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Sarajevo Is The Fulcrum Of Modern History: The Great War And Its Terrible Aftermath

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Submitted by David Stockman of Contra Corner blog,

One hundred years ago today the world was shook loose of its moorings. Every school boy knows that the assassination of the archduke of Austria at Sarajevo was the trigger that incited the bloody, destructive conflagration of the world’s nations known as the Great War. But this senseless eruption of unprecedented industrial state violence did not end with the armistice four years later.

In fact, 1914 is the fulcrum of modern history. It is the year the Fed opened-up for business just as the carnage in northern France closed-down the prior magnificent half-century era of liberal internationalism and honest gold-backed money. So it was the Great War’s terrible aftermath - a century of drift toward statism, militarism and fiat money - that was actually triggered by the events at Sarajevo.

Unfortunately, modern historiography wants to keep the Great War sequestered in a four-year span of archival curiosities about battles, mustard gas and monuments to the fallen. But the opposite historiography is more nearly the truth. The assassins at Sarajevo triggered the very warp and woof of the hundred years which followed.

The Great War was self-evidently an epochal calamity, especially for the 20 million combatants and civilians who perished for no reason that is discernible in any fair reading of history, or even unfair one. Yet the far greater calamity is that  Europe’s senseless fratricide of 1914-1918 gave birth to all the great evils of the 20th century— the Great Depression, totalitarian genocides, Keynesian economics,  permanent  warfare states, rampaging central banks and the exceptionalist-rooted follies of America’s global imperialism.

Indeed, in Old Testament fashion, one begat the next and the next and still the next. This chain of calamity originated in the Great War’s destruction of sound money, that is, in the post-war demise of the pound sterling which previously had not experienced a peacetime change in its gold content for nearly two hundred years.

Not unreasonably, the world’s financial system had become anchored on the London money markets where the other currencies traded at fixed exchange rates to the rock steady pound sterling—which, in turn, meant that prices and wages throughout Europe were expressed in common money and tended toward transparency and equilibrium.

This liberal international economic order—that is, honest money, relatively free trade, rising international capital flows and rapidly growing global economic integration—-resulted in  a 40-year span between 1870 and 1914 of rising living standards, stable prices, massive capital investment and prolific  technological progress that was never equaled—either before or since.

During intervals of war, of course, 19th century governments had usually suspended gold convertibility and open trade in the heat of combat.  But when the cannons fell silent, they had also endured the trauma of post-war depression until wartime debts had been liquidated and inflationary currency expedients had been wrung out of the circulation. This was called “resumption” and restoring convertibility at the peacetime parities was the great challenge of post-war normalizations.

The Great War, however, involved a scale of total industrial mobilization and financial mayhem that was unlike any that had gone before.  In the case of Great Britain, for example, its national debt increased 14-fold, its price level doubled, its capital stock was depleted, most off-shore investments were liquidated and universal wartime conscription left it with a massive overhang of human and financial liabilities.

Yet England was the least devastated. In France, the price level inflated by 300 percent, its extensive Russian investments were confiscated by the Bolsheviks and its debts in New York and London catapulted to more than 100 percent of GDP.

Among the defeated powers, currencies emerged nearly worthless with the German mark at five cents on the pre-war dollar, while wartime debts—especially after the Carthaginian peace of Versailles—–soared to crushing, unrepayable heights.

In short, the bow-wave of debt, currency inflation and financial disorder from the Great War was so immense and unprecedented that the classical project of post-war liquidation and “resumption” of convertibility was destined to fail.  In fact, the 1920s were a grinding, sometimes inspired but eventually failed struggle to resume the international gold standard, fixed parities, open world trade and unrestricted international capital flows.

Only in the final demise of these efforts after 1929 did the Great Depression, which had been lurking all along in the post-war shadows, come bounding onto the stage of history.

America’s Needless Intervention In The Great War And The Ensuing Chain of  20th Century Calamities

The Great Depression’s tardy, thoroughly misunderstood and deeply traumatic arrival happened compliments of the United States. In the first place, America’s wholly unwarranted intervention in April 1917 prolonged the slaughter, doubled the financial due bill and generated a cockamamie peace, giving rise to totalitarianism among the defeated powers and Keynesianism among the victors. Choose your poison.

Even conventional historians like Niall Ferguson admit as much. Had Woodrow Wilson not misled America on a messianic crusade, the Great War would have ended in mutual exhaustion in 1917 and both sides would have gone home battered and bankrupt but no danger to the rest of mankind. Indeed, absent Wilson’s crusade there would have been no allied victory, no punitive peace, and no war reparations; nor would there have been a Leninist coup in Petrograd or Stalin’s barbaric regime.

Likewise, Churchill’s starvation blockade would not have devastated post-Armistice Germany, nor would there have been the humiliating signing of the war guilt clause by German officials at Versailles. And the subsequent financial chaos of 1919-1923 would not have happened either—-meaning no “stab in the back” myth, no Hitler, no Nazi dystopia, no Munich, no Sudetenland and Danzig corridor crises, no British war to save Poland, no final solution and holocaust, no global war against Germany and Japan and no incineration of 200,000 civilians at Hiroshima and Nagasaki.

Nor would there have followed a Cold War with the Soviets or CIA sponsored coups and assassinations in Iran, Guatemala, Indonesia, Brazil, Chile and the Congo, to name a few. Surely there would have been no CIA plot to assassinate Castro, or Russian missiles in Cuba or a crisis that took the world to the brink of annihilation. There would have been no Dulles brothers, no domino theory and no Vietnam slaughter, either.

Nor would we have launched Charlie Wilson’s War to arouse the mujahedeen and train the future al Qaeda. Likewise, there would have been no shah and his Savak terror, no Khomeini-led Islamic counter-revolution, no US aid to enable Saddam’s gas attacks on Iranian boy soldiers in the 1980s.

Nor would there have been an American invasion of Arabia in 1991 to stop our erstwhile ally Hussein from looting the equally contemptible Emir of Kuwait’s ill-gotten oil plunder—or, alas, the horrific 9/11 blowback a decade later.

Most surely, the axis-of-evil—-that is, the Washington-based Cheney-Rumsfeld-neocon axis—- would not have arisen, nor would it have foisted a $1 trillion Warfare State budget on 21st century America.

 

 The 1914-1929 Boom Was An Artifact of War And Central Banking

A second crucial point is that the Great War enabled the already rising American economy to boom and bloat in an entirely artificial and unsustainable manner for the better part of 15 years. The exigencies of war finance  also transformed the nascent Federal Reserve into an incipient central banking monster in a manner wholly opposite to the intentions of its great legislative architect—the incomparable Carter Glass of Virginia.

During the Great War America became the granary and arsenal to the European Allies—-triggering an eruption of domestic investment and production that transformed the nation into a massive global creditor and powerhouse exporter virtually overnight.

American farm exports quadrupled, farm income surged from $3 billion to $9 billion, land prices soared, country banks proliferated like locusts and the same was true of industry. Steel production, for example, rose from 30 million tons annually to nearly 50 million tons during the war.

Altogether, in six short years $40 billion of money GDP became $92 billion in 1920—a sizzling 15 percent annual rate of gain.

Needless to say, these fantastic figures reflected an inflationary, war-swollen economy—-a phenomena that prudent finance men of the age knew was wholly artificial and destined for a thumping post-war depression. This was especially so because America had loaned the Allies massive amounts of money to purchase grain, pork, wool, steel, munitions and ships. This transfer amounted to nearly 15 percent of GDP or $2 trillion equivalent in today’s economy, but it also amounted to a form of vendor finance that was destined to vanish at war’s end.

Carter Glass’ Bankers’ Bank: The Antithesis Of Monetary Central Planning

As it happened, the nation did experience a brief but deep recession in 1920, but this did not represent a thorough-going end-of-war “de-tox” of the historical variety.  The reason is that America’s newly erected Warfare State had hijacked Carter Glass “banker’s bank” to finance Wilson’s crusade.

Here’s the crucial background: When Congress acted on Christmas Eve 1913, just six months before Archduke Ferdinand’s assassination, it had provided no legal authority whatsoever for the Fed to buy government bonds or undertake so-called “open market operations” to finance the public debt.  In part this was due to the fact that there were precious few Federal bonds to buy. The  public debt then stood at just $1.5 billion, which is the same figure that had pertained 51 years earlier at the battle of Gettysburg, and amounted to just 4 percent of GDP or $11 per capita.

Thus, in an age of balanced budgets and bipartisan fiscal rectitude, the Fed’s legislative architects had not even considered the possibility of central bank monetization of the public debt, and, in any event, had a totally different mission in mind.

The new Fed system was to operate decentralized “reserve banks” in 12 regions—most of them far from Wall Street in places like San Francisco, Dallas, Kansas City and Cleveland.  Their job was to provide a passive “rediscount window” where national banks within each region could bring sound, self-liquidating commercial notes and receivables to post as collateral in return for cash to meet depositor withdrawals or to maintain an approximate 15 percent cash reserve.

Accordingly, the assets of the 12 reserve banks were to consist entirely of short-term commercial paper arising out of the ebb and flow of commerce and trade on the free market, not the debt emissions of Washington.  In this context, the humble task of the reserve banks was to don green eyeshades and examine the commercial collateral brought by member banks, not to grandly manage the macro economy through targets for interest rates, money growth or credit expansion—to say nothing of targeting jobs, GDP, housing starts or the Russell 2000, as per today’s fashion.

Even the rediscount rate charged to member banks for cash loans was to float at a penalty spread above money market rates set by supply and demand for funds on the free market.

The big point here is that Carter Glass’ “banker’s bank” was an instrument of the market, not an agency of state policy. The so-called economic aggregates of the later Keynesian models—-GDP, employment, consumption and investment—were to remain an unmanaged outcome on the free market, reflecting the interaction of millions of producers, consumers, savers, investors, entrepreneurs and even speculators.

In short, the Fed as “banker’s bank” had no dog in the GDP hunt. Its narrow banking system liquidity mission would not vary whether the aggregates were growing at 3 percent or contracting at 3 percent.

What would vary dramatically, however, was the free market interest rate in response to shifts in the demand for loans or supply of savings.  In general this meant that investment booms and speculative bubbles were self-limiting: When the demand for credit sharply out-ran the community’s savings pool, interest rates would soar—thereby rationing demand and inducing higher cash savings out of current income.

This market clearing function of money market interest rates was especially crucial with respect to leveraged financial speculation—such as margin trading in the stock market.  Indeed, the panic of 1907 had powerfully demonstrated that when speculative bubbles built up a powerful head of steam the free market had a ready cure.

In that pre-Fed episode, money market rates soared to 20, 30 and even 90 percent at the peak of the bubble. In short order, of course, speculators in copper, real estate, railroads, trust banks and all manner of over-hyped stock were carried out on their shields—-even as JPMorgan’s men, who were gathered as a de facto central bank in his library on Madison Avenue, selectively rescued only the solvent banks with their own money at-risk.

Needless to say, these very same free market interest rates were a mortal enemy of deficit finance because they rationed the supply of savings to the highest bidder. Thus, the ancient republican moral verity of balanced budgets was powerfully reinforced by the visible hand of rising interest rates: deficit spending by the public sector automatically and quickly crowded out borrowing by private households and business.

How The Bankers’ Bank Got Hijacked To Fund War Bonds

And this brings us to the Rubicon of modern Warfare State finance.  During World War I the US public debt rose from $1.5 billion to $27 billion—an eruption that would have been virtually impossible without wartime amendments which allowed the Fed to own or finance U.S. Treasury debt.  These “emergency” amendments—it’s always an emergency in wartime—enabled a fiscal scheme that was ingenious, but turned the Fed’s modus operandi upside down and paved the way for today’s monetary central planning.

As is well known, the Wilson war crusaders conducted massive nationwide campaigns to sell Liberty Bonds to the patriotic masses. What is far less understood is that Uncle Sam’s bond drives were the original case of no savings? No credit? No problem!

What happened was that every national bank in America conducted a land office business advancing loans for virtually 100 percent of the war bond purchase price—with such loans collateralized by Uncle Sam’s guarantee. Accordingly, any patriotic American with enough pulse to sign the loan papers could buy some Liberty Bonds.

And where did the commercial banks obtain the billions they loaned out to patriotic citizens to buy Liberty Bonds?  Why the Federal Reserve banks opened their discount loan windows to the now eligible collateral of war bonds.

Additionally, Washington pegged the rates on these loans below the rates on its treasury bonds, thereby providing a no-brainer arbitrage profit to bankers.

Through this backdoor maneuver, the war debt was thus massively monetized.  Washington learned that it could unplug the free market interest rate in favor of state administered prices for money, and that credit could be massively expanded without the inconvenience of higher savings out of deferred consumption.  Effectively, Washington financed Woodrow Wilson’s crusade with its newly discovered printing press—-turning the innocent “banker’s bank” legislated in 1913 into a dangerously potent new arm of the state.

Bubbles Ben 1.0

It was this wartime transformation of the Fed into an activist central bank that postponed the normal post-war liquidation—-moving the world’s scheduled depression down the road to the 1930s. The Fed’s role in this startling feat is in plain sight in the history books, but its significance has been obfuscated by Keynesian and monetarist doctrinal blinders—that is, the presumption that the state must continuously manage the business cycle and macro-economy.

Having learned during the war that it could arbitrarily peg the price of money, the Fed next discovered it could manage the growth of bank reserves and thereby the expansion of credit and the activity rate of the wider macro-economy. This was accomplished through the conduct of “open market operations” under its new authority to buy and sell government bonds and bills—something which sounds innocuous by today’s lights but was actually the fatal inflection point. It transferred the process of credit creation from the free market to an agency of the state.

As it happened, the patriotic war bond buyers across the land did steadily pay-down their Liberty loans, and, in turn, the banking system liquidated its discount window borrowings—-with a $2.7 billion balance in 1920 plunging 80 percent by 1927. In classic fashion, this should have caused the banking system to shrink drastically as war debts were liquidated and war-time inflation and malinvestments were wrung out of the economy.

But big-time mission creep had already set in.  The legendary Benjamin Strong had now taken control of the system and on repeated occasions orchestrated giant open market bond buying campaigns to offset the natural liquidation of war time credit.

Accordingly, treasury bonds and bills owned by the Fed approximately doubled during the same 7-year period. Strong justified his Bernanke-like bond buying campaigns of 1924 and 1927 as helpful actions to off-set “deflation” in the domestic economy and to facilitate the return of England and Europe to convertibility under the gold standard.

But in truth the actions of Bubbles Ben 1.0 were every bit as destructive as those of Bubbles Ben 2.0.

In the first place, deflation was a good thing that was supposed to happen after a great war. Invariably, the rampant expansion of war time debt and paper money caused massive speculations and malinvestments that needed to be liquidated.

The Bank of England’s Perfidy

Likewise, the barrier to normalization globally was that England was unwilling to fully liquidate its vast wartime inflation of wage, prices and debts. Instead, it had come-up with a painless way to achieve “resumption” at the age-old parity of $4.86 per pound; namely, the so-called gold exchange standard that it peddled assiduously through the League of Nations.

The short of it was that the British convinced France, Holland, Sweden and most of Europe to keep their excess holdings of sterling exchange on deposit in the London money markets, rather than convert it to gold as under the classic, pre-war gold standard.

This amounted to a large-scale loan to the faltering British economy, but when Chancellor of the Exchequer Winston Churchill did resume convertibility in April 1925 a huge problem soon emerged.  Churchill’s splendid war had so debilitated the British economy that markets did not believe its government had the resolve and financial discipline to maintain the old $4.86 parity. This, in turn, resulted in a considerable outflow of gold from the London exchange markets, putting powerful contractionary pressures on the British banking system and economy.

 Real Cause of the Great Depression: Collapse of the Artificial 1914-1929 Boom

In this setting, Bubbles Ben 1.0  (New York Fed Governor Benjamin Strong) stormed in with a rescue plan that will sound familiar to contemporary ears. By means of his bond buying campaigns he sought to drive-down interest rates in New York relative to London, thereby encouraging British creditors to keep their money in higher yielding sterling rather than converting their claims to gold or dollars.

The British economy was thus given an option to keep rolling-over its debts and to continue living beyond its means. For a few years these proto-Keynesian “Lords of Finance” —- principally Ben Strong of the Fed and Montague Norman of the BOE—-managed to kick the can down the road.

But after the Credit Anstalt crisis in spring 1931, when creditors of shaky banks in central Europe demanded gold, England’s precarious mountain of sterling debts came into the cross-hairs.  In short order, the money printing scheme of Bubbles Ben 1.0 designed to keep the Brits in cheap interest rates and big debts came violently unwound.

In late September a weak British government defaulted on its gold exchange standard duty to convert sterling to gold, causing the French, Dutch and other central banks to absorb massive overnight losses. The global depression then to took another lurch downward.

Inventing  Bubble Finance : The Call Money Market Explosion Before 1929

But central bankers tamper with free market interest rates only at their peril—-so the domestic malinvestments and deformations which flowed from the monetary machinations of Bubbles Ben 1.0 were also monumental.

Owing to the splendid tax-cuts and budgetary surpluses of Secretary Andrew Mellon, the American economy was flush with cash, and due to the gold inflows from Europe the US banking system was extraordinarily liquid. The last thing that was needed in Roaring Twenties America was the cheap interest rates—-at 3 percent and under—that resulted from Strong’s meddling in the money markets.

At length, Strong’s ultra-low interest rates did cause credit growth to explode, but it did not end-up funding new steel mills or auto assembly plants.  Instead, the Fed’s cheap debt flooded into the Wall Street call money market where it fueled that greatest margin debt driven stock market bubble the world had ever seen. By 1929, margin debt on Wall Street had soared to 12 percent of GDP or the equivalent of $2 trillion in today’s economy (compared to $450 billion at present).

The Original Sub-Prime: Wall Street’s 1920s Foreign Bond Mania

As is well known, much economic carnage resulted from the Great Crash of 1929. But what is less well understood is that the great stock market bubble also spawned a parallel boom in foreign bonds—-a specie of Wall Street paper that soon proved to be the sub-prime of its day. Indeed, Bubbles Ben 1.0 triggered a veritable cascade of speculative borrowing that soon spread to the far corners of the globe, including places like municipality of Rio de Janeiro, the Kingdom of Denmark and the free city of Danzig, among countless others.

It seems that the margin debt fueled stock market drove equity prices so high that big American corporations with no needs for cash were impelled to sell bundles of new stock anyway in order to feed the insatiable appetites of retail speculators. They then used the proceeds to buy Wall Street’s high yielding “foreign bonds”, thereby goosing their own reported earnings, levitating their stock prices even higher and causing the cycle to be repeated again and again.

As the Nikkei roared to 50,000 in the late 1980s, the Japanese were pleased to call this madness “zaitech”, and it didn’t work any better the second time around. But the 1920s version of zaitech did generate prodigious sums of cash that foreign borrowers cycled right back to exports from America’s farms, mines and factories.  Over the eight years ending in 1929, the present day equivalent of $1.5 trillion was raised on Wall Street’s red hot foreign bond market, meaning that the US economy simply doubled-down on the vendor finance driven export boom that had been originally sparked by the massive war loans to the Allies.

In fact, over the period 1914-1929 the U. S. loaned overseas customers—-from the coffee plantations of Brazil to the factories of the Ruhr—-the modern day equivalent of $3.5 trillion to prop-up demand for American exports. The impact was remarkable. In the 15 years before the war American exports had crept up slowly from $1.6 billion to $2.4 billion per year, and totaled $35 billion over the entire period.  By contrast, shipments from American farms and factors soared to nearly $11 billion annually by 1919 and totaled $100 billion—three times more—over the 15 years through 1929.

So this was vendor finance on a vast scale——reflecting the exact mercantilist playbook that Mr. Deng chanced upon 60 years later when he opened the export factories of East China, and then ordered the People’s Bank to finance China’s exports of T-shirts, sneakers, plastic extrusions, zinc castings and mini-backhoes via the continuous massive purchases of Uncle Sam’s bonds, bills and guaranteed housing paper.

Our present day Keynesian witch doctors antiseptically label the $3.8 trillion that China has accumulated through this massive currency manipulation and repression as “foreign exchange reserves”, but they are nothing of the kind. If China had honest exchange rates, it reserves would be a tiny sliver of today’s level.

In truth, China’s $3.8 trillion of reserves are a gigantic vendor loan to its customers. This is a financial clone of the $3.5 trillion equivalent that the great American creditor and export powerhouse loaned to the rest of the world between 1914 and 1929.

Needless to say, after the October 1929 crash, the Wall Street foreign bond market went stone cold, with issuance volume dropping by 95 percent within a year or two. Thereupon foreign bond default rates suddenly soared because sub-prime borrowers all over the world had been engaged in a Ponzi—-tapping new money on Wall Street to pay interest on the old loans.

By 1931 foreign bonds were trading at 8 cents on the dollar—-not coincidentally in the same busted zip code where sub-prime mortgage bonds ended up in 2008-2009.

Still, busted bonds always mean a busted economic cycle until the malinvestments they initially fund can be liquidated or repurposed. Thus, the 1929 Wall Street bust generated a devastating crash in US exports as the massive vendor financed foreign demand for American farm and factory goods literally vanished.  By 1933 exports had slipped all the way back to the $2.4 billion level of 1914.

1929-1933 Foreign Bond and US Export Bust: True Source of the Great Depression

That’s not all. As US export shipments crashed by 70 percent between 1929 and 1933, there were ricochet effect throughout the domestic economy.

This artificial 15-year export boom had caused the production capacity of American farms and factories to become dramatically oversized, meaning that during this interval there had occurred a domestic capital spending boom of monumental proportions.  While estimated GDP grew by a factor of 2.5X during 1914-1929, capital spending by manufacturers rose by 7X.  Auto production capacity, for example, increased from 2 million vehicles annually in 1920 to more than 6 million by 1929.

Needless to say, when world export markets collapsed, the US economy was suddenly drowning in excess capacity. In short order, the decade-long capital spending boom came to a screeching halt, with annual outlays for plant and equipment tumbling by 80 percent in the four years after 1929, and shipments of items like machine tools plummeting by 95 percent.

Not surprisingly, in the wake of this drastic downshift in output, American business also found itself drowning in excess inventories.  Accordingly, nearly half of all production inventories extant in 1929 were liquidated by 1933, resulting in a shocking 20 percent hit to GDP—a blow that would amount to a $3 trillion drop in today’s economy.

Finally, Bubbles Ben 1.0 had induced vast but temporary “wealth effects” just like his present day successor.  Stock prices surged by 150 percent in the final three years of the mania. There was also an explosion of consumer installment loans for durable goods and mortgages for homes.  Indeed, mortgage debt soared by nearly 4X during the decade before the crash, while boom-time sales of autos, appliances and radios nearly tripled durable goods sales in the eight years ending in 1929.

All of this debt and wealth effects induced spending came to an abrupt halt when stock prices came tumbling back to earth.  Durable goods and housing plummeted by 80 percent during the next four years. In the case of automobiles, where stock market lottery winners had been buying new cars hand over fist, the impact was especially far reaching. After sales peaked at 5.3 million units in 1929, they dropped like a stone to 1.4 million vehicles in 1932, meaning that this 75 percent shrinkage of auto sales cascaded through the entire auto supply chain including metal working equipment, steel, glass, rubber, electricals and foundry products.

Thus, the Great Depression was born in the extraordinary but unsustainable boom of 1914-1929 that was, in turn, an artificial and bloated project of the warfare and central banking branches of the state, not the free market. Nominal GDP, which had been deformed and bloated to $103 billion by 1929, contracted massively, dropping to only $56 billion by 1933.

Crucially, the overwhelming portion of this unprecedented contraction was in exports, inventories, fixed plant and durable goods—the very sectors that had been artificially hyped.  These components declined by $33 billion during the four year contraction and accounted for fully 70 percent of the entire drop in nominal GDP.

So there was no mysterious loss of that Keynesian economic ether called “aggregate demand”, but only the inevitable shrinkage of a state induced boom. It was not the depression bottom of 1933 that was too low, but the wartime debt and speculation bloated peak in 1929 that had been unsustainably too high.

 

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Sat, 06/28/2014 - 12:48 | 4905451 moneybots
moneybots's picture

"So there was no mysterious loss of that Keynesian economic ether called “aggregate demand”, but only the inevitable shrinkage of a state induced boom. It was not the depression bottom of 1933 that was too low, but the wartime debt and speculation bloated peak in 1929 that had been unsustainably too high."

 

And here we sit with a 59 trillion debt bubble waiting to burst and deflate, just as in 1929.

 

That so many think that Bernanke saved us from a Great Depression.

Sat, 06/28/2014 - 12:53 | 4905468 onlooker
onlooker's picture

Could be that Germany would have won without the USA officially entering the war. US Expeditionary forces were in Europe before the War Declaration. Westinghouse was manufacturing a Mosin rifle and Hopkins & Allen the Mauser;  somewhat covertly. Wilson had seen the horrors of the Civil War and seemed to be opposed to involvement. However, France and England were long standing allies and when it appeared the Great War was about to be won by Germany, Wilson made a decision that I question. The US certainly turned the tide. A German victory before being exhausted might have saved enough men and supplies for Germany to take over Russia from the Reds and Whites. More than likely not. Communism in Russia was not a byproduct of WW1. The army revolt however can not be discounted.

 

IF WW1 was indeed set off by a single shooter without a conspiracy theory, it may be that the World Powers saw an opportunity to grab more of the Colonial territory from each other. A great deal of the World was a spoils of War prize.

 

Blaming the US may have some validity especially the truce. But, WW1 and WW2 were not started by the US and the isolationist mentality of the US trumps a premeditated bellicose mind set. Remember the WW2 start was around 1939 and the US got in a couple of years later, similar to WW1 except no attack on US soil. If Germany had avoided attacks on US shipping to England, Wilson might have delayed entry.

 

The Wars with Mexico and Spain might be a different discussion.

Sat, 06/28/2014 - 18:57 | 4906051 optimator
optimator's picture

Had the U.S. stood out of the war the exhausted Central and Allied powers would have called a halt to the war.  

Sun, 06/29/2014 - 18:38 | 4908030 logicalman
logicalman's picture

US isolationism was as believable as Obama's transparency.

Great for propaganda purposes.

 

Sat, 06/28/2014 - 12:54 | 4905469 withglee
withglee's picture

Should I read past the 2nd paragraph?

In fact, 1914 is the fulcrum of modern history. It is the year the Fed opened-up for business just as the carnage in northern France closed-down the prior magnificent half-century era of liberal internationalism and honest gold-backed money. So it was the Great War’s terrible aftermath - a century of drift toward statism, militarism and fiat money - that was actually triggered by the events at Sarajevo.

"honest gold backed money" is an oxymoron. There is only about 1 oz of gold per person on Earth. It takes about 1oz of gold to trade for production of a new ounce of gold. That is about $1300. That is the value of gold. To back all money a person contols with $1300 worth of gold is just plain silly ... and far from honest.

"fiat money": mentioned as if it was a bad thing. Money is "a promise to complete a trade". All trading promises "are" created out of thin air ... there's nothing novel in that. Making trading promises "is not" a bad thing. It's what make the world go around.

Todd Marshall
Plantersville, TX

 


Sat, 06/28/2014 - 13:39 | 4905520 Hubbs
Hubbs's picture

When you trade with a promise with your local neighbor whom you know well, that ("trading promises" is a good thing may be  true.) But in trades done locally, it is more likely to be done old fashioned way- physical barter- than with a conglomerate online purchase from Amazon. 

 

The way I see it, when you use fiat to pay for an object or service (in person with cash), you are making a promise only as far as the fiat will be worth something when the payee goes to redeem it. So it really is a one sided trade

Sat, 06/28/2014 - 15:06 | 4905640 Matt
Matt's picture

$1300 is the current PRICE of gold, not its value. 99% of the trading volume for gold is paper contracts settled in dollars; if this were not the case, the price of gold might be far different, and in a world where gold was used as money, far, far different.

Having gold-backed money and using gold directly as money is very different. You could, for example, have gold holdings for nations, and at the end of each year, move the gold between each nation's accounts to settle trade imbalances.

The value of each currency would then be supply divided by gold reserves, and would more directly pressure countries not to run sustained excessive imbalances, since that would result in the currency devaluing or appreciating rapidly. 

Trading based on promises is ok, but in case the one party defaults on their promise, it is nice to have something gauranteed, since it both encourages the person making the promise to work harder to keep the promise, while also reassuring the other party.

Sun, 06/29/2014 - 09:45 | 4906893 shovelhead
shovelhead's picture

So what happens if I have a printing press that takes your unit of promise and dilutes it to infinity?

Look at a dollar as a unit of energy you expend to recieve one and I have a power plant. I have a distinct advantage, no?

$1300 for gold? Take all the wealth in the world and divide it by ounces of gold above ground in the world and you get your value of gold.

A bit above 1300 but 1300 is a dollar value. We aren't using dollars here.

Sun, 06/29/2014 - 12:47 | 4907179 Seer
Seer's picture

Yes, but...

The ISSUE is less about the currency and MORE about the underlying operationing premise.  In the case of our "modern" economic system the failing is that it's based on the improbable: perpetual growth on a finite planet.  Since there's still gold in the ground one could say that that encourages growth; therefore, it's still aiding into the underlying bad premise.

In oder to prove some sense of true viability one has to demonstrate how a given system can maintain stability, how a given system can be SUSTAINABLE (and growth is NOT sustainable).

So, yes, I agree with:

"Making trading promises "is not" a bad thing."

The problem, the "bad thing," is that it's based on top of the premise of growth- this essentially buys into a Ponzi.

Sun, 06/29/2014 - 18:40 | 4908033 logicalman
logicalman's picture

Money and currency are NOT the same thing, FFS.

Sat, 06/28/2014 - 13:51 | 4905536 Hubbs
Hubbs's picture

From this article, I can gather:

The Federal Reserve was the demon seed that was planted.  The situation  Europe was in at the time merely provided fertile ground for the seed to take root.  Wars cost money, and banks love to loan it to desperate governments to pay for them.

Would all the susequent wars still have taken place had the FED/central banking- debt based fiat- fractional reserve system NOT been created  around 1913-4?. Probably. The reason: Oil in the Middle East. One way or another, developing countries were doomed to fight over it. Arguably, it has for now replaced gold as the 6,000 year old store of value/money.

Sun, 06/29/2014 - 01:59 | 4906591 Seer
Seer's picture

Glad that someone else can see the REAL dots!

"The reason: Oil in the Middle East."

Don't forget Russia!  I note below (somewhere) that I believe that Germany had its eyes on Russian oil before WWI, and that, clearly, they most certainly did as part of their great plan for WWII: they found out the hard way that it's very difficult to win wars for resources when you don't have the very resources that you're needing!

"Arguably, it has for now replaced gold as the 6,000 year old store of value/money."

It's BETTER than all other stores of money as far as power, therefore ability to "control," goes.  Oil is a direct connection to make work happen, it's ENERGY!  All else is a chit for energy (in a roundabout way): and WAY back in time it was about slavery, but slaves are a bit trickier to steer toward making work "happen."  With oil came real controllable industry, and with industry came the ability to create machines that wouldn't care if they were ripping people to shreds.

Sat, 06/28/2014 - 14:23 | 4905580 AustriAnnie
AustriAnnie's picture

If not for the death of Archduke Rudolph, who was tutored by Carl Menger, history may have unfolded differently.  Perhaps the war would not have started at all, perhaps Rudolph would have ruled as an Austrian economist?  One suicide that changed the world.  Talk about a butterfly flapping its wings...

Sat, 06/28/2014 - 15:35 | 4905698 Terminus C
Terminus C's picture

Did this sucide happen to involve a nailgun or a hot tub?  There is a good chance that certain individuals would not have been happy with an "Austrian" Austrian...

Sat, 06/28/2014 - 16:50 | 4905819 AustriAnnie
AustriAnnie's picture

It is possible........or even probable....

Like many political coverups where the truth is buried.  

Sun, 06/29/2014 - 10:15 | 4906918 shovelhead
shovelhead's picture

An interesting twist of history.

All done in by a 17 year old.

I know the feeling...lol.

Sat, 06/28/2014 - 15:07 | 4905641 tumblemore
tumblemore's picture

Wars are the ultimate in debt-fuelled spending.

I wouldn't say that means *all* wars are therefore bankster wars as human conflict is natural but I would say banksters make them bigger and longer and more expensive and thus the ever larger mountains of debt left afterwards are more damaging to the peace. Also the economic crises caused by the banksters on a regular basis magnify pre-existing tensions and so are often the primary cause of wars and lastly wars can be used as a tool to bounce an elite into instituting central banking.

 

That's not to deny that some wars may be quite deliberately created by the banksters e.g. the global war we're currently being led into seems to be almost entirely created by the bankster caste to get themselves out of the various holes they're in.

 

"They want their gold back."

"What! we sold that back in '78."

"What are we going to do!"

"Start a war and pack for Hong Kong!"

 

 

Sun, 06/29/2014 - 12:58 | 4907199 Seer
Seer's picture

Happy to see someone else make a good connection.

I'd state that the System essentially delays the inevitible and that this creates the build-up that eventually has to blow off the steam in some dramatic fashion*.  Bankers are all just part of this puzzle, part of the over-all game.  The conflicts and potential violence don't magically get removed by removing all of this, no more so than the notion that you can make risk disappear by spreading it around; a tradeoff would be that we'd more frequently experience/see direct but smaller threats.

* We dance around it but fail to call it for what it really is- an attempt to collect on bad debts; and if someone is horribly in debt and broke then it's basically senseless to think that one can collect.  Wars are what we do in place of debt jubilees: not saying that all would be great if we just did debt jubilees (not the case- the issue of insufficient resources doesn't go away [may get delayed]).

Sat, 06/28/2014 - 16:34 | 4905785 earleflorida
earleflorida's picture

"Griffin the Author of : 'The Creature from Jekyll Island'"    http://www.bigeye.com/griffin.htm     and current events... http://www.bigeye.com/news.htm    

the birthing of the FRB system

this was a two-fer?  America made money off the Great (WWI) War just as they played the neutrality card in WWII. all by design!

as Stock man says, the two sides were exhausted... but, Germany was turning the tide and could have won if not for the US going from neutral to become an integral part of the allied powers vs. the axis powers of Hungary/Austria, Germany, and the prize after all was the Ottoman  (       http://www.bing.com/images/search?q=ottoman+empire&qpvt=ottoman+empire&FORM=IGRE     )  Empire!      

the Rothschild's of France & Britain got Palestine which gave Israel to the Ashkenazi jews on Nov. 2, 1917!!! (ref:      http://en.wikipedia.org/wiki/Balfour_Declaration_1917       ) note: the US entered the War on April 6,1917 and within seven (7) months the Ottoman's had capitulated with the Great War ending Nov.11,1918.  america backed out from the League of Nations which was the genesis for WWII! the allied powers crucified Germany!!!

what happens next is the sudden outbreak of the Spanish Flu which killed almost as many that died from fighting in war... ?  was it deliberate???   (    http://en.wikipedia.org/wiki/1918_flu_pandemic    )

and lastly the Bonus for Enlisting in the Great War was never paid  (    http://en.wikipedia.org/wiki/Bonus_Army     )   Note:  a young Eisenhower and a gun toting MacArthur that killed the veterans disobeying Eisenhower's orders!   

the FRBsystem was design and fabricated as a working/living manuscript to accomodate the vast wealth to be made in the Middle East from oil which the British and French wanted but were trump by America's Rockefeller's. america was now top dog in the hegemonic kingdom of a neo globalization.

jmo   Thankyou Tyler   

nice read David

Ps. perhaps i could elaborate moar, but you can see how these guys at Jekyll Island were very diviate and treacherous, when they could start world wars for various other reasons than inequality.          

Sat, 06/28/2014 - 16:34 | 4905806 tony wilson
tony wilson's picture

griffin is a bit of a word thief.

 

eustace mullins the secrets of the federal reserve is the original source book

also anything by

anthonty c sutton

 

the empire of the city by e.c. knuth

 

Sat, 06/28/2014 - 17:23 | 4905872 earleflorida
earleflorida's picture

perhaps, but Eustace could never ligitimately connect the dots

when you own the printing press of knowledge-- it is unfortunately scrubbed daily for fingerprints 

i will check out sutton and knuth

thanks

Sat, 06/28/2014 - 16:29 | 4905794 22winmag
22winmag's picture

Oh yeah?

 

JPM's revenue went up 8x from 1915 to 1916 on war profiteering while the U.S. was still supposedly neutral.

Sat, 06/28/2014 - 16:55 | 4905828 marriedgeordie
marriedgeordie's picture

The two biggest monsters coming out of that war, which the article forgot to mention, are communism and fascism

Sat, 06/28/2014 - 16:56 | 4905829 stiler
stiler's picture

Yeah, you got that right, you sure got that right. 

WW 1 started the end of all things. Get your spiritual house in order.

Sat, 06/28/2014 - 16:56 | 4905830 stiler
stiler's picture

Yeah, you got that right, you sure got that right. 

WW 1 started the end of all things. Get your spiritual house in order.

Sat, 06/28/2014 - 17:12 | 4905849 falak pema
falak pema's picture

This whole post is based on the fundamental flaw that the current industrial age is founded on the primary ETHICAL  principle of "sound money" and its messianic role in making civilization honest.

Its laughable to simplify the human experience meme to this simplistic view of life. The so called "golden age" of sound money was also the age of rampant slavery in the country that created industrial capitalism based on robbing the land from an indigenous population.

Yes, robbing Indian land followed the civil war which was supposed to cure that other ill : a South built on agrarian "cotton pickin" black slaves.

Its amazing how people now engaged in this new crusade against the FED's legacy can warp their mindsets to find expedient explanations that comfort past inbred prejudice; that markets are perfect and that they be the key to the future of humanity, PROVIDED we make the money line pure as the religion of Christ...Hahaha ! Pure money changers in the age of puritan "free market" meme! Some pipe dream.

Sarajevo was the signal that the political construct of COLONIAL IMPERIAL Europe had reached tipping point. Period.

That model spawned its own Nemesis; aka self destruction in thieves falling out for Lebensraum in old Europe and its colonies. 

Nothing new under the sun. And don't make up false Gods to find a new Messiah in a pure monetary construct. We ALL KNOW that Economists are just the Shamans of the political war lords. ZH has written enuff on that front.

So MONEY is a means its not the be all of civilization. Never will be.

Don't confound means and ends.

Sat, 06/28/2014 - 17:14 | 4905855 earleflorida
earleflorida's picture

nice.

Sun, 06/29/2014 - 01:47 | 4906584 Inbetween is pain
Inbetween is pain's picture

True that.  And let's suppose that America had not gotten involved and WWI had ended in a draw and all the direct consequences had not ocurred, e.g., Germany's burdensome war reparations and subsequent depression, the rise of Hitler etc.  So the 20th century would have just been filled with peace, love, and rainbows?  No doubt there would have been other terrible crises and wars, perhaps just as egregious as the history we know, perhaps even worse.  When you re-write history, all you can say is it would have been different, not better or worse.

Sun, 06/29/2014 - 10:53 | 4906970 blindman
blindman's picture

..." As Rob Kirby of Market Oracle wrote in 2008,

In the energy area [crude] – J.P. Morgan was 'granted' the rights to, effectively, set up the Central Bank of Iraq in Dec. 2003:

J.P. Morgan Chase was chosen by the Coalition Provisional Authority [CPA] to 'set up' the NEW Central Bank of Iraq [specifically, the Trade Bank of Iraq ]. Take note how this TRADE BANK only became operational in December of 2003:

• Trade Finance. The Trade Bank of Iraq (TBI) was established in July 2003 to facilitate trade of goods and services to and from Iraq by providing irrevocable letters of credit. The TBI officially became fully operational in December 2003 and has a services contract with a multi-international banking consortium led by JP Morgan Chase. Since opening in December , the Trade Bank of Iraq has issued or has pending 183 letters of credit, totaling $708.9 million in imports from thirty-one countries. Letters of credit have been issued on behalf of Iraqi Ministries as well as several state-owned enterprises.

In that capacity, Morgan was charged with developing the framework of collateralizing movable and immovable property for the nation of Iraq.
The fact is that one of the largest derivatives facilitators in the world is one the principal architects of the Trade Bank of Iraq, plus it is also well-known that J.P. Morgan has a direct connection[3] to the Rothschild banking dynasty;[4] a trend that is to be seen in virtually every central and major bank in existence across the planet." ....
http://www.activistpost.com/2012/09/state-owned-central-banks-are-real.html

Sun, 06/29/2014 - 11:15 | 4907008 blindman
blindman's picture

The issue which has swept down the centuries and which will have to be fought sooner or later is the people versus the banks.

Lord Acton
.
Read more at http://www.brainyquote.com/quotes/keywords/banks.html#GSCTW7BPBbDGkREz.99

Sun, 06/29/2014 - 01:47 | 4906585 Seer
Seer's picture

To "quote" Dire Straits (OK, written by Mark Knopfler):

I go down to Speaker's Corner I'm thunderstruck
They got free speech, tourists, police in trucks
Two men say they're Jesus, one of them must be wrong
There's a protest singer singing a protest song - he says
'They wanna have a war to keep their factories
They wanna have a war to keep us on our knees
They wanna have a war to stop us buying Japanese
They wanna have a war to stop Industrial Disease

Actually, the last line should be "They wanna have a war to PROMOTE Industrial Disease"

Seems that the lead up to WWI was all about a battle for industrial supremacy, which, could not happen without ready access to oil.  The British were reaching out to Mesopotamia for oil, the Germans were looking to Russia.

Some info on Russia's oil and gas history:

http://bellona.org/news/uncategorized/2007-12-1-1-russias-oil-and-gas-in...

You can see that leading up to the early 1900s there was quite a ramp up in oil extraction/production in Russia.  I'd be interested in seeing if there is any historical documents that contain an awareness by the Germans of this: it was pretty clear in WWII, as Germany's overall strategy for success depended on them gaining control over Russian oil (and had they done that then I doubt that we'd be talking about British bankers today).

So... it's about oil.  Well, it's oil because of what oil can do: power comes from the ability to do work, and there's nothing that can make work happen to the degree that oil can.

Sun, 06/29/2014 - 10:39 | 4906946 shovelhead
shovelhead's picture

Either your reading comprehension stinks or your overactive imagination ran away with you again.

Money is money. It's neither good or bad. It simply transmits value. Honest money keeps the counterfeiters at bay.

You conflate two issues. Because theft and slavery are profitable that money is somehow at fault. This is childish thinking.

People are at fault, not the coins in their pocket.

Sun, 06/29/2014 - 11:11 | 4907001 falak pema
falak pema's picture

As all dogmatic people you are not concentrating on what is outside the vision of your personal binoculars.

I'm NOT saying the money thread is not Important, I'm saying that power plays are MORE important. 

Its a question of telling the wood from the trees.

Why keep harping on the obvious? Why not look beyond? 

And, by keeping the discussion of civilization to ONLY the monetary thread you start to eat stale bread! 

Get some fresh air into your lungs, look out of the monetary box! 

I know its difficult here on the Hedge! 

Sun, 06/29/2014 - 18:52 | 4908059 logicalman
logicalman's picture

Money was invented to keep the rich and powerful rich & powerful.

Lot's of things fall into place when you realise that.

Sat, 06/28/2014 - 19:35 | 4906106 401K of Dooom
401K of Dooom's picture

Uh Tyler, why are you quoting Stockman?  He is accusing us of every sin in the book?  We did not cause all of the problems by getting involved with the first world war.  Let me ask one question, would Lenin have been more moderate if we had stayed home and tended the gardens?  Uh no because Lenin wanted to foist revolution on all of the world.  Stockman is a classic example of the Stockholm Syndrome.  I cannot believe this guy once worked in the Reagan Administration.  Now he is spewing all the crap the left says about our country.  My country, right or wrong!  If it is wrong, let it be right.  Still my country.  I hope he gets what he deserves!

Sat, 06/28/2014 - 20:17 | 4906171 AUD
AUD's picture

No. Overall this article is very good. It was indeed the central bank which financed the 'Great War'. It is also true that the original intent of the Fed was to discount commercial bills, not government bonds.

And I doubt the 'left' says any of this.

Sun, 06/29/2014 - 10:42 | 4906953 shovelhead
shovelhead's picture

He's reporting what happened. You don't like it, don't blame Stockman.

He draws his conclusions from the numbers. Where are you drawing yours?

Sat, 06/28/2014 - 21:24 | 4906271 ThroxxOfVron
ThroxxOfVron's picture

 

http://en.wikipedia.org/wiki/Armenian_Genocide

"Joint Austrian and German mission

As allies during the war, the Imperial German mission in the Ottoman Empire included both military and civilian components. Germany had brokered a deal with the Sublime Porte to commission the building of a railroad called theBaghdad Railway that would stretch from Berlin to the Middle East. At the beginning of 1915, Germany's diplomatic mission was led by Ambassador Hans Freiherr von Wangenheim who, upon his death in 1915, was succeeded by Count Paul Wolff Metternich. Like Morgenthau, von Wangenheim began receiving many disturbing messages from consular officials around the Ottoman Empire that detailed the massacres of Armenians. From the province ofAdana, Consul Eugene Buge reported that the CUP chief had sworn to massacre any Armenians who had survived the deportation marches.[30]:186 In June 1915, von Wangenheim sent a cable to Berlin reporting that Talaat had admitted that the deportations were not "being carried out because of 'military considerations alone'". One month later, he came to the conclusion that there "no longer was doubt that the Porte was trying to exterminate the Armenian race in the Turkish Empire".[47]:213

When Wolff-Metternich succeeded von Wangenheim, he continued to dispatch similar cables: "The Committee [CUP] demands the extirpation of the last remnants of the Armenians and the government must yield ... A Committee representative is assigned to each of the provincial administrations ... Turkification means license to expel, to kill or destroy everything that is not Turkish".[107]

Another notable figure in the German military camp was Max Erwin von Scheubner-Richter, who documented various massacres of Armenians. He sent fifteen reports regarding "deportations and mass killings" to the German chancellery. His final report noted that fewer than 100,000 Armenians were left alive in the Ottoman Empire: the rest having been exterminated (Germanausgerottet).[46]:329–30 Scheubner-Richter also detailed the methods of the Ottoman government, noting its use of the Special Organization and other bureaucratized instruments of genocide.

The Germans also witnessed the way Armenians were burned according to Israeli historian, Bat Ye'or, who writes: "The Germans, allies of the Turks in the First World War ... saw how civil populations were shut up in churches and burned, or gathered en masse in camps, tortured to death, and reduced to ashes".[108] German officers stationed in eastern Turkey disputed the government's assertion that Armenian revolts had broken out, suggesting that the areas were "quiet until the deportations began".[47]:212 Other Germans openly supported the Ottoman policy against the Armenians. As Hans Humann, the German naval attaché in Constantinople said to US Ambassador Henry Morgenthau:


Children taken in by Near East Relief

I have lived in Turkey the larger part of my life ... and I know the Armenians. I also know that both Armenians and Turks cannot live together in this country. One of these races has got to go. And I don't blame the Turks for what they are doing to the Armenians. I think that they are entirely justified. The weaker nation must succumb. The Armenians desire to dismember Turkey; they are against the Turks and the Germans in this war, and they therefore have no right to exist here.[42]:375

In a genocide conference held in 2001, professor Wolfgang Wipperman of the Free University of Berlin introduced documents evidencing that the German High Command was aware of the mass killings at the time but chose not to interfere or speak out.[46]:331 In his reports to Berlin in 1917, General Hans von Seeckt supported the reforming efforts of the Young Turks, writing that "the inner weakness of Turkey in their entirety, call for the history and custom of the new Turkish empire to be written".[109] Seeckt added that "Only a few moments of the destruction are still mentioned. The upper levels of society had become unwarlike, the main reason being the increasing mixing with foreign elements of a long standing unculture".[109] Seeckt blamed all of the problems of the Ottoman empire on the Jews and the Armenians, whom he portrayed as a fifth column working for the Allies.[109] In July 1918, Seeckt sent a message to Berlin stating that "It is an impossible state of affairs to be allied with the Turks and to stand up for the Armenians. In my view any consideration, Christian, sentimental, and political should be eclipsed by a hard, but clear necessity for war".[109]

Photographs exist that may also suggest the Germans participated in the mass killing and some of the German witnesses to the Armenian holocaust would go on to play a role in the Nazi regime. Konstantin Freiherr von Neurath, for example, who was attached to the Turkish 4th Army in 1915 with instructions to monitor "operations" against the Armenians, later became Hitler's foreign minister and "Protector of Bohemia and Moravia" during Reinhard Heydrich's terror in Czechoslovakia"

Sun, 06/29/2014 - 00:19 | 4906502 tbd108
tbd108's picture

This "the war started in the Balkans" is bank history nonsense. The war was between the British Empire (also known as the Bank of England) and the rising German Empire. The "first shots" were fired during the Franco-Prussian War that began in 1870. For forty years the Germans struggled to not be made English slaves but by 1912 decided that only fighting would prevent this (it had directly to do at that moment with who would rule Morocco). When WWI ended the British did their best to dismember Germany but we all know how that worked out. The most interesting story of our time is how Germany is going to go today. Obviously Merkle is a bank stooge but Germany industry looks east. If Germany tells London/New York to suck wind you will get to see the real end of WWI/WWII. If interested in the details on this period in history, not written by a banker stooge, try "Germany's Aims in the First World War" written by Fritz Fischer. It is quite dry by includes all of the important diplomatic dispatches by all of the principals. Without this knowledge, you are left to the history promulgated by the banker devils. This book is available from Amazon.

Sun, 06/29/2014 - 10:58 | 4906980 shovelhead
shovelhead's picture

"For forty years the Germans struggled to not be made English slaves"

Why? Because they borrowed money and now had to pay it back?

Duh.

Hey. Here's an idea...Don't borrow to fight a war.

Sun, 06/29/2014 - 13:11 | 4907234 tbd108
tbd108's picture

It was the sources for raw materials and markets for their products that the Germans wanted to avoid being controlled by the British. As we speak the American/British Empire wants to break the trade relations that the Germans have with the Russians (and to some extent the Chinese) so that they can continue to order them around (not to mention own them). The same was true in the late 19th/early 20th century.

Sun, 06/29/2014 - 01:21 | 4906562 Seer
Seer's picture

Hm... the rise corresponds to the rise in discovery and use of stored energy.  Naw, POWER wouldn't gain anything by that!

Sun, 06/29/2014 - 01:49 | 4906586 christiangustafson
christiangustafson's picture

Reading First Day on the Somme right now.  

There's no way any Jerrys survived a full week of shelling.  When the whistle blows, it's Over the Top for the lot of you, walk with your wave across No Man's Land, take the empty German trenches, and secure the towns.

Wait what?

Sun, 06/29/2014 - 10:09 | 4906694 Leraconteur
Leraconteur's picture

 the Great War would have ended in mutual exhaustion in 1917 and both sides would have gone home battered and bankrupt but no danger to the rest of mankind. 

 

This trend since 1980 - I know of no name for it as of yet - to rewrite history 100 years after the fact using attitudes 100 years in the future about assessing current events has become a true intellectual scourge far more pernicious than Political Correctness.

It is seen in the actions and thoughts and words of the high self-esteem deluded young adults of recent matriculation who have begun to post truly insane missives, such as one who criticised a TV show of the 1980's for not having the foresight to film in HD or widescreen.

When discussing history this moves far beyond applying what we know now to past events - it asserts that present values, mores, attitudes and societal memes of present would have existed in the past when this was never the case.

I suppose it's part of the dumbing down of the planet.

 

Sun, 06/29/2014 - 11:13 | 4907007 shovelhead
shovelhead's picture

The advantage that history has over the present and future is that of 20/20 hindsight.

Far easier to connect the dots if you know the proper plot points.

Stockman is simply illustrating plot points and drawing conclusions based on those points and not rewriting anything.

It's called inductive reasoning.

Sun, 06/29/2014 - 08:37 | 4906814 IndianaJohn
IndianaJohn's picture

It seems that this self obvious view of the great war is little known; http://kevinmacdonaldespanol.wordpress.com/2013/04/16/americas-unpardonable-crime/

Sun, 06/29/2014 - 11:29 | 4907038 shovelhead
shovelhead's picture

Now that's some funny shit, right there.

Sun, 06/29/2014 - 09:17 | 4906863 SelfGov
SelfGov's picture

Anybody who read/watched Chris Martenson's full presentation on the 3 E's here on ZH just a few days ago knows that this isn't the full story.

The global peak in conventional oil production in 2005 led to huge economic problems that we're still not clear of.

"Europe’s senseless fratricide of1914-1918 gave birth to all the great evils of the 20th century— the Great Depression, totalitarian genocides, Keynesian economics,  permanent  warfare states, rampaging central banks and the exceptionalist-rooted follies of America’s global imperialism."

1914 is a huge year in this article but it fails to mention the energy related portion of the story that emerged the year before.

It was the Peak in UK Coal productin in 1913 that gave birth to this era of "...senseless fratricide..."

 

Sun, 06/29/2014 - 09:31 | 4906877 jonjon831983
jonjon831983's picture

"Bosnian Serbs erect statue to nationalist who ignited World War I"

http://www.latimes.com/world/europe/la-fg-bosnia-serbs-princip-ww1-20140...

"Bosnian Serbs unveiled a bronze statue Friday in Sarajevo of Gavrilo Princip, the nationalist who assassinated Austrian Archduke Franz Ferdinand a century ago and set in motion the First World War, which took 10 million lives and shattered empires."

Sun, 06/29/2014 - 10:41 | 4906952 PGR88
PGR88's picture

Best ZH article of the last 6 months.

Sun, 06/29/2014 - 12:48 | 4907180 Flakmeister
Flakmeister's picture

Funny how a article purporting to explain the 20'a and 30's makes no mention the Law firm of Sullivan and Cromwell and their role of promoting American corporate extra-national interests....

The original power lobbyists....

Sun, 06/29/2014 - 13:02 | 4907207 insanelysane
insanelysane's picture

Should be renamed the First Bankers War.  They had the two sides go out and dig fucking trenches and then sit in the fucking trenches year after fucking year.  What purpose did that serve except to ensure the war would drag on a long time and require even more funding from the banks?  Here's a fucking military strategy for all of you.  If someone digs a trench and sits in it.  GO AROUND IT!!!  Granted that air warfare was new but countries have had navies for fucking thousands of years.  The first world war demonstrated to the ruling class of the world that the sheeple were, are, and always will be fucking morons.

When world war two broke out, the French dug trenches again, but Hitler was playing for keeps, and he just went AROUND.

Sun, 06/29/2014 - 13:09 | 4907228 insanelysane
insanelysane's picture

This is a decent read and goes into the Germans trying to stop US shipments while the US was still "neutral".

http://www.amazon.com/Dark-Invasion-Germanys-Terrorist-America/dp/006230...

Sun, 06/29/2014 - 14:49 | 4907461 PADRAEG
PADRAEG's picture

Deleted dupe

Sun, 06/29/2014 - 14:33 | 4907462 PADRAEG
PADRAEG's picture

InsanelySane, great analysis, you should avoid so many 'fucks'

Sun, 06/29/2014 - 17:13 | 4907820 bajaranger
bajaranger's picture

I began to read this article with interest until I came to the part that stated "no Hitler, no Nazi dystopia, no Munich".  
That's a powerful stretch and a far fetched assumption that is stated as fact.  At that point the author loses all his credibilty and this piece degenerates into just another piece of hyperbole that so often frequents this bloq.

Do NOT follow this link or you will be banned from the site!