Thursday, December 28, 2017

Protect the Petrodollar

The second most important story after the catastrophe of climate change is the quite related story of: What is the end game for the Age of Fire and Fossil Fuels?

This is no small question. The incredible energy density of fossil fuels has made possible a huge population that will be fighting over the table scraps as these fuels become more rare and expensive. Just remember, any fuel that is not renewable is by definition running out. The role of fuels like gasoline in the food supply is beyond important. And while activities like freezing food for preservation can powered by solar or wind with a few changes, the idea of a battery-powered tractor or combine is still mostly a fantasy.

Here in USA, the end of the Age of Petroleum promises to especially difficult. We have been a net energy importer since about 1970 and while we sold off the country's industrial crown jewels and some prime real estate to help pay the bills, such actions were but a drop in the bucket compared to the massive oceans of oil we import every day. In 2012, the trade deficit in oil was over $300 billion and while fracking has recently lowered that amount to less than $15 billion in 2016, fracking is a secondary recovery technique designed to extract the last remnants of a depleted oil field. Of course, selling off the industrial crown jewels means that we make less of our needs every year�we now make less than 2% of our shoes for goodness sakes.

But the pain has mostly been rendered invisible because of the agreements USA managed to get agreed to in the 1970s when Richard Nixon closed the gold window. The most important plus the USA got by being the superpower was the agreement that the medium of exchange for the petroleum trade would be the dollar.

But we should remember a few fundamentals about money so we can understand why the petrodollar is so important.

The form money takes seems important to some, but in fact this is the most irrelevant issue (sorry goldbugs). The important question is: What makes money valuable?
  1. Money is valuable if it can be exchanged for something else you want or need. Monetary cranks insist that paper or electronic money should be able to converted into something more intrinsically valuable like gold. Problem is, gold has very little intrinsic value compared to something like oil so the petrodollar is a FAR more stable store of value than gold could ever hope to be.
  2. Money is valuable if you need it to pay off persons who can make your life miserable. As Peter Cooper, the Greenback Party Presidential candidate, would say, "If you can pay your taxes with it, the money is good." Of course, the same can be said for money used to pay off mortgages, etc. Creditors use police powers to enforce their currency rules.
  3. The third way money is made valuable is when it is a monetization of human genius. When Japan's PM Abe tried to drive down the value of the Yen in 2012, he discovered that the factors usually blamed for driving down the value of a currency by the monetary pundits didn't work for the Yen. Turns out that if you can trade Yen for a Lexus (or thousand of other perfectly good examples), by gum it is worth something.
Bitcoins meet none of these criteria. Therefore its value is quite ephemeral. On the other hand, the petrodollar IS backed by force. The big problem is that it isn't easily-bullied pipsqueaks like Iraq or Libya challenging petrodollar supremacy. This time it's Russia and China. And while the Petrodollar is so powerful that it can withstand a bunch of shocks, it also has a bunch of enemies. Bringing down the petrodollar would make much of the world's population very happy. So while it is still powerful and backed by murderous people with insanely destructive weapons, the petrodollar is no longer invulnerable. We should all keep an eye on this story. There isn't a LOT of good writing on this subject but I found three articles worth reading.

Why the Russia Scare? Protect the Petrodollar

gjohnsit, 11/29/2017

Remember when Saddam insisted on selling Iraqi oil in Euros?
Saddam made a profit, but he never lived to spend it.

Remember when Gadhafi planned on selling Libyan oil in a gold-backed currency?
It was mentioned as a reason in Hillary's emails to bomb Libya.

Iran started selling oil in Euros two years ago.
I'm sure that it's just a coincidence that some in Washington are pushing for war with Iran.

Which brings us to the primary threat to the petrodollar today - Russia.

Russia has gone waayyyy past the "crimes" of Iraq, Libya, and Iran.
I was informed at a White House meeting that U.S. diplomats had let Saudi Arabia and other Arab countries know that they could charge as much as they wanted for their oil, but that the United States would treat it as an act of war not to keep their oil proceeds in U.S. dollar assets.

This was the point at which the international financial system became explicitly extractive. But it took until 2009, for the first attempt to withdraw from this system to occur. A conference was convened at Yekaterinburg, Russia, by the Shanghai Cooperation Organization (SCO). The alliance comprised Russia, China, Kazakhstan, Tajikistan, Kirghizstan and Uzbekistan, with observer status for Iran, India, Pakistan and Mongolia. U.S. officials asked to attend as observers, but their request was rejected.

The U.S. response has been to extend the new Cold War into the financial sector, rewriting the rules of international finance to benefit the United States and its satellites � and to deter countries from seeking to break free from America�s financial free ride.

...The U.S. plan was to hurt Russia�s economy so much that it would be ripe for regime change (�color revolution�). But the effect was to drive it eastward, away from Western Europe to consolidate its long-term relations with China and Central Asia.
Repeated rounds of international sanctions have failed to cow Russia, and the reason is China.
In a symbolic blow to U.S. global financial hegemony, Russia and China took a small step toward undercutting the domination of the U.S. dollar as the international reserve currency on Tuesday when Russia�s second biggest financial institution, VTB, signed a deal with the Bank of China to bypass the dollar and pay each other in domestic currencies.
Russia's deals with China have given it access to the international markets, hard foreign currency and manufactured goods.

That was 2014.

China and Russia (and Iran to a lesser extent) have gotten closer and closer ever since.
Russia and China were considering linking their national payment system, Russian Prime Minister Dmitry Medvedev said on Wednesday, as he called for a more balanced global finance structure.

...That would have "good prospects" and "avoid those problems that sometimes arise when you use American payment systems", Medvedev said, mentioning Visa and Mastercard without elaborating.

Russia started to create the Karta Mir system after Western sanctions were imposed on the country in 2014, during the Ukraine crisis. The system is now widely accepted in Russia.

After new U.S. sanctions were imposed, Moscow promised to intensify work to cut dependence on Western payment systems further. Among other things, it wants to create more domestic financial services such as its own ratings agency.
Russia and China did in fact link their payment systems, thus making a huge part of Asia independent of western banks.

This direct currency settlement move by China and Russian, however, is one of the most dynamic game-changing developments since Washington�s Treasury and Wall Street banks came up with the US Dollar system at Bretton Woods in 1944.

It�s not about reducing currency risks in trade between Russia and China. Their trade in own currencies, bypassing the dollar, is already significant since the US sanctioned Russia in 2014�a very foolish move by the Obama Administration Treasury. It�s about creating a vast new alternative reserve currency zone or zones independent of the dollar.

Russia is also forming trade deals with India.

Plus, the war in Syria has brought Russia and Iran into a military alliance, on top of trade deals.

Russia and China, our only mildly-serious military rivals, are increasingly becoming more friendly and more independent of our influence.

The United States is a dying empire, and dying empires tend get paranoid.

And the U.S. should be paranoid about the petrodollar. The U.S. dollar is not in good shape.

The extended policy of zero interest rates plus all the �quantitative easing�, are indications of systemic weakness.

Put all that dry timber together, and then add a spark - the 2016 election - and you have a full-on hysteria.
The petrodollar has lasted for over 41 years, and has been the driving force behind America�s economic, political and military power. It would be ironic, indeed, were the tensions with Russia inadvertently to become the driver of America finally losing its petrodollar card.

China about to knock out petrodollar by trading oil in yuan

14 Dec, 2017

As one of the world�s top energy importers, China has successfully completed its fifth dry run in yuan-backed oil futures contract trading. The step has been already called Beijing�s challenge to the US dollar.

China's launch of 'petro-yuan' in two months sounds death knell for dollar's dominance

According to Bloomberg, which cited a statement from the exchange, 149 members of Shanghai International Energy Exchange traded 647,930 lots in the rehearsal with a total value of 268.2 billion yuan. The system met the listing requirements of crude futures after the exercise, it added.

�This contract has the potential to greatly help China�s push for yuan internationalization,� said Yao Wei, chief China economist at Societe Generale in Paris.

She added, however, �its success will hinge critically on the degree of freedom allowed for the capital flows related to the contract.�

A former China division chief at the International Monetary Fund, Eswar Prasad said: �It is not unreasonable to envision a world in which the overwhelming share of commodity contracts, especially for oil, are no longer denominated just in dollars.�

But �the yuan�s role in global finance will ultimately be determined by the degree of commitment of Xi Jinping�s government to economic and financial market reforms.�

Since the 1970s, the global oil trade has almost entirely been conducted in US dollars. The largest energy consumer, China, is interested in having oil contracts in yuan. Beijing plans to introduce its own oil benchmark which will rival Brent or West Texas Intermediate. Analysts say Chinese authorities will need to first convince large oil producers and consumers to use the yuan and invest in the Shanghai benchmark.

The Chinese government announced plans to start a crude oil futures contract priced in yuan and convertible into gold earlier this year. The contract will enable the country's trading partners to pay with gold or to convert yuan into gold without the necessity to keep money in Chinese assets or turn it into US dollars.

The new benchmark will reportedly allow exporters, such as Russia, Iran or Venezuela to avoid US sanctions by trading oil in yuan.

In September, Venezuela ditched the greenback for oil payments. Caracas has ordered oil traders to convert crude oil contracts into euro and not to pay or be paid in US dollars anymore. The measure followed the rolling out of sanctions by the United States against the country. more

The Petro-Yuan Bombshell and Its Relation to the New US Security Doctrine

"Russia and China ... have concluded that pumping the US military budget by buying US bonds ... is an unsustainable proposition ..."
Pepe Escobar, Dec 23, 2017

The new 55-page �America First� National Security Strategy (NSS), drafted over the course of 2017, defines Russia and China as �revisionist� powers, �rivals,� and for all practical purposes strategic competitors of the United States.

The NSS stops short of defining Russia and China as enemies, allowing for an �attempt to build a great partnership with those and other countries.� Still, Beijing qualified it as �reckless� and �irrational.� The Kremlin noted its �imperialist character� and �disregard for a multipolar world.� Iran, predictably, is described by the NSS as �the world�s most significant state sponsor of terrorism.�

Russia, China and Iran happen to be the three key movers and shakers in the ongoing geopolitical and geo-economic process of Eurasia integration.

The NSS can certainly be regarded as a response to what happened at the BRICS summit in Xiamen last September. Then, Russian President Vladimir Putin insisted on �the BRIC countries� concerns over the unfairness of the global financial and economic architecture which does not give due regard to the growing weight of the emerging economies,� and stressed the need to �overcome the excessive domination of a limited number of reserve currencies.�

Yes, this is photoshopped, but still very apt - the whole world is wondering what his next move will be ...

That was a clear reference to the US dollar, which accounts for nearly two-thirds of total reserve currency around the world and remains the benchmark determining the price of energy and strategic raw materials.

And that brings us to the unnamed secret at the heart of the NSS; the Russia-China �threat� to the US dollar.

The CIPS/SWIFT face-off

The website of the China Foreign Exchange Trade System (CFETS) recently announced the establishment of a yuan-ruble payment system, hinting that similar systems regarding other currencies participating in the New Silk Roads, a.k.a. Belt and Road Initiative (BRI) will also be in place in the near future.

Crucially, this is not about reducing currency risk; after all Russia and China have increasingly traded bilaterally in their own currencies since the 2014 US-imposed sanctions on Russia. This is about the implementation of a huge, new alternative reserve currency zone, bypassing the US dollar.

The decision follows the establishment by Beijing, in October 2015, of the China International Payments System (CIPS). CIPS has a cooperation agreement with the private, Belgium-based SWIFT international bank clearing system, through which virtually every global transaction must transit.

What matters, in this case, is that Beijing � as well as Moscow � clearly read the writing on the wall when, in 2012, Washington applied pressure on SWIFT; blocked international clearing for every Iranian bank; and froze $100 billion in Iranian assets overseas as well as Tehran�s potential to export oil. In the event that Washington might decide to slap sanctions on China, bank clearing though CIPS works as a de facto sanctions-evading mechanism.

Last March, Russia's central bank opened its first office in Beijing. Moscow is launching its first $1 billion yuan-denominated government bond sale. Moscow has made it very clear it is committed to a long-term strategy to stop using the US dollar as their primary currency in global trade, moving alongside Beijing towards what could be dubbed a post-Bretton Woods exchange system.

Gold is essential in this strategy. Russia, China, India, Brazil & South Africa are all either large producers or consumers of gold � or both. Following what has been extensively discussed in their summits since the early 2010s, the BRICS countries are bound to focus on trading physical gold.

Markets such as COMEX actually trade derivatives on gold, and are backed by an insignificant amount of physical gold. Major BRICS gold producers � especially the Russia-China partnership � plan to be able to exercise extra influence in setting up global gold prices.

The ultimate politically charged dossier
Intractable questions referring to the US dollar as the top reserve currency have been discussed at the highest levels of JP Morgan for at least five years now. There cannot be a more politically charged dossier. The NSS duly sidestepped it.

The current state of play is still all about the petrodollar system; since last year, what used to be a key, �secret� informal deal between the US and the House of Saud, is firmly in the public domain.

Even warriors in the Hindu Kush may now be aware of how oil and virtually all commodities must be traded in US dollars, and how these petrodollars are recycled into US Treasuries. Through this mechanism, Washington has accumulated an astonishing $20 trillion in debt � and counting.

Vast populations all across MENA (Middle East-Northern Africa) also learned what happened when Iraq�s Saddam Hussein decided to sell oil in euros, or when Muammar Gaddafi planned to issue a pan-African gold dinar.

But now it�s China who�s entering the fray, following through on plans set up way back in 2012. And the name of the game is oil-futures trading priced in yuan, with the yuan fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets.

The Shanghai Futures Exchange and its subsidiary, the Shanghai International Energy Exchange (INE) have already run four production environment tests for crude oil futures. Operations were supposed to start at the end of 2017, but even if they start sometime in early 2018, the fundamentals are clear: this triple win (oil/yuan/gold) completely bypasses the US dollar. The era of the petro-yuan is at hand.

Of course, there are questions on how Beijing will technically manage to set up a rival mark to Brent and WTI, or whether China�s capital controls will influence it. Beijing has been quite discreet on the triple win; the petro-yuan was not even mentioned in National Development and Reform Commission documents following the 19th CCP Congress last October.

What�s certain is that the BRICS countries supported the petro-yuan move at their summit in Xiamen, as diplomats confirmed to Asia Times. Venezuela is also on board. It�s crucial to remember that Russia is number two and Venezuela is number seven among the world�s Top Ten oil producers. Considering the pull of China�s economy, they may soon be joined by other producers.

Yao Wei, chief China economist at Societe Generale in Paris, goes straight to the point, remarking how �this contract has the potential to greatly help China�s push for yuan internationalization.�

The hidden riches of �belt� and �road�
An extensive report by DBS in Singapore hits most of the right notes linking the internationalization of the yuan with the expansion of BRI.

In 2018, six major BRI projects will be on overdrive; the Jakarta-Bandung high-speed railway, the China-Laos railway, the Addis Ababa-Djibouti railway, the Hungary-Serbia railway, the Melaka Gateway project in Malaysia, and the upgrading of Gwadar port in Pakistan.

HSBC estimates that BRI as a whole will generate no less than an additional, game-changing $2.5 trillion worth of new trade a year.

It�s important to keep in mind that the �belt� in BRI should be seen as a series of corridors connecting Eastern China with oil/gas-rich regions in Central Asia and the Middle East, while the �roads� soon to be plied by high-speed rail traverse regions filled with � what else - un-mined gold.

A key determinant of the future of the petro-yuan is what the House of Saud will do about it. Should Crown Prince � and inevitable future king � MBS opt to follow Russia�s lead, to dub it as a paradigm shift would be the understatement of the century.

Yuan-denominated gold contracts will be traded not only in Shanghai and Hong Kong but also in Dubai. Saudi Arabia is also considering to issue so-called Panda bonds, after the Emirate of Sharjah is set to take the lead in the Middle East for Chinese interbank bonds.

Of course, the prelude to D-Day will be when the House of Saud officially announces it accepts yuan for at least part of its exports to China.

A follower of the Austrian school of economics correctly asserts that for oil-producing nations, higher oil price in US dollars is not as important as market share: �They are increasingly able to choose in which currencies they want to trade.�

What�s clear is that the House of Saud simply cannot alienate China as one of its top customers; it�s Beijing who will dictate future terms. That may include extra pressure for Chinese participation in Aramco�s IPO. In parallel, Washington would see Riyadh embracing the petro-yuan as the ultimate red line.

An independent European report points to what may be the Chinese trump card: �an authorization to issue treasury bills in yuan by Saudi Arabia,� the creation of a Saudi investment fund, and the acquisition of a 5% share of Aramco.

Nations under US sanctions, such as Russia, Iran and Venezuela, will be among the first to embrace the petro-yuan. Smaller producers such as Angola and Nigeria are already selling oil/gas to China in yuan.

And if you don�t export oil but are part of BRI, such as Pakistan, the least you can do is replace the US dollar in bilateral trade, as Interior Minister Ahsan Iqbal is currently evaluating.

A key feature of the geoeconomic heart of the world moving from the West towards Asia is that by the start of the next decade the petro-yuan and trade bypassing the US dollar will be certified facts on the ground across Eurasia.

The NSS for its part promises to preserve �peace through strength.� As Washington currently deploys no less than 291,000 troops in 183 countries and has sent Special Ops to no less than 149 nations in 2017 alone, it�s hard to argue the US is at �peace� � especially when the NSS seeks to channel even more resources to the industrial-military complex.

�Revisionist� Russia and China have committed an unpardonable sin; they have concluded that pumping the US military budget by buying US bonds that allow the US Treasury to finance a multi-trillion dollar deficit without raising interest rates is an unsustainable proposition for the Global South. Their �threat� � under the framework of BRICS as well as the SCO, which includes prospective members Iran and Turkey � is to increasingly settle bilateral and multilateral trade bypassing the US dollar.

It ain�t over till the fat (golden) lady sings. When the beginning of the end of the petrodollar system � established by Kissinger in tandem with the House of Saud way back in 1974 � becomes a fact on the ground, all eyes will be focused on the NSS counterpunch. more

Sunday, December 24, 2017

The hidden truth about Christmas

One of the peculiarities of my childhood was that I was raised in a home where we were taught that lying about Santa Claus to children was a sin. However, we were also coached not to tell our friends that Santa was just a hoax. In other words, we were taught that Santa was a lie but instructed to keep the lie alive in homes where it was taught. Considering how important "sin" was to our worldview, this contradiction was stunning.

Below, Lee Camp gives an absolutely hilarious explanation for this contradiction, and argues pretty persuasively that the Santa lies are FAR from harmless.

I loved this because it really did remind me of my childhood. And yes, massive lying to children is probably a serious drag on their mental and cultural development. However, in my case I tend to think the Santa lie was condemned by the religious types mostly because it distracted people from the stories they were telling. I won't even get into the debate of whether the flying toy-giver or the birth-by-virgin tale has caused more social damage.

Merry Christmas

Saturday, December 23, 2017

The Higgs boson and the purpose of a republic (repost)

The following was first posted July 31, 2014. It was a hit back then so it is being reposted at Tony's request for those who might have missed it.

Tony Wikrent

Two years ago this July, the scientific team at CERN, the European Organization for Nuclear Research, used the Large Hadron Collider (LHC) to confirm the existence of the Higgs boson, the most important "missing" particle of the Standard Model of modern particle physics. The work of the CERN team was filmed by theoretical physicists Mark Levinson and David Kaplan, who used over 500 hours of film footage to create a 99 minute documentary, Particle Fever, which was released in July 2013.

The film is a joy to watch.

I especially liked the use of the chorale movement of Beethoven's Ninth at the moment on 4 July 2012 that the LHC provided evidence of the Higgs boson. If you need a lift; if you need a break from all the mayhem and madness of today's politics; if you want to weep tears of joy, watch the film.

A computer generated map of the particle paths generated by a collision of two sub-atomic particles traveling near the speed of light. Source: CERN Press Office Photo Selection.
But that's not what I want to focus on this evening. Near the beginning of the film, Kaplan is shown addressing people in an auditorium somewhere, explaining the search for the Higgs boson, and how its "discovery" will validate the theories of the Standard Model. At 20 minutes into Particle Fever, a member of the audience gets up and asks:

�Let�s assume you�re successful and everything comes out OK. What do we gain from it? What�s the economic return? How do you justify all this?�

Then, as if to strike terror into his listeners -- or perhaps to validate his own importance in the face of a superior intellect of a, you know, actual scientist -- the questioner adds, �By the way, I am an economist.�

Now, I can't decide if Levinson and Kaplan have done a greater service to humanity by providing a popular and entertaining explanation of the quest for the Higgs boson, or by allowing some unnamed arrogant economist, in a few short breaths, to show us quite precisely what is fundamentally wrong with modern economics as a discipline, and the whole cult of conservative / neo-liberal economics thinking that demands everything be justified solely by its ability to create a "profit."

Again, you have to watch the film to see how perfect is Kaplan's reply.

After the nervous laughter of the audience reacting to the sudden self-revelation in their midst of a high priest of money, Kaplan broke the tension by replying, �I don�t hold it against you.� Then he leaned toward the audience, and said, �It�s a very, very simple answer.� The audience hushed expectantly, and Kaplan gave them the big scientific zinger:

�I have no idea. (pause) We have no idea.�

When the laughter subsided, Kaplan continued. �When radio waves were discovered, they weren�t called radio waves, because there were no radios. They were discovered as some sort of radiation.�
�Basic science, for big breakthroughs, needs to occur at a level where you�re not asking what is the economic gain, but where you�re asking: What do we not know?� And, Where can we make progress?"

(The next scene in the film is great, showing one of the five story tall arrays of electronic sensors and instruments, all custom designed and hand soldered, but I digress. I will, however, toss in these great pictures from CERN to give you an idea of the epic scale of the LHC.

View inside the particle accelerator tunnel of the Large Hadron Collider at CERN. Source: CERN Press Office Photo Selection.

One of the massive instrumentation clusters of the LHC at CERN. One of the observers in the picture is a very special person. Can you guess who? Source: CERN Press Office Photo Selection.

The exchange between Kaplan and the economist goes to the heart of an issue I have been struggling to elucidate for the past couple years. I want to tie together in one neat package the creation of the United States as a constitutional republic, what the political economy of a republic should be, and the centrality of science to republican political economy. The obstacle I find is that the most important economic activity any society undertakes -- the creation, dissemination, and application of new scientific and technological knowledge -- is not even taught as basic economics. Everybody has been mis-educated (perhaps mal-educated would be a better word) about economics.

For example: what is wealth? Is it really hoards of cash, or stockpiles of precious metals? Consider: Why do we have computers now, when there were none 200 or 500 or more years ago? Certainly, 500 years ago, all the raw materials that go into making a computer were available. There was lots of silicon laying around, and there was a lot of petroleum, with which to make plastics, sitting in the ground. There was the same presence of germanium and silver, and copper, and whatever else is needed to make a computer, 500 years ago, as there is today. What is so different today that we can make computers now, but could not 500 years ago? The answer, of course, is knowledge - we first had to develop, acquire, and master, the various facets of science that allowed us to make use of those latent natural resources, then apply that science to actual physical processes of production, or what we call technology. So what wealth really is, is the human power of thinking: reason, investigation, hypothesizing, testing, figuring out why things are the way they are -- and then figuring out how that new knowledge can be used to change the way things are.

If you start off with a mal-educated idea of what wealth is, how can you possibly ever measure how wealthy a society is?

Here's a little mental exercise. Assume one day in the not too distant future the most extreme candidates of the Tea Party / conservative / libertarian / Republican elements of the US population come to power, and they enact a law deporting all scientists and engineers who refuse to take an oath repudiating evolution, the science of climate change, and the idea that the world is older than 6,000 years. What would be the impact on US gross domestic product in five years? In ten years? In 20 or 30 or more years? Do you have any doubt that in that sort of Tea Party dream land, the United States would inexorably slide into technological atrophy, then economic collapse you can�t even imagine, and finally violent social upheaval?

Without the constant development of new science and technology, any society will become impoverished, and will eventually collapse. Jared Diamond�s book, Collapse: How Societies Choose to Fail or Succeed, examines how societies descend inexorably into collapse when they ignore environmental limitations and mismanage their natural resources. The key point that most readers of Diamond miss is that a society�s environmental limitations are defined only within a fairly specific period of time based on the prevailing technological mode of that society�s economy. Any society that remains stuck in one technological mode will eventually bump up against environmental limitations: what is considered a resource and how much of it is readily available and usable.

All an economy really is, is how a society organizes itself to procure and process raw materials (natural resources) to create and distribute what is needed to sustain and reproduce human life.
And this is true even for societies that are not technologically advanced, and which we think is �sustainable.� Because, how do we know it�s sustainable? We need some measure of that society�s capacity for transforming natural resources into useful material and services, and we need some measure of the resource base of that society. You cannot get such measures without some level of science, and science applied as technology, to get at the answers. Unless you�re willing to settle for this method of measuring such things: Wait and see if a catastrophic extinction event occurs or not. If and extinction event does not occur, congratulations you have developed a sustainable economy. If it does occur, well, saying �oops� just won�t cut it. And what if the extinction event does not occur until the next generation?

So the most important economic activity a society engages in is the pursuit of new scientific and technological knowledge that allows that society's economy to avoid environmental limitations and inefficient misuse of natural resources. This is one of those wonderful, mysterious paradoxes of life: basic scientific research has no measurable immediate payback but nonetheless is THE most important economic activity that occurs in a society. Recall Kaplan's answer to the economist.

In the United States, there are already many indications and markers of our collapse. Since the social shift from a market economy to a market society began under Ronald Reagan, we've spent three decades now matriculating nearly twice as many MBAs and accountants, as we have biologists, physicists, mathematicians, and engineers. Industrial companies that took a half century or more to build up a level of technological excellence that was formerly envied around the world, have been bought and sold and bought and sold, restructured, reorganized, streamlined, had the fat cut out, had hidden value released, downsized � call it what you will, the truth is those companies have been asset stripped and looted. We�ve been doing that for nearly half a century now. Since Reagan�s first election, our national debt has increased by a factor of double an order of magnitude, from just over $900 billion, to nearly $17 trillion. Our trade balance has been increasingly negative. These are all not independent phenomena and developments; they are all inter-dependent in a complex web of cause and effect that, if our society were sane -- instead of crazed with the market fundamentalists' worship of mammon -- some of our best scientific minds would be devoted to investigating and understanding. Instead, we have allowed a banking and financial system, "deregulated" from any responsibility or concern for the general welfare, to induce many of our best scientific minds to create credit default swaps and other financial instruments of mass destruction.

So, science is the most important aspect of the political economy of a republic. Why is this so hard to understand? Part of the problem here is that when the United States was founded, the concept of capitalism, as we know it today, had not yet been fully formed. That would happen over the next century. You can search the texts of the Constitution and The Federalist Papers in vain for the words "capitalism" and "capitalist" (thank God for archived books and computerized search functions). The word "capitalism" did not really come into common usage until after Marx's Das Kapital was published in 1867.

I have never agreed with the interpretation of American history, most popular on the left, that the United States was founded as an irredeemably oppressive and exploitative capitalist system. The very concept of capitalism was unknown at the time of the nation's founding, so how could the country be founded as a capitalist economy? I am not about to deny the obvious ugliness of much of U.S. economic history. But I think we blind ourselves to our true enemies if we don't realize that the US economy developed in the context of a continual battle between republicans and their enemies, oligarchs and aristocrats. These last were not necessarily titled nobility, though there was no shortage of those. And make no mistake, they wished only ill for the US. There were also commoners, nominally citizens of the US republic, whose avarice and greed for power made them the functional equivalent of oligarchs. Closer to our time, Franklin Roosevelt called these deformed creatures "economic royalists." Today, "Wall Street" and "the one percent" are terms often used to denote these "economic royalists". It�s about time we begin to take seriously the concept of �domestic enemies� mentioned in the Constitution.

So as the US economy developed, there raged a fierce, often bitter contest, between progressives who looked to the Founders for inspiration on the one hand, and, on the other hand, reactionaries, revanchists, and perhaps most often, simply self-centered pricks, who hated the ideas of self government and the general welfare because those ideas created manifold obstacles to their drive to accumulate wealth and power.

But a more weighty reason why there has never been a clear statement of the central role science must play in the economic affairs of the republic is simply that, two and a quarter centuries ago, the importance of science was simply an assumed given, much as it was assumed at the time that most Americans understood what a "republic" was. The creation of the United States is clearly an outgrowth of the Enlightenment, but what is important to understand is that the scientific Enlightenment went hand in hand with the political Enlightenment. In his 2010 book, The Science of Liberty: Democracy, Reason, and the Laws of Nature, American Association for the Advancement of Science fellow Timothy Ferris argues that they are inseparable. More, even � Ferris argues that it was the Scientific Revolution that enabled the Enlightenment, not the other way around. The �democratic revolution,� Ferris writes,
was sparked�caused is perhaps not too strong a word�by the scientific revolution, and�science continues to foster political freedom today. It�s not just that scientific creativity has produced technological improvements, which in turn have enhanced the prosperity and security of the scientific nations, although that is part of the story, but that the freedoms protected by liberal democracies are essential to facilitating scientific inquiry, and that democracy itself is an experimental system without which neither science nor liberty can flourish�. science is inherently anti-authoritarian. In order to qualify as scientific, a proposition must be vulnerable to experimental testing. If it repeatedly fails such tests it tends to fall by the wayside, regardless of who supported it or how much it may have seemed to make sense. (pages 3-4)

The Orrery, by Joseph Wright of Derby, 1766, used as the cover illustration on Tim Ferris's book, The Science of Liberty: Democracy, Reason, and the Laws of Nature. An orrery is a mechanical model of the solar system, showing the motions of the planets, though rarely to scale.

It is worth noting here that Ferris' argument handily destroys the American conservative mythology of democracy and liberty arising from property rights. So it is unfortunate that most historians have ignored science and political economy, and have been more interested in researching and writing military and political histories. In 1976, historian Arthur M. Schlesinger wrote,
Professional scholars have been slow to study the progress of science and technology, partly because of their penchant for political [and military] history, and partly because, even with the rise of social and intellectual history, they have been daunted by the unfamiliar and formidable subject matter. At certain points, it is true, they have touched upon epoch-making mechanical inventions which had self-evident economic consequences, but these occasional references fall far short of depicting the pervasive and continuing role of science in all ranges of American life. -- �An American Historian Looks at Science and Technology,� in Early American Science , edited by Brooke Hindle, Science History Publications, New York City, 1976, page 7.
The founder who absolutely personifies the union of the scientific and political Enlightenments is Benjamin Franklin. His experiments with electricity were at the cutting edge of science in his time. Pulitzer prize winning historian Joseph Ellis has written that Franklin today would be the equivalent of a Nobel Prize winning scientist. In fact, Franklin was actually given, in 1753, what was then the most prestigious award for scientific achievement in the world: the Copley Gold Medal, by the Royal Society in London.

In 1743, Franklin proposed the creation of the American Philosophical Society, modeled on his earlier "Proposal for Promoting Useful Knowledge Among the British Plantations in North America.'' Note the inclusion of the phrase "Useful Knowledge" in Franklin's original proposal. According to the bylaws formulated by Franklin, there were always to be, among the members of the Society, "a physician, a botanist, a mathematician, a chemist, a mechanician, a geographer, and a general natural philosopher.'' In the mid-1700s, these were all leading positions of scientific inquiry and activity. The members of the Society, Franklin stipulated, were to gather and share information concerning "all philosophical experiments that let light into the nature of things, tend to increase the power of man over matter, and multiply the conveniences or pleasures of life.'' That meant monitoring closely developments in horticulture, botany, animal husbandry, geology, mines and minerals, advances in mathematics and chemistry, useful inventions and improvements in labor-saving mechanical devices of all types, new processes and techniques of manufactures, surveys, maps and charts, and geology.

 Franklin would later put forward a similar proposal for an Academy of higher learning in Philadelphia; this would eventually become the University of Pennsylvania, which today proudly claims Franklin as its founder.

Another founding member of the American Philosophical Society was Franklin�s friend, John Bartram, at the time perhaps the world's leading botanist and horticulturist. Carl Linnaeus, the Swedish botanist and zoologist who created the modern biological naming scheme of using two Latin grammatical forms (for example, Acer saccharum is the scientific name for the sugar maple tree) called Bartram the "greatest natural botanist in the world." Bartram's 8-acre botanic garden, on the west bank of the Schuylkill River about three miles southwest from the center of Philadelphia, is considered to be the first scientific botanic collection in North America. Bartram died in 1777, so he did not play much of a role in the Revolution.

The third leader in establishing the American Philosophical Society was another friend of Franklin, Dr. Thomas Bond, a leading physician and surgeon of the time. According to Wikipedia, Dr. Bond has been called the "Father of Clinical Medicine." He developed an effective splint for fractures of the lower arm, which became known as a "Bond splint." Recall that in this era, fractured limbs often resulted in gangrene and loss of the limb, and very often, death. The medical profession, at that time was considered to be one of the most important in science. In 1750, Dr. Bond sought the assistance of Franklin in establishing the Pennsylvania Hospital in Philadelphia, the first medical facility in the American colonies. According to Wikipedia, the Hospital "quickly drew attention as a center for medical advancement, especially in maternity care and the humane treatment of mental illness, a poorly understood area of medicine at the time."

During the Revolutionary War, Bond, in his sixties, was assisted by his son in creating the medical department of the Continental Army, and establishing the first field hospitals. (Bond as co-founder of the American Philosophical Society. is from "The Quaker Background and Science in Colonial Philadelphia," by Brooke Hindle, in Early American Science , edited by Brooke Hindle, Science History Publications, New York City, 1976, page 176.)

A list of the earliest members of the American Philosophical Society speaks for itself: George Washington, John Adams, Thomas Jefferson, Alexander Hamilton, Thomas Paine, James Madison, Marquis de Lafayette, Baron von Steuben, Tadeusz Kosciuszko, James McHenry, David Rittenhouse, Nicholas Biddle, Owen Biddle, Benjamin Rush, and John Marshall.

David Rittenhouse was another close friend of Franklin He was a surveyor, mathematician, inventor, clockmaker, designer and manufacturer of scientific instruments, and the foremost astronomer in North America. He surveyed and marked the 12-mile circle centered on the Court House in New Castle, Delaware, which comprises the northern border of Delaware. He also surveyed parts of the boundaries of New Jersey, New York and Pennsylvania.

President Washington appointed Rittenhouse the first director of the United States Mint, a crucial position that involved much more than the supervision of the Mint: Rittenhouse supervised the Mint�s design, construction, equipping, and start up. Rittenhouse built what is thought to be one of the first telescopes in the US, and designed and built the world's first diffraction grating with a spacing of about 1/100 of an inch. Rittenhouse was one of the special committee appointed by the Society to observe and report on the June 3, 1769 transit of Venus across the sun. According to Wikipedia,
On February 24, 1775, Rittenhouse delivered a lecture on the history of astronomy to the American Philosophical Society, in which he linked the structure of nature to the rights of man, liberty and self-government. Rittenhouse also used the occasion to decry slavery. So impressed were those in attendance that the American Philosophical Society commissioned the speech to be printed and distributed to delegates of the Second Continental Congress when they arrived in 1776

The drawing of the 1769 transit of Venus made by David Rittenhouse for the American Philosophical Society. Source: Wikipedia.

Owen Biddle, Sr. was, like Rittenhouse, a clockmaker, watchmaker, and an astronomer. He became involved in the Revolutionary cause as early as 1765, when he signed the Non-importation Resolutions of October 25. He served on the Committee of Safety, then on the Council of Safety. These were the organizations that exercised de facto political and administrative control of the various colonies, as the royal governors lost influence and power. Biddle was a member of the Pennsylvania Constitutional Convention of July 15, 1776.

In June, 1777, the Continental Congress appointed Biddle as Deputy Commissary General of Forage for the Continental Army, with the rank of colonel. Biddle was another member of the special committee of the American Philosophical Society to observe and report on the June 3, 1769 transit of Venus. In 1782, Biddle was elected a member of the American Academy of Arts and Sciences, two years after that organization was founded by the Massachusetts legislature, with a Charter of Incorporation instructing it "to cultivate every art and science which may tend to advance the interest, honor, dignity, and happiness of a free, independent, and virtuous people."

There was a generalized understanding and support for science among the founders, including those who were not scientists. For example, of all his many accomplishments, John Adams took the most pride in the Constitution he wrote for the Commonwealth of Massachusetts. Look at Chapter V, Section II:
Wisdom and knowledge, as well as virtue, diffused generally among the body of the people being necessary for the preservation of their rights and liberties; and as these depend on spreading the opportunities and advantages of education in various parts of the country, and among the different orders of the people, it shall be the duty of legislators and magistrates in all future periods of this commonwealth to cherish the interests of literature and the sciences, and all seminaries of them, especially the university at Cambridge, public schools, and grammar schools in the towns; to encourage private societies and public institutions, rewards and immunities, for the promotion of agriculture, arts, sciences, commerce, trades, manufactures, and a natural history of the country; to countenance and inculcate the principles of humanity and general benevolence, public and private charity, industry and frugality, honesty and punctuality in their dealings, sincerity, good humor, and all social affections, and generous sentiments among the people.
"Cherish the interests of literature and the sciences"! Compare that to the anti-science political hooliganism of conservatives, Tea-baggers, and Republicans today. At six minutes into Particle Fever, Levinson and Kaplan include two clips of Republican Congressmen, Sherwood Boehlert and Joel Hefly, speaking on the floor of the House in 1992 against the Superconducting Super Collider, then in process of construction near Waxahachie, Texas. The Superconducting Super Collider had a planned ring circumference of 54 miles, and would have collided particles with an energy of 20 terravolts per proton, nearly three times the level possible with the Hadron Large Collider at CERN. But the US Congress voted to cut all funding for the Superconducting Super Collider in 1993, and it was abandoned long before being completed. It would, of course, have come online and made possible the Higgs boson experiments probably a full decade before the CERN HLC. Of course, no one talks about a "lost decade" of basic research in particle physics. Only the "lost decade" in Japan -- during which financiers and usurers were unable to keep pumping up the values of the assets they held.

"Rewards and immunities, for the promotion of agriculture, arts, sciences, commerce, trades, manufactures, and a natural history of the country."

One of the reasons agricultural machinery developed more quickly in the USA than other countries is that the committees which ran State Fairs made it a practice of awarding tidy sums of money for the most advanced machinery brought to the Fair. In the 1840s and 1850s, the great problem to be solved was the application of steam power to agricultural production. It simply was not very safe to move a working steam engine under pressure on anything but the prepared bed and smooth surface of a railroad. Reynold M. Wik writes, in Steam Power on the American Farm (University of Pennsylvania Press, Philadelphia, 1953):
Although somewhat crude in appearance, the portable engines built in the 1850's possessed all the basic features necessary for successful operation. They were self-acting, with tubular boilers, governors, safety values, and a forced draft. Most of them were simple in construction and could be purchased with or without trucks. Their manufacture was encouraged by many of the state agricultural societies, which offered cash awards, diplomas, and medals at county and state fairs. The Hoard and Bradford engine received favorable comment from the judges of the New York State Fair in the summer of 1851. In awarding the company a medal, the committee remarked that the engine was built in portable form which could be as "conveniently removed from place to place and set up as readily as a common stove." The Virginia State Agricultural Society held mechanical exhibits in Richmond in 1855, and premiums as high as one hundred dollars were awarded for the best farm engines. (page 20)

"Busting sod" in 1910 with a steam traction engine manufactured by the Geiser Co., Waynesboro, Penn. Note the men in front of and besides the large rear wheel. From the files of my business, Nation Builder Books.

Here is John Adams, again, from his 1765 A Dissertation on the Canon and Feudal Law:
Liberty cannot be preserved without a general knowledge among the people, who have a right, from the frame of their nature, to knowledge, as their great Creator, who does nothing in vain, has given them understandings, and a desire to know; but besides this, they have a right, an indisputable, unalienable, indefeasible, divine right to that most dreaded and envied kind of knowledge, I mean, of the characters and conduct of their rulers�. The preservation of the means of knowledge among the lowest ranks is of more importance to the public than all the property of all the rich men in the country.
Does this sound like a guy intent on erecting a new exploitative economic regime geared toward grinding down and exploiting working men and women?

"Their great Creator." I want to discuss that whole idea of God a bit, because it is central to the Enlightenment belief in science and self-government. The key concepts here are the divine spark of reason, and Imago Dei, man created in the image of God. These concepts were the foundation of the Enlightenment and the development of science. Basically, the Enlightenment was based on the belief that God was not arbitrary and capricious, and the universe was therefore created lawfully (that is, according to invariable laws, i.e., two plus two will always equal four, or the square of the hypotenuse of a right triangle will always be equal to the sum of the squares of the other two sides); that man is a creature of reason, and can thus inquire into and understand the laws of creation. Or put it this way: we can inquire into and understand the laws of physics, hydrodynamics, aerodynamics, and so on. This capacity for reason and understanding creation is what makes each individual precious and unique. It is why we assert that "all men are created equal."

This Enlightenment view of science permeated the society. Here is part of a sermon, entitled "The Dignity of Man," delivered in Franklin, Massachusetts in 1786. The good people of Franklin, it appears, having honored the great man by naming their town after him, were in turn honored by him. The full subtitle I think points to how this whole concept characterized the epoch: "A Discourse Addressed to the Congregation in Franklin, Upon the Occasion of Their receiving from Dr. Franklin, the Mark of his Respect, in a Rich Donation of Books, Appropriated to the Use of a Parish-Library."
...what has been said concerning the nature and dignity of man, shows us, that we are under indispensable obligations to cultivate and improve our minds in all the branches of human knowledge. All our natural powers are so many talents, which, in their own nature, lay us under moral obligation to improve them to the best advantage. Being men, we are obliged to act like men, and not like the horse or the mule which have no understanding. Besides, knowledge, next to religion, is the brightest ornament of human nature. Knowledge strengthens, enlarges, and softens the human soul, and sets its beauty and dignity in the fairest light. Learning hath made astonishing distinctions among the different nations of the earth. Those nations, who have lived under the warm and enlightening beams of science, have appeared like a superior order of beings, in comparison with those, who have dragged out their lives under the cold and dark shades of ignorance.... the cultivation and improvement of the mind is more necessary for use, than for ornament. We were made for usefulness and not for amusement. We were made to be the servants of God, and of each other. We were made to live an active, diligent, and useful life. As men therefore we cannot reach the end of our being, without cultivating all our mental powers, in order to furnish ourselves for the most extensive service in our day and generation. Knowledge and learning are useful in every station; and in the higher and more important departments of life, they are absolutely and indispensably necessary.
In developing, acquiring, mastering, and diffusing that science and technology, we are acting God-like; we are acting in the image of the Creator, by ourselves creating new knowledge, and new uses of that knowledge. The idea that every individual human being is endowed with the divine spark of reason, and therefore can act God-like -- can, in fact, participate in the ongoing work of Creation, by him- or herself creating or assimilating, and using new scientific knowledge -- is the bedrock for the idea of a republic of self-governing citizens.

And Creation is an ongoing process. So, it simply does not square easily with the mindset of a conservative. The foundational statement of modern American conservatism is William Buckley's "standing astride history and yelling 'Stop!'" If the whole idea of being human is to act in the image of God and create new knowledge, if the whole idea of a republic is to nurture and protect those engaged in this noble quest, then how can Buckley's conservatism be anything other than a repudiation of God, and the most noble aspects of humanity: reason, and science?

But, what are we supposed to do with all this new scientific knowledge? Well, it says right in the Preamble of the Constitution: promote the general welfare. Well, OK, but what, exactly, is "the general welfare"? Who decides what it is? Do any of us have any say in deciding what is "the general welfare"?

The Framers certainly thought "the General Welfare" was important. They included the phrase in Constitution twice -- first in the Preamble, as a statement of the purpose of the Constitution, and then again in Article I, Section 8, which established the broad powers of Congress to "provide for the General Welfare." It is interesting that the Articles of Confederation omitted the phrase, despite Franklin's attempt to include it. So, when the time came to remedy the weaknesses of the Articles of Confederation, the phrase "the General Welfare" was included twice. It is further interesting that when the Confederate States wrote their constitution, they mostly copied the US Constitution word for word, with some notable changes and omissions. Among these is dropping the phrase "general welfare" entirely. (Another interesting change, given the machinations of Republicans today to destroy the U.S. postal service, was that the Confederates stipulated in their constitution that their postal service must pay its own way.). Today, political conservatives and libertarians explicitly denounce the idea of the general welfare as the "slippery slope" to tyranny.

The clearest statement of the general welfare was given by first Secretary of the Treasury Alexander Hamilton, in his December 1791 Report on Manufactures. Hamilton discussed the powers of the Federal government to encourage necessary industries and infrastructure, and near the end explained his concept of the general welfare:
The terms 'general welfare' were doubtless intended to signify more than as expressed or imported in those which Preceded; otherwise numerous exigencies incident to the affairs of a nation would have been left without a provision. The phrase is as comprehensive as any that could have been used; because it was not fit that the constitutional authority of the Union, to appropriate its revenues shou'd have been restricted within narrower limits than the 'General Welfare' and because this necessarily embraces a vast variety of particulars, which are susceptible neither of specification nor of definition.
It is therefore of necessity left to the discretion of the National Legislature, to pronounce, upon the objects, which concern the general Welfare, and for which under that description, an appropriation of money is requisite and proper. And there seems to be no room for a doubt that whatever concerns the general interests of learning of Agriculture or Manufactures and of Commerce are within the sphere of the national Council as far as regards an application of Money."
"Left to the discretion of the National Legislature." This is really interesting, because now we have to discuss the proper role of politics in governing a republic, and how the shift from a market economy to a market society (Michael J. Sandel, a political philosopher at Harvard, is the author of What Money Can�t Buy: The Moral Limits of Markets), abrogates that role. As I wrote above, the development of new science and technology is the most important economic activity any society can undertake. Without new science and technology, economic collapse is inevitable.

But scientific and technological knowledge is always changing. Or, it should be, as science and technology advance. So, in a republic, the highest duty of a statesman is to understand the present frontiers of science of technology, and where the boundaries of those frontiers must be expanded in order to find the answers to looming, as well as existing, economic and social problems. For example, we face a terrible crises of man-made climate change. But, we have available a wide range of new technologies that can stop, and even reverse climate change. The development, dissemination, and application of this new scientific and technological knowledge should be the highest priority.

So, it is the role of Congress to determine exactly what is the General Welfare -- and what the nation as a whole, acting through the social compact of the national government, can do to promote the General Welfare. In times past, this meant, in the 1790s, hiring geometers and surveyors and mathematicians and cartographers to chart the hazards of coastal waters, and to build lighthouses; in the early 1800s sending out Army expeditions to explore and map the west; in the 1820s, outright financing of the building of The National Road; in the 1840s, giving money outright to Samuel Morse to develop the telegraph; in the 1850s and 1860s, giving millions of acres of the public land away, free, to companies in exchange for their promise to build railroads; in the 1910s, paving roads and building bridges to facilitate the use of new fangled motor vehicles; in the 1920s, supporting the development of aviation with lucrative mail carrier routes; in the 1930s, bringing electricity to rural areas that privately owned power companies could not see a profit providing service to; in the 1950s, building an interstate highway system; in the 1960s, kick-starting applied scientific research by making a commitment to a manned moon landing; in the 1970s and 1980s, funding the development of things called routers, TCIP, and ARPAnet.

If you didn�t like what the Congress had decided was the General Welfare, then you could vote the bums out in the next election. That�s the role of politics in a republic.

Then Reagan came into office, and we got crammed down our throats the very un-American idea that the national government can�t do anything right. That it should just plain keep its nose out of the economy. Now, there is no real role for politics � all the decisions about our collective futures are supposed to be made by the new right-wing, neo-liberal deity, The Market. Do we need to promote the General Welfare by implementing a crash program to build wind power and solar energy? Sorry, only The Market can decide that. Yeah, it�s great that we have two or three states now that can get over half the electricity from wind and solar on a good day. For me, that�s where we should have been ten years ago. Do we need to promote the General Welfare by building a high speed passenger rail system? Sorry, only The Market can decide whether we should do that, and look at how many people are voting economically by driving cars. In the meantime, the Japanese have been running their 150�200 mph Shinkansen since 1964. We have a trade deficit with Japan now? And you don�t think the two are related in any way?

This is why I feel betrayed by President Obama. He came into office with a huge mandate, with his party in control of both houses of Congress, and with a public mood, -- in reaction to the financial collapse of 2007-2008 -- that had finally been broken from the cultural �worship of riches� we have had to endure since Reagan. Rather than draw upon the rich and powerful Enlightenment tradition of the American Revolution, in which government was established as a force to do good, he sided with our �domestic enemies�, the financiers, rentiers, and usurers of Wall Street (�I�m the only thing standing between you and the pitchforks,� he literally told them) to save their morally bankrupt system � a system that is destroying us from within.

There is much more to the neat little package I want, tying together the creation of the United States as a constitutional republic, what the political economy of a republic should be, and the centrality of science to republican political economy. The discussion of the general welfare must be expanded, to include its corollary, the Constitutional concept of implied powers. My first cut at that was in November 2011, in Constitutional Foundation of the US Economy: Powers are Implied Not Enumerated. A short extract I posted as a recent comment is here.

The de-industrialization of the US economy over the past half century is the inevitable result of not knowing what the political economy of a republic is supposed to be. Rentiers, speculators, and usurers have no place in the properly functioning economy of a republic; they must be rooted out and destroyed ruthlessly. Financiers do have a role, and it is not unimportant. However, their activities must be closely monitored and tightly regulated. The issue is quite simple: the creation and allocation of money and credit must be organized and regulated in such a way that it promotes the general welfare, not just private gain. There is room for private gain; in fact capitalism remains the best form of organizing most (note: most, not all) of an economy. Alexander Hamilton laid down a short and simple test in The Federalist Number 15: �Is private credit the friend and patron of industry?� In June 2012, in Neo-liberalism, De-capitalization/De-industrialization, and the Res Publica, I posted the evidence that in fact, the financial system is the enemy of industry: the United States is becoming less capital intense. It is becoming, in other words, less capitalistic. In another recent comment, I posted a series of graphs that I used in that piece showing the de-capitalization of the US economy. We need an economy in which real capitalists can profit and flourish, not rentiers, usurers, and speculators.

But this post is quite long already, so I think it�s time to finish. I will leave you with this happy thought:

I love this photo; it make me sniffle every time I see it. This is physicist Peter Higgs, in his eighties, shown on site at one of the massive instrumentation clusters at the CERN LHC. May we all be so blessed to live to see such powerful validation of our life's work. Source: CERN Press Office Photo Selection.

Friday, December 22, 2017

The infuriating irony of libertarians' wet dream, Bitcoin and cryptocurrency

I suspect that most people do not understand bitcoin and cryptocurrencies because they also do not understand how money is "created." The reality that money can be created out of nothing is so ludicrously simple that most people simply cannot believe it. John Kenneth Galbraith observed that "The process by which banks create money is so simple that the mind is repelled."

I am going to go out on a limb and assert that if you do not understand the creation of money, you cannot be truly progressive on economic issues. You can support progressive positions on economic issues, but until you understand how money is created, you will always be vulnerable to being herded into a veal pen for slaughter by financial oligarchs.

If you want an explanation of money creation, in January 2015 I posted Creating money out of thin air on DailyKos. If you want examples of so-called progressives freaking out because they refuse to believe money is created out of nothing, read the comments. The hostility and arrogance of certain imbeciles is part of what pushed me away from DailyKos.

Cryptocurrencies, of which Bitcoin is now the best known example, with the highest market capitalization -- $217.8 billion the minute I write this -- are nothing more than computer programs creating their own units of money. Libertarians love it, because it is money that is NOT being created by governments. No small number of libertarians also hate the big banks almost as much as they hate government. So, I think cryptocurrencies are going to be more than a passing speculative fad simply because they are a libertarians wet dream. Nothing will happen to knock cryptocurrencies that libertarians won't shake off as they cling to their anti-government, anti-"crony capitalism" ideology. 

The infuriating irony is that one of the things libertarians hate most about governments and central banks (which are often quasi-government entities controlled by the very financial oligarchs who control the big banks of Wall Street and the City of London) is that governments and central banks issue fiat currency that is backed by nothing. Libertarians insist on a return to the gold standard, so that government-issued money has "value." What about cryptocurrencies, though? I have yet to hear any libertarian denounce Bitcoin or any other cryptocurrency because it is not backed by gold, or backed by anything else of "value."

So, while the speculative frenzy of Bitcoin and cryptocurrencies is bad, the one good thing is that it is teaching people that money can be created out of nothing. I suspect that's why Dimon of JP Morgan hates Bitcoin and cryptocurrencies so much. Either that, or Dimon is just talking them down to manipulate the price.

(A note on why the speculative frenzy is bad. Because it is a misuse and misapplication of society's talents and resources at a time when the only frenzy should be building the Tesla and electric car recharging stations, wind turbines, solar energy arrays, geothermal generating plants, urban mass transit systems, and upgrading and replacing every man-made structure on the planet to, to transition as quickly as possible away from burning fossil fuels and worsening climate change.)

Tuesday, December 19, 2017

Ultra High Voltage Direct Current from ABB

ASEA, Brown, Boveri is a Z�rich-based electrical engineering company. They have vast experience in large electrical infrastructure projects. ABB is the product of a merger between Swedish-based ASEA (founded 1883) and Brown, Boveri & Cie (founded 1891 in Baden). Both were leaders in the production and installation of heavy electrical machinery. ASEA, for example, built much of the systems that powered the Swedish rail lines and built 9 of 12 of her nuclear power plants. These days, the company is concentrating of the sort of hardware necessary for sustainable energy.

China has a very large desert that could be paved over with solar cells. The problem is that these cells are a LONG ways from the big population centers. So China has to move all that energy without incurring large transmission losses. Alternating Current, the preferred technology for heavy-duty electrical transmission for a host of very good reasons, has one major flaw�it's not efficient for long-distance. As a side issue, it is almost useless for underwater power cables which becomes very important in places like Japan and Indonesia.

Enter Direct Current transmission. More expensive and not as flexible as AC but it is really the only solution for long-distance and underwater. No one has a lot of experience in DC transmission but ASEA once built a link from mainland Sweden to the isle of Gotland in 1954 that's still working. And now, ABB has announced the completion of successful tests for transformers and key equipment for world�s first 1,100 kilovolt (kV) project in China.

1100 kV. Scroll down to see what kind of equipment is required to "go solar."

Tesla vs. Tesla: The Juice In Your Car Will Increasingly Come Through HVDC, Edison�s Preferred Current

Michael Barnard, December 16th, 2017

So you�ve got this awesome car, Tesla Models S/3/X. You plug it in at night in your garage or at a local garage with an urban Supercharger, or maybe your company is enlightened and has chargers in the parking garage along with bike racks and an LRT shuttle.

But where is the electricity coming from? Increasingly, it�s generated by wind, sun, or water, coming from a long way away and transiting high-voltage direct current (HVDC) transmission lines to get to you. This is one of the major trends in grid innovation I�m exploring in my ongoing series. It started with 7 Reasons the Future is Electric and has parallel threads on HVDC, blockchain for cleantech, and emerging ancillary marketsthat wind and solar can play in.

So, what�s HVDC and how is it different from normal transmission?

This is partially a Thomas Edison vs Nikola Tesla story. Edison was committed to direct current, but Tesla liked alternating current. Alternating current was easier to step up and down and DC couldn�t be transformed reliably, so it became the transmission and distribution standard for electricity. Edison did some ugly things to try to win the fight, but lost. Then he won economically anyway.

Most long-distance transmission today is built using high-voltage alternating current, but it has some interesting limitations.
? It�s limited to 765 kilovolts (kV), which is more than enough to fry an egg. Due to the nature of alternating current, after that, voltage losses due to the electromagnetic field interacting with the insulation and heating it makes AC uneconomic.

? Most of the transmission is through elevated lines, in part due to the expense of burying lines and maintaining underground lines, but also because the heat buildup problem is worse underground and they hold more charge, which limits the distance they can transmit electricity to about 80 kilometers. The holding more charge point, capacitance, means that more energy has to be pushed into the line before it can be reversed. Overhead, high-voltage alternating current lines are kept a long way from one another and the earth, because the electromagnetic fields of individual lines interact, reducing total capacity. Underwater alternating current transmission has worse challenges than underground transmission.

? You can�t make the wires thicker than they are to get greater throughput because alternating current has a strong tendency to flow near the surface of metal conductors, so making them thicker adds a lot of weight and not much transmission capacity.

? The last bit of the challenge is that frequency is hard to change, so any alternating current transmission must be between two grids operating at the same frequency.
That�s a lot of engineering compromises to deal with, but alternating current is obviously economically viable for transmitting electricity long distances, so these aren�t deal breakers in most situations.

Until 1954, there was no real alternative to this set of compromises. That�s the year that the problem of reliably changing the voltage of direct current up and down was cracked. ABB, a major player in this space, built a submerged 96 kilometer HVDC transmission line between the Swedish mainland and an island.

Direct current doesn�t have most of the limitations of alternating current for transmission.
? While it�s limited to about 800 kV, not dissimilar from AC, the way it�s constructed you effectively get double the voltage of AC.

? Underground and underwater lines don�t lose effectiveness for transmission compared to aboveground lines. No electromagnetic field is created by direct current to interact with other wires, the ground, or water.

? The wires can be arbitrarily thick because direct current doesn�t tend to flow along the surface.

? Direct current has no frequency, so it�s easy to connect two grids at different frequencies and use electronics to match frequency when it�s converted back to AC. HVDC is sometimes referred to as asynchronous transmission for this reason.
But direct current has still had two limitations that prevented it from taking over the world, at least until recently.

The first is that the voltage converters were a lot more expensive than the simple, physical alternating voltage converters. DC converters are electronic in nature, and as I pointed out in the 7 Reasons article, Electronics outperform the physical. That�s true in this case too, with DC transformers plummeting in cost. If you look around, almost every electrical device you can see runs on DC internally and the power blocks convert AC from the plug to DC for the device. That�s been made cheaply possibly by electronics, and it�s true for transmission-scale transformers as well.

The second problem is that circuit breakers for high-voltage direct current were ineffective. Circuit breakers are components that protect electrical systems from excess current. If you have an older home, you probably have a fuse box. If you have a newer home, you probably have electronic circuit breakers, typically a row or two of black switches in a panel. Mechanical breakers for DC were too slow while semiconductor breakers were fast enough but had 30% power loss. This has been hard to overcome, but it�s been licked recently with a new generation of hybrid breakers.

Why is this important again?

HVDC lines always deliver more of the power put into them regardless of the distance that the electricity travels. But the big reason this is important is that it�s cheaper at longer distances and at very short distances underwater and underground.

�Over a certain distance, the so called �break-even distance� (approx. 600 � 800 km), the HVDC alternative will always provide the lowest cost.

�The break-even distance is much smaller for subsea cables (typically about 50 km) than for an overhead line transmission.�

The diagram is interesting. DC terminals will always be more expensive than AC terminals simply because they have to have the components to transform DC voltage as well as convert the DC to AC. But the DC voltage conversion and circuit breakers have been dropping in price. The break-even price continues to drop.

Right now on modern grids, transmission losses are 7% to 15% with aboveground transmission. With DC transmission, they are a lot lower, and they remain low if you run the cables underwater or underground.
The NIMBY factor

That last point is worth drawing out a bit, as it�s directly related to the use of HVDC for renewables. A key element in the successful use of renewables is continent-scale grids. Energy has to flow from low-carbon hydro in areas with low biomass far north, far south, across deserts, from areas with lots of sun nearer the equator, and from wind offshore or in windy plain areas to large urban and industrial areas. In the USA, the best wind and sun resources are in places a long way from most of the people.

With alternating current, that means huge towers and lines marching across long distances. And that means a lot of people protesting because they hate change, they don�t want their views spoiled, they think that their land is somehow special and shouldn�t have a tower on it, or because they have an irrational fear of the electromagnetic spectrum. I�ve written a lot about NIMBYs in the past � in fact, the article linked was my second article ever on CleanTechnica and published close to 4 years ago. Much of what I said holds for transmission projects as well.

HVDC holds the promise of being able to dodge this problem in a lot of places. Where it�s impossible to overcome local outrage at the thought of big metal towers, it is possible to bury the line for a few miles. It�s more expensive, but it�s a way to dodge a lot of the problems.

And the last thing you can do with HVDC that�s interesting is that you can string it on existing AC tower paths, effectively making your existing, accepted transmission route deliver a lot more electricity to highly populated areas. That typically avoids NIMBY complaints too.

The archipelago factor

The other place this makes a difference is for populaces spread over islands. Indonesia is a good example. It has 261 million people living on 6,000 of its 17,500 islands. And a lot of those islands depend on oil and diesel generation.

Japan is similarly challenged. While most people think of it as a country, or if they know more think of it as three or four big islands, it actually has 6,852 islands with 430 of them populated. Japan is looking at two major HVDC power links to Asia to enable it to break free of its need to generate and manage all of its own electricity in a limited geographical area with significant terrain challenges.

And lots of people think of the British Isles as a few big islands, but it�s actually well over 6,000 islands with close to 200 permanently occupied. Denmark has a mainland, but also 1,000 islands with 70 of them inhabited. This pattern repeats itself globally.

Remember that HVDC doesn�t lose effectiveness when submerged, unlike AC transmission. Remember also that renewables are more and less effective in different places, often different places than the people who need the electricity. And remember that offshore wind energy has one of the highest capacity factors available, with 50% as a usual number and 60% not unusual.

When HVDC pays for itself with lines 50 km long, the HVDC revolution of cheap transformers and effective breakers starts to look like a miracle.

So that�s HVDC and why the electricity you use will increasingly come through HVDC transmission. It gets more power delivered over longer distances, it�s increasingly economically viable, it works better underground, it works better underwater, it can dodge NIMBYs, and it reduces the challenge of variable renewable generation. It�s one of the top innovations in the world of electricity, and it�s coming soon to a grid near you.

Future articles will look at specific projects, take a closer look at the economics, and explore some of the factors touched on in this article in greater depth. The set of innovations that have led to HVDC transmission being increasingly competitive and effective in places where AC is less effective are going to enable greater growth of renewables globally.

As one last data point, China�s State Grid Corporation has seriously put forward the idea of building a global HVDC grid to tie all of the wind and solar power in the world together by 2050. The potential for low-loss, long-distance movement of electricity is enormous. The larger the grid, the less storage will be required. more

ABB achieves breakthrough with world�s most powerful HVDC transformer


ABB writes next chapter in electrical history as transformers and key equipment for world�s first 1,100 kilovolt (kV) project in China pass stringent tests

ABB has set another pioneering innovation record with the successful testing of the low and high voltage units of the world�s most powerful ultrahigh-voltage direct current (UHVDC) transformer. The +/-1,100 kV (1.1 million volts) UHVDC transformer, developed and manufactured in close collaboration with State Grid Corporation of China (SGCC), has successfully passed a series of type tests, paving the way for the implementation of the Changji-Guquan UHVDC link, which will transmit power from the Xinjiang region in the Northwest, to Anhui province in eastern China.

Changji-Guquan, the world�s first +/-1,100 kV UHVDC link will set a new world record in terms of voltage level, transmission capacity and distance. It will be capable of transporting 12,000 megawatts of electricity - the equivalent of 12 large power plants and 50 percent more than the +/- 800 kV UHVDC links currently in operation. Transmission distance will be extended from around 2,000 kilometers (km) to over 3,000 km, enabling the integration and transmission of remote renewables on a much larger scale.

When fully operational this UHVDC link will be able to feed eight 500 kV and two 1,000 kV AC lines � delivering power equivalent to twice the average annual power consumption of Switzerland. ABB�s latest breakthrough also makes it possible to connect +/-1,100 kV DC with 750 kV UHVAC links for the first time. In addition to the transformer, ABB has also developed and successfully tested a range of other key +/-1,100 kV components, including converter valves, bushings and DC circuit breakers.

�In addition to transporting more power across longer distances with lower losses, this breakthrough will enable the interconnection of AC and DC grids and support the future linking of regions and countries.� said Claudio Facchin, president of ABB�s Power Grids division. �It reinforces our pioneering technology leadership in HVDC transmission and reaffirms our close collaboration with SGCC, as we enable a stronger, smarter and greener grid�.

�The Changji-Guquan +/-1,100kV project is a major technical step-up making it the world�s highest DC voltage. The transformer is a key element of this link and we are pleased that the first of these landmark transformers have passed critical tests and exceeded expectations. I would like to congratulate the teams from ABB and SGCC on this successful achievement� said Mr. Liu ZeHong, Executive Vice President, SGCC.

China has major consumption centers in the east, while a significant amount of its energy resources are in the west and northwest. The expansive geography and increasing demand have prompted the build-up of ultrahigh voltage links to increase transmission capacity while minimizing losses.

ABB pioneered HVDC technology more than 60 years ago and is the global market leader with over 110 HVDC projects, representing a total installed capacity of more than 120,000 megawatts - around half of the world�s installed base. UHVDC transmission is an advancement of HVDC and represents the biggest capacity and efficiency leap in over two decades. In 2010 ABB supported SGCC with the Xiangjiaba- Shanghai project, the world�s first +/- 800 kV UHVDC link to go into commercial operation. more

Sunday, December 17, 2017

The sun STILL never sets on the British Empire

�If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.� ? Sun Tzu, The Art of War
I have been openly questioning, in sundry forums around the pixelsphere, why Rupert Murdoch and Fox News have never been treated the same way RT is being treated now--forced to register as a Russian agent of influence because of a flood of suspicions regarding to what extent RT is controlled by Russian intelligence, or even Putin personally. Why have Rupert Murdoch and Fox News never been even considered as British agents of influence? I should have seen it coming, but I did not, yet come it did, on--where else?--DailyKos. Someone informed me that I was wrong: Murdoch is not British, but Australian.

Well, OK, I should try to be more understanding that Americans have not really had first hand experience with the strict social and political hierarchy of Britain and the countries of the British commonwealth, and probably do not understand that Australia, when push comes to shove, is still under the thumb of the British monarch. The same is true for Canada and a bunch of other countries. The British monarch is head of state of 16 countries: Antigua and Barbuda, Australia, Barbados, Belize, Canada, Grenada, Jamaica, New Zealand, Papua New Guinea, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Solomon Islands, The Bahamas, Tuvalu and the United Kingdom. Note how many of these are hot money centers.

The head of government, usually the Prime Minister of the country, can be dismissed by the British monarch, usually acting through the monarch�s representative, the Governor-General. This happened in Australia in November 1975, after Prime Minister Gough Whitlam of the Australian Labor Party (ALP); began to prepare to break from the financial stranglehold of the City of London by reaching out to the Saudis and other oil states for financing. Governor-General Sir John Kerr dismissed Whitlam as Australian PM, and made the Leader of the Opposition, Malcolm Fraser of the Liberal Party, the new Prime Minister. This is still a really big deal in Australia. It created a constitutional crisis that is called "The Dismissal". A series of movies have been made about it, and a number of books published. In the national memory of Australians, it is comparable to Watergate for Americans.

When I started searching the internet to verify a few details (for example, I had forgotten the names of Whitlam and Kerr), I found controversy over The Dismissal has been rekindled in Australia by a court fight to force Queen Elizabeth to release to the public her private files regarding The Dismissal. The court case apparently was initiated by a scholar after she found a handful of extracts from Kerr's letters to the Queen's private secretary in Kerr's journals. According to an Australian Broadcasting Company posting:
A handful of extracts from Kerr's letters to the Palace quoted in his own journal show that from as early as September 1975, the Governor-General had raised the prospect of him sacking of the Government, and of his own dismissal by Whitlam. "The moment he set that out to the Queen she was already involved because the Queen from that point had options that she could take," Professor Hocking said. "One of the options was to alert the prime minister Gough Whitlam to the fact that the Governor-General was speaking about these very extreme possibilities ... Now, from all accounts she chose not to do that."
This past November, ABC posted an article on the anniversary of The Dismissal: The facts of the Whitlam dismissal are more important than ever.

1. The 'supply crisis' was actually overIn the weeks before Whitlam's dismissal, the Senate was frozen. The Liberal opposition were starving the government of funds by repeatedly deferring the vote on its money bills, creating a "supply crisis"... Kerr "ambushed" Whitlam, dismissing him just hours after he announced the Senate election.
I find this very interesting, because over the years I have seen a number of indications that Reagan's "supply side revolution" was prefigured by what Margaret Thatcher did to Britain. Of course, one possible reason is probably that Milton Friedman's ideas were nurtured by the Mont Pelerin Society of which Friedman was a prominent member. Of 76 economic advisers on Ronald Reagan's 1980 campaign staff, 22 were MPS members. Philip Mirowski has edited and written two excellent books on MPS, with excruciating details in how MPS has shifted both intellectual and public thinking on economics, labor rights, jurisprudence, and more. But while Mirowski listed many of the members of MPS, he never looked at the background of the British and other European members who were tied into the European royal families and establishments in one way or another. One of the founding members of MPS was British economic historian Sir John Clapham, who was also a senior official of the Bank of England. So, I wonder: was this parliamentary obstruction of the Australian national budget in 1975 a model for what the Republicans would begin doing in the United States on the issue of the debt ceiling?
2. Kerr's second dismissalAfter Kerr sacked Whitlam, the House of Representatives met in the afternoon. Kerr's newly-appointed prime minister Malcolm Fraser was defeated in a "no confidence" motion. Next, the Speaker of the House went to advise the governor-general that the House had no confidence in the Fraser government. Kerr simply refused to see the Speaker or receive the motion of no confidence. In short, he rejected the democratic role of the House of Representatives in the making and unmaking of governments.... 
3. Kerr believed he had a green light from Buckingham PalaceKerr's recently released papers show he was seeking advice on using the "reserve powers" to dismiss Whitlam long before was previously revealed. This included consultations with Prince Charles, the Queen, and the Queen's private secretary, Martin Charteris.... 
4. Fraser and Kerr were in secret phone contactFormer Liberal Senate leader Reg Withers recently revealed that Kerr had already decided to act against Whitlam in the week before November 11 and Fraser was aware. In utter disregard for our constitution and political conventions, the pair were in secret phone contact the week before the dismissal. Their deception around this was sustained for decades.... 
5. Two High Court justices secretly advised KerrIn an egregious breach of the separation of powers, Chief Justices Garfield Barwick and Anthony Mason advised how to dismiss a government. Kerr's papers show Mason secretly advised him for months leading up to the dismissal, and both during and after it. Mason even drafted a letter of dismissal for Kerr.
All very foggy and suspicious, isn't it? But if you really want to go exploring down some rabbit holes with some tin-foil wrapped around your head, I invite you to follow some links and learn about the Queen's private secretaries. According to Wikipedia, "The Private Secretary to the Sovereign is the senior operational member of the Royal Household of the Sovereign of the United Kingdom [and] is the principal channel of communication between the monarch and the governments in each of the Commonwealth realms. They also have responsibility for the official programme and correspondence of the Sovereign. Through these roles the position wields considerable influence."

The most recently retired private secretary is Christopher Geidt, Baron Geidt GCVO, KCB, OBE, PC, who held the post from September 2007 until this year is a former officer in the British military's Intelligence Corps. Some highlights of The Lord Geidt's career, according to his Wikipedia profile:
In 1991 Geidt and Anthony de Normann sued the journalist John Pilger and Central Television over the documentary Cambodia: The Betrayal in which they were accused of being members of the SAS who had trained the Khmer Rouge to lay mines. Geidt and de Normann accepted �very substantial� damages and all costs.[5] In a related libel action Ann Clwyd MP, then shadow minister for overseas development, issued a public apology to Geidt and de Normann and agreed to meet all legal costs.... During and after the war in Bosnia (1992�1995), Geidt was the British military liason with the Bosnian Serb leadership, including Radovan Karad�ic, Momcilo Kraji�nik and General Ratko Mladic, all later indicted for war crimes.
Kerr's dismissal of Prime Minister Whitlam was not the first time an agent of the monarchy removed a head of government. In May 1932, Jack Land, the Premiere of New South Wales was dismissed by Royal Governor Philip Game. And get a load of the reason:
Early in 1931 Jack Lang released his own plan to combat the Great Depression in Australia; this became known as "the Lang Plan". This was in contrast to the "Melbourne Agreement", later known as the Premiers' Plan, which all other State Governments and the Federal Government had agreed to in 1930. Lang believed that the Depression was essentially caused by overseas bankers who were greedy for even more money and that this deflationary plan would only secure their wealth.[citation needed] Key points of the Lang Plan included the reduction of interest owed by Australian Governments on debts within Australia to 3%, the cancellation of interest payments to overseas bondholders and financiers on government borrowings, the injection of more funds into the nation's money supply as central bank credit for the revitalisation of industry and commerce, and the abolition of the Gold Standard, to be replaced by a "Goods Standard," whereby the amount of currency in circulation would be fixed to the amount of goods produced within the Australian economy.
Besides the quiet but absolute power of the British monarch, most Americans have no idea of how the British empire has been reorganized and pretty well camouflaged as a network of interlocking multinational corporations, investment banks, and insurance companies. This network not only ties together the British monarch with the British oligarchy, but it also extends their influence into very important corporations that are not British, such as Goldman Sachs.

Back in the late 1980s, I was working on a project that was trying to map out who controlled the world's finances and natural resources. There were a number of Australian and Canadian companies that were actually just fronts for the City of London (which means the financial elites of Britain, just like �Wall Street� denotes the financial elites of USA) and various British and European oligarchs. One of the most important was Broken Hill Proprietary, HQ�d in Melbourne, and known today as BHP Billiton. It is the world�s largest mining company, and together with  another nominally Australian company, Rio Tinto Zinc (today Rio Tinto Group) and Glencore (a British-Swiss group which controls what used to be the nominally Canadian mining company Noranda) exercises almost monopoly control over a number of resources such as lead, zinc, bauxite, copper, and tin. 

In other words, the British Empire never really ended. It has merely taken on a new, corporate appearance. In the 1980s, control was exercised through interlocking directorships and management positions. The other big multinational companies that were tied in at the time were British Petroleum, Royal Dutch Shell, Cadbury, Nestle, Unilever, Anglo American DeBeers, Imperial Chemical Industries, Lonrho (London Rhodesia Co.) and a few others I can�t recall off the top of my head. Almost all the directors and CEOs were �Sir�s and �Lord�s as I recall.

The whole monster was interlocked with the major financial institutions in the City, with some connections to Wall Street as well. Barclays, Barings, Lloyds of London, Standard Charter, and HSBC (Hong Kong and Shanghai Bank Corp.)  are some I remember. Some of these have died off in the financial collapses of the past few decades, such as Barings.

A couple years ago, I poked around in the boardroom of HSBC. Here are very brief profiles of just a few HSBC directors:
  • Jonathan Evans, Lord Evans of Weardale, former Director-General of the British Security Service, the United Kingdom's domestic security and counter-intelligence service. You really think this guy does not know what HSBC is doing while he's a director? 

  • Joachim Faber, CEO of Allianz Global Investors from 2000 to 2012, and is chairman of the German Stock Exchange Group since May 2012. Allianz is the world's largest insurance company. In April 2001, Allianz bought 80 per cent of Dresdner Bank, the largest bank in Germany. 

  • Sir Simon Robertson, former Chairman of Kleinwort Benson, which has historically been used by top British elites, particularly for off shore banking. Kleinwort Benson was a pioneer in privatisation: it was the lead adviser on the privatisation of British Telecom which, at the time in 1981, was the largest public offering ever. In 1995, Kleinwort Benson was bought by Dresdner Bank. Sir Robertson was also President of Goldman Sachs Europe. 

  • Jonathan Symonds, CBE, former Chief Financial Officer of Novartis AG, the Swiss company which is the largest pharmaceutical company based on sales. Symonds was was a Partner and Managing Director of Goldman Sachs in 2007-2009. 

  • Janis Rachel Lomax was Deputy Governor of the Bank of England from 2003 to 2008.
And here is a useful summary of the richest oligarchs of the British establishment:  The 15 aristocrats who are richer than the Queen. Note how many of these oligarchs are of families that have held power and wealth in Britain for centuries, and how much many millions of acres in London and Britain they own.  This is what Republicans are going to create in USA by eliminating the estate tax. Why are they even called the "Republican" Party? They're the Oligarchical Party.

Not much has changed. A few years ago, the computer model built by the Swiss Federal Institute of Technology showed that Barclays PLC is the most connected and powerful of the multinational corporations in control of the world economy: Revealed � the capitalist network that runs the world, 19 October 2011.

And this is a very useful report: Perpetual Decline or Persistent Dominance? Uncovering Anglo-America's True Structural Power in Global Finance. The misuse of NZ companies, Part III. Backdoor access via the UK - a classic cross jurisdictional regulatory arbitrage play Hiding in Plain Sight, how UK companies are used to launder corrupt wealth

Climate Grief

Below is a pretty good description of what the author calls "climate grief"�the crushing realization that everything at all lovely...