Google+ Followers

Thursday, 9 May 2013

The Roman state, the enemy; the barbarians, liberators

The Fall of Rome
Back in December 2011 I did a few posts looking at where lessons could be learnt from history, such as the one on Rome.

On the theme of Roman history, particularly the problem of inflation and its impact, my analysis is based on the premise that monetary policy cannot be studied, or understood, in isolation from the overall policies of the state.

We are now at the 'end of empire' stage for the US dollar and so it may be interesting to look at some of the methods employed by the Roman state to deal with the consequences of an inability of the State to transform itself.

Monetary, fiscal, military, political, and economic issues are all very much intertwined. And they are all so intertwined because any state normally seeks to monopolize the supply of money within its own territory.

Monetary policy therefore always serves, even if it serves badly, the perceived needs of the rulers of the state. If it also happens to enhance the prosperity and progress of the masses of the people, that is a secondary benefit; but its first aim is to serve the needs of the rulers, not the ruled. This point is central, I believe, to an understanding of the course of monetary policy in the late Roman Empire.

We may begin by looking at the mentality of the rulers of the Roman Empire, beginning at the end of the 2nd century AD and looking through to the end of the 3rd century AD. Roman historians refer to this period as the "Crisis of the 3rd Century." And the reason is that the problems of the Roman society in that period were so profound, so enormous, that Roman society emerged from the 3rd century very different in almost all ways from what it had been in the 1st and 2nd centuries.

To look at the mentality of the Roman emperors, we can look just at the advice that the Emperor Septimius Severus gave to his two sons, Caracalla and Geta. This is supposed to be his final words to his heirs. He said, "live in harmony; enrich the troops; ignore everyone else." Now, there is a monetary policy to be marveled at!

Caracalla did not adhere to the first part of that advice; in fact, one of his first acts was to murder his brother. But as for enriching the troops, he took that so seriously to heart that his mother remonstrated with him and urged him to be more moderate and to restrain his increasing military expenditures and burdensome new taxes. He responded by saying there was no longer any revenue, just or unjust, to be found. But not to worry, "for as long as we have this," he insisted, pointing to his sword, "we shall not run short of money."

His sense of priorities was made more explicit when he remarked, "nobody should have any money but I, so that I may bestow it upon the soldiers." And he was as good as his word. He raised the pay of the soldiers by 50 percent, and to achieve this he doubled the inheritance taxes paid by Roman citizens. When this was not sufficient to meet his needs, he admitted almost every inhabitant of the empire to Roman citizenship. What had formerly been a privilege now became simply a means of expanding the tax base.

He then went further by proceeding to debase the coinage. The basic coinage of the Roman Empire to this time — we're speaking now about 211 AD — was the silver denarius introduced by Augustus at about 95 percent silver at the end of the 1st century BC. The denarius continued for the better part of two centuries as the basic medium of exchange in the empire.

By the time of Trajan in 117 AD, the denarius was only about 85 percent silver, down from Augustus's 95 percent. By the age of Marcus Aurelius, in 180, it was down to about 75 percent silver. In Septimius's time it had dropped to 60 percent, and Caracalla evened it off at 50/50.

Caracalla was assassinated in 217. There then followed an age that historians refer to as the Age of the Barrack Emperors, because throughout the 3rd century all the emperors were soldiers and all of them came to their power by military coups of one sort or another.

There were about 26 legitimate emperors in this century and only one of them died a natural death. The rest either died in battle or were assassinated, which was totally unprecedented in Roman history — with two exceptions: Nero, a suicide, and Caligula, assassinated earlier.

Caracalla had also debased the gold coinage. Under Augustus this circulated at 45 coins to a pound of gold. Caracalla made it 50 to a pound of gold. Within 20 years after him it was circulating at 72 to a pound of gold, reduced to 60 at the end of the century by Diocletian, only to be raised again to 72 by Constantine. So even the gold coinage was in fact inflated — debased.

But the real crisis came after Caracalla, between 258 and 275, in a period of intense civil war and foreign invasions. The emperors simply abandoned, for all practical purposes, a silver coinage. By 268 there was only 0.5 percent silver in the denarius.

Prices in this period rose in most parts of the empire by nearly 1,000 percent. The only people who were getting paid in gold were the barbarian troops hired by the emperors. The barbarians were so barbarous that they would only accept gold in payment for their services.

The situation did not change until the accession of Diocletian in the year 284. Shortly after his accession he raised the weight of the gold coinage, the aureus, to 60 to the pound — this was from a low of 72.

But ten years later, he finally abandoned the silvered coinage, which by this time was simply a bronze coin dipped in silver rather quickly. He abandoned that completely and tried to issue a new silver coin, called the argenteus, struck at 96 coins to the pound of silver. The argenteus was fixed as equal to 50 of the denarii (the old coinage). It was designed to respond to the need for higher-tariffed coins in the marketplace, to reflect the inflation.

Diocletian also issued a new bronze coin tariffed at ten denarii, called the nummus. But less than a decade later, the nummus had gone from being tariffed at ten denarii to now equaling 20 denarii, and the argenteus had gone from 50 denarii to 100. In other words, despite Diocletian's efforts, the Empire suffered 100 percent inflation.

The next emperor who interfered with the coinage in a meaningful way was Constantine, the first Christian emperor of Rome. In the year 312, which is also the year he issued the Edict of Toleration for Christianity, Constantine issued a new gold piece, which he called by a new name, the solidus — solid gold. This was struck at 72 to the pound, so it was in fact debased more than Diocletian's.

These were very large issues of coin and historians have puzzled over where Constantine got all the gold; but I think the puzzle is not so difficult once you begin to look at his legislation.

First of all, Constantine issued two new taxes. One was on the estates of the senators. This was rather new because senators were usually free of most taxes on their land. He also issued a tax on the capital of merchants; not their earnings, but their capital. This was to be levied every five years and it was to be paid in gold. He also required that the rents from the imperial estates, which were rented out to tenants, were to be paid only in gold.

Constantine took on the bullion reserves of his former partner Licinius, who had extracted, by force, bullion from the treasuries of the cities of the Eastern Empire. In other words, any city that had any gold bullion or silver bullion left in its treasury was simply requisitioned by Licinius. This gold passed on now into the hands of Constantine who had gotten rid of Licinius in a civil war.

We're also told that he stripped the pagan temples of their treasuries. This he did rather late in his reign. In the early days he was apparently still somewhat afraid of angering the gods of Rome. As his Christianity became more fixed, he felt greater ease at robbing the temples.

Now, in one sense, Constantine's reform began the reversal of the process: the gold coinage was sufficiently large that it began to take hold and to circulate more freely. However, the silver coinage failed and, what was worse, at no time in this period did the central government try to control the token coinage. The result was that token coinage was being minted not only by the imperial mints, but also by the mints of cities. In other words, if a city couldn't pay its costs or pay the salaries of its employees, it simply struck up some token coinage and issued that.

By the late 3rd century we also begin to have the massive appearance of what numismatists call counterfeits. I would say it would be called credit money today. People need small change, and they simply go and manufacture it. All of this of course meant that the amount of token coinage in circulation was uncontrolled and increasingly massive.

Now, one of the things that had happened in the course of this 3rd-century inflation was that the government found that when it paid its troops in token coinage, or even in debased silver coins, prices immediately rose. Every time the silver value of the denarius dropped, prices naturally rose.

The result was that the government, in order to try to protect its civil servants and its soldiers from the effects of inflation, began to demand payment of taxes in kind and in services rather than in coin. They wound up, in effect, repudiating their own issued coins, not accepting them for tax collection purposes.

With Constantine's reform, this situation changed somewhat and, slowly but surely, the government began to move away from collecting taxes and paying salaries in kind, and began to substitute collecting taxes and paying salaries in gold. Over the long run, this meant that the gold standard was strengthened and gold remained the real money of the Roman Empire.

However, the inflation did not end for the masses of the people. In other words, gold was a hedge against inflation for those who had it, and these were principally the troops and the civil servants.

The taxpayers had to buy these gold coins in order to pay their taxes. If they were wealthy enough, they could afford to buy these gold coins, which were increasingly expensive in terms of token money. If they were poorer they simply couldn't pay the taxes; they lost their lands in one form or another or became delinquents. We hear constant references to people abandoning their land, disappearing.

As a matter of fact in the 3rd century this was a constant problem in Rome: all sorts of people were trying to escape the increased taxes that the military needed. The army itself had grown from the time of Augustus, when they had about a 250,000 troops, to the time of Diocletian, when they had somewhat over 600,000. So the army itself had doubled in size in the course of this inflationary spiral, and obviously that contributed greatly to the inflation.

In addition, the administration of the state had grown enormously. Under Augustus, essentially, you had the imperial administration at Rome, the secondary level of administration in the governors of different provinces, and then the primary governmental units in the Roman Empire in this time were the cities.

By the time of Diocletian this pattern had broken apart. You had not one emperor, but four emperors, which meant four imperial courts, four Praetorian Guards, four palaces, four staffs, etc.

Under them were four Praetorian prefectures, regional administrative units with their staffs and their budgets. Under these four prefectures, there were then 12 dioceses, each diocese having its administrative staff and so on.

Under the diocesan rulers, the vicars of the dioceses, we have the provinces. In Augustus's time there were approximately 20 provinces. Three hundred years later, with no substantial increase in territory, there were over a hundred provinces. The Romans had simply divided and subdivided provinces for the purposes of maintaining internal military control of the regions. In other words, the cost of policing and administrating the Roman state became increasingly enormous.

All these costs, then, are some of the reasons why the inflation took place; I'll get to others in a moment. To give you some idea of the situation after Constantine's reform of the gold, let me just briefly give you the figures for what it cost in terms of the denarius, the silver coinage, or token coinage now, to buy a pound of gold.

In Diocletian's time, in the year 301, he fixed the price at 50,000 denarii for one pound of gold. Ten years later it had risen to 120,000. In 324, 23 years after it was 50,000, it was now 300,000. In 337, the year of Constantine's death, a pound of gold brought 20,000,000 denarii.

And by the way, just as we are all familiar with the German currency of the 1920s with the bigger stamp on it, the Roman coinage also has stamps over stamps on the metal, indicating multiples of value.

At one point, one of the Roman emperors had a marvelous idea: instead of issuing coins he devised a method to handle the inflation. He took brass slugs, put them in a leather pouch, and called it afollis; and people began passing these pouches back and forth as value. I guess it was the Roman equivalent to those baskets of paper we see in the pictures of Germany in the 1920s.

Interestingly enough, within ten years or so after that began, the word follis — which had meant this bag of coins — had now drifted to mean just one of those brass slugs. One of those slugs was now the follis. They couldn't even keep the bags stable, they too were inflated.

Now one interesting thing with all this inflation should be a great comfort to us: historians of prices in the Roman Empire have come to the conclusion that despite all of this inflation — or perhaps we should say, because of all of this inflation — the price of gold, in terms of its purchasing power, remained stable from the first through the fourth century. In other words, gold remained, in terms of its purchasing power, a stable value whereas all this other coinage just became increasingly worthless.

What were the causes of this inflation? First of all, war. The soldiers' pay rose from 225 denarii during the time of Augustus to 300 denarii in the time of Domitian, about a hundred years later. A century after Domitian, in the time of Septimius, it had gone from 300 to 500 denarii; and in the time of Caracalla, about 10 years later, it had gone to 750 denarii. In other words, the cost of the army was also rising in terms of the coinage; so, as the coinage became more worthless, the cost of the army had to be increased.

The advance in the soldiers' pay in the rest of the 3rd century and into the 4th century is not known; we don't have figures. One reason is that the soldiers were increasingly paid in terms of requisitions of supplies and goods in kind. They were literally given food, clothing, shelter, and other commodities in lieu of pay. This applied also to the civil service.

When one Roman emperor refused to pay a donative on his accession — this was a bonus given to the soldiers on the accession of the emperor — he was simply murdered by his troops. The Romans had had this kind of problem even in the days of the Republic: if the soldiers don't get paid they rather resent it.

What we find is that the donatives had been given on the accession of a new emperor from the time of Augustus on. In the 3rd century, they began to be given every five years. By the time of Diocletian, donatives were given every year, so that the soldiers' donatives had in fact become part of their basic salary.

The size of the army, I indicated already, had also increased. It had doubled from the time of Augustus to that of Diocletian. And the size of the civil service also increased. Now, all these events strained the fiscal resources of the state beyond its ability to sustain itself; and the ship of state was kept going, frequently by debasing, then by taxing, and then often simply by accusing people of treason and confiscating their estates.

One of the Christian fathers, Saint Gregory Nazianzus, commented that war is the mother of taxes. I think that's a wonderful thing to keep in mind: war is the mother of taxes. And it's also, of course, the mother of inflation.

Now, what were the consequences of inflation? One of the odd things about inflation is, in the Roman Empire, that while the state survived — the Roman state was not destroyed by inflation — what was destroyed by inflation was the freedom of the Roman people. Particularly, the first victim was their economic freedom.

Rome had basically a laissez-faire concept of state/economy relations. Except in emergencies, which were usually related to war, the Roman government generally followed a policy of free trade and minimal restriction on the economic activities of its population. But now under the pressure of this need to pay the troops and under the pressure of inflation, the liberty of the people began to be seriously eroded — and very rapidly.

We could start with the class known as the decurions. This was your prosperous, small- and middle-landowning class who were the dominant elements of the cities of the Roman Empire. They were the class from whom the municipal counsels, magistrates, and officials were chosen.

Traditionally, they had viewed service in the governments of their towns as an honor and they had donated, not merely their time, but also their wealth to the betterment of the urban environment. Building stadiums and bathhouses, and repairing the streets and providing for pure water were considered benefactions. It was a kind of philanthropic act and their reward was, of course, public recognition and esteem.

This class, in the mid-3rd century, was assigned the task of collecting the taxes in the municipality. The central government could no longer collect its taxes effectively, so they made the decurion class collectively responsible for getting revenues and passing them on to the imperial government.

The decurions, of course, had as much difficulty as anyone else in doing this, and the returns were, again, frequently inadequate. So the government solved that problem by simply passing a law that any taxes that decurions could not collect from others, they would have to pay out of their own pockets. That's known as the incentive method for the tax collector. [laughter]

As you can well imagine, as the crises became greater and the economy was disrupted by civil conflicts and invasions and the effects of inflation, the decurions, strangely enough, no longer wanted to be decurions. They began to abandon their lands, abandon their cities, and escape to wherever they could find refuge in other larger cities or other provinces. But they were not to be allowed to do that with impunity, and a law was then passed that any decurion discovered somewhere else was to be arrested, bound like a slave, and carted back to his hometown where he would be restored to his dignity as a decurion. [laughter]

The 3rd century is also the period of the persecution of the church. We find that at least some of the emperors must have had a sense of humor because they passed a regulation that if a Christian was arrested and found guilty of a capital crime, namely believing in Christ, he was not to be executed but offered the option of becoming a decurion. [laughter]

Now, the merchants and the artisans were traditionally organized into guilds and chambers of commerce and that sort of thing. They now, too, came under government pressure because the government could not obtain enough material for the war machine through regular channels — people didn't want all that token coinage. So merchants and artisans were now compelled to make deliveries of goods.

So that if you had a factory for making garments, you now had to deliver so many garments to the government requisitions. If you had ships, you had to carry government goods in your ships. In other words, what we have here is a kind of nationalization of private enterprises, and this nationalization means that the people who use their money and their talent are now compelled to serve the state whether they like it or not.

When people tried to get out of this they were then, by law, compelled to remain in the occupation that they were in. In other words, you couldn't change your job or your business.

This was not sufficient because, after all, death is a relief from taxes. So the occupations were now made hereditary. When you died, your son had to take up your profession. If your father was a shoemaker, you had to be a shoemaker. These laws started by being restricted to the defense-oriented industries but, of course, gradually it was realized that everything is defense-oriented.

The peasantry, known as the coloni, were leaseholders on both imperial and private estates. They too were formerly a free class. Now under the same kinds of pressures that all smallholders were in in this situation, they began to drift away, trying to find better opportunities, better leases, or better occupations. So under Diocletian the coloni were now bound to the soil.

Anyone who had a lease on a particular piece of land could not give that lease up. More than that, they had to stay on the land and work it. In effect, this is the beginning of what in the Middle Ages is called serfdom, but it actually has its origins here in late Roman society.
"War is the mother of taxes."

We know for example from studies of Palestine, particularly in the Rabbinical writings, that in the course of the 3rd and early 4th century the structure of landholding in Palestine changed very dramatically. Palestine in the 2nd century was mostly composed of peasant landholders with very small acreage, perhaps an average of two and a half acres.

By the 4th century those smallholders had virtually disappeared and been replaced by vast estates controlled by a few large landowners. The peasants working the estates were the same people, but in the meantime they had lost their land to the larger landowners. In other words, landholding became a kind of massive agribusiness.

In the course of this, the population of Palestine, still principally Jewish, also changed in that the ownership of land passed from Jews to Gentiles. The reason for that undoubtedly was that the only people with large amounts of cash who could buy out these smallholders who were in distress were, of course, the government officials. And we hear of them being called potentates, powerful ones. In effect there is a shift in the distribution of wealth in Palestine; and obviously, from other evidence, similar things were happening in other places.

With regard to taxes, they naturally increased across the board, but Diocletian decided that it was a very inefficient system that he had inherited. Every province more or less had its own system of taxation going back to pre-Roman times. And so he, with his military mind, demanded standardization.

And what he did was to have all wealth, which was of course landed wealth, assessed by a standard unit of productivity, the iugum. In other words, every person who had land was either singly, if he was a large landowner, or collectively, for those who were smaller landowners, put into a iugum.

This meant that the emperor for the first time had the basis of a national budget, something the Romans never had before. Therefore, he knew at any given time how many taxable units of wealth there were in any province. He could simply levy an assessment and expect to get a fixed amount of money.

Unfortunately, this took no account of the fact that in agriculture productivity varies considerably from season to season, and that if an army has passed through your district it may take years to recover. The result is that we hear of massive petitions from whole regions asking the emperor to forgive them their taxes, to remit five years of past dues, or to reduce the number of units of productivity to reflect the loss of population or materials.

As a matter of fact, when people began to say "it used to be I had five people paying this unit of taxation, but two of them have fled and it's only half the land in production," the response of the government was, "that doesn't matter, you still have to pay for the land that is now out of production." So, I mean, there was no relationship between taxes and actual productivity.

How did people protect themselves from this? Well, first of all, long-term mortgages virtually ceased to be given. Long-term loans of any kind disappeared. No one would lend unless they were guaranteed payment in gold or silver bullion.

In fact the government itself, under Diocletian and Constantine, refused to accept gold coins in payment of taxes, but insisted instead on gold bullion. So that the coins that you bought in the marketplace had to then be melted down and presented in the form of bullion. The reason was that the government was never sure how adulterated its own gold coinage really was.

Pledges and securities for crops and for loans were always in gold, silver, or indeed in crops themselves. In Egypt we have a document in which it seems that the banks had been refusing to accept coins with the divine image of the emperor; in other words, state issues. The government's reaction to that, of course, was to force the banks to accept the coinage. This led to wholesale corruption in Roman society, as people refused to exchange coinage at the officially fixed tariffs but instead used the black market to exchange coinage on a market principle.

There was, obviously, flight from the land, massive evasion of taxes, people left their jobs, they left their homes, they left their social status. Now, Diocletian's final contribution to this continuing disaster was to issue his famous Edict on Maximum Prices, in 301 AD. This is a very famous instance of a massive effort by the government to limit inflation by price controls.

You have to realize that there was a little problem: the Roman Empire was a vast region running from Britain in the West to Iraq in the East; from the Rhine and the Danube to the Sahara.

It included areas of very sophisticated and very primitive economies, and thus the cost of living varied considerably from province to province: Egypt seems to have had the lowest cost of living; Palestine had a cost of living twice that of Egypt, and Roman Italy had a cost of living twice that of Palestine.
"The Roman people, the mass of the population, had but one wish after being captured by the barbarians: to never again fall under the rule of the Roman bureaucracy."

Diocletian ignored that; he just issued a single standard price for the entire empire. The result was that in Egypt, the Edict probably had no effect, because the maximum price fixed in the Edict was very rarely reached in Egypt. It was the people in Rome, of course, who found the maximum price lower than the market price.

The result of that, of course, was riots in the street, and the disappearance of goods. The penalty for violating this law was death, a very common penalty in Rome for almost anything.

The mentality of Diocletian, and the cause of the maximum price edict, comes out in the preface to the law. I'll just quote briefly some of it. When you hear these first words I'd like you to pay attention, because you may have a different interpretation of them than what Diocletian meant.

He says, "if the excesses perpetrated by persons of unlimited and frenzied avarice could be checked" — he doesn't mean himself - "if the general welfare could endure without harm this riotous license, if these uncontrolled madmen, the unscrupulous, the immoderate, the avaricious, could be persuaded to desist from plundering the wealth of all, then all would be well." Now who are these people? They are the merchants; they are the avaricious greedy types who cause inflation as we all know.

Then he speaks about himself and his three partners. "[We, the protectors of the] human race" — sounds familiar, doesn't it? "We are agreed that decisive legislation is necessary, so that the long-hoped-for solutions, which mankind itself could not provide" — you know, it's the same stuff; we can't do anything ourselves, we need the legislator.

"By the remedies provided by our foresight, these things may be remedied for the general betterment of all."

In fact, as you read through the rest of the thing it becomes clear that the reason the Edict on Prices was issued was that the soldiers were the principal victims of the inflation. Diocletian was afraid he was losing control of his army. And so the people who are to be protected are the soldiers and the other servants of the state.

Now Diocletian's monetary reforms were tentative steps in the right direction; except for the Edict on Prices, which, by the way, simply didn't work and was gradually dropped. But his steps were not radical enough.

Because of his inability to create a sufficient supply of gold and silver coinage, combined with his continued reliance on payments in kind for taxes and salaries, and his continued issuance of fiat bronze coinage in endless amounts, he failed to make a significant dent in the problem.

Constantine's reforms were also partial, but of sufficient vigor and radical character to make a difference. Through his willingness to extract by compulsion the gold reserves of the taxpayers, forcing them to disgorge their bullion, he placed an ever-increasing supply of gold in the hands of government officials.

This was increasingly used to pay military bonuses, salaries for bureaucrats, and even payments for certain public works. Increasingly, then, a two-tier monetary system emerged in which the government, the soldiers, and the bureaucrats enjoyed the benefits of a gold standard while the non-governmental portion of the economy continued to struggle with a rapidly inflating fiat currency.

The new gold solidus — circulated widely by its possessors, the government-salaried employees — sold at various market rates to customers who desperately needed it to pay their taxes. Thus the state had found a way to protect itself and its servants from the unwholesome effects of its own earlier inflationary cycle, while slowly withdrawing from the cumbersome and wasteful system of accepting taxes and paying salaries in kind. Meanwhile, the masses suffered from a massive injection of fiat money, which they had to accept in payment for government requisitions of gold, silver, or other commodities.

Now, we may wish to find some lessons in this tale of the monetary policies of the late Roman Empire. The first lesson, I think, must be that if war is the health of the state, as Randolph Bourne said, it is poison to a stable and sound money. The Roman monetary crisis therefore was closely connected with the Roman military problem.

Another lesson is that problems become solvable when a ruler decides that something can be done and must be done. Diocletian and Constantine clearly were willing to act to protect their own ruling-class interests, the military and the civil service.

Monetary reforms were necessary to win the support of the troops and the bureaucrats, who composed the only real constituency of the Roman state, and the two-tier system was designed to this end. It brought about a stable monetary standard for the ruling group, who did not hesitate to secure it at the expense of the mass of the population.

The Roman state survived. The liberty of the Roman people did not. When freedom became possible in the West in the 5th century, with the barbarian invasions, people took advantage of the possibility of change. The peasantry had become totally alienated from the Roman state because they were no longer free. The business community likewise was no longer free. And the middle class of the cities was no longer free.

The economy of the West was perhaps more fatally weakened than that of the East. The early 5th century Christian priest Salvian of Marseille wrote an account of why the Roman state was collapsing in the West — he was writing from France (Gaul). Salvian says that "the Roman state is collapsing because it deserves collapse; because it had denied the first premise of good government, which is justice to the people."

In other words, the Roman state was the enemy; the barbarians were the liberators. And this undoubtedly was due to the inflation of the 3rd century. While the state had solved the monetary problem for its own constituents, it had failed to solve it for the masses. Rome continued to use an oppressive system of taxation in order to fill the coffers of the ruling bureaucrats and soldiers.

By justice he meant a just system of taxation. Salvian tells us, and I don't think he's exaggerating, that one of the reasons why the Roman state collapsed in the 5th century was that the Roman people, the mass of the population, had but one wish after being captured by the barbarians: to never again fall under the rule of the Roman bureaucracy.

Tuesday, 7 May 2013

The Wisdom of the Court

William Bailhache presided
I was privileged today to be able to assist a lady in bringing an application for leave to appeal out of time. I shall of course be discrete with some of the facts and identities of the persons involved in the case as they related to a child.

The lady in question was involved in a troubled relationship during which she suffered some violence and as a result turned to alcohol as a coping mechanism.

At a time when she was gathering the courage to move on from the relationship and as a result of other factors which caused a high level of emotional and mental distress she found herself unable to cope with the responsibility of looking after her four year old daughter. In a moment of extreme need she turned to the States of Jersey Police for assistance in ensuring the safety of her child.

The response of the Police was to imprison her under the Mental Health Act for fear that she would harm herself and after a night in the custody suite she was charged with an offence under Article 35 (1) (b) of the Children's Law (Jersey) 2002 the relevant law being:

35    Causing harm to or neglecting children under 16
(1)    If any person who has responsibility for a child under the age of 16 intentionally or recklessly –
(a)     causes any harm to that child;
(b)     exposes the child to a risk of harm; or
(c)     neglects the child in a manner likely to cause the child harm,
the person shall be guilty of an offence and liable to imprisonment for a term of 10 years and to a fine.

Now this is a very hard charge to counter; most things that most people do exposes their child to some form of risk.

The specifics of this prosecution case were that she had been drinking and there was unopened prescription medication within reach of the child. The lady was represented under Legal Aid and effectively told to plead guilty. The sentence given was 1 month's imprisonment.

However for the past three years this has played upon her conscience but was unable to receive legal assistance to bring the matter on appeal so I offered to assist as far as possible. Therefore we had to seek not only to appeal but leave to appeal out of time.

The Court very quickly concluded that the Attorney General had been ill advised to bring a case of this nature and that it is not 'in the public interest' to bring charges against people who turn to the States of Jersey for assistance in ensuring the health and well being of their children and that no prosecutions of this nature should be bought in future.

The Lady was unwilling to undergo a re-trial and so the Royal Court concluded that the best way forward would be to amend the sentence to that which would most quickly be 'spent' under the Rehabilitation of Offenders act and amended the sentence to a £400 fine (already paid in full due to time served 'in default'). The Court also ordered that the Police National Computer records be clearly amended to show that this was reckless neglect and not intentional neglect as it erroneously showed on the printout presented by the AG to the Court.

I believe that had the lady in question been willing to prolong matters that the re-trial would not have proceeded, although as the case was never tried the evidence which the prosecution might present is not known. Still there is a mental burden in undergoing Court proceedings and I fully respect her wishes just to have the matter resolved and move on in her life; should anyone ask in future then there will soon be a judgement that she can show to anyone so interested.

So I left Court with a warm, fuzzy feeling of doing good; not just for this particular lady, but to any person who might find themselves in a similar situation in the future who can now request assistance without fear of prosecution. Jersey Courts have once again shown that they can and do act in the interests of justice.

Saturday, 4 May 2013

Libertarian/Green parties thrive in UK Local elections

The Europe wide disillusion with the mainstream political parties based upon the old social class societal cleavage continued yesterday with a number of gains for both the Green Party and the Libertarian UK Independence Party.

The final results were:

Conservative 1007 Councillors
Liberal Democrat 366 Councillors
Labour 360 Councillors
UKIP 131 Councillors elected yesterday, 144 in total
Green 22 Councillors elected yesterday, 141 in total
Plaid Cymru 6 Councillors elected yesterday (Isle of Anglesey only)
Mabyon Kernow 4 Councillors elected yesterday (Cornish National Party)
Independent/Other 161 Councillors elected yesterday

The Labour traditional urban strongholds such as London, Birmingham, Manchester, Liverpool, Newcastle and Leeds etc. were not contested so one should not read too much into Labour's apparently poor showing - these elections were in the more rural areas of the nation.

Friday, 3 May 2013

China has invaded India

Whether this is just a 'misunderstanding' or a land-grab to make up for Japan's Senkaku actions, the Indians are claiming that a platoon of Chinese soldiers have crossed the so-called 'Line of Actual Control' in the Indian-held Ladakh region.

They have remained there for two weeks and even as India complains, the Chinese deny, saying that they are "firmly opposed to any acts that involve crossing the Line of Actual Control and sabotaging the status quo." Indian officials fear that if they react with force, the face-off could escalate into a battle.

But doing nothing would leave a Chinese outpost deep in territory India has ruled since independence. "If they have come 19 kilometers into India, it is not a minor LAC violation. It is a deliberate military operation. And even as India protests, more tents have come up," said one analyst but the Indians are rattling other sabres. China is India's biggest trading partner, with bilateral trade heavily skewed in China's favor, crossing $75 billion in 2011. Politicians are demanding Chinese imports are banned, "the Chinese have to learn that such aggression cannot be delinked from trade." Most are baffled by Beijing's motives, since its actions could force India to move closer to Beijing's biggest rival, the United States; though perhaps bringing that closer is just the point.

The platoon of Chinese soldiers slipped across the boundary into India in the middle of the night, according to Indian officials. They were ferried across the bitterly cold moonscape in Chinese army vehicles, then got out to traverse a dry creek bed with a helicopter hovering overhead for protection.

They finally reached their destination and pitched a tent in the barren Depsang Valley in the Ladakh region, a symbolic claim of sovereignty deep inside Indian-held territory. So stealthy was the operation that India did not discover the incursion until a day later, Indian officials said.

China denies any incursion, but Indian officials say that for two weeks, the soldiers have refused to move back over the so-called Line of Actual Control that divides Indian-ruled territory from Chinese-run land, leaving the government on the verge of a crisis with its powerful northeastern neighbor.

...

"If they have come 19 kilometers into India, it is not a minor LAC violation. It is a deliberate military operation. And even as India protests, more tents have come up," said Sujit Dutta, a China specialist at the Jamia Milia Islamia university in New Delhi.

"Clearly, the Chinese are testing India to see how far they can go," he said.

That is not China's stated view.

Chinese Foreign Ministry spokeswoman Hua Chunying said Thursday that Chinese troops had been carrying out normal patrols and had not crossed the boundary.

"China is firmly opposed to any acts that involve crossing the Line of Actual Control and sabotaging the status quo," she said at a daily briefing in Beijing as she was repeatedly questioned about the dispute.

...

Local army commanders from both sides have held three meetings over the crisis, according to Indian officials. India's foreign secretary called in the Chinese ambassador to register a strong protest. Yet the troops did not move, and even pitched a second tent, Indian officials said.

...

"China realizes that India has a weak government, and a prime minister who is powerless," said Yashwant Sinha, a former foreign minister from the opposition Bharatiya Janata Party.

He demanded a stronger response. "A bully will back off the moment it realizes that it's dealing with a country which will not submit to its will," Sinha said.

... 
demanding India retaliate by barring Chinese imports.

China is India's biggest trading partner, with bilateral trade heavily skewed in China's favor, crossing $75 billion in 2011.

...

"The Chinese have to learn that such aggression cannot be delinked from trade," Dutta said.

...

Analysts said they were baffled by Beijing's motives, since its actions could force India to move closer to Beijing's biggest rival, the United States.

"The Chinese for some reason don't seem able to see that," said Joshi.
...
The stand-off may eventually be resolved diplomatically, "but what it really shows is the PLA's contempt for our military capability," former Indian navy chief Sushil Kumar wrote in The Indian Express newspape

A Brief History of the Sino-Indian Border Dispute and the role of Tibet

On 3rd July 1914, as Ivan Chen made his way down the steps of the Summit Hall building in Simla, he must have been aware of mixed feelings rising up inside him. He had done something which would have far reaching repercussions; and which would for years be remembered by many people on both sides of the Sino-Indian border, albeit in very different ways – He had just left the Simla conference.
After refusing to sign the agreement himself, he was made to sit in a separate room, and behind his back, was signed one of the most controversial and bizarre treaties in human history – The Simla accord.

For over a century, the intricacies of the border between India and China/Tibet have baffled scholars. In fact, the plot leading to the Simla conference and beyond actually plays just like a thriller movie or book. The sheer complexity of this problem can be judged by the fact that 36 rounds of negotiations have taken place between India and China at different levels since 1981; but they have yet to reach a settlement.

Background

The era of the late 19th century and the early 20th century was ripe with the European colonial powers finding new ways of exerting their influence in Asia and dividing it up.
Tibet was no exception. For years, many kings and empires, from Muhammad Tukluq to the British, had tried to wrench Tibet from China, with no significant successes.
Finally, the British came up with an underhand ploy to divide Tibet from within; so as to create a buffer state between British India and China; just as Mongolia had been divided and part of it made into a buffer between Russia and China. Sir Henry McMahon proposed the division of Tibet into an ‘inner’ and ‘outer’ Tibet. The Chinese representative saw through British imperial designs and smelt a rat; and thus left the Simla conference.

But the matter didn’t end there. A note was appended to the Simla accord, which contained a map showing a part of Tibetan territory as Indian, based on a thick red line known as the McMahon line. Furthermore, China was barred from any rights and privileges of the Accord with respect to Tibet.

Disputed Territories

The major territories which are disputed between these two countries can be divided into two distinct parts:

1) The Western Sector – Aksai Chin, which lies to the east of the Kashmir valley, covering an area of about 37,250 sq.km (14,380 sq.mi) – currently occupied by China.

2) The Eastern Sector – The Indian state of Arunachal Pradesh, which China calls South Tibet, covering an area of 83,743 sq.km (32,333 sq.mi) – currently occupied by India.

In addition to these, there are also a few small chunks of territory in between these two sectors, but they are largely irrelevant when compared to these two major distinct territories.
The McMahon Line

The McMahon line is the basis of the Indian claim to the area which was formerly known as the North-East Frontier Agency; and has since become the Indian state of Arunachal Pradesh. It was drawn with a complete disregard forcartographic techniques and the geography of the area. The scale was – eight miles to an inch.

As Wikipedia makes clear, “The actual treaty map itself is topographically vague (as the treaty was not accompanied with demarcation), and the treaty includes no verbal description of geographic features nor description of the highest ridges.” There is no protocol or scientific method which uses cartographic techniques to identify the geographical location of the line. The McMahon line was literally a line on paper.
Aksai Chin

Historical claims on the Aksai China area are even more dubious. There has never been any concrete demarcation of this region.
Britain was concerned about Russia’s designs in this area, and hence proposed to make the Karakorum Pass as the boundary, so as to again create a buffer between Xinjiang/China and India.
As author Neville Maxwell states,
“In early 1880s, China and India agreed the Karakoram Pass as the fixed point of boundary, while leaving both sides of the pass indefinite. In the mid-1890s, China claimed Aksai Chin as its territory, and voiced the claim to Macartney in 1896, who drew part of the British boundary in the Himalayas. Macartney presented the claim to the British who agreed with his comment that part of Aksai Chin was in China and part in the British territory. Meanwhile, the forward school of British strategist in London suggested that the British should not only include the whole of Aksai Chin, but also all the territory given to Kashmir in 1865.”
In 1899, the British proposed to China that the whole of Aksai Chin would remain Chinese territory and the boundary would be along the Karakorum range; which is the status quo as of today. The Karakorum pass falls precisely on the boundary of territory controlled by India and China, marking northern end of Sino – Indian border, known as the Line of Actual Control.

However, China didn’t reply to this proposal, something which it would regret for years. If it had, the fate of Aksai Chin would have been sealed then and there.

Nehru, for his part, appeared willing to play down the Indian claims to the Aksai Chin. He tried to delay disclosure if the news that the Chinese had built a road in the area. After the news had been revealed, he sought to play down the economic significance of the area, describing it as “barren tundra” and where “not even a blade of grass grows”. He even went so far as to cast doubt on the validity of the Indian claim to Aksai Chin.

In statements to the Indian Parliament during early 1959, Nehru pointed out that
“…during British rule, this area was neither inhabited: nor were there any outposts, …….this place, Aksai Chin area, is distinguished completely from other areas. It is a matter for argument which part belongs to us and which part belongs to somebody else. It is not clear”.
Britain’s Flip-Flops
Around that time, it was understood by the British government that Tibet forms part of Chinese territory. According to the Anglo-Russian Convention of 1907, both players of the so called ‘Great Game’, Britain and Russia, had decided to negotiate with Tibet only through China. According to the Anglo-Chinese Convention of 1906, Britain was “not to annex Tibetan territory”. British Journalist Neville Maxwell states that McMahon had been instructed not to sign bilaterally with the Tibetans if China refused.

But that was exactly what McMahon did, previous promises be damned. Britain and Tibet signed the agreement themselves without Chinese knowledge, and was thus rejected at first by the British government in London. (Later however, its stance seems to have changed; and then changed again in 2008, as discussed below). Tibet welcomed this treaty because it would give further credence to what it thought was its ‘sovereignty’, even if it came at the cost of territory. Accordingly, the purpose and content of these exchanges had to be kept secret, and not only from the Chinese.

Britain seems to have taken upon itself the self-appointed role of Tibet’s Guardian. In the 1940s, British officials in India pointed out to Anthony Eden, the then British Foreign Secretary, that China had no rights in Tibet since it had not accepted the provisions of the Simla accord of 1914 (As if it was up to Britain to decide the extent of China’s ‘right’ to Tibet!). Needless to say, the Tibetan government welcomed these intrusions.

Initially, London rejected the Simla accord as it was in contradiction with many previous agreements. But later, in 1935, some hardliners within the government convinced it to start using the line on official maps – thus officially accepting that the McMahon line was the official border between India and Tibet (and hence, later China too).

But recently in 2008, a historical statement was released by the British Foreign Office which would have far reaching consequences. The British government discarded the Simla agreement as an anachronism and a colonial legacy – a “position [the British] took based on the geo-politics of the time”. The British pulled away the only leg India had to stand on.

The statement says,
“…….our position is unusual for one reason of history that has been imported into the present: the anachronism of our formal position on whether Tibet is part of China, and whether in fact we harbour continued designs to see the break up of China. We do not.”
“Our ability to get our points across has sometimes been clouded by the position the UK took at the start of the 20th century on the status of Tibet, a position based on the geo-politics of the time.  Our recognition of China’s “special position” in Tibet developed from the outdated concept of suzerainty. “
(A New York Times article about this statement, entitled, ‘Did Britain just sell Tibet?’ (as if Britain owned it!) accused the British of ‘rewriting history’ in exchange for China’s support during the financial crisis!)

Effectively, what Britain in fact was saying was that Tibet is a part of China and is not sovereign – which was the position of almost all countries by that time, including EU nations and the US. It even apologized for not having done so earlier. However, what is important in that statement is that the British seem to have completely discarded the Simla agreement – on which the whole of India’s negotiating stance is based. Consequently, if we start with the assumption that the Simla agreement was illegal as Tibet had no right to conclude treaties separately, then we arrive at what the Chinese position has been all along!

The Tibetan question and the cause of the dispute

The fact is that a large part of the border dispute hinges on the uncomfortable question of Tibet’s sovereignty. If Tibet was sovereign at the time of the Simla conference, then the treaty is legal and it serves India’s cause. If Tibet was not sovereign at that time, then the treaty is illegal and serves China’s cause.

Some activists campaigning for a free Tibet often bring up the Simla conference as proof of Tibet’s independence. Their arguments are mainly two fold -

a)The Tibetan representative signed the treaty even though he was instructed by the Chinese representative not to sign, a clear indication undermining Chinese suzerainty over Tibet.

b) More importantly, since Tibet concluded a treaty with a foreign power on its own, it was an independent country on that day.

At the time of the Simla conference, although the Tibetan government had driven out all Chinese officials from Tibet after the collapse of the Qing dynasty and declared independence, the Nationalist government did not accept this and neither has the PRC or any other government.

India had enjoyed certain privileges with regard to Tibet under the Simla Agreement, including those regarding trade and commerce. If the Simla accord is legal, then it serves India’s cause; and if it is illegal, China’s. However, when China annexed Tibet in 1951, India under Nehru recognized it as Chinese territory, thus giving up those privileges and undermining Tibet’s sovereignty (which it may have momentarily enjoyed during the time of the Simla agreement). Thus in a sense the Indian government tacitly admitted that the Simla agreement was effectively illegal, which to this day remains China’s official position. In doing so, India weakened its own position with respect to the border dispute.

The Simla agreement was signed between Britain, Tibet and China. Now, from this information, two questions present themselves -

1) If Tibet was sovereign, why was China invited at the conference at all? Why didn’t the British negotiate directly with Tibet?

2) If Tibet was not sovereign, why was it invited at the conference? Why didn’t the British negotiate directly with China?

In other words, why did China accept to attend a conference where Tibet was represented as a separate party?

The answer to (1) is that, as stated above, Britain recognised Tibet to be under Chinese suzerainty. Hence, any bilateral agreement that Britain signed with Tibet (without Chinese agreement) would be illegal. (But ironically, that is exactly what the British did)
(2) is a bit more complicated. There are indications that the British had blackmailed the Chinese into attending by threatening to –

a) withdraw their recognition of the new nationalist government, and,

b) sign the treaty with Tibet alone if China didn’t participate, thus acknowledging that Tibet was in fact sovereign. (But later the British did this exact same thing when China didn’t agree to its terms during the conference).

Hence it is clear that Britain’s imperial designs and its policy of ‘divide and rule’ and double crossing everyone was in effect the cause of the entire dispute.

Conclusion
Surprisingly, in this complicated dispute, China has shown a remarkable tendency to restrain its own claims and even recognize the McMahon line. It is willing to ignore history and has offered to recognize Indian claims on 74% of the total disputed territory (currently controlled by India); provided India recognizes Chinese claims on the remaining 26 % (Chinese controlled Aksai Chin). In other words, while China has taken a prudent first step and is willing to convert the current status quo ‘borders’ into the international boundary. But India, on the other hand, is just not willing to even discuss the issue of compromise.

In the western sector the claim is entirely a matter of perspective, as Nehru himself admitted. In the eastern sector, however, the entire disputed territory hinges upon one question – The legality, or not, of the Simla agreement.

India has had two contradictory stances simultaneously – a) Not recognizing Tibet’s sovereignty and b) Recognizing the McMahon line as the international boundary; and thus the legality of the Simla agreement. However, if a country doesn’t recognize Tibet’s sovereignty, then consequently it is expected that it would also not recognize the legality of the Simla agreement and the McMahon line.

The Indian position can also be construed to mean that regardless of whether or not Tibet is sovereign now , it wassovereign when the Simla agreement was signed; and consequently the McMahon line is legal. Which begs the question on which the whole dispute in the eastern sector is based – Does signing a bilateral treaty with a foreign power make a province sovereign?

Thursday, 2 May 2013

Golden Jackass: Consequences of the US Fascist Business Model

It has been an interesting day and one which home-owners in Jersey should be taking notice of Zero-Hedge and the Daily Mail pick up on the under-reported news that a bank has increased the mortgage rate on the very day that the ECB has cut interest rates. Bank of England base rates may be unlikely to go up, but that does not prevent the retail banks from raising the mortgage rate and increasing your monthly repayments. And on the same day warnings have been issued to interest-only mortgage holders to work out how they are going to repay the capital.

But the most exciting news is that Jim Willie, the Golden Jackass, has scribed his latest public offering, so without further ado...

The Fascist Business Model came into vogue in 2001
.

The merger of state with the largest of corporations, primarily the big banks, the big defense contractors, the big news media networks, and the big pharmaceuticals, has created a chokehold around the neck of the nation, without 5% recognizing the function of the model during the strangulation in progress. The merger with the deeply corrupted corporations in power became standard fixtures following the 911 attacks, an elaborate self-destruction of the fundamental structure of the nation and its priorities by the syndicate. 

Think a massive elaborate bank heist of gold bars, bearer bonds, and diamonds, but such discussion belongs in other venues. Let it be said that the events of September 2001 were the syndicate coming out party and the Patriot Act their Nazi Manifesto, with painfully little recognition of events by the sheeple masses or the subservient press talking heads. The national socialists are back in force after a 70-year hiatus, with far more toys and devices. Their telltale signals are bank welfare and a flag wrapped in a cross with unending press coverage of terrorism. During the last twelve years, financial treachery and banking criminality have run rampant in a true global spectacle, their stock & trade. However, treachery with permitted bank and bond fraud, rigged financial markets, naked short ambushes, flash crashes, and lawsuits that convert criminal procedures into standard low business costs all have resulted in profound consequences.

The entire world has reacted, with some significant momentum having been generated in the last year. Back in 2009, repeated in 2010, the Jackass had stated that the nations who are first to move toward a non-USDollar system will thrust themselves into a global leadership position while at the same time permit a recovery from the cancerous fiat currency system led by the USDollar as reserve currency flagship. A basic tenet, the security forces are given more power when security is undermined, even if violent events are perpetrated by the security agencies themselves in great spectacles. The Western nations really truly sincerely need a wake-up call on reality, and it is coming as a paradigm shift with shock waves. But consequences have a way of developing out of natural systems in reaction. Some scientific types call it Newton's Law. Others call it the order of natural systems. The Jackass preference is to call it a defensive maneuver motivated by the survival instinct, whereby the cancer or pathology is isolated, trapped, then suffocated and extinguished, left to die on the vine or shed like bad skin.

TREACHERY, FRAUD, PROTECTION

The collection of treacherous practices, most of which emanate from the myriad USGovt offices, have invited stern reaction by the global players. These diverse treacherous practices, often implemented by the Wall Street banks and their ring leader the US Federal Reserve, have invited stern reaction by the global players. The broad cover for treacherous practices, provided protective cover by the USGovt regulatory agencies, have invited stern reaction by foreign nations in a powerful response. The disintegration of the financial foundation built of USDollar steel beams and USTreasury Bond cement blocks has been crumbling and collapsing for the last four years, ever since the Lehman Brothers failure and the integration of Fannie Mae & AIG under the USGovt roof, where their $trillion frauds are kept deeply hidden in the shadows and basement. While the Manhattan Made Men continue to attempt to hold things together, they struggle mightily, lacking sufficient fingers and toes to plug the vast leaky dikes. In response to predation and treachery, the rest of the world has not only been undergoing reaction, they have also been developing the reaction into organized structures.The main victim has been trust and security, for money, bonds, and bank accounts. All property not nailed down is at deep risk. The current wave of treachery and fraud follows the last wave, where most Americans saw their home equity vanish, many foreclosed and jettisoned from the homestead. The public should harbor no trust, while clinging to suspicion toward the leadership crew that undermined security with its own hands.

The list of acts steeped in treachery is long. The reactions are impressive. When viewed as the mosaic for actions coming to pass, the global response is indeed formidable. The micro events are important in their own right, as each hilltop must be retaken and restored. The macro events are what will en masse change the world, as a Paradigm Shift is underway. The United States and its fascist allies are not in control. They will not find a path to retain or regain control. They have no solutions. The most powerful element of the shift has been the movement of gold wealth from Western locations (New York, London, Switzerland) to Eastern locations (China, Russia, Singapore, Taiwan, Hong Kong). Most residents of the United States, the United Kingdom, and Western Europe are in shock, constantly distracted by the sweeping disruptive events led by a) unstoppable government deficits, b) the powerful crumble of sovereign bonds, c) the ruinous insolvency of the banking systems, d) the relentless reign of tax terror, and e) the tragic decline of the underlying economies. The West is sinking in a sea of fecal soup, stirred with the toxic paper spew, infected by the rot of acidic corrosion, weighed down by absent legitimate solutions, exploited by criminal activity in high offices. The treachery has brought on powerful consequences. The Western lords are being deposed. They can appeal for squire posts to the East, or else they can wreck the globe. The biggest question is whether new trade devices will win out over the chosen Western fascist predilection toward wider war, release of more virulent viruses, more obvious slavery pens, and louder propaganda.

MEGA-ACTION & MEGA-CONSEQUENCE

Break the Gold Standard of Bretton Woods Accord: The action has wrecked the entire global financial system, the destruction a slow burn. The banking leaders are caught in a monetary vise where monetary policy is stuck with ZIRP (0% forever) and QE to Infinity (endless bond monetization purchases). A constant wrecking ball has been applied to the capital structures. Deep damage has come to the financial markets from lost trust, vanished integrity, and no semblance of proper value. The world reacts by searching for a USDollar alternative, since the removal of the Gold Standard has crippled the world and permitted widespread fraud. The new standard will usher in the new Gold Trade Standard. Many are its forces. Many are its motives. Many are its devices. A picture says 1000 words. Observe the Concentric Rings of Death, the great implosion of the USDollar and fiat currency. The rebirth of the Gold Standard will be based in trade settlement, not the banking and currency systems. A grand sidestep is being undertaken under heavy risk. The West controls the banks and FOREX mart. The East has been controlling trade, the emerging economies who finally stand up to demand a voice, even a hand in architecture. They are learning new ways, building new roads, forging new paths.



ACTION & CONSEQUENCE

Quantitative Easing which is bond monetization: The action has unleashed hyper monetary inflation, known better as hyper monetary inflation by another less euphemistic name. The action constitutes a systematic undermine of assets held in reserve by angry foreign governments in the macro sense. The action debases the USDollar currency, in effect all currencies since they defend by competitive devaluations. Central banks around the world must debase their currencies, or else face economic hardship from lost export trade. The reserves held by governments, including sovereign wealth funds managed by government ministries, all lose value from the inflation effect by the USFed actions in debasement. Theconsequence is immediate. Eastern nations make decisions to diversify out of the USTBonds, the main US$-based vehicle. They have stepped up their accumulation of Gold bullion in reserves and wealth funds. They seek to discharge the USTBonds, and return them to sender. The owners of PIIGS sovereign debt can simply issue a sell order. But foreign nations must send USTBond back to their criminal underwriters and destructive central bank overlords. They must deploy more elaborate plans, like the Russians & Chinese building the Eurasian Trade Zone, who finance its infrastructure with USTBonds, sending the toxic bonds to London for digestion, then burial.

QE bond monetization which is pure inflation: The action is hyper monetary inflation, which works efficiently to cause rising prices in the broad micro sense. The design is to raise asset prices in a beneficial way by naive desperate hack architects. The reality is that the capital structures face severe threats. The deeply felt effects have been engrained in rising cost structure, shrinking profit margins, widespread job cuts, and powerful recession pressures within local economies. The stupidity is compounded by austerity measures, which would have had a positive effect 20 years ago, or even 10 years ago. Now they are a death spiral assurance. The consequence is simple survival. The world reacts by searching for and developing a USDollar alternative, a new standard upon which to build viable strong enduring systems with the requisite price stability. The Eastern nations work toward a new trade settlement system which will no longer see USTBonds paper chit exchanged for real goods, either bulk commodity and finished products.

Western central banks talk in empty terms about an Exit Strategy: The action is constant 0% in place (ZIRP forever) and endless bond monetization in redemption (QE to Infinity). No lessons have been learned by the Japanese monetary corner suffered for 22 years. In summer 2009, the Jackass called the Bernanke Fed a liar, after the pervasive deceptive talk of an exit strategy. They have none, proved each year. The consequence is that Eastern nations band together for a bonafide real Exit Strategy, as the vast array of nations, many led by the emerging economies giants, will depart the USDollar since the American toxic merchants and fraud kings cannot. The banking and FOREX standard out of the West has been the USDollar, steeped in longstanding hegemony. The trade settlement standard out of the East will be Gold, steeped in rebellion. The two fronts will clash for a monetary nuclear war.

Iran sanctions within the banking system: The story is such poppycock of Iran developing nuclear weapons. They have no weaponized plutonium. They have no missile delivery systems. What they did that was so objectionable was to sell energy products (crude oil & natural gas) outside the USDollar system. Such actions are considered usage of financial devices of mass destruction. The Saddam Hussein regime in Iraq committed the same banker sin. The sanctions are coupled by pressures against the UAE trade artery toward Iran, and pressures against the Turkish gold market working as intermediary to keep the Iranian supply chain filled. The usage of bank SWIFT code bans and lost credentials for Western banks that cooperate with Iran have backfired in a grand way. The resulting reaction in consequence is astonishing. The Iran sanctions have done more to galvanize the entire Eastern nations into workaround devices and elaborate platforms which are coalescing into promising emerging global systems. The Eastern reaction has brought about a global initiative to develop a workable USDollar alternative, but centered in trade. The Gold Trade settlement is the center piece. Its device platforms include the BRICS Development Fund. Its proving ground is the Eurasian Trade Zone.

LIBOR price fixing revealed, bank derivative fraud made public: The action has permitted the world to observe how the foundation of the entire Western banking system is a deep fraud. Worse, the world is able to observe how no prosecution, no justice, and no remedy will be pursued for banker crimes. The LIBOR and derivative frauds are the next to final exposure to happen. The effect is a stench, a vast distrust across the entire banking system and bank derivative product pricing. The big bank profits are all an illusion based on lies and price rigging. The reaction in consequence is a pervasive perception of a corrupt system in need of replacement, and a willingness to work toward legal avenues. The reaction will be distrust of all asset prices and profound confusion. The reaction will be a vast writedown of wealth in bank failures and financial firm failures.

Allocated Gold Account theft and malicious usage: In order to make bilateral trade account settlement easier, the New York and London banking centers encouraged settlement to be done on a net basis. They went further, to encourage holding Gold bullion in trust at the New York Fed and at the Bank of England, held on account as special untouchable elite accounts serving as treasury emissary substitutes. They were touched. They were stolen. They were replaced with Gold Certificates of dubious value, without permission. The reaction in consequence has begun as a strong wind, but now a powerful storm. The reaction has been defiance in stated demands for repatriation of Gold Accounts, a return to home locations. Germany is the leader in the movement, a respected nation with deep wealth, sturdy prestige, and a no-nonsense attitude. The extension of the consequence is that a gaggle of private Allocated Gold Accounts are under scrutiny. They were also touched, stolen, replaced with worthless paper certificates. The gathering storm is building force and power. It is the final bank fraud to reveal how over 40,000 metric tons of gold have been stolen, in need of replacement in the open market. The true Gold price will reflect the acute supply shortage. A $7000/oz Gold price might not bring the Demand versus Supply imbalance into proper equilibrium. The price might have to be higher, to offset the gargantuan growth of money supply. The missing gold from supposedly guarded sacred accounts exceeds the central bank holdings in reserve on a global basis.

Phony USGovt citation of gold reserves in form of Deep Storage Gold: The USGovt takes the public for fools in a global sweeping sense. After leasing and selling all 8500 metric tons from Fort Knox, the Clinton Admin began to put phony entries on the official statements. The arrival of Deep Storage Gold should evoke laughter, even deep guffaws. They are nothing but mountain ore deposits, with a hope of becoming gold bullion some day. If truth be known, the grand misfortunes experienced at Barrick Gold, with shutdown of their Pascua Lama mine on the Argentine Andes, will interrupt the process of bringing the deep storage gold to the COMEX. Also, whatever portion of the Kennecott Utah mine output was due to see the COMEX vaults, it will not arrive anytime soon either. The landslide will curtail delivery for at least a year. The reaction in consequence by Eastern nations is to build gold reserves. They realize the United States, the Canadians, and the British are liars on almost all matters of gold accounting in reserves. The USDollar, the Canadian Dollar, and the British Pound have no collateral. Neither does the Euro currency. The Eastern nations will accumulate much faster than they claim. The Chinese and Russians have an order of magnitude more Gold bullion held in reserves than they admit. They feel no urge to share the truthful proper count.

Big US bank gold & silver naked short positions: The practice of naked shorting (sales with no intention of ever delivering the metal bars on the loading ramps) is plain illegal and corrupt beyond description. Imagine selling Mercedes Benz cars to push the price down, never to delivery the cars. The incredible sham takes place every day in the COMEX market, supported by the LBMA in London. The so-called paper gold price has no bearing or connection anymore to the physical Gold price. The consequence has been a profound shortage of gold bullion, gold bars, gold coins, and gold talents, even gold jewelry. The Eastern nations have responded by building gold reserves in much greater volume, sensing massive shortage of precisely what would stabilize the monetary system, namely Gold. The global market for various gold products has responded by imposing a premium on the official gold price, since it has become a forced cocktail of meaningless rubbish with a slimy foam head. The other more heart felt consequence is the return removal of Eligible gold in COMEX within the JPMorguen vaults. They have fallen by a reported 65% in just two days of vacated metal. The JPMorguen crew have handled a reported 99% of all gold delivery requests in the last three months time. A bank run is occurring, not in the commercial banks, but in the JPMorguen vaults where Chased out are the gold bars.

Wide distribution of tungsten fake gold bars in the 1990 decade: The action was largely directed at Hong Kong, the port for China. The volume according to my sources is beyond a thousand fake gold bars sent to Hong Kong banks during the Clinton-Rubin era. The reaction is an unspeakable anger and resentment. The remedy pursued in order to keep the lid on the scandal appears to be a secretive drain of US gold sent East by refiners (not central bank). Doing so enables it to be classified as Industrial Gold Supplies in the official trade data. The big red thumb in the data is the arrival of an outlier of exports to Hong Kong that did not exist last year. The more profound consequence is the intense scrutiny over Allocated Gold Accounts and their demanded repatriation. The bars are being assayed, verified, even recast. The distrust of the vile New York and London bankers has reached high pitch on the global stage.

Slug US coins in usage since 1965, making official coins mere plated tokens: The action has revealed the shell game deployed by government officials in their management of money. In ancient times, money was metal held in hand. The sophisticated criminal bankers have been unable to conceal the duplicity in money beyond coins as bonded securities became the standard. In past Roman times, the practice was called sovereignty, whereby the leaders would skim small amounts of gold from coins for personal accounts and family wealth tucked away. The American trend setters have gone far beyond what ancient Romans did. They have removed over 90% of the precious metal in circulated coins. They went the rest of the way to 100% by making paper the recognized legal tender, with zero gold backing to the USDollar. By breaking the Gold Standard in 1971, the USDollar has no gold in support. The coins are a mere side show. Theconsequence is an exercise in Gresham Law. Good forms of money are removed from circulation, removed from the risk that others might recognize their higher value than the worthless slugs circulating among hands. The coin market has seen fit to call the pre-1965 silver coins a strange name, Junk Silver. Their value is multiples greater than face value, a great embarrassment and signal flare of corruption.

Raids against the GLD & SLV exchange traded funds: The entire design of these sham deceptive ETFunds is brilliant. The Wall Street and London City designers deserve credit for building a Trojan Horse that has been ridden for almost ten years by absolute morons and lazy dolts, the greatest dupes ever to walk within the gold community gates. The dupes include meatheads like Adam Hamilton and other supposed wise men. The consequence in this case is not a retaliatory deed, but rather a drainage of the inventory at a rapid rate. Officially known as the SPDR Gold Trust, the GLD gold inventory is enjoying a half-life of destruction. Spare the engineering details. Note that on or about April 22nd, a whopping 18.3 tons were removed. An acceleration is plainly evident over the last few months. The first 50 tons took 75 days to depart the vaults. The next 100 tons took 48 days to be loaded off and depart. The next 100 tons took a mere 13 days to vanish. The most recent 100 tons took under 7 days, as the acceleration continues apace. At the current rate of departure, the SPDR Gold Trust will be vacant in around two months time. The refill replenishment will be required by the Swiss castles and Roman catacombs, but not the Tower of London (since nearly bone dry). Forget the embarrassing negative premium inherent to the ETFund over the last three years. Zero inventory is far more an embarrassment. The big questions are whether the indescribably stupid investors will notice, and whether lawsuits will hit the scene to bite hard.

Bail-in solution for bank failure, Cyprus style: The action is devious and destructive, whereby banks will talk of recapitalizing within elaborate restructure events. However, when the dust clears, the evidence is plain that the change to be seen will be dead banks in dissolution with private bank accounts vacated. In other words, razed leveled banks with no functioning operating offices, and bank accounts showing zero balances. The consequence is ugly and powerful, lost client trust in the banking institutions. Faith is a key ingredient to stable systems. The US account holders will be treated with stock shares in conversion for the dead banks, whose value will converge quickly to zero. Same effect, lost accounts. Expect soon the result to be a climax with bank runs. The bank runs will coincide with bullion bank runs, the fast removal of gold held in inventory vaults at the bullion banks, including JPMorguen and the GLD exchange traded fund.

Phony big US bank accounting with FASB blessing: In April 2009 a seminal event occurred, whereby the big financial institutions were given permission legally to declare any value they wish for their assets held on balance sheets. What an incredible travesty, like giving children the authority to grade their own school exams. Or like giving Al Capone the authority to approve his own tax returns. Naturally, almost all the big US banks pass the Street Tests, those shams to put a second layer of phony legitimacy on balance sheet wreckage. The consequence is multi-sided. The big US banks have grown dependent upon the USTBond carry trade for rebuilding their balance sheets. They borrow for free and invest in 10-year or 30-year USTreasurys. They tend to have no profitable business segments, not from commercial lending, not from investment bank functions like bond and stock issuance, not from credit cards. The banks have in the process lost their commercial credit function within the USEconomy. They have become casinos for carry trade, derivatives, even money laundering.

Most Favored Nation status granted to China, with a Golden twist: The pact was secret but its ugly features finally became known. The Wall Street bankers shepherded a curious pact in 1999, whereby China would lease to the syndicate bankers a sizeable portion of the Mao Tse-Tung era gold. China would benefit from a wave of foreign direct investment starting in 2002, to build a critical mass of factories, enough to industrialize the nation. With trade profits, they would recycle the surpluses into USTreasury Bonds, just like the Saudis agreed to do, beginning in the 1970 decade. The Wall Street bankers were thus able to continue their gold leasing game. They had gutted Fort Knox and its ample tonnage. They continued with the Chinese gold, leasing it to support the price suppression. The Wall Street Boyz did not honor the pact, did not return the Chinese gold in 2007, thus the trade war heated up fiercely. The consequence has been a multi-lateral trade war, culminating in a deadly conflict that has the Beijing leaders motivated to kill the USDollar as global reserve currency on numerous grounds. It is not worthy, the object of monetary inflation decided upon unilaterally by the USFed central bank. It is the common denominator of wrecked banking systems. It is the credit card for consumption, even foreign aggressive wars. It compensates for what the United States lacks in industry. The ultimate consequence will be the United States losing its privileged global reserve currency USDollar, suffering imported price inflation, contending with supply shortages, and entering chaos. The Third World will be the death sentence, complete with a vast police state and utter brutality.

Reliance upon asset bubbles in USEconomy, dependence upon housing bubble: The decision to dispatch the bulk of US industry to China from 2001 to 2004 was a critical turning point in the USEconomy. It convinced the Jackass immediately of political and corporate sabotage of the nation. To forfeit industry and the legitimate income was to put the nation at systemic risk. Any dependence upon the housing and mortgage gigantic asset bubbles for the USEconomy consumption spending was a perilous step to lock in. At the time, the Jackass expectation was for the twin bubbles to bust around 2006 or 2007, sending the nation into an uncontrollable tailspin. The actual years were 2007 with the subprime mortgage bust and 2008 for the Lehman bust. The Wall Street mavens attempted to sell the clean industry plan of financial engineering within an advanced system and sophisticated economy. They failed, as did the phony offset risk structures. The consequence is the nation approaching systemic failure amidst unstoppable central bank hyper monetary inflation, with the Weimar nameplate on the overheated printing press. The consequence is the collapse of Europe in tandem, and a revolt among Eastern nations which seek a USDollar alternative for both trade settlement and banking reserves management.

The TARP Fund following the Lehman/ Fannie Mae/ AIG bust: A major turning point for the public to wise up to Wall Street criminality was the $700 billion TARP Fund designed for the big US bank system rescue. The USCongress and the public were told that $700 billion was urgently needed to keep the lending channels flush with cash, so as to avoid a systemic seizure in the entire credit system. The arrogant megalomaniac vile bankers instead funded preferred stock for the big US banks, and made sure executive bonuses were funded as well. The largest US banks quickly became giant hollow reeds without hope of remedy. The bankers in firm control of the USGovt realized that directing funds to the credit lending pipelines would not have avoided insolvency and ruin. So they filled their pockets. The consequence was the lost trust by the public of big US banks, which slowly they realize are crime syndicates immune from law. The Too Big To Fail banks are widely regarded as now Too Big To Jail, a big shift in perceptions. The popular movements began, alongside the scattered lawsuits.

Abuse of Petro-Dollar arrangement with accomplice OPEC Saudi leader: Claiming that the USTBond was our debt but your problem, stated to foreigners, was arrogant and callous. It invited a response. The many energy importing nations have been forced to pay for crude oil with USDollars for over four decades. They resent the stricture, since it means they must arrange for USTBonds to serve as the reserve foundation within their banking systems. Numerous fronts have been engaged with non-USDollar alternatives in response. However, Russia has a unique strategy as consequence, sure to weaken the OPEC cartel and possibly to force its crumbled path. The Russian energy giant Gazprom is working avidly to create a NatGas Cartel. Several large natural gas producers are already onboard, like Iran and Qatar. Their devices are pipelines and liquefied natural gas terminals. The zinger in the NatGas new coalition is Qatar, already a key OPEC crude oil player. The coffin nail in the new coalition could be Israel, whose Tamar floating natgas rig in the Mediterranean has promised to send surplus output through the Gazprom system to European customers. Add Cyprus to the Med mix, and Gazprom has captured Europe with its new cartel.

Criminal banking activity, with collusion and protected by USGovt ministries and agencies: Since the 1990 decade, the criminality has become deeply rooted. The gutting of Fort Knox by the Clinton-Rubin Admin was the main seminal event. It climaxed in the 911 false flag event that still confuses half the nation of sleepy dopey types. The 2000 decade featured the mortgage finance bubbles, laced with massive fraud. Its primary clearing house was Fannie Mae, which proved useful for several other fraud rings run by the USGovt, thus requiring its formal adoption and certainly not liquidation with prying eyes. Fannie Mae is the multi-$trillion fraud store that is linked to most every scummy seamy slimy game run by the USGovt. The consequence of the permitted and impervious banking sector criminality can be seen from the inside and from the outside. The domestic front saw the rise of Occupy Wall Street, which federal police and local police conspired to label as terrorist. The movement has been disbanded easily. The more powerful threat might be the secession movement combined with states pursuing gold for usage as legal tender, even applied for debt satisfaction. Those are critical points cited in the Constitution when defining MONEY. The US States have begun to exercise their independence via the Tenth Amendment with secession movements. The foreign response is more toward isolation of the United States, both for its governing bodies and its currency, which means the USTreasury Bond flagship will lose its reserve status. Numerous reports hit my desk of foreign corporations and even government ministries not returning phone calls in a grand global shun of US offices. They object to the arrogance and practiced hegemony on financial matters in a queer global kingdom manifestation. The USGovt acts like a global emperor, and foreign nations resent it. The recent FACTA test is worth watching for reaction. Generally the East ignores it, while the West dislikes it. Switzerland will not deal with US citizens in banks any longer, a cheaper alternative. The isolation has parallels in seeking non-USDollar alternatives.

The confusion of money, ordained debt backed money used as legal tender: The floating currency system used by the United States and the West has a pernicious undercurrent, whereby by default the Western currencies are deemed essentially as denominated debt coupons, designated for usage as money for managing transactions and settling debts public and private. The West thereby has confused money with legal tender for several decades. The Western money is not money, but rather denominated debt. The foundation of the monetary system is sovereign debt, in deed, in reality. Not 1% of the American public comprehends this subtle but highly important point. The super abundance of debt has reached crisis levels, and has been in writedown phase for over four years, since the Lehman Brother signal flare event. The phony debt based money has persisted. For decades the wealth accumulation process has been laced with the cancer of phony money. As the debt correction occurs in accelerated speed, the sovereign debt of the West undergoes deep losses. In the process, the nasty consequence is that entire national wealth vanishes as part of a debt writedown. It can be seen in the planned failures of systemically important financial institutions (SIFI), as the Bail-In features wipe out private accounts. The private accounts for savings, stock accounts, futures accounts, even pensions, are merely badly defined debt markers within the vast cockeyed skewed misaligned perverted system. Much of the US private wealth will vanish in the debt writedown and financial firm failures, one decade after phony home equity wealth vanished in a similar manner.

Ambush of the gold market in mid-April, reported as a massive selloff: The gold market selloff was as shocking an event as it was pathetic. It was as destructive an event as it was hilarious to observe. The bankers committed suicide on the global stage. Rather than permit a London and New York gold market default, they committed a grand illegal act by selling $20 billion in gold through paper certificates in two days. The grand sale was executed without benefit of any metal changing hands, without promise of any metal changing hands, with full protection by the USGovt for its criminal actions. The ambush attack did not net more than a handful of gold bars from margin calls, themselves mere paper entries. Theconsequence is vast and has brought huge changes to the entire monetary stage. A tremendous increase has been seen in gold demand, from Turkey to India to Mexico to the United States to Japan to China to Thailand to Singapore. The corrupt bankers avoided a default, but they assured a more unavoidable future default by lighting a fire of global gold demand, on the physical side with bars, coins, and jewelry. Gold contract defaults will spring up everywhere, lately even for the Chairman of the CME Group on his own contracts held. They exposed the paper gold sham based upon gold futures contracts. The most powerful consequence is that the banker syndicate has revealed the absent link between price discovery and gold delivery. They have therefore ruined the essence of the COMEX & LBMA gold market, rendering it a perverse playground for criminals. It has no gold in inventory sufficient to handle the delivery demands. The COMEX will soon be totally ignored, its price considered a meaningless sideshow that only lacks criminal prosecution.

QUICK CONCLUSION

Miscellaneous other deep dark deceptions have occurred, far too numerous to delineate in complete fashion. A general effect must be cited, since so pervasive and insidious. Gold and USTBonds aint a market. Their so-called official trading arenas are empty rooms with USGovt and USFed devices filling the empty space, creating a phony price. The false Gold price has no real supply. The false Bond price has no real demand. The claimed price is not where Supply meets Demand to clear the table on the market. Therefore the claimed price is not the real price. Neither Gold more the USTBonds are a real market. Witness pure heresy.