Why The US Economy Was Lost


Richard Moore

How The US Economy Was Lost
By Paul Craig Roberts

Paul Craig Roberts presents in his article a very good critique of Obama’s bailout agenda. These two paragraphs summarize his conclusions, which are supported by his analysis:

The Bush and Obama plans total 1.6 trillion dollars, every one of which will have to be borrowed, and no one knows from where. This huge sum will compromise the value of the US dollar, its role as reserve currency, the ability of the US government to service its debt, and the price level. These staggering costs are pointless and are to no avail, as not one step has been taken that would alleviate the crisis.

How long will Americans permit “their” government to rip them off for the sake of the financial interests that caused the problem? Obama’s cabinet and National Economic Council are filled with representatives of the interest groups that caused the problem. The Obama administration is not a government capable of preventing a catastrophe.

Is Obama’s administration not capable of preventing a catastrophe, or does it rather have no desire to prevent a catastrophe? Is The National Economic Council a brake on the administration, or is it the heart, the engine, of the administration? These, unfortunately, are questions that Roberts does not consider. He falls into the same trap most people fall into: interpreting deceit as incompetence…

Eamonn Fingleton, Pat Choate, and others have described how negligence in Washington DC aided and abetted the erosion of America’s economic position. What we didn’t give away, the United States let be taken away while preaching a “free trade” doctrine at which the rest of the world scoffed. … Chasing after shareholder return and “performance bonuses,” US corporations deserted their American workforce. 

If incompetence in Washington, the type of incompetence that produced the current economic crisis, destroys the dollar as reserve currency, the “unipower” will overnight become a third world country, unable to pay for its imports or to sustain its standard of living.

What is lacking in Robert’s analysis is relevant historical context. What is most relevant for comparison here, in my opinion, is the decline of Britain, which parallels very closely the decline of America. Britain dominated industrial production more completely than the US ever has, and the Pound was the reserve currency for much longer than the dollar has been. And just as Wall Street and the privately owned Federal Reserve dominate US policy, so did The City and the Bank of England dominate British policy.

In both cases, these elite bankers invested in domestic development for a while, as long as that provided the best available investment opportunities. But the law of diminishing returns always takes over eventually, and the investments, in both cases, began flowing outside. This led to the gradual but inevitable decline of the domestic economy, while enabling the big investors to go right on raking in profits. It is not political incompetence that permitted these developments; rather it is political corruption: the total domination of the political process by financial elites.

Just as the recent financial collapse brings the sudden and final demise of US economic hegemony, so did World War I do the same thing for Britain. And in both cases the instrument of final destruction was debt: debt to the financial elites that caused the gradual decline, and who engineered the final death-knell events. Britain took on the debt by prosecuting the war, while the US took on the debt by pursuing the insane bailouts. Insane from the perspective of America, but shrewd from the perspective the bankers, who call all the shots in Washington, and have done so ever since 1913 when the Fed was established.

Most relevant historically, in terms of understanding our current situation, is what happened in the aftermath of World War I. The financial elites simply moved their center of operations, and their bundle of capital, from The City to Wall Street. Britain went down the tubes, but who cares? America provided an opportunity to play the whole game over again on a grander scale, from rise to decline to death by debt, punctuated by elite-arranged wars that accelerated the process. The Iraq war has made little sense from an American power perspective, but a great deal of sense to the bankers. The huge cost of the war, enhanced by the toleration of contractor looting, succeeded in bankrupting the US economy, setting it up to be vulnerable to the engineered collapse.

One could entertain the hypothesis that the bankers have blown it, that they don’t have a viable escape plan this time around. This would be falling once again into the trap of assuming incompetence, on the part of folks who have historically always shown great shrewdness. One possible escape plan, paralleling the escape from Britain, would be for the bankers to move their center of operations to China, which is on the economic ascendency now, just as the US was following WWI. This escape plan can be ruled out, however, due to the unshakable nationalism of the Chinese leaders, and the unshakable Anglo-Saxon orientation of the Western banking elite. 

In fact, their escape plan is rather clear. They have been pursuing and talking about the plan for a very long time; they have now set up the conditions to enable it; and we are beginning to see political moves in its direction. It is an escape plan that once again provides a grander scale for financial manipulations, and a grander base of operations. 

There is a wealth of documentation of their long-range planning, and Carroll Quigley is one of the foremost researchers in this area:

“The powers of financial capitalism had (a) far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world’s central banks which were themselves private corporations. Each central bank…sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world.”
     “The Council on Foreign Relations (CFR) is the American Branch of a society which originated in England… (and) …believes national boundaries should be obliterated and one-world rule established. I know of the operations of this network because I have studied it for twenty years, and was permitted in the early 1960’s to examine its papers and secret records.” [emphasis added]

By tolerating the fraud that led to the collapse, and by pursuing the bailouts, “cooperative politicians” have created the conditions that ensure the global financial system will need to reorganized. As the recession deepens, an increasingly desperate citizenry will support any reorganization plan that promises hope for economic salvation. We can be sure that cooperative politicians and media will be forthcoming with such promises of hope for the plan, and Obama has clearly mastered the art of hope salesmanship. That is why he was promoted in to the Presidency and sold to the American people at this time. 

The critical first step in implementing the plan will be to centralize financial control in a single global institution. Once that is achieved, real power will be centralized globally, and the institutionalization of that power politically will follow easily. The UN is sitting the wings and is already undergoing a process of “reform”, so that it will be suitable for the role.

Quigley cites the Bank for International Settlements as a contender for the role of a global central bank, based on planning documents he has researched. But since the time of those documents, the Bretton Woods institutions have been created, and now the IMF and World Bank are the more obvious choices for that role. And indeed, cooperative politicians are now pursuing that alternative:

“Leaders said there was a need for international institutions, including the International Monetary Fund, to play a greater role not just to help countries in financial trouble but to prevent countries from getting into such difficulties. … The Berlin gathering is a precursor to the next meeting of the G20 group of major developed and developing countries in London on 2 April, which aims to rewrite the rules of the global financial system.”