Fed Reserve Wants Free Trade 'Inflation Fixer-upper'

June 23, 2008

Elaine Meinel Supkis

Free trade goes bonkers! Instead of using sensible tariffs and barriers to control trade, the US floating currency system uses the relative value of the dollar and grinding, terrible recessions to fix things that could be easily fixed the old fashioned way. But we are being warned, stopping the flood of imports will CAUSE INFLATION! Well, hate to say this, but if inflation bothers our bankers at the Fed so much, why aren't they raising interest rates and reserve ratios like China is doing? Eh? But no, we 'fix' excess liquidity by exporting US labor industries. Talk about insane. We visit Toyota today to see how this works.

Bernanke's Inflation Cure Loses Potency as Import Costs Rise

(Bloomberg) -- What's good news for U.S. businesses may turn out to be bad news for Federal Reserve Chairman Ben S. Bernanke's fight against inflation.

The surging oil prices that are raising exporters' costs to ship everything from steel to sofas to America are encouraging customers to buy more domestically made goods -- and giving the producers of those goods more room to raise their prices.

The result: As Bernanke and fellow policy makers meet in Washington this week, they may find themselves starting to lose the benefit of the flow of inexpensive imports the chairman cited in a June 3 speech as a key force holding down living costs.

``It's changing global costs,'' says Jeffrey Rubin, chief economist at CIBC World Markets in Toronto. ``It's a huge inflationary threat.''

Lord preserve us! These men are all TRAITORS. Bankers create inflation then tell us to eat this inflation in various ways that weaken our nation fatally. Why, if we ship all our labor-value-added industries and as many services as possible to other nations that have cheaper labor, why, things will be cheap here, eh? Only one fly in this ointment: the workers here see falling wages and even if things are 'cheaper' they are still increasingly out of reach of the workers! Duh!

Japan fought off inflation by cutting wages at home with ruthless efficiency. This still didn't kill the real rate of inflation but it certainly fixed Japan's trade problems! The Japanese workers are now so poor, they increasingly can't buy much of ANYTHING! And the fix for inflation the ruling elites there are thinking of using is to drop taxes Toyota pays and increase the domestic sales tax as well as cutting services. Guess what?

In the US we see the Federal Reserve dropping interest rates far, far below the rate of inflation. And we see dropping wages and lost jobs and loss of buying power in the lower classes as well as the upper classes. The job losses in the financial industry are continuing and getting worse and worse. Citibank, for example, is laying off many more thousands of high-status workers. Usually, they fire the cheap labor first.

So we have dropping wages, loss of jobs and grinding down of the spending ability of the workers here just like in our ally, Japan. And like Japan, we see taxes on corporations being cut while all the hidden taxes on the working class are rising. Property taxes are way up, just for example. The hidden war tax that our mainstream media lies about so much has shot through the roof. Energy costs are killing us.

The US public isn't attacking Bernanke and his gang of thieves because we love cheap imported goods. We wish we could have more, not less. Just as unions have been attacked relentlessly for 'driving up inflation' so we see the concept of having even ANY American workers making stuff or doing things as 'inflationary.' This astonishing change in US values is utterly at odds with our ancestors. From 1781-1970, the US has been very protectionist. After the Great Depression, there has been a propaganda push to destroy all protective barriers. This has been amazingly successful. No one can earn an economics degree today without first being hammered with this bizarre propaganda story that trade protections in America caused the Great Depression!

I fight this idiot idea tooth and nail every day! One reader here mentioned that Mish, a very popular economics professor online, is furious that the US has finally set up a tiny barrier to Chinese pipes pouring into our nation! He thinks this will cause a Great Depression! I have said, based purely on economic data, the US struggled to protect itself from aggressive exporting by the bankrupt British Empire which tried to send its goods from all over the planet to the US. We had to set up many barriers to this starting in 1921 or we would have been stripped of all industries by 1940! The reason we could fight and win WWII was because we kept our industries intact behind a wall of tariffs and barriers! England should have sued for peace with the Germans and ditto, Germany, in 1915. Neither did this because both were being funded by the global banking houses that wanted this mad war to go on and on and on. It made the bankers very, very rich. And bankrupted Europe.

Europe has shown the ability to wage wars for long periods if bankers allow this. The 100 Years War and the Thirty Years War are two disgusting examples of this. Anyone who creates wars that are named after the number of years they rage is totally insane! And note that we are now prone to this, too!

Time to visit our mirror double, Japan.

Major Landlords Set Tokyo Office Rents High Amid Tight Supply

TOKYO (Nikkei)--Mitsubishi Estate Co. (8802), Mori Trust Co. and other large real estate companies are raising their office rents in Tokyo by an average of 15-20%, the steepest increase since the collapse of the bubble economy in the early 1990s, to reflect the low vacancy rate.
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JBIC To Lend Y1tln For Natural Resource Development In Australia

SYDNEY (Nikkei)--The Japan Bank for International Cooperation intends to lend roughly 1 trillion yen over the next five years to help finance natural resource development projects in Australia that involve Japanese companies, sources at the bank said Monday.
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Confidence Of Large Manufacturers Sinks To Record Low In April-June

TOKYO (Nikkei)--Rising materials costs caused the business confidence index of large manufacturers to decline to a record low of minus 15.2 in the April-June period, according to a government survey released Monday.
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Declining Car Use Forces Transport Rivals To Join Hands

TOKYO (Nikkei)--The transport sector is having to come up with new ways of getting from A to B as environmental awareness, fuel prices and perhaps even the cost of buying and maintaining a vehicle are pushing some commuters to rethink the way they travel.

I try to read the Nikkei News every day. It is a real eye-opener. Most of what passes for US analysis of Japan's economy are based on reading US news about Japan. Like much of our news, this is pure propaganda. And the Japanese will lie to US reporters without blinking an eye. Japanese industries enjoyed a golden era during this terrible 'depression' in Japan that hammered ONLY the working classes. The Japanese exporters have unilaterally decided to cut out the Japanese workers from all wealth sources and basically enslave them. This is working due to the fact that communist parties that flourished in the fifties in Japan have been utterly destroyed.

For a short while, Japanese businesses took care of workers and treated them kindly as 'family'. This was due 100% to the shadow of fear that the workers would revolt and take over. Slowly, as workers aged and got careless and let their unions die, as students ceased taking over Universities and agitating, as soon as everything got quiet in Japan, the industrialists counter-attacked. Under cover of the post-Plaza Accords bubble bursting, they ruthlessly suppressed worker's wages and increased hours. For a short while, the government spent wildly on public facilities and the social welfare got a lot of money.

Now, taxes are climbing rapidly, services are vanishing and the people there are being shoved literally off a cliff. The elderly are increasingly a problem. This is being dealt with via the 'put them on an ice floe and let them die' system. Most Japanese are no longer reproducing and therefore, there will be fewer or even no children to protect them when they cease being useful for the industrialist exporters who have taken over the country. This, dear readers, is the model the US rulers want for us! This is why I focus on Japan much more than China. China knows its own people are restive and difficult They fight back! Even under that dictatorship, they will resist the rulers sometimes with amazing risks and open fists! Koreans fight back, too. Literally, in the streets. Both are forces that give the rulers of these lands a great deal of sleepless nights.

But not in Japan! Or the US! We are sleepwalking the plank that ends with us falling into the ocean filled with sharks.

Japanese shares suffer big early losses

(MarketWatch) -- Japanese shares suffered big losses early Monday, extending their decline from the previous session, as exporters such as Toyota Motor Corp. and Nikon Corp. reacted to a strengthened yen and a decline on Wall Street. The Nikkei 225 Average lost 1.7% to 13,705.38, on top of the 1.3% drop Friday, and the broader Topix index gave up 1.7% to 1,333.77. South Korea's Kospi shed 1.7% to 1,702.27 and Australia's S&P/ASX 200 lost 1.1% to 5,229.20, while New Zealand's NZX 50 index slipped 0.3% to 3,273.68.

The investors in Japan know that Toyota and others depend on the US markets to make big profits. They may sell in Europe and China, for example, but the profit margins are much smaller! The US has had the ability to take on endless loans to buy Japanese imports. And these imports, far from being discouraged by our rulers, have been actively encouraged. Note how even Marketwatch now admits that the weak yen is a blessing to Japan and Japan works hard to insure this is the case! Only Marketwatch won't mention that little detail. Which is key to understanding banking, trade and our declining economy.

The Nikkei above, by the way, casually mentions that Japan is taking over Australia's commodity markets, buying out the stupid English Imperial settlers there and giving them a few AU dollars for precious resources. China is doing this too. All over the former British Empire, we see this. Is this happening to China or Japan?

NO! They are NOT letting ANYONE do this to THEM! DUH. Because the rulers are ruthless and vicious and know perfectly well that free trade is a poison and best served to stupid foreign devils who they hate because we tried to steal everything from them in the past! DUH. NEVER ever forget history. She has a long memory and writes in blood. Here are two charts I made showing the interrelationships of monetary changes, recessions and the different histories of Toyota versus General Motors:

Look! Toyota's stocks shot upwards AS GENERAL MOTORS FELL. The differential now is gigantic and growing by the hour. There are several elements to this but note how very much stronger Toyota is affected by small changes in financial values of floating currencies, negotiations by our ruling elites and our recessions! How obvious this all is! The Nikkei News mentions that more and more Japanese can't afford to own or buy cars anymore. They can't afford to drive them, either. So they are being forced out of the car culture. Toyota's stocks shot upwards WHILE JAPANESE COULDN'T BUY TOYOTAS! Is this our fate, too?

YOU BET IT IS.

Banks Trimming Limits for Many on Credit Cards

After fostering the explosive growth of consumer debt in recent years, financial companies are reducing the credit limits on cards held by millions of Americans, often without warning.

Banks that issue cards like Visa and MasterCard, as well as the American Express Company, are cutting the limits for customers who have run up big debts, live in areas that have been hit hard by the housing crisis or work for themselves in troubled industries.

Credit is now receding from US shores leaving free-spending Americans high and dry. We want more liquidity! We want more debts! But bankrupt people can't get this. Yet the time people want this the most is during times of rising inflation. And when do interest rates rise to prevent more loans? During times of rising inflation! This is a cruel, cruel system. The Fed is supposed to protect us from this cruel dynamic by preemptively raising interest rates whenever too many loans threaten to cause this inflationary spiral. Of course, the Fed does the exact opposite: it encourages and creates bubbles, not stops them. Arrest the Fed officers! Arrest them for treason.

NYT continues with this interesting sob story:

Many are already feeling pinched. Pamela Pfitzer, a family therapist with a stable six-figure income, was stunned when she went to a garden center near her home outside Sacramento in early April and tried to buy about $30 worth of flowers with her American Express card. Her transaction was denied, she says, even though she insists she had rarely missed a payment and had just made one for $1,000.

After inadvertently hitting her credit limit a few months ago and then falling behind on a mortgage payment, Ms. Pfitzer said her limit was lowered by American Express to $900 from $2,300. The flowers pushed her over the new cap.

Then last month it happened again, she says, when she tried to buy office furniture with her Wells Fargo Visa card. Although she had just made a payment of about $700, Ms. Pfitzer found out that her credit limit had been lowered to $2,000 from $2,800.

What the hell? This woman is a classic case: this dead beat who is so far in debt, she can't pay her mortgage regularly, she is out shopping? HUH? And is she buying necessities? Flowers and office furniture? I scavenge for stuff all the time. I grew up dumpster diving. For fun and profit. Much of my beautiful house was built from free, scavenged materials! Windows, doors, whole sections are free materials or gotten super-cheap from 'damaged goods' stores or I buy it from bankrupt people needing money.

This woman is totally irresponsible. She thinks she deserves credit even as she rings up greater and greater debts! And she is America! Our nation is up to our collective eyeballs in debts! And yesterday, I had to attack the Washington Post over their stupid article that made light of these debts. 'We are only running 3% of our GNP in red ink,' is the propaganda line being fed. Well, if the GNP falls, the percentage of debt to GNP shoots up, doesn't it? From 3% to 10% just for example! And who says we can run in the red all the time?

That leads eventually to bankruptcy. Note how the US Congress is exactly like this stupid woman buying flowers and furniture while deep in debt! We want China and Japan to bankroll our spending. We get mad when our credit line is reduced or cut off. But it will be both soon enough! It is inevitable. We can't go into debt forever. We can't run higher and higher trade deficits in order to destroy inflation caused by Asia extending us credit! This is IMPOSSIBLE.

Now for a good analysis from Mr. Schiff:

The Fed Unreserved
by Peter Schiff

What few economic leaders have acknowledged is that the Federal Reserve itself is responsible for the real estate and credit bubbles, which are the source of our current troubles. By keeping interest rates too low for too long, the Fed ignited a speculative fever and engendered a disregard for risk management that pushed asset prices above rational levels. Should we blame the private sector for taking advantage of all the cheap credit, or the Federal Reserve for supplying it? If a kindergarten teacher passes out handfuls of Pixie Sticks, and then leaves her classroom unattended for several hours, should we blame the five year olds for the hysteria that ensues?

The reality is that we should be restricting, rather than expanding, the powers given to the Federal Reserve. Since Greenspan, Bernanke and company have already inflicted so much damage with the weapons already in their arsenal, why provide them with heavier artillery? Only in Washington do those who screw up get rewarded for doing so.

Kisses to Schiff for telling the truth. A precious commodity here. He hopes for a gold standard just as I hope for it: to regulate the flow of CREDIT. He even hints at the need for old fashioned tariffs and barriers. Then there is this line which I love:

Mr. Schiff has some amusing analogies such as this one:

When it comes to economic performance during the past 150 years, the U.S. is the Big Brown of economies. 1858-1908 was the Kentucky Derby, 1908-1958 was the Preakness, and 1958-2008 was the Belmont Stakes.

Heh. I am not the only one to use the Triple Crown as a fable to explain things. He is correct here. Bravo. Do read the rest of his analysis. It is well worth the time.

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