I lifted this article from the GATA website. It is an intriguing insight for several reasons. One of those is their view that the involvement of the US in the Yuogolsavian war in 1999 was to stave off an economic collapse at that time. Another is that the collapse will immediately increase the price of gold - an asset that has been price depressed for years resulting from the purposeful manipulation of leading US & European banks, while physical gold has been privately acquired in large volumes in off-market transactions by those same banks. But the most important point, I think, is the authors view that the EURO will step into the breach as the new global currency following the collapse of the dollar. There has long been a plan to introduce a global electronic currency and the EURO is it. Note also that the two Russian economists indicate that Russia should elect Germany as their principal Western partner. David **** Eric Von Baronov The Washington Insider 26 August 2000 Will the United States Manage to Bring on the Apocalypse? "Will the United States Manage to Bring on the Apocalypse? The World Economic Crisis Should Begin in November of This Year," is the title of an extraordinary article, published in the July 24 issue of Ekspert, a prominent Russian economics and business weekly. The authors, Oleg Grigoryev and Mikhail Khazin, former high-level economic advisors to the Russian government, during 1994-1998, now work as independent consultants. Significantly, the two authors and Ekspert magazine could be characterized as having a "liberal" economic policy orientation. Taking the so-called New Economy and its relation with industrial production, the authors argue that the bubble in asset prices in the New Economy will be one critical factor in unleashing the coming collapse. Unlike previous technological revolutions, which had led to broad increases in productivity and living standards in the real economy, "as yet, there has been no observable impact by the new, information sector, on the traditional sector, with respect to any significant increase of labor productivity and rates of profit." This situation, however, "undermines the New Economy itself, which too much resembles a financial pyramid scheme, the stability of which largely depends on strictly psychological factors." The authors emphasize that "the persistent and steady decline of profitability of the old, real economy, primarily industry" will be the other "trigger of the future global economic crisis." The New Economy has "flourished just in time to attract any excess financial resources, making possible a repetition of the phenomenon of 1920s - rapid growth, with practically no inflation - and to postpone the stage of overheating for approximately ten more years. Now, this time is up." Following the economic and financial collapse of Asia in 1997-98, Khazin and Grigoryev argue, "the only remaining possibility to postpone the crisis in the United States itself, was to employ non-economic mechanisms," like the 1999 war in Yugoslavia. Referring to the internal dynamic of the US economy, the Russian economists write that there has been a "decrease of US citizens' savings rate. They began to spend more, while also increasing their debt obligations. With rising interest rates, this process had to provoke inflation. The first signs of inflation appeared in 1998.... But, for a long time the inflationary processes were not reflected in prices on the [goods] markets, thanks to the skilled and competent efforts of the Federal Reserve system. By the end of 1999, however, the Federal Reserve could no longer contain inflation. The critical point was reached in March-April 2000, when the annual rate of inflation in the United States, reached the average profitability level of industrial production." Referring to the increasing daily volatility on the major US stock markets, the Russian economists see this as a sign of "how close the United States is to the onset of the collapse." Then, pointing to the politics of the US election process, they outline two scenarios: The first one plays out in the event that the US "financial oligarchy" keeps control over the two major parties. In this case, nothing will happen before the elections; but immediately thereafter, the truth about the real state of affairs, will necessarily appear in the mass media by early November, when the balances from two quarters of the business year begin to be published, likely triggering the dumping of shares of industrial companies. Thw second scenario would unfold, if the leadership of the US Republican Party were to behave relatively independently and push to accelerate the crisis - firstly, in order to guarantee victory in the election, and, secondly, to force the Clinton Administration to take the first and most unpopular measures after the crisis broke out. Noting that such a collapse in the US stock markets would wipe out "some $10 trillion" in paper assets, "this will sharply accelerate inflation.... The trillions of dollars of liquidity, which investors manage to pull out of the hardest-hit sectors of the economy, will be invested "in any available long-term assets." This will cause a sharp rise in the prices of gold, other precious metals, real estate and other kinds of durable property. "Our very preliminary calculations suggest that world average consumption levels will fall by a factor of 1.5 to 3." In order to combat the industrial depression, the authors believe that national governments will resort to earlier "credit-creation mechanisms," and that "the interaction of mechanisms for the protection of national markets will define the development of the global economy in the first post-crisis years." "The crisis will profoundly change the correlation of forces in the global economic arena. The weakening of the US economy ( aggravated by social upheavals ) , will hit those regions, which derive a significant part of their income from sales in the United States - above all Japan, China, and Southeast Asia. Serious stagnation will take place in [Western] Europe, too, but it may secure powerful investment potential by expanding the role of the euro. In part, this will be directed towards Latin America. "After the destruction of the WTO system and re-establishment of protectionist mechanisms, the situation in the world economy will be very reminiscent of the early 1930s. A small quantity of major international monopoly concerns, a multi-currency system, high unemployment, rising social tensions, inflation and stagnation - these features will define the picture of the world economy at the start of this new century." In conclusion, the authors insist that the perspective given in their forecast could be acted upon by the Russian leadership, only in cooperation with an economically strong Western partner. In view of "historical Russian business traditions, Russia's relations with Western countries during recent decades, and the existing volume of investment," Grigoryev and Khazin propose that this partner should be Germany. Source: WASHINGTON INSIDER, Vol. 10, No. 34 August 24, 2000 -------------------------- eGroups Sponsor -------------------------~-~> <FONT COLOR="#000099">Kids tested. Mom approved. And Dad liked it because he got his loan approved in under 60 seconds. Find out how. 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