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Presenting The Currence Crises, Devaluations And Regime Changes Since The Collapse Of The Gold Standard

Tyler Durden's picture




 

One of the often repeated "truisms" of modern economics, is that the advent of central banking, and the end of the gold standard ushered in a far more stable, safe and secure financial system. Facts notwithstanding (because hard as we try, we can't find a historic episode where the entire developed world had to coordinate to fund, guarantee and backstop a $30+ trillion global bail out - using even more money created out of thin air, i.e., debt - to prevent the nearly $1 quadrillion derivative complex from collapsing, not to mention the failure of every single modern financial institution, during the gold standard), the reality is just slightly different. As the following table from Bloomberg's Joseph Brusuelas shows, modern "stabilty" is certainly in the eye of the beholder, in this case manifesting itself in countless periods of uni- and multi-lateral currency devaluation, beggar thy neighbor, and currency, trade, and various other types of war.

Here is Brusuelas' personal take on the past 80 years of "stable" central banking and floating exchange rate history:

Tensions between policymakers due to volatility in foreign-exchange markets pale in comparison to those induced by the policies of the Great Depression. That period saw tariff and non-tariff barriers imposed by countries attempting to arrest the economic slide that characterized the global economy in 1929-1939. The coordination between the large global central banks that are engaging in competitive QE has avoided the outbreak of protectionism that was observed during the 1930s. In Thucydides’ History of the Peloponnesian War, he stated: “The strong do what they can and the weak suffer what they must.” As the large central banks attempt to boost their economies via QE, small and developing countries will likely have to  adjust by accepting faster inflation or accommodate to these policy changes by accepting currency appreciation.

Currency warfare summary table:

Keep an eye on the 2007-??? line item. If history is any indication, what follows next will hardly be pleasant for anyone involved.

Source: Bloomberg Brief

 

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Mon, 03/11/2013 - 12:50 | 3319519 Intoxicologist
Intoxicologist's picture

Look out below!

Mon, 03/11/2013 - 12:52 | 3319529 McMolotov
McMolotov's picture

Better look out above, too. Thar be drones!

Mon, 03/11/2013 - 21:35 | 3321344 old naughty
old naughty's picture

I can't remember that far back to 1930s, but I can't shake that feelings since '71, they're in full control, with so much hidden in plain sight?

Mon, 03/11/2013 - 13:20 | 3319608 4realmoney
4realmoney's picture

BREAKING NEWS! US MINT IS NOW ON ALLOCATION AGAIN. ALLOCATIONS ARE DOWN 20% LAST 2 WEEKS. RUMOR IS THE US MINT IS HAVING TROUBLE SOURCING BLANKS.

APMEX HAS RAISED PRICES, TEXMETALS AS WELL, UP $0.50/OZ: https://www.texmetals.com/silver-eagle-monster-box.html

Mon, 03/11/2013 - 13:39 | 3319680 ziggy59
ziggy59's picture

Hmmm. Sunshine is one of 3 i believe that supply the blanks...

The Sunshine mint rounds I had before the thin ice accident claimed them, were very nice. Made it out with my life tho..

Mon, 03/11/2013 - 14:07 | 3319792 DoChenRollingBearing
DoChenRollingBearing's picture

tulving.com has raised their buy/sell spread on Gold Eagles by $2.00 more.

Mon, 03/11/2013 - 13:45 | 3319710 RockyRacoon
RockyRacoon's picture

Just for perspective:

A history of gold confiscation in one graphic:

http://www.mining.com/wp-content/uploads/2013/03/history-of-gold-confisc...

Mon, 03/11/2013 - 14:05 | 3319788 DoChenRollingBearing
DoChenRollingBearing's picture

Exellent link Rcoky, thanks!

Mon, 03/11/2013 - 14:10 | 3319813 akak
akak's picture

Yes, that was very interesting, Rocky --- I did not know any of that before!  (Aside from Roosevelt's crime against the American people of gold illegalization --- oops, I mean that ONE crime of his among so many others).

Mon, 03/11/2013 - 14:23 | 3319892 DoChenRollingBearing
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My notoriously bad spelling is even worse when using foreign keyboards...

Mon, 03/11/2013 - 14:27 | 3319909 akak
akak's picture

When you mentioned "Rcoky" there, DoChen, I thought maybe you were subconsciously thinking of John Mauldin in that video debate with Peter Schiff yesterday (sniff sniff)!

Mon, 03/11/2013 - 16:09 | 3320344 ParkAveFlasher
ParkAveFlasher's picture

Great stuff Rocky. 

I didn't know that England confiscated gold as early as the 70's.  They did allow diamonds though.  I imagine that's because diamonds are worthless.

Mon, 03/11/2013 - 12:51 | 3319521 McMolotov
McMolotov's picture

Keep an eye on the 2007-??? line item. If history is any indication, what follows next will hardly be pleasant for anyone involved.

War — what is it good for?

Distracting citizens from their own government's failures, sending restless youth to die in far away lands, and (as always) enriching bankers and their well-connected friends.

Mon, 03/11/2013 - 13:01 | 3319549 whotookmyalias
whotookmyalias's picture

Wag the dog baby!

Mon, 03/11/2013 - 12:57 | 3319523 JustObserving
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Where is the mention of all the wars that unlimited printing have permitted?  The US went off the gold standard due to the Vietnam war on Aug 15, 1971.  The Iraq war, which is estimated to have cost much more than the Vietnam war (more than  $3 trillion per Stiglitz),  and the Afghanistan war (which will hit $1 trillion soon enough) were enabled by the Fed.  Without unlimited printing by Bernanke, all these wars and killing would not be possible. Bernanke must be angling for that Nobel Peace prize.

Keep printing, praise the lord. pass the ammunition, summon the drones and go long stocks - what can possibly go wrong?  

 

Mon, 03/11/2013 - 13:13 | 3319586 Stuck on Zero
Stuck on Zero's picture

Don't forget the war on drugs, war on poverty, war on cancer, and the war on workers.

 

 

Mon, 03/11/2013 - 13:36 | 3319663 ziggy59
ziggy59's picture

War... What is it good for?

Except the MIC and their bankster minions...

Absolutely nuthin

Mon, 03/11/2013 - 15:54 | 3320261 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Thank you for mentioning the everlasting link between bankers and war. Cause..effect...cause....effect

Ever since the Romans took the silver out of the denarius...and the Rothschilds financed the overthrow of Napoleon...who had repaid the Banque de France and told them to f off.

F'ing bloodthirsty bankers

Mon, 03/11/2013 - 16:11 | 3320356 resurger
resurger's picture

+1

Mon, 03/11/2013 - 16:11 | 3320358 resurger
resurger's picture

+1

Mon, 03/11/2013 - 13:07 | 3319571 New American Re...
New American Revolution's picture

Along with a lot of key currency events omitted, you should at least mention the 50% devaluation of the yuan on jan 1 1994 (a small adjustment that saved China's elites).

Mon, 03/11/2013 - 13:22 | 3319613 akak
akak's picture

Nonsense!

We all know that all these constantly rising prices over the past 80 years were solely the product of those evil speculators.  Both Richard Nixon and Orly simply can't be wrong!

Mon, 03/11/2013 - 13:28 | 3319636 adr
adr's picture

Even though the ture economy has barely budged since 2009, the Wall Street Ponzi is showing signs of 2007-2008. Big retail is rolling over with comp declines and revenue misses. This only happens when the inventory in all of the supply channels is so backed up, that inventory stuffing is no longer possible. There is so much dead inventory sitting in warehouses that retailers can't order enough new inventory to fill the shelves.

Reported revenue has nothing to do with end sales. Revenue is a function of inside sales to retail channels, that is it. Stores exist seperate on the ledger from the corporate arm. When a mass retailer can no longer open new stores, revenue growth and comparables drop. Think of new stores as new investors in a Ponzi.

International wholesalers that buy up leftover inventory are booming. They are buying product for $.10 on the dollar and selling the product in Russia, Brazil, etc. A lot of the product ends up on Amazon. So now the retailer has to compete against Amazon selling product they originaly held at a price the retailer can't sell for.

So you have old inventory that can't sell filling up warehouses preventing the buying of new inventory and have little to no expansion in real store count to channel stuff increansed revenue. Amazon is killing your margins and same store traffic is declining. What culd go wrong?

When a retailer like Dick's reports comp declines and misses on revenue, you can be sure there are massive internal problems. Like a hedge fund leveraged 1000:1, a decline of 10% is enough to sink a mass retailer. Every retailer is Circuit City, invenstors just choose to ignore it because the flashing lights are still green.

Mon, 03/11/2013 - 14:17 | 3319851 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

 

adr, or anyone please do let me know of wholesale quantities of old inventory automotive bearings backed up in warehouses that I can get for $0.10 on the dollar, or even $0.15...  

:)    $$$...

(my moniker) (at) /gmail/ (dot) /com/

US, Swedish, Japanese, Korean and German product only.  Piece No, Qty, U/Price (US$).  For sale to Peru only.  Thanks!

Mon, 03/11/2013 - 15:12 | 3320086 jeebus
jeebus's picture

It's all just in time, turn on a dime. The Yo-yo years. A good description.

Mon, 03/11/2013 - 13:34 | 3319661 ChacoFunFact
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http://www.barefootsworld.net/docs/fedchart.txt

CHART 1
=======
** Federal Reserve Directors: A Study of Corporate and Banking Influence **
   Staff Report, Committee on Banking,Currency and Housing,
   House of Representatives, 94th Congress, 2nd Session, August 1976

Mon, 03/11/2013 - 13:35 | 3319662 tony bonn
tony bonn's picture

there have been more wars, totalitarian governments, and economic destruction since the advent of central banking, less affectionately known as mammon, than any other time in modern history. plague, pestilence, and war go hand in hand with central banking.

Mon, 03/11/2013 - 14:12 | 3319724 akak
akak's picture

Indeed.

And for the record, the above list of currency crises and significant currency devaluations is laughably short and incomplete ---- the full list just for the Latin American nations in the 20th century would be far longer than this one.  Brazil alone has had at least FOUR hyperinflations and currency revaluations since World War II, and Argentina has had at least three as well. 

And where are all the post-WWI devaluations and hyperinflations in Germany, Austria, Hungary, France, Poland, the USSR, Italy, Turkey, and Great Britain, among others?  Where is the epic Hungarian hyperinflation of 1946?  Where are all the radical currency devaluations and outright hyperinflations in many of the African nations in the last 30 or 40 years?   Where the Hell is ZIMBABWE?

I would say that the author here has done a woefully incomplete job.

Mon, 03/11/2013 - 14:21 | 3319881 DoChenRollingBearing
DoChenRollingBearing's picture

Maybe he was in a hurry, akak!  I´ve been there, LOL! 

 

VERY TRUE are your comments on LatAm hyperinflations.  Our company had to endure Alan Garcia´s...  I still have a 5,000,000 Soles note somewhere...

Mon, 03/11/2013 - 14:29 | 3319923 akak
akak's picture

And don't forget the now hyperinflated-into-worthlessness intis that followed them!

Mon, 03/11/2013 - 13:44 | 3319700 ziggy59
ziggy59's picture

Theres always this..lmao
U.S. Needs to Invest Its Way Out of Debt: Leonhardt

http://finance.yahoo.com/blogs/breakout/u-needs-invest-way-debt-leonhard...

Like they say in Jamaica, W.I., not Queens, No problem, mon..

Mon, 03/11/2013 - 13:54 | 3319756 docj
docj's picture

Just keep drinking yourself sober, duuuuuuuuuuuuuude.

Mon, 03/11/2013 - 14:39 | 3319967 JOYFUL
JOYFUL's picture

Facts notwithstanding (because hard as we try, we can't find a historic episode where the entire developed world had to coordinate to fund, guarantee and backstop a $30+ trillion global bail out - using even more money created out of thin air, i.e., debt - to prevent the nearly $1 quadrillion derivative complex from collapsing, not to mention the failure of every single modern financial institution, during the gold standard), the reality is just slightly different...

hard as it is to parse that particular tylerism, what's said boils down to 'never before in history has the entire developed world had to coordinate an economic program to prevent collapse.' And yet, that is indeed the great untold story of 'modern times' - the coordinated movement to demonetize silver at the behest of the moneypower was the background story to the better know narrative called "the Industrial Age." Their agents wormed their way into the seats of power in all the Euro-merikan countries, and made it their business to bride, bully, or blackmail the political classes into compliance with their program.

Using the theme of the proverbial instablity in the ratios between gold and silver, and the difficulties in adapting the mechanics of modern business to their vagarities. the serpent tongues of the cartel convinced each country in it's turn to abandon silver and turn to a 'gold standard' which would conform better to the 'mechanics of manipulation.' And it was their success in this ploy that paved the way for fiat to conquer the world.

For gold was but a temporary victor in the championship of currencies...it's true role was to be a stepping stone in paving the way to the debacle of the present day...a world of limitless debt based upon the principles of usury and spending...at the expense of social cohension and saving. The so-called Gold Standard was a contrivance to trick the West into allowing its' sovereign nations to be embroidered into a web of deceit and decay - and the substitution of 'finance' and vertical integration for trade and localised systems. When the time was deemed right, the plug was pulled on gold just as it had been on silver.

Same as there are many myths about the phony world of fiat finance, there are dangerous mythologies of a 'golden age' of the "Gold Standard' which are  propagated by some who may not even realize they are but tools of the clever puppetmasters who now aim to consolidate their control via grabbing the baton from the dying 'reserve currency' and replacing it with their own new brand of economic and political tyranny.  Their words are sweet but the fruits of re-entering the path of mono-currency must be bitter. The moneychangers staved off defeat of their own schemes in the C19th by demonetizing silver, and seek to stave off collapse of their empire now by bankrupting the West and then holding all power via the mighty metal they worship. 

Silver must return to claim it's position in our trading systems...as protection against a golden tyranny. Like the moon in the sky, it must  take it's place again to shine in reflection of it's golden sibling, and  for the universe to be made right.

Mon, 03/11/2013 - 20:44 | 3321227 ComstockRoyalty
ComstockRoyalty's picture

The Silver Lining

 

is the Silver Ingot

Mon, 03/11/2013 - 16:05 | 3320313 Wave-Tech
Wave-Tech's picture

Speaking of the link between currency/central banking and Wars -  this piece tells a rather interesting story.

ALL WARS ARE BANKERS' WARS

http://youtu.be/5hfEBupAeo4

 

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