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Nov 24, 2010

Latest North/South Korean Exchange: Who Needs A Conflict

24 November, 2010
Countercurrents 

Last March, North Korea was falsely blamed for sinking a South Korean ship, a topic an earlier article addressed, accessed through the following link:
Seoul said there's "no other plausible explanation....The evidence points overwhelmingly to the conclusion that (a) torpedo was fired by a North Korean submarine," even though none was detected in the area.
At the time, evidence suggested a false flag, manufactured to blame the North. The incident occurred near Baengnyeong Island opposite North Korea. US Navy Seals and four US ships were conducting joint exercises in the area. The torpedo used was German, not North Korean as claimed. Germany sells none to Pyongyang. Yet it was blamed for what it didn't do, what apparently was Pentagon-manufactured mischief.


What now? According to US media reports, North Korea incited the gravest incident since the Korean War armistice. For example, on November 23, New York Times writer Mark McDonald headlined, "Crisis Status in South Korea After North Shells Island," saying:
"The South Korean military went to "crisis status" on Tuesday (11/23) and threatened military strikes after the North fired dozens of shells at a South Korean island, killing two of the South's soldiers and setting off an exchange of fire in one the most serious clashes between the two sides in decades."
America, Britain and Japan condemned the attack, the White House calling on North Korea to "halt its belligerent action and to fully abide by the terms of the Armistice Agreement."
"Analysts," said McDonald, "were quick to see the shelling as a deliberate North Korean provocation," even though South Korean forces fired first, AP reporting:
"The skirmish began when Pyongyang warned the South to halt military drills in the area, according to South Korean officials. When Seoul refused and began firing artillery into disputed waters, albeit away from the North Korean shore, the North retaliated by bombarding the small island of Yeonpyeong, which houses South Korean military installations."


A Pyongyang supreme military command statement read:
"The South Korean enemy, despite our repeated warnings, committed reckless military provocations of firing artillery shells into our maritime territory."
A November 24 McDonald article headlined, "Nerves Are Rattled in Seoul by Attack on Island," discussing the incident solely from a South Korean/Washington perspective, much like other Western media reports.
The BBC, for example, quoted a Seoul analyst, calling Pyongyang's action "an act of war." Other accounts were also inflammatory, Britain's Foreign Secretary, William Hague, condemning the "unprovoked act." Other comments were similar, citing various reasons for the incident (like internal North Korean tensions during a transition of leadership period), except for what, in fact, may be true, though at this point not everything is known.
However, the exchange occurred while South Korean forces were conducting "Hoguk" military exercises scheduled to end on November 30, including simulated landings. Pyongyang called them a rehearsal for invasion.


Now the aftermath, a David Sanger, Mark McDonald Times article headlined, "South Koreans and US to Stage a Joint Exercise," saying:
Obama and South Korean President Lee Myung-bak "agreed Tuesday night to hold joint military exercises as a first response to North Korea's deadly shelling (as) both countries struggled for the second time this year to keep a North Korean provocation from escalating into war."
America's USS George Washington, a nuclear armed aircraft carrier, and accompanying ships will participate, clear saber-rattling over diplomacy that all US administrations, to one degree or another, have emphasized in US-North Korean relations for decades. That despite Pyongyang wanting rapprochement with the West, only to have Washington rebuff them, choosing confrontation over stability and risking war, potentially with nuclear weapons.


On Russia Today, investigative journalist Wayne Madsen called South Korean President Myung-bak "very warlike," in contrast to his predecessor, Kim Dae Jung's "Sunshine Policy" to establish greater North-South political contact and better relations. South Korea's current president "is very aggressive, very right-wing, very unpopular at home, and the only thing he has going for him is to get into a military showdown with the North." In other words, incite fear and conflict for political advantage, the same Washington policy Bush, Obama, and past US presidents adopted to justify imperial adventurism.

What next? So far, Pentagon officials said no additional forces are planned for the region, and America's 29,000 in South Korea haven't been placed on high alert. For now, Washington ruled out resumed six-party talks, including both Koreas, China, Russia, Japan and America. China and Russia, however, disagree, saying the incident shows the importance of restarting them now.
China's Foreign Ministry spokesperson, Hong Lei, said it's "imperative....to restart six-party talks as soon as possible. We hope the relevant parties do more to contribute to peace and stability on the Korean peninsula," adding that Beijing needs to clarify events leading up to the clash. "The situation needs to be verified," he said.
Russia's Foreign Minister, Sergei Lavrov, stressed "a colossal danger which must be avoided. Tensions in the region are growing." A cool response is needed. North Korea has no reason to want conflict. Washington and South Korea may have other ideas.

Stephen Lendman lives in Chicago and can be reached at lendmanstephen@sbcglobal.net. Also visit his blog site at sjlendman.blogspot.com and listen to cutting-edge discussions with distinguished guests on the Progressive Radio News Hour on the Progressive Radio Network Thursdays at 10AM US Central time and Saturdays and Sundays at noon. All programs are archived for easy listening. 
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Related:

On Korea, Here We Go Again!

By Robert Parry
November 24, 2010
If American journalism should have learned one thing over the years, it is to be cautious and skeptical during the first days of a foreign confrontation like the one now playing out on the Korean Peninsula. Often the initial accounts from the “U.S. side” don’t turn out to be entirely accurate.  Read on.


Palin: ‘Obviously, We’ve Got To Stand With Our North Korean Allies’

Jim Willie: QE2 & The Great Misdiagnosis


From Golden Jackass website
By Jim Willie CB, editor of the “HAT TRICK LETTER”

Use the above link to subscribe to the paid research reports, which include coverage of critically important factors at work during the ongoing panicky attempt to sustain an unsustainable system burdened by numerous imbalances aggravated by global village forces. An historically unprecedented mess has been created by compromised central bankers and inept economic advisors, whose interference has irreversibly altered and damaged the world financial system, urgently pushed after the removed anchor of money to gold. Analysis features Gold, Crude Oil, USDollar, Treasury bonds, and inter-market dynamics with the US Economy and US Federal Reserve monetary policy.

The backdrop has turned dire on several front simultaneously. The great millstone around the USEconomy’s neck continues to drag it down. CoreLogic reported 2.1 million units have created a swamp in Shadow inventory of the housing market. That equates to 23 months inventory, whereas normal is 7 months. They tallied the growing tumor of bank owned properties as a result of home foreclosures, also called the REOs (real estate owned). Look for no housing market recovery for at least another two years. Starting in summer 2007, the Jackass forecast each year has been for another two years of housing market declines, all correct. Ireland might be squarely in the news, but the big enchalada is Spain. The Irish banks have presented a grand headache for the European banks, with a $150 billion exposure. Ironically, Ireland has done more to reduce its budget spending effectively than any EU member nation, yet is left to twist in the soft rain. They cut their government budget by 20%. The USGovt budget grows every year without remedy or remorse. Few seem to remember that Irish fund managers lost the German civil service pension funds a couple years ago, a source of hidden tension and great resentment. Spain will rock Europe and the Euro currency in the springtime. The gold price consolidation will center on the Spain debt crisis hitting fever pitch, with the Euro hit. Then again, perhaps a mammoth new wave of European gold demand will neutralize any USDollar stability. On Tuesday this week, the Euro fell by 200 basis points, but the gold price was stable like a rock. That is notable strength. But the bigger story of strength is with silver. The round robin of destruction to major currencies that makes the Competing Currency War, the race to the bottom in rotated currency debasement, it will lift gold & silver in a round robin of strong demand.

MISDIAGNOSIS: INSOLVENCY NOT ILLIQUIDITY
The US bankers often go home to mommy and order a giant slosh of monetary inflation whenever in deep intractable trouble, like after the previous mistake in QE1 when ordering a giant slosh of monetary inflation. The USFed, led by the academic professor with no business experience, has ordered a fresh supply of gasoline from a lit fire hose, but he does so on a collapsing building. Bernanke has very erroneously diagnosed lack of liquidity within the system to be the underlying problem. He has prescribed a huge swath of ‘free money’ to be sent into the bond market as a solution. He has prescribed that cheap money continue to be delivered to the USEconomy. Bernanke has failed to notice the insolvency in banks, and has failed to notice that 0% has yet to prompt any revival in lending among banks. Bernanke is fighting INSOLVENCY with LIQUIDITY for a second time after learning nothing the first time.

The USTreasury 10-year yield has risen from a grand bond market dare, not at all from evidence of growth. Bond players dare the USFed to create another $1 trillion in new money. In no way does another lift in retail spending constitute a recovery. Household insolvency rises every month from worsening home loan balances. The USFed wants households to spend more on borrowed funds, yet they have depleted home equity and vanished income security. No, US bankers are confused with their wrecked financial engineering aftermath and the broad banking system insolvency that they refuse to acknowledge or discuss. Ever since the April 2009 decision by the USCongress to bless the falsified accounting practices by the Financial Accounting Standards Board, the big US banks have masked their ruined balance sheets, sold stock for their dead entities, and pretended to act as banks. Instead they are mere carry trade shells taking advantage of the USTreasury yield differentials, and storing the cash profits in the USFed, where it earns interest.

Finance minister Wolfgang Schauble from Germany was hostile in public remarks toward the desperate monetary decisions. At the recent G-20 Meeting, Schauble called USFed Chairman clueless openly (his word), describing his policies as reckless (his word). He ridiculed the USGovt approach to urge China and Germany to reduce their trade surpluses. Take surpluses as signs of success and competent industrial and policy management, where the US is void. He gives his nation credit for a strong competitive industry. He cites a direct contradiction. Schauble said, “The American growth model, on the other hand, is in a deep crisis. The United States lived on borrowed money for too long, inflating its financial sector unnecessarily, and neglecting its small and mid-sized industrial companies. There is no lack of liquidity in the USEconomy, which is why I do not recognize the economic argument behind this measure.” Exactly on both counts!!! The USFed is fighting insolvency with liquidity rather than debt restructure for a second time, after learning nothing the first time. The US economists have lost their way so badly, that they no longer comprehend the concept of legitimate income. The US counselors push for putting more cash in consumer hands, regardless of where it comes from. Call it heresy, or call it incompetence, or call it blindness from the Keynesian bright lights that burn bright in the inflation laboratory.

New money does not cure an insolvent banking system or insolvent households. No sterilization of QE2 is in the plan, to serve as protection for the USEconomy. Not in QE2!! My forecast is for the hollowing out of the USEconomy from a massive cost drain with puny export benefit, compounded by continued income erosion. Price inflation will be labeled as growth, even income growth, the chronic sins. The borrowing costs have been near 0% for 18 months with no economic response, making Bernanke’s points again vacant, myopic, and deficient. He is fighting an endemic insolvency problem with amplified monetary inflation. A voice with hint of wisdom came from former New York Fed President E Gerald Corrigan Corrigan. He said, “Even in the face of substantial margins of under-utilization of human and capital resources, efforts to achieve an upward nudge in today’s very low inflation rate make me somewhat uncomfortable.” His experience came under ex-USFed Chairman Volcker during the late 1970 decade, who raised interest rates to 20% to combat inflation, pushing the economy into the 1981-82 recession. That was the final chapter of anti-bubble USFed chieftain linneage. Since the Greenspan Era, it has been full speed ahead with inflation engineering, asset bubble creation, erudite apologists, permitted bond fraud, careful collusion, and reckless management. They have systemic failure to show for it.

The claim by Bernanke and a supporting chorus of economists that QE2 will bolster USEconomic competitiveness is fallacious, and patently backwards as usual. It will push the US further into a wasteland, a vestibule to the Third World. The higher cost structure uniformly imposed will render great damage in a profit squeeze for businesses and discretionary spending squeeze for households. New money does not cure an insolvent banking system or insolvent households. It presents a new problem of significiant price inflation. They want it, so they can call it growth!! Producing high value products efficiently and cost effectively makes the nation competitive. Imposing a fair tax structure that is stable, reasonable, and with proper incentives makes it competitive. Having an active legal prosecution staff to combat bond fraud and defense appropriation fraud makes it competitive. Having a strong education system makes it competitive. A weaker currency raises the cost structure, increases import costs, and assists the export trade if a nation has one. The United States has shipped a large segment of it away in the last 10 years to China, after having shipped a larger segment away in the 1980 decade to the Pacific Rim. Not only did the US promote its financial sector, but it denigrated the industrial sector as dirty. By removing a significant portion of the nation’s capacity to generate legitimate added value income, the USEconomy was left vulnerable to debt overload and insolvency. The US Ship of State was hoisted on its own petard. For those ignorant of naval terminology, that means the US killed itself in a great display of cannon backfire in recoil. The QE2 initiative will be disastrous from many angles, certain to push the nation into an Inflationary Depression, from the current chronic Deep Recession.

MARGIN HIKE AS FINAL LIMP WEAPON
Increases to the silver margin requirement in futures contracts should be viewed as the final act of desperation. It is a device to control price within the paper silver arena. However, in a grand backfire, a higher margin produces a lower price for the physical buyers, who eagerly step up to place and fill orders. The margin maintenance hike on November 9th was six times greater for silver than for gold. The Big Four US banks are caught in an historically unprecedented short squeeze, bleeding $billions. Tuesday November 9th saw a powerful gold & silver price downdraft. The COMEX raised the silver margin requirement in a bland attempt to slow a raging bull market amidst a broken global monetary system. One week later they raised the margin again for both monetary metals. The price downdraft continued. But some calmer winds in Europe enabled precious metals prices to recover. Silver has snapped back much more than gold.

The Chicago Mercantile Exchange raised the margin requirements for silver on November 9th. It was highly motivated. They wanted to prevent a blowout upside move in silver past $30 before Christmas, and to relieve some of the pain to the Big Four US banks. Unlike gold & silver, no margin hikes were doled out for soybeans, corn, sugar, or cotton despite their concurrent price gains. The message is clear, that desperation has set in relative to precious metals, as conditions are breaking down badly. The CME sent out a memo raising the margin maintenance requirements for silver futures by up to 29%, from $5000 to $6500 per contract. Initial positions have a slightly higher margin. It is their right, being the market maker. Let not their fast disappearing silver inventory deter their path. Less than two weeks later, the CME raised the silver margin maintenance requirement another 11.5% to $7250 in a sign of desperation. They also raised the gold margin, but only by 6% from $4251 to $4500 in a symbolic gesture. The CME motive is less about risk mitigation concerns and more driven by the desire to restrain the bull market movement. The investment world will regroup long before Christmas, like in the next week or two. Just when the European woes focused on Ireland, and a rescue aid package seemed in the offing, the silver price jumped upward by $2.00 on a single day, November 18th, a strong telegraph across the paper-physical silver table. The Powerz cannot halt the silver juggernaut, which will see $30/oz by January. If a double hike in the silver margin is the best they have, then they are truly whistling in the grave yard.

The demand for gold is global, diverse, and motivated by the gradual disintegration of the monetary system. Sovereign bonds that support the major currencies are in deep trouble the world over. The consensus actions toward Quantitative Easing, also known as hyper monetary inflation, have boosted demand for gold & silver monumentally in a natural offset. Dozens of nations and billions of people around the world are slowly awakening to the grand deception of money itself and the crumbly foundation that make up fiat currencies. They are losing money in supposedly safe government bonds, a trend without precedent. Most of Southern European nations will declare debt default within two years. Foreign central banks are attempting to diversify their oversized US$-based reserves without causing a run on the USDollar. Gold is gradually being seen as part of the solution, at least in private wealth preservation. Gold is the new reserve safe haven asset, since it is true money.

Important changes have come to the precious metals market. Silver has taken a leadership role. It has broken out in Europe to new highs. Its snapback was impressive after the weak-kneed COMEX hike in margin requirements. Silver is no longer only seen as just an industrial metal, a commodity, but rather as a safe haven alternative, a monetary brother to gold. The European Union bond fracture has wrought great damage to the structural foundation of the global monetary system. It is exposed as having a debt backbone, a paper spine fashioned of weakness, vulnerable to central bank abuse. Money is fleeing the EU Govt bonds, and fleeing even to some extent the USTreasurys. Horrible publicity has befallen the Big Four US banks with class action lawsuits at a time when Asian buyers have targeted the silver market. The Asians of unidentified origin (probably China) have descended with waves of layered orders, exploiting the discount offered from the paper impact after the margin hikes by COMEX officials. Recall that the US & China are locked in a trade war. The louder the USGovt accuses China of currency manipulation, the more they bid up Gold & Silver on the quiet. The strongest months of the year for Gold & Silver are December and January. The margin hike seemed designed to interrupt momentum. It only delayed the next powerful upward thrusts in price.

TITANIC BATTLE OVER PHYSICAL METAL
The nature of the Gold & Silver markets is two-headed. The price discovery aspect is driven by the paper futures contracts. Intended as devices to aid in pricing, to protect from drawn out periods under which business is conducted with commitments made, the paper futures arena turned into a monster two decades ago. The paper tail has led the metal dog, a backwards condition. Some important developments have taken place in recent weeks and months. Secure allocated account holders at both the COMEX and LBMA have forced the situation, demanding physical delivery of futures contracts. They openly cite their distrust, as suspicion is aroused of improper lease of allocated accounts. Huge delivery demands have come from Chinese and Arab investors. The remarkable new wrinkle is that silver paper price ambushes have led to strong silver physical purchases. Stories abound of an Asian assault on the silver market underway. Interviews granted by those with direct information have appeared on reliable websites. The skirmishes result in backfires to the paper market mavens, as they offer repeated discounts to the Asian physical buyers, who grab at the discounts with layered orders, as reported. Therefore, the actions by the paper mavens works to accelerate their own destruction. Investors should hope for occasional ambushes, so that the physical side can reload and obtain more physical metal at lower prices. Also, with occasional bouts of consolidation, the price advances are more stable. A very bizarre pathogenesis of the silver paper market is evident, hidden from view.

The London contact source has shared details to the inner workings of the Asian silver market assault on New York and London with an update. The Asian buyers have been squeezing the shorts in the silver market, causing great pain as the silver price has risen 50% since late summer. After the drop in price from a brief touch of $29 down to the low $25′s, the physical market has responded with strong demand. Keep in mind that the paper silver market is the opposite, a key point. The bizarre anomalous paper market results in more selling when the price drops, the opposite to normal. The ambush catches the leveraged players off guard, forcing paper position sales in sudden liquidations. So a collision is in progress. The paper arena cannot produce enough silver after the raids push down the paper price in order to relieve their tenuous short condition. By pushing down the paper price, they must bring to the table the discounted silver at the lower price, in physical deliveries. The paper market is playing directly into the hands of the physical participants who want to drain the exchanges of their bullion metal. The credibility of the London source was enhanced by the quick jump above $26 as he predicted earlier in interviews. He described lines being crossed between the paper and physical orders, stops, covers, and delivery demands. Details are provided in the November Hat Trick Letter. Great intrepid work by King World News for developing the valuable source.

A staggering rise in physical demand is noted from Chinese & Indian buyers. Physical demand growth more than offsets the miner de-hedging, a process almost wound down fully. Investment demand globally is skyrocketing. According to the World Gold Council, global demand for gold bars climbed by over 30% between 2Q2009 and the second quarter this year. De-regulation in China might permit much broader gold ownership. That would unleash huge demand and pressure the Anglo bankers. Chinese demand has been strong for years, soon to reach a higher gear. With domestic mine output not expected to grow much next year, China will tap the global market, pushing up the gold price. New rules in China have already enabled tremendous increases in private gold demand, whose volume surpasses and overwhelms European central bank sales. The Chinese gold demand in 2010 will be a mammoth consensus estimated 500 tonnes. It will rise by as much as 20% in the year 2011, enough to surpass India as the top consumer in the next three years. Demand is forecasted to rise to around 600 tonnes in 2011, according to a Reuters survey of five analysts. Recent Chinese Govt restrictions imposed on property investment and speculation in other markets have resulted in more money going into gold and jewelry, which seems a calculated policy by the crafty government officials in Beijing. Gold will not burn their citizens in a bubble bust. Jewelry demand has risen by an average of 7% annually in steady fashion.

Investment demand for gold in China has surged by 60% in 2009 to 150 tonnes. On an annualized basis, China is on course to import 118 tonnes of gold through Hong Kong. Domestic gold mine output is expected to be flat inside China for 2011, the first time in years. Couple strong demand and flat output, and big net import of gold bullion will result. The Peoples Bank of China announced in August a relaxation of gold rules, a prelude to broader reform of financial markets pertaining to bonds and currencies. Banks would be permitted to export and import more gold in a program to drive the development of their market in the precious metal. Regard this as a direct assault on the COMEX in New York and LBMA in London, since huge physical gold demand will ramp up to a staggering high level. The PBOC wants to draw gold tonnage into their country without disrupting market equilibrium unduly, as it diversifies more of its burgeoning $2.6 trillion in FOREX reserves.

STATE VERSUS FEDERAL BATTLE
A great battle is being waged, but not presented in the light preferred by the Jackass. Witness the Tenth Amendment battle by the states versus the USGovt on the federal front. The battle has myriad microcosms in the mortgage court decisions made against the big Wall Street banks. So far the decisions favor the people, but the USCongress is busy preparing an unconstitutional bill to permit interstate contracts and possibly to whitewash any mortgage contract fraud. Bank lobby funds flow briskly to the craftsmen of the legislation. If challenged, such a bill might not withstand a constitutional battle. Sheeple justice versus mega-banks could reveal a quintessential states rights battle versus the federal govt controlled by the banking syndicate. Local judges are taking action against obvious criminal and predatory behavior by the big US banks. Some Florida homeowners were foreclosed by the big banks when no home loan was active in force. The Robo-Signers have captured much attention in document forgery. People who challenge are often winning their homes free & clear. Fraudulent attempts to foreclose and seize homes are being interrupted by those who challenge, and demand to prove property title. Legal precedents are set. Banks are worried. Regard the battle as an extension of the Tenth Amendment challenge, with proxy brigades doing battle. The big US banks represent the federal authority when a certain lens is applied.

The struggle in my view reveals a bigger macrocosm, where the states are pitted against the federal government. The proxy warriors for the states are local courts, where mortgage jurisdiction lies. The proxy warriors for the USGovt are the big Wall Street banks, whose syndicate has taken control of the national government bodies in their financial ministries. The states are fighting and winning the battle on home property challenges. Recall that in separate movements, 20 states have invoked the Tenth Amendment in a struggle to wrest back control from the New York and WashingtonDC syndicate. Their turf struggle has been over taxation, waged war, national security directives, border immigration, even threats of pandemic. Witness numerous local battles, erupting conflicts that serve as substitutes for state revolt against the encroaching federal apparataus. The legal structure favors the states. Watch the movements in reaction in counter-attack. What comes next might be Fascist Business Model corrupt extensions. The November Hat Trick Letter includes a review of some legal cases and their implications, which seem to be centered in metropolitan New York City. Some confusion might come from different decisions in different jurisdictions that lack consistency across the 50 states. That lack of uniformity might work to the advantage of upholding state rights, since the nation has always favored individuality of the states, a strength from diversity. Either way, a gigantic hairball is building within the system pipelines at a time when the majority of states are ruptured with huge budget shortfalls and pension shortfalls. They point a finger to the Wall Street corner where the housing & mortgage bust rendered damage. They point a finger to the USGovt colossus where the bloat exists, the deficits have expanded, and the control is centered.

By the way, notice how Bank of America quietly is approaching the funeral parlor. Word from my sources tell of Wall Street buying heavily the Credit Default Swap contracts for Irish and Portuguese Govt debt, in order to lift the bond yields enough to create a renewed crisis. That accomplishes two goals. EU financial distress creates some selling pressure for the Euro currency, thus supporting the USDollar. But a buoyed buck did not soften the gold price!! Sabotage of PIIGS sovereign debt is the order of the day so as to force the situation in Europe, which is stuck. The US bankers sense the need for contagion and crisis to befall Europe once more. Ruinous monetary policy is being exported from US locations. In the recent spring months, the USDollar was given a relative lift from Greek financial woes. This time, the effect will not be the same. Perhaps they can engineer an eerie calm in the FOREX currency market. The USDollar image and condition are so damaged and crippled, that the funds in flight will find Gold & Silver in heavy volumes. But the more hidden motive is to provide effective diversion from Bank of America. It is in a death spiral that requires almost daily cash infusions. As one source put it, “The wires for funds transfers at the Federal Reserve are burning from daily rescues of BOA.” Witness the demise of Bank of America, again. Its own 200-day moving average serves as a ceiling on a dark pathway leading to the cemetery. Its managed death decline has come without news items. The mortgage mess is their curse.


WORKABLE SOLUTION FAR TOO LATE
The solution to the USEconomy and financial structure is long past available with the removal of the USTreasury gold. Here is a solution that could have worked. QE2 is the antithesis of a solution, one certain to cause great damage. Collateral, industry, and smaller government are the cornerstones to a solution. The $500 billion in gold collateral leased in the 1990 decade by Wall Street would be useful nowadays. People grope for bonafide solutions. Try this: Multiply the gold price 7-fold to obtain a hefty realistic $10,000 price level, sufficient to provide $3.5 trillion for US banking system collateral. Presto, some stability for the USDollar vis-a-vis the USGovt debt. Then the task shifts to reducing the USGovt deficit by means of terminating the endless war based upon dubious motives, ending Medicare largesse, cutting entitlements from pensions, eliminating several worthless agencies (like Energy and Homeland Security), and offering major incentives for the return of US manufacturing industry to US shores. The defense budget must be cut by 50%, and be declared no longer sacred. But the opportunity is long gone, since the USTreasury of gold was leased and sold for a few $trillion in private Wall Street gains. The usual suspects are deemed national heros.

These steps could have constructed the foundation for recovery, with $300 to $600 billion in budget cuts. Painful but progress. In two years, the deficit could have been tremendously reduced. That math works for me, but it is too late really. The nation repeatedly kicked the can down the road, the road that leads to the Third World. The opportunity for solution begins with a placement of gold collateral for both currency and debt, and a basis of industry for legitimate income. Both are absent, due to wretched leadership and profound corruption, as debt suffocates the system. Almost all attempts toward remedy mask the true motive at work, the preservation of power. The remedies turn out to be deceptive, adding $trillions to the clean-up bill without results. The squander of new money and the dissipation of asset bubbles are the essence of the Gold bull, which will take it well past $2000 in the coming two years, and much higher. The policy is not about solution, but rather power over money. Hyper-inflation, economic deterioration, and USTreasury default lie directly ahead, just a matter of time. Gold is the personal lifeboat, whose silver oars row to safety.

THE HAT TRICK LETTER PROFITS IN THE CURRENT CRISIS.
From subscribers and readers:
At least 30 recently on correct forecasts regarding the bailout parade, numerous nationalization deals such as for Fannie Mae and the grand Mortgage Rescue.

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Jim Willie CB is a statistical analyst in marketing research and retail forecasting.   He holds a PhD in Statistics. His career has stretched over 25 years. He aspires to thrive in the financial editor world, unencumbered by the limitations of economic credentials. Visit his free website to find articles from topflight authors at  www.GoldenJackass.com. For personal questions about subscriptions, contact him at  JimWillieCB@aol.com

Ellen Brown's Web of Debt Is an Anti-Gold Currency, Pro-Fiat Money, Greenback, Keynesian Tract. Here, I Take It Apart, Error by Error.

By Gary North
Ellen Brown has thrown in the towel. She is no longer willing to argue with me. I finished my critique of her on November 17, 2010. On November 20, she publicly switched sides. She came out in favor of Bernanke, the Federal Reserve System, and quantitative easing.

Hard to believe? Read it here: http://www.garynorth.com/public/7286.cfm

I spent almost 200 hours over a two-month period refuting this left-wing lawyer, line by line. I said repeatedly that she is intellectually unreliable. She has just proved my case. She has joined the Federal Reserve's cheeleaders.
Therefore, the following is ancient history. Here is what this department originally said.
* * * * * * * * * * *
Ellen Brown is devoting her life to a cause. She wants Congress to take over the printing presses and provide 100% of America's money: fiat money, with no gold or silver backing.
She says that if we allow this, Congress can then:
1. Get rid of the income tax
2. Pay off the national debt
3. Pay off Social Security
4. Without any price inflation
To see what she believes in, click here:
http://www.garynorth.com/public/7270.cfm
Is she nuts, or what?
Her 2007 book, The Web of Debt, has become a best-seller within the Patriot movement. This indicates the extraordinary intellectual vulnerability of the Patriot movement. Its members cannot distinguish conservatism from radical leftism. This book promotes the following:
The Populist economics of America's far Left
A vast expansion of Federal government welfare
Pure fiat money: printing press money
Total Federal government control over money: "Obama dollars"
Legal tender laws that force people to accept Obama dollars
The American Civil War as a great engine of economic growth
Franklin Roosevelt's New Deal as a great economic program
The gold coin standard as a terrible evil that restrains the state
Ellen Brown is the latest in a long line of pro-fiat money, anti-gold currency, monetary statists who have infiltrated the conservative movement.
They have accomplished this for over 50 years by the tactic of wrapping themselves in a flag of opposition to the Federal Reserve System. I call them false-flag infiltrators. I have written about them here:
False-Flag Infiltrators
False-flag infiltrators are remnants of a left-wing American political movement of the late 19th century: the Greenbackers, named after the green currency issued by the North during the Civil War. These paper bills were unbacked by gold. Consumer prices rose by 75%, 1861-65. The Greenbackers were opposed to the gold standard because it kept prices low. They wanted the government to inflate the currency, so that debtors could pay off their debts with cheap money.
They had a small political party for almost two decades, the Greenback Party. It 1878, it merged with a labor Party to become the Greenback Labor Party. It went out of existence after 1888. Its main leader, James Weaver, co-founded the Populist (People's) Party in 1891. It was a farm-bloc party that promoted fiat money in order to let farmers pay their debts with cheap money and also because they thought inflation would raise farm products' prices more than the prices of other goods.
There was never any question of the Greenbackers' politics. They were leftists, and openly sided with government controls on the economy.
Brown praises these left-wing parties on page 13 of Web of Debt. She writes: "They advocated expanding the national currency to meet the needs of trade, reform of the banking system, and democratic control of the financial system." In short, they preached what she preaches.
This woman is no conservative.
The Populist movement went out of existence after 1896, after the anti-central bank, anti-gold standard, radical leftist William Jennings Bryan failed to beat William McKinley for President the first time. He failed again in 1900. The last pro-gold standard Democrat lost to Teddy Roosevelt in 1904. Bryan got one more shot in 1908. He lost. From then on, both political parties were pro-central bank.
The Greenbackers were without any political party after 1896. So, they switched strategies. They allied themselves with the anti-Federal Reserve movement. In the 1930s, the main voice was Father Charles Coughlin, an anti-Semitic radio preacher who was a Greenbacker. His outlook was clear. He was a leftist. He wrote:
We maintain the principle that there can be no lasting prosperity if free competition exists in industry. Therefore, it is the business of government not only to legislate for a minimum annual wage and maximum working schedule to be observed by industry, but also to curtail individualism that, if necessary, factories shall be licensed and their output shall be limited.
When his bishop forced him to quit writing or speaking on politics in 1942, the Greenbackers were left without a major spokesman.
Another Greenback author in the 1930s was Gertrude Coogan. Her books remain in print. She was never known outside of Greenback circles. I have written a free minibook refuting her ideas (and therefore also Brown's): Gertrude Coogan's Bluff.
After 1952, they gained an outlet when The American Mercury went Greenbacker and anti-Semitic. In a series of articles, later released as a booklet, Money Made Mysterious (1959), the Mercury presented the Greenback case. This magazine was on the extreme Right. One of its occasional authors was the American Nazi Party founder, George Lincoln Rockwell.
Greenbackers began to infiltrate the John Birch Society after 1964, because the JBS switched from anti-Communism to anti-conspiracy and anti-Federal Reserve at the end of 1964 with the publication of Robert Welch's book, More Stately Mansions. They were not successful. Gary Allen, American Opinion's main author on the banking issue, believed in the gold standard. He was a follower of me on the money question, and I follow Rothbard.
They have remained inside the far Right, but they are still Populist radicals, still in favor of pure fiat money, which they call "sovereign money." For a list of about three dozen books by Greenbackers over the last 80 years, click here. Ellen Brown today is their leading author. She begins her book by tracing her ideas back to the Populists.
I am devoting this department to a line-by-line refutation of her book, The Web of Debt, and to occasional responses to her website, www.WebofDebt.com.
I have good news. You do not have to buy her book in order to verify my direct quotations from her book. Google has reproduced 90% of the book. You can read most of it online. Access it here.
Ellen Brown is a lawyer, not an economist. For the sake of her clients, I hope she is a better lawyer than she is a monetary economist and monetary historian. I surely hope she is a better lawyer than she is an historian.
Ellen Brown is a Keynesian, a mercantilist, and a left-wing Populist who promotes the construction of a Federal welfare state by means of fiat money. She is quite clear about what she wants from the Federal government.
The availability of funds for a whole range of government services that have always been needed but could not be afforded under the "fractional reserve" system, including improved education, environmental cleanup and preservation, universal healthcare, restoration of infrastructure, independent medical research, and development of alternative energy sources. [Web of Debt, p. 458.]
This is Nancy Pelosi's vision for America. Is it yours?
Ellen Brown is also the least competent amateur historian I have ever encountered, supporting her entire case for fiat money with bogus quotations. I have devoted two sections of this site to her errors:
Historical Errors
Economic Errors
Anyone who supports what she supports would be wise not to quote her again, and to remove all previous references to her in his writings. There is a real possibility that the the brighter followers of these people will contact them and ask: "How can you defend your position by using anything as bad as The Web of Debt? It's one string of falsehoods, beginning on page one and stretching to page 478." I offer this warning:
The Prophet Isaiah warned the Israelites not to flee the Assyrian empire by fleeing to Egypt. He referred to Egypt as a broken reed (Isa. 36:6). Ellen Brown is a broken reed. Do not flee to her book to support your Populist nostrums.
Then get out of the Patriot movement. This infiltration has gone on long enough. Move on to MoveOn.org. They agree with your welfare state economics. It's your task to sell them on Obama dollars. That should not be very difficult.
Ellen Brown: Hitler's Cheerleader
Gary North
Ellen Brown thinks that Hitler's economic system saved Germany. She is a welfare statist, a Keynesian, a Greenbacker, and an opponent of the gold standard. She is getting a hearing in Right-wing circles. . . . keep reading 
Ellen Brown Switches Sides, Praises Bernanke and the Federal Reserve, and Calls QE2 the FED's Self-Redemption.
Gary North
Ellen Brown is a lawyer. She has just settled out of court with Bernanke. Are you surprised? . . . keep reading 
Ellen Brown Responds to My 31 Historical Criticisms. Now It's My Turn Again.
Gary North
Ellen Brown is desperate. Let me show you just how desperate. . . . keep reading 
Historical Response #1: Ellen Brown Believes That Verifying the Accuracy of a Source Is Not Important.
Gary North
Ellen Brown says it does not matter how accurate a quote is, just so long as somebody has quoted it. . . .keep reading 
Historical Response #2: Ellen Brown Thinks That by Quoting Herself Again, But Without Responding to My Evidence, She Has Refuted Me.
Gary North
Quoting yourself without additional evidence is not an effective response to a charge that you refused to quote the whole document. . . . keep reading 
Historical Response #3: Ellen Brown Now Calls Lincoln a "Reluctant Greenbacker." She Has Backed Off Almost Entirely from Her Book.
Gary North
This is a major retreat on Ellen Brown's part. She has almost abandoned the #1 historical myth of the Greenbacker movement. . . . keep reading 
Historical Error #4: Ellen Brown Denies That She Ever Told a Tall Tale About a Tax-Free, Fiat-Money, Colonial Pennsylvania.
Gary North
Ellen Brown is a lawyer. In public debate, she is not a good lawyer. She doesn't think the "jury" -- you -- can read. . . . keep reading 
Historical Response #5: Ellen Brown Admits That Franklin's Bogus Quote on Money Is Bogus.
Gary North
Ellen Brown used a bogus quote for three years. Then she dropped it and rewrote those sections of her book that relied on it. Why did she use it in the first place? . . . keep reading 
Historical Response #6: Ellen Brown Relies on a Phantom Letter Proving That Franklin Supported Paper Money, but She Won't Tell Us Where It Is.
Gary North
When caught in a whopper of a mistake, an author should either fess up or shut up. Ellen Brown does neither. . . . keep reading 
Historical Response #7: Ellen Brown's Research Policy: "Primary Source Documents? I Don't Need No Stinking Primary Source Documents!"
Gary North
Ellenm Brown thinks that primary source documents are irrelevant for historical research. . . . keep reading 
Historical Response #8: Ellen Brown Admits She Was Wrong, but Objects to My Adjective.
Gary North
With or without my adjective, she was wrong. . . . keep reading 
Historical Response #9: Ellen Brown Now Says That Mass Inflation in Medieval China Produced Prosperity.
Gary North
Ellen Brown says that fiat paper money does not produce mass inflation, except when it does, and when it did in Medieval China, the result was prosperity. No, it wasn't. It was collapse. . . . keep reading 
Historical Response #10: Ellen Brown Now Re-Defines "Fiat Money" to Match How Economists Define "Non-Fiat Money."
Gary North
Ellen Brown defines "fiat money" in the way that an economist defines commodity money. I ask: "Why does someone write a book promoting fiat money who defines fiat money as commodity money?" . . . keep reading 
Historical Response #11: Ellen Brown Responds by Not Responding Regarding Her Bogus Quote by Nathan Rothschild.
Gary North
Why Ellen Brown thinks this is a response baffles me. She offered no evidence that the bogus quote was in fact real. . . . keep reading 
Historical Response #12: Ellen Brown Afmits That Her Jefferson Quote on Banks Was Bogus.
Gary North
A reader tipped her off in 2010. After three editions and three years, she has dropped it. This is the first time her original readers have heard about this revision. . . . keep reading 
Historical Response #13: Ellen Brown Still Does Not Prove That Jefferson Helped to Stop the First Bank of the U.S. from Being Re-chartered.
Gary North
Ellen Brown quotes selectively from her own book. Twice, she gets Jefferson's influence wrong: in 1791 and in 1811. . . . keep reading 


Historical Response #13: Ellen Brown Still Does Not Prove That Jefferson Helped to Stop the First Bank of the U.S. from Being Re-chartered.
Gary North
Ellen Brown quotes selectively from her own book. Twice, she gets Jefferson's influence wrong: in 1791 and in 1811. . . . keep reading

Historical Response #14: Ellen Brown Says That the Major Economic Historian of the American Civil War Is Wrong. So There!
Gary North
Lawyer Brown has no use for the latest findings of economic history. What non-historians and historians who were not economic historians taught 50 years ago or 80 years ago had it right. . . . keep reading

Historical Response #15: Ellen Brown Says We Should Respect This Bogus Lincoln Quote Because the Idea Is True.
Gary North
Ellen Brown does not bother to defend this quote as legitimate. Whether a quote is legitimate is irrelevant to the truth or falsehood of her presentation. Besides, the fakes are so lively, so persuasive! . . . keep reading

Historical Response #16: Ellen Brown Says That Lincoln's 1863 Statement Against More Greenbacks Meant Nothing.
Gary North
Ellen Brown thinks that when Lincon said "no," he really meant "yes." . . . keep reading

Historical Response #17: Ellen Brown Confuses Legal Language With Economic Reality--Civil War Greenbacks as Pure Fiat Money.
Gary North
Lawyer Brown does not understand economics. She looks only at the law and then ignores people' behavior. . . . keep reading

Historical Response #18: Ellen Brown Says That by Adding the Words "Is Quoted as Saying," She Escaped All Responsibility to Verify Any Quote.
Gary North
Ellen Brown uses this argument again and again. Are you impressed? . . . keep reading

Historical Response #19: Ellen Brown Admits She Was Wrong About Lincoln's Supposed Defeat by the Bankers in 1863.
Gary North
Ellen Brown promises to revise her book's next edition. . . . keep reading

Historical Response #20: Ellen Brown Admits I Was Correct About the Bogus Quote by Garfield.
Gary North
Ellen Brown says she will remove the quote from her next edition. . . . keep reading

Historical Response #21: Ellen Brown Still Refuses to Offer Statistical Evidence Regarding Money and Prices on the Island of Guernsey.
Gary North
I originally pointed out that Ellen Brown offered no statistical proof regarding the inflation-free island of Guernsey. She has yet to offer any. . . . keep reading

Historical Response #22: Ellen Brown Reasserts Her Support of the Far Left Movement 19th-Century Known as Populism.
Gary North
Ellen Brown is a Left-winger. Nowhere is this clearer than in her support from the 19th-century radical political movement known as Populism. . . . keep reading

Historical Response #23: Ellen Brown Backs Off from Her Reference to a Phony 1892 Manifesto of Unnamed Bankers, but Not the 1934 "Update."
Gary North
Ellen Brown says she never really said this document was true. Not really. Just sort of, maybe a little bit. She skips over the fact that she openly promoted its 1934 "update," as she called it. . . . keep reading

Historical Response #24: Ellen Brown Defends Her Use of a Stalinist Non-Historian's 1934 Attack on American Big Business.
Gary North
Ellen Brown continues to rely on Matthew Josephson, a 1920s literary critic who hated capitalism and defended Stalin in the 1930s. She dismisses modern pro-capitalist accounts of American enterprise. . . . keep reading 

Historical Response #25: Ellen Brown Brushes Off Her Reference to a Secret Meeting Where a Dead Man Discussed the 1929 Stock Market Crash.
Gary North
Ellen Brown tries mightily to deal with the fact that she failed to check Benjamin's Strong's date of death: 1928. . . . keep reading

Historical Response #26: Ellen Brown Says That She Can See No Difference Between a Failure to Act and Active Causation.
Gary North
Ellen Brown says that Milton Friedman taught that the Federal Reserve caused the Great Depression by contracting the money supply, 1930-33. He never said this. . . . keep reading

Historical Response #27: Ellen Brown Denies That Hitler's National Socialism Was Socialistic and Keynesian.
Gary North
Ellen Brown tries to distinguish between Hitler's economic policy and his political policy. She continues to defend his economic policy. . . . keep reading

Historical Response #28: Ellen Brown Refutes My Statement That the German Central Bank Was a Government Bank by Quoting Experts Who Also Say It Was.
Gary North
Ellen Brown quotes verbatim from two experts who conform my position. She insists that these sources are accurate. . . . keep reading

Historical Error #29: Ellen Brown Stands by Her Expert Witness for Zimbabwe's Victimization: The Central Bank of Zimbabwe
Gary North
Ellen Brown says that international currency speculators caused Zimbabwe's inflation. She has provided a single expert to present this thesis: the central bank of Zimbabwe. . . . keep reading

Historical Response #30: Ellen Brown Admits I Was Right -- She Got Her Dates Scrambled. But That's Irrelevant, She Insists.
Gary North
Ellen Brown is not interested in the details of history. Dates are irrelevant for her. It's the thought that counts, I guess. . . . keep reading