Financial, Economic and Social Mood Update (September 1, 2019)
The topic chosen for the September 2019 blog is due to a request from one of our readers, who asked that I comment on the subject of environmental degradation (climate change), specifically with respect to natural resources backing global currencies, credit and wealth – all of which equal global power. His particular interest is in Bougainville Island (an autonomous region within the nation of Papua New Guinea), which is home to very large deposits of gold mine deposits. This is of global importance due to the fact that precious metal assets (especially gold bullion) must ultimately back national currencies. The largest untapped underground gold reserves in the world today are in 1) Grasberg (West Papua, Indonesia), 2) South Deep (near Johannesburg, South Africa), and in Bougainville, Papua New Guinea.
The USA has been the world’s number one economic, military and colonial power especially since the end of World War 2. The dominance by the USA is basically a continuation of British world power which lasted from the time of the English & Dutch defeat of the Spanish naval Armada (in 1588) until the end of World War 2 when Germany & Japan had weakened England to the point where she could no longer be the number one power in the world (in 1945). Spain and her Iberian neighbor Portugal emerged as Germanic states which overthrew the yoke of Islamic colonialism on the Iberian Peninsula in the 13th century A.D. to become world naval powers which initiated their own colonial domination over most of Latin America & the Caribbean, the southwestern USA, much of the Pacific (the Philippines, Guam and Micronesia) and parts of Africa.
The ancient world witnessed the rise of numerous regional empires. In the Americas, they included the Inca (Peru), Aztec & Maya (Mexico & Central America). In the Middle East, Asia Minor, the Balkans, North Africa & Central Asia this included the Islamic and later the Ottoman Empires. Asia was home the economically richest and most populous empires of China and India. This is of prime importance to this discussion because China was the source of the great “Silk Road” which linked much of the old world (i.e. the eastern hemisphere) to China via trade & commerce, because China had the greatest trade surplus (this is what led Britain to infringe upon Chinese sovereignty during the infamous Opium Wars) and because China owned the largest & most valuable reserves of precious metals which backed currency – especially the Chinese reserves of gold bullion.
Since 1976, the People’s Republic of China (PRC) has embarked upon the most successful economic expansion in human history. China as a nation-state is in the process of reclaiming her historical ancient role as a global super and economic power. China has the largest middle class on earth today. Fully 90 percent of Chinese families own their own home, and an astounding 20 percent of Chinese families own 2 or more homes – a definite sign of upper middle class affluence. These are absolutely amazing accomplishments in a country with more than 1.4 BILLION inhabitants. It is against this success (and the impending doom of record American debt – by far the most massive debt in human history) that US President Donald J. Trump, Sr. has embarked upon a lose-lose crusade of engaging China, India, the rest of Asia, Europe, Canada and Latin America in a futile, vain and destructive global trade war.
The 10 largest underground gold deposits on earth today (including the one in Papua New Guinea) have proven reserves of 16,958 tons of gold bullion. The reserves of already-mined and processed gold (in the alleged possession of countries, organizations, companies and individuals) is officially 190,040 tons but reportedly as high as 325,607 tons. The problem arises with respect to ownership, because like with any valuable resource, wars have been waged over such issues.
The Philippines has a large amount of gold bullion, due to the fact that the Japanese invaders took these gold reserves away from the then Republic of China (formerly in the possession of the last Imperial Manchu Dynasty of China) and stored this stolen bounty in the then Japanese occupied Philippines. Yet other very large reserves of processed gold bullion are in the possession of the Chinese, the American government (Fort Knox, Kentucky) and the Swiss (powerful European based banking families). The lion’s share of this gold bullion is actually Chinese and lawfully belongs to China.
Mining (be it for gold, for other precious metals, for crude oil, for natural gas, for coal or for other hard minerals) is closely tied to global wealth. These resources back this wealth and/or they make the creation of wealth possible through industrial and manufacturing processes. Mining and manufacturing processes gave birth to the modern industrial revolution (which began in the 18th Century), made the industrialized world what it is today, made wealth what it is today (with modern millionaires and billionaires) – but it has also led the world to an unprecedented level of environmental degradation. “Global warming” or not, we can and should all agree about the fact of pollution and unprecedented species extinction happening before our very eyes. The most basic building blocks of the global food chain (insects on land and the oceans which comprise 70 to 75 percent of our planet) are literally dying out. It is for this reason that the global motor vehicle manufacturing industry has committed itself to convert from fossil fuels (crude oil, gasoline and diesel) to battery electric vehicles from right now to reach the goal of 100 percent electric vehicles by the year 2050. This is good, but it is not an end in itself – the minerals required for these batteries are already causing tremendous environmental mining stress in countries such as Chile (for the battery water) and in the Congo (for the battery minerals).
Crude oil is used in most modern manufacturing processes, and gives us not merely refined gasoline and diesel fuel…………….but all of our plastic products and packaging which refuses to degrade when thrown away – and which is killing our oceans and our ocean life. The message here is that we cannot afford to stop trying to develop more environmentally friendly methods of running our economies and our lives – if we fail in this attempt, we as a human race will pay the ultimate price by not being able to survive to tell about it. Most of the governments of the world have committed themselves to continue to move in this direction. The USA must not merely jump on board in this common effort, but stay on board.
