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Written by Andrew Puhanic
Published on Monday, January 23rd, 2012
The entire Globalist new world order system is chaotic with sovereign bonds, currencies, stock markets and the fate of politicians all in the same boat. The hidden agenda of QE1 and QE2 was always to “cheapen the dollar” by causing inflation in China.
The main issue is the United States of America, Europe and China and their currencies, the dollar, euro and the yuan. The dynamic is simple: all three would like a cheaper currency, relative to the others, to help exports.
China has the least justification for cheapening; at least their currency doesn’t go up. The U.S. has the most advantage – it has the leading reserve currency and a printing system so it can just print its way to devaluation.
Europe wants to depreciate but is dependent on China to buy its sovereign bonds and dependent on the U.S. for dollar liquidity in shape of swap lines so it has no leverage over the other two. Germany has a different history of a strong export sector even with a strong currency because of its efficiency, technology and labor-management. If the USA devalues against yuan and the euro, it gets all of it.
If China revalues against the dollar, but keeps an eye to the euro, it gets half of what it wants. If the Euro remains a strong currency against the dollar and pegged against yuan, it gets nothing. This has been the world fight since end of June when the Chinese finally let the yuan appreciate against the dollar in a serious way.
There’s only one problem: Germany may be able to survive with a strong currency but the rest of Europe cannot and parts of Europe, especially Greece, are going to insolvency. Up to a point, the Greeks have to accept the fiscal austerity forced on them by the Germans. At this point, either the euro must weaken significantly or Germany must rescue Greece. German reluctance on the bailout has recently led to a weaker euro as a default or break-up loomed. However, this euro weakening broke the global arrangement with China, which was now faced precisely with its worst state of affairs, i.e a weaker euro, and, a weaker dollar, at the same time. China is prepared to accept one or the other but not both of it.
During these “currency wars”, all advantage is temporary and it is always just a matter of time before “the strong currency” tries to get in on the Globalist new world order game that everyone has a sinister role to play. Since not everyone can devalue at once, every country with a cheaper currency must produce a loser country who gets stuck with the strong currency. At first it looked like Europe was the biggest loser but now China is beginning to assume that role.
If Europe expects China to purchase European sovereign bonds to help alleviate the crisis, they must offer more favourable trading terms to ChinaInternational Journal of Business Derivatives Written by Claudia Kling, Massachusetts Institute of Technology (MIT), USA Edits made by Andrew @ The Globalist Report