Gold and The Cold WarCommodities / Gold and Silver 2012 Nov 15, 2012 - 04:55 AM GMT
There are now two great nations in the world, which starting from different points, seem to be advancing toward the same goal: the Russians and the Anglo-Americans... Each seems called by some secret design of Providence one day to hold in its hands the destinies of half the world.
Democracy in America, Alexis de Toqueville, 1835
De Toqueville’s amazing prediction in 1835 about the destinies of Russia and the Anglo-Americans was every bit the equal to those made by his illustrious French predecessor, Michel de Nostradame.
In the 1830s, Russia was a czarist empire and the US had fought its war of independence from England only 60 years before. The idea of Russia and the Anglo-Americans ..starting from different points advancing toward the same goal.. called by some secret design of Providence..to [each] hold .. the destinies of half the world was an extraordinary prediction, especially in 1835.
Nonetheless, 110 years later, just as de Toqueville predicted, Russia and the Anglo-Americans each advancing towards the same goal would become enemies in what would become known as the Cold War, an extraordinarily costly decades-long battle for economic hegemony and world dominion in the second half of the 20th century.
In 1835, deToqueville called the two great nations, Russia and the Anglo-Americans. DeToqueville knew full well the difference between England and America. Nonetheless, de Toqueville made no mistake when he described the future Anglo-American alliance as one nation.
It was a prescient prediction of a coming, close relationship between England and the US, a relationship that would extend British geopolitical influence but would bankrupt America in the process and cost it its once great heritage as a beacon of freedom and liberty in the world.
EMPIRE, EMPIRE AND MORE EMPIRE
When de Toqueville made his prediction in 1835, both Russia and England were already empires. By the 18th century, the Tsardom of Russia had become the huge Russian Empire, stretching from the Polish-Lithuanian Commonwealth eastward to the Pacific Ocean.
The British empire, however, would become far larger and ultimately cover almost a quarter of the world’s land area. By 1922 it was estimated that England ruled 20% of the world’s population and was the largest empire in history.
The US, unlike Russia and England, had no interest in empire. Indeed, the democratic ideals of America were antithetically opposed to the imposition of power over others, let alone nations.
I have never been able to conceive how any rational being could propose happiness to himself from the exercise of power over others.
America’s participation in the Anglo-American pursuit of empire one century later would have catastrophic results for America. Cut loose from its moral anchor as a beacon of freedom, America would gain wealth and power but would lose its soul in the process; and, in the end, America would also lose much of its wealth and power as well.
Although, in the end, America would deny its democratic past to pursue the fruits of empire, it would not escape the costs, both financial and moral, in so doing:
Every ambitious would-be empire clarions it abroad that she is conquering the world to bring it peace, security and freedom, and is sacrificing her sons only for the most noble and humanitarian purposes.
That is a lie, and it is an ancient lie, yet generations still rise and believe it! If America ever does seek Empire, and most nations do, then planned reforms in our domestic life will be abandoned, States Rights will be abolished in order to impose a centralized government upon us for the purpose of internal repudiation of freedom, and adventures abroad.
The American Dream will then die—on battlefields all over the world—and a nation conceived in liberty will destroy liberty for Americans and impose tyranny on subject nations.
George S. Boutwell, (1818-1905), Secretary of the Treasury under President Ulysses S. Grant, Governor of Massachusetts, Senator and Representative from Massachusetts.
THE ANGLO-AMERICA ALLIANCE
In 1945, at the beginning of what is now known as the Cold War, England and America had become far more alike than America’s founding fathers could have foreseen; the central bank being the most egregious example.
Of all the English institutions that Founding Father Thomas Jefferson opposed, it was the central bank. Designed by bankers to transfer the profits of societal productivity, commerce and ingenuity to bankers and financiers via the mechanism of debt, the central bank was at the center of British power and wealth.
England’s central bank allowed England to wage war on credit, an advantage not shared by others; and as along as England’s armies and navies were victorious, the bankers’ debts were repaid, their wealth increased and England’s empire expanded.
England’s central bank allowed England to literally create money out of thin air. This monetary alchemy was possible as long as England (1) maintained confidence in paper money, (2) maintained the balance between credit and debt, and (3) kept its economy expanding.
In central bank debt-based economies, economic activity needs to expand or debt will overwhelm productive capacity; and when the growth of England’s empire began to slow in the late 1800s, England’s bankers realized they would soon need another base from which to continue their financial franchise.
America was ideal for England’s purposes; and despite Jefferson’s numerous warnings about central banks, in 1913 a consortium of private European bankers, US financiers and industrialists established the Federal Reserve Bank in the US, modeled after England’s central bank, the very institution that Thomas Jefferson so strongly opposed.
It was the establishment of the Federal Reserve Bank in America that allowed England to regain control of its former colony, the United States. Establishing a central bank was the first and only step necessary; for with a central bank established in America, private bankers would henceforth control America’s money supply and, ultimately, its political future.
Give me control of a nation’s money and I care not who makes the laws.
Mayer Amschel Rothschild (1744-1812)
RUSSIA, THE ANGLO-AMERICANS AND THE COLD WAR
In the 20th century, as England’s imperial power weakened, England’s grip on the US grew tighter; and by 1945, the US was more than eager to betray its democratic heritage in order to join England in the pursuit of world power.
After WWII, what Alexis de Toqueville had predicted in 1835 came true. Russia and the Anglo-Americans would compete for world dominion in what would become known as the Cold War.
The Cold War lasted from 1945 to 1990 when the USSR collapsed. It would appear the Anglo-Americans won and Russia lost. But, in truth, both sides lost; for the five-decade reign of Anglo-American dominance would cost the England and America their foundation of economic hegemony, i.e. the ability of their debt-based economies to expand ad infinitum.
The pursuit of global dominion would also cost America its vast gold reserves, once the largest monetary reserves in history. Maintaining a world-wide military force forced the US to end the gold-convertibility of the US dollar in 1971; and the removal of gold from the world monetary system allowed credit and monetary aggregates to grow at heretofore unprecedented rates.
The unrestrained growth of money and credit after 1971 led to the sequential growth and collapse of the three largest speculative bubbles in history: (1) the Japanese Nikkei in 1990, (2) the US dot.com bubble in 2000, and (3) the 25-year global credit bubble in 2008.
The subsequent inability of the Anglo-Americans to revive the credit and debt machine that had initially allowed it to achieve suzerainty over the East has now leveled the playing field between the East and the West; and, in this new playing field, the East and West are pursuing radically different strategies.
With its economic foundation threatened as never before, the West is doing everything in its considerable power to strengthen its now faltering economic foundation; and, gold, once viewed as necessary to maintain the stability of its paper money, is now viewed by Western bankers as a threat.
As confidence in the West’s confidence game of credit and debt wanes, investors are increasingly seeking the safety of gold. They have done so in every monetary and financial crisis in history and it is no less true today.
However, transferring wealth from paper assets, e.g. stocks and bonds, to gold threatens the leveraged asset base so necessary to the credit and debt ponzi-scheme that comprises the foundation of modern economies, i.e. debt-based capitalism.
It is perhaps appropriate that the two former communist antagonists to capitalist expansion, China and Russia, are now playing the exact opposite hand. As the latest iteration of ‘great game’ is being played out on the geopolitical stage, China and Russia are going for the gold.
THE EAST GOES FOR THE GOLD
Since 2007, Russia has more than doubled its official gold reserves, the largest increase in reserves worldwide; and every month Russia buys about a half a billion dollars more. In 2012, China replaced India as the world’s top importer of gold and for the past five years China has led the world in gold mining production.
No gold mined in either China or Russia is sold on the open market. All gold mined in China and Russia stays in that country. Clearly, the East has a different strategy than the West and gold is a critical part of that strategy.
The West, however, is primarily concerned with protecting the economic system, i.e. capitalism, which allowed it to conquer and exploit much of the world for almost three hundred years. Such leverage is rarely come by and the fact that it may be ending has only redoubled Western efforts to save it.
The East has a much more sanguine outlook on the possible demise of capitalism. Capitalism is seen as a Western contrivance. Whatever replaces it will most likely involve gold and they’re getting ready.
My current youtube video, Exchange is Inevitable, Like Death, is a discussion with fellow author and long-time coin dealer, Ralph T. Foster. Most don’t realize the dangers of our times. They will. Unfortunately for most, it will be too late when they do.
Buy gold, buy silver, have faith
About Darryl Robert Schoon
In college, I majored in political science with a focus on East Asia (B.A. University of California at Davis, 1966). My in-depth study of economics did not occur until much later.
In the 1990s, I became curious about the Great Depression and in the course of my study, I realized that most of my preconceptions about money and the economy were just that - preconceptions. I, like most others, did not really understand the nature of money and the economy. Now, I have some insights and answers about these critical matters.
In October 2005, Marshall Thurber, a close friend from law school convened The Positive Deviant Network (the PDN), a group of individuals whom Marshall believed to be "out-of-the-box" thinkers and I was asked to join. The PDN became a major catalyst in my writings on economic issues.
When I discovered others in the PDN shared my concerns about the US economy, I began writing down my thoughts. In March 2007 I presented my findings to the Positive Deviant Network in the form of an in-depth 148- page analysis, " How to Survive the Crisis and Prosper In The Process. "
The reception to my presentation, though controversial, generated a significant amount of interest; and in May 2007, "How To Survive The Crisis And Prosper In The Process" was made available at www.survivethecrisis.com and I began writing articles on economic issues.
The interest in the book and my writings has been gratifying. During its first two months, www.survivethecrisis.com was accessed by over 10,000 viewers from 93 countries. Clearly, we had struck a chord and www.drschoon.com , has been created to address this interest.
Darryl R Schoon Archive
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