Currency war threatens global economy

The euro is rising again but the price increase is mainly due to the depreciation of the U.S. dollar. At the annual meeting of the International Monetary Fund and the World Bank are concerned about the competitive devaluation of major currencies in focus. The “currency war” is mentioned. China in particular is in the pillory, which couples its renminbi than 15 years ago to the U.S. dollar. The external value of the Chinese currency is considered undervalued and promotes the export of Chinese consumer products.

The United States increased in late September, the import duties on imports of Chinese tires by 5% to 35%. Of course, if they cause a tangible trade war high rock, in the end everyone loses. This example shows how quickly established itself in times of crisis, a policy that can lead to currency and trade wars. The world is on track to repeat the old errors. It is our currency, but it’s your problem formulated “in 1971 the U.S. Treasury Secretary John Connally. After all, the United States certainly see the practical benefits of a weaker dollar.

The import of foreign goods is complicated, and the export of American production is facilitated. There is more. The fact that the euro had gained since its February low of around 15% is displaced. It everyone should know that for the German export industry is in the air continues to rise, euro rate fast thinner and ultimately the whole recovery is jeopardized. The mere term “currency war” by the media, unfortunately, are equal to the number of nine wise politicians and bankers to jump on it shows that there is no one solution to a real problem.

The first step to move away from the false theory would be „As high export surpluses automatically lead to economic growth and prosperity.” If all countries had taken a lesson from this error, the first step would be done. Second, it comes to the current account imbalances. Just not too much can be achieved. Of course, after the financial crisis, the U.S. budget deficit has grown to have a few hundred billion and the euro is suddenly too strong.