By Paul Chong Monday, 23 November 2009

Basic science tells us that to every action there is an equal & opposing reaction. It follows with the natural law of phenomenon of cause & effect. So with solving any problem, consideration lies with the cause not the effect – treating the cause & not the effect is the only logical solution.

Do you remember the 1970s era of the Pyramid Marketing Schemes as deviously ingeniously devised by the Americans, particularly from the home ground of Utah? There was this mushrooming of the “Get Rich Quick” concept with ‘Holiday Magic’ spearheading & exploding the marketplace. It adversely affected the pockets & lives of many a home & individual. It was banned in Singapore & became restricted, operating as a Multi-Level Marketing Scheme. There are still such Multi-Level Marketing companies around, and in reality all its productivities benefit largely the company itself – the distributors getting the crumbs & pittance. Calling a rose by any other name still makes it smell the same.

Unlike the conservative British, the Americans are undoubtedly the most innovative & progressive with propitious modern ideas of marketing. In a word, they are the greatest “wheelers-dealers”! They preach & practise this philosophy right to the extreme – with success objective at all costs. The underlying theory maybe sound, but in practice it’s invariably unsound, as individuals have differential capability & capacity.

The Americans are famous for their doomsday & catastrophic shows on the big screen. This time they really hit the real thing – from Wall Street to the Main Street. But it’s not confined or restricted just to the American scene – it’s so monumental that the global economy is reeling & hurting. The cause of the Pyramid practice has evolved & resulted into the Domino effect. Like in a masquerade ball, the Americans have been wearing those loose cloaks with masks to cover up their faces.

Who’s to be blamed? Bush then & now Obama administration would like to attribute the alleged root of this economic crisis to the market itself – speculators, hedge funds, greedy bankers & lax regulators. Passing the buck does not eradicate the fact that it’s one Monumental Policy Failure on the part of the US government.

We are witnessing history unfolding right before our eyes. Two monumental things are glaringly obvious:

1. A dangerous collapse or near breakdown of the capitalist             financial system.

2. A massive outpouring of Free Money by the US government in   bailing out the “Big Boys” who are the real culprits of this             economic calamity. Hundreds of billions are spent in bailing out   the key major players – not at all benefiting the average American & sending the budget deficits going through the roof.

This Monumental Policy Failure of expanding money supply & credit growth is fuelling the economy negatively. The economy is imploding within with the exploding of endless printing of paper money. These two colossal events of the past 24 months with the collapse of Wall Street in 2008 & the irrational response of Washington in the outpouring of free money & the Federal Reserve printing money without restraint.

What happened initially with the huge speculative real estate bubble, which not even Greenspan nor Bernanke would now deny, has triggered off the ramification of the banking problems & the recession.

Many of us to be sure must remember the worthlessness of the Japanese money during the Japanese Occupation in both Malaya & Singapore. The Japanese were also running their printing press overtime to finance their warfare & occupation. Now in the present era, just ask any Zimbabwean what a billion or million dollar note is worth in his country.

US dollar is not backed by anything, not gold or silver or any tangible commodities and with its paper money running off the press like crazy, what can you expect of its worthiness in the final analysis? The confidence of the world for its currency is at a critical point, and all it takes is 24 hours for all the other nations to drop its use as the currency reserve.

As said, US may well be destroyed from within & from without – the wrath & non-confidence of the world may be brought to bear down on US all within the hours before the wake of Wall Street.

One Nobel Prize winning economist predicts a run on the dollar as “Probably the kind of disorderly run that precipitates a global financial crisis . . . ” while other monetary experts now warn “We are in the terminal stages of the world’s most gigantic pyramid scheme.”

To be forewarned is to be forearmed.

Take Care.