Class Warfare in America || David Lifschultz

Operation Disclosure | By David Lifschultz, Contributing Writer September 24, 2020 MATTIS AND WOODWARD As we wrote in the "Introductio...

Operation Disclosure | By David Lifschultz, Contributing Writer

September 24, 2020

MATTIS AND WOODWARD

As we wrote in the "Introduction to Goethe, Faust and the Euro" in footnote one, the US foreign and commercial policy is tied to geopolitical objectives. The build up of China from 1972 was to oppose Russia which did not matter even if it wiped out American jobs, and now that China and Russia are allies as of 2014, the US wants to move the Chinese production for the US and other markets to South America. It is not that the US cares about the people of South America because they do not little wonder when it does not even care about its own people.

The Wall Streeters Class hatred against its own lower classes is exemplified by the attack on the Middle Class and lower classes by offshoring US industries and importing like blocks of stock third world bodies to man the few factories that are left whose supply drives down the American wage. We have not seen such class hatred in the Anglo-Saxon world since the Enclosure Movement in England in the 19th century when the aristocracy cast their peasants off to the cities when they converted their estates from agricultural farming to raising sheep for the textile industry. This was the squalor of the then greatest nation in the world where the upper class luxury was contrasted by Charles Dickens to the squalor the English inner cities. Where did all the money go from the increase in industrial productivity? Not to the displaced peasants.

What we see in the new US initiative for South America is an effort to move production from China to South America as merely a change in venue. There is not the slightest consideration for moving the jobs back to the United States. The move of manufacturing to South America is to geopolitically block Chinese inroads in South America already quite extensive in themselves as well as to close the supply chain in China itself.

This ties into our manipulated currencies where the dollar is kept strong so that it can import cars from Germany, etc. while Germany destroys the industrial infrastructure of our own nation. These German cars should be made in the US as our others based on 100% of the content made here. The US military industrial complex supported this policy by maintaining the German car imports to please our ally at our expense. in their opposition to Russia. It was pure folly.

Robert Rubin Correspondence – David Lifschultz

The trade war against China is senseless as a balanced of trade between the US and China could have been worked out as originally planned, but now we face the trade deficit growing even larger as China is merely replaced by South America. The US Military Industrial Complex is proving itself to be self-destructive.

Footnote One:

The essay below proves that the US has never been in a war about true idealism but power.

AN INTRODUCTION TO GOETHE, FAUST AND THE EURO

DAVID K. LIFSCHULTZ

The precipitous and calamitous decline in US power from its undisputed peak as the sole world hegemon in 1991 on the collapse of the Soviet Union has to be marked as one of the greatest turning points in history. We demonstrate this both in the military analysis included in this paper and the study of the dying United States dollar. We follow in this study the classical authorities and some of the key points in Carroll Quigley's "Tragedy and Hope".

It may not appear to most observers that this has happened as it did not appear that the greatest army in the world in France that had held back the Germans in World War One would collapse in 1940 in twenty days. Just for the reader's information, the nations of the EU today, or NATO, would not last two weeks against the Russian shock armies as that is how long it would take them to reach the English Channel as the preponderant US airpower would be nullified in ten minutes by Russian missiles destroying the NATO airfields. Tsar Alexander I accomplished this against Napoleon though it took Alexander I longer.

How did this Russian rearmament come about? This answer will require a short excursion into history. Anglo-Saxons have followed the Roman tradition of balance of power as their schools taught Latin and Roman history. This has nothing to do with morality even though Queen Victoria rightly said that the King James Version of the Bible was the source of all the British power. It is interesting to note that the English abandonment of the Bible is the primary source of their decline of power. Anglo-Saxon foreign policy was rather guided by the balance of power under the ethics of Lord Palmerston when he said:

"We have no eternal allies, and we have no perpetual enemies. Our interests are eternal and perpetual, and those interests it is our duty to follow."

The Anglo-Saxons engineered the war between Russia and Germany in World War One to destroy Russia though Russia was an ally of the Anglo-Saxons (US and England). England was afraid of Russia moving to India which would have been indefensible for England to protect from a million man land army based simply on the problem logistics. England's other problem was Kaiser Wilhelm who started to build a fleet threatening the English control of the oceans. It was decided to kill two birds with one stone by World War One. The utter defeat of Germany and Russia pleased His Majesty's government. It was a total victory.

The rise of Stalin's Russia worried England after World War One and so it was decided again to nullify Russia by building up Germany for another go at it. Stalin was an extraordinarily capable and cagey operative who had been spying on the Bolsheviks as an Okhrana agent under Pyotr Rachovsky and was swept along in the Bolshevik Revolution. He had liquidated by 1938 all the Trotskyites who had massacred the Tsar, his family and the royalists. If the Chief Prosecutor Andrei Vishinsky's denunciation of the Trotskyites during the Moscow Treason Trials between 1936-1938 are read, it is found to be almost Biblical in their tenor which can be attributed to the studies by Stalin in Seminary until he was twenty. He taught in the public schools the holy Christian concept of marriage of Saint Augustin restricting the marital act only to procreation and all children were to taught to avoid all forms of onanism. You will not find anything of this kind in the writings of the bloodthirsty guttersnipe Trotsky.

When Hitler took over in Germany in 1933 the United States and England following their balance of power doctrine lent Germany one billion gold dollars from the US and two billion gold dollars from England which today is in excess of 300 billion fiat dollars if not more. This was to build Germany up against Russia and at the Munich Conference Stalin was not invited as it was designed to build Germany up and was hardly a form of appeasement. The goal once again was to see Germany and Russia destroy themselves. Stalin clearly saw this and allied with Germany in 1939. England was shocked.

While the truth about the Hess trip to England has not been revealed, the English clandestine overtures to Germany were to encourage them to invade Poland and then Russia. This is why the English and French Armies were idle allowing Germany to concentrate all its forces against Poland leaving a light screen of troops on the border facing the British and French troops. If Britain and France had invaded Germany as they promised, the German Army would have been split in half.

The problem the Anglo-Saxons faced after World War Two was that Stalin's Russia was not destroyed as the Tsar's, and Stalin controlled Eastern Europe and by 1949 was allied with China shifting the balance of power against the Anglo-Saxon nations. In essence the Anglo-Saxons has lost World War Two for instead of Germany and Japan controlling the Eurasian land mass it looked to be Russia and China. George Washington's "Farewell Address" that the US should not get involved in European conflicts was proving true.

This was a total and costly fiasco.

The Anglo-Saxon reaction was to adopt a policy of containment seen in the Korean and Vietnam Wars, and reversing course on their German vilification campaign to bring them in as an ally against Russia to balance the power and the German's obliged based on the end of their vilification. Hence NATO was formed and the Russians formed the Warsaw Pact on the other side. Russia's eastern boundary was secured by their ally China. Stalin's death wrecked Russia as a group of nonentities took over, and Chairman Mao could not stand the buffoon Khrushchev. Sino-Russian relations went from bad to worse after Khrushchev's denunciation of Stalin in 1956. By 1972 the border conflict almost had led to war and the anti-communist McCarthyite Richard Nixon ran to Beijing to embrace Chairman Mao as an ally against Russia.

Let's pause for a moment to ponder this. Here was a fervent anti-communist embracing a very pure form of communism in China which tells us that communism or national socialism had nothing to do with World War Two, nor did making the world safe for democracy have anything to do with World War One, but purely balance of power ideas of Halford MacKinder combined with the creed of Lord Palmerston. The gullible masses who were hated as cattle were to be the cannon fodder fed by the propaganda of Edward Bernays manufacturing of consent with the usual lies as in the coronavirus.

Once Nixon had his alliance with China sealed, the strategic significance of Vietnam was over, and we abandoned the place in 1973. Now China was an ally and we tried to strengthen them against Russia. But it was not until Deng Xiaoping took over that China accepted the terms of our massive build up. The US switched from Japan who was allowed to go sideways and built up China. Japan was no longer important to contain China who was now our ally against Russia. Japan was superfluous.

We taught China how to use their central bank to finance only productive investment as Dr. Schacht did for us in Germany when we built them up, and allowed China to take over our US market from Japan. We built up China to be the largest economy in the world. In the meantime, Russia looked with horror at China and had 400,000 troops tied up at the border. They were bleeding when Jimmy Carter took over.

Carter was a quite underestimated President in this sense. He did not initiate any wars for the US. He and Brzezinski decided to give Russia a Vietnam in Afghanistan to destroy Russia and in 1979 this program was launched. It was a Roman war by proxy.. It was clever. Now Russia was draining by the Warsaw Pact for 600,000 troops, and 400,000 on the border of China, and now they were bleeding in Afghanistan. When Reagan takes over Casey was assigned to go to the Gulf States to order them to flood the world with oil driving oil to eight dollars a barrel to destroy half the Russian budget. That combined with the fictitious PYSOP Star Wars campaign, and Russia was going bankrupt. The display of advanced US weaponry in Gulf War One was the last straw for Russia. They lost their nerve and collapsed.

Here the US took the position that they would not accept Russia into the community of nations as the Prodigal Son in Luke as they publicly avowed but tear them apart into 50 countries run by oligarchs whose sole purpose was to supervise the looting of the oil and other natural resources and let the masses be damned as in the Ukraine.

The BND and the CIA fomented the Yugoslavian disorders in the 1990s Sudetenland style to weaken Russia further and bombed Belgrade for 78 days in 1999. Russia woke up from their delirium by this 1999 78 day bombing and moved to rearm. The first eight years were to develop offensive and defensive missiles and the next twelve were to include the modernizing of the army. This has largely taken place. The 2014 Kiev Coup was to draw them into another partisan war in the Ukraine as we did in Afghanistan. This time Russia did not bite only taking back the Crimea and the the coal states of Donbas and Luhansk.

When China saw this Kiev Coup it was quite obvious what the US was doing, and they became quite worried as they were a net importer of natural resources and Russia was the natural place to look for it. They did not want to lose Russia to the Euroland. Also, they were too dependent on the seas patrolled by 11 US carrier task forces and they needed to turn to the Eurasian land mass to divert their trade from the seas to land by high speed trains that could go from China to Europe in 48 hours. Russia could supply all their natural resources and they could supply all the technologies that Russia required. This was part of the vision of the BRI or Belt and Road Initiative. This required a rapprochement with Russia and an alliance. The United States could not accept this alliance out of balance of power fears, and this is the sole cause of the present friction between the US and China. This ends our short historical excursion.

Professor Quigley had two famous students who made their way in the world which were former President Clinton who praised him to the skies in his "Inaugural Address" and HRH Prince Turki al Faisal, the former head of Saudi Intelligence (Al Mukhabarat Al 'Ammah). In my conversations with Bill regarding Professor Quigley, he said that he followed Quigley's concept that technological advancement was the basis of the advance of all civilization as outlined in Quigley's book "The Evolution of Civilization" and this was the foundation of his entire political career. His greatest obstacle to achieving these goals was the institutional bias against change which he resolved by creating the dot.com era that Bill said he did not care if 99% of those companies went bankrupt as long as the 1% drove the United States economy forward. This approach worked amazingly well and Bill left the presidency with such giant budget surpluses there was fear that in no time that entire national debt that is now around 21 trillion dollars would be paid off. Even Arthur Laffer, the inventor of the Laffer Curve, in a recent debate sponsored by the Wall Street Journal, praised the former President as creating such great incentives to growth.

I had gone to school with Prince Turki at the Hun School of Princeton, and had flown to see him when he was Ambassador to London as the US was about to invade Iraq under George Bush II to see if we could work out a plan to stop the invasion, and my colleague held secret talks with Saddam Hussein and his generals offering them incentives and safe passage out of Iraq if they would turn over the country to a leader of our selection. This would have avoided the destabilization of the entire region as the destruction of the Sunni Iraq tilted the balance of power in the favor of Iran. Saddam and the generals agreed but later Saddam reneged. The generals withdrew at the siege of Baghdad which was therefore won relatively without cost and received their reward.

It looked as though President Clinton was establishing what Quigley called a reorganization of western civilization so that its dynamic growth could continue. In essence, Clinton found the US in a form of stagnation as the GDP growth figures were pure fiction based on the falsification of records where inflation was eliminated by removing from the CPI commodities or goods with rapidly rising prices with lower prices for supposedly comparable items. This falsification continues. The switch by George W. Bush to endless Islamic wars as planned far in advance of the 9-11 false flag operation created trillions of dollars of expenses diverting from productive growth to non-productive military appropriations for meaningless brush fire wars. We see this is in the industrial collapse in the rust belt and the debilitation of our infrastructure. All that Clinton created was destroyed. Bill bewailed to me that his work was needlessly being thrown away. And the United States continued on its path of ruin until President Trump began trying to rebuild the destroyed American industry by stopping the rigging of currencies as indicated next.

Robert Rubin Correspondence – David Lifschultz

Quigley in his introduction compares western civilization to others that have declined and fallen before it. In the case of the Canaanite civilization who descended from Noah's grandson through Ham the core or beginning of that civilization was located in and around Tyre and Sidon. Tyre was famous as a great seafaring power which was similar to later seafaring nations as Venice and England and now the United States. This Canaanite civilization in Tyre planted colonies in areas such as what became Carthage, and interestingly enough, Carthage grew to be a greater power than Tyre. I use that example as that was very similar to what happened with the colonies of England so as England declined as a great power its colony the United States surpassed it as Carthage had surpassed Tyre. Although Quigley does not attribute this to moral decline as he should but rather to the core (Tyre and England) diverting their time to pastimes as pleasure, art, ideas and leisure instead of material work, the non-core Puritanical United States focused only on work or materialism as pleasure was a form of sin to the Puritan founders of the US. Thus peripheral areas became militarily stronger than the original core civilizations.

Western civilization developed from the classical civilization of Greece (Elisha or Hellas) and Rome (Javan as in Ionian Sea) or the descendants of Japheth son of Noah, and the power initially started in Greece but transferred later to Rome (Tiras). The Europeans are descendants of Tiras and the Russians Meshech (Moscow, or Rosh Meshech as Russia-Moscovy as the center of Russia) the descendants of Japheth. This is western civilization. It incorporated the Bible that was transmitted to them by the descendants of Shem.

However, the United States is presently in a state of moral and material decline almost unprecedented in history. 70% of its 17 to 24 year olds are not fit to serve in the military largely based on the diffusion of drugs and vice as in Carthage. The Romans say they destroyed Carthage for moral reasons as it was given over to human sacrifice and sodomy which in a sense is proliferating in the west in the form of abortion and sodomy. These are signs of a massive, moral decline while power is starting to transfer to the Asian nations which are focusing mostly on the material aspects of western civilization. And the House of Representatives and Senate of the United States are acting as the Carthaginian Senate who undermined their greatest general Hannibal and are largely to blame for the irrational form of funding weapon procurement as in the twenty year F-35 whose 400 billion cost blueprints were hacked anyway by an adversary. This was paralleled in some of our history by the removal of General MacArthur from running the Korean War by a Pendergast mob frontman, and since then the calibre of our military leadership has been in a precipitous decline as no one with talent would like the mob telling him what to do as the monetary remuneration is no inducement to stay as it does not compete with industry or Wall Street. If the DIA or CIA or NSA have anyone of great talent, Google offers them a million dollars a year to come to them and off they go.

This is the introduction to the present work. It has been largely revised to cover the Quigley analysis in more detail from a previous work that we presented. Since the next exposition will demonstrate that the dollar is intrinsically worthless, it in necessary also to enter into a discussion of the waning military power of the United States which can no longer intimidate nations to use the dollar. The value in exchange of the dollar and its military power are thus inextricably connected.

Goethe, Faust and the Euro

by DAVID K. LIFSCHULTZ

We find Johann Wolfgang von Goethe’s Faust in his library in Germany around the late 18th century in a state of manic depression contemplating his forty years spent in the study of philosophy from the ancient Greeks and Romans to the the Schopenhauers, Hegels, and Kants of his day. He had nearly gone insane reading the Critique of Pure Reason and it suddenly had dawned on him that he had wasted his entire life drowned in books and that all his learning was worthless. Mephistopheles, the Devil, seeing his opportunity to prey on the spiritually weak, approached him to say all was not lost. He could make up for lost time, and offered him the most beautiful woman in the world (Margarete), and a paradise on earth with her at his side, and all that he had to do was sign over his soul on the dotted line contracting to deliver it up to him at the appointed time of his death. Our friend, Faust, tired and exhausted in studying the vain fruit of the tree of the knowledge of good and evil, decided to choose what he thought would be the new route to Paradise.

In this jolly period Dr. Faustus and Mephistopheles alighted on a Kingdom in Germany where the bankers in Frankfort had created a species or gold shortage, and thereby had induced a depression here in Holy Germany for the purpose of dominating or overthrowing this Christian Kingdom. The population was near to rioting in the streets as they were hungry, the country was is disrepair everywhere with buildings looking like they were going to crumble, and there was a distinct possibility of the King being overthrown after a thousand years of the monarchy.

Enter Dr. Faustus (Goethe) and Mephistopheles (Mayer A. Rothschild) into the King’s palace, and there they proposed the John Law remedy of paper money and credit to be created out of nothing to solve the problem of the Frankfurt gold manipulation. The King exclaimed that how could he sign off on a paper and currency that had no gold backing, and not be perceived as a fraud. Mephistopheles answered that they would put the King’s picture on the currency, and they would sign his name to the statement that the currency was backed by all the gold in the kingdom that had not yet been discovered and dug up, and that would solve whatever qualms the population might have had. The King said that it would never work and would not be the first King in his thousand year line of the Holy Roman Empire to have committed such a fraud.

Mephistopheles and Dr. Faustus then proposed a grand ball where all the beauties of the Kingdom would gather, and the liquor would flow profusely, and everyone would have a merry time. The King was plied with drink until he lost his senses, and they then put the paper currency decree into his hand, and he signed it. While the drinking celebrations lasted weeks, Mephistopheles was at work spreading the currency around and the Kingdom became prosperous and happy. Mephistopheles became the finance minister and central bank head, and coordinated with his kinfolk at other central banks. These were the same folks who had induced the depression in the first place so they could take over this kingdom that was holding out.

Nevertheless, finally the King sobered up, and in walking through the streets of his Kingdom he found that all had changed, and it was happy and prosperous. When he asked how it happened, and found it was due to his having signed the paper money and credit decree, he was furious. What a fraud, he cried. His wisest minister warned him that the new power transferred to the finance minister spelled the eventual doom of his throne, and would lead to the diabolical overthrow of the Christianity that he had sworn as monarch to support over all other things, and the total debasement of all womanhood in the Kingdom as was later seen in Holy Germany during the Weimar period. But Mephistopheles countered that it was too late, and that he would certainly be immediately overthrown if he withdrew the paper as the population was so happy and industrious. The King feared the consequences and relented.

Goethe summarized this series of events with the following poetic verse:

“I am fed up with this endless how and when, if there is no money, let us make it then.”

And how this make believe paper works is the next part of this discussion.

“Paper money eventually returns to its intrinsic value – zero.” (Voltaire, 1694-1778)

The gold value of the dollar in 1920 was $20.67 and today an ounce is worth $1,683.86 or around 81 times more expensive or 1.228% of its earlier value. That is a 98.77% depreciation of the dollar in relation to gold.

Now, let's look at the CPI Index which is a little more optimistic giving it $3.48 in value:

Decreasing Purchasing Power of the U.S. Dollar: What's $10,000 in 1900 Worth Today?

If a shopper were magically transported from the year 1900 to 2012, the $100 bill that he had in his wallet in 1900 would now be worth only $3.48! That is, $100 in 2012 would have the purchasing power that $3.48 had in 1900; $10,000 would be worth only $348 today. That's a 96.4% decrease in buying power. Our shopper would consider current dollars virtually worthless. (Note: the calculations in the post were made using the inflation calculator introduced earlier this month.) This almost parallels the decline in relation to gold and it is worse than it looks as the CPI has been falsified by removing from it products whose price rises so much it starts to be substituted by other products. This skews the inflation rate downward. The dollar is almost all gone. The picture is worsens even more when you look at the gold behind the dollar using the unaudited gold reserves recorded to be Fort Knox and the New York Fed which are 8,133 tons or 260,370,000 ounces. If you divide these ounces into M-3 of 18 trillion you come to $69,132.38 an ounce.

It will be the fate of all paper and fiat credit systems that the monetary unit in such a vehicle will die. History is strewn with American Continentals or the French Assignats but the most curious part of the German hyperinflation which was largely caused by the overproduction of the fiat mark was that in 1923 what was left of it vaporized even though the money supply no longer was increasing. People stopped believing in it. What was even more curious was that Dr. Hjalmar Schacht created a new currency with nothing behind it and it maintained its value and he was consequently called the old wizard. Yet the Saigon currency after the North Vietnamese surrounded the city vaporized to zero. What happened to Milton Friedman's monetary theory of measured expansion or that of Keynes for that matter who thought digging for gold was as stupid as burying dollars and then digging them up? (See Keynes "General Theory" and Friedman's "Monetary History.") In each case the value that was thought to be there was what it was thought at the time to be and not what it was in reality. What this really represents really is a substitution of monetary transubstantiation making according to Karl Marx the jealous god of money in place of the Catholic transubstantiation.

Fiat money and usury are a social control mechanism that are founded on principles that according to Aristotle are against nature (Politica 1258b) in that they cannot create their own children and thus cannot create the interest to pay it back. For example, if I lend to a member of this audience the 176,300 tons of gold which is all that exists in the world, and ask for ten percent interest payable in principle and interest in a year, then the 176,300 tons of gold plus the 17,600 tons of interest cannot be paid in full as there is no gold in the world to pay the interest. In other words, the system based on gold and interest (usury) cannot work as it cannot pay the interest on the fully extended lending base. But even if we used paper, and people believed it was gold, the paper too cannot procreate. So once the money is fully lent out, then no further lending can take place nor can the interest be paid unless you hypothecate out of nothing additional paper or credit. The system would otherwise start an implosion if it were not continually hypothecated with additional credit or paper money. Such an implosion took place during the time of King Edward the Pious of England as the weaker creditors started to default first and then the stronger ones until the usurer had all the wealth of the kingdom without having done any real work. King Edward simply took all the money back from the usurers and expelled them from England hence he was known as the pious.

Dante placed the usurer in his seventh rung of Hell with the sodomist as the usurer made gold fruitful though it was not, and the sodomist made what was fruitful unfruitful. In other words it was natural to sow in the field to reap but sowing gold cannot produce an increase and the sodomist does not plow in a field where anything will grow. That is why it is against nature. He consigned both to the seventh rung of Hell for the sinners against nature and God as these sins are forbidden in the Bible. Shakespeare understood this in his play “The Merchant of Venice” in that Shylock says he makes gold fruitful like Laban’s flock that bore wages to Jacob of the ring streaked and spotted cattle but this could not make gold fruitful.

And Shylock tells us at the trial that he really wants the life of Signor Antonio because he was interfering with his control mechanism for ruling over the society for his lending without interest would drive his system of control out of business. It was through that control mechanism that Shylock controlled the state. He was offered by Bassanio ten times what was owed and refused for state control was more important than the multiple interest offered by Portia or the multiple principle offered by Bassanio. Therefore, he wanted Signor Antonio's death though the extraction of the pound of flesh that was already forfeited and not the money.

I would not recommend to the audience that anyone seek to interfere with this control mechanism as he would be striking at the roots of the control of the state of the present masters of the universe and these masters would react no differently than Shylock who wanted his pound of flesh as that would have ended the threat by slaying Signor Antonio the representative of the love your neighbor as thyself state. The Rothschilds and Barings as Lord Byron points out in his poem "Don Juan" replaced the sovereign monarchs of Europe as control shifted to those who controlled the creation and contraction of money (largely fiat) through the banking function usurping the right of kings as sovereigns to issue money (which should have been restricted to gold) and used the sin of usury as a control mechanism.

"It was through "the manipulation of the quantity and flow of money which enabled them to influence, if not control, governments on one side and industries on the other. To do this it was necessary to conceal, or even to mislead, both governments and people about the nature of money and its methods of operation. In 1909 Walter Rathenau, who controlled the German General Electric Company, said 'three hundred men, all of whom know each other (bankers or their agents), direct the economic destiny of Europe and choose their successors from among themselves.' It must not be felt that these heads of the world's chief central banks were themselves powers in world finance. They were not. Rather, they were the technicians and agents of the dominant investment bankers of their own countries, who had raised them up and were perfectly capable of throwing them down. The substantive financial powers (fiat money) of the world were in the hands of these investment bankers (Rothschild and Baring, etc. also called 'international' or 'merchant bankers' ) who remained largely behind the scenes in their own private unincorporated banks." (Quoted from Carroll Quigley's "Tragedy and Hope" published by MacMillan Publishers. When the deep state realized what MacMillan had done, they ordered them never to reprint this book and to destroy the plates.)

This is the so-called invisible hand of Adam Smith or his masters of the world replacing the royal monarchs. It was thought necessary in order to carry out this control to destroy the entire moral fabric of of Christian society. In this the Rothschilds were preeminent together with their lackey J. P. Morgan until about 1940 when the German Panzer Armies marched into Paris singing songs of hatred against usury. Baron Eduard de Rothschild, the erstwhile ruler of the world, fled to New York City. Plus ca change, plus c’est la meme chose or the more things change the more they stay the same.

Alfred Marshall, J. M, Keynes teacher at Cambridge, struggled with this Aristotelian fallacy in our monetary system and could not solve it. In other words, the gold or paper money cannot create its own liquidity for the interest to be repaid and requires a fraudulent hypothecation to keep it going. And as the monetary aggregates expand, it becomes more and more difficult to control them until they self-destruct from the inherent contradictions. He was the last one and there are no others who tried to tackle it since.

The control mechanism works like this. If we take the Euro central bank reserve of 1%, and the Euro is not backed by gold, and I have a billion in capital which I invest in my bank, then my bank will create a hundred billion of new money as it expands under a 1% reserve requirement. The equation is .01x equals a billion so x equals 100 billion. So from a billion in gold or fiat money is created a 100 billion. My goal is to make 10% profit on this money as it expands like an accordion through the EU fractional reserve system, and while interest rates vary, we will use this figure as a simple proxy. So I make ten billion a year out of my one billion in capital or ten percent of my now 100 billion. Now let’s say my neighbor is as rich as I am and invests a billion dollars in gold to build an automobile plant as Henry Ford, and makes a thirty percent profit, then he makes three hundred million dollars a year to my ten billion. He is just as capable and intelligent as I am but I have the fractional reserve banking system behind me. And I make absolutely nothing but money out of nothing. I have no inventory to keep. My wealth is a bookkeeping entry that everyone believes in. As I make ten billion a year in profit, I grow richer and richer. How can my Henry Ford neighbor keep up with me? I have to win the game.

And before you know it the Dukes of England with their grand estates are nothing compared to me. I came to England in 1798 and my family took over the whole country as I had all the money. As the Dukes lost their lands to me, I decorated my board with their graces (see Anthony Trollope’s “How We Live Now”). Even the Queen had to come to me when she needed money and I lent it to her (Proverbs 22:7). I became the master of the universe and the Queen became a figurehead (see “Coningsby” by Benjamin Disraeli). I declare on television that I am not accepted as an aristocrat despite my purchased title as I am only in this country five generations but what I don’t say is who cares. I am the ruler and that is all that counts.

Now, my friends, this is why gold cannot work. You cannot mine gold fast enough to cover all of the fiat credit that has been created out of nothing. Nor can the paper money keep up so I just have to make more of it under my system. As our Goethe says in Faust, I am fed up with this endless how and when, if there is no money, let us make it then. And so we have.

Now what is the real value of gold. If the United States has 8,133 tons of gold in Fort Knox (unaudited) which comes to 16,267,000 pounds. The pounds translate to 260,270,000 ounces. If I divide that by M-3 money supply, which is to divide the ounces into about 18 trillion dollars, then the gold backing for the dollar is $69,150.00 for each ounce. The quoted ounce today is around $1,683.86. $20.67 in 1920 used to be convertible into one ounce of gold. Now, what does this mean? It means that the fiat money and credit that has no value has supplanted the gold that has intrinsic value until at some future time the jig is up, and reality dawns on the masses as during the German hyperinflation or during the Saigon siege. It is then, and only then, that they will escape from their collective insanity.

I used this literary excursion, taking some liberties with the text, to introduce the discussion of the Euro for reasons which will be soon apparent. The goal of consolidating Europe into one state goes back in modern times to Napoleon Bonaparte’s Continental System whose goal was to create a system of Empire that was self-sufficient and would preserve within it its industrial capacity against the exports of Britain. Here we see a substitution of the Christian consolidating principles of the Holy Roman Empire being replaced by purely materialistic considerations. Napoleon was not the only one to see that you must preserve your own industries if you wish to have power, but Friedrich List wrote about it later in Germany and Alexander Hamilton about this time set up the United States with tariffs so that its industries would not be destroyed. Napoleon used his military genius to foster this system but was confounded in Russia as Germany over hundred years later in the early 1940s. Germany had sought to create a Eurasian Empire from France to Japan using Japan as a partner. Again, Britain in its traditional classical balance of power role, found allies in the United States and Russia to stymie this German project that would have shifted the balance of power against the Anglo-Saxon nations.

The Euro is a new effort led by Germany to achieve a new Continental System. It was Germany that pressed the Euroland nations to extend the Nato Alliance to Poland to protect its industrial investment in eastern Europe in direct violation of the agreements with the drunken Yeltsin. Germany’s foremost goal was to create this 18.292 trillion Euro common market and Euro currency as a direct competitor of the United States where it would finally have a similar market to scale its products. Germany would use the economies of scale of the European Union to destroy the US industry. Then, combined with their currency rigging, they would invade the United States wrecking what was left of their domestic industries that they and Japan had not already destroyed. It is for this reason we do not see Germany giving up on this dream just because a Portugal at 1.4% of Euroland in GDP, or Greece at 1.8% are having problems. (I have to revise my opinion on the longevity of the EU and Euro based on their present conflict with Russia for if it is not settled soon it may lead to the breakdown of the EU and the Euro.) These problems benefit Germany though it cries with crocodile tears of distress over the thought of subsidizing the weaker nations while its exports soar as the Euro falls while within the EU their manufacturing destroys their southern neighbours. These German export profits more than offset some lending to the states as Greece and Portugal that are in IMF tribulation.

If there are any problems here it is between the bank exposure of the main Euro nations in lending to the banks of Portugal and Greece, and they would be concerned with triggering another derivative crisis that happened when Lehman went down. The pulling of the plug at Lehman detonated parts of the 1.5 quadrillion derivatives which represent 17 times the world GDP of 88 trillion. I hold up before this august audience the June 23 article in the Financial Times on quantitative easing of the United States. There is a gigantic fact here that few really understand. It is the 4.434 trillion Federal Reserve Credit (7.1 trillion dollars today). At the time of the fall of Lehman there was only 900 billion of this credit built up from 1914, and in the three months following the Lehman catastrophe the Fed created one trillion in new credit, or a hundred years worth, to save the system, and another trillion over the past few years to keep the United States from falling back into crisis and to try to grow it out of its problems. Would Germany want to pull the plug on Greece or Portugal to face another Lehman as they could not be sure how much effect a Grecian collapse could have on the derivative structure?

It is important to note that about 2.3 trillion dollars of the Federal Reserve credit is held by the banks as excess reserves. The banks that hold these excess reserves lend them back to the Federal Reserve at interest rates above market for two reasons. The first is to allow the banks to generate profits so that they could very gradually write off the bad debts that overwhelmed their balance sheets from the 2008 crash. If they had showed these losses all at once, it might have caused a banking panic. It took eight years to reestablish the balance sheets of the banks on a sound footing. The second reason was by paying higher than market rates this money was noninflationary as it did not expand the money supply by fractionalizing in the banking system by a mechanism explained earlier.

I might add in passing that these 1.5 quadrillion of derivatives have been described by Warren Buffett as a potential financial weapon of mass destruction, and whose description was confirmed by the historical events of October, 2008, have not served as a deterrent for their continued utilization as the derivative aggregates continue to mushroom into larger proportions. The problem of the derivative exposure continues to the present day.

As we said in the introduction, we have to discuss in our talk about the US dollar the declining power of the United States military which will demonstrate that the power of the dollar that is one side of 88% of the international currency trades cannot continue as the most powerful financial control mechanism. Its role was only enforced by its predominant military power which is now inferior to that of Russia and therefore such a dollar hegemony cannot last. As the dollar is intrinsically worthless, its doom is sealed without that global military power. What follows is a discussion of the rise of Russia as the greatest military power in the world.

YOU WANT WAR? RUSSIA IS READY FOR WAR

The S-500 anti-missile missile system is capable of sealing Russian of from ICBM and Cruise missiles. It travels at a speed of 15,480 miles an hour rising as high as 115 miles traveling horizontally over 2,174 miles. It ends MAD or mutually assured destruction as it seals Russian air space and is being superseded by the S-600 that is a massive improvement. We expect the roll out of the S-700 in a year. The Russian hypersonic missiles in a war with NATO would nullify the vast NATO advantage in air power in ten minutes as these missiles destroyed all the NATO airfields paving the way for Russian shock armies to reach the English Channel within two weeks.

In a sense the US is no longer a global power according to Brzezinski if this is true which it is. The ability of the United States to continue to intimidate the world by threats of sanctions ultimately reaching the point that the US blocks an Iran (now blocked) or Russia from using CHIPS and SWIFT interbank clearing ending its ability to trade with the world in an efficient manner is gradually eroding in concert with the US military decline.

It is important to note that this financial tool of sanctions has hanging over it a 1.5 quadrillion of derivatives that nearly brought the world down in 2008 being triggered by the fraudulent subprime and credit default swap mechanisms which required four hundred years of credit creation in the aftermath to save the world system but if Iran were to be placed in this squeeze again by the new sanctions, or Russia for that matter, the al-Houthis have threatened to destroy all the Middle East oil. A cutoff by tactical nuclear missiles by the al-Houthis obtained on the Black Market could destroy in the Middle East over 20% of the world oil supply or twenty million barrels a day, and trigger a detonation of the quadrillion of derivatives that could not be papered over as in 2008 creating a depression worse than the 50% unemployment in 1933 that brought down the Weimar Republic in a national revolution as outlined in the article below. This is not to speak of the anti-ship missiles lining the shores of Iran that can block the Straits of Hormuz's 22 million barrels of oil that travel through it, or 22% of the world oil supply, that can well be another source of the destruction of the 1.5 quadrillion derivative market on top of the 88 trillion world GDP. Ask for our Straits of Hormuz study. for further details.

These exposures that lie beneath the surface of the world financial system are not widely understood. And let's go on with further analysis of the system. It is also important to realize that the credit system of these banks is a closed loop and no money leaks from it except when it is converted to cash, and no money leaks overseas unless it is converted to cash and carried overseas. The latter is not easy to do with western nations watching like hawks these cash transfers via the terrorist laws, or really enemy of the people statutes a la Soviet Russia or East Germany. Essentially, this credit dollar based on deposits at banks floats against the credit yuan or credit yen in a similar manner. The problem with this floating system is that it is not clean. There are dirty floats all over. And instead of the dollar floating by supply and demand against the yen, the Japanese erect a currency tariff against our goods by buying our currency to raise its value so they can dump their goods on us. If currencies truly float, the deficit countries based on excess say dollar credits would fall making it harder for them to buy imports, and it would serve as a self-correcting mechanism. This mechanism is interfered with by these dirty floats. This is discussed in the letters exchanged between myself and the US Secretary of the Treasury at that time Robert Rubin.

Robert Rubin Correspondence – David Lifschultz

When we talk about hot money in the United States of about 11.7 trillion we refer to deposits or Treasury instruments that can be immediately sold and converted to foreign credits. If this hot money were to be converted all at once into foreign credits, the currency would crash as it would constitute a dollar exposure and not a dollar turnover as the 5 trillion that turns over on the foreign exchange market each day. (The following figures have not been updated through to the next paragraph.) The only reserves the United States has against this potential run on the dollar is about 300 billion plus of gold at market and currencies at market. This is far too small to tackle the problem and if the gold were sold on the spot it would crash its price causing it to yield much less an amount than the nominal reserve value.

Now, I just looked up at the Federal Reserve balance sheet to find 24 billion in foreign currencies. So our nation's liquidity is 307.47 billion at today's gold price plus 24 billion in foreign exchange plus IMF SDR quota of 83 billion. The US can draw up to its quota of 83 billion. The demand on the US in hot money is 11.7 trillion. Generally, a sound company likes to operate on a two to one ratio of current assets over current liabilities or 2 to 1. The US current assets over current liabilities comes to a ratio of current assets to liabilities of the US of 379.47 billion over 11.7 trillion or a ratio of about 1 to 31 using 58% of the dollar value for SDRs.

What this means is if there was a run on the dollar whereby Japanese holders of over a trillion dollars in US dollar assets sold all of their dollars on the open market, the US could only buy up of this debt of 379.47 billion dollars. Then, it would have no reserves and go bankrupt. The dollar would keep falling unless the US could persuade some other country to buy up the dollars. Then, the issue is whether the US was just illiquid or insolvent. An illiquid company would have been General Electric in 2008 which could not turn over its commercial paper, and in a default, would have had to declare for bankruptcy protection while it liquidated its other assets. All of its assets then exceeded its liabilities. But in a collapsing market, the other assets of GE other than cash would be falling in value as we saw in the concomitant crash of the 2008 stock market. So if GE had huge amounts of commercial real estate, that real estate could have been suffering a rapid erosion in value, and theoretically all of the Triple A assets of GE could have been collapsing at the same time.

In the case of the United States, if it were to be treated as a company and not a sovereign, then if it had a deficit net worth or net deficit position of around 10 trillion dollars which is around the figure it would mean in a liquidation its creditors could not be paid off. The response to this observation is that the entire wealth of the US would be at the disposal of the US and it could issue an asset tax on all its citizens sufficient to pay off its debts. The national debt in relation to the GDP of the US is about 107 to 108 per cent but this does not reflect the total wealth. Its total wealth after debt is estimated at 93.5 trillion in 2017. If we say that the US government has access if not control of all the wealth of the United States which verges on socialism, then the US could tax 8 trillion of that wealth to pay its foreign debt obligation provided the foreigners would take assets in other forms than dollar credits. However, in the world crisis triggered by the collapse of the dollar, the asset values in the United States could fall as much as 90%. This may sound far fetched, but in 1933 at the heart of the depression with unemployment about 25% real estate prices fell over 90% in New York City as the stock market. If all assets similarly fell 90%, there would be nothing left of the US.

If truth be told, if the creditor nations were to try to remove overnight many trillions of their foreign investment from the United States, it would be regarded as an act of war and the assets frozen. The same action would be taken against Japan of freezing their dollar assets in the United States. The issue of turnover against exposure discussed above can be easily explained by the following comparison. If you have a billion dollars to trade with which is hypothetically all my net worth, and I buy and sell bonds all day to the tune of 300 billion dollars, then it would be foolhardy to say that what is my billion of reserves against my trading prowess of 300 billion dollars a day in bonds. But the exposure I have is a billion, and against that exposure the turnover means nothing except as to whether I lose or gain money each transaction. If I lose two billion dollars, I am broke, and minus one billion dollars as happened to Long Term Capital Management whose derivative position was over a trillion dollars. That demonstrates that when the president of the New York Federal Reserve, William McDonough, told me what is 11.7 trillion (it was less then but I am using the current figure to avoid confusion) in hot money exposure when less than half that amount trades each day, either he did not know himself or he was purposely trying to mislead me as to the significance of this exposure that can be ruinous.

The three trillion exposure to China due to their surpluses is therefore potentially very dangerous for the United States and other deficit countries as if they converted these dollar credits into yuan credits as the Middle Eastern countries could to their currencies, the dollar would collapse on the foreign exchange markets. It is not likely to lead to a short-term catastrophe as China is not prepared to cease exporting to us and others, and nor they would benefit from a world depression as it would deter their march into becoming the dominant world power. In any event, China’s dollar credits would also be frozen if the effort were initiated as those of the Gulf States of Arabia.

Another example of exposure versus turnover is the high frequency turnover in the stock and Forex markets. The average holding or turnover of stock in the United States is twenty seconds. In the Forex markets, which is 70% electronically based on preset algorithmic trading, the roundtrip trades or turnover are completed in under a second on average, and the Big Five players are in and out in under 1/10 of a second. This is also called systemic trading responsible for about half the trades on the New York City stock exchanges and they are tied into the cash settlement manipulations. Ask for our studies on cash settlement if you are interested. This is truly an unproductive use of capital as it produces nothing of value to the society, as well as most of the quadrillion of derivatives. The Tobin transactional tax to discourage this wasteful expenditure of national resources is one way to redirect bank credit. Also, another Glass-Steagall Act should be passed which would include removing these derivative exposures from their balance sheets. In addition, taxes should be raised on short-term profits to 90% to discourage parasitic trading and reduced on long term gain over five years to 5% to encourage productive investment wiping out most hedge fund and investment bank trading especially utilizing cash settlement for manipulation by those that control trillions of investment capital. That was behind the crash of 1987 where we reversed the crash by ordering the major Wall St. players to reverse their position short positions.

As John D. Rockefeller laid out for his Standard Oil combine that is best reflected in one of its former components, EXXON, whose Rockefeller principles they still follow, derivatives for decreasing risk are an authentic business purpose but not to gain speculative profit. As John D. wrote in his “Random Reminiscences”, “Standard Oil is not concerned in speculative interests as the oil business itself is speculative enough, and its successful administration requires a firm hand and a cool head.” And this principle was carried forward in a recent Annual Report of EXXON that stipulated that derivatives are only used to protect investment but not speculation. An example would be farmers selling their futures in corn to Kellogg to pay for seed, and supplies, so that Kellogg can be able to plan on a stable price for their corn flakes but not otherwise for the purpose of gambling using bank credit. Or in the case of EXXON, their selling in the future their refinery production of products to be sure they reaped the money necessary to pay for the building of the refinery while it gives the buyer an assured supply of product at a fixed price they can plan on and guarantees EXXON a sale. In a sense, the Shell future sales of natural gas at their 22 billion dollar Sakhalin project was done to protect their balance sheet accords with this principle.

There is a misconception that the creation of bank credit, or the M-3 money supply, is solely the concern of the banks and should remain within the confines of the free market. But the creation of money out of nothing in our fractionally reserved banking system is essentially a conversion of the wealth of one part of the population to another, and at the very least should be guided by the government as Dr. Hjalmar Horace Greeley Schacht did as Reichbank President in 1933 where no bank credit was allowed to be used for unproductive purposes such as speculation and where he turned around the catastrophic unemployment situation relatively quickly in that 50% of the German unemployment was wiped out in six months and the rest by 1938. John Maynard Keynes in his introduction to the 1938 German edition of his “General Theory of Employment, Interest and Money” declared that Dr. Schacht was the greatest exemplar of this theories. (This approach was replicated after World War Two by the Schacht Reichbank protege, Dr. Wilhelm Vocke, who created the German postwar economic miracle, and my friend, George Champion, who was then head of Chase Manhattan Bank, invited him over in the 1950s to explain this to the American Banking Association).

It was Schacht in 1923 who stopped the German hyperinflation by ceasing to supply credit to the currency speculators who were shorting the Mark, and this created a surge in the Mark ending the hyperinflation. The speculators could no longer go to the central bank for credit to cover their short but had to buy it in on the open market. Similarly, the Chinese authorities blocked the speculators and insulated their economy from the so-called Asian currency contagion of 1997 by buying both the Hang Sang Index and their own currency which the speculators had shorted thereby creating a bloodbath among the speculators–who promptly called in Milton Friedman to call foul as government intervention against manipulation was not regarded by him a part of the functioning of a free market.

Creation of money was always historically under the rule of the sovereign whether it was a monarchy or Congress and not to be held in private hands for their use according to their sole discretion. This does not even cover the lender of last resort role. Even Goldman Sachs had to flee to for cover in the Lehman debacle under the Federal Reserve tent despite almost all of their positions being in the right direction--that is short, as well as General Electric, who could not turn over their commercial paper liabilities created under the so-called genius of management, Jack Welsh, to save interest expenses against the higher interest expenses for the more conservative long-term bond issuances, which is another reason for the right of the government to exercise control over this sector that they have to bail out or face the destruction of their economy. The thought of this Jack Welsh must cause the great Thomas Edison to turn over in his grave.

We can look at total central bank gold reserves of 30,562.5 tons or 977,984,000 ounces, and divide these ounces into the world M-3 estimated to be 60 trillion, and come out $63,000.00 per ounce. This relates to the earlier value of the dollar as $20.00 an ounce in 1920. This expansion validates Aristotle’s contention in Politica 1:3:23 that the interest rate system is contrary to nature in that the gold, paper or credit cannot produce its own children, or the liquidity to cover the interest without either hypothecating the gold or issuing more paper money or credit. What this means in ordinary lingo is that if I own a house, and it is worth ten million dollars, and I sell ten five million first mortgages on it, then I have hypothecated the asset gaining fifty million in credit on a ten million dollar asset. Doesn’t that sound familiar in the various alphabet soup derivatives involved in the last Lehman crisis? So when England in 1900 had a 3% gold base against its Pound credits, it had hypothecated its gold over 33 times with similar Pound issuances. It was an untenable gold interest rate system as the dwindling ratio of gold ounces could not sustain a run on the central bank because of the inverse credit pyramid, and the Pound failed in 1931 with the English going off the gold standard. That spelled the death knell of British power as it iid for the US when it went off the gold standard under Nixon. We have already treated the lunacy of a fiat money representing nothing redeemable by another IOU nothing piece of paper representing nothing.

There is the question of whether gold is in sufficient quantities to allow for expansion of an economy but the liquidity for the economy can be achieved by the gold rising in value if there is a proliferation of other commodities far in excess of the gold base, and in that sense gold should float as a money in the form of a commodity against other commodities. Therefore, in a system under Sharia law gold savings would be rewarded as the production of the system expanded, and it would create a much more valuable gold and a certainly honest currency. The rising value of gold in such a situation would also furnish the additional liquidity for the financing of the growth of the economy. Even a currency separated from gold, whose value constitutes a form of secular transubstantiation, follows the same laws of the interest rate system as it must continuously create the credit or liquidity to pay the interest until it starts to disintegrate in currency crises based on the aggregates becoming unmanageable. This is why historically all currencies so divorced from a metallic metal, and based on the interest rate system, die. The British economist Alfred Marshall was the last one to struggle with this paradox and could not solve it. He could not figure out how to circumvent the fact that the interest rate system cannot create its own liquidity except through diluting the currency, credit or gold until it expires.

Lord Byron addressed the same issues as Johann Wolfgang von Goethe in his “Don Juan”, but spent more time on the issue of the fiat credit and paper system with interest as a control mechanism as the quote below indicates:

“Who hold the balance of the world?
Who reign O’er congress, whether royalist or liberal?
Who rouse the shirtless patriots of Spain?
(that make old Europe’s journals squeak and gibber all).
Who keep the world, both old and new, in pain or pleasure?
Who makes politics run glibber all?
The shade of Bonaparte”s noble daring?
Jew Rothschild and his fellow Christian Baring.

And Percy Shelly regarded the fiat system as more oppressive to the lower classes which it is than the medieval use of gold itself as the only money with silver. While the Wall Streeters aggrandize the wealth to themselves as the .1%, the lower classes can hardly afford to raise children as under the the House of Medici utilizing usury.

Tis to let the Ghost of Gold
Take from Toil a thousand fold
More than e'er its substance could
in the tyrannies of old.

Paper Coin-that forgery
Of the title-deeds which ye
Hold to something of the worth
Of the inheritance of the Earth.

(from the poem "Mask of Anarchy")

David Lifschultz
THE LIFSCHULTZ ORGANIZATION
DAVID@LIFSCHULTZORGANIZATION.COM
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