Wednesday, April 1, 2009

Politics of Fear

It is well known tactic of the politicians to jump on big disastrous events to establish more power over the general populace. Whether it be natural disasters or man-made ones, the power elite always have something ready at hand. This tactic of using politics of fear was well used by Hitler after the burning of the Reichstag. George Bush used the 9/11 attack to push through the US PATRIOT Act.

Right now the world is currently facing economic recession, and the powers that be are jumping at the opportunity to create something that gives the financial institutions more power. This time it is a common world currency and a Global Reserve System. All in the name of reforming the world financial system.

This will be the one of the things that will be discussed at the upcoming G20 summit to be held in London. With trillions in foreign currency reserves, China is also trying it's stake to gain more control over the US and EU influenced financial institutions such as IMF and World Bank. A UN panel of experts (headed by none other than 2001 Nobel laureate) advocates the creation of a new global currency and a new global reserve system to counter the boom-bust cycles that the world economies face.

Currently the dollar is considered the world reserve currency due to the US getting the upper hand after the WWII and the subsequent Bretton Woods agreement, which failed in 1971 resulting in the Nixon Shock. However, the dollar (including most other currencies), are created fiat without any backing by a real commodity such as gold. As such, the US Federal Reserve can print the money just out of thin air (the actual steps involve using a nice piece of paper called T-bills). This printing of money is what causes the real inflation, and the excessive amount of printed paper money and bank credit created this financial mess in the first place.

The creation of one global currency, another fiat one, will most likely not prevent the boom-bust cycle. It will only exacerbate the problem, and will give even more control to these institutions over our daily lives. Already, these financial institutions have so much control over our economies via the network of central banks, and a one world currency will empower them even more.

5 comments:

f i Я a s said...

so Adam Smith's being proven wrong here when he said something along the lines of "When things go wrong, the invisible hand of morality would guide us"... No, not in this entirely profit-driven economic systems of ours... even invading a country (Iraq) and killing 1,000,000 (yes, a million) people was justified...

Stewie said...

Yep, they will do it. they are set out to do that. You saw the 1000's of protesters near bank of England against globalization and global warming...
The leaders of the world or big Corporations have very less human considerations in their mind, it mean you can not expect decency in this profit driven, corrupt monetary system. No matter how much they try to solve the problem, as long the money is created out of Debt, we will have to be slaves of it, while couple of corporations and their heads enjoy the world resources.

Hey! who supports venus project advocated by the great Engineer Jacque Fresco.

meekaaku said...

firas:
there is no justification for invading countries and killing millions of people whether for profit ,power,ideology or anything.

The only reason these institutions are powerful is because the big countries' government back them and provide funding. This can be clearly seen in the bailouts. The state is taking money from the productive populace (via taxes) and giving it to these failed institutions to keep propping them up. Without this state protection, they would already be insolvent and gone for good.

f i Я a s said...

but that's the height of the self regulated (unregulated?) free-market system... if there's no demand to supply, you CREATE demand!

meekaaku said...

stewie:
agree. but not sure whether the protesters are actually protesting about the whole money out of thin air thingy. its more to do with general globalisation and exploitations.

firas:
the moment they start regulating, the regulations themselves will be heavily in favour of the big corps due to heavy lobbying. this will only hurt the consumers and small businesses.