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The Currency War, Part II

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In Part I, readers saw how our political “leaders” were deliberately destroying our economies (at the request of the Corporate Oligarchs whom they serve) in order to boost the short-term corporate profits of these Oligarchs – by destroying the wages of their own workers. Readers also saw the additional costs of this economic suicide: massive unemployment, spiraling debts, and soaring inflation.

This comes in the context of a convoluted Bloomberg article, which discusses the current financial summit of the G-20; where the G-7 sub-group issued a quasi-denial that they were planning a “currency war”. This is, of course, a ludicrous lie – since we have roughly a decade of actions by these same G-7 nations which totally contradict their hollow words.

For the past ten years or so “competitive devaluation” has been the official monetary policy of these governments: competing to see who could destroy the value of their currency the fastest. So how would a “currency war” differ from our present “competitive devaluation”?

At most, a currency war would simply be a greater degree of what these corrupt governments have already been doing for the past ten years. At least, the difference is pure semantics. Thus when Bloomberg speaks of our governments efforts to “calm concern” about a currency war, the sham is utterly transparent.

Our dishonest governments are attempting to reassure us that they aren’t “planning" on doing (in the future) the same thing they have been doing for the past decade. This is much like a heroin addict (with needles sticking out of his pockets) assuring anyone who will listen that he has “no plans” on shooting-up with more heroin.

This leads us to two closely related questions. Why are our governments lying about their currency destruction? Why is the success of this lie of such vital importance to these governments? The answer to these questions requires ½ arithmetic and ½ understanding human nature.

One thing which humanity has always been good at is destroying things. Thus when our governments “compete” to destroy their own currencies, we know they will be successful. From the moment that competitive devaluation began, the only possible outcome was all these debauched currencies going to zero – i.e. the definition of hyperinflation.

However, even our dim-witted political servants can comprehend the inevitable result of competitive devaluation: all their paper currencies utterly worthless; the fraudulent Paper Empires of their Oligarch masters nothing but confetti. The only way to delay this outcome is to:

a) Lie about what they are doing.

b) Manipulate markets to hide the effects of their actions.

Hyperinflation should be an event of pure arithmetic. Exponentially increasing money-printing (i.e. an exponentially increasing rate of currency-dilution) should produce identical, but inverse  curves. One curve shows the money-printing going to infinity; while its mirror-image shows the value of currency going to zero at the same rate.

However, hundreds of years of empirical evidence shows us that the typical hyperinflation is not an arithmetic event but rather a “crisis of confidence”.  To properly understand this requires understanding a colloquial term: the “con-man.”

 

This colloquialism is, in turn, the shortened form of “confidence man.” This reflects an understanding that (ultimately) all swindlers require first obtaining and then maintaining the confidence of their Chump(s).  The dynamics are simple.

When the con-man has our confidence we trust what he says, and thus don’t look carefully (and think carefully) about what he is actually doing. However, the moment the con-man loses our trust/confidence we suddenly closely scrutinize what the con-man is doing to us; we recognize the sham/swindle/fraud; and the proverbial “jig is up.”

Logic tells us that hyperinflations should be events of pure arithmetic. History tells us most hyperinflations are a “crisis of confidence”. Translation: the “final stage” of most hyperinflations is the interval between when a currency actually becomes worthless (in economic/mathematical terms) and the Chumps realize that the paper is worthless – i.e. the moment that governments (and the bankers lurking behind them) lose the trust of the Chumps.

Thus history and logic have answered our questions. We now know precisely why our governments are lying to us about their currency-destruction game. And we know why the success of that lie is a do-or-die imperative. Now we get to the really disturbing part.

Our paper currencies are already effectively worthless. This can be demonstrated unequivocally in several different ways. Permanent 0%/near-zero interest rates alone make these paper currencies virtually worthless; and the simple economics/mathematics which demonstrate this are laid out in a previous commentary.

However most of this Western paper is worthless on a much more fundamental basis. Arguably, none of this paper has had value since the Nixon regime abolished the quasi-gold standard which “backed” the U.S. dollar. Since that time, any “value” in this paper has been purely implied – almost identical to how a share in a corporation derives value.

We understand that if we have the misfortune of holding shares in a bankrupt corporation that those shares are worthless, or nearly so. “Secured creditors” may be able to recover some of their own losses, however “unsecured creditors” (i.e. shareholders) often end up with zero.

Most Western governments are now obviously and utterly insolvent. The near-complete monetization of debt in both the U.S. and Europe is unequivocal mathematical proof of this point. To illustrate this, we must understand why the U.S. government and the Euro-zone have chosen to engage in almost complete monetization of debt.

It’s not that there are “no buyers” for this debt in absolute terms. Rather, there are no buyers for any of these fraud-bonds at their fantasy interest rates – many, many percentage-points below any rational interest rate on the debts of these Deadbeat Debtors. Obviously, with all Western governments less solvent than at any time in the history of credit markets; interest rates should (must) reflect that much higher level of risk – especially with one of these Deadbeat Debtors (Greece) having already defaulted.

Pull out your calculators, and you’ll see that if the United States was forced to pay 10% interest on its massive bond-debts it would be bankrupt today. If Europe’s Deadbeat Debtors were forced to pay 10% interest on their massive debts, most of them would be bankrupt today. That would still be only half as high interest rates went in the Volcker era (to “cure” precisely the same spiraling inflation we have today).

Thus the U.S. and European governments are currently monetizing their own debt in order to (fraudulently) drive-down interest rates on their own, bad debts; as literally the last-ditch measure to ward-off immediate bankruptcy. Obviously if the only thing preventing the immediate bankruptcy of these “corporations” is through fraudulently manipulating the interest rates on their debt far below any rational market value; then the “shares” of these corporations are worthless (or nearly so) today.

For those readers seeking to find some distinction/demarkation point between ‘mere’ competitive devaluation and the “currency war” our governments tell us they are not planning on having; we appear to have it. Competitive devaluation represented the era where our governments drove their paper currencies to zero (in economic/mathematical terms).

The Currency War represents the final death-throes of these paper currencies: the interval of time that elapses from the time all this paper actually became worthless, and the inevitable “crisis of confidence” when the Chumps realize that all this paper is worthless.

One final warning. History also tells us that the final “crisis of confidence” which occurs when these paper currencies die is more often than not lightning-quick. You go to sleep one night with “money” in your wallet, and you wake up the next morning with a pocket full of confetti.

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Jeff Nielson
...
written by Jeff Nielson, February 18, 2013
it is not easy to discuss the devaluation of paper money without taking a look at the petrodollar system:...


Yes Redpill.

There is no doubt that the paper-for-oil scam run by the U.S. is a major ingredient in the overall paradigm.
redpill
...
written by redpill, February 16, 2013
Jeff,

it is not easy to discuss the devaluation of paper money without taking a look at the petrodollar system:

http://ftmdaily.com/preparing-for-the-collapse-of-the-petrodollar-system/

http://ftmdaily.com/preparing-for-the-collapse-of-the-petrodollar-part-2/

http://ftmdaily.com/preparing-for-the-collapse-of-the-petrodollar-system-part-3/

http://ftmdaily.com/preparing-for-the-collapse-of-the-petrodollar-system-part-4/
Jeff Nielson
...
written by Jeff Nielson, February 16, 2013
Interesting to see the viscous attack on gold today, coinciding with the G-20 meeting.
While these sociopaths are plotting the continuing destruction of our fiat currencies, what better message to send?
The MSM was all over this with reports that major hedge funds were selling, perhaps signaling an end to the 12 year bull market in gold.
What a crock of shit.
What a brilliant diversion.
Shake the sheeples faith in PM, and get them back in line for fiat currency...



Yes Bobbbny, the pattern is so old it's like a re-run that one has watched about a half-dozen times too often. The periods of MOST vicious attacks on precious metals markets represent the periods of greatest FEAR of an explosive rise in prices. And so we have (in chronological order):

1) The Crash of '08. When the printing-presses FIRST began running white-hot and the FIRST "bail-out" $TRILLIONS were thrown around; this was the single worst/largest ambush of this 12-year bull market.

2) The silver-ambush in the Spring of 2011. With silver about to break through the last (supposed) "resistance" level of $50/oz -- and BEGIN to get the Sheep excited -- we saw the absurd/transparent/illegal take-down of the silver market at that time.

3) Today. With the printing-presses ONCE AGAIN being cranked-up to "white hot" we see the SAVAGE manipulation of bullion markets since the beginning of a major break-out in September. It doesn't LOOK especially "savage" to outside observers -- because hitting the market with everything they've got can do little more than prevent prices from RISING.

However, this temporary delay in the next major, rally/spike in precious metals comes at the expense of an even larger SPIKE in the near future.

Note that the propaganda machine will then blame that spike on the "evil speculators" (i.e. us)... smilies/wink.gif
bobbbny
...
written by bobbbny, February 15, 2013
Interesting to see the viscous attack on gold today, coinciding with the G-20 meeting.
While these sociopaths are plotting the continuing destruction of our fiat currencies, what better message to send?
The MSM was all over this with reports that major hedge funds were selling, perhaps signaling an end to the 12 year bull market in gold.
What a crock of shit.
What a brilliant diversion.
Shake the sheeples faith in PM, and get them back in line for fiat currency.
We've seen this over and over, and it doesn't stop the Chinese, the Russians, the Indians, or astute people the world over from protecting themselves with PM.
They can continue this charade for a very long time, causing us great pain, but in the end the fiat will unravel, as it always had.
Meanwhile, thanks again sociopath banksters for allowing me to buy more at cheap prices.
Jeff Nielson
...
written by Jeff Nielson, February 15, 2013
...yes, I understood that but I was really questioning apberusdisvet, who thinks there could be an overnight devaluation, which seems conceptually impossible to me. And I want to repeat my question to you re the site: (And how come I'm logged in but when I try and post this under my name, Sneed, I get the idiotic message "This name has been registered. Please use other name.") So I use Sneedo and your site is fine with it.



Dealing with your second question first: sorry, there are definitely some things in this universe beyond my comprehension -- and the Gremlins which lurk on this site and occasionally "ambush" the unwary are one of those things (lol).

Now to the first part of your question: how could there be an "overnight" collapse of these (worthless) paper currencies to zero?

Two scenarios:

1) Collapse of confidence. In the Crash of '08; virtually overnight there was "no market" for much/most/all of the "securities" handled by Wall Street -- because people FINALLY removed their blinders and realized that this financial feces was riddled with fraud and (at least potentially) worthless.

"No market" means no BIDS -- and that's just another way of saying "worthless." And our paper currencies are just as riddled with fraud, and of just as dubious a value as Wall Street's precious "securities".

2) Deliberate sabotage. At the MOMENT, our governments are still trying to prop-up this financial time-bomb. But once they decide to GIVE UP attempting to inflate this "lead zeppelin" they may very well decide themselves that a "fast crash" is less painful for THEM than some slow-death spread over weeks/month.

And as I pointed out in my commentary; the one thing these Oligarchs (and their servants) are actually GOOD AT is "destroying things"... smilies/wink.gif
sneed
...
written by Sneedo, February 15, 2013
@Jeff Well, yes, I understood that but I was really questioning apberusdisvet, who thinks there could be an overnight devaluation, which seems conceptually impossible to me. And I want to repeat my question to you re the site: (And how come I'm logged in but when I try and post this under my name, Sneed, I get the idiotic message "This name has been registered. Please use other name.") So I use Sneedo and your site is fine with it.
Jeff Nielson
...
written by Jeff Nielson, February 14, 2013
How does a nation "devalue" a totally unbacked currency? Devalue compared to what? Do they just announce that all prices for everything for sale in the country just doubled? Seems to me there must be something to devalue against for this to happen and I've no idea what it would be.


Sneedo, all that "devaluation" represents is currency-dilutuon -- i.e. printing money. Want to "devalue" the shares of a corporation? Print more shares.

What "competitive devaluation" is all about is driving these currencies to zero AT THE SAME SPEED -- precisely so people don't understand what's going on. I guarantee that if ONLY the U.S. was devaluing its paper you would understand very clearly what was happening: YOUR standard of living was collapsing while the rest of the world remained prosperous.

However with ALL the currencies being driven to zero at roughly the same speed its lobster-in-the-pot syndrome -- we don't realize that EVERYONE'S standard of living is being destroyed (except the Fat Cats at the top).
Jeff Nielson
...
written by Jeff Nielson, February 14, 2013
Jeff: I have always maintained that the end game will be an overnight (preferably on a Friday preceeding a Monday holiday)devaluation of the USD, probably by at least 50%. For that reason I keep as little as possible in my bank accounts; just enough for bill pay. I would advise others to do the same.


Apberusdisvet, when I talk to people who have traded out of their mining shares -- and are holding paper -- their response is that "it's a bear market for the miners" AT THE MOMENT.

When people ALREADY in this sector talk about "having time" to re-position themselves AFTER our economies detonate, sometimes I despair that I'm "reaching" anyone at all...
sneed
...
written by Sneedo, February 14, 2013
How does a nation "devalue" a totally unbacked currency? Devalue compared to what? Do they just announce that all prices for everything for sale in the country just doubled? Seems to me there must be something to devalue against for this to happen and I've no idea what it would be. (And how come I'm logged in but when I try and post this under my name I get the idiotic message "This name has been registered. Please use other name.")
apberusdisvet
...
written by apberusdisvet, February 14, 2013
Jeff: I have always maintained that the end game will be an overnight (preferably on a Friday preceeding a Monday holiday)devaluation of the USD, probably by at least 50%. For that reason I keep as little as possible in my bank accounts; just enough for bill pay. I would advise others to do the same.

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