Written by Torsten Mann
Since infamous “Black Thursday” of 24th October, 1929 which led to the Great Depression of the 1930s one knows the far-reaching consequences a stock market crash can have. Today, it is claimed more and more often that the economic breakdown of the 1930s was caused by the nature of the capitalistic economic system itself that always generates speculation bubbles which burst finally, especially when capitalistic greed gets out of control. As a solution for this problem generally a more or less state-directed economic curtailment of the free market is demanded.
The belief grows that socialism should solve the problems which supposedly capitalism has caused. However, there are also voices which claim that the breakdown of the global economy in the 1930s was not a failure of the market economy, but rather an act of deliberate sabotage.
Furthermore, these voices claim, it was only because of Stalin’s strategic incompetence that Moscow wasn’t able to use this opportunity for triggering a communist revolution, considering the huge social problems in Germany and America that were caused by the Great Depression. It is supposed that, if Trotsky had been in power at that time in the Kremlin instead of Stalin, world history would have taken another course. However, although the global revolution didn’t break out then, the global economic crisis created the political conditions for the Second World War – with all its catastrophic results.
Though the question whether the stock market crash of 1929 was caused by sabotage was never officially examined, at least the US government tried to take fiscal measures as for example the Glass-Steagall-Act, so that a similar fiasco could not recur. And indeed during many decades the world was untroubled by a similarly heavy economic crisis. Until in 2007 the US real estate bubble burst, triggering a world financial crisis, at least according to widespread view.
Again it was allegedly capitalism that failed and this view finds more and more followers, particularly in the form of the Occupy Movement. However, it is exactly this claim that the American author Kevin Freeman contradicts with in his current book Secret Weapon which was published in January, 2012 by Regnery Publishing.
In this book Freeman claims that the bursting of the US real estate bubble was not the real trigger for the global financial crisis, even if he acknowledges that the US real estate bubble has certainly played a role, just like the problem of the too large US national debt and other unfavorable factors. Instead, Freeman presents a very persuasive chain of evidence which points to the fact that the big financial crash of September 2008 was indeed the result of a deliberate and well prepared act of sabotage that was carried out with big organizational expenditure. He calls it financial terrorism. Freeman describes in detail how in 2008 a sequence of carefully coordinated attacks hit the American financial markets which almost caused the entire Western financial system to collapse. Besides, about 50 trillion US Dollars in assets were destroyed worldwide. He speaks decidedly of an act of economic warfare.
These terms may at first seem strange and unusual in connection with the financial crisis of 2008, because most people usually assume that all traders and investors on the world stock exchanges pursue exclusively the aim of making profits, even if sometimes they are unethical and ruthless. Surely no one could have a deliberate interest in collapsing the whole financial system. However, Freeman describes something in his 287 pages that is even comprehensible for a layman. He describes which means and methods were used and in what sequence attacks were committed against specific commercial firms. According to Freeman, the operation was prepared in phase one by an artificially increased oil price. Then phase two followed with suspicious market manipulations which brought down several banks; for example, Bear Stearns and Lehman Brothers; and he indicates in detail how several financial instruments were used respectively and which role they played, among them Credit Default Swaps, naked short selling, currency manipulations, state funds, index funds and hedge funds, as well as algorithmic trading.
Freeman stresses that the financial crash was only possible because all those fiscal safety measures which had been introduced after the global economic crisis of the 1930s were systematically cancelled during the preceding years. For example, in 1999 the Glass-Steagall-Act was abolished by President Bill Clinton and this was a precondition for the excesses on the financial markets during the following years. Another precondition was the extensive deregulation of the financial markets which led to the introduction of those new financial instruments which opened the way to disastrous effects during the crash of 2008. Freeman points to the fact that it was also the government of Bill Clinton which laid the groundwork for the US real estate bubble (because it was the political will of this administration to enable home ownership for people with low income and low financial strength). In addition, he holds the American central bank, the Federal Reserve, responsible for the fiasco because of her many years’ low interest rate policy and her consequent idleness during the outbreak of the crisis.
Freeman shows that prior to the 9/11 terrorist attacks suspicious financial transactions took place which indicated that not only the World Trade Center was attacked as a symbol of the American economic power, but also that these attacks were directed explicitly against the western financial system as a whole. Allegedly, a short time before the 9/11-attacks stock options were traded on an increased level which betted on falling stock prices of those airlines whose planes were used for the attacks. For example the volatility of the United Airlines stock increased 30 percent and this points to the fact that someone tried to benefit from the forthcoming attacks. As Freeman reports, the US Securities and Exchange Commission SEC could prove an increase of suspicious transactions with the shares of 38 enterprises and also with certain US government bonds. All together the terrorist attacks of 9/11 caused an economic damage of approximate 500 billion US Dollars. Even if the attempt failed to bring the western financial system down, Osama Bin Laden repeated in his video messages again and again that his terror was directed not only against human life and material but expressly also against western capitalism as a whole.
But who triggered the world financial crisis in autumn 2008 and why did they try to bring the global financial system to the brink of collapse? Freeman holds an anti-western alliance responsible for the attack, made up of several Islamic terror groups which are supported by states in the Middle East and who are connected to Russia and China. In addition, he supposes the involvement of certain representatives of international high finance who are already infamous on account of dubious currency speculations. The fact that such an alliance existed for many decades and that it connects Islamic terrorism to the Communist camp, is already well documented in literature.
Osama Bin Laden’s videotapes clearly show the influence of socialist ideology; for example, as he justified his call to sell off the US Dollar and boycott American goods, he also accused George Bush of dismissing the climate change agreement to placate giant corporations. Bin Laden also held monopoly capitalism responsible for the rising cost of living. Freeman quotes Bin Laden, saying his supporters would “know the cracks in the Western financial system like the lines on their own hands.”
Bin Laden’s deputy and successor, the supposed KGB agent Aiman al-Zawahiri, asked his followers several times to sell off their US Dollars because the western economy would break down and the breakdown would begin with US markets. However, Osama Bin Laden’s Al Qaeda is not the only Islamic terror gang which is suspected by Freeman of having contributed to the financial crash of 2008. Among others he also mentions Hamas and Hizbollah as well as Egypt’s Muslim Brotherhood which strives to substitute western capitalism with a Sharia-compliant Islamic Jihad. Behind these terror groups Freeman recognizes the participation of oil-producing states including Iran and Gaddafi’s Libya, but he suspects also supporters in Saudi Arabia and he additionally mentions the regime of Hugo Chávez in Venezuela. Freeman points to the close collaboration between Chávez and the Iranian Mullahs who share a common enemy in the US. Defectors revealed that Chávez supported the terrorist organisation Al Qaeda in 2002 with one million US dollars. Freeman cites Chávez during a visit in Teheran in April, 2009: “Capitalism needs to go down. It has to end. And we must take a transitional road to a new model that we call socialism.” However, Teheran was not the only stop during his trip abroad. It led him also to Qatar, Beijing and Moscow; everywhere he demanded an end of capitalism and advertised a new economic alliance with a new reserve currency of its own backed by oil in opposition to the US Dollar and to Wall Street.
Certainly Chávez has found an open ear for his concern in Beijing, because while western investors are stupid enough to invest their money and know-how voluntarily in the rise of the future Communist world power, the leadership in Beijing calls the US its main enemy with which a future conflict will be inevitable. One is reminded of Lenin’s famous aphorism that the capitalists will sell the rope to the communists with which they will hang the capitalists afterwards. How this could come about was described by the Chinese military officers colonel Qiao Liang and colonel Wang Xiangsui in a policy paper from 1999 which is cited by Freeman and wherein they point out that Beijing clearly understood economic warfare and financial terrorism more than a decade ago.
It is an interesting fact that in this policy paper by the Chinese military both Osama Bin Laden and George Soros are mentioned by name. They write that unrestricted warfare, namely a combined offensive consisting of the terrorist attacks of Bin Laden together with financial attacks in the style of George Soros could not be repulsed by the US government: “Whether it be the intrusions of hackers, a major explosion at the World Trade Center, or a bombing attack by Bin Laden, all of these greatly exceed the frequency band widths understood by the American military.” Take notice, these lines were written in 1999! A combination of such means together with naked military power would produce a “hyper-strategical” weapon; and this was the “real hand of cards“ China had to play in the fight against the USA. In this respect one can be sure that the partly unlawful methods which China applied in its rise to superpower status, from bribing Western decision-makers and the theft of intellectual property and spying to their currency manipulations to maintain their trade surplus, is part of a strategical master plan.
Communist China is seeking to achieve both economic and military superiority over the United States within the next ten years and as soon as this is reached, no one should be surprised if the Chinese economy is suddenly collectivized. That means it could very soon turn out that China is not the “market of the future“ for greedy and unpatriotic western investors, but the biggest and most tragic bad investment of all times. Freeman makes clear that communist China is ideologically interested in the decline of the US as a world power which can be brought about by the collapse of the US economy – with short-term loss and long-term gain for China.
Freeman also mentions Russia as one of those states which have a motive for the economic collapse of the western world. He explains that the present regime in Russia, even two decades after the putative collapse of communism, still strives for the overthrow of the US as a world power and the establishment of a new world order. This is certainly correct, however up to the release of Secret Weapon Freeman unfortunately did not known the testimony of the defected Czech general Jan Sejna who is considered the most important principal witness regarding Moscow’s long range strategy. As early as 1982 Sejna wrote in his book We Will Bury You that even after a reorganization (in Russian: Perestroika) of the communist regime in Russia the Kremlin would still follow a long range strategy striving for a communist world order called “global democratic peace.”
During the final phase of this strategy, which shows a remarkable resemblance to the world-political situation of today, Moscow planned to undermine the western economy by means of economic warfare to create the social and economic conditions for progressive forces to seize power. Their task would be to convert America into a socialist state. This means in plain English that very early the Kremlin made preparations to deliberately cause a new world economic crisis which would lead to an extensive impoverishment of the capitalist West, which would aggravate class warfare and create the necessary willingness for the acceptance of socialist or communist solutions.
Jan Sejna wrote that the Kremlin learned from Stalin’s mistake of failing to exploit the Great Depression by carefully laying the groundwork to exploit a future global economic crisis. It is interesting to note in this connection that the current financial crisis broke out immediately before the presidential election of 2008 and was crucial for Obama’s election victory. Up to the collapse of Lehman Brothers the Republican presidential candidate John McCain led in the polls. But McCain’s popularity among the voters fell with the stock market. In the end Obama was elected president.
Even if Sejna is not mentioned in the first edition of Secret Weapon, Freeman refers to Sejna in his current publications and plans to feature him more prominently in future writings. Besides Sejna, Freeman is furthermore confirmed by the Russian GRU defector Viktor Suvorov, who wrote in 1984 about the idea of using western dependence on imported oil for the sabotage of western economies originating back in 1954 with the 10th directorate of Soviet military intelligence (GRU). At that time a study was elaborated, the so-called “locomotive report,” which said: to wreck the ‘locomotive of capitalism’ it was not necessary to smash the whole engine, only to deprive it of a crucial ingredient. Immediately after this, according to Suvorov, the Soviet penetration of the Arab nations began.
Freeman explained that Soviet economic sabotage against the West began with the manipulation of oil prices in 2008. These were pushed artificially upwards for a while. General Sejna and major Suvorov both testify independently that for several decades the leadership in Moscow was thinking about how the western economic system could be sabotaged successfully.
Freeman postulates another clue regarding the Russians; namely, that in Moscow already several months before the terrorist attacks of 9/11 warnings were spread about an imminent breakdown of the American financial markets. For example, with reference to the Kremlin adviser Tatiana Koryagina the Russian newspaper Pravda published the announcement on 12th July, 2001 that the dollar and the American financial system would break down on 19th August or a short time later. Koryagina advised the Russian people to exchange their dollar reserves immediately for rubles. At the same time there were meetings in the Russian Duma how to prepare Russia for the economic breakdown of America.
The breakdown of the American economy would be triggered, according to Koryagina, by the attack of “shadow forces,” or a “mighty group … [of] international mystic-religious forces.” Asked how the US economy could be brought down differently than by a war and without rocket attacks or bomb attacks, she answered, there would be other kinds of weapons. The United States have been selected as the target because the financial center of the world economy was there, and after the breakdown of the US the ruble would become the most important currency in Europe and Asia. When she was interviewed once more after the attacks of 2001, she said new strikes would follow, financial ones as well as others. She said America will be hit in the back and brought to the ground.
Let me summarize once again briefly: According to Freeman, the attack on the western financial system was carried out in two phases. In phase one the oil price was manipulated upwards to strangle the economy. In phase two the market was manipulated through naked short selling against big banks which were system-relevant (for example Bear Stearns and Lehman Brothers); and this led the financial system to the edge of breakdown. However, Freeman stresses that the danger is not over yet. He still expects a further so-called “Phase three attack“ to which the western financial system today is just as defenseless as it was in 2008. In spite of numerous warnings nothing was done by the responsible decision-makers within the US government to turn away the danger or even to reduce the risk.
The completely inappropriate crisis management of the last years with its stimulus packages and bailout funds indeed raised the national debt to heights never seen before. On the contrary, today the situation is more dangerous than it ever was, because the rescue measures of the states exceed their economic efficiency. Immense budget deficits generate high inflation risks, so that in the case of another sabotage attack a collapse of the financial system could hardly be prevented. The national debt of the US increased within the last four years from 10 billion US Dollars to 15 billion US Dollars just as a result of the crisis management of the US government.
A phase three attack, as Freeman expects, would include a massive sell off of US government bonds and US Dollars by which the US Dollar would lose its status as the world reserve currency. This would cause a downward spiral and the global financial crisis would escalate even more. According to Freeman a hyperinflationary demise of the US Dollar would be possible, similar to the situation in the Weimar Republic during the Great Depression. Russia as well as the oil-producing states and particularly China with their huge US Dollar monetary reserves dispose of the necessary means for such an attack. Therefore the Director of National Intelligence warned the Chinese government that if it sold off mass quantities of US bonds, the United States would consider it financial warfare.
Freeman quotes financial expert James Rickards who describes the problem as follows: “The number one vulnerability is the dollar itself. (…) So why hasn’t the dollar collapsed? The short answer is, global investors don’t have any other choice. That is, there simply aren’t enough Euro- or Yen-backed securities for investors to shift their money out of dollars and into some other currency. But what if some kind of global coalition – say a trillion-dollar sovereign wealth fund allied with several countries around the world – banded together to create a gold-backed alternative to the dollar? (…) That’s the end of the dollar. You’d have high unemployment, deflation, and interest rates would go up. It would take what already looks like a strong recession and make it a Great Depression or worse.“ And this would be the end of the USA as a world power, caused deliberately by financial sabotage and economic warfare.
The saboteurs aim is not only America alone. Freeman states that the Euro crisis was also aggravated deliberately, namely using the same means including Credit Default Swaps and naked short selling. He explains that in February 2010, before the Euro crisis escalated, a group of high finance managers met in New York to discuss how they could use the plight of Greece to put pressure on the European currency. The intention of this manoeuvre was to reinforce the need for the introduction of Eurobonds which would accelerate the abolition of the remaining remnants of national sovereignty across Europe and to create further pressure upon the US Dollar as a reserve currency.
In the same extent, in which the Dollar gets under pressure, the demand for the establishment of a new world currency grows. Freeman reports that representatives of the UN, the IMF and the World bank already expressed their endorsement for the establishment of a new reserve currency. Representatives of the communist government of China and the other BRICS states (Brazil, Russia, India and China plus South Africa) also demanded a new world reserve currency. In this context Freeman quotes Vladimir Putin, who said in the summer of 2011: “They (Americans) are living like parasites off the global economy and their monopoly of the dollar. (…) There should be other reserve currencies.“
Obviously Putin has forgotten that until a few years ago his country was dependent on regular loan-financed grain imports from the US and that many of his compatriots simply would have starved without American famine relief at the beginning of the 1990s. Despite this, the Kremlin is ready to agitate against the American economic system, even though Russia was not able to feed itself adequately for many decades.
Freeman suggests that the BRICS-group was created resulting from an 1998 initiative of the former Russian head of secret service and Prime Minister Jewgeni Primakow, likely for strategical and geopolitical purposes. During a summit in April, 2011 the BRICS states announced their intention to replace the US-Dollar as a world reserve currency.
Freeman supposes that prior to such an attack the BRICS states would call on their populations to invest in gold, and this is exactly what they are doing. In the first quarter in 2011 China became the world’s biggest buyer of gold bars and coins, partially hidden under the cloak of state funds. India comes in second. Similar recommendations were issued in Russia already before 9/11 and even Al Qaeda has asked its followers repeatedly to invest their property in gold. Also the regime of Hugo Chávez in Venezuela tried hard the last year to draw off its 211 tonnes of gold reserves from abroad and to bring them back to Caracas. The step was explained with the fact that the future of the US Dollar was uncertain and a new international currency system was being prepared.
Kevin Freeman describes in his book how he together with his team tried for months to inform the relevant American authorities and Secret Services about the fact that the financial crash of 2008 has been caused deliberately and that there still was the danger of a third attack wave which finally could cause the western financial system to collapse. However, astonishingly he bumped into unexpected opposition in Washington. First nobody wanted to hear his warnings, then he was strung along for months and apparently there were attempts to cover up his work. Actually there was even a threat to classify his work in order to prevent him from going public with it. Finally, he was told by an official the truth about why someone tried to suppress his warnings: they did not fit the political dogmata of the Obama administration. This phenomenon is nothing unusual for anyone who deals with the reports of Russian defectors who often try to warn the western public of the fact that the Kremlin is not the strategical partner the western political and media establishment are trying to depict. Usually those warnings are suppressed and hushed up, too. Hence, Freeman decided to go with his warnings to the public, so that his research is now accessible for every interested reader. But unfortunately up to now, his book was published only in English.
If the West’s governments are not willing to protect their citizens from a menacing currency crash, it is incumbent upon the citizen himself to seize suitable preventive measures and Freeman outlines some of them at the end of his book briefly.
For example, he suggests investing in precious metals as for example gold and silver coins — but not exclusively. Instead he recommends to diversify the investment. I have to admit that I am no financial expert and as this subject is dealt with only briefly in Secret Weapon, I do not want to review or comment this segment of Freemans book. But I have researched for more than ten years quite thoroughly the communist strategy which was pursued for decades by Moscow and Beijing, and therefore I claim that I am able to form a sound opinion about Freeman’s main thesis. And in my opinion Freeman’s Secret Weapon is by far the best and most interesting book I have read this year and anyone who ever visited my Facebook page knows that I usually read many books on this subject.
Although Freeman did not know the predictions made by the Czech general Jan Sejna, he succeeded to close a crucial knowledge gap in our understanding of the strategy described by Sejna who announced in 1982 that the communist camp intends to use so-called “external economic weapons“ in the final phase of its strategy to collapse the western economic system, paving the way for the victory of global socialist policy. Without knowing about this connection, Freeman explained in his book precisely how these very “external economic weapons“ were used against the US; and this is an excellent achievement which shows us the necessary countermeasures needed for the protection of the western financial system if only western governments would wake from their dreams.
Freeman also enumerates some of these countermeasures, but it is to be feared that they will remain unheard. For example he demands, that the west must become independent of foreign energy imports, and this is as true for the USA as it is for Europe and in both cases would prove salutary for the local economy. Also the financial markets must be immunized against sabotage, particularly by a regulation of Credit Default Swaps and an effective ban of naked short selling.
In addition, he demands transparency for the financial markets and a wide clarification of the destructive effects of certain financial instruments about which the public up to now is not properly informed. Only if transparency exists and after the necessary clarification was established, market forces will solve the problem without requiring any state-directed economic interventions. The global financial crisis has originated not because capitalism failed, but because there was deliberate sabotage. The public must be informed about this and hopefully a German publisher will be found who has enough courage and reason to understand the value of this book and to publish a German translation.
Finally all those who believe that a collapse of the US Dollar seems promising for themselves, e.g. because they are invested in gold and anticipate a personal profit thereof, or because they perhaps have a perverted desire to see the decline of the US, should think about the inevitable consequences a US Dollar crash would entail. If the US loses her status as the leading world power, communist China will rise in alliance with the KGB regime in the Kremlin as the new dominating world power. One knows from history only too well which results it always had when in any country the communists came to power, there always were collectivisations, re-education camps, mass murders and civil wars. You may reckon with such outcomes, but this time on a global scale.
Secret Weapon: How Economic Terrorism Brought Down the US Stock Market and Why It can Happen Again – Kevin D. Freeman; Regnery Publishing; January 2012
Unrestricted Warfare – Col. Qiao Liang, Col. Wang Xiangsui; Pan American Publishing; 2002
We Will Bury You – Jan Sejna; Sidgwick and Jackson Limited; 1982
Inside Soviet Military Intelligence – Viktor Suvorov; Macmillan Pub Co; 1984
- Torsten Mann