Can we have a common-sense explanation of why eurozone finance gone mad threatens to kill the otherwise healthy real economies of European Nations?
Much is being said about the Euro crisis exploding today in Cyprus which - like its recent Greek, Irish, Spanish, Portuguese and Italian versions – continues to fester like a malignant tumor in the body politic and economy of the European Union.
When times are stable and predictable, economics is treated like
a science by bankers, academics, journalists and politicians
aligned to the money-power elite.
All economic and social woes are explained away as resulting from the “laws of the economy” and the “invisible hand of the market”. Economists’ theorizing mumbo-jumbo never tells you is that the “invisible hand” is moved by a muscular “arm” that is directed by a perverse brain…
They try to convince us that it’s “normal” for markets,
sectors and entire countries to go up, down, sideways, even dive
Such economic nonsense is normally signed by Harvard, LSE or Chicago University eggheads, suitably prestiged with Economics Nobel Prizes, and lavishly promoted by the mainstream specialized media like the Wall Street Journal and Financial Times.
However, as soon as the economic weather turns foul and the
waves of currency instability, winds of banking crises and tornados
of panic start rocking the boats of national and regional
economies, that’s when the “science of economics” takes a
really bad turn and.. it’s every many for himself! Or… every
banker gets “government” to bail them out…
In economics what counts is Confidence and Trust, either real or perceived. That’s why banks’ head offices tend to look like veritable fortresses or gigantic skyscrapers, often with imposing temple-like columns, giant staircases and forbidding iron-clad gates. The idea was clear: when you enter a bank, you enter the Temple of Mammon. Financial Olympuses like the FED, Bank of England, and most every central bank beckon you to “trust” them, just as you trust your God when you enter Church; to have “confidence” in them for, like the Almighty, bankers want to make you believe that they too reign for ever and ever…
But, alas, as Patrick Young writing on RT Op-Edge on Cyprus
clearly explains, “confidence remains a
rather intangible item. Measuring trust is rather a black art. We
can never be absolutely certain we have 100%
Indeed! Trust is like virginity: once it’s gone, IT’S GONE. So when trust turns sour regarding a particular bank, or rumors arise of impending monetary collapse, or some major corporation is about to be “AIG’ed” out of existence, then “trust and confidence” turn into bank-runs, panic and deadly collapse.
What Cyprus 2013 shows is that, like Argentina 2001, “trust and confidence” have little or nothing to do with reality especially when passed through the mainstream media’s 'Lies Machine' for, like all perceptions, they can be manipulated to fool, confound, hide ugly truths and distort.
When things start going really bad, fraudulent lies are maintained for as long as possible to give those who DO know the truth, the chance to exit quietly and unscathed. Once they are at a safe distance then - yes: all hell can be let loose!
That happened during Argentina’s massive banking, financial and monetary collapse of 2001/2: social chaos, dozens killed in clashes with police, 50% of the population buried below the poverty line, 40% drop in GDP, and yet…. not one single private bank folded!
Argentina’s then-president Fernando De la Rúa and his Rockefeller-Soros wizard Economy Minister Domingo Cavallo did everything the mega-bankers needed to weather the storm, but nothing to help “we the people” who lost life savings, jobs, homes, health benefits…
Not surprisingly, after more than a decade Argentina’s government ensures a “business as usual” banking atmosphere: politicians and megabankers always cozy up to each other (money-sloshing tends to do that…).
What about “we the people”…? Argentine workers continue biting the dust suffering all sorts of government-triggered abuse – inflation, a total foreign exchange lock-down, and ferocious tax collector persecution. Why? When President Kirchner of Argentina must choose between local workers and global megabankers, she systematically chooses the latter… with suitable media marketing of course.
Does this ring a bell? Spain? Italy? Greece? Ireland? Cyprus? Occupy Wall Streeters…?
A tip: don’t believe the mainstream media; don’t believe government liars; above all: don’t believe the megabankers!
Example: If you’re having a drink at the pub and your mate knocks your pint of beer on your lap: Ooops! Sorry!! Acccident… If he does that again 5 minutes later: Gosh what bad luck!!! If he does that a third time: HE’S DOING IT ON PURPOSE! For some reason, it’s the guy’s behaviour pattern so best to keep away from him!
Now look at recurrent sovereign-debt banking crises: Argentina
suffered four “debt crises” over the past forty years that
were all so similar to what later happened in 2008 in the US; which
was identical to the banking crises in the UK and Iceland, which
were then repeated in Ireland, Portugal, Spain and Italy; which
flared last year in Greece and today robs Cypriot workers down to
their bones. Accident? Bad luck? No… It’s a
We are in fact dealing with major fraud perpetrated by the
global megabanking establishment and done “legally” because
they pay for, finance, position and control key government posts in
the executive, legislative and judicial branches of governments in
just about every country.
Whether Argentina or Brazil, the US or Britain, Spain or Italy, Greece or Cyprus. Same story; even the same players.
Because the global megabanking establishment have worked really
hard through their media, universities and their own players to
blind us to a key factor no one ever talks about: the difference
between public money (issued by the State) and private money
(created by private banks almost out of nothing).
Public money are the dollar, euro, peso and pound bills
circulating in different parts of the world issued by public
banking authorities, normally a national central bank having
monopoly issuance rights. Any private citizen doing the same
will, if caught, end up in jail. And rightly so because
counterfeiting currency adds money to the system but no work is
added to the Real Economy. The message to the people is
clear: You want money? Work for it!
Private money, however, is created by the private banking system thanks to Fractional Lending which legally allows them to create loans for 10, 20 or 50 times the amount of deposits in their vaults and then charge interest for them! But private bank money is just a figure on your bank statement or a blip on your ATM screen. Like all screens it can go blank “in a moment, in a twinkling of an eye…” The message to the bankers is clear: You want money? Create it for nothing!
People instinctively understand this which is why millions of Argentinians cued at their ATM’s waiting to get some "real money” (even if Mr. Cavallo's “corralito” limited that to 250 pesos per week). Fast forward eleven years to Cyprus: same picture of people trying to withdraw 100 euros before they’re all gone.
1) The private megabanker cabal uses their leverage/control over governments and politicians so legislation is passed ensuring that the central bank never provides the right amount of public money the real economy of goods, services and investment needs; i.e., no credit.
2) In come the private bankers, asking government: “You need money build highways, finance defense, education and health? No problem: we’ll lend you all you want!”
3) Government keeps borrowing and borrowing way beyond its means.
4) Bankers and politicians refinance debt again and again and
again, until it balloons way beyond repayment possibilities of the
…Oh, the wonders of compound interest!!
Say you’re president of a country and you need to build a 100 mile road costing $ 120.000.000 over a one year period, at an investment rate of $ 10.000.000 per month to pay for steel, cement, constructors, architects, workers, etc. Everything is set to go; you have two options:
Option 1: Ask private bankers to loan you $ 120.000.000
at, say, 10% interest which means you are indebted by $
132.000.000. The bankers funding you will, no doubt, impose certain
conditions like you’re having to use such and such a construction
company, insurer, consultant, cement, steel
Final cost: probably closer to $ 140 to 150 million.
Irresponsible modern politicians will of course just dump that debt
into the federal deficit black hole. Let the next president
or prime minister tackle it!
Meanwhile, compound interest makes the debt grow and grow and
grow: music to mega bankers’ ears!
Even more stupid: for a country like Argentina the loan will be
in Dollars even though everything they need to build the highway –
cement, steel, architects, workers – is available locally and could
be paid in local pesos.
Final Result: Public indebtedness in foreign currency in an amount 40 or 50% more than actually needed, that will continue to grow under compound interest…
Option 2: You order your central bank to issue $
10.000.000 per month for 12 months in local currency. This
may have a temporary inflationary effect that is immediately offset
because government recovers tranches of that money through taxes
that cement, steel and service providers start paying to your tax
office, plus labor dues paid by workers. You repeat this for
the 2nd, 3rd, 4th months until the 12th month when the highway is
finished. Final equation: a good part of the currency issued
immediately flowed back to your tax office (who can take it out of
circulation), and the rest that remained in circulation can
be recovered longer-term through road tolls. In fact most of
it will be absorbed by increased demand emanating from real
economic growth generated by the new highway (gas stations, diners,
new towns, etc.).
Benefits: you did it with your local currency at ZERO
INTEREST. If you do your homework right, the temporary
transitional inflationary effect can be duly neutralized.
Final Public Debt: Zero.
Now, you be the judge: what’s better, financing with public
currency issued under a sovereign model, or with private banking
money that makes sovereign debt grow way beyond your means, leading
to inevitable Sovereign Debt crises in country after country; not
by mistake but by design.
That is what megabankers want in terms of money, and that is what the Global Power Elite seeks because public debt ensures full control of countries. To add insult to injury, when bankers really screw things up as in 2008, government and media tell that we must save those nice banks because they’re “too big to fail.” You put your money in a Cyprus bank? Sorry… you’ll have to chip in with 20, 50 or 100 percent of it to save the bankers…
Now do we understand what’s behind this whole diabolical, perverse, fraudulent and immoral Sovereign Debt Crisis system?
Adrian Salbuchi for RT
Adrian Salbuchi is a political analyst, author, speaker and
radio/TV commentator in Argentina. www.asalbuchi.com.ar
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.