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Who Is Winning The Race To Debase?

Tyler Durden's picture





 

For nearly 30 years, two of the world's largest economic nations (China and the US) have continually debauched debased the purchasing power of their currency. For the last 12 years, the rest of the world joined in. So who is winning the race to debase now? It appears globalization was really all about currency debasement and exporting inflation (i.e. loss of FX value) with debt being the inflation buffer (i.e. borrow to afford or vendor-financing - see AMZN). The problem now is the entire world is saturated with debt and so there is no-one left to export inflation to anymore. We do indeed live in interesting times.

 

 

Source: Goldman Sachs

 

and as a bonus chart - the following chart shows how massivley active China has been to 'manage' its currency. The green line is the USDCNY exchange rate and the red and blue lines indicate the direction of exchange rate pressure driven by the market and the CCP/PBoC's wishes. What is extremely evident is that from the end of LTRO to the start of QEternity (note - they stopped 2 days before the FOMC meeting) - China's government was a massive seller of USD to maintain their CNY stability... (while market expects CNY depreciation)

 

 

(h/t INETeconomics)

 


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Fri, 10/05/2012 - 17:04 | Link to Comment lineskis
lineskis's picture

Iran!

Fri, 10/05/2012 - 17:19 | Link to Comment Daily Bail
Daily Bail's picture

MUST SEE: Obamacare Explained In One Sentence

This is pretty fucking brilliant.

Fri, 10/05/2012 - 17:31 | Link to Comment DaveyJones
DaveyJones's picture

pretty damn funny. They forgot sucking up to the very two criminal middlemen (drug and insurance) who have made the costs explode.

I'd write a sentence about both guys military plans but the humor would be too sick (and too expensive) 

check this out on the government treatment of PTSD. It took me a second to realize that by blanket denying the diagnosis, they are shifting all the costs (crime, mental health, joblessness) to the states.

http://www.democracynow.org/2012/10/5/on_afghan_war_11th_anniversary_vets

 

Fri, 10/05/2012 - 18:16 | Link to Comment Daily Bail
Daily Bail's picture

I included the projected military spending numbers for both Romney and Obama here:

Debate Highlight: 'Trillion Dollar Deficits Are Immoral'
Fri, 10/05/2012 - 21:49 | Link to Comment WillyGroper
WillyGroper's picture

On numerous levels, that link really set my hair on fire.

Sat, 10/06/2012 - 07:28 | Link to Comment BattlegroundEur...
BattlegroundEurope2011's picture

"Burnt scalp" is not covered under Obama care.  Suckers!

Sat, 10/06/2012 - 00:05 | Link to Comment Al Gorerhythm
Al Gorerhythm's picture

Only an utter retard, suckling at the teat of government and still convinced that government can save him, would have the gall to junk you and ignore the obvious truth in this. This is the most powerful way to defeat them; subject them to ridicule and satire until everyone else gets it and is comfortable expressing it. Even retards.

Fri, 10/05/2012 - 18:00 | Link to Comment slaughterer
slaughterer's picture

Ben Bernanke listens to this every night before he goes to bed:

http://www.youtube.com/watch?v=DszMp8mGGQ8

Fri, 10/05/2012 - 18:05 | Link to Comment Daily Bail
Daily Bail's picture

Good clip.  Saw the Pixies in London when I was 20 and studying abroad, and then met them in a pool hall in Athens, GA 2 years later when I was playing the greatest pool of my life high on bath salts and napalm.

The Debaser

Fri, 10/05/2012 - 19:12 | Link to Comment slaughterer
slaughterer's picture

What year were you playing pool with the Pixes may I ask?

Fri, 11/02/2012 - 17:17 | Link to Comment Daily Bail
Daily Bail's picture

Early June 1988.

Fri, 10/05/2012 - 17:07 | Link to Comment Motorhead
Motorhead's picture

Charts, bitchez!

Sat, 10/06/2012 - 08:02 | Link to Comment Urban Redneck
Urban Redneck's picture

To identify who is really "winning" the race, you really need a multivariable interpolation that examines both the price of the currency (in gold), and the size of the money supply, over time.

Fri, 10/05/2012 - 17:08 | Link to Comment blindman
blindman's picture

trades people, workers, the middle class,
the young and starting out and the retired,
and others.

Fri, 10/05/2012 - 17:09 | Link to Comment Beam Me Up Scotty
Beam Me Up Scotty's picture

They'll try and export their inflation to holders of PM's by making them illegal to own again.

Fri, 10/05/2012 - 17:09 | Link to Comment IndicaTive
IndicaTive's picture

Did I miss the Friday humor? Oh wait....the unemployment number. Scratch that.

Fri, 10/05/2012 - 17:11 | Link to Comment The big unzip
The big unzip's picture

Put $10 on the U.S. to place!

Fri, 10/05/2012 - 17:28 | Link to Comment ShrNfr
ShrNfr's picture

By the time the race is over, you will win $1,000,000,000 Benny Bux and be able to buy a nickle Hershey bar with that.

Fri, 10/05/2012 - 17:40 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

Diesel just hit $6 a gallon in CA if this spreads or doesn't head back down the Nation will be in serious trouble since we move the majority of food, other goods by truck hope you all have some cash/supplies on hand. Our economy could soon come to a screeching halt.

Fri, 10/05/2012 - 17:45 | Link to Comment Zap Powerz
Zap Powerz's picture

Would you just relax?  Unemployment is (snicker) going (snicker) down (LOL).  Didnt you see the headline?!

Fri, 10/05/2012 - 17:57 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

 

Oh Zap you made me laugh but I'm still stocking up

Fri, 10/05/2012 - 17:11 | Link to Comment falak pema
falak pema's picture

Not that the FED is NOT a massive actor to debase the greenback via QEn and Op twist...its the basis of four years of FED action along with crony capitalist TBTF debt forgiveness.

QEn serves both the debasement pump as it serves the WS asset bubble, hoping that it can control hyper inflation trend. 

Fri, 10/05/2012 - 17:17 | Link to Comment Ham-bone
Ham-bone's picture

Charts that go from upper left to lower right usually not good...but looks like a  Fuck Yeah, USA is in order (not sure if we got the gold or silver medal but definitely made the podium)???

Fri, 10/05/2012 - 17:15 | Link to Comment Occams Aftershave
Occams Aftershave's picture

Someone please tell Goldman there is this thing called "color" which makes chart lines easier to see.  Thank you.  That is all.

Fri, 10/05/2012 - 18:04 | Link to Comment dark pools of soros
dark pools of soros's picture

it's for reptilian eyes

Fri, 10/05/2012 - 17:20 | Link to Comment DaveyJones
DaveyJones's picture

1st debase, second debase, third debase

pretty soon, we'll all go home

Fri, 10/05/2012 - 17:22 | Link to Comment Yen Cross
Yen Cross's picture

 Excellent post Tyler!

You hit the nail squarely on the head!

Have a good W/E  and thank you very much for your outstanding market news, this and every week!

 

Fri, 10/05/2012 - 17:25 | Link to Comment debtor of last ...
debtor of last resort's picture

Peter Mordechai.

Fri, 10/05/2012 - 17:27 | Link to Comment akak
akak's picture

Wait, I thought the REAL problem was 'deflation', according to Bernanke and every other pro-status-quo mouthpiece.

So where are all the falling prices and cost of living, and where is my appreciating fiat currency?

Fri, 10/05/2012 - 19:23 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

 

I thought this was interesting 

Fed is preparing the way for US austerity reckons SocGen

http://www.arabianmoney.net/us-stocks/2012/10/04/fed-is-preparing-the-way-for-us-austerity-reckons-socgen/

Fri, 10/05/2012 - 19:24 | Link to Comment silverserfer
silverserfer's picture

Uh at the DOLLAR store hello!

Fri, 10/05/2012 - 17:32 | Link to Comment francis_sawyer
francis_sawyer's picture

What the planet needs now are some extraterrestrial jews to show up & show us the way forward to higher dimensions of material THEFT & fiat currency DEBASEMENT...

It's all that's left... (I'm pretty sure Krugman, Bernanke, Soros, Kissinger, Wolfowitz, Brezninski, Netanyahu, Rothschilds, Blankfein, & Jamie Dimon are all on board with this)...

Fri, 10/05/2012 - 17:36 | Link to Comment Yen Cross
Yen Cross's picture

The 'GREYS', invaded back in the 40's, and were "subsequently" locked away in [ Area 51].

Fri, 10/05/2012 - 17:44 | Link to Comment francis_sawyer
francis_sawyer's picture

Maybe Snake Plissken helped some to escape...

Fri, 10/05/2012 - 17:47 | Link to Comment Yen Cross
Yen Cross's picture

lol, good thing I'm using my old laptop!  "Big Trouble In Little China"

Sat, 10/06/2012 - 07:55 | Link to Comment BidnessMan
BidnessMan's picture

Maybe it already happened?  The real "Men in Black" ?

Fri, 10/05/2012 - 17:37 | Link to Comment e-man
e-man's picture

Zimbabwe won this race by a mile...

Fri, 10/05/2012 - 17:41 | Link to Comment Ham-bone
Ham-bone's picture

They were DQ'd due to false start...gotta wait for the gun!!!

Fri, 10/05/2012 - 17:56 | Link to Comment e-man
e-man's picture

Oops, I missed it.  Zimbabwe's line on the diagram is superimposed on the Y axis!

Fri, 10/05/2012 - 17:42 | Link to Comment Yen Cross
Yen Cross's picture

 You forgot the "North Sea" ccys.  NOK & SEK ( brent ponzi trade).

Fri, 10/05/2012 - 17:50 | Link to Comment akak
akak's picture

YOU again?

 

Fri, 10/05/2012 - 17:58 | Link to Comment Yen Cross
Yen Cross's picture

 I can't get enough of "you". Hope ya did well this week.

Fri, 10/05/2012 - 18:02 | Link to Comment akak
akak's picture

Yes, I did, thanks for asking, but I am sure that "you" did better.

Fri, 10/05/2012 - 18:28 | Link to Comment Yen Cross
Yen Cross's picture

 Just treading water, like everyone else. Broke even./ 25-35-40.

Fri, 10/05/2012 - 17:43 | Link to Comment Zap Powerz
Zap Powerz's picture

Relax.  Mother Nature's got this.

Gird yourselves for a swift kick in the nuts when She decides enough is enough.

Unless, of course, we elect Barack W. Obamney!

Fri, 10/05/2012 - 17:45 | Link to Comment SmittyinLA
SmittyinLA's picture

I think North America has the greatest citizen counterfitting potential, "they" can still significantly lower the living standards in America to the tune of perhaps 1 billion more people before our living standards drop below our immigration standards.

 

There is plenty of room to debase, even if we run our of indigent Latinos there's Haiti, India, and all of Africa. 

Fri, 10/05/2012 - 17:45 | Link to Comment PicassoInActions
Fri, 10/05/2012 - 18:56 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

PicassoInActions said:

Apple is winning, another strike and fight in Foxconn

http://gizmodo.com/5949406/foxconn-workers-on-strike-after-iphone-5-leads-to-physical-beatings

That's fucking wild. Apple leans on Foxconn to boost production of Telefapple 5. Frustrated by longer hours, inadequate training on the new product, and unrealistic quality expectations, Foxconn assembly line workers kick the living shit out of the quality control inspectors. Management ignores the complaints of the QC inspectors. The result is work stoppages by both line workers and inspectors.

Apple had better watch its iHubris. An incident like this could be the loose thread that starts the unraveling of its precariously perched iEmpire, which would be iFuckingHilarious.

Fri, 10/05/2012 - 17:48 | Link to Comment kevinearick
kevinearick's picture

Capital vs. middle class welfare is not a choice for labor; labor has no interest in a ponzi demographic lottery reduction system, which is why it does not collect the derivative, non-performing capital, why it is so far ahead in time, and why the empire black hole is so strong. Time is not money; time is much more valuable. Labor needs no favor from capital or the middle class.

 

Quality of Life vs. Jobs for Robots

 

Well, well. The stack is popped.

At bottom, Admiral Pansy,

Caught in his own net,

Vainly debasing currencies, State by state,

Stealing from every man, woman, and child,

In a shrinking border of borders,

Between waters, false assumptions all.

 

Nothing worse than a false flag,

Missioning hypocrite Christians,

Training whores to collect slaves in queues.

From the family law civil zoo they come,

Normalized to sell out their own,

Of, by and for the New new order,

Mealy mouth Virginia politicians,

Making bigger and bigger promises; Aloha.

 

San Diego, Gibraltar, sewer’s end,

Expanding promises on contracting revenue,

Sailors face down in their vomit,

Middle class thrown under the train,

Capital, generations removed from providence,

Demographic cliff at continent’s end.

Navy Senator, a piece of discarded gum,

Traveling shoe to shoe, to president.

 

USSNavy, fox guarding the hens.

World leaders as puppets,

In on MADness from the beginning,

Liquidation through global trade,

Mutually assured embezzlers,

Fleeing to one another’s country.

Global trade collapses; PMs rise.

 

Who wants to be Hawaii,

Servants to useless capital expansion,

Increasingly corrupt middle class unions,

Enemies to their own race,

Choking their own,

With empire family values?

 

Nothing quality cannot fix,

Only you, the individual, can create,

Escaping corporate gravity,

With kindness of strangers,

Enemies of State,

FIRE assumptions expunging liberty.

 

Delay, delay, back of the queue

Their own always in front of the line,

Increasing pressure on decreasing volume,

Arbitrary, capricious, and malicious,

Dc gatekeeper nodes sinking costs,

In a war of attrition.

 

Popularized education propaganda;

Labor requires govt largesse;

Positive empire feedback,

In a digitally closed system.

Labor extends the border fulcrum,

Stepping off to ignite FIRE,

In its own shortening.

 

Capital and middle class rule of law,

False assumptions perceived as order,

Labor alternating disorder,

Beyond empire perception,

With incremental sight & quantum anti-sight,

Currency deflation into non-performing inflation,

The almighty rehypothecating ATM.

 

Middle class running to capital,

With stolen secrets from labor,

All jobs to china, under the HR boot,

Viral demographic expansion to crash,

Fixed capital replacing mobile humans.

If Nuremberg is not a defense,

What is Volcker’s excuse?

 

Gravitron collapse of middle class,

Suffragettes all, seeking equality,

Themselves always first in line,

Admiral Flynn, tights and all,

In the bird’s nest, wingless.

One man, one woman, under God,

Makes and breaks the empire,

Check mate, reasoning soul.

 

Govt of, by and for delay trapping of power.

Tell it what you cannot,

Acquire the intermediary skill,

See the unseen for yourself.

Who am I to choose Admiral;

The guy that delivers propulsion?

Who is interviewing who,

And to what end?

 

The girl risks all,

Applying for non-existent jobs,

HR busy work and empire fantasies,

The clothes on her back,

Walking leagues to the next appointment,

Foot prints in the sand,

The anti-sign to all signs.

 

Only your own, self as enemy,

In a world of vacuous souls,

Rushes by at the speed of empire,

In a hurry to get nowhere,

Ignoring at will,

False flags, everywhere.

 

Social condition is a function of family decisions embedded in DNA over time, which is why the only way out is kindness of a stranger, the point of which is to re-learn discernment: “when both the privileges and disqualifications of class have been abolished and men have shattered the bonds which hold them immobile, the idea of progress comes naturally into each man’s mind and all men want to quit their former social position.”

Fri, 10/05/2012 - 18:24 | Link to Comment NotApplicable
NotApplicable's picture

You really don't think anyone would read this, do you?

How 'bout you get your own blog?

Fri, 10/05/2012 - 19:18 | Link to Comment Jam Akin
Jam Akin's picture

WTF?

Fri, 10/05/2012 - 19:27 | Link to Comment silverserfer
silverserfer's picture

thats fucking awsome! I like spagetti too!

Fri, 10/05/2012 - 17:50 | Link to Comment negative rates
negative rates's picture

If this is so, then how can politicians promise growth at a time of peak credit, peak gas prices and soon to a be peak food scene. Call um crazy, lazy and hazy, but don't call um late for supper. 

Fri, 10/05/2012 - 17:55 | Link to Comment Yen Cross
Yen Cross's picture

If I were a China-man, this who I would like to be. Hop Sing  /

Fri, 10/05/2012 - 18:58 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

"Bonanza - In Color"

Fri, 10/05/2012 - 19:36 | Link to Comment Yen Cross
Yen Cross's picture

 You got it! +1, and then some!

                       It was 'juxtapost' , usd/cyn humor!

Fri, 10/05/2012 - 19:43 | Link to Comment LMAOLORI
LMAOLORI's picture

 

 

 

I went to the Ponderosa on vacation a few years ago it's pretty there but this is what we have In Color

Fri, 10/05/2012 - 19:44 | Link to Comment akak
akak's picture

"Me no rikey you fat consumptioning 'american' citizenism citizen!  You arways brobbing-up and monorizing the speeching means!  Make me raugh!"

Fri, 10/05/2012 - 21:50 | Link to Comment TheFourthStooge-ing
TheFourthStooge-ing's picture

.

"Me no rikey you fat consumptioning 'american' citizenism citizen!  You arways brobbing-up and monorizing the speeching means!  Make me raugh!"

"Paw! I think Hop Sing mistook jimsonweed for salad greens again!"

</hoss>

Fri, 10/05/2012 - 17:56 | Link to Comment bart.naf
bart.naf's picture

Purchasing power of gold, silver & various currencies since 1900:

 

http://www.nowandfutures.com/images/purchasing_power_us_gold_etc.png

Fri, 10/05/2012 - 18:15 | Link to Comment Winston Churchill
Winston Churchill's picture

 Log scale,just try and imagine normal x/y.

We need bigger paper,cannot get enough zero's on dollar fiat.

Fri, 10/05/2012 - 19:39 | Link to Comment holdbuysell
holdbuysell's picture

The strong horses in the race are apparent. Thanks for sharing.

Fri, 10/05/2012 - 18:15 | Link to Comment ozziindaus
ozziindaus's picture

slighly off topic but can someone explain what the hell this shit is all about???

 

HR 6566-September 28th 2012


SEC. 3. PREPAREDNESS FOR MASS FATALITIES RESULTING FROM A NATURAL DISASTER, ACT OF TERRORISM, OR OTHER MAN-MADE DISASTER.

http://www.govtrack.us/congress/bills/112/hr6566/text

Fri, 10/05/2012 - 22:41 | Link to Comment shovelhead
shovelhead's picture

Obama's 'shovel-ready' jobs program.

Sat, 10/06/2012 - 08:19 | Link to Comment Urban Redneck
Urban Redneck's picture

Congress-English Translation:

The rich greedy undertakers aren't paying their "fair share" so let's pile several hundred pages of regulations on them so they are effectively non-profit, and since the burden of the regulations isn't in the congressional bill that we are signing our name to, the dumb ass muppets of the electorate will blame the whatever clown is in the nut-house at the other end of Pennsylvania Ave, and continue to elect us back to congress.

Sat, 10/06/2012 - 09:35 | Link to Comment Seize Mars
Seize Mars's picture

What do you do?

You "Do the Watusi."

 http://www.youtube.com/watch?v=8v5aGwjWIQs

 

Fri, 10/05/2012 - 18:47 | Link to Comment proLiberty
proLiberty's picture

"CO-INFLATION"

Fri, 10/05/2012 - 18:50 | Link to Comment JuicedGamma
JuicedGamma's picture

" and so there is no-one left to export inflation to anymore."

 

Thanks Tyler this confirms one of the economic realities brought to us thanks to low brow politicians and a weak Fed. 

 

Eventually worldwide debasement leads to the ultimate economic end game.  

The stick save days are over.


Fri, 10/05/2012 - 18:53 | Link to Comment Howard
Howard's picture

Could someone explain the comment on how Amazon is vendor financing?

Fri, 10/05/2012 - 19:19 | Link to Comment q99x2
q99x2's picture

I don't know but Internet prices went up 8% last month due to taxes. Now gas prices are up and food. So it is moving to revolution.

Fri, 10/05/2012 - 19:36 | Link to Comment holdbuysell
holdbuysell's picture

http://www.investopedia.com/terms/v/vendorfinancing.asp#axzz28TF6HfHt

Think Germany - Greece and Target2, which is effectively the same, but on a much larger scale.

Fri, 10/05/2012 - 19:20 | Link to Comment holdbuysell
holdbuysell's picture

That first chart on currencies is telling. Don't think for an instant that TPTB don't know this.

Fri, 10/05/2012 - 19:24 | Link to Comment DavidC
DavidC's picture

So, perversely, China has been keeping the US stock market UP by selling US Dollars?! Interesting times indeed.

DavidC

Fri, 10/05/2012 - 19:42 | Link to Comment Yen Cross
Yen Cross's picture

 China is a net "seller" of $'s. I suggest you update your data base.

Fri, 10/05/2012 - 19:35 | Link to Comment DowTheorist
DowTheorist's picture

Gold will be the last man standing

Fri, 10/05/2012 - 19:40 | Link to Comment Yen Cross
Yen Cross's picture

On Tungsten props!

Sat, 10/06/2012 - 04:17 | Link to Comment Supernova Born
Supernova Born's picture

Gas Station Proprietor: I didn't put nothin' up.
Anton Chigurh: Yes, you did. You've been putting it up your whole life you just didn't know it. You know what date is on this coin?
Gas Station Proprietor: No.
Anton Chigurh: 1971. It's been traveling 41 years to get here. And now it's here.

Do NOT follow this link or you will be banned from the site!