Economic Manipulation as Political Strategy

We are forced to labor under several apparent falsehoods that are nonetheless enshrined in our collective first-world political imagination. Foremost among them is that the rule of law prevails over the law of the jungle, where the mightiest governs by virtue of brute strength.

	Economic Manipulation as Political Strategy

The fact is that the rule of law only succeeds because the arbiters of the law, the justice system, have at their disposal the greatest collective threat of violence within the political boundaries of the country. Obey the law, or else.

Similarly, the prevalence of U.S. policy around the world in all matters military and economic is a reflection of the threat of violence represented by the nation’s armed forces. While free speech and dissent are encouraged superficially (both domestically and internationally), American foreign policy decisions are implemented unilaterally and independent of any serious consultative process.

George Bush made it clear during the first “G20” summit in Washington on November 14th this year.

"Our nations agree that we must make the financial markets more transparent and accountable," he said, soon after the summit drew to a close. "We agree that we need to improve our regulation and to ensure that markets, firms, and financial products are subject to proper regulation and oversight."

Earlier in the day, Bush had said that any solution to the financial crisis had to be an “American solution”. His comments were mostly ignored, however, since his imminent retirement rendered them irrelevant anyway.

Its been an interesting year, to put it mildly. Commodities prices and stocks have all discovered new lows. Gold has demonstrated consistently its reliability as a store of value. Less than a year after oil prices set all time record highs, it’s trading at 2004 price levels.

Our governments and their academic economists refuse to acknowledge the relationship between economic volatility and excess systemic capitalization, clinging desperately instead to the belief that the secret to never-ending growth is non-stop expansion of money supply.

Over-leveraging, relaxation of credit risk evaluation, and inflated demand for commodities is the inevitable result of such policy, resulting in ever-deepening recessions and wildly exuberant expansion phases.