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