Tag Archive for Currencies

How to Make a Fortune If the Currency Wars Go Atomic- Shah Gilani – Money Morning

There’s a lot of talk about currency wars these days, but very little understanding about what that means for specific countries, economic growth, inflation, and your pocketbook.

Let’s fix that.

First of all, there has been no declaration of any currency war. And there likely won’t be.

That’s because open currency warfare could quickly lead to a mushrooming global crisis.

But that doesn’t mean countries aren’t already engaged in currency battles; they are. They almost always are.

Here’s an over-simplified explanation about how currency wars affect you.

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The Pound Gets Pounded – Peter Schiff – Money Morning

As the global currency war intensifies, the majority of attention has been paid to the 17% fall of the Japanese yen against the U.S. dollar over the past few months.The implosion has given cover to the sad performance of another once mighty currency: the British pound sterling.

But in many ways the travails of the pound is far more instructive to those pondering the fate of the U.S. currency.

Japan has a unique economic and demographic profile which makes it a poor stalking horse. Newly elected Prime Minister Shinzo Abe and the Bank of Japan have clearly and forcefully committed Japan to a policy of inflation at any cost.

Even in a world of serial money printers their plans stand out as exceptional. Britain, on the other hand, is charting a more conventional course to the same destination.

Limited Time Offer: To receive a free copy of Peter Schiff’s new bestseller, The Real Crash, click here.

The UK government, under conservative Prime Minister David Cameron and Chancellor of the Exchequer George Osborne, has succeeded in bringing marginal discipline to their budgetary imbalances.

From 2009 to 2012, British government expenditures rose a total of just 1.6%, which was far below the official pace of inflation. (In contrast, U.S. federal spending grew by 7.9% over that time period). Since 2009 the British have kept their debt-to-GDP ratio lower than America’s and have cut into that metric at a faster rate.

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Is Japan About to Fire the First Shots in a 1930s Style Currency War? – Keith Fitz-Gerald, Money Morning

Chances are you’ve heard about the so-called “race to the bottom” in which various industrialized nations are gradually allowing their currencies to depreciate in an attempt to maintain competitive parity.

Forget about it…the real risk right now is an all-out 1930s-style currency war. I know it’s not front-page news yet, but I have a sneaking suspicion it will be shortly.

It’s going to blindside Washington and most of Europe, where central bankers, politicians, and more than a few economists fail to recognize that events from nearly 100 years ago are now primed to repeat themselves.

Worse, it will devastate an entire class of investors who have put their faith in the current economic dogma of endless bailouts and money printing.

Ironically, this currency war won’t start because of international problems. Instead, it will be touched off in earnest because of domestic concerns– only they aren’t ours. My guess is Japan fires the first shots.

Here’s why:

  1. Japan’s newly elected Prime Minister, Shinzo Abe, is calling for unlimited stimulus and more aggressive financial intervention in an effort to boost Japan’s flagging economic situation and eviscerated domestic economy.
  2. The Bank of Japan has doubled its inflation target to 2% while also promising to buy unlimited assets using a page from Bernanke’s playbook. Bear in mind that Japan’s combined private, corporate and public debt is already nearly 500% of GDP, which is much larger than the 250% that’s commonly bandied about in the media.
  3. Japan has one of the strongest fiat currencies on the planet, which means it has the most to gain and everything to lose if somebody beats them to the punch. An expensive yen holds back Japan’s exports by making them more expensive in global markets, while the debt I just mentioned hobbles future economic development by robbing the private sector of capital it needs for an actual recovery.

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Taleb Says Euro Breakup ‘Not a Big Deal’ as U.S. Scariest – Bloomberg

Nassim Taleb, author of “The Black Swan,” said he favors investing in Europe over the U.S. even with the possible breakup of the single European currency in part because of the euro area’s superior deficit situation. Follow the money. Find the profits!Liquidity is money. Regardless of where in the world that money originates, eventually it…