Wunderbarer Artikel zu Gold, Währungen, und warum Blasen nicht platzen müssen

verfasst von yatri, 06.07.2002, 18:55

FOCUS ON STRATEGY

Copyright 2002 J.N. Tlaga

By defeating France in early summer of 1940, Nazi Germany acquired momentary window of opportunity to defeat England too, depending solely on Luftwaffe's ability to destroy Royal Air Force before the autumn storms would make landing across the English Channel impossible. But when relentless raids on RAF airfields brought Luftwaffe dangerously close to accomplishing this goal, Winston Churchill erased the German edge by ordering RAF to bomb civilian targets in Berlin. Enraged by this provocation, Adolf Hitler ordered around-the-clock bombardment of London in response, and thus RAF's time to breathe and England's ultimate victory in the Second World War were won by focusing foe's attention on the wrong target.

Why this masterful maneuver of England's most illustrious leader never found its way into history books? In order not to enlighten the masses that great powers and numbers, which are difficult to defeat by outright destruction, are easily thwarted by way of distraction. Distraction is the ultimate weapon of war and the ultimate instrument of politico-economic control. How does the fiat money elite, whose entire membership would fit into an opera house, manage to keep the six billion people of the planet Earth in their present state of subjugation? By keeping them distracted!

It would not serve any good purpose to receive Judge Lindsay's decision of March 26, 2002 in Howe vs BIS with anything but magnanimity. Merriam-Webster's Dictionary defines magnanimity as"loftiness of spirit enabling one to bear trouble calmly, to disdain meanness and pettiness, and to display a noble generosity".

In this spirit we should have no difficulties to grasp that when Judge Lindsay upheld the sovereign immunity of gold price manipulators, he in effect said that the proper remedy of the people aggrieved by such misdeeds lay not at law but in the realm of politics. Translated into colloquial format, the underlying message of his decision reads:

"You the people should not try to force administrative officials to correct their discretionary policies by suing them. Such an approach in effect merges the administrative branch of the government into judiciary one, and forces the judges to second-guess administrative decisions rather than to interpret the law. Because you have the power to elect public officials, you should not ask me, a trial judge, to tell them what to do; if you are not happy with their policy, you should throw them out of their offices in the next elections instead. And if you are unable or unwilling to do it, you deserve what you are getting. Don't ask me to pick up chestnuts from the open fire for you! Put your own fingers at risk!"

In this generous interpretation, Judge Lindsay's decision means that our attention should be focused on electing honest-money President and honest-money Congress, and we should allow no one to distract us from this objective, because any change of direction will in the end be like targeting London instead of RAF airbases.

Most emphatically, no effort should be made to relitigate gold price manipulation as a class action of gold mining companies against bullion banks, because two more years down this road, in the election year 2004, sovereign immunity will be invoked again. What the bullion banks need to do to avail themselves protection of the sovereign immunity veil all over again is to tell the truth:

"We are manipulating the price of gold upon request of Secretary of the Treasury and of the Chairman of the Federal Reserve Board as their agents and assigns, we are merely executing the policy of the President of the United States."

It were not the central banks that were drawn into gold-carry trade in order to save the leading bullion banks from their folly that brought them to the edge of the abyss - as an apocryphal or deliberately deceptive statement of Edward A. J. George, Governor of the Bank of England, tends to suggest. It were the bullion banks that were drawn into gold-carry trade by the central banks to execute a global policy decision to make the world safer for the fiat money regime. The fact, that the blueprint of this policy was"sold" in 1992 to then Governor of the State of Arkansas by then Co-Senior Partner and Co-Chairman of Goldman Sachs during a dinner meeting in New York, does not undermine this conclusion. There are plenty of similar dinners in Presidential election years. This is how the winners of incoming elections are actually selected, their campaigns charted, and their policies conformed. The point is, if Mr Clinton would have decided to renege on his promise after becoming the President of the United States, and would have refused to commit the gold reserves of US Treasury to this"strong dollar" policy (a code name for gold price manipulation), the bullion banks would not have been in the position to launch this policy on their own.

To be sure, every player in the"strong dollar" game always had his own ax or two to grind, but the fundamental purpose of the gold price manipulation has been and is to save the fiat dollar regime by converting it into trilateral euro-dollar-yen regime. Creating the source of cheap capital in the form of gold-carry trade to finance hedge funds operations was not the primary purpose; yen-carry trade was already supplying much more than gold-carry trade could ever hope to supply. The specter of collapse of the likes of Goldman Sachs would require no greater attention than actual collapse of Barring Brothers required. And LTCM was bailed out not because its insolvency would destroy world finances, but because its insolvency would expose the fact that central banks gold (and US Treasury's gold) was not being lent into gold-carry trade but outrightly sold in exchange for US Treasury securities.

In EURO AND GOLD PRICE MANIPULATION, PART II, I rushed to judgment that the probable purpose of sudden switch from de facto pegged gold price of $384 in 1995 to the suppression of the price of gold from early 1996 on was"to throw monkey wrench into development of euro". Obviously, I was wrong. The purpose was exactly opposite. It was to assist euro rather than to sabotage it.

Even though launching of euro would in the end displace hundreds of billions of Eurodollars, strategically, the fiat euro is the fiat dollar's natural ally, and the Anglo-American establishment, sitting on top of the world, has no choice but to upgrade the fiat dollar regime to euro-dollar-yen regime. The myth of euro's competition is being recycled for usual disinformation purposes to make the average Joe and Jane completely unaware of what is going on until it will be too late for their voting power to do anything about it.

Anglo-American establishment's imperial control of the world rests on the proposition that the world is ruled by those who buy, not those who sell. Anyone anywhere can always make cars as good as or better than General Motors, and anyone anywhere will always conform to the will of those who wield the power to buy. Herein lies raison d'etre of the Bank of England and its American subsidiary, the Federal Reserve System: without God-like power to create the world money out of thin air, the power to buy is naturally limited by the power to earn. This means that whoever will stay in control of the world fiat currency system long enough, will in the end own the planet Earth. Ever since 1717, England's elite has been driven and possessed by this thought alone. See: GOLD STANDARD = FIAT IN DISGUISE.

Is it reasonable to expect this global elite to abandon its three centuries old quest for world domination as immoral, and to return to honest money system of silver and gold? Of course not! And what is this elite most likely to use to see its tercentennial quest triumphant? Nothing works better than distraction! In order to dominate the masses, it is not necessary to keep them in concentration camps; reducing them to compulsive watchers of cretin television is enough.

With the United States Gross National Product now standing at 22.85 percent of Gross World Product, and the United Kingdom's at 3.12 percent, the Anglo-American ability to maintain the importer-of-last-resort facility for the whole world is openly questioned. But with 15.56 percent brought in by twelve nations of Euroland, and 7.22 percent by Japan, the combined share of the euro-dollar-yen empire will add up to 48.75 percent of Gross World Product. For a time being, this will be enough to allow 769,317,666 people of the trilateral empire to continue buying the products of hands and minds of the remaining 5,388,082,894 people of the world in exchange for commercial stationery, cut into six and adorned with intaglio prints.

The tiny elite of one-eighth of the world people, controlling nearly four-eighths of the world wealth, is setting up seven-eighths of the world people for another Bretton-Woods scheme of purchasing the products of their labor in exchange for pieces of paper without intrinsic value. This is what the whole game is about. It has nothing to do with saving greedy bankers from the consequences of writing too many derivatives on the wrong side.

This trilateral solution, just like the original Bretton Woods setup, can only be temporary. The problem of inability to meet the obligations of importer of last resort will resurface to haunt the new world order elite all over again once the share of euro-dollar-yen empire in Gross World Product will decline.

During the first two years, 1994 and 1995, the price of gold was manipulated from both sides; gold was preemptively sold into the rallies, and preemptively bought to arrest declines, until, in 1995, the price of gold became nearly fixed at annual average of $383.79. With annual average of the monthly highs at $388.46 and annual average of the monthly lows at $380.52, the average bandwidth of volatility became as narrow as $7.94 or 2 percent. One percent on each side, that was like gold export-import points.

With 1995 Gold Standard Index (July 1914 price of gold -$20.6718 - in terms of 1995 Consumer Price Index - 15.24) at $315.04, the pegged price of $383.79 in effect broadcasted to the world that 1995 CPI needed to be upgraded by 21.8 percent in order to arrive at the true picture of inflation. But recalibrating Consumer Price Index was not the reason why the bandwidth of gold price volatility has been so patiently reduced to bare gold points; the purpose was twofold: (1) to calibrate the value of European currencies against euro and dollar, and (2) to prime the gold derivatives pump.

Launched on January 1, 1999, at gold value calibrated in 1995, euro promptly sank against dollar to the level the gold has been manipulated down in the meantime. The fact of pricing gold in dollars (gold must be priced in something other than gold), combined with calibrating new European currency against old currencies in gold, operated to cause one-fourth devaluation of euro against dollar and corresponding one-third appreciation of dollar against euro. This made Euroland's exports one-fourth less expensive in America and American exports one-third more expensive in Europe, a state of affairs that existed upon launching the Bretton Woods system, which conveyed the false pretense to the world that Euroland's economy was alive and well, and thereby facilitated euro's acceptance.

(Even with American market assured by"strong dollar", Euroland could not stay afloat well enough to prevent last minute defections from euro. So, Poland, Czech Republic and Hungary were brought into NATO and were invited to join European Union to make them tolerate the existing crooked terms of trade with their new"allies" on private reassurances that Union subsidies would ultimately compensate them for devastation of their economies by this unfair competition. But now, when euro is fait accompli, the official word came from Brussels that new members of European Union will receive only 25 percent of the subsidies the old members are receiving.)

To manipulate gold price down with the minimum expense of physical gold, the manipulation had to be driven by immense volume of gold derivatives. In other words, investment money available for purchasing physical gold had to be tied up in gold futures and gold options, meaning, someone had to assume the other end of these futures and options, and that someone had to be the bullion banks of course. Because by way of futures and options much higher amount of gold is controlled by a given amount of money than by outright purchase of physical gold, it follows that banks assuming the other end of these futures and options had to increase their notional exposure to stratospheric numbers.

And to go so far out on the thin ice of gold derivatives the bullion banks had to have twofold assurance: (1) that the supply of gold would remain available in ever increasing quantities, and (2) that ostensibly"leased" gold would in fact be outrightly sold in exchange for US Treasury securities. With these assurances, the actual risk to bullion banks was reduced to acceptable level, and their modus operandi was nothing short of sure-fire fraud perpetrated on the unsuspecting public in conspiracy with US Treasury and the Federal Reserve. The bullion banks have been so accommodating in executing the"strong dollar" policy because their real profits were coming not from investing"leased" gold's proceeds but from endless writing of derivatives, designed to expire useless. The innocent public always had as great a chance to win against banks in derivatives games, as it has against casinos in baccarat games.

And what"gold bugs" propose to do about this state of affairs now that federal court was successfully persuaded not to interfere?

Not a few among us have been distracted into endless driving around intellectual cul-de-sac centered on the belief that gold price manipulation must inevitably collapse into a financial meltdown of infernal proportions, by which the market forces will ultimately reassert themselves and will thwart the machinations of the gold cabal when gold will hit again $800 per ounce or more. It is not the first time in history for the helpless to seek solace in the concept of inevitability of the triumph of good over evil. In reality: (1) central bank gold is sold outrightly for US Treasury securities which means that central banks will never call in their gold"loans"; (2) some trillion dollars were erased by NASDAQ dot.com bubble alone which means Regular Joes and Plain Janes simply cannot buy physical gold; (3) Congressionally injected compulsory cash settlement clauses into gold contracts will ratify already existing practice to allow orderly unwinding of the gold derivatives pyramids if those invested in paper gold would elect en masse to take physical delivery.

Similar innocence about the real state of affairs is present in the thought that derivative pyramid of notional value exceeding twenty trillion dollars accumulated by JP Morgan Chase must lead to cataclysmic downfall of the entire financial system. In reality, when divided by the outlandish leverage ratios (inadvertently disclosed by LTCM debacle) this score of trillions translates into few scores of billions, which can be settled with few clicks on Alan Greenspan's computer. (When pyramid of derivatives is netted, no one is"too big to bail"; whatever was done by a few clicks on Alan Greenspan's computer, can be undone by a few clicks on Alan Greenspan's computer.) Furthermore, derivatives written by JP Morgan Chase are mostly interest rate derivatives written from the position of advance notice of the interest rate changes, meaning, no risk is involved because the entire game is played under the roof of one and the same rigged casino.

Even if the price of gold will rise to $800 or more, it will only be an ephemeral spike. This is what happened to the price of gold in the month of its all time high - January 1980:

Friday the 11th - $623.00

Friday the 18th - $835.00

Monday the 21st -$850.00

Monday the 28th - $624.00

How much gold could change hands during the spike weekend of January 18- 21?

And even if so high a price will hold, this will not be the time to light our cigars. As long as gold is priced in Federal Reserve notes and not in silver or other money of naturally limited supply, four-digit prices of gold will only indicate that America is already owned entirely and governed solely from Bermuda and Cayman Islands.

As the alignment of the trilateral currencies evolves toward E1 = $1 = Y100, yen must conform or be left out of dollar's concert with euro. Euro is appreciating against dollar more or less elastically as the controlled price of gold is being gradually released to lift euro to the alignment level (this is happening now), and euro is likely to maintain the alignment exchange value on its own steam (because growing demand for euro as the new reserve currency will keep its value higher than where it otherwise would have been). But yen is resisting trilateral alignment now, and may not be able to hold its appointed line in the future, because the Japanese are still unable to accept deindustrialization for the benefit of China as their ultimate fate. The history of Japan's dependency on yen's structural undervaluation have never been adequately explained by the establishment press and academia not so much out of ignorance as for fear of disclosing too much.

Under Bretton Woods system, yen enjoyed outlandish undervaluation of 58.7 percent against dollar which made the effect of selling $100 US product in Japan very much the same as selling it for $242 in the States, while Japanese manufacturer could sell similar product for $41.30 in the United States and still make a profit. See: EURO AND GOLD PRICE MANIPULATION, PART I.

Ordinarily, such a system would be unsustainable. When Japanese exporters would line up to exchange their immense dollar proceeds into yen, the value of yen in terms of dollar would go up. As a result, Japanese exports to the United States would be growing more and more expensive, and American exports to Japan less and less expensive until the equilibrium corresponding with purchasing power parity was reached. But under Bretton Woods rules, Bank of Japan was required to thwart this elegant mechanism of self adjustment by pegging dollar-yen exchange rate within one percent of IMF anointed par value $1 = Y360. Notwithstanding the foreign trade surplus, or rather because of it, the yen faucet had to be kept open all the time, which, between 1950 and 1973, gave Japan the rate of inflation nearly twice that of the United States.

When the economy is permanently flooded with extra liquidity, the nominal prices go up, but in reality it is the nominal currency unit that depreciates while the real prices stay the same. But in the upside-down world of the Bretton Woods system, the same yen that was depreciating at home was keeping its exchange value abroad. As a result, Japan was rapidly becoming the most expensive country in the world. This was not cutting into her foreign trade edge as such, only into the margin of profit of her export industries. Japanese exporters did not have to give the American consumers 58.7 percent discount the original yen undervaluation allowed. Just a few percent was enough to undercut American manufacturers, while the rest was pocketed as a windfall profit. It was this excess profit that was being eaten up by the higher inflation in Japan. But because the initial undervaluation of yen was so great, even a quarter of a century of high inflation was not enough to eliminate Japan's foreign trade edge entirely. Deutsche mark, on the other hand, started with one-half smaller undervaluation than yen, but Bundesbank kept it on even keel by pegging mark inflation to that of US dollar.

As a result of closing the"gold window" by President Nixon, US dollar depreciated 27.78 percent from Y360 on August 13, 1971 to Y260 on March 19, 1973, while yen correspondingly appreciated 38.46 percent, and that was only the beginning.

When free market returned the gold price to its inflation value, the price of oil was ipso facto reduced by two and a half. OPEC's resurgence was under such circumstances not an accident. It was a life and death necessity for oil producing countries. But adjusting the price of oil to the price of gold ignited worldwide inflation. Everybody and his brother raised their prices because the oil went up, and then they raised their prices time and again because others raised their prices in response to the raise of the price of oil. When this spiral of inflation ate the original oil price adjustment, OPEC adjusted the oil price again. OPEC was not pushing the price of oil; OPEC was merely catching up with the dollar-led world inflation. Before long, everybody was raising prices not to match the actual increases of the prices of others, but to meet the expected increase.

By October 30, 1978, US dollar was down to 177 yen. For the first time in thirty years, the Japanese had to earn their economic miracle instead of merely collecting it on the foreign exchange market, while US-based manufacturers could for the first time enjoy the fair trade instead of suffering under"free trade".

It took Paul Volcker's interest rate in the range of 20 percent to break the inflationary expectation and to arrest the dollar's decline, but it was massive rearming under Ronald Reagan that raised US dollar back to 263 yen by February 25, 1985. Japan was jubilant.

But, faced with ultimatum from US manufacturers, majority of US senators and members of Congress presented Ronald Reagan with ultimatum of their own: Either dollar goes down, or the protective tariff goes up.

On Sunday, September 22, 1985, Ministers of Finance and Central Bank Governors of France, Germany, Japan, the United Kingdom, and the United States agreed at Plaza Hotel in New York,"that recent shifts in fundamental economic conditions among their countries together with policy commitments for the future, have not been reflected fully in exchange markets", that the fact that"the United States has a large and growing current account deficit, and Japan, and to a lesser extent Germany, large and growing current account surpluses"..."together with other factors is now contributing to protectionist pressures which, if not resisted, could lead to mutually destructive retaliation with serious damage to the world economy...", and that"...orderly appreciation of the main non-dollar currencies against the dollar is desirable."

By December 31, 1987, this"orderly appreciation of the main non-dollar currencies" brought US dollar down to 121 yen level. This was accomplished by the Bank of Japan not so much by selling dollars as by keeping a lid on supplying additional yen when dollar proceeds of Japanese exports were being exchanged for yen. The resulting terms of trade could best be described as the end of the world as the Japanese exporters knew it.

To arrest the hemorrhage of their profits, Japanese exporters began to move part of their production to the United States, and then to extract by abnormal transfer pricing what would have been their profit under abnormal dollar-yen exchange. This practice was documented already in 1992 by two finance professors at Florida International University, Simon J. Pak and John S. Zdanowicz. Nine years later, in view of the global expansion of this transfer pricing fraud, Pak and Zdanowicz received $2 million grant from US Congress to continue and expand their research. See: http://dorgan.senate.gov/news/exec.pdf and http://dorgan.senate.gov/newsroom/record.cfm?id=179676

The Plaza policy of sustained appreciation of non-dollar currencies was terminated in the wake of"Black Monday" stock market collapse of October 19, 1987. Financial press correctly identified massive dumping of US stocks by Japanese, German and other foreign investors as the primary cause of that collapse, and computer assisted trading and massive use of stock derivatives as aggravating factors, but the exact motive for this dumping was never satisfactorily explained.

Why Japanese-led foreign investors, who in the first six months of 1987 alone bought $18.4 billion in US equities (which pushed Dow Jones 30 percent up), began to dump US equities in October 1987?

When US dollar was depreciating under Plaza Accord, US equities were becoming greater and greater bargains for foreign investors. But once bought at deeper and deeper currency discount, these equities began to loose money just like those equities that were purchased before the Plaza policy was ushered in, simply because the dollar was loosing its exchange value. The obvious solution was to engineer massive"correction" of the stock market, while placing parallel repurchase orders for the dumped stock. The net gain from such flip-flop would compensate foreign investors for depreciation of US dollar from the pockets of Regular Joes and Plain Janes. But to execute this maneuver successfully, it was necessary to wait until bull market stumbled. (The very same massive purchases of US equities as currency bargains were driving Dow Jones through the roof, offsetting for the time being the currency loss.) The stumble was supplied by Alan Greenspan, who on September 4 made his virgin raise and thus became a"central banker". The pause in the market climb made the currency loss explicit, and everybody who was anybody on Wall Street was thereby put on notice that window of opportunity to execute the flip-flop of a lifetime was open, meaning, the cataclysmic short sale was imminent.

Additional notice came from the massive sustained sales of US Treasury securities. They were being dumped for cash like there was no tomorrow. Obviously, some people needed vast amounts of the Federal Reserve notes to finance something for which payment could not be made in Treasury notes. The Fed had to know who was selling because the transfers of Treasury securities are registered at the New York Fed. Thus the only people who were taken by the resulting October surprise were again the Joes and Janes, who paid for it from their savings.

The Plaza policy was of course the first casualty of the"Black Monday". As Ronald Reagan himself said he did not want the dollar to drop any lower, a massive yen-carry trade was launched by the Bank of Japan to prop up the dollar and to restore Japanese export industries to their former profitability. What is yen-carry trade? It's an offer one cannot refuse.

Try to imagine receiving not another"platinum" credit card but an invitation to borrow immense sum of yen, say 121 billion yen, at deeply discounted interest rate, say 2.5 percent. With $1 trading for Y121, you could sell this loan into the market for $1 billion, buy US Treasury bonds paying 6.5 percent, and within a year collect $40 million profit. In reality, your $1 billion can be more profitably used by leveraging it on derivatives markets where it can control hundreds of billions of dollars, and produce profits many times higher than mere investing in US Treasury bonds. Additional benefit comes from depreciation of yen. When you dump Y121 billion on currency market, and as a result US dollar exchange value goes up to Y125, you acquire additional $40 million profit that can be realized when the loan is repaid. Naturally, you have every incentive to borrow another heavy load of yen in order to dump it on currency market again and again, and in the process to brighten the prospects of Japanese export industries.

Just like gold-carry trade, yen-carry trade is not for everybody. It is only for those who can borrow billions.

When, following LTCM bailout, John Meriwether began to unwind LTCM yen-carry trade, he pulled the rug from under many other yen-carry traders, among them Julian Robertson's Tiger Fund, forcing it to buy $8 billion to $10 billion worth of yen to cover its position, and in the process pushing yen still further up. Robertson's admission, that he lost more than $2 billion in one day when dollar dropped against yen 8.1 percent on October 7, 1998, fixes his net yen-carry position at $25 billion plus. Ultimately, Robertson unwound his hedge funds and closed them down without causing the end of the world. And the same goes for George Soros and many other hedge funds operators. (No one is"too big to fail". Everyone is just about the right size for it.)

Yen issued to Robertsons and Soroses of this world, did not disappear once used for purchasing US dollars, but ignited a gargantuan bubble economy never before seen on God's green Earth. From 1988 till 1990, Japanese stock market prices and real estate market prices more than doubled.

Ordinarily, new fiat liquidity is"parked" at the stock market, and the resulting"assets inflation" is not perceived as inflation of prices. This perception is justified because the stock exchanges usually cancel out the inflationary effect of the Federal Reserve notes newly issued by a click on Alan Greenspan's computer by offsetting them via stock market"corrections" against the Federal Reserve notes earned by Regular Joes and Plain Janes in the sweat of their brows. Friends of Alan Greenspan acquire new liquidity for the price of asking for it, then they use it to inflate the prices of stock, and then they sell short the appreciated stock to Joes and Janes for their families savings, market"correction" then brings the stock prices down, and presto, no inflation. The very purpose of stock market"corrections" is to siphon people's savings to purveyors of the fiat liquidity.

(This is one of the reasons why in THE ALTERNATIVE FUTURE a proposition is made to close down stock exchanges for good, and to trade corporate shares directly with issuing corporations in the same fashion money market mutual funds shares are bought and redeemed. In the final analysis, both stock exchanges and central banks, are the racketeering enterprises, pure and simple. Calling them"rigged casinos" is an euphemism of course.)

On the way up everybody was happy in the cherry-blossom land. They must have thought they grabbed God himself by his knees. Yen was still very high and already plentiful. Everything was possible. Japanese corporations were buying American icons, and Japanese tourists were wearing T-shirts proclaiming"We Are Better Than You".

It took until April 17, 1990, to drive dollar up 31.88 percent to Y159.9 and yen correspondingly down 24.17 percent to 0.625 cent, but by then the Nippon Bubble was already loosing air fast.

In January 1990, Nikkei 225 stood ready to attack 40,000 level when out of the blue the market lost 5 percent of its value in just three days. The Japanese yen-carried their Sisyphean rock almost to the top of Mount Fuji when it began to roll down on them. Only a year earlier, Japanese equity exceeded 40 percent of the value of all markets in the world, now Nikkei 225 was rolling down and nothing could stop it. The losses had to be absorbed of course by the legendary Japanese savers, not by the people who put yen-carry trade proceeds into circulation.

From Y160 on April 17, 1990, to Y80 on April 18, 1995, dollar depreciated against yen exactly 50 percent over five years, and yen appreciated against dollar exactly 100 percent from 0.625 cent to 1.25 cent. However, the dollar's ultimate all time low and yen's all time high were established not so much by Japan's continuous slide into deflationary depression as by circular charade executed by the international"hot money" cabal in an effort to recoup the losses caused by the depreciation of Mexican peso following the NAFTA pact. See: EURO AND GOLD PRICE MANIPULATION, PART II.

From the position of its all time high at 1.25 cent, yen had only one way to go, and it was below the 1 cent level. Nolens volens, Bank of Japan had to embrace yen-carry trade as its permanent policy.

By August 11, 1998, dollar was at Y147 and yen was at 0.680 cent, appreciation of 83.75 percent and depreciation of 45.6 percent respectively. But the same yen-carry traders who created that miracle were also responsible for the reversal of yen's fortune when Russian Government proved once again that no one is too big to fail. Long Term Capital Management placed astronomic bets to the opposite. John Meriwether relied on two Nobel laureates and one former member of the Federal Reserve Board to reach his conclusion; he had no Russians among his advisors. As a result, he had to unwind LTCM yen-carry trade and in the process take down all the nicest guys in Bermuda and Cayman Islands.

Once John Meriwether pushed yen up from 0.68 cent on August 11, 1998 to 0.87 cent on October 19, 1998, the lowest it ever went again was 0.74 cent on January 24, 2002, and the highest it ever rose was 0.98 cent on December 22, 1999.

Yen is fighting now for better terms of trade than Y1 = 1 cent, when its real choice is between E1=$1=Y100 and marginalization. Yen's role in the new world order is to be a cent to euro and dollar.

E1=$1=Y100 formula is self policing, and is more generous to euro and yen than purchasing power parity would have been. Dollar overvaluation in this formula remains significant enough to sweeten the deal for euro and yen within realm of possibility. Any more of the sweetener would unhinge the whole deal because the current account deficit of the United States at its present level is unsustainable.

Once euro, dollar and yen will begin to march in lockstep, they will begin to inflate in tandem to pay for new imports in order to create new illusion of fool's paradise for one-eighth of the world people and new illusion of hope for the remaining seven-eighths.

The only viable alternative to this horrendous scenario, and the only real choice for the free people, is to return to silver and gold as proposed in THE ALTERNATIVE FUTURE.

All we need is an honest-money Presidential candidate who will not be assassinated before the people have a chance to hear his message and cast their votes. There is a way to do it, but it will be presented in the next article for this one is already far too long.



Greetings!

J.N. Tlaga

tlaga@shadow.net

4 July 2002

<ul> ~ http://www.gold-eagle.com/editorials_02/tlaga070402.html</ul>
<center>

<HR>

</center>

Thread gesperrt

 

gesamter Thread:

• Wunderbarer Artikel zu Gold, Währungen, und warum Blasen nicht platzen müssen - yatri, 06.07.2002, 18:55
  • Re: Äusserst interessant, selbst wenn nicht belegbar, müsste an die Presse. (owT) - André, 06.07.2002, 20:37