posted by King Minos in Money / Career

Global Currency Wars??

December 28, 2012

Japan to join currency wars as exports slump
Japan is poised to join the world's "currency wars" as it battles a triple crisis of crashing exports, recession and a suffocatingly-strong yen.

Bottom-line: This tit-for-tat game among major global players should see a contraction of global trade much in the way Depression-era tariffs helped freeze exports AND imports! Hard to say, really, which nation comes out ahead (um, ALL boats float lower!); one thing is certain, however: As domestic unemployment in a nation rises so does pressure on political leaders to take steps to correct the problem; the steps they then take necessarily cause unemployment in competitor nations and ramp-up global geo-political tensions. Often, you have formerly "friendly" nations' at each others' throats; this may be what we see between Japan and China in their dispute over who owns a few small islands.

The modern era, really, probably has never experienced a sustained currency war among major issuers of fiat currency; average citizens, likely, will be harmed much more than governments because it is they who cannot counterfeit monies nor use other means of trade, generally speaking; they are stuck with all the implications of a currency war including sharply higher and more volatile prices;

Where does it lead? When does it end? It leads first to consumer move away from native currency mostly by "dollarization:" using another nation's stronger currency for domestic transactions. Of course, this adds greatly to the costs of transactions; but that is the point: When the costs of transactions in domestic currency outweigh those of using some other means, then savvy consumers will make the switch.

Generally-speaking, government officials seek to anticipate such moves and take actions to prevent an effective retreat from the official currency and into other assets; they may control the flow of capital across borders, ban ownership of precious metals, and more forcefully enforce edicts requiring that all transactions occur using only the native and now much devalued currency.

In CHINA, of course, one expects relatively little resistance from citizens; in America, and other Western nations one might see something of a breakthrough and real political blowback when citizens finally see past the pro-goverment propaganda (Real Americans help their neighbors by using the U.S. currency!) that seeks to demonize those trying to flee God's own currency!

It can be a currency war or tariffs or nasty class action lawsuits targeting a foreign car company; whatever it is, mostly everything is linked to a desire to recapture jobs lost to foreign predatory practices.

In America, today, we have seen a great rise in the income gap between richest and poorest; don't get me wrong, it wasn't really the fault of the wealthy, but caused by political failure.

We may be in a permanent "Gilded Age," where the wealthiest utilize all their monopolistic and other powers to keep the treasure they have gathered; today's modern media, including the ABH, is almost purely composed of various "feel-good" propaganda puff pieces always pushing some new or bigger public subsidy for a public or private concern or individual. (Who ever had the gold -- including the best of all: taxpayer dollars -- can create a public and political groundswell in favor of vast new public spending!) No challenges, no criticism; acceptance of "our" fate by the editors; on behalf of "us," and for the benefit of those with the gold ...

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