Changing World Order

This will make you very angry.

http://www.marketoracle.co.uk/Article23789.html

...The global economic crisis, really having only just begun, will in years to come spiral into a Great Global Debt Depression, plunging the entire world into the greatest economic catastrophe ever known. This will be the ultimate catalyst, the most pervasive crisis, and most commanding ‘opportunity’ to implement the formation of a global government. In 1988, the Economist ran an article entitled, “Get Ready for the Phoenix,” in which it postulated that by the year 2018, there will be a global currency, which it termed the “Phoenix.” The mention of a phoenix is not to go unnoticed, as symbolically, a phoenix dies and from its ashes a new phoenix emerges. It is the symbol of destruction as a form of creation; the ultimate incarnation of crisis as an opportunity. The article in the Economist acknowledged this meaning, with the idea that economic and monetary collapse will likely lead to the formation of a global currency, stating that, “several more big exchange-rate upsets, a few more stockmarket crashes and probably a slump or two will be needed before politicians are willing to face squarely up to that choice.” Further:

As time passes, the damage caused by currency instability is gradually going to mount; and the very trends that will make it mount are making the utopia of monetary union feasible... The phoenix would probably start as a cocktail of national currencies, just as the Special Drawing Right is today. In time, though, its value against national currencies would cease to matter, because people would choose it for its convenience and the stability of its purchasing power...

...In May of 2010, Dominique Strauss-Kahn, Managing Director of the IMF, stated that, “crisis is an opportunity,” and called for “a new global currency issued by a global central bank, with robust governance and institutional features,” and that the “global central bank could also serve as a lender of last resort.”...

In 2000, Paul Volcker, former Chairman of the Federal Reserve, stated that, “if we are to have a truly global economy, a single world currency makes sense,” and a European Central Bank executive stated that, “we might one day have a single world currency,” in “a step towards the ideal situation of a fully integrated world.”[4] In 1998, Jeffrey Garten, , former Undersecretary of Commerce for International Trade in the Clinton administration, former Managing Director at Lehman Brothers and member of the Council on Foreign Relations, wrote an article for the New York Times in which he called for the creation of a “global Fed” and said that, “the world needs an institution that has a hand on the economic rudder when the seas become stormy. It needs a global central bank.”...

If you think the SDRs are not real, look at the bottom-right of the following page for the Central Bank of the Philippines where they publish their SDR buying rate:

http://www.bsp.gov.ph/statistics/sdds/exchrate.htm

...Some of the world’s largest SWFs are those of the United Arab Emirates, Saudi Arabia, Norway, China, South Korea, Kuwait, and Russia. As the “recovery” edges into the oblivion of the Great Global Debt Depression, SWFs are buying up American infrastructure, including:

A toll highway in Indiana. The Chicago Skyway. A stretch of highway in Florida. Parking meters in Nashville, Pittsburgh, Los Angeles, and other cities. A port in Virginia. And a whole bevy of Californian public infrastructure projects, all either already leased or set to be leased for fifty or seventy-five years or more in exchange for one-off lump sum payments of a few billion bucks at best, usually just to help patch a hole or two in a single budget year.

America is quite literally for sale, at rock-bottom prices, and the buyers increasingly are the very people who scored big in the oil bubble. Thanks to Goldman Sachs and Morgan Stanley and the other investment banks that artificially jacked up the price of gasoline over the course of the last decade, Americans delivered a lot of their excess cash into the coffers of sovereign wealth funds like the Qatar Investment Authority, the Libyan Investment Authority, Saudi Arabia's SAMA Foreign Holdings, and the UAE's Abu Dhabi Investment Authority...

The West is To Go Into Perpetual Debt Slavery, Austerity, Inflation

...It essentially creates a condition in which a nation is permanently indebted, and the cumulative debt increases annually. This occurs due to a nation struggling to pay its annual interest on the debt, and so it seeks the ‘assistance’ of the IMF and international creditors to provide a quick loan to the country to pay the interest. The IMF provides a loan, which is instantly redirected to pay the creditors, and the loan amount that the IMF provided is then added to the overall national debt. Thus, rising interest rates will increase the annual interest payments, because the debt itself has enlarged. The nation will need the ‘assistance’ of another loan – more debt – to pay interest on its overall debt, which then continues to rise. This is how the nations of the ‘Third World’ became so indebted: accumulating more debt to pay interest on old debt, which then creates new debt, requiring more debt to pay the interest on the accumulated debt, and on and on and on. Meanwhile, the ‘structural adjustment programs’ (SAPs) were implemented under the ‘conditions’ of IMF and World Bank loans and ‘assistance’ to deconstruct the social foundations of a nation, eliminate the middle class and exacerbate poverty, presumably in order to help reduce the deficit. This now appears to be the fate of the ‘First World’ industrialized nations...

The BIS gold swap applies:

http://www.sprott.com/Docs/InvestorsDigest/2010/MPLID_082710_pg283Emb.pdf

The IMF Can Audit Our Fed, but We Are Not Allowed!

...As a further indication of the coming ‘third world’ status of America, in June of 2008, in the midst of the financial crisis, the United States Federal Reserve was audited by the IMF for the first time in history. As part of the investigation, “the Fed, the Securities and Exchange Commission (SEC), the major investment banks, mortgage banks and hedge funds will be asked to hand over confidential documents to the IMF team.”...

The only possible way to stop the NWO is for a significant minority of the people to move to private gold and silver money systems, and to stop using debt, insurance, futures contracts, which are the Major Frauds that enable creeping socialism:

http://www.marketoracle.co.uk/Article21650.html

Save before you spend! Store to prepare for acts of nature, don't paper store in insurance. Ditto depend on promises of what will happen in the future (contracts). All of those frauds result in mathematical failure and socialism.

Of course the people won't understand what I wrote and of course the NWO will come. And after NWO kills most of the people, it will also die, and then a new smaller private wave will rise from the ashes.

Here is another good article about the path forward:

http://www.marketoracle.co.uk/Article23855.html

Many Crashes to Cross ("but I can't seem to find my way"):

https://www.youtube.com/watch?v=CktlPIlsBdw


It depends what we are talking about when we say "collapse". Was 2008 the "collapse"?

If we are talking about the death of the nation-state system of the world, I believe the change of the global world order from a public wave (increasing governance since birth of the USA circa 1689) to a private wave, will take 309 years from 1998 to reach its final apex (least governance):

https://goldwetrust.forumotion.com/economics-f4/changing-world-order-t32-105.htm#3818

Steve is correct that reduction in the EROEI is pushing the indebted sector towards default faster. The declining EROEI is simultaneously a cause of the peak in debt and an accumulated effect of decades of debt (and the socialism centralization enabled by massive debt societies) causing misallocation of energy investment priorities.

Basically what we have is a world built on credit (borrowing from future to deny the realities of the present), thus we have a world that has some priorities wrong. Which priorities? We don't know. That is the thing about excessive debt and central decision making, it obfuscates the optimum annealing.

We simply don't know what energy alternatives might exist, because the artificially low prices of some forms of energy has been obfuscating the energy that could be discovered (lack of investment because price per BTU is too low to justify investing in R&D). Ditto the effects of centralized control (90+% of all oil is nationalized and or centrally controlled by majors). There are lots of ideas about what might replace declining EROEI far into the future, e.g. natural gas, nuclear, nanotechnology, etc.. But we simply can't see it (yet), because the investment wasn't done already.

But as the crash moves forward, investment is going to morph.

Steve needs to remember that energy won't suddenly stop flowing, it will decline at some percentage, and then investment will respond in kind. As Rick Rule says, "the best cure for high prices [scarcity], are high prices":

https://goldwetrust.forumotion.com/economics-f4/peak-oil-nonsense-t102-30.htm#3809

I think it is crucial that you Steve understand that it is entirely possible for the world to let the national currencies go into perpetual QE (halving of interest rates) because there is nothing for the world to run to other than gold:

https://goldwetrust.forumotion.com/economics-f4/inflation-or-deflation-t9-465.htm#3838

And this is what will enable the NWO currency, because the world will need something to run to in order to escape the hell of perpetual QE:

https://goldwetrust.forumotion.com/economics-f4/stocks-vs-precious-metals-vs-bonds-vs-real-estate-t11-15.htm#3849

==========someone has been reading my writings============
http://www.marketoracle.co.uk/Article23885.html#comment95954

Shelby wrote:re: "Perpetual deflation is hyperinflation"

dincer, nice to see you've been reading me:

http://www.marketoracle.co.uk/Article23162.html

But let me qualify your statement to make it more accurate and understood as follows.

Perpetual deflation is inflation (potentially hyper) relative to GOLD OR SDRs (but can not be hyperinflation relative to general commodities):

https://goldwetrust.forumotion.com/economics-f4/changing-world-order-t32-120.htm#3850

=======================
http://www.marketoracle.co.uk/Article23629.html#comment95970

Shelby wrote:re: banks won't lose if we default

I had posted on this before:

http://www.marketoracle.co.uk/Article23558.html#comment95675

If we default, we implode our economy, we have no choice but to bail out the banks. Our financial systems are already intertwined with the cancer. There is no way to extricate the cancer without imploding the economy and starving people. That is why instead there will be a slow decline into a NWO:

http://www.marketoracle.co.uk/Article23862.html#comment95969

I saw your email around new years, and I saved it and was planning to reply to you, after I finished a new project. The project took longer than I expected, I was working about 12 up to 18 hours per day, nearly nonstop since Dec. 17.

I have been thinking of you, given the overthrow of the governments by the people in Egypt and Tunisia, and this was caused by Wikileaks, Twitter, the internet, and cell phones, where the people have become informed about the corruption in their governments.

But the US government is actually leaking this information on purpose, even though they pretend to be angry about it, it is a lie.

The possible plan is to bring North Africa and Middle East into one economic and political region or union (like the European Union or the coming Asian Union), as one of the 10 Kings in Revelation in Bible. Here is an article with a map of the plan, and you can see that Ethiopia is not to be included in that union:

http://www.marketoracle.co.uk/Article26106.html

Interestingly, Somalia is targetted to be in that political union.

Ah that is because this will be muslim union, and Ethiopia is Christian!

Click the images for articles.



#1 is Israel surrounded by #5.

The globalists are trying to frame this transition forward as one of corrupt national leaders and they want to appeal to the sense of justice that Muslims feel in their religion. In this way, there can be a transfer of power from the nation-state to the regional false idol which the globalists plan to install for the people to express their emotions. This false idol will appeal to their sense of justice and religion, and it will unite the people across the nations to overthrow their corrupt national leaders.

Jason, your brother Terbolizard appears to me to be an extremely talented creative person (based on coin designs he did, the social network pages he did creating multiple personalities for himself, the site he programmed that as chaotic but genuis, etc), even more so than me. He only needs perhaps a little seed of guidance (and then get out of the way) on where to direct his creativity for the most return, as all creative people tend to be unbounded (often results or appears to be like not focused, but that is the nature of creativity).

My idea is could there be a coin design, the one coin design that appealed to people so much, that you could mass produce it (maybe not at your mint, but that is okay). I am thinking Terbolizard could develop a design which appeal to HONESTY and COMMON LOVE OF ALL MEN TO TRUTH, that somehow showed that Allah and Moses were both honest men, or somehow appealed to the people of the world to fight for the common enemy who is trying to use our religions to trick us. I am thinking there could be a coin that changed the world.

Ideas are swirling in my head. Maybe an Eagle on the top of a granite cliff looking down on different races exchanging glittering metal with handshakes, with the light of the Muslim crescent moon illuminating the scene from above. That way we don't actually put Jesus's image or Allah's image on it, so we don't use images of deities in vain.

Maybe someone else understands better than me the relationship with Koran and Bible, I know they mention each other.

I am just thinking that my God would not forsake the people who call themselves by another name.

Time to bury the hatchet, and use HONEST WEIGHTS & MEASURES, so we will not be fooled.

I realize in terms of marketing, maybe you can not sell to the muslim abroad, but maybe there is a coin design which appeals to the westerners' desire to make a statement of truth about these matters, which if became popular would signal to the muslim's abroad that we are have a common goal. So that these globalists can't breed regions that hate each other.

http://blogs.reuters.com/africanews/2010/07/07/nile-river-row-could-it-turn-violent/

The border of that Muslim union coming into view.

2 min cartoon will break your heart:

https://www.youtube.com/watch?v=n7Fzm1hEiDQ

https://www.youtube.com/watch?v=x-CrNlilZho

Pushing the world into cities:

http://splicd.com/x-CrNlilZho/4440/8370

Why the collapse will be exponential, not power law function

I reasonably sure he is just agreeing that people can't change at an exponential rate, which was my point. That is why I said "sell" at $21 silver in March 2008. It wasn't anything against the argument for silver nor against Jason, it was simply a recognition of human nature.

And this is the problem with the scenarios that expect a quick collapse, afaics they fail to take into account the human nature that can not change that fast. And we are not yet at the point where they must change because the natural systems have collapsed. Quick collapses come at the very end when the natural systems are complete hollow. We still have a hugely productive developing world which is holding up the western world. When the developing world completely breaks loose from these chains, that is when the west will collapse. We are seeing the early stages of this is Middle East, but we've got a long way to go. China has to crash and burn before we can get all the way there. The Chinese people have to overthrow their communist party. That is going to take a while.

Silver is an exponential growth market, not power law (accelerating rate of percentage increase) as is Google Android smart cell phones market. Why? Because people can accelerate the rate that they accept that new technology. There are no vested interest barriers standing in the way.

================
http://silverstockreport.com/reports/silverstockreport40.htm

Hommel wrote:

My 2004-2009 price predictions for gold and silver:
2004: $595/oz. gold, 50:1 ratio = $12/oz. silver
2005: $1011/oz. gold, 30:1 ratio = $34/oz. silver
2006: $1719/oz. gold, 10:1 ratio = $172/oz. silver
2007: $2923/oz. gold, 5:1 ratio = $ 585/oz. silver
2008: $4,969/oz. gold, 1:1 ratio = $4969/oz. silver
2009: $8448/oz. gold, 5:1 ratio = $1698/oz. silver
2010+: infinity dollars/oz. gold, infinity dollars/oz. silver.

He got the following correct, I guess he was just too bullish on how quickly people would get their heads out of the sand:

Long before 1% of U.S. paper dollars tries to buy gold, gold will be going up well over $1000/oz., and silver will be headed up over $50/oz.

>
> I'm with you, I think the depopulation plan is intended to span several
> decades. A mass die off would not be desired by TPTB for several reasons.
>
> Ways to depopulate also include decreasing fertility.

Ah your area of speciality raises a perspective that I am of course aware of, but did not think to raise in this context. Excellent point.

> For instance, the
> Gates foundation is supporting research for vaccines to be dispersed
> through nanotechnology dropped en masse from planes and Gates has publicly
> stated that he believes vaccines can reduce the global population (which
> would normally be counterintuitive, right?).

The logic of which I am sure you are aware, is that if women have less fear of losing children to disease, they will delay childbearing, and they become materialistic and self-centered and then the population shrinks, which is exactly what is happpening to most of Europe.

> One of the Rockefeller
> foundations was caught (perhaps 30 years ago) giving vaccines in Latin
> America ONLY to women of child bearing age which raised some suspicion in
> those communities. From what I recall, when the vaccines were tested they
> were found to contain human chorionic gonadotropic hormone which was being
> introduced in the vaccine with the intention of creating antibodies to a
> hormone important during embryonic development (particularly) and fetal
> gestation thus resulting in miscarriages.

Yeah I read about that again recently. They learned the natives are not so stupid. They need a much more insideous method. Thanks for mentioning Bill Gates, I had been commenting about him too recently.

>
> Also, I feel certain that depopulation is also going to be accomplished by
> dramatically lowering life expectancy through GMOs, air and water
> contamination (best example of the latter is the movie Gasland showing
> widespread water contamination in the U.S. with natural gas and poisonous
> chemicals that makes locals very ill and will drive populations out of
> rural areas), engineered pathogens, chemtrail poisoning, and reduced
> health care for middle aged and elderly (already started in U.S. with
> brand new policy on organ donation giving preference to age 30 and under
> rather than need and wait times, and reportedly being considered as policy
> for other health conditions such as cancer).

Ah so the Gulf oil accident was a test run? Remember they did a test run on Twin Towers several years before 9-11.

I don't want to say I know any of this for sure, I don't want to be delusional about correlation.

But again, I say they can't succeed with any of those if they don't have a mentally broken population. So that is why they will focus on mass media and dumbing the population.

I think they hope to keep the wise rebels to less than a few % of the population, so they can kill us during this next few years. They need to get rid of us, so then they can proceed with dumbing down the rest of the population.

Do you see why I am working on sshhout.com now? And Copute.com too to target the programmers and raise their awareness and power.

> Just crashing economies
> dramatically lowers life expectancy. I don't remember the exact numbers
> cited in Crossing The Rubicon but I know that a very dramatic drop in life
> expectancy took place when Russia's economy collapsed on the order of 20
> to 25 years lower for men (down to the mid 50s from the upper 70s). The
> current life expectancy for an American Lakota (Sioux) male right now in
> the U.S. is 45 or 46.

Another excellent point. Breaking down the humans and introducing inferior demographics over decades.

Yeah I see the big picture now, thanks.

> You are spot on about the Gulf oil spill, that definitely has all the
> fingerprints of an engineered environmental catastrophe to depopulate.
> When you get a chance you might want to watch the Jesse Ventura Conspiracy
> Theory video on the Gulf. Ventura produced several excellent mini
> documentaries on a range of subjects and many or most of his television
> programs were placed on youtube after reports emerged of DVR services
> remotely erasing episodes from private homes.

Yes I watched his early series, last being the Manchurian Candidate. Didn't keep up lately. Didn't know he did one on the Gulf.

http://www.usagold.com/goldtrail/archives/another1.html
http://www.gold-eagle.com/research/redbaronndx.html

Btw, it seems FOFOA folks are still jealous that I was correct about silver:

http://www.google.com/search?q=site%3Afofoa.blogspot.com+Shelby

My "Pay in Blood" article explained oil-gold connection and the relevance to the Euro -> NWO connection, just as it is playing out now:

http://www.financialsensearchive.com/fsu/editorials/2009/1109.html

http://www.mpettis.com/2013/02/14/what-ill-be-watching-in-2013/#comment-21493

Shelby commented:

Philippines' economic surge is unbalanced

Continuing on professor Pettis' globalization expansion and contraction model, the crack up boom is now reaching into the Philippines where I am, which is evident to me by a large increase in capital spending on construction, e.g. new shopping malls, retail, and hotel buildings going up every where.

The Philippines seems to have the opposite problem of China, with services share at 54% of the economy and growing three (3) times faster than industry share, with agriculture share stagnant.

The problem is that the highest 10% of income earners contributes 33% of the share. Since exports is dominated (40%) by IC chips which employs few workers relative to GDP share produced, the main income inputs supporting consumption are thus the following all very roughly weighted at 10% share of GDP each.

1. government workers
2. overseas workers
3. tourism
4. call centers and business process outsourcing
5. labor intensive manufacturing exports

If a decade global economic implosion starts sometime between 2015 - 2017 as I expect, sectors 2, 3, and 5 would probably stop growing and even decline. Growth of sectors 4 and 1 would probably slow or stagnate.

In short, the Philippines is too dependent on external economies for the higher valued consumption economy that it is trying to build too fast.

The services economy is predominantly retail and construction serving the above income sectors, and increasing share being driven by debt (although debt not near the saturation level of China and developed countries, except perhaps in Manila vicinity).

Thus, I expect the Philippines to grow too fast and saturate debt in the meantime, then see a significant downturn when the global contagion reaches the implosion point. There will be many bankruptcies in the retail and construction sector.

On the positive side, the Philippines is transitioning to a higher valued service economy, as more workers get higher education, go abroad to work, and work in sector 4. However, many filipino's preference for a guaranteed income has caused them to choose a nursing or teacher education. Healthcare all over the world is nationalized so this sector will fail economically (as all things do when owned by the government). And the future of education is online education and increasing autodidactism, as move more deeper into the computer age as I have been pointing out in my comments over the past months.

Also the success of sector 4 is dependent on the workers in the developed countries being overpaid and paid not to work by their bloated governments, i.e. there is no significant domestic market for this sector to serve. This will moderate if not end with the coming global economic implosion.

The filipinos are not world class engineers (they can not concentrate alone, they need always social stimulation). They are world class performers and they are good with their hands and social interaction, but this is a limited market.

So if you build a consumer economy that is too highly valued for the bulk of the population, then you have an unsustainable economy.

The current government has recognized this and is trying to make strides in education and spreading out development to the lower class. However, the DECS (Dept of Education) itself is a hindrance, because they require nonsense courses that have no relevance in the modern economy and waste half of the education time as well as bore the heck out of the males so much that they males tune out to education and throw spitballs all day. Examples are moral values, history of Jose Rizal (3 semesters in college!), and now reproductive health eugenics top-down waste. Another problem is the culture is too inclusive, refusing to accelerate the best and brightest. It isn't even allowed to test a child to enter college early as I did in the USA. How can an economy expect to have a developed country style level of shopping malls, restaurants, and retail and then have such a backwards educational stance.

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21573

Shelby replied:

Technological shift, national capital base, and the globalization cycle

Not necessarily more debt, but definitely more capital

Whether from savings or debt, it is capital misallocation to the extent that the pathway of dealing with technological shift is one of maladjustment.

Indeed my point is the largest resource of capital in China is the people (and their savings in form of currency and knowledge, ability attained since birth), and thus this is where the capital is coming from in China, either in the form of low wages (i.e. sustained by suppressing consumer share of GDP) or creation of debt from thin air in fractional reserve fiat system.

My fundamental point is I believe that technological shift drives competition which drives finance, not the other way around. Finance can not change any of the fundamental realities, it just reacts to them, as water flows downhill.

For the USA example, the technological shift of the industrial revolution began in the early 1800s and was causing unemployment with the Luddites. This stimulated migration to the USA seeking better opportunities. The USA's main capital was the wide open frontier of freedom, the untapped natural resources, and the ingenuity and motivation of those willing to seek that land of opportunity. Thus we see a very different result of the way finance flowed when comparing the USA and China. (this is the concept of increased degree-of-freedom and thermodynamics that I keep incorporating in all my theories)

The technological shift now is the computer and that the programmer generates orders-of-magnitude more production than a non-programmer. This made it uneconomic to keep uncreative labor jobs in the high tech countries, and it also meant China was falling exponentially behind the curve in the 1970s when the personal computer was born and by the 1980s when the PC was blasting off. So it was a natural fit of capital, that China would eat the uncreative jobs, but the problem is this did not move China close enough to catching up with the technological shift. It was handing the failure to China. China's limitation was that its capital is not sufficient for it to catch up. The capital of China encourages a top-down system run by 200 families to mine that capital.

There is only one solution for mankind going forward. There is no way for these developing countries to adapt monolithically to the computer age shift, because their capital is too much of an incentive for top-down control. Thus the people individually must escape from their nation-state jails. You can see this with the 1.3 million filipinos leaving to work abroad every year. But the more efficient way is for the people to learn online and then work online too.

Thus the nation-states have been disrupted and will become increasingly economically irrelevant.

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21575

Shelby commented:

With my prior points in mind, I continue my analysis of this article.

Chinese development model is an old one, and can trace its roots at least as far back as the “American System” of the 1820s and 1830s

industrial revolutions are not driven by scientific developments but rather by the commercial application ... financial system that seemed to do better than others in financing new infrastructure and technological ventures

The industrial revolution was fixed capital intensive because of the hardware. The software revolution is not fixed capital intensive.

So we needed much financial (savings) capital to direct human resources (via symbiotic balance between fixed capital and consumer spending) into the industrial revolution in the 1800s, but monetary savings is much less useful in the software revolution, where we need knowledge development. Consumer spending can't motivate humans into learning software and actually demotivates it! This is fundamentally why we have ZIRP and competitive currency devaluation. It is not a liquidity problem, it is a technological shift adjustment problem.

China missed the industrial revolution, and is now missing the software revolution, by mining its own capital to build out the antiquated industry.

The contraction of globalization from 1910 to 1944 was caused by the inability of global population to adjust to the mass production age, which resulted from the second stage of the industrial revolution due to network effects stimulated during the primary stage. The contraction from 2000 to probably 2030 or 2040, is being caused by the inability of global population to adjust to the software production age.

I will continue my analysis in a future comment.

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21577

Shelby added:

Their vision of economic policymaking was looked down upon as naïve and even foolish by most American academic economists – schooled as they were in the laissez faire doctrines then fashionable in England

If I remember my US History correctly from 32 years ago in high school, the US developed in the 1800s under a laissez faire doctrine that allowed the big capitalists (such as for the construction of the Erie Canal) to do as they wished without government regulatory interference and even with government facilitation.

Note w.r.t. to my prior comment, the construction labor was provided by immigration, another evidence that unlike China, the USA's capital was not human labor.

Many countries in which the academics had real influence at the time...Jean Gustave Courcelle-Seneuil

It wasn't government non-inference (i.e. laissez faire) that caused Chile's problem, but rather either government interference or Seneuil's influence (see the footnotes on page 1) in moving Chile from commodity money with no central bank to the fractional reserve system with a central bank. While the USA had a "free private banking" (i.e. laissez faire) system without a central bank until 1913.

I think what you are really wanting to argue against is liberalism, i.e. socialism and interference of the government in domestic affairs when the government becomes a huge component of the domestic economy as in China.

It was of course the post-War Japanese development model

Wasn't it Douglas MacArthur who taught the Japanese how to improve their manufacturing?

infant industry tariffs

I.e. the laissez faire doctrine, which small government means cooperating with big capitalists by not interfering internally and supporting their needs externally.

a sound system of national finance

USA had no central bank, was on a gold or bimetallic standard, and had a free private banking defacto fractional reserve system.

These three elements are at the heart, explicitly or implicitly, of every variation of the investment-led development model

Yeah but that is for fixed capital development which is irrelevant in the new economy, and China can't have the laissez faire doctrine, because it is dominated by socialism with a huge population that is massively deficient in high tech software knowledge where the new economy is.

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21579

Shelby clarified:

Shelby wrote:

China can’t have the laissez faire doctrine, because it is dominated by socialism

I mean China can't have laissez faire doctrine w.r.t. to the software economy, because it threatens the ability of the 200 controlling families to mine their 1.2 billion units of flesh capital. China mines the dexterity of opposing thumbs, because it has not the capital to invest in developing the 1.2 billion minds (instead prefers short-term, myopic strategy, i.e. debt based thinking). It actively suppresses domestically the internet, information, thought, and even the citizens hate copyright. (side note software patents are absurd)

Shelby wrote:

fixed capital development which is irrelevant in the new economy

One evidence is Japan which has much faster internet infrastructure than the USA, but is nothing in software.

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21581

Shelby continued:

The idea that countries get rich under conditions of free trade has very little historical support

The USA was trading with nearly every country, and the government wasn't restricting it.

Whether the momentum would have been obtained without tariffs is irrelevant to analyzing China, because China needs to leapfrog the industrial revolution and head directly to the software economy. But of course it can't do that monolithically, only individually, but the monolithic system can't allow individual thought and expression.

So China should charge a tax on using the internet sites created outside the country?

Of course not, and because the price of software is not its main advantage, but rather the quality.

But luckily lot of infrastructure is not required to develop a software economy, so it doesn't need to be coddled by government. Software economy needs a hacker culture (which is often confused with cracker, and not anti-property rights) and a government which does not interfere, because the Mythical Man Month points out why software is very individually developed phenomenon.

it is not enough to protect industry from foreign competition. There must be a spur to domestic innovation, and this spur is probably competition

Agreed, i.e. very small laissez faire government.

Problem is that due to the Iron Law of Political Economy and the impossibility of a meritocracy in the collective, very large population relative to other capital, makes it very difficult for the government to remain small. The only hope is for some disruptive technology that bypasses the normal way that societies organize politics, i.e. the internet. So it is not surprising to me that the taipans of China are blocking it

national and state governments design, finance and construct canals, bridges, ports, railroads, toll roads.

Are you sure this is entirely correct? I thought it was the private capitalists (e.g. John D. Rockefeller and his brutal competitiveness in railroads) that were putting up most of the financing and they were paid back through various revenue schemes, some of which were revenue partnerships with the government. There is no doubt they socialized their business methods (e.g. Rockefeller had the politicians in his back pocket), as you point out this is the only way to make such long-term payout NAV calculations viable.

On the topic of the appropriate level of infrastructure in China, I would argue it should be closer to zero. Because in the coming software economy, you don't need it. Hey I am programming from near the tip of tallest mountain in the wild south of the Philippines right now with a $25 3G wireless USB internet connection device and a $600 computer. I only need my $200 battery backup system and a simple hut. In fact, I created Coolpage.com arguably the world's first social network in 1998 from a Nipa Hut and had 1 million users with me as the only employee.

And those all this infrastructure China is building is just inertia for the rest of the population to resist moving into the software economy. In other words, in a NAV calculation looking forward, nearly all the infrastructure is uneconomic.

Well even programmers need basic sanitation, roads, electricity. But we don't need high rises, bullet trains, museums, etc..

Thus I expect China to crash back to this level of basic services infrastructure.

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21583

Shelby concluded:

Journey to the West

Agreed on all your points.

A sound system of national finance

USA was private banks and a multitude of private debtors doing fractional reserves behind a bimetallic constitutional gold+silver standard, thus the system was constantly crashing (bank runs) and correcting. This multitude of decisions makers based on a profit motive, means very tight and self-correcting (rapid liquidation for failures) fitness to truly economic opportunities.

China is government (200 taipans) making the decisions on financing with 200 taipan debtors, which means extreme detachment from economic reality and very low fitness.

Comparing development models

I think your first 3 points basically miss the key factor. You get closer to the key factor with point 4 about higher wages.

The key factor in attaining high development is rewarding knowledge creation. You have to value the human mind.

China is so far off course, but that is to be expected from a totalitarian culture.

Dogfree, are you going to continue spouting that nonsense about China's model being different in some superior way?

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21586

Shelby replied:

@David Habakkuk

the kind of social model which has been developing in the United States, and elsewhere in the West, over the past decades looks in the context of his arguments about the requirements for successful development. It would seem an interesting question how far the requirements of maintaining the success of a ‘developed’ modern economy are distinct from, or similar to, those of creating such an economy

I wrote in a comment above, "the nation-states have been disrupted and will become increasingly economically irrelevant".

I think the model for development and sustainability is the same. The government has to maintain a laissez faire doctrine w.r.t. to the high-valued knowledge economy. And even with the social model in the USA, you can see enormous resistance to SOPA and PIPA regulation of the internet. Canada's government recently reject such similar bills.

It seems there are enough people (i.e. hackers in the most general definition) involved in knowledge creation (i.e. software) in the developed countries to counter-act the political power of those sucking the tit of statism. And if ever the statists do try to regulate us and limit our ability to code knowledge, we hackers hold all the power. The modern economy would collapse if we stopped working. We always find a clever way to disrupt top-down power that attempts to limit our coding freedom.

I know it is difficult for people to believe that software is invading everything and is so critically important. It isn't just robotics, software is in every creative profession, and increasingly so. Because the computer is the bicycle of the mind.

Those people who don't get with the software age, will fall into relative poverty. And the social systems will be bankrupted and fail and perhaps lead us into a World War 3 result by 2030 or 2040.

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21647

Shelby added:

I wrote up-thread the following.

I want to draw attention to your prior article on globalization and my disagreement there with the fundamental driver of globalization.

My fundamental point is I believe that technological shift drives competition which drives finance, not the other way around.

I explained with charts, that the current downturn is due to the maturing of the computer revolution and that the downturn will last for decades. I explained in that linked article how the prior downturn from 1920s to 1940s was caused by mass production from the maturing of the Second Industrial Revolution (which ostensibly began in 1860 with Bessemer Steel).

Martin Armstrong has identified this 78 year cycle in real-estate downturns. The prior case was the downturn from 1850s as the First Industrial Revolution peaked with the peaking of railroad bubbles. Remember real estate value was driven much higher in value when a railroad was built to access it.

The prior two 78 year real estate cycles were caused by two waves of increased agricultural productivity, one peaked at the end of 1600s, and the other peaked 2/3 of the way through the 1700s.

Note how a war resulted from each of these downturns. The US war of independence in the 1770s, the US civil war in the 1860s, World War 3 in the 1940s, and now surely another war to come within a decade or two.

I hope everyone now understands why I am sure my theory is proven by history, and knows what to expect going forward.

The real estate 78 year cycle peaked in 2007, and the Economic Confidence Model (ECM) also turned down 2007, but the ECM turned back up 2011 and real estate model gets a bounce from 2012 to 2015, then both turn down again. The real estate model will not bounce again nor bottom until 2033, which is also when the ECM peaks and crashes. After 2033, we will be a in public wave for the ECM, which is because robotics will have unemployed billions of people. 2033 is also the turning of the 310 year empires cycle!

http://armstrongeconomics.com/the-princeton-models-and-methodologies-a-users-guide/business-economic-confidence/

http://armstrongeconomics.com/models/7219-2/

http://armstrongeconomics.com/2013/01/29/8797/

http://armstrongeconomics.files.wordpress.com/2012/03/a-forecast-for-real-estate-111509.pdf

Originally Armstrong was expecting gold to rise through 2016 after a pullback 2012 - 2013:

http://armstrongeconomics.files.wordpress.com/2012/03/gold-5000-11-7-09.pdf#page=14

Now he is thinking gold will not rise until after the next peak in Real Estate and ECM models in 2015.75:

http://armstrongeconomics.com/2013/02/25/gold-what-now-2/

His reasoning may be due to his expectations for the sovereign debt crisis:

http://armstrongeconomics.files.wordpress.com/2012/01/armstrongeconomics-sovereign-debt-crisis-when-013012.pdf

It appears that all the money the central banks printed from 2008, has been enough to lift the ECM until 2015.75, so now all they have to do is jawbone (move their mouths but not actually print) until the next big crisis comes. Well that crisis is Japan. Japan's real estate model will bottom on 2015, so it is going into its big tailspin, and then it will have to print like mad from 2015 which will finally put a bottom on its real estate market. Note the USA's real estate market won't bottom until 2033. Remember Japan's real estate crash started in 1989 and the real estate crashes in his 78 year model have a 26 year duration.

However, note that the ECM bottomed in 2002.95 (Dec 2002) and gold did not rise from 2004 to nearly the end of 2005. Yet during that period to 2005, gold/silver ratio dropped from 80 to 50, and then by 2007 to 45. In other words, silver could outperform gold to 2015. Remember that gold was rising from LTCM scare in 1998, Y2K scares, and 9/11 terrorist attack, there was a fear of finance crash. But by 2004, the focus had shifted to the real estate bubble, then silver blasted off. So we have similar situation now, as the scares about Europe, China, and USA have subsided for the time being and now the focus in on bubbles in the developing world.

So while the debt crisis may not erupt again until 2015, the inflation may be increasing in the developing world as capital flows are shifting there.

http://armstrongeconomics.com/2013/02/14/unemployment/comment-page-1/#comment-1617

Shelby commented:

I have explained how Armstrong's 78 year real estate cycle ties in with technological unemployment throughout history, including the current downturn which will culminate (bottom) in 2033. These always contain a big war.

Now it is robotics and network effects from the maturing first computer revolution (second computer revolution will be the quantum computer coming in decades from now). For the Great Depression it was mass production which was a network effect from the maturing Second Industrial Revolution. Caused two World Wars. The 26 year downturn in the USA prior to the Civil War was caused by the busting of the railroad speculative bubble which was a network effect from the maturing First Industrial Revolution. The two 78 year cycles before that were due to technological unemployment due to agricultural yields innovation (e.g. soil technology).

I hope someone can email Martin Armstrong and make him aware of my analysis. I think it will help him better understand the events going forward. I know he basically gets this, but I think I have clarified in a unique focus.

http://www.mpettis.com/2013/02/21/a-brief-history-of-the-chinese-growth-model/#comment-21716

Shelby replied:

Decentralization is exactly the key. China is the antithesis.

http://esr.ibiblio.org/?p=4824&cpage=1#comment-396054

JustSaying (Shelby) wrote:

Going further off-topic, but tying into the my allegation that billions will need to learn to program due to technological unemployment, 3-D Printed Car Is as Strong as Steel, Half the Weight, and Nearing Production[1] could decentralize (open source) manufacturing.

I remember my grandma thinking I was crazy when I asserted in the early 1990s in the U.S.A. after returning from my first trips to the Philippines (where I had ferried in rusted taxis, suffocated on exhaust fumes, and observed massive poverty), that we could build cars out of plastic and they would be stronger, cheaper, and consumer less fuel. Her legacy bias was disposable plastic housewares.

Crazy I am. Mam.

In the deep south between Indonesia and Manila (where I am), the use of open source browsers is the highest in the world at 3%[2]. This is not correlated only with poverty nor with tribalism (see Somalia). Instead this is the "bahala na" culture of natives in serendipitous environs ("embrace uncertainty by maximizing the breadth of available options"). C.f. the Spider and the Starfish how the Apaches (the first hackers?) appeared to be conquered, rather were in decentralized mode.

[1] http://www.wired.com/autopia/2013/02/3d-printed-car/
[2] http://esr.ibiblio.org/?p=4817&cpage=1#comment-396038