'We May Be on Verge Of Currency War'

by JASmius



That's not quite how I would describe it, unless we're talking currency civil wars:

The global economy "may be on the verge" of a currency war, as the Bank of Japan and European Central Bank (ECB) ease policy vigorously to stimulate their moribund economies, says David Wessel, director of the Brookings Institution's Center on Fiscal & Monetary Policy.

Countries seek to depress their currencies to boost exports. A weaker currency makes a country's exports cheaper in foreign currency terms.

"Japan has already managed to depreciate its currency," Wessel writes in the Wall Street Journal. The dollar hit an almost six-year high against the yen Friday and traded at 107.33 yen Wednesday morning.

Japan's economy shrank 7.1% in the second quarter.

"Now the spotlight is shifting to Europe," Wessel warns. The eurozone registered zero growth in the second quarter.

Earlier this month, the ECB intensified its monetary stimulus, cutting interest rates and announcing it will purchase asset-backed securities.

Maybe it's just me, but that all sounds verrrrrry familiar.  Moribund economies strangled by socialistic governments in countries with post-modern declining populations and escalating, entitlements-driven national debts, and the only macroeconomic "remedy" they're willing to try is even more deficit ("stimulus") spending and currency debasement to try and camouflage the entirely self-created economic mess.  If I didn't know better, I'd suspect they're following somebody's prominent bad example.

Which brings us to this sprightly observation:

"For now this isn't a big threat to the U.S. economy. The U.S. dollar has been strengthening for some time, initially because nervous investors were looking for safety and more recently because markets expect the Fed to begin raising interest rates from rock-bottom levels next year, well before the ECB does."

That is one of those quotes that makes me wonder what planet on which I'm living.  How exactly is other countries opting to destroy their own currencies a "threat" to the United States?  Hell, we've been doing that for almost six years, with no end in sight.  The quote's perverse premise is that we aren't destroying the dollar hard or fast enough, and if we don't pick up the devaluatory pace, the EUnuchs  and the Japanese will beat us to the vaunted and coveted hyperinflation brass ring.  Which is a level of stupid for which even I do not possess adequate descriptive language.

But then what else can be expected from a mindset that is incapable of questioning the efficacy of anti-capitalist dogma?  To which it never even subconsciously occurs that they could simply cut taxes, dismantle their welfare states, deregulate their economies, trust their citizenries, de-fiatize their currencies by restoring the gold standard, let liberated free economies rip, and sit back and behold the tsunami of wealth and prosperity that would inevitably ensue.  Heck, by this time capitalism and republicanism have probably been completely bred out of the European and Japanese branches of the human genome.  And Obamerikastan isn't far behind.

Have no fear, though, folks.  I'm sure Janet "Old" Yellen will be pushing another round of "quantitative easing" to pre-emptively "fight" this "currency war".  Because a race to the economic bottom is a "war" about which Barack Obama actually does give a damn.