America's dollar problem comes from America counterfeiting its own currency and calling that GDP growth. As a result of this hoax we will see an escalation in the class war and possibly something more confrontational.
Historically speaking, it can be said that counterfeiting rankles the American psyche deeply. As HuffPost member 'joebhed' points out in the comments section of a previous post; "U.S. Dollar Euthanasia While Finns Legislate Days-Off for Shagging," it is unfair to write off America's colonial currency, the Continental, as just another failed fiat currency. Had it not been for the British counterfeiting Continentals, 'joebhed' argues, they would have done just fine.
It's impossible to know exactly what would have happened to the Continental and whether it would have escaped the curse of all fiat currencies: extinction.
What we do know is that America's Founding Fathers decided they didn't want anything to do with fiat currencies after the Continental episode so they wrote into the Constitution the clause that all money in America must be either gold or silver. Over time, this Constitutional mandate (like many Constitutional mandates) was special-interested away as "We, the People" became "I, the Corporation." And pari passu with this shift from a commonwealth to a corporate welfare state (i.e., corporatism, or fascism as some call it) came the apparition of hundreds of trillions of dollars in so-called derivative contracts dancing like sugar fairies on CNBC.
Even Alan Greenspan, before he drank 'New Economy' Kool Aid warned about counterfeiting in America. In 1966 he wrote, "Gold and Economic Freedom" where he warned against counterfeiting and fiat currencies as the instrument of "welfare statists."
So what will be the new post-capitalism, post-counterfeiting world order?
Listeners to "The Truth About Markets" on Resonance 104.4 FM in London, a show that I co-host with producer-writer-director Stacy Herbert every Saturday night, know that when we started doing the show three years ago, I introduced the idea of neo-feudalism; the breakdown of everything that came after the Enlightenment and a return to kings and warlords living in walled cities; physical and/or electronic with not many civil rights on offer.
America's embassy in Iraq is an obvious example of this trend, but Rummy's Peace Palace is still a couple of years away from hosting a housewarming party. In the meantime, we see the trend toward neo-feudalism busting out large in London and in Greenwich, Connecticut, the two biggest money laundering capitals in the world.
Some recent history; neo-feudal Russian warlords and oligarchs - beneficiaries of a very drunk Boris Yeltsin's largesse - were gifted multi-billion pound ownership rights to the country's energy, industrial, and mineral resources in exchange for a shot of Stoli and a lap dance from a hot Russian shiksa. They are now at war with each other in London.
Boris Berezovsky has launched a £2bn lawsuit against Roman Abramovich, owner of the Chelsea football club, for using "threats and intimidation" to force him to sell shares in the Russian oil companySibneft and aluminium giant Rusal for less than their market value.
How nasty can this get? Remember that in late 2006 Alexander Litvinenko was trying to blow the whistle on the Russian mafia controlled government-business- military's involvement in the murder of a journalist. He was poisoned (and killed) with polonium-210 - just a few steps from the American embassy.
Wiki describes that fateful day:
November 1: Just after 3 p.m., at the Itsu sushi restaurant on Picadilly, Litvinenko meets the Italian security expert Mario Scaramella, who hands alleged evidence to him concerning the murder of Anna Politkovskaya. Around 4:15 p.m., he comes to the office of Boris Berezovsky to copy the papers Scaramella had given him and hand them to Berezovsky. Around 5 p.m. he meets with the former KGB agents Andrei Lugovoi, Dmitry Kovtun and Vyacheslav Sokolenko in the Millennium Hotel in London. He later becomes ill.
According to wiki, one of the suspects is:
Igor the Assassin; the code-name for a former KGB assassin. He is said to be a former Spetznaz officer born in 1960 who is a Judo master and walks with slight limp. He speaks perfect English and Portugese. He may be the same person who served Litvinenko [polonium-210 laced] tea in the London hotel room.
Most Americans have no idea this was happening just a few steps from the American embassy in London; during Bush's so-called WOT and in the backyard of America's coalition partner, Britain. It appears not to have made the news in America that there was an apparent state sanctioned nuclear strike on an individual threatening to expose the Russian state's alleged murder of investigative journalist AnnaPolitkovskaya. But don't worry, nothing like that could happen in the U.S., unless of course you live in Greenwich, Connecticut.
"Greenwich, CT is in an uproar over a mysterious Russian billionaire's proposal to buy an $18 million home, tear it down, and build what would be the biggest home ever built in the tony Connecticut enclave - a 27,000 square foot supermansion. The billionaire in question is reportedly Valery Kogan, who has ties to Vladimir Putin."
Is this capitalism? No, it's neo-feudalism.
According to straightdope.com, Byzantine theologians and medieval scholars really did argue about how many angels could dance on the head of a pin. Today J.P.Morgan's 'algorithmic trading,' Citi's 'Black Box' currency arbitrage, and Goldman Sachs 'quants' are trading trillions in securities collateralized with less than a pin head's worth of equity.
And the neo-Catholic Church of our neo-feudal age - the rating agencies, Moody's, Fitch and S&P (the Father, Son and Holy Ghost) - bless these products with AAA rated Benedictions. Unfortunately, when Europeans and Asians take this Eucharist it turns out to be nothing more than vanilla wafers and grape juice and they are forced to forge currency themselves to 'recapitalize.'
Here a couple of prayers pulled from from the new, NEW testament for Wall Street and City market fundamentalists and other financial jihadis - Bloomberg. Inside the brackets is additional commentary:
Credit Swaps Top $62 Trillion in Rush to Hedge Losses
By Shannon D. Harrington and Abigail Moses
April 16 (Bloomberg) -- Credit-default swaps worldwide expanded to cover $62.2 trillion of debt in 2007 as investors rushed to protect against losses triggered by the collapse of the U.S. subprime mortgage market. [the price of moving decimal points to the left of nothing is still nothing] Contracts [toilet paper] outstanding rose 37 percent in the second half of 2007 from $45.5 trillion in the first half, the New York-based International Swaps and Derivatives Association said today. The market, which has grown from $34.5 trillion in 2006, doubled in each of the previous three years as traders used the derivatives as a cheaper and easier way to invest in corporate debt. [We're so far into a financial black hole I met Einstein playing dice with two Goldman traders] ``Trading volume has gone up dramatically,'' said David Verschoor, a default swap trader at BNP Paribas SA in Hong Kong. ``People are punting it harder than they punt equities.'' [I think I might be drunk, but I'm not sure.]
U.K. Banks Need $200 Billion Aid From BOE
By Jennifer Ryan
April 19 (Bloomberg) -- Former Bank of England policy maker Willem Buiter said the central bank will need to offer loan swaps [like banner swaps from the dot-com days when companies exchange worthless baners and each books a short term gain and long germ loss] to financial institutions of at least 100 billion pounds ($200 billion) to kick-start the U.K. mortgage market. The central bank, the Treasury and Prime Minister Gordon Brown's office may unveil a plan to swap mortgage-backed securities [AAA rated portraits of Jesus as seen in the burnt of toast of a grilled cheese sandwich] for government bonds as soon as next week, which the British Broadcasting Corp. reported yesterday will total 50 billion pounds [of the government's own counterfeited currency]. Banks including HBOS Plc have curbed lending [hiding under their desks fearing for their lives if they ever have to go to jail for forgery] and raised the cost of mortgage loans even after policy makers cut the benchmark lending rate three times [shot UK savers in the head] since December to help avert a U.K. recession.
In other words, these are just more worthless, counterfeit fiat U.S. dollars and British pounds printed up (electronically birthed from the Satanic womb of vague fractional reserve banking regs) by fee mongering U.S. neo-feudal investment banks and Fed wonk priests whose glee in rehashing worthless mortgage entrails and calling the resulting monetary Scrapple 'money' brings to mind the sadistic smile of a six year old pulling the wings off flies.
Peter Schiff of Euro Pacific Capital points out a medieval precedent:
"Backing paper money with mortgages is nothing new. The French tried it in the late 18th Century, and it lead to hyperinflation. Assignats, which were first issued in 1790 to help finance the French revolution, were backed by mortgages on confiscated church properties. Although the stolen underlying collateral did have some value, the revolutionaries saw no reason to limit how many Assignats were printed, which resulted in massive depreciation. Within three years, price controls were introduced and failure to accept Assignats, initially an offence subject to six years in prison, was made a capital crime. By 1799 the currency was completely worthless. If even the threat of death could not prop up the Assignat, does anyone believe that the currency could have been saved if Robespierre had forcefully mouthed a "strong Assignat policy" as President Bush is now doing with the dollar? Rather than repeating the mistakes of history we should learn from them. Our own failed experiment with the Continental currency as well as the Great Depression should prove conclusively that it is Austrian, and not French, economics we should be following."
But it's not just currency forging we're talking about that is destroying the U.S. economy, the counterfeiting crisis extends to stocks and bonds as well. The back-dating options scandal from last year is basically a story about counterfeiting. CEO's who didn't like the fact that their options were 'out of the money' simply repriced them so that they were 'in the money.' The result was instant earnings dilution for share holders and instant payday for CEO's. Not to be outdone, the Royal Bank of Scotland (RBS) just decided they'll issue the biggest rights offering in corporate history to dilute their stock holders. UBS and other banks are following suit. Any claw back in bonus money or salary? Ah, No.
Is the financial press - Murdoch, for example, who now owns The Wall Street Journal - bringing these counterfeiting schemes to the public's attention?
Mark Cuban, billionaire blogger and basketball fan writing on his eponymously named website has a possible answer:
"You can't turn on CNBC or Fox Business without them cheer-leading the market to go up. Every man, woman, child, fund, index or interested party who buys the stock is doing everything they can to get the stock of the company to go higher. They don't really care how you run the company and they care less about the results of the company than they do about the performance of the stock."
As Cuban explains in his blog, it's almost a dead certainty that a CEO in America can easily raise their net worths to 10, 50 or 200 mn. dollars simply by awarding themselves more options, warrants and stock.
It's basically a counterfeiting scheme with CNBC bubble vision, or Fox Business' scantily clad strumpets (and Neal Cavuto) 'pumping and dumping.'
Cuban has some ideas on how to improve the system and his blog is worth reading. He also wrote the forward to an interesting book, "The Number" that blows the lid off brokerage firms cooking quarterly earnings numbers. Definitely worth a read.