Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your mortgage, loans, because interest rates set to rise

Get rid of your loans, guys and gals, because we are going into a high interest rate period. Very high. It will be the equivalent of going into the double digit interest rates we had in the 80s where many people threw their house keys at the bank and we had record numbers of ba

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E-cigarettes save lives, money

E-cigarettes save lives, money

"We know that cigarettes have thousands of chemicals in them and we know that they are killing us. They have been for over a hundred years. So now, the e-cig industry comes along with only one or two chemicals in their mixture and people are freaking out over these as well. Whe

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US inches closer to big bank charges

US inches closer to big bank charges

Federal prosecutors are nearing criminal charges against some of the world’s biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades. In doing so, prosecutors are confronting

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Canada’s home sales top predictions; why a real estate crash is inevitable

Canada’s home sales top predictions; why a real estate crash is inevitable

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Comparing today’s recession/depression to the 1980 recession

Comparing today's recession/depression to the 1980 recession

"Much like today, Americans were concerned not only with high unemployment but increasing budget deficits in the early 1980s. A September 1983 Gallup poll found that three-fourths of the public agreed that the federal government's budget deficit was a great threat (42%) or some

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Why savers are getting screwed

Why savers are getting screwed

"Without the intervention of economic policymakers, interest rates would be naturally higher. That would increase the cost of borrowing for businesses and consumers, but there would be some offsetting economic benefits. Savers are getting screwed by the current monetary policy

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Geithner admits USA bankrupt to US Senate

Geithner admits USA bankrupt to US Senate

"Never in our history has Congress failed to increase the debt limit when necessary. Failure to raise the limit would precipitate a default by the United States. Default would effectively impose a significant and long-lasting tax on all Americans and all American businesses

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World economies on verge of currency revaluations to deal with debt

World economies on verge of currency revaluations to deal with debt

"It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning." -- Henry Ford Basically what the world central banks are doing is increasing their money by devaluin

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Is Obama the next Mugabe of Zimbabwe?

Is Obama the next Mugabe of Zimbabwe?

"America, Britain, Japan, Germany, France, Sweden, Holland, Norway, Canada and Australia make up the Fishmongers Group and their meeting on Tuesday will deliberate on the state of the inclusive government, debt relief, public finance administration and the controversial economi

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US raiding foreign countries with dollars, not soldiers

US raiding foreign countries with dollars, not soldiers

""The United States is going to China and saying: we want you to commit economic suicide, just like Japan did. We want you to follow the same thing: we want you to revalue your currency, we want you to squeeze your companies, we want you to go bankrupt,” says Michael Hudson,

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FDIC wants your retirement cash to save banks: Bloomberg

FDIC wants your retirement cash to save banks: Bloomberg

“The FDIC is constantly looking at structures where we can get the greatest opportunity to tap into capital that we have not had the success reaching through previous disposition methods,” FDIC spokeswoman Michele Heller said in an e-mailed statement. “We welcome and work

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Canadian government admits recovery never happened

Canadian government admits recovery never happened

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Content By: The Coming Depression Editorial Staff (dates cited below)
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china owns the usa

“We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness,” he [Brazilian finance minister Guido Mantega] said.

The world is in the midst of an “international currency war” according to Brazil’s finance minister as governments force down the value of their currencies to boost their struggling economies.

The comments are the first public admission made by a senior policymaker about a practice which has become increasingly widespread since the global economic downturn.

Many countries, notably China, have been deliberately weakening their currencies by selling them on foreign exchanges or keeping interest rates artificially low to make their exports cheaper.

china's peg against usd 1994-2005

The currency issue is nothing more than a scapegoat for the failed domestic policies. US has trading deficit with almost every trading partner, regardless their currency. The deficit is structural. Indeed, the saving rate in US is too low, while the big part of economy that only actually makes stuff is the military industrial complex for blowing others up, and not many consumer goods are sold overseas.

A higher yuan will actually increase trade the deficit with China until it is high enough for manufacturers to move out of China. Until then buyers just have to pay higher price. During 2006 to 2008 yuan appreciated by nearly 20% and that caused US deficit to increase by 30%.

Capital chases maximum profit. No matter how high yuan goes, no manufacturers will come back to north America. At most they will go to other cheaper places like Vietnam and India. They only come back if they can make better profit here. That may happen if oil goes to $300 and causes shipping cost to sky rocket, or if the US enforces strict trade controls as has happened in the past like during the World Wars of the 20th centuries.

Myth #1: The US will continue as long as it obtains more loans

The point is not invalid – the U.S. needs legitimate purchasers of its debt to give the dollar any further credibility – the Fed buying its own debt is no different than a Ponzi scheme and will destroy the dollar in slow motion. The world has been telling the U.S. }enough,” and that is why the Fed has to buy increasing amounts of its own debt.

It is basically extortion – the US dollar still rules the roost, and none of the other central banks would be foolish enough to dump (as much as they might want to), because the consequences would be catastrophic. So you get a slow unwinding. The unwinding will accelerate if things flare up with China, however, and everyone would suffer if these idiotic politicians get their way.

That said, we should see that mostly just pre-election saber-rattling to garner votes – the sheeple love the idea of “buy American” even though the country’s manufacturing core is an empty shell and will never re-establish. Sad, really.

A return to gold standard to ease currency wars?

In decrying the gold standard pundits often write things like: “The problem is not the value of our currency but the extent of our debt, national and personal, and the public persona of our politicians that allows it.”

Under a gold standard dangerous amounts of debt, such as those carried by Canada and most of all the United States would not only not be allowed, it would not be possible.

Gold standard does not mean there would be no printing of paper money, but rather that every piece of paper money printed would be backed by something relatively scarce and which holds value (gold, obviously). Therefore, there would be a finite amount of paper that could be printed in the first place, greatly limiting the amount that could be borrowed.

Fiat currency, like that of most nations in the world, are just asking to be devalued through the carrying of debt. It is easy for politicians to borrow with money that isn’t “real” money. We need a gold standard so that politicians cannot have the power to bankrupt our children’s futures to finance our immediate, short term, greedy needs (i.e. cheap Chinese crap from Wal Mart, unnecessary SUVs, unions that make obscene demands, etc.) and wasteful and illegal wars (Afghanistan, Iraq).

Without a gold standard (which we’ll probably never see again) you can own a piece of “global currency” by buying physical gold. That’s the only currency that can never be “talked down”, and will always rise against currencies that are.

Resources:

US Is ‘Practically Owned’ by China: Analyst

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This entry was posted on Thursday, September 30th, 2010 at 6:14 pm and is filed under Eurasia. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

1 Comment

  1. September 30, 2010 @ 8:26 pm


    Not only will the United States trigger a trade war with China over currency issues, looming competition for finite supplies of oil will create additional stress. Should China’s per capita energy consumption reach that of the United States, they will require nearly 50% of the world’s current daily output.

    For more information on China’s energy issues see:

    http://viableopposition.blogspot.com/2010/08/china-now-number-1-and-number-2-part.html

    Posted by Viable Opposition

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