Posts Tagged ‘bretton woods agreement’

What is Happening in the Financial System

Friday, September 19th, 2008

The current Foundation of the World Financial System, the US Economy based on the Dollar, is in a Fatal Crisis. The Solution to the Current Crisis, Bailing Out, will finally Speed Up the Crisis. The real problem is moved to the Near Future, to another Level of Society (MiddleClass, the Poor) and to another part of the World. In the End it will fireback on the US itself and deepen the Recession that is already taking place.

Money represents a Value of Something. For a very long time money was based on the value of Gold. This foundation failed. The failure of the Gold Based Money system created the Great Depression and finally the Second World War. At this moment the Financial System is without any Foundation.

To prevent a Third World War the Bretton Woods Agreement was created in 1947. The foundation of the International Money System was based on the Dollar. In 1971 the US broke up the Agreement because it was unable to stabilize the International System. At that time the US was spending too much money to fight the war in Vietnam. It became a Debtor and remained a Debtor until today.

From that Time on the International Money System is Floating but the Foundation, the Dollar, is still used. The Euro is an alternative but it is almost impossible to move to the Euro without destroying the US Economy and the World Economy. Europe, China and even Russia are Forced to help the Biggest Debtor in the World to avoid the destruction of their own Financial System. In the mean time the Biggest Debtor in the World keeps on Spending. It is even Increasing its Spending Behavior.

Many people believe that the reason behind the Financial Crisis is the Credit Crunch. They believe mortgages are the cause of everything but the reason is much more complicated. The main reason are financial derivatives.

Derivatives are very complicated ways to gamble with money. They are so complicated that almost nobody is able to calculate the value of these financial instruments. They are so complicated that almost nobody is able to keep the books. The controllers of the banks lost the control a very long time ago.


Derivatives are the playingfield of dealers and the dealers are able to confuse almost everybody when they want to play their game. The effect of playing dealers has shown itself in many cases like the falldown of Barings. The Derivatives have transformed The Banking Industry into a Casino.

The US Government and its Allies are trying to avoid a new Great Depression by bailing out or protecting every US Bank, Insurance Company and other Company (Farmers, Chrysler, Boeing, Ford, ..) that is unable to pay its debts. The US Government is moving the huge and uncertain debt from the Market to the Government hoping the Market will Restore itself. They believe the Market is going Up and Down. Someday they will be able to Sell the current Debt with a Profit back to the Market.

The strange thing is that other countries are helping the US to protect their vital companies from a certain disaster. The US, the Protector of the Free Market, is protecting its Own market and the only reason why others are helping the US is to avoid a certain disaster on the level of the World. Strangely enough they are disturbing their own market to avoid the destruction of the market of their biggest competitor.

In the background investors, Countries and Companies are slowly moving out of the US Economy. The are investing in Europa (Warren Buffett) or are creating their own financial market and currency (China, Russia, India).Nobody believes the US will recover but they have to prevent a total meltdown.

China is even taking over control of the US Economy. With their enormouss funds they will be alble to “blackmail” the US. They are already doing this. The Chinese are in contrary to the US fighting the war with the Wapens of their Opponent. They know how to win without fighting.

What many peopl don’t realize is that the long term Economic Cycle (The Kondratiev) is going Down for about 26 years. We have entered a State of Compression in 2000. The Expansion of the World Economy during the last 26 years has stopped. We are just in the beginning of the Phase of Compression.

During the phase of compression the Baby Boomers will stop working. They have invested a lot of money to buy a pension. During the compression their pensions will evaporate. During the phase of compression many people will get old and ill. The Social System will be without any money to help them. Many people will move into a very angry state when they realize what really has happened.

During the Downfall The Debts will increase tremendously. The move from the Market to the Government (and the Tax Payer) is a temporary solution. Someday the Debts have to be repayed and the only thing US Govenment can do is to accept the fact that the US and the strongly related Western Economy will enter a state of Recession.

The Economic Activity will go Down but Social Activities will Move Up. When you are losing money somebody (Your Friends, Your Family, Your Community) has to help you.

What many people also don’t realize is that the very long time cycles are supporting the DownFall of the Economic System. The very long time cycles and especially the Cycle of the Precession is Jumping to a new Level. It is jumping to a higher level of Consciousness.

The current instability of the World System is not only visible in the Financial System. It shows itself in every System of the World. It shows itself in the Psychological System, the Cultural System, The Religiouss System, the Political System, the Ecological System, the Weather System and the Planetary System.

These Systems are highly interconnected. A Disaster in one of the Systems has an impact on all of the other Systems. When the Financial System is fixed, a Political Conflict (Russia) starts and the Financial System is unbalanced. When the Political System is stabilized a huge Earthquake or a giant Tornado will move the total System into unbalance. This will go on and on until everybody realizes that we are living in a Highly Interconnected Reality.

The only thing we can do is to act on the Level of Earth and Face Reality. We have to realize that all the Isolated Systems are One and the only thing we can do is to find Balance on Every Level.

We could start to Find Balance on the Level of the Human.

We could start to Reduce the Power of the Ego, Desire, by reducing our Needs.

We could start to Reduce the Power of our Expectation, our Thinking, and start to Trust the Other.

We could start to Empower our Imagination, Spirit, and Imagine a Shared Future.

We could start to Empower our Soul, Empathy, and start to Take Care of Others.

We could start to use our Consciousness and become Aware of what is really Happening.

Many people believe the current crisis will be a Fatal Crisis, a (Financial) Apocalyps. I don’t believe this will be the case.

Imagine a world were you are not Working all the time. Imagine a Life without Stress.

Imagine a World where You don’t have to Play Political Games to Survive.

Imagine a world where You could enjoy Nature.

Imagine a World were You are able to Help without Being Payd.

Imagine a World were you are able to Create when You want to do this. Imagine a World without War and Violence. The only thing You have to do is Leave a Little Bit of Your Current Luxury behind.

If this happens the Downfall of the Bad Buck would be replaced by a tremendous Rise of Good Luck.


How the Great Depression was created

About Derivatives, Accountants, Greed and other terrible problems in the Banking Industry