1. THE GREAT BETRAYAL This is the story of how America came to be imperilled by government debt and why continuing with the existing economic model will only lead to more government debt, more interest paid, and a greater burden on the back of every American... not for generations to come, but till the end of time. THE GREAT BETRAYAL has implications for Britain and Europe too. “Mainstream economics is fundamentally flawed and we are all doomed” THE PROBLEM The quote below is from George Soros, the man who ‘broke the Bank of England’ by betting against the high value of sterling during the ERM fiasco in 1992. From that escapade we might reasonably assume that George Soros knew a thing or two about economics and exchange rates... which the decision-makers at the Bank of England and Treasury didn’t know. In the quote below, Soros was referring to the recent recession – the third in 30 years - and budget deficits in America and Britain which can’t be allowed to continue. He was right, and the solution is to get all our people back to work, paying taxes and coming off welfare dependency. The best brains on both sides of the Atlantic have brought us to the state we’re in because there’s something fundamentally flawed in their thinking and in the policies they pursue. To continue with the present model and expect a different outcome in the future would seem to fit Einstein’s definition of “insanity”. So, unless we change our economic model the decline of Britain and America will continue... into shameful oblivion. And politicians will be complicit in this decline if they continue to follow the advice of public officials who are either thoroughly inept or thoroughly corrupt. This is not called The Great Betrayal for nothing. CLICK TO CONTINUE VIEWING THIS IS ECONOMICS Most macroeconomics of the past 30 years was spectacularly useless at best and positively harmful at worst. Professor Paul Krugman Princeton University Nobel laureate Mainstream economics is fundamentally flawed and we are all doomed. George Soros Billionaire Philanthropist The past 30 years of macroeconomics training at American and British universities were a costly waste of time. Professor Willem Buiter London School of Economics THIS IS EQUALOMICS The beautiful science of society after 317 years of evolution WORLD’S FASTEST GROWING ECONOMY S I N G A P O R E EQUALOMICS is based on the ideas, experiments, successes and failures of the world’s greatest economists and world leaders, including Adam Smith, Maynard Keynes and Milton Friedman... and Lee Kuan Yew, prime minister of Singapore for 31 years. Lee broke the rules of orthodox economics to lift Singapore to First World status in little more than a decade. Singapore now has almost full employment, 12-15% annual growth rate and a higher standard of living than ours. We can learn from the Singapore Experiment to achieve even more. The Singapore Experiment is not taught in Western schools. They teach the model that is fundamentally flawed and has given us three recessions in 30 years... since its adoption by Margaret Thatcher in 1979. The British Experiment tested a new inflation-busting model from Milton Friedman and it’s taken 30 years and three recessions for economists in Britain and America to see that it is “fundamentally flawed”... and for George Soros to offer $50 million for British and American universities to develop a new model. Prime Minister Lee Kuan Yew forced labour costs to rise 60% over the three years 1980/81/82. The higher wages meant higher demand, higher sales, higher production, higher employment, higher profit, higher savings and higher investment. The experiment was a shining success and in England one man noticed. He was already researching the economic failure of Britain and America where recessions were raging once again. After 23 years of research the secret of Singapore’s success has been found... George Soros can put his cheque book away. The two models produced widely differing results. In studying both for 23 years a set of principles emerged called EQUALOMICS. From these a new economic model emerged, the ENIGMA... so named because it works almost automatically to deliver precise control of inflation, a near-zero bank rate, full employment, higher wages, higher consumer demand, higher production, higher profit, higher savings and higher investment. And like the movements in a watch, or an internal combustion engine, the Enigma’s movements can be illustrated to explain how all future recessions will be averted, almost at a stroke. The last recession will be the last recession. For the disciples of Milton Friedman the best tidings of all: the Enigma makes a marriage between the works of Adam Smith, Maynard Keynes and Milton Friedman; and makes Karl Marx smile at the prospect of higher wages in the wake of full employment. So it’s a model for everyone, Left, Right and Centre. Whilst full employment, strongly rising wages and low inflation are unimaginable in Milton Friedman’s model the Enigma delivers all three with consummate ease by reinterpreting 317 years of established economic intellect. So, though the Enigma seems rather radical it’s really quite conventional. 1 The Enigma delivers substantial second pensions at 65... or sooner, giving everyone the option of taking early retirement to make way for youngsters in the dole queues waiting their turn to work. As technology frees us from the toil of labour and we become more productive we’ll never find work for everyone unless we all work less, for more... not least as planet Earth can’t tolerate endless demands for endless growth. 2 The Enigma can fund the building of one million new homes in America every year and 200,000 in Britain... for sale to families with no deposit and even no job. And they’d never be at risk of foreclosure. Homes are the source of most private wealth and social disparities will not diminish till every family owns one. Soon every family in Britain and America will own a home and the need for social housing will cease. 3 The Enigma can fund an extra 2 million teachers in America and 400,000 in Britain... seizing the opportunity to halve school class sizes at this moment in our history when skilled people are being made redundant by the effects of globalisation and budget deficits. As the state shrinks its responsibilities, wrong though it often is, the Enigma drives the private sector to expand, especially to raise standards in education. 4 As the number of teachers in primary and secondary education is doubled and class sizes are halved the demand for higher education will rise. But so will tax revenues from the hundreds of thousands of extra teachers in primary and secondary education, funded by the Enigma. So the Enigma enables spending on higher education to keep pace with rising demand whilst abolishing all student fees and loans... forever. 5 Plus DYNAMIC INFLATION CONTROL... the most powerful control system yet devised, ensuring uninterrupted private sector investment to expand consumer supplies and needing no central bank intervention in the process. Plus a DYNAMIC RECESSION AVERTER, a mechanism for countering every known cause of recession, needing no central bank intervention to stabilise consumer spending and safeguard investment and employment. 67 Plus non-tariff measures by which America and Britain can enforce a balanced trade upon every country with an endemic surplus, especially Germany, Japan and China... on the road to our own full employment. Yes we can. And this is not the half of it. To understand equalomics we must first understand our history, British and American history. The story begins in 1690 ….. in the English colony of Massachusetts and ends in 2007 in England, when the Northern Rock went bust. (CLICK) 1690 THE BATTLE OF QUEBEC In 1690 the English garrison in Massachusetts attacked the French fortress of Quebec. Their purpose was plunder... GOLD... the gold coins that were needed for the back-pay of English soldiers. The attack failed and the soldiers returned disgruntled. Some way of paying them had to be found. And it was: pieces of paper signed by the garrison commander, promising to exchange the pieces of paper for gold coins when the next supply ship from England arrived. These pieces of paper then came to be accepted by everyone in the local community in payment for the goods and services they exchanged with each other, everyone knowing that the pieces of paper were as good as gold when the next supply ship arrived. In the English colony of Massachusetts, paper money was born. Had the attack succeeded the soldiers might still have returned disgruntled, for the French also had problems expanding the supply of money to keep pace with the growing needs of trade. In Quebec they turned not to pieces of paper but to playing cards, which had the advantage of being more durable, bearing numbers, and with denominations to which different values could be attributed... Hearts and Diamonds had half the value of Clubs and Spades. Sixty-nine years after the failed attack on Quebec General Wolfe’s British army scaled the Heights of Abraham to defeat the French on the plains above. But for that British victory all North America might now speak French and the balance sheet of Citibank might list its assets in Hearts and Diamonds and Clubs and its profits in Spades. Meanwhile, on the West coast of Africa in 1690 cowry sea shells were used as an acceptable form of money and for one sea shell you could buy many bunches of bananas, or two slaves. (CLICK) 1815 WATERLOO “I care not what puppet is placed upon the throne of England to rule the Empire on which the sun never sets. The man who controls Britain’s money supply controls the British Empire, and I control the British money supply.” Nathan M Rothschild By 1820 Nathan Rothschild controlled the Bank of England and in 1844 it was granted a monopoly for printing England’s bank notes. His control of the Empire’s money supply was complete. (CLICK) THE FIRM Nathan M Rothschild died in 1836 and control of his family firm, N M Rothschild & Sons, passed to his son, as did control of the Bank of England. Eight years later the Bank was granted a monopoly for printing and distributing England’s bank notes. The Rothschild family started out as goldsmiths in Europe, a time when the nation states used gold and silver coins as money. But gold and silver coins were heavy to carry about and easily stolen if not locked away. So people deposited their coins with goldsmiths for safekeeping and accepted written receipts for their value. In Europe, as in Massachusetts, the paper receipts came to be accepted in the course of trade since they could be changed into ‘real money’ at any time and even carried a ‘promise’ to that effect. Experience then showed that demands to change the ‘paper promises’ into coins of precious metal required only a small fraction of the coins to be held in reserve... about ten per cent. That’s how our present ‘fractional reserve’ banking system began, which we’ll come to shortly. After the goldsmiths came the local banks, issuing paper money on an industrial scale to service the burgeoning needs of the Industrial Revolution. Finally, in 1867, Europe’s central banks agreed on a common metal for redeeming paper promises and settling debts between each other. It was GOLD. Then, just 19 years later... In 1886 GOLD was discovered in South Africa and the firm, N M Rothschild & Sons, set about gaining control of that too. They financed the Boer War to gain control of the gold and then set about fixing its daily price in London. They were the first notable ‘price fixers’. The firm, N M Rothschild & Sons, was nothing if not ambitious. With the British Empire’s gold under its control, along with its central bank, it was time to conquer America by another central bank under its control. But Congress wasn’t keen to have a central bank under anyone’s control. It had echoes of England and Congress saw no reason for a bank at the centre, controlling things. To fulfil their ambition the firm would have to show Congress a good reason. (CLICK) In 1907 THE FIRM sent $100 million of gold to America, to support an orchestrated scam. The banker J P Morgan (now JPMorgan Chase) then spread rumours that two banks were insolvent. As depositors rushed to withdraw their money the Rothschild gold arrived to stem the panic. It was proof that America needed a central bank to stem future panics. Three years passed between THE FIRM concocting a panic and calming it, but Congress still made no move towards creating a central bank. So, in 1910, THE FIRM conspired with two subservient bankers - J P Morgan and John D Rockefeller - to move things along. At a secret meeting they wrote a bill for Congress to approve. It proposed a privately owned central bank and gold as the metal of choice, as in Europe. To conceal their role in writing the bill it was presented to Congress as the Aldrich Bill, named after Senator Nelson Aldrich, the son-in-law of John D Rockefeller and a business associate of J P Morgan. But Congress still opposed the concept of central control - it was not the American way. It preferred local banks serving local communities, and since the discovery of silver many in Congress were against the adoption of gold. So the battle lines were drawn between those favouring a central bank and gold, and those favouring local banks and silver. (CLICK) Opposing the Aldrich Bill in Congress was a Christian firebrand and orator, William Jennings Bryan. He had fought the same battle on behalf of America’s local banks and silver in 1896 when he delivered one of the most famous speeches in American political history. Invoking Jesus and the Crucifixion, he ended with arms outstretched... “You shall not press down upon the brow of labour this crown of thorns. You shall not crucify mankind upon a cross of gold.” William Jennings Bryan, Courtesy of the Library of Congress Prints and Photographs Division (CLICK) Bryan’s speech had the necessary effect and the Aldrich Bill was defeated. But the debate in Congress revealed a way for THE FIRM to return with a modified bill. They renamed it the Federal Reserve Bill, and filled it with amendments to placate the objectors. In particular, a government-owned institution (the US Bureau of Engraving and Printing) would do all the printing, unlike England where the Bank of England printed whatever THE FIRM wanted. And the resulting Federal Reserve Notes would be for the federal government alone to borrow. This seemed to give the government, not the bankers, control of any expansion of the money supply, which could only occur by its own borrowing, which was not a concern in 1913. In view of the government’s effective control over all printing it seemed innocuous to suggest that the distribution of all new notes should be through a ‘Federal Reserve System’ that was owned by the bankers. This would ensure that their gold might be called upon to support the “promise to pay” inscribed on every note. Still unsure if the bill would pass scrutiny it was brought before Congress three days before Christmas when everyone’s thoughts would be focused on packing and returning home to be with family and friends for the festive season. The ploy worked and on 23 December 1913 the Federal Reserve Act was signed into law by President Woodrow Wilson. Perhaps he knew something was amiss for he had earlier written: (The New Freedom: A Call for the Emancipation of the Generous Energies of a People) (CLICK) Some of the biggest men in the United States, in the field of commerce and manufacture, are afraid of somebody, are afraid of something. They know that there is a power somewhere so organized, so subtle, so watchful, so interlocked, so pervasive, so complete, that they had better not speak above their breath when they speak in condemnation of it. President Woodrow Wilson, Courtesy of the Library of Congress Prints and Photographs Division (CLICK) THE POWER OF WHICH MEN WERE AFRAID, THAT WAS SO ORGANISED, SO SUBTLE, SO WATCHFUL, SO INTERLOCKED, SO PERVASIVE, AND SO COMPLETE WAS THE SUBVERSIVE POWER OF THE FIRM THAT HAD THE GOLD AND THE MONEY SUPPLY OF THE BRITISH EMPIRE UNDER ITS CONTROL AND WAS ALREADY EXERCISING THAT POWER IN AMERICA. (CLICK) “Give me control of the credit of a nation and I care not who makes the laws. The few who could understand the system will be so dependent on its favours that there will be no opposition from that class. But the great body of the people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without suspecting that the system is inimical to their interests.” (CLICK) Nathan Meyer Rothschild - 1912 President Wilson signed the Federal Reserve Act in 1913 on the eve of Christmas Eve. The following year, as the guns of August broke the silence of the Somme in France, America established not one but 12 Federal Reserve Banks across the country... to satisfy the American way of avoiding ‘central control’. But THE FIRM easily overcame this deliberate dispersal of control. The Federal Reserve System disperses control between 12 Federal Reserve Banks, but the Reserve Bank of New York has a 53% controlling share of the System and is in turn controlled by Citibank and JPMorgan Chase Co, which are controlled by the J P Morgan and Rockefeller families who were proxies for THE FIRM from the outset. Whenever the government needs to borrow money, the Federal Reserve System offers its bonds for sale in the financial markets. If there aren’t enough buyers the 12 banks buy them and fund their purchase with new FEDERAL RESERVE NOTES from the government-owned US Bureau of Engraving and Printing which they buy for the cost of putting ink on paper. So 12 banks – we’ll call them the Dirty Dozen – buy bonds ‘for nothing’ though the bonds cost the government an annual interest. They can then sell the bonds for cash at any time. That’s where the word RESERVE comes from, a future source of FREE money. (CLICK) THE SCAM The 12 Federal Reserve Banks were established in 1914 and it took two decades for Congress to see the ‘FEDERAL’ scam and set up the Federal Open Market Committee to oversee the scam and press the Dirty Dozen to repay the interest on the bonds they’d bought for nothing. They are now required to refund all the interest from the bonds they buy, but only after charging 6% for their initial investment. But their initial investment was made with free money from the government’s own printers, given to the government to pay its way, then returning as deposits into the nests of banks they own around the country as the government spends the money... and growing ten-fold by the fractional reserve multiplier. This 6% is the extra ‘pound of flesh’ it breaks their hearts to give up. The bonds not sold when offered must be bought by the Dirty Dozen with money printed for them. The government gets the new money as the Federal Reserve Act requires and the Dirty Dozen get the bonds. The money then returns as deposits into the thousands of banks they own and is multiplied ten-fold by the fractional reserve multiplier, and they STILL own the bonds which they can sell to money lenders in China and elsewhere, essentially recycling America’s trade deficits back to America as loans... with the government then paying interest to the new owners who don’t have to refund it. (CLICK) The Federal Open Market Committee was set up to stop a scam but its name reveals it’s role in another. Why sell bonds on the OPEN MARKET if the government can get free money from its printers as the Dirty Dozen did for 20 years before the committee was set up? And why did Hillary Clinton go to China in 2009 to beg them keep buying US bonds? It’s because the Dirty Dozen don’t want to buy bonds with free money and repay the interest they receive. They’ll do it once for a 6% interest and a 10-fold increase in their lending... and do it twice by selling the bonds they got for nothing and lending the proceeds for yet another 10-fold increase. For super-salesmen they then have Hillary Clinton and Barack Obama, two top lawyers, to speak of things they do not comprehend, as Nathan Rothschild predicted almost 100 years ago. (CLICK) THE BANKS WALTER WRISTON was chairman of Citibank. It was the world’s biggest bank until it crashed in 2007. He used to boast that banks need little capital if they are well managed. He was referring to the lending scam that had been developed by the goldsmiths centuries earlier and was then adopted by the banks and dignified by the term ‘fractional reserve banking’. Simply stated, money loaned by one bank is soon deposited into an account at another bank, and all but a fraction of that deposit can be loaned again, to be deposited into yet another account at yet another bank, where all but a fraction can be loaned again, and again, and again, and again... It’s a merry-go-round, enabling the banks to make loans ten times the value of what customers deposit on the merry-go-round. But the merry-go-round has a flaw: it must keep turning. This means the banks must keep lending to each other. Overnight, some will have surplus balances with each other and some will have deficits... broadly totalling the same. If the banks in surplus lend their balances to the banks in deficit the merry-go-round keeps turning and, properly managed, the inter-bank positions should unwind within days. But if a bank runs up huge losses due to imprudent loans it might take too long to unwind its overnight positions with other banks, confidence saps out of the system, lending slows down... and then stops. When the merry-go-round stops the system is imperilled. At times like these what wouldn’t the banks give for a printing press of their own, outside Government control, to end their need to borrow from other banks and foreign money lenders? (CLICK) In 1946 England’s politicians got their hands on a printing press by nationalising Rothschild’s Bank of England, but then did nothing with it. So what was the point? The Bank of England acts as ‘lender of last resort’ instead of ‘lender of first resort’. This compels the Government to borrow from foreign money lenders instead of putting ink on paper as the garrison commander in Massachusetts did in 1690. (CLICK) TO SUMMARISE: The banks lend trillions that they are able to create in a merry-go-round amongst themselves. They then borrow billions from foreign money lenders to turn into even more trillions on the merry-go-round amongst themselves. Umpteen trillions are then loaned to hard working families and secured on their homes. Now here’s the rub: when the banks have to repay the billions they borrowed abroad they take out new loans to repay the old loans. But if new loans aren’t available because the foreign money lenders have lost confidence, the merry-go-round of banks becomes insolvent. All then rush to foreclose on homes and loans to get their money back. In 2009 almost a million American families were ruined by losing their homes, along with 56,000 in Britain. And Citibank was only one bank amongst many in this sewer of capitalism that swept the world into a sea of recession. The banks were then saved by a printing press... one in America and one in England. The Great Recession was due to banks bringing money into America from abroad because it suited them. It was the same in Britain, but it was also due to a printing press standing idle when the government needed money but roaring into life when the banks needed it. In 1690 paper money did the rounds in Massachusetts, playing cards did it in Quebec, and sea shells in West Africa. In 2007 Citibank pushed plastic cards and personal loans onto its customers, to the tune of trillions. Little capital was needed, as Walter Wriston boasted, just good management of a merry-go-round to keep it turning. But when the merry-go-round stopped they were found to be crooks. We can be saved from this sewer of capitalism next time if we learn the lesson this time... but it will take another page to tell. (CLICK) THERE IS ONLY ONE CAPITAL, HUMAN CAPITAL. The rest is paper, plastic, playing cards or sea shells. All money is created. We use it to unlock our human capital, as receipts for our labour which we use for the things we buy from the labour of others... exchanging our labour for their labour at rates that differ only according to our skills. And we are happy to be paid in pieces of paper. So we can let middlemen create the money we need and borrow it at a premium, or we can create it ourselves and pay no premium. America is now controlled by THE FIRM AND ITS ACCOMPLICES so there’s nowhere for her to turn. But since 1946 England has been free... the Bank of England has been free. And from that freedom can flow the necessary supply of new money for Britain, for America and for the entire free world... with the Enigma keeping inflation fully under control. How much money we’ll need, not for the profit of middlemen but for the wages of working men is a complex equation from Adam Smith, so difficult to comprehend that even economists struggle with it, but let’s try. (CLICK) “Those who live by wages cannot increase but in proportion to the increase of funds which are destined for the payment of wages” Adam Smith EXAMPLE To take 15 million workers off the dole in America at a cost of $40,000 each would require about $600 billion for their first year’s wages. That’s ink on paper remember, not gold from South Africa. But then something wonderful happens... CLICK THE GOVERNMENT GETS ALL THE MONEY BACK ON ANOTHER MERRY-GO-ROUND KNOWN AS THE KAHN-KEYNES MULTIPLIER The multiplier was discovered in 1936 by Richard Kahn, the favourite pupil of John Maynard Keynes at Cambridge University. Kahn discovered it and Keynes wove it into his General Theory for eliminating unemployment. After the Rothschild Roundabout it is the most powerful force in economics, whose effect can be explained as follows. As a pebble is thrown into a pond and creates ripples around it, so all NEW public spending that is based on NEW money instead of taxes creates a ripple of NEW employment and taxable incomes followed by further ripples of NEW employment and taxable incomes, then still more ripples of NEW employment and taxable incomes... and so on until all that was borrowed in the beginning is recovered by extra employment and taxes and only then do the ripples cease. According to Kahn and Keynes for every $100 billion borrowed by the government to create jobs the process of recovery by the multiplier will be approximately as follows: COLLECT TAXES of every kind, including a payroll tax, from the new workers of about 40% ($40BILLION) leaving them $60billion to spend according to their needs. COLLECT STILL MORE TAXES from those who receive the $60billion that ripples out from the above, which becomes added income for others in the surrounding community who also pay taxes of about 40% ($24BILLION) which leaves about $36billion to ripple out as added income for still others in the surrounding community. COLLECT EVEN MORE TAXES from all those who receive the $36billion, also at 40%, ($14.4BILLION) which leaves... So it continues through ripples of added spending by some becoming added income for others and added taxes for the state, till all that was borrowed in the beginning comes back. The multiplier is arithmetically irrefutable in its FREE job-creating effect. But it is subject to a caveat which can cause it to fail: the PIGOU PARADIGM. (CLICK) THE PIGOU PARADIGM Professor Arthur Pigou was called out of retirement in November 1949 to deliver two lectures on the Keynesian model to students at Cambridge University. He explained that extra public spending – of new money not tax money - would eliminate unemployment by the effect of the multiplier... but only in a closed economy where the rounds of new spending and taxation are confined within the domestic economy and cannot dissipate abroad. But ours is not a closed economy, it is open to the beneficial flows of foreign trade where the sterling exchange rate and other factors can cause endemic trade deficits. In these circumstances, explained Pigou, “S0METHING ELSE IS NEEDED” for the multiplier to deliver full employment. It seemed that the Keynesian model was incomplete. Little did Professor Pigou know that exactly 30 years after his two lectures an intellectual fraudster by the name of Milton Friedman would develop an economic model that would curtail the money growth, to moderate wage growth... the opposite of the wage growth in Singapore that was imposed by Lee Kuan Yew in 1980/81/82. While he was imposing substantial wage growth in Singapore, Margaret Thatcher was imposing the opposite in Britain. In Singapore’s case the multiplier had considerably more to bring back in the form of consumer spending, production, employment, taxes, savings and investment; in Britain’s case there was considerably less for the multiplier to bring back, so Margaret Thatcher had to set about selling Britain’s assets to pay the bills... as would a delinquent child with its inheritance. The problem posed by Professor Pigou in 1949 was solved in 2007 as the Northern Rock went bust... the SOMETHING ELSE that was needed was found. It means that full employment is no longer a possibility... it’s an absolute certainty. There is however yet another impediment in the way... (CLICK) THE DESTRUCTIVE MULTIPLIER THE KAHN-KEYNES MULTIPLIER has two moods, constructive and destructive. The destructive multiplier is unleashed by government spending cuts. Incomes then fall, businesses fail, workers lose their jobs and tax collections plummet. Invariably, this results from the dumb advice of Treasury officials with a handbag mentality. In 1979 Margaret Thatcher (a barrister) became Britain’s prime minister and she appointed Geoffrey Howe (a barrister) as her chancellor of the Exchequer, in charge of Britain’s finances. For his first Budget speech in 1980 Geoffrey was fed a line of rhetoric by his Treasury minder, Sir Anthony Rawlinson, which made a great impression: “Finance must determine expenditure, not expenditure finance”. Conservative MPs cheered loudly, all revealing their handbag mentalities. But the finances of a state are not the same as the finances of a handbag. As the state spends more it collects more and is able to spend more and then collects even more. That’s the Kahn-Keynes Multiplier. If the people are near to being fully employed Rawlinson’s line of rhetoric will do, but on behalf of those who remain unemployed we must say: “Expenditure must determine finance, not finance expenditure.” Geoffrey Howe studied Law so he was not qualified to manage Britain’s finances. George Osborne studied History and is equally unqualified. Like Howe, he’s in the hands of Treasury minders with handbag mentalities. As he goes about his cutting, firms will fail, jobs will be lost, tax revenues will falter, benefit payments will rise, and a balanced Budget will remain out of reach. It’s like a dog chasing its tail and never catching it... with a real risk of recession resulting from this hapless exercise. Moreover, we’re only chasing our tail to assure foreign money lenders of our credit worthiness, so that a higher interest won’t be demanded for lending us the money we sent them to buy their goods, that put us out of work, that reduced our tax revenues, that made us poor and more in debt. It’s the economics of the madhouse. The message from this madhouse is that we are terminally doomed: climate change insists we spend trillions more but handbag mentalities insist we spend billions less. Meanwhile, whatever we spend costs a growing annual interest when it should only be the cost of ink on paper from the central bank... since there’s only one capital, human capital, the rest being paper, plastic, playing cards or sea shells. (CLICK) THE THIRD WORLD WAR The Third World War is now well and truly underway. This is not a war where lives are destroyed by bombs and bullets. This is a war where lives are destroyed by unemployment, and poverty, and hunger, and hardship. This is a trade war, where it suits 12 Federal Reserve Banks – the Dirty Dozen - for America to incur mighty trade deficits, followed by mighty budget deficits and mighty borrowing... so that they can get free money according to the 1913 Federal Reserve Act and multiply it not once but twice; not 10-fold but 20-fold. This is a war where America’s enemy operates from inside the New York Federal Reserve, a sinister mob with the power to get its chief, Tim Geithner, appointed US Treasury Secretary - taking over from Hank Paulson who was previously Chairman and CEO at Goldman Sachs, an investment bank which more than once has settled out of court to escape fraud charges. Mafia bosses couldn’t have organised things better... controlling America’s supply of money, getting it for nothing, and now controlling the Treasury that authorises the printing and borrowing of it. And America’s politicians are complicit in this sewer of capitalism. Hank Paulson was appointed to head the Treasury by President George W Bush, and Tim Geithner was appointed by President Barack Obama. Both political parties are sleeping with America’s enemy... the money-lending mob from New York. Speaking of enemies, when Hank Paulson was with Goldman Sachs he visited China some 75 times. Why? Because China was sitting on hundreds of billions of US dollars, obtained by putting US citizens out of work by China growing its trade surpluses. Hank wanted to bring those billions back home... essential if America was to get back to full employment. But Hank wasn’t bringing the billions back home to buy US goods made by his fellow Americans. Hank was on a selling-spree, selling US assets to communist China. Government bonds made billions but the mob wanted billions more. So they bundled together tens of thousands of prime and sub-prime mortgage deeds, got all the bundles certified ‘Triple-A’ regardless of their quality and then duped foreigners into buying them as ‘securitised’ investments, much better than bonds, which were just pieces of paper with ink on. Hank built good relations with China’s elite during his 75 visits, came back with billions, made $750 million for himself, then got posted to the US Treasury where he could keep an eye on things for the money-lending mob that brought America down. In due course he handed the baton to his chum, Tim Geithner, former head of the New York mob. (CLICK) THE MONEY SUPPLY It is indisputable, that unemployment can be ended by spending sufficient new money. Adam Smith explained it in these immortal words: “Those who live by wages cannot increase but in proportion to the increase of funds which are destined for the payment of wages”. SOVEREIGN DEBT It is indisputable, that any new money that is spent to create jobs will NOT be recovered by the multiplier in an ‘open economy’ to the extent that an adverse trade carries any money away to create jobs and tax revenues abroad, leaving the domestic economy to carry the baby called SOVEREIGN DEBT. INFLATION It is indisputable, that if the supply of money expands too quickly it might end in rising prices but it might also end in falling prices. Inflation arrives when wages (consumer demand) rise faster than investment in consumer supplies, and deflation arrives the other way round. What matters is not the total spent but where it is spent. By a simple mechanism the Enigma manages supply and demand simultaneously to deliver dynamic control of both. It curbs unemployment and deflation by high and stable consumer demand and curbs inflation by the appropriate investment in consumer supplies... and the mechanism is breathtakingly simple. TRADE SURPLUSES At the Bretton Woods Conference in 1944 Keynes proposed financial measures to compel the elimination of all trade surpluses. But in 1944 America had the greatest trade surplus and had most to lose from Keynes’ proposals, so he was overruled. America is now paying the price for overruling Keynes... with trade and budget deficits of heroic proportions. THE PIGOU PARADIGM We need new measures that can’t be overruled by those who now have most to lose - Germany, Japan and China... and Singapore too. The Enigma has these measures, non-tariff measures that can be directed from London and Washington and can’t be overruled. They will protect the borders of every country from adverse trade flows (the Pigou Paradigm) so that full employment and high wages permeate every economy, as classical theory predicts. THE THIRD WORLD WAR will be won by the five great English-speaking nations enforcing a balanced trade on every nation, thereby eliminating the need for sovereign debt. All that will then remain to threaten global peace and prosperity will be the growing military might of a few dictatorships around the world... against which the only remedy will be the military might of the free world. (CLICK) £40 BILLION MORE FOR DEFENCE AND £40 BILLION OFF THE BUDGET DEFICIT ARC ROYAL America, Britain, Canada, Australia and New Zealand will now be able to double their spending on military personnel and equipment and reduce their budget deficits by a similar amount. The ‘elegant intellect’ that underpins this is, of course, an enigma. Once explained it is stunningly obvious, and it also explains the ‘fundamental flaw’ in our present economic model that drives us all into ever increasing debt even as we struggle to balance our budgets by spending less. Our five countries now have 30 million people not working and not paying taxes. And millions of students leave our universities every year with little prospect of finding suitable employment. A deficit in jobs is what underpins our deficits in tax revenues and governments will never solve the problem by scrapping jobs in the public sector. Nor will they solve it by scrapping our means of defence. Scrapping the Arc Royal and reducing Britain’s armed forces by tens of thousands were acts of treachery by politicians with handbag mentalities. And yet, they serve us well, for there is a tide in the affairs of men which must be taken at the flood. On such a full sea are we now afloat and if the voyage of our young men and women into adult life is not to be bound in shallows and in miseries we must take the current towards new intellect or lose our ventures. Now the current flows, from an economic model that is fundamentally flawed towards one that’s taken 23 years to develop. (CLICK) 400,000 EXTRA UK TEACHERS TWO MILLION MORE IN THE US NO-DEPOSIT MORTGAGES CHILD BENEFIT RESTORED DYNAMIC INFLATION CONTROL PLUS SECOND PENSIONS AT 65 OR SOONER PLUS A REDUCTION IN THE BUDGET DEFICIT OF AT LEAST £40 BILLION* * Intellect for reducing the deficit by £40 billion will only be released after the Treasury agrees our terms for exploiting the intellect. RECESSION PROOF The Enigma averts recessions with ease. As unemployment recedes an extra $3 trillion will be generated annually by the great English-speaking nations and they’ll be able to spend at least $20 trillion over 20 years to halt climate change. Wages will rise rapidly as unemployment falls but inflation will be held in check by a DYNAMIC control mechanism with a near-zero bank rate. NO FEES, NO DEBT, £50 PER WEEK MAINTENANCE AND A £30,000 PRIZE TO EVERY STUDENT ON GRADUATINGPLUS the Arc Royal and its Harrier jets saved, and four new carriers built. PLUS £16 BILLION FOR LOCAL AUTHORITY SERVICES PLUS Defence spending doubled. Spectacular performance from two models... and they’re both British. PLUS Police numbers doubled. PLUS NEAR ZERO BANK RATE forever Take it all in before you CLICK THE FIRST ENIGMA PRESENTATION What would it be worth to Britain and America if the Enigma’s new intellect made it possible to avert all future recessions? Worth the billions in bonuses paid to bankers? “Worth more than all the inventions of Microsoft” is how the chairman of a British insurance company replied. What about more effective control of inflation despite a near-zero, bank rate? What’s a stable, shock-proof, near-zero bank rate worth to every business? What about second pensions enabling everyone to retire at 65, or sooner? What about no-deposit home loans for everyone, including the unemployed? What about £40 billion more for Britain and $300 billion more for America to nurture children from nursery to university and then rewarding their success? But what’s the point of it all if we can’t save our planet from climate change? THE FIRST ENIGMA PRESENTATION covers only the above. Not included is the intellect for eliminating sovereign debts, trade and budget deficits, expanding public services, and halting the inexorable rise in global populations. The intellect for these will be released in subsequent presentations. (CLICK) NO STUDENT FEES, NO DEBT, £50 ($75) PW MAINTENANCE AND A £30,000 ($45,000) PRIZE TO EVERY STUDENT ON GRADUATING GENEROUS FINANCIAL AID FOR EVERY CHILD 400,000 EXTRA TEACHERS IN THE UK AND TWO MILLION MORE IN THE USA NO-DEPOSIT MORTGAGES FOR ALL INCLUDING THE UNEMPLOYED SECOND PENSIONS AT 65 OR SOONER DYNAMIC RECESSION PREVENTION WITHOUT INTERVENTION OR FUNDING BY CENTRAL BANKS DYNAMIC INFLATION CONTROL NEAR ZERO BANK RATE There is a tide in the affairs of men, which, taken at the flood, leads on to fortune. Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat and we must take the current when it serves or lose our ventures. William Shakespeare THE GREATEST BETRAYAL This trailer has been sent on CD to 330 Labour, Lib-Dem and other MPs (enough to bring down the government) inviting them to presentations in London on dates of their own choosing, in the hope that new intellect will change minds. The greatest betrayal will be a decision by any MP not to attend. Students, teachers, parents, pensioners and anyone concerned about climate change can check the decision of their MP at www.peoplepoweruk.org/mps.html/www.peoplepoweruk.org/mps.html/ Presentations are also offered to universities, colleges, employers, unions and local authorities throughout Britain. © Peoplepower Foundation, 5 Trinder House, Free Street, SO32 1EE Presentations colin@peoplepoweruk.org Employment melissa@peoplepoweruk.org Media lee@peoplepoweruk.org T +44 (0)1923 820587colin@peoplepoweruk.orgmelissa@peoplepoweruk.orglee@peoplepoweruk.org