In the wake of the fractious International Monetary Fund (IMF) meeting held October 9-10 in Washington, the descent into global currency and trade war has accelerated, with the United States playing the role of instigator-in-chief.
The US is deliberately encouraging a sell-off of dollars on international currency markets in order to raise the relative exchange rates of its major trade rivals, increasing the effective price of their exports to the US while cheapening US exports to their markets.
While largely responsible for the growing financial disorder, Washington is accusing China, in particular, of jeopardizing global economic recovery by refusing to more quickly raise the exchange rate of its currency, the renminbi (also known as the yuan). By working to drive down the value of the dollar, the US government and the Federal Reserve Board are placing ever greater pressure on the Chinese to revalue, ignoring warnings from Beijing that a rapid rise in its currency will harm its export industries, leading to mass layoffs and social unrest.
The protectionist cheap-dollar policy has an important domestic political function as well. It aims to divert growing public anger over the refusal of the government to provide jobs or serious relief to the unemployed away from the Obama administration and Congress and toward China and “foreigners” more generally. Among its most enthusiastic supporters is the trade union bureaucracy.
For the rest of the article please click the link below…
- G-20 to Avoid Competitive Devaluations, Backs Market Currencies (businessweek.com)
- As Dollar’s Value Falls, Currency Conflicts Rise (nytimes.com)
- U.S. Policies Intensifying Currency War and Trade Conflicts :: The Market Oracle :: Financial Markets Analysis & Forecasting Free Website (yzerfonteinchronicles.blogspot.com)