Towards A Worldwide Inflationary Depression, Collapse Of The Anglo-American Empire

Towards A Worldwide Inflationary Depression, Collapse Of The Anglo-American Empire

According to our calculations we have been in an inflationary depression since February of 2009. Everyone looks back on the deflationary depression of the 1930s as a benchmark or a reference. As far as we are concerned the 1930’s depression only ended when the powers behind government arranged another war. Few talk about the recession of the early 1920s, which only lasted two years and was caused by the newly formed Fed, which financed US participation in World War I.
They raised interest rates, which enticed citizens to save, which provided money for loans for research and expansion. The Fed, other than raising rates, stayed neutral, as did the Treasury. The result was the recession ended quickly. A bad story with a happy ending, which contributed to the roaring 20s, which the Fed eventually turned into a depression via their interference.

There was no deficit spending in the 1920s and funded debt fell by 1/3rd. That went on from 1945 to 1960. Today we have a different kettle of fish, which consists of perpetually kicking the can down the road, hoping some miracle will save the day, when those who caused these problems know full well the situation cannot now be saved without purging the system and allowing maleinvestment and speculation to die a normal death in bankruptcy. The Fed, Wall Street and speculators cannot bring about recovery, but they try anyway. Those who agree with these elitists are fools and they will pay a high price for not listening.

The Treasury is issuing $2.16 trillion in debt annually and if the Fed purchases 80% that works out to $1.7 trillion a year. As QE2 comes to end this month there will be few to buy that $1.7 trillion in treasuries and the system will collapse into deflationary depression.
That means the Fed has to keep doing what it is doing. If the Fed stops we’ll have deflationary depression with a year. If they continue doing what they are doing we will have hyperinflation in 2 to 2-1/2 years.

Today’s worldwide crisis centered in the US, UK and Europe did not have to happen. It was not caused by incompetence and greed. It was designed to destroy the economic and financial system to a point where the inhabitants of these countries would beg for world government. It began, as we know it on August 15, 1971, when the US went off the gold standard. Since then the dollar has lost 98% of its value versus gold, silver and in some cases other currencies. As this became the monetary future, events were put in place to move almost all industry and some services out of the US, UK and Europe, better known as free trade, globalization, offshoring and outsourcing.
In addition unsustainable debt was created to make sure the system collapsed. Of course, as far as the elitists are concerned, there is no problem - there is just a period of adjustment. Part of this adjustment is the extension of the short-term debt limit to $16.3 trillion from $14.3 trillion.

When, we ask, will Social Security and Medicare be cut? Trillions in taxes were paid for this old age and survivor’s pension. From its very inception the money was looted from the general fund and the bonds issued are not worth the paper they are written on. Mandated benefits can never be covered as the taxes are at this very moment being looted. This is a reflection of what is happening in the entire global system, a hallmark of socialism. As the debate rages, we can assure you the elderly will get screwed again with major cuts in Social Security and Medicare.

As we said earlier the longer the inevitable is delayed the worse the result will be. We do not know what untoward event will bring on the inevitable, but it is there lurking somewhere. When it happens it will be like a bolt out of the blue.

The Anglo American empire is in an ongoing state of collapse, which they deliberately caused themselves in order to subdue and enslave humanity. We saw the faux adulation afforded to the illegal alien who calls himself president. The Anglo American special relationship still is firm at the upper levels. This includes their joint role of guardians of civilization. Just more Illuminist sanctimonious crap. The key to globalist power is control of the world banking system and we plan to take that away from them.
This is not 1348, and there will be no exile from Venice. There will only be long prison terms, a confiscation of all family wealth and execution for those who have betrayed our country. This time the Illuminists will suffer the unthinkable. Something they have not suffered in the last 1,000 years.

The Fed is now holding just under $2.8 trillion in bonds of which they say $1.6 trillion is in Treasury paper. The rest is in Agency securities and toxic bonds. By the end of June they should be over $3 trillion. Our question is what is the real figure? How much do they have or are they committed for with other nations that are not visible? Remember, it took two years and a trip to the Appeals Court to force the Fed to tell us what they were secretly hiding from us.
As a result they have no credibility, so anything they say has to be taken with a grain of salt. From June to June, we expect that $1.6 trillion to grow to $3.3 trillion and the Fed may well have to disperse another $500 to $850 billion to keep the system afloat. That would bring to figures to $3.8 to $4.15 trillion. That should be enough to keep the system afloat, provide 50% hyperinflation and tend to the beginnings of WW III.
The creation of war will be the distraction needed to force inflation, debt and monetary problems into a second position. Who worries about money and purchasing power when they may be dead shortly? This is the pattern the elitists have followed for centuries.

At the same time the amount of Treasuries purchased by foreign investors and other nations are falling and that we believe will continue. The question then arises how much additional paper will the Fed have to absorb – another $600 billion a year? We do not know that answer, but it doesn’t look good.

We believe after having seen Mr. Strauss-Kahn set up for extinction as head of the IMF and as the main challenger to Mr. Sarkozy, that there is a power struggle going on between the European and the Anglo American interests to above all make sure that the dollar remains the world reserve currency no matter what the circumstances. This is really the main battle that is going on. The Europeans want the SDR, the British and Americans the dollar.
The latter’s thinking is that since WW II the US has again and again saved the world economy, being the engine that has driven all economies. In the recent case of China it is the same as well. If US markets had not approved and opened their markets to China’s exports and most favorite nation treatment, China would not be where it is today. The American elitists believe the dollar deserves its position no matter how much they have damaged it.

You can see Europe going all out to make sure French Finance Minister Christine Lagarde becomes head of the IMF. They want a European running the IMF in spite of the fact that Strauss-Kahn said in 2007 that the next leader of the IMF would not be a European. That is why the Mexican finance minister, Mr. Carstens, threw his hat in the ring. He is in reality the US designate. An additional reason that has brought Lagarde strong European support is that Sarkozy wants to get rid of her, because she is doing a good job.
Another reason we see conflict within the inner sanctum is that Greece could bring down the ECB and the euro and it seems the elitists would like that. It switches focus away from a falling dollar and destroys its main competitor, the euro. This is a titanic struggle that most observers are missing. It makes Strauss-Kahn’s arrest and termination at the IMF and his fall from socialist party grace a diversion. The battles are for the continued supremacy of the US dollar and more control over the IMF via Carstens. US interests want a Greek default and a euro breakup. The US rating agencies continue to attack the ratings of all of the weak euro counterparts and at the same time short European country bonds.
The UK is in this with the US up to their eyeballs. The US and UK have left Europe to swing in the wind. This is what is really going on in Europe. Remember, there is no honor among thieves.

Late developments from our contacts in Greece tell us the bankers, EU and IMF had best forget about collateralizing debt (Mnemonic). The entire country is now aware of what the bankers are up too. What put the frosting on the cake was that a publication in the Netherlands said as a result of the secret deal, the Turks would get a Greek Island and raise their flag over it. That has really enraged the Greeks.
PM Papandreou told 30 of his party legislators (Voulefles) that if they didn’t vote for collateralization he will fire them and replace them with people off the street. He obviously thinks he is a dictator because that is beyond his legal authority. Each day 150,000 people are surrounding the Vouli, the Parliament and the members are growing.
PM Papandreou now only moves by helicopter, obviously fearful of assassination. One thing is for certain he will have difficulty ever living in Greece again. A woman professor said on TV that a Patriotic resistance has already started in Crete and in many smaller cities; people are signing up in the new movement. The police cannot handle the massive crowds and the military is securely behind the people. The bankers had best give it up and walk away. They are going to lose this one and it means the end of the euro zone and the EU.

Switching back we must remind you again that the Fed is monetizing $900 billion, not $600 billion as you have been told. Without that number the Fed could not have accomplished all of its Treasury buying. Of the almost $2.8 trillion in bonds some $900 billion are toxic waste, that is about 33%. We do not know their value, but we would guess it to be close to $200 billion, which the American taxpayer will get to pay for – that is a $700 billion loss, if that is what it works out to be.
By what has happened over the last few years we conclude the Fed is the main source of economic instability. There is very little savings and that is understandable with virtually zero deposit interest rates. The Fed can throw money and credit at the problems, but in the final analysis you have to have a large pool of savings to borrow from. For some time there was negative savings. Presently they are 4% to 5%, which is inadequate to launch a permanent recovery. Quantitative easing only temporally solves the problem. The Fed’s approach has driven what savings there are and funds from QE2 into speculation and that does not create recovery. Loose monetary policy diverts funding away from positive recovery activities to speculation and into bubbles. The Fed’s policies will bring about one or two conclusions: hyperinflation is obvious as an extension or present policies.
The other is a cessation of creation of money and credit, which will bring about a falling economy and economic contraction. At least at this juncture the Fed continues on Plan A – expansion. At the same time we are told an increase in interest rates are a long way off. Toward this end the Fed’s balance sheet is quickly expanding and we do not see any slowdown ahead. An increase from 15% to 17% might not seem like much, but it is, especially when savings numbers are falling causing a loss in underlying momentum. This is negative for Treasuries because 80% of buying has to continue to come from the Fed via monetized money created out of thin air.

If anyone believes higher inflation is going to act as a governor on monetary growth they are mistaken. The Fed has little concern regarding inflation and price stability, if they did they wouldn’t be doing what they are doing. The government lies about the CPI figures and the Fed swears to it. The figures are far higher than stated and anyone who believes official figures is very remiss in professional evaluation.

Between the Fed and Congress $1.8 trillion has been spent to achieve 1.8% growth in the first quarter and all indications are that the economy is slowing again. We thought the carryover in the first quarter would have been 2-1/2% to 3-1/4%, but that didn’t happen. We expected a further slowing in the second quarter to 2% and then negative growth for the remainder of the year. We’ll stick to that projection, but the slippage will come from a lower level. Unless QE3 is already underway we should see minus 2% for the second half of the year. What professionals and investors have to understand is that what the Fed is doing doesn’t work and the Fed knows that.
The longer they create money and credit the higher inflation will rise along with gold, silver and commodities and the lower the dollar will fall versus other currencies, but more importantly the lower the US dollar will fall versus silver and gold.

The same kind of condition exists in Europe with the same systemic corruption we see worldwide. The current Greek government is an excellent example. It is probably the most dishonest since WWII. And that includes the mid-80s communist government of George’s father, Andres of the Papandreou crime family. As we look back we wonder what EU countries were thinking of when they knew they were subsidizing a lifestyle Greeks could never afford? Government workers were retiring at 50.
Living standards have been cut 30% to 40% and retirement is now 70 years. These are appropriate measures, but the changes should have been stretched over years. The shock has essentially crippled the economy. Even Draco was not that cruel. The very concept agreed to by the Greek administration to put $400 billion in assets into the hands of foreign experts is something that will harbor strife for years to come. It must be remembered that the banks and governments should have never made those loans in the first place. Who is to know whether these fellow EU socialists are going to do any better than the Greeks have done? The European and British banks want their money back, and it will be interesting to see if they are successful.

In the US a similar situation exists. Even if there is debt approval on August 2nd, the damage caused by the impasse will continue far into the future because printing of money and credit by the Fed is certainly not the answer and financial people worldwide are well aware of that. If legislation is not passed, real interest rates will rise from today’s ridiculously low levels very quickly.
That means bonds would plunge along with the stock market, which in turn means all Treasury fiscal needs would have to be filled in a vacuum by the Fed. Hyperinflation and a dollar collapse would be the final outcome.

As a result of this predicament the only real asset the US has that is worth anything are the portfolios of Fannie Mae, Freddie Mac, Ginnie Mae and FHA. Instead of nationalization their holdings would be sold off to collateralize outstanding US debt to the debtors. That would be $6 trillion worth.
Or perhaps 401Ks and IRAs could be commandeered by Congress in behalf of the state and given to creditors. The Americans thus robbed of their lifetime assets would receive worthless government guaranteed annuities. Those assets would probably be exchanged for perhaps $0.50 on the dollar or $0.33 on the plunging dollar. Can you see what your government has been doing and continues to do to you in order to further enrich those in government, on Wall Street and in banking? This is what you have worked so hard for – betrayal. This is probably where this is all headed and you are the victims. You cannot do much about the situation, as the Greeks and others cannot, short of a military coup. This is where you stand and this is where this is all headed and you had best prepare for it, because if you do not you will be very sorry.

August 2003 Article - Predicting today

Death of Manufacturing

The rise of free trade has eroded America’s industrial base and with it our sovereignty.

Patrick J. Buchanan

After Mass at St. Mary’s, a retired FBI agent who had worked as a boy in the great steel plant in Weirton, W.Va., whose father had died in an accident at the mill, handed me the Weirton Daily Times. “Where Do We Go From Here?” read the May 20 banner. The front page was devoted to the bankruptcy filing of Weirton Steel, which had once employed 14,000 workers in a town of 23,000. Mark Glyptis, president of the Independent Steelworkers Union, said it didn’t have to happen. It was a poignant story. When I began my campaign of 2000 at the Weirton mill, Mark and his ISU endorsed me.

That same week, a friend e-mailed me. Timco, a lumber mill where we spent the last day of the New Hampshire campaign of 1996, had shut down. As Weirton Steel had been hammered by subsidized steel dumped in the U.S. market, Timco had to compete with subsidized lumber from Canada.

Across America the story is the same: steel and lumber mills going into bankruptcy; textile plants moving to the Caribbean, Mexico, Central America, and the Far East; auto plants closing and opening overseas; American mines being sealed and farms vanishing. Seven hundred thousand textile workers—many of them minorities and single women—have lost their jobs since NAFTA passed in 1993.

Thirty years have elapsed since our free-trade era began and 30 months since George W. Bush became president. It’s time to measure the promise of global free trade against the performance.

Undeniably, free trade has delivered for consumers. A trip to the mall, where the variety of suits, shoes, shirts, toys, gadgets, games, TVs, and appliances abounds, makes the case. But what has it cost our country?

Every month George Bush has been in office, America has lost manufacturing jobs. One in seven has vanished since his inauguration. In 1950, a third of our labor force was in manufacturing. Now, it is 12.5 percent. U.S. manufacturing is in a death spiral, and it is not a natural death. This is a homicide. Open-borders free trade is killing American manufacturing.

In 2002, we ran a trade deficit in goods of $484 billion. This May, it reached the level of $562 billion, nearly 6 percent of GDP. Evangelists of free trade tell us trade deficits do not matter. Michael Boskin, Chairman of the Council of Economic Advisers under Bush I, declared, “It does not make any difference whether a country makes computer chips or potato chips.”

History teaches otherwise. In 1860, Britain abandoned its Britain First trade policy for the free-trade faith of David Ricardo, John Stuart Mill, and Richard Cobden. By World War I, Britain, which produced twice what America did in 1860, produced less than half and had been surpassed by a Germany that did not even exist in 1860.

Free trade does to a nation what alcohol does to a man: saps him first of his vitality, then his energy, then his independence, then his life.

America today exhibits the symptoms of a nation passing into late middle age. We spend more than we earn. We consume more than we produce.

Why does it matter where our goods are produced? Because, as I wrote in The Great Betrayal:

Manufacturing is the key to national power. Not only does it pay more than service industries, the rates of productivity growth are higher and the potential of new industries arising is far greater. From radio came television, VCRs, and flat-panel screens. From adding machines came calculators and computers. From the electric typewriter came the word processors. Research and development follow manufacturing.

Alexander Hamilton, the architect of the U.S. economy, knew this. He had served in the Revolution as aide to Washington and lived through the British blockades. He had led the bayonet charge at Yorktown. And he had resolved that never again would his country’s survival depend upon French muskets or French ships.

As first Treasury Secretary, he delivered in 1791 the “Report on Manufactures,” one of America’s great state papers. Reflecting on how close his country had come to losing its liberty, Hamilton wrote,

Not only the wealth, but the independence and security of a country, appear to be materially connected with the prosperity of manufactures. Every nation … ought to endeavor to possess within itself all the essentials of a national supply. These comprise the means of subsistence, habitation, clothing and defense.

Under the Constitution he helped write, a national free-trade zone was created. Hamilton’s idea was to use tariffs to end our dependence on Europe and force British merchants to finance our government and the roads, harbors, and canals that would tie America together with commerce.

Tariffs would give our national government the revenue to operate, while providing our people both privileged access to the fastest growing market on earth and incentives to go into manufacturing. With American manufacturing thus encouraged, we would soon produce ourselves the guns and ships to defend the republic and the necessities of our national life so we could stand alone against the world.

For 12 decades, America followed Hamilton’s vision. On the eve of World War I, the 13 agricultural colonies on the eastern seaboard had become the richest nation on earth with the highest standard of living, a republic that produced 96 percent of all it consumed while exporting 8 percent of its GNP, an industrial colossus that manufactured more than Britain, France, and Germany combined.

The self-sufficiency and industrial power Hamiltonian policies created enabled us to rearm in security, crush the Axis in four years, rebuild Europe and Japan, and outlast the Soviet empire in a Cold War, while meeting all the needs of our people.

But in the Clinton-Bush free-trade era, Alexander Hamilton is derided as a “protectionist.” Woodrow Wilson’s free-trade dogma is gospel. Result: our trade surpluses have vanished, our deficits have exploded, our self-sufficiency has been lost, our sovereignty has been diminished, and an industrial base that was the envy of mankind has been gutted.

And for what? All that junk down at the mall? What do we have now that we did not have before we submitted to this cult of free trade?

The Loss of Independence

Consider the depths of our new dependency. Imports, 4 percent of GDP for the first 70 years of the 20th century, are near 15 percent now, and 30 percent of the manufactures we consume. Pat Choate, author of Agents of Influence, gives the following levels of U.S. dependency on foreign suppliers for critical goods:

Medicines and pharmaceuticals: 72 percent

Metalworking machinery: 51 percent

Engines and power equipment: 56 percent

Computer equipment: 70 percent

Communications equipment: 67 percent

Semiconductors and electronics: 64 percent

In July, the U.S. Business and Industrial Council reported that the Pentagon officials responsible for procuring U.S. weapons had joined with defense industries to oppose legislation requiring 65 percent U.S. content. U.S. missile defense and the Joint Strike Fighter would be imperiled if 65 percent of the components had to be made in the USA.

As Choate writes, Dell Computers of Austin has 4,500 suppliers. Its just-in-time supply line, which stretches across the Atlantic and Pacific, has an inventory of four days. A dock strike on either coast, and Dell begins to close down after 96 hours.

The Loss of Sovereignty

In the lame-duck session of Congress after the GOP triumph of 1994, Bob Dole and Newt Gingrich colluded with Clinton to bring us into a World Trade Organization where we are outvoted 15-1 by the European Union. In its most important ruling, the WTO has held that the foreign sales corporations of U.S. exporters like Microsoft and Boeing, set up to receive tax benefits voted by Congress, violate the rules of free trade.

Europe is now authorized to impose $4 billion in tariff penalties on U.S. exports if Congress fails to rewrite our tax laws to conform to WTO commands.

When America bailed out the world in the Asian crisis of 1997-98, Indonesia, South Korea, Russia, and Brazil devalued their currencies, slashing the dollar price of their exports. To enable them to earn the hard currency to pay back Western banks and the IMF, America agreed to keep her markets open. Soon, steel from Indonesia, South Korea, Japan, Russia, and Brazil was being dumped in the United States, and American mills were reeling.

The recent steel decision is instructive. By 2002, 25 steel companies had gone bankrupt, and the International Trade Commission had identified dumping as the industry killer. Invoking U.S. trade law, President Bush imposed tariffs. The dumpers howled and ran to the WTO, which declared the U.S. tariffs unjustified. Either the Congress removes them or the EU is empowered to impose $2 billion in tariff penalties on U.S. exports.

Consider what submission to the WTO has meant. Our Congress is ordered by foreign bureaucrats to alter U.S. law or our companies face penalties. Presidential decisions to protect vital American industries are declared invalid by Eurocrats. The terms of access to the U.S. market are now to be decided in Geneva by Lilliputians of the New World Order.

Why are we letting this happen?
Libertarians teach that free trade provides a check on government power. By enabling citizens to buy outside their borders, free trade forces governments to reduce regulations and taxes to stay competitive.A fine theory. Has it worked out? Hardly. History shows that the opposite is true. Bismarck’s Zollverein, or customs union, went hand-in-hand with the rise of the Second Reich. The EU evolved from a free-trade common market into the socialist superstate of today that is the model for the world government under which all nations surrender sovereignty and how we live will be decided by Platonic guardians.

In the protectionist era from 1789 to 1933, U.S. taxes rarely took more than 3 percent of GNP, except in wartime. Government relied on tariffs. Before 1913, except for the Civil-War era and briefly under Cleveland, we had no income tax. But in the free-trade era, U.S. tax rates on incomes, currently 35 percent, have risen as high as 70 percent, and spending has exceeded 20 percent of GDP in peacetime. The free-trade era is the era of Big Government.

As a former Friedmanite free trader, let me say it: free trade is a bright shining lie. Free trade is the Trojan Horse of world government. Free trade is the murderer of manufacturing and the primrose path to the loss of national sovereignty and the end of our independence.

NAFTA: The Big StingIn 1993, the NAFTA debate gripped the country. Clinton had the backing of the political establishment, the Heritage Foundation, AEI, Brookings, National Review, New Republic, Wall Street Journal, Washington Post, Chamber of Commerce, Business Roundtable. Perot, Buchanan, Nader, and the AFL-CIO were opposed, as were the people. But that did not matter. Before the vote, the bazaar opened, and Congressmen began selling votes to Clinton for whatever they could get. NAFTA won.

Ten years later, returns are in. We were told our trade surplus with Mexico would grow, that NAFTA would create jobs here, that the rising wages in Mexico would end the invasion of illegal aliens.

But, the year after NAFTA passed, Mexico devalued the peso, and the United States began to run a string of trade deficits that has reached $40 billion a year. Drug cartels in South America shifted operations to Mexico. U.S. exports to Mexico are up, but it is not finished goods we send south but parts to be assembled—and factories and jobs as owners shutter plants north of the Rio Grande in search of wages that are 10 to 20 percent of what they have to pay in the United States.By 2000, a million Mexicans were working in maquiladora plants south of the border at jobs once held by Americans. But now, the creative destruction of globalization has come to Mexico. Factories there are being shut down and moved to America’s new enterprise zone, China.

And the Mexican people? Half of the 100 million are still mired in poverty. Tens of millions are unemployed or underemployed. Real wages are below what they were in 1993. And the migration north continues as 1.5 million are caught each year breaking into the United States. Of those who make it, one-third head for California where their claims on welfare, Medicaid, schools, and prisons have tipped the state toward bankruptcy as the taxpayers have begun a great exodus to Nevada, Idaho, and Colorado.

NAFTA has helped to convert California into Mexifornia and the Golden State into a Third-World country. Ten years after its passage, Mexico’s leading export continues to be Mexicans.

Factory Floor to the World

While Americans are sacrificing the future for the present, China is sacrificing the present for the future.

Beijing’s boom began after it devalued its currency in 1994. While a blow to Chinese consumers, devaluation gave Beijing a competitive edge over the other “Asian tigers.” Beijing then invited Western companies to locate new factories there to tap its pool of low-wage labor. As the price of access, Beijing demanded that Western companies transfer technology to Chinese partners. What the companies do not transfer, the Chinese extort or steal.

By offering excellent workers at $2 a day, guaranteeing no union trouble, allowing levels of pollution we would not tolerate, and ignoring health and safety standards, China has become the factory floor of the Global Economy and surpassed the United States as the world’s first choice for foreign investment.

What analyst Charles McMillion calls “the world’s most unequal trading relationship,” can be seen in the trade statistics. In 2002, the U.S. trade deficit with China was $103 billion. In May, it was running at $120 billion, the largest deficit between two trading nations in history.

It is thus a myth to say President Bush is presiding over a “jobless recovery.” The Bush tax cuts and Bush deficits are creating millions of manufacturing jobs —in China. America buys 14 percent of China’s production and delivers Beijing a trade surplus of 12 percent of its entire GDP. American purchases probably account today for 100 percent of China’s economic growth.

The U.S.-China relationship cannot truly be described as trade. It is rather the looting of America by China and its corporate collaborators in the United States. Beijing understands what economic nationalist Friedrich List wrote long ago: “The power of producing wealth is infinitely more important than the wealth itself.”

China has now amassed $360 billion in reserves from her trade surpluses since 1990. Much of that is invested in U.S. bonds and T-bills, earning Beijing billions in interest from the U.S. Treasury. America may be the most advanced nation on earth, and China a developing country, but you could not tell that from studying the trade statistics.

In 2002, China ran up its largest trade surpluses with us in electrical machinery, computers, toys, games, footwear, furniture, clothing, plastics, articles of iron and steel, vehicles, optical and photographic equipment, and other manufactures. Among the 23 items where we had a surplus with China were soybeans, corn, wheat, animal feeds, meat, cotton, metal ores, scrap, hides and skins, pulp and waste paper, cigarettes, gold, coal, mineral fuels, rice, tobacco, fertilizers, glass. Beijing uses us as George III used his Jamestown colony.

One who has studied how China deals with craven capitalists who come courting is columnist Terry Jeffrey. On inspecting the Web site of Motorola, Jeffrey found this description of how it sees its future:

Motorola is moving toward … taking China as its home and development base. Motorola Chinese Electronics … has increased its investment several times in China without taking away a single dollar. The company reinvested all the profits in China. … Since the very beginning Motorola has brought forward the idea of trying to be a good citizen of China, taking China as its home and thriving with the Chinese people. … The development goal is to become a true Chinese company.

The hilarity of Motorola’s kowtow to the mandarins of the Middle Kingdom aside, this passage reveals a hidden cost of globalization. When U.S. companies go global, they shed their loyalty to America.

Consider Boeing, last surviving U.S. manufacturer of commercial aircraft. Apparently, Boeing has gone beyond building plants in China to make horizontal stabilizers and vertical fins for its fleet. On Jan. 1, this story ran in the New York Times:

The State Department has accused two leading American companies of 123 violations of export laws in connection with the transfer of rocket and satellite data to China during the 1990s. The Boeing company and Hughes Electronics Corporation, a unit of General Motors, were notified of the accusations last week.

Hamilton, Clay, Lincoln, and T.R. would recognize China’s policy for what it is and counter it. But this generation of free traders does not have a clue as to what is going on, or does not care. Either way, the consequences will be the same: de-industrialization of America, decline of the dollar, a deepening dependency on foreign countries for the necessities of our national life, diminished sovereignty, and eventual loss of our independence. If you disbelieve this, look at the once sovereign and independent nations of Europe.

Implosion of the Global Economy

One need not have a Nobel Prize in economics to understand that U.S. trade deficits cannot continue rising indefinitely. As Choate reports,

In the 1970s, [the United States] mounted a decades-long deficit of $75 billion. … In the 1980s, the deficit soared to $843 billion as Japan began to take away our industries. … In the 1990s, that trade deficit doubled to $1.7 trillion. … At this pace, we’re probably going to have a $6 trillion cumulative deficit in this decade—and that’s probably an understated number given the pace we are losing our manufacturing base.

But the world is not going to continue lending Americans $500 or $600 billion a year to indulge our appetite for foreign goods. The U.S. dollar has already lost 25 percent of its value against the Euro, and foreigners have begun to buy up America, purchasing our land, stocks, bonds, and T-bills. Foreigners now claim a lion’s share of the $300 billion we pay in annual interest on the U.S. debt and have liens against all future profits of our Fortune 500 companies.

Consider the altered situation we face today compared with five years ago. When the Asian crisis broke, our economy was booming. We could see budget surpluses out to the horizon. With the IMF, we poured over $200 billion in fresh loans into Thailand, Indonesia, the Philippines, South Korea, Russia, Argentina, and Brazil. To enable them to earn the cash to pay back the sums they owed private creditors and international banks, we pledged to keep America’s markets open to their exports.

These, then, are the three pillars of the Global Economy: first, the willingness of America to bail out nations about to default. Second, the willingness and capacity of America to run enormous trade deficits indefinitely. Third, continued wealth transfers to the Third World.

And this is why the Global Economy is in peril. When Argentina declared it could not service its debt, America and the IMF refused to lend new money. Argentina defaulted. A tottering Brazil was bailed out, but the message was clear. The days of automatic bailouts of bankrupt regimes are over.

And with the dollar sinking, the U.S. budget deficit soaring, our merchandise trade deficit at $562 billion and rising, and manufacturing jobs vanishing at the rate of 80,000 a month, America’s willingness and ability to continue sacrificing for the Global Economy are coming to an end.Perhaps the most inexplicable free traders are the neoconservatives who champion “unilateralism,” talk of a Pax Americana, and cheer the coming American empire of pith helmets and jodhpurs. Do they not understand that trade is not an end in itself but a means to an end: national power? Can they not see that our growing dependence on foreign oil and nations like China for the necessities of national defense imperils our security? Can they not see that these mammoth trade deficits must sink the dollar and that no nation with a falling currency can maintain the troops and subsidies to sustain an empire?

In 1962, Prescott Bush stood with Barry Goldwater and Strom Thurmond to vote no on JFK’s Trade Expansion Act. President Bush rejects the economic patriotism of his grandfather and embraces the Wilsonian faith that free trade will lead to global democracy and world peace. Like his father, he also embraces Wilson’s faith in open borders and moral interventionism. Wilsonism may cost him his presidency.

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