Economic Warfare through currency, trade, and sanctions – tools that can be used to crush a nation without firing a shot – but have historically been a pre-curser to war – also – the war on all of us financially – conducted by Central banks/Fed

 

James Rickards – got through his 4 books this year and he has an interesting theory on financial wars turning into real wars –

Stages

– where financial crisis lead to – transition from economic wars to hot wars

  1. Build up –
    1. Trade imbalances – starts when people living beyond their means begin taking on debt. Wages become distorted, production costs escalate and industries move offshore – results in trade deficits and unsustainable national debts
    2. Financial Crisis occurs – Debt levels reach tipping point and the financial system suddenly destabilises – economy crumbles and borrowing stops, bankruptcies rise and unemployment increases – leaves the country in a bad state
  2. Initial outbreak –
    1. Currency wars – political leaders/bankers cheat the rules of the game – economic laws of floating currencies – Governments print money to pay debts and devalue their currency – promotes more competition on exports and discourages imports
    2. Those who move first in devaluation gain the most
    3. Trade wars – As countries steal trade from one another – governments impose tariffs – global trade slows having the ability to make the financial crisis worse, or make it contagious – Politicians again devalue currencies and become populist
    4. Can then go to Sanctions – or cutting off a country completely from trade through blocking international transactions – like NK or counties in middle east
  3. Hot wars break out – when everything else fails – invade – but assured mutual destruction is too great a chance with nukes

Looking into it – has a very good point based on a few examples –

First – taking a step back and explaining what these are individually –

  1. Nothing new about the first two on this podcast – so skip as covered this in previous episodes
  2. Have also touched on Currency wars – A currency war refers to a situation where a country seek to deliberately depreciate the value of their currency – purpose is to help stimulate their economies
    1. Currency wars begin in a condition of too much debt and not enough growth. Countries steal growth from their trading partners by cheapening their currencies to promote exports and import inflation.
    2. A currency war is a tit-for-tat escalation of currency devaluation aimed at improving one’s economic position on the global stage at the expense of another.
    3. Currency devaluation involves taking measures to strategically lower the purchasing power of a nation’s own currency
    4. Devaluation, however, can have unintended consequences that become self-defeating – those are trade wars
  3. Trade wars – introduction of taxes (tariffs) on other countries imports – helps make domestic production more competitive
    1. Other side of direct subsidies – Holden – Say they get $100m p.a. in assistance from gov, but also benefit from
    2. Why Germany has economically conquered EU – benefit from devaluation on what the Deutsche mark would be along with free trade across the rest of EU

 

  1. The present currency war started in January 2010. The problem with currency wars is that all advantage is temporary and is quickly erased by retaliation. Trading partners retaliate with their own devaluations. Currency cross-rates end up back where they started, with costs imposed due to the uncertainties.
    1. Not only is the world not better off but it is worse off because of the costs and uncertainty resulting from the currency manipulations.
  2. Eventually, the world wakes up to this reality and moves to the trade war stage. Once countries realize that currency wars don’t work, they turn quickly to trade wars through tariffs and other trade barriers.
    1. The problem is that trade wars don’t work either, for the same reason currency wars don’t work — retaliation or tit-for-tat tariffs soon puts everyone back where they started.
  3. The new trade war started in January 2018 with the announcement of tariffs, and those tariffs actually began to take effect last week. Just because trade wars have started does not mean the currency wars are over. Not at all. The currency wars and trade wars continue side by side – they become related and also self-defeating
    1. If the U.S. puts tariffs on China, which we have, then China can fight back two ways.
      1. The first is to impose their own tariffs on U.S. exports, which they have.
      2. The second is to cheapen their currency to offset the impact of the tariffs.
    2. If the U.S. imposes a 25% tariff on China but China cheapens its currency by 25%, then everyone is back where they started in terms of the costs of Chinese goods to U.S. consumers.
    3. This would be a potentially devastating development for markets – due to currency devaluations = capital flight
      1. If you are a US investor – If you invest $100 in China but going to lose 25% of value through currency what are you going to do? Keep it in china and potentially lose 25% of the comparative value – or sell – but also create panics through all markets
      2. A shock yuan devaluation as what happened twice in 2015 – U.S. shares fell over 10% in a matter of weeks in both cases
      3. There are individual winners and losers from the currency and trade wars, but the global economy as a whole is definitely a loser. This new trade war will get ugly fast and the world economy will be collateral damage. 

The narrative of trade wars, devaluations, and potentials of nuclear wars or terrorism has been able to distract from the modern-day weaponised economics –

  1. Distraction tactics – dread surrounding potential nuclear warfare or terrorism distracts from economic threats behind the scenes  
    1. Important to remember that almost all wars benefit international financiers by creating an environment ripe for centralisation of wealth and political power. This notion tends to confuse some analysts and activists in the liberty movement.
    2. The bottom line is this: Russia and China are in full support of globalist-controlled institutions like the Bank for International Settlements (the central bank of central banks) and the International Monetary Fund (IMF
      1. Pushing for the SDR – so the IMF becomes the de facto ruler of a new global monetary system
  2. It would appear that a crisis event is now being triggered in the form of an international trade war – this trade war is becoming widespread and will accelerate the de-dollarization
    1. China has been preparing for the move away from the US dollar since at least 2005
        1. began issuing what are referred to as “panda bonds” – i.e. Yuan-denominated bonds
        2. expanded its liquidity by trillions over the past 13 years
    2. China now even began purchasing oil in Yuan instead of dollars – created what is being called a “petro-yuan” market
        1. Also – considering the fact that China is the largest importer/exporter in the world, it is only a short matter of time before many of China’s trading partners switch from the dollar to the yuan for exchanges
        2. This can dethrone the USD in oil/commodity/reserve currency
  3. All of this is culminating is a final action – the end game for developing trade war
      1. Done through the complete dumping of the dollar itself by China and its allies
        1. Building evidence that China is stopping purchases of US treasury bonds, this action may come much sooner than many people seem to think
        2. People rightly point out that if china dumps US bonds – they will lose a lot of money in the process –
        3. This is used as a reason why they won’t – but Wars cost billions or trillions anyway
        4. Assured mutual destruction in financial wars isn’t true – one country willing to lose billions to cripple another nation financially
        5. Spend $500bn on a war – or lose $500bn in the markets – same money spent – but one is effective in hurting the USA – war with the USA would be much harder for china
    1. The mainstream media automatically blames Trump and the trade war for instability in share markets –
      1. Easy to point the blame there due to the attention the media gives him -but they completely ignoring the direct correlation between the Federal Reserve removing artificial support from stock markets and their continuing declines towards the end of last year – but they have recently entered into the markets to give them another boost
    2. The central bankers created the massive market bubble – they could and have also created massive market meltdowns by removing support and withdrawing liquidity –
        1. Have a scapegoat to limit the suffer of any blowback to themselves
  4. International financiers and central banks have everything to gain by pulling the plug on life support for stocks, bonds, real estate
    1. In the midst of a trade war panic, they can pretty much do anything they want without retaliation. All future catastrophe can now be dumped in the lap of any number of scapegoats. Some people will blame Donald Trump and the conservatives that voted for him. Some people will blame China and Russia as the culprits behind our ills. Other people will blame “capitalism” and “free markets” in general for the crisis even though we haven’t enjoyed true free markets in well over a century. But, very few people will blame global banks specifically.
    2. Central banks don’t suffer in depressions like the average joe – they lend the money through creating it out of thin air
    3. Never directly take the blame either – benefit over the panic as the blame is pushed on “selfishness” of  “nationalism”
      1. They will call for a one world economic system built on a one world currency framework as the solution.
  5. Their Wealth can be shifted into any number of assets anywhere on the planet — so the idea that they have anything to lose in this scenario is rather naïve – they can wait and buy back assets or short the markets
    1. Bankers/thinktanks will push for even more power for existing organizations like the IMF and BIS – As history shows – when countries suffer economic breakdown, globalist institutions only grow under the guise of ‘if only we had more power before this we could have stopped it’ – Central banks were meant to put an end to crashes – but still going on
  6. That is the major difference between hot wars and financial wars –
    1. In hot wars – there is chaos and countries can lose power – China in the opium wars with the USA, Germany in ww1 and 2,
    2. But in an economic war – centralized dominance remains possible and increases
      1. So while the tragedy of mass unemployment, loss of monetary stability or loss of reliable food and energy production occurs – banking conglomerates and central bank organizations will thrive
      2. Elites seem to be preparing for some instability in life – Google bunkers in NZ or other parts of America, or underground in London –
  7. In summary – bankers fund wars and profit from them, also in financial wars – but have always retained and amplified control over the economy

There are two good examples of this sort of build-up –

  1. This happened in the 1930s and it seems to be happening again
  2. Let’s hope that history does not repeat and that we don’t end up in a Third World War, as the currency/trade wars of the 1930s helped lead to WWII.
    1. Come back to the History of WW2 leadup of great depressions – deserves its own episode

Next week – look back at 1929 – what happened in the great depression- with currency and trade wars – and how it helped lead to another world war – but also look at how to stop the trend

Thanks for listening to today’s episode. If you want to get in contact you can here: http://financeandfury.com.au/contact/

 

Are tech shares like Afterpay and Facebook are a good long-term investment option?

Welcome to Finance and Fury, the Say What Wednesday edition.  Today's question comes from Mike - "Hey Louis, Wondering if you think buying Tech shares are worthwhile"  We have the FANG and the WAAAX – US – FANG - Facebook, Amazon, Netflix and Google Aus – WAAAX -...

Are we in a property bubble and if so, why?

Welcome to Finance and Fury,  Are we in a property bubble? There is no question that the Australian property market has become significantly overpriced – but is it a bubble and due for a significant downturn? – For this – only talking about capital cities – most of...

Say What Wednesday: Paying your home loan off with debt

Say What Wednesday Paying your home loan off with debt How can you pay off a mortgage with debt? Velocity banking and Offset accounts This question comes from Tom a podcast listener. He asks “Just wondering if you have ever used Velocity banking at all to pay down...

Theory versus reality – Can any theory explain the current action of financial markets?

Welcome to Finance and Fury, the Furious Friday edition. Today – want to look at market theory versus reality – because a lot of market theory doesn’t hold up – so are the markets truly changing? Is this just a short term divergence prior to markets going back to...

How to not get tricked by election promises!

Welcome to Finance and Fury, the Furious Friday edition This is a continuation from this week’s Say What Wednesday episode, in part one on Who to vote for? Check it out here. Part 1: Political culture Tribalism 3 main parties policies and promises Today: How to tell...

Furious Friday: Do you work full time? Are new tax cuts only going to the “top end of town”? Is this “selling Queenslanders out”

Furious Friday Do you work full time? Are new tax cuts only going to the “top end of town"? Is this "selling Queenslanders out"? Welcome to Furious Friday… The Tax Bill has Passed…Yay! Now, let’s clear up a little misconception floating around, we’re going to talk...

Investing in infrastructure as part of a wealth accumulation strategy.

Welcome to Finance and Fury.  This episode will looking at infrastructure as an asset class, to see if it can help to provide some diversification for portfolios and decent moving forward. Infrastructure – physical assets that provide services that are essential for...

Say What Wednesday: Welcome to the Wild West

Say What Wednesdays Welcome to the Wild West Welcome to Say What Wednesday This week we’re going to answer some of the burning questions that have been on a lot of peoples’ minds around the banking royal commission…and rather than repeat everything you’ve been hearing...

Say What Wednesday: Getting tied up with Investment Bonds

Say What Wednesdays Getting tied up with Investment Bonds Welcome to Finance and Fury’s ‘Say What Wednesday’ where we answer your questions on personal finance. Today’s question today comes from William who asked us to do an episode on Investment Bonds. Investment...

The freedom in financial freedom

Welcome to Finance and Fury. What does your future have in store for you? It is hard to say exactly – so instead, what does your ideal future look like? You might be thinking about next year, the year after that, or 20 to 40 years in the future – Let’s say that in...

Pin It on Pinterest

Share This