General Bernanke

I'm thinking about how the world economy looks from the viewpoint of economic warfare. In this vein, Fed policy statements are strictly misinformation. U.S. policy consists of devaluing the dollar to pay off foreign debts. Policy will be changed to reverse the outflow of capital by U.S. corporations. I couldn't find data on Chinese manufacturers of steel pipe that tariffs were just slapped on, but the tire tariffs fall almost entirely on U.S. companies that built factories in China. Just maybe, those tariffs are a message to U.S. companies not to build any more in China.

Devaluing the dollar would seem to be a great way to pay off U.S. debts easily. Unfortunately, China is our largest debtor. Their currency peg means that we cannot devalue against the Renminbi. But Bernanke and Geithner can see that devaluing the dollar is causing inflation in China. So they are quietly setting the stage for the attack. How? They are shutting down U.S. dollar flows to China. Devaluing the dollar is one way of doing this. If China doesn't revalue upwards, then Japan and Europe will pressure them to, and enact protectionary measures if needed. So Bernanke can count on Europe and Japan to help. So if China can be forced to revalue the Renminbi upwards, then the U.S. gets to pay off the debt with new dollars. On the other hand, if China devalues the Renminbi with overstimulation, inflation will go sky-high, interest rates will have to be raised, and China will have to sell their U.S. bonds. Of course, the Fed will step in and buy. Prices will be frozen to keep rates low, but the Fed will be able to buy just by printing. And this should be good for gold.

Most of this is speculation and very fuzzy and blurry in my mind. But maybe it will give me some good ideas. I'm only fairly sure of two things here: first, Bernanke will reinstate quantitative easing. Second, this should be good for gold.