By Theodore Shoebat
Germany and Turkey want to get closer and closer economically in the midst of US financial pressure. This is an indication that Turkey and Germany are slowly revolting against the American hegemony. As we read in one report from Kurdistan 24:
The Ankara government has stepped up efforts to rekindle its broken ties with European Union nations amid a spat with Washington and yet another nosedive fall the Turkish Lira took against the US Dollar at the beginning of the week.
On Tuesday, the Lira neared 6.30 USD and 7.35 Euro a day after Turkey’s Treasury and Finance Minister and President Recep Tayyip Erdogan’s son-in-law Berat Albayrak signaled to improve relations with EU during a visit to Paris where he met with his French counterpart, Bruno Le Maire.
The Lira has lost up to 40 percent of its value since the start of the year due to interest rates as low as 4.5 percent aggressively pushed by Erdogan and high inflation expected at 13.5.
Increasing foreign debt in hundreds of billions of dollars mostly spent on grand infrastructural projects, military expenditure as Turkey continues to fight Kurdish groups at home and those in Iraq and Syria, as well as tensions with the US, have added to the financial crisis.
At a press conference in Paris, Albayrak said Turkey and France, “as two allies, will act together” to counter tariffs President Donald Trump’s administration imposed by trading in Euro and not the American Dollar.
Ankara faced a severe backlash from Trump who sanctioned two Turkish ministers and doubled tariffs on steel and aluminum from the country over the continued detention of a dozen Americans, including Pastor Andrew Brunson accused of supporting terrorism, coup plotters, and Kurdish rebels.
On Monday, Erdogan talked on the phone with EU’s departing member UK’s Prime Minister Theresa May about the war in Syria and the Turkish economy.
Turkey is also cozying up to Germany, an important trade partner much vilified by Erdogan and the media close to him since the failed coup attempt in 2016 and particularly for Berlin’s granting asylum to dissidents.
Erdogan phoned his German counterpart Frank-Walter Steinmeier on Tuesday and praised commercial ties between the two sides. The Turkish President is set to visit Germany next month.
Juergen Hardt, a senior member of the German parliament’s foreign affairs committee and an ally to Chancellor Angela Merkel’s government, had earlier told Bloomberg that Germany could help Turkey stabilize its economy if it changed policy, by respecting media freedoms, releasing Germans jailed for political reasons, and refraining from inflaming the war in Syria.
Meanwhile, Foreign Minister Mevlut Cavusoglu was on a trip to Lithuania, another EU member, where he said Ankara and Brussels needed each other. He will attend the EU Foreign Ministers’ convention at the Austrian capital of Vienna on Aug. 30-31.
Last month, he described Turkey’s decades-long application to join the EU as “a strategic goal.”
Germany wants to lead Europe in a pan-European military force, Japan also wants to become militarily independent. What is happening is the fragmentation of the American security umbrella. A similar situation happened after the First World War. Japan and Germany went under the gold standard as a universal monetary system. But the Germans and Japanese, revolting with egoism, abandoned the gold standard and such events signified a revolt against American hegemony and portended a coming war.
After the Second World War the United States tried a similar attempt by putting Western Europe under the gold standard, but the Americans pulled the plug on the Europeans with the “Nixon shock,” and also left the gold standard themselves. Now the Europeans are under another monetary system, the euro, with Germany dominating it. But, Germany, Turkey and Japan are still under the American security umbrella, but this is fragmenting, with each three of these countries seeking to become militarily independent of the United States. The European Union has also, to a certain degree, fragmented with Brexit, and with the British working to leave the EU, that means that the biggest obstacle to a pan-European military force — led by Germany — is exiting the bloc. Germany is becoming more and more unhinged. Just as the Nazis wanted to abandon the gold standard to becoming financially independent, so the Germans today are speaking of becoming financially independent of the United States by establishing autonomous “financial channels” in Brussels. But it goes beyond financial independence. Germans have been seriously discussing the prospect of Germany producing its own nuclear weapons, with major German political scientist, Christian Hacke, declaring recently:
Since the U.S. nuclear guarantee has become increasingly doubtful and a common European deterrent does not seem to be forthcoming, only one possible conclusion can be drawn: in a serious crisis the only one Germany can truly rely on is itself. … Thus, our attention turns to the elephant in the room, which nobody in Germany wants to acknowledge: What about Germany as a nuclear power?”
So lets begin our discourse in history, for history is a mirror looking upon the face of the future.
So lets begin with how Japan left the monetary system of the gold standard, and then we will talk about Germany leaving the gold standard. There is much detail in this article to read, but it will form the basis of our understanding of current events and their significance for the future. So bear with us here.
In the late 1920s, the Communists in China were growing into a major movement. The Chinese Communist Party was once a small, seemingly insignificant group, that had become a substantial force of 60,000 activists. These people were most present in major cities of central and southern China. The Communists had their biggest enemy in China: the Nationalists. The National Revolutionary Army, or the NRA, were sending their forces right into Shanghai on March 21st, 1927. The Communists, seeing this deployment of troops, revolted and led an uprising against General Chiang Kai-shek, a political and military leader who would serve as the leader of the Republic of China between 1928 and 1975.
The National Revolutionary Army
Three days later, the Nationalists invaded the city of Nanking (or Nanjing), an action that would trigger riots. The National Revolutionary Army, although it represented the Nationalists, were heavily incorporated with communists who filled the Sixth Army of the NRA and who systematically looted and attacked the British, American and Japanese consulates, and murdered one American, two Britons, one French citizen, an Italian, and a Japanese. Overlooking these events were the Americans and British who had warships on the Yangtze river. These navies decided, as a response to the instability on the streets, to fire shells on Nanking with a heavy loss of life.
The USS Noa, one of the ships that engaged the NRA
Moscow demanded that the National Revolutionary Army remove General Chiang, but he was having none of this. On that same month, Chiang purged his Nationalist army of its Communist faction. Chiang went on an anti-Communist campaign in Shanghai to remove any sort of Russian influence or tutelage. Japan backed Chiang’s efforts to rid China of Communism; the British refused to get involved, and the United States did not want to join the cause because it did not wish to support the use of force. From having 60,000 members, the Chinese Communists were reduced to just a number of 10,000 by the end of 1927, because the Nationalists slaughtered most of them. More than this, the Chinese Nationalists also butchered hundreds of thousands of insurgent peasants. In July of 1928, the United States recognized the government of Chiang with its capital of Nanking, and permitted it to set its own tariff duties.
In April of 1927, the Japanese government, led by the right-wing Seiyukai Party and its leader, General Tanaka, backed the NRA in China. Even though the Nationalists had clashes with Japanese troops — in which thousands of Chinese people were killed — General Tanaka did not respond heavily against the Chinese and even expressed to the US his support for Chinese rulership over Manchuria, a region the Japanese wanted for their own. The Japanese were maintaining the policy of neutrality that had been kept by Foreign Minister Sidehara which had been pursued by Japan since 1921. When the Americans and British navies clashed with the Chinese Nationalists, the Japanese navy did nothing. This struck the Japanese with so much humiliation, that one Japanese lieutenant who was involved in the evacuation of Japanese citizens from Nanking, committed hara-kiri, or ritual suicide. The question lingering amongst the consciences of the Japanese was: ‘Why aren’t we fighting for our interests?’
General Tanaka
Japan had a foothold in Manchuria, with its own settlement population which consisted of around 200,000 people, and which was increasing by 7,000 a year. Meanwhile the Chinese in Manchuria were outpopulating the Japanese, with them peaking at 780,000 by 1927. Japanese ultra-nationalists were enraged that their country was taking such a moderate approach to Manchuria. On June 4th, 1928, radical nationalists within Japan’s Manchurian army assassinated the Chinese warlord, Chang Tso-lin while he was trying to run away from the Chinese Nationalist Army. It was the hopes of the assassins that by killing this warlord they would spark a clash between Japanese forces and the warlord’s army, and thereby providing the pretext for Japan to annex Manchuria. Their plan failed.
The Chinese Nationalists succeeded in occupying Beijing and managed to unify China under a Nationalist government. The warlord who was killed by the Japanese radicals was simply replaced by his son, Chang Hsueh-liang, whose policy it was to have non-confrontation with Japan. But in December, Chang Hsueh-liang defied the Japanese and placed the three regions of Manchuria under the Nationalist government of China.
This was to the embarrassment of General Tanaka and his cabinet fell apart in July of 1929, and it was replaced by the even more moderate government of the Constitutional People’s Government Party, or Minseito. Their policy was one of non-confrontation, and it aimed at the completion of the ratification of Kellog-Briand, — which was a treaty that affirmed the renouncement of war —, the taking up of the Anglo-American invitation for naval disarmament, and to pursue the gold standard. (See Tooze, The Deluge, ch. 25, pp. 482, pp. 485—486)
THE GOLD STANDARD
Lets observe some things here: for one, the pursuing of the gold standard that preceded the eruption of the Second World War. After World War One, nations began to place their currencies under the gold standard in what essentially was something of a universal currency system. In the 1920s, Winston Churchill placed Britain under the gold standard, and, as Yanis Varoufakis writes:
“the gold standard would prove a ball and chain for the British economy, causing an unnecessary, never ending recession … following the crash of 1929, Britain was among the first countries to exit the gold standard; which it did in 1931 to ameliorate for the Great Depression, two years before President Roosevelt pulled the United States out too.” (Varoufakis, And The Weak Must Suffer What They Must?, notes to chapter 1, n. 14, ellipses mine)
Following the First World War, inflation was common to countries, both combatant and non-combatant. Europe and Asia saw a surge in demand, and prices increased everywhere accept for the United States which had still remained under the gold standard. This went on until 1920. Before the war, the British sterling was — comparative to the dollar — at $4.92 to the pound. But by February 1920, it dropped to as low as $3.40 to the pound. Prior to the war, the French franc was at 5.45 to the dollar. By the end of April 1920, it precipitously declined in value, being worth 17.08 for every American dollar. The Italian lira fell to a disastrous state, only bringing up inflation and raising import prices.
On the other hand, Japan’s economic strength boomed. This was reflected in the Japanese government’s 800 million yen spending program for its railways. Spending on the construction of schools and the building of roads was also prevalent. But what surpassed all of this was Japan’s spending on its military. What accelerated military spending was the spread of Bolshevik revolutionism from Russia eastward. In 1917, the French asked Japan for help to intervene in Russia to fight Bolshevism, but the Japanese refused — probably because they did not care about the Czar since they had a major war with Russia from 1904 to 1905. Things changed the next year, however, with Japan’s Imperial Army General Staff and Army Ministry founding the “Siberia Planning Committee.”
In this program the Japanese saw the fall of the Czar, not as a problem, but as an opportunity to end the threat of Russian hegemony, since Japan and Russia were truly the biggest rivals over East Asia. The solution to Russia of the Japanese committee was to cut off Siberia from Russia and transform it into an independent state that could be used as a buffer against Russia. The Interior Minister of Japan, Goto Shinpei, said that Japan should capitalize on the situation and send one million troops into Siberia in order to outcompete the West in East Asia. Goto expressed his enmity for the United States. “If we probe the real intentions of the USA further,” Goto said, “it embraces what I call moralistic aggression. It is, in other words, none other than a great hypocritical monster clothed in justice and humanity.” (See Tooze, The Deluge, ch. 7, p. 143)
American troops in Vladivostok
The Japanese military made a plan to attack on two fronts: they would make their way from Vladivostok to Khabarovsk along the Amur River, and through the Chinese Eastern Railway they would go and cut off the Russian Trans-Siberian Railway at Lake Baikal. But the plan was rejected by the the civilian leadership of Prime Minister Hara Takashi. But then, in late 1917, when the Japanese found out that the British fleet, the HMS Suffolk, was heading to Vladivostok, they aspired to outdo their European rival. Japan’s new Prime Minister, Terauchi Masatake, was incensed that the British would go to Russia without including Japan, and so he ordered that the Imperial Japanese Navy head to Vladivostok first.
Japan sent two naval ships, the Iwami and Asahi. The Iwami landed at Vladivostok on January 12th, just two days before the British HMS Suffolk’s arrival. The Asahi arrived on January 17. Supposedly, the intention of this deployment of ships was a show of force. But this ended after a mob attacked a Japanese owned store and murdered its owner. Without being delayed by any investigation on the murder, the Japanese went for the attack, sending marines into Vladivostok who proceeded to occupy the whole city. The British sent one hundred marines to protect their consulate. The Americans did nothing. In July of 1918, President Wilson requested from Japan to send 7,000 soldiers who would have been a part of an international coalition of 25,000 troops, which included an American expeditionary force, to back the Czech White Army against the Bolsheviks. Prime Minister Terauchi agreed to send more than seven thousand — he agreed to send 12,000, but he had his conditions: the large military force would have to be under Japanese command and not under an international coalition.
Japanese soldiers in Vladivostok
The Japanese eventually sent 70,000 troops, more than any other of the other Allied powers involved. The Allies thought of the mission as being localized in Vladivostok, but Japan took advantage of the situation to expand further into Russia. Japanese troops extended their presence as far west as Lake Baikal and Buryatia, and by 1920, corporations such as Mitsubishi and Mitsui opened offices in Vladivostok, Khabarovsk, Nikolayevsk-on-Amur and Chita. This brought in over 50,000 Japanese civilian settlers. The international coalition withdrew its troops, but Japan stayed and continued to back the White Army against the Bolsheviks.
On June 24th, 1922, Japan agreed to withdraw its troops from all Russian territory by October, except for Northern Sakhalin. Whats very interesting is the fact that today the Russians and Japanese still have tensions over the Sakhalin island which lies right in between Japan and Russia, and it would not be surprising if a conflict erupted between the two in which they would fight for this territory. Japan was not so much as interested in fighting Bolshevism as it was in expanding its own power. It is not surprising that Wilson conceded in 1918 that: “What you would say about Russia and against Germany could be made to apply to Japan or any other power seeking to do what we know Germany is attempting.” (Ibid)
By the spring of 1920, Japan’s economy did not only crash, but it led the world in deflation. In a matter of months the price of gold, in terms of silver doubled. In 1919 — just a year before — China and India, whose currencies were based upon silver, had a surge in purchasing which increased world silver prices to record levels. But in 1920, the rise of the price of gold accelerated an appreciation of the yen relative to China’s silver-backed currency. Japanese exports declined, and by March 20th 1920, the Tokyo stock market crashed. The price of rice and silk went down. In 170 Japanese banks frantic investors were pulling their monies from their accounts. The post-war peak that Japan was enjoying had now come to an end. By June 1920 the Tokyo stock exchange had fallen by 60%.
Meanwhile in Britain, the country was up to its head in debt from all of the loans it was taking from Wall Street to fund its war effort. Billions of pounds were owed to Wall Street. Since 1915, Britain and France had been bankrolled by Wall Street. This was further strengthened in 1917, through the Liberty Loan program laid out by Congress. No empire in Western history had been able to create the financial hegemony that the United States had created in 1917. The Entente was borrowing American money to buy American weapons. When Congress authorized any loans to the Entente, a condition was placed that the money had to be spent in the United States. It was, in the words of Tooze, “a gigantic, publicly funded export scheme.” Britain’s victory over Germany put Britain under the yoke of America. The victory over Germany also solidified America’s position as the world’s most powerful empire.
While struggling with debt the British were planning on making their currency equal in value to the US dollar so as to bring the pound back to its pre-war days. But as American gold was being drained out, the British feared that the Fed would respond by impelling deflation. The fear was real. American prices plummeted, and the prospect of reinvigorating the sterling to its pre-war glory was becoming more and more distant. The British now not only had to bring the pound up to par with American inflation, but American deflation as well.
In April of 1920 the Bank of England imitated its master, the Federal Reserve, by raising interest rates. The British government also increased taxes on higher incomes. The result was higher interest rates, plummeting prices and higher wages amongst nominal occupations. With higher wages you have unemployment. Between July of 1920 and July 1921, the unemployment level amongst trade union members went from just 1% to 23.1%. Fear of rioting was deep enough that on April 15th 1921 eleven battalions of infantry and three calvary regiments, backed by tanks, were prepared for use in London. But the relationship between three major unions in Britain was polarized and the wave of strikes was broken.
Treasury officials even started discussing a plan to slice down pensions and cut unemployment benefits to the “barest minimum needed to prevent starvation”. Chancellor Austen Chamberlain, however, dissented from such a plan, believing that in the wake of the Great War, the country could not deprive from its citizens a right to sufficient welfare. The British economy was in free fall. While deflation was universal, the United States, Britain and Japan were most hurt by the crises. Japan took measures to stabilize its economy, such as establishing the Imperial Silk Filiature in December of 1920 to purchase and freeze surplus silk stocks. In April of 1921, the Hara government commenced a policy of government purchasing of rice to strengthen rice farming.
NATIONALISM RISES
In January of 1930, Japan’s newly elected liberal government put the country under the gold standard, with J.P. Morgan brokering a large loan for Japan. By countries entering the gold standard, it was believed that an international monetary system — regardless of bankruptcy and unemployment — was vital for maintaining the new post-war world order. While the debts owed by Britain, France and Italy to the United States shackled these countries, Germany owed a tremendous amount of reparations to the United States and the Entente. With the removal of the Kaiser from power and the Treaty of Versailles, nationalism was the inevitable response.
Nationalism had been rising in Germany. On June 6th, 1920, nearly 28.5 million Germans voted for the first Reichstag of the Weimar Republic. The “Reichstag majority” coalition which consisted of the SPD (Social Democratic Party of Germany), the Centre Party and the Democratic Liberals, took 45% of the vote. Voters made the leftist Independent Social Democratic Party of Germany (USPD) into the second largest party. The nationalist party, the German National People’s Party (DNVP) took 15% of the vote. By May of 1924, that number rose to 19% for the DNVP, over a quarter of the German electorate. And its rival party, Hitler’s National Socialist German Workers Party (NSDAP) got 7% of the vote.
From Wikipedia: A DNVP poster from 1920 showing a Teutonic knight being attacked by Poles and socialists. The caption reads “Save the East”
The rise of the nationalist was so alarming to the Americans that the US ambassador, Alanson Houghton, called in leaders from the DNVP and told them that if they rejected the Dawes Plan (which agreed to loan Germany 800 million Goldsmarks) that it would be one hundred years before the US ever assisted Germany. The DNVP then began to get lots of pressure from their funders to acquiesce to the American demands for moderation. Enough DNVP members sided with the government to support the Dawes Plan. Part of the plan was to give a loan to Germany to stimulate its economy. On October 10th of 1924, Jack Morgan — overseeing a consortium of American investment banks — signed the loan agreement and 800 million Goldmarks were given to the Reichsbank. The capitulation of the DNVP for the Dawes Plan diminished its image of being devoted nationalists.
The DNVP was soon to be eclipsed by a more staunchly nationalist group. In the summer of 1932, the Nazis took 37% of the vote in a major victory. In November of 1932, politicians Franz von Papen and Alfred Hugenberg, along with several other major industrialists and businessmen, wrote a letter to Paul von Hindenburg urging for the appointing of Hitler to the position of Chancellor, stating that:
“The transfer of the responsible leadership of a Presidential Cabinet, endowed with the best objective and personal resources, to the leader of the largest national group will eradicate the slags and mistakes that inevitably cling to every mass movement and carry millions of people who stand aside today to affirmative strength.”
Franz von Papen
Alfred Hugenberg,
The story of the rise of the National Socialists reveals something that we can learn when observing the gradual rise of nationalist parties. It shows that German people were not always in favor of the Nazis, as we can see in the popularity for the SPD and other moderate parties. The popularity of nationalists was gradual, and really surged in the midst of several crises: such as the rise of Communism, the expansion of Bolshevik power in Germany, and the heavy financial burden placed on Germany as punishment for starting a war in Europe. People today think that Germany is not going to rise again, but one could have said the same thing in the 1920s, when the Nazis were getting very little votes.
Nationalism in Japan was also intensifying. Near the end of 1931, the Foreign Office official and fascist, Matsuoka Yosuke, stated: “It is a good thing to talk about economic foreign policy but we must have more than a slogan. Where are the fruits? We must be shown the benefits of this approach.” Japan needed to form its own trade bloc. The international order that was formed after World War One was now fragmenting to the rise of aspirations of powerful countries to form their own internationalisms, that is, their own empires.
Matsuoka Yosuke
When Japan agreed to join the gold standard in 1930, it was directly connected to an agreement to disarmament, since after World War One countries made the superficial renouncement of war. Being under the American greenback meant being peaceable under American hegemony. But with countries leaving the gold standard, it meant that the world was eschewing US control and pursuing their own interests, which were not necessarily good since nations that revolted against the American empire aspired for their own destructive agendas. In December of 1931, Japan abandoned the gold standard, with nationalist fervor fueled by a resurgent China and the rise of Soviet Russia. Today there are still territorial tensions between Japan and Russia over the Sakhalin and the Kuril Islands (or the Northern Territories). Just recently the Japanese asked Russia to cease militarization in the Kuril Islands, as we read in one report from the Moscow Times from July of 2018:
Japanese Defense Minister Itsunori Onodera said on Tuesday that Tokyo had asked Russia to reduce its military activity on a disputed island chain in the Pacific after Moscow beefed up its forces there in response to what it sees as a potential threat.
The territorial dispute over the islands, known as the Kuril Islands in Russia and the Northern Territories in Japan, is so acrimonious that Moscow and Tokyo have not yet signed a peace treaty to mark the end of World War II.
Prime Minister Dmitry Medvedev approved the deployment of Russian warplanes on one of the disputed islands in February, accelerating the area’s militarization at a time when Moscow’s ties with Tokyo are strained over the roll-out of the Aegis U.S. missile system.
Moscow has also deployed its newest missile defence systems to the islands and plan to build a naval base there even as it continues talks about the territorial dispute.
After the Second World War, Europe and Japan entered yet again another world monetary system: the US dollar, under the gold standard. The United States needed a powerhouse in Europe and a powerhouse in Far East Asia to fortify the strength of the dollar in these regions. And which countries did it choose? The very two countries that it had gone to war with: Germany and Japan. As Varoufakis explains:
“Looking at the Far East, the American administration saw that the only nation capable of playing the necessary shock-absorbing role there, and developing a suitable currency, was Japan: a mighty industrial power whose factories were largely unharmed (except perhaps in Hiroshima and Nagasaki), whose workforce was highly skilled and impressively disciplined, whose constitution the United States had had the opportunity to script and, last but certainly not least, a country ruled by America’s armed forces. Once their gaze turned back toward Europe, the puzzle dissolved: West Germany was the obvious equivalent and, indeed, a splendid candidate for the role of the global plan’s European shock-absorbing pillar—certainly not Britain!” (Varoufakis, And The Weak Suffer What They Must?, ch. 2, pp. 40-41)
The Americans put the Europeans on the American gold standard, and this went on until the Nixon administration pulled the plug on them with the “Nixon shock” of 1971. Europe would eventually form its European monetary system in which the values of European currencies were based on the value of the German mark (whether or not Europe has the euro, the German mark is king). Britain eventually left the European monetary system and this was greatly thanks to George Soros crashing the Bank of England in 1992.
Britain leaving the European monetary system was what Germany wanted and Varoufakis affirms that what happened to the British sterling in 1992 was “engineered” by the German bankers. (And The Weak Must Suffer What They Must?, ch. 5, pp. 121-127) After Britain left the European monetary system, Italy followed and the whole umbrella crashed. Between 1991 and 1993, the French president Francois Mitterrand and the German chancellor Helmut Kohl, contrived the concept of the euro which is what would unite the EU.
Just as the Germans wanted the British to leave the European monetary system, so did they want them to leave the European Union, since with Britain exiting, the Germans have now had the green light to pursue a German led European force, something that the British were preventing. This is why we have been saying, since the beginning of the Brexit situation, that a breakdown of the EU will lead to war. As Cambridge economist, Nicholas Kaldor, warned:
“It is a dangerous error to believe that monetary and economic union can precede a political union or that it will act (in the words of the Werner report) ‘as a leaven for the evolvement of a political union which in the long run it will in any case be unable to do without.’’
Kaldor also warned:
“[If] the creation of a monetary union and Community control over national budgets generates pressures which lead to a breakdown of the whole system, it will prevent the development of a political union, not promote it.” (See Varoufakis, And The Weak Must Suffer What They Must?, ch. 3, pp. 88-89)
If you do not have political union, then you have no union, and thus the same tensions that Europe had are still there in one form or another. Thus, war is inevitable.
Europe would eventually be under the pan-European monetary system, the euro. The euro is what is binding the European Union. And like the gold standard before the outbreak of World War Two, the EU is weakening and beginning to fragment, and what happens when a bloc polarizes? It is a sign that war is coming, just as the fragmentation of the gold standard was a foreshadower of war.
The Dawes Plan was formed in tandem with the 1924 Banking Act which obligated Germany to back its currency with gold. The German population generally associated leaving the gold standard with inflation and so supported it. The Reichsbank was required to keep at least 40% of its gold as reserves (gold cover). In April 1929, the negotiations in Paris on the reparations that Germany owed nearly collapsed, causing a panic. People began to empty their accounts and such reserve outflows threatened the gold cover. In May of 1929, negotiations resumed and the panic was brought to calm. In September of 1930 Hitler’s party became the second biggest party in the Reichstag, commencing a panic that led to gold outflows from the Reichstag bank. Germany then took in a loan from an international consortium, and in May of 1931, Germany’s gold cover increased to a good 60%.
The Nazis desired to remove Germany from the gold standard because they wanted to enable the German bank to do what it wanted with its money without the interference of the Allies. By abandoning the gold standard, it brought about the financial independence from American power that the Nazis wanted. As Otto Nathan writes:
“The abandonment of the gold standard in 1931, and the subsequent development of a highly effective system of foreign exchange control, enabled the Nazis, on the one hand, to establish any relationship they might have desired between foreign currencies and the mark, and on the other hand, to pursue any kind of domestic credit policy without fear that external forces might upset that relationship.”
Monetary authorities in Germany wanted “to pursue a wholly independent credit policy that would fit the needs of their domestic situation.”
Historical events do not repeat themselves in every exact detail, but they do have a consistent pattern. As the Nazis wanted financial independence from the United States, Germany today is actually talking about forming financial channels in Brussels independent of the US, because it is upset that the Trump administration’s reversal of the Iran Deal prohibits Germany from making deals with Iran which it has been close to for many years. As one report from Holly Ellyat explains:
“Europe should look to bypass U.S. payment systems by creating its own financial channels, a European monetary fund and international bank transfer system like SWIFT, Germany’s foreign minister has said. Heiko Maas called for the setting up of independent payment channels which could avoid U.S. sanctions targeting any firms that do business with Iran. … Writing in the German Handelsblatt newspaper, Foreign Minister Heiko Maas called for the setting up of independent payment channels, largely as a way for European businesses to avoid U.S. sanctions targeting any firms — whether inside or outside the U.S. – that do business with Iran.
“As Europeans, we have clearly told the Americans that we consider phasing out the nuclear deal with Iran a mistake., ” Maas said in an op-ed for Handelsblatt on Wednesday. “Meanwhile, first U.S. sanctions are back in force. In this situation, it is of strategic importance that we clearly tell Washington: we want to work together. But we will not let you act over our heads. Therefore, it was right to protect European companies from legal sanctions,” he said.
It is therefore essential that we strengthen European autonomy by setting up payment channels independent of the U.S., creating a European Monetary Fund and building an independent SWIFT system. The devil is in a thousand details,” he added. “But every day that the (Iran) agreement continues to exist is better than the highly explosive crisis that otherwise looms in the Middle East.”
Heiko Maas
Look at the words that Maas uses: “European autonomy” and “channels independent of the U.S.”. What is happening here? A revolt against the American empire. As the Germans under Gainas in the 4th century revolted against the Byzantine empire, the Germans today are revolting — although so far diplomatically — against the American hegemony.
NUCLEAR GERMANY
The breakdown of the bind of the gold standard was something that presaged war. One of the things that weakened the gold standard was the nationalisms of countries, such as German and Japanese nationalisms. Today we are seeing the US really voluntarily allowing and openly encouraging Germany, Japan and Turkey to become militarily independent, thus breaking the bind of American power and control. With the Trump administration backing Turkey’s expansion into Syria, supporting Japanese military boosting, and pushing Germany to increase it military capacity, it is obvious what is happening: America is facilitating the revival of the Ottoman Empire, the German Reich and Imperial Japan. The issue of a resurgence of German and Japanese militarism was made known in a report addressed to the Committee on Foreign Relations of the United States Senate in 2008, entitled: Chain Reaction: Avoiding a Nuclear Arms Race in the Middle East, in which it says:
“In the cases of Germany and Japan, both countries can easily obtain nuclear weapons but have chosen not to because of their integration beneath a NATO (Germany) or an American (Japan) security umbrella. Today, all of these countries have the technical capacity to obtain nuclear weapons in a matter of months or a few short years. … If these countries ever begin to question the reliability of this security umbrella, they would almost certainly reassess past nuclear weapons decisions.”
This is happening right now. Germans are using Trump’s ‘Germany must pay for its own defense” rhetoric as a justification to not only say that Germany needs to become militarily powerful, but that Germany should pursue the production of nuclear weapons. On August 12th, 2018, the influential German political scientist, Christian Hacke, wrote an article for the National Interest entitled, Why Germany Should Get the Bomb, in which he says:
First of all, Berlin should try to accommodate the United States in terms of its security policy: Germany’s insufficient defense spending must be increased quickly and substantially. The half-hearted approach we have seen so far is not enough. … Germany’s new role as enemy number one of the United States president forces it to radically reconsider its security policy.
…
Particularly Germany, as President Trump’s new enemy, can no longer count on U.S. support. This forces us into a disturbing conclusion: for the first time since 1949, the Federal Republic of Germany is without the protection of the U.S. nuclear shield. Accordingly, in case of a serious crisis, Germany would be defenseless! Yet, who talks about this issue? Who presents a well-reasoned argument about possible consequences? Clearly, the German security debate is in need of more intellectual and material contributions. In order to again convince the United States that both NATO, as well as its member state Germany, are worth defending, Germany must think and act, especially in regard to nuclear deterrence, with a view toward the future. … Since the U.S. nuclear guarantee has become increasingly doubtful and a common European deterrent does not seem to be forthcoming, only one possible conclusion can be drawn: in a serious crisis the only one Germany can truly rely on is itself. … Thus, our attention turns to the elephant in the room, which nobody in Germany wants to acknowledge: What about Germany as a nuclear power?”
Christian Hacke
Hacke goes on to use very martial language, declaring at the end of the article: “we must not content ourselves with high-handed criticism of Trump; instead, we must arm ourselves militarily, against all sides and by any means necessary.” And of course, Hacke gives the nationalist call with his push for militarism and nuclear weapons production, when he says:
“Finally, the ritualized idealization of European integration and the demonization of national interest has led the European Union into a dead end and deep crisis. Consequently, striking a balance between community interests and national considerations is long overdue, especially in Germany. In the face of new transatlantic uncertainties and potential confrontations, national defense based on an independent nuclear deterrence capacity must be given priority.”
Getting beyond all of the clout of diplomatic talk, this article is a call for militarist nationalism, and nothing more. Whats very interesting to point out is that this article pushing for a nuclear Germany was published by the National Interest, which was founded by a Irving Kristol, the founder of neoconservatism and the father of Bill Kristol who is the founder of PNAC (Project for the New American Century), one of the biggest pushers for the Iraq War.
The duration of time between World War One and World War Two is very short (just 21 years), and the reason for this is that there were no nuclear weapons until the end of the Second World War. The only reason why we have not had a world war since 1945 is because of nuclear weapons. Right when all of the major powers have nuclear weapons, then the idea of “nuclear deterrence” is obsolete, because countries would use their nukes on each other. Once countries like Germany, Turkey and Japan go nuclear, then another world war is a very real event for the future.
The polarization of the EU with Brexit is another sign of a coming European war. When an empire, confederacy or bloc breaks down, it foreshadows conflict. The break down of the monetary system of the gold standard after World War One was a sign of impending war. The loss of enthusiasm of the current ways of the European Union, alongside a drive for independence from the American security umbrella, signifies that the Germans want to use their own weapons, which means militarism. Yanis Varoufakis makes the observation that:
“The moment a monetary union between different nations begins to fragment, and as the fault lines expand inexorably, only serious dialogue and a readiness to return to the drawing board can mend the fences on which peace and shared prosperity must rely. The lack of such dialogue in the 1930s led to the disintegration to that era’s common currency: the gold standard. Eighty years later, it is happening all over again in a Europe that ought to know better. Europeans have taken far too long to understand that 2008 was our version of the tragic generation’s 1929. Wall Street was the epicenter on both occasions” (And The Weak Suffer What They Must?, preface, p. xxvii)
When the Bohemian protestants revolted against the Hapsburg Empire in 1618, it escalated into a Thirty Years War involving most of Europe and the Ottoman Empire, with the Protestant powers and their Catholic French allies and Muslim Turkish allies on one side, and the Catholics on the other. The point is, when a powerful hegemony fragments, unintentionally or intentionally, it means war is on the horizon.
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