Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
So, Where Is Gold's Corrective Upswing? - 7th Mar 21
US Treasury Yields Rally May Trigger Stock Market Crazy Ivan Event - 7th Mar 21
The Great Reset Is Coming for the Currency - 7th Mar 21
Gold Continues Declines on Bond Yield Jitters - 7th Mar 21
The Case for Inflation - 7th Mar 21
Dow Short-term Stock Market Trend Analysis - 6th Mar 21
Intel Rocket Lake EXPLODE on Launch - 11th Gen CPU's RUN VERY HOT Bad Cinebench R20 Scores - 6th Mar 21
US & UK Head for Post Coronavirus Pandemic Lockdown Inflationary Economic BOOM - 6th Mar 21
FED Balance Sheet Current State - 5th Mar 21
The Global Vaccine Race Against Time and Variants - 5th Mar 21
US Treasury Yields Rally May Trigger A Crazy Ivan Event (Again) In Stock Market - 5th Mar 21
After Gold’s Slide, What Happens to Miners? - 5th Mar 21
Racism Pandemic Why UK Black and Asians NOT Getting Vaccinated - NHS Covid-19 BAME - 5th Mar 21
Get Ready for Inflation Mega-trend to Surge 2021 - 4th Mar 21
Stocks, Gold – Rebound or Dead Cat Bounce? - 4th Mar 21
The Top Technologies That Are Transforming the Casino Industry - 4th Mar 21
How to Get RICH Crypto Mining Bitcoin, Ethereum With NiceHash - 4th Mar 21
Coronavirus Pandemic Vaccines Indicator Current State - 3rd Mar 21
AI Tech Stocks Investing 2021 Buy Ratings, Levels and Valuations Explained - 3rd Mar 21
Stock Market Bull Trend in Jeopardy - 3rd Mar 21
New Global Reserve Currency? - 3rd Mar 21
Gold To Monetary Base Ratio Says No Hyperinflation - 3rd Mar 21
US Fed Grilled about Its Unsound Currency, Digital Currency Schemes - 3rd Mar 21
The Case Against Inflation - 3rd Mar 21
How to Start Crypto Mining Bitcoins, Ethereum with Your Desktop PC, Laptop with NiceHash - 3rd Mar 21
AI Tech Stocks Investing Portfolio Buying Levels and Valuations 2021 Explained - 2nd Mar 21
There’s A “Chip” Shortage: And TSMC Holds All The Cards - 2nd Mar 21
Why now might be a good time to buy gold and gold juniors - 2nd Mar 21
Silver Is Close To Something Big - 2nd Mar 21
Bitcoin: Let's Put 2 Heart-Pounding Price Drops into Perspective - 2nd Mar 21
Gold Stocks Spring Rally 2021 - 2nd Mar 21
US Housing Market Trend Forecast 2021 - 2nd Mar 21
Covid-19 Vaccinations US House Prices Trend Indicator 2021 - 2nd Mar 21
How blockchain technology will change the online casino - 2nd Mar 21
How Much PC RAM Memory is Good in 2021, 16gb, 32gb or 64gb? - 2nd Mar 21
US Housing Market House Prices Momentum Analysis - 26th Feb 21
FOMC Minutes Disappoint Gold Bulls - 26th Feb 21
Kiss of Life for Gold - 26th Feb 21
Congress May Increase The Moral Hazard Building In The Stock Market - 26th Feb 21
The “Oil Of The Future” Is Set To Soar In 2021 - 26th Feb 21
The Everything Stock Market Rally Continues - 25th Feb 21
Vaccine inequality: A new beginning or another missed opportunity? - 25th Feb 21
What's Next Move For Silver, Gold? Follow US Treasuries and Commodities To Find Out - 25th Feb 21
Warren Buffett Buys a Copper Stock! - 25th Feb 21
Work From Home Inflationary US House Prices BOOM! - 25th Feb 21
Man Takes First Steps Towards Colonising Mars - Nasa Perseverance Rover in Jezero Crater - 25th Feb 21
Musk, Bezos And Cook Are Rushing To Lock In New Lithium Supply - 25th Feb 21
US Debt and Yield Curve (Spread between 2 year and 10 year US bonds) - 24th Feb 21
Should You Buy a Landrover Discovery Sport in 2021? - 24th Feb 21
US Housing Market 2021 and the Inflation Mega-trend - QE4EVER! - 24th Feb 21
M&A Most Commonly Used Software - 24th Feb 21
Is More Stock Market Correction Needed? - 24th Feb 21
VUZE XR Camera 180 3D VR Example Footage Video Image quality - 24th Feb 21
How to Protect Your Positions From A Stock Market Sell-Off Using Options - 24th Feb 21
Why Isn’t Retail Demand for Silver Pushing Up Prices? - 24th Feb 21
2 Stocks That Could Win Big In The Trillion Dollar Battery War - 24th Feb 21
US Economic Trends - GDP, Inflation and Unemployment Impact on House Prices 2021 - 23rd Feb 21
Why the Sky Is Not Falling in Precious Metals - 23rd Feb 21
7 Things Every Businessman Should Know - 23rd Feb 21
For Stocks, has the “Rational Bubble” Popped? - 23rd Feb 21
Will Biden Overheat the Economy and Gold? - 23rd Feb 21
Precious Metals Under Seige? - 23rd Feb 21
US House Prices Trend Forecast Review - 23rd Feb 21
Lithium Prices Soar As Tesla, Apple And Google Fight For Supply - 23rd Feb 21
Stock Markets Discounting Post Covid Economic Boom - 22nd Feb 21
Economics Is Why Vaccination Is So Hard - 22nd Feb 21
Pivotal Session In Stocks Bull Bear Battle - 22nd Feb 21
Gold’s Downtrend: Is This Just the Beginning? - 22nd Feb 21
The Most Exciting Commodities Play Of 2021? - 22nd Feb 21
How to Test NEW and Used GPU, and Benchmark to Make sure it is Working Properly - 22nd Feb 21
US House Prices Vaccinations Indicator - 21st Feb 21
S&P 500 Correction – No Need to Hold Onto Your Hat - 21st Feb 21
Gold Setting Up Major Bottom So Could We See A Breakout Rally Begin Soon? - 21st Feb 21
Owning Real Assets Amid Surreal Financial Markets - 21st Feb 21
Great Investment Ideas For 2021 - 21st Feb 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

New Chaos And Old Versailles: Is This Guided History ?

Politics / Global Debt Crisis Nov 27, 2011 - 12:29 PM GMT

By: Andrew_McKillop


Best Financial Markets Analysis ArticleEverybody knows that Keynes' first (some would say only) claim to fame was to argue that Kaiser Germany's war debt reparations following the 1914-18 war were too high and should be struck down. In modern parlance this is called debt write down and economic bail out by an accelerated turn of central bank money printing presses, and the play of institutions partly-proposed or invented by Keynes, the IMF and Bank for International Settlements (BIS).

In the 1920s and 1930s this didnt happen, and Hitler Germany did happen. National revenge on the international community-equivalent of the time - the Allied winners of World War 1 - played a big motivating role for German middle class voters who massed to vote for Hitler. Chaos did rule but it wasnt OK.

Nothing stops history repeating itself, especially when the real bases of old style, Victorian style capitalism are still there to keep the speculative roulette wheels whirring, chaos building, the poor poorer, and the rich richer: this is artfully called "No Alternative". Imaginative persons add that exactly like the 1930s, the chaos-provoking dark shadow of also-Victorian great banking families plus a few billionaire newcomers, like the Bills (Gates, Joy and Clinton) are currently at work with the aim of loss and impoverishment for all mankind, but especially the indebted.

Mainstream media will be rather shy on the details of the real processes at work: what really happens as mass protest turns to street fighting, this morphs into near civil war, and The Great Leader emerges out of the chaos like a jack-in-the-box.

Called a "directoire" in French, this new power system is already formed by the knockabout pair of comics, Nicolas Sarkozy and Angela Merkel whose house style is disarmingly close to "The Simpsons". This unlikely pair of would-be great leaders is presented by doomsters as a "cabal" seeking formal European wide federal government and – in particular – the spreading of European debt far and wide, to China, the Moon and beyond. Barack Obama, in a TV interview with Sarkozy was invited on board this Night Flight to Venus, and gave every sign of being eager to take the ride. If he understood the question.

Only having to address their shrinking ranks of "middle class voters" the fear-based promotions used to sell this outdated merchandise are becoming more stark every day. Global warming has almost totally fallen off the teleprompter, these days. Its popularity ratings have fallen even lower than ratings of the Sarkozy-Obama-Merkel trio - and GW is now replaced and superceded by a threat even middle class consumer chaff can understand: your savings will be trashed to nothing if you dont obey. All banks will close. All political power will now move to specially prepared globalist institutions.

The first two parts of this message have a real hold on middle classes - who in any case feel uncomfortable voting out Lifetime Presidents and PMs, starting with Reagan and Mrs T. They will be little moved by the most important new message: Democracy is terminated. No need to waste time voting, anymore. Markets have a horror of uncertainty and one thing dictators deliver is certainty: why do you think Mubarak, Ben Ali and Gaddafi (RIP) hung in so long and had such solid support from their consumer-educated and greedy middle classes, like Bashr el Assad still has, today ?

To be sure, actions speak an awful lot louder than words. Despite its fantastic economic unreality and unrelatedness to the real world, but with stolid determination, an oil crisis is in preparation. If there is one thing that gets the middle class moving, it is an oil crisis ! After that, the chimpanzee-like middle classes will be massing and twittering in the electric car salesrooms, with no need to worry about voting and all monetary worries forgotten for a while.  With sufficient agit-prop and the right theatricals the National Unity governing coalitions, rigorously self-declared and self-elected, will be nodded through by middle class opinion to become permanent institutions of government. The mature postindustrial postdemocracies will be enshrined.

The car industry, for starters, can be saved but first the middle classes have to believe in the New Mission of the capitalist ruling classes, and other actions are underway to help them believe.

The posh words for this are "directed history". The basic theory is that the power elite, the rich and troublesome, the parasitic 1% classes, are orchestrating a max of controlled and directed chaos. Nobody is obliged to believed this, we can add. Once the chaos level is judged to have attained the right intensity, this cabalistic and parasitic elite will switch to outright authoritarian rule: for example eugenics and the police state, to make up for 40 years of ignoring population problems.

In olden times, up to about 1945 and the invention of atomic weapons, guided history meant Victorian-style colonial wars on a regular basis, if only to restore middle class morale. Unsatisfied with only raising misery inside their own societies, they could spread their poison wider and further. These wars are now more or less off the menu, except for the now failing Comfort War in Afghanistan and drone attacks in Pakistan or Yemen, so the high ground is occupied by the "war on debt" AKA the sovereign debt crisis, currently focused on Europe.

What we know is the likelihood of this crisis ever occurring was very low in the 1990s, leapt higher with the creation and forced introduction of the Euro at the turn of the century, and was totally certain by at latest 2007.  Doomsters ask: Who planned this ? Others can argue that nobody did.

Conspiracy theory is a story of wheels within wheels. Fractals breed fractals. The process can go on for a long time, but exclusively imagining that Evil Elites plan and operate economic chaos on a pushbutton production line basis to amuse their middle classes may be a fatal error. Later, we might find there was No Pilot On Board, but this was not of much interest to the crash victims' families - and of no interest at all to the direct victims.

Since Keynes and the famous, or infamous Versailles Treaty are so close linked and not only in the imagination, we should understand this treaty did an awful lot more damage to the world before it lost credibility from 1935, than the Kyoto Treaty ever did, before it lost all credibility in 2011 and was abandoned in 2012. The Versailles Treaty forced reparations payments on Germany that not only it didnt want to pay - but couldnt pay. All we know from conventional history is that this was a "mistake."

Was the Treaty of Versailles an innocent mistake? First, the losers had to express guilt for losing - which as we know is only partly applied to Wall Street losers. Germany had to admit it started the war. Forcing the expression of guilt, Germany would then pay reparations for losing – roughly $24 billion in money of the day, or roughly 2 to 3 months of current Greek debt repayments as presently scheduled. As we know, the sovereign national debt of Greece, today, is only a tiny fraction of European aggregate sovereign debt, Japanese debt, or American debt. Debt wheels within wheels, also called compound interest look after that.

From the last conference in the Versailles Treaty series, in 1923, to Hitler Germany's total repudiation of all its obligations in 1936, less than 13 years was needed to start what was by then the inevitable process culminating in World War 2. More important and long before this, in fact from the years 1930-31, it was evident that Germany could never pay the total of reparations. Today, we know the War on Debt is lost and the countdown to chaos has started.

Details of Germany's economic rout, starting with hyperinflation can be given a kick-off date as Summer 1921. This hyperinflation only moved into deadly high gear from late 1922 and the start of 1923, and is well described by Phillip Cagan in his "The Monetary Dynamics of Hyperinflation", where he defined hyperinflation as a monthly inflation rate of at least 50%.

Interested persons can try current (November 2011) interest rates applied at Greek sovereign debt auctions. Little or nothing prevents this shifting to Italian, Spanish and French debt.

When national spending for any reason - like war reparations or debt reparations - exceeds all capabilities of the nation to pay, the result is programmed and certain. Several models exist to explain the process, but in Germany's case, and probably Greece's case in a short-term future, and in Egypt's case in a probable near-term future, we have the so-called "confidence model"

In the confidence model, middle class consumer morale melts to zero. Defeat in battles and wars, invasion and occupation, stock market losses, hyperinflation, the disappearance of old and respected moneys (like the national moneys destroyed to enable the euro) erodes mass confidence that authorities issuing money are reliable and will remain solvent. This in fact concerns central banks, but for the middle classes their mass belief is that it concerns government.

Fear of demonetization or inflation - basically the same thing - is almost openly used, today, to force the middle classes to perform robot-style and to spend, because of their fear of holding bank notes which will lose value and may become valueless. To be sure, vendors of anything will demand a greater and greater premium over the original price they set for any good or service. This confidence trick of central banks and governments however has a shorter and shorter "best by" date. The hyperinflation process is geometric, as shown by the German 1922-23 sequence.

Under this model, the main and "traditional" method for ending hyperinflation is to issue a completely new money - but this was already tried in Europe, 10 years ago. This shifts the most likely candidate to the US dollar, at least in theory. If the new money is issued under unfortunate economic circumstances, as proven at least a dozen times through the 20th century with a wide variety of countries, the result is not double dip - but double disaster. The better model, the better precedent is to backtrack to 1923 and the Versailles Conference. Basically, Germany went all on its own into hyperinflation.

War is the most commonly cited cause of middle class crises of confidence, but the German context following November 1918 was postwar. For a considerable time (at least 2 to 3 years) there was no sure outline of what German middle classes might have to lose by way of the Treaty. Their first kneejerk response was typical: hyperinflation. The fear of future possible loss triggered the petit bourgeois bad habit of panicking, and this was no isolated case.

As a multitude of case examples show, from as early as the 19th century Napoleonic wars and their aftermath, middle class confidence meltdowns can be purely mass psychological. Arguably, the worst, most murderous excesses of the 1789 French revolution can be traced to a form of middle class panic where anybody else's blood, on the street, was needed to restore bourgeois "order". Following the revolution, French middle classes lined up to watch an estimated 30 000 public executions, by guillotine, in Parisian squares and parks in the first 6 months following the collapse of royal power. Who says the Taliban are especially barbaric ?

In an increasing number of European countries, government admission of profligacy is current practice paving the way to unelected National Unity coalitions. Like German leaders forced to express guilt at losing World War 1, this admission of profligacy makes the shift to austerity completely logical and rational for the middle classes - who will take a little time to understand their own consumer greed is going to take a big hit. When they do, only fascist-type Great Men (or perhaps women) can occupy the political scene, after an initial and short transition period of so-called Technocrats.

Dealing a heavy blow to the "guided history" conspiracy theory where Technocrats remain in power forever and  reinforce the one-way march to one-world order, the real world result of No Alternative one-world economics - misery, despair, resource waste and depletion, intensified concentration of elite power and wealth - acts like a time bomb. Bourgeois society quickly morphs into fascism, nazism and totalitarianism. There really is No Alternative.

Related rationales for one-world order being guided for all our tomorrows are even less credible - for example a supposed mass action (coordinated of course) by the Great Banking Families to lend impossible-to-repay amounts to Europe's soft underbelly southern rim of Club Med countries. Provoking sure and certain crisis, Technocrat rule could only come next. Claims that this is a planned campaign of economic terrorism for creating a European super state to be dovetailed with the US super state imagine that somehow the clock can be stopped dead and the fractals stop turning, when the Evil Elite punches the right button. Maybe, maybe not.

By Andrew McKillop


Former chief policy analyst, Division A Policy, DG XVII Energy, European Commission. Andrew McKillop Biographic Highlights

Andrew McKillop has more than 30 years experience in the energy, economic and finance domains. Trained at London UK’s University College, he has had specially long experience of energy policy, project administration and the development and financing of alternate energy. This included his role of in-house Expert on Policy and Programming at the DG XVII-Energy of the European Commission, Director of Information of the OAPEC technology transfer subsidiary, AREC and researcher for UN agencies including the ILO.

© 2011 Copyright Andrew McKillop - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules