Thursday October 7, 2010        

Robert Zoellick, President of the World Bank called for international currency cooperation on Thursday before a three day conference on global finance in Washington DC saying,

 " If ever there were a time that we should not turn our backs on international cooperation, it is now".

This was a public warning to developed nations against a currency war. This comment comes after recent harsh public criticism by both the US and Europe of China, for refusing to adjust it's currency higher against both the dollar and the euro. Currently, an exchange rate of six yuan to the dollar, gives the  weaker yuan a significant edge in the export markets.

Recent declines in the value of the dollar has given it an edge against the euro making it more expensive for Americans to visit Europe, and it makes American goods cheaper for Europeans to purchase. However, SHTF America believes that this is a typical seasonal phenomena as the dollar normally rises in value in the spring to encourage tourism in Europe for the summer, and declines in value in the autumn to encourage the purchase of American products by Europeans.

Not that we would suggest for a moment that currency values are manipulated by governments, we're just saying, that's our observation. The reality, is that the dollar has declined about 12% in value since June 2010. Zoellick's concern is that tensions could undermine investor confidence, spark a trade war, and see barriers erected to free trade, rolling back progress made in open markets.

Last week US Secretary of the Treasury Geithner, voiced his opinion that the Chinese government should peg the yuan higher against the dollar, and this week the European Union Finance Minister chimed in with a similar criticism. Both finance secretaries face similar problems in their home economies: high unemployment, massive trade and budget deficits, and a perpetual printing press running nonstop to fuel massive government spending.

In that vein, Chairman of the Federal Reserve, Ben Bernanke, in testimony before Congress this week, made the following statement:

"U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.

"By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services.

"We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation"

When push comes to shove, we believe that the Chinese will yield a bit after strenuous and lengthy negotiation, pegging its yuan a little higher; (so buy some yuan) while printing, or quantitative easing by Europe and the United States, will continue to erode the purchasing power of both currencies and increase inflation on both continents. This we anticipate by "a thousand cuts" and not a "collapse" as feared by many. World trade cannot be equitable until some measure of parity between these currencies are reached. Right now, the U.S, Europe, and China are playing an adulterated game of Three Card Monte. As long as China plays the game under the current rules, China wins.

Asian Currency Appreciation- Chinese Yuan Red Flatline

In the Bloomberg Chart above, you can see the appreciation in Asian currencies and Brazil's over the past year: with the lone exception of the Chinese Yuan.  China's manipulation of the yuan allows it to dominate other nations in its share of global exports.

The United States and Europe have transferred as much wealth as they dare, to China, turning China into the second largest economy in the world, behind the United States. This wealth has come at a tremendous cost to the middle class of both the United States and Europe as the manufacturing means of production to support the prosperity of their societies has been shipped to China primarily, and also to India, to a smaller degree.

At the same time as the USA and Europe have transferred their manufacturing to China, each continent has encouraged MASSIVE immigration to the physical and financial detriment of their lawful citizens. This massive immigration has suppressed wages, spawned increased crime, and placed an unholy burden of welfare taxes to support this massive invasion of aliens, upon their lawful citizens. Is it any wonder then, that citizens in some European cities are rioting?

To the citizens of Europe and the United States, SHTF America warns that your sovereignty is at stake. The European Union may have been a good idea for Europe to halt centuries of warfare between your sovereign states, but the North American Union is NOT a good idea for America, and American Patriots, citizens, veterans, and troops will resist the dissolution of the United States of America, its Constitution and Bill of Rights, by ballot as long as possible, with blood if necessary.

The entire World needs to know and understand that the Independence of the American people, like our right to keep and bear arms, is embedded in our DNA after more than 230 years. It is manifesting itself now as a patriot, GRASS ROOTS movement all across America. It is our CONSCIOUSNESS, not just our Constitution.

Can you imagine that the Administration of this US government has labeled American citizens that state their faith and belief in the US Constitution as "subversives" and "potential terrorist threats"? To this Administration maybe, but not to the United States of America! This Administration, like some before it, has demonstrated its Treason against the American people on a grand scale!

No matter, it has only two years left before this Administration passes into oblivion: a dark chapter in America history and an experiment that the American people will not soon repeat. On the contrary, a new burst of freedom is coming to America in November, and America will once again pass the light of that freedom to the world!

Embrace your freedom!