INFLATION WARNING AND THE WAR IN IRAQ

by Bill Hansen

The next round of mega-inflation is just beginning. Three times this century inflation has leap upward. The last mega-inflationary waves peaked in 1919, 1947, and 1982. These peaks, and several lesser ones, accompany war. Wars cause inflation because material is produced in greater quantity, much of it being destroyed in the process. Inflation is determined by the quantity of goods compared to the available money supply. When material goods are produced in excess of the money supply, the government prints more money and issues bonds. The result is an increase of the money supply and a reduction in the value of the dollar.

PREDICTION: An inflationary crisis will begin shortly after the Jupiter conjunction Neptune of May 27, 2009. This aspect occurs twice more during its retrograde phase peaking July 10, 2009 and final direct motion peaking December 21, 2009. Inflation rates will rise rapidly reaching a peak near March 2010. A break in this hyperinflationary period will occur after January 2011. The long-term inflationary high will be in 2020 when Jupiter is sextile Neptune.

During times of inflation, the cost of goods increases. Wages may not keep up with the higher cost of living, and paper investments like stocks become worth less because the value of dollar is diminished. Valuable commodities like gold and silver, however, are a hedge against runaway inflation because they increase in value. There are several other ways to protect against inflationary times. I detail these in the Inflation chapter of my book Earth Changes. We face several perilous years pertaining to inflation, stock prices, and the ravages of other natural and man-made calamities. The first two decades of the 21st century, peaking around 2010, will usher in a new world order of unparallel proportions. But here, let me outline the inflation threat created by the War on Terrorism.

Gold prices fluctuate not only due to inflationary pressures but also on economic and political uncertainty. The international War on Terrorism, especially in Iraq and Afghanistan, and the recent armed conflict between Hamas forces in Lebanon and Israel caused gold prices to jump 8.7% in eleven days! Gold opened at about $613 an ounce on July 3, 2006. It then shot up to $666.30 an ounce due to the Middle East conflict. The world markets feared that Iran and/or Syria might get involved in the Israeli invasion of southern Lebanon. This could disrupt the supply of oil and spread violence throughout the region.

The tense standoff with Iran and North Korea can further erode world confidence leading to a spike in precious metal prices. Political instability, however, is not the only factor that can crash the financial infrastructure. Natural disasters and man-made problems like pollution and global warming are equally devastating to the economy. The pace of change today is even a leading factor in world instability. Governments’ realize the state of world affairs and are known to manipulate the price of gold to create an illusion of normalcy. They may sell vast quantities of gold to make it appear that they possess real wealth. This happened in the 1970s when the U.S. legalized individual ownership of gold. There was widespread uncertainty at the time. Anti-Vietnam War protests led to a counterculture revolution. Anarchy was literally spilling into the streets of America. Selling gold was a way for the government to ease public fear. The price of gold and other precious metals hit a high in 1980. Gold is now, by the way, at about the same price as it was in 1980. It is about to go much higher!

Gold will continue to go up because we are in a long cycle of continuous wars, huge financial readjustments, unusual weather patterns and natural disasters. In addition, China began to sell gold to its citizens about three years ago. China is buying gold like crazy in the world market to satisfy its demand. A similar situation occurred in the 1970s when the U.S. government sold gold to raise money for the Vietnam War effort. Some estimates are that gold will rise to $2500-$3000 an ounce. If gold reaches this price, it would amount to a 300% increase. Gold is considered a long-term investment. The price of this precious metal fluctuates wildly in response to worldwide unrest. Uncertainty is the bane of money market stability.

The time to act is now. It will take years for inflation to reach the high levels expected, but the rise will be spectacularly fast like it was in the 1970s. I predicted in Earth Changes that beginning in 2006 inflation would raise its ugly head. Although the inflation rate has been less than 4% a year, don’t bet that the FED can fiddle with interest rates to effectively keep inflation tamed for long. Inflation, heralded by war, is easy to foresee. The war on terrorism is not going to end anytime soon. It will, in all likelihood, lead to further entanglements involving Iran, North Korea, western Africa, and South American nations – even some of our allies today (Pakistan, Russia, Saudi Arabia, etc.). 2010 is an epochal war year. So the prospects for increased government spending are all too real in the coming years. Get ready, then, for the next mega-inflationary wave.

A whole chapter in my book Earth Changes is devoted to the causes, trends, and historical consequences of mammoth government spending. For now, I would like to add a short outline of historical notes regarding inflation that will put the current situation into better focus.

Gold has been a standard of value since ancient times. To increase the wealth of a nation, more gold was mined or taken from neighboring countries. Another ploy to increase the amount of gold in circulation was to add base metals, like lead or copper, to the coin of the realm. This amounted to devaluing the price of a coin by increasing the number of coins. Nations have been doing this throughout history.

Ancient Persia did this to finance its war against Greece. Alexander the Great won, however, and captured much of the Persian gold to finance his invasion of Asia.

Rome debased its gold coins during the classic struggle against Carthage.

The Anglo-Saxons used debased coins to buy mercenaries.

William the Conqueror used a similar tactic to launch his Norman Invasion.

The British did the same to fight Napoleon.

The American colonies lacked gold coins so they printed Continental Currency to pay for the rebellion against Britain. The resulting hyperinflation almost destroyed the war effort by creating a devastating recession.

Similarly, the Southern States printed Confederate dollars during the Civil War, which ruined its economy. The North was not immune to the massive war expenditures and took on inflationary debt by selling war bonds.

Bonds were used by the British in World War I and inflation soared as a result.

During World War II, the U.S. National Debt grew from $16 billion to over $260 billion resulting in an inflation rate of 18.13% by 1946.

Inflation rates shot up 6% during the Korean and Vietnam wars. After Vietnam, inflation was 11.04% in 1974 and 9.13% in 1975.

Notice how the accumulated national debt grows in relation to inflation and war. The War of 1812 raised the U.S. debt from $57 million to $127 million in just seven years. It took 20 years to pay this debt down to pre war levels.

The Mexican War quadrupled the debt from $16 million to $63 million in just two years.

The Civil War was the greatest inflator. It caused the federal debt to go from $75 million in 1861 to $2.8 billion four years later!

The beginning of the present national debt crisis started after the end of World War I, which added $26 billion to the debt barrel. Roosevelt’s New Deal swelled the debt level to $72 billion. Money was taken off the gold standard at this time, effectively allowing paper currency to flourish.

World War II increased the debt to a staggering $260 billion.

The Korean War, Vietnam, and the Cold War came next, which raised the debt to $2.7 trillion by 1988. Inflation went sky high and the standard of living sank. No longer could the majority of American families maintain a single “bread winner” to keep up with the cost of living.

The national debt is now over $8 trillion. The War on Terror and the wars to come will accelerate this debt. To make matters worse, we are borrowing money from China and other nations to finance our debt. We also buy more foreign products in turn. America is a debtor nation. That is why I keep saying that we are most vulnerable financially, not militarily. Terrorists’ strikes here may frighten and kill people, but a crash in the stock market will bring true terror to every American.

Our ratio of debt to gross domestic product is 65.1%. At the end of the Civil War and World War I the debt ratio was less than 40%. Only after World War II was it higher than it is today. So inflation is here. Yes, it is less than 4% a year, but it can not and will not remain at this level. It has steadily been going up. Soon, it will rocket up like it did after The Vietnam War. The Pentagon request for $127-$150 billion in new emergency-war spending is the largest amount since the special-spending measures were begun in 2001. This is in addition to the $495 billion already spent for Afghanistan, Iraq, and terrorism-related efforts. This request, added to the $70 billion allocated for 2007, would easily exceed the annual cost of the Vietnam War at its height. Adjusted for inflation, the U.S. spent $121 billion on the Vietnam War in 1968. Still, the overall cost of the Vietnam War – $549 billion adjusted for inflation – exceeds the combined costs of the fighting thus far in Afghanistan and Iraq. However, the Bush administration announced in December 2006 that it is drafting an additional request for $100 billion, above and beyond the 70 billion already approved, for the wars in Iraq and Afghanistan. Since the attacks of September 11, 2001, Congress has approved more than $500 billion for terrorism-related operations. Add another 100 billion to this and the War on Terrorism will then exceed the Vietnam War in terms of expenses.

And don’t be deceived by the Federal Government’s estimates of yearly deficits. The Bush administration revealed in October 2006 that the federal budget deficit fell to its lowest level in 4 years to $247.7 billion. Great! But that is still almost 250 billion dollars in the hole added to the $8 trillion of accumulated debt that has never been paid off.

Current estimates are that the wars in Iraq and Afghanistan could cost nearly $550 billion a year. To pay for additional expense, Congress has been raiding trust funds from Social Security, Medicare and other programs. But the accumulated debt continues to increase from $5.6 trillion in 2001 to a projected $11 trillion by 2011.
The annual interest paid by the government to finance the debt is $220 billion in 2006 – more than 12 times NASA’s budget.

The next crisis situation to address is oil. Kevin Phillips writes in his book American Theocracy, “Excessive debt in the twenty-first-century United States is on its way to becoming the global Fifth Horseman, riding close behind war, pestilence, famine, and fire.” Phillips contends that the Republican Party has been taken over by zealous, religious fundamentalism. The fact that much of the world’s oil lies in Muslim countries makes our bid to secure and maintain a foothold in the region a power struggle between faiths. Many believe in a Biblical prophesy of Armageddon being fought in the holy lands. Interestingly, it is indeed in this region of the world that has become a focus point for hostilities based on ethnic disagreement and oil.

World economic powers are prone to collapse through a number of factors. War, climate extremes, natural resources, religious intemperance, and national debt head the list. The Dutch, for instance, were the dominant world power in the seventeenth-century based on their use of the wind for mill power and sailing ships. From the 1580s until the European wars of 1688-1713, the Dutch commanded the foremost global trading empire of the time. The age of steel and machinery brought Britain to the forefront because of her coal abundance. The British era dated from 1763 and the defeat of France after The Seven Years’ War (also known in America as the French and Indian War). The U.S., although rich in coal, never utilized this resource like the British because wood was so plentiful. But America was next to wrestle economic and military control of the world due to her reliance on oil. Beginning in the 1890s, chemicals, petroleum products, and electrical engineering began to displace coal as an economic engine. Britain lagged behind in the large firms, scientific laboratories, and educated workforces needed in these new fields. By the end of World War I Britain was superseded by the United States. Oil became the all-important fuel of American global ascendancy. It is also likely to be the reason for her demise.

Neptune (planet of oil) is one of the strongest planets in the U.S. Declaration of Independence horoscope. Oil, and the other industries associated with Neptune, are economic giants in our country. Neptune is also square (a 90-degree aspect) with Mars in our national chart. This implies that war (Mars) will be fought over oil, and for clandestine (Neptune) reasons – mostly economic in nature. The true reasons for most of America’s foreign contraventions beginning in the 1890s have been kept secret (Neptune). If the facts were made known for why we have used our military (Mars) overtly and covertly to takeover and overthrow other nations, the public would disapprove. So the government has either fabricated reasons for military intervention or emphasized what logical reasons existed without revealing certain crucial motives. A separate paper will detail America’s ongoing Manifest Destiny. What is relevant here is the dominance of oil in our economy. Without oil, America would be bankrupt.

We are in the Middle East, Europe, Africa, Asia, and South America for reasons based on oil resources and transportation lines. We do not have enough oil of our own so we must protect our sources overseas. The most recent example of this occurred since the December death of Turkmenistan’s flamboyant leader. Turkmenistan holds the 5th largest natural gas reserves in the world and is a major supplier of gas to Europe after first being pumped to Russia. The U.S. and Turkey have been vigorously attempting to secure oil and gas leases with this volatile country. Another reason America is clinging to oil is due to the fact that the United States is the world’s leading debtor. To pay for the interest on the national debt the government prints bonds, which are sold to individuals, and to European and Asian bankers. If foreign investors decide to sell their dollar holdings and switch to rival currencies, the U.S. would be in big financial trouble. Since oil is still the main world fuel, keeping it priced in dollars and not rival currencies props up the U.S. economy.

Oil is the current fuel of choice. But as oil wanes, a new energy super-giant will emerge, and with it, a new center of world power. The new energy might be natural gas, hydrogen, more nuclear reliance, renewable energies, or non-polluting fossil fuels like coal converted to a clear liquid. The U.S. must hurry to find an alternative fuel. China is already seeking innovations in hydraulics, natural-gas use, and deep drilling for oil. Unfortunately, change is not easy to make because entrenched corporate and governmental interests, and cultural habits, hinder the transition from oil.

Wars fought over natural resources, including water, are extremely likely in the years ahead. The Middle East is expected to hold two-thirds of the world’s remaining oil by 2020. Global demand will intensify as supplies tighten. China, India, Japan, Latin America, and Asia are all in need of vast energy resources and they will compete savagely on the world market. Although experts do not agree on how close world oil production is to its peak, optimists see it only two or three decades away. This does not mean that oil reserves will completely dry up in 20 to 30 years, only that oil production will peak and remaining supplies will, thereafter, become depleted. After the so called peak in oil production, remaining reserves become more difficult to find and extract; in other words, more costly to discover, produce, and use. Governments have optimistically estimated that global oil production will peak between 2025 and 2035. This puts the United States in the difficult position of importing roughly three-quarters of its oil needs by 2025.

The Federal Government has long known that oil, and the oil-peak crisis, pose a strategic problem. Bill Richardson, U.S. Secretary of Energy, said in 1999, “Oil has literally made foreign and security policy for decades. Just since the turn of this century, it has provoked the division of the Middle East after World War I; aroused Germany and Japan to extend their tentacles beyond their borders; the Arab oil embargo; Iran versus Iraq; the Gulf War.” The Gulf War and Desert Storm were fought to place our oil companies in Iraq, and to secure agreements for the purchase of Iraqi oil in dollars. Due to the importance of oil as the now dominant fuel, this makes the world’s reserve currency the U.S. dollar. But there are other competing national currencies vying for the dollar’s preeminence. A secret arrangement was made some time ago between the U.S. and Saudi Arabia that beefed up the value of the dollar by requiring that all OPEC sales be secured in dollars. In other words, countries had to obtain dollars to purchase OPEC oil. Oil-producing nations, especially the Persian Gulf states, deposited much of their oil money in U.S. banks and Treasury debt. This has buoyed the dollar and the U.S. economy. But since the War on Terrorism, tensions have mounted between the U.S. and Saudi Arabia. American presence on Saudi soil is no longer desired, although security agreements are still in effect. Without a large military base in Saudi Arabia, America needs a new Middle East staging area for controlling her oil interests. Iraq proved to be the perfect candidate. There were plausible reasons to convince the American public and her principle allies that Iraq under Saddam Hussein was a serious threat to world security. What resulted was a second invasion in 2003.

The history of oil and the Middle East began in 1879 when Kuwait asked the British for protection. Kuwait was leery of German interests in the rich oil field of the Tigris-Euphrates Valley. The Germans had negotiated oil rights as far as Mosul by 1914. So when war broke out, Turkish Mesopotamia became a battleground. The British and French made a secret pact in 1916 (Sykes-Picot Agreement) that stipulated a postwar split of Mesopotamia. The British broke the agreement and continued to fight after the November 1918 armistice and took Mosul, which was to be under French control. The French were appeased with parts of Germany given in exchange. British control of the region was tenuous from the start. The Arabs rose in rebellion at least 30 times between 1919 and 1958, when the British finally had had enough and left Iraq.
German troops again pursued petroleum in the region during World War II by moving into Egypt and pressuring the Vichy French regime in Syria to help seize Iraq. In spite of a pro-German Iraqi group that staged a successful coup in Baghdad, the British eventually took control after heavy fighting around Fallujah.

After World War II, the CIA staged the 1953 overthrow of elected Iranian Prime Minister Mohamed Mossadegh. Mossadegh’s offense was his nationalization of the British-owned Anglo-Iranian Oil Company. This coup put a puppet Shah in power loyal to the U.S. and, consequently, reestablished the British Anglo-Iranian Oil Company - with one caveat – it was to yield a 40% share to U.S. oil firms.
Another nationalist Iraqi leader, Abdul Qarim Qasim, rose to power and a coup to replace him planned by U.S. intelligence in 1959 failed. Saddam Hussein was hired by the U.S. to carry out the coup.

War almost broke out again in the Middle East over oil during the 1973-1974 Israel-Arab war. This conflict led to an Arab and OPEC embargo on oil shipments to the United States and the Netherlands. The economic effects were devastating bring long lines at gas stations and aggravating a severe recession. In response, the Nixon administration contacted senior British officials and set out to plan a joint airborne attack to secure the oil fields in Saudi Arabia, Kuwait, and Abu Dhabi. The British were hesitant, however, and the attack was called off.

The Iranian revolution in 1979 overthrew the Shah and seized 53 American embassy employees. President Carter ordered a helicopter rescue mission to free the hostages but it failed miserably.

The Iraq-Iran war of 1980-1988 was fought over boundary issues with oil being an implied reason for the Iraqi invasion. During the war the U.S., Britain, and several other nations sold arms to both sides to keep their fingers in the pie in the event that either side might win. Washington and London also arranged clandestine transfers of dual-use materials to Iraqi leader Saddam Hussein that helped him develop chemical, biological, and potentially nuclear weapons to defeat Iran. Saddam Hussein had been used before so assisting him into power made sense.

The two Iraq wars of 1991 and 2003 were orchestrated by Washington and London under false pretenses. Saddam Hussein told U.S. officials his intentions before invading Kuwait in 1990. His invasion was based on oil-related provocations by Kuwait. Kuwait was allegedly stealing Iraqi oil by slant-drilling into Iraqi territory. The second reason for Hussein’s decision to attack was Kuwait’s efforts through OPEC to drive down the price of oil to deny Iraq much needed money to rebuild after the devastating war with Iran. Right or wrong, Hussein’s move was the rationale needed to pump-up fears that he would next take the Saudi oil fields after running rampant through Kuwait. Oil experts were also saying that by 2010 the U.S. would need an additional fifty million barrels a day. The Saudis were not always reliable so the untapped and largely unexplored Mesopotamian basin was an obvious choice for regime change.

Oil, transportation networks, and the military bases to protect them also drove Bush to intrude in Somalia in late 1992. Chevron, Amoco, Conoco, and Phillips had exclusive oil rights covering two-thirds of Somalia before the nation’s pro-Western government was overthrown by warlords. The military was quickly called in under the guise of “humanitarianism” but oil interests were clearly at stake. Conoco had also turned its corporate base in Mogadishu into a de facto U.S. embassy days before marines landed in the capital. The fierce fighting that took place was a bloodbath. Nineteen marines were killed and many more wounded; an estimated 1,000 Somalia fighters were killed before driving the Americans from the country.

The next administration under Bill Clinton formed a strategic partnership in 1995 with Uzbekistan and several other independent republics in former Soviet central Asia. Several U.S. companies had previously acquired leases with Kazakhstan and Azerbaijan to tap potential oil reserves in the Caspian Sea and environs. A pipeline and other transportation routes were laid out, but little oil was discovered.
Saddam Hussein worried the Clinton administration in late 1995 by proposing oil concessions to Russia, China, and France. To prevented Hussein from implementing these oil allowances, aircraft and cruise missile attacks were ordered in January and June 1996; and more followed in December 1998. The Iraq Liberation Act of 1998 set down in writing what the U.S. government wanted – Hussein out – a regime change in Iraq. The formal complaints for deploying troops near Iraq’s border were that Hussein was building weapons of mass destruction, and that he was failing to cooperate with the United Nations sanctions.

The government’s explanation for ending the first Gulf War before a final takeover was achieved was that Iraq had been driven from Kuwait and the Saudi oil fields were no longer threatened. Hussein, although a horrible villain, was still our villain. Hussein in power meant a semblance of order in Iraq. The earlier British experience in the area was, no doubt, a factor in making the decision to allow Saddam to remain in control. Another major concern by major oil consuming nations was what would happen after the U.N. sanctions against Iraq ended. Hussein was reported to have been secretly violating the sanctions by exporting oil to Russia, France, and China – all UN Security Council members who might vote to lift the sanctions. What if Iraq’s huge oil reserves were made exclusively available to non-Anglo-American companies? The sanctions were supposed to prevent this – sanctions placed in effect due to Iraq’s supposedly “weapons of mass destruction” program previously supported by the U.S. What really tipped the scale again Hussein and put him in the rifle scope was OPEC’s potential to price oil based not on American dollars but a foreign exchange. This would devastate the U.S. economy because of the huge national debt.
Oil, however, and hidden political motives usually based on big corporate interests, has been the primary reasons why America has gone to war since 1890. This is indicated by the Mars square Neptune aspect in the U.S. chart. If ExxonMobil, ChevronTexaco, BP, and Royal Dutch Shell were to have drilling and processing rights in Iraq, their proceeds over the next fifty years would be $4-5 trillion dollars. Iraq, in turn, would earn $80-90 billion per year based on 40% royalties. The Iraq wars were about who gets to sell and buy Iraqi oil – and what currency will determine the value of the sales. Russia, Germany, and France were eager to buy Iraqi oil in euros. Besides selling oil to France illegally under the U.N. sanctions, Hussein made the sale of legal oil in euros, not dollars, official in late 2000.

It was determined by the George W. Bush administration, his election being heavily supported by the oil industry, that Iraq be renationalized under a democratic regime friendly to U.S. interests. With American and allied oil companies in position to tap Iraqi oil, the flood of crude on the world market would hopefully undercut the OPEC monopoly, and prevent Iran, Venezuela, and Indonesia from swaying the cartel to exchange the dollar for the euro. This plan failed to materialize because Iraqi insurgents were able to sabotage oil pipelines and facilities in Iraq time and time again causing output to remain at prewar levels. U.S. interests have been further stymied by Saudi Arabia giving a big gas development contract to French Total instead of ExxonMobil. Other OPEC members were also keen on trading oil in euros as U.S. interest rates fell in late 2002. Indonesia considered dropping the dollar as the invasion of Iraq got underway. Malaysia was leaning in the same direction by June of 2003; and Iran was continuing to transfer reserves from the dollar into the euro. It was at this time that Russian president Vladimir Putin and German chancellor Gerhard Schroeder considered selling their oil for euros. The pressure on the U.S. to resolve the oil currency exchange through regime change in Iraq was intense as the second Iraqi war commenced.

Future American political decisions based on energy needs will have a direct effect on the economy and military planning. Oil transportation routes and the means to safeguard them became important as early as 1997 and 1998 when U.S. and European forces moved into the southern portions of the former Yugoslavia to make it safe for pipelines bringing Caspian oil from Bulgaria on the Black Sea to Albania on the Adriatic. In late 2004, Albania, Macedonia, and Bulgaria signed a pact to build a trans-Balkans pipeline. The principle financing came from the U.S. government’s Overseas Private Investment Corporation and private American firms.
Future U.S. military base locations were tied to oil resources and oil-transportation networks. The State Department, for instance, requested funds for a “rapid-reaction brigade” in Kazakhstan reasoning that such a force was needed to protect oil platforms in the Caspian Sea from terrorist threats. The Pentagon planned to establish permanent bases in Senegal, Ghana, and Mali in West Africa. These African bases would protect Nigeria’s oilfields. African oil fields are projected to account for 25% of all U.S. oil imports in the future.

The war on terrorism, then, is in actuality a redeployment of American military might to oil rich regions around the world. Centcom, the military control center for most of the Middle East, expanded its territorial responsibility in 1997 to include the oil-rich Caspian basin. Military facilities were established in Uzbekistan and an air force base in Kyrgyzstan. Volatile, and often American unfriendly, oil regions of the world are in the forefront of military planning. These include the major oil exporter countries of Iraq, Saudi Arabia, Kuwait, the United Arab Emirates, Venezuela, Colombia, Nigeria, Equatorial Guinea, Angola, Indonesia, and Russia. Remember that Neptune, planet of oil, is also associated with uncertainty, debt, deceit, illegal and clandestine operations. The slippery slopes of oil diplomacy are fraught with grave complexities.

The Defense Department projects a world crisis over oil between 2010 and 2020. Geologists and investment bankers see a peak in oil extraction at this time that will push per-barrel oil prices above $100. As this crisis period approaches wild financial speculation will set-in. A credit bubble, a housing bubble, and the $4 trillion U.S. international debt bubble could trigger a financial collapse of unprecedented proportions. Climatologists also warn of a devastating climate change in the 2010s. Add to this the estimated $30 trillion needed to fund Medicare past 2018 as the Baby Boom Generation continues to retire. Entrenched, old, oil thinking can not lead to a solution to these new problems. This is one reason that the American public switched control of both the House and Senate from the Republican Party to the Democratic Party in the 2006 mid-term elections. Whether the Democrats can come up with a viable plan of energy relief is questionable. Certainly, American ingenuity is on the rise. More and more states, local governments, and enterprising corporations are developing alternative fuels. Oil as the fuel of choice is meeting its end. It is only a matter of time.

The Federal government will be forced to continue to depreciate the dollar and allow inflation to dismiss much of its huge debt. But such a move would lead Asia and others to dump much of their holdings in Treasury debt. This would further weaken the dollar and make oil that much more expensive. Washington has kept interest rates as low as it can to make the payment on the debt affordable. Low interest rates have also helped the housing market and the financial services industry – albeit with the nasty consequence of creating soaring credit and mortgage debt for most Americans. Economists have worked up models of what would possibly happen if the Chinese central bank sold vast quantities of its dollar reserves or merely decided to purchase half of U.S. Treasury debt. If Japan, Britain, Canada, Germany, Mexico, Russia, South Korea, and others, who each own huge amounts of our debt, would follow suit, the financial balancing act would tilt. OPEC members between 2001 and 2004 have already dropped their share of dollar reserves from 75% to 61.5%. Iran and Venezuela decided not to hold many dollars due to their differences with Washington. OPEC preferred a more diversified array of currency investments considering that the European Union was the Middle East producers’ biggest customer. EU currency has risen as a result although oil is still being traded in dollars. By 2004 and 2005 other proposals were being discussed by OPEC. One was to establish a Middle East regional currency (the gold dinar), or using the Acu (Asian currency unit) supported by the Japanese yen. Fortunately, the Federal Reserve Board raised interest rates and stole the wind from these ploys to undermine the dollar’s influence.

Japan, China, Taiwan, and South Korea have been rapidly gobbling up U.S. debt and accumulating dollars in the giant trade deficit. OPEC received the greenback ion payment for oil exports, while these Asian nations collected them from cheap exported trade goods. These nations are our allies under U.S. military protection. So a plot to erode the American economy is not in their interest. This can not be said for China, Iran, Russia, Syria, Venezuela, and a host of other countries. The looming financial crisis over oil prices and the national debt has not been overlooked by major American corporations. Corporate America has been stashing big piles of cash. Liquid assets increased by 20% from 2003 to June 2004 according to reports by the Federal Reserve Board. This accounts for about 10% of the total U.S. economy! Much of this money was invested overseas and in tax havens to avoid paying the 35% tax to bring them home. Enticements of a 5.25% profit tax to bring the money back before the end of 2005 were made by the government.

In the end-all, should a credit and financial collapse in the United States occur, stock and home prices would fall together. Credit would be harder to secure and, thus, the massive consumer debt would bankrupt hundreds of thousands, millions perhaps, of people. In light of the westward drift of nation states leading the world, there is little doubt as to the next dominant nation. The manufacturing and credit market rise of Asia – China being the number one U.S. creditor - make China, possibly in the 2030’s, the next to become the world economic power. The only way America can hold its leadership position is to hold power in oil producing areas and transportation lines. An estimated 30 to 35% of world energy will come from natural gas by the 2020s. That puts the major gas producers of Qatar, Iran, Turkmenistan, Russia, Venezuela, and North Africa in a position of great strength. Alliances, overthrows, or war will be necessary to secure our financial future in the face of these realities.
Goldman Sachs predicted that China would pass Japan in GDP by 2015 and would overtake the United States by 2040. The Hong Kong and Shanghai Banking Corporation projected that China would overtake the U.S. by 2034. China is consuming vast quantities of raw materials – from precious metals, half the world’s cement, and on-third the world’s steel. The Economic Strategy Institute for Washington estimated that China’s domestic purchasing power, its Gross Domestic Product, could rival America’s by 2025. China has the world’s biggest market for cell phones and the second largest for personal computers. China has a savings rate of 43% - overall the U.S. savings rate is next to nothing. More foreign investment is also rolling into China than into the United States. And remember, China has a long history of technological talent: the invention of gunpowder, rocketry, wheel-barrows, cast iron, compasses, paddle-wheel boats, block-printing, stirrups, paper-making, and mechanical clocks. Their number of engineers is expected to exceed ours by 2010. So a wave of more innovations is likely to come in the very near future from China and not from the United States. All this together means that the 2010s and 2020s are likely to witness the next major shift in international power centers and, perhaps given the possibility of new wars, redistribution of territories and resources.
China has been clamping down on its rapidly expanding industries to prevent the economy from becoming over-heated if supply greatly exceeds demand. The government has also raised interest’s rates to control inflation. Car manufactures from around the world have factories in China. A financial crisis there could easily imperil the world’s financial markets.

The United States also has some concerns about the military expansion in China. Beijing has spent heavily in recent years on adding submarines, missiles, fighter planes, and other high-tech weapons to its arsenal. The 2.3 million-member People’s Liberation Army, the world’s largest fighting force, has been extending its reach in the past several years. This is the probable reason why Japan is bolstering its military, stimulating nationalism, and discussing changing the constitution to allow for the production of nuclear weapons. To counter China’s military expansion, U.S. law-makers reached an agreement on December 7, 2006 on allowing shipments of civilian nuclear fuel to India. The bill creates an exemption in American law to allow U.S. civilian nuclear trade with India in exchange for Indian safeguards and inspections at its 14 civilian nuclear plants; eight military plants remain off-limits to surveillance. The Bush administration hopes that India’s expanded nuclear arsenal would help stop nuclear programs in Iran and North Korea while being a buttress to China. India is a democracy and ally of the U.S. but New Delhi has rejected the nuclear nonproliferation treaty. An arms race appears in the making supported by vast economic incentives for the United States. American companies stand to make substantial gains, from investments in real estate to selling soybean oil and fighter planes to India’s huge market. Wal-Mart recently announced its entry into the Indian retail market. And Boeing has an $11 billion contract for 68 commercial airplanes for India’s airline industry.

Federal government estimates cite the period around 2010 as the earliest beginning of a run-up in oil prices and world instability. Looking to the U.S. natal chart for answers to this timing question is revealing. The transit of Uranus, Neptune, and Pluto to Mars in the U.S. horoscope has been a relatively accurate gauge of America’s wars. I have written extensively about American engagements in my book Earth Changes. Although more accurate indicators for war exist, aspects to Mars do time a number of war periods rather closely: The Revolution from 1776-1783 (Mars aspect in 1779 and 1780); the navy and military build-up in 1794 and 1799 in response to French raids on American shipping (Mars 1798-1799); the War of 1812-1814, the defeat of the Creeks by Andrew Jackson in 1814, and the First Seminole War of 1817 (Mars 1814, 15, 16, 18, and 19). The Black Hawk War in 1832 that pitted the U.S. government against the Sac and Fox tribes of western Illinois is missed by a Mars aspect. The bitter and, arguably, the most difficult and costly of all Indian wars, The Second Seminole War of 1835-1842 is timed rather well by the Mars aspect of 1841; and the Mexican War of 1846-1847 followed. The army fought an estimated twenty-two Indian wars during the 1850’s out west (Mars 1857-1858). The Civil War 1861-1865 (Mars 1863-1864). The first naval expansion after the Civil War began in 1882 (Mars 1882-1883). America was on the verge of becoming a world power and belief was that a strong navy was necessary to insure her expanding interests. The numerous Indian engagements after 1866 culminated in the slaughter of Custer in 1876 and the surrender of the Sioux in 1877. The last Indians to concede defeat were the Apaches. One of their ablest chiefs, Cochise, surrendered in 1872 but other chiefs, notably Geronimo, did not do so until 1886. The last tragic battle was fought in 1890 at Wounded Knee. The Mars aspects of 1882 and 1883 fall close to the middle of the Western Indian Wars. The Spanish-American War of 1898 is precisely timed by the Mars aspects of 1897 and 1898. The war with Spain allowed the United States to proclaim possession of the Philippines in January 1899, but insurgents continued a guerrilla war until the summer of 1902 (Mars 1902). The navy was modernized after the Spanish-American War and soon found itself checking Japanese expansionism in 1905 (Mars 1904-1906) after the Russo-Japanese War. The excursion into Mexico in 1916 to punish Pancho Villa revolutionaries who had been raiding American towns along the border was a small engagement and is not signaled by a Mars aspect. Surprisingly, neither is World War I 1917-1918. The nearest Mars aspect takes place in 1924 and 1925 – more in keeping with the gangster era. But World War II is clearly defined by the 1938-1939 Mars aspect. The subsequent beginning of the long Cold War that first culminated during the Korean War 1950 is shown by the Mars aspects of 1946 and 1947. Vietnam was next 1964-1975 (Mars 1966-1968). The Iran-Iraq War 1980-1988 led to our clandestine involvement in the Middle East (Mars 1980 and 1986). This latter Mars date marks the political intrigue that resulted in the First Gulf War of 1991. The seminal 9-11-2001 terrorist attack led to the invasion of Afghanistan, a war that is not completely over, is not clearly marked by a Mars aspect; and yet, this engagement is tied to the Second Gulf War to topple Saddam Hussein that started in 2003 (Mars peaking first in January 2004). More Mars aspects occur in 2008 and 2009. These could signal the ongoing insurgencies in Afghanistan and Iraq, or an additional confrontation with Iran, Syria, North Korea, African or South American rouge nations. More is to come near 2021 and 2022. I suspect that this will involve a foreign nation since the transit to Mars is Neptune. Neptune transits to Mars have all involved foreign or self-governing (American Indian) peoples.

The 2008-2009 aspects to Mars signal an ongoing struggle in the Middle East, possibly involving yet another country or two. If, as Osama bin Laden hoped would happen, the war on terrorism lasts long enough the United States will be worn down militarily and economically. The U.S. military as an oil-defense force may be required to remain in oil sensitive locations – the Middle East, the Caucasus, and west Africa - for several decades. Oil will not be the only concern for the military because water and climate induced resource wars could spring up around the globe. A big war like the Thirty Years War, the wars of 1688-1713, the Seven Years War, the French Revolution and Napoleonic wars, World War I & II have each redefined world leaders and national boundaries. Such an Armageddon that might cripple the United States and elevate Asia to international prominence is possible, but more likely regional resource wars and continued terrorism will pull the U.S. down. The debt crisis in America has put American families, corporations, and the Federal government in a “catch-22” situation. If oil prices and inflationary pressures escalate rapidly, the price of commodities will skyrocket. The economy would likely falter but not fail as a result. If leading countries exchange the dollar for the euro or another currency, essentially begin investing in rival economies and not U.S. bonds, then a financial collapse is likely. The soonest for a series of events leading to this scenario to occur is 2010 according to Federal government intelligence.

Let us now take closer look at the most significant astrological indicators near 2010. First I want to say that I foresee many hopeful signs for the near future. Eventually though, I believe that a series of economic, environmental, and political-military blows will cripple America’s role as world leader. The U.S., due to her strong Mars of war, individual initiative, and industry, is destined to be a strong country. But we are literally “melting into the world” as foreign investors continue to buy American assets. Our history prior to 1890, and for brief periods during the 20th century, has shown that the American people value independence over foreign entanglements. Long wars, for instance, have been unpopular. This trend toward U.S. unilateralism will likely return as a war-weary nation turns inward to heal her financial wounds. Our global ambitions will remain primarily financial and resource oriented in the years ahead.
The planetary cycles to the U.S. chart during the coming years are unusual and dramatic. They are not, however, wholly unfavorable. In fact, many of the planetary signs point to economic growth, a restructuring of policy, and resurgence in the American principles that have made our nation great. The near future – centering on late 2009 through 2015 - could be a watershed moment that determines the future of the country. If oil peaks in the next decade as expected, sources of oil must be secured and new technology developed to tap and exploit existing natural oil, gas, and coal reserves. Increasing the number of nuclear plants and developing alternative fuels will also need to be done. Probable climate changes, natural disasters, and epidemics will need to be prepared for in advance. Although these challenges are surmountable, it will take the will of the American people to make government responsible. Corporations, by and large, are only interested in making money. They and a cadre of mega-wealthy individuals have been influencing politicians since the get-go – with an emphasis on special international interests since about 1890. The people must rise to the occasion and with a united voice help bring about necessary changes. This, I believe, will happen in 2008 when the Moon (the public) is being aspected in the U.S. chart. A revolution of innovation and individual initiatives that started with Uranus squaring natal Uranus in the U.S. Declaration of Independence chart in 2005 has provided some alternative plans for energy renewal/independence, local and state preparations for terrorist attacks, pandemics, and the like, and a call for a change in the policy direction in the Iraq quagmire. Social displeasure with the Middle East wars will force a significant cut-back of troop levels in 2008; this could even be signaling the complete withdrawal of all but a contingent force of advisers and others protecting key government installations and oil networks. The insurgency war will still be going on in 2008 but the public outcry for the Iraqi government to take over enforcement of their country will overrule what the military, oil companies, and bind-the-scene players have to say.

Peace may come in 2009 – for us at least. The Iraqi government might try a different tactic and be successful in regaining the upper hand against insurgents and warlords within the country. This would both please the American public and lead to a period of prosperity indicated by a strong aspect to Venus in the U.S. chart at this time. The resulting peace negotiations, prosperity, growth in commerce and investment that should begin in late 2009 are likely to reach a peak in 2011 and 2012. The president elected in 2012 will lead the nation in a spectacular way in 2014 and 2015 saving the day against the ravages of debt, high fuel prices, and foreign entanglements. The critical years of economic distress, terrorism, high fuel prices, unprecedented natural disasters and a demise of American leadership will begin slowly in 2017 and intensify in 2018. 2020-2024, centering around 2022, are in my estimation the most critical and dangerous for the U.S. and our oil/commerce entanglements worldwide.

Economically speaking, many prominent investment gurus anticipate a huge stock market run-up followed by a world-wide recession. My research into U.S. stock prices involving sunspots, and combined Jupiter-Saturn and Mars-Jupiter aspects point to a continuation of the current bull market through 2007. But a sharp, nasty correction is quite possible near August. The next 4-year low in U.S. stock prices will most likely be in 2008 when sunspots first go above 50 on average per month. [Note: a warning will be posted on my website astrobill.com when sunspots first go above 50 signally the next 4-year stock market bottom.] January 2009 is the next Mars/Jupiter and Jupiter/Saturn aspect signally a market bottom. Sunspots are not predicted to rise above 50 in 2007 so chances are 2008 or 2009 – close to January 2009 - the market will turn south. Whether or not this is the much talked about world-recession or not is hard to say at present. But near August 2010 and April 2011 another critical period will be at hand. Planetary cycles to the U.S. chart are rather promising at this point so, perhaps, this is the really big stock market and financial run-up as the “Baby Boom” generation retires in mass. A world recession could then follow affecting the United States near October 2012 or July 2013.

The numerous financial Venus and Jupiter cycles in the U.S. beginning in 2009 and continuing through early 2013 are indicative of important economic developments - the great boom of the decade, or incredible government and business efforts to restructure the economy while holding the world together in peace.

The importance of the next decade, especially in the first few years, is clearly illuminated by the Sun. Sunspots are next expected to peak in 2011 or 2012. Sunspots are vigorous solar storms that send electromagnetic particles hurling through space that interfere with electrical transmissions and cause human and all living things unrest. The number of sunspots and the severity of solar storms associated with this cycle already appear similar to other long-term ones. This natural 11-year cycle can be tied to a much longer cycle of 60 repetitions – about 660 years. We may also be nearing a new 1,000 year cycle in elevated sunspots. These long-waves may be alluded to in the New Testament Bible and may give timing to the Israel-Palestine dilemma. Luke 21:5-7, 20, 24-25 reads, “Some of his disciples were remarking about how the temple was adorned with beautiful stones…But Jesus said, “As for what you see here, time will come when not one stone will be left on another; every one of them will be thrown down.” “Teacher, when will these things happen? And what will be the sign that they are about to take place?” “When you see Jerusalem being surrounded by armies, you will know that its desolation is near…They will fall by the sword and will be taken as prisoners to all the nations. Jerusalem will be trampled on by the Gentiles until the times of the Gentiles are fulfilled. There will be signs in the sun, moon and starts…”

Most calculations date the crucifixion of Christ 28-30 AD. This places his birth around 3-5 BC., although certain convincing astrological signs appear in 7 BC as well. At any rate, Jerusalem and the holy Temple were destroyed in 70 AD as Jesus had prophesied. The remains of the temple were “trampled on” again 60 sunspot cycles after 30 AD, the Dome of the Rock being erected in 687 to 691 AD. Jesus predicted that the Gentiles would again persecute the Jews in a big way. This occurred 660 years later throughout Europe during one of the worst plagues in all of history (1347-1351). 660 more years brings us to the present – 2007-2011. Surrounded by enemies, Israel and her main supporting ally the United States, face unprecedented challenges in the great struggle over oil, religious beliefs, and policy in the Middle East. Iran’s leader has repeatedly called for the complete destruction of the Israeli state along the lines of the demise of the Soviet Union. Iran’s blustering rhetoric and daring race to build nuclear reactors to generate electricity and atomic-bomb grade by-products put it at odds with Israel, the United States, NATO, and other allies. Unfortunately, Iran has many Muslim allies of her own. The stage for Armageddon is being set.

The Jews were tested from 30 AD though 70 AD. This was the last time the Jews had possession of Jerusalem until 1967 – 2007 when they again are in control of the ancient holy city. If the United States is driven from the Middle East, the Jews could once again lose Jerusalem. Compromise and agreement with her Muslim neighbors could cede much of Jerusalem back to Islamic rule. But this is unlikely based on the past behavior of both Jewish and Muslim peoples. A critical juncture, then, appears to be forming between 2007 and 2012. The next Sunspot peak due around 2012 is likely to cause, or at least be an indicator of, increased volcanoes, earthquakes, tsunamis (“the roaring seas” mentioned in the Bible), intense storm fronts, electromagnetic disturbances, and a rise in warfare.

In my book Earth Changes book in the War and Peace chapter the Cyclical Index accurately illustrates the ups and downs of war for many centuries. Here is a quote from page 72, “The War on Terrorism begins in 2001 during a low in the 4th harmonic chart. The Taliban regime controlling Afghanistan quickly succumbs to heavy U.S. bombing and moderate ground support, withy much help from allied Afghan forces. The war then progresses to other fronts like fighting insurgents in the Philippines. The Cyclic Index moves up from the 2000 low, pointing to relative peaceful conditions until late 2002-2003. The greatest level of hostilities in the first decade of the 21st Century, however, will come as a double-whammy: 2006-2007 and 2009-2011. The period 2019-2021 is particularly troublesome looking.” These predictions dovetail well with what has been said thus far in this article.

Expect, then, inflation to rise dramatically in the years just ahead. Maintaining a military presence in Afghanistan, Iraq, and other nations in the region will be necessary well into the very violent periods of 2040-2045. Food, water, and resource shortages are likely to cause or exacerbate regional conflicts. The Israeli-Palestinian or Muslim problem will remain as a flashpoint as will the nuclear ambitions of North Korea and rogue states in Africa, South America, and Asia who are hostile to U.S. driven globalism. Communist China and unpredictable Russia will also play decisive roles in the years ahead. The European Union, a united Europe once again, makes the stakes for a realignment of geo-political power in the next two decades. As these various cycles unfold, more commentary will be necessary. Please refer to my website for important updates. This is, your astrologer, Bill Hansen – blessings to you all.