MoneyAccumulator.com

In the 1930’s the American Government used currency as a weapon or currency war against China to de-stabilize Chinese society and incite a revolution that destroyed China. The U.S Government called it “The China De-Stabilization Plan”

In the 1930’s the Chinese currency, the Yuan was backed by and pegged against Silver prices. The U.S Goverment went on a propaganda campaign that advertised to the Chinese that an appreciation in the Chinese currency Yuan would bring with them an appreciation of the yuan against the U.S. dollar and would benefit the Chinese by increasing their purchasing power. However, they knew that it would actually cause economic havoc.

As a special committee of the U.S. Senate created a propaganda report in 1932: “Silver is the measure of their wealth and purchasing power; it serves as a reserve, their bank account. This is wealth that enables such peoples to purchase our exports.”

What it really cause was a severe drop in Chinese exports as the American Government manipulated Silver prices up 128%. This sharp increase in Silver threw China into a Great Depression. In the 1932-34 period, China’s gross domestic product fell by 26% and wholesale prices in the capital city, Nanjing, fell by 20%.

The social unrest and monetary havoc eventually caused a revolution in China, and the Nationalist party that lost fled to Formosa and Taiwan was formed.

Fast forward to 2008-2010 , does all of the above sound familiar? We are now in the midst of a great recession caused by the U.S financial giants (Wall Street), and they have stolen all of the American Citizen’s money…the U.S treasury funds in bail-out money and also the U.S in now 14 Trillion dollars in debt and printing money like no tomorrow. U.S Congress is looking for someone to blame, anyone but themselves, so they blame a foreign country…China. Now, the American government wants China to appreciate or increase the value of the Chinese currency again, a second attempt at destroying China.

Will the Chinese government fall for this again? However, this time it is different, China’s currency is not backed or pegged to Silver, as well China as a country now have trillions in surplus. Will that stop the U.S Government from trying other sneaky tactics to de-stabilize China…the answer of course is “NO”.

Just look a QE2, the 600 Billion dollar stimulus plan, the American Government is intentionally trying to de-value the American dollar, this is another form of currency manipulation similar to how they manipulated Silver in the 1930’s. However, by de-valuing the American dollar they are also hurting Europe and other parts of Asia. Also, the U.S Government owes China 900 Billion dollars, and by printing more money out of thin air, they are saying “we borrowed lots of money from you but we don’t plan to pay it back.”

Doesn’t the American government set a great example of financial responsibility for their citizens…such liberal use of debt. If you look at how the U.S Government is borrowing money and printing money like crazy, basically what they are promoting is “borrow all the money you want to fuel your lifestyle, and don’t intend to pay it back at all.”

In short, I am sure that the American government is going to keep dreaming up of schemes to de-stabilize China and other countries. If you look back into history that is one of the tactics American foreign policy is very good at “destroying other countries.”

by Das Brain

Read original article below.
=========================================================
The U.S. war on China

Financial Post Staff October 28, 2010 – 10:51 pm

A U.S. currency attack helped topple Chinese leader Chiang Kai-shek.

By Steve H. Hanke

In early October, Chinese Premier Wen Jiabao addressed European leaders in Brussels. Ominous talk of currency wars dominated the proceedings. And why not? After all, America — and a growing coalition of forces — has mounted a massive attack on China. And the American-led coalition’s weapon of choice is the yuan- U.S. dollar exchange rate. According to America’s war “plan,” a maxi appreciation of the RMB against the greenback will generate economic instability in China. This will rein in the hegemony.

Premier Wen had good reasons to be worried and to warn the assembled in Brussels that a maxi yuan appreciation would destabilize China and be “a disaster for the world.”

The rhetoric coming from Washington fails to mention weapons and war plans. Instead, the airwaves are filled with a never-ending stream of nonsense about how a maxi yuan appreciation is designed to help the Chinese and to make the world safe from global imbalances. Not surprisingly, Washington’s line bears no relation to the facts — not even the relationship that is implied by an ordinary lie.

This isn’t the first time America has used currency as a secret weapon to destabilize China. In the early 1930s, China was still on the silver standard and the United States was not. Accordingly, the Chinese yuan-U.S. dollar exchange rate was determined by the U.S. dollar price of silver.

During his first term, President Franklin D. Roosevelt delivered on his Chinese currency stabilization “plan.” It was wrapped in the guise of doing something to help U.S. silver producers and, of course, the Chinese.

Using the authority granted by the Thomas Amendment of 1933 and the Silver Purchase Act of 1934, the Roosevelt administration bought silver. This, in addition to bullish rumours about U.S. silver policies, helped push the price of silver up by 128% (calculated as an annual average) in the 1932-35 period.

Bizarre arguments contributed mightily to the agitation for high silver prices. One centred on the fact that China was on the silver standard. Silver interests asserted that higher silver prices — which would bring with them an appreciation of the yuan against the U.S. dollar — would benefit the Chinese by increasing their purchasing power.

As a special committee of the U.S. Senate reported in 1932: “Silver is the measure of their wealth and purchasing power; it serves as a reserve, their bank account. This is wealth that enables such peoples to purchase our exports.”

Things didn’t work as Washington advertised. It worked as “planned,” however. As the U.S. dollar price of silver shot up, the yuan appreciated against the dollar. In consequence, China was thrown into the jaws of the Great Depression. In the 1932-34 period, China’s gross domestic product fell by 26% and wholesale prices in the capital city, Nanjing, fell by 20%.

In an attempt to secure relief from the economic hardships imposed by U.S. silver policies, China sought modifications in the U.S. Treasury’s silver-purchase program. But its pleas fell on deaf ears. After many evasive replies, the Roosevelt administration finally indicated on Oct. 12, 1934, that it was merely carrying out a policy mandated by the U.S. Congress.

Realizing that all hope was lost, China was forced to effectively abandon the silver standard on Oct. 14, 1934, though an official statement was postponed until Nov. 3, 1935. This spelled the beginning of the end for Chiang Kai-shek’s Nationalist government. America’s “plan” worked like a charm — Chinese monetary chaos ensued. This gave the Communists an opening that they exploited — one that contributed mightily to their overthrow of the Nationalists.

Ironically, now the shoe is on the other foot. As was the case in the 1930s, Washington does not have a war plan, or even the idea of a plan, nor do I believe it knows the meaning of the word “plan.” That said, if Beijing caves into Washington’s current demands for a yuan appreciation, the result is totally predictable. A Chinese upheaval and a world disaster will ensue.

Fortunately, Premier Wen has studied the data. Since China embraced Deng Xiaoping’s reforms on Dec. 22, 1978, China has experimented with different exchange-rate regimes. Until 1994, the yuan was in an ever-­depreciating phase against the U.S. dollar. Relatively volatile readings for China’s GDP growth and inflation rate were encountered during this phase. After the maxi yuan depreciation of 1994 and until 2005, exchange-rate fixity was the order of the day, with little movement in the RMB/USD rate. In consequence, the volatility of China’s GDP and inflation rate declined, and with the yuan firmly anchored to the U.S. dollar, China’s inflation rates began to shadow those in America. Then, China entered a gradual yuan appreciation phase (when the yuan/dollar rate declined in the 2005-08 period). Without a firm dollar anchor, China’s inflation rate picked up, relative to the U.S. inflation rate. And, yes, the volatility of China’s GDP picked up and China’s average inflation rate rose, too.

In addition to letting the data “talk,” Premier Wen must be also listening to the echoes of Karl Schiller, German finance minister between 1966 and 1972, who pithily said: “Stability is not everything, but without stability, everything is nothing.” Let’s hope he keeps listening.

Financial Post
Steve H. Hanke is a professor of applied economics at The Johns Hopkins University in Baltimore and a senior fellow at the Cato Institute in Washington, D.C.

Posted in: FP Comment Tags: Chiang Kai-shek, currency, foreign exchange, Steve H. Hanke, Wen Jiabao, yuan

Bookmark at:
StumbleUpon | Digg | Del.icio.us | Dzone | Newsvine | Spurl | Simpy | Furl | Reddit | Yahoo! MyWeb

This entry was posted on Thursday, January 27th, 2011 at 7:27 am and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.