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The Illustrated Guide To 4 Years Of Currency Wars
While central bank intervention in the foreign exchange markets is nothing new, the last 4 years have seen unprecedented use of direct and indirect (jawboning) manipulation of exchange rates. As Goldman Sachs notes non-cooperative exchange-rate mechanics (i.e. currency wars) remains the new normal dynamic in world markets; and while some of the moves are generally consistent with cyclical (or structural conditions), efforts by central banks to 'manage' developed market rates in a low volatility range may come under further pressure with the Fed "tapering" as emerging market nations face money flow crises.
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Chart: Goldman Sachs
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TWD, BRL and MXN but no CAD? Seriously?
Currency wars, not back-bacon and beer, eh?
Hey Genius, if Canada is not the USA's biggest trading partner, it's close to it. How can that not be important in matters such as these.
The irony is, even most ZHers (bloggers and writers) don't know that.
Just wait until the ECB goes negative rates or another LTRO, and Japan starts buying equities and RE securities next year. Then it's on like donkey kong!
China has been letting the Yuan appreciate and buying gold for inflation protection, but they have major liquidity issues. Exports are still their life blood. Emerging economies and BRICS aren't going to sit around and let Japan go apeshit crazy devaluing the yen.
Japan is demographically and structurally broken, and no amount of QE is going to fix lack of demand domestically or globally.
....and it doesn't help Japan that the population by in large are myopic sheep who will be led into the nuclear gas chamber asking where the soap is for the shower
Too much hair dye and "Hello Kitty" brainwashing prains.
"last 4 years have seen unprecedented use of direct and indirect (jawboning) manipulation of exchange rates."
What good has it done? Things seem just as screwed up as they were 4 years ago. European unemployment hit 12%. 47 million Americans are still on food stamps.
"What good has it done". None, in the long run, just created more misery for the vast majority of the population, while enriching those at the top in Te greatest transfer of wealth from the middle and bottom to the very top, while simultaneously postponing the inevitable crushing decline in the fiat currencies and standard of living for most people living in the debt fueled bubble we call an economy.
"47 million Americans are still on food stamps." ...and climbing!
Hah! Looks as if the Yuan is coming to a bank near you (maybe even your favorite ATM).
In the memorable words of Peter Lorre "We are doomed!"
It's funny how they keep saying that this monetary experiment of the PhD's who never worked a day in business is uncharted territory. Does it really make a difference if the whole world is doing it, or just Weimar Germany or Zimbabwe? I think not! The end will be horrible. When it finally crashes, trust no-one, or you'll end up being lunch!
Look at the bright side, if you survive then it'll be open season on all that caused this mess.
Bankers gone wild. This is the result of taking the world's reserve currency off the gold standard.
Look at the bright side... If we still had to live within our means, we wouldn't have the world sending us cheap stuff and things would cost a lot more.
Of course we wouldn't have Gunboat Diplomacy, 200 bases abroad, no real or protracted foreign wars, and a more limited MIC. We also wouldn't have GS and AIPAC running the country. And Israel would have to make peace with its neighbors.
No currency war discussion is complete without watching the approx 50% dive by the Indian Rupee, which holds the world record for being depreciated on every single time scale over the last 50 years, whether 2 years, 5 years, 10 years or 20 years, against the USD.
http://www.barchart.com/chart.php?sym=^USDINR&t=BAR&size=M&v=0&g=1&p=WO&d=X&qb=1&style=technical&template=
Secondly, currencies must be compared to something, in the case of currency wars, they must be either compared to the Chinese yuan which has risen consistently for 20 years now (stability) or with gold (long term).
The gap beween AUD, CAD, MYR, THB, ZAR, INR, BRL, MXN, RUB, EUR, GBP etc etc as compared to the Chinese Yuan keeps rising every single year. and one day, it will be kaboom!
For example, the INR has lost 40% to 50% versus the USD but has lost 55% to 60% versus the CNY.
http://www.bloomberg.com/quote/CNYINR:CUR/chart
The BRL has lost in excess of 60% versus the CNY in the past 5 years and so on...
http://www.xe.com/currencycharts/?from=CNY&to=BRL&view=5Y
Just by holding the alternate currency viz CNY, one can benefit instead of losing by holding the other currency, which is today more powerful / profitable than the rate of interest or any equity price movement or even the price of gold in some time horizons. CNY makes it palatable because it is still a form of money and easily convertible into USD or any other major currency for purposes of trade or investment or tourism or real estate etc. Whereas, gold is tough to carry around the world, needs also to be converted into an alternate currency to make it useful as a form of payment and has other logistical issues such as storage and theft and declaring across international borders etc. Gold must be part of any portfolio but cannot be 100% hence CNY fills a useful part in any portfolio of savings, if it is available, which it is not as on date to all.
Dont beat me with the gold thing, I like gold and recommend as holding it but it just cannot be 80% or 100%, that's all.