China Just Started A Currency War: Here’s what it means for you

by | Aug 12, 2015 | Articles | 10 comments

chinacurrencywarby James Corbett
August 11, 2015

Last month I wrote about the worrying capital outflows we’ve seen from China recently (with the country bleeding $224 billion in the last quarter alone). At the time I wrote:

When China starts hitting the panic button and officially joins the ZIRP and QE club, the “currency wars” of the last several years will seem like a quaint relic of a bygone age, and the real currency wars will begin in earnest. Devaluations, more and more frantic money printing, and central banks acting increasingly aggressively will be the order of the day. And when and if that happens, the gears of world trade will start to grind to a halt and the “currency war” will turn into a real war, exactly as the trade wars of the 30s led to WWII.

Well, guess what just happened? The People’s Bank of China just changed the way their currency is valued, causing the yuan to fall a record 1.9% in one day.

That’s all well and good, but what does that mean for the average person? Well you know it’s not a positive thing when even the “everything’s fine!” mainstream financial media (read: FT, CNBC, Bloomberg, MarketWatch, etc.) start openly discussing the “currency war” idea.

So what exactly is a “currency war”? It’s when central banks begin devaluing their currencies in order to make their exports cheaper (and thus more attractive) on the global market. The policy is dangerous because it causes other countries to devalue their own currency in order to stay in line with their trading partners, and soon you have a cycle of devaluations better known as the “race to the bottom.” Or, as Stephen Roach, former chief economist at Morgan Stanley, helpfully explains:

“In a weak global economy, it will take a lot more than a 1.9 percent devaluation to jump-start sagging Chinese exports. That raises the distinct possibility of a new and increasingly destabilizing skirmish in the ever-widening global currency war. The race to the bottom just became a good deal more treacherous.”

currency-war-riskNow it can certainly be argued (and it has been) that we’ve already been in a currency war of sorts for some time. The Fed’s QE programs, Japan’s Abenomics money printing spree and the ECB’s own QE have all been part of this war, and Switzerland’s Euro de-peg was one of the notable casualties. But if those battles were the equivalent of the invasion of Poland in WWII, this Chinese devaluation just may be this war’s Pearl Harbor.

If there is any potential brake on all-out currency war at this point, it’s that China has a very real interest in keeping the yuan propped up. As readers of this column will know, China is still lobbying to be included in the IMF’s special drawing rights basket as a world reserve currency, and massive devaluation or volatility on the FX markets would obviously not help to make that case. (It should be noted, though, that Zhou Hao of Commerzbank in Singapore argues exactly the opposite.) This is why China has been dumping its (secret) bond stash so furiously in recent months trying to offset the country’s capital outflows and keep the yuan at its dollar peg. That’s also why it’s so surprising that they made this move right now, and why it’s a sign that the Chinese economic slowdown may be as bad as its worst critics have feared.

Things are obviously in flux at the moment, and this is obviously still a developing story, but here are some things we know for sure about what just happened:

  • US equity markets gave up nearly all of their gains from earlier this week on news of the yuan cut.
  • Euro stocks are plunging as the euro-yuan carry trade unwinds and European manufacturers (specifically car and luxury goods manufacturers) stand to lose Chinese business.
  • Gold jumped on the news as investors brace for a new round of paper money devaluation.

Here is what we don’t know yet:

  • Which central bank(s) might be the first to blink and cut their interest rate in response.
  • Whether or not China’s move will factor into the Fed’s decision on whether to hike rates at the FOMC meeting next month.
  • Whether China will reveal more of their stash of gold when they make their next report to the IMF as part of a plan to shore up confidence in the yuan even as they “let off some steam” with this devaluation.

yuanvdollarWhatever else might shake out, there’s no doubt that something significant has happened here. “Currency war” is the idea that dare not speak its name amongst the central bankster jetset . . . until it’s time for some major moves on the geopolitical chessboard. That time may be now. As Boris Schlossberg of BK Asset Management noted in a recent interview: “We are now playing a multi-global chess game on the monetary front.”

Indeed we are. But as Corbett Report listeners will know, this chess game is of the 3D kind, and the players and teams are not what we are told they are. It isn’t China vs. the U.S. vs. Europe vs. Japan or anything of that sort. It’s the Trilateral/Bilderberg/Central banker jetset vs. the people, and the end goal is global government and global currency. The only question is whether this currency war is part of the go-global plan, and, if it is, how the latest maneuvers will help move the global currency football down the field. Stay tuned . . .




  1. If they did, they just received a micro-nuke today (the kind of thing Obama said existed but is otherwise denied by all countries who could make them officially, a speech from Obama in 2010 he made to a university, one with a large chemistry and physics faculty speaking of nukes big like an orange could devastaste small but totally areas in America.

    Well these kind of things don’t go higher than 1kt, they’re programmable, 0.1kt to 1kt, and you have them placed in the sewers under a place like where it happened today (highly dangerous flammable chemical factories) and people who don’t know better won’t suspect it. Burned cars, a building looking like the facade of the A.P. Murrah building…I hope I’m wrong, but from the things I learned that one is apparently not supposed to know…it looks like it. Btw I’m a pharmacologist, so I got a lot of chemistry classes in me. Not a PhD, not even a masters, just did 1 year of my masters then abandoned, a job offering way more money than I need was offered to me and yeah. Lived in a 2 room apartment for 4 years to repay my student loans. But that’s not important, what happened today is major and like I expect, China will keep real quiet. I’m sure they think its retribution for economics that James talked about when the Yuan became a reserve currency or something like that. Really not my domain, I understand the ramifications of economy when James talks about it, but the specifics I can’t retain, it’s so boring yet dangerous, which makes it even more dangerous I guess?

    I feel really bad today.

    • I’ll take a look, thanks sir. I feel better now, had a little valium and I went to bed early hoping to get up tomorrow when something fun related to my hobbies will arrive in the mail. I wonder how you can think of a species (not just humans) holocaust if the crazies like Gen. Breedlove who make threats every single week (he really had to have a last name like this? the guy who most likely can have everything disappear in a flash. I also wonder how you deal at your age with the possibility of…well, I have only evidence to believe your conscience dissipates and melts away when you die, nothing more, which I used to think was comforting in my 20’s, but now is more like..wait, no way I want my brother and my mom to be with me if it’s all going down, as if there’s no nukes, but police state and such turns even Canada into a “tinpot dictatorship” (come on James, cops here won’t even shoot a fly, the worst I’ve seen is that my small town of 250 000 has a cop force which has not the license plate readers, but license plates radar which collect all of them around them so they can spot anyone with reasons to arrest (my mom had to put away her car for 4 months for a ticker she was paying month by month and I couldn’t believe it when she said she didn’t do one of typical bad driver moves to get a ticket. He let her drive home which was like 500m away when she got caught and it was during horrible times when her stupid boyfriend, my step-dad hurts to say but its the case, lost his business and had to bring my mom with him, they managed to kept their home, and finally are out of poverty, he’s got a not too difficult job physically now that pays about 3/4 what his business brought in, so they’re good, had to go live with them just to give her a rent for some months and she works everyday almost still 9 hours and is nearing 60 while him didn’t seek treatment at all, I hate people who do not take advantage of our health system because they’d rather hurt than wait in the ER or just call their doc for an appointment (it might take long for some people, I’m kinda lucky mine takes a week max to see), but yeah he didn’t help himself and his not-able-to-turn-a-wheel in his truck shoulder issues that brought them down….he just had to get some treatment, well he did,but when it wasn’t effective, he had to pester and be a real annoyance, here doctors are in fact our employees and tend to forget it.

      Here I go again, but I thought his lame approach to a capsulitis/tendinitis combination, he gots meds for it yes,once he had no more business, great. He really didn’t help himself and brought down my mom in his 7 years of imposed “personal failure” thing, only 4 to go through left, but will they make it? They’d need a french speaking Corbett to see things clearly and its just not there (french part of Canada). They don’t understand english enough and well…see what I meant by disappearing..mostly not for myself, but the prospect of not seeing my brother, mom and even my dad ever again is really scary.

    • Who spoke of alcohol and weed? Taking alcohol with medication is well…you deserve whatever happens to you.

      “Weed” was medication before 1937 in the US and still is, natural medication. And don’t speak to me of concentration of thc in weed. Bottles of cannabis oil extract (basically what everyone calls hash oil) was sold at the pharmacy, 90% pure extracts of thc oil, I have pics of the bottles still made in 1932 by Long Island Pharmacists Inc. heh. Basically all the good stuff was removed in a fake mass panic in the 1920’s, before alcohol, the war on opiates and then cocaine started (the way cocaine was used was not recreational at all, thats why its still used by ENT’s to logically numb places for really sensitive surgeries, pure cocaine is made by generics companies like Pharmascience where I worked 2 years before, of course I didn’t have a card that allowed me to enter the places where opiates and such were made, I mostly supervised the lab workers making omeprazole…it got boring..anyway. Imagine not having to deal with BS for a toothache when you could place a drop of cocaine on it, it would disappear instantly and not get one to transform into Skarface. Prohibition of alcohol was part of the package and because it was the most used drug, well, they gave in in ’31.

  2. Those how behaded Louis XVI are TPTB of today, the bourgeoisie. Nothing good to expect.

    • Hmm nah…it’s so not true, BRITISH ROYALTY has inherited it all and they’re the most disgusting pigs on this planet, they even basically tell Israel what to do. See British Israelism.

      It would be great if William Cooper was not shot for predicting the fake blames of Bin Laden on an attack that would happen during summer 2001…it was still summer on 9/11, all his radio-shows are archived by his wife and I suggest getting jdownloader and getting them all. He also warned us of Alex Jones being a fake, a hysteric. IRS shot him (indirectly, it was on their orders, he first started getting harassed by the IRS and then local cops in October 2001) on his doorstep after messing with him by pointing extremely powerful flashlights into his house windows in Arizona. Then the “never blame Israel” Alex Jones rose to pro-eminence.

      • Hmm nah…it’s so not true, BRITISH ROYALTY has merged with the new power of industry and finance (again, bourgeoisie, those who beaded Louis XVI). It was a power grab and power merge, concentrating it in even fewer hands, so again: nothing good to expect.

        Bill Cooper wasn’t perfect, he made some mistakes, but indeed he had good insight, and his analysis of the global situation was one of the most complete and accurate (in the big picture, relatively of the large amount of domains of study he covered, when you go into details you find many flaws). His real time covering of 9/11 on radio is a good lesson of lucidity and cold blood. If you read the report of his death (DPS Report DR2001-070756), you can see that the police intervention that lead to his death was initially planned on September 11 2001! So his live radio covering was a threat for TPTB, they didn’t want it to happen.

        Same for the Mystery Babylon series, a big piece of essential knowledge.

        But be aware of Bill’s mistakes, flaws, ego, etc. when you consult his work. And follow his moto “Listen to everyone, believe no one, unless you can prove it in your own research”, it applies on Bill’s work as well.

  3. Great research about his death being planned on 9/11. Clinton said he was one of the (or the) most dangerous radio host in the US. And then he proudly repeated that moniker for the rest of his time amongst us.

    I know he was wrong about some things, but then again, some of it is hard to prove (that piece of technology he witnessed as a navy officer that seperated the water like fuckin Moses and then got out of it like a flying quarter was a catharsis to his later work.

    I have more respect for him than Alex Jones. He can’t possibly have been as wrong as Jones. Jones probably operates the same way Gordon Duff operates, “only 40% of what I say is true, otherwise I’d be dead”.

    As for the people being killed in the french revolution…it was the bourgeois. I’m french Canadian, we even have 4 classes of french in college here, you might have ended all your chemistry classes and be an outright chemist, you won’t get your diploma unless you pass these 4 french classes which take 4 hours out of your schedule and maybe 4 more at home. Anyway, French Litterature 102 is about old french litterature (a hell of a lot is boring, some wasn’t though), 101 was about the classic fables, was easy stuff, but I know that the people targeted, at least at first, were the bourgeois, the kings and then the royal welfare (nobles/bourgeoisie).

    American Revolution is pretty much based on the French Revolution sharing a lot of the same ideals.

    Had they been followed to the letter, Alex Jones wouldn’t be selling iodine pills and radiation detector. Want a real radioactive danger to be taken care of? Buy a Radon detector if you have a basement, 10-15% of lung cancers are caused by a natural very radioactive gas. Right there you’re doing more good to yourself.

    As for your naturopaths and I imagine acupuncture propping up…yeah. I’ll keep it to myself.

    As for the cocaine-related anti-tooth pain stuff, it’s a temporary measure before one can get what’s needed for them. I brush my teeth twice a day, and yes it has fluoride, I spit it all out. That’s how it works. The sodium fluoride hazardous waste makes no sense, it maybe touches teeth a split second and then you’re supposed to swallow that?

    I’m real glad Canadians aren’t really into that thing. My town had it years ago, lasted maybe 3 years until an MP (who back then were still doing their job, we’re such weirdos in Canada), came up with a very large pile of files and a discourse added a joke that pikes he fished out of the lakes had no cavities. And that was the end of it.

    • I have perfect teeth, like beyond the average, probably the only thing I ever got compliments about, physically. I had 2 tiny cavities in my life. I just brought up cocaine because of the hysterical “Moderation Groups” made of women back in the ’10’s and 20’s that led to all out prohibition of everything…except marijuana…until the DuPonts and other blank cutting forest killers lobbied FDR hard enough to actually ban what was viewed as the mildest medication (that had a sort of high associated to it) in 37. While germans were extra busy making morphine analogues….and all the nazis while in wartime were on meth pills but that’s something else.

      Back to the DuPonts, why did they do that? Hemp is way too competitive, every year you have new material to make paper with, which is of higher quality than paper made from trees. And Anslinger who was a racist and hated blacks and mexicans who prefered it to alcohol.
      It’s just that the best chemists in the world are always from France, Germany or Switzerland, especially during the developing times.

      All forms of fluoride are harmless to you, including naturally found in water elemental fluoride.

      Now SODIUM fluoride, if you watch James’ vodcast about it, or maybe it was during his filmed radio shows, explains it all very well.

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