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The Currency War, Part I

Articles & Blogs - International Commentary

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The morning ‘news’ rarely fails to disappoint when it comes to churning out Machiavellian double-talk which is more convoluted than your average pretzel. Today was no exception. The stalwart propagandists at Bloomberg have treated us to another exercise in logical perversity with this headline:

G-7 Said To Discuss Statement To Calm Currency War Concern

Machiavelli himself would have stood and applauded this effort. Before we see what this statement actually says, let’s review what it does not say. It does not say that our (morally/intellectually/economically) bankrupt governments don’t want a “currency war.” It does not say that our governments aren’t planning on having a currency war. My apologies for the double-negatives.

Indeed, focus on precisely what is said here and things become much clearer: a “statement” to “calm concern”. “Statement” = lie; and “calm concern” = putting the Sheep back to sleep. Having dissected the title of this propaganda missive, we’re now ready to begin analysis. Why/about what do the Sheep need calming? And how are we being lied to?

The two questions are closely related. Roughly a quarter century ago, the Corporate Oligarchs (and the puppet-politicians whose strings they pull) decided to destroy the West’s economies in the name of short-term, corporate profits. The euphemism they created as a label for this sadistic plan was “globalization”.

A quick definition is in order. Often given the even more heinous euphemism “free trade”; globalization was/is a scheme to erase borders (in economic terms) to the exclusive benefit of large corporations. The primary “benefit” to these corporations was to drive wages downward in a sickening plunge, so that even the inept suit-stuffers whom we refer to as “CEO’s” could maintain healthy bottom-lines – and supposedly justify plundering their corporate coffers for the largest salaries (by a factor of ten) in economic history.

Regular readers are familiar with the chart below:

[courtesy of nowandfutures.com]

Wages for the average American worker (in real dollars) have plummeted by more than 50%; as the average American worker now gets paid what their grandparents earned during the Great Depression. Accompanying this we have Great Depression-level unemployment.

Forget the absurd “official” unemployment rates. When we include the 60+ million “discouraged workers” across Western economies (permanently unemployed people who have lost hope, and given up looking for work); unemployment rates throughout the Western world start at 15% and spiral higher from there.

 

Regular readers will also recognize this chart:

It shows the percentage of employable Americans who have jobs at a 30-year low, and on its way to who-knows-where. Observant readers will notice the steepest part of the plunge in this chart: the last 4 years. This is when the U.S. government has claimed to have generated an “economic recovery” and claimed to have “created millions of new jobs”.

They say a picture is worth a thousand words. In this case, I think we can boil-down the chart above to just two words. “What jobs?” However, slashing the wages for 80+% of our populations by more than half, and inflicting massive/permanent unemployment upon us is only the beginning of the economic carnage.

With wages slashed by more than half, with less people working than at any time in more than a generation; tax revenues from the Average Person (individually and collectively) have naturally collapsed as well. Meanwhile the Fat Cats who have prospered throughout this economic carnage (most notably the Top-1%) have instructed their political servants to tax themselves at the lowest rates in history.

The consequences of this are patently obvious – yet seemingly invisible to 99.999% of the population: our economies are going through the worst revenue crisis in history. This is detailed in a previous, three-part series; again based primarily on U.S. numbers, since this is where we have the most “real dollar” data available.

[courtesy of nowandfutures.com]

The real-dollar line in this chart is unequivocal. After an artificial spike in the 1990’s due to the “dot com” bubble; we see U.S. government tax revenues in a sickening plunge very similar to the “sickening plunge” in U.S. employment and the “sickening plunge” in U.S. wages.

Incredibly, the Corporate propaganda machine has had the audacity to refer to the worst revenue-crisis in history as a “spending crisis”. Observe the chart below, and again be sure to focus on the line representing “real dollars”.

[courtesy of nowandfutures.com]

We see U.S. spending – even with all the $trillions spent on its endless wars – roughly flat. Subtract the spending on its military expeditions, subtract the spending on interest payments to the Financial Overlords, subtract the $100’s of billions per year in direct and indirect corporate subsidies; and spending on people (in real dollars) is obviously plummeting lower.

Yet the Corporate propaganda machine calls this a “spending crisis”, demanding that spending on people be slashed much lower; presumably so even more of our tax dollars can be diverted to military spending, interest payments to our Financial Overlords, and corporate subsidies. Even more incredibly, not only do the Sheep passively absorb this economic mythology, but it is parroted on a daily basis by the brain-dead professionals(?) who absurdly refer to themselves as “economists”.

Spending flat, with revenues plummeting lower is not a “spending crisis”. Naturally when one misdiagnoses an affliction one will mis-apply the “cure”. What happens if a doctor prescribes a “diet” for a severely anorexic patient? Funeral arrangements. What happens if clueless, economic witch-doctors prescribe a “diet” for severely anorexic economies? Greece (and Portugal, and Spain, and the UK).

Three years of Austerity, and an unblemished record: all the economies who have allowed the economic witch-doctors to prescribe their Voodoo Austerity have grossly underperformed their peers. Put another way, the crippled Western economies which have resisted Voodoo Austerity (because our governments know exactly what will happen) have been disintegrating less-rapidly than those afflicted by the witch-doctors’ “cure”.

Austerity or no Austerity; with our economies spiraling downward from globalization, suffering the worst revenue crisis in history, and racking up year after year of “record deficits”; we are also experiencing the worst insolvency crisis in modern history as well.

The parameters here have now been clearly outlined. The Little People (i.e. the bottom-80%) have nothing left to tax. The Fat Cats refuse to pay taxes, and have passed those instructions along to their political servants. Spending on people has (literally) been “cut to the bone”; while our corrupt governments refuse to cut their military spending or interest payments to our Financial Overlords, and corporate subsidies continue to increase.

This has left these aforementioned morally/intellectually/economically bankrupt governments with only one option: the printing press. In Europe, in answer to the “Euro debt crisis”; we have “unlimited bond-buying” (i.e. monetization of debt). With all these nations being massive debtors; ipso facto, unlimited bond-buying means unlimited money-printing to finance those purchases.

Across the Pond’ in the United States; not only is the Federal Reserve now directly buying virtually every Treasury which lands on the market, it is spending an additional $500 billion per year in “open ended” purchases of $trillions in fraud-ridden financial feces – which the Wall Street Vampires have still been unable to purge from their cesspool balance-sheets. All of this from newly-printed dollars.

This direct, complete monetization of government debt is nothing less than a desperation, last-gasp measure to temporarily delay financial implosion – but at the inevitable cost of hyperinflation. With this context in place, it’s now possible to define and dissect our “Currency War”; which will take place in Part II.

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