Another major target was a primary school in Minab, Southern Iran, which was singled out during a normal school day for bombing twice (with a delay of almost an hour in order to kill relatives and helpers), killing 168 primary school girls and others.

Bombings of thousands of targets continued throughout March 2026 (more than 13,000 locations were bombed according to the Pentagon). Many innocent civilians died, adding many war crimes to the US and Israeli record amongst a war that itself is illegal and not sanctioned by the UN. Due legal process does not apply to the US or Israel.

Bombing Metropolitan Tehran, one of the largest conurbations in the world (pop. ca. 17m)

The EU failed to condemn this US and Israeli war. No sanctions were imposed on the US or Israel.

Then, on 3 April, a US special force conducted a major operation to raid the Nuclear Technology Center at Isfahan, inside Iran. The goal was to extract Iranian enriched nuclear material, but this failed spectacularly, with several US helicopters and two C-130 Hercules transport planes shot down, and no nuclear material extracted (the death toll has remained undisclosed; the official Pentagon narrative is that this was a successful rescue operation of a soldier stranded in enemy territory).

The real surprise however was that in response to being so ferociously attacked, Iran bombed virtually all US military bases in the entire Gulf region, and in addition, all CIA-bases (whose locations are supposed to be secret). A BBC report of 1 June 2026 confirmed that at least “20 US military sites” in the region had been “damaged” since Isreal and the USA unleashed the war on Iran, with the damage of US sites “more extensive than publicly acknowledged” (BBC). The strikes hit US bases in Saudi Arabia, the United Arab Emirates (UAE), Qatar, Kuwait, Iraq, Jordan, Bahrain and Oman. “The actual figure could be higher [than 20], with some analysts placing the number of bases hit as high as 28.”

“Vice-Admiral Mark Mellett, the ex-head of the Irish Defence Forces, told BBC Verify that the batteries are at the core of a “highly complex” regional defence network that cannot be “quickly or easily replaced”.

Iran also destroyed US refuelling and surveillance aircraft at Prince Sultan Airbase in Saudi Arabia, leaving smoking craters where expensive and proud specialised aircraft used to stand. Fuel storage bunkers were destroyed, aircraft hangars wiped out and troop accommodation hit multiple times. In total at least 42 aircraft were destroyed or damaged since the Israeli-US attack on Iran, including F-15 and F-35 fighter jets, and dozens of MQ-9 Reaper drones, as well as at least one A-10 attack plane.

Pentagon estimates of the costs of Operation Epic Fury are at USD 29bn, and most of this seems to consist of “repair or replacement costs for equipment” that was destroyed by Iran.

Initially Iran aimed at overwhelming US air defense systems by sheer volume of missiles fired. However, several days later, Iran shifted to fewer but more precisely targeted missile salvos.

The Iranian strikes resulted in the almost complete destruction of three state-of-the-art anti-ballistic missile systems and several US key regional high-tech radar installations. This includes the Terminal High Altitude Area Defense (THAAD) batteries, which cost ca. USD 1bn each and require a crew of 100 military each to operate.

Iran’s new Supreme Leader, Mojtaba Khamenei, stated that

“the nations and lands of the region will no longer serve as shields for American bases… America will no longer have a safe place in the region for mischief and the establishment of military bases, and day by day it will drift further from its former position.”

Apparently the accuracy and devastation of Iranian strikes took the US military by surprise and it concluded that Iran was receiving advanced support by Russia and China, concerning both intelligence and weapons technology.

The strikes were so specific, accurate and devastating that the US military leadership essentially ordered many US bases in the region to be evacuated. In some cases, soldiers were instructed to take rooms in local hotels – but then these rooms were also targeted by Iran, suggesting more sophisticated information networks than anticipated.

Russian president Putin has since (5 June 2026) clarified that Russia has not provided any weapons to Iran during the entire period of conflict and that Iran had not requested any. However, the intelligence concerning US military targets is another matter – not mentioned by President Putin. When the UK and US military moved to supplying Ukraine with target information for long-distance missiles inside Russia and even used their military to operate them (under the guise of being “trainers” of Ukrainian troops), Russia stated that it reserved the right to respond in kind at a time and place of its choosing. That time and place had arrived with the war on Iran.

On 8 April, a ceasefire was announced, initially for two weeks, and it has been extended multiple times since. Yet, a shipping stand-off has continued and blocked much of the shipping through the Strait of Hormuz. Ca. 1,500 ships are waiting in the vicinity in order to pass the Strait. President Trump announced on 13 April that a US-led naval blockade is being imposed, in an attempt to block Iranian shipping and thus foreign currency revenue (the “blockade of the blockade”).

However, China immediately announced that it will not accept the US Navy hindering or blockading its shipping access to Iran. On 14 April 2026, Chinese Defense Minister Dong Jun stated:

“We have trade and energy agreements with Iran; we expect others not to interfere in our affairs. The Strait of Hormuz is open to us.”

On 24 April 2026, the US Treasury announced so-called secondary sanctions on Chinese companies importing Iranian oil. China responded soon after. On 2 May 2026, the Chinese Ministry of Commerce issued a formal prohibition order, instructing Chinese companies not to recognise, enforce or comply with specific US sanctions imposed on Chinese oil refineries for trading in Iranian oil. This was the first time China invoked its 2021 anti-sanction rules against US measures.

“Teapot” refinery in Liaoning province, China

While the shaky cease-fire was undermined by the dubious US retrospective claim that peace in Lebanon was not included in the deal, targeted bombing has sporadically continued, with Iranian retaliation following as recently as Sunday, 31 May – although the present state is still considered one of a ceasefire. Meanwhile, Isreal had quickly resumed its invasion, occupation and wholesale destruction of Lebanon, giving it the Gaza treatment. Even Beirut is currently being attacked by Israel and many Lebanese have lost their lives at the hands of the invading Israeli army.

Over the weekend of 30 and 31 May, the US had bombed an Iranian military site in the city of Goruk, near Iran’s southern coast, and also a communications tower on the Iranian island of Qeshm, which is an important site of Iranian refineries, oil processing and port facilities. The US army also targeted an Iranian oil tanker with an air-launched hell fire missile near the Strait of Hormuz. Iran responded by hitting US military bases once again, including one of the US locations of the launchers of the missiles that had struck Iran, an airbase inside Kuwait, as well as a Mossad camp in Iraq which Iranian fighter jets targeted, to devastating (though not yet officially acknowledged) effect. Asked about it, President Trump said on 3 June: “They were slightly provoked because we took a strong action…; they were reciprocating.”

As negotiations continue according to Donald Trump, it becomes increasingly clear that there won’t be a sudden end to this war. The negotiation positions of both sides are too far removed from each other.

On Monday, 1 June 2026, Iran’s foreign ministry spokesman had stated that the US was “constantly changing its views and putting forward new or contradictory demands” so that negotiations would naturally be “prolonged”.

As this report goes live, the tit-for-tat exchange in strikes continues, with international aircraft avoiding the Iranian perimeter carefully.

Disruption to International Trade

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Yesterday and today Vice-President J. D. Vance spoke to the public in Budapest, capital of Hungary, having held meetings with the Hungarian Prime Minister Viktor Orban. The importance of the VP’s trip - and hence the upcoming national election on Sunday, 12 April 2026 - is underlined by the fact that the Vice-President undertook this journey precisely at the moment that President Trump had warned the world he was set to wipe out the entire Iranian civilisation, civilians, their infrastructure, cultural heritage and all, if Iran did not bow to his demands.

In the event, the Tuesday deadline passed, as President Trump fortunately bottled it up again, or TACOed it (“Trump Always Chickens Out” - something one unfortunately cannot rely upon when it comes to warfare). As it turns out, the White House just announced that JD Vance will travel on to Islamabad where he will lead the negotiations with Iran.

In his public speeches in Budapest, JD Vance pointed out that Hungary has long been battling an overburdening EU Commission - whose interference in Hungary he called “truly disgraceful” - and whose policies Viktor Orban had been disagreeing with, including concerning energy policy.

Hungary has refused to adopt the EU Commission policy of ending the reliance on cheap and reliable energy from Russia; so Hungary continues to buy energy from Russia and as a result has been able to keep the retail prices at the pumps unchanged this year from the previous year, to the ire of the Commission, which demands that such price caps must be abolished and energy prices must be raised. Another area of strong disagreement with the EU has been the EU’s war policy: Hungary keeps vetoing further billions of European public money for Ukraine.

Meanwhile, the EU has increasingly resorted to borrowing money directly, despite this being explicitly forbidden in a number of agreements with the member states.

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All else unchanged, it is bad news for the US nation to do without the tariff revenue that the Trump administration had expected to count in the billions: As of 28 February 2026, national debt had reached US$ 38.7 trillion, and is likely to hit 40 trillion before the end of the first quarter 2026.

The 6-3 decision, signed by conservative Chief Justice John Roberts, provoked a furious reaction from Trump, who said he was ashamed of certain members of the court who were “not having the courage to do what’s right for our country”.

Trump said “other alternatives” are available to him to pursue tariffs, and announced a 10% global tariff under a legal authority different from the one at issue in the case “over and above our normal tariffs already being charged.”

“Our task today is to decide only whether the power to “regulate ... importation,” as granted to the president in IEEPA, embraces the power to impose tariffs. It does not,” said Justice Roberts in the ruling.

The U.S. Constitution grants Congress, not the president, the authority to issue taxes and tariffs.

The main alternative available to Trump is to invoke national security, as well as anti-terrorism and anti-money laundering legislation, while accusing other countries of criminal actions – as was done to Venezuela.

As expected, it wasn’t long before Treasury Secretary Scott Bessent and other administration officials announced that the U.S. would rely on different legal grounds to keep most of Trump’s tariffs in place. One of these is a law that allows tariffs on imports considered a threat to national security. Another provision permits retaliation against trading partners that the U.S. Trade Representative finds have engaged in unfair trade practices against American businesses.

A good time to reconsider the Trump Tariff Tactic

Before rushing into dramatic alternative legal justifications, the Trump administration and its senior economic policy leaders, including the new Chair of the Council of Economic Advisers, Pierre Yared, might wish to re-think the blanket tariff strategy adopted so far.

While tariffs can be very useful, there is something about them that had not been considered by the Trump Administration, and this is a good time to reflect it. I’ll explain.

Acting Chairman of the Council of Economic Advisers, Pierre Yared

No nation has achieved rapid, sustained, stable and inclusive growth without aligning its trade policy with a coherent industrial policy – and both, in turn, with a supportive banking and monetary framework. Tariffs can be powerful policy tools. But uncoordinated with domestic credit creation and industrial strategy they provide protection without production – form without substance. It’s a missed opportunity and rather like building factory walls without putting machinery inside.

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Epstein files confirm many “conspiracy theories”

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Takaichi became Japan’s Prime Minister only late last year, as the first female Japanese head of government in modern history. She won a majority in internal voting by the long ruling Liberal Democratic Party (LDP), partly due longest serving post-war prime minister, Shinzo Abe, having been her mentor. She also was adept at forging a coalition agreement with the Japan Innovation Party, and thus on 21 October 2025 she was appointed Prime Minister. So Sanae Takaichi had not yet faced a public vote.

However, PM Takaichi has been adept at marketing herself in this brief time, including on social media, playing on the novelty value of a female prime minister. She appears with media stars, well-known sports people and even played the drums together with the president of Korea, who, like her, is able to work the percussion for a band. Takaichi has succeeded in building up something akin to a personality cult in this short time. Her handbag has sold out at the Japanese manufacturer and there is a 9-month order backlog. She has accumulated 2.6 million followers on X, compared to barely more than 60,000 for her political opponent. Her popularity with young voters was clearly a key plank of her calculation to dissolve parliament, announced only on 22 January 2026, and jump this election onto the political landscape.

Not from an insider family

One thing in her favour is that, unlike many Japanese politicians, she did not inherit her seat in parliament (the Diet, in Kasumigaseki, Tokyo). She is a self-starter who worked during university years to pay for her own education, as her parents, from humble background, did not have the funds.

One has to be aware of the incestuous nature of Japanese politics in order to appreciate the phenomenon that is Ms Takaichi. Here is a table only of postwar Japanese prime ministers who are related to each other:

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A Happy New Year to my readers and subscribers! May you be blessed this year.

I comment on what could potentially come to be seen as one of the most significant interventions in the 21^st century. Another commentator has already assessed it as a “catastrophic policy error” that undermines the foundations of the international world order.

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Every so often there are moments in world history when the senior decision-makers over nations are neither incompetent agents serving foreign agendas, nor evil, genocidal psychopaths.

The time was ripe for Deng Xiaoping, who had joined the early Communist Party of China in the 1920s and had been on Mao’s Long March in1934. Moreover, he had already been in positions of influence before, but had been unceremoniously deposed several times, sent to labour camps or had otherwise been suppressed. Known as a calm, able and even-handed administrator who had not been involved directly in the cynical anti-human policies of the previous decades, Deng was rehabilitated in 1977 and appointed Vice Chairman of the CCP. He was also appointed Vice Premier of the State Council and member of the Politburo.

Deng picked up the pieces and restored economic order. He was now generally supported, especially as Hua’s unsuccessful attempt to pin the blame for the biggest policy disasters on particular people, such as the “Gang of Four”, had merely driven home the realisation that China had lost many years, even decades in terms of prosperity.

The remainder of 1977 and much of 1978 were a time of preparation for Deng Xiaoping. Then, in December 1978, he gave a key speech, which has since been interpreted as Deng officially taking over the leadership in China.

A New Leader Seeking Results

While Hua officially remained Chairman of the CCP and Premier until 1980 and 1981, respectively, in December 1978, at the Third Plenary Session of the 11th Central Committee of the Communist Party, Deng Xiaoping was given the platform to declare the policies that China should adopt henceforth.

In his plenary speech, Deng exhorted the audience to “free our thinking”. He announced that the longstanding focus on ideology and the enforcement of party-political dogma would be dropped, and instead China’s leadership would be promoting practical outcomes, namely specifically economic growth and improvements to the country, by implementing economic modernisation due to evidence-based economics. He also announced a programme of economic reform that would deliver growth and prosperity – more on that below.

A key reform implemented in the coming years concerned the process of promotion of future leaders. Instead of basing these on pledges of unlimited loyalty to the party and its official proclamations, as Mao’s psy-ops had trained people, leaders were going to be selected based on their empirical success: The mayor of a town would be chosen from among those who had successfully led villages. The mayor of a city would be chosen from among those who had been entrusted with leading a town and had met or exceeded the goals of economic development. The governors of provinces would be chosen from among those who had proven they could deliver results in leading large cities. Central Committee members would henceforth be chosen from among those governors of provinces who had delivered or exceeded performance results. After a few decades of ideology-based promotions under Mao (the Maoist equivalent to DEI appointments), China’s leadership from 1978 onwards was going to have to deliver results for the people. China had returned to its old merit-based system of state administration, honed over millennia. This move put China in one fell swoop ahead of many Western democracies, where local and central government leaders often are badly educated, unskilled politicos who excel only in giving speeches and propagating ideology, as well as in misallocating resources (just like Mao and his ilk).

The End of the Personality Cult

Deng was a modest person, unlike Mao, and would henceforth stay in second-level positions in the formal hierarchy. From there he manoeuvred to ensure that loyal supporters of his would become Premier, party Chairman or President (Hu Yaobang, Zhao Ziyang and later Jiang Zemin). Deng himself never held the position of Chairman, President, or Premier after Mao’s death. This likely ensured that he could influence policy for longer, at the cost of his ego. But Deng was happy to pay that price. It looks like he was one of those rare people in powerful position who are able to resist the temptations of power, and not a cold-blooded narcissistic psychopath happy to walk over dead bodies. His key position of power was being chairman of the Central Military Commission, to which he was appointed in 1981 and which he held until his retirement in 1990 (he died in 1997). This gave him sufficient control over the enforcement of state power to ensure the implementation of his policies. Despite his lack of formal top positions, Deng was universally recognised as China’s “paramount leader” (Wikipedia) from 1978 to 1990, a phrase used both in China and abroad to indicate his real power, while not holding a formal position reflecting it.

A radical change: Evidence-based policy instead of ideology

How was Deng Xiaoping going to deliver on his promise of economic growth and prosperity?

Deng stated in his December 1978 speech that instead of dull ideological dogma the Chinese leadership would on all levels henceforth “seek truth from facts” [實事求是]:

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At a time when the European economies are in the doldrums, Germany is in its third year of recession – for the first time since the recession that helped bring Adolf Hitler to power in 1933 – and China is challenging the US for global economic leadership (while when many observers are saying China has already won the contest, by having decisively moved ahead of the US) we must not lose sight of some fundamental truths, namely that Western economies can also enjoy sustainable, high and equitable economic growth, even at a brisk pace of double-digit growth rates, without inflation and without banking crises.

Given the facts of the credit creation process and the powers of central bankers, we know that whenever we see a country in recession, this is a policy-decision by the central planners, because the tools are available to quickly exit any recession and deliver high growth and prosperity for all.

Realisation of this fact might turn some observers pessimistic. But I think instead of adopting a negative and nihilistic attitude, such as “Europe is finished”, or “America is lagging behind”, or “the system has run its course and is collapsing”, we have to understand – and spread the knowledge – that economic doldrums are not a law of nature. Recessions are not inevitable. They are the result of conscious policy decisions.

I want to refocus attention onto the ingredients of success, and ensure that an increasing number of people know them, and demand such successful policies from their own lawmakers. We simply should not accept a recession or low economic growth. Neither should we welcome asset bubbles, and the mayhem that follows them. These are all avoidable problems, which can be ended in short time at any moment.

The world is abundant and we can all live in abundance. Decision-makers delivering failure after failure, causing wars, unemployment and crises – while simultaneously using these crises to sell their favourite new policies to increase their powers and controls over us as the feigned solution – must be held to account everywhere. It’s not left vs. right, Republicans vs. Democrats, Conservative vs. Labour. It’s power-hungry central planners who want to control us vs. the People, as Lord Acton recognised long ago (the same Lord Acton who observed correctly that power corrupts and absolute power corrupts absolutely – he thus was a staunch opponent of powerful central planners).

In my view a good way to tackle this topic is to review just how China achieved its remarkable rise from developing country status to a developed industrialised economy in only four brief decades so that it is in many sectors becoming the leading nation in the world. However, that has to wait for Part II, to be released shortly. For before we can let the bright lights of high growth and prosperity shine upon us, unfortunately I first have to take the reader to one of the darkest episodes in the twentieth century, indeed in recorded human history.

China’s surge to superpower status in only 40 years can teach us much

The changes that commenced China’s rise to prosperity and economic strength were brought about by someone called Deng Xiaoping (邓小平, or in older script, 鄧小平), who rose to power in 1978, not long after strongman Chairman Mao had died. (A note concerning Chinese names: I am here following the common practice of making an exception for Chinese names by adopting the East Asian language naming order, even when writing in Western languages, by naming the family name first, as East Asian languages do, such as Chinese, Japanese, Korean, Vietnamese or Hungarian; since this text is in English, we should really follow the English naming order, but we would be the only ones doing this, and it might cause confusion if we said ‘Xiaoping Deng’ or ‘Zedong Mao’).

To understand where Mr Deng came from and where China stood at the time he came to power, we need to first reflect on what had happened in the three decades before 1978.

This is also highly instructive for other reasons, and hence merits its own report (this Part I): I have often said that in order to understand the current, and imminent, policies of the European Union, and what is happening in the UK and even the USA, one needs to study the Stalinist Soviet Union and Maoist China. Many policies and psyops will be eerily familiar. This is what this Part I is about. We can then turn to the actual ingredients of success, the Elixir of High Growth, in Part II, which is to follow shortly.

Before 1978: Central planners set out to centralise and reduce the population

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The battle is only just beginning. The implications could be profound. What are we to make of it? In this piece I consider this important development, but first of all I shall try to place it into the context of other developments emanating from the Trump administration.

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Switzerland, 21 July 2025. Many observers are puzzled by the dismal economic performance in Europe - which is not getting better, although a new rearmament program may create the illusion of growth. It is argued here that there is a link to the puzzling period of two lost decades of stagnation in Japan, which also created world record national debt for an industrialised country. The analysis goes back to first principles: Only if we understand how economies actually function will we be able to tackle such questions and make reliable forecasts about the future.

Degrowth prescribed for Japan, now exported to Europe

With hindsight we now know that the Japanese recession that began in the early1990s lasted twenty years. In the first decade the recession took most Japan-hands by surprise by its depth and length. Then it came to be used to argue that “structural reform” was necessary for a recovery, although this argument wore thin in the second decade. More and more analysts concluded that my assessment of the early 1990s was correct, namely that the recession had been artificially prolonged by the Japanese central bank.

The great Japanese recession was finally ended in 2013, after Prime Minister Shinzo Abe had won a landslide victory on the unusual election platform of wanting to tackle the too-powerful Bank of Japan – a central bank that had been acting against the interests of the Japanese people for too long. In some speeches Mr Abe was indeed referring to research in my book Princes of the Yen and its policy recommendation to reduce the Bank of Japan’s powers.

Initially, Prime Minister Abe had contemplated a change to the Bank of Japan Law, which had only been changed in 1997 to make the central bank independent and legally de facto barely accountable to anyone. Mr Abe originally joined my recommendation to formally reduce the central bank’s power and independence, and increase its accountability, by revising the Bank of Japan Law again.

This kind of change had earlier been endorsed by a number of (former) fellow LDP politicians and members of the Japanese parliament, including Mr Yoshimi Watanabe, who later became a government minister, Mr Yoichi Masuzoe, who was a member of the Upper House of the Diet, was a government minister later and from 2014 to 2016 was governor of the city of Tokyo, and Mr Kozo Yamamoto, who is a former Ministry of Finance official. They had been readers of Princes of the Yen, which had made a splash in Japan and was widely discussed in the mainstream media in 2001 and 2002. Based on its analysis, they founded the ‘LDP Bank of Japan Law Reform Group’, to which I was formally invited as advisor. Changing the Bank of Japan Law would have been the safest way to permanently derail the reach for ever greater powers that the central planners at the Japanese bank had been working on.

Unfortunately, for some reason, the Prime Minister, who is the grandchild of Nobusuke Kishi, who featured in important chapters of Princes of the Yen, despite his election promises, failed to attempt any change in the Bank of Japan Law. Instead, he focused on the more quickly achievable goal to install a new Governor as head of the Japanese central bank who he thought would push for a more positive monetary policy geared towards greater economic growth. His choice fell on the former vice-minister of international finance at the Ministry of Finance, Mr Haruhiko Kuroda, who commenced as the new governor in March 2013.

I had already confirmed in one-on-one meetings with Mr Kuroda in 1998, when he was still at the Ministry of Finance, and again in 2013, when he had become Governor of the central bank (at the latter meeting, I had four hours in Japan, as I was changing planes, and managed to spend them visiting the Bank of Japan and meeting its governor – an efficient use of my time I thought), that he was fully briefed on the predicament of the Japanese economy – a lack of bank credit creation in the form of loans to the real economy was holding back nominal GDP growth, and this stalling of bank credit creation had been the unchanged problem since the early 1990s. I had explained to Mr Kuroda in these meetings what was necessary for a swift and lasting economic recovery: As I had argued since 1992, no economic recovery would happen until bank credit creation for the real economy (ideally via bank lending for business investment) recovered. Since bank credit creation for the real economy was actually declining in the 1990s, in 1994 I proposed a set of urgent policy measures that the Bank of Japan and Japanese government should adopt, which I called “Quantitative Monetary Easing” or, short, “Quantitative Easing”, to ensure that what I expected would turn into a massive banking crisis could be averted and growth restored swiftly (see my 1991 Oxford Discussion Paper).

The name “Quantitative Easing” was based on the standard Japanese expression for stimulatory or expansionary monetary policy, which is usually called “easing” (緩和). But most economists were associating that general expression with interest rate reductions. However, I had found that interest rates (the price of money) were not the most important monetary policy transmission mechanism (see my more recent empirical work on this). Instead, it was the quantity of money, correctly measured as bank credit creation that determines economic growth (see my Quantity Theory of Disaggregated Credit e.g. here). To emphasise this quantity aspect, I simply positioned the word “quantitative” ahead of the standard easing expression, and “Quantitative Easing” was born, as published in the leading financial newspaper, the Nikkei (Nihon Keizai Shinbun, 日本経済新聞, whose owner today also owns the Financial Times), on 2 September 1995, and in a series of further articles in the Japanese media and client reports for Jardine Fleming Securities, Tokyo (where I worked as chief economist at the time).

So Mr Kuroda heard first-hand from me the three most important policies that would swiftly create an economic recovery, as I had repeatedly stated since the mid-1990s, namely:

QE1: Central bank purchases of non-performing assets from banks.

The non-performing loans originate from bank credit creation for unproductive use, namely for asset purchases. These caused the prior asset bubble. As soon as such unsustainable bank credit creation ends, asset prices collapse and banks are left with non-performing loans. But this can be remedied swiftly, if the central bank buys them at face value. This QE1 measure addresses the cause of an incipient banking crisis instantly and without using tax payers’ money, by moving the non-performing loans on the banks’ books to the central bank, where they cannot do any harm. This way banking systems can be rescued instantly, and at zero cost to society. This measure also does not create inflation. In fact, it is entirely impossible to cause inflation this way: No new money is injected into the economy – that is, the non-bank sector, by QE1. This form of QE merely constitutes a transaction within the banking system (namely between the central bank and the banks) that cleans up banks’ balance sheets and turns failing assets into pure liquidity. But money creation takes place only when banks inject money into the non-bank sector, which does not happen here. There is no inflation and no fall in the value of the currency. It proves that banking crises do not have to be costly or drawn-out, resulting in recession and unemployment, except when central banks wish it so. Sadly, the Bank of Japan never implemented QE1, and it was Ben Bernanke in the US who did so in 2008 – causing many people to think that all QE is inflation-free, which is wrong, as we shall see when considering QE2:

QE2: Central bank purchases of performing assets from non-banks.

Given the scale of the problem – in 1994 I estimated that 25% of Japanese bank assets were non-performing (based on the amount of bank credit for real estate transactions since 1995) – it was apparent to me that bank loan officers would not increase bank credit, even after their banks’ balance sheets had been cleaned up by the central bank via QE1. The reason is human nature: They would still suffer from “shell shock” from the enormous amount of non-performing loans they had caused and thus would remain cautious for a while. Hence I devised a method by which the central bank can force banks to create credit. This happens, when the central bank engages in asset purchases from non-banks. Normally, central banks exclusively deal with the banks or the government, but not the non-bank sector. My QE2 proposal of 1995 was that the Bank of Japan should simply purchase land in Tokyo and turn it into public parks and green areas accessible to the public. Tokyo is not a very green city and could do with more recreational green space. I was sure that the real estate market was going to collapse for many years to come without the proposed QE policies. This particular measure of QE2 would achieve several goals simultaneously: As the sellers of the land – mostly firms or individuals other than banks – instruct the central bank to receive payment in their bank accounts, the central bank would instruct their bank to credit their current accounts. Since the instructions came from the central bank, banks be forced to newly create this credit in the seller’s account, thus expanding the money supply. In return, the banks would receive a credit in their account with the central bank (known as ‘reserve accounts’). This QE2 proposal is thus a way for the central bank to force a bank credit expansion, an expansion in the money supply and hence an increase in economic activity. It is ideal in situations of recession, shrinking GDP and deflation. Deploying QE2, one can exit such a depression swiftly and stage a strong recovery.

Later in 2013, Bank of Japan governor Kuroda began implementing QE2, which he came to call “Qualitative and Quantitative Monetary Easing”, or “QQE”, in order to distinguish it from the “Fake QE” policy of his predecessors, implemented from 2001 to 2006.

QE3 (fake QE): The central bank purchases performing assets from banks.

During most of the 1990s, the Bank of Japan argued that my QE proposals were “nonsense” and would not work, or could not be implemented. In the early 2000s the central bank then proceeded to implement standard monetarist high powered money expansion by purchasing government bonds from banks – and then wrongly labelling this “quantitative easing” and shouting: “See! It’s not working”, and then abolishing it in 2006. However, in my original contributions between 1994 and 1997 I had already made clear that standard monetarist high powered money expansion would not work. Also, such monetarist measured did not require a new name – proving that the Bank of Japan was merely trying to discredit my original QE proposals.

QE2 for stocks

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London, 3 June 2025. Today it all seems quiet on the bond front. Yields are down, bond prices have been rising, all seems well. But is it? The VIX is on the rise…

In July 2007, the CEO of Citigroup Inc., Chuck Prince, told the Financial Times that global liquidity was enormous and all was well. "As long as the music is playing, you've got to get up and dance," he said. "We're still dancing.”

Are the tenors still singing in the bond markets? Singing, while Rome burns?

Only last Friday, 30 May, Jamie Dimon, chief executive of J. P. Morgan Chase, the world’s fifth largest bank by assets (trailing 4 Chinese banks in the rankings), warned regulators and market participants that the US bond market was going to be a cause for “panic”. Dimon spoke at the inaugural Reagan National Economic Forum, held at the Ronald Reagan Presidential Library in Simi Valley, California.

The bond market is on edge, most commentators would agree.

Jamie Dimon predicted:

“You are going to see a crack in the bond market”.
And: “You are going to panic”.

Indeed, 10-year US Treasuries were traded at yields of 4.4% and 30-year Treasuries at yields of 4.9%. These figures are lower than at the peak of the recent bond scare, on Wednesday, 19 May, when the 30-year Treasuries recorded a yield of 5.09% and the 20-year Treasuries 5.12%, respectively. These yields rose even higher temporarily on the following day, after a failed Japanese government bond auction in Tokyo, within reach of 5.2%, although they settled at a lower rate by the end of the trading day.

Dimon fired off two warnings: One about the shaky state of bond markets, aimed at all investors, and another specifically aimed at US regulators: He argued that a proposed change in US bank regulations, namely a loosening of banks’ supplementary leverage ratio (SLR), was not a good idea.

That may seem surprising, since a bank like JP Morgan would likely prefer a loosening of bank regulations.

The specific change in banks’ regulatory requirements had been discussed by Treasury Secretary Scott Bessent. The SLR imposes a restriction on banks’ balance sheet growth and the US Treasury Secretary raised the prospect of loosening this regulation for banks in case they held US Treasuries. Presently, large US banks must hold equity capital against all assets, whether mortgages or “high-quality assets” like US Treasuries. The leverage ratio is an absolute limit to banks’ balance sheet growth, at any given amount of capital. So loosening the supplementary leverage ratio means that banks can grow their balance sheets virtually without limit, as long as they pile into US Treasuries. Therefore some may consider this as a way to encourage the banking sector to grow, and hence the economy to benefit.

By excluding Treasuries from this ratio it would henceforth give banks powerful incentives to buy US Treasuries. Unfortunately, the logic behind this measure is not a sudden insight that bank credit creation for the real economy is a necessary and sufficient condition for economic growth and that my proposal for backing fiscal policy with bank credit-based monetary policy (what I call Enhanced Debt Management) should be implemented. Instead, it is more like a stop-gap measure designed to boost the bond market by nudging banks to buy bonds, thus placing a lid on potential bond yield rises, and perhaps even pushing yields lower – something President Donald Trump had been keen to achieve since he had taken office again in January. Today it looks like just talk about it is already having an effect.

A bond market massacre, and only losers?

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On 18 March 2025, the chief commissar of the unelected European Commission, Ursula von der Leyen, announced two plans, both of which are highly concerning, and which are closely connected: Firstly, the “ReArm Europe” plan, which ushers in a “new era”, namely the “era of rearmament” for Europe, which states that “Europe” will “massively boost its defence spending”. The goal is to “mobilise close to EUR 800 billion” in order to “unleash the use of public funding in defence at national level”. This unprecedented increase in military armament spending is desired by the other Brussels-based bureaucracy more directly controlled by the USA: NATO.

For this, von der Leyen announced a new EUR 150 billion loan program for member states to borrow from the European Investment Bank, and secondly, and more concerning, she suggested an EU assault on the savings of European citizens. This raid on people’s nest egg is called the “Savings and Investment Union”, in line with the unimaginative Brussels Speak we have had to get used to. Very few details were given on how so much money was supposed to be spent, except that von der Leyen said with such increased military spending “Member States can massively step up their support to Ukraine”. Even less detail was given on the question of just how this “mobilisation” of people’s money was supposed to take place, fuelling speculation and fears of the worst possible scenarios.

NATO Headquarters in Brussels

Editorial note: Even though the “ReArm” name was found to be unpopular to the surprise of its creators, so that this European Commission-ordered rearmament programme of Europe has apparently since been re-labelled to the less militaristic sounding and less blood-dripping “Readiness 2030”, to avoid confusion we shall continue to use its original name here.

That Savings and Investment Union is the second plan announced in its own right on the same day. It is yet another centralisation plan, concocted by the vast European Commission bureaucracy that has, unusually for democratic countries, both executive and legislative powers (the European parliament is a rubber-stamp parliament that has no power to propose any laws).

It is difficult to say which of the two plans is more concerning. Von der Leyen said that for the Commission’s re-armament program of Europe, the people’s "unused savings" will be utilised, and she was referring mainly to people’s deposits in bank accounts. The biggest amount of such savings held in the bank is found in Germany, as its population has a preference for highly liquid savings, and has fewer investments in stocks, bonds or real estate per household than in several other countries in Europe.

In a tweet on X, Ursula von der Leyen stated:

"We'll turn private savings into much needed investment." News Pravda

According to EuroNews, the European Commission plans

“to better channel up to €10 trillion in bank deposits across the bloc into much-needed strategic investments.

Since von der Leyen gives no details, let’s consider what the EU Commissioner for Financial Services, Maria Luis Albuquerque says about this:

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These rumours started with a Q&A session of ECB head Lagarde at a press conference by the ECB on 6 March 2025 in Frankfurt. The statement that triggered this rumour in recent days was in response to a question from a journalist.

Lagarde was asked the following question:

“…my second question is on the digital euro, because the Trump administration decided to stop the Federal Reserve’s project on central bank digital currency, and it looks like the Fed might be on hold on the digital dollar for about four years. So it looks like a kind of a golden opportunity for the ECB and the plans of the digital euro. What is the position of the ECB on these issues with these changes also from the United States, and how can the ECB push forward with the creation of a digital euro?”

She said in response:

"…On your second point, I tend to share your views. Nature does not like a vacuum. We started working on the digital euro way back, actually when I started my term 5 1/2 years ago…. I am not claiming parentality on the digital euro because my colleague Benoit Coeuré had already committed a speech on this matter before I arrived, but I certainly carried on with that project. Subsequently, Fabio Panetta on the Board and then Piero Cipollone, who has replaced Fabio, have taken the lead together with a very good team, which is focused on accelerating the pace and hopefully campaigning enough with all the stakeholders – meaning the European Parliament, European Council, European Commission – so that we can eventually, not put to bed, but put to reality this digital euro. The deadline for us is going to be October 2025 and we are getting ready for that deadline."

It did not take long for social media to be flooded with headlines proclaiming that the Digital Euro, the ECB’s CBDC, will be introduced in October 2025.

But is this actually true? Will the ECB launch its central bank digital currency in October 2025? The answer is no. But this doesn’t mean we don’t need to be concerned. Here’s the real story..

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24 February 2025. Germany. As Germany’s national election catches world attention for a brief moment, any hope of significant policy changes away from the “degrowth” strategy in place under Chancellor Scholz and his economy minister Habeck are as remote as ever. The allegedly “Christian” parties CDU/CSU and their candidate for Chancellor, Blackrock staffer Friedrich Merz, refuse to form a coalition with the conservative AfD party (Alternative for Germany), led by Alice Weidel (ex-Goldman Sachs), despite the latter party’s significant gains (and support from Elon Musk). The reality is that likely future Chancellor Merz is a follower of Angela Merkel, who started Germany’s downfall ten years ago by transforming the CDU/CSU into a left-leaning party that has opened the doors to mass illegal immigration on an unprecedented scale. Merz is set to form a coalition with the degrowth parties SPD or/and the Greens, who are keen to implement World Economic Forum and UN SDG goals of reducing growth to zero. And they have delivered on the promised dismal economic performance in recent years!

Without significant positive impulses from government policy, we are left to ponder Germany’s economic future - which is the topic of this report. The picture is more than bleak: Many pessimists are not even aware of the most dangerous threat Germany is being exposed to, and it is a threat authored by the Europpean Central Bank.

But one thing at a time. When the 2024 real GDP growth figures for Germany were announced in mid-January, few were surprised: Germany’s economy had contracted again in 2024, by 0.2%, after a contraction of 0.3% in 2023. The earlier government expectation of marginally positive growth of 0.1% in 2024 had already relegated Germany to the bottom of the ranking of countries by economic growth (see Figure 1).

Figure 1: Ranking of European (plus Asia Minor) countries by real GDP growth

As it turned out, German growth is now weaker than all but Austria’s and Estonia’s performance, whereby Austria, historically as much German as any of the constituent states of Germany, suffers from the same problems we are going to analyse in this report.

The February report by Germany’s central bank noted that

“German economic output fell surprisingly significantly in the fourth quarter of 2024.”

Looking ahead: While the government forecasts modest growth of 0.3% in real terms in 2025, at present even this appears far too optimistic. Instead, it is more likely that the economy will contract again, producing three consecutive years of GDP contraction and therefore marking the longest recession in post-war German history, and indeed since Hitler came to power in January 1933, ninety-two years ago: Germany has never experienced three or more consecutive years of GDP contraction since then. (The statistics on the years 1945 to 1949 are shaky but it appears that growth recovered relatively swiftly; there were no three consecutive years of GDP contraction). Sadly, much worse is yet to come.

Biggest downturn since the Great Depression

In other words, with another contraction in 2025, Germany is now mired in what will then constitute the longest recession since the Great Depression. The German Chamber of Commerce and Industry (DIHK) expects a contraction of 0.5% in real GDP in 2025.

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Modern macroeconomics, as it dominates the teaching and textbooks of all major universities in Europe and North America, is based on the equilibrium paradigm. This began with the introduction of the deductive methodology in economics – also known as the hypothetico-axiomatic method, by David Ricardo in the 19^th century. The deductive method was used to justify equilibrium economics. Both deductive methodology and its application to equilibrium economics were sponsored and actively advanced by Ricardo, a wealthy financier from the City of London, who was followed by others and their hired economists promoting this particular kind of economics. Once merely an extremist faction in economics, it has experienced a steady rise to total dominance in economics, which was achieved after the end of the second world war, when US domination of international institutions went hand-in-hand with US sponsorship of this particular kind of economics.

Essentially, all important claims in modern economics are premised on the existence of equilibrium. Modern mainstream economics is equilibrium economics.

Just consider the latest issue of one of the top economics journals, the Journal of Political Economy, associated with the University of Chicago: Studying the seven original paper contributions, we see that only one of them is an empirical study not assuming equilibrium. All others, one way or another, are based on the theoretical premise of equilibrium.

JPE December 2024

So what if equilibrium is a rare occurrence? What if there is no equilibrium? The edifice of modern mainstream economics would collapse.

Since large language models have been trained also on economics publications, they surely follow the premise that the true economics is equilibrium economics. So let’s question them a bit in the attempt to gain some answers. Unlike modern economists that simply avoid such direct questions, the AI-models at least have to pretend to give answers.

Asking AI about equilibrium in economics

Here is the transcript of two such interactions with AI, namely the Chat GPT free model:

You said (Richard Werner): In economics, it is usually assumed that markets are in equilibrium. This is the foundation for and precondition of most of the currently dominant theories and economic models. However, can you tell me if there is actually any evidence of equilibrium in any market?

ChatGPT said:

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London, 8 December 2024. Since Autumn 2022, when central banks did the inevitable and predictable, namely raising interest rates, numerous commentators have been warning us of an imminent US banking crisis. True, the size of the interest rate rise, within such a short time period, was unusual (500 basis points within one and a half years). But it was entirely predictable and not surprising at all that rates were going to rise significantly, since empirical research has long established that interest rates follow economic growth and are positively correlated with it. The dramatic QE2 policies by the Federal Reserve of March 2020 had to boost nominal GDP growth sharply in late 2021 (it usually takes 12 to 18 months).

QE2 is the second part of my original Quantitative Easing proposal I had developed in the 1990s for a Japanese economy in the grips of deflation and suffering from contracting nominal GDP growth. It works by enabling the central bank to enforce a massive expansion in bank credit creation, ballooning the money supply, by the central bank purchasing assets from non-banks. This is what the Fed did in March 2020, when, having hired Blackrock for the purpose, it purchased assets from the non-bank sector at unprecedented scale. This meant that nominal GDP growth was accelerated sharply, mainly due to the significant inflation that I warned would be caused by the March 2020 central bank policies (with a delay of 18 months after March 2020). Since rates follow nominal GDP growth, they had to surge as well. The Fed tried hard to delay it. But ultimately cannot prevent major rate movements. So it relented in late 2022.

By March 2023, two banks were shut down, Silicon Valley Bank, the biggest, and Signature Bank, New York. Both had been active in the crypto space. In April 2023, First Republic Bank in San Fransisco was shut. Since then, another four banks have been closed, most recently First National Bank of Lindsay, Oklahoma, in late October 2024.

Hence the persistent talk about a banking crisis in the US, with further trouble brewing, we are being warned.

Source: American Banker

Central banks have been working hard against the many small banks

Why the talk of a banking crisis? Before we come to this, let’s be clear about the

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Of course it is the largest absolute amount of national debt in the world, and in world history in real terms.

The exponential accumulation of debt in recent years becomes especially obvious when we consider the long-term historical perspective as shown in this graph:

Since this US debt mostly takes the form of Treasury bonds issued with fixed promises to pay interest, the annual servicing cost of this national debt has now also reached historic proportions.

Interest payments on debt now exceed $ 1 trillion, ahead of military spending

According to the September 2024 US Treasury Bulletin, the U.S. government has spent over $1 trillion on interest payments for its nearly $35 trillion national debt so for this fiscal year, according to the Treasury Department. This is a new historical record.

Looking at the breakdown provided the September Bulletin published by the Treasury, which actually refer to the figures as at the end of June 2024, the gross interest on Treasury debt securities rose to $868 billion. We need to add interest payments on other obligations of $177 billion, giving us the world record high in interest payments of $1.045 trillion.

Given total fiscal expenditure of $5,027 billion, and total revenues from taxes, social security contributions and other sources amounting to only $3,754 billion, the deficit in the fiscal year to date by the end of June amounted to $1,273 billion. So gross interest payments of $1.045 trillion constitute 21%, more than one fifth of the total US government expenditure so far this year. At the same time, the interest payments amount to 82% of the US government budget deficit so far this year. This marks a 33% increase of gross interest payments by the government, compared to the same time in the previous year.

Since we have to add the significant budget deficits of July and August to these June data, with the August budget deficit alone surging to $380 billion, it seems highly likely that the 2024 US government budget deficit will exceed $2 trillion. The government’s official estimate of June 2024 that the deficit will come in at $1.9 trillion is likely to be overtaken by events, just as its debt forecast that national debt would only reach $35 trillion by the end of 2024 already has.

So where is all the US government expenditure going?

Subtracting government investment earnings, we obtain net interest payments, which still amount to more than $800 billion, ranking just below Social Security and Medicare, and ahead of the spending by the Department of Defense, which used $608.6 billion. Even adding up the Deep State/military-complex departments of “Defense”, “Homeland Security”, “State Department”, “NASA” and “Independent Agencies” (including several of the 17 secret service agencies), the total comes in at $ 794.6 billion, still behind the government spending on interest payments.

Interest payments have jumped by 30 per cent over the same period last year. 2024 is indeed the first year in the history of the United States of America that payments to receivers of coupons on the government debt have exceeded expenditure on the military (US military spending being by far the largest in world, ca. nine times larger than Russian military spending).

A publication by the Federal Reserve Bank of St. Louis knows how to present the massive military spending by the United States: The chart of the international comparison simply gives the US a different scale, alone among all countries whose expenditure is shown. This hides the fact that the US has by a long distance the largest military spending in the whole world.

Spot the presentation trick

Servicing the national debt via interest payments is well on track to soon becoming the single most dominant share of Washington’s budget. Governments often like to hide the interest payments when they present their spending, by restricting the displayed information to “non-discretionary spending”, which conveniently excludes interest payments. Remember, we are no dealing with governments that believe merely “explaining” things properly to us, ideally using behavioural psychology (i.e. mind manipulation) and propaganda, in order to feed us the one and only truth, while any critics by definition utter “misinformation” or “disinformation” that is rapidly being outlawed in Europe, Australia and perhaps even the US.

Elon Musk: America is going bankrupt extremely quickly (9 September 2024)

On 9 September, Elon Musk expressed deep concern about the acceleration in the accumulation of national debt in the US and the fact that interest payments alone now exceed military spending. He also noticed that it now only takes ca. 3 months to add another one trillion dollars to national debt.

“America is going bankrupt extremely quickly. …Interest payments on national debt just exceeded the Defense Department budget, but they’re over a trillion dollars a year. Just in interest. And rising. We’re adding a trillion dollars to our debt, which our kids and grandkids will have to repay somehow, every three months. And then soon it’s going to be two months, and then every month… And then the only thing we will be able to pay is interest… This is not a good ending.”

Already in January this year Elon Musk had stated: “I am alarmed by the US debt”. It stood at $ 34 trn then. On 3 May this year he stated:

“We need to do something about our national debt or the dollar will be worth nothing.”

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There are many examples. Of course not in Europe, where European Commission President Ursula von der Leyen has just proposed to create a new bureaucracy. The Commission President is undaunted by allegations against her and lost legal cases concerning collusion with Pfizer in secret contracts involving billions of European tax payers’ money (such things seem to happen not for the first time; a recent example here; the EU and its Commission have never successfully passed an audit and the official auditors have found an increase in the unlawful “errors” ; in 1999, all Commissars of the Commission resigned en masse due to evidence of impropriety; auditors are said to have died on the job, e.g. here and here; dying on the job also happens to NATO auditors checking procurement spending – conveniently marked as suicide). (The author of this report has never in the remotest contemplated suicide).

Von der Leyen plans to add a new bureaucracy to the promising if not proliferating Brussels administrative jungle of Councils, Commissions, Directorate-Generals, Systems, Boards, Mechanisms and organisations of all kinds – including twenty-four commissioners for various portfolios, such as “Climate Action” (thankfully, eurocrats have the God-given power to regulate the climate via taxes and levies) and one for Equality. The Single Resolution Board in Brussels has the power to close any bank at any time for whatever reason and use depositors’ funds above the ensured minimum to make good other creditors, such as corporate creditors. The European Stability Mechanism has the power to collect tax payer funds from any EU member country at short notice and dispose of them as it wishes. The EU has even been issuing its own securities and credit instruments to raise funds, although Germany remains the largest net contributor to its vast budget.

Evidently, an ever-growing number of bureaucratic bodies can only enrich the process of formulating and implementing thousands of EU Directives and Regulations (the latter now called “Acts of Law”), and hence our very lives: So von der Layen now proposes a new kind of Ministry of Truth that will vet in real time all information disseminated, including by the media and media providers, and ordinary citizens daring to speak their mind on social media. Critics maintain this is in order to stay in charge of “the narrative” and stamp out “wrong” opinions by classifying them as “misinformation” and “disinformation”.

Is Europe’s biggest problem that it doesn’t have enough bureaucratic organisations?

The creation of this new bureaucratic body makes sense, because it is obvious to anyone that Europe’s biggest problem today is that it just doesn’t have enough bureaucratic organs! But no worries, the constantly alert bureaucrats in Brussels have been working on tackling this weakness. Presently called merely a “European disinformation unit”, such a new administrative creature is badly needed – because at the moment the vast geo-landscape of EU institutions concentrates such activities mainly within the already over-worked European Union External Action Services (yes, I have not made this up). After all, the pencils drop in Brussels punctually early on Friday afternoons, if not Thursdays, and overtime can hardly be expected from the overpaid EU staffers – as Europe’s holiday resorts beckon a visit ever earlier in the week.

Moreover, democracy and freedom need to be “managed” appropriately, it would appear. This includes especially the flow of information (see how central banks have been operating information management). Naturally, the new Disinformation Unit will require the creation of related bureaucracies, such as the Joint Response Teams that are already being discussed. After all, the recently imposed European Digital Services Act (the 2065^th Regulation of the EU in year 2022) and the European Media Freedom Act (the 1083^rd Regulation of the EU in year 2024) are there to ensure the freedom of the press. Clearly, there is much work to do – but the fruits are beginning to be seen: The first major German news magazine – Compact – has just been closed and its editor-in-chief was subjected to a dawn-raid at his home, with mainstream media cameras present and filming his detention in a morning gown; the magazine’s bank accounts, computers and other assets were taken into state custody. This was understandable: The government experts had identified “misinformation and disinformation”.

Some readers might find that they could live with a government bureaucracy, if it delivers the goods. For instance, the famed bureaucracy of Prussia was powerful, yet lean and designed in such a way – namely in a decentralised fashion, see my paper on this –  that it remained accountable to the people, delivered outstanding results and responded flexibly to differing local conditions and requirements. Instead, we observe ever more centralisation of control and decreasing responsiveness to needs and accountability fading entirely.

If one is concerned about the risk of ending up with too many bloated bureaucracies and red tape that empower bureaucrats further (what doubter could have such an idea?), while leaving ordinary people increasingly at their mercy, please remember that unelected EU bureaucrats are only doing all this in order to protect us from “proxies and puppets of authoritarians”, as EU Commission President von der Leyen put it – conveniently defined as foreign authoritarians (noticeably there are no authoritarians in the EU bureaucracies).

This introduction so far has only given a hint of the extent of the official bureaucracy managing the EU. The real topic here, however, is the administration and activities of the Deep State, which is rarely acknowledged in mainstream discourse – but much larger, as well as much more influential.

Blessed are the peacemakers

Despite the excellent management of information and opinions by European leaders, not all heads of government in the EU have played ball: Prime Minister Fico of Slovakia had been calling for peace in Europe and sought ways to end the slaughter of Ukrainians and Russians by peace negotiations. In this context he had expressed views critical of current NATO policies, despite – or because of – his country being a NATO member.

Peace initiatives are not welcome by NATO, the European Commission and high-ranking decision-makers in Europe.

On 15 May 2024, Mr Robert Fico, the Prime Minister of Slovakia was shot five times at close range by an assassin and was seriously injured, requiring hospitalisation. He has only recently been able to report back to work. But Mr Fico was blessed: He took the bullets, but survived and recovered.

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This restricted license does not sound impressive on the surface: The key aspect of a banking license is the permission to accept deposits from the general public. (This is indeed the crucial difference that allows banks to create money – see my theoretical and empirical work on this). The restricted initial license however only allows Revolut to gather a maximum of £50,000. –  No, not per day. In total. In other words: With the AWR, Revolut is still not allowed to take deposits in a meaningful way and in practice therefore is still not a bank in the UK. However, the award of AWR opens the prospect that the regulators will, after a further period that could last from a few months to a maximum of 12 months, and which is called the “mobilisation period”, award the full and unrestricted banking license to Revolut.

Doubling the number of bank regulatory agencies

In 2013, when the Financial Services Authority was renamed the Financial Conduct Authority, it was taken down a notch in terms of bureaucratic power and ranking in the hierarchy, as the Bank of England also reclaimed formal regulatory powers over banks (it has always had de facto regulatory powers). This power is located in the Prudential Regulatory Authority, which is situated inside the Bank of England. In practice, this means that the UK doubled the number of bank regulators from one to two: FCA and PRA are now jointly regulating banks, with the PRA being the higher-ranked entity.

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28 June 2024. London. This month many stories were circulated on social media concerning the end of the petrodollar. This is of course a topic that I covered fairly comprehensively in this article, which was published in Fortune in March last year, and when I threw a completely new light on the inflation of the 1970s.

Parts of my analysis has become widespread knowledge, such as my emphasis on the deal between the US and Saudi Arabia – forced on that country the way the Mafia markets its ‘protection’ racket. However, it seems much confusion remains about the details of the events half a century ago, and most of all different versions of what happened were circulated this month, giving quite a misleading spin to the facts.

It started with some reports in early June, which stated that 9 June 2024 was an important date, because this is when the 50-year old “Petrodollar Agreement” would run out, as Saudi Arabia was not going to renew it. Signed on 8 June 1974, we hear in these reports, it ran out half a century later, on 9 June 2024. Such reports triggered a response by the Defenders of Mainstream Narratives reminiscent of those articles in the newspapers in 2020 that “debunked” reports that most people were not threatened by Covid 19, or that the injections were risky and could have seriously harmful consequences.

The 1970s inflation had been sold to us as being due to an external supply shock, triggered by a war. But as I pointed out in my March 2023 piece, it was instead engineered by the US Federal Reserve. As I explained, it was actually the USA that triggered the oil embargo and oil price rises in late 1973 and early 1974, as cover for its central bank’s policy of massive monetary expansion, escalated to all vassal state central banks, which had been implemented since August 1971, when the USA defaulted on its obligations to convert on demand US dollars into gold. The oil price surge, which happened after the first bout of inflation had peaked, was engineered by the US, as cover for the inflation and in order to transfer wealth from Europe and Japan to the US and in order to shore up the US dollar and global network of military bases. For this, a deal was forged between Saudi Arabia and the US, whereby the US would “protect” Saudi Arabia militarily, including ensuring the stability of autocratic rule by the Saud family, in exchange for the agreement by the biggest oil producer, Saudia Arabia, to sell its oil only in US dollars, and invest 80% of its resulting oil revenues in US Treasury securities. This policy supported the US dollar and simultaneously plugged the twin deficits of the current account and the government budget. It also ensured that the world’s oil spending ended up back in the US, so that the proliferating number of foreign military bases and operations could be maintained and financed.

The agreement to reinvest the Saudi oil revenues in the USA had been kept secret, and even the statistics on the main buyers and holders of US Treasuries were kept hidden for many decades, whereby Saudi Arabia was not revealed as the main financial supporter of the USA (an aggregated figure for “Gulf state investors” only was published, until a few years ago). Those who spoke of the “petrodollar” in the 1980s or 1990s were marked as “conspiracy theorists”. The 80% reinvestment requirement was first revealed by John Perkins in his 2004 book Confessions of an Economic Hitman, which was based on his personal experience, including as US consultant on “development consulting” contracts in Saudi Arabia. (The book is highly recommended). Of course he was also censored for spreading “misinformation”.

China launched an oil futures contract denominated in Chinese yuan already in 2018. And Saudi Arabia has been negotiating to sell oil for Chinese currency since at least 2022. But the US is busy trying to avoid this.

So is there any significance to the date of 9 June 2024? A number of reports by mainstream media, establishment financial houses and official “fact checkers” have come forward to engage in recasting the narrative and sow seeds of doubt about the end of the petrodollar.

Fact checkers denounce baseless conspiracy theories – claim no secret deals between US and Saudi Arabia

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