Modern Slavery: Exposing The Globalist Scam

Authored by James Rickards via DailyReckoning.com,

Yesterday, the Fed did what I predicted it would do and cut interest rates. The “pivot” has finally arrived, ending the rate hike cycle that began in March 2022.

I’ll have much more to say about it going forward, but today, I want to talk about the dangerous globalist threats to our freedoms that we presently face. Let’s start with a question:

Do you know these initials: GBI, MMT, WTO? If you do, you understand the neoliberal globalist effort to make sovereign governments obsolete and effectively harness the population of the developed world in a kind of slavery to mega-corporations and soulless wealth managers.

If not, here’s your opportunity to learn how the world works.

GBI stands for guaranteed basic income. It’s a kind of government welfare with no questions asked. It’s a 21st-century version of the ancient Roman dole that handed out free grain to poor citizens to keep them contented.

Along with grain (later bread), Rome provided free games such as gladiator contests and chariot racing. This combination caused the Roman poet Juvenal to refer to Roman public policy as “bread and circuses.” Today, we have the NFL.

The idea behind GBI is that there’s not enough value-added work to employ the population. But if everyone were unemployed, there would be no consumption and no economy.

We might always need workers in bars, restaurants, elder care, plumbing and landscaping, but computers and robots powered by AI will soon be able to do almost everything else including legal, accounting and writing. (Don’t worry; I’m writing this myself. I’m not a robot).

Instead of scrounging for work, individuals would receive a monthly check from the government. There would be no conditions on receipt of the check. If you happened to have a job, you’d get one anyway.

Children would get them also, to be held in special accounts until reaching legal maturity. No income requirements, no floors or ceilings, just a check. The idea, of course, is to create dependence on the government. In many cases, the check would be enough money, and people could simply quit their jobs.

With government money come government strings attached including acceptance of vaccine mandates, censorship of social media accounts and voting support for the ruling party. Most people accept these conditions willingly, as we saw during the pandemic.

It will not surprise anyone to learn that the leading advocate for GBI is Mark Zuckerberg, the founder of Facebook who’s worth about $100 billion. He won’t need the check. He just wants everyone to be as dependent on the government dole as they now are on Facebook and other social media.

Zuckerberg is one of the corporate giants who stand to benefit from a population addicted to government checks.

Below, I show you the globalist scheme that wants to make you a modern-day slave. Read on.

The Globalist Scam

Where’s all this money coming from? That’s where MMT comes in. MMT stands for Modern Monetary Theory although it’s not particularly modern (it was first proposed in Germany in the 1920s), the practitioners don’t seem to know much about money (they view it as an asset rather than debt) and it’s not really a theory (it’s more of an ideology that cannot be tested empirically until the crash comes — then it fails). Whatever. MMT is the flavor of the month in Washington, D.C.

The idea behind MMT is that there’s no limit on government debt provided the debt is in the same currency you print. This condition applies to the U.S. but does not apply to countries such as Argentina that print pesos and borrow in dollars. That’s why Argentina defaults about every 10 years like clockwork.

The U.S. has no need to default — we can always just print whatever money we need to redeem the debt. This approach effectively merges the U.S. Treasury and the Federal Reserve into a single money machine (although there is no statutory authority for this).

The Treasury borrows in dollars, the Fed monetizes the Treasury debt with printed money and holds the bonds on its balance sheet until maturity. Problem solved.

With unlimited borrowing power comes unlimited spending power. (That’s one way to finance GBI.) How long can this go on? Forever, says the MMT crowd, unless inflation arises, in which case their solution is to fight inflation by raising taxes. Are you following this? Good, because it gets crazier.

MMT claims that we don’t even need a Treasury bond market. The Treasury can just give the Fed wire instructions to send money to Raytheon, Lockheed Martin or General Motors and out goes the money. The bond market is just a favor to investors so they have some place to put their money. We don’t actually need it — the Fed can just send the money.

Stephanie Kelton, a professor at Stony Brook University and former top adviser to Bernie Sanders, is the bright light of MMT. I recommend her book The Deficit Myth (2020). Almost everything in the book is dead wrong, but I recommend it so readers can see just how untethered MMT really is.

Kelton got her ideas during a house visit with Warren Mosler in St. Croix. I was a nearby neighbor when I lived in St. Croix in the early 2000s and recall his local radio ads when he was running for Congress. Mosler was a successful hedge fund manager at Adams, Viner and Mosler and one of my customers when I was a bond dealer at Greenwich Capital Markets.

Mosler used to pay his children with his own business cards instead of cash when they did chores. Of course, he never ran out of business cards because he could always print more. But his children were stuck. If they wanted to go out or buy presents, they had to go to Daddy and redeem the cards (bonds) for real cash (printed money).

Kelton thought this arrangement was charming. The kids were trapped in the business card system and could not escape unless they went to Daddy (the Fed) for money. Mosler could impose whatever further conditions he wanted. Kelton thought, Why can’t governments do the same thing? Her answer: They can.

What’s not to like? Under MMT, you get unlimited debt (if you even want any), unlimited spending, unlimited debt-to-GDP ratios (hey, look at Japan. They’re at 300%!), and you can offer GBI, welfare, Medicare for all and anything else. So Kelton says.

Here’s what’s missing: When your debt-to-GDP ratio goes over 90% (the U.S. is currently at 130%), the growth from additional spending is less than the amount spent. This means the debt-to-GDP ratio goes higher and growth slows down even more. You can’t borrow your way out of a debt trap. The collapse of the dollar is not the most immediate danger. The immediate danger is the collapse of growth.

MMT’s idea of fighting inflation with tax increases is also fatuous. Inflation is already a hidden tax; it robs your money of purchasing power just as surely as the IRS taking it away. Tax increases to fight inflation are doubling down on taxes. If inflation does drop, it won’t be a “soft landing.”

It’ll be a hard landing with higher unemployment, slower growth (or recession) and possible deflation (which increases the real value of the debt, making the original problem worse). I guess Shelton wasn’t around in the late 1970s when we had high inflation, high unemployment and a crumbling dollar all at the same time.

Shelton’s biggest blind spot (she has many) is the idea that the monetary system is a closed loop and investors have nowhere else to go. That may be true of Mosler’s children (unless they ran away from home) but it’s definitely not true of the U.S. dollar.

It may be the case that the Fed can control short-term interest rates. It may be the case that JPMorgan and Citi can prop up the Treasury debt market. But no one is big enough to control the $7.5 trillion per day foreign exchange market (far larger if derivatives are included).

The U.S. dollar system isn’t a closed circuit. There are several off-ramps, including reducing balance sheets and buying gold. The collapse of the dollar due to MMT will not emerge through the bond market or stock market at least initially. It’ll emerge in the foreign exchange market.

Finally, we come to the World Trade Organization (WTO). The WTO mandates “most favored nation” treatment, which means that if you offer low tariffs to one trading partner, you must offer those same low tariffs to every trading partner that belongs to the WTO.

The WTO also oversees negotiation of successive rounds of across-the-board tariff reductions (which have not been successful in recent years) and offers an arbitration forum for settling trade disputes to avoid escalation into full-scale trade wars. The WTO can impose penalties and other remedies on countries found to have violated the rules.

China was admitted to the WTO in 2001. Since joining, China has broken WTO rules consistently with government subsidies, theft of intellectual property, slave labor, accounting fraud and more. The U.S. was relaxed about this on the view that, in time, China would modernize and become “just like us.”

China has modernized but it has become more stridently communist than ever. The U.S. was played for a sucker, U.S. industry was stripped bare and U.S. jobs were lost by the millions. The globalists (Clinton, Bush, Larry Fink, Obama, Yellen) still support this scam.

China supplied the slave labor, Fink supplied the money and together they were off to the races. Indeed, they are enriched by it. The nationalists (Trump, J.D. Vance, Robert Lighthizer, Peter Navarro) are pushing back with some success, but the outcome is undecided as of now.

The WTO is an example of what globalists call encasement. The idea is that national governments don’t matter. Democracy is fine but it’s really not that important to the globalists. What’s important is that all global powers — democratic, communist, socialist, kleptocratic — play by the same supranational rules that encase the system of sovereigns.

These rules require free trade, open borders and free capital flows or as close as you can come. In theory, this allows for price discovery, lower costs and higher returns to capital. In reality, it causes lost jobs, lost competitiveness and lower wages, especially for Americans.

If Trump wins, he and his advisers will break free of the encasement with high tariffs, expanded U.S. manufacturing, U.S. jobs with higher wages and reducing the debt-to-GDP ratio with higher growth. China may suffer, but that’s their problem. America first.

So that’s the globalist plan. GBI will make everyone a welfare slave. MMT will make everyone a debt slave. WTO will make everyone a wage slave. The super-capitalists will get even richer and the politicians will take their share.

This system will prevail unless Trump and the MAGA team he’s assembled win the election on Nov. 5. Until then, investors should hedge their bets with cash, gold and reduced equity exposure.

That’s the best posture until the all-clear signal sounds.