We are faced with the corollary of the famous maxim; “It is not who votes that matters but who counts the votes that matters.” It is not the numbers but who devises them and then applies them that matters. It isn’t magic but trickery and you and I are the audience. Words: 598
So writes Mark J. Grant, author of Out of the Box, in edited excerpts from a post* on Zerohedge.com entitled Devaluation.
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Grant goes on to say in further edited excerpts:
The Current Stock Market Valuation Is A Deception
The markets are where they are for one reason only, just one, the sea of money that the central banks have poured out across the globe. There is no other reason. Money flows into the corporations, money flows into the markets and the tide rises because it must. It is a [nothing more than a] House of Cards, [however,] a dangerous game that works because there is no place else to go with [the] money.
The euphoria, New Year’s Eve at the Big Casino, continues but the price will be high when it all ends and it will end because it is not this or that asset class that is in a bubble but the entire world that is a giant soap bubble that will float until the heat of the sun pops the thing in one ugly mess. I fear that subprime loans, dot.com fantasies, and the S&L crisis will pale when we are done with this party because, my friends, the bill for the festivities must get paid.
The Next Deception Will Be Via Currency Wars
Plenty of time to play; we have only had currency skirmishes to date. The boys in the backroom can’t do the Inflation play; “out of bounds” say the politicians. The little blue and green pieces of paper created out of thin air is growing limp and the magicians of money have searched their bag of tricks and will be performing live and in person soon.
Here is the scheme; lower the value of all of the currencies and play the Absolute Value game where Relative Value is consigned to a secondary position. This means that all currencies must be deflated to a lower value regardless of how the Dollar trades against the Euro or the Yen. Now the simplest way to do this is to Devalue in coordination but that course is unlikely as it would be impossibly tough to explain.
The trick will be based upon the same methodology as debt to GDP ratios or the CPI fiction; it all depends on what is counted. There have been many postulates floated about, in the case of America’s CPI number, that real Inflation is somewhere around 8.00%. However if this was accurate and the number used then everything tied to CPI such as wages and pensions would increase dramatically and so the reality is ignored and the data is defined by how it is counted. A great trick; an effective sleight of hand.
So those in the green eye shades sit around and plot. It worked for CPI, it worked for the debt to GDP ratios where liabilities of all types are not counted and tossed into the trash bin so why won’t it work for currencies; it will. Prices of goods and services don’t have to rise; it is just that a scheme to use more Dollars or Euros to buy them must be put in place. So it will be Devaluation by fiat but since it is a new game; it will be tricky. It is a game that has never been played before and there is no rule book for this one.
Watch the hat; the rabbit will be coming out soon.
Editor’s Note: The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.
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I read many hundreds of articles every week looking for writers who have an in-depth understanding of our economy and who are not reticent to tell it like it is. Monty Pelerin (a pseudonym) does just that week after week, year after year. This post includes introductory paragraphs and links to 25 of his most enlightening and current articles. Take a look. There are bound to be several that will grab your interest.
We believe that we are in the “competitive devaluation” stage presently [see graph below] as country after country is printing money in order to lower rates and doing whatever possible to devalue their currency – to have the fastest currency in the…race to the bottom – in order to export their goods and services. [The next stage will be protectionism and tariffs. This article gives an update on the race to debase.]
At some point we are going to see another wave of panic hit the financial markets like we saw back in 2008. The false stock market bubble will burst, major banks will fail and the financial system will implode. It could unfold something like this: Words: 660
How bad do things have to get before people realize that we are living through a nightmare? Sadly, most Americans still have faith in the system. They are still convinced that our politicians will somehow find a way to turn things around. Most Americans…[don’t realize that] America is literally falling apart all around them. We have been living in the biggest debt bubble in the history of the world, and it is only a matter of time until it bursts. 2008 was just a “hiccup” compared to what is coming. I hope you’re getting prepared to survive the economic horror show that is rapidly approaching. Words: 1310
I expect the eventual endgame to this whole Keynesian monetary experiment that has been going on ever since World War II [will] finally terminate in a global currency crisis. [That being said,] I’m starting to wonder if we aren’t seeing the first domino – the Japanese yen – start to topple…[It has] cut through not only the 2012 yearly cycle low, but also the 2011 yearly cycle low and never even blinked [and should it continue its steep decline] and break through the 2010 yearly cycle low [of 105.66] I think we have a serious currency crisis on our hands. Needless to say, if the world sees a major currency collapse… it’s going to spark a panic for protection – to gold and silver. Wouldn’t it be fitting that at a time when they are completely loathed by the market they are about to become most cherished? [This article analyzes the situation supported by 3 charts to make for a very interesting read.] Words: 620; Charts: 3