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Global Fusion - The New American Magazine - 4-27-09.pdf

  1. 1. Titanic Treasury Takeover • 1984 Revisited • The New GM: Government Made April 27, 2009 ThaT Freedom Shall NoT PeriSh $2.95 Global Fusion
  2. 2. 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: 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
  3. 3. I S A I A H 4 0 : 3 1 Retire Safe, Early and Happy... © © W. Neil Gallagher, Ph.D., 1989 All Rights Reserved The Gallagher Financial Group is your personal partner. Every strategy, every portfolio is tailor-made for you, the individual client. Dr. Gallagher is a lifetime John Birch Society member and has helped Americans coast to coast. • Lifetime Income • Legacy Planning • Long Term Care Issues • Tax Protected Strategies “We loved your presentation to our ... and Much Much More company and we want you back!” Zig Ziglar For more information on The Gallagher Group, visit or call (800) 434-4362. Call for a free copy of : “Why America is New, Better & Different.” Principal offices in Dallas/Fort Worth.
  4. 4. 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’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
  5. 5. See Dean Sellers Ford for your new Freedom Machine 2600 Maple Road Troy, Michigan (248) 643-7500
  6. 6. LETTERS TO THE EDITOR Publisher John F. McManus Editor Bias Behind public is to be able to distinguish between Gary Benoit capitalism and socialism. Under capital- Senior Editor Valkyrie the movie ism, people and companies make money by William F. Jasper Selwyn Duke writes once again with great providing better goods or services to their proficiency and clarity on the subjects customers. This is the essence of the free Associate Editor Kurt Williamsen he covers, in this case the real Claus von market. Government lobbying is only to Stauffenberg and his portrayal in the cur- protect against unjust laws or unreasonable Contributors rent film Valkyrie (“Valkyrie: The Real von taxation — never to plunder the taxpayer or Dennis J. Behreandt Christopher S. Bentley Stauffenberg,” March 2 issue). But his re- oppress the competition. Under socialism, Steven J. DuBord view of the film comes up short in an im- with its high government involvement in the Selwyn Duke portant way. private sector, company success is dependent Jodie Gilmore The German colonel who gave his life to on its success in obtaining government fund- Gregory A. Hession, J.D. Ed Hiserodt rescue his fatherland is portrayed by Duke ing or favor. The company no longer needs William P. Hoar as a Catholic patriot whose faith impelled to run itself with sound principles, only to R. Cort Kirkwood him to take action against Hitler, and notes curry favor with the politicians and govern- Warren Mass Llewellyn H. Rockwell, Jr. that this motivation is missing from Tom ment officials. Naturally, when the company Alan Scholl Cruise’s role as von Stauffenberg. Indeed, officials are successful at this they deserve Ann Shibler the colonel is portrayed as nothing but a a bonus. Liana Stanley killing machine with no attempt made by The problem is not the bonuses — it is Michael E. Telzrow Joe Wolverton II, J.D. the producer or director to morally justify government intrusion into the market place! the assassination plan. All of this is unconstitutional according to Editorial Assistant To the producer and/or director of Val­ the 10th Amendment to the U.S. Constitu- Denise L. Behreandt kyrie, von Stauffenberg’s only redeeming tion. In order to enjoy a prosperous tomor- Art Director quality was his attempt to kill Hitler; nothing row and preserve our free and independent Joseph W. Kelly else matters. So any attempt by the audience America, we must elect leaders who will Desktop Publishing Specialist to identify with the hero and his honorable honor their oath to support and defend our Steven J. DuBord background is either totally ignored or bare- Constitution. Research ly mentioned. This is not about the film’s AlbeRt J. segAllA Brian T. Farmer managers appealing to a secular audience, Sent via e-mail Bonnie M. Gillis as Duke pondered; it’s about the biases and Wayne Olson aversions of the film’s controllers. Marketing Kenneth Reynolds Vote Them Out Larry Greenley Bronx, New York I want to thank the new AmeRicAn for the Public Relations information that is presented in your maga- Bill Hahn zine. For the first time, I understand about Advertising/Circulation The cockroach Theory the politics of America and why I always knew that the GOP looked so much like the Julie DuFrane and a Silver Lining Democratic Party — but at times worse. Your The present fuss about the government- magazine gave me that understanding. There approved company bonuses of the bailout isn’t much we can do but vote, and try to vote company officials and the campaign dona- these people out of office. tions to the politicians reminds me of the Alice PReston Printed in the U.S.A. • ISSN 0885-6540 cockroach theory: “Politicians and bureau- Portland, Oregon P.O. Box 8040 • Appleton, WI 54912 920-749-3784 • 920-749-3785 (fax) crats in some ways resemble cockroaches — it is not what they steal and carry off that Send your letters to: the new AmeRicAn, P.O. hurts so much — it is what they fall into and Box 8040, Appleton, WI 54912. Or e-mail: Rates are $39 per year (Hawaii and Canada, mess up!” Due to vol- add $9; foreign, add $27) or $22 for six months (Hawaii and Canada, add $4.50; foreign, add This mess may have a silver lining if the ume received, not all letters can be answered. $13.50). Copyright ©2009 by American Opin- lesson learned by the Letters may be edited for space and clarity. ion Publishing, Inc. Periodicals postage paid at Appleton, WI and additional mailing offices. Post- master: Send any address changes to The New AmericAN, P.O. Box 8040, Appleton, WI 54912. EXTrA cOPIES AVAILABLE The New AmericAN is pub- lished biweekly by Ameri- ➧ Additional copies of this issue of the new AmeRicAn are can Opinion Publishing available at quantity-discount prices. To place your order, visit Inc., a wholly owned subsidiary of The John Birch Society. or see the card between pages 38-39. 5
  7. 7. 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
  8. 8. 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. 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. 7
  9. 9. 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
  10. 10. 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 9
  11. 11. 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
  12. 12. 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 11
  13. 13. 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
  14. 14. 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.” 13
  15. 15. 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
  16. 16. 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. 15
  17. 17. 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
  18. 18. 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- 17
  19. 19. 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
  20. 20. 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 19