---------- Forwarded message ----------
From: Dick Eastman <oldickeastman@q.com>
Date: Sun, Oct 10, 2010 at 5:34 PM
Subject: [bangla-vision] (1) High economic crimes -- the current phase -- (2) Problems with monetary reformers.
To:
An interest rate of zero in a five five percent deflation rate is really five percent interest in terms of growth of purchasing power from what the amount loaned would buy to what the payback will buy -- which is called the real rate of interest. And don't think the deflation rate is low. The prices we see as higher because as firms go bankrupt monopoly concentration increases and therefore monopoly pricingraises prices for the householder. But for the person buying up assets in distressed markets deflation is wonderfully real and generous.
Remember that the Fed is "inflating" only the external dollars, not dollars the reach your or me as wages or revenue for out domestic businesses. We are not allowed any of that money. What the Fed is doing is making open market purchases of securities on in the elite loanable funds market -- they are buying government securites from Big Finance and they are buying securitized mortgages and high-grade corporate bonds. And what are is Big Financ doing with that money? They are buying up assets in the US, Europe and around the world -- because interest rates have been forced down very low in a deflationary environment. (Remember, deflation brings the nominal interest rate lower than the real interest rate, just as inflation takes the nominal rate higher than the real rate.)
Do not be fooled by those who say the dollar has lost value -- it has gained in value in the domestic environment. How can that be, since everywhere you look prices are higher. The price increase are administered monopoly prices -- Wall Mart has no competition and prices are going up. The gas price increase was purely a contrived shortage -- deliberate manipulation of supply to raise prices. Accross the board competiton has vanished and prices are going up -- not wages, but profits -- especially financier profit from buying foreclosed assets. The ruling elite are very sparing in who they let enjoy the net deflation. Our wages -- through cuts, through firing and rehiring the same workers at lower pay. etc.
The elite are not wasting on of these deflated prices on us -- we get the high prices, they get the low prices of distressed and foreclosed assets. We pay monopoly prices -- they buy our homes and bankrupted businesses at deflated prices - and they pay us a deflation wages. Bonanza for the international elite, bust for us -- the intended victim.
Soros calls for more "stimulus" -- but if you are dying from loss of blood, do you need a "stimulus" or do you need a transfusion of blood that does not have to be sucked out again with compound interest?
Soros says fiscal restraint (i.e. not enough government spending) is limiting recovery.
In other words Soros wants the government to deficit spend on some government expenditure -- as if a $3 trillion pair of wars is not enough.
Soros says China must have a greater say in IMF policy and lending. Soros is promoting China's increased involvement in efforts of "international capitalism" to unseat corrupt governments, especially those with resources that should be contributing to global prosperity. The IMF restructures countries that have defaulted to international lenders like Soros. Soros is talking about China having a voice in the disposition of the assets of the United States now in undeclared bankruptcy.
----
Money Power mouthpiece -- and if the word economist means whore to you, then "economist" Paul Krugman says the recession is over but unemployment is going to remain even as investment is going to the "developing" ountires -- by which is meant exploitable countries were corporations and their paid slave foremen rule the roost -- in fact it is our "stimulus" and "bailout" money that is doing that foreign investing. And yes, Krugman views China as one of those developing countries.
Bernanke and Geithner want the China to offer fewer renminbi for the dollar / more dollar for the renminbi so that US exports will have more dollar-denominated demand from China -- and to hell with Americans who have no production facilities remaining and will have to pay more dollars to get the renminbi to buy the imports from China which have taken the place of American production. You see, China is also part of the deflation we are experiencing -- our dollars are used to buy renminbi, but the Chinese who buy the dollars on the currency market are not buying many Ameican goods -- so there is a net drain from the domestic loop to the international loop -- which shyster witchdoctors like Krugman never talk about. And what would imposition of a US tariff on imports do? Merely cut the government in on China's game. You see China knows very well that the dollars it is sitting on appreciating in purchasing power as the dollar here in the US deflates. The Chinese are exercizing monopoly control over our own currency.
Note too that Geithner is calling for countries to hold back on carring out IMF, World Bank and WTO hari-kari austerity measures until after the US elections. Yet Bernanke, Geithner, Robert Zoellick (World Bank), Dominique Strauss-Kahn (IMF) and are in agreement that the US must reduce imports and that the reduction must come at the expense of household consumption through deflation that simply cut purchasing power (wage loss, job loss, along with quality and quantity cuts in products for sale here, and price increase -- due to the drop in supply of foreign provenence.) The international financial elites are bent on forcing a big further drop in American "internal consumption."
So while they want to choke household demand here -- and are calling for expanded IMF powers to force us to do so -- they are calling for China to pass out money to China's households so that they can by more American goods from American corporations that are floated and financed by the international moneyed aristocracy. Geithner wanting: "the multilateral rules-based trading system" that will force these outcomes over the heads of any populations with populist notions that they somehow are sovereign over national economic and financial policy due to their systems of representative government and constitutional provision.
Another development is China using its stock of dollars to buy Euros. This makes the Euro less plentiful in Europe -- deflation for Europe -- so international buyers can buy up European assets at bottom prices. Which brings us back to the zero interest rate which is really a strong real interest rate when deflation is taken into account. (real rate of interest + expected rate of deflation = the nominal interest rate). With prices low in Europe and America to anyone with dollars to spend, the zero nominal interest rate makes it easy to snatch up real asset wealth from distressed sellers around he world. International investors -- with organized crime tapping into China's dollar and Euro holdings are simply plundering the planet -- at prices they have arranged on terms they can dictate.
Of course what needs to be done -- is halt international investing -- each nation must do this on its own -- the US should lead, setting the example. We should end credit buyng -- and feed ourselves through emergency farm support measures, importing ony what we can pay for with exports.
Furthermore the American dollar must stop being a Chinese monopoly possession. Since there are already two loops in which money flows -- the US domestic market must launch its own new dollar -- the fiat treasury note -- and the dollar can remain in existence as an international currency only, no longer welcomed in the US -- we will treat it as a foreign currency. That is the only way we can break free of the present situation where foreig
-----
Big Banks are stopping foreclosures until they are confident that no one is in a position to sue them for not having the mortgage contracts. Legislation being prepared that will allow foreclosures to proceed without a mortgage deed, excusing notaries and witnesses and lenders for creating news sets of mortgage documents without the borrowers signature or the borrowers knowledge. The documents of course were not misplaced, they were simply shredded because they did not allow for securitization. All of the cases where mortgages deeds have been "lost" are cases where the mortgages have been bundled and sold as securities. 
Third, Re your statement: "This cannot be done without getting back to credit manipulation to rig markets for financiers against households and firms. . . "
Yes it can, by breaking up the banking system, and dividing banking responsibilities into "checking" and "lending and investing" institutions, all under local control and all required to operate as any other business, out of their own capital not other people's money, in other words 100% reserves. This does NOT mean that criminality will be eliminated, but it will be substantially reduced.
Fifth, re your statement: "The idea that banks can issue fiat on their own "just as we do now" is totally unworkable and would give us once again a financial elite with extraordinary power over the household and business sectors. . . "
AGREED!!! "The hand that gives is above the hand that receives."
I wish I could get involved in a more extended conversation but I am currently mired in another project on global warming and agriculture, plus I have a whole lot of leaves to rake! But at least you now have my two cents!
Geraldine Perry
On 10/7/2010 11:44 PM, Dick Eastman wrote:
From: Dan Breeden
To: Richard Eastman
Sent: Friday, October 08, 2010 9:15 PM
Subject: My thesis
Richard, I don't have a thesis. . I'm an observer. Everybody has an opinion.
Even Rothbard came out for gold;
http://www.lewrockwell.com/rothbard/rothbard240.html
In a perfect world, there would be perfect solutions. I don't have the
perfect answer. I have questions.
Do we need to abolish the corporation,,, the undying?
Do we need to abolish the nation-state?,,, the uncaring?
Social credit with it's built-in control mechanisms appears to be a great
foundation to work from. Human beings are a weak link.
I tend to look at the solutions that have the most probability of being
implemented. That doesn't necessarily mean that I think they are the best.
The banks are learning the hard way that they can't crash the economy and
still expect to get the profits that they would get from a healthy economy.
They can't very well ALL decamp to Asia.
They have to come up with a solution that will allow the economy to function
without the major fluctuations. Because of the changed economic reality, I
don't believe that the banks hope for a WW to bring back prosperity.
Eventually, the banks are going to realize that their economic well-being is
dependent on the well being of the general populace. There will never be a
replay of the credit free-for-all that was incited to cover up for the loss
of wages / purchasing power.
The foreclosure moratorium is a countdown on the attendant CDOs.
China's backing of Greece and the Euro is a countdown on U.S. GOV paper.
Runaway FED printing has a very short future.
The banks see decades of Japan-style slump with NO exit. The banks see
consumer sentiment that will NEVER turn around on false hopes.
I'm not saying that the banks will see social credit as the only way out. I
believe that after some years of depression, they will see that purchasing
power and the attendant sentiment are the only solutions. They will see
that money and credit are NOT incentive,,, only wealth is.
It's said that America does what is best,,, after they try everything else.
Academia is floundering,,, to put it mildly. Where is the correct consensus
going to come from for future GOV policy? This will all take time.
Sorry. Dan
From: vterranova@juno.com
MONEY AND MARKETS
Friday, October 8, 2010
Central Bankers' Global Race to the Bottom
by Mike Larson
. . . The Fed's goal is clearly to debase the U.S. dollar . . . Or in the
infamous words of now-Chairman Ben Bernanke from November 2002 ...
"By increasing the number of U.S. dollars in circulation, or even by
credibly threatening to do so, the U.S. government can also reduce the value
of a dollar in terms of goods and services, which is equivalent to raising
the prices in dollars of those goods and services.
"We conclude that, under a paper-money system, a determined government can
always generate higher spending and hence positive inflation."
The Cost of Competitive Devaluation
The Fed would have you believe this is good for America. That a country
whose massive debts are majority-held by foreigners will never have a
problem selling bonds even as its central bank drives down the value of
those bonds (in foreign currency terms). . . .
In the past several weeks, soybeans have surged up to 23 percent, crude oil
has gained 30 percent, copper has jumped up to 39 percent, and wheat prices
have soared as much as 97 percent.
The dollar? It has dropped more than 12.5 percent since June, making it more
expensive to buy foreign goods and travel overseas. And gold? It has surged
about 17 percent.
The Fed's policy has pushed the dollar down and gold up.
Yes, stocks have rallied but only roughly as much as the dollar has
declined. In other words, you've basically made no "real" gains in terms of
purchasing power!
. . . Prices for many raw commodities are going up. So are costs for the
companies you buy goods from. But your wages likely aren't keeping pace
because of the lousy labor market. And your savings accounts and fixed
income securities aren't yielding squat.
. . . It's bad enough that our central bank is heading down the dangerous
road to currency debasement. What's worse is that other central banks are
doing the same darn thing!
The Bank of Japan tried to suppress the yen by intervening massively in the
currency markets a few weeks ago. Then this week, it lowered its benchmark
interest rate to 0 percent from 0.1 percent and announced a new QE plan.
It's going to spend 5 trillion yen, or about $60 billion, to buy assets.
Not just any old assets like government bonds either. The BOJ said it will
buy "long-term government bonds, treasury discount bills, commercial paper
(CP), asset-backed CP (ABCP), corporate bonds, exchange-traded funds (ETFs),
and Japan real estate investment trusts (J-REITs)."
Yes, you read that right ...
The BOJ is now going to start indirectly buying commercial real estate and
stocks. . . . Don't forget the Bank of England either. BOE policymaker Adam
Posen advocated for more QE there in late September. The Brits are currently
buying 200 billion pounds (about $317 billion) worth of government bonds to
artificially prop up the market and suppress the value of the pound.
Meanwhile, central bankers in other Asian countries outside of Japan are
selling the heck out of their own currencies to try to keep them from
appreciating rapidly against the buck.
That's happening in Brazil, too ...
A weaker real makes Brazilian exports more competitive.
Brazil's finance minister Guido Mantega just warned of a global "currency
war," and doubled the tax on foreign purchases of Brazilian bonds in an
attempt to stem the flood of hot money into Brazil's markets and currency,
the real.
Lastly, there's China, perhaps the world's biggest currency manipulator.
It's continuing to hold down the yuan despite intense international
pressure.
Chinese Premier Wen Jiabao just told a business conference that "if the yuan
isn't stable, it will bring disaster to China and the world." He added that
European officials should quit bugging him, saying "Europe shouldn't join
the choir to press China to allow more yuan appreciation."
Protecting Yourself from the
Fed's War on Your Wealth!
Bottom line? Practically every central banker in the world wants to drive
his currency into the gutter.
===============
Why China Is Our Secret Ally In The Global Currency War
Charles Hugh Smith, Of Two Minds | Oct. 4, 2010, 10:33 AM | 2,673 | 11
Trade-currency issues between the U.S. and China are dynamic and do not fit
standard models based on the 1930s "tariff wars."
Regardless of whether it is deemed good or bad, trade/currency conflict with
China is a fact of life--but it doesn't fit standard models of "trade wars."
To avoid unnecessary inflammation in the body politic, let's refer to this
bundle of inter-related conflicts as "trade-currency issues" rather than a
"trade war," which is a heavily loaded phrase that adds plenty of emotion
and precious little understanding.
While many commentators warn that any trade war will lead to disaster (based
on the negative consequences of higher tariffs slapped on international
trade in the Great Depression), trade with China overflows the boundaries of
this simple model of trade and tariffs. It may well be a "trade war" would
be beneficial to both nations as long as it doesn't transmogrify into a
"hot" shooting war.
To understand these conflicts, we can start by looking at a few of the major
moving parts of trade between the U.S. and China. Trade and capital flows
between the U.S. and China are complex and highly dynamic. Here are a few
points to consider:
1. Since the renminbi (RMB or yuan) is fixed to the dollar, the pair trade
as one unit against all other currencies. In a simple model of global trade
and currency valuations, then all currencies are either fixed against a
standard such as gold, or they float freely against each other.
Since China pegs its currency to the U.S. dollar, then neither model can
make sense of the yuan-dollar pairing.
Given this pairing, China is less concerned about the consequences of their
yuan peg on their trade with the U.S. than they are of the dollar-yuan's
valuation against the Euro, Japanese yen, Korean won, etc.
If the dollar falls in value relative the euro, Chinese goods become cheaper
in Europe. Since Europe is now a larger export market for China than the
U.S. by a modest margin, that dynamic is critical to the Chinese leadership.
In other words, while self-absorbed American politicians can obsess about
the yuan's peg, the Chinese have to worry about the dollar's moves against
other major currencies.
It doesn't matter much where the yuan-dollar peg is set. As others have
noted, jobs will not be moved to the U.S. from China if the yuan moves from
6.7 to 6. Prices on imported goods in the U.S. will rise modestly, and
suppliers in China will receive fewer dollars.
Ironically, a stronger or weaker dollar has virtually no effect on the cost
(in dollars) of goods from China, as the yuan is pegged to the dollar. The
action is thus all on the dollar and its relative value in euros, yen, etc.
What would concern China is not superficial changes in the yuan peg but a
much stronger U.S. dollar. As the dollar gains in strength, so too does the
yuan. A much stronger U.S. dollar would end up making Chinese goods more
expensive everywhere except the U.S.
2. Much has been written about China's "nuclear option" of dumping its $850
billion in U.S. Treasuries to "punish" the U.S. for its demands. Suffice it
to say that this "nuclear option" is more a firecracker than a weapon of
financial mass destruction. (Please see China's "Nuclear Financial Option"
Downgraded to "Financial Firecracker"September 2, 2010 for more.)
In essence, the Federal Reserve can create as much money as it deems
necessary to buy whatever assets it deems necessary. In 2009 the Fed decided
to expand its balance sheet by $1.2 trillion to buy $1.2 trillion in
mortgage-backed securities to prop up the U.S. housing market, and it did so
without any panic or global consequences.
Thus the Fed could soak up China's entire $850 billion stake of Treasuries
at will. That only represents 10% of outstanding Treasuries, and the Fed
would only have to expand its balance sheet from $2.3 trillion to $3.1
trillion to do so. In the larger scheme of things, this is really no big
deal.
I know many think it should be a big deal, but global markets issued a bored
yawn over the last $1.2 trillion expansion in the Fed's balance sheet.
Another $800 billion simply isn't enough to make much of a ripple.
The currency markets trade several trillion dollars of currencies a day.
$800 billion is sizeable but it's really not that big in today's global
markets. Even after the stock and housing market's declines, there is $52
trillion in net worth in the U.S. China's Treasuries represent about 1.5% of
that.
If we grasp that what matters to China is the dollar's relative value to its
other trading partners' currencies, then we reach a new understanding. What
would cause China to dump Treasuries is not a desire to "punish" the U.S.
but to weaken the dollar globally to keep Chinese goods cheap in Japan,
Europe and elsewhere.
Many in America share this same goal: keep the dollar weak. In this sense,
China and the U.S. are "allies" which are bonded by the yuan-dollar peg into
a partnership against all other currencies and trading blocks.
Thus the yuan-dollar peg is more a sideshow played out for the domestic
audiences in the U.S. and China. China's leaders don't want to "lose face"
with their populace by seeming to cave in to U.S. demands, and American
politicos desperately want to to appear "strong" with China to give the
illusion that
1) they "care" about "creating jobs" in the U.S. (hahaha)
2) the "problem" is the yuan-dollar peg (it isn't)
3) they deserve being re-elected because they're "taking a strong stand" on
this (worthless, nonsensical "issue" that won't create a single job--barf!)
Thus we can predict this issue will magically disappear after the November
elections. The whole Kabuki play is staged direct from Central Casting:
Inscrutable Chinese leaders, blustering know-nothing U.S. Congressmen hoping
to leverage a tempest in a teapot into another term in power, and so on.
What would cause a real conflict between China and the U.S. is a true
"strong dollar" policy. If the U.S. leadership changes in either 2010 or
2012 and the new leadership grasps the folly of beggar-thy-neighbor currency
wars, then the U.S. might seek to strengthen rather than weaken the dollar.
Were that to occur, China would soon suffer a major decline in global
competitiveness as the U.S. dollar rose in value.
The lesson here is the advertised "conflicts" may mask both the differing
interests and unstated partnerships between China and the U.S.
There is much more to be said on these topics, but I will close today's
entry by noting that the key feature of capital flows between China and the
U.S. is this: the U.S. in effect exports credit to China, and imports goods
and dollars back. This trade in credit is reflected in the "real world"
exchange of goods and currencies. While many commentators have noted that
foreign trade flows must balance--China has to "recycle" its excess dollars
back to the U.S.--the real issue isn't currencies, it's the credit
underlying the trade itself.
http://www.businessinsider.com/charles-hugh-smith-china-trade-war-2010-10
==========
The market structure of the rates of foreign currencies has been thrown into question. China has become more active in the eurozone as a result of the economic conflict with the USA. The Chinese dragon starts to determine quotations on world's basic currencies, such as the euro and the US dollar.
Premier Wen Jiabao of China stated during the meeting with the head of the Greek government George Papandreou that China had purchased long-term bonds, issued by Greece to cover its sovereign debt. Beijing, the Chinese official said, was determined to continue purchasing the bonds if Athens needed new loans to settle its huge budget deficit. Several days before that, the lower house of the US Congress approved the bill targeted against the lowered rate of the Chinese currency vs. the US dollar.
The Chinese premier also said that his nation would continue to support the countries of the eurozone that help Greece in overcoming the financial crisis. The official also said that China was intended to double imports from Greece.
Russia Today: UK saved euro by not joining it
The statement from the Chinese premier resulted in the growth of the European currency on the market. One euro is now traded at 1,376 USD, which marked a record since March of the current year. The euro has gained 8.1 percent vs. the dollar and 7.8 percent vs. the yen since September 10. Thus, the euro has grown considerably over a very short period of time.
As a matter of fact, there are no objective factors for such dynamics of the euro. The real state of affairs is absolutely different. Moody's lowered Spain's rating to Aa1 from Aaa at the time when Dublin said that Ireland would need 50 billion euros (a third of the nation's GDP) to rescue the national banking system. One should also bear in mind the high unemployment level in the European Union.
As a result, Forex currently considers the euro as a real investment alternative to gold, which set another traditional price record last week.
Indeed, money work miracles. Big money work big miracles. China holds largest gold and currency reserves in the world, but its determination to support the European currency may only seem to be a manifestation of good will at first sight.
The assets of the National Bank of the People's Republic of China exceed 2.5 trillion dollars. It's an absolutely natural wish for Beijing to diversify the reserves against the background of Washington's enormous state debt and the pressure that it shows on the quotations of the American currency.
Chinese financial experts acknowledge that the level of the US debt is a highly negative factor. Any growth of the American currency is temporal, analysts say, claiming that the devaluation of the dollar is inevitable. That is why China cut its assets in US bonds by 10 percent from July 2009 to July 2010, to 846.7 billion dollars.
The euro is the only alternative to the US dollar in the foreseeable future. Purchasing European state bonds becomes an obvious decision. The critical condition of the economies of Portugal, Ireland, Spain and Greece (PIGS) makes the entrance to the euro market relatively inexpensive and attractive both financially and politically. EU countries will not hamper the Chinese expansion against such a background.
The Chinese resort to the tactics which they have already practiced in South East Asia and in Africa, where they purchased cheap troubled assets without any conditions. However, it currently goes about the European Union, which is world's second largest economy. Thus, China is willing to take this opportunity to demonstrate its global ambitions to the United States.
Last week, the US Congress approved the bill stipulating economic sanctions against the countries that orchestrate manipulations with national currencies. It is easy to guess that the bill targets China first and foremost.
The US administration is certain that the Chinese National Bank manipulates the national currency to create unjustifiable competitive advantages for Chinese exporters. As soon as Chinese goods reach more markets, including the US one, the unemployment level in the United States grows. The high dollar rate against the yuan makes US goods in China too expensive, and American companies lose the enormous Chinese market with over a billion consumers.
Washington believes that it would be reasonable to increase the yuan rate by at least 20 percent during upcoming two years. However, premier Wen Jiabao stated that China would never agree for such an adventure. If only it happened, China would be shattered with a massive social and economic crisis, the official said.
Beijing is perfectly aware of the fact that offense is the best defense.
Sergey Podosenov
Dear Populist,
The Federal Reserve, of which Mr. Bernanke is the figurehead, is said to be
fighting recession with inflation. What the Fed is doing is not going to
increase business startups or prevent companies from going out of business
and households from defaulting on their mortgage loans. The reason it
won't do any of those things is that the money is not making contact with
the US household sector. Nevertheless the failure of what the Fed is doing
to cure the problem of insufficient purchasing power will be used to
discredit all "inflationary schemes," including the one that would have
worked but that the Fed and the government did not try. The Fed's inflation
failed for two reasons: 1) because it all went to the financial sector in
the groundless hope that the financial sector would lend it to the business
sector so the business sector would increase domestic output; and 2) because
it was all debt financed and at a compound interest rate, instead of given
out free and clear.
Having the Fed make money available to lenders -- lending at nearly a zero
interest rate - so banks will lend to the business sector is doomed from the
start because no business venture can succeed in the US because the American
people have been drained of purchasing power.
What needs to be done is that the government gives money -- treasury fiat
money -- printing press money, not loan created money -- directly to
households so they can go out and spend and pay debt. The bailouts should
have gone to the households so they could have paid the creditors -- rather
than waiting until the households have lost their houses and then giving to
the bailout to the creditors who just got this windfall of property.
There never has been anything wrong with the American business sector. The
problem has always been a household sector starved of purchasing power by a
financial sector that has concentrated on capturing all houshold sector
earnings as interest. We shouldn't reinforce the deleterious behavior of
the financial sector with trillions of dollars -- giving them the power of
gods so that their ambition rivals that of Satan. To do so amounts to a
conspiracy against the people.
If you consider yourself a social crediter -- accepting the analysis
above -- please reply saying so.
Sincerely,
Dick Eastman
Yakima, Washington
========================
what I was saying in the yar 2000 -
Sept 8, 2000 Dick Eastman economics:
http://groups.google.com/group/sci.econ/browse_thread/thread/4e467651d8694105
Sept 8, 2000 Dick Eastman to sci.econ
http://groups.google.com/group/sci.econ/browse_thread/thread/e6a1c75ccc6d9455/
Eastman versus Flaherty April 4 2000
http://groups.google.com/group/alt.politics.economics/browse_thread/thread/bafe449f482d7064/308d8d244f0b32d1?hl=en&q=Flaherty+Eastman+group:alt.politics.economics#308d8d244f0b32d1
see:
http://livinglies.wordpress.com/2010/10/06/federal-notary-bill-attempts-to-grant-full-pardon-to-lender-notaries-witnesses/Posted
"Serious people were appalled by Wednesday's vote in the House of
Representatives, where a huge bipartisan majority approved legislation,
sponsored by Representative Sander Levin, that would potentially pave the
way for sanctions against China over its currency policy. As a substantive
matter, the bill was very mild; nonetheless, there were dire warnings of
trade war and global economic disruption. Better, said respectable opinion,
to pursue quiet diplomacy. "
From: Dick Eastman <oldickeastman@q.com>
Date: Sun, Oct 10, 2010 at 5:34 PM
Subject: [bangla-vision] (1) High economic crimes -- the current phase -- (2) Problems with monetary reformers.
To:
06.10.2010
Passing Remarks by Dick Eastman
High economic crimes -- the current phase
How else can I break it to you. High interest rates are hidden in deflation. While you and I may be seeing high prices, the fact is that you and I and people like us are not doing the big buying in the country today. The foreigners are doing the buying and they are enjoying very very low prices. Consumer price indexes are based on how many dollars it takes to buy a typical shopping bag of groceries, fuel and other essentials. For those things the prices are higher -- but this increase is due to monopoly power, not to money supply inflation -- we are not seeing any of that money that the Fed is giving to international lenders. Remember the two loop analysis. We get the deflation and are foreclosed and forced to sell by economic distress, while the rich of international eliteworld enjoy a boom of easy money allowing them to come in and sweep up properties, making them foreign landlords of the land of the debt slaves.
An interest rate of zero in a five five percent deflation rate is really five percent interest in terms of growth of purchasing power from what the amount loaned would buy to what the payback will buy -- which is called the real rate of interest. And don't think the deflation rate is low. The prices we see as higher because as firms go bankrupt monopoly concentration increases and therefore monopoly pricing
Remember that the Fed is "inflating" only the external dollars, not dollars the reach your or me as wages or revenue for out domestic businesses. We are not allowed any of that money. What the Fed is doing is making open market purchases of securities on in the elite loanable funds market -- they are buying government securites from Big Finance and they are buying securitized mortgages and high-grade corporate bonds. And what are is Big Financ doing with that money? They are buying up assets in the US, Europe and around the world -- because interest rates have been forced down very low in a deflationary environment. (Remember, deflation brings the nominal interest rate lower than the real interest rate, just as inflation takes the nominal rate higher than the real rate.)
Do not be fooled by those who say the dollar has lost value -- it has gained in value in the domestic environment. How can that be, since everywhere you look prices are higher. The price increase are administered monopoly prices -- Wall Mart has no competition and prices are going up. The gas price increase was purely a contrived shortage -- deliberate manipulation of supply to raise prices. Accross the board competiton has vanished and prices are going up -- not wages, but profits -- especially financier profit from buying foreclosed assets. The ruling elite are very sparing in who they let enjoy the net deflation. Our wages -- through cuts, through firing and rehiring the same workers at lower pay. etc.
The elite are not wasting on of these deflated prices on us -- we get the high prices, they get the low prices of distressed and foreclosed assets. We pay monopoly prices -- they buy our homes and bankrupted businesses at deflated prices - and they pay us a deflation wages. Bonanza for the international elite, bust for us -- the intended victim.
Soros calls for more "stimulus" -- but if you are dying from loss of blood, do you need a "stimulus" or do you need a transfusion of blood that does not have to be sucked out again with compound interest?
Soros says fiscal restraint (i.e. not enough government spending) is limiting recovery.
In other words Soros wants the government to deficit spend on some government expenditure -- as if a $3 trillion pair of wars is not enough.
Soros says China must have a greater say in IMF policy and lending. Soros is promoting China's increased involvement in efforts of "international capitalism" to unseat corrupt governments, especially those with resources that should be contributing to global prosperity. The IMF restructures countries that have defaulted to international lenders like Soros. Soros is talking about China having a voice in the disposition of the assets of the United States now in undeclared bankruptcy.
----
Money Power mouthpiece -- and if the word economist means whore to you, then "economist" Paul Krugman says the recession is over but unemployment is going to remain even as investment is going to the "developing" ountires -- by which is meant exploitable countries were corporations and their paid slave foremen rule the roost -- in fact it is our "stimulus" and "bailout" money that is doing that foreign investing. And yes, Krugman views China as one of those developing countries.
Bernanke and Geithner want the China to offer fewer renminbi for the dollar / more dollar for the renminbi so that US exports will have more dollar-denominated demand from China -- and to hell with Americans who have no production facilities remaining and will have to pay more dollars to get the renminbi to buy the imports from China which have taken the place of American production. You see, China is also part of the deflation we are experiencing -- our dollars are used to buy renminbi, but the Chinese who buy the dollars on the currency market are not buying many Ameican goods -- so there is a net drain from the domestic loop to the international loop -- which shyster witchdoctors like Krugman never talk about. And what would imposition of a US tariff on imports do? Merely cut the government in on China's game. You see China knows very well that the dollars it is sitting on appreciating in purchasing power as the dollar here in the US deflates. The Chinese are exercizing monopoly control over our own currency.
Note too that Geithner is calling for countries to hold back on carring out IMF, World Bank and WTO hari-kari austerity measures until after the US elections. Yet Bernanke, Geithner, Robert Zoellick (World Bank), Dominique Strauss-Kahn (IMF) and are in agreement that the US must reduce imports and that the reduction must come at the expense of household consumption through deflation that simply cut purchasing power (wage loss, job loss, along with quality and quantity cuts in products for sale here, and price increase -- due to the drop in supply of foreign provenence.) The international financial elites are bent on forcing a big further drop in American "internal consumption."
So while they want to choke household demand here -- and are calling for expanded IMF powers to force us to do so -- they are calling for China to pass out money to China's households so that they can by more American goods from American corporations that are floated and financed by the international moneyed aristocracy. Geithner wanting: "the multilateral rules-based trading system" that will force these outcomes over the heads of any populations with populist notions that they somehow are sovereign over national economic and financial policy due to their systems of representative government and constitutional provision.
Another development is China using its stock of dollars to buy Euros. This makes the Euro less plentiful in Europe -- deflation for Europe -- so international buyers can buy up European assets at bottom prices. Which brings us back to the zero interest rate which is really a strong real interest rate when deflation is taken into account. (real rate of interest + expected rate of deflation = the nominal interest rate). With prices low in Europe and America to anyone with dollars to spend, the zero nominal interest rate makes it easy to snatch up real asset wealth from distressed sellers around he world. International investors -- with organized crime tapping into China's dollar and Euro holdings are simply plundering the planet -- at prices they have arranged on terms they can dictate.
Of course what needs to be done -- is halt international investing -- each nation must do this on its own -- the US should lead, setting the example. We should end credit buyng -- and feed ourselves through emergency farm support measures, importing ony what we can pay for with exports.
Furthermore the American dollar must stop being a Chinese monopoly possession. Since there are already two loops in which money flows -- the US domestic market must launch its own new dollar -- the fiat treasury note -- and the dollar can remain in existence as an international currency only, no longer welcomed in the US -- we will treat it as a foreign currency. That is the only way we can break free of the present situation where foreig
-----
Big Banks are stopping foreclosures until they are confident that no one is in a position to sue them for not having the mortgage contracts. Legislation being prepared that will allow foreclosures to proceed without a mortgage deed, excusing notaries and witnesses and lenders for creating news sets of mortgage documents without the borrowers signature or the borrowers knowledge. The documents of course were not misplaced, they were simply shredded because they did not allow for securitization. All of the cases where mortgages deeds have been "lost" are cases where the mortgages have been bundled and sold as securities.
Dick Eastman
Yakima, Washington
==============================================================
My problem with monetary reformers.
by Dick Eastman
From: Geraldine Perry
To: Dick Eastman
Sent: Friday, October 08, 2010 1:58 PM
Subject: Re: some money reform proposals simply can't work -- yet the drown our minds with their chatter Fw: Money Reform
Dear Dick,
I am not sure where you are getting your pronouncements from but I am guessing you have not read my book or checked out info on my website. I will make a couple points with respect to your statements below.
First, re your statement: " . . . we must have immediately one hundred percent repudiation of national indebtedness to the criminal money power. . . ."
Consider: This sounds appealing, because revenge is often sweet -- but there are unintended consequences, including the fact that these debts are contractual agreements. Just as important, debt-holders include grandmas and grandpas as well as China, etal. While grandma might be considered collateral damage in debt repudiation (as ever it was thus) what do you think might happen if we repudiated the debt we owe to China? And what does it say about a nation's integrity?
I am not sure where you are getting your pronouncements from but I am guessing you have not read my book or checked out info on my website. I will make a couple points with respect to your statements below.
First, re your statement: " . . . we must have immediately one hundred percent repudiation of national indebtedness to the criminal money power. . . ."
Consider: This sounds appealing, because revenge is often sweet -- but there are unintended consequences, including the fact that these debts are contractual agreements. Just as important, debt-holders include grandmas and grandpas as well as China, etal. While grandma might be considered collateral damage in debt repudiation (as ever it was thus) what do you think might happen if we repudiated the debt we owe to China? And what does it say about a nation's integrity?
[Eastman reply: Well, Gereldine, event though I am motivated by revenge and never look for unintended consequences it somehow enters my mind that fraud vitiates all contracts. And if you look, you will see that I said "repudiation of national indeptedness to the criminal money power" . Now I realize that the criminal money power has been leveraging other peoples money, the other people being ugly spinsters and sweet grandmas and doctors and government employees etc. But the criminals have taken more than they have given -- and they will continue to take unless their game is stopped cold. As for China, I have already laid out a fair proposal. The Chinese can have 100 percent ownership of any factory in China owned by an American corporation or wealthy American international speculators. The Japanese will get to keep their assets in the US -- and have them prosper in a good economy. They will also get much better trading terms etc. As for "a nation's integrity" -- a nation or a man who does not take back what has been stolen from him and a swindle that involves mass-murder and hooking us into war with two wholly innocent countries, that is the man or nation that does not have integrity. One pays one's gambling debts -- but when you discover the dealer has aces up his sleeve or that dice are loaded -- then you get your money back.]
(This said, there are perhaps some exclusions here. For example - and arguably - repudiation may be acceptable when - as in the case of the mortgage debacle - loans were improperly and provably deceptively constructed to as to mislead the borrower. But IMO, we need to at the same time consider what this action will do to the money supply, which is after all debt. No debt, no money basically. It may be a good opportunity to help educate the public at the very least, and with a bit of luck may help keep a few hapless homeowners in their homes.)
(This said, there are perhaps some exclusions here. For example - and arguably - repudiation may be acceptable when - as in the case of the mortgage debacle - loans were improperly and provably deceptively constructed to as to mislead the borrower. But IMO, we need to at the same time consider what this action will do to the money supply, which is after all debt. No debt, no money basically. It may be a good opportunity to help educate the public at the very least, and with a bit of luck may help keep a few hapless homeowners in their homes.)
[Eastman reply: You are talking "micro crime" here, Geraldine. I am talking about macro or systemic crime -- it may be legal because the Money Power has bought the legislature and judiciary -- but as Jefferson said: "…law is often but the tyrant's will, and always so when it violates the rights of the individual." When a million loans are made in one economic environment, in which the loans were reasonable, and then the Money Power causes the M1 money supply to actually contract at the same time they instruct the oil cartel -- an effective monopoly -- to raise gas and oil prices far beyond anything seen before -- forcing foreclosures around the country regardless of how thrifty and hard working and conscientious the borrowers have been -- then it is systemic crime -- and must be addressed with measures appropriate to the scale.]
Second, re your statement: "Other people want "flexible credit" -- that the credit system should expand and contract whenever people need it. . . ."
Consider, it is the MONEY SUPPLY, not credit, which should expand and contract whenever people need it.
Second, re your statement: "Other people want "flexible credit" -- that the credit system should expand and contract whenever people need it. . . ."
Consider, it is the MONEY SUPPLY, not credit, which should expand and contract whenever people need it.
[Eastman reply: I stick by what I said:
The money in the system should be set by the Social Credit authority. They will provide the social credit dividend to households -- to each person -- so that the household will be where EVERY dollar gets its start. They will not control the amount of money in circulation, which will depend on people saving and upon the velocity of money (which depends on things like how often people are paid). The National Social Credit Office will provide the dividend checks and will set their amount according to new measures of household purchasing power.
What we need is separation of injection of money into the economy from bank loan credit. I allow only two methods of injecting money into the flow of buying and selling finished products and factors of production -- households spending the money into existence or government spending money into existence if the people (through their representatives and/or ballot initiatives ask for it). The financial sector is no longer going to have that privilege. We are taking fractional reserve banking away from them -- the "out of thin air trick" will no longer be in private hands, the hands of Rockefeller and Rothschild etc. As I have said before -- banks will simply be places where people put their savings -- with the banks given permission to invest the amount deposited -- the bank getting for example, 6 percent on its loan against the depositor getting 3 percent -- but it will be the savers money that the bank lends out -- no more loans backed by only a fraction in reserve. That in itself will kill the mechanism by which the money power has caused boom and bust for their own gain, shorting the bust and going long when they are ready to create easy money conditions. Like I said above -- no more playing the game on a rigged table.
Third, Re your statement: "This cannot be done without getting back to credit manipulation to rig markets for financiers against households and firms. . . "
[Eastman reply: What I said was:
Other people want "flexible credit" -- that the credit system should expand and contract whenever people need it. This cannot be done without getting back to credit manipulation to rig markets for financiers against households and firms."
Yes it can, by breaking up the banking system, and dividing banking responsibilities into "checking" and "lending and investing" institutions, all under local control and all required to operate as any other business, out of their own capital not other people's money, in other words 100% reserves. This does NOT mean that criminality will be eliminated, but it will be substantially reduced.
[Eastman reply: I am talking against government or a private central bank regulating the amount of credit in the macro economy. I have already said that I am in favor of savings banks where there is a penalty for withdrawal. It would be the savings bank deposits which banks or building and loan companies can lend. Of course it goes without saying that if people want a safe place to store their unused liquidity they can have a checking/ATM account for which they will pay a fee. In the present system a bank can count a fraction of its savings deposits and a fraction of its demand deposits as reserves against which it can make loans. That is what I would stop. That is the credit expansion mechanism I intend to see discontinued. One business just needs a good vault. The other also needs a good entrepreneurial lending officer. At any rate, it is pretty clear that you didn't carefully read the letter you are responding to.]
Fourth, what you describe as Social Credit relies on too many individual penalties, etc among other problems. As one example when a bank has over-extended, let it borrow from the National Monetary Authority where interest on its loan helps to extinguish money that has served its purpose. When I get time I will post a paper, based on Irving Fisher's ideas, which helps clarify some of these points.
Fourth, what you describe as Social Credit relies on too many individual penalties, etc among other problems. As one example when a bank has over-extended, let it borrow from the National Monetary Authority where interest on its loan helps to extinguish money that has served its purpose. When I get time I will post a paper, based on Irving Fisher's ideas, which helps clarify some of these points.
[Eastman reply: You are saying that Social Credit that I describe relies on "too many individual penalties" .. "among other problems."? Each member of a household gets a check (or credit to an account that can be debited with a social credit card) -- they spend the money or save it -- they pay no interest, they do not have to pay back the principal. It is their money to spend free and clear. That is how money will be injected into the economy. The first spender with the household. The household sector will direct production with this money -- entrepreneurs will follow their signals of market demand. Economics, using refinements and extensions of the ideas of Irving Fisher, whom I also admire and whose books also have a prominent place on my bookshelf -- will guide the Social Credit agency in setting the amount of the dividend that will be received by all. There is not one "penalty" of any kind associated with the process. What on earth are you talking about???
Fifth, re your statement: "The idea that banks can issue fiat on their own "just as we do now" is totally unworkable and would give us once again a financial elite with extraordinary power over the household and business sectors. . . "
AGREED!!! "The hand that gives is above the hand that receives."
[Eastman reply: Like your hand giving me all this condescending criticism?]
Through the system I describe, approximately half of all money created by the Monetary Authority is through interest free loans to state and local governments for needs in their localities, and extinguished through taxes or other means. Since money is power, this returns a significant power to the people where it belongs
Through the system I describe, approximately half of all money created by the Monetary Authority is through interest free loans to state and local governments for needs in their localities, and extinguished through taxes or other means. Since money is power, this returns a significant power to the people where it belongs
[Eastman reply: I don't like your system. You system gives the money to the state and requires it to be paid back. So you have a Monetary Authority that is distinct from the state? So how does that differ from the independent central bank idea we have now? And if this large amount of money goes directly go government what is that going to do to fiscal responsibility and the lobbyist business of people who want to direct that flow? You are giving us a monster! What we need is money going to households -- then the households have money to pick politicians instead of having the rich men do it for them. And then the representatives chosen by these households will go to local, state and federal legislatures and will decide whether or not the government should spend any money at all on this or that. That way the people have the money -- and they will definitely feel it and know it when they have to give any of it up to obtain a public good or service. Now I realize that I myself have said that the government can create money by inflation of the money supply above and beyond the injection from the distributed social credit dividend. But the people should vote for that too -- the government should not be given arbitrarily half of all the purchasing power -- in fact, you are proposing exactly what I am trying to get rid of in the world.
The remainder of money is created for duly authorized and achievable NATIONAL projects to be paid for through interest payments owed by private banks which have secured loans through the monetary authority PLUS federal taxes or other fees.
[Eastman reply: Oh, no. You mean the state you were taking about above did not refer to the nation, but only to the state of the union. And you mean to tell me that the states get half and the Federal Goverment gets the other half and that all of the money that is injected first goes throught the hands of goverment -- that goverment will always be the first spending of all dollars!!!!!!!
You plan really stinks.
Send me a list of everyone who buys into your program -- I really am curious.
All to be managed automatically by a formula a fifth grader could understand and all FULLY transparent. I do urge you to re-read Part II of my book - OR at least review my slide presentation: http://www.thetwofacesofmoney.com/files/money.pdf When I get time I will post a paper, based on Irving Fischer's ideas regarding separating banks into checking and lending and investing institutions, which may help clarify some of the banking points.
[Eastman reply: Save your effort. Every economics text book written before 1935 has a chapter making that distinction. You started off your letter to me saying "I'm not sure where you get your pronouncements." Let me say that I am not sure where I get them either, but I can assure you that once conceived they do pass through a rigorous selection process and logical tests before I find them worthy to put in a post.
I wish I could get involved in a more extended conversation but I am currently mired in another project on global warming and agriculture, plus I have a whole lot of leaves to rake! But at least you now have my two cents!
[Eastman reply: Are you aware that major weather disasters have been deliberately produced by weather modification technologies that are among this nations most well guarded secrets? Do you understand how completley off beam global warming activists are who do not take the fact existence and frequent application weather control technology into account? And are you aware that constraints on agriculture production around the world have been deliberately engineered --and that the alleged "global warming variables" are merely flim-flam coverup for that mass-murder crime?
Are you being paid for this research or do you expect to publish a book? Is there a foundation grant involved?
Geraldine Perry
On 10/7/2010 11:44 PM, Dick Eastman wrote:
Populists are trying to teach the public that the the economy has collapsed because of insufficient purchasing power in the hands of the public. Of course the Money Power which Bernanke represents does not what this simple solution to be accepted because it will spell the death of international lending to governments and second mortgage and other lending to distressed households (and other reasons). So Berhanke is creating a lot of money, but he is not getting any of it.Some people would like to fade in pure fiat money and phase out debt-based currency over thirty years. In my view we need 100 percent fiat right now because . Repudiation is impossible if you plan to fade out of debt-based money. Debt money has to be killed in one day and the replacement organ be ready to transplant and take over that same day. Anyone who wants to do this slowly is a charlaton who has no intention of killing the monster.Other people want "flexible credit" -- that the credit system should expand and contract whenever people need it. This cannot be done without getting back to credit manipulation to rig markets for financiers against households and firms. In some things rigid (like 100 percent annual balance of trade and 100 percent deposit backing of loans) is better. The money in the system should be set by the Social Credit authority. They will provide the social credit dividend to households -- to each person -- so that the household will be where EVERY dollar gets its start. They will not control the amount of money in circulation, which will depend on people saving and upon the velocity of money (which depends on things like how often people are paid). The National Social Credit Office will provide the dividend checks and will set their amount according to new measures of household purchasing power. So what about the entrepreneur who wants to build some new innovation on a large scale. Credit will not expand to please him. Instead, along with social credit there will still be state banks who lend money to businesses. But the money they lend will be 100 percent people's savings. There will be no fractional reserve banking. When people put their savings in a bank there will be stiff penalties for withdrawal before the alotted time period. Those penalites and durations may be set by state regulators. If a bank has overextended its loans and people choose to withdraw their savings -- then let that bank borrow from other banks who have savings to lend. The bank that suffered the unexpected savings withdrawals will lose and the other bank that loaned to it will gain -- but the net of the entire banking system will be zero.The idea that banks can issue fiat on their own "just as we do now" is totally unworkable and would give us once again a financial elite with extraordinary power over the household and business sectors.My brand of social credit -- I think it's faithful to Douglas and Kitson --and maybe a littel better because I stand on their shoulders -- others are not so sure.
====================================
A while back I asked Dan Breeden what his central message or idea was. I really like his answer.
From: Dan Breeden
To: Richard Eastman
Sent: Friday, October 08, 2010 9:15 PM
Subject: My thesis
Richard, I don't have a thesis. . I'm an observer. Everybody has an opinion.
Even Rothbard came out for gold;
http://www.lewrockwell.com/rothbard/rothbard240.html
In a perfect world, there would be perfect solutions. I don't have the
perfect answer. I have questions.
Do we need to abolish the corporation,,, the undying?
Do we need to abolish the nation-state?,,, the uncaring?
Social credit with it's built-in control mechanisms appears to be a great
foundation to work from. Human beings are a weak link.
I tend to look at the solutions that have the most probability of being
implemented. That doesn't necessarily mean that I think they are the best.
The banks are learning the hard way that they can't crash the economy and
still expect to get the profits that they would get from a healthy economy.
They can't very well ALL decamp to Asia.
They have to come up with a solution that will allow the economy to function
without the major fluctuations. Because of the changed economic reality, I
don't believe that the banks hope for a WW to bring back prosperity.
Eventually, the banks are going to realize that their economic well-being is
dependent on the well being of the general populace. There will never be a
replay of the credit free-for-all that was incited to cover up for the loss
of wages / purchasing power.
The foreclosure moratorium is a countdown on the attendant CDOs.
China's backing of Greece and the Euro is a countdown on U.S. GOV paper.
Runaway FED printing has a very short future.
The banks see decades of Japan-style slump with NO exit. The banks see
consumer sentiment that will NEVER turn around on false hopes.
I'm not saying that the banks will see social credit as the only way out. I
believe that after some years of depression, they will see that purchasing
power and the attendant sentiment are the only solutions. They will see
that money and credit are NOT incentive,,, only wealth is.
It's said that America does what is best,,, after they try everything else.
Academia is floundering,,, to put it mildly. Where is the correct consensus
going to come from for future GOV policy? This will all take time.
Sorry. Dan
From: vterranova@juno.com
MONEY AND MARKETS
Friday, October 8, 2010
Central Bankers' Global Race to the Bottom
by Mike Larson
. . . The Fed's goal is clearly to debase the U.S. dollar . . . Or in the
infamous words of now-Chairman Ben Bernanke from November 2002 ...
"By increasing the number of U.S. dollars in circulation, or even by
credibly threatening to do so, the U.S. government can also reduce the value
of a dollar in terms of goods and services, which is equivalent to raising
the prices in dollars of those goods and services.
"We conclude that, under a paper-money system, a determined government can
always generate higher spending and hence positive inflation."
The Cost of Competitive Devaluation
The Fed would have you believe this is good for America. That a country
whose massive debts are majority-held by foreigners will never have a
problem selling bonds even as its central bank drives down the value of
those bonds (in foreign currency terms). . . .
In the past several weeks, soybeans have surged up to 23 percent, crude oil
has gained 30 percent, copper has jumped up to 39 percent, and wheat prices
have soared as much as 97 percent.
The dollar? It has dropped more than 12.5 percent since June, making it more
expensive to buy foreign goods and travel overseas. And gold? It has surged
about 17 percent.
The Fed's policy has pushed the dollar down and gold up.
Yes, stocks have rallied but only roughly as much as the dollar has
declined. In other words, you've basically made no "real" gains in terms of
purchasing power!
. . . Prices for many raw commodities are going up. So are costs for the
companies you buy goods from. But your wages likely aren't keeping pace
because of the lousy labor market. And your savings accounts and fixed
income securities aren't yielding squat.
. . . It's bad enough that our central bank is heading down the dangerous
road to currency debasement. What's worse is that other central banks are
doing the same darn thing!
The Bank of Japan tried to suppress the yen by intervening massively in the
currency markets a few weeks ago. Then this week, it lowered its benchmark
interest rate to 0 percent from 0.1 percent and announced a new QE plan.
It's going to spend 5 trillion yen, or about $60 billion, to buy assets.
Not just any old assets like government bonds either. The BOJ said it will
buy "long-term government bonds, treasury discount bills, commercial paper
(CP), asset-backed CP (ABCP), corporate bonds, exchange-traded funds (ETFs),
and Japan real estate investment trusts (J-REITs)."
Yes, you read that right ...
The BOJ is now going to start indirectly buying commercial real estate and
stocks. . . . Don't forget the Bank of England either. BOE policymaker Adam
Posen advocated for more QE there in late September. The Brits are currently
buying 200 billion pounds (about $317 billion) worth of government bonds to
artificially prop up the market and suppress the value of the pound.
Meanwhile, central bankers in other Asian countries outside of Japan are
selling the heck out of their own currencies to try to keep them from
appreciating rapidly against the buck.
That's happening in Brazil, too ...
A weaker real makes Brazilian exports more competitive.
Brazil's finance minister Guido Mantega just warned of a global "currency
war," and doubled the tax on foreign purchases of Brazilian bonds in an
attempt to stem the flood of hot money into Brazil's markets and currency,
the real.
Lastly, there's China, perhaps the world's biggest currency manipulator.
It's continuing to hold down the yuan despite intense international
pressure.
Chinese Premier Wen Jiabao just told a business conference that "if the yuan
isn't stable, it will bring disaster to China and the world." He added that
European officials should quit bugging him, saying "Europe shouldn't join
the choir to press China to allow more yuan appreciation."
Protecting Yourself from the
Fed's War on Your Wealth!
Bottom line? Practically every central banker in the world wants to drive
his currency into the gutter.
===============
Why China Is Our Secret Ally In The Global Currency War
Charles Hugh Smith, Of Two Minds | Oct. 4, 2010, 10:33 AM | 2,673 | 11
Trade-currency issues between the U.S. and China are dynamic and do not fit
standard models based on the 1930s "tariff wars."
Regardless of whether it is deemed good or bad, trade/currency conflict with
China is a fact of life--but it doesn't fit standard models of "trade wars."
To avoid unnecessary inflammation in the body politic, let's refer to this
bundle of inter-related conflicts as "trade-currency issues" rather than a
"trade war," which is a heavily loaded phrase that adds plenty of emotion
and precious little understanding.
While many commentators warn that any trade war will lead to disaster (based
on the negative consequences of higher tariffs slapped on international
trade in the Great Depression), trade with China overflows the boundaries of
this simple model of trade and tariffs. It may well be a "trade war" would
be beneficial to both nations as long as it doesn't transmogrify into a
"hot" shooting war.
To understand these conflicts, we can start by looking at a few of the major
moving parts of trade between the U.S. and China. Trade and capital flows
between the U.S. and China are complex and highly dynamic. Here are a few
points to consider:
1. Since the renminbi (RMB or yuan) is fixed to the dollar, the pair trade
as one unit against all other currencies. In a simple model of global trade
and currency valuations, then all currencies are either fixed against a
standard such as gold, or they float freely against each other.
Since China pegs its currency to the U.S. dollar, then neither model can
make sense of the yuan-dollar pairing.
Given this pairing, China is less concerned about the consequences of their
yuan peg on their trade with the U.S. than they are of the dollar-yuan's
valuation against the Euro, Japanese yen, Korean won, etc.
If the dollar falls in value relative the euro, Chinese goods become cheaper
in Europe. Since Europe is now a larger export market for China than the
U.S. by a modest margin, that dynamic is critical to the Chinese leadership.
In other words, while self-absorbed American politicians can obsess about
the yuan's peg, the Chinese have to worry about the dollar's moves against
other major currencies.
It doesn't matter much where the yuan-dollar peg is set. As others have
noted, jobs will not be moved to the U.S. from China if the yuan moves from
6.7 to 6. Prices on imported goods in the U.S. will rise modestly, and
suppliers in China will receive fewer dollars.
Ironically, a stronger or weaker dollar has virtually no effect on the cost
(in dollars) of goods from China, as the yuan is pegged to the dollar. The
action is thus all on the dollar and its relative value in euros, yen, etc.
What would concern China is not superficial changes in the yuan peg but a
much stronger U.S. dollar. As the dollar gains in strength, so too does the
yuan. A much stronger U.S. dollar would end up making Chinese goods more
expensive everywhere except the U.S.
2. Much has been written about China's "nuclear option" of dumping its $850
billion in U.S. Treasuries to "punish" the U.S. for its demands. Suffice it
to say that this "nuclear option" is more a firecracker than a weapon of
financial mass destruction. (Please see China's "Nuclear Financial Option"
Downgraded to "Financial Firecracker"September 2, 2010 for more.)
In essence, the Federal Reserve can create as much money as it deems
necessary to buy whatever assets it deems necessary. In 2009 the Fed decided
to expand its balance sheet by $1.2 trillion to buy $1.2 trillion in
mortgage-backed securities to prop up the U.S. housing market, and it did so
without any panic or global consequences.
Thus the Fed could soak up China's entire $850 billion stake of Treasuries
at will. That only represents 10% of outstanding Treasuries, and the Fed
would only have to expand its balance sheet from $2.3 trillion to $3.1
trillion to do so. In the larger scheme of things, this is really no big
deal.
I know many think it should be a big deal, but global markets issued a bored
yawn over the last $1.2 trillion expansion in the Fed's balance sheet.
Another $800 billion simply isn't enough to make much of a ripple.
The currency markets trade several trillion dollars of currencies a day.
$800 billion is sizeable but it's really not that big in today's global
markets. Even after the stock and housing market's declines, there is $52
trillion in net worth in the U.S. China's Treasuries represent about 1.5% of
that.
If we grasp that what matters to China is the dollar's relative value to its
other trading partners' currencies, then we reach a new understanding. What
would cause China to dump Treasuries is not a desire to "punish" the U.S.
but to weaken the dollar globally to keep Chinese goods cheap in Japan,
Europe and elsewhere.
Many in America share this same goal: keep the dollar weak. In this sense,
China and the U.S. are "allies" which are bonded by the yuan-dollar peg into
a partnership against all other currencies and trading blocks.
Thus the yuan-dollar peg is more a sideshow played out for the domestic
audiences in the U.S. and China. China's leaders don't want to "lose face"
with their populace by seeming to cave in to U.S. demands, and American
politicos desperately want to to appear "strong" with China to give the
illusion that
1) they "care" about "creating jobs" in the U.S. (hahaha)
2) the "problem" is the yuan-dollar peg (it isn't)
3) they deserve being re-elected because they're "taking a strong stand" on
this (worthless, nonsensical "issue" that won't create a single job--barf!)
Thus we can predict this issue will magically disappear after the November
elections. The whole Kabuki play is staged direct from Central Casting:
Inscrutable Chinese leaders, blustering know-nothing U.S. Congressmen hoping
to leverage a tempest in a teapot into another term in power, and so on.
What would cause a real conflict between China and the U.S. is a true
"strong dollar" policy. If the U.S. leadership changes in either 2010 or
2012 and the new leadership grasps the folly of beggar-thy-neighbor currency
wars, then the U.S. might seek to strengthen rather than weaken the dollar.
Were that to occur, China would soon suffer a major decline in global
competitiveness as the U.S. dollar rose in value.
The lesson here is the advertised "conflicts" may mask both the differing
interests and unstated partnerships between China and the U.S.
There is much more to be said on these topics, but I will close today's
entry by noting that the key feature of capital flows between China and the
U.S. is this: the U.S. in effect exports credit to China, and imports goods
and dollars back. This trade in credit is reflected in the "real world"
exchange of goods and currencies. While many commentators have noted that
foreign trade flows must balance--China has to "recycle" its excess dollars
back to the U.S.--the real issue isn't currencies, it's the credit
underlying the trade itself.
http://www.businessinsider.com/charles-hugh-smith-china-trade-war-2010-10
==========
China's recent activities in eurozone to devalue US dollar
06.10.2010
06.10.2010
The market structure of the rates of foreign currencies has been thrown into question. China has become more active in the eurozone as a result of the economic conflict with the USA. The Chinese dragon starts to determine quotations on world's basic currencies, such as the euro and the US dollar.
Premier Wen Jiabao of China stated during the meeting with the head of the Greek government George Papandreou that China had purchased long-term bonds, issued by Greece to cover its sovereign debt. Beijing, the Chinese official said, was determined to continue purchasing the bonds if Athens needed new loans to settle its huge budget deficit. Several days before that, the lower house of the US Congress approved the bill targeted against the lowered rate of the Chinese currency vs. the US dollar.
The Chinese premier also said that his nation would continue to support the countries of the eurozone that help Greece in overcoming the financial crisis. The official also said that China was intended to double imports from Greece.
Russia Today: UK saved euro by not joining it
The statement from the Chinese premier resulted in the growth of the European currency on the market. One euro is now traded at 1,376 USD, which marked a record since March of the current year. The euro has gained 8.1 percent vs. the dollar and 7.8 percent vs. the yen since September 10. Thus, the euro has grown considerably over a very short period of time.
As a matter of fact, there are no objective factors for such dynamics of the euro. The real state of affairs is absolutely different. Moody's lowered Spain's rating to Aa1 from Aaa at the time when Dublin said that Ireland would need 50 billion euros (a third of the nation's GDP) to rescue the national banking system. One should also bear in mind the high unemployment level in the European Union.
As a result, Forex currently considers the euro as a real investment alternative to gold, which set another traditional price record last week.
The assets of the National Bank of the People's Republic of China exceed 2.5 trillion dollars. It's an absolutely natural wish for Beijing to diversify the reserves against the background of Washington's enormous state debt and the pressure that it shows on the quotations of the American currency.
Chinese financial experts acknowledge that the level of the US debt is a highly negative factor. Any growth of the American currency is temporal, analysts say, claiming that the devaluation of the dollar is inevitable. That is why China cut its assets in US bonds by 10 percent from July 2009 to July 2010, to 846.7 billion dollars.
The euro is the only alternative to the US dollar in the foreseeable future. Purchasing European state bonds becomes an obvious decision. The critical condition of the economies of Portugal, Ireland, Spain and Greece (PIGS) makes the entrance to the euro market relatively inexpensive and attractive both financially and politically. EU countries will not hamper the Chinese expansion against such a background.
The Chinese resort to the tactics which they have already practiced in South East Asia and in Africa, where they purchased cheap troubled assets without any conditions. However, it currently goes about the European Union, which is world's second largest economy. Thus, China is willing to take this opportunity to demonstrate its global ambitions to the United States.
Last week, the US Congress approved the bill stipulating economic sanctions against the countries that orchestrate manipulations with national currencies. It is easy to guess that the bill targets China first and foremost.
The US administration is certain that the Chinese National Bank manipulates the national currency to create unjustifiable competitive advantages for Chinese exporters. As soon as Chinese goods reach more markets, including the US one, the unemployment level in the United States grows. The high dollar rate against the yuan makes US goods in China too expensive, and American companies lose the enormous Chinese market with over a billion consumers.
Washington believes that it would be reasonable to increase the yuan rate by at least 20 percent during upcoming two years. However, premier Wen Jiabao stated that China would never agree for such an adventure. If only it happened, China would be shattered with a massive social and economic crisis, the official said.
Beijing is perfectly aware of the fact that offense is the best defense.
Sergey Podosenov
Pravda.Ru
=====================================
Dear Populist,
The Federal Reserve, of which Mr. Bernanke is the figurehead, is said to be
fighting recession with inflation. What the Fed is doing is not going to
increase business startups or prevent companies from going out of business
and households from defaulting on their mortgage loans. The reason it
won't do any of those things is that the money is not making contact with
the US household sector. Nevertheless the failure of what the Fed is doing
to cure the problem of insufficient purchasing power will be used to
discredit all "inflationary schemes," including the one that would have
worked but that the Fed and the government did not try. The Fed's inflation
failed for two reasons: 1) because it all went to the financial sector in
the groundless hope that the financial sector would lend it to the business
sector so the business sector would increase domestic output; and 2) because
it was all debt financed and at a compound interest rate, instead of given
out free and clear.
Having the Fed make money available to lenders -- lending at nearly a zero
interest rate - so banks will lend to the business sector is doomed from the
start because no business venture can succeed in the US because the American
people have been drained of purchasing power.
What needs to be done is that the government gives money -- treasury fiat
money -- printing press money, not loan created money -- directly to
households so they can go out and spend and pay debt. The bailouts should
have gone to the households so they could have paid the creditors -- rather
than waiting until the households have lost their houses and then giving to
the bailout to the creditors who just got this windfall of property.
There never has been anything wrong with the American business sector. The
problem has always been a household sector starved of purchasing power by a
financial sector that has concentrated on capturing all houshold sector
earnings as interest. We shouldn't reinforce the deleterious behavior of
the financial sector with trillions of dollars -- giving them the power of
gods so that their ambition rivals that of Satan. To do so amounts to a
conspiracy against the people.
If you consider yourself a social crediter -- accepting the analysis
above -- please reply saying so.
Sincerely,
Dick Eastman
Yakima, Washington
========================
what I was saying in the yar 2000 -
Sept 8, 2000 Dick Eastman economics:
http://groups.google.com/group/sci.econ/browse_thread/thread/4e467651d8694105
Sept 8, 2000 Dick Eastman to sci.econ
http://groups.google.com/group/sci.econ/browse_thread/thread/e6a1c75ccc6d9455/
Eastman versus Flaherty April 4 2000
http://groups.google.com/group/alt.politics.economics/browse_thread/thread/bafe449f482d7064/308d8d244f0b32d1?hl=en&q=Flaherty+Eastman+group:alt.politics.economics#308d8d244f0b32d1
see:
http://livinglies.wordpress.com/2010/10/06/federal-notary-bill-attempts-to-grant-full-pardon-to-lender-notaries-witnesses/Posted
"Serious people were appalled by Wednesday's vote in the House of
Representatives, where a huge bipartisan majority approved legislation,
sponsored by Representative Sander Levin, that would potentially pave the
way for sanctions against China over its currency policy. As a substantive
matter, the bill was very mild; nonetheless, there were dire warnings of
trade war and global economic disruption. Better, said respectable opinion,
to pursue quiet diplomacy. "
__._,_.___
--
Palash Biswas
Pl Read:
http://nandigramunited-banga.blogspot.com/
Posts
No comments:
Post a Comment