The Inevitable Failure Of The War On Cash

Submitted by Tyler Durden on 04/04/2016 17:55 -0400
http://www.zerohedge.com/news/2016-04-04/inevitable-failure-war-cash
Submitted by Jeff Thomas via InternationalMan.com,
Some years ago, when I suspected there would be a War on Cash at some point, everything in the behaviour of the central banks pointed to the idea—it fit exactly into their own informed, yet unrealistic, pattern of logic. I therefore decided that it would be a likely development and would take place at a time when they had tried everything else and had run out of other ideas. As to a date when this might happen…I had no idea.
When several countries had begun to limit the amount of money that a depositor could take out of a bank, I decided that the first shots in the War on Cash had been fired and began to publish my prognostications as to what shape it would take. First, there were the benefits to the bank (the elimination of cash transactions, which would assure that virtually all monetary transactions, large and small, would have to be passed through banks, allowing them to effectively “own” all deposits, charge for every transaction and even refuse transactions). The governments would also benefit. In approving the banks’ monopoly on monetary transactions, they’d benefit primarily through the new ability to tax people by direct debit, ending any remnant of voluntary payment of taxation.
What I didn’t anticipate at that time was that, within a few months, the War on Cash would be escalated quickly—more quickly than was safe for them to do, as it could alarm depositors. (As in the old analogy of boiling a frog, it’s always best to turn up the heat slowly, to lull the victim into complacency as he’s being done in.)
This indicated to me that the central banks had decided that they’d already waited too late and had better hurry up the programme to assure that it was in place before a currency crisis could heat up.
Since then, someone came up with an excellent name for the phenomenon, one that succinctly describes the plan in a nefarious way, as it deserves to be described—the War on Cash. Today, anyone who is paying attention is aware of the War on Cash and what it might do to him. As each new salvo by the banks and governments is uncovered, attentive observers are publishing such developments on the Internet.
However, there’s another facet to the War on Cash that no one (to my knowledge) has yet addressed. The war is still new, and those who will be attacked are understandably still scrambling for their muskets and hurrying to the ramparts. (Musing on how a war will play out usually comes later, as it’s winding down and a victor seems apparent. However, in my belief, it’s wise to examine what the landscape will look like after the war is over, as it can serve to inform us as to what battle tactics should be employed.)
So, let’s have a look. First off, we know that whenever there’s a coming monetary collapse, major banks look forward to employing their political influence to assure that legislation and emergency government measures protect them in a way that results in putting upcoming competitors out of business. We can expect the same this time around. These smaller banks arise during boom times by creating many small branches—the type seen in strip malls and shopping villages. Typically, they have only 1,000 or so depositors per bank—just barely enough to create profit, but, as “convenience banks,” they can count on a steady business from those who live nearby.
Larger banks also tend to create numerous branches during good times, in order to hold down the rising competition; however, they resent the need to create endless less-profitable entities that tie up funds that could otherwise go out as directors’ bonuses. Consequently, when a monetary crisis occurs and the government steps in to help out the major banks, many of the smaller competitors are driven under, as they don’t receive the same governmental support. At such times, we see the edifices in the city remain, whilst the little banks in the strip mall disappear. The majors can now be rid of them. During a banking crisis, a country returns to 19th-century banking in terms of available institutions. Want to make a deposit? Make a trip into the city.
In keeping with the War on Cash, ATMs will also be eliminated. All transactions will be by plastic card or smartphone.
Certainly, as a result of the dangerous position the banks will already be in, we shall witness a steady increase in the charges by banks for the privilege of having them control depositors’ economic worth. Worse, we shall witness the outright confiscation of deposits (as in Cyprus in 2013) and the control of how much a depositor may debit his account in any given week (as in Greece today). It’s at this point that a universal trend to get around the banks’ control will unquestionably take hold. This, I believe, will manifest itself in two ways: top down and bottom up.

Top Down

As I write, bank branches—all of them in small towns—are already closing in “lesser” countries like Romania. This will both grow and spread eventually, to more prominent countries. Banking will be increasingly difficult for depositors, as the ability to actually talk to individuals at the bank will dry up. The bank will become more like a faceless authority that holds power over depositors’ money and will grow to be hated in a relatively short time. (Most of the people of the world have already learned to be deeply distrusting of banks and bankers; outright hatred would not be a major next step.)

Bottom Up

In the Eastern provinces of Mexico, the Campesinos already eschew banks, choosing instead to store their money privately. (Chiapas Province is in a virtual economic war with Western Mexico. They value the Libertad as East Indians value gold.) Those Mexicans who live further to the west regard their eastern brothers as somewhat lawless and uncivilised at present. However, when the Campesinos prove to be surviving the crisis better than their western neighbours are, the western provinces will, of necessity, follow their lead. Mexico will be amongst the first countries to return to precious metals as the primary (if not sole) currency, setting the stage for other countries.
Countries such as Romania and Mexico will serve as an early-warning system. The solutions they and other “fringe” countries employ will spread quickly to the larger world. In order to keep from being controlled by banks, the average person in the EU, U.S. and other “civilised” jurisdictions will learn quickly that, if other forms of trade (alternate currencies, precious metals, barter, etc.) allow him to feed his children when the banks restrict him, he’ll resort to any and all forms of black market dealing that he can find.

The Treaty of Versailles

Following World War I, the victors decided to economically cripple the losers—the Germans. The Treaty of Versailles was ruthless in its purpose—to strip Germany of all possibility of future prosperity, so that it could never rise again.
Of course, what happened was the opposite. Following an economic collapse just five years after the war, the German people, now desperate, chose to follow a new leader who promised that he would “make Germany great again.” The more arrogant he became, the more support he received. The oppression of the treaty failed, as Germans, pushed to the wall, came out fighting.
I believe that the War on Cash will end without such an extreme, but, just as with the Treaty of Versailles, will be stopped by the people of the world as a result of a monetary stricture that is simply too oppressive to be tolerated. This will by no means be a pleasant historical period to travel through. Many people will have their savings wiped out. Many will literally starve. But the anger that’s created in them will reveal the banks as the clear “enemy” in this drama, and those citizens who are presently respectful of the laws of their country will increasingly defy the enemy. They will resort to an alternate system. This is historically what has always occurred when people have been squeezed to this degree, and it will repeat itself this time around.

Another Petro-State Throws In The Towel: The Last Nail In The Petrodollar Coffin

Submitted by Tyler Durden on 10/09/2015 22:14 -0400

http://www.zerohedge.com/news/2015-10-09/another-petro-state-throws-towel-last-nail-petrodollar-coffin

Submitted by  Eugen von Böhm-Bawerk  of Bawerk.net

Another Petro-State Throws In The Towel - The Last Nail In The Petrodollar coffin

Source: Norwegian Ministry of Finance, Bawerk.net

According to the proposed budget submitted by the current ‘blue-blue’ government the Norwegian deficit will reach another record high in 2016. Mainland taxes are expected to bring in 1,008 billion NOKs, while expenditures are estimated at 1,215 billion NOKs. In other words, 2016 will be another year of record mainland deficit which need to be covered by the offshore sector and its 6,900 bn NOK sovereign wealth fund (SWF).

While record mainland deficits covered by the petroleum sector is nothing new in Norwegian budget history, on the contrary it is closer to the norm, the 2016 budget did raise some eyebrows. The other side of the ledger, the net inflow to the SWF from activities in the North Sea will, again according to budget, be lower than the required amount to cover the deficit. This has never happened before and is testimony of the sea change occurring in the world of petrodollar recycling. Interestingly enough, the need to liquidate SWF holdings is helping to create further deflation in the Eurodollar system in a self-reinforcing loop.

As Eurodollar liquidity dries up and consequently pushes up the price of actual dollar (note, Eurodollars are international claims to domestic US dollars but for which no such dollars actual exists) the problem for petro-states compounds. One way this manifest itself is through international purchasing power of prior savings. A SWF as the Norwegian was created through a surplus of exports over imports meaning it can only be utilized through future imports over exports. When the Norwegians look at their wealth expressed in Norwegian kroner it all looks fine, but expressed in dollars the SWF has shrunk considerably in size. Thus, the surfeit imports expected by the Norwegian populace cannot be met. Norway rode high on a wave of liquidity which pushed up commodity currencies, leading Norwegians to consume more imported goods today, without realizing they were tapping into the principal of their future. When the tide turns the gross misconception is revealed.

Source: Norwegian Ministry of Finance, Central Bank of Norway, Bawerk.net

The Government claims it is all fine though. The current down-cycle will, according to them, end early 2016 so despite a 2 percentage point reduction in corporate- and personal income tax, mainland tax revenues are expected to increase 1.9 per cent.  That is obviously a pipedream, just as the expected 17.9 per cent increase in interest and dividend income which will make sure the SWF continue to grow at a healthy pace despite the massive mainland deficit.

Assuming oil prices remain low, mainland tax revenue will plummet as they are very much a function of what goes on offshore, while expenditure will rise as they do in all welfare states during a down cycle.

If we are right, a global recession is imminent, meaning the expected increase in dividend income will never materialize.

In other words, the drawdown of the SWF will exceed its inflow even after adding financial income flows. The last remnant of the petro-dollar will thus die in 2016.

For a country 100 per cent dependent on continued leverage in the Eurodollar system the absolutely best case scenario is for the US economy to grow just slowly enough for international monetary policy to again realign; reducing the value of the USD through continued ZIRP in the US.

Robust growth in the US will prompt Yellen to hike, spiking the dollar (as Eurodollar claims scramble for actual dollars) while paradoxically a recession in the US will lead to the exact same outcome. The goldilocks scenario of 1-2 per cent growth is the best that the Norwegian government can hope for. It will minimize the gap between the lies and propaganda spewed out by the Ministry of Finance and reality.

Russia Is #1 in the World Now; U.S. Fights to Win Long-Term

Posted on October 9, 2015 by Eric Zuesse.

http://www.washingtonsblog.com/

Eric Zuesse, originally posted at strategic-culture.org

On October 7th, Reuters headlined, “Iraq Leans Toward Russia in War on Islamic State,” and reported, from Baghdad, that, “Iraq … wants Moscow to have a bigger role than the United States in the war against the militant group, the head of parliament’s defense and security committee said on Wednesday.”

Earlier, in an interview in English, with Iraqi Prime Minister Haider al-Abadi, telecast on October 2nd, France24 TV asked him how he would view an extension of Russia’s anti-ISIS bombing campaign into Iraq, and he said (7:54), “I would welcome it.”

This isn’t merely a culmination of U.S. President George W. Bush’s overthrow of Iraq’s leader Saddam Hussein in 2003 — an event twelve years back, and so this is a twelve-year culmination on that count alone — but it is also an unequivocal statement from the majority-Shiite nation of Iraq, that the U.S. is too heavily committed to the rabidly fundamentalist Sunni royal family of Saudi Arabia (who provide the overwhelming bulk of the funding for Al Qaeda and other jihadist movements), to be willing to do what must be done in order to defeat in Iraq the Sunni extremists who have destroyed Iraq, and who are nowpossibly turning Iraq into a failed state, like Libya has become after NATO’s bombing campaign there in 2011. (Qaddafi, like Assad, was an ally of Russia.)

The Reuters report went on: “‘In the upcoming few days or weeks, I think Iraq will be forced to ask Russia to launch air strikes [in Iraq], and that depends on their success in Syria,’ Hakim al-Zamili, a leading Shi’ite politician, told Reuters in an interview. … ‘We are seeking to see Russia have a bigger role in Iraq. … Yes, definitely a bigger role than the Americans,’ Zamili said.”

On Tuesday 10 February 2015, Iraqi News, whose claim to fame is non-alliance with any political party, bannered, “Parliamentary Commission on Security and Defense reveals documents on coalition aircrafts aiding ISIS,” and reported:

The Parliamentary Commission on Security and Defense revealed Tuesday, that there are many documents and photographs confirming that the international coalition aircrafts delivered aids, weapons and supplies to ISIS using parachutes. …

Committee Chairman MP Hakim Zamili said in a press conference at the House of Representatives, … “Our armed forces, volunteer fighters, Peshmerga and tribesmen have achieved victories against the ISIS organization in all operations,” noting that, “Meanwhile, we keep finding documents, pictures, and information confirming that the coalition aircrafts violate the Iraqi sovereignty and the international norms in order to prolong the war with ISIS by providing it with aid by air or on land.”

“We have been receiving this information continuously from many sources, documented in photos and reports to prove that the planes did land at some airports in Mosul, Tal Afar, Al Kiara, and Araf Lahib areas in Kara Tepeh in Diyala and Yathrib, in addition to Dhuluiya village, Fallujah Stadium in Anbar desert,” Zamili stated.

“The monitoring reports and available photos show ammunition, weapons and supplies being delivered by parachutes,” he added.

Already on 20 January 2015, the astute Michael Snyder had managed to lay out the case that, “We have the most sophisticated military on the entire planet and yet we drop weapons into the hands of the enemy by mistake? Come on.”

The United States Government, which had invaded Iraq and killed its former leader, Saddam Hussein, blames the success of ISIS in Iraq, on the failures of Iraqis. Not at all on anything that’s wrong with U.S. operations — not even on the ‘errors’ in dropping weapons into ISIS territory.

But, America had created ISIS; Iraqis had not. Saddam Hussein had prevented ISIS; he blocked all jihadists from operating in Iraq — they all wanted to overthrow him. ISIS had not even existed prior to 2006 (three years after the U.S. invasion), when it was started by Abu Musab al-Zarqawi and Sbu Ayyub al-Masri. (Zarqawi was Jordanian; Masri was Egyptian. There was also a fictitious third founder, Abu Omar al Baghdadi, in order to provide a mythological Iraqi root to this ‘Iraqi’ — actually Saudi — political ‘movement’). According to the Washington Post, Zarqawi “served as Osama bin Laden’s proxy in Iraq, attracting hundreds if not thousands of foreign fighters under the al-Qaeda banner.” Of course, the Saudi royals had co-founded al-Qaeda (working through the CIA and Osama bin Laden) in order to defeat the pro-Russian Afghan government of Nur Muhammad Taraki back in 1979. (Russia is perhaps Saudi Arabia’s chief competitor in international oil-and-gas markets; the U.S.-Saudi alliance is an anti-Russian alliance.) And, so, the Saudi royals massively fund the jihadist movement (the same movement that finally expelled Russia from Afghanistan), which the U.S. secretly supplies. This ‘Western’ support of Sunni extremists is antagonizing Shiites in the predominantly Shiite nation of Iraq. The Iraqi public are now the angriest and almost saddest of any nation on Earth.) Therefore, Zamili has publicly invited Russia into Iraq, and invited America out of Iraq. America in Iraq was even more disastrous thanAmerica in Iran had been. (Both cases generated surging fundamentalism, which means catastrophe anywhere.)

Although Zamili is Shiite, and Saddam was a nominal Sunni but actually committed to keeping religionout  of politics altogether, Zamili is facing the same enemy that Saddam did, which is the U.S.-Saudi alliance.

Secularism is at the core of the Ba’ath Party, which ruled in both Syria and Iraq. Here is an example of that, from Karsh & Rautsi, 1991 Saddam Hussein: A Political Biography (Diane Books), p. 142:

A few months later [in 1978], Saddam delivered a speech in which he vehemently rejected calls for compromising the [Ba’th] Party’s staunch secularism as a means of accommodating the growing Islamic sentiments. “What we must do,” he argued, “is to oppose the Revolution’s intrusion into religion. Let us return to the roots of our religion, glorifying them — but not introduce it into politics.”

One of the reasons why Saddam loathed the Shiite fanatics who were rooted in Iran and who took over there in 1979 (after America’s dictatorship under the Shah ended) was that they were fundamentalists. He was at war against all fundamentalists, of all faiths. The only difference between Shiite fundamentalists and Sunni fundamentalists is that only the Sunni fundamentalists believe in ‘restoring’ ‘the Caliphate’ — a potentially global Islamic empire, so that everyone in the world will bow down in the direction of Mecca, Saudi Arabia. For a Shiite to support that worldwide Islamic government would be equivalent to that person’s converting to the Saudi version of Islam, especially its Wahhabist or Salafist form, which is the royal family’s form.

So: the United States is allied with the Saudi royal family’s political movement, against Russia, and against Iran — and, therefore, against Ba’athist Syria, which allies with both Shiite Iran and secular Russia. (NOTE: When nations are at war against one-another, it’s actually their respective aristocracies that are at war; their publics are just cannon-fodder to be fed propaganda and bullets for the enterprise, killing one-another. Only for an authentic democracy is war actually the last resort — after all, it’s noaristocracy  at all. But aristocratically controlled countries seek out war, in order to extend their empires — the only ‘first resort’ there will be insincere diplomacy, so as to achieve the conquest as cheaply as possible: without war if possible, but with war if conquest can be attained in only that way; i.e., if diplomatic deception can’t suffice alone.)

An Iraq that has moved more firmly into the Iranian camp is moving toward Russia and away from the United States; and that’s today’s Iraq.

On 24 May 2015, U.S. Secretary of Defense Ashton Carter, said, “Iraqi forces showed no will to fight,” though they “vastly outnumbered the opposing force.” Obama was now openly contemptuous of the Iraqi people. However, on both sides (U.S. and Iraq), the heads of state were not talking publicly about the crumbling relations.

So, now, Iraq is, in fact, turning to Russia, which U.S. President Barack Obama has in his second term been treating as America’s main enemy (despite having campaigned for President against  Mitt Romney’s calling Russia “our number one geopolitical foe”). He calls Russia the main aggressor in the world for its having accepted the results of the Crimean referendum to switch from Ukraine to Russia.

On September 25th, Fox News issued an exclusive news report headlined, “Russians, Syrians and Iranians setting up military coordination cell in Baghdad”; and, instead of denying it, Russia’s Sputnik News simply bannered, “Russia, Iran, Syria Reportedly Set Up Joint Center in Baghdad to Fight ISIL,”and cited this Fox News report as its source. The only difference between the two articles is that Fox’s was slanted against Russia, and it presented two retired sources within the U.S. government as making the assertions (including their framing it with anti-Russian propaganda), whereas Sputnik’s version stripped out Fox’s anti-Russian propaganda and focused only on the fact, which was stated in both headlines (theirs and Fox’s). So, the only quotable sources on this allegation were the U.S. government retirees who spoke to Fox (based on their inside sources), but the Russian government transmitted the allegation — the fact itself — with no modifications, thus confirming the fact that was alleged. It’s more tactful to do it this way, instead of having heads-of-state, in Iraq, Iran, and Russia, step in and proclaim publicly that the American Century is over.

Ashton Carter was equally arrogant about Russia. On October 7th, the Wall Street Journal bannered,“U.S. Rules Out Strategic Collaboration With Moscow in Middle East,” and quoted Carter as saying: “We are not prepared to cooperate in strategy which, as we explained, is flawed, tragically flawed, on the Russians’ part. The U.S. is not cooperating with Russia in that regard.” Insulting Iraqis wasn’t enough. Russian officials weren’t speaking in similarly contemptuous language about the U.S., as U.S. officials were speaking about Russia — and also about Iraq. It seemed that U.S. bullies were peevishly responding to getting trounced by a party (Russia) they constantly assaulted but couldn’t even get a rise out of.

This doesn’t mean that the American public cannot recover; it means that the American aristocracy can’t — unless, perhaps, this sort of thing can turn matters around, not on the political battlefields, but on the economic ones. (The only trouble there is that the more the U.S. aristocracy wins there, the more defeated the global publics will be, everywhere — and this would include Russia, China, and every nation, including the U.S. itself. This would be a terrifying global empire, achieved entirely by diplomacy. Tyranny can enter even on cats’ paws, not only with lions’ roars.)

Tyranny that enters via diplomatic means can be just as tyrannous, though perhaps less destructive, than one which enters via nuclear war (the end-point that Putin’s tactics thus far seem to be successful at averting — but, given his peevish opponents, might not be able to continue doing so).

—————

Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

How The Chinese Will Establish A New Financial Order

Submitted by Tyler Durden on 10/05/2015 20:30 -0400
http://www.zerohedge.com/news/2015-10-05/how-chinese-will-establish-new-financial-order
Submitted by Porter Stansberry via InternationalMan.com,
For many years now, it’s been clear that China would soon be pull­ing the strings in the U.S. financial system.
In 2015, the American people owe the Chinese government nearly $1.5 trillion.
I know big numbers don’t mean much to most people, but keep in mind… this tab is now hundreds of billions of dollars more than what the U.S. government collects in ALL income taxes (both cor­porate and individual) each year. It’s basically a sum we can never, ever hope to repay – at least, not by normal means.
Of course, the Chinese aren’t stupid. They realize we are both trapped.
We are stuck with an enormous debt we can never realistically repay… And the Chinese are trapped with an outstanding loan they can neither get rid of, nor hope to collect. So the Chinese govern­ment is now taking a secret and somewhat radical approach.
China has recently put into place a covert plan to get back as much of its money as possible – by extracting colossal sums from both the United States government and ordinary citizens, like you and me.
The Chinese “State Administration of Foreign Exchange” (SAFE) is now engaged in a full-fledged currency war with the United States. The ultimate goal – as the Chinese have publicly stated – is to cre­ate a new dominant world currency, dislodge the U.S. dollar from its current reserve role, and recover as much of the $1.5 trillion the U.S. government has borrowed as possible.
Lucky for us, we know what’s going to happen. And we even have a pretty good idea of how it will all unfold. How do we know so much? Well, this isn’t the first time the U.S. has tried to stiff its foreign creditors.
Most Americans probably don’t remember this, but our last big currency war took place in the 1960s. Back then, French President Charles de Gaulle denounced the U.S. government’s policy of print­ing overvalued U.S. dollars to pay for its trade deficits… which allowed U.S. companies to buy European assets with dollars that were artificially held up in value by a gold peg that was nothing more than an accounting fiction. So de Gaulle took action…
In 1965, he took $150 million of his country’s dollar reserves and redeemed the paper currency for U.S. gold from Ft. Knox. De Gaulle even offered to send the French Navy to escort the gold back to France. Today, this gold is worth about $12 billion.
Keep in mind… this occurred during a time when foreign govern­ments could legally redeem their paper dollars for gold, but U.S. citizens could not.
And France was not the only nation to do this… Spain soon re­deemed $60 million of U.S. dollar reserves for gold, and many other nations followed suit. By March 1968, gold was flowing out of the United States at an alarming rate.
By 1950, U.S. depositories held more gold than had ever been assembled in one place in world history (roughly 702 million ounces). But to manipulate our currency, the U.S. government was willing to give away more than half of the country’s gold.
It’s estimated that during the 1950s and early 1970s, we essentially gave away about two-thirds of our nation’s gold reserves… around 400 million ounces… all because the U.S. government was trying to defend the U.S. dollar at a fixed rate of $35 per ounce of gold.
In short, we gave away 400 million ounces of gold and got $14 billion in exchange. Today, that same gold would be worth $620 billion… a 4,330% difference.
Incredibly stupid, wouldn’t you agree? This blunder cost the U.S. much of its gold hoard.
When the history books are finally written, this chapter will go down as one of our nation’s most incompetent political blunders. Of course, as is typical with politicians, they managed to make a bad situation even worse…
The root cause of the weakness in the U.S. dollar was easy to understand. Americans were consuming far more than they were producing. You could see this by looking at our government’s annual deficits, which were larger than ever and growing… thanks to the gigantic new welfare programs and the Vietnam “police ac­tion.” You could also see this by looking at our trade deficit, which continued to get bigger and bigger, forecasting a dramatic drop (eventually) in the value of the U.S. dollar.
Of course, economic realities are never foremost on the minds of politicians – especially not Richard Nixon’s. On August 15, 1971, he went on live television before the most popular show in Ameri­ca (Bonanza) and announced a new plan…

The U.S. gold window would close effective immediately – and no nation or individual anywhere in the world would be allowed to exchange U.S. dollars for gold. The president announced a 10% surtax on ALL imports!

Such tariffs never accomplish much in terms of actually altering the balance of trade, as our trading partners simply put matching charges on our exports. So what actually happens is just less trade overall, which slows the whole global economy, making the impact of inflation worse.

Of course, Nixon pitched these moves as patriotic, saying: “I am determined that the American dollar must never again be a hos­tage in the hands of international speculators.”

The “sheeple” cheered, as they always do whenever something is done to “stop the speculators.” But the joke was on them. Within two years, America was in its worst recession since WWII… with an oil crisis, skyrocketing unemployment, a 30% drop in the stock market, and soaring inflation. Instead of becoming richer, millions of Americans got a lot poorer, practically overnight.

And that brings us to today…

Roughly 40 years later, the United States is in the middle of anoth­er currency war. But this time, our main adversary is not Europe. It’s China.

And this time, the situation is far more serious. Our nation and our economy are already in an extremely fragile state. In the 1960s, the American economy was growing rapidly, with decades of expansion still to come. That’s not the case today.

This new currency war with China will wreak absolute havoc on the lives of millions of ordinary Americans, much sooner than most people think. It’s critical over the next few years for you to understand exactly what the Chinese are doing, why they are doing it, and the near-certain outcome.

This Is Not A Drill: India, Russia And Thailand Prepare For Currency War

Submitted by Tyler Durden on 08/11/2015 11:22 -0400
http://www.zerohedge.com/news/2015-08-11/not-drill-india-russia-and-thailand-prepare-currency-war
When China sneezes, the world catches a cold. Alternatively, when China devalues, the rest of the (exporting) world scrambles to not be the last (exporting) nation standing, and to do so next, before everyone else does.
Case in point, at least three major emerging market nations announced they are bracing for currency war.
First India, where NDTV ask rhetorically "How China's Devaluation of Renminbi Impacts India" and answers:

1) The Indian rupee slipped to a two-month low of 64.26 against the US dollar on Tuesday tracking the devaluation of the renminbi. Other currencies such as the Australian dollar and the South Korean won also lost ground.

2) The over 0.5 per cent fall in the rupee weighed on traders' sentiments, resulting in a drop in equity markets. Both the BSE Sensex and the Nifty traded with 0.4 per cent losses.

3) According to SV Prasad of Chime Consulting, renminbi's devaluation may push the Reserve Bank of India to cut interest rates in India. Lower interest rates will put off foreign investors and will further weaken the rupee, he added.

4) However, fund manager Sandip Sabharwal said India should not be too worried about the devaluation in renminbi. "Analysts are out with predictions of how a 1.5 per cent fall of Chinese currency will lead to a sharp increase in dumping etc. However the Indian rupee has also fallen nearly 0.8 per cent in sympathy and is now down 5 per cent over the last one year. It is hard to see a major impact of this on Indian stock markets or the economy unless yuan depreciation becomes a trend which seems unlikely at this stage," he said.

5) A fall in the value of the rupee is good for Indian exporters and sectors such as IT and pharma are seen gaining from the depreciation in the rupee. IT stocks were the top performers in stock markets today. However, China-focused Indian companies saw selling pressure because the devaluation of renminbi will make imports costlier in the country. As a result metal stocks saw selling pressure and underperformed broader markets.

Then there is Thailand, where the senior executive vice president of the Stock Exchange of Thailand, Pakorn Peetathawatchai, said that "China is a very important market and a weaker yuan makes our exports there more expensive." He added that weaker yuan also increases travel costs for Chinese tourists.
Well, yes, it's called "war" for a reason.
Finally, there is Russia whose economy is already in a tailspin now that the dead cat bounce in oil has ended, and where moments ago RIA said that the Yuan devaluation puts pressure on RUB, other EM currencies.  Still, the Russian Economy Ministry sees no domestic factors for ruble devaluation, RIA adds even as it admits crude prices to stay under pressure in 2015.
We give Russia, Thailand and India (as well as the rest of the EM countries, actually make that all countries, the US included) at least a few days (hours may suffice) before they all realize that in a beggar-thy-neighbor global currency war, where the ZIRP (or NIRP) liquidity trap is already stalking at least half of the entire world, there really is no choice.
Expect a dramatic surge in interest rate cuts over the next several weeks as the rest of the world realizes this is not some bad dream and responds, and the tit-for-tat FX defection regime (also known elsewhere as "war") goes thermonuclear.