Tuesday, December 25, 2012

Currency Wars Lead To Trade Wars Lead To World Wide Depression

Today the incoming Japanese Prime Minister Shinzo Abe followed through on his campaign promise to reflate the Japanese economy. He directed the Bank Of Japan to reach 2% inflation in the countries stagnant economy. Two percent does't sound very high? Fact is Japans inflation doesn't exist. Fact is the latest reading is -.4% So from there to 2% probably won't happen But it got him and his party elected and that's what he wanted.. During his campaign he pointed out that the  U.S. and the European Union's printing of money was the main problem for Japan's economic woes. The debased currencies of dollar and Euro were edging out Japan in the market place. Since most every major country in the world have similar products, it may come to just cost of goods and services as the deal maker or breaker.And that means relative currency valuations win the business. Trade has become a zero sum proposition There is just so many people and just so much discretionary income. ERGO .Gentlemen, start your printing presses.

And if cheap money doesn't do the trick? Then the next move by governments will be trade protection laws. That will lead to a contraction in global business and will force layoffs around the planet. Then the odds favor a depression and maybe a war being declared by the major economic powers to really generate business and instill brand loyality and to direct irate voter attention to foreigners and away from the local centarl governments.

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