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The End Game

September 14, 2001

That collector from Northern Virginia who introduced me to Sir Arthur Keith has admonished me to outline for you the debate going on in the halls of government between various factions of the inner party.

Op Ed pieces are beginning to appear in our national newspapers which reflect that debate. Numerous articles are floating the trial balloon of "ending states" which harbor terrorists. In addition, several other press organs are breathing life back into a notion born of our most excellent imperial adventure over the skies of Serbia. In the words of an op-ed piece in the Wall Street Journal of 9-14-01, "any state that harbors or abets terrorists - or abuses its own citizens - forfeits its sovereign rights."

In order to examine exactly what such a statement might mean in actual practice we must understand that the attack on the twin towers in Manhattan occurs within the context of a clearly defined imperial structure of rewards and punishments.

The multi-racial empire of the old Soviet Union fragmented into its ethnic and racial components (collapsed to a lower order of complexity) because its centrally planned economy could not provide enough tangible benefits to all the constituent groups within that empire to purchase their continued allegiance. The young turks of the KGB decided that they would be better off and have more power with a smaller, ethnically cohesive Russian nation state.

See Pillar 7, "The Collapse of Complex Societies" by Joseph Tainter.

The same exact thing will happen to the United States if the empire can no longer provide tangible benefits to its citizens that justify the expense of the imperial adventure. And the expense of maintaining that empire has just increased dramatically - at least $20 billions in lost real estate, a $40 billion anti-terrorism appropriation, plus untold costs associated with shutting down air travel and the financial markets for a week.

Until now, the empire has been ruled by a financial system of rewards and punishments.

The American consumer benefits from imports manufactured with cheap foreign labor. In addition, American consumers benefit from the availability of cheap credit to purchase those goods - cheap credit made possible by the recycling of the dollars we pay for those imported goods back into U.S. securities by the exporting countries. Because of this basic circular money flow, Americans have been allowed to consume far beyond their means for decades, and it feels good. It is one hell of a seductive arrangement.

In addition, our intellectual property laws (patent and copyright) guarantee a stream of payments from our trading partners in perpetuity that resemble tribute, and guarantee that our trading partners within the empire can never compete with the U.S. on an equal economic footing. Indeed, we cripple their ability to innovate and obtain patents of their own by hiring away their best and brightest at our overseas subsidiaries (thereby gaining ownership of their innovations) and by removing talented innovators from their native lands through H1-B visas and immigration.

Our trading partners are, in effect, permanent vassal states.

Now you might reasonably ask, "why do they put up with this unbalanced system?"

First, they are reasonably comfortable for the time being, largely because the United States debt balloon provides them with a large export market which allows them to provide employment for their people.

Second, because the dollar is used to settle so many trade transactions between nations other than the United States, non-U.S. participants in the empire are forced to hold very large dollar reserves - meaning that they have no choice but to buy our debt - so that they can trade with other nations (buy oil).

Third and last are the financial punishments.

A number of countries possess cheap labor and compete for the U.S. export market. Thus, we have the power to reduce access or close our markets to one country and open them to another and invest in that other country simultaneously so as to shift production from the country being punished.

Next, our Asian trading partners have much higher savings rates than we do, meaning that the capital structures of their companies must have much higher ratios of debt to equity than ours in order to absorb and utilize that pool of savings. Thus, they become vulnerable to sudden withdrawals of foreign capital and attacks on their currencies despite their high domestic savings rates because of the leverage that those high savings rates create in their domestic financial structures. The inner party has demonstrated on many occasions that they know how to pull the rug out from under any country that allows in large amounts of alien investment capital. In Latin American economies heavily dependent on foreign capital, the rug pulling exercise is simpler than in Asia. After each rug pull, our imperial financiers buy up bankrupt companies at distress prices just as the IMF and the other emergency lending agencies (staffed by their brethren) make loans to the victim country thereby assuring that the distress purchases make huge profits for their new imperial owners.

And we accuse others of crony capitalism! What a country!!

Now it is true that Japan and China have large enough dollar reserves that they can pull the rug out from under us.

However, deliberately selling all our debt and producing a massive depression in the U.S. would cut demand for their exports (an economic consequence) and would be perceived by the inner party as a belligerent act, subjecting them to the risk of bombs falling from the sky.

In the words of the inner party financial consultant Peter Drucker, "never in history has the world's largest debtor had such an enormously powerful military."

Beyond our undeniable military power is a second unique risk factor which makes us extremely dangerous in the eyes of many of our trading partners. We have an elite that has no particular interest in the survival of the American majority - an elite that openly advertises its view that the present majority is expendable and openly advertises its willingness to import a replacement population. And quite inexplicably, instead of feeling threatened by that attitude on the part of our elites, the majority population is quite comfortable, and quite easily persuaded to immolate themselves in hideously destructive wars to vindicate self- righteous slogans and conceptual abstractions that have absolutely nothing to do with their interests or long run survival - making the world safe for democracy - protecting freedom - fighting tyranny - securing human rights - defeating terrorism - each of which is applied quite unevenly in actual practice and none of which have any predictive value whatsoever until you discover the short term and shifting interests of the inner party. It is this unique combustible mix that makes our military behavior quite unpredictable and dangerous, particularly from the viewpoint of Asian nations.

Thus, as long as the trade flows are stable, Japan and China have no desire to upset the empire's apple cart.

In sharp contrast to the above structure, the sources of terrorism lie mostly outside the imperial orbit of financial rewards and punishments. Thus, the normal financial rewards and punishments have no effect on Serbia, Syria, Afghanistan, Pakistan, Somalia, Lybia, Aden, North Korea, and a few others. These are poor countries with relatively little foreign trade. They have mostly autarchic economies.

For these countries, the only method of control up to this point has been aerial bombardment.

During our recent excellent adventure over the skies of Serbia, the inner party came out with a number of talk pieces in the highbrow press claiming that the civilian populations of these countries were guilty (in Iraq's case, of the crime of "complacency") and were responsible for, and should be punished for, the conduct of their rulers. Thus, the inner party has clearly embraced collective civilian guilt even in situations where civilians have no vote, and now advocate the use of military force to kill that civilian population as the appropriate response.

In the case of Serbia these talk pieces finally arrived at the conclusion that the appropriate remedy was conquest, military occupation and re-education.

That wisdom is now reflected in the slogan "ending states" or "forfeiting their sovereign rights" which you see popping up in the papers.

The problem with Islamic Terrorism is that it comes mainly from Afganistan, Pakistan and Iran, the central Asian regions of Islam, where inserting an infantry force to conquer and occupy the land is simply not practical. Unlike the flat desert of Kuwait, rugged terrain makes maneuver difficult and provides cover for the hundreds of thousands of fanatics who are willing to die for their cause. It is a relatively low tech operation in difficult terrain which would minimize our military advantages.

Even worse, the television cameras will be rolling at the backs of our troops documenting their suffering over very long periods of time.

The solution, of course, is the killing of the entire civilian population base that produces these "terrorists" by use of neutron bombs or poison gas, and that is precisely what the inner party is now lobbying to do, much to the horror of the generals.

Here is what is in play.

The Moslem fundamentalists have concluded that the Trade Towers attack has a high probability of provoking an ugly over-reaction of the sort that will cause a rebellion by the populations of the puppet regimes of Saudi Arabia, Kuwait, the Emirates, Jordan and Egypt.

Once the population overthrows the puppet regimes, then the fundamentalists will have at their disposal the oil weapon and will no longer need to resort to terrorism.

They will simply shut off the oil and precipitate an economic depression that would deprive the empire of its ability to provide tangible benefits to its citizens, causing its racial components to split apart just as the old Soviet Union (a close neighbor) flew apart.

Evidence that the fundamentalists have this calculus in mind can be found in the careful word choice of bin Laden, when he urged Americans to adopt a nationalist government that would represent American interests and not Israel's interest. It is clear that he has been surfing the internet.

Note the timing of this attack. It is right at the beginning of a relatively rare economic occurrence - the synchronous slowing of all the major economies of the world. Is the timing accidental?

Could these Moslem fundamentalists have studied Kondratief? Have they read about the Elliott grand super cycle wave?

If the empire does over-react and spur the Arab populations to overthrow the puppet governments and get their hands on the oil weapon, then the fundamentalists themselves will stop terrorism in a heartbeat, and give the inner party no pretext to invade and occupy Arabia - an invasion and occupation that would be necessary to keep the oil flowing.

In fact, the empire has controlled the oil flow in Arabia for 50 years. The only question has been how to control that flow at the least cost, and the cheapest way to do it has been to find compliant locals to do the job, thereby avoiding the wrath of the local population.

If the empire were to overturn those new fundamentalist regimes by invading Arabia and turning the oil back on, the occupation of Islam's holiest sites by the empire could provoke a jihad by all 1.5 billion Moslems worldwide (except in America, where Islam appears to be devolving into just another wimpy Protestant denomination).

The Moslem fundamentalists believe that their biggest problem is the softness of their own Moslem governments. They know the popular mood and know that an over-reaction by the empire would solve that problem.

Thus, the inner party is now pondering whether the outer party in America is enraged enough to abandon their notions of civilized warfare and contemplate wholesale genocide. Simply kill off the population bases that produce terrorists and be done with it.

The inner party clearly believes that the example of turning one Moslem country into a burning glass ball will frighten the Moslem populations left standing sufficiently to ensure docile acceptance of inner party rule.

See "Time to use the Nuclear Option."

Of course, the genocide option would work a profound transformation upon the attitudes of China, Russia, India, and Iran toward the empire. The genocide option is an inner party delusion, but it could happen.

Lesser options involve a clear risk of fundamentalist control of oil prices, and a consequent risk of worldwide depression and a splitting of the U.S. into separate racial republics as the expense of the racial spoils system becomes unbearable, and the dependent racial blocks erupt in violence in response to a cut back in their perceived benefits.

Powerful forces have now been unleashed, and one false step could lead, over a period of years, to disaster for the empire and total public exposure of the inner party and its power.

My bet is that the inner party lust for biblical genocide will be rejected by Bush out of instinct and not because of any understanding of the world situation.

However, it is very possible that he will see an opportunity to appease the inner party and appear tough and presidential at the same time by launching some big, messy and highly visible operation that may nevertheless destabilize all of the puppet regimes.

Naturally, being realists, Russia and China might help the empire stick its foot into that trap.

Such assistance will puff up the inner party's feelings of invincibility and increase the probability that the empire self destructs. Being relatively poor countries, China and Russia have less distance to fall, and being, respectively, a totalitarian and a relatively cohesive nation, they have far less risk of collapse.

They will survive the economic fallout.

The American empire may not.

And from that cause, a new American nation may be born.

Transtopia