Monday, 12 December 2011

Global Currency War Escalates Over Euro: The Pentagon has Undertaken War Games on Currency and Finance as Countries Jostle for Survival

Press TV has talked with Max Keiser, financial analyst in Paris about the new economic treaty proposal between Germany and France to rescue the collapsing Euro and the impact this could have on other countries if approved.



This is a MUST SEE summary of what is going on with the World Economy and Euro.

Economic news is very important. Financial collapses are not good for the common people. Having some warning about what might happen may come in handy.

Related info:



[Posted at the SpookyWeather blog, December 12th, 2011.]

2 comments:

steven andresen said...

spook,

I am interested in understanding what these people mean by currency wars. Is this about a metaphor where things are stolen and people killed not with guns and bombs but with currencies? So, if the Dollar is valued less than the Euro, this means that American goods can be sold for less, and still make a profit over similar goods sold in countries using the Euro?

My understanding is that Nixon made the dollar a "fiat" currency, and decoupled it from gold, because he was concerned that there were countries that had a lot of dollars that were trying to redeem these dollars with American gold. So, he was concerned to stop the gold from leaving the U.S. treasury at Ft. Knox. Won't the U.S. resist returning to a gold standard because there are still counties out there, like China and japan, that have a lot of dollars and would then be able, if dollars were backed by gold, be able to redeem those dollars by taking the gold out of Ft. Knox?

I don't see the U.S. doing better or even surviving a return to the gold standard.

Why did Max focus on Britain in these segments and not add a little bit about the U.S.'s position on this question. What would be the U.S.'s position? Isn't the U.S. the world's largest debtor nation, even more so than Britain?

steve

Spookypunkos said...

S,

I think Max was being topical in talking about the UK's debt. I have seen the chart (in the next Keiser Report appearing on this blog) that puts the UK's debt at 1000%. The US is in there too at position number 4 or something close to that. If questioned I'm sure Max would query the US figure.

As far as I can see the problem with a failing currency is that imports like oil, and goods out of China, will cost a lot more and that will act as a tax upon internal consumption, production (initially) and transportation. Some weakness in the currency might be okay, that helps one undercut a rival's export prices, but too much will add to the imported oil price and the resulting breaks on the economy.

Transitions from strong currencies can be quite devastating. The middle class usually gets hammered- like in Argentina. Eventually, after a period of adjustment a lot of internal production (in a now impoverished country) may be generated to compensate for expensive imports. The problem is energy costs. If a crushed currency can recover then a better balance can be achieved I suspect.

I agree that the gold standard is not so good if you are running up a lot of debt. The solution is either to balance the budget, taking steps to limit overseas expenditures, or to sell hard assets (gold) to cover purchases.

The US would have to think about a massive restructure before returning to Gold, although it might not have a choice if there is a collapse and a mass dumping of the dollar as the global reserve currency. I think the US would default first, and look inwards for its products (somwhat including energy) and then go onto a gold backed currency.

ps. There might not be any Gold in Fort Knox today. I think a lot of it was looted at some point. We know the US has been trading disguised Tungsten bars that look like Gold and that the folks in charge will not allow an Audit of the Gold inventory. Ron Paul has tried to have the Gold amounts verified but has been unsuccessful.

Spook