Mike Krieger On The Death Of Globalization, The Death Of Currency And The Death Spiral

Tyler Durden's picture

Submitted by Mike Krieger of KAM LP

 

They had then learned how easy it is to issue it; how difficult it is to check its over issue; how seductively it leads to the absorption of the means of the workingmen and men of small fortunes; how heavily it falls on all those living on fixed incomes, salaries or wages; how securely it creates on the ruins of the prosperity of all men of meager means a class of debauched speculators, the most injurious class that a nation can harbor,—more injurious, indeed, than professional criminals whom the law recognizes and can throttle; how it stimulates overproduction at first and leaves every industry flaccid afterward; how it breaks down thrift and develops political and social immorality. All this France had been thoroughly taught by experience.

Everything was enormously inflated in price except the wages of labor. As manufacturers had closed, wages had fallen, until all that kept them up seemed to be the fact that so many laborers were drafted off into the army. From this state of things came grievous wrong and gross fraud.

-  Andrew Dickson White, “Fiat Money Inflation in France”, How it Came, What it Brought and How it Ended

Where the road is dark and the seed is sowed
Where the gun is cocked and the bullet's cold
Where the miles are marked in the blood and gold
I'll meet you further on up the road

Further on up the road
Further on up the road
Where the way dark and the night is cold
One sunny morning we'll rise I know
And I'll meet you further on up the road.

-  Bruce Springsteen, “Further On”

Globalization is Dead

I debated whether or not to write today.  To be completely honest I feel as if I have said as much as I can and don’t want to start sounding like a broken record.  That said, we have clearly entered the next stage in this tragic circus called the global monetary and financial system death spiral.  The final stage comes when the system consumes itself as a result of its refusal to reform and we are there now.  The fact that most people are completely unaware of it or have such strong “normalcy bias” they can’t see what is directly in front of their faces is immaterial.  It is here, it is irreversible, and it will unleash a cyclone of chaos and confusion that will leave many literally suspended in disbelief as the entire false paradigm most of humanity has lived under for their entire existence is washed away forever. 

Last week, I wrote about what is happening in Egypt and what it means.  The key point I want to emphasize is that there is no going back from where we are.  The notion of stocking up on the limited food and resources available today is no longer theoretical for governments it is a matter of survival.  While many wake up in cold sweats with the memories of 2008’s commodity crash and the concurrent U.S. dollar rally fresh in their minds, these nightmares are misplaced.  The U.S. dollar has been hyper-inflated since 2008 and the only thing that has kept commodities under wraps has been the absence of a sudden and violent mobilization of those dollars into real goods.  Since so many of these dollars are sitting at the central banks of governments around the world, they key was always what would spark governments to mobilize those reverses.  The spark has been food supply shocks and revolution at the periphery of the American empire.  The gun is cocked, the bullets are cold and the heretofore benign tumor that we call the dollar will puke its malignancy all over the world at once in desperate attempts to own something that will have value in the next monetary system.  The days of governments playing nice with one another is long over.  This is the survival stage and every decision that is made from officials from here on out will be entirely self-serving.  You want to go long protectionism.  Globalization is dead.

So now I want to discuss the Korean Won.  For a very long time I have maintained that we would know we are at the big turning point when the Asia currencies start to properly break out versus the U.S. dollar.  Asian central banks and many others have been resisting a major appreciation of their currencies for two major reasons.  First, their entire economies have been based on the export to the West model.  Although this makes no sense any longer as they are the creditors and those in the West are the debtors, old habits are hard to break.  Secondly, China has refused to budge in any meaningful way and so the other nations don’t want to give China a free ride.  If China was forced to appreciate in a big way all the other Asian nations would immediately follow suit.  I always like to look at this Won-Dollar cross since South Korea is one of those exporting nations that imports virtually all of its resources.  So as resource prices surge and export prices do not keep up the terms of trade start going against them hard.  One option to fight this that has been resisted is a strengthening currency.  I have always said at some point they will be forced to bite the bullet.  As you can see from the chart below the Won has recently strengthened considerably and is close to some serious resistance (the chart is inverted).   

Korean Won vs. Dollar

It’s not just the Koren Won though, take a look at the chart below of the Dollar versus Asian currencies Index, Bloomberg ticker ADXY.  This looks like it is about to bust out.  The dollar is completely collapsing and nobody is knows it!  Sadly, many of the allocators of capital in this world are among the most brainwashed people on the planet.  No guts, no imagination and no ability to see outside of the box.  I don’t feel bad about what is coming to them and their reputations but I feel extreme sadness for the fate that awaits their clients.

JP Morgan Asia Dollar Index

Crimes Against Humanity

I believe that many of the executives of the major financial institutions on this planet and their puppets in government and central banking from earlier this decade and into today have committed and continue to commit crimes against humanity.  Their crimes are subtle and hard for most to understand.  As Keynes quoted Lenin to have said: 

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security but [also] at confidence in the equity of the existing distribution of wealth.

Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become "profiteers," who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the real value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.   

The subtleties of their crimes do not make the perpetrators any less guilty nor the consequences any less severe.  That said, we must be careful and deliberate as this thing plays out to not let our passions get out of hand as they have in so many similar circumstances in world history.  The next stage coming from the corrupt “leaders” in place will be a crackdown on commodity “speculators” as governments try to take the moral high ground like the bunch of disingenuous crooks many of them are.  This will potentially push people out of futures and into physical precious metals and these will move to heights completely incomprehensible to most.

For all those out there whether in government, financial institutions, or elsewhere that are “playing along” and making fortunes at the expense of their fellow humans I do not know how you look at yourselves in the mirror in the morning.  You may look and think you are master of the universe but no one else sees you that way.  The world sees you as the greedy little pigs that you are and the universe has ways of dealing with this kind of karma.

Further on up the Road
I love Johnny’s version.

http://www.youtube.com/watch?v=25674XPNqmo

Stay safe and warm,
Mike 

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tellsometruth's picture

Keep free thinking and telling some truth

tellsometruth's picture

make em nervous put them in your cell phone, just enter your zip:

http://www.congressmerge.com/onlinedb/

 

yes i call yes it feels feutile, until it isn't...come on zh commenting here won't be enough

 

ZackLo's picture

I've tried many times can't even get one of them on the phone.I still try though.

 

http://crimeshouldntpay.com/call-your-ag

call your attorney general about the forclosure crises.

tellsometruth's picture

Could not help myself... I just got on the air on the LarsLarson (local conservative talk host and national host too) show painting the picture of JP morgan...Mentionned todays unsealing docs of complicitness...cftc & manipulation of PM lawsuit... and profiting from food stamps and flipping bonds...Lars Larson said it sounded like the authorites are on the case and asked me what I wanted...My re: people to inform themselves and be free thinkers, and speak out...my cell cut our or I was taken off the air

ZH start doing some heavier lifting with what we know...peacefully try to enlighten please

 

tellsometruth's picture

Is this shit a thread killer? Do you think I am crazy for speaking out that way? Anybody else doing the same? Productive or not?   Or is somebody just gonna put troll beneath this or -1...

clymer's picture

Man Mike..

"I debated whether or not to write today.  To be completely honest I feel as if I have said as much as I can and don’t want to start sounding like a broken record.."

~leads to this:

"The gun is cocked, the bullets are cold and the heretofore benign tumor that we call the dollar will puke its malignancy all over the world at once in desperate attempts to own something that will have value in the next monetary system."

Dude, that is like a holding a straight flush, and looking at the table, all bleary-eyed and beat, and throwing a few chips at the table with a disgusted, defeated expression, and then laying the cards down.

Keep writing.

 

jeff montanye's picture

you are right.  don't stop tst.

tellsometruth's picture

thank you for the words of encouragement...

step up zh readers!

hbjork1's picture

Congresspeople only have 24 hours like everybody else and have a lot constituants going in different directions for the various pieces of legislation being considered. 

The concenious Representatives may keep a "count" of contacts for and against a given piece of legislation. 

If they don't recognize your name, at least it is a count.

hbjork1's picture

Congresspeople only have 24 hours like everybody else and have a lot constituants going in different directions for the various pieces of legislation being considered. 

The concenious Representatives may keep a "count" of contacts for and against a given piece of legislation. 

If they don't recognize your name, at least it is a count.

hbjork1's picture

Congresspeople only have 24 hours like everybody else and have a lot constituants going in different directions for the various pieces of legislation being considered. 

The concenious Representatives may keep a "count" of contacts for and against a given piece of legislation. 

If they don't recognize your name, at least it is a count.

Cheesy Bastard's picture

And prepare.  The death spiral feels a little tighter today.

Turd Ferguson's picture

Sorry for the spam but if you're trading PMs and not reading tfmetals, you're missing out:

http://tfmetalsreport.blogspot.com/2011/02/not-too-shabby.html

hungrydweller's picture

Why would I "trade" my precious metals?  I save that for fiat based paper assets. 

Metals are for holding, not trading.

RockyRacoon's picture

Turd rules!  Thanks for your blog.

Hephasteus's picture

And it's good to see you too hardmedicine.

hbjork1's picture

Sometimes people don't know that they are giving the gift.

razorthin's picture

Don't you mean FUBB instead of FUBM? Fuck U Ben Bernanke!

BigJim's picture

Yes, I got all excited about the GET calls yesterday... they talk the talk and seem to walk the walk. Gold and PM-backed currencies! The end of the Rothschild, Morgan, Lombard, Rockefeller stranglehold on debt-based currency issuance! The end of the Fed! You name it, they decry everything we love to hate.

But on further investigation, it appears they are part-and-parcel of the 'Dinar scam': http://www.mint.com/blog/investing/iraqi-dinar-scam/

SgtShaftoe's picture

Agreed.  Mike Krieger misses the point I think, or get's it half right.  This is the end of something, but not exactly globalization.  It is the end of the world as we know it... and I say GOOD RIDDANCE!  It's the end of a generation pillaging the future of others.  It's the end of the primacy of national governments and the beginning of humanity being put first... Just how I see it.  It may be a bumpy ride though in the meantime:

http://freedomofoceania.blogspot.com/2011/02/if-seatbelt-sign-is-activat...

 

In Fed We Trust's picture

Yo Mike,

Brillant piece. I noticed last week you mention the V posters in Boulder Co I guess on Pearl St, when out dining?  I was thrilled to hear you live in BOulder, as do I. I was wondering if you would be up for coffee sometime? Tea Cup? We can talk of starting a local ZH chapter that meets in person.  You may have see my post in 2008 www.GoldmanSachsExposed.blogspot.com Let me about meeting up. And no it wasn't me with the V posters.

Patrick the Painter

faustian bargain's picture

Aw c'mon man. Don't worry, be happy.

gorillaonyourback's picture

did someone give you a bannana? lolol just lookin at your picture

Slipmeanother's picture

In the land with no bananas the man (or monkey) with one banana is King

faustian bargain's picture

It's me every morning, reading the news headlines.

RockyRacoon's picture

Looks like an enema face.  Of course, the news is the same thing.

Kaiser Sousa's picture

"dont worry be happy was the number one Jam

damn if i say it you can slap me right here..."

Chuck D of Public Enemy from "Fight The Power"

philgramm's picture

http://www.youtube.com/watch?v=LUASiDg-kg4

 

I like it but this is a better song to listen to while reading ZH

Founders Keeper's picture

[Chuck D of Public Enemy from "Fight The Power"]---Kaiser Sousa

PE? That IS old school.

 

Atomizer's picture

It's all about ratings. There are countless examples, here is one.

Fake CNN Gulf War Reporting 

 

 

cougar_w's picture

we must be careful and deliberate as this thing plays out to not let our passions get out of hand as they have in so many similar circumstances in world history.

Why? No seriously, why don't we want that?

dearth vader's picture

Wait for the dead-cat bounce. At least, there must be one!

Calmyourself's picture

Excellent question.  The passion of a few have changed the world in the past and they will again.  It is about time to release the men of passion to achieve real change.

hardcleareye's picture

Because a Demagogue can lead you down very destructive roads.  Hitler was a man of passion, and he did achieve change (not all change is good), but at what cost.......

DosZap's picture

Coog,

Trust me, No One wants it to come to that, but KNOW that there are millions ready to rock and roll, should there be no choice.

Unfortunately, the tree of liberty must be from time to time refreshed with the blood of tyrants and patriots.

 

Bringin It's picture

DosZap says - Trust me?!? 

DosZap you out yourself as a zinophile whore for Israel [ie. "I love Zionism", "I support Zionism"] and then here you say you're ready to ready to rock and roll and shed some blood of tyrants??? 

Who are these tyrants you're ready to go up against?  I'd love to know as most of the Tyrants I can see appear to be, like you ... self identified Zionists.

Maybe it's the patriots you're getting all jazzed about killing?  Conflicted is what you are.

 

buzzsaw99's picture

The Lord Blankfein hath chosen the bernank to lead his banksters out of Egypt and into the promised land. With liberty, and clownbux for few.

treemagnet's picture

heard it, seen it, get it.  when's the VIX gonna spike? 

Jason T's picture

Thanks for writing Mike.  Great points to consider about asian currencies.

Atch Logan's picture

Everytime there is a crises, you "world is ending" guys screams the world is over.  You trot out a bunch of facts (with which you have provided numerous times before) and which this crises applies to.

Even if one agrees with you that in the long term you a probably correct, in the short term you are inevitably wrong and it weakens your overall argument and, frankly, wears people out, makes you look bad, and also makes you and those who agree with you look like nuts.

Let things happen.  Let the end come, and then crow.  Then jump on a box and say "I told you so."

Frankly, I am as sick of this shit as I am of Bernake, Obama and their poodles.

 

rubearish10's picture

LOL, funny shit man. Your sentiments are echoed succinctly. 

philgramm's picture

What's wrong with repeating the realistic point of view.  It seems that CNBS, HarryWanger, Cramer, Bernanke, Geithner all seem to be repeating the "everything is fine" view.  ZH is one of a few places that gives you an opposing view than the TPTB.  Do what you like with the information but it holds a much needed place in the conversation