Best of the Week
Most Popular
1.BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - Nadeem_Walayat
2.BrExit Morning - New Dawn for Britain, Independence Day! - Nadeem_Walayat
3.LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - Nadeem_Walayat
4.BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - Nadeem_Walayat
5.Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - Nadeem_Walayat
6.EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - Nadeem_Walayat
7.Gold And Silver – Insanity Is World “Norm.” Keep Stacking! - Michael_Noonan
8.Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - Nadeem_Walayat
9.Gold And Silver: Security, And BREXIT - Michael_Noonan
10.BrExit Vote - "The Trend is Set" -- And What You Should Pay Attention to Next - EWI
Free Silver
Last 7 days
FTSE and Sterling Brexit Trading, Deconstruction of the EU Referendum Result - 29th June 16
Stock Market Bounce May be Over - 28th June 16
Stock Market Meltdown Likely to Drive Gold Towards $1,500 - 28th June 16
Brexit Victory over the EU Globalists - 28th June 16
Brexit Psyop: Greenspan Falsely Blames the Brits for the Crash and Chaos to Follow - 28th June 16
Greenspan Calls Brexit a ‘Terrible Outcome’ as Euro Area Tested - 27th June 16
Stock Market SPX Below Mid-Cycle Support - 27th June 16
Best Holidays for Summer 2016 - 27th June 16
Another Stocks Bear Market? - 27th June 16
BBC EU Referendum Result Highlights - YouGov, Markets, Bookmakers, Pollsters ALL WRONG! - 26th June 16
Investors Map Post-Brexit Strategies Amid Global Market Upheaval - 26th June 16
Gold Price Weekly COT Update - 26th June 16
First the UK, then Scotland ... then Texas? - 26th June 16
Stocks Bear Market Resumes or Just More Noise - 26th June 16
Gold And Silver: Security, And BREXIT - 25th June 16
Dow, Euro & Brexit Recap - 25th June 16
Resistance Holding Gold Stocks after Brexit - 25th June 16
Venezuela vs. Ecuador (Chavismo vs. Chavismo Dollarized) - 25th June 16
Gold, Silver And PM Stocks Summer Doldrums Risk - 24th June 16
Here’s Why China “Economic Hard-Landing” Worries Are Overblown - 24th June 16
Jubilee Jolt: Markets Crash, Gold Skyrockets as Britain Takes Brexit - 24th June 16
BrExit Morning - New Dawn for Britain, Independence Day! - 24th June 16
LEAVE Wins EU Referendum - Sterling and FTSE Hit Hard, Pollsters, Bookies and Markets All WRONG! - 24th June 16
Trading BrExit - British Pound Plunges, FTSE Stock Futures Slump on LEAVE Shock Referendum Win - 24th June 16
EU Referendum Shock Results Putting BrExit LEAVE in the Lead Hitting Sterling Hard - 24th June 16
Final Opinion Poll Gives REMAIN 52% Lead, Bookmakers, Markets and Pollsters ALL Back REMAIN Win - 23rd June 16
Does BREXIT Matter? Outlook for Sterling - 23rd June 16
Keep Calm and Vote BrExit - Last Chance to Break Free of EU Superstate - 23rd June 16
Here’s the Foreign Policy Trump and Clinton Really Want - 23rd June 16
Details Behind Semiconductor Stocks Leadership - 23rd June 16
Trading BrExit - Stocks, Bonds, Sterling, Opinion Polls, Bookmaker Odds and My Forecast - 23rd June 16
BrExit Looks Set to Win EU Referendum, Final Opinion Polls Give LEAVE Lead Over REMAIN - 22nd June 16
Proof that the Gold Bears are Wrong - 22nd June 16
Here’s a Trillion-Dollar Investment Opportunity for Those Few with No Debt - 22nd June 16
BrExit to Save Europe from Climate Change Refugee Migration Apocalypse - 22nd June 16
Increase In U.S. Rig Count Will Not Cap Oil Prices - 22nd June 16
Are Copper and China Stocks Set to Rally? - 22nd June 16
SPX May Break Its Trendline - 22nd June 16
Believe it or Not: More Kids Live At Home Now than Since The Great Depression - 21st June 16
EU Referendum Latest Opinion Polls Show LEAVE Halting REMAINs Surge - 21st June 16
British Pound Outlook - BREXIT, Europe and You - Does your vote matter? - 21st June 16
Fascist Victory Behind the European Union - 21st June 16
EU Referendum Opinion Polls Analysis Shows Strong Momentum in REMAINs Favour - 21st June 16
Is It Time to Dump Gold and Buy Platinum? - 21st June 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

Market Volaility

Are You About to Lose Your Savings in the Global Currency War?

Currencies / Fiat Currency Feb 20, 2013 - 04:21 PM GMT

By: Money_Morning

Currencies

Peter Krauth writes: You may not have even noticed, but the first shots have already been fired in the next World War.

Only this time there are no tanks, fighter jets, nuclear subs, or missiles. And it's not the North against South, or even East against West.

It's war by other means and it pits fiat currency against fiat currency in a multi-trillion dollar knock-down drag out between the world's central bankers.


At stake is nothing less than the value of your life savings.

Its goal is to cheapen worldwide currencies-which could make every dollar you own worth even less.

Thanks to horrible fiscal mismanagement, virtually every nation in the world now wants its own currency to become cheaper against those of other nations.

Welcome to the currency wars.

Think of it as a race to the bottom. But where it stops nobody knows.

The Lies Behind the Currency War
James Rickards, senior managing director of Tangent Capital Partners, and author of Currency Wars: The Making of the Next Global Crisis, thinks this battle is about an effort to get economies going by importing inflation rather than attempting to boost exports.

But I believe it's about both reflating economies and stimulating exports. After all, national leaders are becoming increasingly desperate.

And though they'd like us to think otherwise, the currency war is here, and it's escalating.

In fact, G-7 finance ministers and central bank governors recently released a statement to try and downplay the intensifying currency war noting that, "...we will not target exchange rates."

Yet true-to-form, these high profile leaders are doing the exact opposite of what they're saying.

In the wake of the financial crisis, the world had seen unprecedented yet (until now) coordinated financial stimulus. But today central banks are so addicted to the temporary "fix" from printing money, they have little concern for its effects on other nations.

Now barely a day goes by without a currency war-related headline. In fact, here are two I came across last week: "Global Monetary System Headed for Collapse" and "The Fed's Global Unintended Consequence."

There are plenty of others and you can expect quite a few more as this situation continues its downward spiral.

Upping the Ante
Of course, the U.S. has been labeling China as a currency manipulator for several years now. They claim the Yuan is kept artificially low so that Chinese imports remain cheap.

Talk about the pot calling the kettle black...

Over the last four years, America doubled the entire debt accumulated since the nation's founding, going from $8 trillion to $16 trillion in the hole. What's more, The Federal Reserve's balance sheet recently set a notorious record, ringing in at over $3 trillion for the first time ever.

Then the Swiss, hurting from the effects of a strong Franc (CHF), decided that their currency was getting too strong and set a floor under it so the EUR/CHF rate couldn't drop below 1.20.

French President Hollande also recently told members of the European parliament that EU leaders "need to think about our currency, the euro. We must have an exchange rate policy otherwise it will have rates that do not reflect the strength of its economy."

But the most aggressive player in the currency war, at least so far, is Japan.

For a host of reasons, including zombie banks and horrible demographics, Japan's economy has stagnated and deflated for an entire generation. Its flagship Nikkei index peaked near 40,000 in 1989, yet today stands at 11,300.

With two straight quarters of contraction, Japan is "officially" back in recession.

In desperation, Japan is trying ever more Keynesian sleight of hand to reflate its economy. The new prime minister, Shinzo Abe, has promised aggressive unlimited stimulus and more money printing to try and jumpstart the economy.

But with an all-in real debt-to-GDP ratio close to 500%, Japan's probably the riskiest place to carry out such an experiment.

Already the Nikkei is up 30% over the past three months, and the Yen has given up almost 20% against the greenback since early October.

Just last week the U.S. undersecretary for international affairs, Lael Brainard, supported Japan's move. She said the G-7 normally prefer exchange rates set by the market, but sometimes "excess volatility or disorderly movements" means finance ministers have to step in and manipulate rates. So much for a free market, or even market-determined exchange rates, for that matter.

The risks are so high in Japan that this could realistically be where the first major currency crisis begins. Only this time, it could initiate the trend toward a total collapse of the world's fiat money system.

Not to be outdone, Venezuela, South America's largest oil producer, has just devalued its currency by 32%. That's the fifth straight time Venezuela has devalued in only nine years. It will help with the government's budget deficit, but it tramples the buying power of Venezuelans.

The country's annual inflation is already running at 22%, but this move threatens to make it even worse.

Many Latin American leaders are pros at this game. A little over a decade ago Argentina defaulted on its foreign bonds, thanks mainly to massive government overspending and corruption, which caused the public debt to mushroom. Making matters worse, Brazil devalued the real, hurting Argentine exports.

Is any of this starting to sound familiar?

I hope so, because not long ago Argentina banned estimates of true inflation by private economists from being made public.

Now, as the authoritarian regime grows ever more desperate, they've even resorted to fixing prices. On Feb.5th, major retailers agreed to freeze their prices until April 1st.

The Currency War Endgame
Unfortunately, I believe the U.S. is on the same path as pretty much the rest of the world. The end game is a race to the bottom because really, under a fiat money system, there's nowhere else to go.

This was recently confirmed by Kyle Bass, founder and principal of Hayman Capital Management, a Dallas hedge fund. Bass has profited handsomely from prescient calls on events from the subprime mortgage meltdown to Greek sovereign debt restructuring.

In a recent discussion with a senior Obama official, Bass disclosed that he asked how the U.S. would be able to grow exports if they don't allow nominal wage deflation. The official's answer: "We're just going to kill the dollar."

By now you're probably wondering how you can protect your net worth from all these central bank shenanigans. In my view, the answer is to own and accumulate gold.

Gold is the go-to safe haven as currencies are debased. If you don't believe me, just ask the Japanese, who now have to pay more than ever to buy an ounce of gold.

They've just seen the precious metal's price in Japanese Yen break out to a new all-time high.

So I suggest you ignore what central banks say, and instead do what they do: BUY GOLD.

China has been quietly accumulating gold since it last announced its reserves. Back in 2009 it reported a total of 1,054 tonnes. Thanks to massive and growing gold imports into Hong Kong and domestic gold production, it's likely that China's official stash is much higher today, likely approaching 4,000 tonnes, with some estimates considerably higher.

That would place them ahead of Germany, whose official holdings are at 3,396 tonnes. It's little wonder why Germany has decided to bring its gold home now.

According to figures from the World Gold Council, last year central banks accumulated more gold than at any time since 1964. That's almost 535 metric tons, with Russia, Brazil, and Iraq in the lead.

Despite this record central bank buying binge, gold still remains a dangerously small percentage of their total reserves.

It's clear that gold is regaining its rightful place as a cornerstone asset. As we continue down our current path, it's increasingly likely gold will once again assume its traditional role as true money.

The signs are there and growing louder by the day. The currency war is intensifying. I hope you'll heed its warning and buy yourself some gold.

But you should do it while your dollars still have some purchasing power.

Source :http://moneymorning.com/2013/02/20/are-you-about-to-lose-your-savings-in-the-currency-war/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife