Guest Post: Currency Wars: Flash Points in the 'Age of Rage'

Tyler Durden's picture

Submitted by Gordon T Long of Tipping Points

CURRENCY WARS: Flash Points in the 'Age of Rage'
Excerpted from 2011 Thesis Paper: Beggar-thy-Neighbor at Tipping Points

The conflict in North Africa was a predictable outcome of the US Monetary Policy of Quantitative Easing. It is not plausible that the US Federal Reserve, as the manager of the world's Reserve Currency, did not fully recognize the global ramifications of such monetary inflation actions well in advance. Quantitative Easing like the Intercontinental Ballistic Missiles (ICBM) of the cold war era has had the same devastating pre-emptive impact on Libya.
There can also be little doubt that the bi-monthly meetings of the Bank of International Settlements (BIS) board of directors, which specifically meet to discuss coordinated monetary policy outcomes, did not consider this eventuality. The board of directors of this global power center includes all G7 Central Banks chiefs, with the conspicuous absence of a single member of the Arab League not receiving US military financial aid.

Our Process of Abstraction research methodology (shown below) has been signaling looming political conflict and social tensions for eighteen months. Our Tipping Points have proven once again to be surprisingly accurate predictors. Though Tunisia as an initial flash point was somewhat of a surprise, we knew it was going to soon emerge somewhere due to serious inflationary pressures injected into the global macro. As we will discuss, it is a direct result of the US policy of Quantitative Easing  (QE) igniting global inflation in food and basic resources of survival. The social unrest this triggers is still in the early stages of what we call the "Age of Rage".

CONFLICT & TENSION - The "Age of Rage"


The map below from the Economist shows the members of the Arab League. Starting with Tunisia's overthrow of the 23 year rule of Zine el-Abidine Ben Ali, the rage has spread like a wild fire through the Arab world. Egyptian protesters replaced President Hosni Mubarak in just 18 days, after 3 decades under his rule. More recently Algeria, Bahrain, Yemen, Jordan, and Libya have all seen major demonstrations by people fed up with the living standard they face on a daily basis. It appears to get worse and more deeply rooted each day.


Before we look below the headlines and media sound bites, it would be informative to step back and look at global unemployment rates. The chart below is based on the 'official' numbers as consolidated 01/2011 by BMGBullion.

I have drawn a vertical line at 10% unemployment as a reference point. What is quickly evident is that:

  1. Countries above 10% unemployment have experienced significant  and well documented social unrest, primarily because of poor economic conditions.
  2. Countries in the range of 10% are presently reporting sporadic events that show borderline indicators of social unrest.
  3. Countries with low unemployment are politically stable with minimal social tensions.

What you will also notice from this chart is that not a single Arab League country is represented. This is most likely because of their smaller GDP levels, but it is an indication that festering problems facing this area often go unreported in the West. 

So what is the unemployment situation in the Arab League nations?

Now consider the percentage of the population below the age of 25 years old. This is the generation looking to enter the work force, who are starting or have young families needing income, or are contemplating what their lifelong occupation will be.

Yemen 35%
Libya 30%
Sudan 18.7%
Iran 14.6%
Tunisia 14%
Jordan 13.4%
Saudi Arabia 10.8%


Borderline Tensions

Algeria 9.9%
Morocco 9.8%
Egypt 9.7%


Frustrated and angry is the best way to describe the situation the above statistics foster - a situation ripe for a spark to set it off.

Forget the spin that every country wants to put on these protest events:

United States and EU:    "This is a pro-democracy movement!!!"
Iran:                              "This is an Islamic revolution!!"
China:                           "These are riots instigated by minorities!!!"
Russia:                          "This is a protest against America!!!"

It is really about being able to exist.

It is about unemployment, rising prices and the ability to make a person's life better for their family.

Call it social inequality, low personal income levels, corruption or whatever.  None of this incites the masses until they are hungry, worried about their families' future and have nothing to lose. 

As futurist Gerald Celente regularly says: "When people have nothing to lose, they lose it!"


I believe the root of the Arab problem  is their relatively small GDP growth in relation to their population growth compounded by food inflation that can no longer be affordably subsidized by the government.

According to the above chart, over a 5 year period since January 2006, food has compounded at over 6.5% annually on average in North Africa and the Middle East. Like a vice grip, every year tightening further and placing increasing pressures on families. 2011 is not reported in the above chart, but the UN announced food prices were up 2.2% in February following 8 consecutive monthly increases.

The hidden issue is the difference between the countries' food price index increases and actual import food price increases. The difference is what the government is absorbing as subsidies to contain rebellion because of unaffordable food costs.

The levels of subsidies as shown below is staggering, with Egypt projecting 26.2% in 2010 alone. What happens when governments can no longer keep up with food price increases? Perfectly predictable massive social unrest. A few well place insurgence and you topple governments.


Western citizens would likely react by saying: 'but this is why we have foreign aid, to help countries in need'. That may very well be the perception, but the facts when it comes to the Arab League nations, does not bear that out.
What the chart below shows is that the aid given is very targeted and the vast amount is spent on military needs. In other words, it is money paid out to be military proxies in the region for US foreign policy. This is why Mubarak was able to stay in power for three decades.

Between 1945 and 1975, the US strategy in the region has been determined by the desire to ensure control over the vast oil reserves, then by the objective of forcing payment for oil in “paper-” dollars, that’s to say, a dollar free of any fixed parity with gold. This double objective was achieved in the 1980s.

In 2011, the whole structure is collapsing under the battering of the Arab populations. Because, as regards oil, the real shock emanating from Tahrir Square that has been felt in Riyadh and in the oil monarchies of the region, is the discovery that the United States is not a reliable "bodyguard".

In practical terms, as local reactions show for that matter, the Egyptian crisis and the lack of US support for Mubarak, has initiated a 'behind the scenes' review process of the entire relationship with Washington, including the dependence of these countries’ leaders on military trained and equipped by the United States.

The end of cheap oil, or more exactly of the indirect control of oil prices through the protection afforded to the oil monarchies, has apparently arrived.

In my concluding article to the Extend and Pretend series: Stage I Comes to an End! in July 2010, I warned of a US False Flag event specifically coming in the Middle East. As I see pictures of the massive amphibious assault ship USS Kearsarge now off the coast of Libya and headlines of a possible US invasion of Libya, I am reminded of what I wrote in July 2010.

"Looking forward, now that all of Europe is gripped in austerity, (and make no mistake - this very same austerity is coming to the US on very short notice with crashing popularity ratings for all political parties), has the political G-8/20 elite focused a little too much on a 'Falkland War'? Is war precisely the diversion that Europe and soon America hope to use in order to deflect anger from policies such as ....

Is there a Gallup or some other polling "unpopularity" threshold that the G-20 is waiting for before letting loose all those aircraft carriers recently parked [1] next to the Persian Gulf, the Israeli jets in Saudi Arabia [2] or the recent US troop buildup [3] on the Iran border? [4]"

Picture: "Defense Secretary Gates just announced that two amphibious US assault ships were loaded and bound to Libya."



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Ancona's picture

The US is in a bad place right now, with unemployment stagnating at high levels and the invisible hand holding the markets up by a thread.

The sword of Damocles is dangling over the heads of the banking cartel and the world is losing faith in the dollar.

In short, we're fucked.

DoChenRollingBearing's picture

Then it is up to each of us to get prepared!  Buy gold and silver.  Guns and ammo if so inclined (I am).

Diversification and Agility will help each of us to be ready.


Earlier today I bought $40 worth of nickels.  I enjoyed it so much I just went and bought $40 more!  Let's do the math:

$80 * 0.39 (metal value premium) = $31.20 (paper) profit

Elapsed time: 25 minutes, tops.

Beats working!

SilverFiend's picture

You profit only if you can find someone who will pay you extra for a nickel.  Which will be almost impossible.  I have heard of doomsday scenarios speculating the nickels will be traded for their metal value post currency collapse.  I seriously doubt it.  Gold and Silver are money.  Other than that you be better off to buy ammo and food stuffs for barter post collapse.

DoChenRollingBearing's picture

You may be right!  This is a small but fun little hedge for me.  But, apparently the US Mint will phase out the nickel in its present form.  Current nickels will disappear (Gresham's Law) and get saved.  Could be that before long "junk nickels" will be sold by the bag like junk silver is now.

As money comes in, the Bearing uses some of it to buy gold, ammo and food.  And maybe some more nickels too!

rocker's picture

Gold and Silver were exchanged as currency just like nickels today. Looking forward, I think you are correct to save nickels now. Copper pennies made before 1982 are almost worth .03 today. This is really a great way for kids to learn about the real value of real things and inflation. Might even teach them to save for a rainy day.

fasTTcar's picture

Canadian pre 1982 nickels bitchez!

.999 pure, 4.54 grams each = exactly 1/100th of a pound.  100 nickels = $5 face = 1 pound of pure Ni.

AND perfectly legal to export to the US and melt outside of Canada.

I am currently back ordered 2000 lbs at 12 cents each.  Might have to raise my price.

covert's picture

you all have it all wrong. they are idiots in love with the worst dreams of the stupidist dictatorships. this is impractical. the edicts are bad for business.


Buck Johnson's picture

I agree, the sword of Damocles is dangling over the heads of the banking cartel as much as it's hanging over the head of Americans also.  I still say that we are going into hyperstagflation when everything is said and done.

buzzsaw99's picture

bombing brown babies in their beds since 1950.

Michael's picture

Poisoning all of you from the sky too. Watch this only if you are wearing your aluminum foil hat because you won't be able to see it otherwise. Without your special hat it will just look like gobldy gook to you.

Now with your special hat in place tell me this is not how normal passenger airplanes fly?

Danish Chemtrails 7 March 2011 Effing Shocking Footage (Caught in the Act in HD!)


I am more equal than others's picture

Chemtrails? No. Con-trail? yes.  That is condensation trails caused by the air being heated up as it passes over the wing.  High pressure under the wing ... low pressure over the wing creates lift.  Wait, maybe it is the dreaded HOH!  HOH is known to cause death when taken in massive quantites or when used as a substitute for oxygen.

LowProfile's picture


The pressure change created by the turbines causes the HOH present (but stable) in the atmosphere to precipitate out and quite literally 'rain' down (eventually) on the public.

Those sinister bastards!

Michael's picture

How do you explain those 2 aircraft crisscrossing each others paths at close range and those other planes flying parallel patterns? I know this is difficult for you to understand but tell me this is normal for passenger aircraft.

I called Governor Rick Scott of Florida about 6 weeks ago and asked him to get the air force to stop dumping its chemicals on us that are blocking out our sun. We sell sunshine here in Florida. That's why they call us the sunshine state. Tourism is our #1 industry. We don't want our bread and butter going home with bad memories of their vacations because of polluted disgusting skies, I told him.

I also said I don't care if they dump their shit in other states as I could care less about those people, just keep it out of ours.

A couple days later the chemtrails stopped over the state of Florida and for the most part has been beautiful ever since. Thanks Governor Rick Scott.

tonyw's picture

It is perfectly normal for passenger aircraft to follow the same route. I have had commercial passenger aircraft pass directly/exactly under me flying in the opposite direction. From this video in two dimensions it is not possible to know how close the aircraft really are and almost certainly they were at different heights. Fortunately air traffic controllers are normally pretty alert to planes on collision courses:-)

As an example, you might remember the "rogue missile" fired off the California(?) coast a few months ago and caught on camera, this turned out to be an ordinary plane so easy to confuse.

Something about Occam's razor.

tellsometruth's picture

post perfecto...I remeber your previous posts and it allowed me free think my way into seeing silver at 36 in march in the fall...flashpoints before march delivery...thanks for telling some truth

RobotTrader's picture

Not everyone is getting screwed

PigMen are making huge coin shanking the daytraders on a daily basis.

Watch them plunge the Dow by 200 points tomorrow.  Or they could jack up the Dow by another 200?  Who knows?

tellsometruth's picture

the lack of cognissant correlation in markets is evidence of said PigMen monopolies of monopoly money.

buzzsaw99's picture

They are whipsaw-killing the small potatoes crowd that have to hold overnight.

trollin4sukrz's picture

Killing traders by opening huge and sidewise action.

Motorhead's picture

Just a quick look at individual stocks and volume appears to be lower than average (execpt the FAZ, which is getting whacked after yet another recent r/s).


dark pools of soros's picture

who the hell are the day traders?  Isn't it just computers trading to sheep 401k funds?

malikai's picture

Yep. And it will all happen in about 5 minutes time, with the rest of the time spent blowing stops or faking breaks. It's good to be the king.

asteroids's picture

If they can't fuck retail then I guess daytraders are next. Then they go after pension and mutual funds, heh heh.

buzzard beak's picture

Hey, why are my banner ads for " ... Muslim Matrimonials ... Browse singles now" and " ... Call Cote d'Ivoire ... 17,9 cents a minute ... Try for free!"

What, are all you other dudes on this site finding raghead mail order brides while checking in on the progress your cocoa pirates are making in the heart of darkness?

Or is it just me getting these cause I'm a black buzzard?

savagegoose's picture

bankruptcy negotioations here

Sokhmate's picture

it's the behavioral targeting intelligence of the ad system. The ad is specifically addressing you.

Cleanclog's picture

World is entering a world of hurt.  And just wait in the US for the wealth effect to end.  Owie!!

Motorhead's picture

And the Dow 30 is up 134 points as I type this.  WTF?!?

cosmictrainwreck's picture

+144 now...prob'ly finish at high for day.... I think it might be "manipulated". YA THINK?

Motorhead's picture

Oh, don't be so harsh.  We have the SEC watching.  They have a "no exception" policy.  Tough as nails, the SEC is.

dick cheneys ghost's picture

all at a time when america is at its own tipping point. we need to cut defence to save our own ass...........



SilverFiend's picture

No,  we need defense to defend from our enemies.  Bringing all of our troops home and securing our borders with them would be good start and save a lot of money without cutting the core of the strongest military in the world.  Like it or not,  the strong rule the world,  the weak perish.

Sudden Debt's picture

Extraordinary popular delusions and the madness of crowds will make it all interesting in the comming months/years.



tellsometruth's picture

Really with all the corn subsidies out there? lol jk... but i prefer peanuts (5lb bag of Hoodies for $5.99) and Bananas (new national fruit of the republic usually from TJ's for $.19) for inflation/deflation diet.

Sudden Debt's picture


InconvenientCounterParty's picture

quick, print more FRN's before the value of the raw materials exceeds 1$.

Oh regional Indian's picture

", which specifically meet to discuss coordinated monetary policy outcomes, did not consider this eventuality."


Are you kidding me? The bank of banks? Did not foresee this? Heck, they probably had the head of the plannign table.

This is all still very much to script...

Ordo Ad Chao.... then ordo ab Chao.

Lot's more Chao to come. Currenseas are at the heart of it. Since money make the world go round.

burning paper.


Sudden Debt's picture




Some things just don't change....

hedgeless_horseman's picture

I like how Mexico exports unemployment.

rocker's picture

Don't forget, we export jobs to Mexico too. Hershey foods now makes some of their candy there and sells it here.

Just remember,  "Don't Drink the Water".    Hmmmmmmmm.  What about the candy.   Yummmmmmm.   Not !!!

Internet Tough Guy's picture

Too bad you threw in the 'false flag' nonsense. Apparently once you descend into paranoia you don't come back. Bon voyage.

WaterWings's picture

Hey, just curious, what other avatars do you have for this site?

serotonindumptruck's picture

I always viewed the expression 'false flag' as being a euphemism for an unknown variable or event. It doesn't necessarily have to be rooted in paranoia. The expression seems to have evolved into an attempt to define the level of fear and uncertainty about the future.

Pants McPants's picture

Mr. Long's claim that the protests/revolutions are about being people fighting for the right to exist commits the fatal J6P error: namely, ascribing human characteristics to brown people with strange religious habits.

newworldorder's picture

Check out the population percentage under 25 in the report. What is going on in the Middle East?

duckduckMOOSE's picture

High stress and over-population with no resolution makes rats in laboratory experiments copulate frantically while simultaneously attacking each other.

SparkyvonBellagio's picture

Everyone Call JG Wentworth





Great ad. Everyone ask for GOLD/SILVER NOW!


nyse's picture

Gordon has great analysis. His reports are well worth the price, IMO.

trollin4sukrz's picture

food clothing shelter PM and 12 gauge  maybe some water to wash it all down with?