Iceland's Economic Revolution - New Eastern Outlook
By F. William Engdahl
Iceland - image source
|Icelanders are a proud stubborn people with more than 1200 years of history, rugged Scandinavian stock, living in one of the most beautiful natural areas of our Earth. In 2001 her government made a colossal series of disastrous decisions that resulted in the worst banking crisis in history.
Prime Minister Davíð Oddsson, enchanted with Milton Friedman’s free market ideas, implemented a course of tax cuts, cut the corporate income tax to 18%, abolished the net wealth tax, lowered the personal income tax and inheritance taxes and privatized the banking system, introducing financial deregulation along lines of the United States, for a nation with a population of a mere 239,000 citizens. He also entered a free trade agreement with the EU. Oddsson joined the charmed circles of Bill Clinton, of George H.W. Bush, who was invited to Rekyjavik to go salmon fishing. He became a regular at Bilderberg meetings. It seems it all went to his head.
Oddsson went on to become head of the Iceland National Bank in 2005 where he fed the megalomania of the three deregulated banks by in effect printing money at unprecedented rates, flooding the economy with liquidity, until he was de facto fired in 2009 by an act of parliament in the wake of the worst banking crisis in Iceland’s history.
Since the outbreak of the Iceland banking collapse and economic crisis in 2008, in the wake of the September 2008 US Lehman Bros. crisis, Icelanders, exercising their centuries-long tradition of direct democracy, took to the streets demanding fundamental change.
Oddsson’s pals in the small country’s newly-deregulated private banks had abandoned caution to the winds as they decided Reykjavik was destined to become the new Wall Street, an emerging world financial center.
By the outbreak of the global financial crisis, the three banks had combined assets equal to more than 11 times of the Icelandic GDP. They held foreign debt in excess of €50 billion, compared with Iceland’s gross domestic product of €8.5 billion. The inexperienced Iceland bankers had financed their staggering growth by borrowing on the interbank market mainly from UK and Holland banks.
The government’s main priority was to insulate the nation’s population and economy from the effects of the wanton lending abuses of the three banks, something the present Greek government was elected to do for its citizens, to the horror of German Finance Minister Wolfgang Schäuble and others. By November 2008 Iceland’s unemployment had tripled in a matter of two months.
When the dust settled, relative to the size of its economy, Iceland’s systemic banking collapse ranked as the largest experienced by any country in economic history. By the October 2008 the country’s three major banks–Glitnir bank, Landsbanki and Iceland’s largest bank, Kaupþing were placed into state receivership, nationalized.
That was the same time US Treasury Secretary Henry Paulson, who deliberately triggered the Lehman crisis, categorically refused nationalizing the criminal Wall Street banks, contemptuously stating, “Nationalization is socialism; we don’t do that here.” It was a lie at best as Paulson, with carte blanche control over an unprecedented $700 billion Troubled Asset Recovery Fund, bailed out AIG, Goldman Sachs and his old buddies on Wall Street with “socialized” losses dumped on American taxpayers.
Unlike Greece or Ireland or other EU countries or the USA, the Iceland Parliament and government refused to give unlimited state guarantee to save the private banks.
They nationalized them instead, creating a “Good bank-Bad bank” model loosely based on the successful Swedish 1992 experience with Securum. All domestic assets of the three banks were placed in new publicly-owned domestic versions of the banks. All foreign liabilities of the banks, which had expanded with subsidiaries in the UK and Netherlands, went into receivership and liquidation. British and Dutch bank counterparties and governments shrieked howls of protest, threatening Iceland with being blackballed and forever cut off from further credit by the world. The government also imposed currency controls.
The Parliament established an Office of Special Prosecution to investigate allegations of criminal fraud by government and bankers. People responsible went to prison. Baldur Guðlaugsson, Permanent Secretary of the Ministry of Finance went to prison for insider trading; the president of Glitnir bank went to prison for tax fraud; the president of Kaupthing Bank got 5 ½ years prison; former Prime Minister Geir H. Haarde was indicted.
Iceland decided to go it alone and focus on rebuilding her devastated real economy. The results are quite opposite the results in the EU where the brutal IMF and ECB and EU austerity policies have turned a banking crisis into a major economic crisis across the EU.
By March 2015, according to the IMF itself, “Overall, macroeconomic conditions in Iceland are now at their best since the 2008-9 crisis. Iceland has been one of the top economic performers in Europe over the past several years in terms of economic growth and has one of the lowest unemployment rates… Iceland’s strong balance of payments has allowed it to repay early all of its Nordic loans and much of its IMF loans while maintaining adequate foreign exchange reserves.” The report added, “This year, Iceland will become the first 2008-10 crisis country in Europe to surpass its pre-crisis peak of economic output.”
Revolution in banking next?
The most dramatic and heartwarming development from the Iceland financial crisis however is the Prime Minister’s proposal to revolutionize the country’s money creation process. The first country in the present world to consider such bold action, Prime Minister Sigmundur Davíð Gunnlaugsson commissioned a major report, on reform of the monetary system to prevent future crises. The report, issued by Progressive Party parliamentarian and chair of the parliament’s Committee for Economic Affairs and Trade, Frosti Sigurjónsson, examined the very taboo subject of how private commercial banks are able to create money “out of thin air.”
The report considers the extent to which Iceland’s history of economic instability has been driven by the ability of banks to ‘create money’ in the process of lending.
They went to the Holy of Holies of the secrets of banking since the Bank of Amsterdam first introduced systematic fraud into credit lending in the late 1700’s before it went bankrupt—fractional reserve banking. That simply means a bank lends many times over its deposit or equity base. If there is a crisis of confidence and depositor bank runs, under fractional reserve banking, the bank goes under.
The Frosti report concluded its examination of the link between Iceland bank lending up to September 2008 and the severity of the crisis. Their conclusion was that, “the fractional reserve system may have been a long term contributing factor to various monetary problems in Iceland, including: hyperinflation in the 1980s, chronic inflation, devaluations of the Icelandic Krona, high interest rates, the government foregoes income from money creation, and growing debt of private and public sectors.” That’s a strong indictment and accurate.
It described the stages of every bank crisis since at least 1790 when the Bank of Amsterdam went bankrupt after a run: “A bank’s stock of cash and Central Bank reserves (both assets of the bank) is small compared to total deposits (the banks’ liability). A rumor that a bank may be in difficulty can therefore cause customers to withdraw their deposits in panic (a bank run). A bank run forces the bank to sell assets quickly to fund payouts to depositors. Such a sudden increase in the supply of assets can lead to a fall in market prices, putting other banks into trouble, and the whole banking system may follow.”
Sovereign Money System
The report to the Prime Minister concludes that a revolutionary change in control of credit is needed to control the greed and voracity of the private banks. They call for something known as a Sovereign Money System.
To read more including Iceland's simple and effective solution, click on the link below
Image source and a little more background - Icelandic People Take Back Government. Refuses to pay international debt!
In the first part of this series, I wrote how it is less than useful being informed of the problems of this world if we do not understand or are not shown the causes of the problems. Being subjected to a litany of the harmful effects and not the causes is disempowering. It contributes to a condition known as “learned helplessness”.
The answers to the world's problems are predicated on knowing the causes of these problems.
The second and third parts detailed the primary cause of our troubles, psychopathy; it's nature and prevalence together with some tips on how to deal with it in your personal life. Psychopaths in religion, politics, law and business, especially banking, cause the vast bulk of humanity's problems. But, to remain in control, psychopaths need to divorce us from our power over ourselves through propaganda to control the content of what we think about and offer us the false choice of being for or against whatever the topic of the day is. They cause further conflict between us by offering power over others to further divide and thus rule us. This essay is about how they use their psychopathic culture against us to divide us so that we attack each other and disempower ourselves as a group against the psychopaths. In short, how we contribute to the problems we all suffer from.
Our present culture is psychopathic in nature because it is organised around coercion. But it wasn't always this way. This is not how we evolved through 99% of our history. Before civilisation (the last 1% of our time on earth), humans lived in tribes which were generally of a size where everyone knew everyone else. There were no hierarchies to speak of, no prisons and no taxes. We lived according to Natural Law where it was accepted that everyone was of equal value and were treated accordingly, unlike our present day situation.
But what is Natural Law? Natural Law is the law of nature; that which can be observed in operation in the world and is universal and immutable. These are the observable principles that govern and guide our world including our species. The law of gravity is one such law, for instance. It is constant and is not dependent upon someone's opinion. Quite the opposite, in fact. Anyone who advocates that there is no objective reality, that reality is a matter of personal perception, is welcome to jump off the roof of my house any time they like!
(If you haven't read Pt1 - Psychopaths and Power: Hand, Meet Glove- pt 1: Civilisation and the Rise of the Psychopaths, it can be viewed here)
Many people do not want to know about psychopathy. It is not something I relish thinking about for too long myself. Who wants to contemplate evil? But to survive, we need to learn about it. If we leave it to the 'authorities', then we are leaving it to the foxes who are in charge of the hen-house to police themselves and to inform us as to their goings-on as they see fit.
We are in this world with psychopaths amongst us and in charge of us whether we like it or not. And psychopaths will exploit us at every opportunity regardless. They bring about the wars and the poverty and much else besides including serious crimes against us as individuals and as nations. So it behooves us to learn about them and their condition. Once we learn to recognize them, we can actually improve our individual lives because we can remove them from our personal lives (or ourselves from their lives) and not continue under their spell and not keep following their destructive advice.
It may be unpleasant to recognize one or more family members or acquaintances as being psychopaths but once you do and take appropriate action, life for yourself and for the rest of your family or social circle can improve markedly. The same applies to businesses and all sorts of organizations. With growing awareness of this condition, we can affect government and politics for the better. This path is the only one that will bring an end to wars and poverty because no matter how ingenious an answer to a problem that is enacted, it will be undone by psychopaths who will be attracted to your organization or your solution. If you can't spot them coming, then your work will be in vain.
If you have read my previous article, you will have read that psychopaths believe they can create reality. This is a delusion, of course, but they do 'create' delusions. I say 'create' because delusions, by their nature, do not exist in reality. But they can exist in peoples minds. If your mind is out of sync with the objective world around you, you will sooner or later find yourself in a world of pain. Your progress through the world will become like trying to navigate through a minefield with a faulty map.
To illustrate this, we have a quote from Evgeny Fedorov, a deputy of the Russian Parliament, talking about the Ukrainian disaster but it is applicable to most situations, “Many, many thousands of people will die in this slaughter. This slaughter will only increase. You know why? Because when people don’t have the truth, they can’t solve the issue.”
The problems that face mankind now are a result of following that faulty map that has been drawn up for us in many ways by psychopaths over many centuries. We are not entirely innocent either. I will discuss the ways that normal, empathic, people contribute to the madness of this world in the next essay. But for now, we'll focus on the psychopaths.
Below is an excellent article by William Barbe copied (with emphasis mine - Ed) from Signs Of The Times website.
I have a couple of qualifications, though. The article concerns a talk given at the Mises Institute by one of its members, Judge Andrew Napolitano. I do not endorse the Mises Institute as I disagree with their solution to the current economic woes. But that is another issue for another day.
I also want to point out that though Judge Napolitano correctly blames government for the abuse of our natural rights (and for the incarceration of half of the US prison population even though they have not harmed anyone - and therefore have committed no crimes - in another video talk of his), he leaves out the very pertinent fact that his own profession is entirely complicit in these outrageous abuses and that these abuses are knowingly enacted daily for the profit of the legal profession. But more on that below William Barbe's article.
|Judge Andrew P. Napolitano, once a Fox News TV show host - and now an outspoken critic of the US government - delivered a short, intriguing, and, I believe, important speech at the Mises Institute in Costa Mesa, California, on November 8th, 2014.
He began by talking about the origins of Natural Laws, beginning with this quote from Sir Thomas More's treason case under Henry VIII:
Some men say the earth is flat.
More was appealing to the jury of the Laws of Nature that restrain even the government. This was the classic Natural Law argument. More was not the originator of this argument; that was Saint Thomas Aquinas nearly 800 years ago. The English liberal philosopher John Locke picked up on this, as did Thomas Jefferson when he wrote the Declaration of Independence, and James Madison when he was a Scrivener for the US Constitution.
Thomas Jefferson's version of More's phrase -- "We are endowed by our creator with certain inalienable rights and among these are life, liberty, and the pursuit of happiness" -- articulates the view that our rights come from our humanity.
Napolitano asks: What are these rights that come from humanity? And how can the government trample them? The concept of Natural Rights articulated by Aquinas is that there are areas of human behavior for which we do not need a government permission slip in order to make free choices. Things like freedom to develop your own personality, to think as you wish, to say what you think, the right to worship or not to worship, to assemble in groups or to refuse to assemble, to petition the government for redress of your differences, and the right to defend yourself against tyrants. These are the quintessential 'American rights'. The right to be left alone, for example, codified in the Fourth Amendment today is called the 'right to privacy'.
Below is a very instructive article first published in Russian by Dmitry Kalinichenko. This translated version by Kristina Rus was found at Fort Russ. I have copied it below in full but I urge readers to follow the link to Fort Russ to read this and other excellent articles.
| Grandmaster Putin's Golden Trap
by Dmitry Kalinichenko for Investcafe.ru
Accusations of the West towards Putin traditionally are based on the fact that he worked in the KGB. And therefore he is a cruel and immoral person. Putin is blamed for everything. But nobody ever accused Putin of lack of intelligence.
Any accusations against this man only emphasize his ability for quick analytical thinking and making clear and balanced political and economic decisions.
Often Western media compares this ability with the ability of a grandmaster, conducting a public chess simul. Recent developments in US economy and the West in general allow us to conclude that in this part of the assessment of Putin's personality Western media is absolutely right.
Despite numerous success reports in the style of Fox News and CNN, today, Western economy, led by the United States is in Putin's trap, the way out of which no one in the West can see or find. And the more the West is trying to escape from this trap, the more stuck it becomes.
What is the truly tragic predicament of the West and the United States, in which they find themselves? And why all the Western media and leading Western economists are silent about this, as a well guarded military secret? Let's try to understand the essence of current economic events, in the context of the economy, setting aside the factors of morality, ethics and geopolitics.
There are two wars being waged in Ukraine. One is by the Kiev Junta Forces (KJF) against the citizens of the Donbas in an effort to drive them out of their home and to kill and terrorize those that remain. This is, of course, one big war crime. The second war is being waged by the Novorossian Armed Forces (NAF) against the invading KJF and their masters in Kiev.
The purpose of Kiev junta's war is to gain (or regain) control of physical territory and resources. That is what is important to psychopaths. Behind the oligarchs in control of Kiev are the bankers of London and New York who control NATO and their member governments. Their big picture aim is to cripple the Russian economy so it doesn't outshine the dying economies of the West and to eventually bring about regime change in Moscow.
The NAF are fighting to completely eliminate the Ukrainian military and the fascist volunteer forces as viable forces that can be used by the junta against all the people of Ukraine.
(picture source) . . . Come on Porky. Just a bit closer . . . .
They aim to bring about freedom for the Novorossians and the chance for the rest of Ukraine to bring about a regime change of their own. This will suit the Russian government in its overall aim of eliminating the bankers from any power over the BRICS nations and eventually eliminate them from any power in the world.
So right now the junta are shelling the population of Novorossia to gain territory and the NAF are setting about systematically killing the KJF. The NAF are much less interested in controlling territory in the short term. They are focused on destroying the KJF and the best place to do that is in the Donbas on their own territory where supply lines are short, where they have the support of the people and where they know the territory intimately. It also frames their war as defensive and not aggressive.