In India today, 84 percent of “workers” make less than $US 2 per day. In China, the number is 42 percent. In Brazil, it is 15 percent and in Russia, it is 2 percent. In the US, the federal minimum wage is $US 7.25 per HOUR. Over an eight-hour day, that works out at $US 58.00. Most if not all of those working for less than $US 2 per day in the four nations mentioned above work more than 8 hours a day.
Please note that these four nations - Brazil, Russia, India and China - are the “BRIC” nations. They rank first, second, fifth and ninth in terms of world population. Two of them, China and India, are the two most populous nations on earth with almost 37 percent of the global population between them. The BRIC nations are often singled out as the coming global economic powerhouse, the nations which are and will increasingly drive world economic “growth” in future. In recent surveys done in the US, they were seen as being a better investment bet than is the US itself.
The majority of the “ordinary” people in ALL these nations, but in India and China in particular, are still living in a coin economy. They still conduct their transactions the way the whole world did until the 1920s or 1930s and the way that all but the richest nations (the US and Canada in particular) did until the mid 1960s. Coined money is not a nuisance to these literally billions of people, it remains money itself.
Economic Goods Are REAL THINGS:
There are billions of people throughout the world who still operate all but exclusively with a coin-based monetary system. If there is one thing these people know, it is that there is no such thing as economic
“growth” through consumption and debt. These people know that they must produce before they can
consume and that they are not in a position to take on any debt for any purpose whatsoever.
These are the simple economic and financial truths which have long since been forgotten in the
“developed” world. What has “developed” in this world is the mirage that production and savings are no longer required. In a coin-based economy, the fundamental function of money as a medium of exchange is taken for granted as stark reality. In a paper and debt based economy, that function is lost sight of. The fundamental reason for this is that nobody ever actually sees or handles what they are spending.
The IMF/World Bank Meetings: Tilting At Windmills:
In a world where more than half the ADULT population lives and functions on $US 2 per day or less, we are faced with a debt situation in which the amounts at “risk” in the US alone are in the hundreds of $US TRILLIONS. Taken globally, the amount of debt is much higher than that. No more ridiculous financial or monetary situation has ever existed in the history of the world. To call it “unsustainable” (a word which Fed Chairman Bernanke recently resorted to in a speech to Congress) is laughably inadequate.
To imagine that even the tiniest fraction of all this debt can ever be “repaid” in money which retains the purchasing power it had when the debt was contracted is simply laughable. But what is not funny at all are the lengths that the global financial potentates are willing to go to in order to keep this fairy tale alive.
The latest and most obnoxious example of this was laid out in front of the world at the IMF/World Bank meetings in Washington DC. The next “episode” will come at the G20 meetings in South Korea. The issue, as it has come to be defined by the global financial press in recent weeks, is “currency wars”.
What Other Choice Is There??:
In the hundreds of articles appearing in the mainstream financial press all over the world and especially the English-speaking world, one headline stood out. It was this - “Currency wars are necessary if all else fails”. The headline appeared in the October 11 edition of the UK Telegraph.
The contents of the article are not germane. What is germane is the naked contention that the nation or nations which will emerge the “strongest” from the current financial malaise is the nation or nations which succeed in devaluing their currency faster than any other. Only in that way can the “currency wars” be won. If these “wars” develop further, they will become a race to see who can come up with a worthless currency faster than anybody else. The 1930s coined the phrase “beggar thy neighbour”. Today, the financial potentates have gone one better. They are working on a “beggar thyself” policy.
Co-operative debt-based stimulus didn’t “work” and neither have “austerity” programs, according to the IMF. Their “World Economic Outlook” comes to the conclusion that the world can neither “stimulate” its way out of the current GFC nor get there via “austerity” programs. And it isn’t too sanguine on the prospects of currency wars either. As the IMF report noted: “Not all countries can reduce the value of their currency and increase net exports at the same time”. After all, they tried that in the 1930s. The only thing that “saved the day” then was a REAL war, not one on the foreign exchanges.
But still, the global financial potentates keep thrashing around inside their own context looking frantically for a way to overcome their plight. As they want the citizens of the nations they “represent” to see it, they have no choice. If they for one second admitted that the entire system as it is presently constituted is deficient by its very nature, they would instantly have the “social instability” they are warning us against. . .
Ever since the US Fed announced a cautious second chance of straight (no chaser) money printing (aka “quantitative easing”) at their August 10 FOMC meeting, markets everywhere have gone haywire. In the US, after a 260 point relapse immediately after the FOMC announced its plan, the Dow has forged steadily ahead. On October 8, the index closed above the 11,000 level for the first time since the height of the Greek sovereign debt crisis in April. US Treasury yields have plummeted right alongside with two year yields falling below 0.50 percent within days of the Fed’s announcement and recently dropping as low as 0.26 percent - on the same day as the Dow breached the 11000 barrier.
On the “flip side”, the US Dollar has been trending inexorably lower and $US Gold has been setting new records on an almost daily basis for the past month. Money flows globally have been manic, with “emerging” stock markets booming and currencies everywhere rising against the US Dollar. Capital controls have been put in place in many nations, as have taxes on foreigners buying sovereign debt.
Those who “trust” government are flocking into Treasuries and, to a lesser extent, into US stocks. Those who don’t are buying precious metals, commodities of all descriptions, and anything they can find anywhere which offers a yield.
Ó 2009 – The Privateer
(reproduced with permission)
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