The yuan is valued in comparison to another currency, like the USD for example. For the yuan to go up
in value or to appreciate against the USD, (1) it could go up in value against a static USD, or (2) it can
remain static against a falling USD, or (3) it could be one of many permutations thereof. The U.S. has
been devaluating or debasing or decreasing the worth of its USD through monetary inflation as the
above chart demonstrates, i.e., printing money from thin air and exporting most of it to other countries,
making their currencies like the euro and yuan more valuable.
The Chinese, like other export-driven countries, can't allow that to happen because it would result in
losing their export market shares to these other countries. So, they engage in devaluating or debasing
or decreasing the worth of their currency in order to keep up with the ever falling USD. The euphemistic
term is “quantitative easing.”
The other export-driven countries, such as Japan, Brazil, India, etc., are all engaging in the same
quantitative easing scheme to keep up with China, and, more significantly, with the crashing USD.
And so this potentially vicious circle of debasement of currencies goes on and on.
What is the real solution to the currency wars?
- 8 -
UNITED STATES OF AMERICA: CEASE AND DESIST FROM DEBASING YOUR CURRENCY!
Unfortunately, such a simple solution would never see the light of day.
Now, letʼs get back on board the U.S.S. QE2.
The Real Purposes of QE2
To put it in simplest laymanʼs terms what is happening: the United States is “pissing” on its currency, the
USD, by hyper-inflating it through QE1 and QE2 and, soon to be, QE3, i.e., it is debasing or devaluing its
currency by printing trillion of dollars out of thin air. [15]
The United States government doesnʼt give a damn to what its citizens and the world think because the
USD is currently the reserve currency of the world: (1) it has the only license in the world to freely print
its currency from nothing, and the rest of the world will gladly accept the newly minted USD, and (2)
because it doesnʼt plan on paying off its debts to countries such as China. [16]
However, the rest of the world, including China, is catching on to this greatest Ponzi Scheme in history.
Countries like China and Japan are slowing down their purchase and accumulation of U.S. Treasuries
due to the indisputable fact that their holdings of U.S. government debts are losing value as the USD
continues to drop.
What is the United States going to do when other countries are not willing to keep buying its Treasuries
when it needs to finance the projected $721 billion for its Department of War (oops, I meant the
Department of Defense) in 2011, among other deficit spending expenditures?
Thatʼs where the Fed comes in and why QE2 was implemented. And, subsequently, QE3 and QE4. . . .
The Fed is literally forced to print trillions of USD to buy up all of the unwanted U.S. debts in the coming
months and years, as other nations stop buying U.S. Treasuries and start selling them back to the U.S.
ever so gently and quietly.
The secondary purpose of QE2, of course, is to bail out the Wall Street banksters by providing them with
liquidity at an almost zero interest rate. The banksters, in turn, might take some of that $600 billion and
use it to shore up their bottom line or they might re-invest it in the stock market or in other higher yield
investments.
Contrary to all the pundits who are blaming the Fed for making a big mistake for implementing QE2, the
Fed is doing exactly what it was created to do. As an anonymous commentator on Gonzalo Liraʼs
popular blog succinctly puts it: [17]
Now, for the assertion that the Fed made a mistake. Wrong! They did exactly the best thing...FOR
THE FED! The Fed is a privately held [consortium] of banks. Their actions are not necessarily
intended to save us or the economy; their actions are intended to save the banks, to drive up
asset valuations so the smart money can get out before the collapse.
Ben Bernanke was a boy wonder, child prodigy and a genius academician. He still is. He is only
doing the bidding of his betters in this, saving the asses of the asses who drove the economy into
the ground. To hell with the best interest of the US.
- 9 -
Conclusions?
What conclusions can we make from all of this?
For one thing, massive price inflation is coming very soon to the United States in terms of everyday retail
prices such as in food and fuel. This will probably be felt by the average American within the next 6 to 9
months. Secondly, the currency wars among the export-driven nations will intensify as the USD keeps
falling off the financial cliff. Thirdly, we are headed into Great Depression 2 just as assuredly as the
RMS Titanic headed straight to the bottom of the Atlantic Ocean. And last but not least, another major
war, maybe even global in scale, may not be too far off in the distance, and it will be initiated by the
United States or by one of its proxy allies in a “shock and awe” attempt to bypass and cover up the
greatest economic and financial collapse in history.
You know, maybe we should have let these final three gentlemen handle the U.S. economy (from left to
right: Moe Howard, Curly Howard, and Larry Fine). They couldnʼt have done a worse job than Hank,
Ben, and Timmy, or Obama, Bush, and Clinton.
__________________
David Chu is a professional engineer who has worked throughout the United States for over 19 years.
In 2008, he wrote the book, NO FORECLOSURES!, to help Americans fight the banksters by delaying
and stopping foreclosures. For more information on his book, please go to www.no2foreclosures.info or
you may email him at david@no2foreclosures.info.
- 10 -
[1] http://buddhistsjustwannahavefun.tribe.net/thread/6e18d590-a7a8-4145-bdd4-afe3a791442f
[2] This term is coined by Gerald Celente of the Trends Research Institute. His original wording,
“Princeton, Harvard, Yale, Bullets, Bombs, and Banks” succinctly describes the real underlying
causes of the economic and financial problems in the United States.
[3] The word “amateur” comes from the Latin words “amator” or “lover,” and “amare” which means “to
love.” To be an amateur in golf, for example, is to love the sport.
[4] http://www.bloomberg.com/news/2010-11-03/federal-reserve-to-buy-additional-600-billion-ofsecurities-
to-aid-growth.html
[5] http://market-ticker.org/akcs-www?post=170176
[6] http://www.shtfplan.com/headline-news/fed-clicks-print-button-saves-america-again_11032010
[7] Changes in wholesale prices usually take about 6 months to appear in the retail markets.
[8] http://www.kitco.com/ind/Schiff/feb222008.html
[9] http://english.caijing.com.cn/2010-09-25/110529595.html
[10] The Argentina peso went from $3 pesos buying $1 USD in 2008 to $4 pesos buying $1 USD in
2010. Or another way to express this currency ratio: from $1 peso buying $0.33 USD to $1 peso
buying $0.25 USD. So, what the peso buys in terms of the USD has gone down from $0.33 to
$0.25. This decrease can be expressed as a percentage which is equal to (0.33-0.25)/0.33 or 0.24
or 24%. The peso has depreciated by 24% over 2 years or 12% per year.
[11] http://momento24.com/en/2010/11/03/inflation-and-growth-increase-the-printing-bills-of-100-pesos/
[12] http://en.mercopress.com/2010/01/05/argentinas-inflation-third-highest-in-the-world-say-privateconsultants
[13] The price of our iPod example went from $3 to $4 pesos, or the iPod went up in price by an amount
equal to (4-3)/4 or 0.33 or 33%. Remember this is over a 2 year period. So, our iPod increased by
16.7% per year. We can call this “monetary inflation,” as the iPod is used in place of the USD.
[14] http://news.yahoo.com/s/nm/20101019/bs_nm/us_usa_dollar_geithner
[15] http://www.theglobeandmail.com/report-on-business/commentary/jeff-rubins-smaller-world/
quantitative-easing-is-just-devaluation/article1782626/
[16] http://dailybail.com/home/peter-schiff-of-course-were-not-going-to-pay-back-the-chines.html
[17] http://gonzalolira.blogspot.com/2010/11/two-more-nails-in-dollars-coffinthe.html
Friday, 12 November 2010
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