Currency Wars Often Lead to Trade Wars ... Which In Turn Can Devolve Into Hot Wars

George Washington's picture

d Currency Wars Often Lead to Trade Wars ... Which In Turn Can Devolve Into Hot Wars

Currency War → Trade War → Hot War?

According to numerous high-level insiders, the global currency war is accelerating:


And Japan's escalation of the currency war has caused leaders in the Eurozone (more), Norway, Sweden, South Korea, Taiwan, Columbia, Mexico, Peru, Chile, Venezuela and many other regions to devalue or consider further devaluing their currencies. China may be joining as well.  (And James Rickard and Reggie Middleton think that Germany’s demand for its gold is part of the currency war.)

We've been in a global currency war for years.

As the Wall Street Journal asked in 2010:

Beggar-thy-neighbor currency devaluations proved ruinous for the global economy in the 1930s. Is the world setting off down the same slippery slope again?

Yes, we are.

Despite drivel from ignorant sources, currency wars don't help the average person.

Quantitative easing - the main lever to depreciate currency - hurts the little guy and only helps the super-elite.

Former Secretary of Labor Robert Reich points out that a weak dollar makes everyone poorer ... and any new jobs created by a a policy of devaluation are low-wage jobs.

Economist Mark Thoma noted in 2010:

While the positive effects a currency war produced in the 1930s [many disagree] are unlikely to reappear, there is a chance of large negative effects such as a simultaneous trade war or the breakdown of the international monetary system, so let's hope a currency war can be avoided.

Philadelphia Federal Reserve Bank president Charles Plosser notes that currency wars would only hurt world trade and the economies that were involved.

The IMF noted in 2010 that currency wars "would represent a very serious risk to the global recovery".

Even Paul Krugman is not that keen on currency wars.

Trade Wars

It is widely accepted that currency wars can lead to trade wars. As Time notes:

A competitive devaluation game can turn into a trade war, whereby losing countries start slapping tariffs on imports and exports to punish countries deemed to be “manipulating” their currencies. Trade wars, of course, make stuff more expensive for everyone, and that’s just about the last thing global consumers – increasingly squeezed by rising unemployment and inflation – need.

Nouriel Roubini agrees.

Indeed, there are signs that currency war induced trade wars are already starting.  And see this.

Hot Wars

Brazilian president-elect Rousseff said in 2010:

The last time there was a series of competitive devaluations ... it ended in world war two.

Billionaire investor Jim Rogers says:

Trade wars always lead to wars.

Top trend forecaster Gerald Celente has said for years that currency wars turn into trade wars ... which in turn lead to hot wars.

Jim Rickards agrees:

Currency wars lead to trade wars, which often lead to hot wars. In 2009, Rickards participated in the Pentagon's first-ever "financial" war games. While expressing confidence in America's ability to defeat any other nation-state in battle, Rickards says the U.S. could get dragged into "asymmetric warfare," if currency wars lead to rising inflation and global economic uncertainty.

Indeed, trade wars have been leading to hot wars for thousands of years.  For example, the war between Rome and Carthage - leading to elephants in the mountains surrounding Rome - essentially started as a trade war.

Indeed, with top economic forecasters predicting war, the American policy of using the military to contain China's growing economic influence, and the U.S. considering economic rivalry to be a basis for war, the global currency and trade wars are creating a tinderbox.

8419051627 bb9814e780 b Currency Wars Often Lead to Trade Wars ... Which In Turn Can Devolve Into Hot WarsImage by William Banzai

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falak pema's picture

damn right GW, and spot on with history rhymes. Chavez now pouring oil on that fire to protect his imports labelled in $.

The Bermuda triangle of Yuan/Yen/USD and Euro surrogate now heading for the rocks.

All it takes is a spark and Jap-Chin confront can blow up; as Iran-Israel; as in Sahel-Euro oligarchy presence standoff in Mena/Africa building up.

The stakes are now getting higher as currency race to bottom make RM rich countries the source of real wealth!

Russia and Africa along with Saud are the linch pins to the ongoing oil/fossil fuel conundrum.

But now, just Food and water itself are becoming front line...tipping times in MEna and Asia. 

In terms of history : What the Conquistadors achieved directly and indireclty for Spanish Empire, massive gold/silver pilfering and massive herd thinning locally; albeit more thru disease transfer like small pox virus, destroyed local civilizations in Amerindia.

A lot of people today realise a similar trend is now inevitable in current global confrontation for growing populations and receding food and water per capita. 

And the Oligarchs play on that theme like the Conquistadors of old. All we need is a Jesuit mindset, ideological dope,  and we will have the justification of that new war on the savage/terrorist target, of our age. "Kill em all..."

Bogey man, bogey man, if you didn't exist we'd have to create you to make it happen...we did it with God and the devil, (ask Voltaire that),  why not rinse and repeat, as always!  

Damn Islamo-Cathars! Forward charge! Onward christian soldiers we need to make the holy land clean again!

Drones away! (Keep a few handy for the local home heretic!)

Remember, never to bomb any local Oligarch, they're one of us!...  Damn I told you not to bomb a local Oilgarch...what have you done?

It ain't me, its that CIA shill! The army never misses...but those guys are outa control!

Perfect shit storm of overkill. 

The Heart's picture

Darn, the truth so esoterically put well. Will it do any good to tell the crew on the ship how they are going to sink and die? Speeded up time tells all things.

Gratitude for your well written Light sir.

Debeachesand Jerseyshores's picture

"Perfect shit storm of overkill".

Threw in leaving just one Carrier Group in the Middle(Shit)East and baby there's she blows.

flapdoodle's picture

What scares the Bejesus out of me is what I read today - South Korea is contemplating a pre-emptive strike against North Korean nuclear facilities...

I used to think only the North Koreans are bat-shit crazy but looks like South Korea is contesting the crown.

Really good idea there to stir up the bat-shit psychos in the North saying you are going to attack them...


Bandit und Buster's picture



WARS AND RUMORS OF WARS..... Wher have I heard that  phrase before???

groundedkiwi's picture

Dear George, the sooner you concentrate on Fukushima and the continuing earthquakes in the Pacific, ........ ........ .....

silverdragon's picture

The sooner the world adopts a rational system whereby fiat is backed up by Gold/Silver etc the better.

Long live the Austrians, just not the short one with the funny moustache, the monetary ones.

The tide is going out and soon we get to see who is broke and who isn't.


Lordflin's picture

War is unthinkable... Until it becomes thinkable.

Aside from the abundance of flash points... Middle East, South China Sea... Even the border between India and Pakistan, and recently India and China...

The world is militarizing... Nations do not build military's without using them... The cold war being something of an exception... More or less... As nuclear war seemed too terrifying... Somehow it seems less terrifying now and, in fact, inevitable... Live with an elephant in the room long enough it becomes part of the furniture...

The currency war imposes a time frame... Depreciating currencies are a clock ticking down the final seconds before the starting gun.

And then you have the Obamaphone lady...

Kind of makes you want to stop this ride and get off doesn't it?

AnAnonymous's picture

The world is militarizing...

no kidding...

What has the world been doing since 1776, July, 4th?

Ah yes, 'americans' introduced demilitarization of the world...

overmedicatedundersexed's picture

NWO inspired international free trade, had a price after all.

Son of Loki's picture

Boooyaaaaah George!

suteibu's picture

And just today, Nikkei, the mouthpiece of the Keidanren and the LDP, said that the weak yen was caused by the shrinking trade surplus with no mention of Abenomics, QE, or a 2% inflation target.

So, what the hell are those Europeans, Russians, Brazilians, Australians, Chinese, Fed Presidents, and Soros whining about? 

old naughty's picture

eh, someone is pulling the strings behind them (the whinners, or actors), just like before.

madcuban's picture

Must be easy.  CTRL +C and CTRL +V.  We've heard this over and over.  Don't need links to everyone else's articles.  We know it's true, now come up with original writing.

alatnar's picture

I disagree as a layman I sometimes need it spelled out on a chalk board if you already know all this 1 good for you and 2 shut the hell up

madcuban's picture

Shut the help up? Is that your impression of a narrow minded liberal? If so, that's a good one.

diogeneslaertius's picture

madcuban i just cant understand your attitude, i can dig that you want someone to dig deeper but why the hostility towards an obvious ally?


this is scholarly work that No One else is really doing

we need this kind of coalescing and boiling down a great deal so we can shove it into ppls inboxes who have no idea wtf is going on

it offers an inescapable litany of links to secondary refutations and .... why am i even explaining this

akarc's picture

"we need this kind of coalescing and boiling down a great deal so we can shove it into ppls inboxes who have no idea wtf is going on"


Ain't happening. How many people do you personally know who either do not want to be educated, or are already convinced that they know all they need to know?

It is exactly why we will repeat history as Argentina is repeating history and so on.......

On one side you have a reframe of the second amendment as an issue of how many bullets does a hunter need? With little if any media raising objection as to the argument that the second amendment has nothing to do with hunting, perpetrating instead public ignorance as to what actually constitutes an assault weapon.

On the other side you have those who holler they can have my gun when they pry it from my cold, dead hands as if they actually mean it.  If the past 6 years have not provided justification for picking the bitches up and actually loading them, nothing will! Their alligator mouths have outrun their tweety bird asses cause an "assault rifle" is poor defense against a drone missile strike.

And we are all guilty of allowing the existence of that possibility.

While the general population engages in "support our heroes" campaigns, our heroes (some of whom have been robo-closed on), who have taken an oath to uphold the constitution call occupiers and many others who do not think like us or whoever scum. Yes these are exaggerations to make a point. Though in my neck of the woods not so much an exaggeration.

Many in these comment threads exhibit knowledge enough to understand the devolving situation but it takes little to watch comments devolve into hate speech re jews, blacks, gays, Unions, religions, whoever your favorite group to hate may be. Left and right alike. Hell some just like hating everybody.

China has us on three fronts easy. Israel, Japan and South Korea. O.k. throw in Taiwan. Russia is more than happy to agitate the situation. It would take very little to suck us in over our heads at the time of their choosing.

We are leaving Afghanistan (so they say) but have we "won" anything.  Fighting in Mountainous cave riddled terrain or jungles of swamp is not the same as wide open desert where you can see your target a mile away (or further w/ a drone). 

I suspect it has not yet happened as it appears we still have a technological edge (do not count out that we have something that can hold folk at bay for a bit that the public is unaware of). However China has a heap of people that are not gung ho happy over there causing them their own problems.

At what point in time does human cannon fodder trump technology? You think the European youth are gonna be willing to put their lives on the line for us?  How about South America? Hell, theres a heap of mexicans looking for a better way of life. But then they may not want to die for us considering we don't even want them picking our lettuce.

And to those that abhor war due to the human suffering and carnage, when the hell has that meant anything?   Like everyone is currently fat and happy?

And therein lies our undoing. The corruption. hypocrisy and lies at the top reaches down to each and everyone of us and even if we/they had the knowledge few are willing to buck the system and will most obligingly go overseas to fight when the option is have your family droned.

Say it ain't so? I know! I have spent years involved in activism and seen how many talk and how many do.  Nobody defers to knowledge anymore. Critical thinking is a myth. We all know more than the other guy even though most of us, born w/ clean hard drives, suffered from defective programming that has taught us to hate w/o question!!! 

Problem is we have spent so much time blaming others the real enemy has seen our proclivity and used it against us while they raped and continue to rape us.

Who do you think will stand for either side. Occupy showed us what happens when anyone decides to go against the corporate/government/military/industrial complex.  

Policemen who were veterans and took the oath to protect the constitution love nothing better than an excuse to run over your ass.

But then history repeats itself doesn't it? Kent Ohio anybody?  But then that was just a bunch of dumb dirty hippies, students, commies who didn't know shit.  After all, it was men of reason and education that got us out of Vietnam????

We didn't get out of Vietnam til the people hit the streets. Blacks didn't get their rights til they hit the streets. Nothing changes till YOU/I change it. Unfortunately it won't be so easy now. There are to many who will sell there souls to Blackwater/Qi to guard the criminals who are already untouchable.

Yes, all the commenters are right. "It's" coming.  No wait a second. I'm wrong, it's here. Sometimes the dead just don't know when to lay down.   



madcuban's picture

His style of extreme propaganda writing getting shoved into peoples inboxes isn't going to win most people over since it screams extremist, especially the ignorant.  In trying to make friends and family think, i usually recommend How Capitalism Saved America, buy thomas di lorenzo.  It gives a great background of how we got started and where things went wrong. A nice gateway drug.  I mean book.

madcuban's picture

I had given GW some light constructive criticism in the past to be more original and dig.  He immediately just down arrows it and gets his followers to pile in.  If I didn't know better, it would seem he logs in under aliases and down arrows it some more. (This is something Facebook users would do and I abhor Facebook.)  His headlines and the body of his articles all scream propaganda to me.  Is his form of sensationalizing conservative/libertarian/subjectivist ideas (whatever label you choose to give him) any better than liberal/socilaist/nazi propaganda?  Some of his writings (plagiarism or just links) are just hype, while some of it merely regurgitates truth.  ZH is full of fantastic and true articles which enlighten and uplift.  GW stories seem to be aimed at stirring up people much in the same way the left would stir up thier base.  It seems more people are just interested in screaming clever comments than to stop and think.  GW articles cater to those who just want to say clever things.  ZH has been a tremendous influence on my life and my line of thought.  Most of the posts are intelligent and in depth.  If GW ever posts anything that meets teh true ZH standard, I'll be the first to commend him on it.  In the meantime, his articles pale in comparison to almsot all others here.  I ask everyone to think a bit deeper and be more critical about every article, good or bad.  But instead I think I will just get a dozen or more down arrows, it seems easier for most to do that than use their brains.  Your point on coalescing is good, and I agree.  ZH in general accomplishes that.  But they should be careful to not fall into the same trap as the MSM and allow propaganda from the other extreme.

AnAnonymous's picture

ZH is full of fantastic and true articles which enlighten and uplift.

Absolutely. Delivering life elevating stories, that is what, we, Americans, do.
It is our gift to humanity.

Signed: an American.

diogeneslaertius's picture
ed·i·fi·ca·tion   /?ed?fi?k?SH?n/ Noun The instruction or improvement of a person morally or intellectually: "the idea that art's main purpose is edification".   Synonyms enlightenment
diogeneslaertius's picture

so geroge puts in overtime fighting tyranny and you come in and take a shit in his mouthfor it?

well guess what pal: no one wants to eat your shit

DUNTHAT's picture

Check out this week's COT's trader positions for the currency futures---

rehypothecator's picture

Regarding Germany's attempt to repatriate its gold, and the sluggish timetable of its promised return by the Fed:  What's the big deal here? Germany held the gold at the Fed allegedly to be able to trade it.  Whether the gold is actually there or not, they could nevertheless "sell" it, in a public sort of way, and then use the proceeds to buy gold off the Comex and stand for delivery.  Theoretically this would be price-neutral, because they would be selling just as much as they are buying, i.e. they would be buying their own sales, at least insofar as the paper price goes.  Comex might not have enough to cover the entire transacted amount, but they could certainly move much more size this way than at the snail's pace promised them by the US - note that China has imported over a thousand tons of physical gold in the last few years.  The US can hardly object if the gold isn't there. It's not like they can say "no, we can't even sell it on paper."