Currency Dreams of the Elite
By Staff News & Analysis - November 08, 2010

Asia-Pacific finance ministers agree to deflect currency wars … Finance ministers from the Asia-Pacific region agreed Saturday to avoid using their currencies as trade weapons and embrace steps to shrink global trade gaps, joining the swelling chorus of world leaders calling for deeper co-operation to safeguard global growth. The two-day gathering of finance chiefs from the 21-member Asia-Pacific Economic Co-operation, or APEC, forum served as a prelude before heads of state converge for twin summits next week in Asia where the agenda will be heavy on economic matters. APEC members will boost multilateral co-operation and "pursue the full range of policies conducive to reducing excessive imbalances and maintaining current account imbalances at sustainable levels," the finance ministers said in a joint statement. They also vowed to move toward "more market-determined exchange rate systems that reflect underlying economic fundamentals" and to refrain from competitive devaluation of currencies. Leaders from the Group of 20 major economies — including President Barack Obama, Chinese President Hu Jintao and Japanese Prime Minister Naoto Kan — will meet in Seoul, South Korea, next Thursday and Friday. About half will then travel to Yokohama, Japan, for the APEC leaders' summit starting Nov. 13. – Canadian Press

Dominant Social Theme: It will be OK. World leaders agree on what to do.

Free-Market Analysis: We return to what is obviously a crux issue for what we call (with increasing irony) Western civilization. It could be seen as fairly simple. The Western power elite is perhaps reaching a turning point in world affairs. For at least a century in our humble view, the Anglo-American axis has conspired to tear down, militarize and otherwise destroy Western civ as a functional entity with Jeffersonian principles derived from the Renaissance and, before then, the Greeks. But the difficulty the power elite is currently faced with is that it has nothing readily available as a substitute.

How do we know this? We watch the great game playing out in the real world. Western economies are in trouble and Western elites are evidently and obviously concerned by it. It is one thing to plan for the collapse of civilization (and its aftermath) but it is another thing to live through it, especially with your every move being discussed around the world on the Internet. Articles like the one excerpted above tell a tale of reasonableness and a willingness to work together, but we are not so sure the center will hold in this regard. In this article we will re-examine how the top-level discussion continues to play out.

We are not just trying to "guess." We make what analyses we can based on a paradigm that we have espoused for about a decade since it occurred to us – and then of course more recently here at the Daily Bell. The idea is that Internet is causing great changes to the way the world works. Seen this way, the 21st century's main narrative (from the standpoint of the human race's sociopolitical destiny and living conditions) will be decided by the clash between new communication technology and the aspirations of a tiny clique of banking families to bring their plot to rule the world (in a sense) to its conclusion.

It is difficult in our opinion to acquire a world-view (paradigm) that yields even semi-predictable results. We have found by applying our point of view to real life that we can explain (or attempt to explain) some of the trends now taking place. Additionally, the power elite has worked via fear-based promotions in the past 100 years. These dominant and sub-dominant social themes infect the entire society and are propagated by various academic and media cliques. Eventually, legislation is the result, and thus the larger mechanism may be seen as mercantilism – the use of government power for private gain.

This has served the power elite extraordinarily well. Central banking, global warming, the war on terror, peak oil and other scarcity-based memes are all in circulation currently and some are still fairly effective. Nonetheless, is it can certainly be argued that the Internet itself has affected the credibility of many of these memes. Global warming is in tatters as a credible promotion; central banking itself is increasingly in disrepute; peak oil is not much referred to in even in the mainstream press anymore; the war on terror has received tremendous pushback throughout Europe, Britain and, even, increasingly, America. We could go on and on. The Internet, and its truth-telling, is depriving the power elite of its main organizational tool. What is also telling is that the elite in our view has NO logical or effective response.

How do we know this? The elite is forging ahead with these memes (and building authoritarian legalities around them) as if they were still effective. This is some sort of wish-fulfillment or fantasy in our view. The Anglo-American elite has spent trillions of dollars creating and propagating these memes. Secrecy was a most important part of it. The major media was not to write about the reality of how the world (really) worked. Those involved were never to breathe a word of it either.

So how then does it feel when hundreds of bloggers descend on Bilderberger conferences – so secretive that they were never previously mentioned in the press? How does it feel when articles, biographies and news reports in the thousands – millions – focus on the evolution of the power elite and its illuminati promotions in agonizing detail? How does it feel when each movement and strategy (once top secret) is entirely dissected?

We can tell by the response. The elite is IGNORING the changes that have taken place. There is no answer except the threat of further repression. And yet, we ask … did repression halt the Renaissance or retard the evolution of the Reformation or the Enlightenment, etc? There is evidence, in fact, that the elite of the day took ADVANTAGE of the intellectual ferment of the time to, say, encourage the Reformation (taking aim at the Catholic church) – but even here we wonder how effective the elite was and whether at some point it did not lose control. Certainly, they did not have influence initially in the New World and until the Civil War lacked promotional control from our point of view.

The elite tried to license books after the advent of the Gutenberg press as we understand it. Then copyright was introduced as a means of control. But these measures and others did not have an appreciable impact in our view because – as we have pointed out many times – human beings have a tendency to use tools the maximum of available performance. It is possibly an instinct, a genetic imperative. Over and over we see adolescents (not coincidentally post-pubescent males) becoming adept with computers and soon testing limits that many who are much older cannot rival.

It would take a great deal to shut down such activity. One would basically have to rewind the Western industrial revolution. But more than this, the repression would have to be worldwide not merely in the West. Genetic imperatives apply to biology not culture. What the Internet is creating, therefore (in our view) is a kind of continuing 21st century Renaissance or New Elightenment. You may not agree with us, dear reader, but we continued to believe this perspective has some level of credibility. In fact, we have rehearsed these arguments because we have long noticed there are very few sites on the Internet (if any) propounding similar arguments in a regular fashion. (Admittedly it is in aggregate an idiosyncratic perspective.)

It doesn't strike us that the elite has everything under control at the moment. The EU is tottering and it seems the elite is doing everything it can to salvage it. In America, the political environment is chaotic and the Federal Reserve is under attack from numerous quarters. As far as QE2 goes, we propose another solutions: Bernanke is providing as much stimulus as he can WHILE he can. Perhaps Bernanke is under the impression that his freedom to act regarding monetary policy is going to come under even more severe attack, and that he may not be able to make such "big moves" so easily in the future.

It is not an easy thing to sort through. Inflation verus deflation. An IMF bancor versus the collapse of a dollar reserve (a collapse we remain reluctant to predict in the near term). What we do know – or believe anyway – is that the paradigm we have proposed regarding a confrontation between Internet truth-telling and elite global ambitions remains at the center of world events. The elite can ignore the unraveling of their themes, but they do so at their own peril. Simply moving ahead with implementation of more and more authoritarian construct without generating the appropriate belief structures is an illogical and even panicky way to operate.

The G20 is meeting again late next week in Korea and this will be another critical test of the comity that the Anglo-American elite apparently seeks regarding currencies. If the Chinese can be brought fully on board then one would expect the IMF would be increasingly aggressive about brokering a kind of evolving, one-world currency. If the Chinese are not, in fact, on board, then the elite's momentum on this head would be seen to have halted or at least slowed.

This is certainly a naive way of looking at how the elite functions, for there are wheels in motion at fundamental levels that may go back decades or centuries from what we can tell. But nonetheless, at some point, the Anglo-American axis needs some sort of viable arrangment or announcement to move forward with what is obviously and evidently its stated goal: a closer global union. At some point the Chinese and the BRIC, generally, have to come on board in a public and obvious way.

World Bank president Robert Zoellick has now created quite a stir by writing in the Financial Times that leading economies should consider readopting a modified global gold standard to guide currency movement. "He said a 'Bretton Woods II' system of floating currencies is needed to replace the Bretton Woods fixed-exchange rate regime that broke down in the early 1970s." (Reuters) We have been predicting for two years now that the powers-that-be might attempt this sort of revaluation (though we are surprised by how fast events are unfolding). At the same time, we would much prefer that the current unraveling leads to a PRIVATE gold and silver standard and free banking. We are not enthusiastic (who would be?) about another power-elite powwow and another manufactured money system.

One can always postulate that the economic crisis is going exactly as planned and that what we are seeing among world leaders, especially Western leaders, is merely a charade. The move toward a closer international union is "a done deal" from this perspective. But even as skilled meme watchers we are not sure we buy into this, or certainly not yet. There has been too much panic in the ranks of the elite from our point of view, a level of genuine concern that we have detected (rightly or wrongly).

We return to the perspective that the Internet itself has bollixed up the works. The Western elites have been forced to move more quickly than they intended to, or at least have acted in a way that has been more imperious and transparent than they would have liked. And so we watch for obvious signs. Is the elite more confident (in aggregate) than it has let on thus far? is there a genuine willingness to share power with a China that only centuries ago was prostrate and addicted as a result the British Crown's opium dealings? And India and Brazil as well?

After Thoughts

We detect thus far in China a genuine reluctance to whatever the Anglo-American elite is offering. Maybe it is simply posturing; but if it is not, then there are implications in our view across the board – in monetary, political and even military terms. Lack of an arrangement in a rapidly evolving and evermore chaotic global currency environment would further threaten the EU, the euro and, of course, the dollar. Most extraordinarily, it would pose a danger to the grip that the Anglo-American axis has had on the world's powers for the past 50 years. This would be ironic as the axis strains to complete its dream of further consolidation, only to see it move further away from its grasp.

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