The value of the Chinese currency is fixed by the government and
not allowed to trade freely on global currency markets. Secondly,
foreigners are sharply restricted in the types of shares they
can trade on China's two stock exchanges-one in Shanghai, the 
other in Shenzen (the Chinese name for Hong Kong). Notwithstanding, 
market turmoil in China's capitalist enclave Hong Kong has
occasionally sent other stock markets tumbling.

In October, 1997, Malaysian government leaders blamed currency 
speculation for the problem. Its currency, the Ringgit, had 
depreciated over 25 percent, which sent its stock market to 
all-time lows.

The Prime Minister had blamed the crisis on currency speculators,
most notably the famous hedge-fund manager George Soros, who is 
Jewish. They announced that the stock market crash in Malaysia 
was a Jewish plot to destroy Muslim countries in Asia.

Of course, other nations have also experienced sharp currency 
losses, including the Mexican peso just a couple of years ago and 
the South African rand as a result of UN sanctions in the 1980s.
In 1980, the rand was worth 1.18 to the U.S. dollar. By 1990, it
was about 2.65 rands to the dollar.

Today, after three years of Nelson Mandela and the kind of 
government the UN wanted for the
country, the rand has dropped 
to 4.98 rands to the dollar.

Currency devaluation against the dollar is worldwide. Why is this 
so important? Many observers believe the current instability in 
the Asian markets was caused by currency speculation and, they 
think, speculation was the cause of the worldwide depression of 
the 1930s. Americans, on the other hand, seem reasonably 
confident that, whatever the problems in the 1930s were, the 
United States is now protected from a similar depression by a
series of laws and government actions which are in place to slow
down any panic. Well, that's exactly what the people thought in 
1929, too. The formation of the Federal Reserve System, the
Democrats said when it opened for business in 1914, would 
prevent booms and panics through the control of interest rates. 
"Never again can panic come to the American people."

This confidence is based on the notion that it was speculation 
that caused the Depression; that a Republican President, Herbert
Hoover, stood by and did nothing, and that the problem was 
solved by a proactive Franklin Delano Roosevelt. It was 
Roosevelt, it is widely believed, who, on coming to power, 
immediately took stern action to stop the panic by closing 
down the banks, taking America off the gold standard, and 
creating jobs through government spending programs.

Yet, with the creation of the Federal Reserve System in 1914, 
fifteen years prior to the disastrous collapse of the market 
in 1929-32, all the "experts" in the Democratic Party who pushed
for it said it would "stop forever" the booms and busts of the 
stock market. In fact, that was the major reason for creating 
the Federal Reserve System in 1914: to end financial panics.

Senator Robert L. Owen, father of the Federal Reserve Act of 
1913, said the system "gives for the first time in this country
an assured stability in business.

It brings into activity every human agency available in our 
country. It brings to employment every man willing to labor. 
It brings a condition, not of temporary prosperity, but of 
continued stable business prosperity in this country, which 
cannot be broken."

Fifteen years later, when the system broke down in a major way, 
the Democrats promptly blamed the Republican President, Herbert 
Hoover, who had been in office nine months, for the debacle. But
was speculation and currency manipulation the cause of the 1930s
depression? And DID Herbert Hoover do nothing, and FDR save the 
day with his basically socialist solutions? Many financial 
experts believe they can tell us, after nearly 70 years of 
Monday-morning quarterbacking, how the Great Depression could 
have been avoided, as well as what caused it and what stopped it.

However, the recent sudden crashes came as a surprise to most 
and the recovery from the 1987 crash, for example, has been just 
as mysterious. What exactly was going on in 1929 when the Dow
Jones took a sudden fall, wiping out as large a percentage of 
the market as has occurred in Hong Kong? What happened in 1987 
when a similar steep drop took place? Why didn't that crash cause 
a serious recession or depression? What's going on right now as 
currencies worldwide are in trouble, Asian markets have dropped 
precipitously, and Wall Street seems to have the jitters?

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