Why the U.S. has Launched a New Financial World War — And How the the Rest of the World Will Fight Back!
- This is an interesting article to get an understanding into all the ramifications of currency war and Quantitative Easing. Many complex issues are covered. Professor Michael Hudson:
Why the U.S. has Launched a New Financial World War — And How the the Rest of the World Will Fight Back
What is to stop U.S. banks and their customers from creating $1 trillion, $10 trillion or even $50 trillion on their computer keyboards to buy up all the bonds and stocks in the world, along with all the land and other assets for sale in the hope of making capital gains and pocketing the arbitrage spreads by debt leveraging at less than 1 per cent interest cost? This is the game that is being played today.
Finance is the new form of warfare – without the expense of a military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? All that is required is for central banks to accept dollar credit of depreciating international value in payment for local assets. Victory promises to go to whatever economy’s banking system can create the most credit, using an army of computer keyboards to appropriate the world’s resources. The key is to persuade foreign central banks to accept this electronic credit.
U.S. officials demonize foreign countries as aggressive “currency manipulators” keeping their currencies weak. But they simply are trying to protect their currencies from being pushed up against the dollar by arbitrageurs and speculators flooding their financial markets with dollars. Foreign central banks find them obliged to choose between passively letting dollar inflows push up their exchange rates – thereby pricing their exports out of global markets – or recycling these dollar inflows into U.S. Treasury bills yielding only 1% and whose exchange value is declining. (Longer-term bonds risk a domestic dollar-price decline if U.S interest rates should rise.)
“Quantitative easing” is a euphemism for flooding economies with credit, that is, debt on the other side of the balance sheet. The Fed is pumping liquidity and reserves into the domestic financial system to reduce interest rates, ostensibly to enable banks to “earn their way” out of negative equity resulting from the bad loans made during the real estate bubble. But why would banks lend more under conditions where a third of U.S. homes already are in negative equity and the economy is shrinking as a result of debt deflation?
The problem is that U.S. quantitative easing is driving the dollar downward and other currencies up, much to the applause of currency speculators enjoying a quick and easy free lunch. Yet it is to defend this system that U.S. diplomats are threatening to plunge the world economy into financial anarchy if other countries do not agree to a replay of the 1985 Plaza Accord “as a possible framework for engineering an orderly decline in the dollar and avoiding potentially destabilizing trade fights.” The run-up to this weekend’s IMF meetings saw the United States threaten to derail the international financial system, bringing monetary chaos if it does not get its way. This threat has succeeded for the past few generations.
The world is seeing a competition in credit creation to buy foreign resources, real estate, public and privatized infrastructure, bonds and corporate stock ownership. This financial grab is occurring without an army to seize the land or take over the government. Finance is the new form of warfare – without the expense of a military overhead and an occupation against unwilling hosts. Indeed, this “currency war” so far has been voluntary among individual buyers and the sellers who receive surplus dollars for their assets. It is foreign economies that lose, as their central banks recycle this tidal wave of dollar “keyboard credit” back into low-yielding U.S. Treasury securities of declining international value.
For thousands of years tribute was extracted by conquering land and looting silver and gold, as in the sacking of Constantinople in 1204, or Incan Peru and Aztec Mexico three centuries later. But who needs a military war when the same objective can be won financially? Today’s preferred mode of warfare is financial. Victory in today’s monetary warfare promises to go to whatever economy’s banking system can create the most credit. Computer keyboards are today’s army appropriating the world’s resources.
The key to victory is to persuade foreign central banks to accept this electronic credit, bringing pressure to bear via the International Monetary Fund, meeting this last weekend. The aim is nothing as blatant as extracting overt tribute by military occupation. Who needs an army when you can obtain the usual objective (monetary wealth and asset appropriation) simply by financial means? All that is required is for central banks to accept dollar credit of depreciating international value in payment for local assets.
But the world has seen the Plaza Accord derail Japan’s economy by obliging its currency to appreciate while lowering interest rates by flooding its economy with enough credit to inflate a real estate bubble. The alternative to a new currency war “getting completely out of control,” the bank lobbyist suggested, is “to try and reach some broad understandings about where currencies should move.” However, IMF managing director Dominique Strauss-Kahn, was more realistic. “I’m not sure the mood is to have a new Plaza or Louvre accord,” he said at a press briefing. “We are in a different time today.” On the eve of the Washington IMF meetings he added: “The idea that there is an absolute need in a globalised world to work together may lose some steam.” (Alan Beattie Chris Giles and Michiyo Nakamoto, “Currency war fears dominate IMF talks,” Financial Times, October 9, 2010, and Alex Frangos, “Easy Money Churns Emerging Markets,” Wall Street Journal, October 8, 2010.)
Quite the contrary, he added: “We can understand that some element of capital controls [need to] be put in place.”
The great question in global finance today is thus how long other nations will continue to succumb as the cumulative costs rise into the financial stratosphere? The world is being forced to choose between financial anarchy and subordination to a new U.S. economic nationalism. This is what is prompting nations to create an alternative financial system altogether.
The global financial system already has seen one long and unsuccessful experiment in quantitative easing in Japan’s carry trade that sprouted in the wake of Japan’s financial bubble bursting after 1990. Bank of Japan liquidity enabled the banks to lend yen credit to arbitrageurs at a low interest rate to buy higher-yielding securities. Iceland, for example, was paying 15 per cent. So Japanese yen were converted into foreign currencies, pushing down its exchange rate.
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- Gold is protection from the Illuminist banksters’ fiat currencies debasement worldwide. The current monetary problem is not just a USD-CNY issue. Yes, the USD is heading towards toilet paper status. If you think it is only the USD in trouble, you are mistaken. This is a financial war against the world. The collapse of the USD is the final piece in their global currency crisis plan.
- All fiat currencies are becoming toilet paper. Fiat currencies are simply legalized fraud perpetrated by Illuminist banksters who own the global central banking cartel. The sheeple are hoodwinked into believing that pieces of ‘Monopoly’ money printed out of thin air is real money. It is a confidence (con) job! Illuminists will electronically create massive amounts of fiat currency out of thin air to buy up the world. This tidal wave of USD, JPY and EUD will slosh around the world driving up prices and collapsing prices as it withdraws. Smart governments will implement capital controls quickly to protect themselves.
- Eventually, the world will dump their fiat currencies and exchange them for hard assets like: precious metals, commodities…etc. We will see a financial, economic and monetary collapse leading to world war. At the end of this period, the Illuminati will usher in their New World Luciferian Order. Remember their Hegelian dialectic of Order Out of Chaos, you will live through it. These people are mentally ill, sick bast*****.
Gold Rises as Bankster Currency War Gains Momentum
Globalist loan sharks feign worry. Unemployment is so bad in the United States, the government is thinking about slapping tariffs on cheap Chinese slave labor products.
China is a lead player in the so-called currency war now underway. It has kept the value of its currency low in order to game the system and gain trade advantages. China refuses to follow the rules and this concerns the loan shark boss Dominique Strauss-Kahn and Little Timmy Geithner, the latest Wall Street and Federal Reserve insider to run our Treasury.
“The United States believes that global rebalancing is not progressing as well as needed to avoid threats to the global economic recovery,” said Little Tim. “Our initial achievements are at risk of being undermined by the limited extent of progress toward more domestic demand-led growth in countries running external surpluses and by the extent of foreign exchange intervention as countries with undervalued currencies lean against appreciation.”
China’s authoritarian leadership does not take kindly to the IMF and Little Tim bossing it around. Zhou Xiaochuan, China’s central bank governor, told their counterparts in the United States that China has no intention of devaluing its currency. Beijing was committed to gradualism rather than “shock therapy” when it came to the revaluation of its currency, explained Xiaochuan.
On Monday, the beleaguered U.S. dollar hit a new 15-year low against the yen after meetings of the IMF and G7 finance ministers failed to put the brakes on the currency war now underway. The dollar weakened against a basket of currencies and fell as low as 81.37 yen, before recovering to 81.99. The dollar also traded near an eight-month low against the euro on speculation the Federal Reserve will buy government debt with more funny money.
Friday’s bad news on employment raised the specter of more quantitative easing — creating money out of thin air — and devastating inflation that inevitably occurs when the money supply is artificially expanded.
It was good news for gold. The precious metal climbed for a second day. Gold for immediate delivery rose $2.14, or 0.2 percent, to $1,348.88 an ounce while silver advanced 0.3 percent. Dundee Capital Markets said the primary catalysts for its continued bullish gold price outlook are “hyper monetary and fiscal reflation,” in other words central banksters creating money out of thin air.
People interested in protecting their wealth from the engineered ravages of the Federal Reserve and the central banksters are flocking to gold. “Most countries want a weaker currency and their attempts to get there are good for all kinds of real assets including gold,” Matthew Turner, an analyst at Mitsubishi Corp. in London, told Bloomberg. “Just talk of currency wars is going to prompt people to diversify away from paper assets.”
Strauss-Kahn said that “we face the risk of a lost generation” if employment does not turn around soon. “When you lose your job, your health is likely to be worse. When you lose your job, the education of your children is likely to be worse. When you lose your job, social stability is likely to be worse — which threatens democracy and even peace. So we shouldn’t fool ourselves. We are not out of the woods yet. And for the man in the street, a recovery without jobs doesn’t mean much,” said Strauss-Kahn.
In 2009, as storm trooper police were unleashed on G20 protesters in Pittsburgh, the IMF was anointed as the globalist central bank. The IMF issues its own funny money, known as SDRs, or Special Drawing Rights. The SDR is a synthetic currency originally created by the IMF to replace gold and silver in large international transactions. It was proposed that it be used as a substitute global reserve currency while the U.S. figures out how to pay international banksters and foreigners who hold U.S. debt.
During the G20, plans were announced for implementing the creation of a new global currency to replace the dollar’s role as the world reserve currency. Point 19 of the communiqué released by the G20 at the end of the Summit stated, “We have agreed to support a general SDR allocation which will inject $250bn (£170bn) into the world economy and increase global liquidity.”
“Ultimately, what this implies is that the future of the global political economy is one of increasing moves toward a global system of governance, or a world government, with a world central bank and global currency,” writes Andrew Gavin Marshall. The concerted push for world government will ultimately result in “a decline in democracy around the world, and thus, a rise in authoritarianism. What we are witnessing is the creation of a New World Order, composed of a totalitarian global government structure.”
Strauss-Kahn’s “lost generation” is not happenstance or the unfortunate result of the fumbling of clueless economic managers, as much of the corporate media would have us believe. It is part of the plan to crash national economies and foment social chaos of the sort the globalists will exploit in order to sell their agenda to a desperate public.
- This coming food crisis is about bankster speculative money pouring into agricultural commodities. Quantitative Easing (QE) causes currency debasement and inflation. The Illuminist banksters will take this opportunity to drive food prices to the moon. It is true that global grains stock and harvests are shrinking. But the rise in prices will be disproportionately higher than based on pure fundamentals. It is all part of the agenda to cause global famine and use it as a depopulation tool. See : Banksters Inflate Speculative Food Bubble, U.N. Offers Global Governance Solution
U.S. corn jumps by daily limit to hit 2-year high
Chicago corn jumped 8.5 percent on Monday to its highest price in more than two years, extending gains after the U.S. forecast on Friday supplies in the world’s top exporter would shrink to a 14-year low. Chicago Board of Trade December corn futures surged as much as 45 cents to a high of $5.73-1/4 a bushel, the highest since September 24, 2008, and trading limit-up for the second straight day. By 11:40 a.m. BST, it was at $5.72-1/4 a bushel, up 44 cents or 8.3 percent.
“Any period of time where you get two consecutive limit-up days, it’s likely to spur a little bit of panic buying as some people try to get in before they perceive it being a little too late,” said Luke Matthews, a commodity strategist at Commonwealth Bank of Australia.
Citing a late summer heat that reduced yields across the country’s corn belt, the U.S. Department of Agriculture on Friday cut its crop estimate by 4 percent, saying stockpiles would fall to less than a four-week supply by next autumn. The USDA pegged the 2010/11 corn crop at 12.664 billion bushels, based on the average projected yield of 155.8 bushels per acre — well below the average analyst estimate of 12.960 billion bushels in production and 160.0 bushels per acre in yield.
With high demand, the corn surplus will shrink to 902 million bushels by the end of this marketing year, the smallest since 883 million in 1996/97. “It’s not surprising the market reacted the way it has,” said Paul Deane, an agricultural commodity strategist at ANZ. “People were of the expectation the USDA would cut (its yield estimate by) 2 or 3 bushels, but nothing as dramatic as they did, cutting to 156 bushels.”
Corn could breach $6 a bushel “reasonably comfortably,” given the market’s shock over the magnitude of the cut, said Deane, a level not seen since August 2008. Soybean futures also raced higher after the USDA cut its crop forecast by 2 percent. CBOT November soybeans rose 4.25 percent to $11.83-1/2 a bushel, after rising as high as $11.85-1/4 earlier, their loftiest since August 13, 2009.
Hot weather in August prevented corn and soybeans from reaching peak yields, traders said. Mid-September rains slowed the harvest in the Upper Midwest. CBOT December wheat rose 1.5 percent to $7.29-1/2 a bushel, off a three-week high of $7.39-3/4 earlier.
Corn has risen 77 percent since its June low of $324-1/2 a bushel, but it is still around 25 percent shy of the 2008 peak of $7.65 a bushel. Wheat is up 71 percent from the June low and 45 percent lower than the 2008 high. European grains futures were also higher, mainly fuelled by the surge on U.S. markets and the bullish USDA data, traders said.
Food crisis fears grow as corn prices surge
Warnings from the US about its poor harvests have added to growing fears about an impending food crisis. As the price of corn soared to hit a two year high on Monday, a soft commodity specialist told Citywire it opens up investment opportunities in soybeans, lean hogs and live cattle.