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Renminbi Devaluation Signals High Stress in China’s Economy



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Renminbi Devaluation Signals High Stress in China’s Economy - By Jeff Nielson

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Having covered the issue of “competitive devaluation” and currency-debauchment in considerable depth in recent commentaries, China’s “surprise devaluation” of the renminbi provides a practical, current example to illustrate the economic dynamics at work here.



First a brief summary of the concepts, for regular readers. For readers less-familiar with the economic fundamentals at work here; you can refer to previous commentaries for greater depth on the subject of currency-debauchment and how/why many of these paper, fiat currencies are already worthless, in fundamental terms.


“Competitive devaluation” is the official, economic policy of the entire (corrupt) Western bloc, and most of the world. It is literally a race to see which government can drive the value of its currency to zero, the fastest. Since having a currency with “zero” value represents the complete collapse/destruction of that economy, competitive devaluation is deliberate economic suicide. The official, economic policy of all of our governments is deliberate suicide.


However, despite all of the (Western) propaganda to the contrary, China has not been a practitioner of such suicide. For many years, the U.S. constantly accused China of “manipulating its currency” (lower), even though the U.S., itself, is the most-egregious currency manipulator in the history of humanity. To make that hypocrisy even more absurd, China’s currency (the renminbi) was rising – slowly – against the U.S. dollar all of those years.


Thus the gist of the (hypocritical) accusation made by the U.S. was that China wasn’t allowing its currency to rise fast enough – because of its “peg” to the dollar. Follow the anti-logic of the U.S. government here. The U.S. accuses China of “manipulating its currency”. But China’s currency is pegged to the dollar, meaning it shadows the dollar’s moves.


Therefore when U.S. hypocrites pointed to sudden/dramatic “moves” with the renminbi as being “proof of manipulation”, the dollar itself had to be moving in virtually an identical, “suspicious” manner. And because China’s peg copied the dollar’s moves, it meant that the U.S. was engaging in this manipulation first. The supposed “proof” which U.S. hypocrites claimed to possess about Chinese currency manipulation would equally prove American currency manipulation.


More recently, China has officially ended its peg to the dollar. It did so for one, obvious reason. It saw that the U.S. government (i.e. the Federal Reserve) was rapidly-and-totally destroying the value of the USD, in fundamental terms, thus it had to either end the “peg”, or copy that descent to worthlessness. The (very) familiar chart below depicts, in mathematically unequivocal terms, the complete destruction of the U.S. dollar.



This is the chart of a hyperinflated currency (past tense), denoted unmistakably by the extreme, exponential function depicted in this curve. However, as regular readers have heard, ad nauseum, hyperinflation “is a confidence event”. As long as people think the worthless currency has value, it continues to have an exchange-rate above zero. It’s only when the Chumps lose confidence in the worthless paper (i.e. the con) that the exchange rate matches the fundamental value of the currency: zero.


It is with this context in mind that we can now look (intelligently) at China’s decision to engage in an outright (but small) devaluation of the renminbi. The mythology fed to us by the Corporate media and the charlatan economists is that devaluing our currencies makes our economies stronger (otherwise, why are we doing it, “competitively”?).


The truth, as already noted, is entirely opposite. Strong economies have strong currencies, weak economies have weak currencies. Choose to have a weak currency, and you choose to have a weak economy. Unlike Western governments, however, China’s government is neither patently stupid, nor overtly suicidal. So why engage in this “suicidal” policy?


Put simply, devaluing one’s own currency is a bandaid for an economy, or perhaps “tourniquet” is the better metaphor, since like a tourniquet, it is a form of treatment intended only for an emergency (like ultra-low interest rates). By its very nature, the tourniquet can only be used for a very brief period of time before it starts to do substantial harm.


This analogy applies precisely to currency devaluation, because the (dubious) “benefits” of currency devaluation come immediately, while the (serious and hidden) costs of devaluation lag somewhat. What are the hidden costs? At the top of the list, we have wage devaluation. Reduce the value of the dollar, or the euro, or any other currency, and you reduce the pay (in real dollars) for every worker who is paid for his/her labour with that currency.


Competitive devaluation means permanently and continually cutting the wages of every worker in that economy, except for the Fat Cats at the top – who hand themselves pay-raises which exceed the rate of devaluation. For everyone else, competitive devaluation is institutionalized poverty. It is how these traitorous Western governments have transformed their Middle Class into the Working Poor.


Thus we see the cynicism of our own, corrupt governments now fully on display. By engaging in “competitive devaluation” as a constant, ongoing policy, we see these reckless Traitors doing the same thing here they are doing with every other facet of our economies: mortgaging our futures (with the crippling consequences of their suicide) to make “today” a little better. And all of this suicide is purely to facilitate the financial blood-sucking of the banking crime syndicate.


China does not do this. Competitive devaluation is not the official economic policy of China. Instead, as we see here, China is using this dubious economic tool as a (short-term) bandaid. In turn, this is overt acknowledgment by the government of China of severe economic stresses in its own economy, stresses significant enough for it to engage in this mortgage-the-future-for-today policy.


This is about the closest we ever see the government of China come to “panicking” economically. This is entirely in contrast to Western governments, which (since 2008) have operated in a permanent state of panic, irrespective of what is claimed by the lies of the Corporate media. We know our governments are engaged in (permanent) “crisis management” because they leaped towards the most-extreme economic policies possible (ultra-low interest rates, currency devaluation) and have made these ultra-extreme policies permanent.


Why does China’s government rarely demonstrate anything remotely resembling panic? Because its economy is a “planned economy” (meaning in practical rather than ideological terms). China has a plan. And (unlike the West) that “plan” is not suicide. It is because China’s government has a positive, long-range plan for its economy that there is rarely a need for panic-reactions – because it is moving in the right direction.


Then we have the West, which has no plan, except self-destruction. Thus the moment we hit some “pot-hole” in the road (i.e. the banking crime syndicate detonating the bubbles they are constantly creating), these corrupt, puppet-governments immediately plunge into “crisis” mode. When you’re already drowning, sinking deeper into the water is an immediate problem.


What could have thrown the careful economic planning of China’s government into awry, in 2015? (More) U.S. economic terrorism. This specific topic was just covered in a recent commentary, which noted that dozens of U.S. traders had their accounts “suspended”, and were under investigation by Chinese authorities for acts of economic terrorism in China’s stock market.


Regular readers are also familiar with the “tool” used by the banksters for this form of economic terrorism: their Pied Piper “trading algorithms”. The manipulative power (and potential) of these obviously illegal computer programs is now out in the open, yet only now do we finally see one government (China) taking action to “investigate” (and ban?) these illegally manipulative trading algorithms.


Now (finally) we have cause-and-effect. It is the vicious attack on China’s economy (first creating a “bubble” with these trading algorithms, then detonating it) which has thrown off China’s meticulous economic planning, and (apparently) necessitated the “emergency measure” we see today.


However, there is a second explanation which is also plausible. Instead of this being a reactionary move (to more U.S. economic terrorism), it could also be interpreted as a preemptive move. In other words, instead of China’s government “reacting” to the economic terrorism being perpetrated by the U.S. (and its banker overlords) today, it could be preparing for the economic terrorism which they are about to unleash.


The Next Crash (in our own economies) is almost certainly timed – by the bankers – for late this year, or early next year. We know this because the bubble-and-crash cycles perpetrated by these financial psychopaths have fallen into an eight-year pattern. In turn, this eight-year bubble-and-crash cycle is designed to mirror the U.S. election cycle.


After one of the puppet-parties has served (the bankers for) its eight-year term, the banksters time their crash so that the outgoing puppet gets fingered as the scapegoat. Then the other puppet-party is brought back into power, after being “exiled” for eight years following their own turn as scapegoat. This clumsy strategy shouldn’t fool a population of eight-year-olds (more than once), yet it fools the U.S. electorate every time.


China’s government is worried. We know that much with certainty, as this is the closest we ever see that government come to panicking, economically. What is not totally clear today, however, is whether this (responsible) government is “worrying” about what is already happening today, or about what is going to happen – tomorrow.




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