GLOBAL ECONOMIC COLLAPSE –
WHAT HAPPENS NEXT?
Will
the world’s governments be able to save the global economy? Will the
printing of so-called “money” enable them to stimulate a sustained economic
recovery?
What
is the cause of the threatened collapse of the global economic system? Why has
the current system failed? Will a new and successful economic model emerge from
the current economic crisis?
The
global economy is going through a period of change and readjustment that has
never been experienced before in history. This article will outline the
emergence of a new economic order, and the implications of what this will mean
to the world.
The
chief cause of the economic crisis is that the Anglo-Saxon peoples, who up to
now have dominated the world economy, have been living for decades on borrowed
money to finance their domestic consumption and military adventures. They now
have to repay the money borrowed from their international creditors, but do not
have the income to repay them. Even worse, if the Anglo-Saxon world cannot
continue borrowing from foreign creditors their economies will not have
sufficient liquidity to maintain economic the activity necessary to provide
employment to their citizens. Their creditors are now becoming wary
of continuing to lend money after already suffering considerable losses from
the collapse of American financial institutions.
Without
the flow of credit to finance consumption in the Anglo-Saxon world the global
economy is being forced to go through a period of very painful readjustment? The UK and
US banks are now largely insolvent and unable to recover many of their loans
from their indebted customers, and have had to seek government help to bail
them out to repay their lenders. Additionally, asset values are continuing to
decline, wiping out the asset values of bank securities. As governments pump
more public money (which they have not yet collected in the form of taxes) into
the banking system, or offer government guarantees to financial institutions,
there is now the real possibility of governments themselves going bankrupt,
unless they are bailed out such as happened to Iceland recently. The
expansion of the money supply, it is hoped, will inflate asset values to help
support the banking system by reducing the current disparity between assets and
liabilities.
This is thought possible because liabilities are generally fixed,
while assets are subject to inflation. The problem is that, but in the process
they erode the values of currencies – good for sellers but bad for investors
and savers.
It
has become popular to blame the banks for financial difficulties they face, but
governments need to accept they are the prime cause of the current banking
crisis. Governments
inflated their money supply far faster than the economy could increase real
productivity. The banks are in the business of lending money, and to earn
return for their depositors they took increasing risks in lending as the supply
of money increased, engaging in speculative activities. The current crisis would never have
occurred if the money supply had not been increased faster than the
productivity of the economy, creating an over-supply of liquidity that resulted
in inflating asset values. Amazingly today, governments are
becoming even more reckless in increasing their money supply in the mistaken
belief that this will generate jobs.
If
the Anglo-Saxon economies can be saved from economic collapse at this time, it
will only be a temporary respite until uncontrollable inflation takes hold, and
the value of their currencies approach zero as has recently happened in
Zimbabwe. During the time before stag inflation takes over there may be
a short period of economic recovery as the benefits of government stimulus
kicks in. This will be followed by total economic and social collapse, massive
unemployment, starvation and widespread poverty. We only need to look at the example of
Zimbabwe today to see what the consequences will be and how fast it can happen.
The
current crisis has shown how completely much the world has become a single
global economy. The reduced flow of money from the creditor nations to the
debtor nations has had a dramatic effect on world trade. There is general
consensus that there needs to be a global solution if the global economy will
survive the current crisis. The current crisis is propelling the world into the
necessity of having a single regulated global economy supervised by one
regulatory body for the entire planet. This all-powerful agency will control
the movement of goods and services as international commerce evolves into a
single global economy.
Firstly the world needs to accept the reality that the Anglo Saxon
nation’s (USA, Canada, UK, Australia and New Zealand) economies cannot be
saved. With
the down-turn in the global economy they will be unable to earn sufficient
export income from the rest of the world to service their enormous external
debts. Their governments are now urgently printing and borrowing money to save
their banking systems from collapse, and to stimulate domestic spending to in
an effort to create employment by spending on infrastructure and other
projects. This
is a desperate attempt to save their socio-economic institutions from unravelling
which would destroy government’s tax base, resulting in massive national
bankruptcies.
Sadly these efforts will only debase
their currencies, cause uncontrollable inflation, and result in defaulting on
their international debt obligations. The
Anglo-Saxon economies cannot be saved – they will shortly collapse into a state
of anarchy.
The
current crisis is having a major impact on the Asian economies, which had
become dependent on exports to North America to finance their domestic growth. Without
these markets, Asia must stimulate domestic demand to sustain local industrial
output. China
is taking the lead here by massive spending on developing their internal
infrastructure and improving social services. However it will take a few months before
economic demand will pick again within the Asian region from the Chinese
stimulus. During this time some Asian countries will run the risk of
political upheaval as unemployment grows.
No country in Asia is being impacted more than Japan, the world’s second
largest economy. Japan has numerous
fiscal problems, including caring for an aging population, enormous government
debt, declining export markets and huge industrial capacity surpluses to
existing markets. Japan
is looking at creating once again a Greater East Asia Co-Prosperity Sphere as
it did in the thirties and forties for much the same reasons – to secure a
reliable supply of natural resources and markets for its excess industrial
capacity. Its
previous efforts to stimulate domestic demand had limited success, and will be
difficult to duplicate a second time. We can expect
Japan to go through a period of political upheaval following the collapse of
America, with the right-wing nationalists gaining control of the government.
We
can now expect to see use some of Japan’s surplus industrial capacity used to
rebuild its military capacity (partly as a deterrent against China), and to
fill the vacuum following the collapse of US markets. The one economic activity that will
utilise surplus industrial capacity is increasing defence expenditures. Both Japan
and Germany need to develop new markets for their surplus industrial capacity –
increased expenditure on the military will be a simple way of resolving what to
do with their idle factories.
The region in which we will see the most dramatic change is Europe. There is a growing gulf between the asset
rich countries of NW Europe and the poorer south and east. Political tensions are mounting. Social unrest is spreading. Cracks are appearing in European solidarity. Unless bold, decisive leadership emerges in the EU,
there is a danger that the current partnership may unravel. The
collapse of the Anglo-Saxon nations will be the catalyst to force the EU to
resolve their political differences, and to make the necessary reforms in
response to the political and economic turmoil in Europe. The
English speaking world will be blamed for the economic problems emerging in the
EU. Europeans
will look for a strong leadership that is able to unite them and restore
confidence in their failing economies. The Catholic
Church will encourage a spiritual revival to restore Christian values. There will be a shift from individual
freedom to serving the needs of the state.
It
is now widely accepted that the current Bretton Woods
economic model needs to be replaced. What is envisaged is the new economic
model where the movement of capital is much more regulated. In place of the IMF
and World Bank would be a new regulatory body that would limit the movement of
capital to serve the needs of the people, rather than today where capital is
free to exploit the people to maximise the profits which only enrich a
privileged few.
This new regulatory body would require considerable power to
enforce its authority than exists today. It would be a
global central bank, but would have greater authority than the ECB or Federal Reserve.
It will mean nations giving up a considerable degree of national
sovereignty. This new entity will have
the power to control how people conduct business. It will be modelled along the
National Socialism policies Hitler implemented to restore prosperity to Germany
in the thirties.
Who will control this new economic authority? It is the Europeans, in particular Germany
that is strongly advocating a new global economic order. Germany is the one nation that has the
capital to dictate the terms for creating a new global central bank. This bank will have the authority to issue
currency, control the movement of capital and oversee a new global order where
capital services the needs of the people.
German Chancellor Angela Merkel recently set this out this vision at the
Davao World Economic Forum. It will be Germany that has the financial
strength to dominate the coming new economic order.
This new economic order is opposed by the USA, as it will mean giving up
the dollar as the world’s reserve currency and America giving up its position
as the world’s dominant economic power. For
this reason the US has been unenthusiastic in supporting an international
regulatory body.
However the United States is now so desperate for money that they
will have little choice but accept the terms of the new international
regulatory body, to avoid economic collapse.
There will emerge one global Central Bank, which will restore prosperity
to much of the world. This Central Bank
would have regulatory power over the banks of those nations that submit to its
authority, which would virtually mean nationalising the banking system. However, there will be many strings attached to how
capital is used, with serve [severe] restrictions [on]many of the economic
freedoms we enjoy today. It will create a regulatory market, directing capital
to serve the needs of the state rather than the individual, but will be able to
protect one’s savings, create employment, and prevent the speculative risk
taking that has gone on with free market capitalism as has been the case over
the last few years.
It will be modelled along the lines of the ECB,
but with greater regulatory powers. It will restore confidence for those
with savings to know their investments will be protected and not lost through
speculation or invasion.
These
are historic times.
Events are now moving fast. For the people living in the
English-speaking world, it will be a time of great suffering and sorrow. Many will starve through lack of food. Disease will be wide-spread – many will
die. Law and order will break down –
crime will become rampant. Eventually these countries will be taken over by
their creditors, and their people put into slavery.
These
events need not have happened. The most blessed people on the earth
have been the Anglo-Saxon people. They have thought that their wealth
and power have come from their own abilities and not as a blessing from God. It
is a result of rejecting the moral and economic laws of the Bible that they now
face this crisis.
Now these blessing have been withdrawn, and a time of punishment
is being inflicted upon them.
Note
by Ron: I published my vision long ago on how you should learn to grow your own
food hydroponically or otherwise. You
need to obtain non-hybrid seeds and save some from all your crops for the next
season. Hybrid plants do not make seed.
All seeds age and do not reproduce well unless they are from a fresh
(last seasons) crop. See this link: https://omega77.tripod.com/hpgar1.htm
Ron
Bruce Porteous
Bruceporteous50@yahoo.co.nz
15 February, 2009