As we approach the 100th anniversary of the start of World War I, the (non-mainstream) media is starting to talk about the parallels between then and now. Could it be true that there are similarities? In this article, I would like to discuss some of the intriguing, and frankly disturbing, parallels I see between the period just prior to WWI and today. I think that understanding these parallels is of utmost importance, not only because the events leading up to WWI are, in my view, also the indirect cause of the Second World War, but they are important to understand the similar problems we could be facing today.
Geopolitical power shift underway
Until 1914, the British Empire dominated the world by controlling the seas and ruling over many territories and colonies. However, starting 1871 with the unification of the German “Kaiserreich”, Britain’s superpower role became increasingly challenged by the Germans. Germany was becoming an economic giant. By 1913, the Germans produced more steel than Great Britain, Russia and France together, and had overtaken Britain in terms of world industrial output. The basis of this economic success story: Education. The school system was “producing” engineers, scientists and a skilled labor force. Its literacy rate among recruited soldiers was the highest in Europe. Out of 1000 soldiers, 330 in Italy couldn’t read. In Austria-Hungary, it was 220 out of 1000, and in France 68. In Germany, the literacy rate was nearly at 100%. In the 40 years prior to 1913, salaries in Germany more than doubled in most industries (this increase was more or less in real terms due to the strong gold standard). On the other hand, in the richest country on earth at the time, Britain, approximately a third of the population suffered from poverty and was living in slums and under miserable circumstances. I am convinced that one of the key reasons for WWI was the above-mentioned geopolitical and economic power shift and not the fight about good versus evil.
I believe we are seeing similar patterns evolve today. The rising powers in the East under the leadership of China and Russia are calling the Western supremacy, led by the United States, into question. The Western world is facing the biggest economic crisis since WWII and has accumulated the largest amount of public and private debt ever (this is not to say that the East does not have its fair share of problems). Similar to the British situation in 1914, the United States’ share of world GDP is sinking. There is no real reason for optimism that these problems will change any time soon.
No silver lining ahead
Today we have almost 50 million Americans living off of food stamps. The Eurozone’s youth unemployment rate has skyrocketed to between 30% and 60%, and the real economy is far from showing any marked improvement! Steen Jakobsen, chief economist of Saxo Banks recently wrote, “I think people are mistaking low interest rates for a recovery, it’s not. If you look at history, this has happened before in other countries but if the recovery means you have the lowest productivity and the highest unemployment in 10 years, then it’s not really a recovery”.
This dire situation, in combination with the massive loss of production capacity of the West in the past decades, is an explosive mix. This environment where the younger generation is unable to find a job without a prospect of a brighter future can lead to a radicalization of the people over the coming years. This is what worries me the most.
The situation today resembles that of the period prior to 1914; we are currently living in very uncertain and dangerous times. I see the mid-term risk of wide-scale social unrest or possibly a lot more dangerous, the start of a new World War, as each state seeks its own interest instead of the greater good. We already see the re-emergence of nationalism in many countries in Europe. An outright sectarian war in the Middle East can also not be ruled out – any form of clashes within them or between them will have serious consequences, similar to the Balkans prior to 1914.
Profiteers haven’t changed
Prof. Dr. Carroll Quigley, the historian and book writer, gives us an interesting perspective in his 1966 book “Tragedy and Hope”. According to him, the main profiteers of the war were the bankers; their every move was dictated by their own personal interest at the detriment of the British people. Quigley describes what happened at the time as follows: “The British government paid for this war in various ways: by taxation, by fiat-money, by borrowing from banks (which created credit for the purpose), and by borrowing from the people by selling war bonds to them. Each of these methods or raising money had a different effect upon the two chief financial consequences of the war. These were inflation and public debt”.
Similarly in the US, the bankers cemented and increased their power by establishing the “Federal Reserve System” in 1913. At the same time, the income tax was implemented, which in my opinion was done so out of two reasons: first, to create a demand for the currency, and second, so that the government could afford to pay for the debt-based monetary system, which has made governments reliant on central bankers.
To sum it up, the war was paid by the “little” people in the respective countries, be this through inflation or taxation. The large banks and big industries, mainly the military industrial complexes, were the main profiteers.
When we look at the world today, we see the funded and unfunded liabilities of the Western world have skyrocketed in historical comparison. Only during the inter-war period between the First and Second World Wars was the debt level comparable to the levels we see today. The profiteers today are the same as those before and during WWI. In essence, I believe that war does not necessarily need the destruction of human lives, but is defined by loss of the products of human effort. Therefore, I believe that the ongoing “Currency War” is comparable to WWI. Instead of using missiles, currency has become the weapon of mass destruction.
More and more centralization
As we have mentioned, and as the results of the European Parliament elections have shown, the people want more decentralization. This totally opposes the massive increase in centralization we have seen in recent years. The tentacles of the state are increasing on a daily basis and are now touching many aspects of our lives.
In general, legislation worldwide is giving more and more power to the federal government and is undercutting the sovereignty of states. The same is true for the tendencies we had prior to 1914. Some examples include the introduction of the income tax in the US or the fact that prior to 1914, people could move freely without passports throughout Europe. The structure of Europe and its governments was historically loose in the 19th century until the rise of nation states in the beginning of the 20th century.
Imperialism and alliances
When I look at our world today and see what happened within the last 10 years in Central Asia, the Middle East, Africa and Eastern Europe, one could argue that another parallel is imperialism!
The proper definition of imperialism is: “It is the policy of extending a nation’s authority by territorial acquisition or by the establishment of economic and political hegemony over other nations.” Interestingly, the period between 1870 and 1914 was also called “the era of the European, Russian and American imperialism”. Towards the end of the 19th century, 20% of the global land area and 10% of the global population fell under the rule of the imperial powers. Alignment of British and French interests in Africa and similarly between London and St. Petersburg in Asia had a strong impact on strategic alliances; these political entanglements played a significant role leading to the start of the First World War. We can see that even back then, imperialism was driven by trade and economic interests and access to natural resources in combination with national prestige and power.
Just think about the fact that today, the US has more than 700 military bases in 130 countries around the world. Using Ukraine as the most recent example, we can also see what alliances are at play. We have China and Russia (Shanghai Cooperation Organization) on one side, and the US and NATO on the other. Although both sides have no interest in going to war, the situation remains explosive.
Even today, Africa is not immune from the policies of neo-colonialism and military interventions, as China and the West benefit from natural resources, particularly oil. My mentor, Ferdinand Lips, summed up his views on wars with the following: “Often wars are started to divert attention from problems on the home front. In the Middle East, both aspects are involved: the control over oil resources and the distraction from the disastrous condition of the U.S. financial system.”
Although I neither believe, nor hope, that we are on the verge of a new World War, I see worrisome parallels between the situation today and the situation in 1914.
In such precarious times, I believe that direct and unencumbered ownership of physical precious metals stored outside the banking system is not only your insurance against unexpected monetary events, but especially in the case of an escalation of the political situation. It is crucial here to remember the words of professors Roghoff and Reinhard: “The 5 most expensive words in human history have been ’this time it is different’.”
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