by Matthias Chang
June 29, 2010
In a November 2009 article, I forecasted that at
the earliest, by the first quarter and the latest by the second quarter of
2010, the global economy would unravel.
Since the second quarter of 2009 and more so in the first quarter of 2010,
the Obama administration, the G8, the international mass media,
the IMF and
the World Bank, all sang the chorus that the global economy is on "the road
to recovery" and "the worst is behind us".
While, the Dow (DJIA) “recovered” from the March lows of 2009 and shot above
the 10,000 mark, all major markets were manipulated to give the illusion of
recovery. The gullible took it all - hook, line and sinker.
But let me share some common sense logic.
When the so-called economists and financial analysts were trumpeting that
there was a global recovery, did you consider what that means in real terms?
If there is an economic recovery, common sense tells us that productive
entities, namely companies and national economies must be making money
- i.e. firms are making profits and countries are improving their export
And more importantly, if the so-called recovery is a sustainable recovery
with economic growth, subsequent policies would no doubt reflect that
In essence, theory must jive with practice and/or reality.
But, what did we observe? What were the global central banks doing?
They deliberately kept interest rates
low (in the case of the
Federal Reserve, at almost zero rates),
serving the interests of the Shadow banking system. I will explain
later this sinister policy and what it means for common folks.
They continued their policy of
“Quantitative Easing” - i.e. creating money out of thin air to
maintain the debt / slavery cycle.
Knowing that the crisis has not abated
and fearing the worst, they began an intense currency warfare i.e.
Dollar v Euro, Dollar v Yuan, Dollar v Yen and so forth. This
resulted in competitive devaluations of currencies.
What was the reality on the ground, namely the
Corporate profits were weak
Unemployment numbers continued to climb
Taxes are set to increase
Severe cut backs of all major categories
of public expenditure have occurred in major national economies
There have been renewed calls for
another massive "stimulus"
The G20 was convened in another attempt
to sort out the economic mess.
This is the harsh reality of the G-20 Summit.
The outcome is another charade, no different from the previous summit. It is
abundantly clear that each summit participant has signaled that
self-interest comes first and no one can be in any position to help another
given the out of control sovereign debts that have swarmed the developed
There are now two competing schools of thought as to how best to address
this financial cancer that has spread to every major organ of the global
financial body, namely:
Continue with the massive stimulus and
more borrowings at all levels, and
Adopt severe austerity measures to
reduce deficits and borrowings.
The solution put forward is not unlike tossing a
coin – either head or tail, but these so-called economists and experts
forget that they are both sides of the same coin. Whatever may be the
preferred solution, the end result will be a vicious cycle of delayed boom
and bust, but this time more severe than the bust of 2008.
Why is this so?
Let us just examine one critical factor of the global economy, specifically
the issue of interest rates.
It is a wonder why until now there has been no violent revolution and/or
social unrest throughout the developed world. And the people of the
developed world are deemed to be educated and sophisticated “investors” with
access to modern technology and savvy financial newspapers.
Should public opinion not be angry that:
Too Big to Fail Banks can borrow
billions at zero rate interest and then lend them out, reaping huge
Why can’t anyone see that no interest payable means no costs of
borrowing the billions from the central bank (Fed, ECB, etc). It is
a no brainier to see how these banks can make so much money. If you
have no costs, everything else is super profits.
And that is why
these corrupt banks have all declared record profits, more profits
than they have ever earned before 2008. This is because before 2008,
these banks had to pay interest to the Fed or to banks in the
These financial manipulators are the only economic / financial
entities in the world that need not pay interests on their
Meanwhile, ordinary people have to continue paying mortgage payments
for a house that is not even worth 50% of its mortgage value.
So why has the public not taken action against the central banks
(including the Federal Reserve), the fat cats on Wall Street and the
The rest of the world must incur a huge
burden of financial cost in the form and shape of interest to start
any worthwhile business. And the profit margins are so small, that
it is a wonder that profits can be made at all in some cases.
Hardworking people are lured into the
global casino with the illusion that they can make more money there
than sweating in honest labour in a shop, factory or whatever.
The mantra, “invest for the long run” is
drummed into Joe's head and he is brainwashed. He needs to leverage
to make the big bucks, the big score.
When these financial manipulators get
this kind of handout, what do the smart guys at the Fed and the
politicians call it?
I call it handouts, under the table money, SUBSIDY!
And the amount
is in the Trillions.
Now there is a clamor for an austerity
The corrupt governments the world over demand that spending
for social security, social services, pensions, public housing,
medical care etc. must be cut drastically; subsidies must be slashed
as there is not enough in the national coffers to pay for these
This is a nonsensical argument.
Ordinary people must bear the burden, while the banksters can
continue to enjoy the biggest subsidy ever paid in history to a
“The government is broke”, the paid
scribes never cease to proclaim.
But they can afford to lavish trillions
worth of subsidies to the fat cats of Wall Street and the Too Big to
Fail Global Banks and the Shadow Money-lenders. They create money
out of thin air and lend at zero interest rates to them. But for
you, the government says that they have to borrow to finance social
security, medical care etc. and since they have no money, they have
to raise taxes.
Why can’t the government create money
out of thin air and lend you at zero interest rate just as they are
doing for the fat cats?
So why has the public not reacted?
I need not go further to explain whether the so-called economists and
experts are right in adopting one or the other solution referred to in the
The answer is staring at your face. Do something about it. Stop
whining and moaning!
Organize and stop this global robbery, the largest ever transfer of wealth
from the many to the minute few in history.
Let me assure you that if all the global Too Big to Fail banks were to
collapse and go into bankruptcy, the world’s economy would not collapse.
To avert such a collapse, all the people need to do is to take absolute
control of their respective Central Banks away from the hands of the
so-called “independent board of directors/governors” and transform the way
central banks are managed.
It is a lie that markets control interest rates (and for that matter the
value of a nation’s currency). It is the global central banks in connivance
with the Shadow Money-lenders, hedge funds etc. that control rates through
pre-arranged parameters. It is and always has been an insider’s game.
Until this is done, all talk of financial reforms is just that – cheap talk.
Control of the central banks is the crux of the matter.
Did not the Founder of
the Rothschild financial empire say that whosoever
controls the power to create money will have the ultimate power to control
all and sundry?
So who should have the ultimate power to control the creation of money:
common people or the carefully selected financial elites, the fat cats etc.?