Peter Koenig, a former World Bank economist and a Voice of Russia regular, outlines one of the scenarios in which America’s plans for a New World Order are broken.
Part I
For several decades, we’ve been told by the mainstream media that the West has a firm grip on the word’s economy and that America decides the future of the world. Peter Koenig, former World Bank economist and Voice of Russia regular, outlines one of the scenarios in which America’s plans for a New World Order are broken. This is the first part of the series about “How to dismate the New World Order”.
Imagine – it is December 31, 2013. The Presidents of the BRICS (Brazil, Russia, India, China and South Africa) plus Iran and Venezuela call an impromptu press conference – in Paris – to present a ‘Sea of Change in Economics,’ as they call it. The announcement was circulated throughout the international media and diplomatic offices and embassies just a day before – an indication of urgency. Despite it being the last day of the year with most people thinking of their year-end festivities, the event calls the attention of many – especially the world of finance – and of course the media. The press meeting is planned for 18:00 at theDolce Chantilly, in Chantilly, just 40 minutes from the center of Paris.
The seven presidents, accompanied by their Ministers of Finance, are seated in a half-moon panel in front of about 500 journalists from all over the world. The Chinese President and General Secretary of the Communist Party, Mr. Xi Jinping, opens the conference without fanfare, introducing the subject as an event that may have worldwide repercussions. He elaborates,
“We the BRICS and some other hydrocarbon producing countries, like Iran and Venezuela – others may join in the future – have decided as of tomorrow – January 1, 2014 – to introduce two new economic measures. First, the BRICS and Iran and Venezuela will launch a new currency, called the Bricso. The Bricso will, at least initially, be a virtual currency; similar to what the Euro was in its initial years of existence and currently the Sucre in the South American trading community of ALBA. The backbone of the Bricso is a basket of moneys of the BRICS and those of Iran and Venezuela. The individual country currencies will be weighed according to their respective economic strength – similar to the Special Drawing Rights – SDR – of the IMF. The initial basket of Seven, does not impede that later other countries, trading partners of the BRICS, may join the Bricso.”
Reality Check comment: One has to wonder: why do it in a sudden almost theatrical manner? The reason is simple: such a move is a declaration of war, an economic war, but a war none the less. Maybe, calling this operation a “revolution” or an “insurrection” would be more appropriate, but the essence remains the same. The West has abused its economic power and used its financial institutions to the detriment of the rest of the world. It was time to turn the tables. When global domination is at stake, it is a good idea to fire the first shot.
“Initially, each country will continue to use its own currency. In the course of the coming years we may decide to also issue the Bricso as a paper currency for all member currencies, similarly to the euro. For now, we believe, each member country will have to adapt its economy to certain established parameters of economic viability – criteria that were not followed seriously enough by the Euro member countries.”
Reality Check comment: This plan has an important technical requirement. The new currency requires a central bank. Actually, BRICS countries are already building an alternative financial system. While kick-starting it into action on short notice is quite hard, using the new mechanisms for clearing the trades done with the new currency is not impossible.
Mr. Jinping went on – “The recently created BRICS Development Bank will initially act as the BRICS Central Bank, issuing guidelines and norms of economic and financial viability, for each member country to adopt, so as to create coherence among them and facilitate trading within, as well as outside the Bricso domain. As our economies evolve, we may consider other steps to adjust to the new dynamics, like – as mentioned before – issuing common paper money. The BRICS Central Bank will also act as a bank of last resource for the member countries, lending to their respective national central banks at inter-bank rates.”
“We have also decided on an initial exchange rate between the US dollar and the Bricso – one Bricso equals 10 US dollars. This is roughly the relation of the outstanding debt – or unmet obligations – in proportion of the respective GDPs – of the US and the combined BRICS.”
Reality Check comment: It doesn’t take a prophet to predict that the western media will describe such a move as an attack on the dollar. Probably, stronger terms like “financial terrorism” are likely to be used. However, it is clear that the mainstream media will always demonize the BRICS countries so there is no point in trying to be “the good guy.” Anyone who disagrees with the NWO will be labeled as an evildoer, tyrant and terrorist. History is written by the winners and if BRICS win this financial war, the leaders of the anti-dollar movement will be hailed as heroes. Given the financial atrocities the West has committed against the world, it is safe to assume that any act aimed at dismantling the existing global financial system is actually an act of self-defense.
A murmur went through the room gaining increasing strength. But before the noise got out of control, President Jinping continued with a raised voice – “The second important step we are announcing – also as of January 1, 2014, the BRICS, Iran and Venezuela will sell their hydrocarbon – primarily oil and gas – inBricsos, in a newly created Shanghai Oil Bourse. In fact, all countries, oil producers and otherwise, wishing to trade in other currencies than the US dollar may do so at the Shanghai Oil Bourse, or in short the SOB. The reason for abandoning the dollar as an oil trading currency is its volatility. In fact, the dollar has lost its value – and its trust – over the past decades; it is beset by enormous debt and has no real economic backing. Many oil producers see their hydrocarbon wealth at risk.”
“That is all for tonight. I wish you a fun-filled transition into 2014 and a happy New Year.”
Reality Check comment: There is nothing unrealistic about this scenario. Everything could be ready quickly. The oil companies will easily “unwind” their dollar-based contracts and even if they do it gradually, the global oil price is set by the “marginal” (aka “free”) production that is not sold in advance. The same structure can easily work with 3-4 delivery points across the globe in order to ensure a fair, transparent and adequate pricing mechanism for all global producers and consumers.
The presidents and ministers collected their papers and were about to step down from the panel – when the aula exploded in yelling and shouting.
One voice barely pierced the noise on the floor – “What will happen to the US dollar?”- Screamed CNN’s José Perez – “When suddenly a third of the world’s hydrocarbon is traded in – eh – I mean in Bricsos?” – BBC correspondent, Jim Dillen, was afraid that the world economy may collapse. France’s Bernard Betancourt, exclaimed – “Finally a relief from the dollar. But where is the gold? You did not mention it as part of the basket.”
A spokesman of the Nigerian Embassy, who attended the Press Conference, asked simply – “What are we going to do with the worthless dollars in our coffers?”
Mr. Vladimir Putin, Russia’s President, tapped the mike with his pen, attempting to soften the anxiety in the room. As quiet was restored, he said – “These measures will certainly have an impact on the world economy. To predict exactly what will happen is impossible. Time will tell. But, yes, there will be some collateral damage, especially in those countries that have been relying heavily on the US dollar, on trading with the United States. But it will also affect us, the BRICS. A large proportion of our dollar denominated reserves will be wiped out, as the dollar will undoubtedly plummet – but again, it is difficult to speculate at this time to what extent it will lose its value.”
Reality Check comment: In judo, this is called a sacrifice-throw. Such moves require the thrower to move into a potentially disadvantageous position in order for it to be executed, such as falling to the ground. The momentum of the falling body adds power to the throw and requires comparatively little strength, compared to the effect. Sacrificing a part of currency reserves in order to bring down the American empire is definitely a good strategic move.
Mr. Putin directed his next words at the representative of Nigeria – “And, Sir, yours too – and that of other countries that have large amounts of US Treasury bonds in their central banks. But, ladies and gentlemen, I predict that this is only a short-lived loss, as we will quickly recover the value of the lost dollars through a stronger and more stable Bricso. To be precise, the artificial and highly inflated value of the US dollar – which in fact, has for decades had no real backing, other than the world’s belief in America’s strength. But by now, most of the world realizes that the only strength that Washington can stand for is brute military force. Its economy depends on wars and conflicts around the world. The US economy is indeed based on destruction – not construction. Accounting for all associated industries and services, way more than 50% of the US GDP consists of the American military industrial and security complex. The rest is consumption of goods made abroad, many of them in the BRICS countries, and of values of services blown out of proportion.”
Reality Check comment: The crucial aspect of this operation is the message sent to the people of the world. The message is about the change of core principles of the global economy. Any change in the global financial system is useless without a proper change of the underlying ideology. For the BRICS to prevail, the professionals working on spreading the right message have to perform brilliantly. The world must see that the whole struggle is not about hijacking the current economic system, but it is about creating an equitable economic system.
Mr. Putin paused into a moment of silence, but then continued before the outbreak of the next barrage of questions – “If America has chosen this way of life – living on debt and high above their means, some 5% of the world’s population is consuming almost 30% of the world’s resources, they may consider that to be their privilege. But it is not, since it has become a burden for the rest of the world – and for our planet. This way of life is quickly depleting the Earth’s resources and destroying the environment by a boundless pillage of unrenewable natural resources and wars.”
And after a reflective pause, Mr. Putin added – “And mind you, not even military action by Washington – lest it be nuclear and suicidal – could stop this bloodless strive for financial and economic justice and equality.
After scanning the audience, he continued – “In addition, Washington imposes the dollar as the world’s main reserve currency, and money of reference to be used in international trade. As you may know, we the BRICS, as well as some other countries, are already using our own currencies for commercial exchanges and for dealing with commodities. It would be unfair to expect the world to rely on a sheer paper currency that has no backing – and eventually is at the mercy of the United States, for example subject to inhuman sanctions, like the people of Iran is currently suffering – and Iraq in the 1990s. They can be sanctioned because their trading transactions are dollar denominated. We are seeking a fairer, freer world, in which sovereign countries can live peacefully together without the threat of subjugation for not following the dictate of a self-styled empire.”
Reality Check comment: Iran, India, Pakistan and Vietnam are already moving in the right direction. Iran is negotiating with India to trade its hydrocarbons in rubles and yuan. Pakistan is moving towards dropping dollar-denominated trading with China. India and Vietnam are progressively moving towards a close cooperation with the Customs Union of Russia, Kazakhstan and Belarus in which all members are strongly encouraged to drop the dollar in bilateral trade.
Silence. Mr. Putin looked around the room – into wide-eyed and confused faces. – “And as far as gold is concerned, yes, you are right. Gold is not in our basket. The value of gold is subject to speculation and manipulation, mostly by Western nations. The highly fluctuating value of gold is the result of speculation, but foremost, the result of fear. When world leaders, mostly westerners, are afraid of their unchecked and wildly uncontrolled economies, they resort to gold, as if gold would be a savior.
But the rising value of gold is but a thermometer for a sick economy. The intrinsic value of gold is nothing more than its industrial value. Putting gold into the basket would make the basket, the new Bricso, vulnerable to those who will undoubtedly try to speculate with gold, and maybe even revert to the gold standard to save the dollar. Those who are willing to follow the dollar, perhaps under a newly created gold standard are welcome to do so.
The BRICS and its affiliated countries are not dependent on that market. Our combined GDP is at least the size of that of the US and much stronger, more solid – it’s based on real, hard production – and what’s more – our countries account for almost 50% of the world population – not a negligible market.”
Reality Check comment:The current huge gold reserves of the West are a direct result of their colonial past and looting of poorer countries. Therefore the repartition of gold reserves has nothing to do with economic strength of the country, only with its proficiency in being a colonial powerhouse in the past. So, gold would be a bad global “currency.”
“And let me add one more caveat – while the Western world sees hydrocarbons as the panacea for energy, their driver for world domination – we know that hydrocarbons, petrol and gas, are just a passing fashion. The future is in renewable sources of energy. For example, the sun is an endless source of energy. Through photo-synthesis it can potentially achieve up to 97% efficiency of solar radiation, for which we will invest in research and development. In the meantime, we also need to refine research into Thorium reactors as an alternative to traditional nuclear power – and investigate sources we are barely aware of that they exist – all around us. But we, the BRICS and those who will associate with us, will put our economic resources into alternative and renewable resources of energy. This will, at once, save the planet, and save humanity from the dependence on those who control the oil.”
Mr. Putin paused – his eyes scanning the room – quiet, full of unasked questions and worried facial expressions. He was compelled to continue, to quench the thirst for more answers, more explanations, since a world that has been living off instant gratification can hardly imagine a long-term solution to saving humanity and the planet.
He continued – “The future is with viable alternative energy sources and we’re working on creating radically cheap energy that will allow us a higher standard of living and a drastically more efficient industry. Our search for better and sustainable energy is a long term proposition. We mustn’t think about the next financial quarter or election cycle, we must think about future generations and start working today for the long term benefits of our children, grandchildren – and their descendants, who have the same right to our planet earth as we do.”
“Tomorrow – or better yet, on January 2, 2014, because tomorrow is a holiday in most of the Western world – we will see the first impact of this economic revolution.”
With these words Mr. Putin stepped away – ignoring the ensuing volley of questions. His colleagues followed.
Reality Check comment: Such an announcement hits the American economy, breaks the morale of the US vassals around the world and it is likely to create a massive panic. The gist of the BRICS’ message is clear: this is the end of the world as we know it.
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Part II
Next is a hypothetical unfolding of events. A dynamic system, as the move described above, would engender the possibility of a myriad of different developments. Here is a possible scenario.
In the next 24 hours the media runs amok. There was not much of a New Year’s celebration in the Western Hemisphere. People were afraid. They were speculating what may happen. Some planned a run on the banks to withdraw their money, though not knowing what to do with it in a system that may collapse. They couldn’t even convert their cash dollars and euros into Bricsos, as the Bricso was to be only a virtual currency. Some planned to convert their bank accounts into BRICS currencies. They would be safe. Others continued to trust the dollar, the existing system, no matter how defunct it was. They figured Washington will again find a solution to save them.
When the banks opened, 48 hours after the announcement, the western stock markets literally collapsed. They had to be closed for an indefinite period of time to salvage what hadn’t been wiped out yet and to consolidate and control the damage.
Reality Check comment: Surely, the President’s Working Group on Financial Markets (aka “Plunge Protection Team”) would intervene in the markets, but when everyone is trying to sell their holdings no intervention can keep the markets afloat. The size of the US financial markets (esp. financial derivatives markets) is in the hundreds of trillions of dollars dwarfing the US gross national product. There is no way to avert a collapse if the BRICS pull the rug from under the US market.
At the same time, there was indeed a run on the banks. Some wanted to withdraw, others to convert their money. The resulting chaos made the authorities close the banks again. After ten days, people took to the streets. They had no cash left to buy food and other necessities. The banks opened again, first for a few hours per day with strict withdrawal limits.
Reality Check comment: There is nothing surreal or impossible in this scenario. Actually, we can speculate that the US and EU banking systems have been preparing for a crisis of similar magnitude. The European “bail in” banking regulations and the Cyprus banking collapse are two examples of the West preparing for a generalized banking crisis.
After a month, as lines behind the counters got longer instead of subsiding, some European governments considered, especially the weaker Eurozone countries, to exit the Euro, revert to their former currencies and to nationalize their banks. This move would allow them to print their own money, stimulate their local economy with a national banking system for local production and internal consumption, thereby creating jobs – restoring confidence in society.
Reality Check comment: In this highly plausible scenario the IMF, European Commission and World Trade Organization (WTO) would be powerless with their likely sanctions, such as capital controls, international trade blockade, or a ‘financial marshal law’ to stabilize the illusionary ‘markets’ – simply because the markets would indeed be illusionary, since those countries which decided to exit the Euro and progress to local production for local consumptions have decided to get rid of their corrupted leaders and chose their own way of recovery. See Argentina after the 2001 collapse.
The US indeed ordered the IMF to re-introduce the gold standard at an arbitrary rate of US$ 2,000 / oz. and with a ‘debt-equity’ ratio of 10:1, meaning that a country’s outstanding debt or unmet obligations, as is the case in the US, could be ten time higher than the gold coverage of its circulating money mass.
To protect the interests of the dollar economy, the IMF in unison with the BIS – Bank for International Settlement, the de facto central bank of central banks, also the presumed largest gold depository of the Western economy, introduced strict rules for countries that decided to follow the new gold standard. For example, Quantitative Easing – QE – a euphemism for printing money – was strictly controlled for the US dollar as well as for the Euro. The 10:1 ratio was not to be exceeded. Banks were again divided between investment banks and the traditional commercial banking, effectively bringing back the Glass–Steagall Act – that Bill Clinton declared ‘dead’ in 1998.
Reality Check comment: Basically, in this scenario, the BRICS countries forced the US to swallow the bitter pill of tough economic measures. Washington would have never accepted a limit on their “printing rights” unless it was forced to. Somewhat paradoxically, a brutal financial attack from the outside world may be necessary to make the US go back to a saner form of economy.
The Gulf State oil producers rushed to convert their dollar reserves into Bricsos – some into euros, as they didn’t trust the BRICS. Of course, by the time the banks opened, the dollar had already lost about two thirds of its value vis-à-vis the Euro and the British Pound. The current loss from conversion into Bricsos would be even higher, but who knows what will happen to the Euro. Will the Eurozone stick together? – Fall apart? – Chose different alliances – maybe migrating towards the BRICS system?
Six months down the road, Greece, Spain, Portugal, Italy and Ireland had chosen to exit the Eurozone and to restart their economy with their local currencies; some of them quietly seeking an alliance with the BRICS. The Eastern European and Central Asian countries which recently acquired Eurozone status were in a dilemma: they desperately wanted to belong to the Western monetary system, but in trade they were closer to Russia and China, key partners of the BRICS. Their state of limbo would create internal unrest – parts of the population still identified with the former Soviet Union, others tried to stubbornly adhere to the dollar system, no matter how defunct it was.
Reality Check comment: One important consequence of this scenario is that political leaders around the world will see that the change is possible. The mere sight of the BRICS’ actions should have a liberating effect on the mindset of national leaders who grew accustomed to the idea that American economic hegemony is eternal and invulnerable. In this scenario, the Eurozone breakup becomes almost inevitable because the mechanisms of economic coercion employed by the European Commission will be “jammed” by the ensuing crisis. Without firing a single shot, the BRICS and their allies can start a chain reaction of financial liberation in Europe and around the world.
Western stock markets had opened again a few months earlier, but were trading cautiously, with firm limitations. Speculative buying long or short was prohibited. Stock market listed companies and corporations were carefully analyzed as to the extent of their autonomy within the ‘Western markets’ – vs. dealing with the BRICS market.
What was left of the globalized Western ‘market economy’ was limping along. Many were in doubt whether they should remain faithful to a system that has let them down. Some thought to diversify into the BRICS domain, as they saw the long-term gains in a sounder and more just economy.
On the other hand, the BRICS and its two associate members, Iran and Venezuela, recovered rapidly from the first shock, as their new strong currency gave them a boost vis-à-vis the other half of the world economy which was still teetering on the dollar with some backing of the Euro.
Reality Check comment: In this scenario the BRICS would work hard to develop their internal market(s) in order to compensate the reduction of demand from the decaying western economies. Internal market development coupled with efforts to satisfy the internal demand with internally produced goods has created a virtuous cycle of sustainable economic development.
Within the first year, Indonesia and Malaysia joined the BRICS alliance. The BRICS market grew almost exponentially, not only in production and consumption, but also in research, especially for alternative, renewable sources of energy – a policy promised by the BRICS Presidents at their Press Conference in Paris on New Year’s Eve 2014. Freedom from fossil fuels meant also political autonomy and a path towards real democracy and well-being. Food self-sufficiency for the BRICS and their allies will be achieved from day one. The West won’t be able to jack up the prices for food commodities (markets crashed, lack of speculative capital). This will reduce the price of food worldwide. At the same time, the people in the West won’t be able to consume as much as they did before 2014, making the food available to the whole non-western world at bargain prices.
Reality Check comment: This scenario creates the perfect environment for a “BRICS Renaissance” or “reverse brain-drain”. For decades, the West has bought off the smartest and the best educated from around the world. In this scenario, the process has been reversed. Within the first year scientists began flocking to the banners of BRICS research institutions.
The new BRICS system became increasingly attractive even for those still adhering to the traditional, gold revamped ‘dollar-euro economy’. As more of the richer, more prestigious – and remaining – Euro countries, Germany, France, The Netherlands, Finland, Sweden, Denmark – saw the benefits of trading with the BRICS system, the Euro became gradually aconstant in trading with the BRICS market.
By early 2015, negotiations began to make the Euro part of the Bricso basket.
Reality Check comment: Hard feelings between politicians can’t cancel objective economic needs. Europeans needed to sell their exports to the BRICS countries and needed to buy the hydrocarbons – while waiting for viable renewable energies to become marketable. Eventually, they got used with the new system even if they didn’t like it.
At the beginning of 2015 the Shanghai Oil Bourse was in full bloom. It traded trillions ofBricsos, not only from BRICS and associate countries, but from all over the world. Hydrocarbon producers realized that the Bricso was a stable currency, offering more long-term security then dealing in dollars. Hydrocarbon trading in dollars gradually subsided.
In addition, the SOB member countries agreed on levying an energy tax – one per-mil (0.1%) of the daily volume of trade – to fund research and investments for alternative renewable energies.
Reality Check comment: Besides providing a steady stream of financing for energy related research, such a tax is a wonderful damper for excessive volatility. In the West, financial oligarchy has always blocked any attempt to introduce a “transaction tax” or a “Tobin tax” on financial transactions. BRICS countries have the luxury to introduce financial safety measures that are impossible in the countries controlled by financial parasites.
The exchange rate of the gold-backed dollar tended to fluctuate significantly. Gold as the backbone of the dollar based Western economy was vulnerable to speculation. Even though the exchange rate to the dollar and associated currencies was fixed, speculative fluctuations influenced the conversion rates of the gold-dependent currencies – demonstrating the psychological factor of instability. Nobody was really sure if and when the IMF would decide on another gold-dollar parity rate. This could happen any time, since the IMF was still a mere extension of the US Treasury.
Reality Check comment: This is a very important aspect that most of the “gold bugs” get wrong. The return of the gold standard doesn’t mean that the existing financial oligarchy will lose its grip on the American and European financial systems. The method of control may require adjustment but nothing will change if the whole financial infrastructure (i.e. the banks, the clearing houses, the exchanges) remains under the control of the same old financial clique. The gold standard per se is not a “silver bullet” for the global economic problems. A deeper reform is a needed.
The artificially inflated speculative value of gold was gradually falling towards its real intrinsic value. It still may take a while until the value of gold – which cannot be eaten in times of crisis – would end up at its mere industrial value. Gold has had a long-lasting tradition and thousands of years of history as one of the most precious metals, measuring the wealth of kings and czars. It will take a new way of thinking, new generations, to realize that what really counts are not primarily material values but cooperation, solidarity and peace among people. Material values always tend to interfere with these sustainable human values.
On the other hand, the Bricso had by now, early 2015, the solid backing of 9 nations, the economies of the five BRICS, plus those of Iran, Venezuela, Indonesia and Malaysia. – Mongolia, with a fast growing economy – about 10% per year – was also envisaging coming closer to the BRICS.
Reality Check comment: In a contest between a gold standard and a properly managed fiat standard, the fiat monetary system will win because few people will agree to replace the banking clique with a clique of the world’s biggest mining companies.
As more countries tended to trade in Bricsos, the currency gained in strength. It became a solid reserve and reference currency for many non-BRICS countries. The energy tax was popular and its use transparent. It was a trend-setter for a different way of thinking. From 2015 / 2016 forward, protection of the environment and a life more integrated into nature with more social justice, using what nature had to offer without destroying it, became increasingly ingrained in the minds of people. These concepts were also reflected in teachings and culture.
Reality Check comment: The main change achieved through this financial and economic maneuvering is a “paradigm switch”. The world’s economy must embrace the ideology of “innovation without financialization”. The current economic structure has an unnatural tilt or bias towards financial markets that tend to dominate over the traditional industrial economy and agricultural economics. Boosting innovation and curbing financialization is the key to a stable, sustainable and equitable economy.
From about 2020 onwards a shift from material to human life values became noticeable. A healthy environment, protection of species and resources became progressively important. A solid education and health services for all became important. The value of economies was no longer just linear, material and measurable growth – the old GDP – but included also – and to an ever-growing degree – values of well-being, such as capability of conflict resolution and living in harmony with each other and the environment.
What the BRICS had started in 2014 was perhaps a utopia – a new monetary and economic system, detached from wars and conflicts for greed, striving for peace and equality. There was no way to predict its outcome – other than faith that with political will the utopia might succeed.
By Peter Koenig, Voice of Russia
Global Research