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Strategic Considerations on the Covid-19 Crisis

We are in midst of a crash which began before the Corona virus was known.

Submitted by Leif Johnson…

Let us assume for the sake of argument that this Crisis is part of a considerably larger strategic plan of the Anglo-Americans, which ends in a state of war with the China-Russia bloc.

That war could be surrogate wars, endless wars sapping the strength of the Sino-Russian bloc (as envisioned by George Orwell), or military confrontations short of nuclear war. I see that Russia has informed the U.S. that use of tactical nuclear weapons would mean full scale nuclear war. As Putin said a year ago, “Previously we had to catch up militarily to the Americans, now we are ahead of them” (referring to some super weapon).

We are in midst of a crash which began before the Corona virus was known. But now the Fed has claimed that they are “ahead of the curve” on this crisis, unlike the last. They have also boasted that they will print as much money as necessary to stabilize the financial system, including eliminating reserve requirements and reducing capital requirements. That’s wildcat banking …. why even keep ledgers?

If the Fed can lend an infinite amount of money and the major banks can lend without reserve or capital requirements (also an infinite amount of money), what on earth is the Fed thinking?

Now consider the virus and the U.S. response. The media is Trump-bashing, declaring he acted too late and this has caused the need for a complete lockdown. But by the time he ordered lockdown, virtually all the characteristics of the virus were known, and they weren’t terribly dreadful.

Why did the Chinese lock down Wuhan, Hupei and other parts of China? Understandably they didn’t know the contagiousness, the vectors, which cohorts were targeted, and how many other areas were infected. They poured 40,000 medical workers into Wuhan; produced ten emergency hospitals (our U.S. emergency hospitals lie empty, the hospital ship has sailed away from New York, and our hospitals have even closed floors because emergency care was cancelled.) I think they may have suspected germ warfare aimed to curb Chinese growth. One top leader said it may have been spread by American participation in military athletic games in September in Wuhan, but the more important was a top leader statement that the virus came at a critical moment in the development of the Chinese economy. I think China was undergoing a phase shift in their development—which will pick up now that China is “open”.

The Chinese rapidly discovered the virus genome, (and told the world), knew that it targeted the elderly and those with underlying conditions. They had a roughly calculated death rate, and moved knowing that the number of persons with the disease was a gross undercount. But they moved in with contact tracing (any city does this with infectious diseases) and told the world what they knew.

Sweden was the only European country to learn from the Chinese. Very few young people (under 40) catch the virus; 75% of cases in Sweden were over 65. They kept society functioning, but limited gatherings to 50; and belatedly protected the elderly (Sweden, for financial reasons, has an evil Do-Not-Resuscitate policy towards the elderly.) Children are in school, the shops and industry are open as are hospitals, recreation and transportation. Because of their policy of reducing the elderly, and allowing the virus to spread, they will have higher death rates (though so far not much), but in the long run, immunity will build up and the death rate will probably be similar to rest of the world which is about what flu would bring. If we assume that 10% of the world population will get the virus and 750,000 (thrice the present number) will perish, the death rate is 0.1%.

Now, Trump, in January/February, knew these things. But why did he then make an abrupt about-face into a nation-wide lockdown? This occurred at the same time Trump’s attitude towards China suddenly shifted from praising China’s Covid-19 efforts to ridiculous demands that they pay for damage they had done to the West. Somewhere a strategic shift was decided.

What exactly? You can’t just shut down economic activity for two, three or four months and not expect to have a quite different economy at the end of that. The impoverishment of the population will be shocking. In the U.S., 50,000 small businesses disappear, another 20% of the informal economy will be unemployed, major companies will reduce payrolls; ten million homes will be lost.
Why? To save 50,000 lives? But this virus attacks almost exclusively those with weakened immune systems (Crones disease, etc.), underlying diseases, and the elderly. Those are the people to be quarantined—not the healthy, non-susceptible population. Yet, no extra precautions or medical care was rushed to the most vulnerable population. Everyone was quarantined even though persons under 40 were relatively unaffected. When have we ever quarantined the healthy?

The authorities did dot direct medical attention towards the susceptible portion of the population, proving that the purpose of lockdown had little to do with saving lives.

I had long wondered how the world financial oligarchy would be defeated. I imagined coalitions of Third World countries, as envisioned by Fred Wills, the former foreign minister of Guiana, confronting the Empire, but at terribly great cost in the face of Anglo-American advanced weapons. I imagined the Soviets might oppose the British Empire imperialists, but that was dashed by Yeltsin and Jeffrey Sachs. What else was left?

My wife and I were in China in 2012, and our guide told us this pun: “The national bird of China is the crane. Look around, all you can see are cranes.” Today China makes a billion tons of steel annually—almost ¾ ton of steel for every man, woman and child. America produces 74 million tons per year—less than a quarter of a ton per capita. China produces enormous quantities of drugs and medical equipment, and has 70% of the world’s communications market. They are, by a great measure, the world’s largest productive economy.

How can the West wage war on China—or even credibly threaten it? It would require a war build-up. But how can the present banking system maintain an enormously expensive war build-up? It doesn’t have any money—that’s what a crash signifies.

I think that for the oligarchs, the post-lockdown economy will require a financial structure like that devised by Hitler’s finance minister Hjalmar Schacht—a dual system separating the regular economy from the war economy, analogous to Schacht’s MEFO bills. The normal economy will be financed by local and regional banks, the war economy by the megabanks and off-shore money. The financial resources in the real economy will be siphoned into the warfare economy. By oligarchs’ reckoning, reducing people’s consumption reduces inflation. To further curb inflation military profits must be kept separate from (cannot flow into) the real economy. Therefore, MEFO-bills profits from war armaments were nonconvertible to Reich Marks (real economy).

How are the megabanks and trading houses going to finance a military build-up when they are de facto bankrupt (as they were in Nazi Germany)? The Fed’s bailout trillions will just stabilize the system, but not finance war preparations. What about the huge overhang of debt—derivatives, etc.—that requires servicing?

Ah… they will monetize the debt. This will be fine as long as two conditions are met: the world (actually including the Chinese) agree to the existing value of the dollar, and the dollar remains the world’s reserve and trading currency. Maintaining the dollar — after adding another tens of trillions to world circulation, coupled with a several-month shutdown of the Western economies — will be quite a juggling act. Some Southeast Asian countries now use the Chinese yuan as their trading currency.

The economic conditions post-lockdown will be similar to 1936 Germany: a massive 30-40 million unemployment (20-25%); great impoverishment and actual hunger; and a strategic situation that motivates mounting a credible threat to the Sino-Russo bloc. Haste is of the essence: China grows by 9.5% a year (however that is measured), and the U.S. is already considerably behind China in productive output. Every day China grows relatively stronger. I think the pace of confrontation will increase rapidly. Needless to say, a Schactian economy requires a fascist government.

Now consider Europe. They aren’t fully part of the Anglo-American establishment. The European Commission is an enormous bureaucratic hulk set up and run by the likes of Herman Aps of Deutsche Bank (and other ex-Nazis), which has come under considerable fire from American media. Is Brexit symptomatic of a serious disagreement between English and Continental oligarchies, and what would that imply?

I have left out Russia. This past summer, as we were leaving our St. Petersburg hotel, I met a man who claimed to have been in charge of the Soviet missile fleet’s electronic systems. He claimed to have inspected the electronics of a Chinese submarine and found them “magnificent, perfect”. There will never be another Cuba Missile Crisis that secures the West’s sphere of influence.

How is it that no one, not the establishment media, not the alternative media, not even the most radical ”anti-capitalist” internet commentators, ever talk about what the post-lockdown economy will look like? They bemoan the terrible damage done to the population, which is certainly valid, but can’t they look six months or a year or two down the road? Meanwhile, they accept the untruths that the financial collapse was caused by the Covid-19 virus and that the virus necessitated the lock down.

I think it was the reverse: the crash became the necessity for the lockdown, first to take people’s mind off the crash and secondly to become the plausible basis for massive reorganization of the economy into a warfare state. Schacht’s 1936 armament program reduced unemployment by 2 million (30%) within the first year. Is that what is planned for the U.S.?


Readers may contact the author by email: [email protected]

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Adrian E.
Adrian E.
May 26, 2020

The article is largely evidence-free. It commits the widespread error of assuming that the economic damage of the pandemic in Sweden is smaller than elsewhere. The opposite is true. In fact, right now, indications are that the economic damage from the pandemic in Sweden is somewhat greater than average in Europe (~-7% GDP) and far greater than in East Asian countries and New Zealand that acted quickly to suppress the spread of the virus. Even compared to countries like Austria and Switzerland that did much worse than the East Asian countries, Sweden is in a bad position now. It is… Read more »

George
George
Reply to  Adrian E.
May 26, 2020

This opinion is evidence free, and I can confirm false in regard to the view on NZ.

TEP
TEP
May 26, 2020

Finally an articulate summary analysis in line with my thoughts (fears) … I was beginning to think I must be wrong since few -if any- serious analysts were pointing to a staged collapse using an infectious scapegoat. Leif you are a diamond. TEP.

leifjohnson
leifjohnson
Reply to  TEP
May 29, 2020

Dear TEP, First, the collapse began in 2019 (see wallstreetonparade.com for details; second, the lockdown had no relation to the conditions of the virus. Thank you for your response and I would like to correspond. You have my email: [email protected]

Sally Snyder
Sally Snyder
May 26, 2020

As shown in this article, a handful of American oligarchs has become far wealthier since the COVID-19 lockdown began:

https://viableopposition.blogspot.com/2020/05/which-americans-are-benefitting-from.html

As well, not surprisingly, it is America’s wealthiest that will benefit the most from Washington’s CARES Act.

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