Announcement

**Mega** · May 28, 2012, 04:29 PM

Re: James Rickards' Currency Wars

Hi Don
Yep read it, but he said we see "QE" by now & we have as yet....not.
Mike

**doom&gloom** · May 29, 2012, 02:58 AM

Re: James Rickards' Currency Wars

give it time. bernankes Ctrl-P finger got tired after the last few presses...

**Mega** · May 29, 2012, 04:20 AM

Re: James Rickards' Currency Wars

I think the "Plan" is to wait after the "games"............& after Nov if "They" can.

Mike

**don** · May 29, 2012, 08:44 AM

Re: James Rickards' Currency Wars

Rickards on QE:

In June '11 the US was emerging as a winner in the currency war. Like winners in many wars . . . the US had a secret weapon . . . "quantitative easing" or QE, which essentially consists of increasing the money supply to inflate asset prices. As in '71,the US was acting unilaterally to weaken the dollar through inflation. QE was a policy bomb dropped on the global economy in '09, and its successor, promptly dubbed QE2, was dropped in '10. The impact on the world monetary system was swift and effective. By using quantitative easing to generate inflation abroad, the US was increasing the cost of almost every major exporting nation and fast-growing economy in the world." (p.134)

"Here was Bernanke's entire playbook - keep interest rates at zero, devalue the dollar by QE and manipulate opinion to create fear of inflation . . . this was central banking with the mask off.

"Easy money and dollar devaluation are two sides of the same coin, and currency wars are part of the plan. Easy money and dollar devaluation are designed to work together to cause actual inflation and to raise inflation expectations while holding interest rates low to get the lending and spending machine back in gear. This is clear to the Chinese, the Arabs and other emerging markets in Asia and Latin America that have complained vociferously about the Fed's stewardship of the dollar. The question is whether the collapse of the dollar is obvious to the American people.

"when the public realizes that it is being deceived, a feedback loop is created in which trust is broken and even the truth, if it can be found, is no longer believed. The US is dangerously close to that point." (p.182-3)

**Mega** · May 29, 2012, 09:16 AM

Re: James Rickards' Currency Wars

After Nov i think Don.
Mike

**lektrode** · May 29, 2012, 02:53 PM

Re: James Rickards' Currency Wars

Originally posted by Mega View Post

After Nov i think Don.

dunno mr mike - altho that would be the way to bet, altho the days are getting longer and 'sunnier', methinks the rumble (of the next leg down) in the distance is getting louder: HP to sh_tcan 27000 (more)? and there's more, LOTS more: http://www.dailyjobcuts.com/

and when even big NYC 1300 lawyer lawfirms are goin tits up? never mind what it'll do to the mere mortal secrataries and mailroom/filing clerks...

and altho there's some kind of an uptick in US mfg 're-shoring', we find this is (likely) only happening because "wages are flat" - but then thats NOT going to last much longer, as we see one of the few bright spots for US mfr's (mostly due to the mining industry), CAT has 780 workers out on strike - for a month now? (but i spose they aint counted as 'unemployed' )

but not to worry, Needless Markups (uhhh... i mean neiman marcus') profits are UP 35% ??? but wait!
uh oh... things might not be as rosy as they seem (or the lamestream media is trying to convince us of):

"The latest results continue a streak of revenue growth for Neiman Marcus as its wealthy customers have returned after the recession, but executives did sound some caution.

"We did experience a slowing in our momentum as the quarter progressed similar to other retailers," Chief Executive Karen Katz said on a conference call. ..."

so its starting to look like even our aspirational/wannabee rich crowd is feeling a pinch - and never mind that FB dropped under 30 today = whooo! i tell ya - things are lookin shaky when even GS cant pump up the volume to bubble-blow The Most Overhyped IPO of the new millenium??? and considering that almost 25billion, thats BILLION with a B - has just been wiped out the past week or so??? i dunno, maybe that wealth-effect thing may start to affect the other things, eh? (like mercedez leasing rates in silicon valley, much to the chagrin of jerry brown&co and the former queen nancy, just as they got to hoping a few new billionaires could be milked for more)

so it might not take all that long to get ole unkle ben's CTRL-P finger limbered up again - but then...
there's always the worry that this will end up looking 'political', if he goooses the monopoly-money machine too late in the game, so my guess is that june is still looking like the best option - that way it gives the lamestream media (dem-lib-run) propaganda machine plenty enuf time to blame it on the opposition

Originally posted by don/Rickards on QE

In June '11 the US was emerging as a winner in the currency war. Like winners in many wars . . . the US had a secret weapon . . . "quantitative easing" or QE, which essentially consists of increasing the money supply to inflate asset prices.
.....
...
"Here was Bernanke's entire playbook - keep interest rates at zero, devalue the dollar by QE and manipulate opinion to create fear of inflation . . . this was central banking with the mask off.

"Easy money and dollar devaluation are two sides of the same coin, and currency wars are part of the plan. Easy money and dollar devaluation are designed to work together to cause actual inflation and to raise inflation expectations while holding interest rates low to get the lending and spending machine back in gear. This is clear to the Chinese, the Arabs and other emerging markets in Asia and Latin America that have complained vociferously about the Fed's stewardship of the dollar. The question is whether the collapse of the dollar is obvious to the American people.

"when the public realizes that it is being deceived, a feedback loop is created in which trust is broken and even the truth, if it can be found, is no longer believed. The US is dangerously close to that point." (p.182-3)

oh i think its even closer than that - IMHO, if the majority of The Rest of US had seen the movie INSIDE JOB
and spent even 1 hour viewing a few choice sections of the 'tulip, THERE'D BE RIOTING IN THE STREETS that would make the OWS crowd look like kindergartners on a field trip to the big city.... "wow, chauffers and limo's and helicopters landing on skyscrapers an everything!!!..." (and "is your daddy still laid-off? no, he got a job after his unemployment checks stopped - he's now working at that new temp service 3 counties over and we dont see him much anymore")

and - interestingly enuf, mr mike - linked-off that one you just posted about the UK refinery shutting down - eye ran into this one about: the globe-swimming tuna with 'added attractions' showing up on our left-coast - as IF we dont already have enuf ANTI-EVERYTHING-NONGREEN-ENERGY related HYSTERIA already puking out of the propaganda machine (altho maybe this will have a good effect, for once - and drop the price of ahi for a change we can believe in) - its always The Comments tho, where one can get the best or certainly The Most Interesting of background info:

Originally posted by not-quite-zero-cred

Tue, 05/29/2012 - 14:05 | 2472620 sgt_doom

Great post, and thanks for keeping everyone current on this subject, GW.
While this rant may not appear connected, the energy industry is highly interlocked, with GE being an historically Morgan company.

Timeline: The Great Masquerade
1911
US Supreme Court orders Rockefeller’s oil monopoly, Standard Oil, to be dissolved over the next few years. During the formation of the new companies, majority stock ownership is shifted to the Rockefeller foundations.

1913
US Congress passes four pieces of crucial legislation (with the aid of a Rockefeller son-in-law in the US Senate):

The Federal Reserve Act

Amendment to establish the federal income tax to pay the interest owed on those loans from the Federal Reserve to the US Treasury.

Oil depletion allowance

Financial structure of foundations (creating their tax exempt status and format allowing for sheltering – or hiding – ownership and wealth)

Thus Rockefeller – and other super-rich – can continue their monopoly ownership through foundations and charitable trusts.

1918
Oil depletion allowance increased

1919
Gulf Oil, owned by the Mellon family, will enjoy an oil depletion allowance that year which was 449% larger than its net income.

1920s
Oil depletion allowance again increased several more times (during two administrations, Coolidge and Hoover, when Andrew Mellon is US Treasury Secretary).

1961
President Kennedy confers with Representative Wright Patman, a populist, who convenes a committee to investigate foundations and charitable trusts.

1962
In October of this year, President Kennedy persuades Congress to pass legislation removing the distinction between repatriated profits and profits reinvested abroad, aimed at the oil companies and that oil depletion allowance largesse.

First preliminary report from Rep. Wright Patman’s committee released this year.

1969
Tax-Exempt Foundations and Charitable Trusts: Their Impact on Our Economy
Final report from Rep. Patman’s House Select Committee on Small Business, detailing how the super-rich (Rockefeller, Morgan, Mellon, et al.) hide their monopoly ownership and wealth through foundations and charitable trusts.

[Report of the House Select Committee on Small Business, Vol. I, 1969, v.]

(1969)
A commission is formed to “study” the financial structure of foundations, but the Rockefeller family pressures to have their man, Peter G. Peterson, appointed to chair and whitewash the study --- no effective action is taken.
(Commission on Foundations and Private Philanthropy, known as the Peterson Commission)

2008
Timothy Geithner, a member of the Mellon family on the Moore side, is appointed US Treasury Secretary.

2012
Steve Coll’s book tour for his book, Private Empire: ExxonMobil and American Power and curiously, Coll’s clueless as to the ownership of ExxonMobil.

Coll is the president of the New America Foundation, which is funded by the Peterson Foundation, endowed by Peter G. Peterson.

http://www.spartacus.schoolnet.co.uk...ldepletion.htm

**don** · May 29, 2012, 05:27 PM

Re: James Rickards' Currency Wars

On Russia's blue fuel . . .

"it is difficult for Westerners to grasp the scope of Gazprom's operations and its links to the Russian government. It is as if Exxon Mobile, JP Morgan and Time Warner were a single company with Bill Clinton as its CEO. (this hasn't happened yet?) Gazprom's revenues are about 10% of Russia's GDP. It produces over 85% of Russia's natural gas and over 20% of the world's. It is full vertically integrated, including exploration, production, transmission, processing, marketing and distribution. In addition to energy, it has major interests in media, banking and insurance, and operates an internal investment company.

"Russia speaks openly of dethroning the dollar as the dominant reserve currency. While the Russian ruble is in no position to replace the dollar it could become a regional reserve and trade currency for Russia and Central Asian gas suppliers and Eastern Europe gas customers.

"Energy is a wedge used to forge a regional bloc with a regional currency . . . the dollar will be left out in the cold. (p.155-59)

**c1ue** · May 29, 2012, 07:14 PM

Re: James Rickards' Currency Wars

"it is difficult for Westerners to grasp the scope of Gazprom's operations and its links to the Russian government. It is as if Exxon Mobile, JP Morgan and Time Warner were a single company with Bill Clinton as its CEO. (this hasn't happened yet?) Gazprom's revenues are about 10% of Russia's GDP. It produces over 85% of Russia's natural gas and over 20% of the world's. It is full vertically integrated, including exploration, production, transmission, processing, marketing and distribution. In addition to energy, it has major interests in media, banking and insurance, and operates an internal investment company.

The above would be a lot more credible if it were noted that previously 100% of Russia's energy and mineral resources were the controlled by the Russian government.

In contrast, the United States with the parade of ex-investment bank CEOs as Secretary of Treasury is supposed to be better?

**lektrode** · May 29, 2012, 07:45 PM

Re: James Rickards' Currency Wars

never mind when the families of banksters own the oilco's (too)

Originally posted by earlier ZH post

1919
Gulf Oil, owned by the Mellon family, will enjoy an oil depletion allowance that year which was 449% larger than its net income.
...
2008
Timothy Geithner, a member of the Mellon family on the Moore side, is appointed US Treasury Secretary.

the surest evidence eye have seen to date to support continuation of the 'death tax'

**don** · June 01, 2012, 09:01 AM

Re: James Rickards' Currency Wars

Japan, China bypass US in currency trade
By Kosuke Takahashi

TOKYO - Japan and China started direct trading of their currencies, the yen and the yuan, on the inter-bank foreign exchange markets in Tokyo and Shanghai on Friday in an apparent bid to strengthen bilateral trade and investment between the world's second- and third-largest economies.

Direct yen-yuan trades also aim to hedge the risk of the dollar's fall in the long run as the world's key settlement currency and as the main reserve currency in Asia, the world's economic growth center in the 21st century. By skipping the dollar in transactions, the region's two biggest economies intend to reduce their dependence on dollar risk and US monetary authorities' influence on the Asian economy - aiding China's goal of undercutting US influence in the region.

It is the first time that China has allowed a major currency other than the dollar to directly trade with the yuan. For Beijing, this new step brings benefits of further internationalization of the yuan. For Tokyo, the possible future correction of China's still artificially undervalued yuan may bring the plus of a weaker yen, boosting profits of Japanese exporters such as Toyota and Sony in the long run.

Japan's three megabanks - Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group - will begin direct yen-yuan trades with major Chinese banks on Friday. Exchange rates between the yen and the yuan will be determined by their transactions, delinking the current "cross rate" system in which the US dollar intermediates in setting yen-yuan rates.

"We can lower transaction costs and reduce settlement risks at financial institutions as well as making both nations' currencies more useful and energizing the Tokyo market," Japan's Finance Minister Jun Azumi said on May 29.

China welcomed the new trading agreement with much fanfare.

"This will help lower currency conversion costs for economic entities, facilitate the use of RMB [the renminbi, as the Chinese currency is also referred to] and Japanese yen in bilateral trade and investment, promote financial cooperation and enhance economic and financial ties between the two countries," the People's Bank of China (central bank) said in a statement.

Skipping the dollar
Up until Friday, Japanese and Chinese firms had paid currency conversion fees twice. For Japanese companies, they first had to convert the yen into the dollar, then they exchanged the dollar for the Chinese currency. For Chinese firms, it was vice versa. With this removal of the interim step by skipping the dollar in transactions, many expect cost reductions.

Japan ranks fourth among China's trading partners after the European Union, the United States and the 10-country Association of Southeast Asian Nations (ASEAN), while China has been Japan's largest trading partner for the past three years.

Bilateral trade rose 14.3% year-on-year to reach US$344.9 billion in 2011. For Japan, China accounts for about 20% of its world trade value. Around 50% to 60% of that is being settled in dollars, with less than 1% of it settled in yuan. One Chinese news outlet has estimated direct yen-yuan transactions will realize $3 billion in cost savings.

There are still cautious views on the scale of cost reductions among Japanese market participants.

"Dollar-yen transaction costs are already very low," Daisuke Karakama, market economist at Mizuho Corporate Bank in Tokyo, said on Thursday. "The cost reduction effect of direct yen-yuan trading should be limited."

Internationalization of the yuan
For China, this new trading is a step in its moves to internationalize the yuan, accelerating the currency's wider use. More than 9% of China's total trade was settled in yuan last year, up from only 0.7% in 2010, according to Xinhuanet.

Yuan-denominated trade between the mainland China and Hong Kong started in July 2009, as Beijing allowed companies in Shanghai and four cities in the southern province of Guangdong to use yuan in trade with Hong Kong, Macau and members of ASEAN. [1] In July 2010, China also allowed the yuan to be more freely traded and transferred in Hong Kong, establishing an offshore yuan market for the first time.

But many experts such as Mizuho's Karakama believe China will soon face a trilemma in its economic policy.

An economy cannot combine at the same time a non-floating dollar peg currency, free capital mobility and autonomy in its monetary policy. Developed nations such as Japan and South Korea abandoned a dollar peg system in order to secure international inflows of money and discretionary monetary policies. (In contrast, countries using the euro abandoned individual monetary policy by consolidating their financial policy instruments to the European Central Bank.)

In April, the People's Bank of China announced it would widen the yuan's daily trading limit against the dollar to 1% from 0.5%.

"With the internationalization of the yuan, it will become more and more difficult for China to control the yuan," Karakama said.

Should China shift to a limited floating exchange rate system, the yuan will likely appreciate against major currencies such as the dollar. With Japan's business with China expanding and the presence of the yuan increasing in Japan's international trade, this will push down the yen's effective exchange rate against major currencies. Annual trade between China and Japan more than doubled in the past 10 years.

Kosuke Takahashi is a Tokyo-based Japanese journalist. His twitter is @TakahashiKosuke

**don** · June 03, 2012, 01:47 PM

Re: James Rickards' Currency Wars

Finished the book - worth a read. If anyone wants my copy, let me know.

**Jay** · June 04, 2012, 09:47 PM

Re: James Rickards' Currency Wars

I found a few parts interesting, but for the most part I found that if you have followed Rickards over the years there isn't a whole lot of new earth shaking stuff in there. I found the outcome of the economic wars games he was involved in less impactful than advertised.

**Slimprofits** · September 17, 2012, 10:40 PM

Re: James Rickards' Currency Wars

http://www.usnews.com/topics/author/james_rickards

Rickards writes an almost weekly column for U.S. News and World Report