The article discusses a document from The New American magazine dated April 27, 2009. The cover story discusses how international institutions like the IMF, WTO, and World Bank are moving closer to creating a world government centered on the UN. Other articles discuss the Treasury takeover of private companies, the government takeover of GM, and Orwell's 1984 as an increasingly accurate depiction of the modern world.
Beginners Guide to TikTok for Search - Rachel Pearson - We are Tilt __ Bright...
Retire Safe, Early and Happy with Dr. Gallagher
1. Titanic Treasury Takeover • 1984 Revisited • The New GM: Government Made
April 27, 2009
www.TheNewAmerican.com ThaT Freedom Shall NoT PeriSh
$2.95
Global Fusion
2.
3. Mix or
Match
for Sp
ecial
Quant
it
Discou y
nts
Global Fusion
As some longtime global-governance advocates are now openly
admitting, the empowerment of international institutions such as the
IMF, the WTO, and the World Bank is moving closer than ever before
to creating a system of world government centered on the United
Nations. (April 27, 2009, 48pp) TNA090427
Creating “Wealth” Shock & Awe Economics
The Federal Reserve’s ability to create money out Obama’s so-named American Recovery and
of thin air and to manipulate the value of the Reinvestment Act, along with a larger government
dollar gives it ultimate control over the purse role in banks, is supposed to jump-start the
strings of every American household. Find out American economy. But the plan will likely lead to
exactly who is pulling your strings and how to the nationalization of industries and a long-term
cut the ties that bind. (April 13, 2009, 48pp) economic depression. (March 16, 2009, 48pp)
TNA090413 TNA090316
From Riches to Rags LOST: Law of the Sea Treaty
Zimbabwe’s economy crashed as its inflation Though the United States stands to gain virtually
rate skyrocketed from 12,000 percent in 2007 nothing by ratifying LOST — while the UN
to an immeasurable figure in 2008. Discover would gain legal control over every aspect of our
the similarities between our nation’s situation country’s decision-making regarding the seas
and Zimbabwe’s, and find out what lessons — the U.S. Senate still looks to ratify the treaty.
America must learn if it is to avoid the same (March 2, 2009, 48pp) TNA090302
fate. (March 30, 2009, 48pp) TNA090330
✁
QuAnTITy TITlE/DESCrIpTIon ToTAl prICE
Name ______________________________________________________________
Global Fusion
Creating “Wealth” Mix or Match Address ____________________________________________________________
❏ 1 copy $2.95
Shock & Awe Economics ❏ 10 copies $12.50
City _____________________________ State __________ Zip ________________
❏ 25 copies $22.50
From Riches to Rags 100+ copies*
Phone ____________________________ E-mail ______________________________
LOST: Law of the Sea Treaty
EnTER Mix OR MATCh QuAnTiTiES AnD SubTOTAL ❑ Check ❑ ViSA ❑ Discover 000 0000 000 000
0000
0000 0000 0000 0000
❑ Money Order ❑ MasterCard ❑ American Express VISA/MC/Discover
Three Digit V-Code
American Express
Four Digit V-Code
SUBTOTAL Wi RESiDEnTS ADD
5% SALES TAx
ShiPPinG
(SEE ChART bELOW) TOTAL Make checks payable to: ShopJbS ___ ___ ___ ___ ___ ___ ___
# _________________________________________ Exp. Date ________________
For shipments outside the U.S., please call for rates. Signature ___________________________________________________________
Standard: 4-14
Order Subtotal Standard Shipping Rush Shipping business days. MAiL COMPLETED FORM TO:
$0-10.99 $4.95 $9.95 Rush: 3-7 business ShopJBS • P.O. BOX 8040
$11.00-19.99 $7.75 $12.75 days, no P.O. boxes, APPLETON, WI 54912
$20.00-49.99 $9.95 $14.95 hi/AK add $10.00
Order Online: www.shopjbs.org
1-800-342-6491
*Buy case lots of 100 at a special rate of $75.00. See case-lot
shipping rates on card tab between pages 38 and 39. Credit-card orders call toll-free now! 090427
5. 10
Vol. 25, No. 9 April 27, 2009
Cover Story
GLOBALIzATION
10 Global Fusion
Design by Joseph W. Kelly
by William F. Jasper — The goal of the G20 is to transform the IMF
into a global Federal Reserve, moving us closer than ever to the
creation of a world government under the United Nations.
FeatureS 17
Photo by Michael Barrett Austin
EcONOmy
17 Titanic Treasury Takeover
by Charles Scaliger — The Treasury Department’s “framework for
regulatory reform” is actually a massive federal power grab.
20 The New Gm: Government made 23
by Charles Scaliger — Socialist Sweden refused to bail out its pivotal
automaker Saab, yet our government jumps at the chance to own GM. 20
INTErVIEW
23 The Burden of Empire
Interview of AntiWar.com’s Eric Garris by Thomas R. Eddlem
cuLTurE
27 1984 revisited
by James Perloff — Orwell’s 1984 is proving to be an ever more
frighteningly accurate depiction of the world we live in.
AP Images
HISTOry — PAST ANd PErSPEcTIVE
33 Kinsey: deviancy Is the New Normal
by Selwyn Duke — The Kinsey Syndrome, a DVD documentary 27
about the “Father of the Sexual Revolution” and his research,
examines Kinsey’s methods, his supporters, and his legacy of lust.
THE LAST WOrd
44 Obama Wants “Stronger, Global regime”
AP Images
by Gary Benoit
33
DepartmentS
5 Letters to the Editor 31 The Goodness of America
6 Inside Track 40 Exercising the right
Newscom
9 QuickQuotes 41 correction, Please!
cOVEr Design by Joseph W. Kelly
6. See Dean Sellers
Ford for your new
Freedom Machine
2600 Maple Road
Troy, Michigan
(248) 643-7500
www.deansellersford.com
8. Inside Track
Major Media Sensationalize Mass Shooting Sprees
The mainstream media have sensationalized recent sprees of mass with guns, according to the anti-gun lobby, and so therefore only
shootings — from Jiverly Wong’s murder of 13 (plus killing him- the government should have guns. But how trustworthy is the
self) in a Binghamton, New York, language center, to the shoot- government? One need only “Google” some far less-publicized
ing of three police officers in Pittsburgh, attempted murder charges brought re-
Pennsylvania, to the murder of eight by cently against a Baltimore Police offi-
another gunman in a Carthage, North Car- cer, an Oakland area BART police of-
olina, nursing home just weeks earlier. ficer, and a U.S. soldier in Iraq to find
And the gun-grabbing lobby, which that people who work for the govern-
garners plenty of publicity, has a pre- ment also “snap.” A government badge
dictable “solution” to the problem. Paul is no guarantee of moral purity.
Helmke, president of the Brady Cam- Meanwhile, nobody’s saying that
paign to Prevent Gun Violence, opined: police save people from mad shooters.
“It is time for leaders in Washington to At the Binghamton shooting spree,
drop empty platitudes after each horrific police did not enter the building until
shooting, and instead do what they’re more than 40 minutes after the first
paid to do: show backbone, and enact 911 call. “Nobody could have been
reasonable laws to keep dangerous saved if the police walked in the door
weapons out of the hands of dangerous that first minute,” Broome County
people.” District Attorney Gerald Mollen
Binghamton,
Who are those “dangerous people” he’s New York
noted. However, if one or more of the
talking about? He’s talking about you. victims had been armed, the blood-
Law-abiding citizens cannot be trusted shed might have been minimized.
AP Images
Is the United States Really to Blame for Gun Crimes in Mexico?
An often-repeated allegation is that 90 percent of the guns used that statistic was “clarified” by an ATF spokeswoman, who told
in crimes in Mexico come from the United States — a shocking Fox News that “over 90 percent of the traced firearms originate
statistic employed in the call for greater gun control north of our from the U.S.” (Emphasis added.)
border with Mexico. However, according to a recent Fox News ATF Special Agent William Newell reports that Mexico sub-
report, the percentage is much smaller than that. mitted 11,000 guns to the United States for tracing in 2007-2008.
Why such a disparity in the numbers? The higher figure appar- Of that number, 5,114 guns were traced here. During the same pe-
ently came from ATF Assistant Director William Hoover, who in riod, the Mexican government recovered 29,000 guns, according
congressional testimony said: “There is more than enough evi- to the Mexican attorney general’s office. That means that most of
dence to indicate that over 90 percent of the firearms that have the guns recovered were never submitted for tracing to the United
either been recovered in, or interdicted in transport to Mexico, States and that those guns that were traced here represent only
originated from various sources within the United States.” But about 17 percent of the total.
Obama Wants Turkey to Join the European Union
During his European tour, President Barack Obama made clear that he wants the EU to
welcome Turkey into its union. “The United States and Europe must approach Muslims as
our friends, neighbors and partners in fighting injustice, intolerance and violence,” he said
before departing Prague for Ankara. “Moving forward towards Turkish membership in the
EU would be an important signal of your commitment to this agenda and ensure that we
continue to anchor Turkey firmly in Europe.”
EU membership for Turkey would put the Islamization of Europe into hyper-drive. The
White House photo
EU permits its “citizens” to travel on EU passports and to work or live in any country they
choose. Turkey’s population of 77 million is 99 percent Muslim. Given that Islam is already
sweeping over Europe, with its adherents killing and terrorizing Europeans across the conti-
nent, as well as demanding speech codes that have muzzled politicians, unfettered access to Obama with foreign
ministers in Istanbul, Turkey
Europe’s major cities for Turkish Muslims would be catastrophic.
6 THE NEW AMERICAN • ApRIl 27, 2009
9. Vermont Legalizes Same-sex “marriage” by Legislative Action
Vermont became the first state to legalize same-sex “marriage” by fense of this law as opposed to condemnation of homosexual
legislative action, when on April 7 the state legislature overrode unions as immoral. “I believe our civil-union law serves Vermont
Gov. Jim Douglas’ veto of the day before. A two-thirds majority well,” he said. Ironically, Vermont’s civil-union law, which Doug-
vote was required to override the veto, and the override succeeded las supported, served as a steppingstone to Vermont’s same-sex
by a vote of 23-5 in the state Senate and 100-49 in the House. “marriage” law, which he opposed.
The lopsided votes on behalf of a life-style that was almost uni- In addition to Vermont, same-sex “marriage” has been legal-
versally regarded as a perversion just a ized in three other states by judicial
couple of generations ago shows how decisions: Massachusetts, Connecticut,
successful the homosexual lobby has and Iowa. The latter action, by the Iowa
been in transforming the cultural face Supreme Court, occurred on April 3,
of America, at least in liberal New Eng- just four days before the Vermont leg-
land. Homosexuality was classified as islature overrode the governor’s veto.
a disorder by the American Psychiatric The California Supreme Court had also
Association, for instance, until Decem- legalized same-sex marriage, but the
ber 1973. court decision was negated when Cali-
Vermont already had a civil-union Gov. Jim fornia voters amended the state Con-
AP Images
law, and Douglas’ opposition to same- Douglas stitution to prohibit same-sex message
sex marriage was predicated on a de- through a ballot proposition.
Fedgov Gives more H-1B Visas as u.S. Tech Worker Layoffs climb
The U.S. Citizenship and Immigration Services (USCIS) an- The 85,000 H-1B visas about equal the number of domestic tech
nounced on April 8 that it has received enough H-1B applica- workers laid off recently. MarketWatch.com reported on April 6
tions to meet the congressionally mandated cap of 85,000 H-1B that “high-tech companies announced job cuts totaling 84,217 in
visas for fiscal year 2009. The H-1B visas are given to foreign the first quarter,” the steepest reduction since the fourth-quarter
workers in “specialty occupations” (science, engineering, law, lay-offs of 2002. “The latest decline follows 66,312 reported lay-
medicine, computer programming, etc.) where U.S. employers offs in the 2008 fourth [quarter],” the MarketWatch report con-
have filed petitions claiming there are not qualified U.S. appli- tinued, noting job cuts “have risen five straight quarters.” That,
cants to fill the jobs. The total current 85,000 includes an annual of course, is but part of the job-loss picture; nearly 10 times that
65,000 “cap” and an additional 20,000 exemptions for applicants number of workers were laid off, in all occupations, during the
with advanced degrees. If precedent holds, other exemptions will month of March. The U.S. economy lost 663,000 jobs in March,
add tens of thousands more; in 2008 the number of H-1B visas, and the unemployment rate shot up to a 26-year high of 8.5 per-
including exemptions, totaled about 122,000. cent, according to the Bureau of Labor Statistics.
Obama Administration Plans to Push for Global-warming Accord
Todd Stern, the Obama administration’s special envoy for climate Denmark, meeting in December. If
change, told representatives of 175 nations in Bonn, Germany, all goes according to plan, this con-
on March 29, that global warming “requires a global response” fab will unveil a new global-warming
and that rapidly developing economies like China “must join to- treaty replacing Kyoto that would
gether” with industrialized nations to solve the problem. have a devastating effect on our indus-
“We are very glad to be back. We want to make up for lost trial society if implemented. And the
time, and we are seized with the urgency of the task before us,” Obama administration will attempt to
Stern told the 2,600 delegates present for the UN negotiations. get the treaty ratified by the Senate
AP reported that the delegates applauded Stern’s remarks loudly despite our recessionary times.
and clapped again when Stern said the United States recognized Yet the evidence continues to
State Department photo
its “unique responsibility … as the largest historic emitter of mount that there is no global-warm-
greenhouse gases,” which he suggested has created a problem ing threat. For information about the Todd
Stern
threatening the entire world. evidence, see “Whatever Happened
The two-week series of talks in Bonn, which concluded on to Global Warming” in our February
April 8, were a steppingstone for the upcoming Copenhagen, 16, 2009 issue.
www.TheNewAmerican.com 7
10. Inside Track
Kennedy’s Serve America Act Passes congress
The New York Times calls the Edward M. Kennedy Serve Amer- in the bill prevents feder-
ica Act the “largest expansion of government-sponsored service al taxpayer dollars from
programs since President John F. Kennedy first called for the being used to support
creation of a national community service corps in 1963.” As any- state and local programs
thing that’s created under the Kennedy name, the bill involves that force children to per-
ever-bigger government. It authorizes what President Obama form ‘community service’
ominously calls an “army of 250,000 Corps members” who will as a condition of graduat-
serve in paid positions of national service, more than triple the ing from high school. Be-
75,000 now in AmeriCorps. cause an increasing num-
AP Images
Edward
Paid volunteers? Only the federal government could come up ber of schools across the Kennedy
with such a concept. The Congressional Budget Office estimates nation are forcing chil-
that the bill would cost $1.2 billion in 2010 and significantly dren to provide ‘service’
more in subsequent years. as a condition of graduating, it is quite likely that the funds au-
This bill is not about volunteerism, as Congressman Ron Paul thorized by this bill will be used to support mandatory service.”
(R-Texas) explained on the House floor March 18: “Participation As we go to press, the legislation had cleared Congress but
in the program is not voluntary for the taxpayers. Second, nothing awaited Obama’s signature.
GOP Budget Alternative Wasn’t much of an Alternative
On April 1, April Fool’s Day, prior to House and Senate passage would give these huge deficits the appearance of being “conser-
of similar versions of the Democrat-backed budget plan two days vative” is that the deficits in the Obama budget would be even
later, Republicans unveiled their alternative budget which they larger.
called, “Fiscal Responsibility: Republicans on the Budget,” The Republican plan would increase the size of the federal
But how “responsi- government by nearly four percent per year: “Total mandatory
ble” was the GOP alter- spending [about three-fourths of total federal spending] increases
AP Images
native? Well, it called for by an average of 3.9 percent per year for the next 10 years. This
$500 billion-plus annual is slightly slower growth than projected in the Congressional
deficits through 2019. Budget Office baseline and the Obama/Democratic budget.” If
Every annual deficit in the best that the Republican Party can do is claim — using their
the Republican budget own words — “slightly slower growth” than Obama’s spending
would be larger than any proposals, what’s to be said of Republican “principles”?
Paul Ryan deficit in the entire his- Republicans clearly are a party of big government. They want all
talks about
an alternative tory of the nation before the government the Obama administration would bring to Ameri-
Republican 2008. The only thing that ca, except that they would bring this about at a slower rate.
budget plan
missouri militia report continues to cause Political Waves
Public outcry over a highly controversial political profiling report play Constitutional Party, Campaign for Liberty, or Libertarian
by a branch of the Missouri State Highway Patrol continues to material.”
reverberate through the Show Me State. The report, entitled “The On March 29, Campaign for Liberty staff member Steve
Modern Militia Movement,” lists a number of violent activities Bierfeldt was stopped and subjected to harassing search and
attributed to “right-wing” militia groups and then posits “mind- questioning by law enforcement at the St. Louis airport after the
set” links between them and legitimate, law-abiding groups, po- conclusion of the group’s three-day conference, at which Rep.
litical parties and political candidates. Ron Paul was the keynote speaker. The intimidation session was
The report, which was disseminated to law enforcement, recorded on Bierfeldt’s iPhone and has subsequently become an
specifically names Congressman Ron Paul (R-Texas), who ran Internet sensation.
for president in the 2008 Republican Party primaries, and Bob Van Godsey, the director of the Missouri Information Analysis
Barr and Chuck Baldwin, presidential candidates, respectively, Center, the federal-state-local “fusion center” that produced the
for the Libertarian and Constitution Parties. The report states: report, was replaced on April 6. Missouri State Rep. Jim Guest
“Militia members most commonly associate with 3rd party po- informed the new AmeRicAn on April 8 that he will be holding
litical groups. It is not uncommon for militia members to dis- hearings into the matter after the Easter recess. n
8 THE NEW AMERICAN • ApRIl 27, 2009
11. QuickQuotes
The Get US Out! of the UN Partisans Are deemed correct
“Those people who have been yelling, ‘Oh, the UN is going to take over.’ Now they’re correct.”
After pointing out that the G20 participants plan to give the IMF power to
coordinate international regulation of business and industry, political commen
tator Dick Morris is no longer willing to discount those who have long called
for U.S. withdrawal from the world body.
Talk-show Host Says conspiracy Believers on Target
“Geithner said he’d be open to the idea of a global currency. Those conspiracy
people had suggested this for years. They’re not wrong.”
After years of consistently discounting the very thought of a world conspiracy,
AP Images
Sean nationally syndicated talkshow host Sean Hannity has suddenly become a
hannity
believer himself.
Buchanan Leans Toward Legalizing Narcotics
“There are two sure ways to end this [drug] war swiftly: Mao Zedong’s communists killed users and sup-
pliers alike, as social parasites. Milton Friedman’s way is to decriminalize drugs and call off the war.”
In his column, Patrick Buchanan presents his case for calling off our nation’s war against drugs by
decriminalizing their use and, in the process, destroying the Mexican cartels that are ruling sizable
portions of their nation.
Maud
Photographer: Johanna Jansson
Sweden refuses Government Help for Ailing Saab Olofsson
“The Swedish state is not prepared to own car factories.”
Facing a desperate financial crisis, the Saab Company hoped to re
ceive government help. But, according to enterprise minister Maud
Olofsson, Sweden’s leaders will not bail out failing companies as it
has often done in the past.
Wonder Why Gm and chrysler Are Hurting?
“After its annual testing of vehicles, Consumer Reports recommended 100 percent of Subaru vehicles,
95 percent of Hondas, 89 percent of Toyotas, and 70 percent of Fords. Only 17 percent of GM cars and
zero percent of Chryslers were recommended.”
Reported in the Boston Globe by columnist Derrick Jackson.
Presidential Signing Statements Will continue
“They’re going to do the same thing, whenever they feel like
it.”
While pointing out that candidate Obama forcefully spoke
White House photo
against his predecessor’s practice of altering and even nullify
ing laws with signing statements, former Bush administration
press spokesman Ari Fleischer noted that the highly dubious
Ari Fleischer tactic has already been employed by the new chief executive.
Taliban chief Threatens Attack on u.S.
“Soon we will launch an attack in Washington that will amaze everyone in the world.”
Because he has no record of ever having attacked a target outside Asia, and because he has made similar
unfulfilled claims in the past, the threat issued by Baitullah Mehsud has not
been taken seriously by U.S. authorities.
renowned Physicist Scorches Global-warming champions
“Al Gore is just an opportunist. The person who is really responsible for this
Photographer: Betsy Devine
overestimate of global warming is Jim Hansen. He consistently exaggerates
all the dangers.”
Noted Princeton University physicist Freeman Dyson accuses both men of
relying too heavily on unreliable computergenerated climate models and
blames both for “lousy science.” n Freeman
— comPiled by John F. mcmAnus Dyson
www.TheNewAmerican.com 9
12. Globalization
Global Fusion
the goal of the G20 is to transform the iMF into a global Federal Reserve, moving us
closer than ever to the creation of a world government under the United nations.
by William F. Jasper ing them about a new smart phone, the agenda of the alpha-numeric gathering,
trendiest fashion footwear, or the latest but virtually everyone above room tem-
S
uppose we had conducted a national fat-burner diet drink. perature had at least heard of it, and more
opinion poll a few months ago to By the time President Obama and other than a few were getting an inkling that its
canvass Americans on their opin- world leaders headed off to London for the outcome might have a significant impact
ions of the G20. Most respondents, it is April 2 economic summit of the G20 na- on their jobs, businesses, pocketbooks,
probably safe to say, would not have had tions, most Americans may have been still pensions, bank accounts, and stock port-
the slightest idea whether you were ask- more than a bit fuzzy about the aims and folios. In fact, the outcome may be more
10 THE NEW AMERICAN • ApRIl 27, 2009
13. G20 leaders pose
for a group photo at
the London Summit,
April 2, 2009.
AP Images
far-reaching and significant than that, im- to describe the transfer of powers from first decision, which can be made at the
pacting individuals and nations — eco- nation-states to institutions that are part of G-20 Summit, will be to shorten this pe-
nomically, politically, and socially — far the United Nations system. That includes, riod from 2013 to 2011.”
beyond what is generally surmised. of course, the IMF and World Bank (and “A new world order is emerging,” de-
regional development banks), which were clared British Prime Minister Gordon
G20 Agenda established as financial sister institutions Brown at the conclusion of the summit.
Foremost on the G20 agenda is what glo- to the UN by many of the same architects The signals being sent by Brown, Sarkozy,
balist movers and shakers refer to as “global who designed the UN. It includes also the Strauss-Kahn, Geithner, German Chan-
financial architecture reform,” code words World Trade Organization (WTO), another cellor Angela Merkel, and others should
for transforming the International Mon- UN institution that is expected to receive be setting off high-decibel alarm bells.
etary Fund (IMF) into, virtually, a global enhanced powers to enforce the G20’s an- We are witnessing the demolition of our
Federal Reserve System, with vast new nounced commitment to “fight all forms of constitutional system and the piecemeal
monetary and regulatory powers — and protectionism and maintain open trade.” replacement of it with world government.
huge new infusions of cash to be provided In fact, French President Nicolas Sar- Over the coming months, the architects
principally, as usual, by the citizens of the kozy, a closet socialist who is pushing hard of this new global system intend to wring
United States, Japan, and Europe. In addi- to scuttle what little sovereignty remains every opportunity possible out of the cur-
tion to pledging $1.1 trillion to the IMF, for nation-states in the European Union, rent economic crisis to bulldoze through
the summiteers are proposing that the IMF threatened to “walk away” from the Lon- our constitutional checks and balances that
assume a central role in the monitoring and don summit if concrete global governance stand in the way of empowering the IMF,
regulation of global financial markets, and “deliverables” on financial regulation are the WTO, and the United Nations.
greatly expand Communist China’s influ- not met.
ence in the IMF structure. In the run-up to And there’s much more to
the summit, there was even a stunning pro- come. The London summit, it is not only the “alarmists” who are now
posal made by China, Russia, a UN panel, says Dominique Strauss-
and others — and tacitly endorsed by U.S. Kahn, the French economist
noting the obvious; some longtime world-
Treasury Secretary Timothy Geithner — who is the IMF’s managing government advocates are coming out of
to replace the dollar as the world’s reserve director, is but the launch-
currency with the IMF’s Special Drawing pad for an ongoing process.
the closet and verbally confirming what is
Rights (SDRs). “This reform is a dynamic re- empirically and logically apparent: these
This “supersizing” of the IMF, as it form, meaning that it has to
current “reforms” are pushing us ever
has become popularly known in globalist be completed over time with
circles, falls under the rubric of “global several rounds,” he said on closer to actual world government.
governance stimulus,” a term being used the eve of the summit. “The
www.TheNewAmerican.com 11
14. Globalization
pean Union has already set up opts for soothing language,” he notes, as
a continental government for for example, using “ ‘global governance’
The Council on Foreign Relations has 27 countries, which could be a rather than world government.”
been the principal fount in America model. The EU has a supreme But some globalists, especially in Eu-
court, a currency, thousands of rope, speak more boldly. Rachman notes:
through which proposals to empower
pages of law, a large civil ser-
the un and its affiliates have flowed vice and the ability to deploy Jacques Attali, an adviser to Presi-
into academia, the media, and official military force. dent Nicolas Sarkozy of France,
argues that: “Global governance is
government circles since the un was “So could the European model go just a euphemism for global govern-
created more than six decades ago. global?” Rachman asks. He of- ment.” As far as he is concerned,
fers three reasons why he thinks some form of global government
it might: “global warming, a cannot come too soon. Mr. Attali
Is the voicing of such concerns being global financial crisis and a ‘global war believes that the “core of the inter-
unnecessarily “alarmist”? Of course it is, on terror.’” national financial crisis is that we
say the talking heads dispensing the con- “The financial crisis and climate have global financial markets and
ventional wisdom in the major media. change,” Rachman avers, “are pushing no global rule of law.”
national governments towards global solu-
coming Out of the closet tions, even in countries such as China and “So, it seems, everything is in place,” says
However, it is not only the “alarmists” the US that are traditionally fierce guard- Rachman. “For the first time since homo
who are now noting the obvious; some ians of national sovereignty.” sapiens began to doodle on cave walls,
longtime world-government advocates Rachman approvingly quotes from there is an argument, an opportunity and
are coming out of the closet and verbally a recent report of a globalist think tank, a means to make serious steps towards a
confirming what is empirically and logi- the Managing Global Insecurity project, world government.”
cally apparent: these current “reforms” calling for a legally binding UN climate- But, to his disappointment, there is still
are pushing us ever closer to actual world change agreement and the creation of a stubborn resistance to this vision and “any
government. 50,000-strong UN peacekeeping force. But push for ‘global governance’ in the here
One of the semi-uncloseted one- he observes that the MGI report tellingly and now will be a painful, slow process.”
worlders is Gideon Rachman, a leading avoids using words that might “get people Rachman, the ardent global govern-
financial opinionator for the very influ- reaching for their rifles in America’s talk- ment proponent, then makes an important
ential Financial Times. In an important radio heartland.” “Aware of the political admission against interest. He acknowl-
op-ed last December 8, Rachman blurted sensitivity of its ideas, the MGI report edges:
his undisguised enthusiasm
for the developing contours
of world government appear-
ing from the current so-called
reform process. In his column
entitled “And now for a world
government,” the Timesman
expresses excitement that
“for the first time in my life,
I think the formation of some
sort of world government is
plausible.”
And not only plausible,
but, as far as Rachman is
concerned, very desirable.
Rachman describes what he
envisions: $1.1 trillion ImF boost: iMF
Managing Director Dominique
A “world government” Strauss-Kahn says the new
would involve much more “supersizing” of the iMF is
part of a “dynamic reform”
than co-operation between
process that will require
nations. It would be an more rounds.
AP Images
entity with state-like char-
acteristics, backed by a
body of laws. The Euro-
12 THE NEW AMERICAN • ApRIl 27, 2009
15. AP Images
Even in the EU — the heart-
land of law-based international
government — the idea remains
unpopular. The EU has suffered
a series of humiliating defeats
in referendums, when plans for
“ever closer union” have been
referred to the voters. In gen-
eral, the Union has progressed
fastest when far-reaching deals
have been agreed by techno-
crats and politicians — and
then pushed through without
direct reference to the voters.
International governance tends
to be effective, only when it is
anti-democratic.
This, of course, confirms yet again
two of the main objections by crit-
ics of the processes employed to “A new world order is emerging,” says british Prime Minister Gordon brown, the London G20
promote “global governance,” Summit host, seen here at the summit with President barack Obama.
“harmonization,” “shared sover-
eignty,” “interdependence,” and
other code words for schemes that subvert as Bundesbank President Karl Otto Pohl, said exactly what he had said. We had
national sovereignty and build global gov- German Chancellor Helmut Kohl, British all heard it. It was beyond doubt his
ernment. The first is that globalists peren- Labour politician Peter Hain, and Europe- informed position. He was giving us
nially mislead and deceive to obtain their an Commission President Jacques Delors. the final destination of the European
objectives; the second is that despite their Forsyth, an outspoken opponent of the Union project.
proclaimed commitments to transparency, EU threat to national sovereignty, said in
democracy, and rule of law, the global- a speech to the anti-EU Bruges Group: The Financial Times never breathed a word
government adherents regularly ignore of this meeting or the words of the German
and violate all of these principles. I sat once in a meeting … at the Fi central banker to its readers. No indeed,
Unfortunately, while revealing admis- nancial Times editorial offices in because the Financial Times is a very im-
sions (and boasts) by other globalists are Blackfriars to listen to Mr. Pohl. He portant part of what Forsyth referred to as
cropping up, most of Rachman’s and At- was a former president of the Bundes- “a very powerful cabal in our country that
tali’s one-world colleagues are more cir- bank and he had been eased out of is quite literally dedicated, fanatically, to a
cumspect. When the inquiring journalist that presidency by Helmut Kohl spe- futuristic dream.”
or alarmed citizen points to the obvious cifically to work with Jacques Delors The Forsyth saga related above is es-
disturbing destination where this process is in the creation of the new currency, pecially apropos not only because many
taking us, he is given the Wizard of Oz treat- the Euro. And he was, I thought, ex- of the same deceptive methods are being
ment: “Don’t pay any attention to that man tremely forthcoming. He said, “It is used to supersize the IMF, but because
behind the curtain.” In other words, don’t my duty to tell you my English friends many of the same key individuals and or-
believe your eyes, ears, or common sense. … that you will have to abandon the ganizations involved in the euro cabal are
British nation state because the fu- now pushing the IMF/SDR scheme.
The Eu Example ture has no provision for the nation Take, for instance, Robert Mundell, the
We have a highly apropos example of this state within it.” There was a stunned Nobel Prize-winning Canadian economist
as it relates to the skullduggery employed silence. And then in the course of the who played a major role in setting up and
to force the euro currency and the Europe- remarks that followed almost imme- promoting the euro. He is also a central
an Central Bank on the people of Europe diately afterwards, Peter Hain stood figure behind the proposed IMF currency,
and the current push to do the same on a up and told us quite bluntly that we having been a leading advocate of the idea
global scale with the IMF. had not heard what we thought we for many years. In a 1990 essay, later re-
Frederick Forsyth, the bestselling Brit- had heard. It hadn’t been said. And a printed in the Wall Street Journal, Mundell
ish author, relates a secret meeting to rather bemused German former pres- wrote: “We have a better opportunity to
which he was privy some years ago in- ident of the Bundesbank sat there as create a world central bank with a stable
volving Rachman’s employer, the Finan if someone had accused him of being international currency than at any previous
cial Times, and EU heavyweights such slightly deranged. He had of course time in history.”
www.TheNewAmerican.com 13
16. Globalization
Shadows of power: best- place the dollar with a new global fiat cur-
selling author Frederick rency he called the “bancor.” Zhou Xiao-
Forsyth attended and chuan’s proposal, posted on the website of
exposed a secret meeting the People’s Bank of China, cites Keynes
of “a very powerful cabal” as his inspiration:
of globalist insiders.
Back in the 1940s, Keynes had already
proposed to introduce an international
currency unit named “Bancor,” based
on the value of 30 representative com-
modities. Unfortunately, the proposal
was not accepted.... The creation of
an international currency unit, based
on the Keynesian proposal, is a bold
initiative that requires extraordinary
political vision and courage.
Nexus of Globalism
It is not surprising that Geithner’s com-
ments came at an event of the Council on
Foreign Relations. Geithner is a longtime
AP Images
member of the organization, and the CFR
has been the principal fount through which
proposals to empower the UN and its af-
In the week prior to the London sum- on the table. I want to know which it filiates have flowed into academia, the
mit, when Zhou Xiaochuan, the governor is. The American people deserve to media, and official government circles
of Communist China’s central bank, and know.” since the UN was created more than six
Nursultan Nazarbayev, the communist Asked today about a currency decades ago.
dictator of Kazakhstan, both called for a proposal from China at a Council on In fact, CFR members in the Roosevelt
global currency and a global central bank, Foreign Relations event, Secretary administration dominated both the 1944
Mundell was trotted out in the major media Geithner stated he was open to sup- Bretton Woods Conference that created
to provide his stamp of approval. “It would porting it. Despite attempts to clarify the IMF/World Bank system and the par-
be a very good idea if the G20 took that his remarks later in the day, the un- allel 1944 Dumbarton Oaks Conference
idea up in London,” Mundell said. guarded initial response calls into that created the United Nations Charter.
question his true intentions. The principal U.S. official in charge of
u.S. Officials “Open to” ditching dollar the Bretton Woods Conference was Trea-
But it is the American globalists, especial- A transcript and video of Geithner’s state- sury official Harry Dexter White, a CFR
ly those serving as elected and appointed ment at the Council on Foreign Relations member (as well as a Soviet agent), who
federal officials — not the Chinese, Cana- (CFR) are available on the organization’s worked closely with Keynes to craft a sys-
dians, or Europeans — who should most website. Geithner says: “as I understand tem that would gradually transfer global
concern American citizens. On March 25, his [Zhou Xiaochuan’s] proposal, it’s a financial control to the United Nations.
U.S. Rep. Michele Bachmann (R-Minn.) proposal designed to increase the use of The most influential proposals for
rightfully took Secretary Geithner to task the IMF’s special drawing rights. And empowering the UN and the IMF today
for being deceptive about his true inten- we’re actually quite open to that sugges continue to flow from the CFR and its
tions concerning China’s global currency tion. But you should think of it as rather subsidiary think tanks, which include
proposal. Rep. Bachmann’s office issued a evolutionary, building on the current archi- the Greenberg Center for Geoeconomic
release declaring: tectures … rather than moving us to global Studies, the International Institutions and
monetary union.” (Emphasis added.) Global Governance Program, the David
“Yesterday, during a Financial Servic- Secretary Geithner’s denials notwith- Rockefeller Studies Program, the Center
es Committee hearing, I asked Secre- standing, Communist China’s proposals for Preventive Action, and the Center for
tary Geithner if he would denounce for the new currency reserve are indeed Universal Education, as well as similar
efforts to move towards a global cur- a scheme for “moving us to global mon- organizations that are dominated by CFR
rency and he answered unequivocally etary union.” It is an attempt to move us members: the Peterson Institute for Inter-
that he would,” said Bachmann. “And closer to the original vision of Lord John national Economics, the Brookings Insti-
President Obama gave the nation the Maynard Keynes, the Fabian Socialist, ar- tution, the Carnegie Endowment for Inter-
same assurances. But just a day later, chitect of the International Monetary Fund national Peace, the Ford and Rockefeller
Secretary Geithner has left the option and World Bank. Keynes had hoped to re- Foundations, the Clinton Global Initiative,
14 THE NEW AMERICAN • ApRIl 27, 2009
17. and the Carter Center — to name a few. is) highly venerated in CFR
The CFR’s International Institutions and circles, advised fellow one-
Global Governance Program (IIGG) calls worlders simply to lie to
The late Admiral Chester Ward resigned
for “re-conceptualizing ‘sovereignty’ in an their countrymen about from the CFR after 16 years, concluding
age of globalization,” openly admires the their revolutionary plans.
that the organization existed for the
EU model for having “chosen to ‘pool’ “I believe that the monster
their sovereignty in return for economic, of sovereignty is doomed subversive “purpose of promoting
social and political benefits,” and speaks to perish by our sword,” disarmament and submergence of u.S.
approvingly of “the evolution of new Toynbee confidently de-
norms of state sovereignty” and an “emerg- clared in a 1931 speech sovereignty and national independence into
ing doctrine of ‘contingent sovereignty.’ ” that was later published in an all-powerful one-world government.”
This has been the central CFR theme for the RIIA’s journal. “[W]e
nearly a century. When the group’s leading are at present working, dis-
lights are not attacking outright the very creetly but with all our might,” he said, “to Obama’s Globalist Brain Trust
concept of national sovereignty, they are wrest this mysterious political force called Globalist-without-equal Henry Kissinger
usually attempting to define it into oblivi- sovereignty out of the clutches of the local (CFR) declared in recent interviews with
on. National sovereignty is, of course, the national states of our world. And all the PBS and CNBC that there is “a need for a
main obstacle to what they call “world time we are denying with our lips what new world order” to bring the world back
order.” A 1944 CFR study lamented the we are doing with our hands, because to from “the abyss,” and said that President
American public’s “sovereignty fetish.” impugn the sovereignty of the local na- Obama’s “task will be to develop an over-
Walt W. Rostow (CFR), a big name in tional states of the world is still a heresy all strategy for America in this period, when
the State Department and National Se- for which a statesman or a publicist can be really a ‘new world order’ can be created.”
curity Council during the Kennedy and … ostracized and discredited.” (Emphasis President Obama is getting plenty of
Johnson administrations, called in 1960 added.) help with that new world order “task” from
for “an end to nationhood as it has been So, most globalists have adopted the the globalist brain trust he has appointed
historically defined.” He also called for Toynbeean path of prevarication and as staff, cabinet, and advisers, including
“the creation of a world order” which couching their world government aims these CFR members: George Mitchell,
would include “world law and some form in less threatening terms such as “world Richard Holbrooke, Tim Geithner, Robert
of world government.” order,” “global governance,” and “respon- Gates, Janet Napolitano, Susan Rice, Eric
Ambassador Richard N. Gardner (CFR) sible sovereignty.” Shinseki, Ivo Daalder, Neal Wolin, Lael
argued for patient gradu-
alism in his famous 1974
AP Images
article in the CFR journal
Foreign Affairs entitled “The
Hard Road to World Order.”
Since attempts at “instant
world government” had been
foiled by America’s obsti-
nate clinging to sovereignty,
he conceded that “an end run
around national sovereignty,
eroding it piece by piece,
will accomplish much more
than the old-fashioned fron-
tal assault.”
Similar pronouncements
by prominent globalists,
both Republican and Demo-
crat, could be multiplied a
hundred fold. Most have fol-
lowed the advice of historian
Arnold Toynbee, an ardent
globalist and member of the
CFR’s British sister organi-
zation, the Royal Institute for
International Affairs (RIIA). reds and greens: Street demonstrations by communists (above) and environmental activists at the
Toynbee, who was (and still London G20 summit help make the summit’s radical socialist proposals look modest by comparison.
www.TheNewAmerican.com 15
18. Globalization
Strobe Talbott, Obama
“states’ rights” sentiment which pre-
adviser and president of the vents a gradual subordination of the
brookings institution, longs Senate, and the position of the Su-
for the day when “nationhood preme Court as final interpreter of the
… will be obsolete; all constitutional separation of powers
nations will recognize a — all these militate against the devel-
single, global authority.” opment of responsible government.
Hence it was not surprising that in the
1980s top leaders of the CFR headed up
a front group, the Committee on the Con-
stitutional System, to remove those checks
and balances. Their principal playbook,
Reforming American Government, infa-
mously admitted their subversive designs.
It declared: “Let us face reality. The fram-
ers have simply been too shrewd for us.
They have outwitted us. They designed
AP Images
separated institutions that cannot be uni-
fied by mechanical linkages, frail bridges,
tinkering. If we are to ‘turn the founders
Brainard, Ashton Carter, and Michele A. Turning the Founders upside down upside down’ — to put together what they
Flournoy. The list could go on and on. The facts support this grim assessment. put asunder — we must directly confront
Brookings Institution President Strobe And hand in hand with the CFR’s abhor- the constitutional structure they erected.”
Talbott (CFR), an Obama adviser, is a full- rence of national sovereignty is its animos- Turning the American founders upside
blown one-worlder. In a 1992 essay for Time ity toward limited constitutional govern- down is precisely what the CFR-led glob-
magazine entitled “The Birth of the Global ment. The CFR’s globalists at the IIGG alists are attempting to do in their current
Nation,” Talbott rhapsodized over a future Program lament the United States’ resis- drives for “global governance.” This is very
he saw materializing in which “nationhood tance to the ideals of global governance. evident in the push to transform the IMF.
as we know it will be obsolete; all states They seem particularly annoyed that “the We are already saddled with the Federal
will recognize a single, global authority.” separation of powers enshrined in the U.S. Reserve System, a dangerously arrogant
In this regard, we see little change from Constitution, which gives Congress a criti- threat to our economy and our constitu-
previous administrations running all the cal voice in the ratification of treaties and tional system. However, it is still possible,
way back to the days of FDR and Truman. endorsement of global institutions, com- if enough Americans can be educated, mo-
Washington Post ombudsman Richard plicates U.S. assumptions of new interna- tivated, and activated, to force Congress
Harwood has described the CFR as “the tional obligations.” The Founders intended to curtail the Fed’s powers, or even (yes,
nearest thing we have to a ruling estab- that the separation of powers would “com- please!) abolish this unconstitutional mon-
lishment in the United States.” Writing of plicate” efforts to expand government strosity. The IMF is another matter. Con-
the council’s top-heavy presence in the power, whether under legitimate or phony gress can (and should) cut off any further
Clinton retinue, Harwood observed in the claims of “obligation.” U.S. participation in and contributions to
October 30, 1993 issue of the Post that This IIGG complaint echoes a familiar the fund. If it does not and allows the IMF
“they very definitely look like the people refrain in CFR literature since its earliest to be bumped up to the levels proposed by
who, for more than half a century, have days. the “supersizers,” Congress soon will find
managed our international affairs and our In 1928, the CFR’s first Survey of Amer that it has lost what little leverage it has
military-industrial complex.” ican Foreign Relations openly attacked the had on the IMF’s conduct and policies.
That unbroken trend continued through U.S. Constitution’s intricate checks and If the IMF is empowered with global
the Bush retinue and into the new Obama balances as incompatible with “responsi- monetary and financial regulatory pow-
retinue. This is especially disturbing if the ble government.” The CFR study charges ers, along with the ability to issue a global
charges of the late Admiral Chester Ward that our Constitution’s most salutary and currency and bonds, it will no longer have
have any merit. Admiral Ward resigned venerated features are actually defects: to ask its member states for funding. Nor
from the CFR after being a member for 16 will the UN. The IMF will be able to pro-
years, having come to the conclusion that The jealous control of the purse by vide the UN with the revenues it needs to
the organization existed for the subversive Congress is a check which would become an actual world government, com-
“purpose of promoting disarmament and inevitably curb an ambitious presi- pletely unbridled by any constitutional
submergence of U.S. sovereignty and na- dent.... The comparative equality of constraints, accountable to no one but the
tional independence into an all-powerful power of the two houses, rendering “very powerful cabal” (Forsyth’s words)
one-world government.” each a check upon the other, the running the show. n
16 THE NEW AMERICAN • ApRIl 27, 2009
19. EconoMy
Titanic Treasury
Takeover
The Treasury Department’s “framework for regulatory reform” is actually a plan for the
most massive federal power grab since the New Deal.
by Charles Scaliger groundwork for an expansion of federal have been plugged, the freedom to make
power the likes of which America has not financial transactions, large and small,
I
t’s official: the Obama administration seen since the New Deal. free of federal government oversight, will
intends to nationalize the entire finan- “Over the past 18 months, we have faced be gone.
cial sector. If there were any lingering the most severe global financial crisis in Nor will there be any refuge overseas,
doubts as to the intentions of President Ba- generations,” Treasury Secretary Geithner if Obama and his like-minded associates
rack Obama and Treasury Secretary Tim- told the House Financial Services Com- overseas — Britain’s Gordon Brown, for
othy Geithner, they were dispelled by an mittee. “To address this will require com- example — have their way. “International
announcement on March 26 detailing the prehensive reform. Not modest repairs at coordination” means that new U.S. finan-
Treasury Department’s new “framework the margin, but new rules of the game.” cial regulations will be harmonized with
for regulatory reform.” those of the EU and other major economic
“Regulatory reform” is a favorite Belt- Nationalize the Entire Financial Sector powers, and brought under the authority
way euphemism for bigger, more expen- True to Secretary Geithner’s words, the of an international organ, presumably the
sive, and more intrusive government. The new Treasury plan contemplates “reform” IMF.
new Treasury plan should be styled more in four general areas, to wit: “addressing At the April 2 meeting in Great Britain
accurately “Blueprint for a massive new systemic risk,” “protecting consumers of the G20, the top action items included
federal power grab,” because that’s pre- and investors,” “eliminating gaps in our new powers and reserves for the IMF and
cisely what it is. Such power grabs are regulatory structure,” and “fostering inter- a global clampdown on tax havens, hedge
usually accomplished under the camou- national coordination.” The plan has not funds, and bank secrecy — precisely the
flage of crisis, when public emotions — yet been fully fleshed out, but such scraps kinds of things that Timothy Geithner and
and the widespread sentiment that govern- of information that the Obama Treasury his counterparts overseas are demanding.
ment should “do something” — are easily has seen fit to make public are evidence According to Britain’s Finance Secretary
exploited. enough of the end that the Obama admin- Stephen Timms, “the era of banking se-
And the Obama administration has been istration has in mind: effective nationaliza- crecy is over.”
only too happy to take advantage of the tion of the entire financial sector. By the In point of fact, the era of financial se-
turbulence, with dire warnings laying the time the “gaps in our regulatory structure” crecy of any kind will be over if the Trea-
www.TheNewAmerican.com 17
20. EconoMy
credit default swaps and a confidential basis to appropriate
over-the-counter deriva- federal regulators.... Finally, we will
The Obama administration has in mind tives for the first time,” the apply robust eligibility requirements
the effective nationalization of the entire Treasury proposal ex- and, where appropriate, standards of
plained. The proposal went care; and will require that they meet
financial sector. by the time the “gaps
on in smugly dictatorial ca- recordkeeping and reporting require-
in our regulatory structure” have been dences to describe the com- ments. [Emphasis added.]
plugged, the freedom to make financial ing regime:
It doesn’t take a Ph.D. in finance or an
transactions, large and small, free of We will subject all expertise in the arcane of derivatives to
federal government oversight, will be gone. dealers in OTC deriva- understand what is happening here. OTC
tive markets to a strong derivatives, an innovative new financial
regulatory and supervi sector in which transactions are private
sury plan, or even a reasonable facsimile sory regime as systemically impor- and entirely voluntarily, are to be trans-
thereof, is voted into law by Congress. tant firms.... We will force all stan- formed into yet another compliant arm of
“Transparency” — another delicious dardized OTC derivative contracts FedGov-directed financial activity. Hence-
Beltway euphemism, meaning total gov- to be cleared through appropriately forth the federal government will oversee
ernment surveillance — will be the order designed central counterparties all such transactions and will determine,
of the day, with few financial transactions (CCPs).... We will require that all in its allegedly superior wisdom, wheth-
more complex than putting a quarter in a non-standardized derivatives con- er or not such voluntary transactions are
gumball machine exempt from the Federal tracts report to trade repositories and permitted.
Government’s all-seeing eye. be subject to robust standards for In addition, the Treasury proposal con-
Just one of the four areas of contem- documentation and confirmation of templates strengthening the regulation of
plated reform — addressing systemic trades; netting; collateral and margin money-market funds and setting up an
risk — was described in any detail in the practices; and close-out practices.... FDIC-like guarantor of last resort — to be
Treasury’s press release, but it was a fair Central counter-parties and trade re- paid for by those systemically-important
indicator of things to come. The Treasury positories will be required to make firms coerced into accepting its coverage.
intends to create a new regulatory body aggregate data on trading volumes All of this may seem unimportant to
with responsibility for determining which and positions available to the public the man on the street, applicable only to
firms are large or interconnected enough to and make individual counterparty the rarefied upper atmosphere of high fi-
pose “systemic risk.” This body will have trade and position data available on nance. But it is the activities of the hedge
the authority to decree which
firms are “systemically impor-
AP Images
tant” and to exert controls over
systems of payment and the
disposition of derivatives, those
pesky financial innovations de-
vised in the first place to dilute
systemic risk that government
regulations had imposed on fi-
nancial transactions like mort-
gages. Firms deemed “systemi-
cally important” will be subject
to rigorous new regulatory re-
quirements for capital reserves
and credit risk management. All
hedge funds larger than an asset
threshold to be determined will
be registered and subjected to
detailed federal scrutiny.
OTC (over-the-counter, or
privately traded) derivatives
will also be brought under Big
Brother’s benevolent oversight.
“In our proposed regulatory Everything must go: Economic corrections always claim large numbers of less-efficient businesses.
Luxury goods, like the high-end clothing at this new York store, are particularly vulnerable as
framework, the government
chastened consumers save rather than spend their excess income.
will regulate the markets for
18 THE NEW AMERICAN • ApRIl 27, 2009
21. Out of his depth: Treasury Secretary Timothy Geithner testifies before the house Financial Services Committee.
AP Images
The best thing the Treasury Department could do for the economy is leave it alone. Geithner’s Treasury
Department, however, intends to do just the opposite, imposing a welter of new controls on financial activities.
fund and money-market fund managers, order of free market economic activity is funds,” which the Treasury now intends
the stockbrokers, the currency traders, that it will bring about dramatic improve- to bring under the malignant umbrella of
the dealers in derivatives, and other prime ments in the human condition if not inter- federal regulation and oversight, came
movers in the world of finance, that help fered with. about as the wealthy sought to put their
to determine the values of retirement port- Nor is a free-market economy fragile money where the grasping hand of gov-
folios and other assets near and dear to the or unstable by nature, despite what politi- ernment could not confiscate or control it.
American middle class. And the engine cians are wont to claim. The fragility and Absent the efforts of government every-
that has powered American economic and instability that have brought about the re- where to control financial activity, market
financial growth has always been volun- cent meltdown are consequences of gov- forces would have tended towards greater
tary, free-market exchange. Government ernment mismanagement, not defects in transparency, as interest rates and lending
intrusion into such activities always and the inherently self-regulating free market. found natural levels.
everywhere hampers the market and en- The extent that we have an economic In this same spirit, the Treasury’s plan
courages misallocation of resources. or financial “system” at all is a direct con- for “protecting consumers and investors”
sequence of interfering in the workings means “making more regulations to re-
Fallacy: The Economy can Be managed of the market, of trying to micromanage lieve consumers and investors of the re-
The entire Treasury plan, along with all and predict outcomes for something that sponsibility of making informed choices
the other half-baked attempts to reform or is neither manageable nor predictable. The and accepting the consequences of risk.”
bail out “the financial system” perpetrated “system” is not the market itself but the Few Americans would buy a car or house-
by this and the preceding administration, web of regulations and controls that know- hold appliance without doing a lot of re-
is based on an almost-universally accepted it-all federal regulators — like Geithner — search and comparison shopping. This is
fallacy, namely, that the economy is a “sys- have foisted on banks, investment houses, because, if we spend our money on things
tem” that must be managed for optimal insurance companies, and the rest of the fi- that don’t work, we know that we have
performance. But the economy, including nancial sector. That this system has failed no one to blame but ourselves. If we have
the financial sector, is not a system like a so spectacularly is now being touted as an genuinely been cheated, the courts provide
man-made electrical grid or even a natural excuse to impose another, more severe sys- recourse.
phenomenon like the solar system. Those tem of controls that may well squelch free But very few do much research before
systems, whether man-made or natural, market financial operations altogether. plunking their savings into a bank account
operate according to laws that allow any As for the “systemic risk” that Geith- or mutual fund. The most that consumers
observer to predict future states. ner wants to reduce, the Byzantine com- typically think to ask is how much inter-
But an economy is something alto- plexity of modern finance has come about est will be paid. But because we know (or
gether different. It is less a system than primarily as the market has tried to find think we know) that the government will
a spontaneous order. While it obeys the innovative ways of avoiding the regula- guarantee our bank accounts and keep an
laws of human action, it is impossible to tory burden, unnatural levels of risk, and eagle eye on investment houses, we almost
predict future states because the economy moral hazard imposed by government never trouble ourselves to check the books
itself is constantly in flux. The countless interference. Much-maligned “credit de- of the banks and investment houses.
billions of decisions made each moment fault swaps” and similar derivatives, for
by economic actors (people) are impos- example, were created to dilute the irra- Free market Is Better Than regulation
sible to quantify, and their future conse- tional levels of risk introduced by the fed- In reality, the free market is a much bet-
quences impossible to predict. The most eral government’s compelling of banks ter watchdog than government could ever
that can be said about the spontaneous to loan to high-risk borrowers. “Hedge be. This is not to say that fraud will never
www.TheNewAmerican.com 19