March 30, 2012
By Amaterasu Solar
In order to understand the very basis of money, it is best to contemplate how it developed in the first place.
Once society developed past the clan stage, when barter, trade and so forth arose, it became the practice to place value on the products of human energy expended. If one used one’s energy to build a bow, go out hunting, kill an animal, process the carcass, and transport the meat back to be traded or bartered for, this gave that meat value. The bow components were free, as was the animal. The same was true for the farmer, who expended meaningful energy in tilling, sowing, tending, harvesting, and, if need be, transporting what that farmer produced. The produce had value. Even the gatherer expended meaningful energy in seeking things to gather, then transporting the find back to be used as “money” for other things. The miner expended the meaningful energy to find the (free) ore, hew it out of the earth, and transport it.
From these beginnings, the practice of using coin and other objects arose to represent this meaningful energy expended when transporting large amounts of goods, as well using to acquire something another had but not having the specific thing the other wanted. And from this, humans went on to bills when coins and jewels and other objects became too cumbersome. And, lately, we have added electronic funds, as even bills are cumbersome in million unit, billion unit and trillion unit transactions. But the foundation of all these monetary units is the meaningful energy expended, whether human or resource-based (oil, coal, nuclear, etc.) energy.
Given this, it becomes clear that an addition of abundant energy — in the form of overunity (“free energy”) and robotics (to replace human energy in necessary work nobody wants to do), the need for money in any form — barter, trade, work exchange, coin, bills, electronic funds — becomes unnecessary.
October 4, 2011
By David Stanway and Aileen Wang
* Beijing accuses U.S. senate of “politicising” trade issues
* Warns of trade war, says bill would violate WTO rules
* Forcing the yuan higher would damage world recovery
* Says bill will not address underlying economic problems (Adds analyst quote, Xinhua commentary, links)
An angry China warned Washington on Tuesday that passage of a bill aimed at forcing Beijing to let its currency rise could lead to a trade war between the world’s top two economies.
China’s central bank and the ministries of commerce and foreign affairs accused Washington of “politicising” currency issues and putting the global economy at risk after U.S. senators voted on Monday to start a week of debate on the bill.
The response suggested China sees a greater risk from the proposed bill than it has in the past when U.S. lawmakers attempted to put forward similar legislation to speed up the pace of appreciation in the yuan, or renminbi.
Beijing made similar remarks last year after the House of Representatives passed a currency bill that later failed to make any further progress in Congress.
Tuesday’s coordinated salvo and the central bank’s warning of a trade war and a slowdown in China’s exchange rate reforms indicated Beijing was taking the latest currency bill more seriously.
“It is very rare for three different ministries of the country to refute something so quickly and strongly, showing how deeply the Chinese government is concerned about the yuan bill,” said Wang Zihong, a researcher at the China Academy of Social Sciences, a top government think tank.
“The strong responses made by the Chinese government may also suggest that the possibility would be quite high this time that the United States will pass the final bill in the end and that Beijing is worried about the possible negative impact on China’s exports resulting from the legislation,” he said.
U.S. Senate vote opened a week of debate on the Currency Exchange Rate Oversight Reform Act of 2011, which would allow the U.S. government to slap countervailing duties on products from countries found to be subsidising their exports by undervaluing their currencies.
U.S. lawmakers, eyeing 2012 elections, said keeping China’s currency undervalued had cost American jobs and that a fairer exchange rate would help cut an annual trade gap Washington puts at more than $250 billion.
“By using the excuse of a so-called ‘currency imbalance’, this will escalate the exchange rate issue, adopting a protectionist measure that gravely violates WTO rules and seriously upsets Sino-U.S. trade and economic relations,” foreign ministry spokesman Ma Zhaoxu said in a statement posted on China’s official government website (www.gov.cn) on Tuesday.
“China expresses its adamant opposition to this.”
Ma urged U.S. legislators to “proceed from the broader picture of Sino-U.S. trade and economic cooperation” and “forsake protectionism”.
He repeated Beijing’s position that it will continue to gradually reform its currency policy, “strengthening the flexibility of the renminbi exchange rate.”
China’s exchange rate has long been a bone of contention between Beijing and Washington. The yuan has appreciated some 30 percent against the dollar since it was revalued in 2005, although critics say it is still valued too low and gives Chinese exporters an unfair advantage.
The emergence of China as the world’s fastest-growing major economy has led to often testy relations with the United States. The most recent tension was over U.S. plans for a $5.3 billion upgrade of the F-16 A/B fighter fleet of Taiwan, which Beijing considers to be a breakaway province.
CAN THE BILL PASS?
Monday’s vote bolsters prospects for the bill to clear the Democrat-run Senate later this week, but prospects for action in the Republican-controlled House of Representatives are murky.
If the bill did clear both chambers, it would present President Barack Obama with a tough decision on whether to sign the popular legislation into law and risk a trade war with Beijing, or veto it to pursue a more diplomatic approach.
“My colleagues, both Democrats and Republicans, agree that China’s deliberate actions to devalue its currency give its goods an unfair competitive advantage in the marketplace,” said Senate Majority Leader Harry Reid.
China has routinely denied claims that its policies are responsible for trade imbalances and a high rate of unemployment in the United States, saying that structural problems were to blame.
“It is widely understood that the renminbi exchange rate is not the cause of China-U.S. trade imbalances,” Ma said.
China’s central bank said in a statement that the bill failed to address the underlying issues in the U.S. economy.
“The yuan bill passed by the U.S. senate will not solve its problems, such as insufficient savings, high trade deficit and high unemployment rate, but it may seriously affect the whole progress of China’s reform of its yuan exchange rate regime and may also lead to a trade war which we would not like to see.”
Ma said Beijing would continue “proactive” and “gradual” reform of the currency and the central bank added Chinese inflation had already pushed the real yuan exchange rate further “towards the equilibrium.”
Ministry of Commerce spokesman Shen Danyang said the United States was trying to pass on the blame for its own failings.
“Trying to turn domestic disputes onto another country is both unfair and in violation of standard international rules, and China expresses its concern,” he said in a statement issued on the ministry’s website.
The Senate move had to be viewed in the context of deepening economic and political uncertainties in the United States, as well as dwindling approval ratings ahead of next year’s elections, the state news agency Xinhua said in a commentary.
“U.S. politicians are using the pretext of creating jobs and playing the China currency card — the practice of diverting attention from domestic conflicts has almost become a political convention in recent years,” it said.
Shen said any move by the United States to force the yuan to appreciate would undermine joint efforts to revive global economic growth, which took another blow on Monday with data showing that global manufacturing shrank in September for the first time in over two years.
“It will weaken China-U.S. efforts to join hands and together promote global economic recovery,” he said. “The global economic is in a complex, sensitive and changeable period, and so even more needs a stable international monetary environment.”
U.S. critics of China’s currency policy have gained some traction as a weak economy keeps U.S. unemployment stuck above 9 percent and as 2012 presidential elections draw near.
Passage of the bill by the Democratic-controlled Senate would send it to the House, which is run by traditionally free-trade-friendly Republicans.
A China currency bill passed the House last year with 99 Republican votes, but lapsed because the Senate took no action. This year, the bill already has more than 200 House co-sponsors and this week supporters expect to reach 218, the number needed to pass it.
However, House Republican leaders have not shown a great appetite to pursue currency legislation, and it is unclear if the bill would ever face a vote in that chamber.
As with similar legislation in the past, the Obama administration has not taken a public stance on the bill, although White House spokesman Jay Carney said on Monday that the president shares “the goal it represents.”
The Senate decision was a sign that China was being made a scapegoat by struggling western economies, said Wang Jun, researcher at the China Centre for International Economic Exchanges.
“Maybe the United States will not be the only and last country
May 21, 2010
By Sam Gustin
Facebook, the giant social network now under fire over its privacy practices, has been sending personal information to online advertising companies without its users’ consent, according to a Harvard Business School professor who filed a letter of complaint with the Federal Trade Commission Thursday.
“Facebook has been telling its users one thing and then doing the opposite,” Ben Edelman, an assistant professor at Harvard Business School, told DailyFinance Thursday. “Facebook never told anyone, anywhere, they were going to do this. It’s no longer about quality of disclosure, but about whether Facebook is telling the truth in the first place.”
May 21, 2010
The Chicago Tribune
By Duaa Eldeib
Infomercial pitchman Kevin Trudeau was spared 30 days in prison when a federal appeals court Thursday overturned a ruling in which a judge held him in criminal contempt of court.
U.S. District Judge Robert Gettleman had made the ruling after Trudeau urged supporters to communicate with the judge, and the judge’s e-mail inbox was flooded with messages.
Gettleman has been presiding over a dispute between the Federal Trade Commission and Trudeau regarding Trudeau’s hair- and weight-loss treatments.
May 18, 2010
By Joseph Menn
Authorities on both sides of the Atlantic on Monday moved towards investigating Google following the internet group’s disclosure that it had recorded communications sent over unsecured wireless networks in people’s homes.
Peter Schaar, the German commissioner for data protection, called for a “detailed probe” by independent authorities into the practice by Google.He said the group’s explanation of the collection of data as an accident was “highly unusual”.
“One of the largest companies in the world, the market leader on the internet, simply disobeyed normal rules in the development and usage of software,” he said.
In the US, the Federal Trade Commission was expected to launch an inquiry as well, according to people who spoke to agency officials.
April 27, 2010
By Steve Green
S 510, the Food Safety Modernization Act of 2010, may be the most dangerous bill in the history of the US. It is to our food what the bailout was to our economy, only we can live without money.
“If accepted [S 510] would preclude the public’s right to grow, own, trade, transport, share, feed and eat each and every food that nature makes. It will become the most offensive authority against the cultivation, trade and consumption of food and agricultural products of one’s choice. It will be unconstitutional and contrary to natural law or, if you like, the will of God.” ~Dr. Shiv Chopra, Canada Health whistleblower
It is similar to what India faced with imposition of the salt tax during British rule, only S 510 extends control over all food in the US, violating the fundamental human right to food.
Monsanto says it has no interest in the bill and would not benefit from it, but Monsanto’s Michael Taylor who gave us rBGH and unregulated genetically modified (GM) organisms, appears to have designed it and is waiting as an appointed Food Czar to the FDA (a position unapproved by Congress) to administer the agency it would create — without judicial review — if it passes. S 510 would give Monsanto unlimited power over all US seed, food supplements, food and farming.
In the 1990s, Bill Clinton introduced HACCP (Hazardous Analysis Critical Control Points) purportedly to deal with contamination in the meat industry. Clinton’s HACCP delighted the offending corporate (World Trade Organization “WTO”) meat packers since it allowed them to inspect themselves, eliminated thousands of local food processors (with no history of contamination), and centralized meat into their control. Monsanto promoted HACCP.
In 2008, Hillary Clinton, urged a powerful centralized food safety agency as part of her campaign for president. Her advisor was Mark Penn, CEO of Burson Marsteller*, a giant PR firm representing Monsanto. Clinton lost, but Clinton friends such as Rosa DeLauro, whose husband’s firm lists Monsanto as a progressive client and globalization as an area of expertise, introduced early versions of S 510.
January 22, 2010
The Wall Street Journal
By Terence Roth and Laurence Norman
European governments on Friday gave a mixed reaction to American President Barack Obama’s initiative to restrict the activities of big U.S. banks, calling for an international agreement before they will commit to the same course.
Mr. Obama on Thursday outlined a plan to prevent commercial banks and institutions that own banks from operating and investing in hedge funds and private-equity firms, while capping trading activity done for in-house accounts.
The move appears to be setting a barrier between commercial and investment banking, similar to the Depression-era Glass-Steagall Act that separated investment and commercial banking. That separation was repealed in 1999.
In Europe, major banks have traditionally adhered to the one-stop-banking, or “universal bank,” concept of bundling traditional commercial banking with investment banking and other financial services under one roof.
Changing this, European governments believe, makes an internationally binding agreement the only alternative to prevent competing banking policies between banking centers. London, for example, would be at a competitive disadvantage to Frankfurt or Zurich if the U.K. government followed the U.S. lead but the German and Swiss authorities didn’t.
In the U.K., whose finance-heavy economy was one of the biggest casualties of the credit crunch, the Labour government has backed off from any separation of risk in large banks or caps on size.
Paul Myners, the U.K. Treasury’s financial services minister, said Friday that the U.K. government won’t be following the U.S. plan to reform banking.
“We’re not going to separate investment banks from universal banks, retail banks,” he said in an interview on BBC. The current government’s approach is to require much more capital to be required by the riskier parts of the bank and to put a firewall in place that ensures that those parts of the bank can never put at risk the whole bank or the system, he said.
But George Osborne, finance spokesman for the opposition Conservative Party, welcomed the Obama plan. But he told the BBC that the U.K. should consider similar rules only if there is an international agreement. “It needs to be done here in Britain as part of an international agreement,” Mr. Osborne said. “We are committed to getting international agreement on this.”
That puts bank reform at center stage in the U.K. election campaign, with the Labour government seen as hard-pressed to reject populist issues such as bank reform.
“Gordon Brown has repeatedly opposed the specific action which President Obama has today announced,” Mr. Osborne said in an earlier statement. “He now looks very isolated as a defender of the old model of finance that he presided over for years and that went so catastrophically wrong.” The Conservatives are favored to win the election, which is due to take place by June.
French Finance Minister Christine Lagarde also welcomed the U.S. plan, calling it a good step forward. “I’m delighted today to see that the U.S. president is following suit and considering that regulation … is decisive in framing and limiting excesses in the banking sector,” Ms. Lagarde said during an interview on Europe 1 radio.
In Berlin, the government said the Obama initiative should be assessed within international forums. “The U.S. president’s new proposals are helpful suggestions for further discussions on an international level. As known, the [German] government strives toward internationally coordinated solutions as far as the addressed problems of ‘too big to fail’ are concerned.”
The U.S. initiative is a rejection of the European “universal bank” model, traditionally championed by Germany. The Obama administration’s plan to limit the absolute size of banks also contrasts sharply with the slowness of German regulators, in particular, to come to grips with the issue of banks that are “too big to fail.”
Germany’s largest private-sector banks have become even larger as a result of the crisis, with Deutsche Bank AG intervening to acquire Sal. Oppenheim, Germany’s largest independent private bank, and Commerzbank AG absorbing troubled Dresdner Bank with the help of substantial bailout funds from the government.
Axel Weber, head of the German central bank as well as a member of the council of the European Central Bank, has been a staunch defender of Germany’s universal banks.
Mr. Weber last year observed that the wave of mergers sponsored by U.S. authorities in the wake of the Lehman Brothers Holdings Inc. collapse had amounted to a de facto rapprochement of the U.S. and German models of banking, and cited it as evidence of the advantages of the German system.
November 19, 2009
The Globe & Mail
By Barrie McKenna and Andy Hoffman
Tensions over two of the world’s major currencies are escalating, playing out in economic and political circles as countries make a desperate push for crucial trade dollars.
Visiting China, President Barack Obama said he wants the country to dismantle its currency peg to the U.S. dollar. But while the two countries bicker over the value of the yuan, momentum is building for a replacement for the world’s reserve currency.
But International Monetary Fund director Dominique Strauss-Kahn says the days of one country’s currency as the global benchmark are numbered. The U.S. dollar remains the currency standard, but globalization demands a new global currency that provides representation for the growing importance of a variety of major economies, Mr. Strauss-Kahn said during a trip to China.
Increasing talk for a new global currency comes as friction mounts between the United States and China over the yuan, whose restrained value helps keep China’s exports competitively priced. During his visit to China, President Obama on Tuesday urged China to expose the yuan to market-oriented forces and let it rise.
But aside from fending off pressure to let its currency climb, China has a bigger problem. Its fortunes are inexorably hitched to a faltering U.S. dollar and all the economic challenges that entails, including exploding deficits, lurking inflation and a gusher of easy money that may be hard to cap.
Every time the dollar dips, so too does the value of China’s massive and growing foreign exchange reserves – 70 per cent of which, or an estimated $1.6-trillion, are stashed away in various U.S. dollar investments.
It’s the classic trap. China’s not happy living with the dollar, but it can’t live without it.
China’s reserves are so large that diversifying out of the dollar and into the euro, or any other currency, isn’t feasible because those other markets aren’t big enough or deep enough to accommodate its cash. And even a hint that China was poised to dump dollars would send the greenback spiralling further downward, deepening losses on the country’s offshore holdings.
The result is that the U.S. and China are caught in “a dangerous game of chicken that could easily spin out of control,” argued Eswar Prasad, a senior fellow at the Washington-based Brookings Institution and a former top IMF official. “A precipitous action by China to shift out of U.S. dollar instruments, or even an announcement of such an intention, could act as a trigger that nervous market sentiments coalesce around, leading to a plunge in bond prices and the value of the U.S. dollar,” Mr. Presad pointed out.
Facing deficits totalling $9-trillion over the next decade, the United States desperately needs China’s cash to finance its profligate ways.
None of China’s possible escape routes offer much short-term relief. Speaking at a forum in Beijing Tuesday, the IMF’s Mr. Strauss-Kahn said the global financial system would be a lot better off if countries embraced the concept of a truly global currency, possibly based on the fund’s own accounting unit, the special drawing right or SDR. “That probably has to be a basket,” he said of the eventual replacement for the dollar. “In a globalized world there is no domestic solution.”
Chinese central bank governor Zhou Xiaochuan embraces the idea of morphing the SDR into a new super currency.
But most experts say that’s a decade or more away.
“If it does happen, it will take an extended period of time,” said Benjamin Reitzes, an economist BMO Nesbitt Burns in Toronto. “It won’t be all of a sudden.”
And if it does happen, the U.S. dollar will still be significant part of the mix, perhaps 50 per cent of any basket, Mr. Reitzes said. “It’s not as if they’re eliminating the U.S. dollar altogether and we’re just going to use the euro instead,” he said.
Even Mr. Strauss-Kahn acknowledged that in the short-term, China should let its yuan strengthen to help smooth out imbalances in the global economy and boost domestic demand. That, in turn, would depress the value of its foreign reserves.
And so for now, China has little choice but to hitch a ride on the Greenback Express, wherever it may go.
“They’re going to keep accumulating dollars. That’s just the reality,” agreed Charles Freeman, a former assistant U.S. Trade Representative for China, who now holds the China chair at the Center for Strategic and International Studies in Washington.
Indeed, China and other countries boosted their holdings of Treasury bills and other U.S. financial assets in September, the U.S. Treasury Department reported yesterday. China, the largest foreign holder of Treasuries, increased its holdings by $1.8-billion to $798.9-billion.
The Chinese are buying more of a currency in which they have increasingly less faith because they don’t have a choice, BMO Nesbitt Burns’ Mr. Reitzes said.
“There really is nowhere else to go,” he said. “It’s kind of the U.S. dollar by default at this point,” he said.
The SDR isn’t yet anything more than an internal IMF exchange unit, the euro has its capacity constraints and the yen’s influence is on the wane, along with Japan’s relative economic clout.
Ultimately, Mr. Reitzes said the yuan has the best potential to become an alternative to the U.S. dollar as a reserve-like currency. But that means China will have to end its peg to the U.S. dollar and let the yuan float.
“The yuan is the only currency I can see that would challenge the U.S. dollar, but that could be 25 or 30 years away,” Mr. Reitzes said.