Gyroscopic Investing

Interesting development. I suspect we may see a currency war developing with the major countries trying to debase their currencies.

http://seekingalpha.com/article/875311- ... view&ifp=0

Ad Orientem wrote: Interesting development. I suspect we may see a currency war developing with the major countries trying to debase their currencies.

http://seekingalpha.com/article/875311- ... view&ifp=0

I thought we had been seeing that since 2008.

MediumTex wrote:

Ad Orientem wrote: Interesting development. I suspect we may see a currency war developing with the major countries trying to debase their currencies.

http://seekingalpha.com/article/875311- ... view&ifp=0

I thought we had been seeing that since 2008.

On a small scale we have. I think the central banks are shifting gears though. Global currency debasement is going to be a major factor for years to come.

What would a war with China do to their currency?

Reub wrote: What would a war with China do to their currency?

Probably the same thing it would do to ours, incinerate. It would just be more slowly since they are not already running the levels of debt that we are. Major wars are almost always disastrous from a budgetary and monetary point of view.

Ad Orientem wrote:

Reub wrote: What would a war with China do to their currency?

Probably the same thing it would do to ours, incinerate. It would just be more slowly since they are not already running the levels of debt that we are. Major wars are almost always disastrous from a budgetary and monetary point of view.

Ooops I think I misread that. You meant Japan's currency and a third Sino Japanese war. Same answer though. A major would would have devastating budgetary and monetary effects on both countries. It's worth noting that Japan is a military ally of the United States so the outbreak of a third Sino Japanese war would almost certainly drag us in. And we are in very bad shape for a war anywhere given how strained our military is.

Our weakness is China's strength.

Reub wrote: Our weakness is China's strength.

The Chinese aren't stupid. They have been watching us bankrupting ourselves and severely degrading the world's finest armed forces through an endless series of ill advised military adventures. They know that we are overextended and can't afford a major war now. If I were Japan, I would be very very nervous.

Ad Orientem wrote:

Reub wrote: Our weakness is China's strength.

The Chinese aren't stupid. They have been watching us bankrupting ourselves and severely degrading the world's finest armed forces through an endless series of ill advised military adventures. They know that we are overextended and can't afford a major war now. If I were Japan, I would be very very nervous.

IMO. Japan could put together some nukes in a month if they wanted. They may already have the parts stored somewhere ready to go. Maybe could even get together a delivery system relatively quickly as well. And, it would fit on your wrist.

The anti-nuclear Japan could quickly change around if China were breathing down their necks.

This is what I find disturbing, seeing as that China doesn't just have a stake in the Japanese bond market, but ours as well:

http://www.telegraph.co.uk/finance/chin ... Japan.html

Thoughts?

MomTo2Boys wrote: This is what I find disturbing, seeing as that China doesn't just have a stake in the Japanese bond market, but ours as well:

http://www.telegraph.co.uk/finance/chin ... Japan.html

Thoughts?

It all comes down to the evils of debt. Debtors are not free men. When you owe someone money they have power over you. Someone once told me that gold is the currency of kings, silver the currency of princes, and barter the currency of peasants. But debt is the currency of slaves.

Ad Orientem wrote: It all comes down to the evils of debt. Debtors are not free men. When you owe someone money they have power over you. Someone once told me that gold is the currency of kings, silver the currency of princes, and barter the currency of peasants. But debt is the currency of slaves.

Does that really apply when the debtor has a printing press?  There is no forced liquidation as a coercive tactic.

MachineGhost wrote:

Ad Orientem wrote: It all comes down to the evils of debt. Debtors are not free men. When you owe someone money they have power over you. Someone once told me that gold is the currency of kings, silver the currency of princes, and barter the currency of peasants. But debt is the currency of slaves.

Does that really apply when the debtor has a printing press?  There is no forced liquidation as a coercive tactic.

Yes. Your creditors can force you to do things you would rather not do, including print money in an extreme situation.

Ad Orientem wrote: Yes. Your creditors can force you to do things you would rather not do, including print money in an extreme situation.

But that implies the debtor will stick to the hallowed sanctity of contract.  Why would it be in the debtor's self-interest to harm themselves by doing so rather than flipping the bird?  If history is any indication, there is no long-term consequence as investors have short term memories.

A debtor has the power over a creditor when he no longer makes any payments.  There's very little the creditor can do if the debtor refuses to pay, cannot pay, refuses to abide by the terms of the contract, refuses to abide by the rule of law, flees, etc. or has a morally legitimate reason of self-preservation. 

I find it so naive when everyone expects everyone else to abide by the unwritten rules of law and civility when extreme circumstances arise, especially over figments of the imagination and scribbles on paper known as fiat money.  Human beings are capable of rationalizing anything when expedient to do so, no matter how perverse, immoral, violent or destructive.