As in real war defense, of today, some countries hold a much lesser army, and depend on "the alliance" with other stronger nations to defend them. Such it is with the currencies! Many states hold but a few "digital currencies" as reserves for currency wars and see no need for "gold nuclear weapons". They sell off these weapons and do join "the currency alliance" of stronger nations. We see this in Europe, yes?
- 5/21/98 ANOTHER (THOUGHTS!)
Is the Euro a child of the forces of the New World Order, or the forces of regionalism/nationalism/tribalism? **
I would say, "Old World Order" to return. To understand/explain better: "A very easy way to view this "order", would be to simply say that the American Experience is reaching the end! As we know, world war two left Europe and the world economy destroyed. Many thinkers of that period thought that the world was about to enter a decades-long depression as it worked to rebuild real assets lost in the conflict. It was this war that so impacted the idea of looking positively toward the future. The past ideals of building solid, enduring, long term wealth were lost in the conception of a whole generation possibly doing without! In these fertile grounds people escaped reality with the New Idea of long term debt, being held as a money asset. Yes, here was born the American Experience that comes to maturity today.
New world order, regionalism and tribalism are but modern phrases that denote "group retreat to avoid paying up". The worldwide currency system is truly a reflection of an economy built from war, using the American Experience, the US$ and the debt that it represents. But, for the American dollar to continue as the representative of the global financial system, in the form of being the reserve currency, maturing generations of all countries must accept it, and the tax on real production it clearly imposes! In the very same mind set, that people buy the best value for the lowest price (Japan cars in the late 70s), and leave an established producer to die, so will they escape the American currency and accept any competitor that offers a better deal. Because we are speaking of currencies here, the transition will be brutal!
- 5/5/98 ANOTHER (THOUGHTS!)
Currency Wars, by Song Hongbing, is a bestselling book in China, reportedly selling over 200,000 copies and is reportedly being read by many senior level government and business leaders in China. Originally published in 2007 the book gained a resurgence in 2009 and is seen as a prominent exponent of a recently emerged genre labeled "economic nationalist" literature. Another bestselling book within this genre is Unhappy China, however, unlike this and other books within this genre, Currency Wars has been received more positively by the Chinese leadership as its recommendations are seen as less aggressive towards the US. The premise of this book is that Western countries are ultimately controlled by a group of private banks, which according to the book runs their central banks. This book cites the fact that the Federal Reserve is a private body to support its role.
According to the book, the western countries in general and the US in particular are controlled by this clique of international bankers, who uses currency manipulation (hence the title) to gain wealth by first loaning money in USD to these developing nations and then shorting their currency. The Japanese Lost decade, the 1997 Asian Financial Crisis, the Latin American financial crisis and others are attributed to this cause.
The book's author predicted a banking crisis in the US in 2008.
In China, which is in the midst of a lengthy debate about opening its financial system under US pressure, the book has become a surprise hit and is being read at senior levels of government and business.
"Some senior heads of companies have been asking me if this is all true," says Ha Jiming, chief economist of China International Capital Corp, the largest local investment bank.
The book also gives ammunition, however haywire, to many in China who argue that Beijing should resist pressure from the US and other countries to allow the yuan to appreciate.
The book's publisher, a unit of the state-owned CITIC group, says Currency Wars had sold almost 200,000 copies, with an estimated 400,000 extra pirated copies in circulation as well...
Chinese officials remain deeply suspicious of advice from Western countries to open up the financial system and float the currency. "They think it is just a new way of looting developing countries," Ha says.
Song himself has been commissioned to write a number of new books to capitalise on his success: on the yen, the euro and also on China's financial system.
- The Australian
...After all, the root of the world's problems for nearly a century - from the Great Depression to the Asian financial crisis - is Wall Street's manipulation of the global financial system, he says. China should be prepared to fight 'bloodless wars' waged by 'evil forces' like the US Federal Reserve aimed at destroying the Chinese economy, Mr Song's book concludes.
If that does not send chills across the developed world, another book, China Is Unhappy - which just hit No. 3 in the bestseller's chart - laid bare Chinese unhappiness with the current set-up where the West holds major influence.
- The Straits Times
Kinda makes you wonder how many of those laughing students read Currency Wars, huh?
Geithner tells China its dollar assets are safe (Reuters)
Mon Jun 1, 2009 8:03am
"Chinese assets are very safe," Geithner said in response to a question after a speech at Peking University, where he studied Chinese as a student in the 1980s.
His answer drew loud laughter from his student audience.
And don't forget that Geithner also offered China some of Europe's stake in the IMF!
Geithner offered U.S. backing for a higher-profile role for China in running global institutions including the IMF -- a controversial proposition since it raises the sensitive issue of reducing Europe's voting share in the global lender.
"The United States will fully support having China play a role in the principal cooperative arrangements that help shape the international system, a role that is commensurate with China's importance in the global economy," he said.
Who out there thinks the ECB is feeling some pressure right now?
Trichet leaves early to attend crisis meeting (ABC News)
Tue Feb 9, 2010 10:25am
There were rumours last week that the European Central Bank would hold an extraordinary meeting to discuss sovereign debt problems in some euro zone countries.
But it is not known whether the meeting Mr Trichet is leaving for is a scheduled meeting or an extraordinary event.
Mr Trichet was scheduled to be in Sydney until Wednesday for a seminar of central banks in the Euro Area and East Asia Pacific.
I'd say so. But don't be too quick to assume the euro will simply buckle under the pressure.
Devaluation today - a policy so often used to rescue the short-term political and economic fortunes of what City analysts cannot now call the PIIGS - also remains shut to the Greeks, but for another reason entirely: Revaluation within the Euro is impossible.
Joining the European single currency, and consigning sovereign notes and coins to history, meant swapping those notes and coins for a certain, agreed quantity of Euros. Once set and enacted, that exchange rate could never again be revised. Because the exchange... once you were holding Euros ...could never again be replayed.
"There is no wiggle room here," as two English academics - both smirking and gasping at the Eurozone strait jacket - wrote in a 2004 tome.
"Greece has to live with this conversion rate no matter what happens to its level of productivity or inflation relative to its Euroland partners, or its level of internal unemployment.
"If it becomes politically unacceptable to live with this rate, Greece has only one realistic option, and that is abandoning the Euro."...
Quitting Euroland, on the other hand, would leave Greece - or Spain, Ireland or Portugal, or all of them together - horribly alone. Gold Standard historian and former IMF advisor Barry Eichengreen posited an Italian exit back in late-2007. Only the names have been changed:
"The very motivation for leaving would be to change the parity [between Greece's new domestic currency and the now-neighboring Euro]...Market participants would be aware of this fact. Households and firms would shift their deposits to other Euro-area banks. A system-wide bank run would follow. Investors anticipating that their claims on the [Greek] government would be redenominated into [the Euro's devalued replacement] would shift into claims on other Euro-area governments, leading to a bond-market crisis...
"It would be unlikely that the ECB would provide extensive lender-of-last-resort support. And if the government was already in a weak fiscal position, it would not be able to borrow to bail out the banks and buy back its debt."
In short, "This would be the mother of all financial crises," guesses Eichengreen. But no matter, he says; it can't happen. "The decision to join...is effectively irreversible. Exit is effectively impossible."
How come? "The insurmountable obstacle to exit is neither economic nor political, but procedural," says the professor. Short of a coup, revolution or state failure, you have to agree.
First, all contracts - both domestic and cross-border - would either be void (which again means revolution, state failure, coup or all three), or they'd be subject to a sweeping redenomination law. That would require long, detailed, co-operative discussion, both internally and with governments, business and private individuals across the European Union and beyond. So no dice there, then.
Then there's the logistical nightmare of re-pricing all goods and services, replacing all those vending machines, and reprogramming all Greece's bank and till systems - a fun project when Euro accession approached, but hardly a laugh as hyperinflation looms. So again, we're back to revolution... if not a coup or failed state ...and you don't need to be Helmut Kohl or Jacques Chirac to wince at the irony of Europe's greatest unifying dream (to date) ending with chaos and bloodshed west of the Balkans.
Greece's problem, therefore, really is "a Eurozone problem" as finance minister George Papaconstantinou has repeated throughout this crisis. Since it cannot devalue or exit, something else has to give.
Excerpts from 1931 For The Euro Part II
by Adrian Ash
23 February 2010
So if Greece can't devalue, can't just quit the euro, the ECB can't just bail everyone out like the Fed, and Germany is not willing to float the Greeks, what options are left? Where is the give?
It's simple really. Adrian doesn't mention the ECB's Marked to Market policy for gold bullion reserves, but that is exactly where I am looking. When your finances are insolvent you must part with some of your REAL treasure in order to keep the bare necessity wheels turning while you restructure your productive efforts and economy. This is how Freegold works. And this is what the EU now faces.
Robert Mundell and the late Milton Friedman explained in their 2001 debate, "One World, One Money?", there is a full spectrum of currency relationships which have been tried. From hard fixed, unified or common currency areas, to "dollarized" areas, to a "monetary union", a currency board system, fixed rates, pegged rates, or a floating exchange system, "the dirty float" as Another calls it.
This "dirty float" is the relationship between the US, Canada, Britain, Japan and the Euro. But Greece is in a common currency area with the rest of Europe, just like California is to New York, or Ontario to Quebec:
1. A common currency area. This is the apotheosis of fixed exchange rates. The BC dollar, the Ontario dollar and the Quebec dollar are the same currencies, the Canadian dollar. Settlement between regions, provinces and municipalities is automatic. If there is an excess supply of money in one province combined with a corresponding excess demand for goods, the excess money leaves that province (a balance of payments deficit) and that completes the adjustment process. The same adjustment process applies between New York and California or between different Federal Reserve districts. This fits Friedman’s category of “unified.” -Mundell
ANOTHER: Today every digital money is a product of the US DOLLAR by nature of "it being the book keeping reserve". To this extent, the US DOLLAR is the only world currency! To this end, no one can see the true size of the "mismatch" in gold as money in US DOLLARS.
Time does record, that many young persons do mature without a history of "currency defeat" in money wars. These same persons do attain positions of authority with respect to handling the currency "reserves" of a nation. It is in their "education" that the private citizens do lose much wealth. We proceed to such a time today, as gold loans hold only paper collateral! The motives of all Central Banks be not the same, with respect to "gold loans". A small number do travel the road of "monetary union" and sell gold as a commodity for funds to reduce debt. These officials that sell for this purpose alone will be viewed as "much the fool" by voters, as gold does become a "great value" in the future. Some CBs also "lend" gold for a small return, as they see little difference in this metal to holding the Yen reserves and also receiving perhaps 2%! These Central Banks place the gold with a private Bullion Bank. The gold is sold and the proceeds wait in this BB and draw market interest. The CB does have a "letter" claim to these "proceeds" and views it as "the same" as other "lent out currency reserves". The BB uses these "proceeds" as collateral to create a contract with a gold mine for future purchase of "new mined gold". The CB does also "attach" this "future gold" and views it as "lent out bullion reserves". With this "attachment", it could claim the entire assets of a mine in default, yes? Perhaps, we can see that "default" can also occur from other than a "low gold price"? In currency wars of the future, workers walk from doing jobs, as in Indonesia? A mine of few workers has little value, but often we see banks do claim "things of little value".
The key for this "new gold market" is found not in the process of gold loans and sales, but in the "who is the new owner of this metal"? No one did see clearly, "the other side of this". Always the view was, "see how the fools sell the gold and drive price low", not "who is buying all of this new supply at such cheap prices and giving up interest on currency also"? One should consider, "how much currency has flowed thru gold" over these past years! It is a great deal of wealth! -1998
And all this "wealth that flowed through gold" did so with the promise of a future revaluation. An unavoidable end to a finite timeline.
Which brings us to...
FOA (09/03/00; 16:27:20MD - usagold.com msg#34)
Of Currency Wars
Gold will reset itself in value compared to all world fiat currencies. But, that percentage reset will be viewed in a different context than when gold money was ordained by governments. Gresham's understanding applied more to gold as a bankable currency, not an asset holding "in and of itself". This is the future of "freegold" in our time. It will be much like comparing an advancing stock to the currency it's denominated in, a rising asset,,,, not a competing money!
Now look northeast, into the valley:
What will make this "modern gold market evaporate"? Well, value in a paper contract is a funny thing,,,,,,, it can change radically when no market bid exists for it to trade in. Like paper dollars, contracts have no value without a trading market demand. Walk into any store,,,,, if everything is suddenly priced in a physical barter format, our dollars suddenly become worthless, no?
If the gold market was to shift to say, 5 day hard delivery, how could one trade their contracts for gold? Yes, you guessed it, paper would trade all right,,,,, at a huge discount. But in short order, as a spiking price lunges upward into the thousands,,,, and doesn't come back to earth,,,,,, what counter party on the other side of your contract could deliver? Further, how could the bullion banking system match liabilities and make good on a cascading default?
Stop here and see how it could happen two ways (or a combination of both):
You see, all it takes is for one or two government and/or private entities to pull the cord. Most all of you long ago came to the same conclusion; a Dollar / Euro currency dispute could set this off. Outside parties begin buying gold with dollar reserves,,,,, on the barrel head for 5 day placement. It begins with twenty or thirty 100 ton orders ,,,,,, a billion$$ or so each! Not derivative orders, mind you,,,, hard delivery orders that aggravate and outline the soft nature of modern gold banking. They keep coming,,, days on end! Then, suddenly the paper markets "are no more".
Yes, the name Freegold refers to an emergent system. But its ultra-high valuation of gold is also an anticipated prize. A prize that has been paid for through the support necessary to keep the dollar system alive for decades beyond its natural timeline, and to keep the price of gold metal low while it found its way to where it was wanted. With the tight supply of physical today we can assume that most of the metal has now found its home. And that those entities that have been waiting patiently for the prize and faithfully supporting a system at end of its life can now be expected to withdraw their support. "To pull the plug" so to speak.
This is what we are seeing today. From the central banks' gradual shift from sellers into buyers, through the Central Bank Gold Agreement, five years at a time, to India, China and Russia now showing an open interest in physical gold, the signs are everywhere. In the past, large entities like central banks would never openly express a desire for physical gold because it would move the markets. The last time we saw such a move Charles de Gaulle demanded official gold at its fixed price of $35/ounce, and such was all it took to end the entire global gold standard. Talk about moving markets! So it is no small thing for central banks to openly want gold.
But don't be too upset. This whole gradual shift bought us much time to prepare. And the "prize" is available to ANYONE! Yes, even you! This was ANOTHER and FOA's whole purpose through four years of postings. To get the word out that gold would be revalued by the Giants once the dollar reached its inevitable dead end.
In my last post, Greece is the Word, I wrote that the euro has a secret "nuclear" weapon. This is what I was talking about. What Another said at the top:
As in war, the larger and better equipped army in "reserve" does rule over the lesser force. Perhaps we should think in this way: in a "cold war" of modern exchange rates, "digital currencies from reserves are used", however, when a "hot war" of major default does begin, "nuclear weapons of GOLD" are deployed!
And yes, the euro is the better equipped army in this regard. The main point I made in Your Own, Personal, Freegold and Freegold was that the Eurosystem's gold is very much in play!
The Eurosystem holds 10,800 metric tons of gold, roughly one third of world gold reserves.
And in Confiscation Anatomy - A Different View, I argued that whatever gold the US Treasury and the Fed still own is most definitely not in play:
The US gold hoard is now off the table. Think of a poker cheat who pockets his winnings yet still wants to play. When he loses he writes paper IOU's to the other players. Can he ever pull his money back out of his pocket without having it taken away? Think of an individual who declares his own insolvency and defaults on his obligations to pay, only to resurface later with a windfall inheritance. What problems will he face?
This is not about Greece paying off its debt in high priced gold. It is a systemic shift to meritocracy where if you don't earn it, then you must part with some REAL treasure. Sure, Greece could theoretically sell the Parthenon.
But this is precisely "where the rubber hits the road". When a symbolic currency system starts to affect reality in dire ways it will be abandoned. This is why the gold is there. Gold is a REAL treasure that can be surrendered OR hoarded without affecting anyone's daily life. It is not consumed in any of the basic necessities of life. It is simply the 6,000 year old score keeper. And to this role it will return.
Did you get yours yet? Time appears to be running out on "the prize".
Another Record For Euro-Denominated Gold
European currencies were again under attack
Financial Firms Receiving Subpoenas For Euro Shorting Collusion
Greek Roadmap Update From Goldman's Erik Nielsen
S&P Rating Agency Delegation Vists Greeks Bearing Gifts
China PLA officer urges challenging U.S. dominance
Head of IMF Proposes New Reserve Currency
EMF - European Monetary Fund?