Archive for October, 2009

Currency Wars by Song Hongbing

화폐전쟁

<Picture: Chinese Book & Korean Translated Book>

Recently I have read a book called Currency Wars written by a Chinese economist Song Hongbing. I first want to say that this book is filled with conspiracy theories and nationalistic ideas. However, the writer has given specific data and reasoning to support his ‘conspiracies’. Therefore I think the book should be called a ‘faction’ book as it is based on truth, however, dramatized too much.

This book overall ‘reveals’ the conspiracy of colossal finance corporations and how they use currency as an instrument of exploiting wealth of people. The book has some of the shocking comments such as ‘Bill Gates isn’t the richest man in the world’ and ‘huge finance corporations are responsible for wars around the world.’ Also, the book raised one’s consciousness about how currency as a weapon can be more destructive than physical weapons.

Rothschild Family:

First of all, the book reveals that the Rothschild family is the richest family with $5 trillion dollars whereas Bill Gates “only” have $40 billion dollars. The Rothschild family’s wealth is 100times the Bill Gate’s wealth. How has this family earned exponential amount of money, and how hasn’t no one noticed about it? This is the mysterious question the author asks. The author then answers that the family’s strict control, accumulated experience in markets, and their endless desire in making ‘financial empire’ across the world made it possible for them to be the richest family in the world. Actually, this family has accumulated its wealth well before 200 years ago starting from England.

The rise of Rothschild family begins in 1815 when the Battle of Waterloo between England and France ignited. At the time, Rothschild family was devoting to bank management. They had international banks around Europe such as Germany, France, and England. The family had vast network of industrial spying agency. Therefore, the Rothschilds had an efficient network for market informations.

<Battle of Waterloo>

When the Battle of Waterloo began, the Rothschilds instantaneously realized that they will earn tremendous amount of money. Many people were betting their whole wealth by buying national bonds of either England or France. If England loses the battle, the national bonds will be worthless. Conversely, if France loses this battle, the price of French national bonds will fall dramatically. Therefore many people were betting their fortunes on the Battle of Waterloo.

At the time, it took days for troops to either report a victory or defeat to the government simply because there weren’t any cars or other efficient means of transportation. The Rothschilds family, using their vast spy network, succeeded in finding out the result of the battle, one day faster than the government. When the Rothschilds family found out that the British has won the battle, Nathan Rothschild (the family’s third son) immediately headed to the stock exchange of England.

Everyone was nervous in the appearance of Nathan Rothschild in the stock exchange. Nathan ordered his agents to sell tremendous amount of British stocks. He ordered one of his agents to shout out false information, “Rothschilds found it out! The British has lost to the French.” People, terrified, struggled to sell their stocks before the price got any lower. The stocks exchange was in chaos. In a minute, the price of national stocks fell to 5% of their original value. The stocks became a worthless piece of paper in a minute. Nathan Rothschild then immediately told his agents to buy all of the stocks.

This was a victory for Rothschild’s family. British government was also victorious in the Battle of Waterloo, however, in a long run they were losers. As Rothschild family seized all of the stocks in England, they seized the right of Bank of England. The family then forced the British government to pay their loan (for a long battle) by tax. So the family was successful in seizing the rights of imposition of taxes.

<The Bank of England>

By seizing the Bank of England, the family of Rothschild exercised power and dominance by controlling the supply of currency. Here are the quotes relating to the dominance of currency.

  • “Money is Power”, or shall we say, “The Monopoly to Create Credit Money and charge interest is Absolute Power”. (Alex James)
  • “Let me issue and control a Nation’s money and I care not who makes its laws”. (Amsel Rothschild)

Like Amsel Rothschild what said, Rothschilds used currency as a mean of exploiting wealth from people with out being noticed.

In the past, gold was used as a mean of currency. Gold has a limited amount of money, and it was perfect in serving as a currency. However, as ‘paper’ currencies came out, it was possible to make infinite amount of money. If you know the common sense of finance, the infinite supplying of currency will cause an inflation. For example, if a person named John has one dollar, it would not worth a dollar after the inflation. As a result, Jon will lose sums of his wealth. Rothschilds used this method in order to exploit wealth from people. They increased the supply of money in order to decrease the wealth of people. Once it has decreased its price, Rothschilds bought the wealth away from people. After they have bought such things as stocks from people, the Rothschilds limited the supply of money. This caused deflation and increased in value or worth of currency. As a result, Rothschilds increased their wealth to tremendous amount.

  • Satirical cartoon protesting against the introduction of paper money, by James Gillray, 1797.

Later on, the Rothschilds used these kinds of methods to manipulate the stocks and gained wealth. They also stirred wars around the world to make profit.

In conclusion, Rothschilds expanded their financial empire by dominating national banks around the world such as Federal Reserves of United States, and etc. Rothschilds with other huge financial corporations caused many economic depressions such as the Japan’s lost decades and 1997 Asian Financial Crisis that affected Korea, Thailand, Malaysia, and etc.

On its rest of the pages, the book illustrated about how finance and currencies operate. Also, it deals with the problem of paper notes as a currency. It also deals with the problem that paper currencies creates problem such as debt being larger than the actual amount of money due to debenture of ‘money earned in the future’.

Through out the book, I did not (or tried not to) believe the claims stated in the book. I knew that some of the stories have been too much dramatized. However, I feared in a sense that this could be a reality because the writer Song Hongbing has given out specific data through out the book, which supporting his claims strongly.

In sum, it was too complicated for a high school student to understand the functionality of currency and finance in the book, however, I think I understood most of the important aspects of currency.

Related Resources:

Article: “Chinese buy into currency war plot”

Wikipedia: Rothschild Family

Wikipedia: Currency Wars

Wikipedia: Fiat Money

2010.5.21 Writer’s Comment

I think that we should not ‘mindlessly’ believe what is written in this book. It’s full of conspiracies, however, the author has given us different point of view and perspectives to how some people think of economics. Majority of the people used to think of economics as a subject of ‘how to earn money.’ But, Song Hongbing introduced us the new perspective of how the economy can be dominated in the way it is described in the book. Remember, it is not entirely comprised of ‘facts.’ Many of the ‘theories’ are based on the ‘reasonable’ assumptions.

2010.10.4 Writer’s Comment

I must admit that comparing the wealth of a family (multiple individuals) and the wealth of ‘an’ individual is somewhat awkward. There could be hundreds of individuals in one family. Therefore, it could be possible that the book was wrong about how Bill Gates is not the richest man in the world. However, doing simple math it could be easily known that there are individuals within the Rothschild family that has more wealth than Bill Gates. For example, 5000billion divided by 100 would equal to 50billion. This would mean that 100 individuals have more wealth than what Bill Gates has (40billion). However, the wealth would not be distributed equally like equal slices of pizzas. The distribution of the wealth within the family will be concentrated in the middle and it disperses to other individuals. So there will be about 10 individuals with 50% of the $4 trillion.

However, I really don’t believe in what the book is saying. I still believe that Bill Gates is the richest man in the world. I’ve just done some calculations to see if it is ‘legitimate’ to compare a group of people to an individual.

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Naked Economics

While reading the book Naked Economics by Charles Wheelan in the pages from 17 to 22, there were several points made.

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1. The market economy is a powerful force for making our lives better.

  • Competition in business firms lowers the price and the cost of a product or a service, thus making the lives of costumers better.

2. Market is amoral.

  • Market system does not protect the poor.
  • Market system lacks moral in a process of rewarding scarcity and pricing any valuable product.

3. Price is the means of allocating scarce resources.

  • Since there is a limited amount of resources, prices act as a medium of allocating the resources. The one pays more than another gets to be an owner of that resource.

4. Through pricing, most market are self-correcting itself.

5. If a government fixes price in a market system, private firms will find

some other ways to compete.

  • When OPEC decides to cut off the production of oil, the price goes up. However, as the price goes up, some of its members start to opt out and cheat on that promise in order to sell their oil at best price.

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