Letter to the Editor:
The epicenter of the global war threat is not located in the Donbas, Gaza, Tehran, or Caracas. What’s actually driving all these conflicts is the ominous impending blowout of the Trans-Atlantic financial system, and the abject refusal of its controllers to consider any alternative to their ruinous policies.
Federal Reserve Chairman Jerome Powell has now announced a return to Quantitative Easing, a thinly-disguised bailout for the banks and hedge funds who effectively own that institution. The immediate impetus for that shift is the widely discussed likelihood that the huge bubbles in artificial intelligence and crypto-currency are at the bursting point.
Turning on the money spigot could easily make today’s inflation rates pale by comparison, but the opposite, tightening approach substantially increases the probability of a deflationary collapse worse than 2008. How do we escape this Scylla and Charybdis conundrum?
The solution is not found in monetary policy per se. We’ve made a series of horrible decisions: moving to an unmoored floating exchange rate system in 1971, the 1983 legalization of the cancer of derivatives, and the 1999 repeal of Glass-Steagall. As a result, the financial system has become ever-more detached from the underlying physical economic base, with the paper values of the former now exceeding the output of the latter by orders of magnitude!
So the question presently is not whether bankruptcy reorganization is required, but rather: Will it be orderly or disorderly? Glass-Steagall would minimize the disruption while credit is rerouted by a “nationalized” Fed into cutting-edge projects such as high-speed rail, massive freshwater development, and a crash program for harnessing the gigantic power of fusion energy. Our children and grandchildren deserve no less!
So, what’s standing in the way? Powerful financial families in the West react to the prospective write-off of their wildly overvalued financial paper with the same warm enthusiasm that Southern slaveholders displayed for the Abraham Lincoln Presidency. These elites have unleashed endless warfare and chaos, desperately trying to prevent any challenge to their bankrupt system from especially the Global South and East.
If you want peace, promote orderly bankruptcy and development!
Sincerely, Doug Mallouk