In a wider historical perspective, the current currency war is the latest conflict in a series of acute crises of the modern international monetary system. In a world of national monetary regimes based on fiat money without physical anchors, domestic monetary instability automatically transforms into exchange-rate instability. FULL ARTICLE by Antony P. Mueller
Source link: http://archive.mises.org/15789/whats-behind-the-currency-war/
What’s Behind the Currency War?
Previous post: DiLorenzo and Woods discussing the Lincoln Myth on Freedom Watch
Next post: Do the Rich Oppress the Poor?
{ 10 comments }
“Without a fundamental change of the monetary system itself, without a return to sound money, the international monetary system will remain in a state of permanent fragility — ever oscillating between the abyss of deflationary depression and the fake escape of hyperinflation.”
OK. But with every oscillation someone is coming out ahead and someone else is losing. As long as the top 10% is gaining and the people who work for wages are losing, everything is under control.
Is it really true that devaluing nations are the ‘winners’? It appears to me that prices are relative and devaluing a currency only has short-lived effects (it basically impoverishes a country).
My understanding is that devaluing a currency benefits importers while impoverishing anyone relying on imported goods. The net result is a loss for that country, rather than a gain.
The market manipulation that has occurred was truly revealed at the beginning of the end of the bull market which was namely the commodity massacre that happened in the summer of ’08. The prior build up to that sell off event had been planned. The build up of oil escalated to $147 dollars a barrel while at the same time freighters were floating around the world full of oil. Why didn’t the owners of this oil, Goldman Sachs and JP Morgan were the main culprits, sell the oil on the tankers into a rising market? Because as they pulled the bid rug out from under oil on the paper trades and oil started down, they then raised margin requirements for investors and selling begat selling, the oil on the tankers was then sold into the physical market as the paper trade was being taken down by the investment houses, taking oil eventually down to the $33 dollar a barrel low that we had during the market sell off. This occurred in other commodities as well. Now consider the destabilizing effects to OPEC and then consider what is happening to date.
The same thing occurred in the banking sector. Bear Stearns was taken down and the manipulators even had the brazen audacity to buy 1 ½ million dollars of put options on their collapse which paid out $270 million dollars to the trader(s). The SEC says that they have not been able to track the trade which is a bold face lie. Every trade has a number so it is a matter of looking it up. The benefactor of their demise was Goldman Sachs and JP Morgan because Bear was there largest competitor. The next chip to fall was Lehman brothers, another large competitor which they also let fail. Again JP Morgan and Goldman were the beneficiaries. Both in the way of derivatives and asset transfers and that was paid for by the Fed. That is only the beginning of empowering these two investment houses. Remember that these derivatives, this toxic poison, was spread around the globe – on purpose with a purpose. The entire GDP of the world is/was around 55 trillion dollars although I don’t think any one knows but as I have read the derivatives figure exceeds 1500 trillion dollars which includes much more than just the mortgage portfolios with swaps and commercial real estate to just name a couple. They wrote these derivatives as insurance policies and everything else under the sun that had risk. The issue that I am pressing here is that they did not want to leave any sector in the world or entity unaffected. This was a precision strike against the economies of every country that they could penetrate for this all out assult by the banking world to enslave the world.
The greed of the investment houses/banks in control for monetary and asset gains are obvious but they were in collusion with the U.S. and they had to have the Fed’s blessing in this. This was made obvious by the sell off that was created beginning in the summer of ’08 with Bear Stearns and the derivative pay out that cascaded as a result. There is no question of Goldman’s and J.P. Morgans role in the government – just look at the positions in government that are filled from that domain and then JP Morgan might as well be in the White House basement because ever since ol’ John Pierpont Morgan saved the United States back at the turn of the century they have been close to the controlling mechanisms. Why?
In view of this market/commodity rigging I believe that there is a financial world war going on and not a currency war that is being paraded as the reason and cause of all of this. It runs much deeper than currencies. It penetrates every cintilla of each nations fabric and it was done with designed intent and not the consequence of any ineptitude as that is a mere lie to cover their larcenous hearts. If you’ll notice who the players are in this, it is those Anglo countries with aging populations going into decline both economically and physically against all of the emerging markets and emerging populations including that of the young (warring age) Islamists, which are the fastest growing group in the world. Remember that London is as complicit in this as New York. The market rigging is part of it, just as are the derivative poison that has been spread around the globe to disrupt every market and sovereign emerging country that might have a role in reducing or berating the economies of the Anglo nations. This was no accident by bankers or oversight by regulators. This was engineered and we are a few months away from it being perfected or failed, depending on your desired outcome. Just wach in the next couple of months and you will see a controlled market correction as the Fed is the main buyer of the market and just for this reason. When the interest rates are on th everge of a break out and gold silver and oil are on the brink of being out of control as is the dollar you will see a controlled market sell off. Oh it will be dramatic as this enables the brokerages to clean up on the options trades. You read a lot about how the U.S. is turning into a 3rd world country and how the emerging economies will over take us financially and possibly militarily should our financial position and age of population (think immigrants) be that we could not afford to fight a war. I think that this is the answer to that cause. When the Euro was introduced as the answer to the U.S dollars woes isn’t that when the “home ownership” effort began in earnest? Isn’t that when Clinton engaged in the gold swaps and leasing to buy treasuries to pump the dollar up for this engineered fall? And that enabled the derivative trade. Japan one of the worlds leading economies was fell by Wall St. as much as their own decisions. I suppose the architects of this “Financil War” (not currency) said after the Japan fall -”one down.”
With that thought in mind you should be able to see that the U.S./ Wall St. (take your pick but my money is on they bankers, they are now at the moment one in the same along with the military-industrial and energy) are not going to roll over and let this third world scenario for the U.S. happen. The oil and other commodity sell offs that have occurred were engineered to perfection and succeeded in –at least temporarily- disarming the rest of the emerging world who were barbarians at our gate. Yes our currency is at risk but look what we have done to their currency and their economies and you should take note of how expensive it is to China – in maybe more ways than I can put in this letter. Not only is it realized that their exports can be decimated but China has also spent much of their reserves on a stimulus package that was used to fight this down turn. Now they will possibly get involved with the Koreas.
Our economic decline was to be a natural one. With consumers being 70 % of our economy and with baby boomers that are passing to another phase in their life and are spending less and less. Unemployment will surpass the great depression. So there goes the consumer part of our economy and a substantial part of the 25% we represent to China’s. Of course China can build domestic demand within but at what price (think stimulus) and how long it will take. In the mean time the interior of China has not enjoyed the wealth that the Pacific Rim has and they are wanton. Try to pacify that many people with a trillion dollars and you are likely to come up a few bowls of rice short. It doesn’t have to be, but a few years of this chaos to keep the US in the loop economically and to be an “also emerging economy.” So our society is in decline both physically and financially and at a vulnerable point for those who would wish to take the lead role in the world away from the US. Chances are that if China’s economy can be hit hard enough they will not have the money to wage a real war either when or if the US would default on their treasuries or at the very minimum pay it with painfully depreciated dollars. Plus a war with them would be an excuse to default on all of the mortgage bonds and prevent colonization in this country by the Chinese.
Wall St. is a bunch of thieves and the Congress, which I have no respect for, is not worth the powder it would take to blow their nose. I also find it very interesting that there was 600 million dollars spent on lobbying for or against (lets see 535 members…hmmm.) this health care legislation. This TARP, stimulus, and every other project of government intervention is the biggest robbery in the history of the world and that the taxpayers are covering Wall Street’s losses or supposed losses, but that game is rigged as well using the likes of AIG to funnel the money through to the desired investment bank targets.
An amusing story was circulating around the internet about an economic fix for the U.S. whereby the near 40 million over 55 age group would be given 2 million dollars to retire and the only stipulation was that they either had to buy a house or pay their mortgage off and buy a new car. Problems would be solved by jobs being created by the retiree’s vacancies, enough cars for many years of production, and the mortgage problems would have disappeared plus there would be extra money to stimulate the economy. This would have taken about half of what it cost to rescue AIG. But this is secondary just like the supposed wars for democracy are really about protecting the drug trade and the corporate welfare to the industrial-military-energy complex, the bailouts are to enrich a select few while fighting off the declining of America-but that only benefits the elite as the people of the U.S. are being transformed into hard work, low pay serfs.
The protection of the drud trade has a duel role.The thinking here or what they would have you believe is their thinking is that the drug money is better in our hands than the enemies hands so this should make it alright and it is also an element of war as it is being spread into Russia to expand an already depressed social structure where abortions out number births and the society is ageing. On the energy front, Afghanistan is the route for the gas pipeline that will feed the emerging economies of China and India with the trillions of feet of natural gas that is in the Turkmenistan region. So the corporate welfare of the energy companies is being paid for by the GI’s blood and none of the spoils of the drug trade or the energy complex will find their way to our citizens. That is for the profit of the “Bluebloods.”
This area in the mid-East is not ours yet but also as long as the area has not decided who the victor is then it does not belong to the enemy either. And now that we have disunion in the Mideast it is not likely that there will be an assembling of the forces there to fight us. And remember that much of this was done from Wall St. and the grain markets.This will prolong resources that will be desperately needed for those emerging economies to emerge as well as be a form of control. recollect the control that Russia had over Europe with the natgas distribution? Read about the natgas and oil that is supposed to be piped through the war torn regions. Think about all of the drug money from the poppy and if it fell into enemy hands and how harmful it could be to the US. So it was in the national interest to keep this money from accumulating in enemy hands. Why is it that the taxpayer foots the bill and then does not enjoy any of the spoils? It is sad that we paid and died for the military excursions and the money goes to the Bush cabal.
Anyway the World Financial War is the fundamental reasoning that makes the most sense to me. That we will, in fact, bring the rest of the world to its knees and then we too will be an emerging economy in competition with and not subservient to the rest of the world. In order to be competitive in the future world, or at least that is how I think Wall St. sees it, we need to become a hard work low pay economy coming out the other end of this depression once the country has been reindustrialized under control of the worlds investment banks (As will the rest of the world). In our new economy if we are to be competitive in exports and manufacturing there needs to be very low wages and house prices that are affordable at those wages. The house prices being lowered are in the works of being met or controlled to ensure no losses to the to big to fail. I think this year you will see housing reinvigorated and this scam ran through on more time. We have a housing supply along with a depression that will provide for both of those needs. The house prices will drop below the cost to build them and the truly sad part of that is that materials are going down along with labor prices. Lumber had risen 60% and I believe this has been a fix to prevent any sort of recovery for new housing. They are in complete control and making loads on refinance so they want to keep it that way.
Currently the government has maneuvered so that it owns a lot of the means of production – the banks, and airlines are there for the taking. Farms are next on their list of “wants” and you have seen legislation on farming already that will cripple many farmers and so it will be that many of these farms will pass to the stronger hands. What they can not do with legislation they will do with taxes and water rights. The near and long term world food needs will be not only a huge profit machine but it will also be a strategic weapon against China who can not feed her people without grain imports. You see all sorts of legislation now that is trying to capture the farmer anywhere from the government trying to capture water ownership to legislating standards for produce of farms doing over $250k a year and here in Ohio they have this silly issue that animals are not being treated humanely. I always thought that was because they are not humans. But that is not their issue. They want, and now have, this 13 member board to morph into a control mechanism for a revenue stream complete with annual inspection fees and tax forms and on and on. The bankers know because of the depression that the agrarian state will return to some degree and that they do not want any profiteering done without their oversight and taxation and impeding their opportunity to control the profits and don’t forget a probable value added tax that will undoubtedly come into play. They have plans for farm production and they do not want anyone being able to build a business out of it before they-the boyz- are ready.
Back to the oil trade for a moment, below is a link about proven reserves measurements. I include that merely to show that the process of determining oil reserves (and consequently price) is just part of the effort to control prices of oil for reasons that are readily apparent if you think of them in that light of World Financial War (WFW). This price manipulation of oil and precious metals is not going to last long I do not believe, but it will last long enough to cripple economies around the globe if it is coordinated nearly as well as the commodity massacre in July ’08. Think of that as a trial run for the next market sell off/buy up as is needed. Again they have the tankers of oil sitting ready to sell into the market.
The logic behind the great value of gold is unquestionable in my mind and no one that holds it should have any intention of selling it. But you will not be battling logic. You will be battling the boyz who can not be underestimated. In the end while the US paper(t bills,etc.) is not worth a dime, come time the world will still flock to it and for a moment in time the value of the dollar will rise and the precious metals will probably sell off. I do not think that it will be enduring but I do think that commodities will get whacked one last time. I think oil and gold will probably get maimed however it will be only temporary and it will be the last time in our lives that we ever see gold, oil, or silver at the low prices that I anticipate. If it is available it will be a great buying opportunity but you can not wait for the bottom because the entire world will be looking for something to preserve their money.
How this chaos happened and the reason it was carried out should be obvious. This was no banker or regulatory error.
http://seekingalpha.com/article/174575-the-oil-casino-sec-heading-for-monte-carlo-part-i?source=email
So far I have only described the scene where bankers are trying to become dictators. Having this power they are not going to return it to the electorate voluntarily – or anyone else for that matter. There are surely others who are vying for the driver’s seat. The old powerful money of Europe maybe? Or how about Rockefeller’s group the trilateral commission? The illuminati? The Bilderbergs? Or maybe the Council on Foreign Affairs who some claim to be the controlling interest of our nation. I am of the mind that these groups have mutual people on their rosters but it is my hope that they will end up trying to take each other out. I don’t know the answer to those questions except that as this financial war is waged all of these “kids” are not going to play well together. Or could it be that we have an invisible but altruistic force in all of this who will provide the coup to snatch the life out of the evil doers and put our constitution back on the table. That invisible force is the people if they can be rallied to take their money out of the banks, stop making house payments, tax payments, rent payments, buying and whatever else we can do to rob the evil system of their life blood-money. Just stop playing the game and the game is over. This would not make anything worse for our people but it would force their hand. We would forever have control because we could vote with our money. No corrupt voting machines to deal with now.
The climate summit in Copenhagen was supposedly an attempt at world control through domination and control of industry by way of carbon emissions. This would be a powerful mechanism and could really decide who was allowed to operate and who could not and we will not even get into the outrageous taxes. We also will not get into the trade of carbon credits and brokers role in administering them.
That is a summary of some things as the way I see them……… I’ll have to stop because this is becoming quite long as it is.
“Calling competitive devaluation a “war” may seem like a gross exaggeration.”
It is not an exaggeration. Because such such competitive devaluation can lead to an real all out war.
Welcome to the foundation Julius, now what do your psychohistorian equations say about when the Mule shows up in part 2.
In some ways Quantative easing is the FEDs response to foreign currency manipulation. Other countries purposely manipulate their currencies by creating new money faster then the US so that based on paper exchange rates foreign labor and foreign imports are artificially cheaper. Some economists would say that foreign exporters are helping US consumers but in reality they are not. If a country like the US cannot pay for it’s imports with exports, then it has to to trade either debt, jobs, factories, transfer technology or ownership of US companies to make up for the deficit. That’s why it doesn’t matter if exports increase if imports increase even more. But in any event increasing exports is not exactly economic growth in the first place. Economic growth is the increase in the rate of capital accumulation that is faster then population growth. If increased exports or for that matter increased imports lead to greater capital accumulation and more capital per worker then we have growth. Increasing the consumption of foreign imports artifically through the creation of new debt is not the way to grow an economy.
The more capital per worker, the higher real wages will be. Since the US has been exporting capital due to outsourcing, US wages have been declining in which the increased use of debt has been used to compensate for lower real wages. Outsourcing is a monetary phenomenon where the multinationals outsource US technology to countries that have weaker currencies due to faster money printing so that foreign labor based on paper exchange rates is artifically cheaper.Because of all the outsourcing due to flawed trade agreements and currency manipulation, the US has been exporting captial to pay for consumer goods. So the US is exporting the cow for the milk. Definitely not a policy for growth.
Yes the monetary system is flawed but the reason the recovery is slow can be found by comparing how other countries are spending their money. If the Trillions that the Fed printed out of thin air went to fund production like China, Japan and Germany does, then more jobs would have been created in the US. But instead of creating money to fund production, the money created in the US went to funding the outsourcing of US jobs, technology transfers to China, military bases abroad, speculation in financial assets and artifical consumption with debt. Once again not a policy for growth.
Hello Harry,
I am not sure what a psychohistorian is and the same with the mule but I think you are after some forward looking analysis. That is difficult to do with any certainty but I have addressed part of it with the low pay, hard work scenario in that if we are to also become an emerging economy – that is to stay above a third or forth world status economically we will have to be competitive labor wise in the world market so that is where the low pay, hard work comes in.
The houses will have to be affordable so that is being taken care of and the down side could accelerate after 2012 when most of the mortgage resets are over and the big banks are able to start putting that episode behind them. The downside acceleration depends on the inflationary efforts and the stagflation forces that are present. I think the down side will win.
They have a huge shadow inventory of housing and I sometimes wonder if it will come to market at all. Because of the reduced revenues to the government it is possible that this shadow inventory can be used as rentals and it would also act as a form of rent control for the privately owned residential rentals. I think the shadow inventory runs much deeper than it is presented. The numbers given are for single family or condo dwellings and there are a huge number of apartments not only empty but also the complexes that have been taken back. I have read that these total numbers are over 20 million units. I’m sorry I don’t have a reference for you but it is my thoughts you were after anyway I believe.
With the hard work. low pay, and probably extended hours mentality, the latest thinking in condo and rental development is around “Transportation Oriented Development” (TOD) as it was referred to in an Apartment Finance article where housing is built around transportation hubs. I’m sure you have read and heard of the rail systems currently being formulated in various cities. What amazes me is the with the inventory overhang they would consider building more residential property.
On another facet of our economy re-emerging is the power grid and other infrastructure problems. As I have read we do not have the capacity presently for an industrial base. I do know that electrical contractors such as Pike Electric are hiring and the reason given to new employees is the country’s electrical grid is currently being revamped. I learned that from the family of a recent hire. That expansion if true seems to be occuring under the radar. You would think that would be a political feather for a political hat but you don’t hear much about it.
The currency devaluations that are occurring in this financial war seems to be as much by mutual agreement as it is economic demands. I know what they are saying but if you notice it is the aging anglo countries that are doing all of the talking. This is the same group that is trying not to be relegated to a lesser position in the world and the one world effort is as much about the elite remaining elite as anything else. The internet has informed the entire world of what is politically and this is a threat to those elite or at least that is the claim made by Zbigniew Brzezinski in “The Grand Chessboard.” He is supposed to be the daddy of all of this one world order thinking although there has been an ongoing conspiracy, in the U.S. at least, to confiscate power. Here is a 52 minute video that relates to my conspiracy beliefs.
http://www.brasschecktv.com/page/898.html
This word conspiracy really tones down the fact that this is actually treason at its best but it has carried forward buying every politician in its path. It is said that every politician should be limited to two terms and I agree with that to the extent that the first term should be spent in office and the second term in jail. This video as I remember was made in the 80′s and the reporter that did it for some reason kept it in his archives. It is a little slow starting but the information is priceless and I hope it makes it all over the internet.
So we have the new work ethic, housing being devalued, new housing centers as a possibility, new modes of transportation being pushed, questionable infrastructure, and so let’s look at the currencies. The currency devaluations are the primary culprit to the one world order, although the emissions controls would have been a prize asset for them, and it will lead to a common currency and digital currency for the populace. This will not stop trade between individuals and it may even enhance it once these trade systems are developed. It has been done for centuries and I predict its return. This will also exacerbate the reduced tax revenue problem. It seems that all of the leaders want a common currency including China and if the other anglo countries are somehow not on board with the common currency then the U.S. can make them repulsed enough with the U.S. dollar that they will demand it. The question probably is the current trade imbalances between countries and how it will all be resolved. It is not likely that the U.S. can meet their obligations – at least with money. Maybe there should be some thought to the alternatives since there are many things less expensive than war for all people. I suppose it will come down to who wants what and the blood and the cost they are willing to spend for those things. Currency and national identity are not issues that concern the elite as they have a world address and are not concerned with specific locality because they intend to own the planet.
While the comments that author “E” has presented are of historical interest they are at the moment secondary to what is taking place. So I look for freedoms to disappear as we all become enslaved to the elites process of continued domination. Information will be hard for them to restrain and more importantly technology that can be used against them so how long they can maintain control will depend on how cruel they are and the determination of those that would stop them. The Wiki Leaks is an example of how much power that they have. The organization of that power could be “revolutionary.”
The one true thing that amazes me is the lethargy of the young people who do not seem to question authority. It is not natural but the video above answers some of that.
The answer to the Fundamental Evil of the Fiat Currencies is a currency based on one or more useful and precious metals! A Metallic Currency is the Answer to todays Fundamental Evils of Fiat Currencies! The Book, “Th Paper Aristocracy makes a valid argument of why the Metallic curency should be based on Silver or a group of Precious, Useful Metals, rather than Gold! Britain became Great Britain based on Oxford Aristotelianism, Non-Racism, and Sterling Silver as its Metallic Currency;
when Great Britain gave up its Oxford Scholasticism, Non-Racism, and its Sterling Silver Currency, it gave up its Greatness, and became little-bitty U.K. based on Germanism-Racism, in the form of the Elector of Hanover descended Monarchs, Anti-Aristotelianism, and Fiat Currency!
Comments on this entry are closed.