The Name of The Game V - Redux
Pre QE and still prescient...
Forex Arbitrage
The real profit of debauching a floating currency and increasing the money supply comes through Forex arbitrage (bond and currency).
I.E. The currency and bond division of Goldman Sachs earned $2.5 billion in the first quarter of 2005. Borrow yen at 1.5%, sell yen, buy dollars, buy U.S. bonds. Or, over valued Japanese bonds are sold, proceeds are used to purchase undervalued American bonds.
Japan at circa $800 Billion is by far, the largest holder of dollar assets. It is in their interest and ours to keep the dollar and yen at a stable and profitable exchange rate.
The Japanese exchanges that have occurred are far in excess of the need to finance the American trade deficit with Japan. Therefore, the only purpose of the exchange's would be to prevent a run on the dollar by other central banks and foreign exchange speculators (players in the game).
By lowering rates and increasing the money supply, the government can purchase more goods and services with lower value dollars. Through the resulting inflation, the government imposes a tax on the people's money because it increases its own buying power while the purchasing power of the public's money decreases.
Our old debt (bonds & notes) must be serviced, the investors (our partners in the game) depend on it. The Treasury sells lots of debt, especially when rates and the currency are low. This is an opportune time, as it allows for the retirement of older debt (higher value dollar & higher interest rate) with new debt (lower value dollars to be paid out at a lower rate).
Our partners in the game recycle the dollars they made selling imports to US consumers, back into our treasury. The Treasury retires older debt in devalued dollars, our partners lessen the rate of debasement on their current dollar based holdings.
Our treasury gives the money to the government to spend. The politicians can line two sets of pockets, theirs and their corporate sponsors. In the process, wars are fought, strategic assets secured and jobs are created. This allows consumers to buy imported goods from our trading partners, and the cycle plays out all over again.
Multi national corporations benefit through division of labor, reduced taxation and environmental compliance costs. Elitist’s benefit from expatriation of profits to tax friendly offshore havens like Bermuda and the Cayman Islands in the Caribbean, where the hedge funds are incorporated. The money can then be invested and used for Forex arbitrage and other market manipulation.
Revaluation and Increased Levels
To remedy "irredeemable" currency, increased playing level and reduce debt, governmental players can revalue their currency internally. This is an old sleight of hand trick on the populace, a form of internal currency arbitrage.
I.E. The French have done this 3 times in the last 30 years, twice with the Franc, once with the Euro. The government prints and issues new currency, revaluation is mandated. One Euro is worth five old Francs, please turn in your old Francs and the market will revalue accordingly. Or does it?
Most recently the Euro was a spectacular success for the players. Prices for staples and assets in Italy and France, doubled across the board. Yet, real wages stayed the same, half as much purchasing power for the same wages. Voila!! An instant 50% pay cut. Nice trick eh!
You can rest assured of this fact, over time, real incomes never keep pace with the toll that debauching, inflation and revaluation take on the currency. Few people notice or pay attention to this critical detail. A man with a briefcase can steal a lot more money than a man with a gun can.
All actions taken by the players are by design, and there are no unplanned byproducts. The described methodology allows the players to rob the public blind without lifting a finger. This is a very cruel trick and the people that suffer the most are those on fixed incomes. In Part Six we will discuss the costs of the Game.
Forex Arbitrage
The real profit of debauching a floating currency and increasing the money supply comes through Forex arbitrage (bond and currency).
I.E. The currency and bond division of Goldman Sachs earned $2.5 billion in the first quarter of 2005. Borrow yen at 1.5%, sell yen, buy dollars, buy U.S. bonds. Or, over valued Japanese bonds are sold, proceeds are used to purchase undervalued American bonds.
Japan at circa $800 Billion is by far, the largest holder of dollar assets. It is in their interest and ours to keep the dollar and yen at a stable and profitable exchange rate.
The Japanese exchanges that have occurred are far in excess of the need to finance the American trade deficit with Japan. Therefore, the only purpose of the exchange's would be to prevent a run on the dollar by other central banks and foreign exchange speculators (players in the game).
By lowering rates and increasing the money supply, the government can purchase more goods and services with lower value dollars. Through the resulting inflation, the government imposes a tax on the people's money because it increases its own buying power while the purchasing power of the public's money decreases.
Our old debt (bonds & notes) must be serviced, the investors (our partners in the game) depend on it. The Treasury sells lots of debt, especially when rates and the currency are low. This is an opportune time, as it allows for the retirement of older debt (higher value dollar & higher interest rate) with new debt (lower value dollars to be paid out at a lower rate).
Our partners in the game recycle the dollars they made selling imports to US consumers, back into our treasury. The Treasury retires older debt in devalued dollars, our partners lessen the rate of debasement on their current dollar based holdings.
Our treasury gives the money to the government to spend. The politicians can line two sets of pockets, theirs and their corporate sponsors. In the process, wars are fought, strategic assets secured and jobs are created. This allows consumers to buy imported goods from our trading partners, and the cycle plays out all over again.
Multi national corporations benefit through division of labor, reduced taxation and environmental compliance costs. Elitist’s benefit from expatriation of profits to tax friendly offshore havens like Bermuda and the Cayman Islands in the Caribbean, where the hedge funds are incorporated. The money can then be invested and used for Forex arbitrage and other market manipulation.
Revaluation and Increased Levels
To remedy "irredeemable" currency, increased playing level and reduce debt, governmental players can revalue their currency internally. This is an old sleight of hand trick on the populace, a form of internal currency arbitrage.
I.E. The French have done this 3 times in the last 30 years, twice with the Franc, once with the Euro. The government prints and issues new currency, revaluation is mandated. One Euro is worth five old Francs, please turn in your old Francs and the market will revalue accordingly. Or does it?
Most recently the Euro was a spectacular success for the players. Prices for staples and assets in Italy and France, doubled across the board. Yet, real wages stayed the same, half as much purchasing power for the same wages. Voila!! An instant 50% pay cut. Nice trick eh!
You can rest assured of this fact, over time, real incomes never keep pace with the toll that debauching, inflation and revaluation take on the currency. Few people notice or pay attention to this critical detail. A man with a briefcase can steal a lot more money than a man with a gun can.
All actions taken by the players are by design, and there are no unplanned byproducts. The described methodology allows the players to rob the public blind without lifting a finger. This is a very cruel trick and the people that suffer the most are those on fixed incomes. In Part Six we will discuss the costs of the Game.
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