Did Ben "Bazooka" Bernanke turn the tide in the US currency war with China?
We're in the throes of Currency War III, and Ben Bernanke has won the first offensive by flooding China with inflation.
If this sounds like a geeky online game, recall how Chinese prices surged after the Federal Reserve unleashed its quantitative easing in 2009 and 2010, one of many moves James Rickards parses in his somber book, “Currency Wars.”
“It was the perfect currency-war weapon and the Fed knew it,” he says, describing how the Fed's expanding money supply forced China to print more yuan to maintain its peg to the dollar. “China was now importing inflation from the United States through the exchange-rate peg after previously having exported its deflation to the United States.”
The move is straight out of the Bush 41 playbook, destabilizing the currency of a communist rival. It has largely deflected the inherent weaknesses in our own system and allowed the focus to remain overseas.
In 1989 President George H. W. Bush began the multi-billion dollar Project Hammer program using an investment strategy to bring about the economic destruction of the Soviet Union including the theft of the Soviet treasury, the destabilization of the ruble, funding a KGB coup against Gorbachev in August 1991 and the seizure of major energy and munitions industries in the Soviet Union. Those resources would subsequently be turned over to international bankers and corporations.
Meanwhile, the Wall Street - City of London axis can continue to rig interest rates and make zero-reserve loans to one another Ad infinitum, without consequence.