As a friend of mind states, trying to figure out how much one currency is worth as compared to another is like standing on top of the Empire State Building with all the paper currencies and dropping them off at the same time to see which one floats to the ground quickest. If you think only the Chinese are manipulating their currencies you would be wrong. Most countries manipulate their currency at least once a year. The U.S. does it all the time. I’ve combined two stories in one because of there obvious relationship. There is a lot of money in the world and most countries are manipulating their own currencies.
China And Their Unscrupulous Currency Manipulation
We’ve all heard, even from newly elected President Trump, that China is manipulating their currency. It is true, but what the President and the Lame Stream Media (LSM) fail to tell you, is that every central bank and their respective governments are often trying to manipulate their currencies.
The British Pound is being manipulated by their government and the Bank of England (BOE), their central bank as is the Japanese Yen being manipulated by their government and the Bank of Japan (BOJ), their central bank. Almost every single nation all 230+/-, and their central banks, are trying to both stimulate their economies and yet keep inflation in check by keeping their currencies strong. It has become quite the balancing act for many of the countries around the world.
Argentina and Venezuela are not doing so well as inflation which is essentially the weakening of their currencies (losing its value) is tearing up their economies, the business environment and they both are in serious financial trouble. No country wants double digit inflation, as we had in the late 1970s and early 1980s, which I personally experienced and it was not good.
It’s not commonly reported news in the lame stream media, except for Foreign Exchange (Forex) and other relevant financial circles. Does the average person care that the Mexican central bank just raised or lowered their lending rates or that their government may start buying their own government bonds back and even if they did report it more widely, how many people would know what they are even talking about?
The Forex is the largest single market in the world trading in the range of $2 trillion to $4 trillion or the equivalent a day. I know that the U.S. alone has upwards of $50 trillion in circulation at any one time and Japan and China also have huge amounts of currency also in circulation. That number of $50 trillion could be really low because I’m trying to take it from memory. I’m being lazy to look it up and additionally it’s hard to find the real number because there are so many varying opinions. Suffice to say, it is a very large number.
The manipulation of currencies has gotten so bad that it has almost become a war in of itself, between all the nations in the world, especially the larger economies who have the most influence on other countries and international trade. There are even numerous factions working together to compete against other groups and partnerships. CARICOM is a group of Caribbean nations and the unlikely group, the BRICS, are Brazil, Russia, China and South Africa, I kid you not.
Do any of you even know what a reverse repo is or that both the central banks of Japan and the U.S. are doing them as we speak? What the different between a repo and a reverse repo.
Definition: Reverse repo rate is the rate at which the central bank of a country (borrows money from commercial banks within the country. It is a monetary policy instrument which can be used to control the money supply in the country. – economictimes.indiatimes.com/definition/reverse-repo-rate
By lowering the money supply, you decrease inflation and conversely by increasing the money supply you create inflation. Most countries are trying to increase inflations by 2% to 3% annually while also increasing the GDP at a similar rate. There are also others ways to do this but based on current economic conditions and policies they do different things, sometimes multiple things at one time to accomplish their goals.
Obviously, the average person could care less or more importantly, doesn’t know just how important these kind of issues are because we are just not taught their importance. There is probably not a dozen high school teachers in the entire U.S. that even know this kind of information or even its relevance.
The fact that many central banks around the world are having to buy their own government’s debt is an indication that investors around the world are getting tired of the government printing presses that have been funding the huge bureaucracies of both the welfare and warfare States. The central banks cannot and will not continue to buy the debt of their government forever.
This will force the governments to both downsize and cut spending. “The very near future is likely to see a sea-change in central bankers’ attitude to the gold allocation in their reserves. The failure of G20 monetary policy since the financial crisis is causing a general rethink, which may eventually lead to a new policy direction.” – Gold Money
This chart is of the European Community, a major component of the G20, generally considered the most advanced and industrialized nations in the world. https://wealth.goldmoney.com/research/goldmoney-insights/central-banks-and-gold – If you haven’t read this article you should. The bottom Line is that almost all nations are having to manipulate the value of their currencies because the monetary policies of fiat currencies have caused excessive government spending and the resultant debt within the various nation-states and this is not a sustainable model. Notice the years 2007 and 2008.