Brave New World Economy

An engaging look at the road to a sustained economic recovery

The global finance system can be regulated to prevent massive credit fraud, tame capitalism, confront the sovereign debt crisis, and move towards investing in the real economy and full employment. "Obamanomics", and American reinvention can lead to a sustained economic recovery but only together with major domestic, European, and global monetary reforms in cooperation with emerging nations.

For decades, the U.S. dollar has served as the world's reserve currency. But after the global market meltdown and the resulting massive stimulus spending meant to keep the Great Recession from becoming an even Greater Depression, confidence in America's ability to make good on its growing debt is at all-time lows. In Brave New World Economy: Global Finance Threatens Our Future, Wilhelm Hankel and Robert Isaak—two extremely controversial, yet highly respected experts on international economics and management—describe how "Obamanomics," the Euro crisis, and shift of economic growth from the West to emerging economies, if handled properly, can lead to true economic stability and job creation.

• Highlights America's 'Great Bluff' bail-out strategy to cope with the crisis and the reforms Obamanomics must make to bring about sustainable job recovery
• Describes the risks and rewards of borrowing from future generations—in the United States, Europe, and the developing world—to save the current generation
• Details how money became separated from government control and why the interbanking credit system threatens western nations with bankruptcy, undermining pensions, and the human right to work
• Points out why nation-states need to go back to helping themselves and not rely on the false promises of regional integration and globalization
• Shows how legalizing underground labor will create more jobs

How we arrived at this economic crossroads isn't as important as the decision as to which path to take. The Brave New World Economy points us in the right direction.

Preface.

Manifesto Democratization of Capitalism.

Rescue the Right to Work in Aging Societies.

Legalize Black Market Labor.

Defuse the Ticking Time Bombs of the Welfare State.

Enroll 100 Percent of the Population in Pensions.

Reduce State Indebtedness.

Look for New Answers to Old Problems.

Subsidize Start-Ups in Disadvantaged Regions.

The Mandate of the Democratic, Constitutional Welfare State: Stability, Reliability, Prosperity.

Chapter 1 Midas Reveals How to Create Money through Credit Fraud.

Does Progress in Developing Money Equal Progress in the World Economy?

The State as Accomplice or Controller of the Money Economy, or Both?

The Illusory World of Finance and the Fictional Capital of Banks.

Will Yesterday’s Recipes Help Us Today?

The Finance Sector Always Underestimates the Risks of Its Innovations.

Four Fatal Innovations of Global Banking.

Essential Reforms.

Four Conclusions from the Financial Crisis.

Keynes, Properly Understood

Chapter 2 The Great Bluff: The American Way out of the Crisis.

A Brief Tour of How We Got Here.

How American Globalization Revolutionized Finance.

Wanted: An Emperor with Clothes.

How Goldman Sachs Milked Bubble Trouble.

Origins of the Financial Crisis.

The Lost Lessons of Long-Term Capital Management.

The Government Intervenes; Investors Panic.

Obamanomics: Exploiting Crisis, Postponing Costs.

The Debt Culture versus Hoarding and Investing.

Austerity versus Stimulus: The Trillion-Dollar Gap.

Recasting the United States: Domestic Dynamism with Responsibility.

Chapter 3 Giant with Feet of Clay: The European Union.

What Services Has the EU Rendered?

The Euro: Not Dynamic but Dynamite.

Is the European Union on Its Way to Becoming a Nation-State?

Do EU Institutions Induce Constitutional Infidelity?

Can the Euro Survive?

The Three Unknowns of the Current Bailout of the Euro.

The Next Financial Adventure: A European State Bankruptcy Law.

What Comes after the Euro?

The Future of the EU: The Swiss Model.

Currency "Concubinage": The Currency Has to Serve the Citizen, Not the Citizen the Currency.

Chapter 4 The New New World: Can BRICs Save the Rich?

Mimicking Past Economic Miracles.

The Rise of the BRICs.

Characteristics of the New New World.

Legitimacy Lost.

Decoupling and Demographics.

One BRIC at a Time.

Debt versus Investment and Savings in BRICs.

The Group of 20 and Global Imbalances.

The Roadmap to the New World Economy Has Changed.

Chapter 5 Time for a New Bretton Woods: Crisis Prevention through Monetary Law.

What Caused Bretton Woods to Fail?

"Floating"Exchange Rates: A Compelling End?

Living in the "Nonsystem"of Post–Bretton Woods.

Keynes with a New Feature: Real (Not Nominal) Fixed Exchange Rates.

Chapter 6 Toward a Brave New World Economy: Reducing Debt and Unemployment.

The World Economy and Nation: States Are a System of Communicating Pipes.

Democracy Begins and Works at Home.

Pillars of Stability and Self-Healing Therapies of Modern Society.

From "Underground"Work to Lifelong "Retooling".

The Old-Age Pension Dilemma.

The Dilemma of the Overindebted State.

What Can Be Done?

The Three Megatrends of the Global Economy of Tomorrow.

Epilogue Faust and Mephisto on the World-Money Stage.

From Paper Gold to Paper Paper.

The Narrow Middle Lane of Successful Capitalism.

From Gold to the G-20.

Invitation.

Notes.

Bibliography.

About the Authors.

Index.

"... provides an original and thoughtful angel of analysis... a must-read!" (UK-Analyst.com, July 2011)

"... this abrasive book points out why nation-states need to go back to looking after No1... a surprisingly upbeat read." (Ethical Corporation Magazine, April 2011) Wilhelm Hankel is former Director of the German Economic Finance Ministry, Department of Money and Credit. An internationaleconomist and consultant to centralbanks, his creative theories of money and the global economy, as well as his proven fixesfor stalemated political economies, are illustrated throughout fourteen books.

Robert Isaak is a political economist and the Henry George Professor of International Management at Pace University, in New York. A consultant to businesses such as Siemens and Prudential Intercultural, he has taught at Johns Hopkins SAIS, and New York University, and has been a guest professor of international management at the University of Mannheim, Heidelberg University, the University of Grenoble, and SKEMA Business School, in France. He has authored eleven books on political economy.

Democratic capitalism, one of the greatest civilizing forces known to man, has been pushed to the edge of a precipice. A brave new world economy, one not in thrall to a runaway interbank credit system, is struggling to be born, and only the actions of world policymakers, working in concert to make the hard choices, can bring it into being.

Written by an international monetary expert and a global political economist, Brave New World Economy offers an unvarnished look at the serious problemsfacing us. The authors persuasively argue that theWest's long experiment in global laissez-faire capitalism has hit a dead end. Rather than serving its original function as an engine of real economic growth and innovation, digital age global finance has become a 24/7 wealth extraction machine siphoning off the capital and productive capacity of Main Street. If left to its own devices, it will self-destruct, taking the global economy down with it.

Brave New World Economy goes beyond the usual post mortems. Nor do the authors indulge in moral finger pointing. Rather, they offer a clear set of practical steps and guiding principles for taming global finance and restoring it to its vital role as driver of economic growth and entrepreneurialinnovation. These include:

• Establishing national development banks to foster entrepreneurial innovation and smallbusiness growth
• Freeing the U.S. dollar from its role as global reserve currency
• A new Bretton Woods agreement with the BRICs playing a central role
• Creating a nation-neutral "inside-money,"along the lines of Keynes's "bancor," for regulating central bank transfers
• Eliminating the euro and restoring national currencies
• Legalizing the "black market" economy
• Requiring the wealthy to pay into Social Security on a proportional basis
• Raising the age of retirement and promoting the human right to work for adults of every age

Does the future hold a brave new world of economic growth and prosperity for all, or an ever-downward spiral of economic crisis? Brave New World Economy points the way; the rest is up to us.

Praise for Brave New World Economy

"This book will become a must-read for students, scholars,as well as all practitioners who want to understand the root causes ofmarket economy crises and the scope of a more stable and fair world order.This book provides an original and thoughtful angle of analysis and vividly explains why and how each of us will soon be ruined without a new governance system emerging that enables globalization to become a genuinepositive sum game in terms of both time and social horizon."
—Dr. Michel Henry Bouchet, Head, Global Finance Center, SKEMA Business School, former senior economist,The World Bank, former CEO, Owen Stanley Financial SA

"Presents compelling arguments for radical change in theworld monetary system to save our future. Includes bold and practicalrecommendations to meet current challenges of the global economyincluding the need for balance between the regulatory role of thestate for public good and the confidence of investors andentrepreneurs. Jargon free and easy to read."
—Shabbir Cheema, Director, Asia-Pacific Governance and Democracy Initiative, East-West Center

Unrestrained global finance and the massive credit crisis it has engendered threaten to end civilization as we know it. Clearly, a thorough restructuring of the monetary system and more stringent banking rules, both domestically and internationally, can salvage centuries of progress from the scrap heap of history. What steps must policymakers take to achieve a sustainable, new world economy before it's too late? Find out in Brave New World Economy.