THE CORRUPTED NEOLIBERALISM & THE COMPLICITY OF THE US

THE CORRUPTED NEOLIBERALISM & THE COMPLICITY OF THE US according to Karen Hudes . 

Introduction 

Hugo Adan, Sept 9-13

First at all, Karen didn’t use the word mafia  that I attributed to her in my previous article. I did use it to describe two things that Karen denounced:  

(a)  the take over of the Federal Reserve in 1913 by a group of private bankers when most of the US Senate was in break. In Latino America we call this act as mafia style of doing business by big corporations. The WB use the word “State capture” to name  this corruption (in fact, American crook-bankers  invented  this style of doing business at that time) ;  and 

(b)  the fact that the captured Federal Reserve, the one that prints  dollars and charge for it by placing  “interest on it  and have it grow and compound every year” (as Karen said)  continue manipulating this debt inside and abroad.  

It is said that America is in debt and is about to collapse so Americans should work more and the social programs in the US budget should be cut. Who said that? , The Federal Reserve or crook bankers that run this country and finance both democrat and republican parties. Karen said that this debt is a fabrication and should be repudiated.  

Karen made this point clear with the manipulation of the debt in Detroit, this city was declared in bankruptcy by the Federal  mafia. It was said so because this people had no money to pay their health insurance debts. The fact is that Detroit’s people was left sick by manufacturing polluter cars and all their tax dollars  and  perhaps their social security was took by Britt-mafia-bankers and transferred  to a bank in the Vatican. This happens with the complicity of the senate and the current government. 

This type of manipulation of the debt is to me a mafia business that goes beyond America and is damaging economies worldwide.  Karen start this interview  by referring  the case of Latin America that are rejecting the fiat dollars and using offsets to balance the damage of QEs (quantitative easing), but unfortunately  Sophie cut it. 

I still want to know the effects of this crazy printing of dollars and the reaction of the BRICS in the meeting coming  tomorrow Wednesday.   

To me this is a mafia style of corruption and I apologize to Karen for attributing to her the uses of the word maffia. “State capture”  is the technical or academic word to describe such despicable corruption inherited in the neoliberal US model of economy.  

FACTS AND REMEDIES derived from insights of Karen Hudes

1. MANIPULATION in  PRINTING DOLLARS.   

“We’re on the verge of the currency war. The Federal Reserve is printing dollars like there is no tomorrow. If they keep going, the rest of the world is not going to accept them. As it is with the BRICS countries – Brazil, Russia, India, China and South Africa – have decided that they are going to finance the trade among these countries with offsets and pay for the difference in gold. And this is a right move for them” , said Karen Hudes. 

MY COMMENT: 

The printing dollars  is not the problem. Who control it or who benefit and its effects abroad, is the problem. The Federal shutdown (not its printing) has stopped many financial transactions and cut the money flow  of US FDI to programs in process. The immediate effect of the shutdown was the shortage of dollars and its higher price. This means that local currencies have been depreciated in relation to dollars.  The Latino foreign debt is automatically higher now and the price of anything coming from the US (medicines and equipment)  are more expensive right now. People who have debts in dollars and get their income in a depreciated local currency are ruined.  The Fed shutdown has caused a big chaos in all emerging countries.  The supply and demand is broken between US and Latino America and this affect both sides, specially the emerging economies that now have to get out of the dollar and re-define its business trade. 

Printing more dollars to counter-balance its scarcity in the south, won’t solve the problem of stability required for sustainable economic growth. That will make their economies more vulnerable.  If autonomous  Latino Banks control de printing of dollars, according to the weight of their trade, things will be different.  Why not?  Even Christina Legarde admitted so. “"El crecimiento de las economías de mercados emergentes, que en gran medida ayudó a mantener a flote a la economía mundial durante la crisis, está perdiendo ímpetu” , they need not only voice but decision making power in all internacional instancies of goverment.   

At this point my proposal is an impossible because there is only few State autonomous in the South,  and because the FED  won’t  allowed more. The Fed is instead creating trouble to their own States Banks to became autonomous and follow North Dakota example. How to put down the al-capone-banks behind the FED,  is today the main problem of the Americas. 

2. THE CORRUPTED BUREAUCRACIES in THE US.  “The US Congress has been fighting with the presidency because the presidency has been in total contempt and the highest legal officer of the United States. The Government has also been in contempt of Congress in fighting this international corruption that is ruining the dollar as an international reserve currency” said Karen Hudes 

My comment.

The dollar is an instrument and so depends on who used, to what purpose?  And this is a political problem. At political level the problem is piecemeal change vs. radical change. The main American problem -at political level- is the bi-partisan system, whatever change of bureaucracies means only continuity . Democrats and republicans are the same, financed by same bankers and Wall Street crooks to their exclusive dictatorship. We need a strong socialist party able to unite the rest inside an anti-fascist Front around a democratic-action-plan. 

How to create this socialist choice to re-construct America from the bottom-up, state by state, that will be a real 3^rd choice. That is our main problem and the challenge of all Americans.  Richard Wolff have interesting insights on this topic  in “Democracy at work”.  What is needed  now are their actors, or their implementators. 

3. MANIPULATION OF GOLD vs. FIAT CURRENCIES

“We’re headed to something called “permanent gold backwardation”, that means there is a loss in confidence in the fiat currencies … these currencies are about to crash because they are valueless, that’s what always happens to paper currencies that aren’t backed by assets. [..] Tthe biggest market for the Federal Reserve notes is the US Treasury and there is a God of dollars right now. Yes, there is also a small market, unfortunately, the market is weakening as the dollar weakens because of all of this, what they call quantitative easing, where every month so many additional dollars are printed with absolutely no backing". said Karen Hudes

Listen More:

Sophie: So you think the return to the gold standard is a realistic thing? It could be a possibility?

Karen: Well, actually, there is not such a good thing. The currency ought to be backed by value, but there is no reason why it should be restricted to precious metals, it could be any of the commodities that are valuable. The important thing is that, yes, the currency should be backed by assets rather than by debt as we now have.

Sophie: But if a financial collapse happens , let’s say, will gold be of any use? I mean, there is shortage of food, look at the world today, the biggest problem we’re facing is a clean drinking water. What gold is going to do about that?

Karen: First of all, I think that we’re going to manage together, act together, I’m not expecting a collapse. Very accurate game-theory model is showing that we’re going to manage to make a transition in a very smooth way, maybe there’ll be a few fits at start. I think most of the countries in the world are in favor of working together and not to have a collapse. The only thing that you’re saying is that some of these crooks haven’t figured out [the solution] they haven’t seen the writing on the wall, they haven’t seen that we understand that there is a way to work together and avoid these problems, which are definitely avoidable.

My comment: 

One of these solutions were proposed by Dominique Strauss Kahn the ex-IMF director that agreed with  Russia and China’s Ministers of Economy to create a single currency for international trade and Bank Reserves. (see: International Monetary Fund director Dominique Strauss-Kahn calls for new world currency that would challenge the dominance of the dollar and protect against future financial instability. He suggested adding emerging market countries' currencies, such as the yuan, to a basket of currencies that the IMF administers could add stability to the global systemhttp://www.telegraph.co.uk/finance/currency/8316834/International-Monetary-Fund-director-Dominique-Strauss-Kahn-calls-for-new-world-currency.html) .He wanted to discuss this proposal with Germany when the CIA manage to involve Strauss Kahn in a sex-scandal when he came to NY for a UN meeting (may 2011)  imprisoned him and discredited as candidate in the French elections. 

However, his proposal is still on and Putin said that Russia and China and other BRICS countries are ready for such single currency backed with gold. I guess this is the time to debate this proposal. Otherwise there will be protectionisms at regional level (the so called offsets that are being implemented in Latin America for instance, the ones that  Karen saw as “right move for them” when she was interrupted by Sophie. If “We’re on the verge of the currency war,  as Karen said to the 1^st Question. The 2nd Q of Sophie to Karen should've been: how offsets or proteccionism in Latin America could be a right move?). We are facing a world problem, not a regional problem.

To me (a) any protectionism will be a big disruption to the current economic growth and global trade, and (b) protectionism can create a similar chaos that lead to the currency war and crisis of the 1930’s. 

The only solution to a disaster coming from a currency war is a New Bretton Woods agreement. The one of 1944 lasted until the 1970s and in September of  1985 we had the Hotel Plaza agreement in New York. Here the US, France, Germany, Japan and the UK agreed a depreciation of the US dollar. 

We need a similar type of meeting, to solve a similar problem with similar solution: the problem is that US is pretending reactivate its economy by revaluating the dollar by mixing QE with Fed shutdowns. The solution is to run the IMF “SDR” currency (Special Drawing Rights) compose of dollars, euros, yuans, yens & the latino block currency. In addition we need to re-install in America a new version of the Glass Steagall Act so that the new manipulation of the crooks on financial matters be stopped. Finally we need to create the Tobin tax on all financial transaction to solve emergency humanitarian problems worldwide. 

This meeting should not take place  in NY to avoid the type of dominique “sex scandals”. It should be held in The Garotas Hotel of Sao Pablo, Brazil, the only place in the world where sex-es-cums doesn’t care in Politics. Just kiting, the meeting should be held in India, in China, Russia or South Africa, or any BRICS country; but not in the US nor in its war-share leaders UK or France.

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