Before we begin our series introducing the corporate mafia families that own Asia, let’s take a peek into the past and see which modern events have shaped the world’s financial system the most.
The world market has been through a lot in the last hundred or so years. For one there’s been major market crashes, like in 1929 the Great Depression, and in 2008 the Big Bank collapse.
Additionally, global trade and currencies went from being pegged to gold to the dollar and eventually indirectly to oil. And let’s not forget about the creation of the unified Euro. The global economy has also seen its fair share of world altering treaties, like the Bretton Woods Agreement in 1944 and the Petrodollar agreement in 1973.
All the while, the importance and influence of the U.S. and the dollar grew side by side. The shadow of oil lurking in the corner.
Central banks across Asia have also slowly gained independence. Central banking reforms help stabilize economies and reel in inflation. In turn, Asia’s potential as an economic powerhouse is increasing every day.
And the region’s natural leader? Well, China of course. The country has already become the world’s manufacturing hub, joining Japan and Korea. Yet, China is plagued with new problems like pollution, corruption and inequality.
Modern wars have also ravaged economies. Many recent wars and terrorist attacks can be tied to oil agreements and U.S.’s hegemonic influence throughout the world.
By analyzing past momentous financial events, we can learn how and why the world market fluctuates. We can also understand what the future may hold…
The U.S.’s Federal Reserve Bank is created. The U.S. also passes its 16th Constitutional Amendment, authorizing the income tax.
Many experts point to these two events to explain our current global crisis. Without the Fed, there would not have been multi-trillions in quantitative easing, the 2007 real estate market crash or the collapse of giant banks in 2008 (which were bailed out by taxpayer money). 1913 lit the spark that would ignite today’s market chaos.
Archduke Franz Ferdinand is assassinated and World War I begins. On that same day, England signed for the oil rights in Mosul, Iraq. Today, oil-rich Mosul is under ISIS control.
Throughout modern history, oil has played an important role is shaping world events and global economies. For instance, Pearl Harbor was attacked in 1941 in response to the U.S. cutting off oil to Japan. It can be argued that the Vietnam War was about oil, not communism. The U.S. wanted to prevent China from acquiring Vietnam’s oil.
Ten thousand unemployed Hunger Marchers jammed the streets in Washington during the Great Depression (Shutterstock)
The Great Depression was caused by the largest market crash in history.
The American economy was devastated. The Great Society was created in response, birthing many of today’s social programs. This includes the unfunded liabilities of entitlement programs (like Medicare, Social Security) that are currently bankrupting the U.S.
As of 2017, when insolvent programs are added up, national debt is estimated at over US$220 trillion.
Social Security is created by President F.D. Roosevelt. Today, millions are counting on the government to assist them after retirement.
The current Tax Payment Act is enacted, allowing taxes to be taken from employees’ paychecks.
The world goes on the dollar standard
with the Bretton Woods Agreement. The U.S. backs its currency with gold, making dollars “as good as gold”. The world must now trade internationally in dollars. The U.S. gains an unprecedented economic advantage. Many Americans become rich.
U.S. President Nixon (commons.wikimedia)
President Nixon prints money, violating the Bretton Woods Agreement. Without this event, it’s unlikely today’s crisis would exist.
The Petrodollar and warfare are closely linked (Shutterstock)
The Cold War is ending, President Nixon opens the doors to China. Job security is lost as outsourcing increases to low-wage countries. In the next three decades China goes from widespread poverty to a global power.
The dollar becomes backed by oil with the Petrodollar Agreement between Saudi Arabia and Nixon. All countries are required to buy oil in dollars, making it the strongest currency in history.
The Fed starts printing money like mad men. The U.S. economy booms, but terrorism increases.
The Petrodollar has caused many wars and accounts for the Middle East’s current unrest. The U.S.’s position, is often referred to as the World’s Policeman. But in reality, the U.S. fights to protect its currency’s hegemonic power. If the Petrodollar ends, massive inflation will ravage the U.S. economy.
The 401(k) is created. It was sold to baby boomers as financial security. But in reality, the 401(k) was designed to enrich Wall Street.
Bucky Fuller’s Grunch of Giants is published. It details the rise of corporations and their increasing control and influence in every aspect of society.
Alan Greenspan, former head of the Fed and Wall Street’s “man” (Shutterstock)
The stock market crashes. The Fed’s Chairman, Alan Greenspan (1987-2006), enacts the “Greenspan Put”. It promises that whenever the market crashes, money will come from “mysterious sources” (the Fed) to prop it back up.
After the Fed stopped the 1987 crash the rich knew the Fed was in their favor. They saw Greenspan as their banker. They were now protected from crashes, just like the market.
1987 to 2000:
The Dow goes parabolic. Savers earn big.
The Asia-Pacific Economic Cooperation (APEC) is created. Free trade is promoted between economies throughout the Asia-Pacific region. Asia’s strength increases. The forum now has 21 member countries.
The central bank of Philippines becomes independent in 1993.
Fed Chairman Greenspan warns the public of “irrational exuberance” – that the market is overvalued. In other words, the party is coming to an end.
The Asian financial crisis strikes. It started with Thailand’s decision to unpeg its currency to the dollar, others followed. Like dominos, currencies devalued, stock markets collapsed, import revenues were sliced and government upheaval spread throughout Asia.
The central banks of Japan and Korea are granted independence.
The European Union creates the Euro. In addition, Indonesia’s central bank gains independence.
Saddam Hussein announces his intention to sell Iraqi oil in Euros, not dollars.
The U.S. World Trade Center is attacked. (73 percent of the hijackers are from Saudi Arabia, none were from Iraq.)
There have already been three major crashes in the first 10 years of this century:
- 2000: the Dot-com Crash
- 2007: the Subprime Crash
- 2008: the Big Bank Crash
Three giant market crashes in a row – all a thousand times larger than the 1929 crash that started the Great Depression. In each crash, many people lost their savings. Many more will be wiped out in the coming crash.
The U.S. invades Iraq and war begins. Saddam Hussein is overthrown.
The Trans-Pacific Partnership (TPP) is established to facilitate trade between the Asia Pacific and North America. Then in 2017, President Trump withdraws from TPP. China takes the reins left by the U.S. and leads the way.
The U.S. housing bubble bursts. The big bank crash begins. Lehman Brothers, one of the U.S.’s oldest banks files for bankruptcy and closes.
Then the Fed’s Chairman, Bernanke, and the Secretary of the Treasury Hank Paulson (a former Goldman Sachs CEO) created the Troubled Assets Relief Program (TARP). It bails out the biggest banks, including Goldman Sachs. Taxpayers will be paying for this bailout for generations.
Additionally, Thailand’s central bank becomes independent.
Libya’s leader, Gaddafi, proposes selling Libyan oil in gold-backed dinars.
NATO enters Libya. Gaddafi is killed.
After the housing bubble burst in 2008 many people lost their homes. Houses were on the market at discounted rates. In 2013 hedge funds and private equity funds, funded by Wall street, started buying U.S. homes like there was no tomorrow. When housing prices finally rose in 2015 they stopped.
This is how market crashes make the rich richer and the poor poorer. The Fed bailed out Wall Street only so they could go on the biggest real estate shopping spree of the century.
The Shanghai-Hong Kong Stock Connect is launched. Shanghai mainland shares can now be traded on the Hong Kong exchange.
President Obama begins to normalize relations with Iran. U.S. allies, Israel and Saudi Arabia, feel snubbed.
The Dow plunged. The average investor lost 6.3 percent or 8 percent for the average NASDQ investor. The Fed’s rescue team created by Greenspan is sent in.
The mighty Deutsche Bank is in serious trouble. Shares lose half their value.
Saudi Arabia’s economy is in danger as oil prices are low and Iran is selling oil in euros. They threaten to sell their oil company on the public market. President Obama flies to Saudi Arabia to kiss the ring of the king.
The Shenzhen-Hong Kong Stock Connect is launched. This further opens China’s market.
MSCI announces it will add 222 Chinese mainland large-cap stocks to its Emerging Markets index. The market’s reaction: investors started relocating funds from other Asian markets into China. Major Asian markets like Japan, Taiwan, and Korea will suffer.
Saudi Arabia’s power dynamics are changing. The young prince Mohammed bin Salman is leading an anti-corruption committee. Many members of the royal family and Saudi’s inner circles have been arrested. Curbing corruption paves the way for major economic and political reforms.
Oil prices have plummeted. Interest rates are at record lows. Terrorist groups, like ISIS, are on the rise. China and Russia have started construction of a pipeline. They will soon trade oil in their currencies. The Petrodollar agreement of 1974 is falling apart.
The Future Crash
Impending doom is creeping closer. For most Americans, pay has not increased in decades, people can’t afford to buy a house, they have no retirement saved, and their children are buried under a pile of student loan debt. And yet, the U.S. government goes deeper into debt. The next giant crash is starting…