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: Ron



Bruce Porteous

15 February, 2009