- This economic newsletter is going to be perhaps, a bit different from the others that I have written. It will be personal, economic, and political. Many of you know that I have been covering high level global meetings for eleven years (September 3). You may or may not know the story behind this activity, which has been all consuming. I would like to share it with you, as an introduction to this newsletter and to the activities and agenda of the last two global meetings that I covered: the 75th Anniversary of the Bank for International Settlements in Basle, Switzerland and the Group of Eight meeting in Gleneagles, Scotland. MY STORY
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- While everyone has a story, this is mine. When I was growing up, I was told to make a list of what I wanted to do and accomplish in life, which would provide direction for me, as I worked towards those goals. I never made a list. When I ended up in business, I was told to make a list of my 12 month and five year goals. I never did. Instead, I relied on God to lead and direct me. While my life has had a number of twists and turns, many of which I never planned or looked for, I believe I am where I am supposed to be.
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- When I was sixteen, I read a book which told about a time in which there would be a world governmental on the earth. I was fascinated with the idea that I could be living in a time in which a world governmental system, like the Roman Empire, would come into being. From that point on, I started to pay attention to world events that could lead to such a system. About fifteen years ago, I purchased the business book Euroquake by Author Daniel Burstein, which gave "Over 100 specific predictions for economic and political change in the 90s." I was fascinated by Burstein's four pages of acknowledgements in which he talked to almost everyone in the world from world leaders, to CEO's, to people throughout the UN infrastructure, leading economists and experts from the world's leading think tanks. As I read Burstein's book, I was fascinated by the concepts he put forth. There would be a new global order, where corporate power would rule, while governments set the agenda. Three types of capitalism would compete: the Anglo-American brand with its roots in English speaking countries and the Industrial Revolution; the Japanese/Asian model with its cultural roots in Confucianism; and the German/European model with its "social market" philosophy. America would be the "odd man" out. Additionally, there was his key thesis: the rise of Europe and European power, which would trump America.
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- Now that his book is fifteen years old, I think he was really off on a number of his predictions, but right on many others. Of his predictions, the one that hit home was #95, "A new global currency agreement will be hammered out between 1995 and 1997 [in which there] will be a massive devaluation of American assets roughly analogous to fixing today's exchange rates at Yen = 105 = $1.00 and DM1.2 = $1.00" (p.347). As I read this, I was shocked by the amazing fact that he was describing a global currency. My goodness, you do not have a global currency unless you have a world governmental system. This understanding took me back to the book I had read when I was sixteen. Since I did not know what kind of form a world governmental structure would have and did not think there was any kind of structure like that in 1990, I began asking God to reveal to me if there was such a system anywhere on the planet.
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- In 1994, I was challenged by a good friend of mine to go to Cairo to attend a United Nations conference on reducing the population of the world. I bulked at the idea, but, then I found that the World Bank and the International Monetary Fund were going to be there. Since I wrote this economic newsletter which covered the value of the dollar, I went to Cairo to look and see what was happening on the international level. The only thing I knew about the United Nations was the name "UNICEF", since I had collected for the poor children of the world when I was a Brownie (The children are still poor and now the reason for global tax). What was the United Nations? What was the purpose of these global meetings and what did it mean to me? The only way you could get into a UN meeting was to go as a reporter. So, for the first time ever, I became a reporter. When I arrived in Cairo, I was shocked and amazed at the people, the organization, the structure, the agenda, and the politics involved. In the press briefings that the United Nations held, I had a problem. While they were using the English language, their words and the meaning of their words appeared to have a different meaning than how you and I would use them. At the end of the day, I would go back to the hotel room and transcribe the meetings, so as to get a closer understanding of what was really happening.
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- It was about 3:00 a.m. on the third morning that it all came together. It finally dawned on me that what I was seeing on the international level was world government! I was shocked. Here it was right under my nose. While there is much I that could tell you about that meeting, I came home angry"where were the conservatives to hold back world government, since it was a democratic administration that was supporting it? I also brought home a suitcase full of material"magazines, documents, speeches, and pamphlets that I had picked up. My goal was to find out how big, how vast, and how far advanced this agenda of world government was.
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- For the six week following my return from Cairo, I was like a mad woman, pouring over all the documents to determine the agenda and what it meant for me and my clients. I only found one article that told me the United Nations was going to present the idea of a global tax at another conference in six months. My goodness, that was it--you don't have a global tax unless you have a global government. Shades of Daniel Burstein! In addition, I saw from the newspaper reports, when I returned home, that there was hardly anything of a serious nature that really described what went on at that meeting and what it meant for you and me. It was then that I made a commitment to cover as many meetings as I could in order to report to the American people about an agenda that would weaken our nation's sovereignty and change how we lived socially, politically, financially, and personally. I went to the follow-up meeting in Copenhagen, where I confronted the United Nations with the idea of global taxation and the amount of money they wanted to raise from their suggested global taxation schemes. Since then I have covered 70 global meetings around the world as an independent and free-lance reporter.
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- Those meetings include: trade, economic, peacekeeping, UN mega-conferences on the environment, social issues, food, and zoning, General Assembly meetings, the International Criminal Court, and many others. I have interviewed presidents and prime ministers, key officials throughout the United Nations system, CEO's, economists and leaders of think tanks.
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- Throughout the last 11 years, I have reported on the structure of the world government that has been put in place above the nation-state. I have written about it a number times in this newsletter and, now again, in this issue, where we will track the evolution of a world governmental structure, a global tax and a global currency. In the past, when I spoke of these things, people would look at me as if I were from Mars. Well, I am not from Mars and these things need to be discussed and understood in order for you and me to make the best decisions that we can for our future. This is not the time to stick your head in the sand but to confront a growing reality about the changing value of the world's monetary system!
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- THE ECONOMIC
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- In June and July, I covered the 75th Anniversary of the Bank for International Settlements in Basle, Switzerland and the Group of Eight heads of state meeting in Gleneagles, Scotland. In order to set the background for these very important issues, we will start with President Nixon's decision to take America's currency off the gold standard.
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- Off the Gold Standard
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- It took two major moves for America's dollar to be separated from the gold standard. The first step was taken in 1933 by newly elected President Franklin Roosevelt, whose first act as president was to close the banks after a number of runs had occurred. Americans, concerned about our financial system, ran to the banks where, under law, they could withdraw their savings in gold because our currency was convertible at any time. Then, one dollar had 0.77 troy ounces of silver or 0.048 troy ounces of gold backing it. Today, only the "full faith of people" backs our paper monetary system. Because of the bank run, Roosevelt ordered the government to confiscate all personally-owned gold with the exception of rare coins. Today, you can still find people who remember the government knocking on the doors of their parent's home to collect the gold they withdrew.
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- For a specimen of the U.S. $10 gold certificate, Series, 1922, please send $15.00 payable to Veon Financial Services. If you would like a wonderful hardback book on the history of MONEY by James Ewalt, please send $55.00, also payable to Veon Financial Services, Inc. This book has been purchased worldwide by key monetary authorities. In order to understand the level of power that you and I have as individuals, we need to understand the power of money. As many of you know, because of our trade and federal deficits, the value of the U.S. dollar has been dropping against other currencies for the last two years. What this means is that the purchasing power of the dollar is diminishing, and it takes more to live than it did before.
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- While the value of the dollar has been declining since 1973, as a result of the birth of the euro, it now has another currency for people and governments to purchase as an alternative to the dollar. In the September newsletter we will discuss the new moves of the Chinese with regard to the failed Unocal bid and the new "Cold War" that is brewing between the U.S. and Russia, as Russia is going to back their ruble with gold and challenge the dollar. Today, with the rising price in oil, the sale of oil is only transacted in dollars. Now, between a gold-backed ruble and other countries switching to the euro, our economic hegemony is being seriously challenged.
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- When the euro was birthed on January 1, 1999, it had a value of 1.16 euros to the U.S. dollar. Shortly after its birth, it fell to a low of .80 euros, which meant the dollar could buy 30% more in goods from Europe. Today, however, instead of getting 1.3 euros for one dollar, American's are only receiving .75 euros to the dollar. What this means is that we cannot purchase what we used to in Europe, but must pay 55% more for those same goods. What are we describing? A floating currency is a currency that is not supported by a tangible asset. It is a currency that can be changed in value at a whim by those with great financial assets, like the Rockefellers, Rothschilds, Kuhns, Loebs, Schiffs, and Buffets. Before Nixon's actions in 1971, our dollar had a supporting tangible that gave it not only value on the day you wanted to cash in the gold but a STORE OF VALUE"meaning its purchasing power stayed the same over time. America could only import goods according to the amount of gold we had. For every trade deficit, a corresponding amount of gold was transferred between the countries involved, and there was no such thing as a trade deficit!! Furthermore, the value of currencies held their value with the dollar being the strongest currency in the world. On August 15, 1971, President Nixon took the second step in closing forever any link the dollar had to the gold system when he refused to convert requests by foreign countries, which were holding gold backed dollars in their vaults, to exchange U.S. gold-backed dollars for gold. For the first time in the entire history of money, the system of money was de-linked from a tangible. In the past, early Middle Eastern traders used gold and silver, jewels, expensive clothing, and animals as forms of currency. Today, the world monetary system uses a SYSTEM IN WHICH THE VALUE OF THE RESPECTIVE CURRENCY CHANGES, ACCORDING TO SUPPLY AND DEMAND, POLITICAL ACTIONS AND OTHER WHIMS. In other words, you can never be certain as to the amount of money it will take to live or to purchase a specific item or commodity. Uncertainty has now become the rule of the day as our financial sovereignty is gone.
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- In order to create "currency harmony", the dollar has been devalued to bring it in line with the currencies of other countries. Through concerted efforts by the Group of Seven finance ministers, the dollar had an "orderly reversal" in 1985, when they met in New York City at the Plaza Hotel. There, they agreed that the United States should deliberately weaken the dollar relative to other currencies. Their reason for doing so was that the dollar was the strongest currency in the world and they said they wanted to make our products more affordable to foreign countries in order to reduce our trade surplus (Sound familiar? Their economics is off because they are saying the same thing today, except that, this time, the need to devalue the dollar is because we have a huge trade deficit.) In other words, we the people have a declining purchasing power because of these kinds of actions. As a result of the above referenced Plaza Accord, between 1985 and September 1986, the dollar dropped 40% against the yen and Deutsche mark. To understand the change in the purchasing power of the dollar, one dollar was worth 3.65 Deutsche marks and 3.55 Japanese yen in 1975. Today, the dollar will only buy .75 euros (the Deutsche mark was replaced by the euro) and 1.11 yen! Talk about an orderly reversal! This is a 70% loss in the purchasing power of the dollar. Does anyone want to have a tea party? At the most recent Bank for International Settlements meeting, they called for (another) "orderly reversal." Also in 1985, America became the world's largest debtor nation for the first time in its history since it is that year that we started to import oil.
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- Because our currency is no longer backed by gold, our government can print all the money it wants to support its spending habits without worrying about being accountable. For example, in 1995, there was $380B in U.S. currency in circulation. As of April, 2004, there is $700B in circulation! The classic definition of inflation is "too much money chasing too few goods." It appears that the inflationary spiral is not in the process of being squelched but really is only just beginning. In the last five years in many major cities across the U.S. the cost of home ownership has doubled! Compare this to 1970 when a three bedroom 1,500 square foot brick home in the Washington, D. C. area sold for $32,000. Today, my former home which I am using as an example, is selling for over $500,000. This is an increase of $468,000 over 35 years or an increase of 7.89% PER YEAR. When, in the last ten years have you heard that the inflation level was over 7%? You have not. The government has changed how they measure inflation to confuse the minds of men. The core inflation rate today measures the cost of renting versus home ownership! Currently, across the country the median price of existing home is $219,000 which is 14.7% higher than a year ago. While Western states posted a 17.4% increase in existing home prices, the Northeast saw 13.6% gains, while the Midwest saw 12.7%. However in San Francisco, the median price is $750,000. There, 61% of the buyers had to resort to interest-only loans, while only 18% were able to use a conventional 30 year fixed rate loan (Washington Post-WP, 8/14/05, Parade section).
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- The Federal Reserve Bank
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- Many people know that our banking system is run by a private corporation called the Federal Reserve. This private corporation was birthed by an inner circle of senators, who stayed on after those who were opposed went home for Christmas. The Federal Reserve Act was passed in 1913 at 11:45 p.m. on December 24. The U.S. joined a host of other countries such as England, Japan, Italy, France, Germany, and Switzerland that already had private corporations, also known as central banks. You and I would be a bit naïve, if we thought that all these central banks had different owners. As such, the Federal Reserve does not publish Annual Reports and their meetings are kept secret for several months. When Fed Chairman Alan Greenspan goes to Capital Hill to testify, it is Greenspan who has the real power and not the congressmen and senators. Mr. Greenspan and other central bank managers meet on a bi-monthly basis at the Bank for International Settlements in Basle, Switzerland, where they basically determine the fate of every country economically.
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- The Bank for International Settlements was set up in 1930 and was part of a plan by an American, Owen Young. The Statutes of the BIS state that its purpose is to "promote the cooperation of central banks." The founders of the BIS "wanted to provide an increasingly close and valuable link in the cooperation of central banking institutions"a cooperation essential to the continuing stability of the world's credit structure'" (Central Bank Cooperation at the Bank for International Settlements, 1930-1973 by Gianni Toniolo, 1). As reported in many previous economic newsletters, Dr. Carroll Quigley who was Bill Clinton's mentor at Georgetown University wrote in his 1,340 page tome, Tragedy and Hope: [T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at frequent private meetings and conferences.
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- The apex of the system was to be the Bank for International Settlements in Basle, Switzerland a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world. The B.I.S. is generally regarded as the apex of the structure of financial capitalism whose remote origins go back to the creation of the Bank of England in 1694 and the Bank of France in 1803 (p. 324).
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- The Bank for International Settlements I have had the privilege of covering eight Bank for International Settlements annual meetings, since 1997, with the exception of 2004. During that time, I have interviewed on an annual basis the head economist. I have had numerous interviews with the managing director of the Financial Stability Forum and an exclusive interview with the new BIS Managing Director, Dr. Malcolm Knight, in 2003. I find it interesting that the theme of this year's annual report was on "disturbing patterns of uneven growth worldwide." While the BIS cites household debt at historic highs and low savings rates in America, as opposed to other countries of the world, the report concentrated on the "disturbing patterns of uneven growth." The BIS cited three cycles of highs and lows. The first began in the 1970's, when the dollar was taken off the gold standard. Head economist, Mr. Bill White told me that the change in the gold standard was very important in world affairs. The second cycle began in the mid-1980's, ending in a property bust; and the current cycle began in the mid-1990s. All Americans should be concerned about this report, as the world's bankers are signaling the end of the third cycle, which can only mean higher interest rates, as they withdraw money from the banking system. This comes at a time of higher oil prices which only enforces the inflationary spiral. It is the BIS that has created the uneven cycles of growth. With a floating currency system of PAPER, you can do whatever you want. If you have a great deal of money you can create the highs and lows of any countries currency just by buying or selling it. Heaven help all of us!
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- Furthermore, household savings is not evident in the U.S. to the same extent that it is in the Asian countries. World national savings rose to 25% of Gross Domestic Product or about 1% point more than the annual average rate for the decade. This was due to the higher savings habits in the developed world, and in particular, China where savings rose 48%. High debt-to-income ratios and low savings in the U.S. do not bode well for Americans. Furthermore, the U.S. and China accounted for half of the world's growth, the euro area and Japan have much slower growth, and they stated that the prospect of reducing America's fiscal deficit is not encouraging. Citing concerns over disinflation, the BIS stressed the need for interest rates to rise in order to slow consumer spending. Mr. White explained, "The time has come for a measured withdrawal of the stimulus that has been put into the [economic] system." What he is saying is that it is time for the Fed to withdraw some of the huge amounts of money that it injected into the banking system that created 45 year low interest rates.
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- Now the U.S. is in the process of another "orderly reversal." The Federal Reserve has increased interest rates TEN TIMES in 4 months to 3.5%. Currently prime rate is 6.5% which is the highest in four years. By the end of the year, prime is expected to be at 7.25% which means three more point increases. With this increase, the fed funds rate is now back to the level prevailing before September 11, 2001. The Fed cut the rate to 1 percent by mid-2003 and started tightening in June 2004.
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- Lastly, the Annual Report stated that the "underlying issue seems to be that we no longer have a system that somehow forces countries to alter their domestic absorption and associated exchange rates, so as to reduce external imbalances in an orderly way." It should be noted that with a floating exchange rate there are no ways for any kind of adjustment, as there was under the gold standard. Global or Regional Currency
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- The BIS recommended what several academics have suggested by way of establishing a single international currency or, perhaps. moving to regional currency blocks, such as the dollar, euro, and renimbi/yen. (This is the first time I have seen renimbi and yen tied together. What it indicates is the growing power of the renimbi over the yen. )
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- History of Global or Regional Currency Amazing! Why is the Bank for International Settlements talking a global or regional currency, but ABC, NBC, CNBC, The Wall Street Journal and The Financial Times are not? Since I subscribe to The Financial Times, I was surprised that the only thing it reported was Bill White's comment about "an orderly reversal."
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- As mentioned earlier, the first time I had any kind of understanding of a global currency was by reading Euroquake in 1990. Furthermore, Burstein talked about the "Triad" the three spheres the world was going to be divided into, which mirror the types of capitalism: North America, Japan/East Asia, and Europe. As such, Burstein is the one who helped me to understand that the world was already divided up into three major currencies: the dollar, the Deutsche mark"now replaced by the euro, and the yen, now, described as the renimbi/yen.
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- I remember being at an international financial meeting in Boston in 1996 in which the head of IBM-Asia discussed the fact that we already had a global currency, and went on to give the values of those currencies which were at the time within 10% of being equal. It was not until June 30, 2003 that I realized there was a concerted effort to move the world into a global currency, when The Wall Street Journal published an article entitled, "World Money at the Palazzo Mundell" by Robert L. Bartley. In the article Bartley described the 10th Santa Colomba Conference convened by Nobel Prize economist, Robert Mundell. The first conference was held in 1971, three weeks after Nixon severed the link between the dollar and gold. The theme of this conference was, "Does the Global Economy Need a Global Currency?" Those contemplating this question included former Israeli central bank minister Jacob Frenkel, former Argentine Finance Minister Domingo Cavallo, economist Steve Hanke, and former Federal Reserve Chairman Paul Volcker. The logic is "If the euro can replace the franc, mark and lira, why can't a new world currency merge the dollar, euro and yen? Since the three top central banks in the world are the Federal Reserve, the European Central Bank, and the Bank of Japan, that means a major reform of central banks into a supra-national central bank would also emerge. Furthermore, they suggested that it could be called the "dey" for dollar-euro-yen.
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- On September 30, 2004 I interviewed former Federal Reserve Chairman Paul Volcker who told me that a "globalized world needed an international currency." When I asked him if he meant the Special Drawing Right-SDR, which is a basket of currencies comprised of the dollar (0.577), Euro (0.426), Japanese yen (21) and British pound (0.0984) (amounts found on page 193 of the BIS 2005 Annual Report), the dear boy turned his back on me. Please realize what this meant. He is almost to seven feet tall while I am five feet tall! In an interview with BIS head economist, Bill White, in August, 2004, I asked him why the BIS was changing to the Special Drawing Right which is the currency used by the International Monetary Fund, instead of using the gold franc. He replied,
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- When the SDR was brought in, the hope was that the IMF would be able to generate more of these drawing rights and create a global money. This has not happened. The SDR has not gone anywhere in its own right. What happened at the BIS is a bit bizarre, but from a pure accounting issue, our accounts were presented in terms of gold francs, and this is the way they were described in the 1930s and this was the gold exchange standard in any event. When you define the gold franc it was really US$1.96. [The switch to the SDR is] purely an accounting convention"it in no way implies that the BIS is going to be creating SDRs and contributing to increases in global liquidity. Mr. White went on to describe the global markets:
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- One important aspect of globalization is the new "international reach of global banks." More business in emerging market countries is being done by global banks. As you get more and more of this global banking and integrated global markets, shocks in one part of the world now have impacts in other parts of the world that they did not have in the old days. It has become an "integrated global financial system" with the bank playing a very large role in it
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- At the BIS 2005 press briefing, I was the only reporter to ask about a global or regional currency. When I asked if the regional currency would be a stepping stone to a global currency, as suggested by Messrs. Mundell, Frankel and Volcker, BIS Managing Director Dr. Malcolm Knight told me:
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- The question you ask is not an easy one about r regional currencies. Global imbalances are a result of very high savings levels relative to investment levels in a number of emerging market countries and is what is allowing the very large current account deficit of the U.S. to be financed rather smoothly most of the time. What this means is that the policies and the changes in behavior that are needed to adjust these imbalances are real. We need a rise in savings in certain countries which have low savings. That can come partly from policies such as tax incentives to saving. I think that movements to regional currencies are a long run consideration.
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- Dr. Knight did not really address my question, but, he did lay the foundation for a change in the U.S. tax system, which would change the behavior of Americans with regard to savings. Personally, a value-added tax system would be the nail in the coffin for Americans, as it would return us to a feudalistic system of living. Furthermore, the government passed a major law in 1980 which basically allowed banks to pay the going rate of interest. Today this means they can pay 1-2% for savings and charge 21-25% for credit cards. Throughout the 1990s, a lot of money left the banking system and went into the stock market because people would rather take a risk on a higher return than leave their money invested at 1-2%.
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- What do we have here? Basically, the framework has been set in place for a global currency. The world has been divided up into three major trading spheres. The Americas, which encompasses the 34 countries in our hemisphere from Canada to the Tierra del Fuego in Chile. Most people are not aware of it, but America and our other 33 neighbors are about to be put into a trading zone like the European Union in which the dollar will be the prevailing currency used throughout this hemisphere. Furthermore, like the EU which has a European Parliament in Strasbourg, France, our "parliament" would be at the Organization of American States. Currently, Florida, Georgia, Texas, and I believe Costa Rica are vying for where the parliament would be located.
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- Within our hemisphere, how do you merge the dollar with the peso of Brazil, Honduras, Chile, etc.? How do you integrate 34 countries so that they are one? Our lawmakers for all 34 countries have been meeting throughout the last 11 years to merge this hemisphere into a new trading sphere. Already two smaller trading spheres have been approved by Congress: the North American Free Trade Zone-NAFTA, passed in 1994 and, the recently passed Central American Free Trade Areas-CAFTA. Let it be known these governing bodies do not and will not have ELECTED officials but APPOINTED officials, which is a great change from our Constitution of representative government. These changes and the continuing integration will have great implications for our financial future and the value and stability of our currency. Inflation steals the purchasing power of our hard-earned dollars. Living will become very, very expensive--much more than it is today. If the Special Drawing Right is the pattern for a global currency, which I believe it is, the transfer of all currencies to this basket will wreak havoc on all of us, in particular, the poorer people and countries. Add to a global currency, a global tax or a number of global taxes.
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- GLOBAL TAXATION
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- It was not until I covered the UN conference in Egypt in 1994, that I became aware of a plan to bring the world into a system of global taxation. I found that the United Nations had been working on ideas for global taxation for about ten years. In the 1994 Human Development Report, published by the United Nations Development Programme, it called for A New World Social Charter where the world will redistribute wealth as it cannot survive one- quarter rich and three-quarters poor, and where the United Nations must become the principal custodian of global human security and help with basic education, healthcare, immunization, and family planning.
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- To meet these goals, they put forth the concept of global taxation. Their suggestions included: a tax on the sales of arms weapons; a Global Demilitarization Fund funded by the savings countries would experience if they reduced military spending by 3% over a ten-year period; a global tax of $1 per barrel on oil consumption, a tax on speculative international currency transactions that has been dubbed the "Tobin Tax"; and a world income tax of 0.1% on the richest nations with per capita GNP of $10,000. When I totaled up the projected income from all of these taxes, it totaled anywhere from $350B to $1T a year. I asked key officials at that meeting why the world should give the UN this kind of money when their budget was only $10B? They had no real tangible answer. Now they do"the poor of Africa.
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- In 1990 the United Nations held a Millennium Summit at their New York headquarters. There the kings, princes, presidents and prime ministers agreed to the "Millennium Development Goals-MDGs". These goals include cutting in half the number of people living in extreme poverty, those who are hungry, and those who lack access to safe drinking water, providing and achieving universal primary education, reducing by 75% the decline in maternal mortality and 66% the number children dying before they reach five years of age, halting and reversing the spread of HIV/AIDS and providing special assistance to AIDS orphans, and improving the lives of 100 million slum-dwellers by 2015. The estimated cost to meet these goals is $66B by 2006 and $126B by 2015. You can understand that if the rich countries are going to pay for these goals, that it will add another layer of burden on the backs of taxpayers. This is known in socialism as a "transfer of wealth."
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- Over the years, the concept of global taxation has made its rounds. In 2002, it even had its own conference in Monterrey, Mexico. Global taxation then surfaced at the Spring 2004 IMF-World Bank meeting but they were not prepared to give details. Then at the 2004 Group of Eight meeting in Sea Island, Georgia, French President Jacques Chirac put the concept of global tax on the table. He said he would study it and return with specific recommendations. He did just that.
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- In Gleneagles, Mr. Chirac presented the leaders of the industrial world plus Russia with a solid proposal. The global tax scheme is called the "International Solidarity Levy (ISL)." It proposes a tax of $1-$10 tax on airline tickets. Since 3 billion airline tickets are sold yearly, the math would be pretty attractive. Countries in favor include Brazil, China, and Germany. This type of tax would be easy to set up versus the above referenced U.N. tax schemes as there are no international treaties which prohibit the creation of a flat tax on airline tickets since a number of airlines already have various types of taxes on airline tickets for airport renovation and the like. The rate would be personalized according to the level of a country's willingness with airlines collecting the revenues and passing them on to the respective government to supplement their foreign aid funds. In the final press briefing given by President Chirac, I asked him if there would be more global tax schemes like the tax on airline tickets if it works well and he replied that they had many other kinds of international tax schemes planned.
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- SUMMARY
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- Two major concerns of mine when I started covering international meetings were global taxation and global currency. As you can see, we have come from the idea stage to the acceptance stage and soon, to the implementation of both. Furthermore, the G8 leaders last year gave their blessing to an international peacekeeping force for Africa which, when I questioned them, told me that these troops could be sent anywhere in the world. For those who still doubt the idea of a world government, I would ask why we need a global tax, global currency and global army?
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- Furthermore I would direct them to the UN website (www.un.org.) to spend some time researching all of its agencies, commissions, and organs. They will see that the United Nations is more than just a place where world leaders go to discuss their differences. It has become the center of an international framework of governance. You don't have a tax unless you have government. You don't have a global currency unless you are harmonizing currencies.
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- We have yet to feel the burden of both a global tax and a global currency. First there will be a regional currency in our hemisphere. The free trade zone for our hemisphere is called the Free Trade Areas of the Americas and it will open all the 34 borders between countries. The dollar will become the lead currency of choice. In time the people of this hemisphere will have representatives for their area at the forthcoming parliament of the Organization of American States. Once all the regions have a regional currency, then they can be merged into a global currency.
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- To understand the burden that we currently have, let us consider the findings of Kevin Philips, author of Wealth and Democracy who wrote about the affects of Reagan's tax cuts in the early 1980s. Mr. Reagan passed major tax laws in 1981, 1982, 1984, 1985, and 1986. The Economic Recovery Tax Act of 1981-ERTA reduced the maximum individual tax rate from 70% to 50% and the top tax rate on long term capital gains from 28% to 20%. While lower tax rates made the U.S. attractive for foreign investors as capital flowed into the U.S. from all over the world, it eroded the after-tax income of lower bracketed taxpayers. Phillips documents that as a result of Reagan's tax cuts, the tax rate of the median family rose from 5.30% in 1948 to 24.44% in 1985 while the millionaire level or top 12% dropped from 76.9% in 1948 to 24.9% in 1985. Basically, the burden was shifted to the median family.
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- Compound this picture with a value-added tax which Bush has proposed and is in the process of trying to get implemented, step by step. Now add continual inflation which is the printing of additional dollars to cover our growing deficit and the cost of war and energy. Am I being a "fear monger" or am I being realistic in what I see? It is incumbent for us to maximize our savings and our investments, whether they are in art, antiques, gold, silver, stocks or real estate. The September newsletter will concentrate on current structural shifts and the concept of maintaining purchasing power.
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- On a personal note, how do I cope with these concerns? I have to go to God to get His Wisdom. I don't believe He left us here to be at the mercy of powerful overlords when we can have peace in the midst of storm.
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Then we have the Japanese Defense Minister, in typical Japanese B-movie fashion ala King Kong, going one better and even making preparations for defense against a UFO invasion. I’m not kidding!
