CURRENCY WARS

Pressure is building in the global economy. Who will blink?

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The natural fallout from global rebalancing is creating the currency tensions which the media is just now noticing. They have coined the term “currency wars.” The real war as a result of the outcome of currency skirmishes is a trade war. 

The currency skirmishes, raising the specter of a trade war, are nothing more than the natural outcome of global rebalancing in a world where everyone wants to export while global demand is tepid at best. The interesting part of this is twofold: both US fiscal and monetary policy of implicit dollar depreciation, through dollar-based credit creation, is fueling the battle.

In this FREE report Jack Crooks will explain why:

• The market’s continued attempts at global rebalancing in a world where global demand is scant is the cause of the so-called “currency wars” as coined by the media. 

• Emerging market currencies are undervalued fundamentally, but all the money flowing to EMs is leading a potential bubble because EM exports still need to be bought by the developed world.

• Pressure on China to act is growing by the day. If they don’t, it may get ugly.

If China does not make some type of concession, pressure will grow and “currency war” will increase the chances of a real and ugly trade war. Why? Because Western nations, with free-floating currencies and subject to dislocation from the massive pool of Chinese excess FX reserves, have only one real way to defend themselves ...