It's A Bird! A Plane! A Super Bubble!
Elaine Meinel Supkis

Soros talks about the Super Bubble. He chastises our ruling elites and our political classes for refusing to constrain this desire for infinite money, infinite liquidity. He begs them to stop and to do the right thing which is for the US government to cease wild spending sprees and for our taxes to line up with economic reality. He mentions his favorite philosopher, Karl Popper. This leads us into yet another discussion about the various mythological beasts that dwell in the Outer Darkness. Such as the dread Derivatives Beast and the Infinite Wealth monster. As always, any discussion of money and bubbles leads to talk about the Apocalypse and the history of farming. Oddly enough.

Soros Lambastes Market Theory, Says It Created `Super-Bubble'

"The belief that markets tend towards equilibrium is directly responsible for the current turmoil,'' the billionaire philanthropist writes. "It encouraged the regulators to abandon their responsibility and rely on the market mechanism to correct its own excesses.''

His solutions, laid out here in uncluttered prose, range from abandoning some financial instruments to curbing lending to creating an exchange or clearing house for credit-default swaps.

Soros also gives glimpses of the trading strategies he's using to shield his wealth: He has bet against U.S. and European stocks, the dollar and 10-year Treasuries, preferring non-U.S. currencies and equities in China, India and the Gulf states.

The Super-Bubble: what is this? And what launched this? Soros was a nobody until the Bretton Woods II accords were suddenly foisted upon the US public. The old world monetary regime had two main features: gold was the basis and gold supported the dollar by being controlled in price due to government monopoly on the value of gold. The dollar was a fiat currency and the fiat applied to gold and silver, not to the paper. But dollars were flowing out of the US. Europe was anxious to regain control of the gold and silver that flowed to the US during and after WWI. Especially France. France always built up their gold supplies in anticipation of future wars with either Germany, England or Russia.

The plan set up after Bretton Woods II was for money to be detached from gold and it would 'float'. A global trading system for FX fluctuations was crafted. People could buy and sell dollars and get profits or take losses on daily fluctuations. Clever people who figured out how this system worked ended up making fortunes playing what is essentially a gambling game. Whenever our government suddenly decided to totally alter the value of dollars via secret negotiations with other parties, many of these bettors would be wiped out. Clever ones learned that the only way to play this game is to be very political. A better way is to bribe the politicians doing the negotiations. So they joined the ranks of other lobbyists who grease the palms of the politicians. The wealth that these palm greasers have gained is just amazing. And getting greater, not less, as time passes.

Soros is one of these people. He got very rich off of this new scheme for enriching people at the expense of whole nations. Now there is an army of such people who scour the planet and read the news seeking information about currency values. Whenever a status quo is set, they settle in to exploit it ruthlessly. If a status quo such as 'the yen will be weaker than the dollar' is set for more than a year, a host of much less connected people flood into the markets imitating the powerful players. Then, when the time is ripe, the governments move to change the relative values and all the smaller, 'me too' players are wiped out. But not the big players. They get a head's up. This may be seen as 'insider trading' and frankly, it is!

The global 'Super Bubble' was launched by the US itself when our government gave up on balancing the budget and balancing trade. All our systems began to run in the red at the tail end of the Vietnam War. Clipping the currency, debasing the coinage began early in the war. By the end, the degradation of the greenback was obvious to everyone. As soon as Bretton Woods II was completed and the yen and the German mark were both doubled in value suddenly, instead of no inflation in the US, it became a roaring fire! The 'fix' nearly destroyed our domestic economy.

The monetarists didn't expect this. They expected a flood of American imports to flow into Japan and Germany. But both had Value Added Taxes. As I showed earlier, nations with VAT always beat low-tax nations when it comes to global trade balances! Always. The US, after Bretton Woods II, had and still has an income tax that has stages where people pay more percentage the higher the pay. So when inflation was released in order to pay for the government debts incurred during the long Vietnam War, workers retaliated by demanding pay raises. This pushed everyone into higher and higher tax brackets. So one saw little gain in the take-home pay. Congress and the Presidents could have fixed this easily by calibrating tax brackets with inflation.

But never did this! The inflationary raises were a big bonus for the government. It could keep on paying for the Cold War as well as other adventures while piously saying, they were not raising taxes! During the entire 1970's, taxation roared along, higher and higher. While the Federal Reserve and the government pretended to try to kill inflation. It got so out of hand, the value of gold began to climb rapidly. This set off government alarms. Gold is harder to tax than wages! So they began to raise interest rates rapidly. Gold climbed, inflation roared and interest rates were hiked until all were killed when rates reached 20%.

Then began the tax cuts. The strictures of this new monetary-driven life proved painful. The government of Reagan wanted popularity and nothing is more popular than to buy now, pay later. The Federal Deficit Beast was born, with a vengeance. Over the years, the manipulators of our currency and the many cynics who make profits off of our military/ industrial complex assured Americans, it doesn't matter if the national debt grows. Reagan ran on the platform of 'the national debt is too big' and he cynically made it much, much bigger. Bush Sr. did the same. As did Clinton and Bush Jr. The anomaly of the final years of Clinton seeing budget surpluses was due to one of the many bubbles this 40 year spending spree spawned: the Dot Com bubble. Then, Bush Jr. restored the status quo with his tax cuts and many wars. Military spending and government overdrafts roared into action. Ever since Volker smashed inflation by ruthlessly reducing debts of all sorts and preventing bankers from creating money out of thin air, backed by nothing, it has been funny money all the time ever since.

All these global bubbles get most of their initial energy from the world's #1 economy, the US. Even as other nations like Japan and England imitate us by building up equal amounts of public debt, the US is the champion debt-creator. Working in concert with each other, these three nations have been able to introduce and produce more funny money via their central banks than the entire planet combined. So now, currency markets are hopelessly compromised as the effects of the US low-VAT tax/high public spending has caused a global super bubble. This super bubble will pop when the US itself goes bankrupt.

Here is the Wikipedia submission explaining how Soros operates:

On Black Wednesday (September 16, 1992), Soros became immediately famous when he sold short more than $10 billion worth of pounds, profiting from the Bank of England's reluctance to either raise its interest rates to levels comparable to those of other European Exchange Rate Mechanism countries or to float its currency.

Finally, the Bank of England was forced to withdraw the currency out of the European Exchange Rate Mechanism and to devalue the pound sterling, and Soros earned an estimated US$ 1.1 billion in the process. He was dubbed "the man who broke the Bank of England."

The Times October 26, 1992, Monday quoted Soros as saying: "Our total position by Black Wednesday had to be worth almost $10 billion. We planned to sell more than that. In fact, when Norman Lamont said just before the devaluation that he would borrow nearly $15 billion to defend sterling, we were amused because that was about how much we wanted to sell."

According to Steven Drobny,[10] Stanley Druckenmiller, who traded under Soros, originally saw the weakness in the pound. "Soros' contribution was pushing him to take a gigantic position," in accord with Druckenmiller's own research and instincts.

Note how England protected its currency by having it reside within a secure system set up by the paranoid Germans who hate inflation! But inflation was there, all along. This 'controlled' currency system that suddenly burst outwards when it became the 'euro' is winning the race for 'most powerful currency'. It ceased being a consortium and became singular. And since then, it has greatly destabilized world currency markets since it is kept high in value by German paranoia. This is why Europe is seeing less inflation than the US or Japan, for example [Japan's attempt at killing inflation by destroying the purchasing power of the working class is now floundering].

"This will have far-reaching consequences,'' writes Soros, 77. "It is not business as usual but the end of an era.''

What we are witnessing isn't your ordinary boom and bust, he says. It's the culmination of a "super-bubble'' that began ballooning in the 1980s, when U.S. President Ronald Reagan and U.K. Prime Minister Margaret Thatcher were in power. Borrowing swelled and financial regulations were relaxed in the belief that the market mechanism would keep things on an even keel.

"President Ronald Reagan called it the magic of the marketplace,'' Soros writes. "I call it market fundamentalism.'' *snip* In reality, Soros says, misjudgments and misconceptions influence market prices, which in turn distort the fundamentals that they are meant to reflect. He calls this two-way feedback loop "reflexivity,'' a concept influenced by the philosophy of Karl Popper.

The U.S. housing bubble is Exhibit A. Cheap money fueled more lending, which changed the value of the collateral. Other examples include the conglomerate craze of the 1960s and the international banking crisis of the 1980s, Soros says.

Soros first expounded his hypothesis in his 1987 book "The Alchemy of Finance.'' To his frustration, reflexivity didn't receive serious critical consideration, even though market crackups soon became more common in debacles ranging from "Black Monday'' in October 1987 to the near-collapse of Long-Term Capital Management 11 years later.

Soros is 100% right. We should heed his warnings. But he won't be heeded and he will make more killings on the market since he understands how this super bubble market works. I am pleased he takes his time to tell us all this. He could be nasty and refuse. But like myself, he sees the problems down the road. If the US falls into total disrepair, it probably will become a Nazi state. This morphing of nations into total criminal looting/enslaving entities usually happens when there is economic distress. The destructive power of ethnic/religious cleansing is unleashed whenever there is economic turmoil. Past rulers of the US have worried about this and taken measures to insure the masses have some sort of economic hope and security. But I fear the present crew wants financial insecurity so they can cement their draconian powers over us. As yesterday's 'Warmongers' article, I explained how our media, working for their owners who are a very select group who want war, push the American people into supporting only warmongers for President.

They have endless wars waiting in the wings. They rub their hands in anticipation of looting the final parts of our nation as we desperately fight for our lives while living like slaves.

Mr. Soros mentions Karl Popper. I am always interested in such comments. Knowing the inspiration of the philosophy of people like Mr. Soros, I decided to visit Karl's reputation and writings.

Karl Popper

Among his contributions to philosophy is his attempt to answer the philosophical problem of induction. The problem, in basic terms, can be understood by example: given that the sun has risen every day for as long as anyone can remember, what is the rational proof that it will rise tomorrow? How can one rationally prove that past events will continue to repeat in the future, just because they have repeated in the past? Popper's reply is characteristic, and ties in with his criterion of falsifiability. He states that while there is no way to prove that the sun will rise, we can formulate a theory that every day the sun will rise—if it does not rise on some particular day, our theory will be disproved, but at present it is confirmed. Since it is a very well-tested theory, we have every right to believe that it accurately represents reality, so far as we know.

This may be a true description of the pragmatic approach to knowledge adopted by the scientific method, but it does not in itself address the philosophical problem. As Stephen Hawking explains, "No matter how many times the results of experiments agree with some theory, you can never be sure that the next time the result will not contradict the theory."[8] It may be pragmatically useful to accept a well-tested theory as true until it is falsified, but this does not solve the philosophical problem of induction. As Bertrand Russell put it, "the general principles of science . . . are believed because mankind have found innumerable instances of their truth and no instances of their falsehood. But this affords no evidence for their truth in the future, unless the inductive principle is assumed."[9] In essence, Popper addressed justification for belief ("why do you believe") that the sun will rise tomorrow, not justification for the fact ("how do you know") that it will, which is the crux of the philosophical problem. Said another way, Popper addressed the psychological causes of our belief in the validity of induction without trying to provide logical reasons for it. In this way, he provided a psychological account of the use of induction, but left the philosophical ground of induction as a valid mode of knowledge unaccounted for.

Here is his formula:

Science and mythology are intertwined like two snakes. Information moves from one to the other. Both reside in the same parts of the brain. This is why scientists can't accept new information easily. Only renegades can do this. Far from being a blank slate, human brains are group constructs that depend on thousands of years of transmitted stories and information as well as thinking patterns that are drilled into us. Great thinkers are people who can take and accept all of this and then suddenly, they move outside of the group think to take a look from another angle. When this is done, suddenly, some mysteries are solved. It is akin to suddenly turning on the light in a dark room. At least, this is how I operate. I grew up in a house filled with two professor/scientists, my grandparents were all scientists and my brothers and sisters were all hyper-intelligent. Growing up surrounded by all this, I was hit by lightning. This gave me a 'different view' of the cosmos for the cosmos is religious. And nothing hammers away the collective structure of human religious beliefs than to encounter the Gods directly, face to face.

This is 'induction' with a literal bang. Even so, I had to grasp for a mythological creature to save my own life. The choice of Pegasus was pure chance due to playing on the mosaic of this constellation when I was still crawling about at Yerkes Observatory.

The point here is this: perspective comes from viewpoint. The perspective a young person chooses or finds is a lifetime thing. The lightning bolt that hit Soros was Hitler. This motivates his life. He collects money which he then spends on political initiatives that he hopes will stop any new Hitlers. But the method he is using to make this pile of money that will be used to stop Hitler will MAKE IT INEVITABLE.

This is because of the nature of the Outer Darkness: money and death are linked in horrid ways. And Hitler came out of this place. All Hitlers come out of this place! The more that Soros makes money the way he is making money, via monetary speculation, the more it is inevitable that the system will totally collapse. He means well but the tool he is using is going to make the monster he fears! For the Derivatives Beast is connected to the Monetary FX Beast. This creature has MANY HEADS. It is a combination of Medusa and Hydra. Both of which are connected to Pegasus in ancient mythology. They are water gods, all of them.

Everyone talks about debt as 'liquidity'. Red ink is 'liquid'. This is all part of the nexus that is this mytholgogical/magical system, the one humans created long, long ago when they discovered the ability to save food and to tame animals and plants. This comes from the time when religion was really born and raised. The ancient city of Ur. The price we will pay for wishing for infinite liquidity without ever restoring balance with dry spells is obvious: the collapse of global economic power and WWIII. This is why I can't simply say, 'Do this' or 'Do that' to save ourselves. We must understand that the system can only be fought philosophically as well as politically. Humans banding together to change the course of history is the real solution.

And of course, the hardest thing to do.

At a Jewish forum in New York City, Soros partially attributed a recent resurgence of antisemitism to the policies of Israel and the United States, and to successful Jews such as himself: There is a resurgence of anti-Semitism in Europe. The policies of the Bush administration and the Sharon administration contribute to that. It's not specifically anti-Semitism, but it does manifest itself in anti-Semitism as well. I'm critical of those policies... If we change that direction, then anti-Semitism also will diminish. I can't see how one could confront it directly... I'm also very concerned about my own role because the new anti-Semitism holds that the Jews rule the world... As an unintended consequence of my actions... I also contribute to that image.[21]

In a subsequent article for the New York Review of Books, Soros emphasized that "I do not subscribe to the myths propagated by enemies of Israel and I am not blaming Jews for anti-Semitism. Anti-Semitism predates the birth of Israel. Neither Israel's policies nor the critics of those policies should be held responsible for anti-Semitism. At the same time, I do believe that attitudes toward Israel are influenced by Israel's policies, and attitudes toward the Jewish community are influenced by the pro-Israel lobby's success in suppressing divergent views.[22]"

Soros is correct. He is also very clear-eyed. Anti-semitism has a long and ugly history. It has been a total horror. Modern examples have been monstrously horrible. The Holocaust was very real, very horrible and this is now being turned on its head as the Jews slowly but cruelly turn into Nazis, themselves. The temptations to do this are very high, very powerful. The forces that push this are vast. And subterranean. They work deep inside the mind. Soros can barely see this Medusean force. But what does mythology say about the Evil Eye and this snake-braided lady? If you look straight at her, you turn to stone. She was slain and Pegasus was born only when a hero used a mirror to see her indirectly. Mirror is an ancient word that comes from 'shining' and it is part of the complex of words from 'mir' such as 'miracle' and 'smile'. People who want to talk about money but can't talk about the darker aspects of money can't see into the future. To see the future, you must be able to see inside the soul. And that is where all our demons live.

Culture of Life News Main Page