A new currency war coming

   It looks as another round of currency way is on horizon. In EU ECB is commenting on QE policies including some exotic experiments like “negative interests”. In Japan comments appear that up to now money-print was not enough and Yen will soon start to increase its value. In China strange movements of Yuan surprised investors that got used with the trend of constant increase of its value. In all 3 regions statistics showed extremely low inflation that backed the concept of more monetary activity in future.

    It looks as a contrast that at the same time FED is decreasing the size of the QE. But the low inflation data is present here too, along with the promise of long term low interest rates.

   In all regions real economy troubles are discovered and one of the main reasons for them is pointed to be the too strong currency.

   So it looks as money artillery will start shooting noisily soon.

   It is not clear only the final purpose of all this. The bygone currency war led to nothing. We are again in the mid of nowhere. And as a response for this, another round is coming. But using currency devaluation for economic growth presumes having growth at the expense of someone else. I.e. stealing from else’s growth. I.e. this is a redistribution process. You cannot redistribute simultaneously in favor of all sides…

   The problem of the world economy is the real production. But the real production is stimulated by more money for it. I.e. making money by hardworking and creating a real product.  Money print works in the opposite direction. It creates easy money received without working. It devalues the real money created by working. So it de facto suppresses the real production.

   We cannot fight with currencies forever. It is good to stop the fighting and start working.

   Dobri B.
   May-9th-2014

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