The stable dollar was not the cause of America’s growth and ascent to global hyperpower status. It was a consequence.
By Daniel at 26 November, 2009, 2:01 am
It was the manifestation of American exceptionalism based in liberty and a profound sense of mission…the mission of global inclusiveness into the blessings of freedom so abundantly bestowed on America. Free markets, free elections, free speech, free thought and the freedom to experiment and innovate and the freedom to succeed and fail.
A deeply Middle Class nation, America embodied traditional middle class virtues and values and the dollar was the projection of these virtues and values.
The dollar was a symbol of honor because during its great ascent America was an honorable Nation that believed in getting by giving, in working and producing, saving and investing. The dollar was sound because the middle class was strong and America was sound.
Now the middle class is enervated and weakening by the day. The occupation Regime that now rules the USA has contempt for American traditions and legacy values; it dishonors America’s history and mocks its Constitution; it despises the productive middle class.
The dollar is now horribly disfigured and debased because America itself has been degraded by the Regime. As the middle class falls, so America falls. The dollar reflects this descent. The dollar is no longer sound because occupied America is no longer sound. The economic calamity that is impending and is prefigured by the dollar’s descent into shame is the logical consequence of the moral and intellectual calamities that are already being inflicted on America.
The past twenty years of America’s economy have been supported not by production but by ‘financial instruments’ that enabled a constantly-increasing leverage. We love to talk about CDS, but principle among these instruments are of course the always-overlooked Interest Rate Swaps, or IRS, which can and are being used to manage relative currency valuations and which are the Achilles Heel of the current global dollar system.
Traditionally, nations use manufacturing / exports to earn foreign exchange. As American manufacturing declined (was murdered?) the need arose to maintain dollar hegemony so that the new American welfare/warfare global empire could continue to grow.
In other words, the need to use IRS to manage the value of the USD arose concurrently with the decline in American manufacturing. IRS were the weapon of choice; they now total some $200 Trillion. Now, many will come and tell you that IRS are ‘neutral’ and that they net to zero and so they’re they financial equivalent of cute puppies. Even the IMF claims that global IRS net to zero, so they make no effort to acount for them in their global financial report. See www.imf.org/External/P…, page 63, and I quote the report here directly:
‘Caveats to the Application of Estimated Security Loss Rates to Bank Holdings
Our approach for estimating mark-to-market losses on securities includes only cash instruments, and thus does not account for potential leveraged exposures. As in other iterations, we assumed that derivatives exposures net out to zero for the system as a whole. We did not account for concentrations of counterparty risk.’
Nothing to see here, move along.
The simple truth is that derivatives enable leverage through the mechanism of lying about ratings (while simultaneously earning cash flow to those who suborn the lies). And of course the counterparty risk is concentrated, among the five major banks in the US Treasury’s OCC derivative report. Why else could they be ‘too big to fail’?
So Greenspan’s ‘Great Moderation’ was a lie, nothing more than smoke-and-mirrors manipulation of currency valuations. Maestro my aching butt; more like a criminal traitor.
We are occupied by an oligarchy, and nothing will get better until that is remedied. The truth shall set us free.
- SW Richmond
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