World War Is Coming, Currency War That Is - Russia Warns

Tyler Durden's picture




 

It will not come as a surprise to anyone who has spent more than a few cursory minutes reading ZeroHedge over the past few years (back in 2009, then 2010, and most recently here, and here) but the rolling 'beggar thy neighbor' currency strategies of world central banks are gathering pace. To wit, Bloomberg reports that energy-bound Russia's central bank chief appears to have broken ranks warning that "the world is on the brink of a fresh 'currency war'." With Japan openly (and actively) verbally intervening to depress the JPY and now Juncker's "dangerously high" comments on the EUR yesterday, it appears 2013 will be the year when the G-20 finance ministers (who agreed to 'refrain from competitive devaluation of currencies' in 2009) tear up their promises and get active. Rhetoric is on the rise with the Bank of Korea threatening "an active response", Russia now suggesting reciprocal devaluations will occur (and hurt the global economy) as RBA Governor noted that there is "a degree of disquiet in the global policy-making community." Critically BoE Governor Mervyn King has suggested what only conspiracists have offered before: "we'll see the growth of actively managed exchange rates," and sure enough where FX rates go so stocks will nominally follow (see JPY vs TOPIX and CHF vs SMI recently).

 

Via Bloomberg:

The world is on the brink of a fresh “currency war,” Russia warned, as European policy makers joined Japan in bemoaning the economic cost of rising exchange rates.

Japan is weakening the yen and other countries may follow,”

 

...

 

The push for weaker currencies is being driven by a need to find new sources of economic growth as monetary and fiscal policies run out of room. The risk is as each country tries to boost exports, it hurts the competitiveness of other economies and provokes retaliation.

 

Yesterday “will go down as the first day European policy makers fired a shot in the 2013 currency war,” said Chris Turner, head of foreign-exchange strategy at ING Groep NV in London.

 

...

 

The skirmish may lead to a clash of G-20 finance ministers and central banks when they meet next month in Moscow, three months after reiterating their 2009 pledge to “refrain from competitive devaluation of currencies.”

 

While emerging markets have repeatedly complained about strong currencies as a result of easy monetary policies in the west, the engagement of richer nations is adding a new dimension to what Brazilian Finance Minister Guido Mantega first dubbed a currency war in 2010.

 

...

...and as we warned over two years ago:

"We feel sad for the central banks, who apparently don't realize that in this war of attrition there are no losers, and the final outcome is the end of Keynesianism. We hope someone promptly discovers the FX equivalent of the nuke, and a global exchange occurs, as we, for one, can't wait for this most destructive experiment in economic fundamentalism to end already."

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Wed, 01/16/2013 - 12:31 | 3157775 sbenard
sbenard's picture

I'm personally not convinced that the coming "world war" will be restricted to currencies. I hope I'm wrong, but fear that I'm not!

Wed, 01/16/2013 - 12:33 | 3157786 otto skorzeny
otto skorzeny's picture

first the currency wars-then the shooting ones. that's all these assholes have left-although the next one won't have the "happy ending" that WWII did-it will probaly tear the US apart

Wed, 01/16/2013 - 12:54 | 3157831 Ghordius
Ghordius's picture

come on, otto, we had several currency "wars" in the last decades - it's very difficult to argue that they have to result in trade war escalations and then shooting wars

the highlight of one was Tricky Dick's "I'm a golden deadbeat and you are all dirty rascals" moment in August 1971

others that come to mind was how the British Pound got battered by NY for the invasion of Egypt, or Soros' raid, or the great speculative attacks on the european currency grid, etc. etc.

perhaps we should call them "friendly banter" instead of "wars", or borrow some term out of the S&M vocabulary

you could argue that the very setup of the EUR is an act of "currency sadism" on the USD and GBP - brings back the old adage that building fortresses can be seen as the prelude of an invasion and all that

historically, when a few major players - like in this case Russia, who has a lot of clout with the BRICS - call for an end there is a big, big meeting and a new monetary order is born

now that would be something to fear. China really, really wants a stronger, more important SDR, for example

Wed, 01/16/2013 - 14:22 | 3158619 trav777
trav777's picture

petroruble to the rescue!!!!!

Wed, 01/16/2013 - 15:16 | 3158976 SheepleInAction
Wed, 01/16/2013 - 18:45 | 3160006 Enslavethechild...
EnslavethechildrenforBen's picture

Your daily demotion is going hyperbolic...

Wed, 01/16/2013 - 14:32 | 3158674 DaveyJones
DaveyJones's picture

are we practicing currency sadism or currency masochism?

Wed, 01/16/2013 - 15:17 | 3158990 Winston Churchill
Winston Churchill's picture

Like the one in Mumbai last year.The unscheduled FinMin's meeting of the BRIC's.

All is in hand,only the announcement date remains unknown.

The big conference happens only after the details are thrashed out.

Wed, 01/16/2013 - 13:13 | 3157968 Ghordius
Ghordius's picture

found it, ZH was discussing similar things in this 2010 piece

               Are Or Aren't France And China Plotting An Alternative To The Dollar?

from there: "...China's desire to engage in a currency axis away from the US is no secret, and many have alleged that Beijing has approached both Russia and Germany in the past about a USD substitute..."

The background was the same: a G20 meeting. The possible result: a grand currency bargain like in the 80's

-----

edit: now I feel very, very foolish after noticing that ZH has (new?) a sidebar on the right that sports the same link under "You might also enjoy reading"

anyway, this should be worth reading (again): Jim Rickards: On the Reserve Currency etc...

Wed, 01/16/2013 - 13:29 | 3158228 mick68
mick68's picture

Its coming is it Russia?

Welcome to 2011, when the largest economy was actively engaged in the battle.

Why is it that nobody sees anything until its years old these days?

Wed, 01/16/2013 - 14:48 | 3158797 Matt
Matt's picture

Thanks for the link. Don't feel foolish, my "You may also enjoy reading" does not have that link, so it must be different per user or per visit.

Wed, 01/16/2013 - 16:11 | 3159278 Rentenmark
Rentenmark's picture

See also Rickard's book "Currency Wars".  His analysis has been pretty sound the past few years so I think it is worth while to listen to him.

Wed, 01/16/2013 - 14:50 | 3158810 foodstampbarry
foodstampbarry's picture

No more obozo as prez? I'm in, bring it on.

Thu, 01/17/2013 - 00:40 | 3161208 13thWarrior
13thWarrior's picture

Yes that is the plan to end US reign as a ruling state. Guess who will be replacing the US? Yes you are correct Zionist State of Israel expanded borders to encompass MIddle Eastern sweet crude.

Wed, 01/16/2013 - 12:42 | 3157824 EscapeKey
EscapeKey's picture

I think you're right. I predict Target will declare an all-out price war vs Walmart.

Wed, 01/16/2013 - 14:26 | 3158652 DaveyJones
DaveyJones's picture

Then like Iran and the US, Amazon will try to take them down with cyber warfare

Wed, 01/16/2013 - 13:32 | 3158255 Canadian Dirtlump
Canadian Dirtlump's picture

that is the scary reality, and the problem is, who the fuck will be fighting who. On one hand one would expect it to be the "west" versus Iran, Russia, China.. but...

 

given that Iran is lumbering along despite the west's best efforts, and neither russia nor china are anywhere near the dirtiest shirts in the laundry..

 

A more scary proposition is that we have in fighting betwee the developed mongoloid western countries at which point you're in a bar fight full of strangers all or most of whom have nuclear weapons... I'm glad I have some booze in my office.

Wed, 01/16/2013 - 16:58 | 3159515 zerozulu
zerozulu's picture

Its like 7-Eleven's graveyard shift. first peaceful robbery and if any one resists, shoot.

Wed, 01/16/2013 - 17:14 | 3159591 Chupacabra-322
Chupacabra-322's picture

@ sbenard,

The Dept. of Defense runs war game scenarios regarding Currency Wars.

Global currency war escalates over Euro: The Pentagon has undertaken war games on currency and finance as countries jostle for survival and position with the Euro in danger of collapse.

http://maxkeiser.com/2011/12/10/global-currency-war-escalates-over-euro-the-pentagon-has-undertaken-war-games-on-currency-and-finance-as-countries-jostle-for-survival-and-position-with-the-euro-in-danger-of-collapse/

Wed, 01/16/2013 - 17:17 | 3159604 sessinpo
sessinpo's picture

Where in the article or thread is it suggested that the coming "world war" would be restricted to currencies?

 

Point of this reply is to allow you to enhance your reasoning and comprehension skills.

Wed, 01/16/2013 - 12:31 | 3157776 SheepDog-One
SheepDog-One's picture

Gee, and here I thought we were clearly already in a world currency war for the last 3-4 years at least...WTF?

Wed, 01/16/2013 - 12:31 | 3157777 kliguy38
kliguy38's picture

Quit crying and just give us your oil for our fiat you pussies

Wed, 01/16/2013 - 12:36 | 3157793 otto skorzeny
otto skorzeny's picture

europe freezes to death if Putin turns off the NatGas spicket. that and Russia will once again take advantage of an enemies(US?) extended supply lines like they have before to devastating effect

Wed, 01/16/2013 - 12:37 | 3157811 kliguy38
kliguy38's picture

Checkmate to the paper monkies

Wed, 01/16/2013 - 12:42 | 3157825 Gazooks
Gazooks's picture

likely why the Germans want some phys on hand

Wed, 01/16/2013 - 14:29 | 3158659 DaveyJones
DaveyJones's picture

even pussies, especially pussies, want cash that can buy things

Wed, 01/16/2013 - 12:32 | 3157785 SheepDog-One
SheepDog-One's picture

'We feel sad for the central banks'...well, I sure don't.

Wed, 01/16/2013 - 12:33 | 3157787 A Lunatic
A Lunatic's picture

We win. The winnings will look a lot like carnage, but hey, who cares right................?

Wed, 01/16/2013 - 13:39 | 3158302 Shell Game
Shell Game's picture

When in doubt simply apply more lipstick to the carnage..

Wed, 01/16/2013 - 12:35 | 3157794 scatterbrains
scatterbrains's picture

mean while looks like a bunch of sand niggas getting tired of trading fiat for oil ?

http://news.yahoo.com/islamists-seize-japanese-french-nationals-algeria-...

Wed, 01/16/2013 - 12:38 | 3157812 otto skorzeny
otto skorzeny's picture

MoMar in Libya was a big stabilizing effect in the region as the local strongman- but once again "those meddling kids"(CIA,Mossad,Nato,et al) fucked things up and made it worse

Wed, 01/16/2013 - 14:49 | 3158800 donsluck
donsluck's picture

Didn't bother to read the link do to the racist baiting. -1 for you!

Wed, 01/16/2013 - 12:35 | 3157796 Son of Loki
Son of Loki's picture
Dozens held after Islamists attack Algerian gas field

 

http://news.yahoo.com/islamists-seize-japanese-french-nationals-algeria-...

Wed, 01/16/2013 - 13:18 | 3158051 Jack Burton
Jack Burton's picture

Good find Loki! Most people are not paying attention, but the istability in Libya and Mali are spilling over into Algeria which was already very tense. Arab Spring is not a term I like, but Algeria is primed for much of what we call the Arab Spring.
Libya's arms depots were quickly looted by all groups looking to rearm with better more modern versions of Russian and western infantry wepapons. The most dangerous being the hand held AA missiles, thousands of them, the infantry mobile anti tank missiles and modern unguided RPGS.
Algeria will light up into conflict, any battle in Mali or tribal battles in Libya will just push the losers onto Algerian soil where they can join forces with anti government groups.
NATO was happy to light the fuse in Libya, now the whole thing is blowing up in their faces. Syria is not turning ut to be the quick victory NATO planned, as Russia will not allow an air war against Assad's forces. To back this up, Russia delivered some Iskander Surface to surface missiles that can kill the Patriot Batteries in Turkey or Israel's Iron Dome radar sights. Syria has no plan to use these missiles, but they act as a counter weight to Turkey and Israel feeling free from retaliation should they begin to bomb Syria. Rumors are that the recent arival of Russian landing ship in Tartus is that they brought some mobile S-300 anti aircraft batteries. These are able to kill even the most modern Israeli aircraft and missiles. So again, Syria would have a real defense ability.
NATO and the USA have thought they could start and then control the Arab Spring as a force to deliever many nations into the NATO orbit. This is not working out. Algeria is primed to blow, keep an eye on it as the Mali fight expands!

Wed, 01/16/2013 - 13:27 | 3158214 Sandmann
Sandmann's picture

Ghadaffi should never have given Sarkozy that $50 million and opposing French Plans for North Africa was suicidal ......http://ec.europa.eu/trade/creating-opportunities/bilateral-relations/reg...............

Wed, 01/16/2013 - 13:32 | 3158249 NooooB
NooooB's picture

Yeah Loki and Jack! Except the Tuareg region that is under dispute by the French, AGAIN, is in Mali, Algeria, and Libya. So... God job having any sense of history, geography, and your own ignorance...

Wed, 01/16/2013 - 14:31 | 3158667 reload
reload's picture

Consider the number of Algerians domiciled within France. Still think whats happening in Algeria is irrelevant, and not connected to Frances current and recent North African adventures?

Wed, 01/16/2013 - 21:53 | 3160726 dunce
dunce's picture

I was in France in the late 50s to the early 60s and it seemed that then most of their muslims were from Algeria, i doubt if that is still true because of open borders, generous social programs, stupidity, and the muslim aim of converting the world to islam whether they want it or not. It is a case of assisted cultural suicide.

Wed, 01/16/2013 - 17:46 | 3159746 DaveyJones
DaveyJones's picture

follow the uranium

Wed, 01/16/2013 - 13:37 | 3158288 Shell Game
Shell Game's picture

The 4GW contiues, as does the collapse of globalism, central planning and empire.  

Wed, 01/16/2013 - 12:36 | 3157799 Say What Again
Say What Again's picture

If everyone bartered in "units of gold," instead of fiat bullshit, this would not be an issue.

Wed, 01/16/2013 - 12:37 | 3157802 Falconsixone
Falconsixone's picture

"I love the smell of currency in the morning"

Wed, 01/16/2013 - 12:38 | 3157814 Gazooks
Gazooks's picture

burning

Wed, 01/16/2013 - 14:02 | 3158487 A Nanny Moose
A Nanny Moose's picture

Charlie doesn't surf.

Wed, 01/16/2013 - 15:07 | 3158923 Argentbilly
Argentbilly's picture

I love the smell of 90% in the morning.

Wed, 01/16/2013 - 12:38 | 3157813 ziggy59
ziggy59's picture

Gonna get jiggy with it...
First fiat wars, then real wars for real assets...

Wed, 01/16/2013 - 12:43 | 3157829 madcows
madcows's picture

Um, correct me if I'm wrong, but haven't the Central Banks of the World been printing like mad for the last 5 years?  Doesn't that constitute a currency war of who can devalue the best-est?  Note to author:  They've been waging a currency war for the last half a decade.

Wed, 01/16/2013 - 12:45 | 3157833 adr
adr's picture

Wait, I know what will fix all of this, a ONE WORLD CURRENCY!!!!

Has someone thought of that before? Wow, solves everything.

/sarc even tough it shouldn't be needed.

Wed, 01/16/2013 - 12:58 | 3157912 Ghordius
Ghordius's picture

arguably we had once one world currency: gold 

and yet even gold was nearly everywhere engaged in a chronic currency war with... silver

Wed, 01/16/2013 - 13:25 | 3158196 Sandmann
Sandmann's picture

Gold Standard worked because the British Empire had the raw materials and gold. Once the British Empire weakened the Gold Standard weakened. The Bimetallism Debate was the US wanting to use Silver to escape the London Gold Standard. War destroyed the Gold Standard for the British Empire as Vietnam did for the US

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