Currency Wars

[Burke]

For some time, I've suspected that nations around the world will be forced to adopt some kind of gold backed currencies. This is because we now live in a global economy, and they can no longer trust one another's money.

Recall that when the US began its massive money printing programs ("quantitative easing") a few years ago, the Chinese screamed bloody murder. This was because they hold much of our debt and the money printing meant that they would be paid back with dollars that were worth much less than the dollars they had lent us. It also meant that our manufacturers here could compete with them more easily.

Japan has recently acted to devalue its currency, which has caused additional commotion. Here is a story by financial analyst John Butler discussing recent action by the G7 group of countries:

"The evidence of a major breakdown in global economic and monetary cooperation continues to mount. Just yesterday, the G7 released a statement regarding foreign exchange policies, only to be followed by a corrective statement that the market reaction was undesirable. This indicates escalating tensions within the G7. But if the G7 cannot cooperate, how on earth will the G20 do so? Or other countries? We are witnessing in real time a descent into economic nationalism that increasingly resembles the 1920s and 1930s. Then, as now, such nationalism resulted in major economic damage, with every single currency devaluing sharply versus gold, and with every single stock market underperforming gold. History is rhyming, loud and clear."

http://m.financialsense.com/contributors/john-butler/cooperation-breakdown

Here is another story discussing the upcoming meeting of G20 countries, which contains:

"The quantitative easing pursued by central banks around the world – including the Bank of England and the US Federal Reserve – has enraged emerging economies such as Brazil as the value of their foreign reserves dwindles, raising fears over 'competitive devaluations'."

http://www.independent.co.uk/news/business/news/g20-summit-to-focus-on-currency-war-threat-to-economy-8497633.html?origin=internalSearch

Essentially, we have reached the point that countries around the world must print money to maintain their (artificial) economies. The EU is now doing it to avoid "austerity" and consequent riots, as they've had in Greece and Spain. China has been doing it to maintain their export advantage. The US is doing it because the economy is going to collapse as soon as it stops. The current stock market "boom" is a direct result of the Fed's QE policies. It will probably collapse when the money printing stops.

Money printing is and always has been just another kind of wealth redistribution. Whoever gets the newly created money gains and everyone else loses because of the inflation it causes. Now nations are beginning to screw one another this way so much, it is becoming intolerable.

So, what's going to happen?

Recently there have been many reports that central banks around the world are buying gold. I've posted some stories here about it. A return to some kind of gold backed currencies seems to me to be inevitable.

It may be that the heyday of fiat currencies is coming to an end. There is just no way the US and many other countries can "pay" their debts without printing money.

Let's hope so.

In any event, it seems obvious that the US dollar and many other currencies are doomed. You may as well stick a fork in them. It's just a matter of time.

I hope you have been buying gold or silver. It's not too late yet, IMO.

[DieAGator]

The US is doing it because the economy is going to collapse as soon as it stops.
Probably... most likely.

[bluelang]

Look at my navel!!!! Look at it!

[gregthegator]

Carbon or global warming tax and one world order...at LEAST financially is FINAL outcome...all will BE financial SLAVES for the BETTERMENT of mankind.

:cry::angry:

[ncbullgator]

This is the end game Burke.

Liberals and many Pubs, see nothing wrong in printing money to give to the slackers and looters.

Liberals and many Pubs see nothing wrong in having the Fed expand its balance sheet to buy Treasuries to artificially keep rates down.

Liberals and many Pubs see nothing wrong in piling on the crushing debt to our children. The amount paid out in interest with rising rates will bankrupt us.

The currency war, which we will lose, will prove them wrong. And it will get ugly.

:joecool:

[Burke]

Strictly speaking, printing money is not debt being left to our children. They are creating money now and stealing from everyone with any kind of money holdings. When the govt borrows cash, however, it does create debt that will pass on if not paid.

The Fed is buying up a lot of this debt with created money--which is said to be "monetizing" it. But QE is stealing wealth now. It's similar to what a counterfeiter does.

Some states are going broke right now. They can't create money. The US govt is and has been for some time essentially bankrupt. But it is papering over the problems by printing money.

Bernanke is creating a giant bubble in the bond market by buying up all these bonds. Many investors are wondering which will happen first, a bursting of this bond bubble or the collapse of the dollar.

As Jim Rogers says, this is going to end very badly.

[gatorev12]

About the only thing preventing a reboot of the 1920s/30s right now is that there's more global awareness of how interconnected we are.

China certainly can't move against the US because burying our currency would only serve to bankrupt their own currency and their economy (collapsing the US consumer economy would be devastating for China--there's no other market with the spare capital or favorable trading climate that could suitably make up for the shortfall...and the Chinese domestic market is still a few decades away from even getting to that point). Not to mention: the Chinese are even more dependent on oil imports than the US is and the US could castrate them in short order by blockading their oil shipments--driving up the economic and social costs of war with barely even a drop of sweat on our end.

The EU can't blame the Fed for printing money since they can't lose their largest trading partner any more than the Chinese can...AND the fact that US/European banks are so intrinsically tied together for several generations now, even if they wanted to start a currency war, they'd be in an even worse position than from where they started.

Japan has more debt than either the EU or the US per capita...and while they certainly don't like their own exports being more expensive (thus making it harder for them to pay off their debts); their dependence on the US is even greater than the Europeans because the Japanese have a very real need for the US to honor our regional security alliance with them due to the expanding threat from both China and North Korea.

Though there are many, many more points that could be made above--the refreshing thing is that all the aforementioned countries are well aware of those facts and choose cooperation rather than confrontation as the means to resolve differences.

[busigator96]

Why not get rid of competing currencies altogether?

[Burke]

Why not just let people trade as they choose, using what they agree upon for money?

[gatorev12]

Why not get rid of competing currencies altogether?

Didn't really peg you for the "One World" currency type--and I think most rational people can understand why a common medium for trade is preferable than having to barter every single time one wants to buy something.

[busigator96]

Well, we need to rethink on what is profit as humans. Does your definition of profit always include the use of a monetary measure? It would be nice to have access to the basics in life while voluntarily pursing our interests and sharing the findings with the world for their use at no charge. Perhaps it will be time soon to dump the profit motive in favor of collaboration and community. It seems like madness to me to perpetually crowd out people from survival and their respective gifts they have to offer humanity if given a chance to contribute. For us "lucky" ones...why have debt and wage servitude? At least slaves were fed and housed by their masters....we have to do both on our own.

Nothing is really ours. We are not born with it and we die without it. Money is born from a bank and it eventually will end up back a bank.

[madgator]

Gold will easily reach $6-$8k an oz.



as for what will pop first.....I am betting on the bond bubble. rates have been steadily creeping up the past few weeks.

the SQUEEZE is coming!

[Burke]

Actually, busygator, with massive inflation coming you probably want to become a huge debtor.

Borrow on your house at today's low interest rates; use the money to buy precious metals or other commodities; and, watch the real value of your mortgage payment go down as inflation comes roaring in. Maybe pay the mortgage off with some of what you make on your precious metals.

[gatorev12]

Well, we need to rethink on what is profit as humans. Does your definition of profit always include the use of a monetary measure? It would be nice to have access to the basics in life while voluntarily pursing our interests and sharing the findings with the world for their use at no charge. Perhaps it will be time soon to dump the profit motive in favor of collaboration and community. It seems like madness to me to perpetually crowd out people from survival and their respective gifts they have to offer humanity if given a chance to contribute. For us "lucky" ones...why have debt and wage servitude? At least slaves were fed and housed by their masters....we have to do both on our own.

Nothing is really ours. We are not born with it and we die without it. Money is born from a bank and it eventually will end up back a bank.

A utopian world will always sound infinitely preferable to the current reality--but what you're wishing for quite simply will be impossible for mankind to achieve without outright divine intervention.

The whole reason humanity even started on a system on monetary currency was because of efficiency/convenience. It's a pain in the azz for multiple people to agree on a common denominator for equal value for a set of goods and especially services. In our consumer society, it'd be impossible.

[busigator96]

Of course it is impossible....as long as people think in terms of money. The exponential growth of demand will eventually destroy this planet. In the face of this and the available technology, we can take a global inventory of resources and make them available instead of hoarding while others perish. Go to the www.thevenusproject.com to see what I am talking about.

[Burke]

Busy,

The planet has always had natural resources. People walked over oil fields for thousands of years with no knowledge they were there, no ability to get the oil up had they known the oil was there, and little if any ability to use it had they been able to get it. Africa and South America have vast natural resources but are poor. Japan and Hong Kong have little in the way of natural resources but are rich.

The resource that is responsible for wealth is man's reasoning mind.

The environment necessary for it to function is freedom.

[dudehead]

The resource that is responsible for wealth is man's reasoning mind.

I agree. And I've never understood why our tax policy has historically given preference to returns on deployed resource capital by taxing them at lower LTCG rates compared to returns on deployed human capital being taxed at higher ordinary income rates.

Reagan got that right in '86.

[Gatorrick22]

Carbon or global warming tax and one world order...at LEAST financially is FINAL outcome...all will BE financial SLAVES for the BETTERMENT of mankind.

:cry::angry:

This is like adding gasoline on a fire............ Bad idea. Simple answer is to: STOP THE DEFICIT SPENDING.

This is far too complex of a concept for many on the Left to understand.

[gator1986]

One world currency! The bible prophecies are true!

[gatorev12]

Of course it is impossible....as long as people think in terms of money. The exponential growth of demand will eventually destroy this planet. In the face of this and the available technology, we can take a global inventory of resources and make them available instead of hoarding while others perish. Go to the www.thevenusproject.com to see what I am talking about.

Again...thevenusproject is primarily based on a utopian worldview/lifestyle.

The only reason "money" has any value is because people give it value. The reason people give it value is because if they didn't, then every single consumer purchase or sale becomes a long, drawn-out ordeal whereupon two people are trying to agree upon a common medium of exchange.

What's faster/more convenient/more economical: arguing with a gas station manager what the "value" of 10 gallons of gasoline is (a lawyer might try and haggle the value of his legal services...a beekeeper might try and haggle the value of honeycombs and honey)--or paying him $37 for it?

...then multiply that by a factor of a gazillion as you'd need to repeat that every time you went to the grocery store, the mall, online shopping, etc etc etc and you'd realize the utter impossibility of what you suggest.

The only reasons people are going to "rethink" mediums of exchange are based on efficiency/convenience.

[tegator80]

The fundamental problem in the world, and especially in the US, is the march towards too much resources (money, power) in the hands of too few people. The Obamaites think that the best way to solve it is to just re-distribute it, and many of the minions are happy to take part.

If we were truly strict constitutionalists we would not have allowed this to happen but we got too big for our britches and decided that the constitution could evolve. What we needed to do is go back to when we broke up American Oil and AT&T. Not because they were evil or incompetent but that too big to fail eventually leads to some questionable decisions. Unfortunately I think we lost that card and we won't be getting it back.

[T3goalie]

The fundamental problem in the world, and especially in the US, is the march towards too much resources (money, power) in the hands of too few people. The Obamaites think that the best way to solve it is to just re-distribute it, and many of the minions are happy to take part.


I think that this is the biggest Misconception of politics because the opposite is true.

Central planning puts money in fewer and fewer hands (not more), restricts growth of a middle class, reduces private competition, reduces independent ownership and uses the Government as chief distributor of money and benefits for mere survival. Meanwhile the largest private institutions, such as banking, insurance, health care, squeeze the smaller and grow larger by the mere fact that access and competition are eliminated. In the end the top gets narrower and richer, the middle gets squeezed out and bottom gets bigger. And nobody calls them out.

It is similar to the open immigration arguments. Who gets richer? The poor? No. Big farming. Why? cost of goods sold and overhead is reduced. Who gets screwed? Those Americans who end up with lower wages, lose jobs to cheap undocumented labor, live in low income areas and have their schools, social services and medical services over run... People forget that Mexican Americans were pissed when Reagan caved to teddy in the 80s because they knew they were the ones getting screwed.

Reality and the so called reasoning run contrary to stated goals :lie:! Makes you wonder about the real goals...

[tegator80]

I think that this is the biggest Misconception of politics because the opposite is true.

Central planning puts money in fewer and fewer hands (not more), restricts growth of a middle class, reduces private competition, reduces independent ownership and uses the Government as chief distributor of money and benefits for mere survival. Meanwhile the largest private institutions, such as banking, insurance, health care, squeeze the smaller and grow larger by the mere fact that access and competition are eliminated. In the end the top gets narrower and richer, the middle gets squeezed out and bottom gets bigger. And nobody calls them out.

It is similar to the open immigration arguments. Who gets richer? The poor? No. Big farming. Why? cost of goods sold and overhead is reduced. Who gets screwed? Those Americans who end up with lower wages, lose jobs to cheap undocumented labor, live in low income areas and have their schools, social services and medical services over run... People forget that Mexican Americans were pissed when Reagan caved to teddy in the 80s because they knew they were the ones getting screwed.

Reality and the so called reasoning run contrary to stated goals :lie:! Makes you wonder about the real goals...

But you know that is exactly how works. The re-distribution is like Robin Hood taking from the rich but giving to his friends. He just gets credit through his PR departments. No different than the other re-distributors.