09 December 2010

Paying It Forward Is an Important Concept in Creating a Gifting Mentality

In the mid-90s my thinking of, and realizations about, Spiritual Economics led me inescapably to the gift economy and I began to think about how to get it going. I came up with an idea that I called “Free-for-All” that would use a website to connect people who had needs with others who wanted to give. What ever came of that? Well, for several reasons, which I won’t go into here, that never manifest. But the idea of the gift economy must have been in the ether because there were many others who were thinking similar thoughts and were beginning to manifest their ideas successfully. One of them was Catherine Ryan Hyde’s ‘Pay It Forward’ that first came out as a book, then as a movie in 2000, which subsequently has given rise to a movement with this unexpected gifting idea. There was also Nipun Mehta who came up with a group called Charity Focus in 1999, which later generated the Karma Kitchen as an experiment in spawning the gift economy. 
The other day I spent some time looking again at the website of Karma Kitchen, viewing some of the videos, and visiting the links on the site of other people/groups who had started feeding others in the spirit of the gift economy. I noticed a glaring omission: there was no mention of, or link to, the Hare Krishna Food-for-Life program, or the Sunday Love Feasts held in more than 400 temples around the world each Sunday. So I wrote to Nipun Mehta, the founder of Charity Focus and the Karma Kitchen to suggest that the Hare Krishnas be added.
Before getting to his reply let me tell you a bit about him. This is one amazing fellow who has many great ideas for practicing and promoting the gift economy. Actually, let me have him introduce himself. Here is a bit of his story from his blog:

Manifesting Gift Economy

To know about the projects of CharityFocus is to first understand the values underneath it. To that end, Tao of CharityFocus is a published essay from 2007, this impromptu talk at Stanford in 2008 shares stories in video, and Generosity 2.0 is a published article from Winter 2009.
In April 1999, CharityFocus formally started with the idea of gifting our time. We built websites for nonprofits. Couple years later, we took on a for-profit dot-com (PledgePage) and a non-profit in India (ProPoor) and realized that we actually had institutional capacity. Soon, as websites matured, we stretched our capacity to include vertical portals -- like HelpOthers.orgthat spreads kindness. We also started gifting Smile Cards, our first entry into tangible goods. As our ecosystem evolved, in 2008, we adopted a magazine that profiled conversations with social artists -- works & conversations. Later that year, we also started running a restaurant (for Sunday lunches) called Karma Kitchen. As CharityFocus became an incubator for "gift economy" projects, it became clear that this wasn't the work of an organization, but rather an ecosystem with many interconnected parts. Today, with 300 thousand members, the CharityFocus ecosystem sends out 50 million newsletters every year and attracts millions of users worldwide.
Wow! Nipun, and the people he leads, are building a wonderful future. What I like about them is that they are doing things to make others think about giving forward. Not giving because somebody has given to you, as in giving back, or paying back, which is somewhat a normal part of our culture.  However giving forward shifts the focus to make us think about doing something nice for someone else as a gift. After all, that is the idea of a gift economy: what would you like to do for others? What can you give to others without being asked? Everyone has something to give. Hah, we have many things to give, and many ways in which we can give of ourselves. (Hence there is no such thing as poverty in a gift economy). If enough people in the same place simply focusing on giving their talents and abilities an entire economy erupts without even trying.
This was the way of the Kwakiutl, and other natives of Vancouver Island, and the Pacific Northwest. They celebrated the tradition of the Potlatch, which was a competition in giving. For months the members of the group would work to create and accumulate wealth, all for the purpose of giving it away—and not on a quid pro quo basis. There was no consideration of paying back, but only paying forward. Those who gave the most were held in the highest esteem. Not only were goods given, but sacred ceremonies, song, dance and other activities of cultural wealth were offered as well. The status of families was raised not by who has the most resources but by those who give the most resources. Wouldn’t you know it but the Potlatch was made illegal in Canada in 1885 and the United States in the late nineteenth century, largely at the urging of missionaries and government agents who considered it “a worse than useless custom” that was seen as wasteful, unproductive, and contrary to “civilized” values. It’s so sad to see how the European’s, so infected with the qualities of rajas and tamas (the modes of passion and ignorance) imposed their inferior ideas of cultural superiority on the natives. Fortunately the laws were untenable, although they remained on the books until 1951. Currently these indigenous people are working to restore their original culture and the traditions of the Potlatch.  
Back to our email, Nipun replied:

Dear Dhanesvara Das,

Thanks for your wonderful, and thoughtful note. 
I am indeed aware of the awe-inspiring work of feeding people that Hare Krishnas have done, around the globe.  Please accept my heartfelt gratitude and a bow for your selfless offerings.
Karma Kitchen isn't exactly in the same category of free kitchen, in the sense that there is an expectation for people to pay forward for the person after them.  But in doing away with the “me-and-mine” transactional orientation, the hope is that people will deepen in sensitivity and shift to “we-and-our” orientation.  Then, over time, such context can become the foundation for a society where people can give freely.
With smiles, :)

Nipun’s reply is helping me to realize that the transition to a gift economy needs to be built step-by-step. It’s a lesson that I have learned in my own setting, with the Hare Krishna devotees in E. Europe over the past 5 years. One of the objections I hear about my efforts to build Gitagrad communities is that “Dhanesvara wants to build communities of pure devotees.” Well, yes that is true. Gitagrad is actually a place for those who are freed from the consciousness of “I and mine” and who desire to perform every action for the pleasure and satisfaction of the Supreme Lord. Gitagrad is also for those who want to go in that direction, recognizing that as the highest goal of human life, and qualification for entering into the highest realms of the transcendental world, Goloka Vrindavana. And I believe that the devotees can come to that wonderful standard if we create the proper environment for it. It is not too difficult for those who live in the temple ashramas, and many of us have done that. The idea of Gitagrad is to expand the ashrama to include all of the ashramas, especially the grihasta and vanaprastha ashramas. In doing so we free our members from having to live a life of fruitive work which is repeatedly condemned in the Bhagavad-gita. Without having an alternative economic system, such as is available from the earth, it is impossible to give up the ways of the dominant culture and the fruitive work and mentality that is part and parcel of it.
Nipun is also right in his evaluation of our Food-for-Life and Sunday feasts as being “free kitchens.” Although donations are welcomed there is no effort to make the guests feel that they ought to give, or are obliged to give. Or if there is a consciousness of that, it is in the spirit of reciprocation, of giving back, not forward. And in that change of words, from back to forward, lies a significant shift of consciousness. It is that shift in consciousness that is needed to create a gift economy and a culture. I thank Nipun for making me aware of the subtle difference, and the methods that can be employed to give birth to the gift culture.
Please visit the links from his blog to learn more about the activities of CharityFocus.

22 November 2010

Quantitative Easing Explained

So much grist for the mill and I haven't been able to get online for the past week. Sigh. Everybody and their brother is saying that QE2 will go the same way as QE1 -- destroying the world's economy. Well, the story doesn't change, only more chapters are added taking us to the conclusion we all know is coming. But I have already told you that. Didn't I? (I'll look in the previous posts and if I don't find it there I will post it again).

The following video explains in simple terms exactly what the Bernanke Fed is up to (and it ain't good)(but we already knew that, right?) Have a good laugh, and then maybe a good cry. After the emotions have passed and you want to figure out what to do, read my book "Spiritual Economics." It explains the source of our economic problems and their solution. No kidding!

29 October 2010

In Memoriam

Joan Veon
May 17, 1949  --   October 18, 2010

Joan Veon was a rare and wonderful person who worked hard to bring truth and the reality of this world to others. We are sorry to see her pass on at such a young age, and we will surely miss her and her work. 
As a reporter Joan covered major international meetings for more than 15 years. Straight from the horses mouth she learned about the efforts to create a global government and regularly explained, as no other economic writer has, the road map that the world was following to get there. Her articles appeared on News With Views, Jeff Rense's website, and others. Google her, and read her. You will learn a great deal.
Just to give you a taste of her insights and understanding I have copied below an article she wrote describing clearly where the global economic policies are meant to take us. Joan had some sense of spiritual economics because she repeatedly wrote that in order to solve the challenges of this world we must pray!

Moving The World Toward A Global Tax And Currency 
By Joan M. Veon, CFP

This economic newsletter is going to be perhaps, a bit different from the others that I have written. It will be personal, economic, and political. Many of you know that I have been covering high level global meetings for eleven years (September 3). You may or may not know the story behind this activity, which has been all consuming. I would like to share it with you, as an introduction to this newsletter and to the activities and agenda of the last two global meetings that I covered: the 75th Anniversary of the Bank for International Settlements in Basle, Switzerland and the Group of Eight meeting in Gleneagles, Scotland. MY STORY
While everyone has a story, this is mine. When I was growing up, I was told to make a list of what I wanted to do and accomplish in life, which would provide direction for me, as I worked towards those goals. I never made a list. When I ended up in business, I was told to make a list of my 12 month and five year goals. I never did. Instead, I relied on God to lead and direct me. While my life has had a number of twists and turns, many of which I never planned or looked for, I believe I am where I am supposed to be.
When I was sixteen, I read a book which told about a time in which there would be a world governmental on the earth. I was fascinated with the idea that I could be living in a time in which a world governmental system, like the Roman Empire, would come into being. From that point on, I started to pay attention to world events that could lead to such a system. About fifteen years ago, I purchased the business book Euroquake by Author Daniel Burstein, which gave "Over 100 specific predictions for economic and political change in the 90s." I was fascinated by Burstein's four pages of acknowledgements in which he talked to almost everyone in the world from world leaders, to CEO's, to people throughout the UN infrastructure, leading economists and experts from the world's leading think tanks. As I read Burstein's book, I was fascinated by the concepts he put forth. There would be a new global order, where corporate power would rule, while governments set the agenda. Three types of capitalism would compete: the Anglo-American brand with its roots in English speaking countries and the Industrial Revolution; the Japanese/Asian model with its cultural roots in Confucianism; and the German/European model with its "social market" philosophy. America would be the "odd man" out. Additionally, there was his key thesis: the rise of Europe and European power, which would trump America.
Now that his book is fifteen years old, I think he was really off on a number of his predictions, but right on many others. Of his predictions, the one that hit home was #95, "A new global currency agreement will be hammered out between 1995 and 1997 [in which there] will be a massive devaluation of American assets roughly analogous to fixing today's exchange rates at Yen = 105 = $1.00 and DM1.2 = $1.00" (p.347). As I read this, I was shocked by the amazing fact that he was describing a global currency. My goodness, you do not have a global currency unless you have a world governmental system. This understanding took me back to the book I had read when I was sixteen. Since I did not know what kind of form a world governmental structure would have and did not think there was any kind of structure like that in 1990, I began asking God to reveal to me if there was such a system anywhere on the planet.
In 1994, I was challenged by a good friend of mine to go to Cairo to attend a United Nations conference on reducing the population of the world. I bulked at the idea, but, then I found that the World Bank and the International Monetary Fund were going to be there. Since I wrote this economic newsletter which covered the value of the dollar, I went to Cairo to look and see what was happening on the international level. The only thing I knew about the United Nations was the name "UNICEF", since I had collected for the poor children of the world when I was a Brownie (The children are still poor and now the reason for global tax). What was the United Nations? What was the purpose of these global meetings and what did it mean to me? The only way you could get into a UN meeting was to go as a reporter. So, for the first time ever, I became a reporter. When I arrived in Cairo, I was shocked and amazed at the people, the organization, the structure, the agenda, and the politics involved. In the press briefings that the United Nations held, I had a problem. While they were using the English language, their words and the meaning of their words appeared to have a different meaning than how you and I would use them. At the end of the day, I would go back to the hotel room and transcribe the meetings, so as to get a closer understanding of what was really happening.
It was about 3:00 a.m. on the third morning that it all came together. It finally dawned on me that what I was seeing on the international level was world government! I was shocked. Here it was right under my nose. While there is much I that could tell you about that meeting, I came home angry"where were the conservatives to hold back world government, since it was a democratic administration that was supporting it? I also brought home a suitcase full of material"magazines, documents, speeches, and pamphlets that I had picked up. My goal was to find out how big, how vast, and how far advanced this agenda of world government was.
For the six week following my return from Cairo, I was like a mad woman, pouring over all the documents to determine the agenda and what it meant for me and my clients. I only found one article that told me the United Nations was going to present the idea of a global tax at another conference in six months. My goodness, that was it--you don't have a global tax unless you have a global government. Shades of Daniel Burstein! In addition, I saw from the newspaper reports, when I returned home, that there was hardly anything of a serious nature that really described what went on at that meeting and what it meant for you and me. It was then that I made a commitment to cover as many meetings as I could in order to report to the American people about an agenda that would weaken our nation's sovereignty and change how we lived socially, politically, financially, and personally. I went to the follow-up meeting in Copenhagen, where I confronted the United Nations with the idea of global taxation and the amount of money they wanted to raise from their suggested global taxation schemes. Since then I have covered 70 global meetings around the world as an independent and free-lance reporter.
Those meetings include: trade, economic, peacekeeping, UN mega-conferences on the environment, social issues, food, and zoning, General Assembly meetings, the International Criminal Court, and many others. I have interviewed presidents and prime ministers, key officials throughout the United Nations system, CEO's, economists and leaders of think tanks.
Throughout the last 11 years, I have reported on the structure of the world government that has been put in place above the nation-state. I have written about it a number times in this newsletter and, now again, in this issue, where we will track the evolution of a world governmental structure, a global tax and a global currency. In the past, when I spoke of these things, people would look at me as if I were from Mars. Well, I am not from Mars and these things need to be discussed and understood in order for you and me to make the best decisions that we can for our future. This is not the time to stick your head in the sand but to confront a growing reality about the changing value of the world's monetary system!
In June and July, I covered the 75th Anniversary of the Bank for International Settlements in Basle, Switzerland and the Group of Eight heads of state meeting in Gleneagles, Scotland. In order to set the background for these very important issues, we will start with President Nixon's decision to take America's currency off the gold standard.
Off the Gold Standard
It took two major moves for America's dollar to be separated from the gold standard. The first step was taken in 1933 by newly elected President Franklin Roosevelt, whose first act as president was to close the banks after a number of runs had occurred. Americans, concerned about our financial system, ran to the banks where, under law, they could withdraw their savings in gold because our currency was convertible at any time. Then, one dollar had 0.77 troy ounces of silver or 0.048 troy ounces of gold backing it. Today, only the "full faith of people" backs our paper monetary system. Because of the bank run, Roosevelt ordered the government to confiscate all personally-owned gold with the exception of rare coins. Today, you can still find people who remember the government knocking on the doors of their parent's home to collect the gold they withdrew.
For a specimen of the U.S. $10 gold certificate, Series, 1922, please send $15.00 payable to Veon Financial Services. If you would like a wonderful hardback book on the history of MONEY by James Ewalt, please send $55.00, also payable to Veon Financial Services, Inc. This book has been purchased worldwide by key monetary authorities. In order to understand the level of power that you and I have as individuals, we need to understand the power of money. As many of you know, because of our trade and federal deficits, the value of the U.S. dollar has been dropping against other currencies for the last two years. What this means is that the purchasing power of the dollar is diminishing, and it takes more to live than it did before.
While the value of the dollar has been declining since 1973, as a result of the birth of the euro, it now has another currency for people and governments to purchase as an alternative to the dollar. In the September newsletter we will discuss the new moves of the Chinese with regard to the failed Unocal bid and the new "Cold War" that is brewing between the U.S. and Russia, as Russia is going to back their ruble with gold and challenge the dollar. Today, with the rising price in oil, the sale of oil is only transacted in dollars. Now, between a gold-backed ruble and other countries switching to the euro, our economic hegemony is being seriously challenged.
When the euro was birthed on January 1, 1999, it had a value of 1.16 euros to the U.S. dollar. Shortly after its birth, it fell to a low of .80 euros, which meant the dollar could buy 30% more in goods from Europe. Today, however, instead of getting 1.3 euros for one dollar, American's are only receiving .75 euros to the dollar. What this means is that we cannot purchase what we used to in Europe, but must pay 55% more for those same goods. What are we describing? A floating currency is a currency that is not supported by a tangible asset. It is a currency that can be changed in value at a whim by those with great financial assets, like the Rockefellers, Rothschilds, Kuhns, Loebs, Schiffs, and Buffets. Before Nixon's actions in 1971, our dollar had a supporting tangible that gave it not only value on the day you wanted to cash in the gold but a STORE OF VALUE"meaning its purchasing power stayed the same over time. America could only import goods according to the amount of gold we had. For every trade deficit, a corresponding amount of gold was transferred between the countries involved, and there was no such thing as a trade deficit!! Furthermore, the value of currencies held their value with the dollar being the strongest currency in the world. On August 15, 1971, President Nixon took the second step in closing forever any link the dollar had to the gold system when he refused to convert requests by foreign countries, which were holding gold backed dollars in their vaults, to exchange U.S. gold-backed dollars for gold. For the first time in the entire history of money, the system of money was de-linked from a tangible. In the past, early Middle Eastern traders used gold and silver, jewels, expensive clothing, and animals as forms of currency. Today, the world monetary system uses a SYSTEM IN WHICH THE VALUE OF THE RESPECTIVE CURRENCY CHANGES, ACCORDING TO SUPPLY AND DEMAND, POLITICAL ACTIONS AND OTHER WHIMS. In other words, you can never be certain as to the amount of money it will take to live or to purchase a specific item or commodity. Uncertainty has now become the rule of the day as our financial sovereignty is gone.
In order to create "currency harmony", the dollar has been devalued to bring it in line with the currencies of other countries. Through concerted efforts by the Group of Seven finance ministers, the dollar had an "orderly reversal" in 1985, when they met in New York City at the Plaza Hotel. There, they agreed that the United States should deliberately weaken the dollar relative to other currencies. Their reason for doing so was that the dollar was the strongest currency in the world and they said they wanted to make our products more affordable to foreign countries in order to reduce our trade surplus (Sound familiar? Their economics is off because they are saying the same thing today, except that, this time, the need to devalue the dollar is because we have a huge trade deficit.) In other words, we the people have a declining purchasing power because of these kinds of actions. As a result of the above referenced Plaza Accord, between 1985 and September 1986, the dollar dropped 40% against the yen and Deutsche mark. To understand the change in the purchasing power of the dollar, one dollar was worth 3.65 Deutsche marks and 3.55 Japanese yen in 1975. Today, the dollar will only buy .75 euros (the Deutsche mark was replaced by the euro) and 1.11 yen! Talk about an orderly reversal! This is a 70% loss in the purchasing power of the dollar. Does anyone want to have a tea party? At the most recent Bank for International Settlements meeting, they called for (another) "orderly reversal." Also in 1985, America became the world's largest debtor nation for the first time in its history since it is that year that we started to import oil.
Because our currency is no longer backed by gold, our government can print all the money it wants to support its spending habits without worrying about being accountable. For example, in 1995, there was $380B in U.S. currency in circulation. As of April, 2004, there is $700B in circulation! The classic definition of inflation is "too much money chasing too few goods." It appears that the inflationary spiral is not in the process of being squelched but really is only just beginning. In the last five years in many major cities across the U.S. the cost of home ownership has doubled! Compare this to 1970 when a three bedroom 1,500 square foot brick home in the Washington, D. C. area sold for $32,000. Today, my former home which I am using as an example, is selling for over $500,000. This is an increase of $468,000 over 35 years or an increase of 7.89% PER YEAR. When, in the last ten years have you heard that the inflation level was over 7%? You have not. The government has changed how they measure inflation to confuse the minds of men. The core inflation rate today measures the cost of renting versus home ownership! Currently, across the country the median price of existing home is $219,000 which is 14.7% higher than a year ago. While Western states posted a 17.4% increase in existing home prices, the Northeast saw 13.6% gains, while the Midwest saw 12.7%. However in San Francisco, the median price is $750,000. There, 61% of the buyers had to resort to interest-only loans, while only 18% were able to use a conventional 30 year fixed rate loan (Washington Post-WP, 8/14/05, Parade section).
The Federal Reserve Bank
Many people know that our banking system is run by a private corporation called the Federal Reserve. This private corporation was birthed by an inner circle of senators, who stayed on after those who were opposed went home for Christmas. The Federal Reserve Act was passed in 1913 at 11:45 p.m. on December 24. The U.S. joined a host of other countries such as England, Japan, Italy, France, Germany, and Switzerland that already had private corporations, also known as central banks. You and I would be a bit naïve, if we thought that all these central banks had different owners. As such, the Federal Reserve does not publish Annual Reports and their meetings are kept secret for several months. When Fed Chairman Alan Greenspan goes to Capital Hill to testify, it is Greenspan who has the real power and not the congressmen and senators. Mr. Greenspan and other central bank managers meet on a bi-monthly basis at the Bank for International Settlements in Basle, Switzerland, where they basically determine the fate of every country economically.
The Bank for International Settlements was set up in 1930 and was part of a plan by an American, Owen Young. The Statutes of the BIS state that its purpose is to "promote the cooperation of central banks." The founders of the BIS "wanted to provide an increasingly close and valuable link in the cooperation of central banking institutions"a cooperation essential to the continuing stability of the world's credit structure'" (Central Bank Cooperation at the Bank for International Settlements, 1930-1973 by Gianni Toniolo, 1). As reported in many previous economic newsletters, Dr. Carroll Quigley who was Bill Clinton's mentor at Georgetown University wrote in his 1,340 page tome, Tragedy and Hope: [T]he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at frequent private meetings and conferences.
The apex of the system was to be the Bank for International Settlements in Basle, Switzerland a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world. The B.I.S. is generally regarded as the apex of the structure of financial capitalism whose remote origins go back to the creation of the Bank of England in 1694 and the Bank of France in 1803 (p. 324).
The Bank for International Settlements I have had the privilege of covering eight Bank for International Settlements annual meetings, since 1997, with the exception of 2004. During that time, I have interviewed on an annual basis the head economist. I have had numerous interviews with the managing director of the Financial Stability Forum and an exclusive interview with the new BIS Managing Director, Dr. Malcolm Knight, in 2003. I find it interesting that the theme of this year's annual report was on "disturbing patterns of uneven growth worldwide." While the BIS cites household debt at historic highs and low savings rates in America, as opposed to other countries of the world, the report concentrated on the "disturbing patterns of uneven growth." The BIS cited three cycles of highs and lows. The first began in the 1970's, when the dollar was taken off the gold standard. Head economist, Mr. Bill White told me that the change in the gold standard was very important in world affairs. The second cycle began in the mid-1980's, ending in a property bust; and the current cycle began in the mid-1990s. All Americans should be concerned about this report, as the world's bankers are signaling the end of the third cycle, which can only mean higher interest rates, as they withdraw money from the banking system. This comes at a time of higher oil prices which only enforces the inflationary spiral. It is the BIS that has created the uneven cycles of growth. With a floating currency system of PAPER, you can do whatever you want. If you have a great deal of money you can create the highs and lows of any countries currency just by buying or selling it. Heaven help all of us!
Furthermore, household savings is not evident in the U.S. to the same extent that it is in the Asian countries. World national savings rose to 25% of Gross Domestic Product or about 1% point more than the annual average rate for the decade. This was due to the higher savings habits in the developed world, and in particular, China where savings rose 48%. High debt-to-income ratios and low savings in the U.S. do not bode well for Americans. Furthermore, the U.S. and China accounted for half of the world's growth, the euro area and Japan have much slower growth, and they stated that the prospect of reducing America's fiscal deficit is not encouraging. Citing concerns over disinflation, the BIS stressed the need for interest rates to rise in order to slow consumer spending. Mr. White explained, "The time has come for a measured withdrawal of the stimulus that has been put into the [economic] system." What he is saying is that it is time for the Fed to withdraw some of the huge amounts of money that it injected into the banking system that created 45 year low interest rates.
Now the U.S. is in the process of another "orderly reversal." The Federal Reserve has increased interest rates TEN TIMES in 4 months to 3.5%. Currently prime rate is 6.5% which is the highest in four years. By the end of the year, prime is expected to be at 7.25% which means three more point increases. With this increase, the fed funds rate is now back to the level prevailing before September 11, 2001. The Fed cut the rate to 1 percent by mid-2003 and started tightening in June 2004.
Lastly, the Annual Report stated that the "underlying issue seems to be that we no longer have a system that somehow forces countries to alter their domestic absorption and associated exchange rates, so as to reduce external imbalances in an orderly way." It should be noted that with a floating exchange rate there are no ways for any kind of adjustment, as there was under the gold standard. Global or Regional Currency
The BIS recommended what several academics have suggested by way of establishing a single international currency or, perhaps. moving to regional currency blocks, such as the dollar, euro, and renimbi/yen. (This is the first time I have seen renimbi and yen tied together. What it indicates is the growing power of the renimbi over the yen. )
History of Global or Regional Currency Amazing! Why is the Bank for International Settlements talking a global or regional currency, but ABC, NBC, CNBC, The Wall Street Journal and The Financial Times are not? Since I subscribe to The Financial Times, I was surprised that the only thing it reported was Bill White's comment about "an orderly reversal."
As mentioned earlier, the first time I had any kind of understanding of a global currency was by reading Euroquake in 1990. Furthermore, Burstein talked about the "Triad" the three spheres the world was going to be divided into, which mirror the types of capitalism: North America, Japan/East Asia, and Europe. As such, Burstein is the one who helped me to understand that the world was already divided up into three major currencies: the dollar, the Deutsche mark"now replaced by the euro, and the yen, now, described as the renimbi/yen.
I remember being at an international financial meeting in Boston in 1996 in which the head of IBM-Asia discussed the fact that we already had a global currency, and went on to give the values of those currencies which were at the time within 10% of being equal. It was not until June 30, 2003 that I realized there was a concerted effort to move the world into a global currency, when The Wall Street Journal published an article entitled, "World Money at the Palazzo Mundell" by Robert L. Bartley. In the article Bartley described the 10th Santa Colomba Conference convened by Nobel Prize economist, Robert Mundell. The first conference was held in 1971, three weeks after Nixon severed the link between the dollar and gold. The theme of this conference was, "Does the Global Economy Need a Global Currency?" Those contemplating this question included former Israeli central bank minister Jacob Frenkel, former Argentine Finance Minister Domingo Cavallo, economist Steve Hanke, and former Federal Reserve Chairman Paul Volcker. The logic is "If the euro can replace the franc, mark and lira, why can't a new world currency merge the dollar, euro and yen? Since the three top central banks in the world are the Federal Reserve, the European Central Bank, and the Bank of Japan, that means a major reform of central banks into a supra-national central bank would also emerge. Furthermore, they suggested that it could be called the "dey" for dollar-euro-yen.
On September 30, 2004 I interviewed former Federal Reserve Chairman Paul Volcker who told me that a "globalized world needed an international currency." When I asked him if he meant the Special Drawing Right-SDR, which is a basket of currencies comprised of the dollar (0.577), Euro (0.426), Japanese yen (21) and British pound (0.0984) (amounts found on page 193 of the BIS 2005 Annual Report), the dear boy turned his back on me. Please realize what this meant. He is almost to seven feet tall while I am five feet tall! In an interview with BIS head economist, Bill White, in August, 2004, I asked him why the BIS was changing to the Special Drawing Right which is the currency used by the International Monetary Fund, instead of using the gold franc. He replied,
When the SDR was brought in, the hope was that the IMF would be able to generate more of these drawing rights and create a global money. This has not happened. The SDR has not gone anywhere in its own right. What happened at the BIS is a bit bizarre, but from a pure accounting issue, our accounts were presented in terms of gold francs, and this is the way they were described in the 1930s and this was the gold exchange standard in any event. When you define the gold franc it was really US$1.96. [The switch to the SDR is] purely an accounting convention"it in no way implies that the BIS is going to be creating SDRs and contributing to increases in global liquidity. Mr. White went on to describe the global markets:
One important aspect of globalization is the new "international reach of global banks." More business in emerging market countries is being done by global banks. As you get more and more of this global banking and integrated global markets, shocks in one part of the world now have impacts in other parts of the world that they did not have in the old days. It has become an "integrated global financial system" with the bank playing a very large role in it
At the BIS 2005 press briefing, I was the only reporter to ask about a global or regional currency. When I asked if the regional currency would be a stepping stone to a global currency, as suggested by Messrs. Mundell, Frankel and Volcker, BIS Managing Director Dr. Malcolm Knight told me:
The question you ask is not an easy one about r regional currencies. Global imbalances are a result of very high savings levels relative to investment levels in a number of emerging market countries and is what is allowing the very large current account deficit of the U.S. to be financed rather smoothly most of the time. What this means is that the policies and the changes in behavior that are needed to adjust these imbalances are real. We need a rise in savings in certain countries which have low savings. That can come partly from policies such as tax incentives to saving. I think that movements to regional currencies are a long run consideration.
Dr. Knight did not really address my question, but, he did lay the foundation for a change in the U.S. tax system, which would change the behavior of Americans with regard to savings. Personally, a value-added tax system would be the nail in the coffin for Americans, as it would return us to a feudalistic system of living. Furthermore, the government passed a major law in 1980 which basically allowed banks to pay the going rate of interest. Today this means they can pay 1-2% for savings and charge 21-25% for credit cards. Throughout the 1990s, a lot of money left the banking system and went into the stock market because people would rather take a risk on a higher return than leave their money invested at 1-2%.
What do we have here? Basically, the framework has been set in place for a global currency. The world has been divided up into three major trading spheres. The Americas, which encompasses the 34 countries in our hemisphere from Canada to the Tierra del Fuego in Chile. Most people are not aware of it, but America and our other 33 neighbors are about to be put into a trading zone like the European Union in which the dollar will be the prevailing currency used throughout this hemisphere. Furthermore, like the EU which has a European Parliament in Strasbourg, France, our "parliament" would be at the Organization of American States. Currently, Florida, Georgia, Texas, and I believe Costa Rica are vying for where the parliament would be located.
Within our hemisphere, how do you merge the dollar with the peso of Brazil, Honduras, Chile, etc.? How do you integrate 34 countries so that they are one? Our lawmakers for all 34 countries have been meeting throughout the last 11 years to merge this hemisphere into a new trading sphere. Already two smaller trading spheres have been approved by Congress: the North American Free Trade Zone-NAFTA, passed in 1994 and, the recently passed Central American Free Trade Areas-CAFTA. Let it be known these governing bodies do not and will not have ELECTED officials but APPOINTED officials, which is a great change from our Constitution of representative government. These changes and the continuing integration will have great implications for our financial future and the value and stability of our currency. Inflation steals the purchasing power of our hard-earned dollars. Living will become very, very expensive--much more than it is today. If the Special Drawing Right is the pattern for a global currency, which I believe it is, the transfer of all currencies to this basket will wreak havoc on all of us, in particular, the poorer people and countries. Add to a global currency, a global tax or a number of global taxes.
It was not until I covered the UN conference in Egypt in 1994, that I became aware of a plan to bring the world into a system of global taxation. I found that the United Nations had been working on ideas for global taxation for about ten years. In the 1994 Human Development Report, published by the United Nations Development Programme, it called for A New World Social Charter where the world will redistribute wealth as it cannot survive one- quarter rich and three-quarters poor, and where the United Nations must become the principal custodian of global human security and help with basic education, healthcare, immunization, and family planning.
To meet these goals, they put forth the concept of global taxation. Their suggestions included: a tax on the sales of arms weapons; a Global Demilitarization Fund funded by the savings countries would experience if they reduced military spending by 3% over a ten-year period; a global tax of $1 per barrel on oil consumption, a tax on speculative international currency transactions that has been dubbed the "Tobin Tax"; and a world income tax of 0.1% on the richest nations with per capita GNP of $10,000. When I totaled up the projected income from all of these taxes, it totaled anywhere from $350B to $1T a year. I asked key officials at that meeting why the world should give the UN this kind of money when their budget was only $10B? They had no real tangible answer. Now they do"the poor of Africa.
In 1990 the United Nations held a Millennium Summit at their New York headquarters. There the kings, princes, presidents and prime ministers agreed to the "Millennium Development Goals-MDGs". These goals include cutting in half the number of people living in extreme poverty, those who are hungry, and those who lack access to safe drinking water, providing and achieving universal primary education, reducing by 75% the decline in maternal mortality and 66% the number children dying before they reach five years of age, halting and reversing the spread of HIV/AIDS and providing special assistance to AIDS orphans, and improving the lives of 100 million slum-dwellers by 2015. The estimated cost to meet these goals is $66B by 2006 and $126B by 2015. You can understand that if the rich countries are going to pay for these goals, that it will add another layer of burden on the backs of taxpayers. This is known in socialism as a "transfer of wealth."
Over the years, the concept of global taxation has made its rounds. In 2002, it even had its own conference in Monterrey, Mexico. Global taxation then surfaced at the Spring 2004 IMF-World Bank meeting but they were not prepared to give details. Then at the 2004 Group of Eight meeting in Sea Island, Georgia, French President Jacques Chirac put the concept of global tax on the table. He said he would study it and return with specific recommendations. He did just that.
In Gleneagles, Mr. Chirac presented the leaders of the industrial world plus Russia with a solid proposal. The global tax scheme is called the "International Solidarity Levy (ISL)." It proposes a tax of $1-$10 tax on airline tickets. Since 3 billion airline tickets are sold yearly, the math would be pretty attractive. Countries in favor include Brazil, China, and Germany. This type of tax would be easy to set up versus the above referenced U.N. tax schemes as there are no international treaties which prohibit the creation of a flat tax on airline tickets since a number of airlines already have various types of taxes on airline tickets for airport renovation and the like. The rate would be personalized according to the level of a country's willingness with airlines collecting the revenues and passing them on to the respective government to supplement their foreign aid funds. In the final press briefing given by President Chirac, I asked him if there would be more global tax schemes like the tax on airline tickets if it works well and he replied that they had many other kinds of international tax schemes planned.
Two major concerns of mine when I started covering international meetings were global taxation and global currency. As you can see, we have come from the idea stage to the acceptance stage and soon, to the implementation of both. Furthermore, the G8 leaders last year gave their blessing to an international peacekeeping force for Africa which, when I questioned them, told me that these troops could be sent anywhere in the world. For those who still doubt the idea of a world government, I would ask why we need a global tax, global currency and global army?
Furthermore I would direct them to the UN website (www.un.org.) to spend some time researching all of its agencies, commissions, and organs. They will see that the United Nations is more than just a place where world leaders go to discuss their differences. It has become the center of an international framework of governance. You don't have a tax unless you have government. You don't have a global currency unless you are harmonizing currencies.
We have yet to feel the burden of both a global tax and a global currency. First there will be a regional currency in our hemisphere. The free trade zone for our hemisphere is called the Free Trade Areas of the Americas and it will open all the 34 borders between countries. The dollar will become the lead currency of choice. In time the people of this hemisphere will have representatives for their area at the forthcoming parliament of the Organization of American States. Once all the regions have a regional currency, then they can be merged into a global currency.
To understand the burden that we currently have, let us consider the findings of Kevin Philips, author of Wealth and Democracy who wrote about the affects of Reagan's tax cuts in the early 1980s. Mr. Reagan passed major tax laws in 1981, 1982, 1984, 1985, and 1986. The Economic Recovery Tax Act of 1981-ERTA reduced the maximum individual tax rate from 70% to 50% and the top tax rate on long term capital gains from 28% to 20%. While lower tax rates made the U.S. attractive for foreign investors as capital flowed into the U.S. from all over the world, it eroded the after-tax income of lower bracketed taxpayers. Phillips documents that as a result of Reagan's tax cuts, the tax rate of the median family rose from 5.30% in 1948 to 24.44% in 1985 while the millionaire level or top 12% dropped from 76.9% in 1948 to 24.9% in 1985. Basically, the burden was shifted to the median family.
Compound this picture with a value-added tax which Bush has proposed and is in the process of trying to get implemented, step by step. Now add continual inflation which is the printing of additional dollars to cover our growing deficit and the cost of war and energy. Am I being a "fear monger" or am I being realistic in what I see? It is incumbent for us to maximize our savings and our investments, whether they are in art, antiques, gold, silver, stocks or real estate. The September newsletter will concentrate on current structural shifts and the concept of maintaining purchasing power.
On a personal note, how do I cope with these concerns? I have to go to God to get His Wisdom. I don't believe He left us here to be at the mercy of powerful overlords when we can have peace in the midst of storm.

22 October 2010

Bob Prechter is Losing It! (and you can't blame him)

To underscore how ridiculous the entire the entire economic situation has become Robert Prechter, one financial analyst who actually understands what is going on and tells it like it is, appears to go loopy. In his column on The Market Oracle, on October 15, Prechter lambastes Michael Woodford, of Columbia University, who wrote what Prechter says is an "execrable and totally idiotic piece is titled 'Bernanke Needs Inflation for QE2 to Sail.'" Prechter goes on to say “he writes, unbelievably, ‘The Fed should allow a one-time only inflation increase, with a plan to control it when the economy recovers.’ Hahahaha!”
In excoriating him Prechter goes off the deep end with this:
Instead, he says, apparently anxious to show he has no idea what he is talking about and is ignorant of economics in general and the Austrian school of economics in particular, that instead of more stimulus, the Fed should "offer a credible, long term program to prevent the next inflation." Hahaha! Another plan!
Hahaha! A "credible program!" Hahaha! It makes you want to scream out, "And just what in the hell would be a credible program to get out of a monstrous monetary inflation that has been raging exponentially for almost 50 years, which produced the economic disaster of constant, simmering inflation and the suicidal growth of a giant, bloated, twisted and disgusting government-centric economy supporting half the population and a bizarre economy based on the continual financing of grubby, childish, insatiable final consumption, so that all debt in the USA now totals somewhere around $60 trillion (with the federal government having accrued liabilities of at least five times as much), and where the entire freaking GDP is only $13.5 trillion? Exactly what in the hell is a 'credible program' to reverse that kind of horrible, end-stage metastasized cancer? Hahahaha!"
In case you were wondering, as apparently Bigshot Economic Blowhards (BEB) wonder, the only "credible program" in an economy that relies exclusively on creating more and more money out of more and more debt, with which people buy more and more things and the government gives more and more money to more and more people, is different after these kinds of things have gone on too long (two weeks max), like this one that has gone on for Fifty Freaking Years (FFY)!
And caps it all by quite correctly explaining exactly what is going on:
So, if you see this Meltzer guy, you tell him that the Fab Fab Fabulous Mogambo (FFFM) says that "the most important restriction on investment spending" today is that all the customers are up to their freaking eyeballs in debt, staggering under the crushing weight of debt from two insane decades of the loathsome Alan Greenspan at the demonic Federal Reserve constantly creating more and more money to finance bubble economies in raw, naked consumption, insane speculative bubbles in stocks, bonds, houses, derivatives and the cancer-like growth of a treacherous, corrupt system of governments, from local to state to federal, as trillions and trillions of dollars were deficit-spent to add to the orgiastic deluge of tax revenues already pouring in, and then going right back out again as new spending, from the aforementioned bubble economies in stocks, bonds, houses and derivatives spawned by, at the root, the Federal Reserve creating the money necessary!
I got quite a laugh out of it, but if it wasn't so funny we would cry.
It all signals the end of an era, and it is quite easy to see what's coming. As you can understand by reading the above, the entire system is functioning on tamo-guna to the Nth degree. And the result of tamo-guna is what? Destruction. Dissolution.  
It's the destruction of the world's economic system (and likely social system) and it's going on before our very eyes. And the really incredible part is that most people are oblivious. What can be done? Even if they are shown in no uncertain terms what is coming there is nothing that the average person can do. So the result is cognitive dissonance. WHAT problem? Oh, the French? Well, that's how the French are! Why can't they work till 62? After all, the Americans go at it (if they are lucky enough to have a job) till 65! Oh, the Irish have a problem, or the Greeks have a problem. Well, hey what can be done? As long as it's not my problem.
Come to the Dark Side Luke
In any case The End is Near. Not a problem as long as we know that the end spells a new beginning. The real question is therefore, the beginning of what exactly?
I had explained that in a post here about a year ago, but then later took it down so that on this blog I could focus on the spiritual side of economics instead of the Dark Side. Well, the spiritual side doesn't actually fore go the dark side. It's all there in the Bhagavad-gita -- chapter 16 -- The Divine and Demonic Natures. In any case reality is too frightening for some so we have moved all of the Dark Side of our economic analysis to another blog exclusively earmarked for such topics, and it is appropriately named (guess) "The Dark Side of Economics." You can get there easily by going to my profile with the link on the right side of this page next to my photo. 
I'll likely make some references here to what is going on over there, but maybe not. So have a look over there if you can handle the truth.

17 October 2010

Apocalypse Now?

It is said in the Vedas that the people of this world live in illusion. Moreover, they create that illusion themselves by their own desires. Such an amazing place, this world. We all walk around with our unique understanding of reality playing in our minds, as if it were the absolute truth. So strong is that desire to stay in illusion that when we are confronted with the truth we resist it. “Don’t bother me with the facts, my mind is made up!” This was of course the theme powerfully portrayed in the film “The Matrix.” Here is my favorite quote from that movie:
“The Matrix is a system. When you are inside it, you look around and what do you see? Businessmen, Teachers, Lawyers, Carpenters. The very kinds of the people we are trying to save. But until we do, these people are part of that system. You have to understand that most of these people are not ready to be ‘unplugged.’ And many are so hopelessly dependent on the system, that they will fight to defend it.”
Although those words were spoken in a fictional movie they really are true—most people are so dependent on the system that they will fight to defend it (including devotees!).
My interest in Sri Krishna’s instructions about economics in the Bhagavad-gita have led me to study and understand the realities of the economics of this world. The fact is that that truth is very different from what most people think. Let’s just say that economics has a very dark side, and it sometimes happens if I speak about economic realities that people become upset. I was told that after my presentation earlier this year at the Lithuanian Summer Festival that several listeners found themselves devastated, as if there were nothing left to live for. Hearing what I said seemed to destroy their entire world! As you might guess, after brining such a reaction I have not been invited back to the next festival. As the Matrix quote tells it, many people are not ready to be ‘unplugged.’ They want to keep to their own understanding (illusion). Wow! Is that the result that I wanted to create? Well, yes, actually.
The destruction of our illusion is so disturbing that we resist it. We fight those who would wake us up to reality, because reality in the material world is often very ugly. We are living our lives thinking that the world is such a nice place, and we make plans for how we are going to enjoy here. I’ll get my education, then I’ll get my job, then I’ll get my spouse, and then we will get children, and we will gradually accumulate wealth and live happy lives while we learn about Krishna consciousness, and it will all be wonderful, and at the end we will (hopefully) go back to Godhead.
Pop! Goes the bubble of illusion!
“Hey! Who is that guy who destroyed my illusion? What does he think he’s doing? What do I have left to live for now? I’m crushed. Devastated. Lost.”
You see, the first result of realizing the truths of this world is devastation. We are crushed but it takes some time to realize why. But why should we be so disturbed? Because we have been taking shelter of those things that we now realize give no shelter. I can remember when I had those same realizations more than twenty-five years ago, upon learning the inside knowledge of how economics actually works. I was devastated too! It took some time to overcome that feeling, and in the process I had many powerful realizations. Me: “Wow! These things that I thought were my security, the things that I was taking shelter of, are not actually going to protect me. In fact, these people I was taking shelter of are even trying to exploit me! And I was so taken in by it that I was trying to find security there. But...but, if there is no security there, then where does one go for shelter?”  
The things of this world that we go to for shelter are what the Srimad-Bhagavatam calls fallible soldiers (2.1.4):
Persons devoid of atma-tattva do not inquire into the problems of life, being too attached to the fallible soldiers like the body, children and wife. Although sufficiently experienced, they still do not see their inevitable destruction.
Srila Prabhupada Comments:
This material world is called the world of death. Every living being, beginning from Brahma, whose duration of life is some thousands of millions of years, down to the germs who live for a few seconds only, is struggling for existence. Therefore, this life is a sort of fight with material nature, which imposes death upon all. In the human form of life, a living being is competent enough to come to an understanding of this great struggle for existence, but being too attached to family members, society, country, etc., he wants to win over the invincible material nature by the aid of bodily strength, children, wife, relatives, etc. Although he is sufficiently experienced in the matter by dint of past experience and previous examples of his deceased predecessors, he does not see that the so-called fighting soldiers like the children, relatives, society members and countrymen are all fallible in the great struggle... This poor fund of knowledge exhibited by human society is certainly misleading, and it is all due to ignoring the constitution of the living soul. This material world exists only as a dream, due to our attachment to it. Otherwise, the living soul is always different from the material nature. The great ocean of material nature is tossing with the waves of time, and the so-called living conditions are something like foaming bubbles, which appear before us as bodily self, wife, children, society, countrymen, etc. Due to a lack of knowledge of self, we become victimized by the force of ignorance and thus spoil the valuable energy of human life in a vain search after permanent living conditions, which are impossible in this material world.
Our friends, relatives and so-called wives and children are not only fallible, but also bewildered by the outward glamour of material existence. As such, they cannot save us. Still we think that we are safe within the orbit of family, society or country.
The whole materialistic advancement of human civilization is like the decoration of a dead body. Everyone is a dead body flapping only for a few days, and yet all the energy of human life is being wasted in the decoration of this dead body. Shukadeva Goswami is pointing out the duty of the human being after showing the actual position of bewildered human activities. Persons who are devoid of the knowledge of atma-tattva are misguided, but those who are devotees of the Lord and have perfect realization of transcendental knowledge are not bewildered.
We must recognize that these fallible soldiers are more than just spouse, children, home, etc. They include all of the things of this world in which we find “security.” These also include our society, our nation and its military strength, and our political leaders; but especially our money and our ability to earn money. Why? Because money appears to be the source of our sustenance. We do take shelter of it. And if someone comes along and tells me that the entire money system is a scam from beginning to end, that the value of the money I have worked hard and saved, and depend on to maintain me in hard times and old age, can become worthless overnight, then it challenges my illusions. It challenges my notion that I am secure in this world depending on “the system.” And if I can actually understand that, due to this speaker’s statements, then my shelter is lost. Those things, those soldiers, that I have been depending on to save me from the cruel vagaries of life are indeed fallible, so then how will I live? For what will I live? I am vulnerable, and I don’t know how to protect myself. Therefore I am devastated.
It seems like the greatest tragedy! A calamity of immense proportions! Actually, it’s the exact opposite. Such a realization puts one on the threshold of living in reality, of finding real shelter. So, if my money can not be depended on to save me, if my government is not going to save me, if my family cannot actually save me, then where do I go for shelter?
The Bhagavatam answers that question in the very next sloka:
“O descendant of King Bharata, one who desires to be free from all miseries must hear about, glorify and always remember the Personality of Godhead, who is the Supersoul, the controller and the savior from all miseries.”

29 September 2010

Money and Varnashrama Culture

Money, that ubiquitous substance that everyone the world over pursues to fulfill their desires, is rather young in the history of the world—a mere 2,500 years or so old. Prior to that there was no such thing as we now understand it anywhere on this planet. The earliest form of money found in India was that of the Greeks, and is estimated to have arrived there not before the fifth century BCE.[1] Prior to that time all trade was done by barter exchange. There was no notion of “the economy”, and such a thing was certainly not the focus of everyone as it is today.
Often when I make this point someone will cite the fact that Balarama wagered gold coins in His chess gambling match with Rukmi, and that this is therefore “proof” that money was in India at that time. While coins may well have been crafted as a convenient way to handle gold, those coins did not serve as a medium of exchange as money does today. Indeed, in the KRSNA Book (Chapter 11) Srila Prabhupada explains that in those days trade was done by exchange: “Upon hearing the vendor call, ‘If anyone wants fruits, please come and take them from me!’ child Krishna immediately took some grains in His palms and went to get fruits in exchange. In those days exchange was by barter; therefore Krishna might have seen His parents acquire fruits and other things by bartering grain, and so He imitated.”
Understanding this point is essential for our correct understanding of how the varnashrama culture operated, because we often hear devotees assuming it to be the case that money was a feature of Vedic society. It was not, and there are important reasons for that. We will come back to money and varnashrama culture below, but let’s first look at how varnashrama culture functioned.
Varnashrama culture functioned by the cooperative effort of all segments of society. From the Bhagavad-gita we learn that people are divided into categories known as varnas, and that each group would work according to their guna and karma, or their own nature. Many people have experience of the great satisfaction achieved by doing work that they genuinely like to do, which is another way of saying that it is according to their guna and karma. Each varna had their “duties,” which are explained in the dharma shastras. In the varnashrama culture members would voluntarily do this duty understanding that doing so would lead them to a heavenly reward and a higher birth in their next incarnation. Further, the ksatriya was tasked with seeing that everyone had proper engagement. This protected both the individual as well as the group. Their duties were typically performed in cooperation with others, each person reciprocating the service of others with his own service.
We can get some insights into the social dynamics of the varnashrama culture from Bhakti Vikasa Maharaja’s description of Bangladeshi culture in his book Glimpses of Traditional Indian Village Life. There he writes:
“Bangladeshi culture does not promote individual dynamism, competitiveness, or the type of efficiency required for technological advancement. Rather, although not uninterested in economic development, a Bangladeshi is more concerned to preserve the indigenous group culture that fosters the sharing and cooperativeness necessary for a traditional labor-intensive agrarian society... Necessity also dictates maintaining good relationships with neighbors. Most people aren’t well situated economically, so those who have more are expected to help those with less. It’s a culture of sharing and responsibility toward others... Bangladeshis emphasize dependence on others and a sense of group identity. They usually say “our house” and “our country” rather than “my house” or “my country.”... The group lends support when a member is in difficulty, whether moral, social, or economic. Reciprocally, members have obligation to the group, one of which is conformity. In fact, the pressure to maintain fellowship with the group is extremely strong. In this way the group regulates the behavior of its members, keeping them within the bounds of acceptable conduct.
I want to underscore that efforts that were made to maintain the group dependency, because individual members falling away from the group would threaten the survival of the entire group. Although I do not know that varnashrama culture is intact amongst these Bangladeshis it is not unreasonable to extrapolate their experience to varnashrama culture, since it must also have been a labor-intensive culture that depended on the support of the group. Varnashrama culture also functions on the basis of such mutual dependence. The varnashrama culture is often compared to a social machine, and if important parts are removed from the machine it cannot function. We learn from the Bhagavatam how the varnashrama culture began to disintegrate with the fall of the brahminical class, then later the ksatriya class, and now it is the vaisya class that is wreaking havoc all over the world.

Adding Money to Varnashrama Culture
What would happen if money is added to a mutually-dependent group such as the Bangladeshis or varnashrama culture? Let’s consider the influence of money. Typically money makes us feel independent of others because money allows us to purchase our necessities in the market. This gives us a sense of freedom which we have come to value in modern society. The result is that when a person has money, they don’t need others and don’t have to conform to the group standard. They are free to act independently. If I have money I don’t need you. And if you have money you don’t need me.[2] It should not be too difficult to see that the effect of money is to destroy the group solidarity of the mutually-dependent cultures, which in turn destroys the culture itself. We have a recent example of this from the formerly isolated area of Ladakh.
Anthropologist Helena Norberg-Hodge, was the first foreigner accepted to make her home in Ladakh (Kashmir). She had the privilege of living there over the course of three decades, coming to know life in the traditional villages before the intrusion of Western culture. She documented what it was like both before and after the influx of the West, and how the Ladakhi culture was destroyed. She writes:
“A Western tourist can spend more [money] in a day than what a Ladakhi family might in one year. Seeing this, Ladakhis suddenly felt poor. The new comparison created a gap that never existed before because in traditional Ladakh, people didn’t need money in order to lead rich and fulfilling lives. Ladakhi society was based on mutual aid and cooperation; no one needed money for labor, food, clothing, or shelter...In the traditional economy, Ladakhis knew that they had to depend on other people, and that others in turn depend on them. In the new economic system, local interdependence disintegrates along with traditional levels of tolerance. In place of cooperative systems meeting needs, competition and scarcity become determinants for survival.” [3]
Another important aspect is place: in mutually-dependent societies everyone has a place from which to relate to others. they may wish to have a higher status, but in any case they have some status. Having a place gives a person a sense of belonging and a sense of security. With the introduction of money we can be free, but our place can only be had when we have a job. Without a job we have no place in society and thereby become alienated. This increases the sense of voidism and impersonalism that has so alienated the masses of people in the modern day.
What we learn from these cultural lessons is that we cannot successfully mix these two cultures: the modern culture with its artifacts such as money, and the traditional of mutually-dependent relationships. Indeed if we want to have a close and supportive community we have to combine our interests, and particularly our economic interests. This will do much to bring us closer together and give us a real sense of security.
Unfortunately in our efforts to understand and establish rural communities we have not understood the necessity of village economics, and thus we have not been able to achieve the successful results that we so desired. In our future efforts to establish the varnashrama culture we must be careful to understand the proper functioning of the varnas, the positive results of mutual-dependency, and what is necessary to protect the budding culture from undesirable cultural influences.

[1] Studies in Indian Coins, D. C. Sircar, Moltilal Banarsidass Pub., Delhi, 2008, pgs. 4, 8, 349
[2] Of course this is illusory since without the help of many others our money is useless.
[3] Helena Norberg-Hodge, The Pressure to Modernize and Globalize, from Case
Against the Global Economy, Jerry Mander, and Edward Goldsmith, editors, Sierra Club Books, 1997

Revolt of the Elites

Christopher Lasch, a well-known American social and cultural critic, argued in his last book that democracy was withering in the hands of professional and managerial elites who lack a sense of social and civic values. By 1994, Lasch had come to believe that the economic and cultural elite, who historically have insured the continuity of a culture, had lost faith in the traditional values, and had become detached from the concerns of the common man. Modern elites, he wrote, are not anymore connected with their geographical and social background and roots, and do not accept any constraints and limits in the pursuance of their egotistical interests, which are basically money oriented. Money is what counts. Only money. Only “my money.”
Moreover, the elites have lost interest in the plight or the needs of the common man, and have become alienated from them, and “the professional classes in particular, regard the masses with mingled scorn and apprehension.”  Lasch called it a Revolt of the Elites, also the title of his book. Sensing this disconnect, the working class has responded with a sense of apathy and become alienated from the intellectual class of “symbolic analysts.” This is a breakdown of the social order. Lasch was increasingly concerned about the future of the world and questioned whether democracy can survive. His last question of his last book (before passing on) demonstrates his concern for the future: can a society survive when a significant portion of its elite have forsaken its founding principles?
We can answer that question from the Vedic perspective of history: No. When the brahmanas began to fail in their duty, the entire varnashrama culture began to fail. Next the ksatriyas failed, and now, the vaisyas are having their turn at neglecting their duties to the detriment of the entire world. As the world cascades down the slippery slope of tamo-guna the orientation of the entire society is: every person for themselves.

I Got Mine
Those three short words sum up the attitude of many people in the world today. It’s actually an abbreviated form of “I got mine, and that’s all I care about. You didn’t get yours? That’s your problem, not mine.” Although the phrase “I got mine” is perhaps the most recent expression of the attitude it is not new. Students of the Bhagavad-gita can recognize attachment, envy, selfishness, and a lack of empathy in these statements. These qualities are characteristic of the modes of passion and ignorance. This consciousness shows up in all sorts of ways. Some think that it is an expression the “conservatives.” Indeed, I recall years ago hearing a conservative radio-show host ranting against having to pay anything for the less able, who must simply be lazy ner’ do wells, and freeloaders, who suck the energy of those who are willing to work. Their idea is that everybody has an equal chance in this world and they have gotten what they have by their ability and hard work, and all others have likewise. If you don’t have as much as me that is the result of your own lack of initiative and effort.
This is the consciousness of “every man for himself.” It is a consciousness that has more or less pervaded all of Western culture, in part because there is no longer a “social contract” within Western culture. The generally understood idea of a social contract is that free men establish a political community through a social contract in which each gain civil rights in return for subjecting himself to civil law and political authority. This is not the kind of social contract that I refer to. Instead, I mean the inherent social contract based on the natural abilities of men that is established in Vedic culture. By combining their interests and committing their efforts to mutual advantage everybody’s interests are served. Each contributing what they have to offer: the brahmana his vision and spiritual guidance, the ksatriya his strength, protection, and facility, the vaisya his organizational and wealth-creating abilities, and the sudra his labor. Formerly it was the case that all varnas committed to doing their duty according to the dharma shastra, working together for the common good. This is the Vedic social contract, which extended even into the Middle Ages in the form of the feudal culture. But with the increase of tamo-guna that system was purposely destroyed.
A succinct explanation of how the social contract formerly worked and how it was destroyed is given by social psychologist Eric Fromm in his book The Sane Society:
“The breakdown of the traditional principle of human solidarity led to new forms of exploitation. In feudal society the lord was supposed to have the divine right to demand services and things from those subject to his domination, but at the same time he was bound by custom and was obligated to be responsible for his subjects, to protect them, and to provide them with at least the minimum—the traditional standard of living. Feudal exploitation took place in a system of mutual human obligations, and thus was governed by certain restrictions. Exploitation as it developed [under the money economy] was essentially different. The worker, or rather his labor, was a commodity to be bought by the owner of capital, not essentially different from any other commodity on the market, and it was used to its fullest capacity by the buyer. Since it had been bought for its proper price on the labor market, there was no sense of reciprocity, or of any obligation on the part of the owner of capital, beyond that of paying the wages. If hundreds of thousands of workers were without work and on the point of starvation, that was their bad luck, the result of their inferior talents, or simply a social and natural law, which could not be changed. Exploitation was not personal any more, but it had become anonymous, as it were. It was the law of the market that condemned a man to work for starvation wages, rather than the intention or greed of any one individual. Nobody was responsible or guilty, nobody could change conditions either. One was dealing with the iron laws of society, or so it seemed.” [1] 
As we moved into the 20th and 21st centuries the concepts of the “free man,” the “rugged individual,” and the idea that “everyone is equal,” has been indelibly drilled into the consciousness of the people through repeated propaganda. These three ideas have been used to separate people and to destroy their mutual dependence. Indeed, following the principle of “divide and conquer” the government also sought to destroy any mutual dependence. Nineteenth century social critic Peter Kropotkin explains how the formerly strong bonds between the people were long ago broken in order to force them to depend on an impersonal and authoritative state:

For three centuries the States [governments], both on the Continent and in these islands,  [British Isles] systematically weeded out all institutions in which the mutual-aid tendency had formerly found its expression. The village communities were bereft of their folkmotes[1], their courts and independent administration; their lands were confiscated. The guilds were deprived of their possessions and liberties, and placed under the control, the fancy, and the bribery of the State’s official. The cities were divested of their sovereignty, and the very springs of their inner life—the folkmote, the elected justices and administration, the sovereign parish and the sovereign guild—were annihilated; the State’s functionary took possession of every link of what formerly was an organic whole. Under that fatal policy and the wars it engendered, whole regions, once populous and wealthy, were laid bare; rich cities became insignificant boroughs; the very roads which connected them with other cities became impracticable. Industry, art, and knowledge fell into decay. Political education, science, and law were rendered subservient to the idea of State centralization. It was taught in the Universities and from the pulpit that the institutions in which men formerly used to embody their needs of mutual support could not be tolerated in a properly organized State; that the State alone could represent the bonds of union between its subjects; and the State was the only proper initiator of further development. By the end of the last century the kings on the Continent, the Parliament in these isles, and the revolutionary Convention in France, although they were at war with each other, agreed in asserting that no separate unions between citizens must exist within the State; that hard labour and death were the only suitable punishments to workers who dared to enter into “coalitions.” “No state within the State!” The State alone, and the State’s Church, must take care of matters of general interest, while the subjects must represent loose aggregations of individuals, connected by no particular bonds, bound to appeal to the Government each time that they feel a common need. Up to the middle of the [19th] century this was the theory and practice in Europe.[2] (emphasis mine)

Not only are we now free and equal, and depending on ourselves alone, we are divided. Having the state in between the people has isolated them. Even worse, having been acculturated to this idea we think of independence as good and the proper way to live, and distrust or even fear having to depend on others, thinking it a source of shame. Having lost the culture of mutual dependence, and having nobody to depend on but ourselves, many people have lost a sense of responsibility, and have indeed become untrustworthy. When we are not called on to be responsible we do not behave responsibly. Parents and teachers know that what we become depends a great deal on what is expected of us.

The evolution of this social decay has worked its way so deep into society that many people are no longer concerned about others. “I got mine. That’s all I care about.” The real tragedy lies in the fact that we are not equal, and we need the help of each other. However, when this consciousness continues for an extended period of time it has a severe impact on the social structure, resulting in a two-tier society—the have’s and have-nots. Currently less than 1% of the people own more than 40% of all wealth, while 50% of the people own 1%.[3] It is clear that the elite, rather than protecting and guiding the lower classes, now either exploit them, or neglect them. Famed maverick economist E. F. Schumacher, author of the classic text on caring economics, Small is Beautiful, observed the results of this mentality in India during the several years that he lived there. He noted that the educated classes felt no obligation to serve their less endowed countrymen. Indeed, they used their education as a ticket to escape the plight of the poor—“I got mine. That’s all I care about.” Schumacher asked how the general welfare of the people could possibly improve if those with ability and know-how did not apply it to the general welfare. His answer: it cannot. Despite not being trained in India’s spiritual wisdom, he chided the elite of India that it was their duty to look after, and even lift up, the lives of the less capable. Although the lessons were already present in their own scriptures, their duty had to be shown to them by an outsider (to little avail even to this day, however).

Varnas and Duty
What Schumacher was saying without realizing it, was that the different orders of society, the varnas, have an obligation to each other. When they follow their duty properly the varnashrama social system functions to everyone’s benefit. If they do not, as in modern society, we have what Srila Prabhupada called “asuric varnashrama.”
The Srimad-Bhagavatam recounts how, with the increase of rajo-guna and tamo-guna, the elite began to fail in their duty. As everyone focuses on their narrow interests, parts of the social machine cease to function. Eventually the breaking point is passed and the entire society fails. We have witnessed the decline and failure of several Western cultures on these grounds.
The social system of varna is established by Sri Krishna Himself. As He states in the Bhagavad-gita (4.13, 15): “According to the three modes of material nature and the work associated with them, the four divisions of human society are created by Me. And although I am the creator of this system, you should know that I am yet the non-doer, being unchangeable...All the liberated souls in ancient times acted with this understanding and so attained liberation. Therefore, as the ancients, you should perform your duty in this divine consciousness.”
Note that Sri Krishna admonishes us to follow in the footsteps of the liberated souls and perform our duty in the varna system. In ISKCON we take it as a given that we are taking up the Vedic culture, and we have added a part of the culture of Krishna Consciousness to our lives. But the fact of the matter is that in many ways we mirror the dominant, materialistic culture, including its asuric varnashrama. After all, most of us spend most of our time immersed in it, and we are subtly, but very powerfully, affected by it. Just as Lasch observes that the elite have focused on their own narrow interests we can observe the same in our Society. It’s the way the world works, and unconscious of it we follow its ways. And that part, that speaks to us so subtly as the expression of the values that underlie our existence, has yet to change.
The fact is that we live mostly unconsciously without thinking of how society works. This is because we are raised up in a culture from the time of being infants and that culture is instilled in us. We no longer see it, and it acts invisibly to us. As we attempt to become Krishna Conscious it is imperative that we begin to live consciously and see the connection between our actions and the consciousness that they reinforce. Actions affect consciousness. This is why in spiritual training we learn how to offer obeisances by bowing down, touching our heads to the floor, how to respect seniors by standing up or bowing down, to offer obeisances before taking prasadam, and so on.
Still there are an entire host of issues that we conveniently overlook because, to date, we have not developed within our society acceptable alternatives that are in keeping with our philosophy. Among these are: the concept of private ownership, the concept that everyone is equal, money as a means of maintenance, the lack of a social contract, and the concept of marital divorce. In all of these areas we follow the ways of the dominant culture despite the fact that they are diametrically opposed to the philosophy of Krishna Consciousness. Why? Because they are a part of the culture that we live in, and in order to survive in that culture we must live according to their values. If we did not it would be very difficult to remain in the social network of the dominant culture. All of which underscores the need for us to establish a cultural alternative that includes the social orders of varna, and an economic foundation that allows us to fully live our spiritual culture with its attendant values.

Revolt of the Elites in ISKCON?
By referring to the elites of ISKCON I am referring to men of ability, specifically those of a ksatriya and vaisya nature. Now we may ask, what is their duty in the present day? Well, it is no different than in previous times. The higher orders of society have a duty to create the circumstances in which the culture functions. Because, by themselves, the majority of the population, those of a sudra nature, cannot do that. Not even with the help of the brahmanas. Those of a sudra nature have a difficult time to look beyond the immediate future, or their immediate self-interest. The brahmanas lack the passion to make it happen. Men with different abilities are required. Men who have ability to see the long-range in terms of time, who understand the effort required to create a specific result, and who can direct the labor of others toward that purposeful end.
And as Lasch is attempting to point out, when they do not, the society cannot function. At the beginning of Kali yuga it was the brahmanas that failed to execute their duties properly, and rule passed to the ksatriyas. Then as the ksatriyas failed, control passed to the vaisyas. Now we are witnessing the failure of the vaisyas in terms of global economic disaster, extreme disparity, billions of helpless and hopeless people, etc., and rule will pass to the sudras. Srila Prabhupada explains it thus:
“At present, human society is specifically cultivating the mode of ignorance (tamo-guna), although there may also be some symptoms of passion (rajo-guna). Full of kama and lobha, lust and greed, the entire population of the world consists mostly of sudras and a few vaisyas, and gradually it is coming about that there are sudras only. Communism is a movement of sudras, and capitalism is meant for vaisyas. In the fighting between these two factions, the sudras and vaisyas, gradually, due to the abominable condition of society, the communists will emerge triumphant, and as soon as this takes place, whatever is left of society will be ruined. The only possible remedy that can counteract the tendency toward communism is the Krishna consciousness movement, which can give even communists the real idea of communist society.” Cc Adi 8.20 purport
Although communism has ostensibly faded into the annals of history the general idea still holds—everything will collapse under the influence of tamo-guna, regardless of what you call it. We are witnessing the manifestation of the same tamo-guna under capitalism in the form of predatory economics, disaster capitalism, vulture capitalism, casino capitalism, etc., various pejoratives that have certainly been earned. Unless this Krishna Consciousness Movement demonstrates how the upper classes of society, the elite, can, under the influence of sattva-guna and suddha-sattva, transcendental goodness, guide and protect the lower classes, whatever is left of society will be ruined. The selfishness of looking after  only one’s immediate interests are the symptoms of tamo-guna, and this must bring the result of tamo-guna—collapse and destruction.
Now the question arises: will they? Will the upper classes of our Krishna Consciousness Movement rise to the occasion and demonstrate how to guide society to a higher purposeful end? Unfortunately, that is in doubt. The problem is that within our society we have not adopted the social relationships of the varnas. Instead, our devotees live according to the ways of the dominant culture. This is to say that the men of ability, those who can lead and guide society seem to content themselves with living the modern lifestyle and doing their duty to the Society by making financial contributions. While this financial help is certainly necessary, I dare say that it is not enough.
Let me make this point more clear by stating that in my observation of our efforts to establish the varnashrama culture, it is mostly devotees of a sudra nature that participate (that is not to be taken as a criticism. These are good and honorable men, and far superior than the vast majority, especially considering that they are devotees of Lord Krishna). The men of greater ability, those of a vaisya or ksatriya nature, however, are noticeable by their absence. I am aware that there are exceptions to this rule and that the situation is different in different parts of the world. Still, the observation generally holds.
When are the men of ability going to take up their duty and begin to participate in establishing the varnashrama and daiva-varnashrama culture? Will they give up their lucrative careers and businesses, and comfortable lifestyles to live simply and help build an alternative spiritual culture based on self-sufficiency? Without them the varnashrama culture cannot be established, and this Krishna Consciousness Movement cannot offer any possible remedy to the debilitating influences of the age. Is it that the men of our society have also developed the idea “I got mine?” Is it that they are also in revolt, to leave those of less ability to function as best as they can without their guidance and assistance? Is it that they have not been trained to understand their duty to the other orders of society and how to apply it? Or is it because their leaders have not understood the imperative of the daiva-varnashrama culture? Whatever the reason, it is time that we all understand the urgent need for the varna culture and begin to seriously move in that direction. If not, the only remedy that Srila Prabhupada spoke of to save this world will not exist, and society will indeed be finished.

[1] folk·moot  (fōk'mōōt') n. A general assembly of the people of a town, district, or shire in medieval England.

[1] Eric Fromm, The Sane Society,  Holt, Rinehart and Winston, New York, 1955, p. 92
[2] Peter Alexeyevich Kropotkin, Mutual Aid—A Factor of Evolution, Chapter 7,1902. From The Project Gutenberg, online.
The above quotes are borrowed from and expanded upon in my Spiritual EconomicsUnderstanding and Solving the Economic Problem.  Please see www.spiritual-econ.com; http://spiritual-econ.blogspot.com; http://gitagrad.blogspot.com.   
[3] The Guardian, 6 Dec 06. http://www.guardian.co.uk/