Archive for Janeiro, 2015

Generating economic growth

How does the economy really work? In my view, there are many erroneous theories in published literature. I have been investigating this topic and have come to the conclusion that both energy and debt play an extremely important role in an economic system. Once energy supply and other aspects of the economy start hitting diminishing returns, there is a serious chance that a debt implosion will bring the whole system down. In this post, I will look at the first piece of this story, relating to how the economy is tied to energy, and how the leveraging impact of cheap energy creates economic growth. High-priced energy is not a substitute for cheap energy; it tends to create contraction!

Trying to tackle this topic is a daunting task. The subject crosses many fields of study, including anthropology, ecology, systems analysis, economics, and physics of a thermodynamically open system. It also involves reaching limits in a finite world. Most researchers have tackled the subject without understanding the many issues involved. I hope my analysis can shed some light on the subject.

I plan to add related posts later.

An Overview of a Networked Economy

The economy is a networked system of customers, businesses, and governments. It is tied together by a financial system and by many laws and customs that have grown up over the years. I represent the economic network as a child’s toy made of sticks that connect together, but that can, if disturbed in the wrong way, collapse.

Figure 1. Dome constructed using Leonardo Sticks

The economy is a self-organized system. In other words, it grew up gradually over time, one piece at a time. New businesses were added and old ones disappeared. New customers were added and others left. The products sold gradually changed. Governments gradually added new laws and removed old ones. As changes were made, the system automatically re-optimized for the changes. For example, if one business raised its price on a product while others did not, some of the customers would move to the businesses selling the product at a lower price.

The economy is represented as hollow because, as products become obsolete, the economy gradually adapts to the replacement product and loses support for earlier products. An example is cars replacing horse and buggy in the United States. There are fewer horses today and many fewer buggy manufacturers. Cities generally don’t have places to leave horses while shopping. Instead, there are many gasoline stations and parking lots for cars.

Because of the way an economy adapts to a new technology, it becomes virtually impossible to “go backwards” to the old technology. Any change that is made must be small and incremental–adding a few horses at the edge of the city, for example. Trying to add very many horses would be disruptive. Horses would get in the way of cars and would leave messes on the city streets.

The Economy as a Complex Adaptive System and Dissipative Structure

Systems analysts would call a system such as the economy a complex adaptive system, because of its tendency to grow and evolve in a self-organizing manner. The fact that this system grows and self-organizes comes from the fact the economy operates in a thermodynamically open system–that is, the economy receives energy from outside sources, and because of this energy, can grow and become more complex. The name of such a system from a physics perspective is a dissipative structure. Human beings, and in fact all plants and animals, are dissipative structures. So are hurricanes, galaxies, and star formation regions. All of these dissipative systems start from small beginnings, grow, and eventually collapse and die. Often they are replaced by new similar structures that are better adapted to the changing environment.

The study of the kinds of systems that grow and self-organize is a new one. Ilya Prigogine was awarded the Nobel Prize in Chemistry in 1977 for his pioneering work on dissipative systems. One writer (in French) about the economy as a dissipative structure is François Roddier. His book, published in 2012, is called Thermodynamique de l’evolution.

Why Energy is Central to the Economy

If the economy is a dissipative system, it is clear that energy must be central to its operation. But suppose that we are coming from a step back, and trying to show that the economy is an energy-based system that grows as more external energy is added.

Let’s start even before humans came onto the scene. All plants and animals need energy of some kind so that the organism can grow, reproduce, move, and sense changes to the environment. For plants, this energy often comes from the sun and photosynthesis. For animals, it comes from food of various kinds.

All plants and animals are in competition with other species and with other members of their own species. The possible outcomes are

  1. Win and live, and have offspring who might live as well
  2. Lose out and die

Access to adequate food (a source of energy) is one key to winning this competition. Outside energy can be helpful as well. The use of tools is as approach that is used by some types of animals as well as by humans. Even if the approach is as simple as throwing a rock at a victim, the rock amplifies the effect of using the animal’s own energy. In many cases, energy is needed for making a tool. This can be human energy, as in chipping one rock with another rock, or it can be heat energy. By 70,000 years ago, humans had figured out that heat-treating rock made it easier to shape rocks into tools.

A bigger step forward for humans than learning to use tools–in fact, what seems to have set them apart from other animals–was learning to use fire. This began as early as 1 million years ago. Controlled use of fire had many benefits. With fire, food could be cooked, cutting the amount of time needed for chewing down drastically. Foods that could not be eaten previously could be cooked and eaten, and more nutrition could be obtained from the foods that were eaten. The teeth and guts of humans gradually got smaller, and brains got larger, as human bodies adapted to eating cooked food.

There were other benefits of being able to use fire. With time freed up from not needing to chew as long, there was more time available for making tools. Fire could be used to keep warm and thus expand the range where humans could live. Fire could also be used to gain an advantage over other animals, both in hunting them and in scaring them away.

Humans were incredibly successful in their competition with other species, killing off the top carnivore species in each continent as they settled it, using only simple tools and the burning of biomass. According to Paleontologist Niles Eldridge, the Sixth Mass Extinction began when humans were still hunter-gatherers, when humans first moved out of Africa 100,000 years ago. The adverse impact of humans on other species grew significantly greater, once humans became farmers and declared some plants to be “weeds,” and selected others for greater use.

In many ways, the energy-based economy humans have built up over the years is simply an approach to compensate for our own feeble abilities:

  • Need for warm temperature–clothing, houses, heat when cold, air conditioning if hot
  • Need for food–metal tools, irrigation, refrigeration, fertilizer, herbicides, pesticides
  • Knowledge/thinking ability of humans–books, schools, Internet
  • Mobility–airplanes, cars, trucks, ships, roads
  • Vulnerability to germs–medicine, sanitation

A key component in any of these types of adaptations is energy of some appropriate kind. This energy can come in various forms:

  • Embodied energy stored up in tools and other capital goods that can be reused later. Some of the energy in making these tools is human energy (including human thinking capacity), and some of this is energy from other sources, such as heat from burning wood or another fuel.
  • Human energy–Humans have many abilities they can use, including moving their arms and legs, thinking, speaking, hearing, seeing, and tasting. All of these are made possible by the energy that humans get from food.
  • Energy from animals – Dogs can help with hunting and herding; oxen can help with plowing; horses can be ridden for transportation
  • Energy from burning wood and other forms of biomass, including peat moss
  • Energy from burning fossil fuels (coal, natural gas, or oil)
  • Electricity produced in any number of ways–hydroelectric, nuclear, burning coal or natural gas, and from devices that convert wind, solar, or geothermal energy
  • Wind energy – Used in sail boats and in wind powered devices, such as windmills to pump water. Wind turbines (with significant embodied energy) also generate electricity.
  • Solar energy – Most energy from the sun is “free”. It keeps us warm, grows food, and evaporates water, without additional “help.” There are also devices such as solar PV panels and solar hot water heaters that capture energy from the sun. These should perhaps be classified as tools with significant embodied energy.

One key use of supplemental energy is to reduce the amount of human labor needed in farming, freeing-up people to work at other types of jobs. The chart below shows how the percentage of the population working in agriculture tends to drop as the amount of supplementary energy rises.

Figure 2. Percent of Workforce in Agriculture based on CIA World Factbook Data, compared to Energy Consumption Per Capita based on 2012 EIA Data.

The energy per capita shown on Figure 2 is includes only energy sources that are bought and sold in markets, and thus that can easily be counted. These would include fossil fuel energy and electricity made from a variety of sources (fossil fuels, hydroelectric, nuclear, wind, solar PV). It does not include other sources of energy, such as

  • Embodied energy in previously made devices
  • Human energy
  • Animal energy
  • Locally gathered dung, wood, and other biomass.
  • Free solar energy, keeping people warm and growing crops

Besides reducing the proportion of the population needed to work in agriculture, the other things that “modern” sources of energy do are

  1. Allow many more people to live on earth, and
  2. Allow those people to have much more “stuff”–large, well-heated homes; cars; lighting where desired; indoor bathrooms; grocery stores filled with food; refrigeration;  telephones; television; and the Internet.

Figure 3 below shows that human population has risen remarkably since the use of modern fuels began in quantity about 200 years ago.

Figure 3. World population from US Census Bureau, overlaid with fossil fuel use (red) by Vaclav Smil from Energy Transitions: History, Requirements, Prospects.

Besides more and better food, sanitation, and medicine, part of what allowed population to rise so greatly was a reduction in fighting, especially among nearby population groups. This reduction in violence also seems to be the result of greater energy supplies. In the animal kingdom, animals similar to humans such as chimpanzees have territorial instincts. These territorial instincts tend to keep down total population, because individual males tend to mark off large areas as territories and fight with others of their own species entering their territory.

Humans seem to have overcome much of their tendency toward territoriality. This has happened as the widespread availability of fuels increased the use of international trade and made it more advantageous for countries to cooperate with neighbors than to fight with them. Having an international monetary system was important as well.

How the System of Energy and the Economy “Works”

We trade many products, but in fact, the “value” of each of these products is very much energy related. Some that don’t seem to be energy-related, but really are energy-related, include the following:

  • Land, without buildings – The value of this land depends on (a) its location relative to other locations, (b) the amount of built infrastructure available, such as roads, fresh water, sewer, and grid electricity, and (c) the suitability of the land for growing crops. All of these characteristics are energy related. Land with good proximity to other locations takes less fuel, or less time and less human energy, to travel from one location to another. Infrastructure is capital goods, built up of embodied energy, which is already available. The suitability of the land for growing crops has to do with the type of soil, depth of the topsoil, the fertility of the soil, and the availability of fresh water, either from the sky of from irrigation.
  • Education – Education is not available to any significant extent unless workers can be freed up from farming by the use of modern energy products. Students, teachers, and those writing books all need to have their time freed up from working in agriculture, through advanced energy products that allow fewer workers to be needed in fields. Howard T. Odum in the Prosperous Way Down wrote about education reflecting a type of embodied energy.
  • Human Energy – Before the advent of modern energy sources, the value of human energy came largely from the mechanical energy provided by muscles. Mechanical energy today can be provided much more cheaply by fossil fuel energy and other cheap modern energy, bringing down the value of so-called “unskilled labor.” In today’s world, the primary value humans bring is their intellectual ability and their communication skills, both of which are enhanced by education. As discussed above, education represents a type of embodied energy.
  • Metals – Metals in quantity are only possible with today’s energy sources that power modern mining equipment and allow the huge quantities of heat needed for refining. Before the use of coal, deforestation was a huge problem for those using charcoal from wood to provide the heat needed for smelting. This was especially the case when economies tried to use wood for heating as well.

Two closely related concepts are

  • Technology – Technology is a way of bringing together physical substances (today, often metals), education, and human energy, in a way that allows the production in quantity of devices that enhance the ability of the economy to produce goods and services cheaply. As I will discuss later, “cheapness” is an important characteristic of anything that is traded in the economy. As technology makes the use of metals and other energy products cheaper, extraction of these energy-related items increases greatly.
  • Specialization – Specialization is used widely, even among insects such as bees and ants. It is often possible for a group of individuals to obtain better use of the energy at their disposal, if the various individuals in the group perform specialized tasks. This can be as simple as at the hunter-gatherer level, when men often specialized in hunting and women in childcare and plant gathering. It can occur at advanced levels as well, as advanced education (using energy) can produce specialists who can perform services that few others are able to provide.

Technology and specialization are ways of building complexity into the system. Joseph Tainter in the Collapse of Complex Societies notes that complexity is a way of solving problems. Societies, as they have more energy at their disposal, use the additional energy both to increase their populations and to move in the direction of greater complexity. In my Figure 1 (showing my representation of an economy), more nodes are added to the system as complexity is added. In a physics sense, this is the result of more energy being available to flow through the economy, perhaps through the usage of a new technology, such as irrigation, or through using another technique to increase food supply, such as cutting down trees in an area, providing more farmland.

As more energy flows through the system, increasingly specialized businesses are added. More consumers are added. Governments often play an increasingly large role, as the economy has more resources to support the government and still leave enough resources for individual citizens. An economy in its early stages is largely based on agriculture, with few energy inputs other than free solar energy, human labor, animal labor, and free energy from the sun. Extraction of useful minerals may also be done.

As modern energy products are added, the quantity of energy (particularly heat energy) available to the economy ramps up quickly, and manufacturing can be added.

Figure 4. Annual energy consumption per head (megajoules) in England and Wales 1561-70 to 1850-9 and in Italy 1861-70. Figure by Wrigley

As these energy products become depleted, an economy tends to shift manufacturing to cheaper locations elsewhere, and instead specialize in services, which can be provided with less use of energy. When these changes are made, an economy becomes “hollowed out” inside–it can no longer produce the basic goods and services it could at one time provide for itself.

Instead, the economy becomes dependent on other countries for manufacturing and resource extraction. Economists rejoice at an economy’s apparently lesser dependence on fossil fuels, but this is an illusion created by the fact that energy embodied in imported goods is never measured or considered. The country at the same time becomes more dependent on suppliers from around the world.

The way the economy is bound together is by a financial system. In some sense, the selling price of any product is the market value of the energy embodied in that product. There is also a cost (which is really an energy cost) of creating the product. If the selling cost is below the cost of creating the product, the market will gradually rebalance, in a way that matches goods and services that can be created at a break-even cost or greater, considering all costs, even indirect ones, such as taxes and the need for capital for reinvestment. All of these costs are energy-related, with some of this energy being human energy.

Both (a) the amount of goods and services an economy produces and (b) the number of people in an economy tends to grow over time. If (a), that is, the amount of goods and services produced, is growing faster than (b), the population, then, on average, individuals find their standard of living is increasing. If the reverse is the case, individuals find that their standard of living is decreasing.

This latter situation, one of a falling standard of living, is the situation that many people in “developed” countries find themselves in now. Because of the networked way the economy works, the primary way that this lack of goods and services is transmitted back to workers is through falling inflation-adjusted wages. Other mechanisms are used as well: fewer job openings, government deficits, and eventually debt defaults.

If the situation is reversed–that is, the economy is producing more goods and services per capita–the way this information is “telegraphed” back to the people in the economy is through a combination of increasing job availability, rising inflation adjusted-wages, availability of new inexpensive products on the market place, and government surpluses. In such a situation, debt is likely to become increasingly available because of the apparently good prospects of the economy. The availability of this debt then further leverages the growth of the economy.

External Energy Products as a Way of Leveraging Human Energy

Economists tell us that value comes from the chain of transactions that are put in place whenever one of us buys some kind of good or service. For example, if I buy an apple from a grocery store, I set up a chain of payments. The grocer pays his employees, who then buy groceries for themselves. They also purchase other consumer goods, pay income taxes, and perhaps buy oil for their vehicles. The employees pay the stores they buy from, and these payments set up new chains of transactions indirectly related to my initial purchase of an apple.

The initial purchase of an apple may help also the grocer make a payment on debt (repayment + interest) the store has, perhaps on a mortgage. The owner of the store may also put part of the money from the apple toward paying dividends on stock of the owners of the grocery story. Presumably, all of the recipients of these amounts use the amounts that initially came from the purchase of the apple to pay additional people in their spending chains as well.

How does the use of oil or coal or even the use of draft animals differ from simply creating the transaction chain outlined above? Let’s take an example that can be made with either manual labor plus some embodied energy in tools or with the use of fossil fuels: shoes.

If a cobbler makes the shoes, it will likely take him quite a long time–several hours. Somewhere along the line, a tanner will need to tan the hide in the shoe, and a farmer will need to raise the animal whose hide was used in this process. Before modern fuels were added, all of these steps were labor intensive. Buying a pair of shoes was quite expensive–say the equivalent of wages for a day or two. Boots might be the equivalent of a week’s wages.

The advantage of adding fuels such as coal and oil is that it allows shoes to be made more cheaply. The work today is performed in a factory where electricity-powered machines do much of the work that formerly was done by humans, and oil-powered vehicles transport the goods to the buyer. Coal is important in making the electricity-powered machines used in this process and may also be used in electricity generation. The use of coal and oil brings the cost of a pair of shoes down to a much lower price–say the equivalent of two or three hours’ wages. Thus, the major advantage of using modern fuels is that it allows a person’s wages to go farther. Not only can a person buy a pair of shoes, he or she has money left over for other goods.

The fact that the wage-earner can now buy additional goods with his income sets up additional payment chains–ones that would have not been available, if the person had spent a large share of his wages on shoes. This increase in “demand” (really affordability) is what allows the rest of the economy to expand, because the customer has more of his wages left to spend on other goods. This sets up the growth situation described above, where the total amount of goods and services in the economy expands faster than the population increases.

Thus, the big advantage of adding coal and oil to the economy was that it allowed goods to be made cheaply, relative to making goods with only human labor. In some sense, human labor is very expensive. If a person, using a machine operated with oil or with electricity made from coal can make the same type of goods more cheaply, he has leveraged his own capabilities with the capabilities of the fuel. We can call this technology, but without the fuel (to make the metal parts used in the machine, to operate the machinery, and to transport the product to the end user), it would not have been possible to make and transport the shoes so cheaply.

All areas of the economy benefit from this external energy based approach that essentially allows human labor to be delivered more efficiently. Wages rise, reflecting the apparent efficiency of the worker (really the worker + machine + fuel for the machine). Thus, if a worker has a job in the economy affected by this improvement, he may get a double benefit–higher wages and plus the benefit of the lower price of shoes. Governments will get higher tax revenue, both on wages (because of the new value chain and well as the higher wages from “efficiency”), and on taxes paid relating to the extraction of the oil, assuming the extraction is done locally. The additional government revenue can be used on roads. These roads provide a way for shoe manufacturers to deliver their goods to more distant markets, further enhancing the process.

What happens if the price of oil rises because the cost of extraction rises? Such a rise in the cost of extraction can be expected to eventually take place, because we extract the oil that is easiest and cheapest to extract first. When additional extraction is performed later, costs are higher for a variety of reasons: the wells need to be deeper, or in more difficult to access location, or require fracking, or are in countries that need high tax revenue to keep local populations pacified. The higher costs reflect that we are using are using more workers and more resources of all kinds, to produce a barrel of oil.

Some would look at these higher costs as a “good” impact, since these higher costs result in new payment chains, for example, related to fracking sand and other products that were not previously used. But the higher cost really represents a type of diminishing returns that have a very adverse impact on the economy.

The reason why the higher cost of oil has an adverse effect on the economy is that wages don’t go up to match this new set of oil production costs. If we look back at the previous example, it is somewhat like going part way back to making shoes by hand. Economists often remark that higher oil prices hurt oil importers. This is only half of the problem, though. Higher costs of oil production result in a situation where fewer goods and services are produced worldwide(relative to what would have otherwise been produced), because the concentrated use of resources by the oil sector to produce only a tiny amount more oil than was produced in the past. When this happens, fewer resources (including workers) are left for the rest of the world to produce other products. The growing use of resources by the oil sector is sort of like a growing cancer sapping the strength of a patient. Oil importing nations take a double “hit,” because they participate in the world drop in output of goods, and because as importers, they miss out on the benefits of extracting and selling oil.

Another way of seeing the impact of higher oil prices is to look at the situation from the point of view of consumers, businesses and governments. Consumers cut back on discretionary spending to accommodate the higher price of oil, as reflected in oil and food prices. This cutback triggers whole chains of cutbacks in other buying. Businesses find that a major cost of production (oil) is higher, but wages of buyers are not. They respond in whatever ways they can–trimming wages (since these are another cost of production), outsourcing production to a cheaper part of the world, or automating processes further, cutting more of the high human wages from the process. Governments find themselves saddled with more unemployment claims and lower tax revenue.

In fact, if we look at the data, we see precisely the expected effect. Wages tend to rise when oil prices are low, and lose the ability to rise when oil prices are high (Figure 5). The cut off price of oil where wages stop rising seems to be about $40 per barrel in the United States.

Figure 5. Average wages in 2012$ compared to Brent oil price, also in 2012$. Average wages are total wages based on BEA data adjusted by the CPI-Urban, divided total population. Thus, they reflect changes in the proportion of population employed as well as wage levels.

What if oil prices are artificially low, on a temporary basis? The catch is that not all costs of oil producing companies can be paid at such low prices. Perhaps the cost of operating oil fields still in existence will be fine, and the day-to-day expenses of extracting Middle Eastern oil can be covered. The parts of the chain that get squeezed first seem to be least essential on a day to day basis–taxes to governments, funds for new exploration, funds for debt repayments, and funds for dividends to policyholders.

Unfortunately, we cannot run the oil business on such a partial system. Businesses need to cover both their direct and indirect costs. Low oil prices create a system ready to crash, as oil production drops and the ability to leverage human labor with cheaper sources of energy decreases. Raising oil prices back to the full required level is likely to be a problem in the future, because oil companies require debt to finance new oil production. (This new production is required to offset declines in existing fields.) With low oil prices–or even with highly variable oil prices–the amount that can be borrowed drops and interest costs rise. This combination makes new investment impossible.

If the rising cost of energy products, due to diminishing returns, tends to eliminate economic growth, how do we work around the problem? In order to produce economic growth, it is necessary to produce goods in such a way that goods become cheaper and cheaper over time, relative to wages. Clearly this has not been happening recently.

The temptation businesses face in trying to produce this effect is to eliminate workers completely–just automate the process. This doesn’t work, because it is workers who need to be able to buy the products. Governments need to become huge, to manage transfer payments to all of the unemployed workers. And who will pay all of these taxes?

The popular answer to our diminishing returns problem is more efficiency, but efficiency rarely adds more than 1% to 2% to economic growth. We have been working hard on efficiency in recent years, but overall economic growth results have not been very good in the US, Europe, and Japan.

We know that dissipative systems operate by using more and more energy until they reach a point where diminishing returns finally pushes them into collapse. Thus, another solution might be to keep adding as much cheap energy as we can to the system. This approach doesn’t work very well either. Coal tends to be polluting, both from an air pollution point of view (in China) and from a carbon dioxide perspective. Nuclear has also been suggested, but it has different pollution issues and can be high-priced as well. Substituting a more expensive source of electricity production for an existing source of energy production works in the wrong direction–in the direction of higher cost of goods relative to wages, and thus more diminishing returns.

Getting along without economic growth doesn’t really work, either. This tends to bring down the debt system, which is an integral part of the whole system. But this is a topic for a different post.

A Note on Other Energy Measures

The reader will note that in my analysis, I am using the cost (in dollars or other currency unit) of energy production, including indirect costs that are hard to measure, such as needed government funding from taxes, the cost of interest and dividends, and the cost of new investment. The academic world uses other metrics that purport to measure energy requirements. These do not measure the same thing.

Caution is needed in using these metrics; studies using these metrics often seem to recommend using a source of energy that is expensive to produce and distribute when all costs are considered. My analysis indicates that high-cost energy products promote economic contraction regardless of what their EROEI or Life Cycle Assessment results would seem to suggest.


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Charlie Hebdo and Tsarnaev’s Trial: Cui bono?


Update: According to news reports, one of the accused in the attack on Charlie Hebdo when hearing

that he was being sought for the crime turned himself in to police with an ironclad alibi.

UPDATE: According to news reports, police found the ID of Said Kouachi at the scene of the Charlie Hebdo shooting. Does this sound familiar? Remember, authorities claimed to have found the undamaged passport of one of the alleged 9/11 hijackers among the massive pulverized ruins of the twin towers. Once the authorities discover that the stupid Western peoples will believe any transparent lie, the authorities use the lie again and again. The police claim to have discovered a dropped ID is a sure indication that the attack on Charlie Hebdo was an inside job and that people identified by NSA as hostile to the Western wars against Muslims are going to be framed for an inside job designed to pull France firmly back under Washington’s thumb.http://www.wfmz.com/shooting-at-french-satirical-magazine-office/30571524
There are two ways to look at the alleged terrorist attack on the French satirical magazine Charlie Hebdo.
One is that in the English speaking world, or much of it, the satire would have been regarded as “hate speech,” and the satirists arrested. But in France Muslims are excluded from the privileged category, took offense at the satire, and retaliated.
Why would Muslims bother? By now Muslims must be accustomed to Western hypocrisy and double standards. Little doubt that Muslims are angry that they do not enjoy the protections other minorities receive, but why retaliate for satire but not for France’s participation in Washington’s wars against Muslims in which hundreds of thousands have died? Isn’t being killed more serious than being satirized?
Another way of seeing the attack is as an attack designed to shore up France’s vassal status to Washington. The suspects can be both guilty and patsies. Just remember all the terrorist plots created by the FBI that served to make the terrorism threat real to Americans.http://reason.com/blog/2014/07/22/human-rights-watch-all-of-the-high-profi
France is suffering from the Washington-imposed sanctions against Russia. Shipyards are impacted from being unable to deliver Russian orders due to France’s vassalage status to Washington, and other aspects of the French economy are being adversely impacted by sanctions that Washington forced its NATO puppet states to apply to Russia.
This week the French president said that the sanctions against Russia should end (so did the German vice-chancellor).
This is too much foreign policy independence on France’s part for Washington. Has Washington resurrected “Operation Gladio,” which consisted of CIA bombing attacks against Europeans during the post-WW II era that Washington blamed on communists and used to destroy communist influence in European elections? Just as the world was led to believe that communists were behind Operation Gladio’s terrorist attacks, Muslims are blamed for the attacks on the French satirical magazine.
The Roman question is always: Who benefits? The answer is: Not France, not Muslims, but US world hegemony. US hegemony over the world is what the CIA supports. US world hegemony is the neoconservative-imposed foreign policy of the US.


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Charlie Hebdo: Signs of False Flags

By Anthony Cartalucci

Paris Shooters Just Returned from NATO’s Proxy War in Syria

January 8, 2015In an all too familiar pattern and as predicted, the shooters involved in the attack in Paris Wednesday, January 7, 2015, were French citizens, radicalized in Europe and exported to Syria to fight in NATO’s proxy war against the government in Damascus, then brought back where they have now carried out a domestic attack. Additionally, as have been many other domestic attacks, the suspects were long under the watch of Western intelligence services, with at least one suspect having already been arrested on terrorism charges.

USA Today would report in an article titled, “Manhunt continues for two French terror suspects,” that:

The suspects are two brothers — Said, 34, and Cherif Kouachi, 32, both French nationals — and Hamyd Mourad, 18, whose nationality wasn’t known, a Paris police official told the Associated Press. He spoke on condition of anonymity because he was not authorized to speak publicly.

USA Today would also report (emphasis added):

The brothers were born in Paris of Algerian descent. Cherif was sentenced to three years in prison on terrorism charges in May 2008. Both brothers returned from Syria this summer.

The implications of yet another case of Western-radicalized terrorists, first exported to fight NATO’s proxy war in Syria, then imported and well-known to Western intelligence agencies, being able to carry out a highly organized, well-executed attack, is that the attack itself was sanctioned and engineered by Western intelligence agencies themselves,. This mirrors almost verbatim the type of operations NATO intelligence carried out during the Cold War with similar networks of radicalized militants used both as foreign mercenaries and domestic provocateurs. Toward the end of the Cold War, one of these militant groups was literally Al Qaeda – a proxy mercenary front armed, funded, and employed by the West to this very day.

Additionally, in all likelihood, the brothers who took part in the attack in Paris may have been fighting in Syria with weapons provided to them by the French government itself.  France 24 would report last year in an article titled, “France delivered arms to Syrian rebels, Hollande confirms,” that:

President Francois Hollande said on Thursday that France had delivered weapons to rebels battling the Syrian regime of Bashar al-Assad “a few months ago.”

Deflecting blame for the current attack on “radical Islam” is but a canard obscuring the truth that these terrorists were created intentionally by the West, to fight the West’s enemies abroad, and to intimidate and terrorize their populations at home.
We Must Sidestep the Canards 
As with any false flag attack engineered by a government for the purpose of manipulating public perception and pushing through otherwise unjustifiable policy both foreign and domestic, a series of canards are erected to distract the public from the true nature of the attack.In the recent attack in Paris, France, the canards of “free speech,” “condemning radical Islam,” “tolerance,” and “extremism” have all taken center stage, displacing the fact that the terrorists who carried out the attack were long on the leash not of “Islamic extremists” but Western intelligence agencies, fighting in a Western proxy war, as a member of a well-funded, armed, and trained mercenary force that has, on record since as early as 2007, been an essential component of Western foreign policy.
Indeed, Al Qaeda and its various rebrandings are not the creation of “Islamic extremism,” but rather Western foreign policy using “extremism” as part of indoctrinating the rank and file, but directed by and solely for the purpose of serving an entirely Western agenda.

As exposed by Pulitzer Prize-winning journalist Seymour Hersh in his 2007 article,  “The Redirection: Is the Administration’s new policy benefiting our enemies in the war on terrorism?” it was stated explicitly that (emphasis added):

To undermine Iran, which is predominantly Shiite, the Bush Administration has decided, in effect, to reconfigure its priorities in the Middle East. In Lebanon, the Administration has coöperated with Saudi Arabia’s government, which is Sunni, in clandestine operations that are intended to weaken Hezbollah, the Shiite organization that is backed by Iran. The U.S. has also taken part in clandestine operations aimed at Iran and its ally Syria. A by-product of these activities has been the bolstering of Sunni extremist groups that espouse a militant vision of Islam and are hostile to America and sympathetic to Al Qaeda

To this day, the US, its NATO partners including Turkey, and regional partners including Israel, Saudi Arabia, and Qatar are arming, funding, harboring, training, and otherwise perpetuating these “Islamic extremists” within and along both Syria and now Iraq’s borders.
In reality, without Western backing, “laundered” through the Persian Gulf autocracies and manifesting themselves in a global network of mosques jointly run by Persian Gulf and Western intelligence agencies, there would be no “Islamic extremism” to speak of. To focus on “extremism” as a cause, rather than as a means used by the true perpetrators of this global-spanning campaign of Western-sanctioned terrorism, is not only to perpetuate such canards, but to invite the perpetuation of this very terrorism we are shocked and horrified by.

West Apparently Maintaining Domestic Radicalization/Recruitment Centers 

The recent Sydney cafe hostage crisis featuring an Iranian dissident granted Australian asylum and featured in anti-Iranian propaganda, exposed a vast network of radicalization and recruitment run in the Australian city of Sydney, used to organize support and fighters to be sent to the West’s proxy war in Syria. The network included many notorious individuals, well known to Australian law enforcement and intelligence agencies, and many of whom had traveled to Syria, taken part in fighting alongside known terrorist organizations, and were allowed to return and continue their political activities in Australia.The Daily Mail’s article, “Why did police ask former terror suspect for an ISIS flag?” would state:

Counter terrorism police have contacted Sydney man and one time terror accused Zaky Mallah and asked him for an ISIS flag. 

Just over four hours into the Martin Place siege, officers the NSW Police Joint Counter Terrorism Team and asked him if he could give them an ISIS flag. 

Zaky Mallah, 30, from Westmead in western Sydney offered the Counter Terrorist police the flag that hangs on the wall of his apartment, the moderate Islamic Front flag, but ‘they weren’t interested’. 

The article would also state:

Two years ago Mr Mallah travelled to Syria and lived with the FSA rebels engaged in the bloody civil war against Muslim hardliner President Bashar el Assad ‘before it got crazy over there’. After returning home, he encouraged young people to go to Syria and engage in jihad to experience the freedom fight taken up against El Assad… 

As in Australia, France apparently also has a stable of former terrorists who had traveled to Syria and returned, all while on their watch lists – and in Australia at least – some of these terrorists are literally on security agency speed dials and are clearly a part of a network the intelligence community both monitors and in fact, maintains.

Such networks have turned out thousands of recruits to fight in NATO’s war in Syria. The BBC would report in an article titled, “Islamic State crisis: ‘3,000 European jihadists join fight’,” that:

The number of Europeans joining Islamist fighters in Syria and Iraq has risen to more than 3,000, the EU’s anti-terrorism chief has told the BBC. 

Gilles de Kerchove also warned that Western air strikes would increase the risk of retaliatory attacks in Europe.

How exactly is the public expected to believe that such a vast number of terrorists can migrate overseas to fight alongside terrorist forces the West is currently, allegedly, fighting, without the West being able to stem such a tide? Clearly, just as arming Al Qaeda in Syria was done intentionally, so to have the floodgates been open, allowing European terrorists to both join NATO’s proxy war in Syria, and to return home and join NATO’s growing war against its own people.

Operation Gladio on Steroids 

Such networks don’t just mirror NATO’s “stay behind networks” formed during the Cold War, supposedly created to activate in the wake of a full-scale Soviet invasion of Western Europe, but instead used as a covert front of political and terroristic provocation – such networks today are a continuation of NATO’s secret armies.

NATO’s provocateurs used during the Cold War were a mixture of nationalists, anti-communists, former Nazi SS officers, and extremists of every stripe. Their particular beliefs were, however, ultimately irrelevant since they were used for a singular agenda defined not by these beliefs, but by NATO’s own agenda.

Many of the militants and extremists NATO used were liquidated upon the completion of the many false flag attacks NATO organized at the cost of hundreds of innocent European lives. Likewise, today, many of the gunmen or bombers involved in the long string of suspicious domestic attacks carried out by NATO’s modern “stay behind network” are either killed on sight, or imprisoned and forgotten.

While NATO’s Cold War operations appeared confined to conducting terrorism upon its own people, today’s networks are used to carry out both proxy wars overseas as well as to carry out terrorist attacks at home. The expansive nature of this network and the threat it poses to global peace and stability should be at the center of the Paris attack debate – not the alleged beliefs, religion, or supposed agenda of the attackers who, just like their Cold War counterparts, were nothing more than patsies and pawns amid a much larger and insidious game.

Tony Cartalucci, Bangkok-based geopolitical researcher and writer, especially for the online magazineNew Eastern Outlook”.

Paris Shooting Suspects Under French Radar for YEARS


January 10, 2015 (Tony Cartalucci – LD) – The Paris shooting suspects were no strangers to the French government and its security and intelligence agencies. One suspect, Cherif Kouachi, was arrested by French police in 2005, tried and sentenced to 3 years in prison for “association with wrongdoers with the intention of committing a terrorist act,” but his sentence would later be suspended.

Slate Magazine would report in their article, “The Details of Paris Suspect Cherif Kouachi’s 2008 Terrorism Conviction,” that:

Kouachi was arrested in January 2005, accused of planning to join jihadists in Iraq. He was said to have fallen under the sway of Farid Benyettou, a young “self-taught preacher” who advocated violence, but had not actually yet traveled to Iraq or committed any acts of terror. Lawyers at the time said he had not received weapons training and “had begun having second thoughts,” going so far as to express “relief” that he’d been apprehended.

Strange then that Kourachi and his brother would then be reported to have traveled to the Middle East to receive training from Al Qaeda, then to have fought in Syria in a war backed in part by France, before returning home and carrying out this most recent terror attack, all while being tracked by French intelligence. If Kouachi could be arrested for “association with wrongdoers with the intention of committing a terrorist act,” why wasn’t he arrested immediately upon his return to France for having received and employed military training by a terrorist organization?

CNN would report in an article titled, “France tells U.S. Paris suspect trained with al Qaeda in Yemen,” that:

Western intelligence officials are scrambling to learn more about possible travel of the two Paris terror attack suspects, brothers Said and Cherif Kouachi, with new information suggesting one of the brothers recently spent time in Yemen associating with al Qaeda in that country, U.S. officials briefed on the matter told CNN. Additional information from a French source close to the French security services puts one of the brothers in Syria.

To explain how terrorists well-known to France’s legal system and intelligence community could simply “disappear,” the Wall Street Journal in an article titled, “Overburdened French Dropped Surveillance of Brothers,” would attempt to claim:

The terror attacks in Paris that have killed 17 people over three days this week represent one of the worst fears—and failures—of counterterrorist officials: a successful plot coordinated by people who had once been under surveillance but who were later dropped as a top priority. 

The U.S. provided France with intelligence showing that the gunmen in the Charlie Hebdo massacre received training in Yemen in 2011, prompting French authorities to begin monitoring the two brothers, according to U.S. officials. But that surveillance of Said and Chérif Kouachi came to an end last spring, U.S. officials said, after several years of monitoring turned up nothing suspicious.

It is a narrative that begs to be believed – considering the brothers had already tangled with the law, already traveled to Yemen to receive training from Al Qaeda, and with evidence suggesting they were indeed still being tracked since it is now known they have recently returned from Syria. The Wall Street Journal would also claim that France depends heavily on US intelligence, contradicting US intelligence officials who have said their information came from their French counterparts.

France reportedly has over 1,000 citizens under surveillance who have recently traveled to Iraq and Syria, believed to have fought alongside terrorists France itself has been arming. In an NBC article titled, “French Intelligence Is Tracking 1,000 Who Have Been to Iraq, Syria: Expert,” it is reported that:

“French intelligence is mostly focused today on more than 1,000 French citizens that traveled to Syria and Iraq since 2012,” said Jean-Charles Brisard, the author of “Zarqawi: The New Face of Al-Qaeda.” 

He added that one-fifth of them were being tracked around the clock. “This is a problem of resources,” he added. “We cannot follow everyone.” 

Brisard said the brothers had been “well known to French intelligence [for] several years now.”

It is almost certain that the suspects were not only being tracked by French and US intelligence, but selected as prime candidates for pulling off the provocative attack in Paris last week – as part of a greater agenda of manipulating public perception to further crush civil liberties at home and expand hegemonic wars overseas. France is already occupying several of its former colonies in Africa, had participated in the destruction of Libya and its subsequent handover to Al Qaeda terrorist, who with NATO backing, used it as a springboard to attack Syria.
In fact, it is now confirmed that France had provided weapons to terrorists fighting the Syrian government since 2011. France 24 would report last year in an article titled, “France delivered arms to Syrian rebels, Hollande confirms,” that:

President Francois Hollande said on Thursday that France had delivered weapons to rebels battling the Syrian regime of Bashar al-Assad “a few months ago.”

It is likely that if the Paris shooters were indeed in Syria, they may likely have been holding French-supplied weapons as they honed their skills later to be used to spill French blood in Paris.

Three Possibilities – All Damning  
There are really only three possibilities left for France, NATO, and the greater Western World. First, the attacks were known to be impending and were willfully allowed to be carried out with an insidious agenda lined up to fully exploit the public hysteria to follow. Second, the attacks were prodded along by French, US, or other Western or Western-aligned intelligence agencies. Or third, the global spanning surveillance state the West is erecting with the promise of making the world safe at the expense of our freedom has left us both unsafe, and without our freedom.

Determining the degree to which this attack was influenced or engineered by Western intelligence agencies will be difficult to establish. However, considering that NATO itself has been exposed in the past to have used extremist groups to carry out deadly terrorist attacks almost identical to the recent Paris shooting, means that Western intelligence agencies should be prime suspects until otherwise ruled out.

The shooters were well known to Western intelligence, were part of a Western proxy war in Syria, were under surveillance, most likely handled before and perhaps even during the attack last week, and were all subsequently “liquidated,” just as was done amid a wave of NATO-sponsored  terror attacks against Western Europe during the Cold War, now known as “Operation Gladio.”

Al Qaeda is NATO’s Mercenary Foreign Legion 
Even if these attacks were organized by “Al Qaeda,” the fact still remains that Al Qaeda was intentionally selected, armed, funded, and to this day backed in nations like Syria by the West, including France, in an effort to overthrow Damascus by proxy.

As exposed by Pulitzer Prize-winning journalist Seymour Hersh in his 2007 article,  “The Redirection: Is the Administration’s new policy benefiting our enemies in the war on terrorism?” it was stated explicitly that (emphasis added):

To undermine Iran, which is predominantly Shiite, the Bush Administration has decided, in effect, to reconfigure its priorities in the Middle East. In Lebanon, the Administration has coöperated with Saudi Arabia’s government, which is Sunni, in clandestine operations that are intended to weaken Hezbollah, the Shiite organization that is backed by Iran. The U.S. has also taken part in clandestine operations aimed at Iran and its ally Syria. A by-product of these activities has been the bolstering of Sunni extremist groups that espouse a militant vision of Islam and are hostile to America and sympathetic to Al Qaeda

Since 2007, it is clear that the so-called “Islamic State” (ISIS) and various franchises of Al Qaeda operating in Syria are harbored in NATO-member Turkey, with convoys originating from Turkish territory supplying terrorists operating in Syria with an unending torrent of supplies. So even as the US feigns to be striking at the source of ISIS power – allegedly seized Syrian oil fields – in reality, the US, along with its stalwart Persian Gulf allies Saudi Arabia and Qatar – are at the same time supplying this proxy terrorist army with billions in aid year to year – aid that is immune to US airstrikes.

NATO Extremism

Image: ISIS is supposedly an independent terror organization living off the
lands it has supposedly conquered. In reality, it is clear it is instead an
invasion originating from NATO-member Turkey, with the aid not of oil
money from seized Syrian fields, but rather cash and weapons supplied by
NATO and the Persian Gulf autocracies.

However one attempts to examine the recent Paris shooting – it is clear it is not an issue of “free speech,” “Islamic extremism,” or a need to show “tolerance,” but rather an issue involving NATO sponsorship of terrorism worldwide, and the complicity or failure of invasive surveillance networks and intelligence agencies that either helped carry out the operation, willfully allowed it to be carried out, or missed it entirely indicating unforgivable incompetence requiring punitive action against those occupying the highest offices in the French government.

Whatever the case may be, what follows will be a shameless attempt to exploit the hysteria prevailing across much of Europe. The most immediate threat is the West not backing off from its sponsorship of terrorists fighting the government of Syria, but the doubling down of the very policy that produced the killers involved in the Paris shooting. Indeed, even as Western politicians wring their hands over the loss of life in Paris this week, the Military Times would report, astoundingly, that the US is going ahead with a plan to train, arm, equip, and back a new “rebel army.” In an article titled, “Syria rebel training could start in early spring,” it states:

The long-awaited coalition program to train the Syrian moderate opposition could begin by early spring, and officials are beginning to identify individual fighters who could participate, the Pentagon said Tuesday.

Apparently, despite so-called “moderate Syrian rebels” being revealed as simply Al Qaeda or Al Qaeda affiliates, with many literally turning their US, French, British and other NATO-supplied weapons over to terrorist groups, the US desires to send yet more weapons, cash, and training – in what one could only call a deliberate attempt to feign opposition to Al Qaeda while willfully expanding their ranks and armories, as well as both their tactical and strategic capabilities.

It is no wonder then, why the Western media has attempted to focus so diligently on “Islamic extremism” as the cause of the recent Paris shootings. Should the emotional raw nerves of the European people not be manipulated, and were people simply to follow the money, they would realize NATO extremism was to blame. They would also realize that the backlash in the wake of the Paris shooting was not to help stem such extremism, but to only embolden it further.

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