A New Cycle

With the upcoming election and all of the confusing and troublesome events in the financial markets and economy, I decided to release some of the results of research I have done over many years. I am releasing this so that Americans can better understand what is happening and hopefully find it useful for their own personal decisions. I am also releasing it so that people of other countries can also understand what is happening and better understand the bizarre behavior of the United States these last years. I know that many may find it hard to accept but I am writing it for those who have eyes and ears to see the truth of it and make good use of it. I am going to try and make this as simple as possible to reach the widest audience. But you can only simplify this only so much without losing much. So let us proceed even though it is a difficult task.

This work is a synthesis of the work of many before me. Many of the best ideas came from others. I do not wish to claim others work as my own. However, this is not meant to be a book or scholarly paper. I am just interested in getting hopefully some useful information out at this juncture in time. I also do not wish to get into arguments over minutiae. Therefore there are almost few references.

A pdf version of this document can be downloaded from this link: newcycle.pdf

I am trying to reach sane people among the public and within the institutions of national government around the globe. It is ambitious to be sure but who knows what impact something can have if it is introduced at the proper moment.

What we are seeing unfolding is the end of a particular civilization began at the time of the Renaissance. That is the time frame we are dealing with. Over 500 years. That is why we are seeing a systemic breakdown of the western world’s financial system and not simply a downturn in the business cycle. And this is bigger than what happened in 1929. This can be easily demonstrated by a number of market metrics. These metrics are covered well by Crosscurrents:

Crosscurrents January 2010

Consider the sheer size of the pyramid of financial derivatives. It is also the fact that back in the 1930’s it was largely a matter of restarting existing businesses and factories whereas today this physical economy is almost absent from the Atlantic world.

In the course of greater movement of overall Western civilization there have been a number of smaller movements of civilizations and each occurred in succession; Greece, Roman, Early Christian, Monastic Christian, Medieval Christian, and the Renaissance Civilization. Each of these overlaps the others in time so that the later part of Greek overlaps Early Roman. The Renaissance civilization began within the medieval Christian civilization. They may be minor within the larger wave of western civilization but they are still in the range of 500 and often more years

What do I mean by civilization? A civilization is what one would consider as a true cosmos. The modern meaning of cosmos has come to mean Universe. I refer to the more ancient Greek meaning of the term. But even the modern one will suffice because a civilization is a kind of universe unto itself. It comprises a long wave of human development and culture. And a cosmos is alive in the sense that evolves according to natural laws of the universe. As such, each civilization has essential characteristic unique to itself and that these remain throughout its existence. So the sequence of civilizations I have laid out is really about the birth and rebirth of cultures.

Looked at from that point of view we can delineate the civilizations by the organizing basis of the cultures. So for example while the Greeks were organized around a philosophy, the transmission of ideas was organized around drama and music and its greatest monuments were temples and theaters. Roman Civilization was quite different. Its means of expansion was not philosophy but the legions. Its monuments were the roads and aqueducts and its transmission of ideas was through Roman law. The Renaissance civilization is different as well. Its organizing principle is banking and finance, its transmission of ideas is through books and its monuments are the universities.

So each of these have each occurred in succession and conceived and launched by Greeks, Romans, French, Italians, etc. And they each have their own attributes and qualities distinct from its predecessor.

And there is by the way always a founder of a civilization. All ideas begin as a thought and that thought wave always begins in the mind of a single man or woman. Not a committee. Although, it is a great help to anyone’s mental fertility to have good collaborators. So for example all inventions begin in the mind of one man. And all parts of an invention do as well. Even if the parts come from different men. It is also why socialism never works or can work. It is always some clever people who create and make a go of something.

The founder for the ancient Greeks was possibly Solon of Athens and for the Renaissance civilization a man named Cosimo de Medici. He was the leading citizen in the city of Florence Italy who created the first real international bank in the modern sense. He also was a great patron of the arts, books, and universities. One can almost pinpoint the beginning of this civilization as this time period is captured in a painting. It is called the procession of the magi. It is a fresco painted on the walls of the Medici house. It Chronicles a visit by the emperor John Palaeologus from Constantinople in his attempt to elicit help from Italians against the Turks. Anyone who studies this period knows that the renaissance began in this time and space. This movement began in Florence at this time after a long period of gestation.

Link:

La Cappella dei Magi, Palazzo Medici, Florence



One of the most important things to understand is that essence of a culture at the end is the same as at the beginning, albeit in a corrupted form. One of the essential characteristics of the renaissance civilization is it global scope. Right from the beginning international banking was global. The medieval world it was born into was one of mostly city states and kingdoms. In those times there was not much in the way of the concept of nation states like there is today. Some people had begun to develop the idea of a nation state but it had only been partially executed within kingdoms or in miniature in the form of a few free republics. That was to come much later. And today many people think in terms of political organization in terms of a nation and there is a good reason for that which I will get into later.

Now like all civilizations/cosmos this has evolved over the centuries. Its geographical center has shifted westward. When it began, the western world was a Mediterranean based economy. First it moved westward into and over to the Netherlands and the Low Countries. This was a long process of movement from Italy. Finally with the “Glorious Revolution” of 1688 it started to shift to London. This shift was finalized and consolidated during the seven years war and the latest version has been run out of the City of London since 1763. Right up to the present day.

And there have been several movements within the Banking renaissance. But the latest up to modern times has been the one consolidated under London in the 1763 period. There is much available research available on these movements and for those inclined it can be easily found to be the case.

With the new world discoveries starting with the voyages of exploration by the Portuguese this geographically became what one would call the “Atlantic World”. This civilization had created the greatest return on real capital in the history of the world. And its growth can only be described as spectacular. Like its essence in the beginning it was a global enterprise right from the start. Look at the trade routes and geographic expansion. At its peak of vitality over a century ago it physically ruled the whole world through a series of colonies and in particular through the British Empire. It was the age of the “conquest of geographical space”.

Up to the present time that civilization has still existed. Although in a transformed physical form it still retained its essential characteristics. The overt British Empire may no longer exist but the covert one still has ruled out of the city of London. So you might in some respects still call it the British empire but because of its essential global characteristic it is made up of British people but also French, Germans, Dutch, Italians, Japanese, and yes even Americans.

The American Revolution began as a reaction against what happened in 1763. The American colonies were a big project of many Europeans wanting to establish what was best of the greater European civilization on these shores and free of the European Oligarchy. The British victory of 1763 threatened to swallow all of that back up. Independence of a sort was won but Civilizations grow and gain in power and so around the turn of the last century we came increasingly under its domination again. After the assassination of William McKinley it was really lost. Note that this was the time of the reestablishing of the Anglo-American alliance. The founding of the first tax exempt foundations. And soon to be the simultaneous introduction of the federal income tax and the creation of the Federal reserve system. Those two things, more than any other, gave the bankers the keys to controlling the US. And with these two acts now in effect the power of ending our real independence.

As civilizations age a seeming paradox develops. They gain in people and territory, and power but they also lose essential energy and vitality. And they become increasingly corrupt. So that at the end, although essential original characteristics remain, a culture breaks down into a degenerated and corrupt form. Also at a late period in their development a rapid differentiation process happens within its populations and that which was one more uniform become much more diverse within the culture. At the end it is like the Tower of Babel. It is also why nothing effective can be done because there are all of these forces pulling into different directions.

This is what has happened to the Banking/Renaissance civilization. It is old, sclerotic, and totally corrupted. In the last decades it has lived more like an aging rock star addicted to infusions of ever increasing walls of money to keep it alive. It no longer has energy or vitality and has come to operate more as a parasite on the people under its dominion. And like a rock star it is just possible that it died suddenly in the summer of 2007. And what we are seeing are the death throes and convulsions of a civilization. However even if it survives it will no longer provide that energy and vitality that a society and people need to live.

This has been coming on for quite some time. In most peoples recent memory the first convulsion was the 1987 stock market crash. The remedy for that crash was the derivatives market. Then we had the 1997 Asian Crisis, then 1998 LTCM debacle, then the NASDAQ Y2K bubble, then 9-11. And as many have shown 9-11 was as much a financial event with huge sums slipped through the banking system and numerous other financial irregularities. These events were tremors of a coming collapse and a warning that long delayed changes are necessary. Finally we have what has been misnamed the sub prime crisis. It is misnamed because it is fundamentally a fatal crisis of the banking/renaissance civilization. All of the fraudulent debt piled on top of debt is what is breaking down.

Now for some good news. Culture is born from culture. A new civilization in the sequence of civilization has already been around for a long time. It is currently the only thing holding the world up right now. Based on its particular characteristics it can be termed the “Synthetic” [1]civilization. What are its defining characteristics? First you might call it the “Age of the conquest of time”. Its characteristic means of transmission of ideas is photography, movies, television and radio. The iconic image has replaced the written word. In recent times movies are the main means of the transmission of cultural ideas. Its monuments will be electromagnetic apparatus of various kinds. One of its original documents is “A treatise on Electricity and Magnetism” by Clerk Maxwell in 1865. Its organizing political unit is the nation state. And by extension it is all about physical economics. It began around 1860. And you can see in the data the explosion of physical production in everything from agriculture, mining, to all kinds of manufacturing and production.

There is confusion because people think there is only one industrial revolution when in fact there are two. The first came with the Banking/Renaissance civilization. The latest movement of that began with coal and steam power. It began with the Duke of Brigewater delivering cheap coal and marrying up with the invention of steam engines.

By the way each civilization or movement has its own power source. Coal was the power of the move of the banking civilization from the 1763 time period.

History of THE INDUSTRIAL REVOLUTION

Oil is the current source for Synthetic civilization and like coals beginning with the Duke of Brigewater delivering cheap coal from his mines to the docks in Manchester in 1763, oil underwent explosive development in 1859-1860. Here is a link for the origins of the Petroleum industry:

Introduction to Oil History

US Oil production from some of its original oil field discoveries:


What happened in the 1860-1865 time period can be clearly seen to be an inflection point via the NBER time series Macrohistory time series database. One can find other data as well as accounts of that time period.

The National Bureau of Economic Research

NBER Macrohistory Database

Here is a graphical picture of some of the data.










This was not restricted to the United States.




The Synthetic civilization is the long wave underlying the introduction of telegraph, telephones, automobiles, aircraft, computers, internet, nanotechnology, robotics, etc. The number of patents from 1790 to the 1860s was around 60,000. In the next 30 years over 600,000 would be issued.

So while the Banking/ Renaissance civilization is collapsing the Synthetic civilization has already reached quite a high level of development. It is really what is holding up the whole world right now.

In the United States this movement began under the US president Abraham Lincoln. In Mexico Juarez, In Italy Garibaldi and subsequently Bismarck of Germany. All represented the unification of their countries and became mythical figures to their nation’s populations. This was the time of the birth of the modern nation state after a very long period of embryonic development. This was especially true in the United States. And the United State had quite a bit to do with spreading this back into Europe and around the world. One can see this in the explosion of development in the US with railroads, telegraph, telephone, radio and more. It was an across the board process of agro-industrial development. This movement in the US was to peak in energy and vitality with the ending of the Second World War. As anyone who studies this period knows the Second World War years were an amazing period of high technology advancement within the United States.


Now for more bad news. One of the characteristics of the Synthetic civilization is that it raises people up via physical production and conditions of life. The Banking/Renaissance civilization has become increasingly corrupted and the specter of Oligarchy has once again raised its ugly head in the western Atlantic world. And Oligarchy does not like having regular people being raised up. It prefers them to be held down and morally and intellectually corrupted to more easily assert authority over them. It hates real science, high technology and especially the expression of these by injection into everyday life via physical economy.

Since the ending of the Second World War a process of globalization has been carried out on the United States. This was especially so since the period following the Kennedy assassination. With the breaking of the Bretton Woods fixed exchange rate system and the institution of the IMF floating currency rate system this process of destruction went into high gear. Through tariff policy, trade agreements, rabid environmentalism, and outsourcing and off shoring much of the physical economy of the United States has been broken up and sent primarily to East Asia. The things that were off shored are part of a new Civilizations movement. So it did not just disappear. Instead the bulk of what was the Synthetic civilization in the United States has moved to East Asia. And if you look at the trade, economic development and foreign policy of the United States these last decades they are almost the exact opposite of where they were under the Republican Party and Lincoln administration in 1860-1865. But this is not about Democrats vs. Republicans. It is about the Banking/Renaissance civilization vs. Synthetic civilization. And the Banking/Renaissance civilization has had the upper hand in politics in both parties of the United States. And that means New York and London. Institutions like the Tavistock institute and Chatam House in London and the Ford Foundation, Carnegie Endowment, etc in the US. And many tax exempt foundations in the US have been instrumental in this control.

Foundations: Their Power and Influence (Paperback)
by Rene A. Wormser (Author)

Google for the Congressional Reece Commission on tax exempt foundations. For those inclined you can find the commission records in the library of congress.

Video: Norman Dodd

Part1

YouTube - Rare year 1982 video with G. Edward Griffin & Norman Dodds#1

Entire Video

YouTube - Norman Dodd On Tax Exempt Foundations

This state of political affairs is why it has not mattered whether Democrats or Republicans get elected. And it is also why the trade, economic and foreign policies have remained essentially the same no matter which party is in office.

Here is a graph of US exports and imports from 1866-1969. This covers the time period from 1866 to just prior to the destruction of the Bretton Woods System. All Americans know and have experienced what has come afterwards. This is a clear graphic of the management of a physical economy for long term economic development. Unfortunately the political fundamentals for this had been declining for quite some time. And had actually reversed in the aftermath of the Kennedy assassination. And with the deliberate breakup of the Bretton Woods system in 1971 the physical economic system of the US as it had been built up since 1860 was destroyed. Now we have massive deficits and a wrecked physical economy.





What happens is that republicans have run campaigns where the guy comes out and says I am a conservative like you. It is those Democrats. He gets elected and does exactly what he is told to do. The Democrat goes out and says to his constituents I am a liberal just like you. It is those Republicans. He gets elected and does exactly what he is told to do. The financial interests of the Banking/renaissance civilization have controlled both US political parties. They have also mostly controlled the NGOs, big tax exempt foundations and international institutions like the IMF, World Bank, WTO, etc. But the financial interests don’t control everything. Not everyone has his price. Especially now since it appears the payments will be in worthless debt claims. There are still lots of people with good intentions.

American Power at its peak at the end of World War two rested on two Pillars. First, because it was the center of the Synthetic civilization it had, the greatest physical economy in the world. Second, through the Anglo-American Alliance it had the greatest financial power in the world. Synthetic and Banking/Renaissance combined.

But since World War II the great agro-industrial power of the US has been dismantled. And over time much of what one would call part of the Synthetic civilization has been driven out of the United States. We can’t blame China or East Asians. This is a self inflicted wound. Wall Street which has been effectively controlled by British empire/City of London is responsible. Secondly the Banking/Renaissance civilization has become increasingly corrupted and has lost vitality and power. And now for all intents and purposes it is dead. That is why the power of the United States has been collapsing around the world.

Physical values are people, skills, infrastructure, production systems and tools, natural resources, communities and the quality of life of a population. Financial values are often simple dollars and cents. This is also irregardless of how the money was obtained. Often it is a number in a ledger, and often holding of debt over someone as a means of living off of them. It is all about the money. The essence of the Banking/Renaissance civilization is that it values financial values over physical economy. That is why slavery in various forms occupied such an important part of its development. Whereas one of the essential characteristics of the Synthetic civilization is that it favors physical values and economy over the financial ones. Since World War II the Banking/Renaissance civilization has had increasing political dominance. On the other hand in East Asia it has been the Synthetic civilization and its values which have been politically dominant. The net result is that the United States has sacrificed its physical economy for financial values. Whereas the Asians have sacrificed financial values for a physical economy. With the result that we have seen financial values pumped up in the west while the physical economy has been transplanted east. This is visible in the comparison of world physical productive capacity concentration vs. concentration of stock and other financial market capitalization.

This trade has been the real invisible one. Most people are used to doing accounting in strict financial terms. Make a product or service and sell it at a price and make either a profit and loss. On that basis one would say that the US made a lot of money on the China and other Asian trade. But by performing a physical accounting one can tote up enormous and staggering losses. And this has gone on so long that we have reached the point where there is not that much of the physical left to trade off. And now those financial values are breaking down. There is not much there as physical economy to back them up.

This kind of thinking in financial terms is what has done so much damage to the US Auto industry. They cared more about making money and less about making good cars and having advanced and modern production processes to support that. At least that is how they have behaved inside the US. I saw one financial commentator in 2006 say GM should get out of the car business and concentrate on auto loans and Mortgages because they were making so much more money that way! GM may or may not yet survive but if they had done that they would surely be already dead right now in 2008. But this is the kind of thinking that has occurred in this country among so called leading economists and financiers.

What we are witnessing today is a transition of world power from the dying Renaissance/Banking civilization to the younger Synthetic one. We are at the inflection point to this transition. And this means BIG CHANGES ARE COMING ON AND WILL CONTINUE TO COME ON. And although nations, institutions, and individuals can shape their response to them they are not going to be able to stop them. Those who stand in opposition to them will find they have no support and will risk destruction. It is like standing in front of a freight train going 60 mph and thinking you are going to stop it. The prudent thing to do is to get in harmony with these long cycles.

What are some implications for this transition that is occurring?

1)The Synthetic civilization is going to be the driving force for humanity for the coming centuries.

2)Short of a nuclear holocaust we are entering a world of nation states. And not a world of globalized empires.

3)Wars of conquest are going to be enormously costly. And will destroy any nation who tries this route. The age of the conquest of space is OVER. People with pens and briefcases have beaten the US in the securing of Oil and Gas in the Caspian basin and probably even Iraq. Despite trillions spent on war to seize these resources we have seen all efforts turn to powder. The high cost in money and human life has yet to be fully felt in the US economy.

4)It is the physical economy stupid. Not the financial one. Sacrificing the physical economy for the financial one is tantamount to suicide.

5)The American Empire project is over. It will never work. Same with the British Empire. All empires. It takes a civilization to give energy to an empire and there is only a remnant of the Synthetic in the US right now and the Banking/Renaissance one is for all practical purposes dead. Where is the power for empire to come from? Where are the high technology companies? Where are our energy and power systems, public infrastructure, auto manufacturing, and steel? What happened to the US nuclear power industry? Where is our electronics industry? Where are even our farms? It is missing across the board. The US must concentrate its efforts on rebuilding what has been lost.

6)For America what is urgently needed is a return to the original principles of the Republican Party. The party of Lincoln and not the party of Wall Street. And they really are polar opposites.

7)The US economy is going to be quite thin for some time. Look at what remains of our electronics industry. Much production is in East Asia. Most sales are outside the US. Go to their R&D facilities and you will, except for a few old timers, find East Asians. Most of the manufacturing is gone or is falling under foreign domination. What we have left is defense spending with long supply chains deep into East Asia. Also some resource companies and government. The Financial industry is going to dramatically shrink. And a bright spot is natural resource development (if it is allowed) for agriculture, mining and things like timber, oil and gas, etc.

8)The center of the World Economy has shifted to Asia. In terms of physical production, population, skilled labor, etc. This is already the case.

9)Universities are a monument of the Banking/renaissance civilization. Anyone who looks closely at the University system sees just how corrupt and incompetent it has become. Harvard and Yale educated economists. That is a contradiction in terms. Universities are way overpriced for what they offer. A huge crisis is coming to the University system.

The implications of all of this are enormous. Institutions that do not adapt are going to disappear from the face of the earth. Even very large institutions will fail. The old rules of the banking/renaissance civilization have gone on so long that it is like the air we breathe, pervasive but invisible. Those who either cannot or will not change are going to find that it is like someone took away their air supply. A new set of organizing principles, just as pervasive and invisible as the old, are now in action and asserting themselves. We are at a transition period the next few years. And right now we are right at an inflection point. These new principles are what are going to animate the world economy.

These changes are going to affect every individual, institution, government and corporation. A new set of policies are urgently needed for any of those above who desire to succeed and prosper if not outright survive.

To those of you who do not want to change I can only say do you want to eat? If you are in the defense establishment just what will you base budgeting upon. An acute budget crisis is coming for you. Sticking with the banking/renaissance civilization policies are a real organization killer. If you are a liberal and want to fund some pet project just what is going to support you? If you really care about people then only the Synthetic civilization can deliver the goods.

I myself am American. As such I am practical about this. The Banking/Renaissance civilization is dead. It is the past and not the future. I want to hitch my wagon to a rising star. The organizing principles of the synthetic civilization are winners. They will work and will provide the needed support. I say start trying them out. You will find they provide real support.

When viewed from the point of view of civilizations this is clearly a larger problem than 1929. The crisis of 1929 was contained within the banking renaissance civilization. This current crisis is about the end of the banking/renaissance civilization. And it is a severe crisis of the Atlantic world. Sticking with the banking/renaissance civilization is tantamount to suicide.

Let’s look at some specific national policy.

1)One of the characteristics of the Synthetic civilization is nationalism. Like it or not that is a stubborn fact. You can see this clearly in East Asia where it is strongest. We are moving to a world of sovereign nation states. Therefore national development is the correct policy. Each civilization has it advantages and drawbacks and this is a little bit of both. Obviously this can lead to conflict among nations as they compete. But this can be remedied by long term agreements among nations.

2)A new monetary financial order will have to be created. The IMF dollar based system is on the way out. The US no longer has the economic power of one let alone two civilizations behind it. The banking/renaissance is gone and the center of gravity of the Synthetic civilization has shifted to East Asia. There is an urgent need between the US, China, Russia and India to carry this out. London being the center of the banking/renaissance civilization can only act as a spoiler. The new agreements must be based on mutual advantage of all parties or it won’t work. These countries either need to hang together on this or each hang separately. Because rather than conceding power the centers of the Banking/Renaissance civilization may act to try and take things down rather than give up what it can no longer support.

3)Trade policy. Globalization is a dead force. Forget all of those free trade agreements. Implementing them is meaningless at this point. Or just a further form of self inflicted damage. Things like tariff and non tariff barriers are going to go up. Trade is going to increasingly shift towards trade in intellectual property and not physical production. Economics will shift towards physical development of national territories.

4)Military power is going to shift from supporting conquest towards strategic national defense.

5)National economic development. Governments need to return to the internal development of their own nations. Things like the new Trans Alaska/Canada pipeline are right in line with that. Brazil just made a huge offshore find of oil. It is possible that the US has similar offshore fields. Then there are large fields in the Bakken formation in Montana and South Dakota. And quite probably in other parts of the country. These require newer horizontal drilling techniques. Unless a new revolutionary energy source is quickly found, then these fields must be found and allowed to be developed. In the future there is the promise of a Hydrogen based economy. The US can become energy independent again. No more excuses on how long it will take. Get started and make it happen.

There are many more internal improvements and developments possible. Maglev trains for example can replace and solve many of the problems of the ailing Airline industries. These can provide transit times comparable to regional airline flights. And they run on electricity which means sources like nuclear power or any fuel other than oil can be used. Airlines will then shift to long haul flights. The construction of these systems will act as drivers for the economy. Right now the only operating system of this type is in Shanghai, China.

6)Rabid environmentalism is a product of the banking/renaissance civilization to keep people down. That is why you do not see it in East Asia. There are important long term issues of resource depletion but these are solvable within the realm of the synthetic civilizations power of high technology.

The whole alphabet soup of the IMF, WTO, etc is on the way out. Or they will become unrecognizable due to the changes they would need to undergo.
I can go on as there are very many changes coming. Let shift towards corporate changes. Large multinational corporations are going to face enormous challenges.

Coming Changes for corporations. Multinational corporations are going to be the most impacted. Many of the global multinationals in the west are products of the banking/renaissance civilization. To survive they are going to have to restructure dramatically. The free trade/globalization of the banking civilization is on the way out. National development is going to reassert itself. So trying to influence your employees to support free trade agreements is really quite laughable. Your employees have no power over this. These are long term cycles of culture of immense size that are at work. Your employees are just floating on top of that wave. Like it or not those people in your own nation who you considered disposable/tradable in the world of globalization are going to be the key to your survival. So you would be smart to stop promoting policies that undermine them and their incomes and start mending fences.


CURRENT EVENTS

What we have all been witnessing is the systemic breakdown of the banking/renaissance civilization. The path that the Fed has been on will never work. Taking money from productive people and enterprises and giving it to unproductive ones is a recipe for disaster. The banking civilization is both morally as well as physically bankrupt. First came the moral bankruptcy and then came the frauds and the physical bankruptcy. The financial economy has nothing to offer.

I hear the reason they need to do the bailouts is to “save the economy”. But one has to ask just what do they do for the economy? All they have done for years is live parasitically on the physical economy. And these entities have committed one massive fraud after another. The latest ones being the largest, and with witch they managed to kill themselves.

There is a fundamental difference to saving the essential functions of the financial system and saving the fortunes of individual members of the Banking civilization. What they are asking is that all Americans accept and be responsible to pay for is all of these fraudulent debts they themselves created. The Chris Dodd, Barney Frank, Nancy Pelosi, Paulson, Bernake bailout of Fannie/Freddie through the combined actions of the Dodd-Frank bill in congress and treasury fed actions is essentially a declaration of national bankruptcy.

Under the current regime Americans are broke. New treasuries will have to be issued and it is not intended that Americans will be the net buyers. Americans will never be able to pay the combined debt. So they really just poisoned the treasury market. They are turning treasuries into junk bonds. The majority of Americans retirements are in social security. Social Security is in treasuries as are many other pensions which have been dumped into the Pension Guarantee Corporation. This recent action puts these retirements at risk. Also, it is almost a certainty that other junk not in the current bailout will be added in. As it now stands these guarantees are set up as an unlimited blank check.

Now who is intended to buy this new flood of treasuries for the bailouts? Obviously, the plan is that the Chinese and other Asians will buy them. The idea is that they will have no choice but buy them to support their exports. They are offering up the bodies of American citizens and their pensions as collateral! This will never ever work.

Up until now the Chinese and other Asians have made a tradeoff. They have sacrificed financial interests but got a physical economy in return. In exchange for a physical economy they have taken on financial assets of increasingly dubious value. The US has done the opposite. It has sacrificed its physical economy for financial values and now finds them evaporating.

The Chinese and other Asians have gotten about all they can in terms of physical economy out of the Western Atlantic world and the US in particular. There is no longer this huge potential to be used as a source of development. What this bailout really proposes is that China and East Asia pay for it. In the larger physical accounting I talked about earlier they received physical economy ALONG with the financial claims. Now they cannot get much more in terms of the physical out of the United States. So now the accounting is reduced to just the exchange of real physical production for pieces of paper of dubious value. And in effect support the financial values and fortunes of wealthy western financiers with Asian workers.

What confuses people is that they would seem to do the exact same thing as before. Buy treasuries and export goods. But it is different. People think this way because they think strictly from a point of view of financial values. People in the US think (hope) that the Chinese and other Asians have no choice but to continue as before to support their exports. And that is the conventional wisdom. In effect we are asking the Asians to do something they have not done before. There is going to be a big resistance developing to this tradeoff.

There is another process which is happening as well as a result of this and that is people trying to move from dubious financial claims to real stuff. Further, there is only one market in the world where people can trade dollar assets for real stuff without having to trade first into something else. And that is in the US itself. Currently the capital markets are still relatively free. So we are seeing an unprecedented number of US firms and assets fall under foreign control. But there is a limit to this. It is like the gold market. No matter how far you push prices down you can’t make people give up their physical stores. Some things are not going to be available at any financial price. Again, it is the physical economy.

So the Chinese and other Asians have choices. Very hard decisions have to be made. This is far bigger than the Asian financial crisis of 1997. I remember how quickly China acted then to adapt and restructure. I think the surprise will be how quickly they act this time as well. The Asians and Chinese in particular apparently recognize there is a serious problem. That is why recently we hear out of China a hint of big changes. They have expressed the need to develop a world economy not dependent on the United States (dollar). They have also expressed a desire to develop their own multinational firms and many others changes as well.


The US has hard choices. This has been coming on many years but only now at this late hour do I begin to see recognition of a serious problem. The mainstream media and the government economic agencies have done nothing but lie about everything. But now reality is asserting itself upon the population and the lies are all being exposed.

These bailouts will never work. And since I first wrote this on September, 19^th, the proposed bailouts have grown enormously. As I originally said, there is still a lot more to be added into these bailouts. And that is still true today as there is a huge amount of bad debt currently swept under the rug.

The banking/financial system cannot be saved in its present form. Just pouring more and more money into them and further poisoning the US Treasury market is suicidal. The US Treasury is an instrument of national power. Essential banks and banking functions must be saved. The integrity of the population’s pensions must be maintained. Personal fortunes of bankers and toxic debt must be put through a bankruptcy proceeding. That which cannot be paid will not be paid.

Otherwise we will pour all of our resources into something that is dead and has no energy. This will have the effect of undermining that which we need to survive. Then what are you all going to live on? And by that I don’t just mean individual citizens. I mean specifically the big institutions of the United States. One needed change that has to happen right away is to do a wider scope accounting. To also begin thinking in terms of physical values. People and essential skills, infrastructure, production system, tools, communities and the quality of life of communities. Things that have been neglected since the breaking of the Bretton Woods system in 1971. Break the straitjacket that this financial accounting has on your minds.

We need to go back to the principles of the synthetic civilization and use national power in accordance with that. Poisoning the treasuries will cripple that ability. It is tantamount to treason. The only path that will lead to is a sure and possibly permanent national bankruptcy and quite possibly anarchy and revolution. The US Military will find it impossible to maintain its forces with the available resources and it will collapse.

I know that this message will be unwanted to many. But as I have said the thing about these kinds of forces is that they do not care what you think. Hanging on to that which is dead is a sure way to die too. Any international, national, regional, local institution or individual unwilling to adapt and change to the coming world environment and clings to that which is dead is going to go down. And in the end the Banking/Renaissance civilization will still be just as dead. So hanging on is neither a smart or practical solution. And the choice is obvious to any but the ignorant or brain dead at this point.

We are right at that inflection point. So now is the time for all national patriots to unite and push this country in the right direction. You exist in the political establishment, Military, private institutions, corporations, and individuals. It is the only practical path. These recommendations are the only way to safe ground.

And it is time for those patriots of their respective countries overseas to do the same and cooperate to bring about the needed changes.

I can go into very great detail on this and reference and footnote it but those who do not wish to be convinced will remain so. For those who are open to these ideas but are not yet convinced about my analysis all I can say is put it to the test. You will find these concepts work. Use these concepts as a basis for understanding the world. What you will discover is that they work for both explanations of events, forecasting and to accomplishing worthwhile projects.


Ed Moran
Signalspace, Inc.
signalspace@zoomtown.com


I have included a few comments on recent developments.


Oct 23, 2008: Again, the bailouts continue and keep growing enormously.Things are splitting geopolitically along the axis I indicated in my article. We have the BRIC and RIC countries going in one direction and the western Atlantic ones in another. The divergence is striking from the policies of the US and UK. Germany, which has historically suffered severely at the hands of the overt and covert British empire is a special case but seems to have made a policy decision to throw in their lot with Eurasian development. This can be seen from Merkels recent summit with the Russian president and what has come after.

Putin, Medvedev and other members of the Russian government are clearly showing by what they are saying, and more importantly doing, that they understand the nature of the problem and at least some of the principles for economic recovery I have put forward. The Russian government is talking about going to a national directed credit program for various projects instead of relying on foreign investment and loans. That their bailouts should go to firms associated with real production. It is ironic as an American to see them talk about how the US used such tools for rapid economic development. It is sad to see my own government abandon its own heritage and history and foolishly plunging forward with already proven failed policies and even more corruption. Policies that can only lead to an economic collapse.

The way things are progressing the world will split into two camps. One group embracing the principles of the Synthetic civilization and the other attempting to live off of a dead civilization. One going up and the other down.

Here we are at an inflection point and I find strange that Russia is using and discussing methods used in the US that were essential to its economic supremacy and meanwhile the US is adopting the principles more in line with socialism and communism. What a turnabout in world history.

As things are progressing it is becoming clearer that Eurasian capital is going to go into Eurasian development. It is not going to continue to back US and UK consumption. It is not going to backup or bailout the western Atlantic’s banking system. It is not going to be fed back into the old western debt model. Watching Paulson, Bernake, Congress and the Administration in action you would think that they believe they will not only send all of their capital here, but to at least double the amounts.

I have seen this developing for quite a number of years. When I began writing this on Sept 17^th I realized we were at one of those rare inflection points in World history. Moments that only come around in a time cycle of hundreds of years. Subsequent events have proven this to be the case. And the events keep unfolding in accordance with the new principles. And it continues. Really big changes will be coming on by early spring of 2009. Keep your eye on the big picture and not get distracted by the temporary and/or minor events.

I believe that the US will eventually get around to employing the principles of the Synthetic civilization. From the current policies it is apparently the case that it will not be so until after they have tried to bail out the current system and find it is in vain.

Oct 13, 2008: Most everyone is focused on the financial markets. And that is because the financial values still have such a grip on the minds of most people. But this crisis is about far more than the particular value of financial markets. They are just symptomatic. One needs to keep his eye on the ball so to speak. And the daily swings in the markets are a distraction to that purpose.

What has been happening is raw economics and geopolitics. A kind of economic warfare is going on and even between banks. As my article indicates this crisis has been building for 40 years. We are now just reaching the logical conclusion to the failed policies that have been followed over this time period. And as my civilization study shows even longer than that. It has just accelerated the past years. This crisis became acute in February of 2007 with the immediate and almost instantaneous bankruptcies of some mortgage lenders. And this crisis will continue on in an acute phase for several more years. Maybe we are only halfway through.

Right now we are in the eye of the storm and are maybe halfway through the most difficult period of these past years. But now many a structure has been weakened and is not going to survive the next phases of the crisis. We are approaching the point of recognition. The point where everyone realizes that what they perceive as the world monetary system, the one first formulated in the Renaissance and run out of London since 1763, is finished as a global power. And nothing is going to be able to stop that.

This is so big because a number of very large cycles are ending. It is the end of the post Bretton woods IMF floating exchange rate Dollar system since 1971. It is the end of the Postwar system from 1944-45. It is the end of the London centered world monetary system since 1763. It is the end of the Banking/Renaissance civilization. No possible bailout or other remedy is ever going to be able to change those facts. And that is why a move to what has already been proven to work in our own history as a nation and people is urgently needed.

Oct 9, 2008: The policy of pouring out money continues. I have seen people begin to make comparisons to 1929. A comparison I knew was coming long before now. The reason it is not working is that it is the systemic breakdown of a civilization. This crisis is more than an order of magnitude larger than 1929. Because the cycle that is ending now, is more than an order of magnitude larger than the cycle that ended in 1929. If they persist in pouring out more money they will find that the hole does not have a bottom. In that case look for more shocks to come. Any so called bottoms will be temporary and even bigger shocks will come later.

Like the fall of the previous civilizations, those people who stuck stubbornly to the old ways went down though much pain and suffering until they disappeared. The old civilizations did not fall in a day but they went down through a series of enormous shocks and crisis. The new civilizations were about the survivors. Those willing to make the changes needed to survive.

It is a 550 year cycle that is coming to an end. So it is more comparable to the fall of Rome or Byzantium. The big difference to those periods and now is that the Synthetic civilization has reached a very high level and can provide support to the whole world. But it will only provide support to those countries that will go with it. So the good news is that we do not need to suffer a complete collapse of the economy and society. But because the cycle that is ending is far bigger than the one ending in 1929 the depression will be comparably larger if we do not change policy. To solve the crisis you must first understand the scale of it. And then you must come up with solutions that are of the same size as the problem. Otherwise you are doomed to fail right from the start. In the comments of Oct 6, I outline the means to not only save the physical economy, but to put it on a path of spectacular growth. To do that you must use solutions based upon the principles of the Synthetic civilization. That is where the support lies.

Oct 6, 2008: Although Wall Street, the Fed, Treasury and many others in media, business and government pushed the idea that there was no alternative other than the current bailout legislation, this is not true.

The American people had a gut reaction against this bailout. That it was both immoral and that the costs were too high. Cost in terms of fairness, and in economic and other liberties. Liberty that is essential for long term prosperity. And it is socialism for the rich. But there are fundamental economic reasons why it is bad.

And the fact is there are other alternatives. Often it is best to go back to the beginning of something to find your way out of present difficulties. When the US Civil war broke out the United States faced dire economic and political difficulties. The credit markets froze up and the Union needed to borrow money. The Southern cause was backed by an alliance of southern planters and big New York and British Banks. And they thought they had the Union cornered financially. They would be willing to make loans to the Lincoln administration but at exorbitant interest rates. Interest rates of 30 percent or higher. And if Lincoln accepted those loans then Union would have been finished right then and there. Lincoln’s solution to this was the “Greenback Policy”.

The “Greenback Policy” is one of Federal credit as opposed to Federal debt. The current policy and the one used for many years is the Federal Debt policy. This is the policy of the Federal Reserve System. Under this policy the Federal Government sells US Treasury bonds to private banks, foreign central banks, businesses, and individuals. It then uses the proceeds from that sale to fund government operations, infrastructure, defense, etc. The US Federal government must pay interest on that debt.

Let’s take an example of infrastructure. Where I live there is an older bridge that spans a major river. This bridge is part of the US interstate Highway system. Like many bridges in the US it is older than it expected useful life and a crack has been discovered in one of its steel support beams. The bridge can no longer support heavy truck traffic. This is a large loss of productivity to the regional economy. So it needs to be replaced. Under a federal debt system the federal government would sell US treasury bonds to fund this construction. Ideally, since it is a long lived asset one would sell 30 year US Treasury bonds to finance something like this. But as anyone knows who has a house mortgage, interest must be paid, and this can interest can double or more the true cost of a project. So a $200 million dollar bridge may actually cost $400 million.

Under a Greenback or federal credit system this would work entirely different. Instead of selling US Treasury bonds to raise money the US Treasury would in effect issue new currency directly to real producers in the economy. There are a number of ways to do this but in its most basic form it uses the US Treasuries Constitutional power’s to “Utter” money directly to the producers in the economy. Let’s take the case of the bridge. Instead of going into money markets to sell bonds for which it must pay interest the US Treasury would simply issue currency directly to the businesses and contractors who build the bridge. And there is no new treasury debt to pay off. The government debt does not increase by one dollar. And it is not inflationary because a real productive asset is now behind that issued currency.

Imagine the effect of doing this all across the United States to repair our entire crumbling infrastructure. This can be used for water systems, locks up and down the Mississippi river and other rivers, bridges, roads and even thing like jump starting a national maglev train system. There are currently trillions of dollars of work to be done. Why not an 850 billion federal credit bailout of the productive economy of the US? Lincoln used this exact same policy to jumpstart the industrialization as illustrated on the previous charts. Combine that with tariff and non tariff barriers so that the bulk of production from this goes to US domestic firms. Imagine the effect on the confidence of the people of this country seeing all of this going on all at once across the whole country. And there will be a multiplier effect throughout the economy. And the business of this should be open to firms of all sizes. And we should especially concentrate on the mid sized and small firms. This way we can get the most innovation out of the process.

I used to be protectionist while we still had a US physical economy. Now I take a position more practical to the current situation. Ironically, I find people who were more in the “Free Trade” camp becoming more protectionist. But to me this is more like closing the barn door after all of the livestock has left. So I take a more selective approach. The US currently needs to export to pay its bills. We need trade with Eurasia but on different terms. So as far as the infrastructure spending we need a selective tariff or non tarrif barriers regarding the inputs for this development. The US cannot afford to do this kind of work if we have to import the inputs from other countries. We need a real physical economy stimulus program. For other items a more free trade approach can be used to keep foreign markets open to US goods.

A “Greenback” type policy will lead to a process of regeneration and renewal of the United States. There is no way the US economy could collapse with this process happening. And jobs would be plentiful for all Americans. And with real rising production and productivity so would income and savings.

Contrast that with the bailout. That just transfers fraudulent debt from bankrupt financial firms to US citizens with no change in productivity. The US cannot service its debts off of its current production capabilities now. So this does nothing except put an impossible debt burden on the people. This is a policy that has already failed for 40 years. The continuation and acceleration of this failed policy can only lead to massive austerity and cuts in the standard of living of the people.

The other thing the Federal debt system does is that under it this policy US Treasury bonds are often leveraged anywhere from 8 to 100:1 by financial institutions. So the effect of the bailout will result in even more debt than the 850 billion. And like I said before there is more bad debt currently swept under the rug. In a country that is already drowning in debt and desperately needs to increase production to support and remove existing debt the policy is to create more debt. When the crisis started unfolding last year I saw a former Federal Reserve governor say that one of the solutions was to get people into more auto loans! The bankers really have no effective solutions.

And now with this bailout the Federal debt policy is so corrupted that instead of selling US Treasuries to these financial institutions we will now apparently just give them away. And that is really what this bailout does. And with all of the interventions and bailouts they are pouring out new debt and money without the possibility of any increase in productive capability to support it. It is really a hyperinflationary policy. The process has clearly reached a dead end.

Gross Domestic Product (GDP) is the total production of all of the people in the country. It used to be that it took less debt to increase GDP than what you got back. So that for every dollar increase in GDP it took less than a dollar of new debt. Income was rising faster than debt. But since around the time of the breakdown of the Bretton woods system, the opposite has occurred. Now increases in one dollar in GDP require more than a dollar of new debt. The country began to operate below break even and debt rose faster than incomes. And it has done so for 40 Years! And it has been rising exponentially lately. To show how bad it is the last I looked it was over 5 dollars of new debt to increase GDP by 1 dollar.

That is why we are at the end of something so big. There can be no more debt without collapsing the whole country and if we go for the austerity without new production we will collapse the standard of living of most everybody. Things are already tough for the lower 80% of income groups in the US. The middle classis already squeezed. The financiers are pushing what I call the “Revolution” policy. Because that is what we will end up with if we go down that road.

Under the Synthetic civilization principles, finance moves to a secondary role in the economy. Money is put at the service of physical economy. Right now it is the other way around. So we have a political problem as much as an economic one. People and institutions that have had the leading positions in the economy and society for centuries have to accept or be forced into a secondary position. And since we are at the end of a life of a civilization corruption is endemic to it. I know this is a difficult thing to do politically but only those nations that are able to make that transition will prosper and survive. The principles of the Synthetic solution are open to all nations and will provide the needed support. Any sovereign nation can implement the “Greenback Policy”. But the United States because of its constitution and history can do so more effectively than any other nation.

One of the effects of this bailout is going to be political. To the state and local governments in the US I have a message for you specifically. This is especially those of you who supported the bailout. Don’t be surprised if some financial predators show up at your door and offer to buy up your infrastructure at distressed prices to “help” you out with your budgets. Think of it as a kind of leveraged buyout of your communities by the financial predators. And with your own money since you and your children will be financing it through the Treasury bailouts. And municipal workers can think of it as a leveraged buyout of their jobs.

And these firms will not be giving you new bridges and water systems. They are there to load up your existing ones with debt and milk them for all they are worth. Not only have the people already paid for them once but apparently they are expected to do it a second time at higher rates of interest and fees. Contrast that with the Greenback policy of new systems and no debt or fees. And a community of declining debt levels relative to income.

These kind of financial predatory actions are already happening. This really is a policy of revolution. So there are two contrasting policies available. One policy is to continue to go down a path of failure. Do the same thing as before but even more of it. This is a path to national bankruptcy and probably revolution. The other policy is one of a process of revitalization and renewal. This is a policy of ever greater wealth and prosperity for today, and for all of those who come after us.

The top financiers are well aware of the “Greenback” option. Most working people are not. Here is a quote from a London Times article from that period.

"If this mischievous financial policy, which has its origin in North America, shall become endurated down to a fixture, then that Government will furnish its own money without cost. It will pay off debts and be without debt. It will have all the money necessary to carry on its commerce. It will become prosperous without precedent in the history of the world. The brains, and wealth of all countries will go to North America. That country must be destroyed or it will destroy every monarchy on the globe."
Hazard Circular - London Times 1865

This is a policy that has been proven to work. It is what gave the US the largest physical economy in the world. The financiers and bankers are not going to offer up that solution as it removes them from the privileged positions they occupy. In fact, except for those few who can see there really is no other viable option they will vigorously oppose it. And it is the only option that will work to rebuild the physical economy of the US. It is the only viable option for the people of the United States and many other nations in the world.

The people of the United States are going to have to insist on this policy. If neither political party is viable any longer then we are being gamed by the financiers. It is time to kick over the political table. Either new political parties will have to be formed or people need to support independents to carry out these reforms. The passage of this bailout bill means that we are heading in for turbulent times. No matter which way this goes we are heading into a crucible. Either we will get even more corruption and revolution or reform and political upheaval.

Note: One of the interesting (and outrageous) things in the bailout bill is that the US Taxpayer is to bail our British banks as well as US ones. A quarter of the money will go it seems to British and foreign banks. In the history of nations, no nation has ever bailed out the banks of another. But using the banking civilization model and that London has been the center since 1763 then one can understand why this happened at this time. As I said this model works very well.
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Oct 3, 2008: With the passage of the bailout legislation the United States has once again made a terrible and tragic mistake. Repeating the same exact sorts of mistakes made the last 40 years. This is characteristic of the policy decisions that have lead to the destruction of the US physical economy. I believe future events will prove this to be the case beyond any doubt whatsoever.

Oct 1, 2008: I would add one additional comment here. People still ask me why China would be willing to make this trade. Why trade real goods for these pieces of paper, or nowadays simple electronic ledger entries?

You have to go back to the tradeoff of financial values vs. physical economy. Consciously or unconsciously I believe they think the tradeoff was worth it. After all it is Shanghai that has a Maglev train system and not Chicago. Look at what they have gained. East Asian is already right now the center of the world economy. And China is the center of the East Asian economy. They are going to be the center of the world economy for many decades if not centuries. Not a small thing to gain for that tradeoff.

Now having said that will China and East Asians have difficulties? Absolutely they will. The Atlantic world had its own share of crises along its path of development. So has every civilization in the history of mankind. But this lets you put them in context. They will recover and go on to new heights. The systemic collapse of the Atlantic World and especially the United States financial economy is a shock and crisis for them right now.

On the other hand the Banking/Renaissance civilization will not survive this systemic crisis. Peoples or countries that cling to it and its values will suffer one serious shock after another and enter into a severe long term decline. The choice is clear. The principles of the Synthetic civilization are available to every nation on this planet. And that is one of the great characteristics about it. It will be a saving characteristic for many. But any nation or people who wish to participate and prosper must pick them up and run with them.

My message to my fellow citizens is to be practical about this. Dump the losers and go with what works. Unlike the financial values this is not a gamble. These principles have already been proven to work in our own history and experience as a nation and people.

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[1] Synthetic civilization. Rodney Colin, Theory of Celestial influences. One of the few references. I do not want to assume credit for coining the name of the Synthetic civilization, its nature or sequences. Not a scientifically rigorous book but nevertheless based on some scientific facts and correlations. A strange but also very interesting book, It is rich in some powerful and useful ideas. I have significantly extended his ideas on the sequence of civilizations and cycles. Particularly in the areas of cycles, civilizations and their structure, timing and transitions.