The Next Economic Crisis, The Looming Post-Multipolar System And Hybrid War Forever

South Front

The Impending Crisis

At one time, specifically during the post-World War 2 Bretton Woods era, it looked like as if the capitalist model could be indefinitely sustainable and avoid plunging the world into major world conflicts. That era began to come to an end during the stagflation crisis of the 1970s, and came to a complete end at the end of the Cold War which ushered in the era of the so-called "globalization" which took form of unbridled competition for markets and resources. At first this competition did not show many signs of trouble. There were many "emerging markets" created as a result of the collapse of the Soviet bloc into which Western corporations could expand. However, the law of diminishing returns being what it is, the initial rapid economic growth rates could not be sustained and attempts to goose it using extremely liberal central bank policies, to the point of zero and even negative interest rates, succeeded in inflating-and bursting-several financial "bubbles". 

Even today's US economy bears many hallmarks of such a bubble, and it is only one of many. Sooner or later the proverbial "black swan" event will unleash a veritable domino effect of popping bubbles and plunge the global economy into a crisis of a magnitude it has not seen since the 1930s. A crisis against which the leading world powers have few weapons to deploy, since they have expended their monetary and fiscal "firepower" on the 2008 crisis, to little avail. The low interest rates and high levels of national debt mean that the next big crisis will not be simply "more of the same." It will fundamentally rearrange the global economy. 

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War & Who is the Aggressor?

Martin Armstrong

What is very clear is that the philosophy adopted by the US military post-World War II seriously threatens world peace and it diminishes the dignity of the United States. In the Cycle of War report, I provided the evidence that every single war we have engaged in has been a lie not just the invasion of Iraq because they had weapons of mass destruction when it was all about oil and making money for Dick Cheney’s friends. Sadly, George Bush Jr will go down in history for being the aggressor when it would be a miracle if he even knew where Iraq was, to begin with. Then there was the fake news that Vietnam attacked the USA. Even Lyndon Johnson lied to the nation on TV and privately said the Americans were probably shooting at whales that night not a Vietnamese attack.

Even the sinking of the Lusitania was a deliberate act by the USA to justify getting involved in the war because Americans were isolationists. The Germans even took out an advertisement warning that the Lusitania would be sunk because it was using passengers as cover to move weapons to Britain. Our military sacrificed its own citizens to justify war.

Then there was Operation Northwoods where the documents have come out showing that the CIA wanted to kill Americans and blame it on Cuba to start a war. Every single war has been started with fake news all so some in the Military get to play with their toys no matter how many boys die for their games.

The critical problem we face is truly monumental. It is a vast problem that has consumed foreign policy discussions for decades. The underlying Syria issue brings to the surface the core problem. Besides the fact that it was the US invasion of Iraq that has unleashed the war in Syria since Sadam prevented the religious fanatics to ever gain a foothold. There was no civil war in Syria before removing Sadam. Mercenaries have come from all over to fight in Syria. It is not even purely a civil war.

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Elites’ strange plot to take over the world

Salon.com

Matt Stoller 
Sep. 20, 2013

A few decades ago, politicians hatched a Tom Friedman-esque idea to unite U.S. and Western Europe. Did it succeed? 

The idea of a country seems pretty simple. I live in America, and I’m an American. She lives in France, and she is French. The Americans have a president who is their leader, the British have a prime minister, the French have their own president, and so forth.

But the way political decision-making around security issues ricochets around the world, from Western capital to Western capital, is making a mockery of commonly held conceptions of national sovereignty. In recent weeks, a British parliament vote on Syria forced the U.S. president to seek authorization from Congress, while leaked documents detailed extensive cooperation between the intelligence services of the U.S. and other nations. The president of Bolivia was forced to down his plane by Italy and France, just because he joked about having Edwards Snowden on board. And so on, and so forth.

This all demands the question: Why do we hold the conception that we live in separate nation-states? Well, it turns out that this question was actually asked after World War II, and the answer American leaders came up with was … we shouldn’t.

In fact, Western elites in America and Western Europe after World War II made a serious effort to get rid of nations altogether, and combine all “freedom-loving peoples” into one giant “Atlantic Union,” a federal state built on top of the NATO military alliance.

As odd as it sounds, the documentary evidence is clear. This movement did manage to create a “European Union,” which came from the same ideological wellspring as the “Atlantic Union.” Once we recognize that the Cold War saw the construction of a powerful international regime that explicitly sought to get rid of sovereign nations, these broad security architectures revealed by the Syria situation and the NSA spying revelations make a lot more sense. 

The strange story of Atlantica 

The effort to unite Europe and the U.S. started in 1939, with the publication of a book by an influential journalist, Clarence Streit. This influential book was called ”Union Now,” and had a galvanizing effect on the anti-fascist youth of the time, a sort of cross between Thomas Friedman’s “The World Is Flat” and Naomi Klein’s “The Shock Doctrine.” Streit served in World War I in an intelligence unit, and saw up close the negotiations for the Treaty of Versailles. He then became a New York Times journalist assigned to cover the League of Nations, which led him to the conclusion that the only way to prevent American isolationism and European fascism was for political and economic integration of the major “freedom-loving” peoples, which he described as America, Canada, New Zealand, Australia, South Africa and most of Western Europe. The Five Eyes surveillance architecture was created just a few years later, as was the international monetary regime concocted at Bretton Woods.

When Streit wrote “Union Now,” in 1939, the German threat was obvious, World War II was beginning, and fascism and communism had linked arms through the pact between the Nazis and the Soviets. Streit’s argument, that the West needed to combine its strength to fight totalitarianism everywhere, was a powerful draw. The youth of the 1930s — those who read Streit’s book — became the political and diplomatic leaders of the 1950s, 1960s and 1970s, and many of them went on to craft the multilateral institutions and international policies of the Cold War.

Indeed, the congressional record is peppered with resolutions and hearings from the late 1940s to the 1970s pushing for Atlantic Union. For example, in 1971, the Foreign Affairs Committee in the House of Representatives convened a hearing to discuss the prospect of combining the United States of America and Western Europe into one country. This “Atlantic Union” would be a federal union, very similar to the the one described in United States Constitution. Existing countries would become states under a federalist system, with the larger federal system having its own currency, military, interstate commerce regulation and foreign relations apparatus.

That day in 1971, the committee was discussing a specific piece of legislation, a resolution — House Concurrent Resolution 163 — to create an “Atlantic Union Delegation,” a committee of 18 “eminent citizens” to join with other NATO country delegations and negotiate a plan to unite. The subcommittee chairman presiding over the hearing, congressman Donald Fraser of Minnesota, described the specific goal of the legislation as convening an “international convention to explore the possibility of agreement on a declaration to transform the present Atlantic alliance into a federal union, set a timetable for transition to this goal and to prescribe democratic institutions under which the goal would be achieved.” It was to be a Constitutional Convention.

Similar legislation, he noted, “was considered by the full House Committee on Foreign Affairs in 1960, 1966, and 1968, with favorable reports in 1960 and 1968.” Congress even passed the resolution in 1960, and spent money to send a delegation to Paris for such a convention (though John F. Kennedy and Lyndon Johnson ignored the delegation’s recommendations).

This proposal had a great deal of elite support. Nearly every presidential candidate from the 1950s to the 1970s supported it, as did hundreds of legislators in the U.S. and Western Europe. The context of first World War II, and then the Cold War, made such a proposal sound reasonable, even inevitable. 1971 was the tail end of the post-World War II era, during which there had been a frenzy of international institutional creation work designed to avoid a repeat of the Great Depression and the two world wars. A large multilateral military force formed of allied governments and millions of soldiers of all nationalities had recently defeated the fascist powers on three continents. Millions had an experience of international comity in the defeat of the Axis Powers — so the concept of political union was not so far-fetched.

Moreover, the specter of the failed diplomatic and monetary initiatives of the 1930s haunted postwar leaders, and caused them to think deeply and act decisively to weave together a system whose core was the economic, military and political interdependence of sovereign allies. The Depression was seen as a phenomenon borne of a failed international system based on short-sited nationalist objectives. Streit, the president of the International Movement for Atlantic Union, breathlessly advocated for a union lest history be repeated. A lack of a union would lead to a monetary crash, and then crushing poverty. As circumstances changed, Streit’s testimonials to Congress changed. Just after World War II, he noted that Hitler’s appeal came from fascists arguing for political totalitarianism under the slogan “you can’t eat freedom.” He argued, consistent with the anti-communism of the time, that such a union was the only way to beat the Soviet threat. Later, he pointed out that union was important because with nuclear weapons at hand, the world could not afford a repeat of pre-World War II foreign policy mistakes. Then, as Bretton Woods began breaking down in the 1960s, he argued that a 1930s-style financial crash was inevitable without union.

Streit and his fellow Atlanticists were pragmatic; they sought to build the Atlantic Union on top of the North Atlantic Treaty Organization, or NATO, the Atlantic military alliance. And there was momentum on the side of the Atlanticists; the post-WWII international institution-building was impressive. In 1944, officials from the U.S. and U.K. — primarily John Maynard Keynes and Harry Dexter White — worked at Bretton Woods to create what would become the International Monetary Fund and the World Bank. These institutions were designed to avert a monetary crisis such as the one that had occurred in the 1930s. The General Agreement on Tariffs and Trade, or GATT, was created in 1947, similarly, to avert a trade war. The United Nations was constructed to do what the League of Nations had not, to serve as a legitimate forum for nations of the world to continuously deliberate. NATO could apply the united military strength of the West. The Organisation for Economic Co-operation and Development, or the OECD, served originally as a forum whereby the United States could funnel aid to Europe to create the European Union. And this is to say nothing of the collaborative Cold War spying apparatus.

Faced with a Soviet threat, it seemed only natural to think that the next step after all of this institution-building was an Atlantic Union. Richard Nixon in 1966 supported the “Atlantic Union resolution” as a “forward-looking proposal which acknowledges the depth and breadth of incredible change which is going on in the world around us.” President Dwight Eisenhower, upon leaving office, thought such a trans-Atlantic union was inevitable, and argued it could cut massive Cold War defense costs by half. Eugene McCarthy, just before entering the presidential primary race against Lyndon Johnson (who did not support the measure), cosponsored the resolution in the Senate. Bobby Kennedy, George McGovern and Estes Kefauver were ardent believers. Even Barry Goldwater supported it; Ronald Reagan was the only major national figure in the Republican Party who opposed it, and Lyndon Johnson was a significant opponent in the Democratic Party.

The far right hated this idea. Gunthler Klincke of the Liberty Lobby called it a scheme for a socialist world government, and Myra Hacker of a group called the “American Coalition of Patriotic Societies,” said proponents of this plan “distrust and despise the American citizen” and that it was a plan for “national suicide.” Though the proposal for Atlantic Union has been written out of liberal historical memory, there are echoes of this episode in right-wing rhetoric about One World Government. The irony of this is that, as liberals gently chuckle at right-wing paranoia about what they perceive as an imagined plot to create a world government, it is the conservatives who have a more accurate read on history. There was a serious plan to get rid of American sovereignty in favor of a globalist movement, and the various institutions the right wing hates — the IMF, the World Bank, the U.N. — were seen as stepping stones to it. Where the right wing was wrong is in thinking that this plot for a global government was also a communist plot; it wasn’t, it was motivated by anti-communism. The proponents of the Atlantic Union in fact thought that this was the only way to defeat the USSR. 

Streit explained that uniting the countries of Western Europe and the United States would “give their union a hand strong enough to win for peace peacefully, a land that no combination of dictatorships could challenge — all four aces and the joker. By this I meant: The ace of spades or productive power; the ace of diamonds or raw material power; the ace of clubs, or armed power; the ace of hearts, or moral power; and the joker — their growing power, their ability to admit to this nuclear union of the free other nations that desired to enter it, and were willing and able to uphold its standards of liberty. These few freedom practicing peoples needed only unite federally to” achieve it.

The question of Atlantic Union, proposed in 1939, percolated as a catch-all answer to Western foreign policy problems, until the 1970s. There were two basic arguments for Atlantic Union. The architects of NATO and the OECD believed that closer interdependence of nations in the non-Soviet “free world” would isolate the USSR. And this same group recognized that the Bretton Woods system, whereby the United States held most of the world’s gold and operated its reserve currency, was breaking down as Western European nations rebuilt their economies and as U.S. banks sought to escape regulation domestically by parking dollars abroad in those newly prosperous economies. Combining Western Europe and the U.S. into one federal union with one currency and regulatory harmonization of “interstate commerce” could avoid this “Eurodollar” problem.

A formal Atlantic Union was not a realistic proposal, though it was not as unimaginable as one might think — American support for the now-existing European Union came from the same intellectual and political tradition. The State Department, and politicians in power like Lyndon Johnson, opposed global federalism. And as the years crept on, it became less and less realistic. The World War II generation had idolized “Union Now” in their youth, but they had to confront the failures of the war in Vietnam and the global colonial project that Streit ignored (or worse, embraced).  The new political generation drew their inspiration not from hoary pre-WWII tomes of global utopianism, with the implications of a global rich white man’s club. As one New Left-influenced witness in the 1971 hearing put it, “The 1960′s revolution of political consciousness within the United States means the rejection of Atlantic Union ideas or alliance structures such as NATO in the seventies.”

But Atlantic Union was an important part of the debate of how the postwar era would be structured. Think about the debate as follows. On the right, you have the Liberty League and the right-wing patriots, represented by politicians like then governor of California Ronald Reagan. These people wanted a return to an isolationist or hyper-nationalist model of foreign relations. Then you had the mainstream State Department liberal internationalists, the JFKs and LBJs, who built entangling institutions like the IMF, the World Bank, the U.N. and so forth. Even further on the globalist spectrum, you had the Atlantic Unionists. All three strands echo, today. Consider Larry Summers, who in 2000 as treasury secretary argued for allowing cheap Chinese goods into the U.S. as a way of establishing “a fifth column for openness” in that country. Failure to integrate China in the global system with trade concessions, he said, would not only cut the average American’s paycheck, but would “make it more likely his son will be in a war in Asia.” This Thomas Friedman-esque “The World Is Flat” argument owes an intellectual debt to Streit. Integrate, the case goes, or perish.

The formal concept of Atlantica cracked under the weight of Vietnam and the coming neoliberal revolution in finance. The United States didn’t maintain its monopoly on stores of gold, as Nixon repudiated Bretton Woods in the face of high inflation and monetary instability. But as first Jimmy Carter, and then Ronald Reagan, deregulated the banking industry, global capital flows once again became a reality. Only, global capital flows just weren’t run by nation-states, as the Atlantic Unionists and liberal internationalists imagined, they were run by institutions like Citigroup and politically captured regulatory entities such as the Federal Reserve. 

Did the plan succeed? 

The institutional framework of a world government composed of Western European and American states remains far more potent than we like to imagine, even beyond the security apparatus revealed by Snowden’s documents. For example, in every major free trade agreement since NAFTA, U.S. courts have been subordinated to international tribunals, which operate according to rules laid out either by the World Trade Organization, a division of the World Bank, or by a division of the United Nations known as UNCITRAL (the United Nations Commission on International Trade Law). These tribunals rule on consumer, labor, and environmental questions – not just trade. And they are trans-national, much as the supply chains of Apple, Ford, Toyota, or any other multi-national corporation are, or the technology that Google, Microsoft, or IBM promote all over the world.

There are other deep links. The Basil banking accords seek international harmonization of capital standards. Why? It’s not clear what the benefits are of having global standards for what banks should do. But the global elites push onward, regardless, towards a one world solution. And lest one think this is just theoretical, the Federal Reserve supported the European Central Bank with unlimited swap lines during the financial crisis, lending as much as $500B to the ECB in 2008 and 2009. European and other foreign banks drew liberally from the New York Federal Reserve’s discount window. The Fed became the central banker to the world.

Questions of sovereignty still exists – as just one of many examples, the U.S. still refuses to sign the Law of the Sea Treaty, which is a nod to the Liberty League. But the history and reflexive embrace of globalism is far more complicated than we want to admit. And it’s time to begin grappling with the international architecture that we have. This means recognizing that the Cold War involved constructing a “deep state” to partially subordinate national sovereignty, and therefore, voting populations, to transnational elites.

As the spying scandal, a truly global scandal, continues, activists, citizens and journalists are recognizing the powerful remnants of this Cold War-era global deep state. The players in the scandal hop from country to country, some safe zones and some not. The Guardian is a British newspaper, and is now partnering with the New York Times, to keep the global intelligence services at bay. Cyberspace is a new and strange transnational front combining elements of war, trade, journalism, finance, activism, surveillance and applied government power. The Syrian situation too is a global security problem, with the French and the British tied to the American political order. The American executive is finding himself buffeted by British debates that should be irrelevant in a sovereign state acting solely in its vital national security interests.

Streit never achieved his goal of having a formal “Atlantic Union.”  But with an international “intelligence community,” globalized supply chains, increasingly global free trade agreements that subordinate national court systems, and globalized private and central banks, all couched under the rubric of promoting “freedom,” he has as much claim to being the true animating force behind what we’re facing today as anyone else.

MORE MATT STOLLER.