by Michael Hudson
“Coming events cast their shadows forward.” – Goethe
What is to stop U.S. banks and their customers from creating $1 trillion, $10 trillion or even $50 trillion on their computer keyboards to buy up all the bonds and stocks in the world, along with all the land and other assets for sale, in the hope of making capital gains and pocketing the arbitrage spreads by debt leveraging at less than 1% interest cost? This is the game that is being played today. The outflow of dollar credit into foreign markets in pursuit of this strategy has bid up asset prices and foreign currencies, enabling speculators to pay off their U.S. positions in cheaper dollars, keeping for themselves the currency shift as well as the arbitrage interest-rate margin.
Finance has become the new mode of warfare – without the expense of military overhead and an occupation against unwilling hosts. It is a competition in credit creation to buy global real estate and natural resources, infrastructure, bonds and corporate stock ownership. Who needs an army when you can obtain monetary wealth and asset appropriation simply by financial means? Victory promises to go to the economy whose banking system can create the most credit, using an army of computer keyboards to appropriate the world’s resources. Insightful article here