False flags are used to stop the rise of liberty

Although this article applies mostly to North America and Europe, the truth is that the model used to bring down liberty there will soon be utilized all over the world.

By MIKE ADAMS | NATURALNEWS | JULY 25, 2012

In the tragic aftermath of the Aurora, Colorado shooting which has all the earmarks of a staged “false flag” event, a follow-up false flag now appears imminent. To be effective in achieving its political aim, it will have to be orders of magnitude larger and more deadly than what took place in Colorado. This article is largely focused on the safety solutions for you and your family, because above all I want people to be safe. But before we get that part, let’s explore the logical reasoning behind why another false flag attack appears imminent.

For starters, the Batman movie theater shooting was obviously staged (http://www.naturalnews.com/036536_James_Holmes_shooting_false_flag.ht…).

The evidence of this includes eyewitness reports of multiple shooters, James Holmes being drugged out of his mind in court (a common tactic used against patsies), his work as a graduate student in a government-funded neuroscience program that specifically researched altered perception of time and reality, and Holmes having somehow obtained the skill set to build a highly complex maze of makeshift grenades, binary liquid explosives, intricate flammable devices, trip wires and booby traps. The attack in Aurora, Colorado was not a run-of-the-mill random violent act by a graduate student; it was a carefully planned, plotted, funded, and well-trained attack carried out for a specific purpose.

This fact is now obvious to well-informed NaturalNews readers, who, compared to the general public, tend to have far more in-depth knowledge of the way the world works. But as our stories have recently received unprecedented readership — NaturalNews.com recently surged beyond the web traffic of the BBC (source: Alexa.com) — it has unfortunately reached the “dumbed-down masses” who aren’t regular alternative news readers and therefore have very little knowledge of reality.

So for those who don’t believe any of this, simply go back to sleep and change the channel. It is not mandatory for you to understand reality in order to experience it. But for those who seek understanding and knowledge of the real forces at work in our world, keep reading.

What was the purpose of the attack?

Once you realize the attack was planned, funded and carried out for a deliberate purpose, the obvious question becomes: For what purpose was it carried out?

The answer to that question is found in many places, including the novel 1984 by George Orwell, in which the nation state is locked in a perpetual state of fabricated war in order for the government to maintain total control over its population. It is now well established that the Oklahoma City bombing was conducted for much the same purpose, as it explained in the outstanding documentary “A Noble Lie” (http://www.anoblelie.com). Do not make the mistake of thinking you know the true history of Oklahoma City unless you’ve seen this documentary. Had the Oklahoma City bombing been carried out today, during the time of the ubiquitous internet, it would have been almost instantly revealed to be a staged false flag attack. The official explanation of the event is so self-contradictory — and the cover-up so sloppy — that it only succeeded due to a mainstream media monopoly which existed at the time but has since been shattered by the rise of the alternative, independent media like NaturalNews.

The real history of the world — not the fairy tale history you were taught in government-run schools — is a history of government groups and leaders staging events to blame them on their enemies. The “false flag” tactic is so remarkably effective that it has been used since the time of the Romans and continues to this day. Anyone who does not yet realize this truth is simply ignorant of factual history. America’s public school system, of course, is run by the government itself which selectively alters accounts of history to fit its present-day political fairy tale. This altered history is also depicted in great detail in the novel 1984. (http://www.amazon.com/Nineteen-Eighty-Four-Centennial-Edition-George/…)

A similarly fresh look at actual history is also described in the outstanding book by the progressive author Howard Zinn entitled, “A People’s History of American Empire.” (http://www.amazon.com/A-Peoples-History-American-Empire/dp/0805087443) This book reveals the imperialist side of American history that’s almost never taught in public school. An even more interesting read, by the way, is A Patriot’s History of the United States: From Columbus’s Great Discovery to the War on Terror (http://www.amazon.com/Patriots-History-United-States-Columbuss/dp/159…). And I highly recommend “Confessions of an Economic Hit Man” by John Perkins (http://www.amazon.com/Confessions-Economic-Hit-John-Perkins/dp/045228…) as well as “The Secret History of the American Empire,” also by Perkins (http://www.amazon.com/The-Secret-History-American-Empire/dp/045228957…).

What we learn from the open-minded study of history often shatters whatever youthful illusions we may have been taught in school. As it turns out, individuals in government who insatiably seek power are not just cruel and inhumane; they’re often sociopathic. They have a disease, and that disease makes them think they can create a perfect world if everybody else would simply do as they’re told. This disease quickly festers into tyranny; and tyranny into genocide.

Once this disease takes hold of their minds — as it routinely does with Senators, Presidents, dictators and others who incessantly seek power — there is absolutely nothing they won’t do in order to feed their desire for yet more power. Tactics used by these tyrants throughout the history of the world include stuffing ballot boxes, conducting assassinations, blackmailing enemies and of course staging false flag attacks to justify an expansion of power. See Operation Northwoods for an open admission that the U.S. government carefully plotted, planned and was about to carry out its own false flag terror attack in order to justify war: http://en.wikipedia.org/wiki/Operation_Northwoods

The real question to ask yourself in all this is, historically speaking, how did the 9/11 attacks help President Bush, for example? If you recall, he used the tragedy to boost his own ratings in the polls to an astonishing 80% support level, then staged a “heroic bull-horning event” by climbing a heap of rubble and ground zero and delivering a supposedly impromptu — but actually well prepared — speech that helped lay the groundwork for the liberty-crushing Patriot Act that still haunts the ghost of a free America to this day.

President Clinton reportedly credited the Oklahoma City bombings for strengthening his reelection in 1996. One well-placed bomb, it seems, can alter the fortunes of major political players. Never mind the fact that, in retrospect, all the evidence available today clearly and irrefutably points to the event having been staged by rogue elements within the U.S. government itself. Again, see the film “A Noble Lie” for a full review of the stunning evidence.

Similarly, President Reagan has the staged embassy hostage crisis in 1980 to thank for his victory over President Carter. Those hostages were released the very same day Reagan was sworn in as President. “The hostages were formally released into United States custody the following day, just minutes after the new American president Ronald Reagan was sworn into office,” reports Wikipedia. (http://en.wikipedia.org/wiki/Iran_hostage_crisis)

The point of all this is that crisis always concentrates power into the hands of the government. Therefore, staging crisis accelerates that concentration of power. Because power is what all ambitious government operatives ultimately seek, this is the primary purpose of staging a false flag attack in the first place.

The lower Obama gets in the polls, the greater the risk of a large-scale staged event

If Obama were high in the polls right now, with no risk of losing his re-election bid in November, the risk of a large-scale false flag attack in the months ahead would be minimal. It is the risk of him losing the election that creates the high risk of a false flag operation. Curiously, Obama himself may have absolutely no knowledge of any of this.

Most likely, the kind of dirty work that results in false flag attacks is carried out by “handlers” and unelected power brokers who control much of what transpires on the world stage. As long as these power brokers see Obama’s second term as a positive thing for shoring up their global control, they will pull out all the stops to make sure he gets reelected, including (but not limited to) staging a false flag event that Obama himself may not even be aware of until the last minute. It’s easier for his reaction to the tragedy to appear sufficiently authentic, after all, if he’s actually not in the loop.

Why the next false flag may be orders of magnitude larger

If the Aurora Colorado shooting was just a warm-up, a truly paradigm-altering false flag event would have to be something orders of magnitude larger and more horrifying. To really tip the scales in favor of total government control and the complete annihilation of all remaining liberties in America, a truly massive event would have to be staged (or allowed to transpire) such as:

• The release of a nuclear “dirty bomb” in a major U.S. city.
• The ICBM nuking of a major U.S. city.
• Nuclear power plant sabotage leading to meltdown.
• The mass poisoning of Americans via a water supply chemical attack.
• The release of a deadly biological weapon.
• A large-scale bombing on the scale of 9/11.

For the purposes of seizing control over the nation, the more visually horrifying the attack, the better. This provides video footage that can be played over and over again on the evening news, searing into the minds of the public the visual horror of an attack which is blamed on a selected political enemy or even an entire political movement.

Because of this, you can expect the next false flag to be:

• Very large, killing not just a dozen people but thousands.

• Very bloody, for the purpose of showing such images on the news.

• Timed to support the election of whichever President the global controllers want in office. Let’s analyze this briefly:

False flag timing: Before the election or after the election?

If an attack happens before the November election, it would support Obama and help him get reelected. If Romney wins, on the other hand, and an attack happens after the election but before the inauguration, it would support Obama declaring Martial Law and seizing control of the country under emergency powers. If Romney wins and an attack happens after the inauguration in January, it would support Romney’s and make him appear heroic much like Bush in 2001. This would soon be followed by a Romney-led push for more restrictions on whatever freedoms or liberties could be conceivably tied to the attack by the mainstream (lying) media.

So the TIMING of these events tells you a wealth of information about the PURPOSE behind them. If no false flag events are witnessed between now and early 2013, it would indicate that the global controllers feel power is trending in their direction anyway and no special intervention is necessary.

False flags are used to stop the rise of liberty

False flags also tend to take place when the global controllers detect a “wave of liberty” starting to gain traction among the populace. When talk of liberty or the Bill of Rights begins to rise above the usual drone of infobabble, a false flag is often staged and then blamed on so-called “extremist” speech, which inevitably boils down to any speech that questions the credibility of Big Government. If you listen carefully to the rhetoric of any White House, you’ll discover that “extremism” means anything that does not agree with that particular administration’s political agenda. In 1943, growing your own food and even selling fresh milk was considered an act of patriotism — victory gardens! But in 2012, selling fresh milk is considered a criminal activity associated with the “sovereign” movement which, itself, is linked to so-called “extremism.”

This, itself, should be a red alert warning that tyranny has arrived. When the simple pursuit of life, liberty and happiness is equated with extremism by the government, it’s a sign that we’ve all fallen deeper down the rabbit hole of tyranny than you might have suspected.

As further evidence of false flags being used to stifle the rise of liberty, consider this: The Oklahoma City bombing was staged just as “right wing” ideas were gaining audience share on talk radio. Regardless of whether you prefer the adrenaline jolt of Alex Jones or the hypnotic drone of NPR, the attempted blaming of Rush Limbaugh following the Oklahoma City bombing was one of the most cowardly and absurd political attempts to censor free speech that our nation has ever witnessed. We may or may not agree with Rush, but if we are true Americans, we must at least agree that the man has the right to speak his mind.

Similarly, in 2001 as the “patriot movement” was gaining steam, the 9/11 attacks turned the tables on the freedom movement and resulted in the suffocating “Patriot Act” being passed that gave the government vast new police powers for surveillance, arrest, detention and more. Never mind the fact that building 7 was never even hit by airplanes and yet was quite obviously brought down by an expert demolition team using a highly engineered maze of intricately-timed explosive charges that had to have been placed in the building weeks in advance (http://www.naturalnews.com/033684_911_truth_WTC_7.html).

Whatever next false flag event is being planned could be the final nail in the coffin for American liberty. Obama has already put in place the NDAA that denies Americans due process (http://www.naturalnews.com/034537_NDAA_Bill_of_Rights_Obama.html). He promised to never use it, but that promise will, of course, be instantly revoked once a sufficiently large attack takes place. One nuclear explosion, placed not only in the right city, but more importantly in the right narrative context via the media and government, could condemn an entire generation of Americans to suffocating under the boot of tyranny, stripped of all rights, enslaved by a dictatorial police state regime that they falsely believe is protecting them from the very terrorism it initiated.

One attack away from total surrender

Today, America is just one large false flag event away from surrendering to total government dictatorship… assuming the horrifying event can be properly blamed on the right parties — in this case, anyone who believes in the U.S. Constitution or the Bill of Rights, or even someone who is a supporter of the ACLU and the concept of “civil rights.”

In the footsteps of a sufficiently large false flag attack — something on the scale of a nuclear attack on a major U.S. city, for example — you can expect all the following to be rolled out:

• TSA on street corners, in shopping malls, movie theaters, a total police state rollout.

• Domestic units of the U.S. military running patrols, going door to door and demanding everyone’s firearms. (Already happened in New Orleans following hurricane Katrina.)

• Frequent roadside checkpoints run either by the TSA or the military, complete with bulletproof checkpoint booths, strip searches and frequent sexual molestation by TSA pedophiles and perverts. (http://www.naturalnews.com/035607_government_checkpoints_Martial_Law….)

• The activation of FEMA camps and the hustling of “economic refugees” into those camps to be starved to death or exterminated, all in secret. Watch the “lost” episode of Jesse Ventura’s “Conspiracy Theory” show on FEMA camps right here: http://tv.naturalnews.com/v.asp?v=C67234C7049D2AB2F3D897B805FEFEC2

• The abolishment of the Second Amendment and the forced confiscation — at gunpoint — of all guns from private citizens, thereby concentrating control of those guns in the hands of the government. This imbalance of power is always necessary right before governments commit mass genocide.

• Total government control over the internet. An outlawing of all online speech that criticizes the government or reports the truth about anything. Only the White House version of events (fairy tales) will be allowed. All else will be censored or shut down.

• The “secret disappearance” of journalists, activists or anyone who dares to ask legitimate questions about what’s going on.

• The inevitable rise of an underground railroad information network which seeks to expose the lies of government and the real story behind the false flag attacks.

• A massive, nationwide rollout of spy drones to surveil all Americans from the sky.

• The recruitment and deployment of at least 500,000 new “citizen spies” who work as informants for the Department of Homeland Security and are given cash rewards for calling in accusatory reports about their neighbors, family members or even their own parents. “My daddy said he didn’t like the government!” “Don’t worry, little boy, agents are on their way to make an arrest…” Watch for the rolling out of thought crimes enforcers like those depicted in the sci-fi movie Minority Report.

• The complete abolition of freedom. No home gardens, no weapons in the hands of citizens, no public protests, no banking privacy, no choice in anything that really matters. This is what’s coming if another sufficiently large false flag attack is rolled out in America.

How to protect yourself from the next false flag attack

Here’s the really important part of this article. First there is the question of how to protect yourself from the attack itself. And then, secondly, there’s the question of how to protect yourself from the rise of the police state which follows the attack.

Protecting yourself from the initial attack is fairly straightforward:

#1) Don’t live in a major U.S. city. All the likely targets are, of course, high population density areas. They include Los Angeles, Seattle, New York, Houston and Chicago. Each day that you live in a large U.S. city is a day of risk that you will be caught in a false flag attack.

#2) Have your preparedness pack ready. Make sure you cover all the basics: Stored food, water, water filters, communications, first aid, self defense and so on. (See resources, below.)

#3) Have a bug-out location ready. Whether it’s a family member’s house in the country or a cabin in the woods, have a bug-out location picked out and ready in advance. Read the book “Patriots” by James Wesley Rawles. (http://www.amazon.com/Patriots-Surviving-James-Wesley-Rawles/dp/15697…)

#3) Practice bugging out without using the major roads or highways. Remember, all major roads will either be clogged with traffic or held to a standstill due to TSA checkpoints. You’ll need an alternate route.

#4) Have radiation pills and pandemic defense pills ready. Radiation pills are, of course, KI pills (potassium iodide). “Pandemic defense pills” are, above all, high-dose vitamin D supplements but may also include upper respiratory defensive herbal tinctures such as Lomatium or star anise. Radiation detection stickers — “Rad Stickers” — are available atwww.SupplySource.com

The false flag depopulation strategy via a staged biological attack

Understand, importantly, that in the case of a biological attack, the higher the fatality of a biological weapon, the faster it burns out through the population. It would be a tactical mistake for an enemy of the People to develop and release a biological weapon with, for example, a fast-acting “98% kill rate” because its overall fatality would be low due to the fact that its carrierswould die before they could spread it to others.

The most “effective” biological weapon to deploy in terms of an enemy attack or a false flag staged attack is one with a fatality rate under five percent. This way, 95% of the population becomes “carriers” while even a five percent death rate is enough to spread mass fear and terror and therefore accomplish the desired political aim.

A biological attack is very, very easy to blame on anyone you wish. All the evidence needed to convict someone of, for example, breaking into a laboratory, stealing biological weapons samples, then releasing them in a major airport can simply be fabricated at will. We’ve all seen, for example, Forrest Gump shaking hands with President Nixon (http://www.ugo.com/tv/guide-to-green-screens-forrest-gump), even though such an event never took place. Today’s video engineering technology makes it ridiculously easy for a government to fabricate convincing evidence and thereby blame anyone they wish.

Should a biological attack actually unfold, expect to see the CDC spearheading calls for mandatory “gunpoint” vaccinations of the entire population. Anyone who resists will be condemned a “threat to public health,” arrested, quarantined and forcibly vaccines. All the vaccines, of course, will be laced with infertility chemicals or stealth viruses (http://www.naturalnews.com/033584_Dr_Maurice_Hilleman_SV40.html). This is the ultimate goal of the globalists: to get the population to voluntarily line up to be injected with what are essentially infertility chemicals and thereby remove those individuals from the future of the human gene pool.

For review, here’s how a biological false flag would likely be structured:

Development of biological weapon with under 5% mortality but high spread rate –> False flag biological weapons release –> Blame framed on convenient enemy –> Outbreak of fear multiplied by the media –> CDC calls for mandatory vaccines –> People line up for vaccines –> Vaccines are laced with stealth infertility viruses –> Population reduction goal accomplished.

Bill Gates declares history and the human gene pool collapses by 50 – 90 percent, removing from the gene pool the DNA of people who are foolish enough to follow government medical instructions. In globalist circles, this is probably referred to as “natural selection,” and they may actually be right about that point.

Learn more details about surviving any false flag attack in my course, “How to protect and defend yourself, your family and your property during the coming collapse” at: www.HealthRangerLive.com

How to protect yourself AFTER the attack

This is where things get tricky. Surviving the initial attack is relatively straightforward, but making it through the subsequent police state will be nothing short of a nightmare.

Before every revolution of liberty, it seems, there must be a period of great suffering before awakening achieves a critical mass. People don’t realize what’s going on, in other words, until the situation gets really, really bad. And usually by that time the police state tyranny is deeply entrenched and the secret arrests (or mass murders) have already begun. (Read your history, folks, if this doesn’t already ring a bell for you.)

The ultimate answer to surviving the situation after the attack is to help defend and restore liberty in your country. During that effort, surviving means laying low and avoiding direct confrontation with the oppressive government while working to restore Democracy and defend the Republic.

You cannot individually achieve victory against a tyrannical police state by using force. No one person — or even a small group of people — can out-gun the military, for example. The real victory is achieved through information that ultimately educates the masses to the point where the military refuses to support an oppressive regime; hence the name “info war” to describe the process by which victory is achieved through education and the spread of liberating information.

Becoming part of the info war, even in the form of being an advocate of the “underground information railroad,” is crucial to restoring Democracy and the Republic. The laborious process of achieving an overthrow of any given tyranny may take years of dedication and suffering. During this time, all the basic supplies you need to live will be in short supply because they will be controlled by the government: food, medicine, electricity, gasoline, heating fuel, precious metals and probably even garden seeds. A large underground economy will spring up, and people will begin to engage in new crimes such as “seed smuggling” or “selling home-grown vegetables” — both of which will be felony crimes because they express a level of freedom that the tyrannical government will not tolerate. (See the movie “Hunger Games” for a dystopian futuristic depiction of this.)

Because of this, the more you take action TODAY to store food, medicine, seeds, silver, ammo and other basic necessities (even pencils and toilet paper), the better you’ll be able to cushion yourself against the starvation, disease and destitution put in place by the government itself. Governments gone bad inevitably do this because every tyrant drives his own population into poverty in order to create vast wealth gaps between the enslaved masses and the government rulers. North Korea is perhaps the best example of this today, but other examples abound across the span of history (Stalin, Mao, Hitler, etc).

Thus, once again, your best defense against the aftermath of a false flag attack is to have street smarts about avoiding arrest and staying out of trouble while also having a hidden store of essential goods that can keep you healthy, alive and “wealthy” in the barter sense. Meanwhile, fight to protect and defend the Constitution (if you’re an American) against all enemies, both foreign and domestic. Restore liberty, resist tyranny and stay alive.

Survival nutrition

Among all the topics I cover, I have perhaps become best known as a “survival nutritionist,” meaning I specialize in survival nutrition strategies. In the Middle Ages, kings maintained power over their enslaved populations by, in part, starving them to the point of stunted growth. This is why kings, knights and royal families were physically larger and intimidating: the peons were starved into small stature while the royal families consumed an excess of calories that simply were not allowed to the working poor.

The crucial point to understand here is that if the government can separate you from real food, they can eventually control you. So one of the best defenses against tyranny is to have your own stores of highly nutritious foods – superfoods are best. As a side note, Monsanto seeks corporate control over the world’s food supply through intellectual property claims over genetically modified seeds. This, too, is a form of corporate tyranny that parallels the aims of many governments.

Importantly, getting squared away with emergency preparedness nutrition does not, in my opinion, mean rush out and buy the cheap, low-cost “survival” foods commonly sold everywhere. Most of these foods are highly processed, nutritionally depleted, laced with MSG (yeast extract) and manufactured using GMOs. The absolute best source of emergency survival nutrition is none other than sprouting seeds and a sprouting tray kit.

These are all sold at Green PolkaDot Box, a supplier of mostly organic and non-GMO foods and groceries. Their supply of sprouting seeds is perfect for emergency preparedness.

The next best thing to store is superfood powders which include several ideal brands: Boku Superfood, Living Fuel, Enerfood, Healthforce, Vega, Rejuvenate and so on. I strongly recommend only high-end brands and to avoid cheap superfoods with a lot of filler such as soy lecithin. It’s also a good idea to store high nutrient density powders such as Camu Camu powder or Pomegranate powder, both of which deliver a storehouse of disease-preventing nutrition. (Pomegranate powder is available at Green PolkaDot Box. Camu Camu powder is available at health food stores or Amazon.com.)

The emergency food miracle: chia seeds

In terms of storable nutrition, chia seeds are simply one of the best all-around solutions:

• They can be easily sprouted and consumed as living sprouts.

• They can be soaked in water and mixed with almost any other smoothie, baking recipe, salad dressings, etc.

• They’re high in omega-3 fatty acids which will be difficult to acquire during hard times.

• They have a remarkably long shelf life.

• They’re high in magnesium, a mineral that’s often difficult to acquire.

• They contain amino acids, vitamins, fiber and other valuable plant-based nutrients.

• They’re delicious and easy to use in all sorts of foods.

• They can be planted to grow more chia seeds. They grow best in hot, dry climates such as Southern California, Nevada, Utah and Arizona, but will also do well in places like Texas and Florida if well-drained soils are available.

For this reason, I’m including some chia seed sources for you below. If you’re copying this story and pasting it on your own website, feel free to snip off that section of this story (but please give a link and credit to NaturalNews).

Best storable food staples

Beyond chia seeds, some of the best storable foods for fundamental nutrition include:

• Sardines packed in olive oil. (Very high RNA, calcium, omega-3s, etc.)

• Coconut oil (very high calories, very healthy)

• Sea salt (contains essential trace minerals)

• Raw honey (stores practically forever, useful as food and medicine, antibacterial)

• Garden seeds (for growing your own food) for an organic open-pollinated survival seed selection.

• Organic raisins (good shelf life, high nutrition, portable calories)

• Quinoa (complete protein, stores for a decade, cooks with just water)

These food staples are crucial for staying alive during a time when the government may be trying to “thin the herd” through a policy of starvation and forced immune suppression. You’ll also, of course, need a source of common carbohydrates such as wheat, kamut, rice, dried fruits, and so on. Contact your local Mormon cannery for free help on getting squared away with stored foods (Mormons are, without question, the best-prepared religious group in North America). For the record, I’m not affiliated with the Mormon church or any particular church for that matter. I just know the Mormons are the best at this particular skill set.

Speculation Drives Up Food Prices Worldwide

The practice of betting on food prices as if it was gold or silver along with the use of some food staples for the production of fuels have helped plunge millions into hunger.

by Edward Miller
Global Research
October 6, 2011

The Commodity Futures Trading Commission (CFTC) has again delayed the introduction of position limits required under the Dodd-Frank Act. These limits are intended to prevent speculation in (among other things) agricultural commodities, speculation which, many critics argue, have driven up the price of food worldwide and plunged millions into hunger.

>In late 2006, the price of food and other commodities began rising precipitately, continuing throughout 2007 and peaking in 2008. Millions were cast below the poverty line and food riots erupted across the developing world, from Haiti to Mozambique. While analysts initially framed the crisis in terms of market fundamentals (such as rising population, increased demand for resource-intensive food, declining stockpiles, biofuel and agricultural subsidies, and crop shortfalls from natural disasters), a growing number of experts have tied the massive spikes to financial intermediation. As economist Jayati Ghosh explains:

“It is now quite widely acknowledged that financial speculation was the major factor behind the sharp price rise of many primary commodities , including agricultural items over the past year … Even recent research from the World Bank (Bafis and Haniotis 2010) recognizes the role played by the “financialisation of commodities” in the price surges and declines, and notes that price variability has overwhelmed price trends for important commodities.”

Trading Regulation for Financialisation

This kind of speculation was made possible by deregulation in the US financial sector, in particular the Commodity Futures Modernization Act 2000 (CFMA), exempting commodity futures trading from regulatory oversight. Crucially for our narrative, this removed limits on the number of contracts that could be held at any one time (called position limits) from the equation. Firms like Goldman Sachs, Morgan Stanley and Barclays began developing index funds (collective investment schemes) based on these commodities, specializing in buying futures contracts in the belief that the future price will be higher than the present price. Journalist Fred Kaufman eloquently stated this in his Harpers article ‘The Food Bubble’:

“Goldman Sachs envisioned a new form of commodities investment, a product for investors who had no taste for the complexities of corn or soy or wheat, no interest in weather and weevils, and no desire for getting into and out of shorts and longs – investors who wanted nothing more than to park a great deal of money somewhere, then sit back and watch that pile grow.”

All manner of institutional investors began dumping capital into these funds, driving prices, and profits, through the roof:

“As the global financial system became fragile with the continuing implosion of the US housing finance market, large investor, especially institutional investors such as hedge funds and pension funds and even banks, searched for other avenues of investment to find new sources for profit. Commodity speculation increasingly emerged as an important area for such financial investment.”

Traditionally, futures contracts play an important role in price discovery, reducing the price risk of the commodity itself. However without a limit to the number of commodity futures contracts that could be held, investors were able to withhold huge amounts of food from entering the market. When combined with the real supply and demand factors mentioned above, this spelt volatile price spikes; between 2005 and 2008 the price of maize nearly tripled, wheat prices increased by 127%, and rice by 170%. Throughout the crisis, at least 40 million people went driven into hunger, and the number of people driven into extreme poverty rose from 130 to 150 million.

And worse, this speculation wasn’t limited to the 2007-2008 period. While commodity prices fell again in 2009, the latter half of 2010 saw them again skyrocket, reaching an all-time high at the end of that year, and remaining high into this year. Today, over a billion people remain hungry, while wealthy investors continue to reap huge profits by gambling on the stomachs of the world’s most vulnerable.

Dodd-Frank Reform

Following the global financial crisis, Representative Barney Frank and the Chairman of the Senate Banking Committee Chris Dodd proposed legislation to boost US financial stability. The Dodd-Frank Act provided sweeping financial reforms to the US financial sector, including reforms to commodity futures regulation. Section 737 (4) requires the CFTC to ‘establish limits on the amount of positions, as appropriate, other than bona fide hedge position, that may be held by any person with respect to contracts of sale for future delivery or with respect to options on the contracts or commodities traded on or subject to the rules of a designated contract market.’ These limits should, ‘to the maximum extent practicable … diminish, eliminate, or prevent excessive speculation … [and] deter and prevent market manipulation, squeezes and corners…”.

So far so good right, problem solved? Think again. The legislation provided a 270-day window in which position limits were to be put in place, meaning that by the 17th of April this year, this problem should have been solved, or, at the very least, ameliorated. However that date came and went, and the CFTC failed to reach agreement. A new date was set for the 4th of October, however that date also came and went with no further advance. CFTC Chairman Gary Gensler responded, saying “We’re not trying to do this against a clock. We’re trying to do this in a way that gets it right. So a few more weeks is a small thing for us to be concerned with if we’re going to get it thought through in a better way.” The rules have now been delayed until October 18.

The Speculators Fight Back

The CFTC isn’t so much concerned with world hunger as its reason for regulating commodity futures, and has hardly addressed the issue in public statements. However futures trading also affects other commodities such as oil, gold and silver, all of which have risen sharply over the past few years. Robert Pollin and James Heintz of the Political Economy Research Institute at the University of Massachusetts calculate that,

“…the average US consumer paid a 83-cent-per-gallon premium in May for their gasoline purchases due to the huge rise in the speculative futures market for oil. Considering the US economy as a whole, this translates into a speculation premium of over $1 billion for May alone. Of the May price were to hold for a year, that would mean that the speculative premium would total $12 billion.”

The price of oil seems to be the CFTC’s main focus regarding position limits. And its something that is hotly contested, as speculative investors recoil in horror at the idea of their profit blade being diminished. Their effect is indeed being felt, as Reuters reported in mid-September that internal strife at the CFTC had slowed the progress of the position limits rule, and they were struggling to harmonise it with other regulations required under Dodd-Frank.

Leaked documents give us a picture of what the final regulation might look like. The CFTC has proposed a limit of 25% of the deliverable supply of the underlying commodity, a pitifully weak threshold that would allow four financial entities to dominate an entire commodity market. Indeed these limits might even encourage speculation, while other proposed rules would allow companies to avoid aggregating positions in different trading accounts, provided accounts are independently controlled and firewalls are imposed between trading desks. This would be very difficult to regulate, and provides banks with a set of loopholes big enough to drive a Wall Street bailout or bonus through. Traders who exceed futures limits would also be able to use swaps (derivatives that allows parties to exchange benefits of their respective financial instruments) to reduce their net position.

Asleep at the Wheel? Let’s see who’s driving…

Still, it should come as no real surprise that the limits being toyed with by the CFTC fail to address the problem of excessive speculation. CFTC Chairman Gary Gensler himself spent 18 years at Goldman Sachs, had made partner by the time he was 30, and eventually became the company’s co-head of finance. He subsequently worked as the undersecretary for domestic finance at the Treasury Department during the Clinton era, during which time he advocated the passage of the CFMA mentioned above. Commissioner Jill E Sommers also worked closely with congressional staff on the drafting of the CFMA, while another Comissioner, Scott D O’Malia, lobbied for the repeal of the Public Utility Holding Company Act, legislation that was directed at curbing speculation by energy and water utilities.

These viewpoints dominate the CFTC, and they represent the extent of regulatory capture that the finance industry holds over Washington. In light of this, it is little wonder that the proposed limits leaked from the CFTC do little to rein in excessive speculation. Added to this is the fact that the CFTC’s funding hangs in the balance. While the Senate Appropriations Committee recently approved a bill raising the CFTC budget (from $202 million to $240 million for 2012), it is unclear how this will be reconciled with a House bill that cuts the CFTC’s funding to $171.9 million.

Still, all is not lost. Within the CFTC, the other camp is headed by Commissioner Bart Chilton, a vocal supporter of position limits, who has spoken out strongly against speculation in commodity markets, especially the silver market (in late 2010 he revealed that a single trader controlled 40% of the market).

Anti-Excessive Speculation Act 2011

More promising is the Anti-Excessive Speculation Act of 2011, intended to “prevent excessive speculation in commodity markets and excessive speculative position limits on energy contracts…” Democratic Senator Bill Nelson of Florida and Representative Peter Welch introduced matching bills in late September 2011 to cap position limits at a level that reflects market fundamentals of supply and demand.

Section 5(7) of that Act defines an excessive speculative position as a position that affects “more than 5 percent of the estimated deliverable supply of the same commodity,” a drastic reduction on the amount of a commodity than can be gambled on than under either the present scenario or the leaked regulations from the CFTC. While a number of Democrats support the initiative, the massive support the Democratic Party has received from the finance industry would likely mitigate its passage in the Senate, or in the Republican-led House of Representatives for that matter. Indeed, it is would be unlikely that Congress would bother intervening while the CFTC, a supposedly expert, non-partisan body, is still busy delaying in this area.

And all the while as Washington and Wall Street bounce back and forth on this issue, commodity prices hover just below their all-time high and over a billion people continue to starve.

While the zombie bankers and blood-sucking speculators mightn’t realize it, food is a human right, and we need to recognize that the rights of humanity are far too important to be left to the market.