Currency As the New WMD

Burkhardt's picture

Currency As the New WMD
Justin Burkhardt |

How do you hedge when shots are pips? The next world war will be computerized. The global economy is on the brink and battle lines are forming with one objective, restoring economic balance. Properly engineered devaluation measures would accomplish precisely that. This is a new age of currency wars. In the past countries would directly manipulate the value of their currency with trade wars and the like. But today’s currency war is a result of unconventional monetary policy by central banks, which indirectly impacts the value of a countries currency.
The G7 has been working hard to defuse investor concerns of a currency war, but recent comments have only stirred up confusion in the markets prompting an unintended response. On Tuesday the groups said  “fiscal and monetary policies must not be aimed at devaluating currencies” a statement that had been directed at Tokyo.
Shinzo Abe, Japan’s new prime minister, is being accused of manipulating the value of the Yen to gain an unfair competitive advantage in international markets. Shinzo has been working tirelessly to convey that his policies were not aimed at devaluing the country’s currency, but that they were targeted at deflation… and the devaluation of their currency was just an implication of that objective…. Really?
Japan may be in the spotlight today, but the truth is they are not the only country participating in this fight to the finish. Europe’s strides appear to be more subtle, but recent policies would indicated that they have a similar objective in mind… That thinking can be backed up by recent comments from Mario Draghi, head of the European Central Bank (ECB), who has stated on several occasions that the value of the Euro is too high and that a continuation of trend will negatively impact overall growth. And couldn’t we say the same thing about the United States with the Feds new “QE infinity” world? The list goes on…
The G20 is meeting in Moscow this week, so the question remains, how will they respond and what can they actually do when it’s the central banks that are indirectly impacting currency values?
Everyone is trying to devalue their currency, so we have to understand how to navigate through this tension because it will inevitably spark increased volatility in the markets.  Understanding how that volatility is going to play out is our job as currency traders...
Can your portfolio withstand what’s on the horizon, or are you still looking for the perfect hedge?


Stop looking join Forward Thinking for in-depth Insight into this market


Your currency analyst,

Justin Burkhardt

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falak pema's picture

thinking forward can only be based clearly and fairly if we understand cause and effect and current momentum in this field.

 Cause and Effect :

1° The whole financial architecture of the global economy was devised and executed in the context of Thatcherist Big-Bang and Reaganomics deregulation, fed on laxist monetary policy since Greenspan took over; aided and abetted by the key real economy commodity  : Arab/Saud Oil price softening over twenty years, under RR's dictat in 1982; when he had Saud by the nuts in the context of Iraq/Iran war so crucial for Sunni Suadi Camp. The neo liberals built that financial framework on Nixon's 1971 fiat pump explosion : our money your problem!

The reserve currency was already a very strong devaluation weapon in a floating rates Friedmanian world flooded with uncontrolled Petrodollar recycling generated by the PDs from their CIty of London offshore base. That started the inflation cUM monetary devaluation racket right there and then. Volcker dampened that from 1979 onwards and we saw a stronger $.

2° In 1989 Japan felt the currency crunch already, subsequent 1985 Plaza agreement of major economies, and its bubble economy went into tail spin for twenty years.

Read this :

3° In the NWO context the US banks benefitted from ramped up outsourced trade with Chindia and the subsequent GL-ST revoke allowed the TBTF clique to hold global clout beyond the reach of government control and with their benediction thru ZIRP. Fanny and Fred at obvious government behest added the flames of Subprime RE bubble to a basically non solvent and drowning in debt lower echelon consumer class WHOSE EARNING POWER HAD BEEN IMPAIRED BY REAGANOMICS AND LOW MIN WAGES (NO Union clout). Now the whole US economy was contaminated by the TBTF fiat dissemination.

4° The Euro banks joined the party from 2000 onwards, and used the City to use the derivative pump even more wildly. As Libor, rehypoth and Abacus have clearly shown. 

5° THe banking collapse put the financial mayhem on the public BS on both sides of the Pond. The cowardly attitude of governments since 2009 has allowed the Bankstas to ramp up even further their derivative shenanigans now fed on QE/ZIRP/TIWST with all CBs joining the party.

6° The FED Qe is nothing more than USD taking blatant advantage of its reserve status to inundate the market, using currency WAR since 2010 as its MAIN weapon. The Brasilians pointed that out very clearly.

7° Since 2011 and Draghi's heading the ECB the QE show, so called sterilised, has now moved to Europe, albeit under Merkel's austerity dictat, where she puts a brake on ECB's ability to bail out Club Med Europe.

8° In the meantime, Swiss and Japan are feeling the pain as their holdings of USD reserves explode. SO now in desperation Japan joins the currency war, which was initiated as of 2010 by the FED.

All roads lead to the FED in current reserve status of PAx americana. So whatever the other countries do, the last port of call in this war is DC/FED; they started it and they must decide if they want the world to go over the cliff.

Pax Americana runs the show and has to bite the bullet in the end. 

silverdragon's picture

When fiat breaks down which it is already doing, trade will go to Gold and Silver moved from one side of a Hong Kong vault to the other side of a Hong Kong vault.

Why Hong Kong?  Well as China makes most things now, thats what China will require. Why would they accept anything other than Renminbi, Gold or Silver?

Makes sense the Mexicans back their Peso with Silver. Why would anyone take a dollar when you can have a Peso backed by Silver.

The Germans will go back to a Greater Deutchmark type currency with the few fiscally responsible European nations included. Why would anyone accept the euro when they can have the New Deutchmark.

Bottom line, the dollar and Euro go the way of the dodo!

So, buy physical silver and gold, take delivery and keep doing it until the manipulators get raped by supply and demand!

dunce's picture

When nixon killed the gold standard, the idea was put out that the real value of money was our ability to produce goods though i never thought that they really believed it them selves, that it was just for public consumption. That was then, but today all these money printers seem to think that crops will still grow and mines and factories can be kept running  so no one can go broke from trillions in debt. One of the flaws is that it all depends on world trade that could be greatly reduced because of no real credit available. Nations could be reduced to effective bartering. The old bushels of wheat for a barrel of oil deal.

The Heart's picture

Here is an interesting video of Jim Rickards and his view of a currency war scenario.:


silverdragon's picture

Buy physical Silver and Gold and take delivery.

silverdragon's picture

The sooner China declares its 10,000 or 20,000 tonne of independently audited Gold the sooner this nonesense ends.

The sooner we have fiat backed by Gold Silver and whatever other commodities are decided upon the better.

Keep buying physical Silver and taking delivery and that day will come even faster. Buying Silver is like putting your foot on the accelerator.

espirit's picture

Game on Bitchez! Rubber band fight.

steve from virginia's picture




Japan's problem is its long-time trade surplus is now a deficit. It cannot borrow from its overseas' customers any more or leverage F/X.


It's back to the future otherwise its citizens cannot import fuel and Japan turns into Greece (which has a similar problem).


The problem is the fuel moreso than currency: you can call what is taking place: 'Petroleum Wars'.


Buck Johnson's picture

We will be in an economic depression for at least 16 years.

TruthInSunshine's picture

The global race to debase at at quickened paces until all "markets" rip off "investors' " (i.e. gamblers) faces.

jonjon831983's picture

QE infinity, interest rates rock bottom, what could go wrong?


"MetLife Profit Falls 87% to $127 Million"

espirit's picture

That's only because I'd decided to close my account and take the disbursement before the end of the year.