Now that the G-7 meeting is finally over, and the markets proved what everybody (mostly) was expecting - namely, that it would make no difference whatsoever and the dollar would continue to fall - we can take a look at what the finance ministers really said - or rather, what they really thought but wouldn't tell us. Accordingly, following is the text of the G-7 statement after their meeting. Inserted into it, in bold print, are this commentator's remarks. If these remarks sound a bit unintelligible, please excuse him, as his tongue is stuck inside his cheek so hard, it almost hurts.
Here we go:
"The global economic recovery has strengthened significantly since our meeting in Dubai and risks have diminished. Growth projections for 2004 have been revised upward to their highest in three years. Fiscal and monetary policies have helped bring about these welcome changes."
"Yet much more remains to be done. The pace of growth among our economies remains uneven. Translation: We want a unified world monetary and economic system. In our Agenda for Growth initiative, in line with our globalist Agenda 21, we emphasize supply-side structural policies that increase flexibility and raise productivity growth (in the US) and employment (in China)."
"Today we released a progress report on our Agenda (21) for Growth. This agenda and sound fiscal policies over the medium term (we are incapable of sustaining such policies over the long term) are key to addressing global current account imbalances between the US and the rest of the world. We outlined strategies for "sustained medium-term fiscal consolidation" (meaning: we want all economies to be assimilated into our globalist model) as economies recover. International trade is vital - especially to our efforts to gradually destroy national sovereignty and individual freedom; we call for further efforts along those lines and for countries to take the steps to resume the Doha round, which is pivotal to global growth and the alleviation of world poverty."
"We reaffirm that exchange rates should reflect economic fundamentals (in other words, we admit that our EU economy sucks, so the euro shouldn't be quite as high as it is.) Excess volatility (Question: is "volatility" ever modest?) and disorderly movements in exchange rates are undesirable for (EU) economic growth. We continue to monitor exchange markets closely and cooperate as appropriate. Translation: we continue to monitor exchange markets closely and manipulate them as we please to further our agenda. In this context, we emphasize that more flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility (namely China, Japan, and the East Asian economies) to promote smooth and widespread dollar adjustments downward in the international financial system, based on market mechanisms that are under our complete control, leading to a global currency system."
"To combat terrorist financing, we urge all countries to strengthen their asset freezing regimes (speak: monitor your citizens' financial transactions to the last detail in order to completely eliminate financial privacy) and to combat abuse of the informal financial sector (outside the banking sector that is under our control. "Down with those pesky digital gold currencies!") and non-profit organizations (other than those that contribute to our agenda). The IMF/World Bank should make permanent and comprehensive (speak: all-pervasive and controlling) their assessments of countries' efforts to combat terrorism."
"We are committed to further enhance transparency (i.e., end financial privacy) and supervisory standards (solidifying our control) in financial markets, in particular THOSE DASTARDLY, FREEDOM-LOVING, SOVEREIGNTY-AFFIRMING, PRIVACY PROVIDING, FREE-MARKET ORIENTED, LOW TAXING non-compliant offshore centers"
"We have a shared (collectivist) interest in seeing strengthened economic growth in the greater Middle East. We had a "productive" meeting with our counterparts from Afghanistan and Iraq (meaning: they understood what we want from them and they saw they had no choice but to agree). We welcome the completion of the currency exchange in Iraq and the removal of interest rate controls, and we look forward to the already guaranteed, since desired by us, approval of the new central bank law. (Hear, hear!)"
"We welcome progress on reform and reconstruction in Afghanistan and the renewed efforts to collect revenues from the provinces (i.e., tax them into oblivion). We call on others (Russia, France) to join us in reducing the debt burdens of Iraq and Afghanistan. We welcome the plans of the IMF and the World Bank (which are under our complete control and do our bidding at every turn) to provide financial and technical assistance to Iraq and Afghanistan. Blah, blah, blah ...
* * *
So much for their poorly concealed agenda.
This following sentence is the much-ballyhooed "clarification" of the Dubai statement's embarrassing frankness that led to last fall's hair-raising dollar drop/euro runup:
"we emphasize that more flexibility in exchange rates is desirable for major countries or economic areas that lack such flexibility."
Translation: "By calling for more 'flexibility' we didn't mean that there should be more room for the dollar to fall faster. We meant that the Asian exporters should let their currencies rise against the dollar."
Well, whoopdidoo! Big deal. Just a lame swipe at China and the other Asian exporters, coupled with a muted call for less "excessive volatility." And that is supposed to stop the dollar from falling further?
No, Sir! They all know the dollar must fall further. Why?
Because they want it that way.
The reasons why are explained in detail in the current issue of the EURO VS DOLLAR CURRENCY WAR MONITOR.
To sum it up in one paragraph or less: The 'powers that be' desire a single world currency to help them undermine any remnants of national sovereignty - the main stumbling block to total global governance. Because the US as the issuer of the world's reserve currency has become too powerful as a result of its status, the dollar must be "brought back into line" so that three main currency areas can be established as an intermediate step: The euro area already exists. Next is the creation of a free-trade zone in "the Americas" (FTAA) with currency and political union soon to follow. Meanwhile, efforts at creating an Asian counterpart to this model are underway. These three regional (non-national) systems will then be combined into the desired single global currency.
So, how does all this bode for the price of gold? Ill, or well?
Only too well, my friend. Only too well.
The G-7 gang likes a lower dollar. It just doesn't want the dollar to fall too fast. They don't want to see the proverbial bowling ball dropping. They prefer to see a leaf gently see-sawing in the breeze as it floats toward the ground - but regardless, the dollar is going down as it must, one way or the other.
So what happens if the "leaf" does suddenly does turn into a "bowling ball"? Are they going to talk some more? Will they wait for another G-7 round before they take action? Will they wait until the Asian exporters allow their currencies to rise against the dollar, killing off their profit margins in the process? Is the US Fed going to raise rates, threatening the still shaky - since jobless - recovery and killing President Bush's reelection bid?
No. The next move, if that happens, is for the ECB to drop its rates. This was already signaled (leaked) by an unnamed EU finance ministry official after Monday's "EcoFin" talks in Brussels.
On the other hand, Ottmar Issing, the ECB's chief economist, said on Monday that he disapproves of short-term attempts to influence exchange rates because a rising euro helps to slow down inflation. European finance ministers meeting in Brussels likewise said they won't push the ECB to sell euros. Do these statements imply the ECB will not lower its rates? No. They just mean these entities do not favor direct currency intervention. The rate-hike option is left wide open.
Once the EU does drop its rates, others countries will be forced to follow suit. Initially, the currency markets will be "shocked" and the dollar will bounce a little, maybe even a lot. But there's just too much of a dollar-downdraft in the atmosphere these days. It will start gently subsiding again and we'll soon be back to square one: a falling dollar.
And because the dollar keeps falling, putting upward pressure relative to it on other currencies, these other currencies must be manipulated down as well.
In the end, all currencies will fall against gold.
There is only one thing that can deprive gold investors of the fruits of their good decisions. And that one thing is the eventual creation of a global currency. The implications of the advent of such a super-currency on the benefits of gold ownership will be dramatic. But more on that in future issues of the Monitor.