Meanwhile, on main street the closure, of entertainment and retail venues that thrive on disposable income, has become epidemic. Unemployment continues to rise and the underemployed that usually took the crumbs of those changing jobs or taking a holiday are now chronically out of work. This army of unemployed poses a direct threat to local urban stability and neighborhood security.

Look for continued sideways movement of the stock market through the summer and masterful political spin by the Democratic administration. On the Republican side, expect Republican challenger Mitt Romney and Paul Ryan to continue the drumbeat of the need for changing economic priorities. The problem, of course, is that neither party will propose real solutions to the underlying shift in political and economic power. They are powerless to challenge the monetarchy that now dominates the world.

It is important to note that some political leaders, such as those in Israel, believe they can still act unilaterally without considering the consequences of their actions to the monetarchy.

In the conventional political models of international relations, war is a means of acquiring resources or shifting attention of the people from their direct self-interest. Many, in the US for example, continue to decry “false flag” events. However, under the monetarchy model of globalism, war cannot serve that previously useful function. It destroys value and inflates fiat currencies.

If Israel continues to build up its military preparedness and pushes its war policy, it will be interesting to see how the monetarchy will exercise its power. The case study will be critically important because it will set a precedent that other so-called independent “nations” cannot afford to ignore.

As for the global financial system, the instant quantitative easing and twists and shouts from the monetarchy stops, the stock market will collapse and with it the dollar. Already, there are reports of substantial acquisitions of gold by major banks distributed throughout the globe. This indicates the monetarchy has no intention of stopping the flood of reserve notes and is, in reality, shoring up its position for a major change in its internal organization and asset distribution and control system. In other words, it is implementing its global consolidation of power through its financial and banking arms.

For the time being, the flood of federal notes will continue in the trillions of dollars. The only question is how long it can prop up the international system as currently configured. It is unlikely the system, as it is now constituted, can survive for very much longer.

Interestingly, most regular people will notice the quiet desperation of people sinking financially while banks accumulate stronger and stronger balance sheets. The irony will not be lost on those minimally educated in conventional economics.

The Monetarchy will have to make its move soon and it is likely that some form of gold/silver backed currency will come into existence. However, this may not necessarily translate into a benefit for individuals holding metals. It is too early to tell whether the monetarchy will outlaw metals sales of institutions and agents that exist outside its direct control.

In the meantime, the major challenge facing those in power is how to manage the social upheaval the collapse of the current fiat currencies will bring with it. Already the current US administration has wrought a substantial rewrite of cherished constitutional freedoms through various so-called anti-terrorist executive orders. These have become necessary in order to control the population in a condition of civil upheaval.

It behooves for those with minimal financial security to prepare for major changes in short-order. This is not a prediction but rather a description of a process that is already underway, in the present – NOW.

The key for the federal reserve strategy to prop the system through massive and ongoing infusions of federal reserve debt notes (dollars) depends entirely on the ability of the monetarchy to control inflation.

Massive transfers of junk assets to the federal reserve and central bank balance sheets will serve to manage the inflation on paper. However, if the bubbles building as a result of the growth in bank liquidity burst, the entire system will face a massive deflation and, in short order, a massive inflation as the paper transactions tear down the firewall built by the federal reserve.

This threat is what is giving pause to a potential Israeli attack on Iran. The debate is not about Israeli security vs a nuclear threat as much as it is about the potential consequences of a preemptive strike that could elicit a devastating bursting of the inflation bubbles being created.

Quantitative easing (money-printing) by the Federal Reserve and its central banks will continue outside the public view which will give the impression of a “slow growth” recovery until very close to the November elections. At this point, the Federal Reserve will decide whether it will change from Democratic President to a Republican one by adopting a “public” quantitative easing policy. A public QE will have the effect of dumping the current Democratic President.

The Federal Reserve will also adopt a “social fairness” policy of assisting those with “underwater” home mortgages with direct grants through Fannie Mae and Freddie Mac in order to mitigate public opposition to Twist and quantitative easing policies.

Thus, 2012 will be a year of robust activity on the world stock markets boosted by the Federal Reserve in the first half of the year that will hide the fiscal reality from most people. After the November election, there will be a significant “adjustment” to allow the real economy to absorb the malinvestments caused by the easy money policies, in other words, a recession to allow housing market and the dollar to find their real bottom.

Given the above, below are the top 12 predictions for 2012 from jaimeoperez.com:

1. Quantitative Easing – The Federal Reserve, in conjunction with world central banks and sovereign states, will continue an accelerated quantitative easing policy outside the view of the public that will temporarily boost the world stock markets and support the idea that a “recovery” is occurring;
2. Stock Market Wins and Loses – The price of the stock market in dollars will continue to rise consistently for the first two quarters of the year. Volatility will diminish, largely in response to the Fed Reserve quantitative easing policy but it will lose, at least, 25 percent of its current value by the end of the third quarter and continue to slide the remainder of the year propped up only until the November election in the US;
3. Global Recession – The largest trading nations will experience a global decline in GDP output and the UK, Europe (including Germany) will experience a deep recession;
4. US Flat Growth - The U.S. will experience flat growth (less than 1 percent);
5. 10 percent inflation – US price inflation will increase at a rate of 10 percent;
6. Civil War – There will be a marked increase in civil conflict across the globe between citizens and their police and military forces;
7. Israel-Palestine Talk – Conversely, there will be a major, behind the scenes effort to reduce middle east tensions because of the impact such a war might have on global economic activity;
8. Dollar Devalues – The dollar will lose half of its value;
9. Silver ComeBack – Precious metals will rise in price and value gradually in first three quarters and then increase dramatically by fourth quarter;
10. US Unemployment Up - Unemployment in the US will rise to 11 percent (19 overall) by the third quarter and 15 percent (24 overall) by the end of the year;
11. Global Bank Mergers - Major banks will experience short-lived and periodic bank holidays across the globe as smaller banks merge into bigger institutions;
12. Riots- U.S. bill of right protections and social internet communication will come under stress as internal stresses due to unemployment and inflation devolve into riots in major cities.

The world is coming upon a significant transformation. From villages to fiefdoms to monarchies to empires to sovereign states, the world is now poised to transition to its most significant integrative transformation since the middle of the 20th century that saw the consolidation of the nation state.

The world is moving to what President George Herbert Walker Bush referred to as a New World Order. This NWO is a Monetarchy or Rule by Banks.

Monetarchy has sucessfully implanted itself in the internal state governance of those participating in the world fiat currency markets. It has achieved sufficient integration to be rightly considered an empire (overarching entity composed of various countries and nationalities) that exercises global management of multi-state fiscal, and by extension – social, policies through a synarchic financial banking sector led by a Federal Reserve system. The Federal Reserve system is led by a Chairman who functions as the Monetarch of the transnational banking empire.

The monetarchic system is interlinked with the most powerful unipolar, devolving, constitutional and polycratic state – the United States. Polycratic refers to the exercise of the three branches of government.

Kenneth Waltz’s anarchic world order has shifted to a unipolar system supported by a fiscal matrix of fiat currency institutions. The U.S’s unipolar refers to its productive and military capacity relative to other world states. Despite enormous advances by China and Russia in developing their internal market capacity, the U.S. continues to outpace them.

Many states are in a process of nation-state devolution. Devolution is defined here as the transfer of power from the sovereign constitutions to the transnational monetarchy. This transfer of power is best illustrated by the number of technocrats filling important positions in sovereign governments. A technocrat is one that has served as a senior transnational bank official that shares the prevailing ‘equilibrium’ economics ideology, also referred to as Keynesianism.

The international system is, currently, maintained through explicit alliance among the US and a small number of strategic global state regional partners also in a state of devolution: Europe, UK-Australia-Canada, Israel, Arabia-Turkey, Pakistan-India, China, Russia, Japan, Brazil-Latin America, Indonesia-Taiwan, Africa. Importantly, those alliances are maintained through various commercial and free market agreements. These agreements are key in any effort to re-balance the relations of power in the new unipolar system.

Undergirding this emerging hierarchical system is the the fact the monetarchic empire is managed through senior banking sector technocrats sanctioned by the Federal Reserve bank.

The singular characteristic of the empire is that it has designated the US dollar as the world reserve currency and regulates its quantity. This power over the world’s reserve currency and its control of the fiscal decision process provides it with the leverage to exercise a monopoly of force through its state partner and its allies.

Technocrats from the various financial sector corporations serve interchangeably in executive branches of devolving states. Devolving states are not necessarily autocratic. Indeed, they may be democratically-elected governments. They do however share one characteristic. They are plutocracies, that is, governments increasingly composed of members of a wealthy financial class, whose role it is to enforce laws, legislate new ones and arbitrate conflicts. They are also, at least nominally, nomocracies. The legitimacy of their rule depends on the rule of law.

Plutocratic regimes ensure policies consistent with the interest of the Monetarchy because they perceive it as being in their direct financial self-interest. At the top of this empire is the Monetarch. He heads the Federal Reserve International Banking system and, although subject to pro forma oversight by the governing body of the unipolar sovereign (US), is not accountable to it.

There is are opposing dynamics within the monetarchic empire that affect its long-term viability.

On the one hand, there is the ongoing reaffirmation of constitutional democratic institutions of the unipolar sovereign state (US). This sovereign state benefits most from the empire because the Monetarchy transfers its inflation to other lesser state allies. A constitutional reaffirmation tendency can theoretically lead the polycratic state to stop the transfer of wealth from the sovereign’s citizenry to the empire’s transnational financial institutions. This implies the elimination of implicit and explicit guarantees of fiscal international trade, exchange and commercial policies.

In addition, the sudden de facto integration of various classes of global labor pools is increasing the stress within the sovereigns who are forced to rapidly reallocate labor, raw materials and other resources to the needs of the empire.

These tendencies are counterbalanced by the reserve and world currency policies supported by global sovereign governments that continually increase the military and commercial leverage of the monetarchy relative to its principal nation-state partner and other allied devolving sovereigns.

Whether the Empire is long-lived or whether the system re-balances in favor of the sovereignty of the nation state will depend on which dynamic proves stronger with its consequent policy mix.

Many despair of the economic confusion that seems to rule the news of the day as we move into 2012. They simply do not understand what is happening. Single issue micro-analysis is highly cumbersome and often confuses the reader because various complex issues and subject areas considered in isolation from the broader picture are necessarily incomplete and limited. A broader theoretical model is required.

Macro-analysis can provide a brief formal overview but has the very real danger of oversimplifying a great many complex processes. This description of a monetarchic model is an attempt to synthesize the issues in a way that is accessible to the average reader.

If you accept the theoretical framework as presented, the conclusion is fairly simple relative to what steps must be taken to restore the primacy of the nation-state. Implicit in this assertion is the normative bias toward it.

The goal here is seek and recommend prescriptions for the ailments arising from the sudden globalization tipping point experienced in 2008 not, simply, to find short-term palliatives, mitigators or superficial treatments of the global fiscal challenges.

What must be done?

To bring down an empire, the enabling sovereign nations must transform themselves from within. That means each and every American, as well as, each citizen proud of all proud national traditions have a choice to make – Restore the sovereignty of their respective nation-state or allow the continued consolidation of the monetarchic empire.

For Americans, the question is: Can we find and bring back our Washingtonian revolutionary spirit, our tea party boldness, Lincoln’s fight for unity and equality; Wilson’s hope to end all wars; Roosevelt’s affirmation of democratic values relative to the centralized party hierarchies of communism/fascism; Kennedy’s man on the moon searching the stars; Johnson’s great society, and citizen’s multiple occupy (occtupy) passions — in constructive ways that restore sovereignty to the United States?

Most importantly, can we fight to restore sovereignty without resorting to Huntingtonian bigotry?

Can we as Americans reaffirm our values of Life, Liberty and the Pursuit of Happiness?

It remains an open question.

Such tradeoffs are false. There is no reason why harvesting oil and natural gas resources to diminish US energy dependence cannot occur in the context of prudent management of environmental resources. Ensuring drinking water reservoirs, rivers and streams are protected from contamination is part of the cost of doing business for companies who have the largest profit margin of any industry.

An additional point worth making is that both Texas and the US should make a distinction between national oil companies and transnational subsidiaries in terms of taxes and regulation. Texas and the US should come first. The Texas Railroad Commission should be looking at these issues with extreme care.

Should other states consider their own bank as part of the restructuring of the federal reserve debt system?

Democrats propose to impose an American lifestyle sanctioned by the government and an austerity plan that implies reducing military spending while increasing spending on entitlements;

Both strategies are similarly flawed:

1. Both Democrats and Republicans are authoritarian in their desire to make American citizens live as the government would dictate while the lifestyle is forcibly paid for by taxpayers.
2. Both Democrats and Republicans do not address the problem of spending and debt through increased spending on their preferred portion of the budget.
3. Both Democrats and Republicans are allowing the on-going massive transfer of wealth from American citizens to the financial sector;
4. Both Democrats and Republicans are proposing that elderly, infirm and disabled pay for the public debt;
5. Both Democrats and Republicans want to force all Americans to conform to their policy solution relative to public debt;
4. Neither Democrats or Republicans are addressing the problem of private debt.

1. Restore Competitive Advantage — End Free Trade Agreements;
2. Restore a Balanced Federal Budget — End Federal Deficits;
3. Restore Free Market — End Too Big To Fail guarantees to financial sector;
4. Restore Free Market — End Federal Reserve QE & Twist policies that keep interest rates low.

The posts on this blog are an unpacking of various recommendations relative to the four basic steps necessary to restore full employment in the US.