The Money War

[image from the wonderful works of Justine Smith]

Did you know that back in 2009 the Pentagon held its first ever financial war games?
This was a war game not about moving Carriers, Tanks, tactical strikes and aerial bombardments, the weapons were currencies, stocks, bonds, interest rates and derivatives.
The purpose of this game was to discover fatal weaknesses and how an enemy might exploit them.

Jim Rickards, a Wall Street banker, participated in these war games. In his book Currency Wars, he wrote that the pentagon was clumsy at financial warfare.

Financial war is not something that may be looming in the near future, this war has already begun and on a global scale.

In 2010, Brazilian Finance Minister Guido Mantega was the first public official to confirm what many already knew. He stated "We're in the midst of an international currency war" and went on to say "This threatens us because it takes away our competitiveness..."

In the U.S. and many other governments, you hear the officials say "Strong Dollar" every once in a while, but what many of them are actually doing is actively and openly devaluing their currencies to gain an unfair short term economic advantages.

Face with very high unemployment and a very slow global economy, the leading economies are resorting to currency manipulation to steal a greater piece of the economic pie.

In 2012, Global central banks cut interest rates 75 times in an effort to weaken currencies.

When Shinzo Abe was elected prime minister of Japan back in December, he said Japan would implement a massive $1.4 trillion money printing plan to reduce the value of the yen. He also said the yen had risen too high but the truth is that the dollar, euro and yuan had fallen making it appear the yen had risen.  The Prime minister then strong armed Bank of Japan into doubling the inflation level.

This is just a few examples, China is a big player in the currency war and not only that the whole world is engaged and has an interest on some scale. It all could lead to a full blown trade war in the very near future.

So it really don't matter who is to blame or who really started it because it is really heating up and shows no sign of ending.

Thanks

[Source: The Philadelphia Trumpet]
[image from the wonderful works of Justine Smith]

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