Global financial collapse is just around the corner.

Within recent times, global productivity gains have been achieved by shifting production to Asian countries, particularly China. At its height, China's annual economic growth reached 14% in 2007 [1].

China's remarkable growth was driven by global demand for consumer products while global expansion was fueled by China's increased productivity. China has quickly come to recognize that this tightly linked synergy has a downside. It is simply not sustainable. Shifting real productivity from 1st world countries to emerging economies does nothing for consumer countries. US trade deficit has cost the US labor force 2.7 million jobs from 2001 to 2011 [2].

Central Banks in developed countries are trying desperately to keep their individual economies from sinking by pumping huge amounts of money into the system. The US Federal Reserve has committed US$2 trillion through Quantitative Easing.  The Bank of Japan has pumped US$1.4 trillion while the Bank of England has added US$560 billion to the economy. [3]

Where is all of this money going? Why is the global economy still staggering?

All the euphoria is in the global financial markets. Stock market indices in the US have hit record highs while real productivity and wages are down. Governments continue to slash and burn social programs, healthcare and environmental protection. Unemployment reaches record levels and global poverty continues to rise. All the quantitative easing in the world goes to benefit the banks and their share holders and the rich who control the government. Unionized labor and the working middle class has been decimated and the gap between the rich and poor continues to widen.

Financial markets and high flying speculation are being buoyed by quantitative easing. That is where all the money is going.

How much longer can this continue?

Two things are looming on the horizon. The global economy will continue to stagnate while governments incorrectly attempt to revive the patient with austerity measures. How long will it take before the working class gets pushed to the limits and would no longer put up with the injustice?

[1] http://www.china.org.cn/government/NPC_CPPCC_2009/2009-03/13/content_17440359.htm
[2] http://www.epi.org/news/growing-trade-deficit-china-cost-2-7-million/
[3] http://en.wikipedia.org/wiki/Quantitative_easing

Lending money at interest is a sin and a crime and must be abolished

Every textbook of economics begins with the definition of money as being the following:

1. medium
2. measure
3. store

The essential function of money is to facilitate exchange of goods and services. This is the classic textbook first function of money.

The second function of money is that it is a measure of value, which if examined closely, is somewhat dubious.

Every prudent worker/producer wishes to store away a portion of his/her earnings as savings to be relied on at a future time. Money as a store of value is the third function. Whether or not savings represent any real store of value will be discussed later in this essay.

When earnings are stored as savings this has the potential to reduce the money supply. Currency becomes scarce and its value increases. The same amount of currency has greater purchasing power and can be exchanged for a greater amount of goods and services. This is deflation, the opposite of inflation. The simple and obvious solution to this is for the government or banking institution to inject more money into the system.

Since 1974, the Government of Canada has abdicated its responsibility to the Canadian public of putting money into existence. Instead, it has relinquished this authority to private commercial institutions that now create money through the issuance of loans under the fractional reserve banking system.

COURT CASE UPDATE Two individual Canadians and COMER are confronting the global financial powers in the Canadian federal court. The motion before the Federal Court of Canada was heard on December 5, 2012, in Toronto. Press Release (pdf) Amended Court Filing (pdf) Proceedings, December 5, 2012 (pdf)

 

If the Government of Canada were to restore its authority and responsibility, it could direct the Bank of Canada to issue money at zero interest to municipal/provincial/federal governments for public benefits such as education, health care, social services and industrial infrastructure.

Instead, in the current monetary system, all money is created as debt on the backs of the consumer and taxpayer. Interest on loans becomes a debt to future workers and society. Furthermore, the working class is taxed in order to pay interest on public loans which is essentially the working class being indentured to the corporate state.

Consider the worker who attempts to save a portion of her income. If this money is locked away in a savings account, it reduces the money supply and creates a scarcity of money. The lending institution such as a commercial bank can put this money back into circulation by lending it out to private and public borrowers. When the worker retires she may require to make a partial withdrawal of her savings. Since not all account holders need to withdraw all of their savings at the same time, the bank can safely gamble on having only a fraction of the deposits available in cash. This is called the fractional reserve requirement of the banking system. In Canada there is zero requirement. However, a prudent banker would be well advised to maintain a minimum of 10% of outstanding loans available as cash on deposit. This is the basic principle of the fractional reserve requirement.

Let us examine this in simple terms. Imagine that initially the Bank of Canada prints money and puts into circulation $1billion. Imagine that as this money is used to trade goods and services, savers deposit 25% of this total, that is, $250million into savings accounts in various banking institutions. With a 10% reserve requirement, the banks all together can create loans totaling an additional $2.5billion. This is money created out of thin air as credit to the borrowers’ accounts.

Over time, the principal amount on the loan is repaid and the balances on individual loan accounts are reduced to zero. The problem is the interest charged by the banks on the loans. Where does the money come from to pay the interest? The interest is repaid by more loans being issued. The essential point here is that all money created in our present banking system is created as debt which will never be repaid. Our present monetary system is a system of mirrors, a pyramid scheme and a ponzi scheme. This ought to be considered criminal activity and ought be abolished.

The call for public banking

I have presented an outline of how money is created in two different systems. In the public banking system, the government of Canada through the Bank of Canada can restore its authority to create money at zero interest to be used to finance public service, infrastructure and social well-being.

In the current banking system, money is created as loans which is used to pay the interest charges which accumulate in the pockets and accounts of the banks and its shareholders. In this system, money is created out of nothing as a computerized data entry which has to keep on growing in perpetuity otherwise the system collapses. This has become a reality and only now are segments of the world population waking up to this fact.

Where is the real wealth?

At the beginning of this essay I hinted that money as a store of value is questionable. Any money stashed away as savings is supposed to represent wealth or surplus. Money gives the holder an entitlement to goods and services. In reality, money represents a burden on future workers and power to the holder over indentured labourers.

Money created as payment for interest flows back to the bankers and financial elite, the holders of power in government, business and society. When governments, businesses, individuals and the public in general assume a loan, interest charges enriches the banks. We might as well just print money and hand it over to the bankers.

Money created by publicly own banks go directly to the workers and producers of society to facilitate exchange of goods and services for the benefit of society as a whole. There is no need for the transfer of money in the form of interest charges to the banking elite.

If we abolish the practice of lending at interest we would be taking control from the banking establishment and giving it to the working class of society, the true producers of real wealth.

What do we do when the shit hits the fan?

If you think the fiscal crisis or the US National Debt of 16 trillion dollars is something to worry about then you ain't seen nothing yet.

We have a much bigger crisis coming. No. A catastrophe of epic proportions. We will witness a complete meltdown of society as a result of global warming,  financial collapse and social chaos, not to mention the geopolitical quest for world dominance.

Our present lifestyle is killing us all.

Governments, corporations, society and individuals are all to blame for this.

We are the enemy.

By 2050, we will experience extreme human pain and suffering like we've never witnessed before.

By 2100, world population will collapse to under 2 billion.

And yet no one is doing anything seriously about it. We are in denial mode. Severe short sighted thinking.

We worry about deficit, money, jobs and oil.

Wake up folks and kiss your children goodbye.

What can we do about this?
There are steps we can all take to mitigate this, spread the burden and ease the pain.
 

Here are positive things we can all do:

1. Know whom you can depend on when the going gets tough.
2. Know where your food comes from and support your local farmer.
3. Watch where and how you spend your money and buy local.
4. Park your car and walk.
5. Create human scale communities.
6. Build resilience within your community.
7. Join or start a Transition Initiative.

"Limits to Growth" was published in 1970. We have had more that 40 years to reverse the trend towards self destruction. We did nothing and wasted 40 years.

We have passed the point of no return. So what are you planning to do for the next 40 years?

Strikes continue against austerity measures

Strikes by the workers continue to spread across the EU, in Italy, Greece, Spain, Portugal, Belgium, France, and UK, in protest against harsh austerity measures being imposed by the governing troika, the European Union (EU), European Central Bank (ECB) and the International Monetary Fund (IMF).

Striking is one of the last actions remaining for the working class to take in order to bring social justice.

In reality, the working force can produce enough for every citizen of every country to share, feed and care for themselves and their families. The fruits of their labor are co-opted by the corporations, banks, financiers, investors and money speculators who siphon off profits and stash the money away in off-shore tax-free havens. 

And we wonder why there is not enough money to pay a decent wage?

There is one battle left to be fought – collapse of the global financial system that will wipe out all of the accumulated wealth of the ruling class.

The battle wages on.

Corporations Rule the World

The entire world is headed into three simultaneous monumental crises: financial, environmental and social. The environmental destruction, social unrest and financial collapse are all precipitated by corporate stranglehold on our governments, institutions and global monetary policies.

Guns, laws and money are all instruments of social organization and control. Whoever controls any or all will rule the world. Right now, the military-industrial-congressional-complex (MICC) has it all.

In Chris Hedges latest article, “Colonized by Corporations” (truthdig.com - May 14, 2012)http://www.truthdig.com/report/item/colonized_by_corporations_20120514 he writes,

“We have been, like nations on the periphery of empire, colonized. We are controlled by tiny corporate entities that have no loyalty to the nation and indeed in the language of traditional patriotism are traitors. They strip us of our resources, keep us politically passive and enrich themselves at our expense.”

 “Laws are written to legalize corporate plunder and abuse, as well as criminalize dissent.”

“A change of power does not require the election of a Mitt Romney or a Barack Obama or a Democratic majority in Congress, or an attempt to reform the system or electing progressive candidates, but rather a destruction of corporate domination of the political process... It requires the establishment of new mechanisms of governance to distribute wealth and protect resources, to curtail corporate power, to cope with the destruction of the ecosystem and to foster the common good.”

Our only hope to stop the MICC domination is by revolution of the masses. The Occupy protest we witness now is just a dress rehearsal of what is yet to come. We have already seen the start of this revolutionary process in the “Arab Spring” in Middle Eastern nations. We will see this eventually come to Greece, Spain, Portugal and Italy in the coming months. As the walls of the financial-corporate-ruling class structures come tumbling down, this will spread to the rest of Europe and America.

“A revolution has been unleashed across the globe. This revolution, a popular repudiation of the old order, is where we should direct all our energy and commitment. If we do not topple the corporate elites the ecosystem will be destroyed and massive numbers of human beings along with it.”  

"Insanity is doing the same thing over and over again and expecting different results." - Albert Einstein

“Go ahead and vote this November. But don’t waste any more time or energy on the presidential election than it takes to get to your polling station and pull a lever for a third-party candidate—just enough to register your obstruction and defiance—and then get back out onto the street. That is where the question of real power is being decided.”

Plan A vs Plan B

Columnist Evan Davis on BBC News posed the dilemma "Plan A vs Plan B" to economists Jonathan Portes and Roger Bootle. Is austerity or spending stimulus likely to pull us through the financial mess we are in?

Economics explained: Plan A vs Plan B

There is a joke that goes: If you took all the economists in the world and laid them on the ground head to foot they would still not come to an agreement. It is not a question of Plan A vs Plan B but a matter of understanding the creation and purpose of fiat money.

There are many others who are spreading the word that our current economic system is simply not sustainable. It his high time that we consider steady-state economics. Herman Daly, Paul Ekins, Thomas H. Greco, Michael Hudson, Tim Jackson, David Korten, Mike Nickerson, Jonathon Porritt, James Gustave Speth, Peter Victor, are some of these writers, to name just a few.

We know that people can and do trade without the need for money. We also acknowledge that barter is an inconvenient and inefficient mode of exchange. Money has become the life-blood of our modern economic world. Along with money comes the desire and need to save for retirement, to see us through the final years of our lives when we are no longer fit to labour. Personal saving is no different from business profit. The essential objective of every business enterprise is to return a profit. But saving or profit is real and tangible only if it represents surplus. This is one of the essential roles of money that every student of economics is told. Money is a store of value. In our modern world, fiat money is not backed by any underlying surplus. Instead, money is an entitlement to those who hold it. It is a debt obligation on the future worker. The quest for savings, profit, return on investment, or interest is a gigantic pyramid scheme that is dependent on a growing labour force, consumers, population, liquidation and exploitation of the natural resources.

In reality, neither austerity programs nor quantitative easing will solve the financial crisis. Austerity programs destroy the very productivity of the workforce that is required to create any resemblance of surplus. Monetary expansion only continues to build the pyramid scheme that maintains the status quo for the ruling moneyed elite.

Money, like laws and guns are all instruments of social organization and control. And with all three, those who wield the power will corrupt and distort it for their own self interests.

In conclusion, it is not a choice between Plan A and Plan B, but a matter of understanding money, growth and profit. Money is a human fabrication and a false god. Growth is not sustainable on a finite planet. Profit without surplus is all an illusion.

Pipe Dream to Nowhere

The good news for now is that on January 18, 2012, US President Barack Obama rejected the application from TransCanada Pipelines to build the Keystone XL pipeline from Alberta to Texas. But now is not the time to celebrate. There is still another battle being fought right here at home in Canada, the Enbridge Northern Gateway Pipeline planned to stretch across Alberta and British Columbia to the Pacific coast.

On January 9, 2012, federal Minister of Natural Resources, Joe Oliver wrote a letter to the Globe and Mail.

On January 18, 2012, Joe Oliver spoke on CBC Radio, The Current, with host Anna Maria Tremonti defending his government's position on the Northern Gateway Pipeline.

What Natural Resources Minister Joe Oliver had to say reeks with the stench of dirty oil for big profits for Big Oil companies.

"Unfortunately, there are environmental and other radical groups that would seek to block this opportunity to diversify our trade. Their goal is to stop any major project no matter what the cost to Canadian families in lost jobs and economic growth."

"These groups threaten to hijack our regulatory system to achieve their radical ideological agenda. They seek to exploit any loophole they can find, stacking public hearings with bodies to ensure that delays kill good projects. They use funding from foreign special interest groups to undermine Canada’s national economic interest."

Joe Oliver states that "radical" environmental groups are delaying the review process.

In the minds of Joe Oliver, Stephen Harper and his government, the Northern Gate Pipeline is a "done deal". The review process is a hindrance to corporate progress. Why have a review process for the public to tell the government it is dead wrong? The review process is there as an opportunity for both sides to voice their arguments. It is the Harper government that wants to curtail the due process in order to accelerate its own agenda.

"In many cases, these projects would create thousands upon thousands of jobs for Canadians, yet they can take years to get started due to the slow, complex and cumbersome federal Government approval process."

What jobs? All of these so called jobs are temporary, transient jobs. Once the pipeline is built, these jobs will be gone. The jobs and legacy that will be left behind will be the ones to clean up the ongoing pollution, contaminated water system, environmental damage and escalating damage to human health and well-being.

"For our government, the choice is clear: we need to diversify our markets in order to create jobs and economic growth for Canadians across this country. We must expand our trade with the fast growing Asian economies."

Nonsense. You cannot fool the public all the time. The Northern Gateway Pipeline and the entire Alberta Tar-sands project is all about big profits for Big Oil Companies. We give away non-renewable resources to Asian countries for what?. We supply Chinese manufacturing industry with cheap energy in exchange for cheap plastic goods that end up in landfill after less than a year of usage. We are not creating jobs in Canada. No, we are exporting jobs to China.

The Keystone XL Pipeline is the fuse to the biggest carbon bomb on the planet. The Northern Gateway Pipeline is the Harper government's backup fuse.

We have already released a significant amount of carbon into the atmosphere from the Saudi Arabian oil deposits. If we release the carbon from the Alberta Tar-sands you might as well kiss your kids goodbye. The best place for fossil fuel is to leave it in the ground.

Dr. Jim Hansen, head of the Goddard Institute for Space Studies at NASA has said, "Einstein said that to think and not act is a crime."

Now is the time for all of us to act and stop the Northern Gateway Pipeline.

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