Category Archives: GIS Statements

GIS Statements

U.S.-German rapport: the transatlantic X-factor

GIS Statement by James Jay Carafano

The U.S. no longer looks at Germany as its primary political partner in Europe and NATO. Washington’s strategy is not centered on the European Union, where Germany is the leading player, but on bilateral ties in Europe. Although the two countries will still cooperate closely in some areas, their policies will diverge in many others.

“Few questions are more pressing in transatlantic affairs than the future of the German-American relationship,” observes Dr. James Jay Carafano.

These days, the United States no longer presumes that Germany will be its leading partner in the transatlantic system. Instead, Washington’s assessment is that internal political struggles will distract and confound German efforts to exercise decisive leadership. Rather than sharing vision and direction, the two countries are more likely to manage their relations over the next few years on a more transactional basis. That said, there are few signs of fissures and gaps that could eventually create unbridgeable rifts in the transatlantic alliance.

merkel trump gis
Angela Merkel meets Donald Trump. Source: GIS

U.S. President Donald Trump’s recent visit to the United Kingdom and Normandy, France, for the 75th D-Day anniversary was instructive in this regard. In the UK and the president’s subsequent short visit to Ireland, the American leader made clear once again that the U.S. strategy for dealing with the transatlantic community is not centered on the European Union. That is crucial for Germany, which continues to remain a dominating force in EU policymaking …

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*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

The financial elephant in the room

GIS Statement by Prince Michael of Liechtenstein

Three compelling messages on the economy have come through over the past few days. First, neither the United States Federal Reserve nor the European Central Bank (ECB) have imminent plans to end their easy-money policies. Second, the Italian government is considering paying off its arrears to suppliers with new small-denomination bonds instead of euros; the receiving parties would be able to pay with these instruments in Italy. And third, Facebook announced the creation of a new cryptocurrency, the libra, that it hopes will be accepted as a form of payment – one of the critical functions of money. The company issuing the currency, Libra Networks, was registered on May 2, 2019, in Geneva.

U.S. Federal Reserve Chairman Jerome Powell hit pause on future interest rate hikes
U.S. Federal Reserve Chairman Jerome Powell hit pause on future interest rate hikes, prompting speculation that the Fed could cut rates as loudly demanded by President Donald Trump to prevent an economic slowdown Source: dpa

One might question the need for cryptocurrencies, as there is an established monetary system in existence – in theory, guaranteed by central banks as institutions of public trust. To resolve this doubt, you may want to take a look at the last 20 years of monetary policy.

Debasing the system

Following the financial crisis of 2007-2008, Mervyn King, the former governor of the Bank of England (2003-2013), wrote a book entitled The End of Alchemy: Money, Banking and the Future of the Global Economy(2016). In it, he accurately described how the neglect of sound monetary and banking practices by governments, central banks and the financial sector – this neglect being a consequence of the wrong incentives created by cheap money – had led the world into the dangerous crisis …

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The financial elephant in the room


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

The value of data

GIS Statement by Prince Michael of Liechtenstein

Information – data – is supposed to be the critical “raw material” for the economy, business and society heading into the future. We must therefore conclude that data have value.

the value of data
GIS statement: The value of data.

We know from experience that if goods and services are not scarce or do not have a price, they will be spoiled or misused. Damaging misallocations occur especially when such goods or services are under the control of the state, appropriated by the public or subsidized.

Personal data are now collected by many people and organizations, for various reasons.

Governments, public agencies and supranational institutions are requiring an ever-increasing amount of “transparency” from individuals and companies, frequently overstepping individuals’ right to privacy, a human right. Unfortunately, governments frequently distrust their own people – a phenomenon becoming more and more common in the West’s so-called “liberal democracies.”

Mandatory compliance

The result is a strange state of affairs: Individuals are increasingly forced to be fully accountable and transparent to the authorities. This is a complete reversal of the basic principle that governments must be accountable to the citizen, who also has the right to privacy and protection against arbitrary intrusion from the government.

The hypocritical justification given for this illicit but forced collection of data is crime prevention. Of course, the practice does not prevent crime, but the information does help in prosecuting criminals. It is doubtful, however, that such prosecutions justify government surveillance, intrusion into citizens’ everyday lives and putting the general population under a blanket of suspicion …

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The value of data


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

A choice for economies: Freedom or socialism

GIS Statement by Prince Michael of Liechtenstein

Last week the OECD again cut its forecasts for the global economy in both 2019 and 2020. The organization cited Brexit and insecurity due to the United States-China trade dispute as the reasons behind its decision. Under the same pretext, the European Central Bank decided to postpone its first postcrisis interest rate hike. Officials at the ECB said they consider the two above-mentioned “threats” as damaging for the eurozone economy.

freedom or socialism
freedom or socialism

We can agree that Brexit is not helpful to the global economy and has caused quite a bit of collateral damage. Yet, it is not a major threat. The so-called U.S.-China “trade war” may soon be settled and, as we have seen before, is a dispute, not a war. True, it is louder than most trade squabbles, but we can expect a settlement eventually. In fact, an agreement could put some constraints on China that might even improve the efficiency of its economy in the long run.

In light of this more pragmatic, longer-term perspective, one can easily come to the cynical conclusion that Brexit and the U.S.-China trade conflict are godsends to the OECD and ECB: they have a ready-made excuse for the failure of their prognoses and their refusal to accept basic economic facts.

Dangerous doctrine

Officials at the bank say they are worried about deflation. Indeed, we are in a deflationary environment. However, deflation is only damaging if it is due to overcapacity. Today’s deflation is due to production having become more efficient: goods and services can be provided at lower cost at equal or better quality. This is actually advantageous.

A certain credo prevails with many economists that economies can be enhanced and kept stable by strong government intervention, tax harmonization at a high level, some inflation and excessive debt policies. This principalist, authoritarian, centralist, and also socialist doctrine leads to planned economies. Yet it is seemingly accepted and even promoted by the OECD. Little wonder its forecast was wrong.

Unfortunately, these practices and perspectives are symptoms of a more general global trend that has been embraced by a wide group of decision- and policymakers. Excessive regulation is blocking good regulations from being implemented.

It is an old tenet of authoritarian, and especially socialist, systems that people and economies should be planned and controlled by governments. We know from experience that we need the rule of law and legal frameworks, but these should limit rather than augment government influence and control. Here, the authoritarian regimes of the past failed. We also know that the essential ingredient for prosperity is a market economy, based on individual responsibility, competition and entrepreneurship.

The very successful German system, which helped the country rebuild and then develop quickly after its defeat in World War II, was based on the principles of a free market and personal property rights. A legal framework set parameters that were not excessive and allowed everyone, including the weaker members of society, to participate. Most importantly, it also limited government intervention. The principles were called Ordoliberalism but unfortunately it has since been watered down.

We should worry that the world’s democracies – and for this, the so-called populists or “illiberal democrats” cannot be blamed – are now approaching the same level of planning and control in which the autocrats of the past were trapped. This creeping socialism threatens free society.

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Freedom or socialism


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.

Planning the economy

GIS Statement by Prince Michael of Liechtenstein

An economy is a complex, interactive structure. On one side, it engages suppliers and providers of goods and services; intermediaries such as trading companies, the transport industry and the financial system; and, finally, on the other side, consumers. It is a matrix of collaboration involving millions of agents with differing interests and business models.

Dark clouds gathering global economy

Competition and freedom of choice allow these interactions to find a balance. The shorthand for this system is the market. Markets underpin the interaction between individuals and businesses, and also between countries. This mechanism can only work with free exchange and individual freedom of contracts. It requires some rules to function smoothly – helping markets develop and forming a legal framework and a judicial system to secure the enforcement of contracts. Also, failures must be accepted.

Taken together, these elements provide the foundation of probably the most efficient and sustainable economic system in human history. It was this system, called ordoliberalism, that made possible the German economy’s rapid recovery and modernization (the so-called Wirtschaftswunder) after World War II. The essence of ordoliberalism is to reduce the state’s role to a provider of the economy’s supporting framework. As much as possible, the public authorities abstain from any attempt to intervene in the economy or plan its development …

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Planning the economy


*GIS is a global intelligence service providing independent, analytical, fact-based reports from a team of experts around the world. We also provide bespoke geopolitical consultancy services to businesses to support their international investment decisions. Our clients have access to expert insights in the fields of geopolitics, economics, defense, security and energy. Our experts provide scenarios on significant geopolitical events and trends. They use their knowledge to analyze the big picture and provide valuable recommendations of what is likely to happen next, in a way which informs long-term decision-making. Our experts play active roles in top universities, think-tanks, intelligence services, business and as government advisors. They have a unique blend of backgrounds and experience to deliver the narrative and understanding of global developments. They will help you develop a complete understanding of international affairs because they identify the key players, their motivations and what really matters in a changing world. Our experts examine the challenges and opportunities in economies old and new, identify emerging politicians and analyze and appraise new threats in a fast-changing world. They offer new ideas, fresh perspectives and rigorous study.