SOVEREIGN STATES USE FORCE AND FIAT MONEY.
Rapid Reaction Force: Fighting Krugman’s Plutophile Disinformation.
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EUROPHOBES DON’T KNOW MUCH:
Another day, another misleading editorial from Paul Krugman “Greece As A Victim” (NYT, June 18, 2012). As all good propaganda, there is lots of truth therein, just as in all good poisoned beverage, there is much goodness, to make sure the victim drinks it all. So Krugman piles up the truths, all to better lead to the same old stinger, down with the euro:
“…many things you hear about Greece just aren’t true. The Greeks aren’t lazy — on the contrary, they work longer hours than almost anyone else in Europe, and much longer hours than the Germans in particular. Nor does Greece have a runaway welfare state, as conservatives like to claim; social expenditure as a percentage of G.D.P., the standard measure of the size of the welfare state, is substantially lower in Greece than in, say, Sweden or Germany, countries that have so far weathered the European crisis pretty well.
So how did Greece get into so much trouble? Blame the euro.”
“Blame the euro.”: this is Krugman’s sing song. He has used different words to sing the same underlying music. But he, naturally, does not find the right reason to be against the present organization of the European Monetary Union, namely that the EMU was installed as a plutocratic device (by French socialists, of all people, 30 years ago!)
Krugman explains that Greece was doing fine, then it got in the Eurozone (soon he will explain to us that it was doing fine under the American sponsored dictatorship of colonels!). Here is more Krugman:”Then Greece joined the euro, and a terrible thing happened: people started believing that it was a safe place to invest. Foreign money poured into Greece, some but not all of it financing government deficits; the economy boomed; inflation rose; and Greece became increasingly uncompetitive.
Please remind me of this next time: if people come, bearing gifts to the Greeks, it’s a terrible thing.
Krugman omits an important fact here, a fact that I have never seen mentioned anywhere, except by yours truly. A fact all European authorities want to forget, because they are entirely to blame: the Drachma, the old Greek currency, was converted at TWICE its true rate. It was a question of national pride for the Greeks, etc. Other countries (including Germany) thought that was cute and innocuous.
So the Greeks became TWICE richer than they should have been, just by replacing drachmas with euros, at the rate decided by the ECB. Hence one way to look at the present crisis in Greece is that Greece is readjusting down to what should have been the correct conversion rate of the Drachma.
Why were the Germans so anxious to accept Greece in, while making it artificially rich by a factor of two? The answer is obvious. So that the Greeks could afford to buy Porsches, of course. The way the Germans looked at it then, no harm done, all goodness to Germany in general and VW in particular. This explains also why the German authorities, including at the Bundesbank, are so anxious to blame the Greeks: to deflect the revelation of their own instigation of the whole machination of the Greek mess.
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PROFITABILITY IS WHAT THE STATE DECIDES, NOT THE “FREE MARKET”:
Krugman, mentions “productivity“, which is, fundamentally how much one’s work is valued. Valued by whom? Well, maybe by the politicians one rigged the system with. For example in the USA, most of the wealthiest people pay little (Romney’s tax rate: 13.9%) or no tax at all. Contemplate the tax bills of most Silicon Valley titans: they borrow their spending money, and don’t touch their financial assets ownership.
And as far as the so called “market” valuing things properly, some the hedge fund managers have “made” (for themselves) up to 5 billion dollars, making them the most “profitable” members of the biosphere. Part of how they make their money is by selling short entire countries, after careful conspiracies which seem to have the support of the president of the USA (as he sings the praises of the most successful conspirators, the so called “Sage of Omaha”: different countries have different notions of wisdom).
Of course, if the empire was different, hedge fund managers would be rewarded by expropriation, and long jail sentences. The argument can also be made that modern bankers are, by the standard of the Imperium Romanum, and direct descendant regimes, a period of more than two millennia (Roman republic-SPQR-Imperium Francorum-Imperium Romanum-Francia, etc.), simply counterfeiters, a crime punishable by being boiled alive, and slow, under the Franks.
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THE STATE IS A FORCE THAT GIVETH MEANING:
Krugman explains that the USA holds together because of transfer payments: “Ask yourself, why does the dollar area — also known as the United States of America — more or less work, without the kind of severe regional crises now afflicting Europe? The answer is that we have a strong central government, and the activities of this government in effect provide automatic bailouts to states that get in trouble.”
Well the truth, historically, is that the USA stayed in one piece because of the application of massive deadly force. When the Confederacy seceded, Lincoln resisted, and won, by killing more than 850,000 people in the process. 850,000 dead is the latest lower bound in the number of death out of a total population of 31.4 millions in 1860, including nearly 4 million slaves. One can round that up to 3% dead (as the stats are known to be underestimates). This was the deadliest civil war known in the West for at least three centuries.
The second reason the USA is together has to do with being a sovereign state, and that, as in all sovereign states through history, means that the USA has the ability to give money to whoever it pleases, in whatever amounts it pleases.
Krugman will not tell you this, because it is embarrassing for its cherished Wall $treet, and for the policy he has been promoting, Quantitative Easing. In a way a toddler can understand, the policy consists in using the state to give money to friends.
Under Bush II and Obama, the government of the USA, through the central bank, transferred in excess of five trillion dollars of “monetary base” to a handful of very big banks managed by whom Obama calls “friends” (yes, at least a third of GDP). For three quarters of his administration, Obama loudly called Jamie Dimon, head of JP Morgan, a friend and confessed he could never managed the immense and glorious portfolio of Dimon (who used to live in a 20 room mansion in Chicago). Now the Main Stream Propaganda has been busy forgetting these facts (because said facts show that Obama did more, so far, for plutocracy, than Romney ever did!)
So, considering this enormous conceptual picture he royally ignores, why is Krugman “blaming the euro”?
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500 BILLIONS KRUGMAN DID NOT HEAR ABOUT:
It used to be that europhobic Americans such as Krugman accused the Eurozone to not be an “optimal currency area“.
But, it turns out that “productivity” varies just as much in various regions of the USA. So that reasoning was so specious, that the most sophisticated Europhobes were called back to order, and changed their music. So what’s their latest music? Their new music is all about the lack of redistribution in Europe (as it is the EU redistributes only 2% of the total EU GDP). Yet, in truth, redistribution is not, by far, the proximal problem in Europe.
On the face of it, Krugman’s ignorance is mind numbing. Krugman should learn that the total aid to Greece is in the process of passing the 500 billion dollars mark (yes, 500 billions, a total aid of half a trillion). After Krugman integrates that notion it will be interesting to see if his “non redistribution” music changes! Krugman is the plutocratic canary, singing deep in the mines of the subservient soul to reassure the slaves of the established order that Europe is at fault.
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PROBLEM WITH EMU; IT CANNOT CREATE FIAT MONEY:
“Blaming the euro” is the usual anti-European condemnation by innuendo.
So what is the real problem? In truth, the problem is how the European Monetary Union was exactly set-up. The EMU generalized a French law passed by the pro-plutocratic government in 1973 (president Pompidou had been head of the Rothschild bank). The law forbade the French state to borrow from the Banque de France. Thus, similarly, states of the EMU were forbidden to borrow from the ECB. They thus lost their Fiat Money capability.
So what happened? All states use rolling debt. The plutocrats, using a worldwide conspiracy, with the rating agencies (owned by Buffet) and Goldman Sachs (on and off owned by Buffet), and the likes of Buffet and hedge funds (shorting the sovereign debt of states, just before their rating agencies lower their ratings!), have cranked up the interest rates (up to and beyond 100% for Greece). That is why Italy, which has no primary deficit, is now in trouble.
The usual explanation is that the lenders are afraid. But that explanation is all too charitable for the wealthiest people and organizations on Earth. The non charitable explanation is that these wealthiest of the wealthy are maximizing their profits. They do this by using all the tricks they can find, as they operate in a (deliberately organized) judicial vacuum. One of the tricks is simply to blackmail states, by having organized an enormous conspiracy to jack up the interest rates European states have to pay. They will not try the same trick to the USA, because that would be do it to themselves, and Obama has drones, plus the taste to be judge, jury and executioner.
That is why they conspired successfully to force Spain, which has much less government debt relative GDP than Germany, to pay ridiculous high, debt augmenting interest rates, well above 7%. Greed. The striving towards a new feudal order.
Krugman dislike the EMU, while protecting the vast plutocratic plot, because Europe is too socialist and that means too anti-Wall $treet. He wants Manhattan to gleam in the sun, and his mansion well furnished.
It was not the arrogance of European officials that led to the present EMU mess, as much as a silent coup by the pro-plutocratic forces. Now the French socialist, who set-up this mess in the 1980 have the occasion to undo it, and do the right thing, namely gives the ECB all the prerogatives of a central bank, such as creating Fiat Money. Interestingly Milton Friedman would agree to that. Thus the present plutocratic system is amazingly to the right of Friedman!
With Fiat Money, all the European interest rates could be brought down to basically zero, as in Britain, USA, Japan (although Japanese debt is 236% of GDP, much higher than Greece).
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FOLLOW CAESAR AGAIN, & INTEGRATE GERMANIA IN THE GRECO-ROMANO-FRANKISH IMPERIUM:
When Octavian, the grand nephew, and heir of Caesar, took power, he established a plutocracy, and was called Augustus (the one who augments). Later three of his crack legions, plus auxiliaries, and support personnel were annihilated in a three day running battle in Northern Germany. Maybe 50,000 dead, many tortured in gory sacrifices.
Augustus enjoined his successors to leave Germany alone, and keep the limes where it was, awkwardly following the Rhine and then the Danube. There is a gap between both streams, and through it, German invaders would strike again and again, as the centuries flowed. (Germanicus could have fixed things, but Tiberius feared him, and the assassin Consul Sejanus may have poisoned him, as he did Drusus, Tiberius’other son, consul, and expert general!)
Finally the Franks, the hard core of the last two centuries of the Late Roman empire, took power in their own name. The Franks, who were Romanized Sea Germans (the Salian Franks spoke Old Dutch, and wrote in Latin) followed the wise instinct of Iulius Caesar, the assassinated head of the Populares, uncle to the plutocratic Augustus, and decided to conquer all of Central and Western Europe. The Franks did most of Germany in a few years, by crushing the Goths and the Alemanni (“All Men“, French “Allemands”). To finish the task Caeasar had decide upon, took the Carolingians, three centuries later (when the roman Empire, Imperium Romanum, was officially re-established in Pars Occidentalis).
After getting their hands on Eastern European silver, the Franks were able to re-establish enough of a currency for prosperous trade (the Later Romans, like the Chinese, chronically, had run out of enough precious metals to run their economies with free markets).
Unfortunately prosperous Europe attracted invaders and scavengers (in chronological order: Muslims, Avars (a type of Mongols), Vikings). Those powerful and simultaneous invasions forced the Franks to establish a war society, the feudal order (my analysis is very different from that of Karl Marx; Marx considered feudalism within a purely economic model, preliminary to capitalism, proving he knew ver little history, and that of Rome, not at all!).
This exhausting war, democratic forces against plutocrats on a rampage is still on-going: the French led war against the plutocracy in Libya was nothing else (hey, for once that Sarkozy did something right, we may as well celebrate…) Re-establishing a republic in Syria would be more of that reconquista of democracy…
The feudal order, in turn, led to a split of the Imperium Romanum (Charlemagne’s official name of his 300 counties imperium). Rich Francia went on to reconquer Britain, while the relationship with the rest of the Imperium Romanum became murky. Sometimes differences were settled on the battlefield, sometimes the French king-“emperor in his own kingdom” would support his candidate to lead the Imperium Romanum (the addition of “Sacrum” to “Imperium Romanum” came in a superstitious period, centuries later).
That’s how Barbarossa became emperor: he was the candidate of Louis VII of France who wanted to use him against several of his uppity vassals, such as Savoyards, or Normands, the later ruling over Aquitania, England and much of Italy. Soon the splits turned into outright fragmentation. In Barabarossa’s time the feudal order had broken up Germania in 1600 states! Italy and France were not doing much better, with many independent, or quasi independent nobilities and cities. The French king would support English princes living in France in wars against their father the king living in London, etc.
As European states grew in power, one thing became clear: that growing power could be used for unending, ever growing wars. The (civil) war between France and England lasted nearly 5 centuries (from around 1320 CE to 1815 CE). The war between France and Spain around 150 years (from around 1520 to 1666 CE)… within the later was the 80 years war to create the Netherlands, which used to be the old heart of Francia known as Flanders. And so on.
The mood conducive to conflicts reached its absurd conclusion in 1945. after that a different paradigm was increasingly imposed. It is this paradigm that people such as Krugman try to understand, while not doing a very good job.
Europe is a small place. It has space for just one state, Europe. That is what Caesar thought, and Caesar was right. Caesar, arguably the best general who ever was, was also the chief of the anti-plutocratic party. Not a coincidence. So why did the French socialists set-up the European Monetary Union is a way so friendly to plutocrats? Well, maybe some who went along were just stupid, or corrupt. But maybe some were very clever, and set-up an elaborated trap according to Machiavellianism 101. Now the German mammoth has fallen in the trap. Its struggles are mighty. But in vain.
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MACHIAVELLIAN POLITICS: CONSPIRACIES WITHIN, AND NOT WHAT THEY APPEAR TO BE:
To the discharge of the French socialists who set-up the EMU, maybe they thought that is all they could get from the Germans, at the time. Now Germany has swallowed the bait, and France’s position, in spite of Sarkozy selling the country to international plutocracy, is stronger than ever. France is the country of the future, Germany the country of the old. France has 35% more young people than Germany. The two most represented age slices in Germany are the scared, fat 50 to 60 year olds Merkel incarnates so well. Mr. Hollande, the socialist French president, has four adult children. Ms. Merkel, clinging to a past she neither master, nor understand, and rules which are beyond her, has no children.
Europe was built mostly by intellectuals who conspired to create situations where the easiest solution would be to “come out by the top“. The Steel and Coal Union between France and Germany (1948) was conceived to make war between France and Germany impossible, and so on.
The French Socialists are now in command of 21 of France’s 22 regions. They also control the French senate, the French National Assembly, the French presidency, and most significant cities. Even 8 of 11 MPs for the French living in foreign countries went to the Socialist Party.
In 1914, as the plutocrats, fascists and militarists in Germany marched towards war, the German SPD and the French socialists planned a general strike. This faltered as Jaures, the intellectual French socialist leader was assassinated. This time, though, as the plutocrats further their conspiracies, the socialists are in total control of France, and can plot the overthrow of the plutocratic order incarnated by Merkel with the SPD, Sozialdemokratische Partei Deutschlands.
Granted, when plutocracy is at bay, plutocracy is at its most dangerous. The real reason the plutocrats in Germany went to war in 1914 is that they felt at bay, hounded by the SPD, which was asking for more power for the parliament. Dubious encouragement from Colonel House (photo therein the link, interesting in other ways too!) persuaded the Kaiser the USA would support him against France, and Germany’s army attacked an astounded world in august 1914.
Well, it won’t happen again. Greece is a victim of plutocratic plots, not of “the euro”, as Krugman would have it. I say plots, in the plural, because the richest people and organizations in Greece made a tax code which excludes them from taxation.
For example, Greek ship magnates own more than 3300 vessels, 15% of the world’s total. They employ 200,000 people, in Greece alone. Shipping is an example of the globalization of plutocracy. As a major shipping plutocrat, Victor Restis, put it:“Sure tax me. Find me.” He means that nobody can find him, as his life style is global, overseas.
Such plutocrats say that, if the European Union tax them, they will go to Dubai and Singapore. I say: it’s time to use force. French, British and American police and the military could find them, worldwide. Satellites and drones can be used. Ships can be impounded. Magnates can be arrested, expropriated, judged, condemned, jailed. Or then they can restrict their trading between China and North Korea.
France, by the way, just judged and condemned Somali pirates, arrested on the ground, by helicopters, within the country of Somalia (not just the high seas). Somalia pirates are easy to avoid; don’t come next to the Horn Of Africa. But financial pirates are worldwide, they cannot be avoided.
Lincoln is revered in the USA, not because he averted his eyes from infamy, but because he used force, in the name of goodness.
Plutocracy also uses force. When the interest rates the Spanish state is forced to pay reach 7.25%, as it did June 18, 2012, force is being used against the Spanish People, thus against Europe (Spain has a much smaller government debt than Germany). It used to be that finance grabbed 8% of the profits. Now it’s 40%.
The French socialist foreign minister, the extremely experienced Laurent Fabius, an ex-PM, has called Assad of Syria, an “assassin”. The French want to use force in Syria. Very good, once some secular precautions are taken. However, there is an even more crucial need to use force against “le monde de la finance”. As president Hollande said: “My true enemy has no name, no face, no party… He will not be elected, yet he governs. It is the world of finance.”
The state, thus democracy, rests on force, be it only to resist plutocracy. So it has been ever since civilization exists. Time to be reminded of this basic fact.
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Patrice Ayme
Patrice Ayme's Thoughts 