Free - Beyond Collapse

Tuesday, October 12, 2010

Currency Wars-The Phantom Financial Menace

By Giordano Bruno

War, almost every kind of war, is first and foremost a production. A piece of live-action theater with “good guys” and “bad guys” delineated by governments and by media for the benefit of the masses. Most plot-points in most modern conflicts are not genuine. They are written and staged (Gulf of Tonkin, or WMD’s in Iraq anyone?), though we treat the fairytale as if it were reality simply because the story is being told by some corporate mouthpiece wearing a fake smile and a suit on our TV. Very often, we discover after the fact that the wars we witnessed in the dark shadows of our cultural cinema with greasy popcorn and mega-large soda in hand were actually a charade, a farce. We get angry, we get livid, and then we go on with our menial lives because the “damage is done” and what can we do about it now anyway? Very rarely in history do the majority of people have the ability or occasion to see the authentic war going on right in front of their eyes, between the social puppeteers, and those who have broken loose from their strings.

Today, we as Americans have a rare opportunity to step outside the theater, away from the fabricated pageantry of a particular conflict barreling down the horizon, and examine the situation objectively before it fully develops. That conflict is the now increasingly aggressive “global currency war” being readied for implementation and public consumption at this very moment.

For now, the threat of a large scale currency fight is being presented as “minimal” but potentially relevant. In fact, the war has been slowly taking root since at least 2008, right after the initial collapse of the mortgage derivatives bubble when the private Federal Reserve lowered interest rates to near zero and began openly purchasing U.S. Treasury debt. Only this past month has the MSM finally begun discussing the wider implications of these measures, along with the obvious reactions of other nations, including the escalation of trade wars into a full fledged fiat battle royale. But all is not what it seems…

As I hope to demonstrate clearly in this article, not only is the currency war threat utterly unnecessary, irrational, and fiscally pointless, it is also completely engineered to serve a purpose beyond the policy directives of any one sovereign nation, and meant to benefit only a small handful of financial elite…

Currency War Is No Surprise

The mainstream media has lately been treating the currency war concept as somehow shocking and unexpected, as if it fell from the sky out of nowhere to wreak havoc on poor unsuspecting economists. In the article below, the financial analyst even attributes the origin of the phrase “currency war” to Brazilian Finance Minister Guido Mantega, who gauged the issue a week ago:

Wait! What?! I don’t know who exactly coined the term first, but I know it wasn’t some guy named “Guido” only a week ago. Alternative economists and analysts (including myself) have been warning about this issue for years! In fact, top Chinese economist Song Hongbing, who has also lived and worked in the U.S., wrote a book highly popular in China called (…wait for it…) “Currency Wars”, which was first published back in 2007:

Interestingly, Song’s book predicts the crash of 2008, and outlines how Western banking elites were planning to use numerous national fiat implosions to introduce a world currency. But let’s set Song aside for later…

The key here is that the idea and the danger of currency conflicts has been present and warned about repeatedly long before 2010. The reason the media is attempting to paint this topic as a surprise even though many have been loudly cautioning about it is simple; diversion of blame, away from central banks, and away from the establishment. A blithe rewriting of history in ‘real time’, if you will.

Here’s a little secret to telling the future, and you don’t have to be psychic either; just look at the strategies and rhetoric globalists used for the last crisis they created, and then apply them to the next one ad naseum. It works like magic! In 2008 as the credit crisis moved into full-gear, global bankers and MSM pundits everywhere starting shrugging their shoulders in faux denial like four-year-olds who had just raided the cookie jar. “Gee, how could this have happened! It came out of nowhere! We must set up a special commission to get to the bottom of this…blah blah, lies, half lies, quasi-truths, etc.” This is exactly the same kind of distraction we are beginning to hear in terms of the trade and currency tensions evolving today. In 2011, as the U.S. dollar moves towards complete disintegration, and our government and media slather propaganda on the disaster as some kind of unforeseen economic Pearl Harbor, just remember, it’s certainly not a surprise to global bankers, even if they claim ignorance.

Inflation Is So Fun, They Should Make It A Theme Park…

Almost immediately after the credit crisis became visible, establishment economists were calling for a devaluation of the dollar. Here is a Forbes article from 2008 which pretends as if it is anti-banker, then outlines why deliberate inflation is supposedly a “cure all”, which is exactly the kind of disinformation global bankers love:

There are two prongs to this devil’s pitchfork:

1) The argument that through creation of fiat out of thin air national debts can be “erased” and the only downside is slightly reduced purchasing power, which can then be returned by monetary de-circulation over a short period of time (its that easy, right?).

2) The argument that through devaluation, a country’s exports will become more competitive and thus generate more national income, revitalizing the economy.

Both of these arguments are devoid of logic when applied to our particular economic fundamentals. Devaluation of currency to counter unsustainable debt has never actually balanced the accounts of any country. As in the Forbes article above, some MSM analysts suggest that the Great Depression was eventually ended through “controlled liquidity injections” (stimulus) and an increased disconnection from the gold standard. This is highly debatable, but lets’ say for the moment that deliberate inflation towards the end of that decade did pull the U.S. out of crisis. The comparison to today’s situation, as far as devaluation goes, is inapplicable, because the U.S. had nowhere near the level of national debt in 1930 as it does today. In fact, from 1920 to 1930, just before the Great Depression struck, our national debt was reduced by over 30%, and the money we did owe was owed to allied (friendly) governments. In 2008, our national debt was expanding at historic rates and still is. Also, any inflation that was created during the 1930’s and 1940’s went into the general economy, not into the endless bailouts of banks, and not into the constant purchasing of our own Treasury bonds, as is being done currently.

As far as debt/inflation goes, a more accurate historical comparison would be Weimar Germany, and the collapse of the German Mark.

Germany went into its own Great Depression with cumbersome debts, owed to numerous countries (many of them hostile) after borrowing beyond its means to sustain its constant war efforts (any of this sound familiar?). The Republic finally pursued a policy of engineered inflation, believing they could print their way out of their obligations and suffer only minimal losses to their currency value. The problem was that Germany assumed, just as some in the U.S. do today, that their debtors would continue to accept the imploding currency as payment. Instead, debtors began refusing fiat and demanding infrastructure and resources. Coal, Steel, Timber, etc, was seized and used to settle liabilities. German production and industrial capability was destroyed. Printing continued just to keep the government afloat, and soon, no one in the world wanted Marks, not even the German people.

Mainstream economists today are making the same daft presumptions that were made in Weimar Germany. Will countries like China, Japan, or Russia, continue accepting dollars as payment as we continue to inflate? Or, will they treat us like another Weimar, stop accepting the Greenback, dump their T-bond holdings, and cut their losses? Perhaps they will demand infrastructure and resources as compensation.

Keep in mind that investing in a country that has forsaken its own currency, the very basis of its economy, is like giving a full-on sweaty bear hug to a leper; just the thought gives people chills! The point here is, we should not expect that countries we owe money to will continue to accept the dollar as viable. It certainly did not turn out that way in the Weimar Republic.

The claim that our exports will mushroom with a weaker dollar is equally naïve. Like Weimar Germany, U.S. industrial capability has been gutted, just in a slightly different manner. Outsourcing has left us with a 70% service based economy reliant not on production and savings, but consumption sustained by ever increasing debt. Most American owned factories are built and operated overseas, employing foreign workers at rock bottom prices. As severe devaluation of our currency takes hold, I wonder exactly what mainstream economists expect us to export? And even if we could rebuild a semblance of a manufacturing base in less than a decade, why would countries like China buy products from us that they can easily make themselves at higher volumes and at cheaper cost? The whole concept sounds preposterous (and it is)!

This article on Alcoa’s international sales reports, for instance, attempts to assert that the Aluminum manufacturer’s exports are thriving because of the devaluation of the dollar, then, it completely contradicts itself by pointing out that profits are actually FALLING because of the weaker dollar:

The only export we have that foreign countries had any demand for was the dollar as the world reserve currency, and now, our central bank and government has set out to purposely end this! Recently, the Federal Reserve has begun openly calling for increased stimulus, admitting that their GOAL is, indeed, inflation:

The insinuation here is that inflation has “yet” to occur, when it is actually in progress now. Central bankers have so far shrugged off the dramatic rise of gold over the past few months, stating that gold is an “unreliable” indicator of inflation and that its increase is due to greater demand, not the devaluation of the dollar. High demand for gold as an alternative currency should be enough to worry anyone over the safety of the dollar, and gold is gaining against other world currencies as well, however, it is only breaking records against the Greenback!

This indicates that dollar devaluation, not just commodity demand, is contributing directly to inflation.

Gold is not the only commodity inflating because of the weak dollar. Almost all commodities, including food staples, are skyrocketing in price. As Peter Schiff pointed out in his recent video blog, all the excitement over the current Dow and S&P rally is pretty empty when you consider that most commodities are outperforming stocks due to inflation. If you invested in rice, copper, or even jockey shorts (cotton), then you made more money this past month than anyone who invested in the S&P or the Dow:

Grain prices are exploding right now in the face of a weak dollar. Many commodities markets have “lock-limits”, which allow only a certain percentage increase per day. Once that percentage is reached, trading is cut off. Take a look at how many grains are hitting their lock-limit at the exact same time:

The marked spike in commodities has been going on under the radar for quite a while, but anyone who does their own grocery shopping knows what I’m talking about. How many of us have seen shelf prices rise, not fall, in the past two years? Other factors to consider; retailers have been absorbing higher wholesale costs in order to keep shelf prices under control and to avoid alienating their customer base, but this is not going to last. Soon, they will begin to realize that the “recession” is lasting far longer than they were led to believe, and that if they continue to absorb rising costs, they will go out of business. Another problem is the fact that wages are decreasing in the U.S. as prices are increasing! The government refused to allow increases in Social Security this year to match inflation, and they are expected to do it again next year. This is the first time since 1975 that Social Security has not been adjusted in light of rising costs:

Inflation IS underway, and yet the Federal Reserve wants to deliberately create more? How much is enough for the Fed? If they actually intend to mend the economy, then triggering price spikes in a volatile job environment with decreasing wages seems like a funny way to go about it. Interestingly, we parallel Weimar Germany once again in this regard. The German government at that time staunchly denied that inflation was destroying the economy up until the very moment they went into full collapse. Are we really going to welcome such an event again right here in America?

Bottom line; the pundits are Grade-A morons and the central banks are liars. Extreme inflation in the face of untenable national debt is BAD, not good. It’s a drunken relative that ruins your birthday party and makes all the children cry. Don’t go out of your way to invite it into your house.

In A Race To The Bottom, Everyone Loses

It’s amazing how abruptly so many nations across the globe have now openly entertained or executed devaluation policies. Currency intervention is suddenly all the rage! Japan has interceded on the Yen (with little success) and has stated it will continue to do so into the near future:

South Korea and Brazil are stepping up currency controls:

The Bank of England is likely to continue stimulus measures and devaluation of the Pound just as our Federal Reserve has with the Dollar:

Both India and the Ukraine have announced possible intervention:–355810.html

The Federal Reserve has yet to announce if it will accelerate stimulus measures here in the U.S., but the consensus is that they will. Of course, there is little indication that the Fed ever stopped the liquidity injections it started at the beginning of the credit crisis, so I’m not sure what all the excitement is about. What is clear is the obvious trend towards multiple currency implosions in a futile effort to fight over export share that doesn’t exist.

This “race to the bottom” in currencies is sold to the public as necessary because of interdependency, the same interdependency that was essentially forced upon us over the past few decades by global corporate interests. Simultaneously, those same globalist interests are labeling the currency war as “protectionism”. Well, which one is it? Interdependency….or protectionism?

Globalism has created an economic atmosphere in which the masses assume that no country can survive without other nations to prop it up, but what happens when those individual nations can’t even support their own financial condition, let alone anyone else’s? The fact is, interdependency is a sham.

Let’s look at it this way; imagine you live in a large house and you have several roommates to help pay the rent. Some of your roommates are, unfortunately, starving “artists”, or freeloaders, and do not contribute their share. In order to survive, they begin leeching off the people who carry their own weight. This is Globalism, or interdependency.

Now, any sane person would either go find more responsible roommates to share a financial situation with, or, they would move out on their own and become independent. According to globalists though, you are not allowed to move out on your own. You are not allowed to become independent. Like a landlord that has the ability to keep you chained to the property, you live on his real estate or none at all. You must stay trapped in that house, in that financial situation, with a bunch of man-child reprobates, and make it work, for the rest of your life. Why must you do this? Globalists never fully explain, but apparently, it is the “natural order of things”, and isolationism is “bad sportsmanship”.

So, you are stuck in this house of shame. What are your options?

A) Threaten lazy roommates with financial reprisal, withholding funds, goods, etc. (This is what globalists call “protectionism”.) However, if you don’t pay your roommate’s end, you don’t meet the rent, putting the whole arrangement at risk of collapse, dragging everyone down into an abyss of homelessness and doom.

B) Become a freeloader yourself. (This is basically what the U.S. and many other countries have done or are in the process of doing. Why support yourself when you can just borrow and spend to your heart’s content. As long as your roommates keep shelling out the dough, you are good to go. They could go protectionist, though, and stop shelling out the dough. Then what do you all do…?)

C) Assassinate roomies, bury in floorboards, keep stuff for yourself (Shooting wars and violence erupt all the time because of trade disputes).

D) Continue on as the dupe who pays for everyone else. (Nobody does this for long, including countries. Eventually, they’ll turn to options A,B, or C…)

Under forced interdependency, the only person that comes out on top is the landlord. Everyone else becomes equally poor. The illusion, again, is that we must remain interdependent. Why not become self sufficient as a country, and refuse to play the game at all? Why not leave the dysfunctional house, flip the landlord the bird, and build your own home that actually works? Because a bunch of banking elites might label you “isolationist”? Who cares! The alternative is a planet of parasites feeding off each other in a progressively destructive and imbalanced global dystopia. Sometimes, people just don’t get along. Forcing them to predicate their very existence on each other against their will is not a recipe for peace, or economic stability; it’s a recipe for disaster.

The Perpetuation Of The Currency War Myth

In any epic battle, real or cinematic, two very important things are required; a hero, and a villain. Otherwise, the audience will just lose interest. The currency war being thrust upon us is no different. Generally, in war each side tends to see itself as the “hero” and the other side as the “villain”, regardless of their moral position. That doesn’t really matter though to the elites who spin the wheels as long as they derive the benefits they desire from the conflict.

Even though devaluation tensions have not yet mounted to complete distress in the China / U.S. dispute, for example, it is easy to see how the stage is being set on both sides of the pacific for perpetuation of the hero vs. villain myth. The people of America and the people of China are being carefully conditioned to see the other as the sole source of the economic crisis about to unfold.

Noam Chomsky has begun distributing a series of articles entitled, strangely enough, “China and the New World Order”. You can read the first two parts here:

Now, before any Liberty Movement people out there get excited about Chomsky finally waking up to the organized criminal nature of central banks, I have to warn you, he hasn’t opened his eyes to anything. Actually, his latest series of articles continues and supports the fable that American “imperialism” and Darth Vader-like treachery are the root cause of all the problems and discomfort on the face of the planet. In Chomsky’s view, American dominance is the “Old World Order”, an order which China (the hero) is standing against, along with other emergent economies. The “New World Order”, according to Chomsky, is the solution to decades of American tyranny.

I’ll admit, I’ve been a fan of Chomsky’s work on generative linguistics for a long time, but when it comes to his political views, he’s always been two dimensional.

Chomsky certainly ignores the fact that the Chinese Communist Party owes its power to western interests who supported Mao and his revolution through the efforts of General Joe Stillwell, who was supposed to be aiding the Nationalists instead. But hey, lets forget history and facts and just live in the “now”! The problem with Chomsky’s view is that it not only discounts history, it discounts the role of globalism and central banks altogether! It was not American imperialists alone that contributed to the dynamo of economic collapse we witness today. This is not financial “karma”. The collapse is a result of actions by U.S. corporate elites, European elites, South and Central American elites, and yes, even Asian elites. The operative word here is “elites”. Whether Chomsky realizes it or not, he is training his readers to associate the phrase “New World Order” with anti-imperialism! This is laughable, since the globalists who often use that same phrase to describe their objective of centralized economic and social control are anything BUT anti-imperialist.

Remember Song Hongbing and his book ‘Currency Wars’ which we discussed earlier? Well, Song’s view is almost identical to Chomsky’s!

In his book published three years ago, he describes the history of the global banking elite, predicting that they would trigger an economic collapse in order to destroy the U.S. dollar and usher in a new global currency. Sounds like he’s done his homework, except that in the same book he outlines how China is not a part of this plan, but an innocent target.

‘Currency Wars’ took China by storm in 2007, and Song was even named one of China’s “most powerful people” by Bloomberg:

Millions of Chinese citizens are now under the delusion after reading Song’s work that their government, which was brought into existence by globalist interests and institutes globalist policies, is somehow not a part of the globalist engineered currency war and that they are actually under attack by Western elites working through the U.S. Amazing. If only they understood that their own government is just as involved as ours in the making of the collapse, we might not be discussing the possibility of a currency war at all.

Last, and certainly least, is establishment sock puppet Paul Krugman, who never seems to miss a beat when there is a lie that needs disseminating:

In this article, Krugman regurgitates all the MSM talking points we’ve come to expect outlining the so called benefits of “sticking it to China”. Not once does this hack feel it necessary to mention that China also has the ability to liquidate its Treasury bond holdings causing a market domino effect that would annihilate the dollar. Krugman is yet another living example of why you don’t have to be intelligent, or even honest, to receive a Nobel Prize.

Here we see a growing chorus of disingenuous voices in China and the U.S. all chanting “fight fight fight fight”, without giving any concrete or rational reason why we should.

Don’t Bring A Penknife To A Gun Fight

Why not start a trade punch-up with China? I mean, their government is notoriously anti-freedom, right? Unfortunately, ours is not far behind theirs, so moral high ground is out of the question. And, economically, we have everything to lose, they have everything to gain.

China has replaced the U.S. in terms of export markets. The ASEAN trading bloc has been very lucrative for the Chinese economy, surging 55% in the first half of this year:

They have turned $100 billion in trade with Africa:

They have been expanding trade with Europe as well as political ties:

I’ve said this a million times and I’ll say it a million more; China does NOT need the U.S. any longer. It astounds me that mainstream economists still spew nonsense about China relying on American consumer markets. This is in no way true.

China has limited debts, trillions of dollars in foreign currency surplus, and a massive industrial capacity. Their only weakness is actually their currency. Inflation is rampant in China, especially in food and housing. The Yuan has limited purchasing power, making life for Chinese citizens difficult. Eventually, they will have to allow appreciation in their currency if they hope to sustain a stronger consumer base. So, why haven’t they allowed the Yuan to rise? It seems like a major contradiction….but it is actually deliberate.

China’s central bank has been issuing Yuan denominated bonds for the past two years, strengthening the Yuan’s reputation as a possible reserve currency in international circles. Yuan bonds are now nearly at parity with U.S. bonds:

The Yuan is being primed for considerable valuation, but there is one thing left for the Chinese to do: dump U.S. T-bonds. This is a difficult proposition. A dump at this time might look like antagonism, or even an attack, making China the “villain”, and not the “hero”. Wouldn’t it be helpful if the U.S. made a provocation that gave China global vindication in dumping Treasuries? Enter U.S. central bankers and their hordes of currency war propagandists, creating the perfect opportunity for China to bring down the dollar, and for other interests to replace it.

The reason so many people become confused over the China / America currency issue is because they are not looking at the big picture, the method behind the madness…

What An Amazing Confluence Of “Coincidences”, Said The Globalist

Coincidences, by their very nature, are supposed to be inherently unpredictable. Why is it then, that alternative and Liberty Movement economists have been able to predict market movements that would normally be called coincidental time and time again? Because there are no coincidences, especially not in an economy as manipulated as ours.

The question everyone needs to ask themselves is, in these perfect storms of destruction, who benefits the most? Look at all the factors that need to fall into place to produce a currency war between China and the U.S.; a global credit implosion to rival anything ever seen before, a complete re-engineering of the Chinese economy towards consumption in the span of three years, the issuance of Yuan denominated securities with the ample help of global corporations, the final solidification of the ASEAN trading block in the span of a year, the lowering of U.S. interest rates to near zero, the fiat printing of the dollar in the form of quantitative easing for the past two years, and the worldwide announcement of simultaneous currency interventions. That’s a lot of unprecedented events in a very short span of time. The sudden push for the IMF, the central bank of central banks, to become global overseer and “currency cop” is just the icing on the cake:

Currency cop? What does that mean, exactly? Let’s just ask the IMF.

“Further action is urgently needed to reinforce the institution’s role and effectiveness as a global body for macro-financial surveillance and policy collaboration,” the IMF’s steering committee said in a closing communiqué.

So, the solution to the increasing war in currencies, fabricated by central banks, is to give the central bankers more power to oversee and regulate all currencies? What does the G20 think about this? They think it’s a great idea!

What does Forbes have to say? They are declaring a “New World Order” in global markets:

The IMF is being tapped not as a referee in currency disputes, but as an arbitrator and regulator. This role has not quite materialized, and probably won’t until several currencies have imploded, including the dollar, but the end game is clear; we are meant to suffer a dollar derailment, and the IMF is “meant” to step in and take control of the matter for the greater good. Who benefits? The global bankers and elites at the helm of the IMF, who will receive more centralized economic power than has ever been realized in human history. This along with the IMF’s recent admittance that they intend for the SDR (Special Drawing Rights) to become the new world reserve currency, reveals clearly, without a doubt, that a currency war would be a curse for sovereignty, and for the financial life and freedom of the common man, but a windfall in the speedy promotion of globalism. Imagine that.

Original Article

1 comment:

  1. A currency war between China and the US seems inevitable now. China is unwilling to let the value of the yuan “float” and be determined though the normal forces of trade and currency trading. If the American government does plan to make a stand, it has no better time that to do it now to strengthen its level of exports and use that to help the US economy recover.
    Currency wars 2010