The Name of The Game I

Question: Floating currencies and global “free” trade, what do they ultimately lead to?

In this series, we will examine the case of lowering interest rates and the debauching (devaluation) of a fiat currency, and then the raising of rates and revaluation of a fiat currency, along with the phases of the economic cycle that plays out.

The Rules of the Game: These rules follow and build upon each other and will be referred to in the remainder of this series.

Rule #1 Greed: Money is the root of all evil and it’s all about the Money.

Rule #2 Costs: Nothing in this world is free. Whether apparent or not, there is always a business cost or societal vigorish, which must be paid. This rule has been and always shall be, true.

Rule #3 Gravity: The money and the business costs, like random objects in motion, gravitate to the path of least resistance.

Rule #4 Inversion: The business costs and societal vigorish are affected differently by gravity, causing an inverse relationship between the two.

Rule #5 Synergism: Regardless of circumstance or the best of intentions, the 1st four rules feed off each other, exponentially.

Rule #6 Reality: Perception is not reality, money is. With regard to the game, always refer to these six rules when searching for the truth. To discern cause, effect and motive, always follow the money.

Terminology:

We refer to the economic cycle and its phases, as “The Game”.

Government controlled central banks, large multi national corporations and large investor pools (financial institutions and hedge funds). All are liquid and global in nature, and we refer to them as “The Players”.

We will refer to currency and bond arbitrage as “Forex” (foreign exchange) arbitrage.

Control of money supply, interest rates and Forex arbitrage; these are “the tools” of the game, which are at the player’s disposal.

We refer to division of labor and outsourcing, as arbitrage of labor, which is domestic and international in nature. Hence we use the term “global labor arbitrage”.

In Part Two we will discuss the Federal Reserve System and the nature of Fractional Reserve Banking.