Here is a new program to reorganize the United States economy.
The United States Net Deficit Position at the end of last year stood at 2.442 trillion dollars. At the end of World War II the United States constituted over half the world GDP industrial production and was the world's greatest creditor. But as Henry Ford warned, if you place this country in the hands of the New York City Wall Street financiers, you will end up destroying every industry in the country. Therefore, it was preposterous in putting the source of the problem, Henry Paulson, as the architect for the reorganization of the United States economy after the collapse of John Fuld's Lehman Brothers, the equivalent of the collapse of the Kredit Anstaldt of Baron Alfonse von Rothschild. You almost had the equivalent of Germany in that after the Kredit Anstaldt went down in Vienna in 1931, the Jakob Goldschmidt Danat Bank fell bringing down the German banking system. Danat was an aggressive and speculative institution rather parallel to Bear Stearns.
The destruction of the industrial base of the United States, when it lost its electronics in the 1950s and 1960s, was based on predatory pricing from Japan where high profits in Japan subsidized below cost pricing in the United States. The Supreme Court of the United States in the Matsushita Antitrust Action, under direction from Wall Street, authorized the destruction of the entire United States television manufacturing industry in one fell swoop to the jubilation of Wall Street who were investing in the new industries in Japan. These financiers are the true sovereigns of this nation and their so-called one world. The law or constitution has never meant anything to this Supreme Court whether it was the law protecting the national interest of the United States or the laws protecting morality--which is why the Godfather movies were so popular as there is no justice in the United States court system, as they were part and parcel owned by Wall Street, that ferment of decomposition of the United States and the world. Wall Street made a killing on the destruction of the television industry. But that was not enough for the Japanese or Wall Street. The Japanese cheap cars in the early 1950s were no match for the United States. But by fifty years of currency subsidization where they bought dollars to subsidize their exports they managed to destroy the entire American automobile industry. And while General Motors writhes in agony in their last throes of life, the Congress blames the victim for its own destruction.
And here, then, is where that entire net deficit position lies. In the nearly 2.5 trillion net deficit position you can find over in Japan and China over 2.5 trillion in accumulated current account surpluses as proof of their rigging of their currencies to destroy the United States industries. See the exchanges with Patrick Buchanan attached in attachment one.
But there is more to this than Japan's and China's blatant economic warfare against the United States. It is the utilization of fiat credit as a substitution for Spanish gold that has engineered this industrial ruin for the United States. The discovery of new world gold enabled the great military of Spain to be financed by that gold rather than their own industrial production as they found it cheaper to have others make the munitions and equipment that they needed. So the United States finds itself able to buy with fiat credit as a substitute for gold whatever they need while the industrial strength of the Chinese and Japanese grows, and that of the United States declines. At some point when these enemies grow large enough and do not need us, they will dump us as Britain dumped Spain into the dustbin of history. It wouldn't matter that their United States dollars are worthless as they will have the power of production and the most advanced technologies. And that industrial power will thrust them up to superpowers while the United States collapses as Spain before it, and as Great Britain in the 1930 to 1955 period when it became eclipsed as a World Power. Did it matter to the bankers in the City of London that they had stabbed their country in the back by building up the United States? They moved as rats their operations to New York City for their next victim, the United States of America.
The parasitic nature of this banking power was seen in the development of derivative trading banking and hedge funds that owned over 40% of the derivative positions that reached over 500 trillion dollars. This produced nothing for this nation but an expansion of debt to Wall Street from the banks for unproductive purposes. To show the exposure of some of the banks, see attachment two. While Lehman burst apart in their derivative exposure using 1 to 25 leverage, it is absolutely frightening to look at these bank exposures that even Warren Buffett cannot figure out much less the much less talented rocket scientists at the banks. Banks are essentially agents of the central bank with the right, as a sovereign, to create fiat credit. These two institutions, the Federal Reserve and the banks, though private institutions, have the right to create credit which is a sovereign right--banks through fractionalizing their reserves, and any talk of free market banking is absurd in that they essentially have responsibilities to the nation when they use the rights the nation has granted them in the participation of the monopoly of credit creation. This is a sovereign right and they cannot have it without regulation unless the nation has decided to make the banks the sovereign which they, the banks, in their free market pretensions, assert. And in all truth they have been the sovereign running Washington and the courts for the last two centuries after they got control of the banking system. There was no Andrew Jackson to stop them in the twentieth century as Andrew did in the early nineteenth century. And look around at what we have now: universal ruin.
There was never enough money for these folks and that is why we see the hedge funds financed by the banks risked billions and trillions while the poor folk on Main Street face today ruin.
Now, the way out of this mess requires a number of steps outlined in attachment three, which is the letter to Bernanke. But most of all is the ending of predation by manipulating currencies, and the ending of the manipulative use of derivatives as outlined in attachments four and five. And the reflation of the real estate market and productive businesses. That is the plan.
In the letter to Bernanke we recommended that the mortgage rates be lowered to reflate the residential real estate market. See attachments six and seven. Mr. Ross rightly cites its importance but we find mortgage funding pushing on a string. The latter is a grave problem and must be addressed by lowering rates significantly more and mandating the banks make these refinancing and mortgage loans under relaxed standards. If they do not, they should be nationalized. In addition, banks should be mandated to relax standards in the extreme to reactive the Baltic index shipping providing the necessary letters of credit, and also all productive investment. Loans for derivatives should be curtailed and hedge funds should be wound down and regulated against insane exposures as Long Term Capital Management. What they did was use bank credit meant for productive investment for zero sum speculation that produced nothing for the country. What gave them the right to risk this nation?
The new administration is just another group of internationalists who gave us these problems in the first place, and if the international order cannot be restored in a fair way, then the United States must follow the Schacht reorganization on a national basis, and leave the predator nations to prey on themselves while we rebuild our destroyed industries. And as far as the Fulds are concerned, we understand he wants to come back to Wall Street, but far better would he be to be sent to a work camp using bricks to build buildings so that his existence might be useful to this nation that gave him so much opportunity and so much opportunity ill used. See the correspondence with George Champion, former head of Chase when it was the largest bank in the world, and Robert Rubin on the trade deficit in attachments eight and nine.
With best regards.
David
Attachments:
Patrick Buchanan Exchange on IMF
Role of Cash Settlements in 1987 Panic
Mortgage Funding Pushing On A String
Exchange with Secretary of the Treasury Robert Rubin