A Pessimistic Scenario

A PESSIMISTIC

SCENARIO

This chapter remains exactly as first published in 1994. The original whimsical look into the future has become an incredibly accurate portrayal of many real events since then. A banking crisis and massive bailouts have already come to pass. The still unfolding scenario includes hyperinflation, collapse of the economy, a new global currency, domestic violence, U.N. "Peacekeeping" forces in the U.S., and the arrival of high-tech feudalism.

We are ready now for the final trip in our time machine. On the control panel in front of us are several selector switches. The one on the left indicates Direction of Time. Set it to Future. The switch on the right indicates Primary Assumptions. Set it to the first notch which reads: Present trends unaltered. Leave the Secondary-Assumption switch where it is. The lever in the center is a throttle to determine speed of travel. Nudge it forward—and hang on tight!

A BANKING CRISIS

It is 4:05 in the morning. While New York City sleeps, the computers on the fourth floor at Citibank are aware that a full-blown crisis is underway. It started in London—five hours ahead of the East coast—and within minutes had spread like an electronic virus to Tokyo and Hong Kong. That was an hour ago. Alarms are now sounding on computer terminals in all the trading centers of the world, and automatic dialing devices are summoning money managers to their board rooms.

The panic started from rumors that one of the large U.S. banks was in trouble because of the simultaneous default of its loan to Mexico and the bankruptcy of its second-largest corporate bor­rower. Yesterday afternoon, the bank's president held a press conference and denied that these were serious problems. To

reinforce his optimism, he announced that, on Friday, the bank will be paying a higher-than-usual quarterly dividend. The professional money managers were not convinced. They knew that writing off these loans would wipe out the bank's entire net worth.

By 5 A.M., the money-center banks are facing heavy withdraw­als from overseas depositors. By the time the sun peeks between the New York skyscrapers, Americans are also taking their money. These are not small transactions. They involve other banks, insur­ance companies, and investment funds. The average withdrawal is over $3 million. The reservoir is draining fast.

It is now 7:45. The banks will soon be opening their doors, and already newspaper reporters and TV crews are arriving outside. A plan of unified action must be made quickly.

The Chairman of the Federal Reserve has arranged an emer­gency conference call with the CEOs of all the major banks, including one who was located at great effort at his fishing lodge in northern Canada. The President is also tied into the telephone network but on a "silent-monitor" basis. Other than the Chairman, no one else knows he is listening.

TO SAVE THE BANKS IS TO SAVE THE WORLD

The CEO at Citibank quickly summarizes the problem. None of the banks will be able to sustain withdrawals of this magnitude for more than about forty-eight hours. Perhaps less. The money is not in their vaults. It has been put into interest-bearing loans. Even if the loans were performing, they would not have the money. Now that some of the larger loans are in default, the problem is even worse. If the Fed doesn't provide the money, the banks will have no choice but to close their doors and go out of business. That would cause a collapse of the economy and untold suffering would follow. Americans would be thrown out of work; families would go hungry; national security would be weakened. And it would undoubtedly spread to the entire world. Who knows what dire consequences would follow—chaos, famine, and riots here at home? Revolution abroad? The return of a militaristic regime in Russia? Atomic war?

The Chairman cuts the monologue short. He is well aware that the banks must not be allowed to fail. That, after all, was one of the reasons the Federal Reserve was created. He wants to get on with the details of how to do it.

Yes, the FDIC is already broke, but don't worry about that. Congress will authorize a "loan" or some other mechanism for the Fed to create whatever amount of new money the FDIC might need. If Congress moves too slowly, the Fed has other technical means to accomplish the same result. In the meantime, unlimited funding will be available at the Fed's discount window by 8 A.M.,

Eastern Standard time. The printing presses are already running at full capacity to provide the currency. Fleets of airplanes and armored cars are standing by to deliver it. Furthermore, don't give up on those defaulted loans. Congress will probably bail out the bankrupt American corporations. And the President has said he will ask for additional funding for the IMF/World Bank. That money will be created by the Fed and carry the stipulation that it must be used by Mexico and other defaulting countries to resume interest payments on their loans.

The bankers are told to open their doors to the public and act calm. The press already knows that something is going on but not the seriousness of it. So tell them only what they already know. Nothing more. If people want to withdraw their money, give it to them. If lines should develop, call the police to maintain order, but continue paying out. Offer to stay open after closing hours, if necessary, to accommodate everyone. Above all, have the tellers take their time. Check and double check each transaction. Move the lines slowly.

The armored trucks will arrive at the busiest hours so the guards can carry sacks of money past the customers for visual confirmation that there is enough for everyone. A bank officer then should tell the crowd that a fresh delivery of money has just been made from the Federal Reserve System and that there is plenty more where that came from. Once people become convinced that the bank is able to pay, most of them will tire of the wait and go home.

PANIC AVERTED

It is now 6 P.M. of the following day. The plan was successful. Lines of anxious depositors had formed yesterday morning, mostly in the larger cities, and resumed again this morning. But there has been enough money for everyone. The news media treated the story lightly, making sure to include sound bites from various experts that banks can no longer fail, thanks to the FDIC and the

Federal Reserve System. More than half the video time is devoted to armored trucks and guards carrying sacks of money. The banks closed on schedule today, and there were no more lines.

While everything appears calm to the passengers on deck, the fire still rages out of control in the boiler room. Over a billion

dollars has already fled, mostly overseas, and the hemorrhage

continues. The Fed is pumping in fresh money to replace it. Two of the banks have instructed their computer technicians to activate an automatic two-hour delay on all incoming transactions. There is talk of deliberately disabling the entire network and blaming the breakdown on overload, but the idea is abandoned. There are too many people in the system. Someone surely would leak the truth to the press.

The danger of a run on the banks by private depositors used to be the nightmare of the Federal Reserve. Now it is nothing compared to the electronic run that is taking place involving institutional depositors around the world. These are professionals who are not impressed by armed guards carrying bags of currency. They want their money now—and they are getting it. Although they are receiving it in the form of electronic credits, they are immediately exchanging that for something more dependable, such as stocks, other currencies, and bullion.

This is the Fed's finest hour. It is exercising its many powers, carefully accumulated over the years, to create money out of whatever is at hand: U.S. Treasury bonds, bonds from other governments, corporate debt obligations, even direct loans to individuals and partnerships. Billions of new dollars are springing into existence. They are spreading around the globe to fulfill the banks' obligation to give people back their money.

A REAL RUN ON THE BANKS

It is now seven weeks later. Something happened, but no one knows what. Like a spark igniting a twig, spreading to a branch, and then engulfing the entire forest, the public has panicked. Responding to a primitive herd instinct, they are descending on the banks and the thrifts. They want their money. They want their savings.

Perhaps it was the newly released statistics showing higher unemployment, or the continued rise in bankruptcies, or the Congressional vote to increase the national debt again, or the jump

in Social-Security taxes, or the loss of another 140,000 jobs to Mexico, or the riots in Chicago and Detroit for more food stamps and government housing, or the presence of UN "Peacekeeping" troops to augment the National Guard, or the rumor that the Bank of America was technically insolvent, or the UN World Court ruling that the number of American automobiles had to be cut by 30% by December 31st, or the skeptical tone in the voice of the CBS news anchor as he quoted the latest prediction of renewed prosper­ity.

Whatever it was, there are now long lines of sober-faced depositors outside every bank. There is not enough cash in the vaults to meet the demand. Most money is checkbook money, which means it consists merely of magnetic impulses in a com­puter. Only about five per cent of the monetary supply is in the form of coins or currency. Most of that is already outside the banks in cash registers, wallets, and mattresses. The amount inside the banks is only about one-half of one per cent. The Fed's emergency supply of currency—a large quantity warehoused for exactly this kind of crisis—is inadequate. This time, the printing presses cannot keep up.

Spokesmen from the Treasury and the Federal Reserve appear on TV and assure the nation that there is no need for panic. Everything is under control. The only problem is the irrational behavior of alarmists who have no faith in their country.

No one believes them. The lines grow longer, and the people become angry. Bank employees are jeered on their way to work. Bomb threats are made. Sporadic violence breaks out, and bank windows are smashed. The International Guard is called up. The President dedares a bank holiday.

Since people cannot close out their bank accounts by withdraw­ing currency, they rush through the stores on checkbook-spending sprees. If they cannot get their money back, at least they can buy things with it. Garages and basements are filling up with canned goods, shoes, liquor, tires, ammunition. Goods are becoming scarce, pushing prices upward. The Dow Jones is going through the roof as investors empty their checking accounts to buy anything for sale. The Securities and Exchange Commission finally suspends trading.

Nine months have now passed. The crisis has been a blessing for politicians. They have thrived upon it and grown in stature

because of it. It has given them an excuse to swarm through the country on fact-finding trips, to appear in shirt sleeves at town-hall meetings, to give speeches, and to be seen on television—all the time expressing grave concern and appearing to take charge. It has legitimized their role and somehow made them seem more neces­sary than before. They have been converted in the public eye from oafs and bumpkins to serious-minded statesmen.

The party in power said it inherited the mess. The previous party blamed the current one for dropping the ball. Both parties, however, agreed on the solution: more of exactly the same policies that created the crisis: expanded power to the Federal Reserve, more government control over the economy, more subsidies and benefits, and more international commitments. These were called "emergency reforms" and became law. The same men who created the problem prescribed the solution. The public was grateful to have leaders of such vision and wisdom.

BANK BAILOUT AND MORE INFLATION

The most important emergency reform was to bail out the banks with taxpayers' dollars. Defaulted foreign loans were taken over by the IMF /World Bank, and the failing corporate borrowers were given government grants disguised as loans—loans which everyone knew would never be paid back.

Next, the banks were nationalized, at least in part. In return for the bailout money, they gave large blocks of stock to the govern­ment which now operates as an official business partner. This was not a drastic change. The banks were already heavily regulated by government, even to the point of determining their profits, divi­dends, and executive salaries. That is the way the cartel wanted it. It was the means by which competition was avoided and profits assured. Monetary scientists and political scientists have always worked as a hidden partnership. This merely made the relationship more visible.

Technically, no bank was allowed to fail. The Fed kept its promise on that. When the troubled banks were taken over, all depositors with $100,000 or less were fully protected. If they wanted their money and the bank didn't have it, the Fed simply manufactured it. No one was worried about the value of those dollars. They were just happy to have them.

Ten more months have now passed. Those new dollars are flooding throughout the system. The money supply has increased by the amount of the bailout plus the amount of new spending for welfare, health care, interest on the national debt, and foreign aid, all of which are in a vertical climb. Inflation has become institution­alized.

The dollar has been dethroned as the world's de facto currency. Foreign investors and central banks no longer have any use for dollars. They have sent them back to the United States whence they came. Trillions of them have returned to our shores like a huge flock of homing pigeons that fills the sky from horizon to horizon. They are buying our refrigerators, automobiles, computers, air­planes, cargo ships, armored tanks, office buildings, factories, real estate—pushing prices to levels that would have seemed impossi­ble a year ago. A single postage stamp costs as many dollars as once would have purchased a new TV set.

Most stores have stopped accepting checks and credit cards. Workers are paid daily with bundles of paper money. People rush to the stores to purchase groceries before prices rise even further. Commerce is paralyzed. Bank loans and mortgages are unobtain­able. Savings accounts have been destroyed, including the cash values of insurance policies. Factories are shutting down. Busi­nesses are closing their doors. Barter is commonplace. Old silver coins come out of private hoards and a hundred-dollar bill is exchanged for one silver dime.

Following the crash of 1929, the supply of paper money was limited because it was backed by silver, and the amount of silver itself was limited. Those who had money were able to buy up the assets of those who did not. Since prices were falling, the longer they held on to their dollars, the more they could buy. Now, things are exactly the opposite. There is nothing to back the money supply except politics. There is no limit to the amount of currency that can be created. It is just a question of printing and delivering it. Money is abundant, and prices are rising. Those who have money are spending it as soon as possible to prevent further loss of purchasing power. In the 1930s, everyone wanted dollars. Now, everyone wants to get rid of them.

The Emergency Banking Regulation No. 1, originally issued in 1961, empowered the Secretary of the Treasury—without consent of Congress—to seize anyone's bank account, savings account, or

safe-deposit box. It also gave him the power to fix rents, prices, salaries, and hourly wages, and to impose rationing. This was to be done "in the event of attack on the United States." That phrase now has been changed to read: "in the event of national emergency." The Federal Emergency Management Agency (FEMA) has been expanded to administer the directives of the Treasury. FEMA also has the power to detain and forcibly relocate any citizen "in the event of a national emergency."

NEW MONEY

Three more months have passed, and the President has de­clared a state of national emergency. Today, the Secretary of the Treasury announced that the nations of the world had ratified a multilateral treaty that would solve the inflationary problems of the United States. This will be accomplished through the issuance of a new world-wide monetary unit called the Bancor, the name proposed by John Maynard Keynes at the Bretton Woods Confer­ence in 1944. This new money will restore our commerce and put a stop to inflation. At last, said the Treasury Secretary, man will have total control over his economic destiny. Money will now become his servant instead of his master.

The United States, he said, has agreed to accept the Bancor as legal tender for all debts, public and private. The old money will still be honored but will be phased out over a three-month period. After that date, Federal Reserve Notes will no longer be valid. During the transition period, the old money may be exchanged at any bank at the ratio of one Bancor for five-hundred dollars. All existing contracts expressed in dollars—including home mort­gages—are now converted to Bancors in that same ratio.

In the same announcement, the Secretary advised that the IMF /World Bank was backing this new money with something far more precious than gold. Instead, it will be backed by the assets of the world. These include bonds from the participating govern­ments plus millions of acres of wilderness lands that have been deposited into the UN "Environmental Bank." The National Parks

1. "Debt-for-nature" swaps were proposed at the 4th World Wilderness Confer­ence held in Denver, Colorado, in 1987 and they are being implemented right now. Costa Rica, Bolivia, and Ecuador have already agreed to swap their debt in ex­change for a commitment to prevent wilderness areas from being developed. UN control over those lands is inevitable.

and forests of the United States have been added to those reserves, and they will now be under the supervision of the UN Wilderness Asset Preservation and Enhancement Agency (WAPEA). From this date forward, the Federal Reserve System will operate as a subdivi­sion of the IMF which is now the central bank of the world.

Although the Secretary did not mention it in his public appear­ance, the UN treaty also obligated the government to put restric­tions on the use of cash. Every citizen is to be issued an international ID card. The primary purpose of these machine-readable cards is to provide positive identification for all citizens at transportation depots and military checkpoints. They also can be used by the banks and stores to access checking accounts, which are now called debit accounts.

Every citizen is being issued an account in a bank near his place of residence. All payments by employers or government agencies will be made by electronic transfer. Cash transactions larger than five Bancors will be illegal in three months. Most expenditures will be paid by debit card. That is the only way in which the UN Monetary Transaction Tracking Agency (MTTA) can combat coun­terfeiting and prevent money laundering by organized crime. That, of course, is camouflage. The government complex issuing the new money is the greatest perpetrator of counterfeiting and organized crime the world has ever seen. ¹ The real targets are political dissidents and those escaping taxes in the underground economy.

No one will be allowed to earn or buy or sell without this ID card, nor will they be allowed to leave the country or even to migrate to another city. If any government agency has reason to red-flag an individual, his card will not clear, and he will be blocked from virtually all economic transactions and geographical movements. It is the ultimate control.

The new money offers the Cabal yet one more benefit. There can never be another run on the banks, because it is now illegal to demand currency.

1. That is not hyperbole. All fiat money is counterfeit. Furthermore, there is evidence that the CIA and the DEA have been deeply involved in the smuggling of illicit drugs. The money derived from those drugs was apparently laundered through Panamanian branches of U.S. banks and used to finance covert operations in Nicaragua and elsewhere. Virtually all governments have been involved in activities that would be criminal offenses if committed by ordinary citizens.

THE RISE OF REVOLUTIONARY MOVEMENTS

Hyperinflation is fertile ground for the seeds of revolution. Economic despair led the masses to grasp at the promises of Lenin in Russia, Hitler in Germany, Mussolini in Italy, and Mao in China. It has now been three years since that fateful run on the banks in New York, and inflation has not abated, even with the introduction of the Bancor. Now we are witnessing massive public demonstra­tions in every major city for higher wages, more jobs, larger government benefits, and more stringent price controls. Since there are practically no goods in the stores at any price, the demonstra­tors are also calling for higher output from government factories. The demonstrations have been organized by radical organizations advocating the overthrow of the "decadent capitalist" system and the enthronement of socialism in its place. The participants in the street do not understand the words they chant. They are unaware that capitalism has been dead in America for many years and that it is socialism they already have.

Nevertheless, there are tens of thousands of desperate people who are attracted to the rhetoric of revolution. Terrorism and revolutionary insurgency have become common occurrences in the major urban areas. The ranks of the revolutionaries are swelled by those who come solely for the looting that always follows.

People are frightened by these violent events and demand the restoration of law and order. They are relieved when martial law is declared. They are happy to see the International Guard patrolling their neighborhoods. They are not resentful of being confined in their homes or arbitrarily detained by soldiers. They are actually grateful for the omni-presence of the police state.

It is curious that the revolutionary groups behind this violence have not been inhibited by the government. To the contrary, they have been given grants from CFR organizations, and their leaders have been treated courteously by CFR politicians The CFR media have given them extended coverage in the news and has presented their cause with sympathy. A few dissidents have begun to wonder if the revolutionaries are but the unknowing pawns of those in power and that their primary function is to frighten the population into accepting the constraints of a police state.

Such voices, however, are quickly silenced. Those who question the government or the media are branded as extremists at the

lunatic fringe. Authorities say that they are the cause of our present woes. They are remnants of the old system based on profit-seeking and race-hating. They are guilty of politically-incorrect attitudes and hate crimes. They are sentenced to attitude-correction centers for psychological treatment and rehabilitation. Those who do not immediately recant are never seen again.

HOMES ARE NATIONALIZED

One of the first industries to feel the raw power of "emergency measures" was the home industry. During the early stages of inflation, people were applying their increasingly worthless dollars to pay down their mortgages. That was devastating to the lenders. They were being paid back in dollars that were worth only a fraction of the ones they had lent out. The banking crisis had caused the disappearance of savings and investment capital, so they were unable to issue new loans to replace the old. Besides, people were afraid to sell their homes under such chaotic times and, if they did, very few were willing to buy with interest rates that high. Old loans were being paid off, and new loans were not replacing them. The S&Ls, which in the 1980s had been in trouble because home prices were falling, now were going broke because prices were rising.

Congress applied the expected political fix by bailing them out and taking them over. But that did not stop the losses. It merely transferred them to the taxpayers. To put an end to the losses, Congress passed the Housing Fairness and Reform Act (HFRA). It converted all Bancor-denominated contracts to a new unit of value—called the "Fairness Value"— which is determined by the National Average Price Index (NAPI) on Fridays of the preceding week. This has nothing to do with interest rates. It relates to Bancor values. For the purpose of illustration, let us convert Bancors back to dollars. A $50,000 loan on Friday became a $920,000 loan on Monday. Few people could afford the payments. Thousands of angry voters stormed the Capitol building in protest. While the mob shouted obscenities outside, Congress hastily voted to declare a moratorium on all mortgage payments. By the end of the day, no one had to pay anything! The people returned to their homes with satisfaction and gratitude for their wise and generous leaders.

That was only an "emergency" measure to be handled on a more sound basis later on. Many months have now passed, and

Congress has not dared to tamper with the arrangement. The voters would throw them out of office if they tried. Millions of people have been living in their homes at no cost, except for county taxes, which were also beyond the ability of anyone to pay. Following the lead of Congress, the counties also declared a moratorium on their taxes—but not until the federal government agreed to make up their losses under terms of the newly passed Aid to Local Govern­ments Act (ALGA).

Renters are now in the same position, because virtually all rental property has been nationalized, even that which had been totally paid for by their owners. Under HFRA, it is not "fair" for those who are buying their homes to have an advantage over those who are renting. Rent controls made it impossible for apartment owners to keep pace with the rising costs of maintenance and especially their rising taxes. Virtually all rental units have been seized by county governments for back taxes. And since the counties themselves are now dependent on the federal government for most of their revenue, their real estate has been transferred to federal agencies in return for federal aid.

All of this was pleasing to the voters who were gratified that their leaders were "doing something" to solve their problems. It gradually became clear, however, that the federal government was now the owner of all their homes and apartments. The reality is that people are living in them only at the pleasure of the govern­ment. They can be relocated to other quarters if that is what the government wants.

WAGE-PRICE CONTROLS AND WORK ARMIES

Meanwhile, the UN Wage and Price Stabilization Agency (WPSA) has instituted wage and price controls to combat inflation. What few businesses were able to survive the ravages of inflation are knocked out by these measures. Vital industries have been seized by the WPSA and prevented from closing. When employees refuse to work for low, fixed wages or to take the jobs assigned to them, they are placed under arrest and convicted of anti-demo­cratic activities. Given a choice between prison or "volunteering" for the UN Full Employment and Environmental Restoration Army (FEERA), most of them chose the army. They are now doing the work prescribed for them in return for food and shelter. Many have been reassigned to new jobs, new cities, even new countries,

depending on the employment quotas established by the UN International Human Resource Allocation Agency (IHRAA). Their families have been given living quarters which are appropriate to their work status and their willingness to cooperate.

Automobiles are now used only by the ruling elite who hold government positions of authority. To the extent possible, workers have been relocated to barracks which were constructed within walking distance of major industries. Others use rapid-transit systems, which have been greatly expanded by FEERA. For middle management and the more skilled workers who are allowed to live in the suburbs, there are "Peoples' Van Pools" (PVPs) that shuttle them to and from assigned boarding areas.

Last week, Maurice Strong, who is now the Director of IHRAA, toured the fifteen regional subdivisions that have been carved out of the North-American continent—including the former United States and Canada—and expressed gratification that America, at last, has ceased to be an aggressor against the world.

Another twenty years have slipped by, and we now find ourselves in The New World Order. No one around us is sure exactly when it began. In fact, there was no official starting date, no announcement in the media, no ceremony with blaring of trum­pets. Sometime during the past ten or fifteen years, it became obvious that it just was, and everyone accepted it as the natural evolution of political trends and necessities. Now, a whole genera­tion is in place that has no memory of another way of life. Many of the older folks have all but forgotten the details of their previous existence. And, of course, many of them have been eliminated. Schools and textbooks speak of the bygone era as one of unbridled competition, selfishness, and injustice. Previously commonplace possessions such as automobiles and private homes and three pairs of shoes are hardly mentioned, and when they are, they are derided as wasteful artifacts of a decadent society that, fortunately, has ceased to exist.

NO TAXES OR INFLATION OR DEPRESSIONS

The public is no longer concerned over high taxes. For the most part, there are none. Everyone works for the government—directly or indirectly—and is paid by electronic transfer to a government-regulated bank which controls all spending accounts. Even those large corporations which have been allowed to maintain the

appearance of private ownership are merely junior partners of government. They are totally regulated and, at the same time, totally protected from failure. The amount each citizen receives for his labor is determined by his technical usefulness and his political rank. His taxes are pleasantly low or non-existent. The cost of government now is derived almost totally from expansion of the money supply—and from the economic value of the work battal­ions.

Each regional government of the world determines its spending needs and then offers to sell bonds in the open market to raise the money. The IMF/World Bank, acting as the UN's central bank, is the primary buyer. The Bank determines how much money to allow each regional government and then "purchases" that amount of bonds. It accomplishes that by making an electronic transfer of "credits" to one of its correspondent banks within the region receiving the money. Once that has happened, the local govern­ment can draw upon those credits to pay its bills. Not a single tax dollar is needed for any of that. The IMF/World bank simply creates the money and the regional governments spend it.

In days gone by, this increase in the money supply would have caused prices and wages to go up almost immediately. Not anymore. Prices and wages are controlled. What does happen, however, is that the government is caught in its own trap. It needs to keep the workers happy by giving them wage increases, but it also needs to keep its factories functioning by allowing price increases as well. The wage-price spiral, therefore, is not elimi­nated. It is merely delayed a few months. And, instead of happen­ing in response to the interplay of supply and demand in a free market, it is directed by bureaucratic formula. The end result is the same either way. The people of the world are still paying the cost of their international and local governments through the hidden taxation called inflation.

In the chaotic past, the industrialized nations of the world went through phases of disruptive inflation often exceeding 1000% per year. That served a purpose in helping to destroy public faith in their existing national governments. It softened them up and made them more willing to accept drastic changes in their life styles and their political institutions. It paved the way to The New World Order. But now we have arrived, and extreme inflation rates—at least in the absence of war—would cause public dissatisfaction and

be counterproductive. Inflation, therefore, has now been institu­tionalized at about 5% per year. That has been determined to be the optimum level for generating the most revenue without causing public alarm. Five per cent, everyone agrees, is "moderate." We can live with that, but we tend to forget it is 5% per year, forever.

A 5% devaluation applies, not only to the money earned this year, but to all that is left over from previous years. At the end of the first year, the original dollar is worth 95 cents. At the end of the second year, it is reduced again by 5% leaving its worth at 90 cents, and so on. After 20 years, the government will have confiscated 64% of every dollar we saved at the beginning of our careers. After working 45 years, the hidden tax on those first-year dollars will be 90%. The government will take virtually all of them over our lifetime. Current income and earned interest will partially offset this effect but it will not alter the underlying reality of government confiscation.

EFFECT OF "MODEST" 5% INFLATION

For the past fifty years, all the published charts illustrating the decline of the dollar from such-and-such a date to the "present" show the following type of curve.

These, of course, are averages. A few people in the middle class of the bureaucracy will have managed to place some of their dollars into tangible assets or income-producing securities—what few remain—where they are somewhat protected from the effects of inflation. For the vast majority, however, inflation hedges consti­tute but a tiny fraction of all they have earned over a lifetime.

And so we find that, in The New World Order, inflation has been institutionalized at a "modest" level of five per cent. Once in every five or six generations—as prices climb higher and higher—a new monetary unit can be issued to replace the old in order to eliminate some of the zeros. But no one will live long enough to experience more than one devaluation. Each generation is uncon­cerned about the loss of the previous one. Young people come into the process without realizing it is circular instead of linear. They cannot comprehend the total because they were not alive at the beginning and will not be alive at the end. In fact, there need not even be an end. The process can be continued forever.

By this mechanism—and with the output of work battalions— government can operate entirely without taxes. The lifetime output of every human being is at its disposal. Workers are allowed a color TV, state-subsidized alcohol and recreational drugs, and violent sports to amuse them, but they have no other options. They cannot escape their class. Society is divided into the rulers and the ruled, with an administrative bureaucracy in between. Privilege is now largely a right of birth. The worker class and even most of the administrators serve masters whom they do not know by name. But serve they do. Their new lords are the monetary and political scientists who created and who now control The New World Order. All of mankind is in a condition of high-tech feudalism.

HIGH-TECH FEUDALISM

Inflation is not the only aspect of economic chaos that is now under control. Booms and busts in the business cycle are also a thing of the past. Like direct taxes, there are no business cycles any more. Now that the government has firm control over every economic check point, business cycles simply are not allowed. There is no speculation in the market, because no one has funds with which to speculate. There are no expansions of inventories or capital goods in order to maximize future profits, because invento­ries now are determined by formula. Besides, profits are also

determined by formula and, although they are just large enough to keep pace with inflation, they are guaranteed.

Chaos in the economy is now impossible because it is not tolerated. Neither is a depression. Yes, there are hundreds of millions of human beings living under conditions of extreme hardship, and thousands die of starvation every day, but depres­sions are outlawed. No politician, no author, no one in the media would dare to suggest that the system was a failure. Each month the government releases new statistics showing in some obscure way or another that the economy is steadily improving. Although people are starving everywhere, hunger does not exist anymore. Although work battalions are crammed into flimsy barracks and tents, and although older homes and apartment buildings are falling down for lack of maintenance, forcing more and more families to share their tiny, unheated dwellings—nevertheless, the housing shortage is officially being eliminated. There are no more problems in the economy, because they now are illegal.

VOICES FROM THE PAST

There is a message flashing on the front panel of our time machine. It reads: Duplicate sequence in memory bank. Check years 1816, 1831, 1904, and 1949. That tells us that the on-board computer has found a similarity between what we are now viewing in the future and something that was recorded in the past. We had better check it out. On your keyboard, type: Send data to printer and press the key labelled Execute.

The first item is coming out of the printer now. It is a warning. In the year 1816, Thomas Jefferson wrote a letter to Sam Kercheval in which he said:

We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessities and our comforts, in our labors and our amusements,... our people ... must come to labor sixteen hours in the twenty-four, give our earnings of fifteen of these to the government,... have no time to think, no means of calling our mis-managers to account; but be glad to obtain sustenance by hiring ourselves out to rivet their chains on the necks of our fellow-sufferers.... And this is the tendency of all human governments ... till the bulk of society is reduced to be mere automatons of misery.... And the forehorse of this frightful team is

public debt. Taxation follows that, and in its train wretchedness and oppression.¹

Here is the second printout. It is a political commentary and a prophesy. In the year 1831, a young Frenchman, named Alexis de

Tocqueville, toured the United States to prepare an official report to
his government on the American prison system. His real interest,
however, was the social and political environment in the New
World. He found much to admire in America but he also observed
what he thought were the seeds of its destruction. Upon his return
to France the following year, he began work on a four-volume
analysis of the strengths and weaknesses he found. His perceptivity
was remarkable, and his work, entitled Democracy in America, has
remained as one of the world's classic works in political science.
This is the part that our computer recognized:

The Americans hold that in every state the supreme power ought to emanate from the people; but when once that power is constituted, they can conceive, as it were, no limits to it, and they are ready to admit that it has the right to do whatever it pleases.... The idea of rights inherent in certain individuals is rapidly disappearing from the minds of men; the idea of the omnipotence and sole authority of society at large rises to fill its place....

The first thing that strikes the observation is an innumerable multitude of men, all equal and alike, incessantly endeavoring to procure the petty and paltry pleasures with which they glut their lives. Each of them, living apart, is a stranger to the fate of all the rest; his children and his private friends constitute to him the whole of mankind....

Above this race of men stands an immense and tutelary power, which takes upon itself alone to secure their gratifications and to watch over their fate. That power is absolute, minute, regular, provident, and mild. It would be like the authority of a parent if, like that authority, its object was to prepare men for manhood; but it seeks, on the contrary, to keep them in perpetual childhood: it is well content that the people should rejoice, provided they think of nothing but rejoicing....

After having thus successively taken each member of the community in its powerful grasp and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small, complicated rules, minute and uniform, through which the most original minds

1. Basic Writings (New York: Wiley Book Co., 1944), pp. 749-50.

and the most energetic characters cannot penetrate, to rise above the crowd. The will of man is not shattered, but softened, bent, and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to nothing better than a flock of timid and industrious animals, of which the government is the shepherd....

Our contemporaries are constantly excited by two conflicting passions: they want to be led, and they wish to remain free. As they cannot destroy either the one or the other of these contrary propensities, they strive to satisfy them both at once. They devise a sole, tutelary, and all-powerful form of government, but elected by the people. They combine the principle of centralization and that of popular sovereignty; this gives them a respite: they console themselves for being in tutelage by the reflection that they have chosen their own guardians. Every man allows himself to be put in leading-strings, because he sees that it is not a person or a class of persons, but the people at large who hold the end of his chain. By this system the people shake off their state of dependence just long enough to select their master and then relapse into it again. 1

EDUCATION AS A TOOL FOR HUMAN ENGINEERING

The third printout is dated 1904 and is a report issued by the General Education Board, one of the first foundations established by John D. Rockefeller, Sr.. The purpose of the foundation was to use the power of money, not to raise the level of education in America, as was widely believed at the time, but to influence the direction of that education. Specifically, it was to promote the ideology of collectivism and internationalism. The object was to use the classroom to teach attitudes that encourage people to be passive and submissive to their rulers. The goal was—and is—to create citizens who are educated enough for productive work under supervision but not enough to question authority or seek to rise above their class. True education was to be restricted to the sons and daughters of the elite. For the rest, it would be better to produce skilled workers with no particular aspirations other than to enjoy life. It was enough, as de Tocqueville phrased it, "that the people should rejoice, provided they think of nothing but rejoic­ing."

In the first publication of the General Education Board, Fred Gates explained the plan:

In our dreams we have limitless resources, and the people yield themselves with perfect docility to our molding hands. The present educational conventions fade from our minds, and unhampered by tradition, we work our own good upon a grateful and responsive rural folk. We shall not try to make these people or any of their children into philosophers of mental learning or of science. We have not to raise from among them authors, editors, poets, or men of letters. We shall not search for embryo great artists, painters, musicians, nor lawyers, doctors, preachers, politicians, statesmen of whom we have ample supply. The task we set before ourselves is very simple as well as a very beautiful one: To train these people as we find them to a perfectly ideal life just where they are.... in the homes, in the shop, and on the farm.¹

BACK TO THE FUTURE

Here is the fourth computer printout from the past. It is a

satire—and a warning. In the year 1949, George Orwell wrote his
classic novel entitled 1984. In it, he portrayed the same "futuristic"

scenes that now lie before us as we sit in our time machine. His
only error appears to have been the date that became the title of his

book. If he were writing it today, it is likely he would call it 2054. Orwell described the world of our future as being divided into

three regions called Oceania, Eurasia, and Eastasia. Oceania con‑

sists of the Americas plus England, Australia, and the Pacific
Islands; Eurasia is Russia and continental Europe; Eastasia com‑
prises China, Japan, Southeast Asia, & India. These superstates are

constantly at war with each other. The wars are not fought to
conquer the enemy, they are waged for the primary purpose of
controlling the population. The people in all three territories

tolerate their misery and oppression because sacrifices are neces­sary in time of war. Most of the stratagems outlined in The Report

from Iron Mountain are to be found in Orwell's narrative, but Orwell described them first. The think-tank was even willing to credit

Orwell as the source of some of its concepts. For example, on the subject of establishing a modern, sophisticated form of slavery, the group at Iron Mountain said:

1. "Occasional Paper No. 1," General Education Board, 1904.

Up to now, this has been suggested only in fiction, notably in the works of Wells, Huxley, Orwell, and others engaged in the imaginative anticipation of the sociology of the future. But the fantasies projected in Brave New World and 1984 have seemed less and less implausible over the years since their publication. The traditional association of slavery with ancient preindustrial cultures should not blind us to its adaptability to advanced forms of social organization. 1

From this we see that Orwell's work is far more than an entertaining novel. It is relevant to our present journey in time. Our would-be masters have studied him carefully. So should we. This is what he wrote:

These three superstates are permanently at war, and have been so for the past twenty-five years. War, however, is no longer the desperate, annihilating struggle that it was in the early decades of the twentieth century.... This is not to say that either the conduct of the war, or the prevailing attitude toward it, has become less bloodthirsty or more chivalrous. On the contrary, war hysteria is continuous and universal in all countries, and such acts as raping, looting, the slaughter of children, the reduction of whole populations to slavery, and reprisals against prisoners which extend even to boiling and burying alive, are looked upon as normal....

The primary aim of modem warfare ... is to use up the products of the machine without raising the general standard of living. [The "machine" is society's technical and industrial capacity to produce goods.] ... From the moment when the machine first made its appearance it was clear to all thinking people that the need for human drudgery, and therefore to a great extent for human inequality, had disappeared. If the machine were used deliberately for that end, hunger, overwork, dirt, illiteracy, and disease could be eliminated within a few generations....

But it was also clear that an all-around increase in wealth threatened the destruction—indeed in some cases was the destruction—of a hierarchical society. In a world in which everyone worked short hours, had enough to eat, lived in a house with a bathroom and a refrigerator, and possessed a motorcar or even an airplane, the most obvious and perhaps the most important form of inequality would already have disappeared. If it once became general, wealth would confer no distinction.... Such a society could not long remain stable. For if leisure and security were enjoyed by all alike, the great mass of human beings who are normally stupefied by poverty would become literate and would learn to think for themselves; and

1. Lewin, Report, p. 70.

when once they had done this, they would sooner or later realize that the privileged minority had no function, and they would sweep it away. In the long run, a hierarchical society was only possible on a basis of poverty and ignorance....

The essential act of war is destruction, not necessarily of human lives, but of the products of human labor. War is a way of shattering to pieces, or pouring into the stratosphere, or sinking into the depths of the sea, materials which might otherwise be used to make the masses too comfortable, and hence, in the long run, too intelligent....

In practice the needs of the population are always underestimated, with the result that there is a chronic shortage of half the necessities of life; but this is looked on as an advantage. It is deliberate policy to keep even the favored groups somewhere near the brink of hardship, because a general state of scarcity increases the importance of small privileges and thus magnifies the distinction between one group and another.... The social atmosphere is that of a besieged city, where the possession of a lump of horseflesh makes the difference between wealth and poverty. And at the same time the consequences of being at war, and therefore in danger, makes the handing over of all power to a small caste seem the natural, unavoidable condition of survival....

War, it will be seen, not only accomplishes the necessary destruction, but accomplishes it in a psychologically acceptable way. In principle it would be quite simple to waste the surplus labor of the world by building temples and pyramids, by digging holes and filling them up again, or even by producing vast quantities of goods and then setting fire to them. But this would provide only the economic and not the emotional basis for a hierarchical society....

War, it will be seen, is now a purely internal affair.... waged by each ruling group against its own subjects, and the object of the war is not to make or prevent conquests of territory, but to keep the structure of society intact. 1

THE FUNCTION OF WASTE IN MODERN TOTALITARIANISM

Once again, it is clear that Orwell's grim narrative was a primary model for The Report from Iron Mountain. The authors of that blueprint for our future spoke at length about the value of planned waste as a means of preventing the masses from improv­ing their standard of living. They wrote:

The production of weapons of mass destruction has always been associated with economic "waste." The term is pejorative, since it

implies a failure of function. But no human activity can properly be considered wasteful if it achieves its contextual objective....

In the case of military "waste," there is indeed a larger social utility.... In advanced modem democratic societies, the war system ... has served as the last great safeguard against the elimination of necessary social classes. As economic productivity increases to a level further and further above that of minimum subsistence, it becomes more and more difficult for a society to maintain distribution patterns insuring the existence of "hewers of wood and drawers of water."...

The arbitrary nature of war expenditures and of other military activities make them ideally suited to control these essential class relationships.... The continuance of the war system must be assured, if for no other reason, among others, than to preserve whatever quality and degree of poverty a society requires as an incentive, as well as to maintain the stability of its internal organization of power.¹

These documents from the real past and the imagined future can help us to better understand our present. The spectacle of wasteful government spending suddenly becomes logical. It is not stupidity that pays farmers to destroy their crops, or that purchases trillion-dollar weapons systems that are never deployed or in some cases not even completed, or that provides funding for studies of the sex life of the tse-tse fly, or that gives grants to pornographers posing as artists. The overriding object behind most of these boondoggles is to waste the resources of the nation. It is obvious by now that the decline in living standards in the Western world is associated with a widening gap between the haves and the have-nots. What is not so obvious, however, is that this is according to plan. To that end, massive waste in government spending is not an unfortunate by-product, it is the goal.

That brings us back to the question of finding an acceptable substitute for war. War is not only the ultimate waste, it is also the ultimate motivation for human action. As Orwell said, waste in the absence of war "would provide only the economic and not the emotional basis for a hierarchical society." Will the environmental-pollution model be able to sufficiently motivate human action to be a substitute for war?

That is not a safe assumption. The possibility of war in our future cannot be ruled out. The environmental-pollution model is not yet thoroughly proven. It is working well for limited purposes

1. Lewin, Report, pp. 34-35, 40-41.

and on a limited scale, but it is still doubtful that it will ever equal the hysteria potential of a physical war. The world planners will not abandon the use of war until the new model has been proven over many years. On that point, the Report from Iron Mountain was emphatic:

When asked how best to prepare for the advent of peace, we must first reply, as strongly as we can, that the war system cannot responsibly be allowed to disappear until 1) we know exactly what it is we plan to put in its place, and 2) we are certain, beyond reasonable doubt, that these substitute institutions will serve their purposes in terms of the survival and stability of society.... It is uncertain, at this time, whether peace will ever be possible. It is far more questionable ... that it would be desirable even if it were demonstrably attainable. 1

REGIONALISM AS A TRANSITION TO WORLD GOVERNMENT

The coalescing of the world's nations into three regional superstates was already visible even before we activated our time machine. The first steps had been strictly economic but were soon followed by political and military consolidation. The European Union (EU), including Russia, began with the issuance of a common money and eventually merged into a functional regional government. It was Orwell's Eurasia, even though it avoided calling itself by that name. Treaties binding Canada, the United States, Mexico, and South America formed the basic outline of Oceania, built around the Federal-Reserve Note as the regional money. Japan eventually became hostile to the West when trading was no longer to her sole advantage and, along with China which had been built up by Western aid and technology, and with India which had been given atomic technology by the West, became the political center of Eastasia. Even as far back as the 1980s, it was known as the "Greater East Asia Co-Prosperity Sphere." Its mone­tary system was to be based upon the Yen.

The people of the former nations were not yet ready for a giant leap into world government. They had to be led to that goal by a series of shorter and less frightening steps. They were more willing to surrender their economic and military independence to regional groupings of people who were closer in ethnic and cultural origin and who shared common borders. Only after several decades of

1. Ibid., pp. 88-90.

transition was it possible to make the final merger. In the mean­time, the world was plunged alternately between war and peace. After each cycle of war, the population was more frightened, impoverished, and collectivised. In the end, world government was irresistible. By that time, the environmental-pollution model and the alien-invasion model had been perfected to provide high levels of human motivation. But, even then, regional uprisings were occasionally engineered when necessary to justify massive "peacekeeping" operations. War was never fully abandoned. It remained, as it always had been, a necessity for the stabilization of society.

HOW FIXED IS THE FUTURE?

Let us return now to the present from which we departed and reflect upon our journey. The first thing that strikes us is that we cannot be certain the future will unfold exactly as we have seen it. There are too many variables. When we originally set our Primary-Assumption selector to Present trends unaltered, we left the Secondary-Assumption selector where it was. It was pointing to Banking Crisis. Had we chosen the next position, No Banking Crisis, our journey would have been different. We would not have seen long lines of depositors or panic-buying in the stores or closing of the stock market. But we would still have witnessed the same scenes of despair in the more distant future. We merely would have travelled a different path of events to get there.

The forces driving our society into global totalitarianism would not change one iota. We still would have the doomsday mecha­nisms at work. We would have the CFR in control of the power centers of government and the media. And we would have an electorate which is unaware of what is being done to them and, therefore, unable to resist. Through environmental and economic treaties and through military disarmament to the UN, we would witness the same emergence of a world central bank, a world government, and a world army to enforce its dictates. Inflation and wage/price controls would have progressed more or less the same, driving consumer goods out of existence and men into bondage. Instead of moving toward The New World Order in a series of economic spasms, we merely would have travelled a less violent path and arrived at exactly the same destination.

There is little doubt that the master planners would prefer to follow the more tranquil route. Patient gradualism is less risky. But not everything is within their control. Events can get out of hand, and powerful economic forces can become suddenly unleashed. Banking crises can occur even without being deliberately caused.

On the other hand, the Cabal also knows that crises are useful in driving the masses into the corral faster than they would otherwise move. Therefore, the application of some kind of scientifi­cally engineered crisis cannot be ruled out. It could take many forms: Ethnic violence, terrorism, plague, even war itself. But none of that makes any difference. It will not alter our direction of travel through time. It will only determine our specific route. Like a flowing river, it may be diverted this way or that by natural barriers or even by man-made channels, dikes, and dams, but it eventually will reach the sea. Our concluding reflection, therefore, is that it is relatively unimportant whether there will be a banking crisis or any other cataclysmic event. These are all secondary assumptions which are meaningless. Our only real hope for averting the new feudalism of the future is to change the Primary assumption. We must change it to read: Present Trends Reversed.

SUMMARY

A pessimistic scenario of future events includes a banking crisis, followed by a government bailout and the eventual nationali­zation of all banks. The final cost is staggering and is paid with money created by the Federal Reserve. It is passed on to the public in the form of inflation.

Further inflation is caused by the continual expansion of welfare programs, socialized medicine, entitlement programs, and interest on the national debt. The dollar is finally abandoned as the de facto currency of the world. Trillions of dollars are sent back to the United States by foreign investors to be converted as quickly as possible into tangible assets. That causes even greater inflation than before. So massive is the inflationary pressure that industry and commerce come to a halt. Barter becomes the means of exchange. America takes her place among the depressed nations of South America, Africa, and Asia—mired together in economic equality.

Politicians seize upon the opportunity and offer bold reforms. The reforms are more of exactly what created the problem in the first place: expanded governmental power, new regulatory agen-

cies, and more restrictions on freedom. But this time, the programs begin to take on an international flavor. The American dollar is replaced by a new UN money, and the Federal Reserve System becomes a branch operation of the IMF/World Bank.

Electronic transfers gradually replace cash and checking ac­counts. This permits UN agencies to monitor the financial activities of every person. A machine-readable ID card is used for that purpose. If an individual is red flagged by any government agency, the card does not clear, and he is cut off from all economic transactions and travel. It is the ultimate control.

Increasing violence in the streets from revolutionary move­ments and ethnic clashes provide an excuse for martial law. The public is happy to see UN soldiers checking ID cards. The police-state arrives in the name of public safety.

Eventually all private dwellings are taken over by the govern­ment as a result of bailing out the home-mortgage industry. Rental property is also taken, as former landlords are unable to pay property taxes. People are allowed to live in these dwellings at reasonable cost, or no cost at all. It gradually becomes clear, however, that the government is now the owner of all homes and apartments. People are living in them only at the pleasure of the government. They can be reassigned at any time.

Wages and prices are controlled. Dissidents are placed into work armies. There are no more autos except for the ruling elite. Public transportation is provided for the masses, and those with limited skills live in government housing within walking distance of their assigned jobs. Men have been reduced to the level of serfs who are subservient to their masters. Their condition of life can only be described as high-tech feudalism.

There is no certainty that the future will unfold in exactly that manner, because there are too many variables. For example, if we had assumed that there will not be a banking crisis, then our journey would be different. We would not see long lines of depositors or panic-buying in the stores or closing of the stock market. But we would still witness the same scenes of despair in the more distant future. We merely would have travelled a different path of events to get there. That is because the forces driving our society into global totalitarianism would not have changed one iota. We still would have the doomsday mechanisms at work. We would have the CFR in control of the power centers of

government and the media. We would have an electorate which is unaware of what is being done to them and, therefore, unable to resist. Through environmental and economic treaties and through military disarmament to the UN, we would witness the same emergence of a world central bank, a world government, and a world army to enforce its dictates. Inflation and wage/price controls would have progressed more or less the same, driving

consumer goods out of existence and men into bondage. Instead of moving toward The New World Order in a series of economic spasms, we merely would have travelled a less violent path and arrived at exactly the same destination.