Dominant Social Theme:
Mama, it's cold out there. But the sun will shine tomorrow.
Free-Market Analysis:
Jim Rogers, who has given the Bell a terrific interview to appear this Sunday, made news again yesterday with the above excerpted prediction about the British pound. It's no secret that Britain has been inordinately profligate even during the financial crisis, with the Labour government refusing to rein in spending programs. Health care and various welfare and social services programs, alongside of a failing public education system, are breaking Britain, but neither major political party seems prepared to provide lasting solutions. Crises are looming, as Rogers suggests.
When outlays continually outstrip income, the world's currency trading community begins to grow uncomfortable - or hyper-active anyway. The offending country is forced to offer higher rates on its paper to tempt buyers. In extreme cases, as Rogers is suggesting, bonds may not sell at any cost and the currency gradually sinks toward zero compared to other "more solid" international currencies.
Will Rogers predictions come to pass? See other article in today's Bell for a general discussion on the unraveling of the current economic system - EU Unraveling - Greece Vs. Germany - one that depends on central banking, fiat money and the confidence of its citizens. If people ever begin to seriously question the validity of the world economy - as it has been developed - bad things could happen. If the international financial system really began to unravel, there would certainly come a time when a new economic order would start to evolve, spontaneously or not.
Now some of the savvier cynics among us will claim that this is just what has been "planned." That those who are driving the world toward an ever-more perfect union, want to create this sort of crisis, with an eye toward implementing an ever-more centralized solution. We can believe this may have been the plan, but if so, we also believe it's spinning out of control. We don't believe, for instance, the elite wants to lose the European Union or the euro anymore than it wants its painstakingly created global warming promotion to go belly up. We think events are driving the elite for once, rather than the other way round. The combination of bad economic times and the socio-political education available on the Internet itself is proving lethal to many elite promotions, including central banking and fiat money.
It all comes down to what you believe, dear reader. If you believe that the EU and global warming were just way-stations on the road to world government, then you will likely believe that the current chaotic climate is purposeful and that what emerges hews to a long-term plan. If you believe as the Bell does, then you will likely take the position that what is occurring today is out of anyone's control, and that it is a kind of perfect storm, or as Anthony Wile wrote in High Alert in 2003, a financial hurricane - one the power elite never expected. It is, in fact, a confluence of a ruinous global economy and the educative effects of the Internet. The former the elite may have foreseen and advanced. The latter, we believe, was something the elite never imagined.
When we began to write about the Internet as a modern day Gutenberg press some 8-9 years ago, we had no idea what would be the trigger mechanism. We couldn't imagine how events would shake and we figured whatever was going to happen would take another 25-50 years. So we are surprised as you are, dear reader, over the speed with which elite promotions seem to be deflating. What has happened, of course, is that people are upset and angry over the economy and the loss of the jobs - not only in the West but around the world. In the past, the elite has easily been able to take advantage of such anger by directing it in certain populist directions that eventually result in even MORE control. But today, the elite may have lost some of that ability. The elite controls the mainstream news, but the mainstream is not what it was in this Internet era. In fact, the alternative 'Net press, much of which is free-market thinking oriented, is increasingly credible.
What would happen if the pound crashed? It would probably set off a real economic realignment globally. But we have a hard time believing that what would emerge would be a kind of economic global governance. Oh, perhaps that's what the powers-that-be had in mind. But we don't think, at this point, that there would be much of a buy in. Let the power elite emerge from a "crisis meeting" and announce the formation of a comprehensive IMF currency to take the place of the dollar and see what happens. It wouldn't be greeted with the kind of respectful awe that Bretton Woods inspired.
Conclusion:
For the first time in hundreds of years from what we can tell, there is no feasible preordained outcome to what's taking place. Those in charge have little credibility and those who have the money are having difficulty wielding it because the Internet has so thoroughly explained the mechanism. It is perfectly possible that the EU comes under very heavy attack in the near future along with Britain. It is perfectly possible that the central banking regime of the past 100 years becomes increasingly non-credible - and eventually fails in pieces or all at once. In that case, we would anticipate the resurgence, to begin with anyway, of Brownian state-run central banks and perhaps even parochial fiat money. We would hope that free-banking would make a comeback as well, along with a market-based gold and silver standard. Of course, Rogers and others may believe the world in its current incarnation may simply muddle through. But nothing is as certain as it was. The 21st century is not the 20th.
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