1. The invisible hand is never truly supreme, almost all world economies these days are mixed economies, which means that although they allow the market to function, the government puts certain constraints on what the market can do. This is a good thing, because if it were not the case, then you would be able to sell heroin laced chewing gum to children and build toilets that were prone to massive explosions, or something like that.. =)
2. The inevitable effect of letting the invisible hand have complete reign over a nations economy is known as 'Laissez-faire' capitalism, which pretty much means that the rich and intelligent use every power at their disposal to take money from the poor and stupid. Now some people would say that this process is fair and right, however, what they do not realise is that welfare serves a very important purpose in that it stops all the poor people from rising up and trying to kill the rich, preventing another French Revolution style scenario from breaking out.
The Social Darwinism movement, which has become particularly popular with certain right wing people of late (ie, since the Reagan years) believe that this is all good and proper. They reason that because nature is cruel, humanity should be cruel and because animals in nature do not help each other, people should not try and help each other either. Taken to it's logical extreme, this would be an every man for himself scenario regardless of race, creed, colour or family. Of course, most Social Darwinists are intelligent enough to realise that animals do help their immediate family, so they look at their family as people they should help and everyone else as expendable.
The problem with Social Darwinism is that in my opinion, it is used simply as an excuse for human cruelty and lack of empathy. Nature is an incredibly complex system of interlinked networks and processes and it is simply not true that in the animal kingdom all animals kill everything that is not part of their family. Nature and the food web that accompanies it is an incredibly complex series of interdependencies. Species do not just fight, they also help each other, as any study of Symbiosis will show you.
I would make the argument that in the current Global Society, humanity exists in a state very much like a (sort of perverted) form of nature, in as much as it relies on a complex web itself. The fact that this web lies on top of the web provided by nature is another point in and of itself.
Despite spouting Free Market ideals and Pure Capitalism, the US has itself distorted the concept of the Invisible Hand more than any other country. They have in effect, turned it into an Invisible Fist, by manipulating world markets through war or other means and then claiming that the outcome is 'just a result of the invisible hand at work'.
The most visible instrument of the USA's Invisible Fist is the World Reserve Status of the US Dollar. Up until very recently (since the end of WW2) all international trade (especially that of Oil) was conducted in USD. This created what was known as the 'Petrodollar Effect'.
Because every country on earth needs Oil, and because they could only buy that Oil in USD, every country on earth was forced to keep a reserve of USD handy so they could buy the Oil they needed to keep their country functioning. This singular effect has allowed the USA to print more money than any other nation on Earth and externalise the cost of their high standard of living onto the shoulders of the rest of the world.
Woe betide any country that attempted to go against this policy. The list of countries that have tried to extricate themselves from USD dominance and paid for it by having their countries destroyed are growing. Iraq was invaded after Saddam Hussein started selling his Oil in Euros. Libya was invaded when it began minting a new gold backed currency for Africa called the Gold Dinar. This currency was meant to be able to let other countries pay Libya for Oil in Gold, something that challenged the Petrodollar and thus they had to be destroyed.
However, although the US has an impressive track record attacking small counties without any military to speak of (such as Iraq after 10 years of crippling sanctions) Libya, Somalia, El Salvador, etc etc. When it comes to fighting actual wars against countries with actual armies, the US is much more cautious. For instance, it has not invaded North Korea, despite this country being in their sights for years. Despite US rhetoric about Nuclear Disarmament, consider the fate of North Korea (which does have Nukes) vs Libya (who gave up all their Nukes when they 'rejoined' the international community, before they were calculatedly betrayed.)
This lack of nerve that the US has when fighting countries with real armies, such as China, Russia or Iran, comes, in my opinion comes from the fact that the USA realises that they would be at a huge disadvantage if they went to war with any of these countries. For one, they all share a Mutual Assitance Pact meaning that if one country is attacked, all the other countries is the CSTO must respond. Not only that, but due to the rise in cyber warfare, the US cannot rely on using backdoors or fancy hacks to win a war (much like the UK did when they fought the Falklands conflict. The Argentines were using French made Exocet ship to ship missiles and the UK leaned on the French until they gave the UK the remote disable codes to the backdoor that was built into the Excocet system. As a result, all of the Argentine ship to ship missiles stopped functioning and they were unable to continue the war.)
The sanctions imposed on Iran for so many years now have been meant to cripple the Islamic Republic and to also injure it's citizens in the hope that this will decrease the popularity of the current regime. However, what has actually happened is that the Iranians have become very good at building their own weapons and in fact now have an entire weapons manufacturing supply chain working in the country. This is one of the reasons why the US has been desperately trying to cut all sources of International trade to Iran, since they realise that the only way they can stop the Iranians making weapons is to prevent them importing the raw materials such as steel and oil that are need for weapons manufacture.
China has also seriously whipped the Americans ass when it comes to Cyberwarfare. Despite the fact that the USA spends more on their military than the rest of the world combined, much of that money is wasted and alot of it goes on Research and Development. By simply stealing the USA's plans for their latest military hardware, China has been able to develop cheaper, better versions of American fighters and drones, without having to pay any money on Research and Development. Not only that, you can be sure that the Chinese (and therefore also the Russians) know exactly what the strengths and weaknesses are of the American ordinance they will encounter. The fact that Iran has so far been able to remotely hack, take control of and safely land a number of US drones means a number of things.
1.) The Iranians have the ability to jam US control signals inside Iran, even when the drone is being controlled by satellite.
2.) The Iranians have the ability to break the US encryption used to encrypt the signal traffic bwteen the drone and the satellite.
3.) The Iranians have developed the technology to fly drones from remote locations (presumably using a different form of encryption than the Americans.)
In the aftermath of Stuxnet, I would not be surprised if the Iranians are producing their own version of the Seimens industrial control module that Stuxnet infected. Since the Siemens model was made in Germany, the Americans had access to as much documentation and reverse engineering components as they needed. This means that viruses such as Stuxnet, Flame and Gauss are probably going to become less and less effective as time goes on.
In my opinion, it will not be long before China and Russia openly resume trading with the Islamic Republic, in fact, since Iran has not undergone complete economic collapse, another country must still be providing clearing and trade services. Civilian infrastructure may suffer, but I would suspect that it is because these resources are being diverted into the military in the (quite likely) event that Israel decides to drop a hundred or so Tomahawk Missiles on Tehran.
After enjoying the privilege of being the world's reserve for so long, the USD is slowly fading into insignificance. China and Russia have announced that from this year they will be settling all their trade in their local currencies. This not only reduces the cost of the trade and dependence on the weakening USD, but it also means that these countries are now longer compelled to hold US Treasuries. This move I believe was expected to happen for some time. However, what may come as more of a shock is that Australia and China have also agreed to conduct trade in their respective local currencies. Now Australia has traditionally been one of the best quisling client states that the USA has, (in fact, the 3 countries internationally responsible for the Iraq War, and thus liable for reparations are the US, the UK and Australia) the fact that Australia has chosen to de-link from the USD must have annoyed the Americans very very much and I doubt that the Australians would have taken such a move unless they believed that the entire economic future of their country is at stake, whch indeed it would be if they continued to rely upon the USD.
For a currency to be a world reserve, it has to be stable and it also has to be something which cannot just be printed out of thin air. A country who's currency is the world reserve can print as much money as they like, safe in the knowledge that no matter how much they debase their currency (The USD has lost 99.5% of it's value since it was first created) the rest of the world will pay the price. This is in effect a tax on the rest of the world and has terrible economic consequences.
Gold or Silver have historically been the worlds Reserve currencies. It was Silver that originally backed the British Sterling before the 13th Century when 240 silver sterlings weighed one pound.
In 1817, the sovereign was introduced, valued at 20 shillings. Struck in 22‑carat gold, it contained 113 grains (7.3 g) of Gold. The Gold standard was abandoned by England in 1914 at the outbreak of WW1 and in 1940, an agreement with the U.S.A. pegged the pound to the U.S. dollar at a rate of £1 = $4.03. (Only the year before, it had been $4.86.)
The US Dollar was also originally backed by Silver (24.056g per dollar) Until the Gold Standard Act of 1900 abandoned the bimetallic standard and defined the dollar as 23.22 grains (1.505 g) of gold, equivalent to setting the price of 1 troy ounce of gold at $20.67.
However, on August 15, 1971, due to expenses incurred during the Vietnam War, the convertibility of dollars to gold later dubbed the Nixon Shock. The last peg was $42.22 per ounce of Gold before the U.S. dollar was let to freely float on currency markets.
The reason why Gold and Silver make excellent reserve currencies is because they have intrinsic value in other words, it's value is not dependant on some other commodity, it has value on it's own. Not only that, but Gold and Silver cannot be printed out of thin air; there is only a certain amount of Gold that can be mined per year and it costs money to extract, it cannot be extracted for free. This means that Gold and Silver maintain a stable value, unlike paper fiat currency, the value of which is constantly being eroded by inflation, which is simply a function of the government printing more and more money.
It is for this reason (along with suspicions about the honesty of the US Banking System) that is causing many of the European countries holding Gold abroad to repatriate it back to their home soil. Tungsten Salted Gold Bars have been discovered circulating inside the Central Bank 'good delivery' system. Because this system relies upon a closed loop of sovereign central banks, it could have only been a sovereign entity or central bank that carried out this act of counterfeiting. According to this document, this process has been going on since the start of Bretton Woods and the US and the UK have on a number of occasions, deliberately delivered low quality gold to Germany in lieu of real good delivery bars. Since this happened in 1968, these gold bars have now been distributed throughout the good delivery system, meaning that it is unknown how many of the fake bars any one country holds. Despite the fact that the Perth Mint has issued this document saying that Tungsten Counterfeiting is something people shouldn't worry about, because the bars get eventually melted down, I was easily able to find the website of this Company in China that makes tungsten fake gold products of all kinds for 'security' purposes. Although there is no doubt that such items could be very useful to a bullion trader in the event that he is robbed, I am sure that these items are being used to scam people all around the world even as we speak. It seems to me that the only sensible way to act now is to make sure that all bullion you buy is scanned by Ultrasound before you take possession.
This little known fact is of massive importance. It means that none of the worlds countries can be sure how much of any other countries Gold reserve is counterfeit until the time comes to exchange it and the receiving country can test the gold itself. Now the bars can be tested non-invasively using ultrasound, but this would take quite a bit of time. I could easily see some heavy at the Treasury saying something along the lines of 'Are you saying that WE, the USA, the GREATEST COUNTRY IN THE WORLD would sell FAKE GOLD? This could go VERY BADLY if you continue to insist on implying that the USA holds ANYTHING but 100% pure Gold bars.'
Therefore, the receiving country would have to do they tests once the Gold is delivered and it would be understood that if some of the Gold is fake, then tough luck, we are the USA, we do whatever the hell we want, 'what the fuck are you gonna do about it, buddy?'
Therefore, the most likely scenario is that the country would take the Gold and either not test it, in the knowledge that they can still use it as reserve gold as long as no one actually tests the bars, or, they could test the bars once they receive them, then sell them on the open market to recover their money. However, if they sell Gold that is then discovered to be fake, then it could spark an international incident. The last thing ANY country wants is for the rest of the world to discover that it's Gold Reserves might not 100% as declared, since it would immediately trust in their banking system.
Among the number of rumours surrounding the salted tungsten bars and the possibility that they were manufactured in the USA, is the rather shocking possibility that there is no gold left at Fort Knox. (This would actually not be as hard a trick to pull as it sounds, since the gold depository is never audited or inspected by an independent body.) In fact, it was apparently for daring to suggest this very possibility, that Dominique Strauss-Khan, the ex-head of the IMF was stitched up by the NY Police. Apparently, the US Government had been continually stalling for time on it's promise to deliver $65Billion USD of Gold to the IMF to back their 'Special Drawing Rights' which was another attempt to create a gold backed reserve currency. Strauss-Khan became suspicious and began investigating whether the US in fact had the Gold Reserves that they were declaring. Shortly after, he was removed from the head of the IMF and replaced with Ms Legarde, who evidently is not as prone to asking difficult questions.
In short, after being the arm that controls the world's invisible hand for more than 50 years, and using it to squeeze other countries out of their money, it is increasingly looking as though the fingers of the invisible hand are beginning to close around the USA. In the future, the US may find that the 'invisible arm' is being more and more controlled by other countries, negating the benefits that the US has traditionally enjoyed by having global reserve status.
Once the US loses hold of it's control of the invisible hand, it will be forced to play on a level playing field, just like every other country. In my opinion, the US will not take this lightly and like a spoilt 2 year old, will throw a massive tantrum (and quite possibly kill millions of people in the process) in an attempt to retain it's power. However, if history is any guide, their power is already lost and we are merely seeing the final death throes of an Empire in panic. After all, what are they going to do? If they refuse to give the Europeans back their Gold, then the fact that the US is Bankrupt will be there for all to see, causing massive financial chaos. They cannot invade Europe to stop them taking their Gold back, so the only real possibility if for them to invade and steal gold from other countries in order to fill the Gold orders for Europe. Perhaps this is why the USA suddenly has such an interest in Africa? Incidentally, here's a list of the declared Gold Reserves of various African countries that the US has begun exercising it's influence over.
- Top on the African List is Algeria in 24th place with 173.6 tonnes.
- 2nd is South Africa in 28th place with 125.1 tonnes.
- 3rd is Libya in 20th place with 116.6 tonnes. (Although how much is left after the US invasion is debatable)
- 4th is Egypt in 38th place with 75.6 tonnes. (Again, due to the recent turmoil in this country, I am not sure whether these figures can be trusted)
- 5th is Morocco in 57th place with 22 tonnes.
- 6th is Nigeria in 59th place with 21.4 tonnes.
- 7th is Ghana in 69th place with 8.7 tonnes.
- 8th is Tunisia in 76th place with 6.7 tonnes.
- 9th is Mozambique in 85th place with 3.3 tonnes.
However, there are also a number of countries absent from this list, which may have large gold deposits or mining operations, such as the Democratic Republic of Congo.
Perhaps the Americans think that if they take over enough of Africa, they can steal and mine enough Gold to keep the status quo propped up for just a bit longer. However, I do not believe that such tricks will work for long. The sheer amount of money that the US is spending on war is going to require the acquisition of massive amounts of treasure, most of which will go to China in the form of interest payments. The idea that they can pay for another major war, keep up the interest payments on their debt and find enough to Gold to pay back the Europeans is pretty hard to swallow.
The amount of Gold we are talking about here is massive.
According to the 2013 WGC Report. The IMF holds only 2814 Tonnes, the ECB 502 Tonnes and the Bank of International Settlements in Basel holds a measly 116 Tonnes.
Compare this with Germany, the Worlds second largest holder of Gold, with 3391.3 tonnes. The Germans have said that the US have until 2020 to return half of the German Gold in New York.
Even if The Germans hold a third of their Gold in Paris (which is probably a generous figure), the US would still have to find 1100 tonnes by 2020.
Why is it that Germany doesn't want all their Gold back? Not only that, but why are they willing to wait until 2020? Do they know something that we don't? or is it simply the risk associated with moving so much Gold half way across the world? (In my opinion, one of the countries most likely to steal a Gold shipment destined for Germany is the US itself.)
Or perhaps they have told the Germans that by 2020 they will have invaded Iran and stolen the Iranian Gold Reserve, which was valued as the 13th Largest in the World in 2012 at 500 tonnes [see here], however, since then, the Iranians have stopped telling the World Gold Council how much gold they hold, as you can see [here]. However, even if the Iranian Gold Reserve is 1000 tonnes, they will still need even more Gold, since the Netherlands, with the 10th largest in the world, coming in at 615 tonnes, is also keen on taking it's Gold back from the US.
In short, after 70 years of using the US Dollar as the arm behind the invisible hand, the US is rapidly losing control as the rest of the world begins leaving an increasingly weak and irrelevant US Dollar behind. In my opinion, it will not be long before the USA gets violated by an 'invisible fist' on the end of the arm of the new developing economies, such as Russia, China, India and Brazil.
Christopher Carrion.
