Debt Deflation And Competitive Currency Devaluation Means The Loss of National Sovereignty To The Rise Of Global Governance

I … Architects Of Global Governance Foretold The Fall Of National Sovereignty.

Andrew Gavin Marshall in GlobalResearch.ca article The Technological Revolution and the Future of Freedom, Part 1 writes: 

Following the collapse of the Soviet Union in 1991, American ideologues – politicians and academics – began discussing the idea of the emergence of a “new world order” in which power in the world is centralized with one power – the United States, and laid the basis for an expansion of elitist ideology pertaining to the notion of ‘globalization’: that power and power structures should be globalized. In short, the ‘new world order’ was to be a global order of global governance …  Andrew Gavin Marshall, Forging a “New World Order” Under a One World Government. Global Research: August 13, 2009:

Anne-Marie Slaughter, currently the Director of Policy Planning for the US State Department, is a prominent academic within the American elite establishment, having long served in various posts at the State Department, elite universities and on the board of the Council on Foreign Relations. In 1997, Slaughter wrote an article for the journal of the Council on Foreign Relations, “Foreign Affairs,” in which she discussed the theoretical foundations of the ‘new world order.’ In it, she wrote that, “The state is not disappearing, it is disaggregating into its separate, functionally distinct parts. These parts—courts, regulatory agencies, executives, and even legislatures—are networking with their counterparts abroad, creating a dense web of relations that constitutes a new, transgovernmental order,” and that, “transgovernmentalism is rapidly becoming the most widespread and effective mode of international governance.” … Anne-Marie Slaughter, The Real New World Order. Foreign Affairs: September/October, 1997: pages 184-185.

In 1992, Strobe Talbott wrote an article for Time Magazine entitled, “The Birth of the Global Nation.” Talbott worked as a journalist for Time Magazine for 21 years, and has been a fellow of the Yale Corporation, a trustee of the Hotchkiss School and the Carnegie Endowment for International Peace, a director of the Council on Foreign Relations, the North American Executive Committee of the Trilateral Commission, and the American Association of Rhodes Scholars, and a member of the participating faculty of the World Economic Forum. Talbott served as Deputy Secretary of State from 1994 to 2001 in the Clinton administration and currently sits as President of the Brookings Institution, one of the premier American think tanks. In his 1992 article, “within the next hundred years,” Talbott wrote, “nationhood as we know it will be obsolete; all states will recognize a single, global authority.” He explained: All countries are basically social arrangements, accommodations to changing circumstances. No matter how permanent and even sacred they may seem at any one time, in fact they are all artificial and temporary. Through the ages, there has been an overall trend toward larger units claiming sovereignty and, paradoxically, a gradual diminution of how much true sovereignty any one country actually has … Strobe Talbott, America Abroad. Time Magazine: July 20, 1992

Further, he wrote that, “it has taken the events in our own wondrous and terrible century to clinch the case for world government. With the advent of electricity, radio and air travel, the planet has become smaller than ever, its commercial life freer, its nations more interdependent and its conflicts bloodier.” … Ibid.

David Rothkopf, a scholar at the Carnegie Endowment for International Peace, former Deputy Undersecretary of Commerce for International Trade in the Clinton administration, former managing director of Kissinger and Associates, and a member of the Council on Foreign Relations, recently wrote a book titled, “Superclass: The Global Power Elite and the World They are Making.” As a member of that “superclass,” his writing should provide a necessary insight into the construction of this “New World Order.” He states that, “In a world of global movements and threats that don’t present their passports at national borders, it is no longer possible for a nation-state acting alone to fulfill its portion of the social contract.” He wrote that, “progress will continue to be made,” however, it will be challenging, because it “undercuts many national and local power structures and cultural concepts that have foundations deep in the bedrock of human civilization, namely the notion of sovereignty.” He further wrote that, “Mechanisms of global governance are more achievable in today’s environment,” and that these mechanisms “are often creative with temporary solutions to urgent problems that cannot wait for the world to embrace a bigger and more controversial idea like real global government” … David Rothkopf, Superclass: The Global Power Elite and the World They are Making. (Toronto: Penguin Books, 2008), pages 315-316

The global debt crisis, which is beginning in Greece, and spreading throughout the euro-zone economies of Spain, Portugal, Ireland and ultimately the entire EU, will further consume the UK, Japan and go all the way to America.  Andrew Gavin Marshall, Debt Dynamite Dominoes: The Coming Financial Catastrophe. Global Research: February 22, 2010

II … The Age Of Debt Deflation And The Age of Competitive Currency Devaluation Has Commenced And European State And Finance Leaders Waived The Sovereignty Of States Within The European Union

The global debt crisis did indeed spread to America on April 26, 2010,  shortly after the US Federal Reserve QE facilities were terminated on March 1, 2010, as currency traders sold the world’s currencies against the US Dollar, $USD.  Carry trade investing flowed out of stocks world-wide with the greatest disinvestment coming to European shares, FEZ, particularly Spain, EWP, and the Russell 2000, IWM. Chart reveals that it was at this time pure value, RPV, shares fell more rapidly than pure growth, RPG, as European Financials, EUFN, led the way down. The chart of world shares, ACWI, pure value shares, RPV, and growth shares, RPG, shows the age of debt deflation commenced April 26, 2010. Then on June 1, 2010, the US Dollar fell lower, and on July 7, 2010 the Yen, FXY, fell lower introducing the age of competitive currency devaluations.     

Chart of ACWI, RPV and RPG

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Chart of EUFN

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Crisis arose and governance changed. Jolted by a continuing slide in the Euro, FXE, soaring sovereign debt bond yields, and soaring credit default swaps, the EU Finance and State Leaders convened the Eurozone May 2010 Summit and announced European Economic Governance, seigniorage aid for Greece and called for a Monetary Union with seigniorage authority to issue eurobonds. In so doing they effected a bloodless coup where they waived national sovereignty. Sovereign nations are a principle of a bygone era. One is no longer a citizen of a nation-state; rather one is a resident in a region of global governance.  

In June, 2010, the EU state leaders and finance leaders met and announced a debt union to create Euro bonds via the EFSF monetary agency. This monetary authority will have seigniorage authority to create bonds and have lending authority to make loans to Greece and other nations experiencing sovereign distress, based upon the premise that a default by Greece would likely wipe out the banking system of Europe, as both Germany and France hold large amounts of Greece sovereign debt.

III … Soon The End Of Credit Will Manifest

“Eventually, the bad loans and bloated prices in the jumbo market will need to clear — unless we are going to give those homes away. If lenders don’t start to foreclose on these squatters soon, more will join their ranks, particularly if they no longer believe in the threat of foreclosure. Why would anyone pay when they can keep the house for free?” … IrvineRenter Thinking About Accelerated Default? The Average Squatting Time Is Up to 449 Days Irvine Housing Blog.

My response is that lenders will foreclose when they can no longer get commissions, points, etc on referring borrowers to Fannie Mae and Freddie Mac for the non jumbo market place … and that day is coming soon as we are reaching “the end of the age of credit” as soon the government will not be making new mortgage loans. 

A Financial Regulator, a Credit Seignior, will exercise Discretionary Governance, and announce a Home Leasing Program administered by the banks on their REO properties and those of Freddie Mac, Fannie Mae and the US Federal Reserve. Mortgage lending and securitization of loans will cease, and leasing of homes will be a public private partnership cooperative endeavor. Companies that have done servicing mortgage debt, such as Anworth Mortgage Asset Corporation, ANH, will quickly disappear from the economic landscape, as mortgage bond funds such as Goldman Sachs Mortgage Bonds, GSUAX, tumble in value. I also envision this Credit Seignior, perhaps in private partner partnership with American Express, AXP, and Capitol One Finance, COF, issuing credit mostly to those companies which serve strategic national needs.   

The next stage of debt deflation is about to commence.

I expect failed US Treasury auctions soon, as concerns rise over commercial and apartment mortgages held by US banks rise, and as concerns rise over US deficit spending.  

I expect the yield curve, $TYX, $TNX, will continuing to steepen as risk aversion comes to investing in the longer out US Treasuries, thus there will be rapid exit from the 20 to 30 year US debt, causing its value to quickly deflate, resulting in a fast rise in the 30 year rate, $TYX, compared to the ten-year rate, $TNX. 

The soon coming failed US Treasury auctions means the US Treasury is going to be out of money.

The economic and political shock is going to be cataclysmic. Only strategic national defense operations will be operational. There will be no money for discretionary spending, and there will be no money flowing to Freddie Mac and Fannie Mae, and thus no more mortgage lending. Debt servicing at the GSEs will be cut by the Treasury shortfalls, causing lawsuits a plenty and a dramatic rise in interest rates across the board, liquidity will evaporate, and bank lending and corporate bond lending market places will seize up.

A debt deflation ripple out of this cataclysm will be that many more people will stop making mortgage payments. Eventually squatters will be evicted and properties leased by the banks.

The likely outcome of the debt deflation and competitive currency deflation crisis is that the financial sector and governments will merge where the government becomes both sovereign debt and credit seignior.

Does such a concept seem strange to you?

Well it would not seem extreme to President of the Bank of America, A.W. Clausen who said: “New comprehensive politico-economic systems across peoples almost always arise out of conquest or common crisis” … Interview in 1979 with the Freeman Digest, “International Banking” on page 23

Yes, the day is coming soon when both monetary and banking seigniorage will come through government: Uncle Sam will be the banker and lender as the financial sector and government merge.

IV … Eventually as bible prophecy foretells, a sovereign will come to rule universally, Revelation 13:5-10; he will be complemented by a great spiritual leader who has a unifying vision for humanity; this individual will also be the seignior, meaning top dog banker who takes a cut, Revelation 13:11-18, who will direct the 666 credit system, Revelation 13:17-18, which is the seigniorage system whereby one will be given the charagma, or mark, necessary to conduct commercial activity.

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