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Jim Cook



Every once in a while I switch the TV channel from Fox to CNBC to see what the liberals are saying.  After listening awhile I get a deep sense of hopelessness and foreboding for our country.  The most important thing for the left is giving money to people.  They are happy to see the growth of food stamps, disability payments, housing subsidies, free healthcare and all the other welfare benefits.  They utterly fail to see the damage it is doing to the recipients.  Whole cities that once flourished have deteriorated into rotting eyesores populated with shambling hulks of chemically dependent drones.  These people are no longer employable.  They have become incompetent and helpless and the liberals can’t see that it’s their doing.

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The Best of Jim Cook Archive

Best of Andy Sutton
November 22, 2010
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Perhaps the most ironic occurrence in the early stages of the currency war is the exhortations by American politicians and central bankers. They are demanding that China allow its currency to appreciate, which would in effect make it easier for American companies to export to China. We do export a significant amount of heavy equipment to China, as does Germany. After all, someone needs to provide the Chinese manufacturing machine with capital equipment.

But there is much more to this than meets the eye and that is where we all need to be paying attention. Think about what Bernanke, and many members of Congress are asking for. When they demand that China allow their currency to appreciate, they are in effect demanding that the Dollar be depreciated. They are saying essentially “Yes Mr. Jiabao; we want the Dollar to be worth less so Mr. and Mrs. America will have to pay more for your imported goods when they go to the store”. This flies totally in the face of the robotic ‘A strong dollar is in the national interest’ phrase uttered by Hank Paulson in what seems to be an eternity ago now.

In this reality lies the essence of our current problem. We have a choice. Our government is taking a stance that we can create jobs by depreciating the Dollar and somehow that is going to overcome the massive increase in costs of imports. This might work if we weren’t such an import-driven society, but that is certainly not the case. And it isn’t just the Chinese we import from either. Think crude oil and refined gasoline products. At current import rates and oil prices, we import almost $900 Million per day just in petroleum. That is around $27 Billion per month. We’ve seen what the devaluation of the Dollar has done to the jobs picture in just the past five years. Does any person with two brain cells to rub together really expect this nonsense to work?

Strategic Assets Trump Cash?
We are reaching the point where I believe the quiet grab by the Chinese over the past decade in terms of strategic assets is about to pay off. Anyone who runs a manufacturing operation knows that stable input prices and supplies are a key component of that business’ long-term success. Obviously any manufacturing operation built using the petroleum paradigm is going to use plenty of black gold. The same goes for a world that is hooked on handheld gadgets and green technology. Most hybrid owners don’t realize the amount of exploration, provisioning, and drilling/mining that goes into finding the materials necessary to make the high tech components of their vehicles. The same goes for the owners of the vast majority of consumer electronics. We just don’t think about it. The Chinese have. By virtue of their location, they have roughly 95% of the world’s rare earth elements at their disposal. They’ve locked down supplies of crude oil to fuel their manufacturing empire, at least in the short to medium term. Who really thinks the United States is going to win a trade war, a currency war, or any type of economic war with the Chinese at this point?

Given these realities, and how all of these circumstances are woven together, we can already be pretty sure of how the great currency wars will turn out. Those with the advantages will use them and those at a disadvantage with posture, pander, and talk. But in the end, talk is cheap.