be furiously resisted.

To make the transition more bearable, I have proposed a mechanism for adjusting wages nationally or regionally according to the unemployment rate.

But that’s not the sort of thing governments do: rational, fair and effective. No, much easier just to trash the currency, which achieves three objectives at once:

  • First, it lowers wages relative to the international competition. Done sufficiently, it first slows, then stops and finally reverses the off-shoring of jobs.
  • Second, it robs creditors, by enabling repayment of loans in depreciated currency, e.g., China’s $Trillion-plus holding of US Treasuries.
  • Third, increases wealth differentials between financially naive citizens, i.e., the 99%, and the astute wealthy, i.e., the 1%, who know how to protect their wealth during an inflation.

The game’s already afoot.

Japan, mired in recession for decades, plans to to flood it’s moribund economy with money.

Bernanke at the Fed, has promised to print dollars ad lib.

In Euroland, loose monetary policy has seen the German, English and French stock markets rocket.

And, at the Bank of England, the newly hired top gun, Canadian Mark Carney, openly talks of “targeting GDP,” which is banker-speak for, the hell with concern with inflation, we’re gonna print our way out of trouble by trashing the pound, already trashed within an inch of it’s life and worth less than 1% of its value of 100 years ago.

See also: CIA Adviser Warns of ‘Financial Weapons of Mass Destruction’

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