The Current System is PURPOSE-BUILT for Extreme Wealth Disparity, Draft Part 3

(Note: As explained here, this is a draft of a chapter from an upcoming book on vanquishing financial problems once and for all. Part 1 provided an overview of the structural unfairness in the system that makes extreme wealth inequality inevitable, and covered how that unfairness is implemented through money creation by banks and taxation. Part 2 covered how money loaned into existence, money designed to lose purchasing power, government borrowing, and governments borrowing their money into existence all play their part in the structural unfairness of the system. This is the final part of the chapter.)

Growth at any Cost

A major consequence of all money being loaned into existence is the growth-at-any-cost mentality that endangers the well-being of all animals and plants on this planet. Very few nations, states, businesses, and individuals are satisfied with a steady-state financial situation. Instead, we are inundated with calls by our so-called leaders for “growth, growth, growth,” chanted like a mantra.

While there is no doubt that economic booms can make people feel good about things (and about those  politicians currently in power), it is clear that governments and businesses increasingly resort to desperate tactics when growth seems insufficient and the inevitable recession or depression occurs: businesses slash their employment rolls; governments bust their budgets and borrow vast sums to fund massive “economic stimulus” programs, ignoring whether the money they borrow can ever be repaid; central banks push interest rates—the cost of borrowing (renting) money–to zero or even negative; and central banks resort to what they call quantitative easing (money printing).

The clear source of such desperation lies in the fact that money in this world is debt. If the average interest rate in the world, on all loans, is 4%, then the economy must grow sufficiently (by 4% or more) for everyone to pay back their loans plus the interest on those loans. Without such growth, there is insufficient money to pay back loans plus interest, and a negative feedback loops ensues: some people and companies can’t pay back their loans, so they default, and the money they owe literally disappears from the ledger of their lender. If they are companies, their employees lose their jobs, so the households of those employees spend less money, putting pressure on other businesses because of lost sales, leading to more layoffs and more defaults. Many who have lost their jobs are unable to pay their mortgages and the price of real estate, which is the collateral for Trillions of US Dollars in loans, decreases. It’s a vicious feedback loop, an economy in reverse, an economy that is shrinking, deflating. To defeat this deflationary trap, governments resort to lowering interest rates to ease the debt burden, and if that doesn’t work, they print money to try to replace the money that disappears when debtors default.

These strategies supporting growth are accepted by most, even some who realize that these financial tactics are unsustainable and will possibly lead to economic calamities such as governments defaulting on their debts and/or hyperinflation.

This growth-at-any-cost mentality, this quest for infinite growth, is now embedded in the system, but it conflicts with the finite resource base currently needed to enable such infinite growth, over-taxing supplies of natural resources and causing widespread environmental destruction. In our current state of human and technological development, growing economies need increasing amounts of oil, coal, natural gas, and uranium for energy; cement, copper, and lumber for construction; iron ore, steel, and a wide array of metals and chemicals for manufacturing; and fertilizers and pesticides for more food for an increasing population with increasing amounts of money to spend. Thus our often-rapacious quest–for raw materials, farmland, wildlife on land and in the sea; increasing space for housing; and the rampant use of herbicides and insecticides–robs the natural world of habitat and life, and increasingly poisons water, land, and air. Thus humanity is now the primary cause of what is shaping up as the sixth great species-extinction event in the multi-billion year history of our planet.

Extinctions3c-E-MassExtnFig1

(Chart source.)

SpeciesExtinction

Some scientists think it so likely that we will destroy our own habitat, and thus our own species on Earth, that they are dedicating their life to finding other planets that could support human habitation, and devising ways to transport us there—typically only some of us.

If all money were not debt, with the ever-present pressure to pay back a loan plus interest, there would be no need for this growth-at-any-cost mentality. Economies could achieve relative stasis. As with all processes in the physical plane, the economy would be very likely to have a natural cyclical ebb and flow. And yes, some people would still seek growth, but it would not be a structural necessity of the system, that is, there would be no financial danger to the system if the economy failed to grow at all times. Thus this financial system based on money as debt is inherently unstable, and dangerous to many species, including our own.

Legal Tender Laws

The legal tender laws of nations serve to solidify the structural grip that debt-based money holds on the populace. These seemingly innocuous laws state, in the United States, for example, “United States coins and currency…are legal tender for all debts, public charges, taxes, and dues.” This means that anyone can tender (offer, that is) US Dollars to discharge any debt in the US. Any court of law considers such an offer sufficient to discharge the debt.

And while the US claims it does not force people to use US Dollars, the effect of legal tender laws is nearly that in most cases.  Let’s say you lend someone 5 ounces of gold for a year at 5% interest. At the time of the loan, the gold was priced at $1,000 per ounce. So at the end of the year, you would be owed $5,000 plus 5% interest, for a total of $5,250. In the US, after a year, the borrower could offer to discharge his or her debt for $5,250 in US Dollars even if the price of gold had doubled. This has the intended effect of making sure that people not use gold in their borrowing and lending, but use US Dollars instead.

Secondly, despite the huge moves in the relative prices of currencies today (for example, the Euro declined 25% in price versus the US Dollar from March 2014 to March 2015), the legal tender currency is assumed to have a constant value so there is no additional income tax required when someone accumulates their national currency in the year 2000 and spends it in 2015.  But if a person acquires a gold or silver coin, a foreign currency, or a bitcoin or other cryptocurrency, in the year 2000 and spends it in 2015, then this is a taxable event for income tax purposes, often at both the national and provincial/state level. The tax authorities consider accumulating and spending something other than the legal tender currency to be the acquisition and sale of an asset, and they require that people report it as such on their tax forms.

So yes, if you buy a bitcoin in January and buy a cup of coffee with a portion of that bitcoin in February, some countries require that this be reported on one’s income tax form. They want to know if you acquired that bitcoin at a lower price than it had when you spent it, in which case you owe taxes on the gain in value of that bitcoin. Certainly the same is true for the use of gold, silver, or platinum coins.  Such laws are an intentionally strong discouragement against the use of anything other than the legal tender currency issued by the government.  Perhaps even more importantly, these laws discourage transactions that take place outside of the banking system since the banks cannot take their cut from transactions that take place outside of their system.

So while countries typically claim they do not force the use of their currency, there are strong penalties for not using it, and thus gold and silver coins remain in vaults, in hiding, and do not typically compete with government fiat currency for transactions.

Governments do not want other currencies competing against their officially-sanctioned fiat currency because this would limit their ability to manipulate that currency at will, which typically means the creation of more of that currency than is prudent. Even though many become aware that their currency is losing value due to its debasement via over-printing, legal tender laws provide a level of entrapment in the government currency regime.  If people start using the currency of another nation or precious metals for transactions, this weakens the hold of the government/banking cartel that gains great advantage, as shown above, over all others by being the sole controllers of currency creation.

When legal tender laws fail to stem the tide of abandonment of a national currency due to its over-creation or due to fear that its banking system is collapsing, governments will typically impose capital controls that prohibit the movement of currency out of the country and sometimes make it illegal to convert money into or use other currencies or precious metals.  When announced, these measures are generally said to be temporary, but they often become permanent.

Government Guarantees for Banks; Derivatives

When people buy a product or service, they generally care about the quality of the vendor from whom they are buying. They want to buy from someone who stands behind their products and offers some level of quality guarantee, and who will remain in business to back that guarantee.

However, there is, again, a single business for which this is not the case: banks. Most people bank where it is most convenient for them based on the location of bank branches. Few take any interest in whether the bank is operating in a sound financial manner because they believe their deposits are covered by a government guarantee. So if the bank goes bankrupt, government deposit insurance will give them their money back.

The banks claim this is fair because, in many countries, they pay money into an insurance fund that backs people’s deposits. But these insurance funds typically have less than 1% of the deposits they are insuring. When there is a crisis of confidence in banks, that less-than-1% isn’t remotely enough to cover deposits of failing banks. But as shown during the phase of the financial crisis in 2008-2009, governments go far beyond these bank deposit insurance funds to protect banks, calling them too big to fail, and thus, money is borrowed or printed to keep the banks afloat.

This unique arrangement for banks allows them to engage in highly risky financial maneuvers that are unavailable to others.  The most egregious area for this type of behavior is in what are called derivatives.  These complex contracts provide insurance against—and allow people to gamble on for potential profit–nearly every conceivable movement of interest rates, currencies, stocks, commodities, and so forth. But because of this unique government backing, banks are allowed to sell this wide-ranging insurance with nowhere near the reserves that would be required were a regulated insurance company to sell the same coverage. Banks even sell insurance against governments going bankrupt, including their own, even though their ability to make good on such contracts could only possibly come from the government whose debts they pretend to be insuring.  To give just a hint of the size of the risk involved with these derivatives, the largest US and European banks have risk exposure to derivatives of hundreds of Trillions of US Dollars, almost ten times the size of the entire world economy.

Selling these derivatives is extremely profitable for the banks, so these absurd levels of risk are tolerated and excused away.  Many derivatives are, in fact, a blatant form of fraud since seller could not possibly make good on these contracts.  But since it is bankers who in fact write the laws for these contracts, it is all “legal.” While things are going well for the banks selling these contracts, they pull in staggering profits from this activity. When these bets go wrong, the burden of the losses is placed on the taxpayer.

To give an idea of this in numbers, as an example, at the end of 2014 in the US, the bank deposit insurance fund held $52 Billion, insuring $6,200 Billion in deposits (119 times the insurance fund), and backing $239,000 Billion In derivatives (4,596 times the insurance fund).

In addition, it is the trade in derivatives that now move prices in global markets for many commodities, including essentials such as oil, wheat, and corn. The value of trade in derivatives for a commodity can be 100 times larger than the value of trade in the actual commodity. Thus prices are often set through derivatives, not through trade of the actual physical commodity, allowing prices to be moved far from the fundamental value of the commodity, and offering opportunities for outsized profits from magnified price movements that can have severe negative effects on the producers and consumers of essential goods.

Furthermore, many derivative trades are private transactions between parties, often defined by complex contracts that are hundreds or even thousands of pages in length. Efforts to bring all of these trades into the clear light of day on public trading exchanges have been successfully resisted by the large banks, offering the potential for illegal manipulation of markets, yet another potential source of outsized profits.

Financial Domination of Politics

Increasingly, because of the need for massive campaign funds in modern electoral politics, the political class is beholden to those who provide what are politely called “donations” or “contributions” to campaign coffers, but which have become difficult to distinguish from bribes.

Increasingly, national and major state/provincial electoral politics looks like this: prospective candidates meet with extremely rich potential contributors to secure startup campaign funds and the funding promises needed to mount a full campaign. It is at this step that candidates are actually selected—often by billionaires. After this step, actual campaigns are carried forward, first among entrenched party operatives, and finally the campaign is brought to the public where many if not most people often feel like their vote–if they bother to cast it at all–is being cast for the “lesser of two evils” or for “the devil we know versus the devil we don’t.”

As an example, here is the fundraising and spending from 1989 to 2014 of a single US Senator, John McCain:

McCainContributions

(Source: OpenSecrets.org)

So, over the last 25 years, Senator McCain raised and spent almost a half billion US Dollars on his campaigns. And four of his five largest donors are from Wall Street. What are the odds, when any matter relevant to banking or markets arises, that McCain would listen to concerns of you or me, or even a large group of us, versus the concerns of Merrill Lynch, JP Morgan, Citigroup, and Goldman Sachs?

This close connection with contributors increasingly extinguishes differences, once in office, of the actions of the various political parties, regardless of pre-election campaign rhetoric. In other words, once in office, this political class, regardless of party affiliation, enhances the positions of those already in charge of the status quo in almost every respect because all too often, it is doing the bidding of its donors, who often provide major funding to all prominent political parties. If a prominent member of a political party challenges a funding industry, that industry will threaten the entire party with denial of funds:

     Four “Too Big to Fail/Jail” Banks Threaten to Hold Back Funds to Democrats Over Elizabeth Warren

Thus, substantial portions of the huge flow of tax money discussed above are not used to serve the people but to increase the profits of those sectors of the economy that already have sufficient funds to be among the largest of campaign donors, seriously widening wealth inequality in the society and, in effect, taking from those who have less for the benefit of those who already have much more, enabling the very rich to purchase even more political influence and to further entrench the existing political elite. Some label this “crony capitalism,” but it is not capitalism at all, it is theft and oppression by a small, oligarchic class that has learned how to manipulate the system for the personal gain of a small group.

The Revolving Door: This stranglehold on government by big-money interests is further cemented by what is called the revolving door policy. This is the movement of personnel between roles as legislators and regulators and the industries supposedly subject to the legislation and regulation. The excuse for this policy is that industries are now too complex to be regulated by those who are not industry insiders.  This enables members of an industry to write, approve as law, and enforce the legislation and regulations that are supposed to assure the fair play of those industries within the society but which instead guarantee substantive advantages and large financial flows to these industries.

Conclusion

Is this picture becoming clear? We have structures in the world where:

  • Banks (commercial and central) can create money with zero effort while the rest must work for it, often with great effort;
  • People are laboring under a tremendous burden of income, sales, property, and utility taxes and fees that can take 50% or more of their income; much of this tax money flows to those who have the means to strongly influence, if not outright control, government actions to assure that even more of that tax money flows in their direction;
  • Debt has become so integral in government, business, and personal financing, and in the creation of all products and infrastructure, that 30% of the price of almost all products is due to interest expenses in the supply chain; if people take on personal debt in the form of mortgages, car and student loans, or credit card debt, then their personal interest expense burden is even higher; this leads to a massive flow in interest payments paid by everyone but concentrating in the hands of a small group who use that money to buy up large portions of the productive resources of the planet;
  • Any money saved constantly loses purchasing power by design, pressuring people to spend, borrow, and to put their savings into risky assets;
  • When all money is loaned into existence, it forces organizations into a growth-at-any-cost mentality that threatens crucial natural systems that support our life;
  • People are born owing a substantial sum of money that is part of an ever-growing national debt that can never be fully repaid.
  • Ideas to undo structural unfairness are rarely even part of the political debate, and if they do surface in public, are quickly squashed by the entrenched political and financial elites.

Is it any wonder that the vast majority of people on this planet are struggling financially?  They are placed under a tremendous burden of debt and taxation from the moment they are born, and any money they save inexorably loses purchasing power.

The overall effect on people is twofold:

First, if an economy based in fairness can rightly be called the voluntary exchange of service for service among people, what people see is that some players in the economy receive a service without rendering one in return. They see that some of these players become vastly rich in the process and that they then strongly influence the political process to tilt the entire economic table even further in their direction. With such examples on full display, more and more people focus their efforts on getting something for nothing, on gaming the system rather than producing real value that they can rightfully exchange with others in the marketplace. People with money increasingly focus on making money from their money in the world’s giant financial casinos through stocks, bonds, currencies, commodities, futures, options, cryptocurrencies, and so forth.  They don’t see debt as a burden that depresses future expenditures, they see it as a way to get rich from other people’s money, and seek to qualify for as much debt as possible. A home is no longer primarily a place in which to live, it is now an asset class to be re-modeled for resale value, flipped, and borrowed against to meet expenses or to make even more money in other asset classes. People along the entire financial spectrum seek handouts from government programs and jump through hoops, sometimes less-than-legal hoops, to avoid taxes.  People see the richest using tax loopholes to pay a smaller percentage of their income in taxes than a typical worker. People see that those with money can bully the courts and regulatory systems into allowing them to get away with illegal actions—perhaps, for truly egregious actions, they receive a fine that is small compared with the profits earned from outright illegal activity–and thus clever lying becomes honored in the society.

In a society where the money is created from nothing by a small group, getting money for nothing, generally through tricks and sometimes by lying, becomes the focus of more and more people. The economy becomes an increasingly hollow competitive shell of money chasing money wherein there are always “winners and losers” rather than a vibrant, productive joint effort based on a cooperative win/win approach for all.

Second, when all money is loaned into existence and thus all money is debt, and interest must always be paid on that money, there is always a general feeling of not having enough, or a fear of perhaps not having enough right around the corner. Everyone falls in with the environment-endangering growth-at-any-cost mentality since standing still economically does not feel like a valid option to people when interest must always be paid, the paper/electronic currency constantly loses purchasing power, and taxes must be paid at every turn. This gives rise to a feeling of scarcity in a world awash in abundance and leads to the feeling that people must compete with others for scarce resources or they will die starving and penniless in the street.

IT DOES NOT HAVE TO BE THIS WAY! This is a set of structures intentionally designed by a small group of insatiably greedy conscienceless people using us and nature as cannon fodder and who have commandeered academia and the mass media to convince us that it must be this way, that in fact this way is glorious. It is not. Structural unfairness is not inevitable. We have the know-how, power, ability, and to make this world a far, far better place.

* * *

Thank you for reading this series of posts on the structural unfairness of our current system. I look forward to your comments.

 

The Current System is PURPOSE-BUILT for Extreme Wealth Disparity, Draft Part 2

(Note: As explained here, this is a draft of a chapter from an upcoming book on vanquishing financial problems once and for all. Part 1 provided an overview of the structural unfairness in the system that makes extreme wealth inequality inevitable, and covered how that unfairness is implemented through money creation by banks and taxation.)

Money that is Loaned into Existence

Over the first three quarters of the 20th Century, the world’s monetary system was incrementally changed from a system where most money was either gold or silver—or was a certificate backed by one of those—to a system in which almost all money was loaned into existence by those with a government-granted license to create such money, primarily central and commercial banks. These banks do not simply create the money, they grant access to that new money by lending it. This means that, other than coinage and physical cash, which are a very small portion of the world’s money supply, all money is debt, that is, it must be paid back by the borrower with interest.

Most people do not think of their money as debt.  They feel that, if they have a bank account, their money is stored in a bank. They do not think that they have loaned that money to the bank, but that is the truth. The bank now owes the person money, plus perhaps some interest on that money. Almost all accounts for which depositors receive a paper or electronic statement involve money that has been loaned to a financial institution.

This reality has created severe problems:

First, a significant portion of the price people pay for anything is interest expense. Let’s say a person buys a bicycle. Many businesses were involved in creating that bicycle. A bulk shipping company transports iron ore from a mining company to a steel mill that supplies steel to a bicycle company that shapes the steel and then paints it with paint from a paint company that has its own suppliers of raw materials from which it makes the paint.  Another shipper ships rubber from a plantation to a company that makes the tires and a trucking company hauls the tires to the bicycle plant. The finished bicycle, with many parts attached and provided by yet another set of companies, is shipped to a wholesaler who ships it to a retailer. Each of these many companies is using energy in the form of transport fuels and electricity supplied by an energy company that also has its suppliers of raw materials that were mined, shipped, and so forth.

Most or all of these participating businesses are likely to have loans on which they pay interest. People who have studied this process, such as Monneta.org, say that on average, 30% of the price of any consumer product is due to interest payments made all along the supply chain.

Furthermore, all of those businesses used infrastructure such as roads, bridges, and port facilities built by government projects that are often financed by bonds, that is, by borrowing by the government. Monneta.org has studied this process and determined that the cost of government infrastructure projects would be cut by 40% if there were no interest to be paid on the funds for the project. Thus, much of what people pay in taxes goes to cover interest expense.

This 30% of every consumer product and 40% of every government infrastructure project for interest payments are a massive burden on people, on the society as a whole. (Add this interest payment burden to people’s tax burden and it is no wonder that so many people are struggling financially!)

Next, if everyone is paying so much interest, who is collecting all that money? Who benefits? Clearly, the lenders, that is, banks and those with sufficient means to lend money. Monneta.org takes its statistical analysis of this interest expense phenomena further and shows that 60% of all interest payments concentrate in the accounts of 10% of the populace. They show that the worst of the burden falls on the middle class, which pays a lot of the interest flow on purchased products and through taxes and yet collects relatively little of the interest flow compared with the wealthiest 10% of the population.

Monneta.org has a clear, concise 7-minute video on this topic called A flaw in the monetary system? about interest expenses, the concentration of wealth, and the gargantuan expansion of financial assets entirely out of proportion with the real economy:

Thus we see another major structural unfairness built into the system: money loaned into existence burdens the entire society for the benefit of those who can create money from nothing and those with the greatest amount of money to lend.

Money Designed to Lose Purchasing Power

As we have seen, when money is loaned into existence, there must always be more of it in circulation to pay back the principal plus the interest on the loan. Thus, central banks see it as part of their task to make sure that the supply of money in the society is ever growing to support an ever-growing economy. They publicly state their goal of keeping inflation in the general level of prices at 2% or 3% per year and they do their best to make sure that enough new money gets created to support that increase in prices. They do this to avoid the dreaded-by-them deflation during which there is a more or less widespread difficulty in the repayment of loans plus interest and, instead of money getting created and increasing, loan defaults lead to money simply disappearing from the ledgers of lenders, so the supply of money shrinks. During such periods, the central banks work even harder to make sure that new money gets created. Thus, they seek to have money creation occurring in both good economic times and bad.

But what is the effect on people of having the general level of prices increase 2% to 3% per year? To put it in Dollars, in the US, during a period that the authorities say is a period of relatively low inflation of prices, it takes a $1.46 in 2015 to buy what a person could buy for $1.00 in the year 2000. And this is using US government statistics that are designed to understate inflation, so the truth is very likely worse than that.

What is the effect of this inflation on people? First, it discourages saving and encourages spending. Many realize that if they simply save money, that this price inflation inexorably erodes the purchasing power of their savings.  Second, it encourages accumulation of debt. People realize that they can get a loan now and pay it back later with cheapened money. Third, it pressures people to put their money into investments or speculations that they hope will provide a return that is greater than general price inflation. Thus they enter the world of risk assets: speculation in stocks, bonds, currencies, commodities, real estate, and so forth.

This is where the problem of dishonest money arises. Some call for a return to honest money, and by this they generally mean money that is gold or silver, or is backed by one of those. People generally understand that money is useful because it is a medium of exchange and a store of value. The dishonest part arises because of this inexorable loss of purchasing power due to intentional inflation. This puts the honesty of the store of value aspect of paper/electronic money in question because, in the long run, paper/electronic currency is a very poor store of value. In addition, historically, almost all such currencies have lost all of their value, disappearing entirely or being replaced by a new version of the currency that removes a few zeroes from the old currency, that is, 1,000 of the old currency is replaced by 1 of the new currency.

Perhaps the best definition of honest money is money that does not purport to be something that it is not. (For a discussion, see this.) Paper money that is not backed by anything tangible has proven to be an excellent medium of exchange, but a very poor store of value. This will be discussed in more detail in a future post. For our purposes here, what we see is a structure that encourages people to spend now and discourages the independence and security brought about by a person having some savings; that encourages them to take on debt that creates more interest payment flows for lenders; and that encourages entry into financial speculation that inevitably enriches the Wall Streets of the world.

ChinaBananaVendorTrader                            Photo source: @wmiddelkoop

Government Borrowing

The once flourishing and powerful Mesopotamian, Roman and Bourbon dynasties, as well as the British empire, ultimately lost their great economic vigor due to the inability to prosper under crushing debt levels.
Van R. Hoisington and Lacy H. Hunt summarizing works by David Hume and Niall Ferguson

Most governments around the world are in a simple and intractable predicament: they have made promises they can’t keep, they continually borrow more money to try to meet those promises, and if they break those promises, they are thrown out of power.

Let’s say a government decides it needs a fire department and that their budget allows them to hire 15 firefighters. Part of the compensation for these firefighters is the promise of a pension and healthcare for their retirement years. When these 15 firefighters retire, of course a few will die, but let’s say that 12 of them collect their pension for many years. Now the city must hire 15 new firefighters and they are paying 27 firefighters instead of 15. People live much longer now.  With retirement cycles, they may end up paying 30 or more firefighters, some active, some retired, with pensions indexed to cost-of-living increases and with the price of healthcare benefits accelerating faster than the government’s tax receipts for all 30 of the firefighters and their families. So the current cost for firefighters now dwarfs that original budget. It has likely increased several-fold.

Now, add to this small example soldiers, police, school teachers, garbage collectors, administrators, tax collectors, secretaries, spies, building inspectors, diplomats, jailers, judges, clerks, elected officials, border guards, road builders, attorneys, programmers, researchers…you get the picture.

Here is a chart from the Wall Street Journal demonstrating this pension problem from just one of the states of the USA, and just for schoolteachers:

IllinoisTeachersPensions_WSJ

This state has 132,866 active teachers and 98,547 retired teachers. They have assets of $45.8 billion to meet retirement payments, but that is only 44% of what they really need, that is, they are $57.9 billion short. This is called the unfunded liability, that is, promises have been made but they do not have sufficient money to meet those promises.  This example, from just one of fifty US states and just for school teachers, gives an indication of the magnitude of the pension shortfall faced globally by governments.

Some say that a key factor in the demise of the Roman Empire was pension promises to soldiers: things worked well while military campaigns brought home the plunder of war, but when the flow of plunder subsided and the number of pensioner-soldiers increased, the massive amounts owed led to payment in severely debased Roman coinage, where base metals were substituted for precious metals, the money-printing technique of those times. To keep their pension payments coming, Roman soldiers sometimes sacked a city to make their point.

It is essential to understand the nature of borrowing: it pulls forward future spending into the present. It allows a person to buy now something for which they have not yet earned the money. But the need to pay that bill in the future, when the money is finally earned, often depresses future spending. When a person has debts, there is usually a payment due every month that is added to the burden of their current expenses. As debt builds up, the person might not be able to spend as much as they wish on current needs and wants. When debt builds up for a society, it can have an increasingly depressing effect on the entire economy. Too much money has to be spent to pay for expenditures from years ago. We are all observing this now across most of the world, with economies groaning under their massive debt burdens.

While government borrowing began to support war and still does, currently it is often justified like this: “We will borrow money now to pay for infrastructure—roads, bridges, and schools, for example—that will be a benefit over decades. By borrowing to pay the cost over 30 years, we spread that cost to the many taxpayers who will benefit from these investments over those next 30 years.”  While this has some logic to it, the reality is that infrastructure spending is now only a small portion of the spending of most governments. Most government borrowing now supports current consumption and huge standing bureaucracies.

This distinction is crucial. When a business borrows money to buy equipment that it can use to increase production, then the plan is that the use of that equipment increases company income so that paying the loan plus interest is easy, hopefully with more money left over for profits.  Most consider this to be productive debt. But if that same business borrows money to pay rent, utilities, and salaries, how does that present spending produce the future income needed to repay the debt? The same applies to individuals. Financing a car can make sense for people: perhaps it allows them to travel to their job where future income will pay the auto loan plus interest. But when they are borrowing for current rent, food, utilities, vacations, and so forth, the debt tends to build up and, in the future, they must add the cost of paying the debt to then-current costs for rent, food, and utilities.

Borrowing for current consumption, except to cover an emergency that can easily be determined as short-term in nature, is a losing game. The debt for today’s expenses piles up as more debt is added for tomorrow’s expenses. When the amount of debt and interest payments overwhelm the borrower, they are bankrupt, that is, there is no way they can pay back their loans.

Most world governments are in this situation today. Their debt load from the past pressures their ability to spend in the present. And there is no conceivable way they can repay their debts. Yet people keep loaning them money as if nations never go bankrupt, never default on their debt. Here is a chart from The Economist showing country debt defaults from 1800 through 2014. And this chart only shows those countries that have defaulted at least four times, the rest are not shown. Note that the list includes supposed financial stalwarts like Germany:

Sov20140731_default

(Chart sourcefrom The Economist.)

This situation is unjust on multiple counts:

  1. When countries are unable to repay their loans, it is often a disaster for the regular people of the country. Rich people typically have ways to relocate and shelter their resources, but these methods are unavailable or unknown to the middle and lower financial classes. Essential products and services often become unavailable, leading to hunger and severe medical problems. People’s life savings are often wiped out by bank collapses and/or currency collapses in which multiple zeroes are lopped off the old currency as it is replaced with a new currency. The suffering in recent years of people in Argentina and Greece demonstrates these problems.
  2. Countries are borrowing with no intention to fully repay the loans. We see overly-indebted countries struggling to create inflation so that they can repay current loans in future currency that is far less valuable, in other words, they borrow today and hope to pay the loans back in cheapened currency.
  3. Countries are saying to their children and unborn citizens: we want our benefits now and we want you to pay for them. People who claim to want to create a great legacy and life for their children and grandchildren think nothing of lobbying the government to keep and increase their personal benefits which that government clearly cannot afford. Spain, Austria, France, Japan, the UK, Canada, and the Czech Republic have all sold 50-year bonds. Mexico has sold 100-year bonds. These bonds finance current consumption and the taxpayers 50 to 100 years in the future are expected to pay for that current consumption.
  4. As if the preceding sins are not enough, perhaps the greatest immorality is the one that is hidden from most people: interest payments on all this debt go mainly to those who are already financially secure, paid for by those who are much less so. Monneta.org has shown only those who are financially in the top 10% are net beneficiaries (they receive more interest payments than they pay out in interest and taxes) from all this interest expense. And the amounts of interest are huge. From 1988 through 2014, the US federal government, for example, has paid $9.4 Trillion in interest. With the current national debt at $18 Trillion (in early 2015), clearly a huge portion of the accumulated national debt is due to interest payments. Since the few benefit from these interest payments as the rest of the populace pays the bill, once again we see the intentional structural unfairness that pervades the entire financial system.

Governments borrowing money into existence

Almost every government today does not simply have its Treasury Department or Finance Ministry create its national currency, it grants that concession to its central bank, which lends that money to banks or the government itself. Thus, as with commercial banks, the money is loaned into existence and interest must be paid. In some nations, the central bank is a branch of the government, in others it is a private bank. Either way, the money is loaned into existence, saddling the entire society with massive debt that requires interest payments. Were the government to either back its money with gold or silver, or to simply create that money without borrowing it, the taxpayers of nations would not be saddled with today’s huge interest payment burden.

Why is it done this way? Well, what is the job of the central bank? Since it can create infinite amounts of money if needed, it is considered the lender of last resort when there is a financial panic. And whom does it save during financial panics? Primarily banks. So the real job of this central bank is to protect commercial banks, to assure that their money creation cartel remains intact.

And what is the first resort when a nation gets into trouble because its debt load has become too large? More loans! This is always the solution from international banking organizations such as the International Monetary Fund. So the fire of too much debt is fought with additional fire, placing an even larger debt burden on the already over-burdened taxpayers of a country, who now owe even more money to bankers.  If an economically-troubled nation does not cooperate with these measures to saddle them with even more debt, the international banking community threatens them with various types of monetary exile—such as lack of access to markets to export their own products or to import essential products not produced in that country—that will turn their economic situation from a serious problem into a humanitarian disaster.

In this manner, all nations and their people become debt slaves. This is a key element in the very well-devised plan for structural unfairness in the financial system.

There is more in Part 3.

The Current System is PURPOSE-BUILT for Extreme Wealth Disparity, Draft Part 1

(Note: As explained here, this is a draft of a chapter in an upcoming book on vanquishing financial problems once and for all.)

AVOIDING STRUCTURAL UNFAIRNESS

In a condition of societal financial collapse, and its associated privations, people are understandably desperate to reinstate that which prevailed before the collapse.  This is a poor choice when that which is familiar is inherently flawed in ways that:

  • made financial collapse inevitable and,
  • caused a great deal of unnecessary pain prior to the collapse due to structural unfairness in the financial system.

Thus, to avoid creating a future that necessarily includes the pains resulting from structural unfairness (among people, businesses, and regions) and inevitable financial collapse, it is crucial that we all understand the preventable flaws of the modern financial system to assure that these flaws are not reinstated. Repeating these flaws guarantees a world where a very few have great wealth, where a very large number of people struggle daily for basic necessities, and where the vast majority works daily to provide more for the very wealthy few.

The Problem: Structural Unfairness, an Executive Summary

It is essential that people understand this concept of structural unfairness. Allowing structural unfairness means there is no “level playing field” for all parties. It guarantees ever-growing and societally destructive wealth inequality. This is not wealth inequality based on inevitable differences in financial effort and talent among people, this is severe inequality that is built into the system. That is what is meant by structural.

Here are some conclusions to this section, to be followed by the supporting details:

  • Most people and industries work diligently to produce a product or service from which they earn money. Yet one industry, banking, can create money from nothing, lend that money to others, and charge interest on that new money. It is virtually guaranteed that this single industry with access to free money will come to dominate the economic and political worlds.
  • Many people in the world work hard to obtain what is considered a good salary, a steady income. But when they achieve that goal in developed economies, between national, state/provincial, county, and municipal taxes on their income; VAT, sales, and fuel taxes on their purchases; property taxes; and agency taxes and fees (for example, on telecommunications and utility bills); for many, at least 50% of their income is taken.
  • In an economy in which most businesses in the vast supply chain that provides the world’s products and services have taken on debt in their businesses, according to those who have studied it, on average, 30% of the cost of everything people buy is due to interest expenses in the supply chain.
  • Because governments borrow money to fund infrastructure projects, the cost of building roads, bridges, schools, airports, stadiums, and so forth would be, on average, 40% less were it not for interest expenses on the debt for the project.
  • If a person in this economy takes on one or more forms of personal debt–mortgage, car loan, student loan, credit card debt, and so forth—yet another substantial chunk of their income is consumed by interest payments.
  • Because almost all governments have made promises they cannot keep and which are not sufficiently funded by taxes, they borrow ever-increasing amounts of money. From 1988 through 2014, the US federal government, for example, paid US$9.4 Trillion in interest on its borrowings, so a substantial portion of the US$18 Trillion national debt (in early 2015) is due to accumulated interest payments. Furthermore, these vast and accumulating government debts mean that all children are now born with a portion of the nation’s debt burden they are expected to pay so that the lenders can continue collecting interest payments; in the US as of early 2015, each child is born with a national debt burden of more than US$57,000.
  • Who collects these vast flows of interest payments? Those who can create money from nothing, that is, the banks; and those who have excess assets to lend. According to those who have studied it, 60% of the massive flow of global interest payments go to the wealthiest 10% of the populace. And we all now know from more detailed studies that these massive money flows concentrate further within that 10%, especially to the 0.01%, who then use those money flows to have a major influence on government and media, thus controlling the laws under which people live and the messages with which they are constantly bombarded by television, radio, and in print.
  • High taxation and heavy government borrowing go hand-in-hand with massive expenditures by government. Those businesses that continuously benefit from these expenditures use profits to influence elections, elected officials, appointments at regulatory agencies, the writing of laws, and media coverage of issues, continually increasing the flow of government expenditures in their direction at the expense of taxpayers and the rest of the business community. Thus, the banking cartel, the military-industrial complex, the medical-industrial complex, and so forth, become permanent, major fixtures in government budgets, strong voices always moving policy in a direction favorable to their business prospects.
  • The fact that all money is now loaned into existence by either a commercial or central bank means that all money is debt that carries an interest payment that must be made. This means the economy must always grow so that the loans plus interest can be paid. When the economy stays stable or shrinks, some are unable to pay their loans plus interest and money starts to disappear from the ledgers of the lenders, leading to the banker-dreaded “deflation.” Because of this debt-based money, our economies are inherently unstable and thus we hear the endless chants for “growth, growth, growth.” But what is the impact of this quest for infinite growth when our economies are powered by finite resources such as fossil fuels, iron ore, cement, fertilizers for industrial agriculture, and so forth? As we watch our growth-at-any-cost approach accelerate the extinction of species around us—many of whom provide crucial support for humanity—how long will it be before we threaten our own species?
  • If a person tries to save money to gain independence from this structural treadmill, their savings constantly lose purchasing power by design, pressuring them to spend, borrow (which they can pay back later with cheapened money), and to put their savings into riskier assets “to keep up with inflation.”
  • If a person or group attempts to operate financially outside of this web of debt, they are punished by legal tender laws that, while appearing innocuous, go a long way toward locking them into the system. The legal tender laws say that any debt can be satisfied by payment in the legal tender currency. If a person tries to operate using gold or silver or bitcoins, these forms of money are considered by the system not as legal tender, but as assets. Thus, when they are sold–for example, if you buy a cup of coffee using a fraction of a bitcoin or a barter currency—this is the sale of an asset and thus some governments want to know whether that bitcoin gained in price from the time you purchased the bitcoin to the time you “sold” it to buy coffee. And they want to tax you on any gain. Thus, alternatives to the government fiat currency such as gold and silver go into hiding in vaults as forms of savings and are not used for transactions.
  • Attempts to undo structural unfairness rarely surface as part of the political debate, and if they do, it is the voices of those providing the bulk of financing for expensive modern political campaigns that are heard and heeded, increasing structural unfairness rather than undoing it.

While this is not the complete picture of the structural unfairness in our current system, let’s take a quick look at the finances of someone who is “doing well” according to the world, that is, earning what is considered to be a very good salary. Between national, state/provincial, local, property, VAT, sales, fuel, and agency taxes and fees, at least 50% of their income is directly taken. Then, of almost everything they buy, 30% goes to interest expenses. If this person has any debt of their own—such as a mortgage, automobile or student loan, or credit card debt—then another serious portion of their income is dedicated to interest expense. Any money they save constantly loses purchasing power. Is this person really “doing well”? Or have they been enslaved by those collecting taxes and interest? If the minority on this planet that are said to be “doing well” are often in or near financial difficulty, what about the vast majority, the billions of people who do not have that “very good” salary?

Is this beginning to sound like a movie about a criminal syndicate that collects “a piece of the action” from all businesses in an area? For the “protection” of those businesses? It should: the analogy is not far-fetched. The structures described above—structures through which a portion, a “cut” is taken of nearly every transaction in the economy—are not accidental, they are intentional:

When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.
Frederic Bastiat, The Law, 1848

Structural Unfairness, the Details

In early 2015, OXFAM showed that by the end of 2015, “1% of the world’s population will own more wealth than the other 99%.” In other words, the richest 1% own half of the world’s wealth. In early 2015, just 80 people owned the same amount of wealth as the poorest 3.5 billion people on the planet. And the trend toward extreme wealth inequality is accelerating, with the wealth of those 80 people doubling between 2009 and 2014.

This is not accidental, this is by design.

The major structural problems that relentlessly add to this extreme disparity will be shown in these sections:

  • Money Creation by Banks
  • Taxation
  • Money that is Loaned into Existence
  • Money Designed to Lose Purchasing Power
  • Government Borrowing
  • Governments Borrowing Money into Existence
  • Growth at any Cost
  • Legal Tender Laws
  • Government Guarantees for Banks; Derivatives
  • Financial Domination of Politics

Money Creation by Banks

One primary source of structural unfairness is granting bankers—both commercial and central bankers—the license to create money from nothing and to charge people for the use of that money.  A bank does not lend cash from its vaults, it creates ledger entries that create money.

The process by which banks create money is so simple the mind is repelled.
  –John Kenneth Galbraith, economist, professor—Harvard University

Commercial Banks

Let’s say you sign up for a four-year car loan from a Bank A. Bank A now claims it has an asset—your promise to repay the loan.  It creates a ledger entry recording the fact that you will be repaying the loan with interest in installments over four years. So for the next four years, each month, you pay the bank a portion of the money you borrowed plus some additional money as interest, the fee the bank charges you for renting money from them. (If you don’t pay, the bank will claim your car by repossessing it.) If the car dealer is also a customer of Bank A, then the car dealer’s account is credited with the amount of the loan. That’s it. The transaction is done. The money has been created and you are charged interest over the life of the loan for the use of that money.

If the car dealer’s account is at Bank B, an electronic transaction is created that credits the car dealer’s account at Bank B. Of course, like Bank A, Bank B has been busy creating car loans, mortgages, and business loans that day. At the end of the day, all of the electronic credits between Bank A and Bank B are totaled up (by a clearing organization—for example, the Federal Reserve in the US) and whichever bank is owed money receives a credit for that money and the paying bank has a debit. In reality, even though both banks possibly created a lot of money that day, the balance between the banks, the difference at the end of the day, is relatively very small in practice.

Here is a quote from Robert B. Anderson, Treasury Secretary under US President Eisenhower, in 1959:

When a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposits; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.

And here is one from the Bank of England in its quarterly bulletin in the Spring of 2014:

The reality of how money is created today differs from the description found in some economics textbooks: Rather than banks receiving deposits when households save and then lending them out, bank lending creates deposits. . . Whenever a bank makes a loan, it simultaneously creates a matching deposit in the borrower’s bank account, thereby creating new money.

Yet both Bank A and Bank B can charge interest—the continuing rent for borrowed money—on all of the money they created that day. Alternatively, the bank might package up most or all of the car loans they made that month and sell that package to another party, perhaps a pension fund, who pays the bank a hefty amount of cash for the right to receive the interest payments on all of those car loans over the next four years.  In this case, the bank receives a hefty cash payment for all of the money it created from nothing for car loans during that month.

So for doing some fairly straightforward computer processing, the bank received quite a lot of money. It might have also packaged up and sold the business loans and mortgages it created as well. Or it might keep any or all of these loans and collect the interest each month. Either way, since so many believe that they need that money loaned to them by the bank, the bank makes a huge profit from something it created from thin air because it has the license to do so.

Clearly, it is vastly easier for a bank to accumulate money than it is for people and other businesses to do so. All others typically need to work hard to provide useful products or services to earn money. Is it any wonder that most city skylines are, if not dominated by banks, let’s just say that the banks are very well represented.

The credit card business is another highly profitable operation of banks for which they rarely need to use any of their own capital. It typically runs strictly off of the fees charged to vendors who accept credit cards. For those who want the details, they are explained in this article by Ellen Brown:

       Usurious Returns on Phantom Money: The Credit Card Gravy Train

This ability of banks to accumulate money far more easily than others is a structural advantage that makes it inevitable that banks will eventually dominate both the commercial and political domains. Their access to free money makes it nearly inevitable that they will lend to favored businesses and governments; deny loans to those they do not favor; use outsized profits to participate in and dominate what are supposed to be free markets for stocks, bonds, currencies, and so forth; and use their profits to purchase political influence, thus writing laws that guarantee and enhance their privileged position, and placing those who favor the banking industry as government regulators.

Some argue that the public banking model—in which banks are a branch of the government and all banking profits fund projects for the public good—solves this structural advantage problem, even to the point of eliminating the need for taxation and government borrowing. We will analyze the Public Banking Model in a future post.

Central Banks

In almost all nations, the cash and base electronic money of the society is created by a central bank. (While cash may be printed at a mint, central banks currently control how much of that money makes its way into the economy.) This central bank, sometimes a private corporation and sometimes a branch of government, is granted the license, the concession, to create the nation’s money, most of which is electronic, and to manage the quantity of it in circulation.

In recent years, the central banks have engaged in what they call quantitative easing, but which is known in more honest circles as money printing. In this practice, the national government borrows money to pay those bills that it cannot cover through taxation by issuing various forms of government bonds, and the central bank creates electronic money from nothing to buy those bonds.

Prior to this, and in addition to it still, central banks created money in a variety of ways. For example, central banks of the West often create money through operations to add reserves to banks. Central banks in the East, in countries with large trade surpluses, create new national money to exchange for the foreign money that flows in from their exports. Foreign money is deposited into their commercial banks by their exporting corporations; these commercial banks want to exchange that foreign money for their local national money. The central bank then holds onto that foreign money as reserves. For example, we all hear about the central bank in China holding almost $4 Trillion in reserves.

In addition to the great power implied by being able to create the nation’s money from nothing, central banks have the power to manipulate interest rates, thereby strongly influencing the cost of borrowed money.

These powers have given them such influence over economies and markets that they are nearly considered gods in today’s world. Their public statements are awaited with bated breath and then endlessly analyzed and debated as if their words came “from on high.” Financial markets often have large, spasmodic moves because of a single word or sentence uttered by a central banker.

Furthermore, most central banks operate behind a veil of secrecy and often with no outside audit of their actions. They claim that this secrecy protects their independence from political influences. However, this secrecy enables massive abuse of this license for money creation on behalf of favored groups. They create secret bailouts, currency swaps, and special loan programs worth trillions of US Dollars. For example, the Bank of England, still the central bank of the UK, was founded to support the war machine of the King of England in 1694. And it is now known that actions of the Bank for International Settlements, the central bank of central banks, supported financing for Hitler’s activities, and facilitated Nazi theft of national gold from other countries. It is extremely likely that there would be far less war in the world were it not for central banks printing money in support of the war-making capabilities of national governments.

Regardless of the publicly stated aims of central banks for currency and price stability, full employment, economic growth, and so forth, their actions are easily understood when it is clear that the paramount goal of central banks is to protect the game of the large banks. While nominally they are regulators of large banks, in practice, they support and protect the banking cartel. Thus this power further assures the structural advantage of the banks.

We will return to the topic of central banks in the discussion of fiat money below.

Taxation

Taxation is another major structural unfairness, along multiple lines:

Sheer Size of the Tax Burden: First is the sheer size of taxation in the modern world. As an example, government costs the citizens of Denmark 48% of their country’s Gross Domestic Product, and they are not the only country in which the cost of government is approaching 50% of the nation’s output. Yes, some of the money collected by government is returned to citizens in the form of direct disbursements such as retirement pensions and purchased services such as health care. But much of it funds a permanent bureaucracy, standing military, and interest payments on debt. Can a tax jurisdiction and the individuals within it be prosperous in the long term when government takes nearly half the income of those actually producing goods and services in the economy?

Why is this “sheer size” problem structurally unfair? It is on at least two counts:

A. Government career employees deciding their own salaries has resulted in a structural unfairness in the US, where average federal civilian compensation is almost twice average private sector compensation:

Fed_V_Civilian_workers_1(Chart source)

And these compensation statistics do not include the lavish lifestyles and red-carpet treatment politicians and bureaucrats often arrange for themselves at taxpayer expense.StateDinner151533376__586699b

B. Huge taxation results in massive government spending for goods and services. This disproportionately enriches those vendors who secure government contracts, at the expense of other businesses, and at the expense of the taxpaying public. These vendors can use their profits to curry further favor with those in charge of government expenditures, leading to the dreaded “military industrial complex,” “medical industrial complex,” and so forth.

The Legitimacy and Inevitability of Taxes: People have come to accept “death and taxes” as inevitable. While people often argue about the fairness of particular taxes, it is rare to hear a discussion of whether taxes are legitimate at all, despite the fact that this page on the History of tax resistance lists hundreds of tax revolts and rebellions, including famous events such as the American and French Revolutions. Most national boundaries and governments were formed through war, with taxes being promptly levied within the jurisdiction by the victors. Does skill in war make taxing legitimate? Or is it simply imposed by force, particularly with the threat of jail time, without the consent of the governed?

If governments can print money, why are there taxes?  If a national government can print money, why do they need to tax at all, why not simply print the money they need? If this question seems absurd or fanciful, here is a paper written in 1946 by the then-president of the US Federal Reserve Bank of New York making precisely that point.  He said that if a national currency is not backed by gold or any other commodity, and the national government or its central bank can print the money, then taxes at the national level are unnecessary. He said taxation at that point can be a tool of social and political policy, for example, to “subsidize or penalize various industries or economic groups,” or to implement progressive income or estate taxes to redistribute wealth, but that it is not a necessity. So we need to ask ourselves: what is the true purpose of the large tax burdens currently heaped on citizens?

Taxes Used for Personal Power: Taxation directs a vast and seemingly ever-increasing flow of funds to an entrenched political class that identifies the good of the nation, state, or municipality with their personal retention of power. Increasingly, this political class uses all possible organs of state power—spy agencies, tax agencies, the courts, regulatory agencies, government spending, control of the media, and so forth–to strengthen their personal power by destroying or suppressing opposition. They use state apparatus to attack political opponents, jail whistleblowers, and destroy the lives of dissidents and of capable investigative reporters who refuse to “play the game.” They often claim that those who oppose them are a threat to “national security.”

This power is further enhanced by direction of the flow of tax money to favored supporters and away from opponents through government spending, changes to tax law, loans and loan guarantees, and manipulation of purportedly free markets.

While one would expect this in dictatorships, it has become true in nominal democracies as well.

Secrecy: In addition, parts of the tax collection, government borrowing, and government expenditure processes are shrouded in secrecy, making accountability impossible.  Most governments now have “black budgets”–typically related to military and spying operations, the infamous “black ops”–where the amount and purpose of the expenditures is secret. This is a small part of the massive secrecy that shrouds much of government planning and operations, even in nominal democracies.  Much of governing today happens “behind closed doors,” and what goes on behind those doors is not revealed for years or decades, if ever.

This secrecy and lack of accountability allows for the theft of trillions of dollars. On rare occasions, this is admitted by government officials, as in this video:

from CBS News of US Defense Secretary Donald Rumsfeld announcing, on the day before the infamous 9/11 attacks, that $2.3 Trillion had gone missing at the Pentagon. (Any mention or tracking the missing $2.3 Trillion disappeared, of course, after the 9/11 attack.) Independent investigators have documented additional trillions that have gone missing from US government coffers.

Worldwide, most are all too familiar with the stories of politicians who arrived in an office of “public service” as a person of modest means who left that office with great wealth.

Market Manipulation Departments: Also in the realm of secrecy, almost all governments have departments funded by taxpayers for the manipulation of supposedly free markets. In the US, this work in centered in the Exchange Stabilization Fund of the US Treasury. The actions and trading profits of these departments are almost invariably hidden from public scrutiny. Which markets they manipulate and when they do so is rarely revealed, offering ample opportunity for abuse in terms of cementing the personal power of entrenched politicians and the advantage of favored constituencies.

The Tax Avoidance Game: Large and complex taxation regimes lead to businesses and individuals putting great effort into avoiding taxes. Rather than deploying resources in the most logical and productive way, many make decisions based on tax consequences instead. Entire industries exist to help them find loopholes, tax advantages, tax deferrals, off-shore tax havens, and strategies and tactics whose legality is sometimes questionable at best. Businesses and individuals struggle through a blizzard of tax forms, regulations, and audits to pay as little as possible in taxes rather than spending their precious time and resources on productive and life-enhancing activities. Huge government bureaucracies exist solely to collect, interpret, and enforce large and ever-growing tax codes, often now assisted by national spy agencies and law enforcement agencies who are “following the money” and can provide mountains of information about the financial behaviors of the populace.

Taxes that strongly benefit the money creators: In many countries, interest expense on business loans and mortgages is tax deductible.  This is a huge incentive for companies and individuals to take on debt, thus super-charging the flow of interest expenses into the hands of those who have large sums of money to lend, especially the money creators, the banks.  Just in the US in 2015, from corporate announcements, it is expected that companies will purchase over $1 Trillion of their own company stock from the public market. For many companies, all of this stock buying is funded by new debt. This drives up the stock price of the company and the interest expense is deductible. So rather than investing their money in productive activities, companies deploy vast sums in so-called financial engineering, which is a polite term for gaming the system.

Summary on Taxation: Taken together, taxation–grudgingly accepted by most in part because of its ballyhooed noble aims and inevitability–has been hijacked by a small class of people, government and private, to assure the increasing vastness of their wealth at the expense of the rest of society.  It is as though this small group has steeply tilted the economic table in their direction so that they receive a portion of every economic transaction, of every payment for someone’s labor, and of every payment for every product sold in the society.  If we are to vanquish financial problems once and for all, taxation as currently practiced must be understood as a major structural unfairness and impediment, and every avenue for its complete elimination must be explored.

But wait. . . There’s more. Here is Part 2.

A New Direction

Some have asked why there have been no new posts recently. Here is the answer.

Thundering Heard has reported on emerging trends in this time of transition, and offered some suggestions on how people might wish to prepare for the financial, political, energetic, and earth changes that continue to accelerate and that will have impacts over the next decade that are currently unimaginable.

While that work will continue, now it’s time to get into the details of how we take advantage of this confluence of end-of-cycle changes. The first installment is a draft of a chapter from an upcoming book on how we vanquish financial problems once and for all. The words vanquish financial problems once and for all are not chosen as some statement of vague hopefulness.  As you will see in this chapter, this is about the nitty-gritty of how things work now as a starting point for how to accomplish the goal.

The chapter is being labeled as a draft as a way of asking for your help. I sincerely seek your comments on this chapter, especially on anything questionable, unclear, or vague. If you were sending this post to friends, would they need more explanation, better explanation? More examples? Or is it too verbose? Is there a specific section, paragraph, sentence, or word that is unclear? Or should be deleted? Or perhaps the whole thing is fine as it is and should be left alone—but what are the odds of that?!

If this book is to truly help in accomplishing the goal, it needs to be excellent. I am asking for your help so that this chapter and upcoming chapters become as good as they can be.

Please post comments below or send them by email to my personal address or to the address on the Contact page.

In the upcoming book on vanquishing financial problems for all, this current chapter will be called Avoiding Structural Unfairness. On Thundering Heard, it will be posted in three parts. Here is the link to Part 1:

The Current System is PURPOSE-BUILT for Extreme Wealth Disparity, Draft Part 1

Thank you!

Some cycles due in 2015

So you can be prepared, if you wish, here are some cycles due in 2015. One of them is gigantically important to both the political and financial worlds, so I hope my exposition is clear.

The first cycle is very easy to understand: something economically important really hits the fan every seven years. Going in reverse from here, seven years at a time:

  • 2008, start of the Great Recession, first real estate debt bubble pop;
  • 2001, recession begins as part of 2000-2002 internet/tech stock bubble pop;
  • 1994, worst year for bond markets in modern history;
  • 1987, the famed stock market Crash of ’87;
  • 1980, inflation, the “Misery Index”, start of a major recession that doesn’t go away for three years;
  • 1973, Arab Oil embargo, start of a major recession;
  • […] you get the idea.

The article at this link talks more about this cycle, including the note that the years in this seven-year cycle that coincided with an Autumn solar eclipse (1931 and 1987) had particularly strong events; and 2015 does have two solar eclipses. Again, from the article at the link:

In 1931, a solar eclipse took place on Sept. 12…Eight days later, England abandoned the gold standard, setting off market crashes and bank failures around the world. It also ushered in the greatest monthlong stock market percentage crash in Wall Street history.

In 1987, a solar eclipse took place Sept. 23…Less than 30 days later came “Black Monday” the greatest percentage crash in Wall Street history.

Some great forecasters think that March is a strong candidate for significant financial turbulence in 2015, and there is a total solar eclipse on March 20. And there is a partial solar eclipse on September 13, a better calendar correspondence with the events referenced in the quote above. So maybe we’ll get two strong events this year.

For those of you who believe what you read in the US media, perhaps you are wondering how we could get major financial problems when things are allegedly so “awesome.” Well, sorry to tell you, but even Goldman “doing God’s work” Sachs just admitted that the world economy has gone into contraction:

     It’s Official: Global Economy Back In Contraction For First Time Since 2012 According To Goldman 

(As a side note, Al Jazeera did a great video on true nature of Goldman Sachs. The link is here, but, if you are in the USA, the censors won’t allow you to view the video in the “Land of the Free” US, it’s only playable outside the US. A lot of that type of thing is going on these days. It’s a small part of what has dropped the US down to 49th globally in press freedom; see World Press Freedom Index Plunges – USA Now Ranked #49 Globally.)

If this seven-year cycle repeats in 2015, then I think we can easily predict what the authorities will do since it seems to be the only thing they know how to do when there’s trouble: print more money by creating more debt! But as explained in The deflationary wave intensifies, this strategy has become counter-productive and is locking the world economy in a deadly stranglehold.

Some realize all this and some do not. But this brings us to our second cycle: Martin Armstrong’s Sovereign Debt Big Bang. Here is a slide of Armstrong’s forecasts from a conference in early 1998:

Armstrong1998-Forecast

(Source, from Martin Armstrong’s blog)

These major forecasts all came true. The only one left to go (2015.75 = September 30, 2015) is the Sovereign Debt Big Bang. What it says in that the tide will monumentally shift away from confidence in government bonds starting on September 30, 2015. Currently, confidence in government bonds is so high that people are buying them even with negative interest rates. The easiest way to understand interest rates is that they are the rental charge for lending someone money. So you rent someone $100 and you hope to get back maybe $103, the original $100 plus $3 of rent. But people are now buying government bonds even though they get back less money than what they lent to some government in the first place. They are paying governments to lend them money!

     16% Of Global Government Bonds Now Have A Negative Yield: Here Is Who’s Buying It

That was a few weeks back, at which point JP Morgan calculated that $3.6 Trillion worth of government bonds were paying negative interest rates. Some of the countries involved were Germany, Switzerland, Japan, Netherlands, Sweden, and Denmark. In Denmark, because interest rates went negative, some adjustable rate mortgages are now paying interest to the people who took out the mortgage!

     In Denmark You Are Now Paid To Take Out A Mortgage

Now you might say: Why would anyone buy a government bond with a negative interest rate?!?! When I first said we should expect negative interest rates in More shackles readied for deploymentI did get a few e-mails politely suggesting that I might want to get checked for dementia. Here’s what was said:

The policy is that savers will soon be hit with negative interest rates…So people would have to pay the bank interest on their own savings. So if the negative interest rate were -3%, if you had $100 in your account, you’d have to pay the bank $3 in interest.

This is crazy. Most people alive today think governments never default on their debt.  But that’s just plain wrong. Here is a chart showing country debt defaults going back to 1800. And this chart only shows those countries that have defaulted at least four times, the rest are not shown. Note that the list includes supposed stalwarts like Germany:

Sov20140731_default

(Chart sourcefrom The Economist.)

What Armstrong is saying–and he has been saying it since the 1990’s and has strong mathematical/historical models backing up his forecast–is that, near the end of this year, the world at large is finally going to wake up and understand the insanity of all this government borrowing. Not all at once, but relentlessly. They will see that most if not all countries are not going to pay back what they borrowed. They can’t. They don’t have the money. Greece is the first country to forthrightly admit it. One of the pompous Eurocrats threatened Greece last week, saying “If you don’t do what we say, Greece will go bankrupt.”  To which the Greek Finance Minister Yanis Varoufakis replied, “Greece is already bankrupt.”  (Straight truth! From a politician! Finally! Maybe that will become a trend!)

So what will this do to those who own all these government bonds? Who does own them anyway? For one, most of what is called capital at banks is government bonds. So there go the banks: no capital, insolvent. (Watch out for the upcoming bail-ins if you still keep money in banks.) Insurance companies and both government and private pension funds are huge holders of government bonds. So there goes insurance, and pensions. A well-placed German friend says that several European insurance companies are on the verge of bankruptcy. All of the assets of the US Social Security system, for example, are US government bonds: that’s all they own!

And somehow, the financial system has come to accept government bonds as collateral for other loans and bets. The $1 Quadrillion (that’s 1,000 Trillions) world derivatives casino market floats on a thin veneer of government bonds as “collateral” for these bets. Before the US defaulted on its debts in 1971 when Nixon said they were no longer payable in currency backed by gold, as previously promised, but now were backed by promises alone, collateral meant something real. For example, when you have a mortgage, your house is the collateral. A car is the collateral for an auto loan. But now in the financial world, someone’s promise to pay back a loan that they can never repay counts as collateral for even more loans. This is insane. Starting later in the year, a lot more people will start to understand that. That’s the nature of this Big Bang cycle. And there will be major repercussions. We talked about the demise of banks, pensions, and insurance. The derivatives collapse will take down all the brokerages and investment banks. So where will people get money?

Governments love to hide the truth about their historical defaults on their debt. Thus everyone is taught that the “cause of the Great Depression” of the 1930’s was the 1929 stock market crash. Total BS. The stock market crash wiped out stock speculators. That wasn’t a truly big deal. What took down thousands of banks were defaults on government bonds they and their customers were holding. Let’s look at that government bond default chart again. This time there is a red box around the worldwide wave of country debt defaults in the early 1930’s that wiped out thousands of banks and millions of savers:

Sov20140731_defaultBox

Get it? That’s what’s coming up again, only this time it will be worse. Way worse. There’s been far more borrowing, far more leverage, and all of it is floating on paper and electronic currencies and promises. The link to reality–gold–was removed in 1971.

World-Debts

Now some people say all this unpayable debt can be wiped off the books in a debt jubilee, like they used to do in Old Testament times. Well that’s true. It can. The problem is that anyone who put money in a bank account needs to realize that they have loaned that money to the bank. It’s a debt of the bank, they owe you money. And your deposit is backed by government debt, not by actual cash. So, if there were a debt jubilee, no one would have any money in their bank account anymore. Same for businesses, so no business would be able to write a paycheck to anyone. ATM’s would not be able to dispense any cash. Credit cards would no longer work. All of the money in the world is someone’s debt to someone else. So a debt jubilee would mean there was no money.

So now, do you want a debt jubilee? Of course not. But we are going to get one anyway. Not on purpose. By accident. Starting in a big way later this year.

Why can anyone be confident that this is true? Well first, go back and look at the rest of the predictions on Armstrong’s slide from 1998. Second, it’s already starting to happen. Greece, Argentina, Puerto Rico–the dominoes are starting to fall. Japan is a financial basket case, there is no way they can repay their debts, and they have the second largest pile of government debt on the planet. The whole world has gone wild for debt!

Which brings us to a third “cycle of interest’ for 2015. What else floats on a sea of debt? Real estate prices! This cycle was described before here:

As examples, due to his real estate cycle work for the US, he was telling clients–in the 1990’s to give them ample time to act–to be out of all US real estate investments by February, 2007; that real estate prices would then fall from 2007 into 2012, then rise into 2015 in a snapback rally that would sucker a lot of people back into real estate, and then fall again through 2033.

Well here we are in the snapback real estate rally into 2015. So many have forgotten the 9 million US foreclosures and the 7 million US households that are still “under water” on their mortgages. All the signs of a bubble are back, though now some are already starting to dissipate as real estate prices in some of the bubbliest areas roll over:

     Southern California home sale volume for January slowest since 2008: The stalemate accelerates with Orange County seeing a monthly median price drop of $28,500.

The bubble is stronger than ever in countries like Canada, Australia, and the UK. Unless people request it by sending me e-mails saying they want it, I’m not going to do a detailed post on real estate. I doubt it will change anyone’s mind, so it probably isn’t worth it. But when the biggest debt bubble the world–and perhaps the galaxy–has ever known pops, and governments are falling left and right, real estate prices will be hammered. And those falling governments will be desperately raising property taxes to try to stay afloat.

And anyone who agrees with people who say that “debt doesn’t matter,” like Dick Cheney from the right or Paul Krugman from the left, is going to get quite an education over the next few years. Actually, we all will. Which is good, in my view. Humanity badly needs to understand which actions have real value and which do not.

An evolutionary event

It isn’t often that one realizes, at the time of an event, that it will have a definite evolutionary impact. But I think this one will.

For those interested, the Sanctus Germanus Foundation has posted a simple yet powerful chant designed to intentionally develop or enhance clairaudience, to make this ability commonplace.  This has the potential to change people’s experience of what life is.

Clearly, from the amount of channeled information in books and on the web, clairaudience is already more commonplace than in prior time periods. Some of this channeled info is extraordinarily helpful, some is misleading. Thus, precautionary comments are in order: Success will reveal that not all beings from “the other side” are beneficent saints. Nor are they omniscient. Some communicate to advance their own selfish interests, not the interests of the seeker of truth. And just as misunderstandings happen in standard verbal communications, so can the same easily happen with clairaudient communications. The best protection is to take the Mystery School course that is the source of the chant; this provides the wider context and the opportunity to work directly with the Master Serapis Bey.

For those who wish to go it alone: first, if you get into trouble, let’s just say with an entity that doesn’t want to go away, you can request a telepathic healing for that here; second, you might want to read the section under the heading “Tricky Discarnate Souls” at this link.

These cautions are not given to discourage anyone from developing a skill that is the right of all humans, but to highly recommend that discernment and reason be an integral part of the process.

The chant is explained here in a transcript excerpt from the course audio; and you can hear the chant at the link which is the title of that page.

For those who wish to do so, this can help people expand the portion of the energetic spectrum in which they are conscious participants.

Earth Changes Update, End of 2014 – Part 2

Before embarking on the discussion of the unusual happenings in the animal kingdom promised in Part 1, I’d like to cite a quote that demonstrates the nature and impact of exponential change. The quote comes from a remarkable article from Reuters:

      Special Report: In Jakarta, that sinking feeling is all too real

about major world cities combating the combination of rising seas and sinking landmass due to subsidence from draining the groundwater under each city:

Higher seas, sinking cities and more people mean worsening impacts from storms and floods. And the frequency of these events is increasing, too. Recorded floods and severe storms in Southeast Asia have risen sixfold, from fewer than 20 from 1960 to 1969 to nearly 120 from 2000 to 2008, according to an Asian Development Bank study.

So a sixfold increase in severe storms in SE Asia: Take a guess what annual percent increase in storms accounted for that sixfold change. The answer is 6%. Six percent per year doesn’t sound like much. But when it’s applied relentlessly–and that is the nature of an exponential increase–the change seems small at first, but at some point, the change can be overwhelming. Food for thought regarding the many exponential chart patterns shown over time at Thundering Heard. We are living in unprecedented times on many fronts.

     *     *     *

The point about pervasive permeability in Part 1 (accidental alliteration!) sparked some interest. Here’s a perfect example of increasing permeability, in this case in the Greenland ice sheet from Phys.org:

     Two lakes beneath the ice in Greenland, gone within weeks

As everyone knows, that ice sheet stores enough ice to raise the global sea level about 7 meters (24 feet).  As it gets more permeable, it becomes less stable. As I said, food for thought.

     *     *     *

The animal kingdom*

Especially during the last year, the animal kingdom has shown signs of extreme duress.

First, there are many stories of pets attacking, and sometimes killing, their owners:

If you would like to dismiss this as anecdotal, of course you can, but it would fly in the face of statistical evidence, from around the globe:

Here’s a quote from the India link just above:

In 2012, nearly 10,100 people were affected by dog bites from April to December. Number went up to 16,000 in 2013.

Sometimes the dogs are even attacking…CARS:

     Animal crackers: As well as terrorising people in Modesto, crazy dogs are now attacking stationary cars

dogcarwbeTd_AuSt_11

© JOAN BARNETT LEE
Damage done by an animal is seen Tuesday on a Ford Focus at Heritage Ford in Modesto. The car had some damage done to it by an animal. Three vehicles at the dealership have scratches and bite marks on them. The front grille of the Focus was torn completely off.

     Modesto, California: Vicious dogs roaming streets, chasing people and trapping them inside homes

Deer are known for trying to avoid people and buildings. Not these:

Elephants are running amok:

Then there are the many cases of fish that normally live deep in the oceans appearing at shorelines, sometimes thousands of miles from their usual area of habitation:

There are stories of birds so far from their usual turf that they sometimes end up on the wrong continent:

Whales are beaching and dying just about every day now:

And things are increasingly bad for sea turtles:

Fish die-offs have become quite common:

I have a lot more links for animals attacking humans (especially coyotes, jackals, wild dogs, and wild boars, but also including owls, foxes, and otters), but I’ll spare you having to scroll past them, and pass to another category: regional animal die-offs across many species.

Michael Snyder posted an excellent example:

     North America: Massive numbers of sea creatures dying along the west coast

in which he listed reports of devastations of West Coast starfish (A marine epidemiologist at Cornell University says that this is “the largest mortality event for marine diseases we’ve seen“); bluefin tuna (only 4% are left); sardine, anchovy, herring, and oyster populations; and major difficulties for many marine birds including pelicans. And more:

     West Coast devastation continues: seals, oysters, pelicans, fish, squid — all sick, dying or failing to breed

     Study: Dead sea creatures cover 98 percent of ocean floor off California coast; up from 1 percent before Fukushima

At an ocean research station known as Station M, located 145 miles out to sea between the Californian cities of Santa Barbara and Monterey, Huffard and her colleague Ken Smith observed a sharp uptick in the amount of dead sea life drifting to the ocean floor. The masses of dead sea plankton, jellyfish, feces and other oceanic matter that typically only cover about 1 percent of the ocean floor were found to now be covering about 98 percent of it — and multiple other stations located throughout the Pacific have since reported similar figures.

“In March 2012, less than one percent of the seafloor beneath Station M was covered in dead sea salps,” writes Carrie Arnold for National Geographic. “By July 1, more than 98 percent of it was covered in the decomposing organisms. … The major increase in activity of deep-sea life in 2011 and 2012 weren’t limit to Station M, though: Other ocean-research stations reported similar data.”

Anyone who still thinks the ongoing effects from Fukushima are trivial really needs to consider the meaning of that 98 to 1 ratio reported in the study at the preceding quote and link. Truly, what do people expect when this August 2014 article Japan Prepares To Release Thousands Of Tons Of Fukushima Groundwater Into The Pacific quotes NHK, Japan’s national public broadcasting organization, as saying:

Highly radioactive water at the plant is seeping into the earth and mixing with ground water. Experts estimate around 200 tons of contaminated ground water are leaking into the ocean each day.

Each day!

Then there are the global problems:

     More mass animal deaths occurring now than ever before, study claims

Mass die-offs of certain animals has increased in frequency every year for seven decades, according to a new study.

Researchers found that such events, which can kill more than 90 per cent of a population, are increasing among birds, fish and marine invertebrates.

     Silent Spring: Songbirds are disappearing across the planet reveals new documentary film

     Report: Lions, Tigers, Cheetahs Could Be Extinct In 10 Years

     Otters across the world are threatened with extinction says new report

And this link points to a study that lists 794 species that are on the brink of extinction:

     Study pinpoints species facing extinction threat

So, what are the reasons for this dreadful state of affairs. There are several, to be sure.

In the case of the whales (and perhaps the other creatures that normally inhabit the ocean depths and who can now be found at the beaches), one major cause is certain: the use of powerful sonar technologies by the militaries to hunt for submarines and the oil and gas companies to hunt for that stuff we pump into our cars. This link:

     The epic fight to protect cetaceans from the US Navy

has a sad but amazing story of how proof of this was accepted by the US Navy itself. A retired navy guy with an interest in whales–the guy actually worked in the navy’s secret sonar program–witnessed the beaching of 17 beaked whales immediately following US Navy exercises in his area. This is the deepest diving whale species of them all. For them to beach as a group was unprecedented. Suspecting the cause, the guy immediately had their heads sent to a lab for autopsy and it was found that the ear drums of each whale had been shattered. The guy had to get this info onto the 60 Minutes television program before the navy would respond, but finally, respond they did, strongly limiting their own sonar use during exercises. And this link:

      Whale Mass Stranding Attributed to Sonar Mapping For First Time

describes how the mass stranding of 100 whales was connected with exploration by ExxonMobil.

So, is there relief for the whales and other deep-sea creatures? Given the near-daily whale beachings listed above, probably not much. In July, the purportedly liberal White House approved the use of such technologies in Federal waters off the US East Coast:

The Obama administration has sided with energy developers over environmentalists, approving the use of underwater blasts of sound to pinpoint oil and gas deposits in federal Atlantic Ocean waters.

And how could we forget this as an indicator of what’s plaguing sea creatures:

     Fourth Anniversary of Gulf Oil Spill: Wildlife Is Still Suffering from Toxic Cover Up

Perhaps the deflationary wave that has been sent to the world economy–the price of oil, at $45.29 per barrel today, has now been cut by 58% since June, natural gas prices have also been crashing (again), and interest rates are now negative in several countries–will provide the kindness of some relief for the creatures of the ocean deep, kindness that humanity has been unwilling to provide.

Another monster problem for sea creatures and ocean birds is tens of thousands of tons of plastic:

One highly-recommended article that really gets the point across about the state of the oceans, especially the Pacific, is this one by an Australian yachtsman, which should be a must-read for everyone:

     The ocean is broken

What was missing was the cries of the seabirds which, on all previous similar voyages, had surrounded the boat.

The birds were missing because the fish were missing.

Exactly 10 years before, when Newcastle yachtsman Ivan Macfadyen had sailed exactly the same course from Melbourne to Osaka, all he’d had to do to catch a fish from the ocean between Brisbane and Japan was throw out a baited line.

“There was not one of the 28 days on that portion of the trip when we didn’t catch a good-sized fish to cook up and eat with some rice,” Macfadyen recalled.

But this time, on that whole long leg of sea journey, the total catch was two.

No fish. No birds. Hardly a sign of life at all…

If that sounds depressing, it only got worse.

The next leg of the long voyage was from Osaka to San Francisco and for most of that trip the desolation was tinged with nauseous horror and a degree of fear.

“After we left Japan, it felt as if the ocean itself was dead,” Macfadyen said.

“We hardly saw any living things. We saw one whale, sort of rolling helplessly on the surface with what looked like a big tumour on its head. It was pretty sickening.

“I’ve done a lot of miles on the ocean in my life and I’m used to seeing turtles, dolphins, sharks and big flurries of feeding birds. But this time, for 3000 nautical miles there was nothing alive to be seen.”

In place of the missing life was garbage in astounding volumes.

“Part of it was the aftermath of the tsunami that hit Japan a couple of years ago. The wave came in over the land, picked up an unbelievable load of stuff and carried it out to sea. And it’s still out there, everywhere you look.”

This lack of ocean fish is killing the ocean-migrating birds because there is nothing for them to eat:

     Up to 5 million seabirds likely to have died on Australian and New Zealand beaches

The industrial overfishing, the chemical pollution, the radiation, the acidification, the garbage…We truly are trying to “break” the oceans.

When that Malaysian airliner went missing, garbage hampered the search:

     Malaysia plane: Confronting searchers is an ocean full of garbage

Since the older generations can’t see a way to fix this, maybe younger people can start the process:

     19-Year-Old Develops Cleanup Array To Remove 7,250,000 Tons Of Plastic From Oceans

As far as those rampaging elephants are concerned, can you blame them?

These are animals who walk miles to attend to the death of another elephant or the death of a person who was a friend to them:

     Wild Elephants gather inexplicably, mourn death of “Elephant Whisperer” 

Author and legendary conservationist Lawrence Anthony died March 2. His family spoke of a solemn procession of Elephants that defies human explanation…

For 12 hours, two herds of wild South African elephants slowly made their way through the Zululand bush until they reached the house of late author Lawrence Anthony, the conservationist who saved their lives. The formerly violent, rogue elephants, destined to be shot a few years ago as pests, were rescued and rehabilitated by Anthony…

For two days the herds loitered at Anthony’s rural compound on the vast Thula Thula game reserve in the South African KwaZulu – to say good-bye to the man they loved. But how did they know he had died?…

There are two elephant herds at Thula Thula. According to his son Dylan, both arrived at the Anthony family compound shortly after Anthony’s death. “They had not visited the house for a year and a half and it must have taken them about 12 hours to make the journey,” Dylan is quoted in various local news accounts. “The first herd arrived on Sunday and the second herd, a day later. They all hung around for about two days before making their way back into the bush.”

If humans were more rational, perhaps we would be trying to understand elephants’ telepathy and empathy rather than killing them for their tusks.

And then there are the poisons we spray, and the systemic poisons created by design in GMO crops:

     Neurotoxic pesticides linked to honeybee decline are affecting other species, scientists say after four-year assessment

Neurotoxic pesticides blamed for the decline of honeybees is also harming butterflies, worms, fish, and birds, and contaminating habitats worldwide which are crucial for food production and wildlife, scientists have concluded after a four-year assessment.

So we’re not just poisoning ourselves–and the bees and pollinators who are crucial to one third of humanity’s food supply–with toxic chemicals:

Glyph_autism

we’re poisoning lots of species.

And what about the migratory animals, both birds and sea creatures, who are losing their way?

     Birds are losing all sense of direction

It turns out that some migratory birds are stymied when they encounter the edges of a city, industrial area, or campus. The electromagnetic emanations from these places disturb the workings of these birds’ navigation systems. Given that experiments have shown that the emanations from wifi routers can kill plants, I guess it isn’t surprising that our electromagnetics are disturbing animals. And probably us as well.

And how can I fail to mention how we treat animals raised for food, putting them in cramped industrial settings and cages prior to their slaughter. Were it not for strong doses of antibiotics–which end up on our plates–most of these animals would die of disease.

Is the growing 2014 trend of animal attacks on people an indication that they have started to fight back? We better hope not. If the animal kingdom ever decided to fight with us, we’d likely all be dead within months. Without the ceaseless cleanup of our environment by insects, worms, algae, bacteria, fungi, etc., we would find ourselves living in waste. As it is, these beings constantly process billions of tons of materials into forms useful for us. And we often pay them back by trying to exterminate them, interested in the endless “growth, growth, growth” chant of our so-called leaders who definitely have no understanding of the exponential function.

Everyone has heard of the “lost animal syndrome” where there is a notable increase in pets getting lost before earthquakes. Are the animal agitations and disorientations a reaction to current Earth changes, or to an impending mega-Earth change. If it’s the latter, one might shudder to think what that would be.

Are the animals who normally remain deep in the oceans reacting to increases in methane and volcanic materials coming from the ocean floor? Perhaps.

Are the animal attacks a reaction to the changing energies of our evolving world? Are they reacting to the rapid decrease in Earth’s magnetic field, described here:

…based on the latest readings from the European Space Agency’s (ESA) satellite array called Swarm:

          Earth’s Magnetic Field Is Weakening 10 Times Faster Now

Once every few hundred thousand years the magnetic poles flip so that a compass would point south instead of north. While changes in magnetic field strength are part of this normal flipping cycle, data from Swarm have shown the field is starting to weaken faster than in the past. Previously, researchers estimated the field was weakening about 5 percent per century, but the new data revealed the field is actually weakening at 5 percent per decade, or 10 times faster than thought. As such, rather than the full flip occurring in about 2,000 years, as was predicted, the new data suggest it could happen sooner…

(Wow, 5% per decade. An exponential progression to be reckoned with.)

Or are the animal attacks on humans simply the animals reflecting our own emotional and mental states?

It seems clear that the assault, often clearly our assault, on the animal kingdom, and the plant kingdom, is unwise. Some Churchianity people quote Genesis about man being given “dominion” over the animals and plants. For some, this somehow justifies pillage and plunder versus the stewardship that, logically, must have been the intended meaning of the statement. Undoubtedly, dominion can’t mean the creation of a wasteland. But that is what we are doing in many domains. Here’s an excellent indicator of the bad news (I promise to follow it with some good news!):

     Photographic Adventure Reveals the Frightening Deadness of Genetically Engineered Corn Field

By Dr. Mercola

A recent NPR article highlights the truly frightening environmental effect of monoculture. NPR commentator and science writer Craig Childs decided to replicate a photo project by David Liittschwager, a portrait photographer who spent years traveling the world dropping one-cubic-foot metal frames into gardens, streams, parks, forests, and oceans, photographing anything and everything that entered the frame.

Around the world, his camera captured thousands of plants, animals, and insects within the cubes, with entirely different “worlds” of plants and animals living as little as a few feet away from each other.

Childs recruited a friend, and together they set out to replicate Littschwager’s “critter census” in a corn field in Grundy County, Iowa.

But whereas Littschwager’s camera captured several dozens of insects wherever he set up his frames, Childs and friend found nothing stirring among the genetically engineered corn stalks on the 600 acre farm in Iowa, where they spent an entire weekend crawling around on the ground. No signs of life with the exception of an isolated spider, a single red mite, and a couple grasshoppers.

“It felt like another planet entirely,” Childs said. “I listened and heard nothing, no birds, no clicks from insects. There were no bees. The air, the ground, seemed vacant. Yet, 100 years ago, these same fields, these prairies, were home to 300 species of plants, 60 mammals, 300 birds, hundreds and hundreds of insects,” Robert Krulwich writes2. “This soil was the richest, the loamiest in the state. And now, in these patches, there is almost literally nothing but one kind of living thing. We’ve erased everything else.”

The good news, the very good news, is that more and more people (permaculturists, organic growers, channelers of information from the devic realm in places like Findhorn and Perelandra, occultists, etc.) are realizing that nature provides a physical and energetic abundance that is currently well beyond our comprehension and perception; that we should be working with the processes, energies, and intelligences that provide that abundance rather than working against them; and that our own evolution depends directly on our turning our interaction with the natural kingdoms from one of exploitation and devastation to one of great respect and harmony. In this exponential accelerating trend lies great hope for us all.

*     *     *

(*Note of credit and thanks: Many links in this article come from the amazing SOTT.NET Earth Changes tracking page. They make great videos summarizing each month’s earth changes; you can see them here. As stated elsewhere, I think they do a wonderful job of collecting information, but a poor job of theorizing about its causes. They say that there is so much global cooling that a new ice age has already started, that “Planet X” is on the way, etc. I think they are wrong about these things. However, they do seem to like G.I. Gurdjieff, so there is hope.)