Wealth Shocks, Unemployment Shocks And Consumption In The Wake: Fill & Download for Free

Terrific Summary by Yorick:1. "Bitcoin can be best understood as distributed software that allows for transfer of value using a currency protected from unexpected inflation without relying on trusted third parties"2. "While Bitcoin is a new invention of the digital age, the problems it purports to solve - namely, providing a form of money that is under the full command of its owner and likely to hold its value in the long run - are as old as human society itself"3. "People’s choices are subjective, and so there is no “right” and “wrong” choice of money. There are, however, consequences to choices"4. "I like to call this the easy money trap: anything used as a store of value will have its supply increased, and anything whose supply can be easily increased will destroy the wealth of those who used it as a store of value"5. "For something to assume a monetary role, it has to be costly to produce, otherwise the temptation to make money on the cheap will destroy the wealth of the savers, and destroy the incentive anyone has to save in this medium"6. "The monetary media that survived for longest are the ones that had very reliable mechanisms for restricting their supply growth - in other words, hard money"7. "The choice of what makes the best money has always been determined by the technological realities of societies shaping the salability of different goods"8. "Human civilization flourished in times and places where sound money was widely adopted, while unsound money all too frequently coincided with civilizational decline and societal collapse"9. "Whether in Rome, Constantinople, Florence, or Venice, history shows that a sound monetary standard is a necessary prerequisite for human flourishing, without which society stands on the precipice of barbarism and destruction"10. "History shows it is not possible to insulate yourself from the consequences of others holding money that is harder than yours"11. "Some of the most important technological, medical, economic, and artistic human achievements were invented during the era of the gold standard, which partly explains why it was known as la Belle Epoque, or the beautiful era, across Europe"12. "World War I saw the end of the era of monetary media being the choice decided by the free market, and the beginning of the era of government money"13. "Government money is similar to primitive forms of money and commodities other than gold: it is liable to having its supply increased quickly compared to its stock, leading to a quick loss of salability, destruction of purchasing power, and impoverishment of its holders"14. "With the simple suspension of gold redeemability, governments’ war efforts were no longer limited to the money that they had in their own treasuries, but extended virtually to the entire wealth of the population15. "Had European nations remained on the gold standard, or had the people of Europe held their own gold in their own hands […], history might have been different. It is likely that WorldWar I would have been settled militarily within a few months of conflict"16. "The cause of the Great Crash of 1929 was the diversion away from the gold standard in the post-WWI years, and the deepening of the Depression was caused by government control and socialization of the economy in the Hoover and FDR years"17. "All spending is spending, in the naive economics of Keynesians, and so it matters not if that spending comes from individuals feeding their families or governments murdering foreigners: it all counts in aggregate demand and it all reduces unemployment!"18. "In essence, Bretton Woods attempted to achieve through central planning what the international gold standard of the nineteenth century had achieved spontaneously"19. "Hyperinflation is a form of economic disaster unique to government money. There was never an example of hyperinflation with economies that operated a gold or silver standard"20. "With government money, whose cost of production tends to zero, it has become quite possible for an entire society to witness all of its savings in the form of money disappear in the space of a few months or even weeks"21. "Hyperinflation is a far more pernicious phenomenon than just the loss of a lot of economic value by a lot of people; it constitutes a complete breakdown of the structure of economic production of a society built up over centuries and millennia"22. "Even if the textbooks were correct about the benefits of government management of the money supply, the damage from one episode of hyperinflation anywhere in the world far outweighs them"23. "Hanke and Bushnell have been able to verify 57 episodes of hyperinflation in history, only one of which occurred before the era of monetary nationalism, and that was the inflation in France in 1795, in the wake of the Mississippi Bubble"24. “The constantly increasing supply means a continuous devaluation of thecurrency, expropriating the wealth of the holders to benefit those who printthe currency, and those who receive it earliest. This is termed the CantillonEffect”25. “Whether it’s because of downright graft, “national emergency,” or an infestation of inflationist schools of economics, government will always find a reason and a way to print more money, expanding government power while reducing the wealth of the currency holders”26. “It is ironic, and very telling, that in the era of government money, governments themselves own far more gold in their official reserves than they did under the international gold standard of 1871–1914”27. “A sound money makes service valuable to others the only avenue open for prosperity to anyone, thus concentrating society’s efforts on production, cooperation, capital accumulation, and trade”28. “The twentieth century was the century of unsound money and the omnipotent state, as a market choice in money was denied by government diktat, and government-issued paper money was forced on people with the threat of violence”29. “Sound money is an essential requirement for individual freedom from despotism and repression, as the ability of a coercive state to create money can give it undue power over its subjects, power which by its very nature will attract the least worthy, and most immoral”30. “Sound money is a prime factor in determining individual time preference, an enormously important and widely neglected aspect of individual decision making. Time preference refers to the ratio at which individuals value thepresent compared to the future”31. “Economist Hans-Hermann Hoppe explains that once time preference drops enough to allow for any savings and capital or durable consumer-goodsformation at all, the tendency is for time preference to drop even further as a“process of civilization” is initiated”32. “Microeconomics has focused on transactions between individuals, and macroeconomics on the role of government in the economy ; [...] the most important economic decisions to any individual’s well-being are the ones they conduct in their trade-offs with their future self”33. “The better the money is at holding its value, the more it incentivizes people to delay consumption and instead dedicate resources for production in the future, leading to capital accumulation and improvement of living standards”34. “The move from money that holds its value or appreciates to money that loses its value is very significant in the long run: society saves less, accumulates less capital, and possibly begins to consume its capital”35. “Civilizations prosper under a sound monetary system, but disintegrate when their monetary systems are debased, as was the case with the Romans, the Byzantines, and modern European societies”36. “What matters in money is its purchasing power, not its quantity, and as such, any quantity of money is enough to fulfil the monetary functions, as long as it is divisible and groupable enough to satisfy holders’ transaction and storage needs”37. “The best form of money in history was the one that would cause the new supply of money to be the least significant compared to the existing stockpiles, and thus make its creation not a good source of profit”38. “Had government money been a superior unit of account and store of value, it would not need government legal tender laws to enforce it, nor would governments worldwide have had to confiscate large quantities of gold and continue to hold them in their central bank reserves”39. “The fact that central banks continue to hold onto their gold, and have even started increasing their reserves, testifies to the confidence they have in their own currencies in the long term”40. “Sound money is money that gains in value slightly over time, meaning that holding onto it is likely to offer an increase in purchasing power”41. “Unsound money, being controlled by central banks whose express mission is to keep inflation positive, will offer little incentive for holders to keep it”42. “With unsound money, only returns that are higher than the rate of depreciation of the currency will be positive in real terms, creating incentives for high-return but high-risk investment and spending”43. “Savings rates have been declining across the developed countries, dropping to very low levels, while personal, municipal, and national debts have increased to levels which would have seemed unimaginable in the past44. “One of the most mendacious fantasies that pervades Keynesian economic thought is the idea that the national debt “does not matter, since we owe it to ourselves”45. “Only a high-time-preference disciple of Keynes could fail to understand that this “ourselves” is not one homogeneous blob but is differentiated into several generations -namely, the current ones which consume recklessly at the expense of future ones”46. “The twentieth century’s binge on conspicuous consumption cannot be understood separately from the destruction of sound money and the outbreak of Keynesian high-time-preference thinking, in vilifying savings and deifying consumption as the key to economic prosperity”47. “It is an ironic sign of the depth of modern-day economic ignorance fomented by Keynesian economics that capitalism - an economic system based on capital accumulation from saving - is blamed for unleashing conspicuous consumption - theexact opposite of capital accumulation”48. “Capitalism is what happens when people drop their time preference, defer immediate gratification, and invest in the future. Debt-fueled mass consumption is as much a normal part of capitalism as asphyxiation is a normal part of respiration”49. “The only cause of economic growth in the first place is delayed gratification, saving, and investment, which extend the length of the production cycle and increase the productivity of the methods of production, leading to better standards of living”50. “This move from sound money to depreciating money has led to several generations of accumulated wealth being squandered on conspicuous consumption within a generation or two, making indebtedness the new method for funding major expenses”51. “As H. L. Mencken put it: “Every election is an advanced auction on stolen goods””52. “As politicians sell people the lie that eternal welfare and retirement benefits are possible through the magic of the monetary printing press, the investment in a family becomes less and less valuable”53.“The majority of the technology we use in our modern life was invented in the 19th century, under the gold standard, financed with the ever-growing stock of capital accumulated by savers storing their wealth in a sound money and store of value which did not depreciate quickly”54. “The contributions of sound money to human flourishing are not restricted to scientific and technological advance; they can also be vividly seen in the art world”55. “In times of sound money and low time preference, artists worked on perfecting their craft so they could produce valuable works in the long run”56. “Modern artists have replaced craft and long hours of practice with pretentiousness, shock value, indignation, and existential angst as ways to cow audiences into appreciating their art, and often added some pretense to political ideals, usually of the puerile Marxist variety”57. “As government money has replaced sound money, patrons with low time preference and refined tastes have been replaced by government bureaucrats with political agendas as crude as their artistic taste”58. “The Use of Knowledge in Society, by Friedrich #Hayek, is arguably one of the most important economic papers to have ever been written”59. “In a free market economic system, prices are knowledge, and the signals that communicate information”60. “Prices are not simply a tool to allow capitalists to profit; they are the information system of economic production, communicating knowledge across the world and coordinating the complex processes of production”61. “Any economic system that tries to dispense with prices will cause the complete breakdown of economic activity and bring a human society back to a primitive state”62. “The fatal flaw of socialism that #Mises exposed was that without a price mechanism emerging on a free market, socialism would fail at economic calculation, most crucially in the allocation of capital goods”63. “In an economy with a central bank and fractional reserve banking, the supply of loanable funds is directed by a committee of economists under the influence of politicians, bankers, TV pundits, and sometimes, most spectacularly, military generals”64. “Creating new pieces of paper and digital entries to paper over the deficiency in savings does not magically increase society’s physical capital stock; it only devalues the existing money supply and distorts prices”65. “Only with an understanding of the capital structure and how interest rate manipulation destroys the incentive for capital accumulation can one understand the causes of recessions and the swings of the business cycle”66. “The business cycle is the natural result of the manipulation of the interest rate distorting the market for capital by making investors imagine they can attain more capital than is available with the unsound money they have been given by the banks”67. “Contrary to Keynesian animist mythology, business cycles are not mystic phenomena caused by flagging “animal spirits” whose cause is to be ignored as central bankers seek to try to engineer recovery”68. “Economic logic clearly shows how recessions are the inevitable outcome of interest rate manipulation in the same way shortages are the inevitable outcome of price ceilings”69. “Monetary history testifies to how much more severe business cycles and recessions are when the money supply is manipulated than when it isn’t”70. “A capitalist system cannot function without a free market in capital, where the price of capital emerges through the interaction of supply and demand and the decisions of capitalists are driven by accurate price signals”71. “The central bank’s meddling in the capital market is the root of all recessions and all the crises which most politicians, journalists, academics, and leftist activists like to blame on capitalism”72. “Imagining that central banks can “prevent,” “combat,” or “manage” recessions is as fanciful and misguided as placing pyromaniacs and arsonists in charge of the fire brigade”73. “Central planning of credit markets must fail because it destroys markets’ mechanisms for price-discovery providing market participants with the accurate signals and incentives to manage their consumption and production”74. “It is typical of the #MiltonFriedman band of libertarianism in that it blames the government for an economic problem, but the flawed reasoning leads to suggesting even more government intervention as the solution”75. “Only when a central bank manipulates the money supply and interest rate does it become possible for large-scale failures across entire sectors of the economy to happen at the same time, causing waves of mass layoffs in entire industries”76. “In a free market for money, individuals would choose the currencies they want to use, and the result would be that they would choose the currency with the reliably lowest stock-to-flow ratio. This currency would oscillate the least with changes in demand and supply”77. “It is an astonishing fact of modern life that an entrepreneur in the year 1900 could make global economic plans and calculations all denominated in any international currency, with no thought whatsoever given to exchange rate fluctuations”78. “The combination of floating exchange rates and Keynesian ideology has given our world the entirely modern phenomenon of currency wars”79. “Hard money, by taking the question of supply out of the hands of governments and their economist-propagandists, would force everyone to be productive to society instead of seeking to get rich through the fool’s errand of monetary manipulation”80. “Under a sound monetary system, government had to function in a way that is unimaginable to generations reared on the twentieth-century news cycle: they had to be fiscally responsible”81. “For those of us alive today, raised on the propaganda of the omnipotent governments of the twentieth century, it is often hard to imagine a world in which individual freedom and responsibility supersede government authority”82“. The fundamental scam of modernity is the idea that government needs to manage the money supply. It is an unquestioned starting assumption of all mainstream economic schools of thought and political parties”83. “Having the ability to print money, literally and figuratively, increases the power of any government, and any government looks for anything that gives it more power”84. “By placing a hard cap on the total supply of bitcoins, Nakamoto was clearly unpersuaded by the arguments of the standard macroeconomics textbook and more influenced by the Austrian school, which argues that the quantity of money itself is irrelevant”85. “Societies with money of stable value generally develop a low time preference, learning to save and think of the future, while societies with high inflation and depreciating economies will develop high time preference as people lose track of the importance of saving”86. “With sound money, the government’s war effort was limited by the taxes it could collect. With unsound money, it is restrained by how much money it can create before the currency is destroyed, making it able to appropriate wealth far more easily”87. “Unsound money is a particularly dangerous tool in the hands of modern democratic governments facing constant reelection pressure. Modern voters are unlikely to favor the candidates who are upfront about the costs and benefits of their schèmes”88. “Unsound money is at the heart of the modern delusion believed by most voters and those unfortunate enough to study modern macroeconomics at university level: that government actions have no opportunity costs”89. “It is no coincidence that when recounting the most horrific tyrants of history, one finds that every single one of them operated a system of government-issued money which was constantly inflated to finance government operation”90. “Unsound money makes government power potentially unlimited, with large consequences to every individual, forcing politics to the center stage of their life and redirecting much of society’s energy and resources to the zero-sum game of who gets to rule and how”91. “In the world of fiat money, having access to the central bank’s monetary spigots is more important than serving customers. Firms that can get low-interest-rate credit to operate will have a persistent advantage over competitors that cannot”92. “Banking has evolved into a business that generates returns without risks to bankers and simultaneously creates risks without returns for everyone else”93. “In a world where central banks allocate credit, the larger firm has an advantage in being able to secure funding at a low rate which its smaller competitors cannot get”94. “Bitcoin was the first engineering solution that allowed for digital payments without having to rely on a trusted third-party intermediary. By being the first digital object that is verifiably scarce, Bitcoin is the first example of digital cash”95. “Whereas in a modern central bank the new money created goes to finance lending and government spending, in Bitcoin the new money goes only to those who spend resources on updating the ledger”96. “Difficulty adjustment is the most reliable technology for making hard money and limiting the stock-to-flow ratio from rising, and it makes Bitcoin fundamentally different from every other money”97. “Bitcoin is the hardest money ever invented: growth in its value cannot possibly increase its supply; it can only make the network more secure and immune to attack”98. “The security of Bitcoin lies in the asymmetry between the cost of solving the proof-of-work necessary to commit a transaction to the ledger and the cost of verifying its validity”99. “The Bitcoin ledger of transactions might just be the only objective set of facts in the world”100. “Bitcoin is the first example of a digital good whose transfer stops it from being owned by the sender”101. “Bitcoin presents a tremendous technological leap forward in the monetary solution to the indirect exchange problem, perhaps as significant as the move from cattle and salt to gold and silver”102. “Without a conservative monetary policy and difficulty adjustment, Bitcoin would only have succeeded theoretically as digital cash, but remained too insecure to be used widely in practice”103. “Bitcoin’s volatility derives from the fact that its supply is utterly inflexible and not responsive to demand changes, because it is programmed to grow at a predetermined rate”104. “As the size of the market grows, along with the sophistication and the depth of the financial institutions dealing with Bitcoin, this volatility will likely decline”105. “As long as Bitcoin is growing, its token price will behave like that of a stock of a start-up achieving very fast growth. Should Bitcoin’s growth stop and stabilize, it would stop attracting high-risk investment flows, and become just a normal monetary asset”106. “Bitcoin is the cheapest way to buy the future, because Bitcoin is the only medium guaranteed to not be debased, no matter how much its value rises”107. “The strict digital scarcity of the Bitcoin tokens combines the best elements of physical monetary media, without any of the physical drawbacks to moving and transporting it. Bitcoin might have a claim to make for being the best technology for saving ever invented”108. “Any person who owns Bitcoin achieves a degree of economic freedom which was not possible before its invention”109. “For the first time since the emergence of the modern state, individuals have a clear technical solution to escaping the financial clout of the governments they live under”110. “Bitcoin, and cryptography in general, are defensive technologies that make the cost of defending property and information far lower than the cost of attacking them”111. “If BTC continues to grow to capture a larger share of the global wealth, it may force governments to become more and more a form of voluntary organization, which can only acquire its “taxes” voluntarily by offering its subjects services they would be willing to pay for”112. “Contrary to popular depictions of anarchists as hoodie-clad hoodlums, Bitcoin’s brand of anarchism is completely peaceful, providing individuals with the tools necessary for them to be free from government control and inflation”113. “The invention of Bitcoin has created, from the ground up, a new independent alternative mechanism for international settlement that does not rely on any intermediary and can operate entirely separate from the existing financial infrastructure”114. “Bitcoin can be seen as the new emerging reserve currency for online transactions, where the online equivalent of banks will issue Bitcoin-backed tokens to users while keeping their hoard of Bitcoins in cold storage”115. “Bitcoin’s advantage is that by bringing the finality of cash settlement to the digital world, it has created the fastest method for final settlement of large payments across long distances and national borders”116. “Bitcoin can be best understood to compete with settlement payments between central banks and large financial institutions, and it compares favorably to them due to its verifiable record, cryptographic security, and imperviousness to third-party security holes”117. “BTC, having no counterparty risk and no reliance on any third-party, is uniquely suited to play the same role that gold played in the gold standard"118. “If Bitcoin continues to grow in value and gets utilized by a growing number of financial institutions, it will become a reserve currency for a new form of central bank"119. “The first central bank to buy BTC will alert the rest of the central banks to the possibility and make many of them rush toward it. The first central bank purchase is likely to make the value of BTC rise significantly"120. “While central banks have mostly been dismissive of the importance of BTC, this could be a luxury they may not afford for long. As hard as it might be for central bankers to believe it, BTC is a direct competitor to their line of business”121. “The modern central bank business model is being disrupted. Central banks now have no way of stopping competition by just passing laws as they have always done. They are now up against a digital competitor that most likely cannot be brought under the physical world’s laws”122. “If the modern world is ancient Rome, suffering the economic consequences of monetary collapse, with the dollar our aureus, then Satoshi Nakamoto is our Constantine, Bitcoin is his solidus, and the Internet is our Constantinople”123. “Should it achieve some sort of stability in value, Bitcoin would be superior to using national currencies for global payment settlements, as is the case today, because national currencies fluctuate in value based on each nation’s and government’s conditions”124. “Bitcoin is the only truly decentralized digital currency which has grown spontaneously as a finely balanced equilibrium between miners, coders, and users, none of whom can control it”125. “After years of watching altcoins get created, it seems impossible that any coin will recreate the adversarial standoff that exists between Bitcoin stakeholders and prevents any party from controlling payments in it”126. “It is high time for everyone involved in BTC to stop concerning themselves with the question of the identity of Nakamoto, and accept that it does not matter to the operation of the technology, in the same way that the identity of the inventor of the wheel no longer matters”127. “No single altcoin has demonstrated anything near Bitcoin’s impressive resilience to change, which is down to its truly decentralized nature and the strong incentives for everyone to abide by the status quo consensus rules”128. “Contrary to a lot of the hype surrounding Bitcoin, eliminating the need for trust in third parties is not an unquestionably good thing to do in all avenues of business and life”129. “A non-Bitcoin blockchain combines the worst of both worlds: the cumbersome structure of the blockchain with the cost and security risk of trusted third parties”130. "“It is no wonder that eight years after its invention, blockchain technology has not yet managed to break through in a successful, ready-for-market commercial application other than the one for which it was specifically designed: Bitcoin”131. “The most common potential applications touted for blockchain technology - payments, contracts, and asset registry - are only workable to the extent that they run using the decentralized currency of the blockchain”132. “All blockchains without currencies have not moved from the prototype stage to commercial implementation because they cannot compete with current best practice in their markets”133. “Any application of #blockchain technology will only make commercial sense if its operation is reliant on the use of electronic cash, and only if electronic cash’s disintermediation provides economic benefits outweighing the use of regular currencies and payment channels”

The unilateral declaration of independence by Kosovo’s Prime Minister Hashim Thaci, former warlord/commander of the Kosovo Liberation Army (KLA), heralds the birth of a new European narco state.The illegal dismemberment of Serbia, completing the U.S./EU/NATO destruction of Yugoslavia, is proclaimed by ruling elites and their sycophants as an exemplary means to bring “peace and stability” to the region. This provocative move, outside the framework of international law, threatens any sovereign state with similar treatment should they deviate from the “Washington consensus.”Far from bringing “peace” let alone “stability,” an “independent” Kosovo will serve as a militarized outpost for Western capitalist powers intent on spreading their tentacles East, further encircling Russia by penetrating the former spheres of influence of the Soviet Union.Led by dodgy characters and war criminals such as Hashim Thaci and Agim Ceku, “independent” Kosovo is a gangster state governed by thugs with ties to Albanian drug trafficking syndicates and al-Qaeda.Al-Qaeda, the KLA and Western IntelligenceAl-Qaeda’s service to the CIA and other Western intelligence services is well-documented. Beginning in 1998 and perhaps earlier, the London-based cleric Sheikh Omar Bakri Mohammed, the “emir” of the al-Qaeda-linked Islamist group al-Muhajiroun began a recruitment drive for aspiring mujahideen for the “holy war” in Kosovo at London’s notorious Finsbury Park Mosque.On Friday, March 13, 1998 a London rally for the jihad was backed by some 50 local Islamist organizations. According to Christopher Deliso,…the Albanian Islamic Society of London, headed by Kosovar Sheik Muhammed Stubla, was lobbying and raising money for the KLA’s campaign. … In contradiction to the KLA leadership’s claims about secularism, the Kosovar sheik specifically defined the militant group as “an Albanian Islamic organisation which is determined to defend itself, its people, its homeland, and its religion with all its capabilities and by all means.” … The chief bank account for fundraising was in the London branch of terrorist-linked Habibsons Bank of Pakistan. (The Coming Balkan Caliphate, Westport: Praeger Security International, 2007, p. 43)In 2005, in the wake of the July 7, 2005 terrorist attacks in London, it was revealed that Bakri, a probable asset of Britain’s MI6, was the “spiritual” force behind the deadly attacks.Nafeez Mosaddeq Ahmed reports that,The reluctance to take decisive action against the leadership of the extremist network in the UK has a long history. According to John Loftus, a former Justice Department prosecutor, Omar Bakri and Abu Hamza, as well as the suspected mastermind of the London bombings Haroon Aswat, were all recruited by MI6 in the mid-1990s to draft up British Muslims to fight in Kosovo. American and French security sources corroborate the revelation. The MI6 connection raises questions about Bakri’s relationship with British authorities today. Exiled to Lebanon and outside British jurisdiction, he is effectively immune to prosecution. (“Sources: August terror plot is a ‘fiction’ underscoring police failures,” The Raw Story, Monday, September 18, 2006)Before fleeing, Bakri defended the actions of his young dupes by proclaiming, “We don’t make a distinction between civilians and non-civilians, innocents and non-innocents. Only between Muslims and unbelievers. And the life of an unbeliever has no value. It has no sanctity.”The current “secular” Prime Minister Hashim Thaci, when he served as KLA warlord was identified in media reports as having operational links to the al-Qaeda network. Such reports are not surprising when one considers that for earlier U.S./NATO “service” in Bosnia, bin Laden himself was rewarded a Bosnian passport by the “democratic” government of former Nazi and Islamist ideologue, Alija Izetbegovic.As the Afghan-Arab database of disposable intelligence assets streamed into Kosovo, often from Albania with the active assistance of narcotrafficking gangsters under NATO supervision, they replenished the ranks of Thaci’s terrorist army.Michel Chossudovsky writes,Mercenaries financed by Saudi Arabia and Kuwait had been fighting in Bosnia. And the Bosnian pattern was replicated in Kosovo: Mujahadeen mercenaries from various Islamic countries are reported to be fighting alongside the KLA in Kosovo. German, Turkish and Afghan instructors were reported to be training the KLA in guerrilla and diversion tactics. … According to a Deutsche Press-Agentur report, financial support from Islamic countries to the KLA had been channelled through the former Albanian chief of the National Information Service (NIS), Bashkim Gazidede. “Gazidede, reportedly a devout Moslem who fled Albania in March of last year [1997], is presently [1998] being investigated for his contacts with Islamic terrorist organizations.” (“Kosovo ‘freedom fighters’ financed by organised crime,” World Socialist Web Site, 10 April 1999)These links are hardly casual. On the contrary, as Peter Dale Scott avers,The closeness of the KLA to al-Qaeda was acknowledged again in the Western press, after Afghan-connected KLA guerrillas proceeded in 2001 to conduct guerrilla warfare in Macedonia. Press accounts included an Interpol report containing the allegation that one of bin Laden’s senior lieutenants was the commander of an elite KLA unit operating in Kosovo in 1999. This was probably Mohammed al-Zawahiri. (The Road to 9/11: Wealth, Empire, and the Future of America, Berkeley: University of California Press, 2007, p. 169)Agim Ceku another “Prime Minister,” committed massive war crimes in the Croatian region of Krajina when employed by the Croatian army as a brigadier general. As a key planner of Operation Storm, Ceku’s forces massacred Serbs and presided over the largest ethnic cleansing during NATO’s Yugoslavian destabilization campaign. Some 250,000 Serbs fled for their lives as Ceku’s black-uniformed shock troops, many adorned with symbols of the Nazi Ustasha puppet regime during World War II were driven from Croatia.According to Gregory Elich,The invasion of Krajina was preceded by a thorough CIA and DIA analysis of the region. According to Balkan specialist Ivo Banac, this “tactical and intelligence support” was furnished to the Croatian Army at the beginning of its offensive. … Two months earlier, the Pentagon contracted Military Professional Resources, Inc (MPRI) to train the Croatian military. According to a Croatian officer, MPRI advisors “lecture us on tactics and big war operations on the level of brigades, which is why we needed them for Operation Storm when we took the Krajina.” Croatian sources claim that U.S. satellite intelligence was furnished to the Croatian military. Following the invasion of Krajina, the U.S. rewarded Croatia with an agreement “broadening existing cooperation” between MPRI and the Croatian military. U.S. advisors assisted in the reorganization of the Croatian Army. Referring to this reorganization in an interview with the newspaper Vecernji List, Croatian General Tihomir Blaskic said, “We are building the foundations of our organization on the traditions of the Croatian home guard” — pro-Nazi troops in World War II. (“The Invasion of Serbian Krajina,” Emperors Clothes, no date)Following on the heels of this sterling “victory,” Ceku became KLA commander in 1999 and “Prime Minister” in 2006. There is an outstanding Interpol warrant for his arrest according to Michel Chossudovsky.The KLA: “Trained-up fierce” by Germany’s KSKAs in Bosnia Herzegovina and Croatia, the Kosovo Liberation Army was secretly armed by America and Germany and remains what it has always been, a creature of Western intelligence services.Christopher Deliso observes,In 1996, Germany’s BND established a major station in Tirana…and another in Rome to select and train future KLA fighters. According to Le Monde Diplomatique, “special forces in Berlin provided the operational training and supplied arms and transmission equipment from ex-East German Stasi stocks as well as Black uniforms.” The Italian headquarters recruited Albanian immigrants passing through ports such as Brindisi and Trieste, while German military intelligence, the Militaramschirmdienst, and the Kommando Spezialkräfte Special Forces (KSK), offered military training and provisions to the KLA in the remote Mirdita Mountains of northern Albania controlled by the deposed president, Sali Berisha.In 1996, BND Chief Geiger’s deputy, Rainer Kesselring, the son of the Nazi Luftwaffe general responsible for the bombing of Belgrade in 1941 that left 17,000 dead, oversaw KSK training of Albanian recruits at a Turkish military base near Izmir. (The Coming Balkan Caliphate, Westport: Praeger Security International, 2007, pp. 37-38)Hypocritically, while Washington had officially designated the KLA a “terrorist organization” funded by the heroin trade, the Clinton administration was complicit with their German allies in the division of the Serb province along ethnic and religious lines.By 1998, the KLA took control of between 25 to 40 percent of the province before Serb forces wrested the KLA-held areas back. Facing imminent defeat, the Kosovo Liberation Army and allied mujahideen fighters appealed to Washington, citing the imminent danger of “ethnic cleansing” by the Serbs. Laughable on the face of it, Albanians constitute fully 90 percent of Kosovo’s population, and in fact, it was the Serbs, Roma and Jews who were being brutalized by KLA hit squads, their homes torched, their churches and synagogues sacked. It was the dismantling of the KLA’s terrorist infrastructure by the Yugoslav People’s Army that was the trigger that prompted direct military intervention by NATO in 1999.As in Iraq, the 78 day U.S. bombing campaign targeted critical civilian infrastructure in Serbia: bridges, factories, power plants, electrical transmission hubs, communications centers. Throughout Serbia and Kosovo itself, the U.S. scattered tons of radioactive depleted uranium munitions and tens of thousands of cluster bombs. The U.S. attack, ostensibly to “protect” Kosovo’s population from Serb depredations caused some 800,000 civilians to flee NATO’s devastating raids.For Washington, drunk on the illusion that its policies had hastened the collapse of a bureaucratized and rotten Soviet system, the dismemberment of Yugoslavia would again represent the triumph of the so-called “free market” and “democracy” under the umbrella of a new international order administered by World Bank/IMF “reforms”: Francis Fukuyama’s short-lived “end of history.” While on the opposite pole of the same ideological dead end, political Islam’s tactical alliance with the West was a means to establish a bridgehead for penetration into Europe via dodgy Saudi, Kuwaiti and Gulf “charities” in pursuit of their quixotic quest of establishing a “divine” (Islamicized) capitalist order rising from the ashes of a decadent West.Two heads, same poisonous snake.The KLA’s Links to the International Heroin TradeIn Kosovo, Hashim Thaci’s KLA served as the militarized vanguard for the Albanian mafia whose “15 Families” control virtually every facet of the Balkan heroin trade. Kosovar traffickers ship heroin originating exclusively from Asia’s Golden Crescent. At one end lies Afghanistan where poppy is harvested for transshipment through Iran and Turkey; as morphine base it is then refined into “product” for worldwide consumption. From there it passes into the hands of the Albanian syndicates who control the Balkan Route.As the San Francisco Chronicle reported,Until the war intervened, Kosovars were the acknowledged masters of the trade, credited with shoving aside the Turkish gangs that had long dominated narcotics trafficking along the Balkan Route, and effectively directing the ethnic Albanian network.Kosovar bosses “orchestrated the traffic, regulated the rate and set the prices,” according to journalist Leonardo Coen, who covers racketeering and organized crime in the Balkans for the Italian daily La Repubblica.“The Kosovars had a 10-year head start on their cousins across the border, simply because their Yugoslav passports allowed them to travel earlier and much more widely than someone from communist Albania,” said Michel Koutouzis, a senior researcher at Geopolitical Drug Watch who is regarded as Europe’s leading expert on the Balkan Route.“That allowed them to establish very efficient overseas networks through the worldwide Albanian diaspora — and in the process, to forge ties with other underworld groups involved in the heroin trade, such as Chinese triads in Vancouver and Vietnamese in Australia,” Koutouzis told The Chronicle. (Frank Viviano, “KLA Linked to Enormous Heroin Trade,” Wednesday, May 5, 1999, Page A-1)It is hardly an accident that the meteoric rise of the Kosovar families to the top of the narcotrafficking hierarchy coincided with the KLA’s sudden appearance in the area in 1997.As Peter Klebnikov observed,As the war in Kosovo heated up, the drug traffickers began supplying the KLA with weapons procured from Eastern European and Italian crime groups in exchange for heroin. The 15 Families also lent their private armies to fight alongside the KLA. Clad in new Swiss uniforms and equipped with modern weaponry, these troops stood out among the ragtag irregulars of the KLA. In all, this was a formidable aid package. It’s therefore not surprising, say European law enforcement officials, that the faction that ultimately seized power in Kosovo — the KLA under Hashim Thaci — was the group that maintained the closest links to traffickers. “As the biggest contributors, the drug traffickers may have gotten the most influence in running the country,” says Koutouzis. (“Heroin Heroes,” Mother Jones, January/February 2000)As is well-known, U.S. destabilization programs and covert operations rely on far-right provocateurs and drug lords (often interchangeable players) to facilitate the dirty work. Throughout its Balkan operations the CIA made liberal use of these preexisting narcotics networks to arm the KLA and provide them with targets.The rest is history, as they say.Kosovo TodayHas anything changed in the intervening years? Hardly. In fact, the vise-like grip of the Albanian mafia over narcotics, human trafficking and arms smuggling has cemented the “15 Families” place atop Europe’s hierarchy of crime, an essential arm of the capitalist deep state.Considering NATO and the UN’s lofty mandate to bring “peace and stability” to the region through “democracy promotion” and “institution building,” what does the balance sheet reveal?According to regional experts the outlook for Kosovo is grim. The economy is in shambles, unemployment hovers near 50 percent, a population of young people with “criminality as the sole career choice” populate a society tottering on the brink of collapse where the state is dominated by organized crime.According to former New York Times reporter David Binder, citing a 124-page investigation by the Institute for European Policy commissioned by the German Bundeswehr,“It is a Mafia society” based on “capture of the state” by criminal elements. (“State capture” is a term coined in 2000 by a group of World Bank analysts to describe countries where government structures have been seized by corrupt financial oligarchies. This study applied the term to Montenegro’s Milo Djukanovic, by way of his cigarette smuggling and to Slovenia, with the arms smuggling conducted by Janez Jansa). In Kosovo, it says, “There is a need for thorough change of the elite.”Fat chance that happening anytime soon! Binder reports:In the authors’ definition, Kosovan organized crime “consists of multimillion-Euro organizations with guerrilla experience and espionage expertise.” They quote a German intelligence service report of “closest ties between leading political decision makers and the dominant criminal class” and name Ramush Haradinaj, Hashim Thaci and Xhavit Haliti as compromised leaders who are “internally protected by parliamentary immunity and abroad by international law.” They scornfully quote the UNMIK chief from 2004-2006, Soeren Jessen Petersen, calling Haradinaj “a close and personal friend.” UNMIK, they add “is in many respects an element of the local problem scene.”The study sharply criticizes the United States for “abetting the escape of criminals” in Kosovo as well as “preventing European investigators from working.” This has made Americans “vulnerable to blackmail.” It notes “secret CIA detention centers” at Camp Bondsteel and assails American military training for Kosovo (Albanian) police by Dyncorp, authorized by the Pentagon. (“Kosovo Auf Deutsch,” Balkan Analysis, November 18, 2007)As we can readily observe in other climes, the interpenetration of the state by criminal elites serve as the preferred mechanism to cement a “public-private partnership” founded on corruption, maintained by brute force solely for purposes of resource extraction, pipeline politics, military bases and the geopolitical advantage gained over “market” rivals.

Let’s be clear on the ground realities. The oil reserves are going to last, at existing level of usage, much beyond the existing generation. As technological advances are made, oil will be drilled from the sites presently classified as uneconomic. In the meantime, the consumption pattern of energy will surely change, as the prices will react to falling supplies and alternative sources of energy will be tapped.We can get a hint of changes likely in Middle East countries which derive their financial power and high standards from oil from the developments in recent years when the average crude price came down from $110-15 in first half of 2014 to $65 now.The following will illustrate how big the impact will be on the Middle East economies and also the world as a whole. New financial and social power equations will be made.Middle Eastern economies range from very poor (such as Gaza and Yemen) to extremely wealthy nations (such as Qatar and UAE). The economic structure of Middle Eastern nations is diverse - while some nations are heavily dependent on export of only oil and oil-related products (such as Saudi Arabia, the UAE and Kuwait), others have a highly diverse economic base (such as Cyprus, Israel, Turkey and Egypt) with activities like agriculture, cotton, cattle, dairy, textiles, leather products, surgical instruments, defence equipment and Banking, the last especially in the case of UAE and Bahrain. Tourism is significant in Cyprus, Turkey, Egypt, Lebanon and Israel. In recent years other countries such as the UAE, Bahrain and Jordan have begun attracting greater number of tourists by improving tourist facilities and the relaxing of tourism-related restrictive policies.Unemployment is notably high, particularly among young people aged 15–29, a demographic representing 30% of the region's total population.Oil-exporting economies are heavily dependent on oil. Hydrocarbon and government activities account for the majority of total GDP in nearly every Middle Eastern country. Likewise, oil accounts on average for 80% of total exports in half of the oil-exporting economies.Economic growth of oil exporter countries in the Middle East bottomed out in 2017 and is expected to turn around in 2018–19. This largely reflects the continued recovery in non-oil activity as many countries are slowing the pace of fiscal consolidation in support of domestic demand. But then they face Risks a sharp tightening of global financial conditions, growing trade tensions, and geopolitical strains—while the outlook for oil prices remains subdued and highly uncertain. If these risks materialize, they could trigger potentially significant fiscal and financing pressures for many countries in the region.In addition, growth is expected to remain too low to provide enough jobs for the expanding labor force. Generating broad-based growth and diverse production base that benefits all will require an acceleration of structural reforms that improve the business climate and boost productivity.Tightening global financial conditions have increased the urgency of reducing budget deficits and debt in countries of the Middle East. The buildup of debt in recent years—which now exceeds 50 percent of GDP in almost half of the countries in the region—is a source of concern. If governments do not heed the call, they will be forced to spend increasing portions of their budgets on interest payments and paying down debt rather than on critical investments in physical and human capital that promote growth.Over the past three years, most countries adopted a mix of spending cuts and revenue-boosting measures that reduced deficits— but these reforms were not always growth friendly.Oil exporter countries collect less than 10 percent of GDP in non-oil tax revenues, less than half the emerging market average of close to 20 percent of GDP. On the spending side, policymakers need to budget for the likely increase in debt servicing costs and improve the quality of spending. At the same time, measures are needed to increase, or at the very least preserve, investments in physical and human capital.Public debt has rapidly increased in many Arab countries since the 2008 global financial crisis, due to persistently high budget deficits, the International Monetary Fund has warned.The public debt among the oil-exporting countries of the region – which include the six States that make up the Gulf Cooperation Council - has increased from 13% of GDP to the current 33%. The chief reason is the collapse in oil prices five years ago.Lagarde is of the view that oil-producing countries should now pay more attention to renewable energies in the coming decades.Lets see the picture in three major Middle East economies.Saudi Arabia, the world’s largest petroleum exporter and home of 18 percent of the world’s oil reserves, depends greatly on the price of oil. Oil accounts for 85 percent of Saudi Arabia’s export earnings, as well as about 31 percent of the GDP. Saudi Arabia is clearly economically dependent on oil, and in years past, the government has failed to diversify its economy.As of 2016, Saudi Arabia’s budget deficit was 13.5 percent of GDP, and oil still accounted for almost 90 percent of government revenues. The fall in the price of oil has also led to a sharp reduction in Saudi currency reserves and increased government borrowing to make up for the budget shortfalls. In Saudi Arabia, the fall in the prices of oil has complicated both the social contract of lavish perks, jobs, and subsidies in exchange for an authoritarian political system as well as an active, anti-Iranian foreign policy, causing far more damage than simply lower economic growth.Saudi Arabia’s government has responded by attempting to both reduce government spending and diversify its economy, so far with limited success. The reforms are aimed at increasing the private sector’s contribution from 40 percent to 65 percent of GDP, and raise the share of non-oil exports in non-oil GDP from 16 percent to 50 percent. Specific plans include floating a small stake in Saudi Aramco, the world’s largest oil company, creating the world’s largest sovereign wealth fund to enable investment in new sectors of the economy, and increasing the role and number of women in the economy. These plan are to be coupled with ways to reduce government spending.Following Saudi Arabia, Iran ranks second globally in natural gas reserves and fourth in proven crude oil reserves . With oil rents making up nearly 20% of GDP in 2014, Iran is a veritable energy superpower. Government expenditures, therefore, rely heavily on oil prices.With plummeting oil prices, however, Iran’s economy has taken a major hit. GDP growth in 2015 dropped to 0.4%. Like many oil-rich states, Iran’s subsidy program is robust. Prior to the Iran deal, it cost an unsustainable $40-100 billion per year in energy, fuel, water, and food. With falling oil prices, Iran can no longer sustain such a program. The oil plunge has hit the country hard. In order for Iran to balance its budget and avoid deficit, barrel prices need to be above $100 . With crude oil prices at around $50, the national economy is taking quite the hit.Oil revenues accounted for 47% of Iraq’s total GDP and 95% of Iraqi government revenue. Similarly, oil exports accounted for more than 90% of total exports.The current cycle of global oil prices and the consequential erosion of their policies of heavily subsidizing domestic energy consumption have had a dramatic impact on the sovereign wealth fund holdings of the Middle East’s ‘rentier’ states.Not even the most seasoned economist at the IMF could have predicted the range of economic impacts of the global economic downturn since 2008. It is still too early to predict with reasonable certainty the final shape of policies in Middle east, which may range from Keynesian economics to direct state intervention to mitigate massive shocks to the stock market.For the past three decades, Middle East sovereign wealth funds to a large extent provided liquidity that helped to bolster the strength of the American dollar, finance its deficit and maintain the dominance of Dollar and the American banking system is no longer sustainable.Current account surpluses are likely to disappear and some of the GCC oil exporters are facing fiscal deficits for the first time in two decades. Many will be able to avoid deep cuts in government spending in the short term, as they have substantial fiscal buffers of both sovereign wealth funds and foreign reserves built up over numerous profitable years, and even at $50/B they are still making some profit.The Middle east sovereign wealth funds have historically invested in US treasury bonds and other European government debt securities, as well as property in the capital cities around the world – especially in London and New York. But in recent years there has been an increase in investment by the wealth funds in the private sector, directly or indirectly, via private investment trusts. However, as low oil prices seem to be here for the next few years, oil revenues may no longer cover the anticipated rise in government spending. So, investment funds are likely to dry up.Treasury bond markets are likely to see fewer buyers, which might exert pressure to raise interest rates, as bond prices are likely to fall and the commercial and luxury property market may also face a slowdown. Any decline in GCC future spending, will only increase uncertainty and the lack of confidence in many markets.Most of the oil producing states have embarked upon a policy of economic diversification, but the only clear ‘success story’ is the UAE. Faced with low oil prices, rising competition, and little else other than oil to offer the world, these oil-dependent economies may be facing a bleak future if the world economy remains subdued. The emergence of alternative energy sources, many of which are offering a clean alternative to fossil fuels, will only add further to the woes of many MENA economies as the energy mix grows.Economic reforms, downsizing government employment, privatization and encouragement of the private sector are long overdue in some states. In fact it may be too late for many to address the problem of investor confidence, even in the UAE property prices in recent months have been subdued and have even fallen in some areas of Dubai and Abu Dhabi.Are we witnessing the curse of oil dependency, creating the slow death of the region as sovereign wealth funds are being gradually depleted to fund fiscal deficits? Many nations have failed their unemployed younger generation and now will have little to offer the next generation. Regional infighting, corruption, religious intolerance, a growing sectarian divide all usually fuelled by foreign interference and triggered by transnational terrorist groups, will only condemn the region to generations of poverty, unless the situation today becomes a wake-up call for the ruling dynasties to take responsibility and accountability for their own economic development, security and welfare, before all is lost to terrorism and criminality. The UAE has proven that economic security is possible, but few others states in the region have had forward looking politicians as capable as some of the past and present visionary rulers of Abu Dhabi and Dubai.