Guest Post: Currency Wars And The Fed’s Demise

Tyler Durden's picture

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
theXman's picture

Great article! It lays out the facts accurately.

US has been under mercantile currency attacks for decades. Don't blame US for the ongoing currency war.

It's time for US to fight back.

One small disagreement with the author -- China is not under "Communist Capitalism", a more accurate name is "Bureaucratic Capitalism" which greatly favors the bueaucrats who in are in power. Make sure we don't get that here in America. Be vigilant. We need to stop the government from expanding its power. It's not Democrats vs Republicans, it's common people vs the elite.

Fraud-Esq's picture

The public need to seize banking from the private cartel and liberate PRODUCTION from both the government protectionists and the bankers financialists.

Production must be private. 

Banking must be public. 

BOTH are inverted right now. While China's production is bi-public/private, their banking is PUBLIC.

That's China's singular edge. 

hugolp's picture

Banking must be a government monopoly. 

Yeah, that sounds like a wonderful idea. No danger at all there. Just disregard that all the government has done is implement regulations to promote money supply expansions and ponzi systems.

AUD's picture

You're full of shit. No one forced the US to default on its obligations in 1971 then spend the next 39 years selling paper in exchange for real goods, paper that can only be recycled back through the US money markets since it is irredeemable USD & USD denominated debt.

Other countries have screwed themselves playing this game & got caught holding the bag in 2008. Now the Fed has bailed out the entire world & made itself completely insolvent in the process. What else could it do?

Don't blame the rest of the world for your predicament.

Mariposa de Oro's picture


I have an off topic question for you.  I'm living in the RMI and am concerned about the dollar collapsing.  I'm considering obtaining some yuan, Australian, or NZ dollars as 'insurance' should I find myself in a spot.  My question: is the AUD second most used currency in the central and western Pacific countries; is it likely to become a USD replacement at least for a little while; and if so, how do I get some without traveling to Australia?

AUD's picture

Can't say I know what is the second most used currency in the central & western Pacific, though I guess the AUD would be more readily accepted than say the Fijian dollar. I have trouble believing that if the USD collapses the AUD will fare any better since the 'assets' of the RBA consist largely of USD & Euro denominated 'securities'.

Honestly, if you have spare cash by silver or gold. The Perth Mint might be able to help you there,, though I'll also admit to having no idea where the RMI is.

And if you want to follow the fortunes of the USD I can recommend you read Doug Noland at

Mariposa de Oro's picture

I have some but it isn't much. What little it is would attract undo attention if used for everyday survial.   I plan to carry USD, my credit cards should they still work, and some other currency as a back up.  I want to look like just another tourist and keep a low profile.  I'm guessing that if the whole house of cards collapses, dollarized countries out here would just switch to some other currency.  I want to have some of that currency for the transition period.  The plan is to buy time while I figure out my next move.  I could go back to the US.  I still have a house in Florida but there are no jobs there.  Don't even get me started on the police state formation of the US.  Let's just say I don't want to go back to the US.  Being flexible and having at least two currencies will, hopefully, allow me to reestablish myself somewhere.  I can sew dresses and am an electronics technician by trade.  Too bad I'm closer to 50 than not.  Still, I'm working with a NZ immigration consultant for entry there if possible.  Can't say if they'll accept me or not.  I'm okay where I'm at for the moment.  However, that can change in the blink of an eye.  If I don't want to find myself broke and stuck in Florida I need to have plan B ready soon.  The next round of lay-offs is said to be in March.

Charley's picture

Is it a war when no one else has weapons? Oh, yeah -- Iraq and Afghanistan. Looks like the war on terror is morphing.

Life of Illusion's picture

Financial soldiers made their dollar carry weapon move and FED gave them plenty of ammunition to speculate with.

As currency wars heat up so will resource control and that will be the fuel to initiate a very intense “Resource Theater”.

If China chooses a slow revaluation of the RMB expect slow access in purchasing “Real Assets”.

One thing for sure Western Bankers will not miss out on flipping real assets to paper currency holders.

kato's picture

Ben has a 'Walter Mitty' complex and should never have been allowed to be part of the Fed i the first place. He was there with Greenspan for let us call it the continuation and exacerbation  of the problem and now that the easy money problem has been created he wants to be the hero that fixes it. He dreams of himself at night as a man in a cape swooping in to save civilization, going down in history as a 'Great Man'.

We need a cold, hard-nosed realist like Paul Volkler [a willing to let bank balance sheets take the puishment they deserve and need]; instead we have an economic Walter Mitty.

Quinvarius's picture

The US dollar has been artificially held up since the early 80's through FOREX manipulation.  That is why we are so fkd and uncompetitive.  You would have to be completely delusional to think pricing oil in dollars or high interest rates somehow locked out pure Austrian economics all by itself.  We sat on gold and we intervened to prop the dollar.  That is how we stopped the inflation in the 80's.  All Volcker did was tweak your nipples.

Now we are in a postion where our wall of FOREX defenses have resulted in the flow of US jobs and industry overseas.  Republicans and bankers are corrupt.  They would like to see the dollar's purchasing power, their power, maintained through the continuation of the FOREX fraud and at the cost of the American people.  But a free market must return to the USA. 

All we are doing is unwinding a massive fraudulent dollar bubble.

thefedisscam's picture

exactly, China just followed the U.S.

Both are manipulating their currency.

Since China is NO match of the U.S., they can only survive by following what the U.S. does

kato's picture

"China is NO match of the U.S."... In what respect? Spoken like a true jingoist.

CONners's picture

With regard to abstract philosophy and science China is no match for the West.  These abstractions have been developed in the West only, but not in China.  Some think that the differences between Chinese and Western philosophy and science comes from different writing systems. Phonetic writing encourages ontological contemplation, while ideographic writing blocks this intellectual pattern.  As tools of thought, Chinese writing and symbology  provide infertile ground for the growth of critical thinking provided by an alphabetic writing system.

AnAnonymous's picture

The western philosophy can be summed up to its relevant parts: extorting the weak, farming the poor.

Was thought of thousands of years ago in many places in the world.

DisparityFlux's picture


Yea, we don't have to worry about the Chinese.

We've got a copy of the "Art of War", written in the 6th century BC by someone named Sun Tzu.

midtowng's picture

The thing about the Chinese is that their biggest enemies are themselves. They know all about war because they've spent thousands of years killing each other. They've got it down to a science. The government of China is honestly scared of its own people because governments in China usually don't last more than a century or two.

CH1's picture

That is NOT Western philosophy - it is thug philosophy. HUGE difference.

midtowng's picture

How do you figure? Consider that China was waaayyy ahead of the west in the development of philosophy and science through most of human history.

CONners's picture

I have toyed with these ideas over the years, and could be convinced otherwise.

During brain development, genes for learning to speak are active in young children and genes for learning to read are active in elementary school aged children.  Those that miss these early opportunities and subsequently learn these skills as teenagers never reach their full potential proficiency, and their minds have organically different capabilities due to their missing the environmental stimulation of reading and writing required by their genes at the peak of their activity.   As a corollary, a mind's experience changes its organic structure.

Those that learn to read using an alphabetic writing system develop phonetic skills while those reading ideographs must learn each individual character by rote.  If a written Chinese word has never been seen, no one knows how to pronounce it.  There is less information available in Chinese writing.  On the other hand, someone that reads phonetically can see a completely new, unfamiliar word and make a fair attempt at pronouncing said word.  Does the memorization by-rote of ideographs result in a more developed, discerning mind than a mind that uses an alphabetic system to arrive at conclusions regarding words never seen?

Chinese culture is older.  Their culture has greater continuity.  Nonetheless, the Romans and Greeks had sciences and philosophies (Archimedes and Socrates) that surpassed the Chinese and inspired the Renaissance.  The Chinese have told me that they are more mature and more fit, in the Darwinian sense.  However, when the West began the industrial revolution the Chinese were making tea cups, like they had before Rome was founded.  One hundred years later, the West had engines, trains and factories, while the Chinese were still making tea cups.  An example of Chinese thinking, in the Taoist tradition,  is that if one does nothing, nothing will not be done.  This is hardly the rallying cry for activity, change, and advancement.   As long as the Chinese are held back by their language, the West stands a chance of not losing the Chinese fight for dominance by the fittest.

Mark McGoldrick's picture

That is a truly fascinating post.

Thank you.

anarkst's picture

"An example of Chinese thinking, in the Taoist tradition,  is that if one does nothing, nothing will not be done."

Yes, but you do not understand what "nothing" means.  Nothing means the 10,000 things, that is, all that is knowable.

CONners's picture

Does A = A imply that A = -A?

Wynn's picture

You don't understand no-thing, or non-doing, either

Green Leader's picture

Very well, then, the Adamic race has the edge.

Is this your writing?

CONners's picture

No, this is not mine, but when i went looking for material to support the existence of differences in critical judgement due to use of ideographs versus alphabets, this was useful.  I do not know where I read about the testing of reading capabilities and cognitive development versus age.

clymer's picture


What a simplistic crock. They are writing software, building missiles and inventing new technology as we write. To reduce the human creative potential to only one variable of language would seem a very simplistic hypothesis.

It's freedom that is the engine for the human creative spirit.

They were making tea cups because they weren't fucking free. Now they have more freedom than us - it's America that is being stifled by taxes, regulations, bureaucracy and as this article pointed out, a massive amount of corruption.

It wasn't always this way.



CONners's picture

Does governmental oppression breed a citizenry of duplicitous survivors?  Would either the Internet or 7000 years of hierarchical, familial obeisance affect freedom or tax rates more?  Are tea cups with handles better than those without [handles]? 

Saxxon's picture

Accepting arguendo the major premise . . . the PRC is actually less and less held back by Mandarin as each day passes.  The Ruling Class and Merchant Class in the PRC is sending their best & brightest to private schools to learn English at an early age.

The Chinese Lao Bai Shin, on the other hand, just speaks Mandarin and can barely raise their heads from their toil to see what their masters are preparing for them.  And the print and broadcast media in the PRC is utterly centralized, controlled word for word, for the other 99% of the population.

On the other hand, might it possibly be the U.S.'s diplomats' IGNORANCE of Mandarin that fucks them up?  The PRC just steps back and lets our envoys make fools of themselves, on most visits; have you noticed?

Captain Courageous's picture

How do you figure?

Yeah, its just the more recent Mao period, where they murdered more than 100 MILLION of their fellow countrymen that could be considered "suspect."

prophet's picture

There is a chapter in "Outliers" that led me to believe otherwise.  Was it just a fabrication?

bob resurrected's picture

Good article.

So what happens if it doesn't succeed in propping up the TBTF banks and the Fed must swallow TBTF banks whole with its new resolution powers?


bob resurrected's picture

To whom if the top 4 US TBTF banks are all resolved and no longer exist? And, this is repeated in every country with TBTF banks.

In other words, rather than sacrifice the Fed and other central banks as the "bad banks", is it possible that central banks will be the only big banks left standing?

Life of Illusion's picture

Keep an eye on FSB. FSB policy framework with creation of FSOC, ESRB and more to come will grant CB powers.

i-dog's picture

Oh, great! ... a global central planning body that will solve all the problems. Riiiiiight, riiiiiiight.............

Their opening introductory paragraph:

"Since the onset of this crisis, national authorities and international bodies, with the FSB as a central locus of coordination, have advanced a major program of financial reforms, based on clear principles and timetables for implementation that seek to ensure that a crisis on this scale never happens again."

I believe they copied this directly from the Fed's 1913 mandate and/or the 1944 Bretton Woods Agreement.

What "major program of reforms"? "Financial stability"? There is a currency war in progress!!

"Never happen again"? Ben was supposed to ensure this one didn't happen because he was such an expert on the last one!


Amsterdammer's picture

Without he central banks, there

would be since September,15, 2007

feven fewer banks standing.

And yet they remain unaccountable,

having used trillions of taxpayers´money

to maintain the TBTF standing

Atomizer's picture

Everyone is to cheer over the Fed collapse. It's by design. NWO will replace. Ask yourself, do I want to place my chip on black, red or 00?

obama, the asshole song

BTW, 00 = system reset without Federal Reserve, World Bank, BIS, UN, CFR and IMF intervention.

Place your bet wisely.

Atomizer's picture

No Bob, Sinn Féin.

Democratic Unionist Party are wankers - DUP

Dollar Bill Hiccup's picture

"an obscure esoteric sanhedrin of private bankers" -- that really is priceless.

Sanhedrin rhymes with Eccedrin -- as in one big f--king headache.

Has the Bernank jumped the shark or are global imbalances simply being addressed, finally?

The reports of my death have been grossly exagerated -- The Dollar Bill.

AnAnonymous's picture

Similar talks as in the 1970s.

Capital difference: Germany and Japan were accused of growing too slow. Today, China is accused of wanting to grow too fast.

Tells about the difference perspectives on world resources.

Just like in the 70s, these talking heads omit one detail: the vast amount of resources accumulated and burned in the US thanks to the US currency position.

This is this that caused the other players to play the cards they played.

Listening to this guys, you really have the impression the US grew poorer in the process, just because the excess wealth they moved to their country is labelled "debt".

BigJim's picture

True. The US will only be poorer... if they actually pay the debt back.

deez nutz's picture

This has given Beijing the means to accumulate surpluses uninterruptedly and maintain an average 10 per cent growth even in this phase of the current depression.

That statement just validated the entire article. 

Can anyone venture a guess as to how many phases there will be in this depression and what number are we at now?

Fraud-Esq's picture

End the private cartel...

Does anybody else find it amusing that everybody gets excited when the Fed creates reserves ‘ex nihilo’ and buys some bonds, but there is no excitement about the Treasury creating some bonds ‘ex nihilo’ and buying reserves with them.

hugolp's picture

End the government created banking cartel...

There, I corrected it for you.

i-dog's picture

End the privately created, and goverment sanctioned, banking cartel.

There, corrected it for you.

hugolp's picture

Actually it was created by congress.

i-dog's picture

Actually, the Act was drafted by the bankers and presented to a late night session of congress during the Christmas recess for a small captive vote to ensure passage. Read 'The Creature from Jekyll Island' for details.