Exploring mainly Heterodox type Economics, Monetary Reform, Environmental Sustainability, and Climate Change. It is a resource of Internet articles, and also promotes awareness of a futuristic modern universal Paradigm known as TFE, or Transfinancial Economics which is probably the most advanced, and most "scientific" form of Economics in the world .
a) TFE believes it is very important to work with present day banks during the phasing in of the of non-repayable money (ie.a commercial grant)for climate change and the other "humanitarian" projects which would be difficult if not impossible to fund by conventional finance. This would speed up the process of change rather than retard it if the financial system were challenged as the banking system is a very powerful vested interest. If there is a serious drop in profits (ie. lack of demand for repayable loans with interest) the Central Bank could create compensation instantly on a huge scale without leading to serious inflation.
b) Present day banks create most of the money in the world out of thin air as loans. This is involves a simple process in which numbers are tapped into a bank computer (ie money or digital data).This ofcourse is debt based money which requires interest over time.
c) It must be said that money has to be limited in a variety of ways (depending on the the commercial project) and hence maintain some form of credibility and value otherwise it turns into farce even if inflation can be controlled by flexible digital controls. Furthermore there must be robust oversight to ensure everything goes to plan.
d) Ofcourse ordinary mainstream credit creation would also exists with interest.
e) Though TFE believes in flexible digital price controls it also realizes that it is possible to create huge amounts of non-repayable money for various commercial projects that do not lead to serious inflation. However, it would though be wiser to have direct flexible price controls just in case things things go wrong at a later stage.
g) A novel but highly controversial approach to all this is that a commercial grant could be created with interest but would have it paid for by a Central Bank! In other words, a free loan!
The original sin hypothesis has undergone a series of changes since its introduction.
The original sin hypothesis was first defined as a situation "in which the domestic currency cannot be used to borrow abroad or to borrow long term even domestically" by Barry Eichengreen and Ricardo Hausmann in 1999. Based on their measure of original sin (shares of home currency-denominated bank loans and international bond debt), they showed that original sin was present in most of the developing economies and independent from histories of high inflation and currency depreciation. However, this early study left the causes of original sin as an open question.
In the second version of the original sin hypothesis, Barry Eichengreen, Ricardo Hausmann and Ugo Panizza in 2002 discarded the domestic element of original sin and redefined (international) original sin as a situation in which most countries cannot borrow abroad in their own currency. They showed that almost all of the countries (except US, Euro area, Japan, UK, and Switzerland) suffered from (international) original sin over time. Eichengreen, Hausmann, and Panizza concluded that weaknesses of national macroeconomic policies and institutions are not statistically related with original sin and found that the only statistically robust determinant of original sin was country size. Moreover, they claimed that international transaction costs, network externalities, and global capital market imperfections were the main reasons (which are beyond the control of an individual country) of the original sin. Hence, as a solution for the original sin problem, they proposed an international initiative and recommended development of a basket index of emerging-market currencies so that international financial institutions could issue debt denominated in this index until a liquid-market in this index had developed. Burger and Warnock (2003) suggested inclusion of information on domestic bond markets to account for the possibility that foreign investors were holding local-currency emerging market bonds to analyze the determinants of original sin. Using this expanded measure, they showed that emerging markets economies could develop local bond markets (in which they can borrow in domestic currency) and attract global investors with stronger institutions and credible domestic policies.[5] Reinhart, Rogoff and Savastano (2003) criticized the suggested international solution for the original sin problem by claiming that the main problem of emerging market economies is to learn how to borrow less (debt intolerance) rather than learn how to borrow more in their domestic currency.[6]
In these two earlier versions of original sin hypothesis, Eichengreen, Hausmann and Panizza argued that in the presence of high levels of original sin, domestic investments will have a currency mismatch (projects that generate domestic currency will be financed with a foreign currency) so that macroeconomic and financial instability will be unavoidable. Hence, original sin and currency mismatch are used interchangeable in these early studies. Goldstein and Turner (2003) criticized this by showing that large output losses due to the currency mismatches during financial crises could not be attributed to original sin. Hence, they claimed that the original sin is not a sufficient condition for a currency mismatch.[7]
In their last version of their original sin hypothesis, Eichengreen, Hausmann and Panizza defined domestic component of original sin as the "inability to borrow domestically long-term at fixed rates in local currency" while keeping the definition of (international) original sin same.[8][9][10] They reported that no country (having an original sin ratio higher than 0.75) with high domestic original sin had low international original sin suggesting that if a country could not persuade its own citizens to lend in local currency at long maturities, it could not convince foreigners to do the same. On the other hand, they reported that seven countries, among the 21 emerging countries included in their sample, had low domestic original sin but relatively high international original sin, suggesting that dominant use of local currency in domestic markets is not a sufficient condition for dominant use internationally.
There are three different measures of original sin in economics literature. These measures are defined mathematically as one minus the fraction of own currency-denominated securities in the relevant total. Original sin measures range between 0 and 1. A high measure of original sin indicates that a country suffers from high level of original sin. Thus, a country that issues all of its securities in foreign currency would have an original sin measure of one, while a country that issues all of its securities in its domestic currency would have an original sin measure of zero.
The first measure of original sin (OSIN1) is defined as one minus the ratio of the stock of international securities issued by a country in its own currency and the total stock of international securities issued by the country. As this measure tends to 1, the greater the original sin. This index suffers from two shortcomings. First, it is based solely on securities but no other debts. Second, it ignores the effect of other financial instruments, e.g., swaps, which are widely used for hedging currency risk.[11][12]
The second version of the original sin index (OSIN2) is based on two intermediate measures: INDEXA and OSIN3. Unlike OSIN1, INDEXA accounts for bank loans in addition to bond debt and OSIN3 accounts for swaps. Thus, OSIN2 has the advantage of wider coverage; however, it is a less precise measure of Original Sin because of data limitations of bank loans.
The last measure of the original sin is based on an intermediate index (INDEXB) which aims to capture the effects of the swaps on original sin and is defined as
where INDEXB is defined as one minus the ratio between international securities issued in a given currency and the amount of the international securities issued by the corresponding country.
These measures of original sin suggest that U.S., UK, Japan, Switzerland (Financial Centers), and Euroland countries are more successful in issuing their securities in their own domestic currencies relative to developing countries. Moreover, these measures indicate that the original sin is persistent over 1993-2001 period in all country groups.
Measures of original sin by country grouping, simple average
Empirical studies mainly focus on a few parameters as being the determinants of the original sin: (i) the level of development, (ii) monetary credibility, (iii) level of debt burden, (iv) the exchange rate regime, (v) slope of the yield curve, and (vi) size of the investor base.
The first determinant is level of development; measured generally with GDP per capita. Empirical studies indicate that GDP per capita is significantly correlated with original sin. However, this result is not robust to inclusion of other regressors (Hausmann and Panizza, 2003)
The second determinant of the original sin is monetary credibility. This is important for both domestic and international original sin. The monetary credibility is proxied usually by inflation. Generally, the ratio of domestic debt to total public debt is higher in countries with lower and less volatile inflation indicating that inflation can change the composition of public debt and make it riskier. Hausmann and Panizza (2003) find that monetary credibility, as measured by lower inflation and the imposition of capital controls, are associated with lower domestic original sin in emerging economies. On the international side, their study shows that if the monetary and fiscal authorities are inflation prone, foreign investors will lend only in foreign currency, which is protected against inflation risk, or at short maturities, so that the interest rates can be adjusted quickly to any acceleration of inflation.
The third determinant is the level of debt burden. High public indebtness gives rise to an inability to service debt. Consequently, governments attempt to reduce debt service costs through inflation, unexpected changes in interest rates, explicit taxation, or outright default. Such situations reduce their credibility. Therefore, governments will tend to have a shorter maturity debt composition to enhance credibility when the debt burden is high. Most commonly, the ability to service debt is proxied with an array of macroeconomic indicators including the ratios of the fiscal balance to GDP, primary balance to GDP, government debt to exports and government debt to GDP (Hausman et al.,2003 and Mehl et al.,2005)
The fourth determinant is the exchange rate regime. As indicated by Hausmann and Panizza (2003), countries with fixed exchange rate regime experience large volatility in their domestic-currency interest rate, while countries that have a floating exchange rate regime experience larger exchange rate volatility. This creates differences in the structures of borrowing. Empirical studies show that fixed exchange rate regime is the main reason of liability dollarization. Despite these common weaknesses, emerging and developing economies have been able to attract capital because they have often operated under fixed or pegged exchange rate regimes until the early 2000s.
The fifth attempt is the slope of the yield curve. In theory, and given the existence of term premia, issuing short-term debt is cheaper than issuing long-term debt.[13] However, refinancing risk is higher for short-term debt and frequent refinancing implies a larger risk of financing with higher interest rates. Therefore, governments face a trade-off between cheaper funding costs, which tilts the duration towards short-term maturities and refinancing risk, which tilts the duration towards longer-term maturities.[14] Generally, an upward-sloping yield curve is associated with higher long-term borrowing to meet investor demand and, hence, lower original sin.
Moreover, size of the investor base is another determinant of the domestic original sin. This concept actually indicates the level of financial development which is measured most of the time by a ratio of total domestic credits to GDP. Finally, a special care to the level of openness which is generally measured by total foreign trade, should be taken into account.
Jump up ^Eichengreen, B., and Hausmann, R., (1999). "Exchange Rates and Financial Fragility", In New Challenges for Monetary Policy. Proceedings of a symposium sponsored by the Federal Reserve Bank of Kansas City.
Jump up ^Hausmann, R., and Panizza, U., (2002). `"The Mystery of Original Sin: The Case of the Missing Apple",Harward University, Kennedy School of Government. Mimeographed .
Jump up ^Reinhart, C., Rogoff, K., and Savastano, M., (2003). "Debt Intolerance", Brookings Papers on Economic Activity, 1:1-62. 22:957-90.
Jump up ^Goldstein, M., and Turner, P., (2003). "Currency Mismatching in Emerging Economies", paper presented at an Institute for International Economics seminar, August 14, Washington.
Calvo, G.A., (1998). "Varieties of Capital Market Crises", in G.A. Calvo and M. King (editors), The Debt Burden and Its Consequences for Monetary Policy, Chapter 7; London: Manmillon Pres Ltd.
Professor Sutton stated, "Western textbooks on Soviet economic development omit any description of the economic and financial aid given to the 1917 Revolution and subsequent economic development by Western Firms and banks." "In the Bolshevik Revolution we have some of the world's richest and most powerful men financing a movement which claims its very existence is based on the concept of stripping of their wealth," declared Allen. "[M]en like the Rothschilds, Rockefellers, Schiffs, Warburgs, Morgans, Harrimans, and Milners."
Perloff agreed, "Jacob Schiff, the head of Kuhn, Loeb and Co., heavily bankrolled the [Communist] revolution. This was reported by White Russian General Arsine de Goulevitch in his book Czarism and the Revolution." "According to his grandson John," described Allen, "Jacob Schiff ... long-time associate of the Rothschilds, financed the Communist Revolution in Russia to the tune of $20 million." He continued, "According to a report on file with the State Department, his firm, Kuhn Loeb and Co. bankrolled the first five year plan for Stalin," and added, "Schiff's descendents are active in the Council on Foreign Relations today."
Referring to the emergence of a communist dictatorship which resulted from the Bolshevik Revolution in 1917, Professor Marrs wrote that they were funded by "Germany and America. ... Their repugnant campaign to purify and cleanse Mother Russia and to seek world domination resulted in ... [millions of] human beings wiped out and brutally purged..." He attested, "Brown Brothers Harriman" helped finance it with "money made possible by it and the affiliated Guaranty Trust Company." Professor Sutton agreed, writing "W. Averell Harriman was a director of Guaranty Trust Company" and "was involved in the Bolshevik Revolution."
On February 3, 1949, the New York Journal-American stated, "Today it is estimated even by Jacob's grandson, John Schiff, a prominent member of New York Society, that the old man sank about $20,000,000 for the final triumph of Bolshevism in Russia. Other New York banking firms also contributed."
Referring to a June 15, 1933, Congressional Record, Allen wrote "Congressman Louis McFadden, chairman of the House Banking Committee, maintained in a speech to his fellow Congressman: "The Soviet government has been given United States Treasure funds by the Federal Reserve Board and the Federal Reserve Banks acting through the Chase Bank and the Guaranty Trust Company and other banks in New York City. ... Open up the books of Amtorg, the trading organization of the Soviet government in New York, and of Gostorg, the general office of the Soviet Trade Organization, and of the State Bank of the Union of Soviet Socialist Republics and you will be staggered to see how much American money has been taken from the United States' Treasury for the benefit of Russia."
"Now our textbooks tell us that the Nazis and Soviets were bitter enemies and their systems are opposites," observed Professor Sutton. But in the "1920s, W. Averell Harriman was a prime supporter of the Soviets with finance and diplomatic assistance ... [and] participated in RUSKOMBANK," which was "the first Soviet commercial bank. Furthermore, Max May, the Vice President of Guaranty Trust, which was dominated by Harriman and Morgan, became the first Vice-President of Ruskombank." However, declared Professor Sutton, "Averell Harriman, his brother Roland Harriman, and ... E.S. James and Knight Woolley, through the Union Bank ... were prime financial backers of Hitler." He asked, "How could a rational man support Soviets and Nazis at the same time?"
A curious dilemma arises when faced with the documented fact that Wall Street funded both Communists and Nazis. First, it would seem these two forms of government are at opposite ends of the political spectrum. And that capitalists would see them as a threat to their growth. Allen provides a possible answer, writing, "But obviously these men have no fear of international Communism. It is only logical to assume that if they financed it, and are willing--even eager--to cooperate with it, it must be because they control it. Can there be another explanation that makes sense?" He adds, "Remember that for over 100 years it has been a standard operating procedure of the Rockefellers and their allies to control both sides of every conflict."
Before Winston Churchill became Prime Minister of Great Britain, he acknowledged a conscious effort of wealthy people to install a communist dictatorship in Russia. He wrote in the February 18th, 1920 issue of the London Illustrated Sunday Herald, that "From the days of Spartacus [Adam] Weishaupt ... to those of Karl Marx, to those of Trotsky, Bella Kuhn, Rose Luxembourg, and Emma Goldman, this world-wide conspiracy has been steadily growing." He affirmed, "It has been the mainspring of every subversive movement during the 19th century; and now at last, this band of extraordinary personalities from the underworld of the great cities of Europe and America have gripped the Russian people by the hair of their heads and have become practically undisputed masters of that enormous empire."
After the Bolshevik Revolution, Wall Street ensured the communists would retain control of Russia. Professor Sutton described this effort when he wrote, "On may 1st, 1918, when the Bolsheviks controlled only a small fraction of Russia (and were to come near to losing even that fraction in the summer of 1918), the American League to Aid and Cooperate with Russia was organized in Washington, D.C to support the Bolsheviks. This was not a 'Hands off Russia' type of committee formed by the Communist Party U.S.A or its allies. It was a committee created by Wall Street with George P. Whalen of Vacuum Oil Company as Treasurer and Coffin and Oudin of General Electric, along with Thompson of the Federal Reserve System, Willard of the Baltimore and Ohio Railroad, and assorted socialists."
"The Bolsheviks were not a visible political force at the time the Czar abdicated," Allen wrote. "And they came to power not because of the downtrodden masses of Russia called them back, but because very powerful men in Europe and the United States sent them in. "They [Lenin and Trotsky] joined up, and, by November, though bribery, cunning, brutality and deception, they were able (not to bring the masses rallying to their cause, but) to hire enough thugs and make enough deals to impose out of the gun barrel what Lenin called 'all power to the Soviets.'"
"Having created their colony in Russia," said Allen, "the Rockefellers and their allies have struggled mightily ever since to keep it alive. Beginning in 1918 this clique has been engaged in transferring money and, probably more important, technical information to the Soviet Union." Perloff agreed, writing, "Probably no name symbolized capitalism more than Rockefeller. Yet that family has for decades supplied trade and credit to Communist nations. After the Bolsheviks took power, the Rockefellers' Standard Oil of New Jersey bought up Russian oil fields, while Standard Oil of New York built the soviets a refiner and made an arrangement to market their oil in Europe. During the 1920's the Rockefellers' Chase Bank helped found the American-Russian Chamber of Commerce, and was involved in financing Soviet raw material exports and selling Soviet bonds in the U.S."
According to Senator Barry Goldwater, Chase Manhattan built a truck factory in Russia which could also be used to produce armored vehicles such as tanks and even rocket launchers. Perloff echoed, "American technology helped the Soviets construct the $5 billion Kama River truck factory ... [which was] successfully converted by the Kremlin to military purposes."
Wall Street continued to aid the Russian communists as they supplied the Vietnamese communists that Americans were fighting in Vietnam, says Allen. In the late 60s Rockefeller and other industrialists built synthetic rubber plants and an aluminum factory totaling about 250 million dollars. Professor Sutton observed, "these American capitalists were willing to finance and subsidize the Soviet Union while the Vietnam War was underway, knowing that the Soviets were supplying the other side."
An article appeared in the New York Times on January 16, 1967, which carried the headline, Eaton Joins Rockefellers to Spur Trade with Reds. Perloff summed up the story, "The ensuing story noted that the Rockefellers were teaming up with tycoon Cyrus Eaton, Jr., who was financing for the Soviet block the construction of a $50 million aluminum plant and rubber plants valued at over $200 million." He added, "The Chase, which maintains a branch office at 1 Karl Marx Square in Moscow, has gained notoriety for financing projects behind the Iron Curtain." Pictured left is Averill Harriman of the CFR (center) with Stalin (right) & Winston Churchill.(*) W. Averill Harriman was made U.S. Ambassador to the USSR in 1941. Allen wrote, "Sutton quotes a report by Averell Harriman to the State Department in June, 1944 as stating: 'Stalin paid tribute to the assistance rendered by the United States to Soviet industry before and during the war.'" "It is not an exaggeration to say that the USSR was made in the USA," observed Allen.
Referring to Professor Sutton's book, Wall Street and the Bolshevik Revolution, he wrote, "No one has even attempted to refute Sutton's almost excessively scholarly works. They can't. But the misinformation machines that compose our mediacracy can ignore Sutton. And they do." The book, added Perloff, "is based on assiduous research, including a deeper probe into State Department files."
Professor Sutton warned, "The synthesis sought by the Establishment is called the New World Order. Without controlled conflict this New World Order will not come about. ... And this is being done with the calculated, managed, use of conflict. ... This explains why the International bankers backed the Nazis, the Soviet Union, [and] North Korea ... against the United States. The 'conflict' ... [builds] profits while pushing the world ever closer to One World Government. The process continues today."
Summary
The evidence that these researchers present, which includes mainstream news and State Department records, suggests that Communist Russia was not only heavily funded by Wall Street, but was the actual creation of Wall Street. The Communist Revolution was instigated by Wall Street. Wall Street continued to build Russia even as they supplied aid to a country that America was at war with. Because they created communist Russia, they must have known about the millions of people being murdered.
[Footnotes] * Photo taken from the Shadows of Power, by James Perloff.
those unknown Russian libertarians, also known as Greens, who in 1919 fought both the Reds and the Whites in their attempt to gain a free and voluntary Russia
Pictured left is Averill Harriman of the CFR (center) with Stalin (right) & Winston Churchill.(*) W. Averill Harriman was made U.S. Ambassador to the USSR in 1941. Allen wrote, "Sutton quotes a report by Averell Harriman to the State Department in June, 1944 as stating: 'Stalin paid tribute to the assistance rendered by the United States to Soviet industry before and during the war.'" "It is not an exaggeration to say that the USSR was made in the USA," observed Allen.