News & Analysis
The Currency War Promotion
The Group of 20 nations must take the lead to prevent a global "currency war" in which each country tries to weaken its currency at the expense of others, South African Finance Minister Pravin Gordhan said. ... "Everybody would want to depreciate their currency, everybody wants to export their way out of trouble," Gordhan told lawmakers in Cape Town today. Unless the G20 gets "the major players to sit around the table and find a spirit of cooperation and generosity and give and take," we are heading for a "currency war," he said. – Bloomberg
Dominant Social Theme: It is a spiral downward toward abject poverty and North-Korean style dirigisme.
Free-Market Analysis: We have watched the building "currency war" with interest. Warnings are certainly placing the onus of responsibility on the G20 and the International Monetary Fund, both of which have somehow emerged as key players in an effort to ameliorate the worst excesses of the "war" for the sake of the global community and the general prosperity of all. Sub dominant social theme: "Our prosperity is totally in the hands of the wise men populating the G20 and the IMF; these two institutions are, in fact, the last and best hope for humankind, which is gradually circling down the drain."
What is the "currency war" as we understand it? The United States, which owns the world's reserve currency, the dollar (rapidly fading) is continuing to print money by the bucket-load to try to stimulate its economy. The economy cannot be stimulated because after a century of central banking price-fixing (all that interest-rate setting, etc. really is) the American economy is terminally distorted.
Government itself is probably the largest bubble and after that comes the banking industry and then corporate America. By propping up certain industries with cash and not letting them fail, the American government has made it impossible for the private sector to figure out what is a viable company and business and what is not. Thus, banks are not lending and people are not borrowing even two years into the "financial crisis."
As we have pointed out endlessly the financial crisis is not merely another cyclical recession (or even depression). The current economic difficulties stem from the implosion of the current, unanchored fiat-money system of the late 20th and early 21st century. The system essentially ended in 2008 and only hyperactive central bank money printing and enormous cash infusions into ruined banking entities managed to prop it. (This goes for Europe as well as America.) Without the price fixing by central banks, the system would have fallen apart, literally. It has held together, but that does not mean it is healthy. It is like a terminally injured patient on life support. It will die. It just depends on when the plug is pulled.
Nonetheless, the United States continues to try to prop up what is essentially a moribund system. Because of the systemic distortion, no matter how much money the US prints, the economy itself will not respond. It cannot. This means that the money that does manage to circulate finds its way into the US stock market and speculation abroad as well. Other countries are printing too much money as well, and this has caused a generalized commodity boom.
Yes, despite the so-called bond bubble, individual investors may be most enthusiastic about certain stocks and in farmland, real estate, commodities and precious metals. Thus we can see that the endless money printing is causing a global speculative bubble while not helping with the "real" economy at all. What the US (and the West generally) needs to do is to allow governmental, banking and industrial bubbles to collapse, even if this means the end of the economic system as we know it.
This, unfortunately, the powers-that-be probably will not do. But this does not mean the collapse will not come. It will come, sooner or later. The free market itself is impossible to circumvent long term. What the Anglo-American power elite is fighting to do is to prolong the decline and fall of the current system so as to ease the West into a new system, presumably one based on SDRs, an IMF bancor, or even a controllable gold standard. This seems their hope, faint as it is.
The longer it takes, the angrier people get. This is why the power elite seems to be contemplating the possibility of civil violence and military control measures. But essentially this is a faint hope too. It is impossible to control an enraged and enlightened populace. People have been enraged by the failure of the current system and they have been enlightened (increasingly) by the truth-telling of the Internet. This is a noxious combination for the power elite and its continued short-term domination of the levers of wealth and power.
The leaders of other countries that have long enjoyed a wealth splurge courtesy of the US reserve dollar are getting upset too. Because the money being printed by the Fed is not circulating in the US's own terminally damaged economy, it is flowing abroad. Dollars are pouring into first and third world countries and this torrent of dollars is essentially a dollar-devaluation. Thus, countries like Brazil, India, Japan, etc. are faced with dollar inflation, which inevitably makes their own currencies more expensive.
These currencies, now ever-more expensive, make it increasingly more difficult to export goods and services, especially to the United States. Out of self-defense, countries like Japan have begun to buy dollars to sop up the excess liquidity. But this causes resentment too. It is expensive to buy dollars and once again the world is forced to dance to the tune of the United States. Only world leaders are well aware that in this case, buying dollars is not really the answer. The US economy may take another 10 years to readjust because the Anglo-American power elite show no inclination to allow the distortions of elite banking and industrial complexes to subside. They will be propped up no matter what.
This is indeed a recipe for a trade war. Other Western countries plus India, Japan, China and various "third-world" countries like Brazil are being asked to pay for Anglo-American determination to prop up the elite-enterprise system. These countries are basically subsidizing a bankrupt dollar-reserve system. If it were temporary, that would probably pass muster.
But as we have pointed out, this is a situation that is likely to go on for the long term due to the power elite's stubbornness and determination to salvage its Western (American, mostly) commercial power base and central banking system. Thus we have a good deal of talk from the Western power elite about the discouraging possibility of a trade war and "economists" like Joseph Stiglitz continue to grace television screens echoing his supportive babble. The message: Trade wars are a bad thing. The idea is that times are tough but China, Japan, India and third-world countries will make things much tougher with a currency war that can turn into a trade war once "proctectionism" becomes the order of the day.
With its typical talent for turning disaster into further forced (global) centralization, the Western power elite is agitating for the IMF to mediate in this international currency war. The G20 as well (see article excerpt above) is also being urged (and no doubt being threatened) to do the "right thing" and negotiate currency differences rather than carry out individual rebalancing solutions. But as we have pointed out, the UN, the IMF and even the G20 are ultimately Anglo-American institutions. The British and Americans won the Second World War and everything since then, all the institutions and even the evolution of the EU has taken place under a "Pax Americana" – given that the US is the "muscle" of the Anglo-American power elite alliance.
This is a huge problem for the Anglo-American elite right now, in our view. We have stated before that the Anglo-American elite did not expect that the current economic crisis would be so deep and so protracted. We have also pointed out that the elite did not expect the Internet phenomenon to blow up and certainly has no real solution to its truth-telling which has put pressure on governments around the world.
Once upon a time, the rituals of the power elite and their global alliances were secret and within that secrecy, government leaders could plot and plan. Most of the time, the Anglo-American elite had its way. Not anymore. US military dominance is fading. The "post war" era has come to an end. Elite machinations, revealed by the Internet make it much more difficult for other governments to go along meekly with Anglo-American plans and institutions.
The Anglo-American power-situation has been complicated by the emergence of such powerful countries as India, Brazil, China and even Russia as economic powers on their own. The plan, from our point of view, to Westernize the economies of Muslim countries is failing as well, with the failure of the Afghanistan and Iraq wars of control. At a time of maximum economic stress, then, the Anglo-American power elite finds its financial dominance eroding and its military power less rather than more effective.
The problem faced by the world is not really a currency war. That's just rhetoric. What is going on is that the US especially is desperately printing money to try to avoid civil insurrection. The Anglo-American elite has to get from "here" to "there" and to do so without a civil uprising. We even think the elite is rethinking what was to be the next shoe to drop – a derivatives unraveling. Derivatives, for all their complexity may even be a controllable phenomenon, assuming the elite has control over the West's big banking institutions and can always work something out behind the scenes by printing money or creating new structures to hide the unraveling.
What the elite cannot do is put people back to work. The financial economy is controllable because the power elite virtually created it. But the real economy is hopelessly distorted with whole industries created out of the froth of central bank money printing. Lord knows what a "real" economy would look like, but it certainly wouldn't look like what today's scenario with basically one out of every four people out of work in Europe and America (our humble opinion of the reality of things – and it may be even worse).
What is to be the result of all this? The Anglo-American axis is no longer powerful enough to herd the rest of the world in one direction. The rest of the world cannot for a variety of social and political reasons continue to prop up America's terminally distorted "consumer" economy. Thus, there will be an "adjustment" no matter what. The facade perhaps will be maintained but behind the scenes there will indeed be some sort of parting of the ways between the Anglo-American axis and the countries that it has dominated throughout the post-war era. In this case, we think the behind-the-scenes unraveling will eventually spill over into an obvious schism between the "West and the rest."
The Anglo-American elite cannot probably dominate anymore via military authority and Western economies in our view will continue to collapse, inexorably. The only hope the West may have is to move to a new kind of economic basis, probably gold or a combination of both gold and silver. Of course, there are other scenarios as well. The elite may clamp down domestically and try to ride out internal dissent by getting a good deal more authoritarian – and indeed that process seems underway. (Beware the "boot!") These processes are of import to investors and concerned citizens of the West; we urge a maximum level of alertness. Look for clues, especially in the mainstream media.
Personally we welcome a trade war. Of course it won't really be a trade war but the final spasms of a dying system. The mainstream media, in its endless attempts to control the historical narrative, will no doubt do its best to promote a "trade war" as the proximate cause. If a currency war stimulates a trade war some of these noxious global agreements may begin to unravel and that dear reader would be a welcome change of direction.
The more that private enterprise drives the international economy (rather than government negotiated trade agreements) the better off people will be. The system in our humble view is so distorted and unmanageable that sooner or later it must collapse, partially or entirely, of its own weight. When it does, we hope that what ends up in its place will be driven as much as possible by the private market rather than further "grand solutions" of the elite negotiated at the "topmost levels" of government and commerce.
Conclusion: Those leading the way currently are obviously hoping that a controllable G20 and a Western-empowered IMF will lead the way to continued Anglo-American dominance. That is why the elite is currently offering so much additional power sharing at the UN, at the IMF, etc. The trouble is that the Anglo-American axis cannot give up ultimate control – without giving up the dream of an Anglo-American world government. This is why the Anglo-American vision of the past century is currently jeopardized – as "the best-laid schemes o' mice an' men gang aft agley."
Posted by AmanfromMars on 10/20/10 12:18 AM
"I figured this all out in 1961. I was 7. " .... Posted by Cat Writer on 10/16/2010 2:28:29 PM
Using the Knowledge to Real Great Game Effect is something Altogether Different and QuITe Complex to Accomplish and Enjoy, is it not, Cat Writer? But then Ancient Arts Always Are in All Ways ...... and that is their Addictive Attractive Allure and Passage into the Sweetest of Sticky Seductions with LOVE CodeXSSXXXX.
Capture the Heart of XSSXXXXual Desire and the Mind will Follow an Enlightening Path. Virgin Soldiers on the GreatAIMarch to Peace Time Space in the Parallel Dimension Mirroring Reality with Simulation Facilitation and Virtual Presentation of Future Leading Drivers for Rebuilt Reliable Renegade Rogue Space Operating Systems?
And that Question for Answering to Crown Fort Meade.
Posted by AmanfromMars on 10/19/10 01:04 PM
"Substance follows the form. The people better have their form fixed before the skeet hits the fan!" ... Posted by Bruce on 10/16/2010 1:32:22 AM
Nowadays does substance follow phorm, Bruce, and that is Specialist IT Networking .... "As the economy collapses, there is going to be chaos a plenty. Out of chaos comes order. Out of order comes control. The question is, "Who is going to be in control?" The elite? Or the people?"
When the Network is the Computer is the Global Information Grid a Quantum Computer for LOVE ProgramMING in Live Operational Virtual Environments?
Control CyberSpace Controls Everything and Anything, which is why IT is such a hot item and star prize.
Weeble, Apparently 54345 safe net doesn't exist. Certainly no one answers the door to accept packages. I wonder if that is a DDOS or Server Message Block in Desperate Rearguard Action?
Posted by Al Kyder on 10/19/10 10:28 AM
The Anglo-American power-situation has been complicated by the emergence of such powerful countries as India, Brazil, China and even Russia as economic powers on their own.
This struck me a very insightful, Have we all forgotten why B.R.I.C. (Click to view linkina) was formed ? Banco Santander is Bankrupt, All its assets are other peoples debts, registered as assets.
Its been downhill every day since then, it took the CRB four and a half years to go from 252 to 478 and only four months to go from 478 to 252.
Russia and China have woken up to this, and now we are talking about a currency war. Governments are too stupid to pull off something like this, and America lacks the patience to even participate, and that supposing that the war of independence actually happened. That just leaves the great houses of Europe. Hmmm?? can anyone enlighten me here ?
Posted by SEAN on 10/18/10 06:00 PM
It's nothing more than a PE mafiosa turf war over who controls the casino in different jurisdictions. Each mafia boss (CB GOV.) counterfeits his chips/tokens/fiat currency. He can rob the marks in his territory but not the dupes in someone elses. Only the mafia boss in each territory really knows the true amount of the counterfeit chip. You rob yours , I'll rob mine. Omerta-the code of silence rules.
The easiest way to prevent a turf war going physical is to get the capo di capo, aka, the BIS,to oversee the issue of a new round of chips/tokens that have a commonality (global currency?) for inter-casino account balancing.
Picture if you will a number of mythical casino a la Las Vegas being controlled by half a dozen clans. If a chip in one casino has a face value of $5 and in another casino also $5 but the exchange rate is 5 to 4. Hey, the marks might smell a rat and the jig is up. Poaching wealthy gamblers is a no no. Poaching any gamblers is a no no.
Like the old bull said to the young bull, let's stroll on down and do them all. Why? It's very hard to conduct gunfights without scaring off the mug punters. Let's not fight over the spoils but divide them going forward under a single chip regime. Don't scare the dupes. Macau smells a rat coming from Vegas. The issue Must be decided on by the capo di capo. All casino owners are outright winners and all the pleb punters are the losers.
We could discuss the inherent instability of cartels, which is what CB's are. Mafias, Triads, Yakuza are all cartels. Paul Volcker recently stated that the floating currency regime favours competition, i.e. competitive advantage, pushed hard enough it then becomes a zero sum game.
My vote sucks!! Who do you want to be robbed by-him or me? People are waking up to the fact that fiat is a theft mechanism.
A gold backed currency allows for comparative advantage. A win win proposition, (until it is again debauched). Gold and freedom are inseparable. This is why gold is not a solution as all govenments in history have gotten rid of it some how or another, as well as your freedom.. Gold is the peoples money. This is why the mafiosi CB's and there armed muscle, the investment banks will all end up with far more gold than anyone else. He who has the gold makes the rules. And what are the mafiosi CB's buying gold with? A fool and his money are soon separated.
Industrial oligarchs in the East(e.g. Russia), Financial oligarchs in the West. BS!!! All are mafiosi. Does it really matter whether one clan prefers knives and another favours guns to cause you the public to bleed profusly?? Well girly-men fight or flight? The price of freedom is eternal vigilence. The price of freeman's honest money is gold.
Cartel, mafiosi, CB's ,omerta. A rose by any other name...
Posted by Cat Writer on 10/17/10 10:53 AM
@Weeble Jste ceský?
Posted by Victor Barney on 10/17/10 07:01 AM
The bible clearly indicates that a "cashless society" will have power at the end of man's era! Considering the world debt, it's not unlikely! I just know that this is true, even though China presently is buying gold, and I know that Gold is kept in Fort Knox, unless it has been taken out in these later days, but I doubt it? Nonetheless, until I see differently, I'm looking for a "cashless society" in the near future! Watch!
Posted by J6P on 10/16/10 10:37 PM
So today I was out SPENDING dollars (Ben would be so proud of me).
Yep, big roll of 100's in my pocket. Perhaps I'm a bit on an exception, but normally that's not something I do. Yes world, unbelievable, but not all americians are spendthrifts and in debt.
What prompts this post is that I'm getting a bad vibe about holding USD ...and in fact, holding anything non tangible.
There's a G20 meeting coming up in a few weeks...will there be a surprise" coming from it?
This is like a game of musical chairs where one doesn't want to be holding US Dollars when the music stops.
Got to go now...I'm off to do some online shopping while fools...oops (make that folks) still accept my dollars.
Posted by Cat Writer on 10/16/10 02:28 PM
I figured this all out in 1961. I was 7.
Start studying about psychopaths. Cleckley, Hare, Lobaczewski and many others. A good source of info is Laura Knight-Jadzyk's Click to view link.
Posted by Weeble on 10/16/10 07:27 AM
@ John Edwards
After what has happened in the world in the past week, I am of the same mind.
I am probably not going to be around here much this weekend, as my wife needs me . . . to not blog for a while, and this next week is going to be a biggie, so I need to save up a little.
Have a good weekend.
Posted by Weeble on 10/16/10 07:02 AM
@ Cat Writer
Reincarnation is true. Therefore I would suggest we not allow them to gain such a position in the future. The trick is to be able to spot them a mile off. Clue: they have sneaky darting eyes and can talk well.
Posted by John Edwards on 10/16/10 07:00 AM
LOL! Me thinks we may be file sharing outside the 'normal' Internet channels of wires, modems, and WiFi interfaces. I am beginning to consider that this Internet enterprise could be the nut that cracked open the pathways to world-wide, population-wide, telepathic communication. I reason the next step in our evolution is going to be fundaMental! Let's see the elite block those pathways ! To TDB, not a hive mind, more like, I'm alive ! Mind !
Posted by Adam on 10/16/10 06:59 AM
Do you have a blog or website?
Posted by Cat Writer on 10/16/10 06:48 AM
Larry Levin addressed the issue on his blog:
Click to view link
Perjury is a third class felony in Florida punishable by up to five years' imprisonment. So a day's work for Ms Moua, who foreclosed on one property perhaps every 45 seconds, would result in up to 2 500 years.
We hope reincarnation is for real. At 70 years per lifetime, she would need to be reborn at least 36 times to serve out a day's work. If this were her career, then she would need to reincarnate over 7 000 times to serve out half a million years per year of employment in this capacity.
The problem is that the taxpayers cannot afford to keep these people in custody for such a long time.
This should impress everyone about the enormity of the crime.
Posted by Weeble on 10/16/10 06:37 AM
@ John Edwards
That was strange? I post a Monty Python Australian "Bruces" sketch with "Philosophers Song" sketch as a chaser, press F5, and voila, you have snuck one in behind me.
Maybe today is Twilight Zone day. Now I have something to read. Is your new government in a nice stalemate? Thanks and cheers.
Posted by Weeble on 10/16/10 06:29 AM
Chaos is quite orderly really. I can imagine what it would be like . . . in a philosophical kind of way.
If you have a piece of paper that says you own a home, land, a car, or whatever, that piece of paper is as good as gold.
If you have a piece of paper that says you have $155,000 in GICs, then fold it up into a dart and see how far you can fire it.
If you have a piece of paper that says you owe $422,000, then have a mortgage burning party.
If you have some gold or silver, then arrr, you can call yourself Jim Lad.
If you have some paper cash money, like some Andrew Jacksons, you may find it a scarce resource and people will accept it as payment. They are so cute, them old things!
You're a good Sheila Bruce and not at all stack ap! No skeet.
Click to view link
Posted by John Edwards on 10/16/10 06:12 AM
"The financial economy is controllable because the power elite virtually created it. But the real economy is hopelessly distorted with whole industries created out of the froth of central bank money printing." TDB.
Beautifully stated and accurate to a fault. The fault being mine, of course, for ever entertaining the notion that we wouldn't be engaged in ongoing internecine wars of internal and external attrition. I am so sick of watching the power of the state used in such heavy handed ways, leaving it's cold, hard, impression of authorities boot carved into the collective expressions on our faces, wincing, as it grinds in a bit deeper. So many ways in which to enslave you. One year it's the OPEC oil crisis, another it's a Tech Bubble, or an Asian financial crisis, or a Real Estate crisis (sup-prime/derivatives/etc). Then a Global Financial crisis, followed by an orgy of fiat money printing setting the scene for a whole bunch of other crisis to do with currencies and trade. Place orchestrated, preventable wars between, and during, all of those crises and you have a symphony of controlled chaos from which only the maestro and members of the orchestra pit profit.
They profit immensely by creating a fools paradise for those below. A lot of Australians became virtual millionaires over the last 10 years or so because of the increase in the value of their homes. House hopping became a frenetic pass-time for the affluent part of the population as they climbed the debt to equities ratio Helter-Skelter until now, where we are now perched atop massive debts desperate for the party to continue, (so we can keep servicing those debts) even though most of us at the coal face and elsewhere know it can't. Enter the spin-doctors to prop up the fantasy that the worlds economies are going to recover because of government and Central Bank intervention (in the nick of time, I hasten to add ! Sorry about those of you who had to be sacrificed so the system can schlep it's stinking, zombie carcass about the worlds corridors of power for a while longer. I digress.) and we can continue being stupidly greedy and selfish, thinking the bubbles are still there to be ridden to (now, with hindsight) a new level of de-leveraged, real wealth.
I have come to applaud attitudes such as this as testament to the insurmountable insanity that confronts you at every turn in this country.
Posted by Bruce on 10/16/10 01:32 AM
Land and resources are held in constructive trust right now. As the economy collapses, there is going to be chaos a plenty. Out of chaos comes order. Out of order comes control. The question is, "Who is going to be in control?" The elite? Or the people?
Substance follows the form. The people better have their form fixed before the skeet hits the fan!
Posted by Weeble on 10/16/10 01:19 AM
Unravelling an unworkable system should not be replaced with an action plan, In my view. It should self form, as needed. Things change.
When in my Physics class in the 1970s, whenever I smashed Mercury with my fist, it would splatter into dozens of tiny balls and shoot all over the place, across the lab desk and maybe onto the floor. Super cool. But could I get those balls back into a jar and back into being a liquid blob of metal again.? No way. I could not even find some of them.
I feel very thin and pale all of a sudden. I wonder if my classmates are still alive?
Posted by Weeble on 10/16/10 01:10 AM
I remember the Gypsy story a while back. I called them "Gippos." They suddenly arrived and parked about 7 homes away from mine on a plot of empty land. I played with their kids. I was about 7 or 8 at the time. They lived in Caravans, and wandered away after a couple of months. I was so disappointed, yet they were free, and had to move on, I guess. I liked that.
This one girl wore no underwear, just a light cream coloured, slightly soiled summer dress with dots on it. How do I know that? I'm not telling!
Posted by Bruce on 10/16/10 01:08 AM
You are a quick study.
But, there is another option. You can have a fixed area, in which the people live off their land and resources, a nation. The people can even trade with people of other nations, as long as the trade is even, and any imbalance is settled before the sun goes down.
The people can authorize a political state which holds certain property in trust, a small portion of the land mass, say for roads etc., but not the private portion of the described land nor the people. This portion of the nation is held in trust by trustees under bond for performance. The vast majority of the land is allodial. Civil law by legislature is instituted to direct the trustees, who are under bond. And the people are free under common law. The legislature cannot bind the people as it can in a republic.
This is what the people thought they were getting with the constitution for these united States of America. But, they didn't now the principles of sovereignty and servitude. They were tricked. I'm not going to say who was on the inside of the deal. I don't know who knew what when!
Reply from The Daily Bell
This is wonderful. You have done the improbable in defining the basics of a free civil society in a few paragraphs. We doff our collective hat!