recently the G7 Finance Ministers London Accord of 2013. This is seen by some – possibly many, as the first currency war declaration from the US. If so, then the current twin matching forces of the US Treasury plus the US Government’s Exchange Stabilisation Fund (with only USD 22 billion, or USD 44 billion total) seem poorly prepared. It may be assuming too much from too little (at this time) and hopefully not as former UN Ambassador John Bolton has said, ‘Politicians, like generals, have a tendency to fight the last war.’.
Inflation could be the ultimate cost, even a winner of a currency war...if indeed that’s what’s wanted. Maybe look at this further? In The Black Obelisk, end of Chapter One, Ludwig gives a great analysis of Germany in 1923, the cost between the traditional and new reality ‘
...allow us to give you another short analysis of the times. The principles by which you were raised are noble, but today they lead to bankruptcy. Anybody can earn money now; almost no one knows how to maintain its purchasing power. The important thing is not to sell but to buy and be paid as quickly as possible. We live in an age of commodities. Money is an illusion; everyone knows that, but many still do not believe it. As long as this is so inflation will go on till absolute zero is reached. Man lives 75% by his imagination and 25% by fact-that is his strength and his weakness, and that is why in this witch’s dance of numbers there are still winners and losers. We know that we cannot be absolute winners; but at the same time we don’t want to be complete losers. If the 750,000 marks you settled for today is not paid for 2 months, it will be worth what 50,000 is worth now..’. The synchronicity of the winners/losers theme in a currency
war...no possible absolute winners...hopefully no complete
losers...is not lost on me or you I hope.
I’ll leave you with a scene from The Hitchhiker’s Guide to the Galaxy, a book which deals with all parts of the human condition – even inflation. Chapter 32 of The Restaurant At The End of The Universe has a management consultant trying to explain to Ford Prefect a problem...’’Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich. “Ford stared in disbelief at the crowd who were murmuring appreciatively at this and greedily fingering the wads of leaves with which their track suits were stuffed. “But we have also,” continued the management consultant, “run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying one ship’s peanut.” Murmurs of alarm came from the crowd. The management consultant waved them down. “So in order to obviate this problem,” he continued, “and effectively revalue the leaf, we are about to embark on a massive defoliation campaign,
and...er, burn down all the forests. I think you’ll all agree that’s a sensible move under the circumstances.” The crowd seemed a little uncertain about this for a second or two until someone pointed out how much this would increase the value of the leaves in their pockets whereupon they let out whoops of delight and gave the management consultant a standing ovation.’. Burning books or forests was never the ultimate answer (that’s 42)...if only we understood the question...
Eddie Tofpik E:
eddie.tofpik@
admisi.com T: +44(0) 20 7716 8201
‘POLITICIANS, LIKE
GENERALS, HAVE A
TENDENCY TO FIGHT THE LAST WAR.’
5 | ADMISI - The Ghost In The Machine | January/February 2017
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