Guest Post: Welcome To The Currency Wars

Tyler Durden's picture

Your rating: None

- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Thu, 09/08/2011 - 17:00 | 1647771 Hugh G Rection
Hugh G Rection's picture

No paper is safe. POSX up 0.76 today, lmao!

Thu, 09/08/2011 - 17:24 | 1647840 sambro
sambro's picture

Balanced trade is essential for a healthy economy, that is true for both the US and the global economy. The current account balance should be long-term 0, it's simple as that.

It's easy to do - import certificates or tariffs proportional to the trade deficit with the respective country. The longer the cure is delayed, the worse the disease will get.

The problem is that corrupt governments want to retain unbalanced trade... it's a source of corruption.

Thu, 09/08/2011 - 18:07 | 1647934 Highrev
Highrev's picture

The 3rd Currency Wars post in 2 days.


This is getting a bit ridiculous.


Add: What's with all the fuss all of a sudden. Did you just find religion? I mean, these "currency wars" have been going on for over 3 years now. And you just clued in? So, do you have a clue as to who started these newly discovered "currency wars". Any idea?



Americans, in general, have become truly pathetic.


Thu, 09/08/2011 - 18:54 | 1648164 Not For Reuse
Not For Reuse's picture

I would still love to hear one single intelligent argument in favor of shorting treasuries. I mean FFS, think about what the other side of that trade is

Thu, 09/08/2011 - 21:13 | 1649029 Manthong
Manthong's picture

James Rickards has a book coming out “Currency Wars: The Making of the Next Global Crisis”.

I’ve got a copy pre-ordered on Amazon but I wonder if by the time it is released in November, will it have become a history book rather than the futurist tome I am expecting.

Fri, 09/09/2011 - 01:43 | 1649675 FreedomGuy
FreedomGuy's picture

Actually, trade always balances. One side gets currency, the other side gets the stock of equal value. What are currently noted as trade imbalances tend to be currency imbalances. This is where the exchange rates and devaluation shenanigans begin. With a convertible gold standard you could erase these imbalances. However, that requires converting from debt notes to real money.

Thu, 09/08/2011 - 17:02 | 1647778 cossack55
cossack55's picture

Just my opinion, of course, but I cannot be comfortable in any kind of paper past Depends.  All phys all the time. What happens if whomever pulls a Chavez and does a little ol' nationalization number?  Maybe i'm too old.

Thu, 09/08/2011 - 17:04 | 1647779 hedgeless_horseman
hedgeless_horseman's picture



In my opinion, the ECB is really a proxy for the Bundesbank. The Germans, having a particular history with money printing to solve debt problems, will be loath to support much more printing and the polls in Germany so little support for this “solution.”

Wanna bet?

Since when does the will of the German people matter? 

Go Long Heidelberg Presses.

Thu, 09/08/2011 - 17:08 | 1647789 Ahmeexnal
Ahmeexnal's picture

euros are no longer printed in the EU. printing was outsourced to China a while back

unless you are referring to the newly built completely cloned city of Heidelberg in China.

Thu, 09/08/2011 - 17:17 | 1647825 unky
unky's picture

YOu are right. The author doesnt understand that the German CDU, SPD and green party all support the bailouts. Thats maybe more than 85% of the voting power. The german people dont matter, for non politician

Thu, 09/08/2011 - 17:26 | 1647852 Shameful
Shameful's picture

Many analysts still labor under the delusion that the will of the people matters.  We are well into the post democratic age, the veneer of democracy is just there to keep the mass man happy. TARP proved that here in the US and it will be proven in spades in the EU, particularly in Germany, as well.

Thu, 09/08/2011 - 17:42 | 1647904 NotApplicable
NotApplicable's picture

Exactly. IMO, the disaster that is the Eurozone will be precisely the "OMG, we have to do something!" moment that will allow the elites to pull a fast one and create a tighter union. Sure there will be some bloodshed, but given that TINA rules, you know they will try it.

Why else would Obummer give Merkel a prize if she isn't going to stab her constituents in the back by undermining her own government? The people, meanwhile, will be dealt with, and we won't hear anything about it on the MSM.

Thu, 09/08/2011 - 20:30 | 1648784 MrSteve
MrSteve's picture

You're wrong about going long Heidelberg presses.

KBA,  Koenig and Bauer AG is the currency press king, not Heidelberg. KBA invented the perfector press (prints both sides of the sheet in one pass) and has big global grip on engraving presses for currency and security printing. They combine engraving and offset units in the same press for economy and security. The US FRN, printed on KBA presses, are only engraved on one side now.

Heidy was owned by a German utility company as part of Germany, Inc but they got spun off into separate divisions (to facilitate a potential merger with MAN Roland?). The German banks control these two firms, so what is practical will happen.

Currently, only packaging and display ad equipment is moving in the print capital goods world. The printing industry is awash with BK'd paper companies (Abitibi and now New Page) and idle capacity equipment. IP sold off all their timberland and recently junked a 30 year distribution relationship with Ryobi's press division.

Look at the magazines in your mailbox and the USPS threatening default: not a lot of print ad happening and what is produced all asks for your email address. This says growth in print is over, time to restructure, etc. Used US equipment is no longer selling in Latin America, its classic end-of-life home.

ebooks are now outselling printed books, per Amazon.

Do not go long Heidelberg presses.

Thu, 09/08/2011 - 17:08 | 1647794 Mugatu
Mugatu's picture

My Chuck-E-Cheese dollars will be worth more than the US dollar in the end!

Truely pathetic. 

Thu, 09/08/2011 - 17:44 | 1647914 NotApplicable
NotApplicable's picture

Nah, they'll maintain their peg. Those games and junk toys from China aren't free, after all.

Thu, 09/08/2011 - 17:09 | 1647800 Azannoth
Azannoth's picture

Currency wars are like bitch slap wars, trade wars is where the knives come out

Thu, 09/08/2011 - 17:23 | 1647839 unky
unky's picture

The funny thing is that the Western countries (U.S., Europe) pushed the WTO rules to be adopted by so many countries (even China now) which actually forbids trade sanctions. But printing money is not included there.

Thu, 09/08/2011 - 17:45 | 1647918 NotApplicable
NotApplicable's picture

They just call them something else.

Thu, 09/08/2011 - 18:24 | 1648061 hivekiller
hivekiller's picture

Currency wars > trade wars > hot wars.

Thu, 09/08/2011 - 18:55 | 1648167 Ghordius
Ghordius's picture

A recurring thought,
Though difficult to prove

Thu, 09/08/2011 - 20:35 | 1648831 MrSteve
MrSteve's picture

Check the war between Rome and Carthage, that was a trade war for the Mediterranean Sea that ended with elephants in the mountains surrounding Rome, though Rome won. Hannibals war plan counted on his troops eating their dead for provisions in the mountains where there would be no resupply.

Thu, 09/08/2011 - 23:25 | 1649491 hivekiller
hivekiller's picture

Hannibals cannibals proved no match for Roman meatballs

Thu, 09/08/2011 - 17:09 | 1647803 rosiescenario
rosiescenario's picture

"In my opinion, the Swiss and Brazilian moves signaled the true beginning of the global currency wars.  The depreciation race to the bottom has begun.  Trade wars will be next. "


This currency debasement is trade war pure and simple. It is being carried out for the benefit of the multinationals fighting for exports and at the expense of the average citizen who in the end pays higher prices.


Eventually some folks may figure out that this war is really not being fought on geographic lines but on class lines.

Thu, 09/08/2011 - 17:11 | 1647808 yabyum
yabyum's picture


Thu, 09/08/2011 - 17:11 | 1647810 The Heart
The Heart's picture

Just started!

Tribute Memorial to the Liberty with the crew on right NOW at:



Thu, 09/08/2011 - 17:11 | 1647812 slewie the pi-rat
slewie the pi-rat's picture


anybody without blinderZ mighta seen some "currency war" starting when benzelbub said:  "reflation!"

the agora websites (bonner & wiggins) have been saying to get into these exact assets/stocks for years! 


Thu, 09/08/2011 - 17:18 | 1647827 The Deleuzian
The Deleuzian's picture

It will be like a bunch of monkeys trying to fuck a football

Thu, 09/08/2011 - 17:25 | 1647846 centerline
centerline's picture

oooh, I'm not touching this one.

Thu, 09/08/2011 - 19:34 | 1648458 FlyPaper
FlyPaper's picture

Can't get a visual here.  Can you elaborate?

Thu, 09/08/2011 - 17:25 | 1647847 LawsofPhysics
LawsofPhysics's picture

A little late to the party are we?

Thu, 09/08/2011 - 17:27 | 1647858 xtop23
xtop23's picture

This is going to get ugly at light fucking speed -

Thu, 09/08/2011 - 17:30 | 1647870 oogs66
oogs66's picture

and didn't uncle ben always warn that one of the problems in the 30's was trade wars?  how is currency war not a hidden trade war?  he has driven us to where he said we shouldn't go

Thu, 09/08/2011 - 17:50 | 1647942 NotApplicable
NotApplicable's picture

Like all sophists, his words are contradictory on purpose. The trick is not to make the two statements too close together, lest someone notice. Because as long as you keep them separate and compartmentalized, they can sound intelligent on their own. This is why with the exception of Ron Paul, there are no coherent members in either party.

Thanks to the sound-byte driven MSM, this task gets easier every day.

Thu, 09/08/2011 - 17:39 | 1647888 jmc8888
jmc8888's picture

Well we should of never gotten rid of our tariffs.  So call it what you want.


Monetarism and free trade imperialism and fools game, where the people are the fool, until everybody is the fool.  About time to get back to the reality of ending monetarism once and for all, and all idiot monetarist practices, like free 'imperialism' trade.


Not monetarist dogma

Thu, 09/08/2011 - 17:51 | 1647947 NotApplicable
NotApplicable's picture

You had a tariff? What did you with it?

Thu, 09/08/2011 - 18:53 | 1648160 sambro
sambro's picture

Well said. Balanced trade and Glass-Steagall plus the rest of the New Deal banking regulations. Also ease the red tape and other government protections for monopolies. Should do the trick in a few years.

I think they know full well what works best - it's in the history books. The game is what the game is all about...

Thu, 09/08/2011 - 17:40 | 1647895 buzzsaw99
buzzsaw99's picture

...I am a broken record on this but you should own gold and silver miners, fertilizer companies, oil companies and water companies.  Some technology stocks could make sense and reasonable exposure to Asia and Latam.  Corporate bonds of companies providing any of the products listed above (gold/silver, fertilizers, oil and water) makes a ton of sense.  I would avoid the large multi-nationals here as I think trade wars are coming and their cash flows from foreign operations are about to come under fire. 



Thu, 09/08/2011 - 18:21 | 1647910 caerus
caerus's picture

we're all veterans of the psychic wars

live no less

Thu, 09/08/2011 - 17:45 | 1647916 Sutton
Sutton's picture

Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate.

Thu, 09/08/2011 - 17:57 | 1647970 Highrev
Highrev's picture

"My bet is that they will lose control of the peg soon,"

Spoken like a true moron who has no idea what a 30 year monthy chart is.

(But the real morons are those who reproduce it and/or act upon it.)


Thu, 09/08/2011 - 18:10 | 1647978 THE DORK OF CORK
THE DORK OF CORK's picture

As long as the monetory system is tied to oil we are in deep trouble - the monetary aggregates must decrease when there is a deline in production.

At the peak of the boom in 2006 Ireland spent 50 Billion on Its Physical built capital !!!!!!!!!!! - the problem was it was mainly roads and houses that needed cars to get to them.

Thats 7 Giant EPR nuclear reactors -  if they cost over 7 billion when completed - all we need to keep the lights on here is 2 EPRs...............

The problem is our banks only know how to produce credit opium - and that needs rising oil production.

Building Nuclear plants on credit does not work , you need rising real money production for energy utilties that are capital intensive.

If they don't change the monetory system soon most of us will starve / die of cold / disease etc. - maybe thats what they want ?


Thu, 09/08/2011 - 18:13 | 1648030 New_Meat
New_Meat's picture

"maybe thats what they want ?"

either "want" or "law of unintended consequences" choose your poison.

Hobson's Choice imho.

- Ned

Thu, 09/08/2011 - 18:48 | 1648064 THE DORK OF CORK
THE DORK OF CORK's picture

Irish GNP per head ( the most accurate indicator of consumption here)

year 2007 : 37,661

Year 2010 : 28,667

Keep in mind it was still falling  in the first quarter of 2011 and in my opinion there has been no halt in the decline in the second and now the third quarter , also the extra cost of fuel / inflation since then.

They rarely mention the rise in population when giving more postive GDP figures also

Trichet : We must destroy industrial development to peserve price stability...........

Wage deflation is Inflation by other means.

Thu, 09/08/2011 - 19:09 | 1648230 sambro
sambro's picture

Ireland, Greece, etc got tied up with unproductive credit. It's called colonialism, or slavery. Default and be happy, after all, the lenders knew what they were investing in, it's their fault.

Thu, 09/08/2011 - 19:31 | 1648344 LongOfTooth
LongOfTooth's picture

<Thats 7 Giant EPR nuclear reactors -  if they cost over 7 billion when completed - all we need to keep the lights on here is 2 EPRs.........>


If you haven't already, you might want to read John Perkins' Confessions of an Economic Hit Man.

Talking countries into building 7 of something when only 2 is required is exactly the kind of thing the Economic Hit men do.  They really like doing it that way when they know the country in question is incapable of repaying the money they had to borrow in order to build 7 of them mothers.


Thu, 09/08/2011 - 19:40 | 1648504 boffster
boffster's picture

That is an awesome read. Highly recommended.

Thu, 09/08/2011 - 19:50 | 1648565 THE DORK OF CORK
THE DORK OF CORK's picture

Building 2 reactors would have been a wise use of cheap debt back then - it would have reduced much of our natural gas imports we use to provide electricity.

Much of that Irish 50 billion spent in the year of our Lord 2006  went into unproductive enterprises (Houses and roads that require vast amounts of petrol) that are now useless or only partially used.

If we don't produce MONEY not credit to build fossil fuel independence we will be locked into the Banks/OPECs depletion fly trap forever.

Thu, 09/08/2011 - 18:00 | 1647987 JB
JB's picture

Clone wars bitchez!

Thu, 09/08/2011 - 18:03 | 1647995 Use of Weapons
Use of Weapons's picture

@ the op

Shame on you - acknowledge your fucking sources

Thu, 09/08/2011 - 18:06 | 1648004 bebopgun
bebopgun's picture

Havent there always been currency wars. Nothing new here.

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