Introduction
Currency Wars Or competitive devaluation is such international relations in which countries compete with each other in achieving a relatively low course of their currency.
If the real value national currency It will decrease, the cost of exports decreases. What contributes to an increase in its volumes. The import of the country will on the contrary rise in price, but the cost of the domestic industry will decrease and the level of employment will increase. Nevertheless, the rise in import prices can harm in the form of a decrease in the purchasing power of the population. Government actions to reduce the value of national currency can lead to response actions of other countries, which in turn can lead to a decrease in volumes international Trade, harm to countries.
Competitive devaluation was a rare phenomenon in the history of development different countriesbecause Those preferred to maintain a high value of their national currencies. One of the first currency wars in history occurred during the Great Depression in 1930, when countries refused the Golden Standard using the currency devaluation process to stimulate their economies. This period was unfavorable for many countries that made unpredictable changes in exchange rates that led to a decrease in the level of international trade.
According to the Brazilian Finance Minister Guido Mantga, world currency wars broke out in 2010. This point of view was supported by many financial journalists and officials from around the world. Other policies and journalists proposed that the phrase "Currency Wars" oversees the degree of hostility of this process, although agreed that the risk of further escalation exists. States participating in 2010 in competitive devaluation used such a set of political instruments as government intervention, the introduction of capital control, and quantitative mitigation. The most global conflict happened between China and the United States in the evaluation of Yuan. This process is carried out with the help of various mechanisms, and the opinions of economists about the consequences of this war were divided. Some believe that this will lead to negative consequences In the global economy, some on the contrary. In April 2011, many journalists began to report that the wage was subsided. However, Guido Mantga continued to argue that the conflict is still going on. In March 2012, he announced additional measures to protect the national currency - Real.
Devaluation with its negative consequences has always been the least preferred strategy of governments. According to the American economist Richard N. Cooper, a substantial devaluation is one of the most "traumatic" politicians who can take governments of countries that almost always leads to indignations in society and calls for the change of government itself. It can lead to a reduction in the population, the standard of living of citizens, the purchasing power of the population. It may also lead to inflation. Because of devaluation, interest on the external debt of the state may increase, if they are expressed in foreign currency and reducing the inflow foreign capital. At least until the XXI century, a strong national currency was a sign of success and a high level of state development while the devaluation was inherent in weak governments and developing countries.
However, when the country suffers from a high level of unemployment or wants to pursue export growth policies, a low exchange rate of the national currency may be a significant advantage. Since the beginning of the 1980s, the International Monetary Fund suggested a devaluation process as a potential solution. economic problems For developing countries that are constantly spending more import funds than they earn export. An increase in exports contributes to the development of domestic production, which in turn increases the level of employment and GDP<#"660163.files/image001.jpg">
(Fig. 1)
It is clear that this policy causes dissatisfaction with other countries because new program Mitigating the monetary policy of the Fed threatens them, primarily China, an increase in the volume of capital flows into the markets of these countries, which will cause the acceleration of the growth of bubbles in the assets market and the growth of national currencies.
As a result, we can expect gradually to weaken the position of the dollar in world markets and strengthen the disintegration processes in the global economy, and then we seem to be deepening the regionalization of the global economy with the creation of new regional centers and regional currencies.
The current situation is still stronger than the fall of 2008 - confidence in statements of officials on stabilization of the state of economies is accompanied by real difficulties and obvious problems of most countries. The debt problems of states and weakness of economies are becoming increasingly relevant, since lending to the economy has not been restored. Not the best is the position of banks and other financial institutions - from the active stage of crisis, there were essential volumes of "bad" debts that managed to hide on the balance sheets, but it is possible to solve this problem only after the revival of the economy and the increase in solvency real sectorsWhat does not happen in reality. In fact, world economy Everything walks on the same closed circle, about which we spoke another year ago - without restoring crediting, economic growth is impossible, and without economic growth it is impossible to restore the economic lending, because enterprises are not ready to take loans for the production of products under the compressible demand for their products.
A key factor to talk about the inevitability of currency wars is not debt problems, but the weakness of domestic demand in most countries. Citizens do not want to consume, and even more so take consumer loans, but prefer to save. So, in the US, the cost of savings reached 6% - on world standards a bit, but against the background of what was in this country in the previous decade, this is a very large amount. And if Japan is in such a position for more than 10 years and is relatively used to this state of affairs, then for most other countries, salted domestic demand is a catastrophe. Thus, all countries associate the possibility of exiting depression with increasing their exports.
But, since the internal demand is not growing in most countries, then global demand is growing extremely weak. In this situation, the only way to increase the value of export is the devaluation of the national currency and an increase in the absolute volume of exports, but its value equivalent.
The problem is that if everyone is trying to devalue their currency at the same time, no devaluation occurs. Since the beginning of the 70s, the currency is tied exclusively to each other, and for anything outside the currency system. Exactly, therefore, the advantage in the "Devalvation parade" receives those countries that first went on a sharp weakening of national currencies and received the advantage over time.
For the sake of fairness it should be noted that the "Devalvation parade", which occurred at the end of 2008 - the beginning of 2009. Allowed part of countries due to the cheapness of national currencies, if not to keep growth, then, at least, mitigate the economic downturn, by increasing the competitiveness of its own products in foreign markets and import substitution on the internal. Therefore, to reproach the countries that are the first to go to the real devaluation of national currencies, it is possible only from the positions of globalization.
Currency courses are often perceived as a thing of deeply financially in its essence, having a little attitude towards the real economy, although it is the currency courses in many respects determine the configuration of world trade and competitiveness of goods in world markets. In this sense, currency wars, that is, the devaluation of currencies relative to each other is the first step towards disintegration economic SystemBecause they are an integral part of even more terrible to globalize the phenomenon - trade wars, with the establishment of protectionist trade barriers to those countries that are still able to independently provide much of their own needs.
For the modern financial system, this is a kind of apocalypse, since the final termination of the globalization process means the end old system interaction between countries.
Positions of the United States, Japan, China and Brazil are a confirmation that currency wars have already begun: these countries have already moved from words to specific actions.
In September, the currency interventions of the Central Bank of Japan began, officially announced that these are antideofering measures aimed at weakening the yen course, overly fortified to other currencies. The Japanese economy is exported and for it an excessively fortified national currency is a catastrophe, since it reduces the competitiveness of products produced in the country in foreign markets. Changing the yen course for 2 years of crisis was quite essential: Jena strengthened to US dollar from 100 yen for $ 1 in 2008 to 85-90 yen per dollar in 2010, which for the Japanese economy's long-term deflation is a rather negative factor . Naturally, Japan's actions caused a squall of criticism from representatives of other countries, first of all, one of its main trading partners is the United States.
Russia is not involved
Here it is necessary to clarify that the devaluation of the national currency can be achieved by selling it on foreign exchanges or an understatement of the accounting rate of the Central Bank. According to economists, this practice spread during the financial crisis can lead to an increase in instability on international market and complicate the coordination of efforts to overcome the decline, especially against the background of the concerns of a new slowdown in the economy.
Forecasts for 2013.
The strongest planet economies will continue to strive to reduce their currencies to stimulate internal growth, which can provoke a negative reaction from the developing world, the head of the Bank of England Mervin King is convinced.
"I think 2013 will be difficult: in fact, we will see how a number of countries are trying to reduce their exchange rates. This will definitely cause fear. Do other countries respond to the same spirit? What will happen? Policy implemented by countries in order to protect their domestic market He leads to general tension, "King said in an interview with The Wall Street Journal after speech on this topic in the economic club in New York.
As the edition notes, King's comments usually attract attention, since, on the one hand, the Bank of England is known for its innovative approach to regulatory activities, and on the other hand, his chapter uses constant authority among representatives of other central banks.
Therefore, the king concerns about the newly threatening world of currency wars will most likely be taken into account and regulators and markets.
Nevertheless, currency wars are only one of the manifestations of the global imbalance of the planet's economy, the head of the British regulator believes. According to him, it can be partially explained by the fact that countries with a significant traffic balance surplus (Germany, the Netherlands, China) need to stimulate domestic demand, but they have no goal to do it quickly. At the same time, other states whose significant deficit in foreign trade must quickly stimulate economic growth, but the choice of mechanisms for this is extremely scoop.
Regarding the British economy, King voiced a number of concerns related to the further growth of the volume of stimulating programs, first of all, bond redemption programs for 375 billion pounds (more than $ 600 billion). He did not, nevertheless, completely discard the possibility of such an expansion of incentives, but warned that their future efficiency would be weaker.
It should be noted that King will finish work as the head of the Bank of England in June of the coming year, he will change his chairman of the Canadian Central Bank Mark Carney - the first foreigner at the head of the British regulator.
Earlier it was reported that the decline in economic activity in the eurozone was less pronounced in November 2012, which was previously assumed, although the instructions for the fact that the region will come out of the recession soon, there is practically no.
James Ricards "Currency Wars"
James Ricards (American lawyer, economist and investment banker with 35 years of experience in capital markets for Wall Street. He is a writer and a permanent commentator for finance.) In his book "Currency Wars" outlined the four possible scenarilation of the current currency war, which called "Four riders of the dollar apocalypse."
He wrote that: in the first case, this world is several reserve currencies, where the dollar is only one of several. This is a preferred academic solution. This scenario suggests that all currencies will be in good relationship with each other. However, in fact, instead of one loose central bank, we will have such several;
in the second case: these are global money in the form of a special borrowing. This is a preferred solution for global elites. The basis for this is already laid and ready infrastructure. The IMF will whiminate its own printing machine under the unable control of the G20 countries. This will reduce the status of the dollar to the role of national currency, since all important international translations will be nominated in SPZ;
in the third event: this is a return to the Gold Standard. It must be implemented in a much higher monetary assessment to avoid a deflationary error of the 1920s, when countries returned to gold;
in the fourth case: chaos and emergency economic measures. I consider this option is the most possible due to a combination of negation, postponement for later, and issuing the desired for the valid by the money elite.
Also, Ricards writes that industrialized countries twice launched vicious dollar cycles on the planet in the 20th century. The first currency war was the restoration and collapse of the Golden Standard in 1921-1936, which played a role in the Great Depression. The military invasion of Nazi Germany and imperialist Japan followed him. The second currency war he calls the period after refusing the Bretton Woods of the dollar binding to gold, which ended with economic shocks and sent the world to the inflationary spiral in the 1970s.
"In the devaluation of the currency of the developed world, a quantitative weakening is accused, it entails serious breaks in world currency markets. China artificially restrains the strengthening of the yuan to cope with these imbalances, and Brazilian Real successfully goes into new atmospheric layers." "The world currency war may begin in this situation; such countries like Brazil are louder and louder express their discontent. An obvious sideproof is the rise in raw materials; inflationary consequences of this phenomenon are imported into developed economies," said Andrew Wells. , Head of the investment department in fixed-income securities in Fidelity International. For consumers in the UK and the rest of Western countries, prices are growing, and rapidly growing economies, meanwhile, fear for their sectors of the manufacturing industry, which will have to pay for the strengthening of the currency. In the short term, the status of a refuge currency or a favorite asset for speculative investment seems to be a privilege. Foreign investors Buy real estate enriching its owners almost overnight. Residents with a high income can travel and shopping in stores, while on the same amount of their currency can now buy more. Import prices are incredibly low because the growing cost of the currency allows you to buy more foreign goods.
This is a practically exact description of Great Britain in the mid-1990s, many analysts come to the conclusion that the collapse of the manufacturing industry in the leiborists occurred exclusively due to the fact that one pound cost two dollars. Economists call it a "Dutch disease" - in the 1960s sector of the Holland's manufacturing industry came into decay against the background of the development of the gas industry and the currency growth that followed him. The rapid growth of the Australian dollar inflicted on the industrialists of Australia a crushing blow. It became clear last week when BlueScope Steel, the largest steel enterprise, reported on their plans to close half of the workshops, stop exporting and reduce 1000 jobs. Having reached the bottom at the height of the financial crisis at the level of 60 cents, the Australian dollar rose by 70%. Now he is trading in the area of \u200b\u200b1.04. Last month, the maximum of the last 29 years was tested at 1.10.
"Growing the mining sector, there are all the time qualified personnel, infrastructure, we enjoy record volumes even in the context of the growth of the Australian dollar, but at the same time other sectors of the economy suffer," she said to reporters. "On this basis, it should not be concluded that in the future we will cease to be a country that produces goods." In the same situation, the manufacturers of Japan were also, where the yen rose against the dollar by 10% over the past year. Glen Unetak, a currency dealer from MoneyCorp, notes that traders are wary of the countries that do not respond to the financial crisis. According to him, the inability of the American economy to create jobs and grow for investors to abandon investments in dollar assets. Recent growth of employment level is not enough to change these moods. If such countries like Brazil begin in unilaterally prevent the growth of their currencies, introduce restrictions on capital movements, will suffer world Trade. Then you can forget about recovery.
List of sources used
James Ricards "Currency Wars" book;
several articles from the newspapers "rg.ru", "allbest.ru", and others;
http://fx-commodities.ru/category/gold/
Currency Wars - the actions of the financial authorities of the country aimed at lowering the course of their currencies regarding others who are important for the international trade of this state. In response to such actions, other countries begin to reduce the exchange rate of their currency, as a result of which this process becomes difficult to stop.
The meaning of a targeted reduction in the exchange rate of its own currency (devaluation) is to improve the position of its own industry (primarily export) and deterioration of conditions for importing goods and services. It is assumed that an indirect restriction of competition from foreign manufacturers can accelerate economic growth in the country, to reduce unemployment, if necessary, "restart" the economy in a state of crisis or depression.
The traditional object of accusations of currency wars is China, a rigid Renminbie course to the dollar and, according to the American authorities, holding this course on too low to ensure the growth in the exports of Chinese products to the world market.
An example of the beneficial influence of devaluation to the economy of the country can serve as the events of 1998-2000 in Russia, when a multiple one-time decline in the national currency rate caused a boom in the economy: after the fall of GDP by 5.3% in 1998 he grew up in 1999 to 6, 4%, and in 2000-M - by 10% (year by year, in real prices). This devaluation was not an artificial, consciously caused by the leadership of the country, nevertheless, its results demonstrate the effect that is trying to achieve during currency wars.
From July 2008 to February 2009, Russia made a conscious devaluation of the ruble, reinforced, however, with objective market circumstances: the dollar rate to the ruble during this time grew by 55%, euro - by 27%. Minister of Finance of the Russian Federation Alexei Kudrin celebrated on the basis of devaluation that with a decline in the national currency exchange rate, exporters are able to increase their income. The cost of production in dollar terms becomes lower, and it becomes more competitive. At the same time, imports becomes more expensive, its volume is reduced, and it is necessary to spend less currency on imported goods. All this straightens the balance of payments.
The term "currency wars" returned to the active turn during the crisis of the global economy in 2007-2010, when representatives of countries began to accuse each other in a deliberate decline in currency exchange rates. Thus, the actions of the United States, including quantitative softening programs, led to a decrease in the dollar's exchange rate relative to the basket of major world currencies by about 20% in the period from the end 2008 to mid-2011. Also because of the actions of the United States suffered developing countries: Dollars poured into their markets, raising national currencies. As a result of concerns and discontent of these countries in September 2010, the Minister of Finance Brazil Guido Mantga, who used the term "currency war" in his speech. On the other hand, it is worth noting that before reaching 30% in 2009-2010, Brazilian Real experienced a more significant and fast devaluation in 2008.
At a later time, various actions to protect their currencies from strong fortifications were made by Switzerland and other countries. In the period from October 2012 to February 2013, a significant devaluation, supported by the actions of the Central Bank, survived the Japanese yen, which lost 17% of the cost in relation to the dollar. Japan's step was actively discussed financial authorities developed countries, as a result of which they declared the inadmissibility of an artificial decline in currency exchange and commitment to the leadership of the world's largest economies in the principles of free pricing on currency market. Analysts this statement was regarded as an unofficial campering announcement during currency wars.
- Monetary war
- History of world currency wars
- Causes of the Currency War
- Methods used in wars currency
- Methods of currency regulation
- goal and currency regulation tasks
- Modern currency wars
- Conclusion
Currency wars are targeted actions of one or more countries to reduce the course of the national currency relative to other world currencies. Currency wars are also called competitive devaluation.
Competitive devaluation is carried out in order to strengthen the positions of domestic producers, increase the country's exports or take more favorable place in the global economy.
Competitive devaluation can be reflected in the increase in the cost of external borrowings expressed in foreign currency, as well as to reduce the inflow of foreign capital.
In the past, a strong sovereign currency was a sign of the success of the economic policy of the state, the devaluation was characterized by developing countries.
International Monetary Fund at the end of the last century considered devaluation as a way to solve some problems developing economiesEspecially those in which import costs exceed export receipts.
It is believed that the Minister of Finance of Brazil Guido Mantager first introduced this term, accusing the United States in the face of Ben Bernanke at the beginning of the currency war. Like any other asset, currencies are estimated on the basis of supply and demand. When money is printed, with other things being equal, the proposal increases, which leads to a decrease in the price of the currency.
For the first time, the concept of competitive devaluation was replaced by the concept of the currency war in 2010.
In real life, constant changes allow politicians to invent complex explanations, why the emission of money should not be equal to the weakening of the currency. But even if the intentions may have different bases, one of the estimates conducted by the central banks of "quantitative mitigations" is the weakening of sovereign currencies.
This becomes a war, because the weak currency of one country in the modern global economy makes a strong currency of another country, and the "winner" becomes a country with a weaker currency. If the dollar is weakening through expansionist monetary policy, it puts pressure on other currencies. Many countries seek to export their products in the United States, but American monetary policy limits their capabilities.
The United States has tried to explain and hide expansion in the international foreign exchange market for a long time.
Obligation to keep interest rates at a low level until mid-2015 and mortgage purchase program valuable papers Ensures creating huge money Pressing multiple buttons on the keyboard. Fed translates funds to banks as payment for mortgage bonds, the resulting funds can be provided in the form of new loans, expanding the money supply.
A large role in the formation of the course of the US dollar and its disruption Irgay US Fed
Bernanke, speaking at the IMF seminar, pointed to the other side of the medal: if China, Brazil and other countries do not like his politics, they should allow their currencies to rise. But these countries are not interested in the turning of events, because strong currencies will lead to more rigid environment export industries.
Ben Bernanke, being the head of the Fed, tried to shift all the blame for China for conducting currency wars
According to Guido Mantga, world currency wars broke out in 2010 and that the new round QE, launched by America in the fall, incites global currency wars with a new force, forcing other countries to go to response and adhere to similar policies.
Ultimately, the United States policy forces other countries, in particular Japan, follow the rules of the game to eliminate the threats from the devaluation of the US currency, which in turn harms the economies of developing countries.
The policy of quantitative mitigation of the United States is aimed at inciting currency wars worldwide
The Japanese government did not once tried to significantly reduce the cost of the yen, and this is not the only country trying to devalue its currency. Large-scale, disposable interventions against the background of long deflation are not too effective, the markets know that the yen will return to lost positions again.
On the other hand, real intervention could be very useful for Japan - consumer prices Fall, increase cash Might be defeated. The Swiss franc is perceived by many investors as "currency-refuge", which constantly strengthens the pain of national exporters. Adjusting the Frank Course, the Swiss National Bank conducts currency interventions to maintain a national currency rate in the prescribed range.
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History of world currency wars
After the First World War, most large economies sought to return to the Gold Standard, which contributed to the huge growth of trade before the war. Inflation was the problem of most economies standing on this path, therefore, different countries chose excellent return strategies to the Gold Standard.
Ultimately, the cost of some currencies turned out to be overpriced, while others were underestimated, in addition, the situation was aggravated by an essential imbalance in the distribution of world gold reserves.
America and France have accumulated significant reserves of "yellow metal", while the United Kingdom and Germany have relatively small volumes of gold. Countries that do not have the required amount of gold to establish the content of the national monetary unit were in the constant danger of speculative attacks.
Previously, all currencies of the world reinforced national currency with gold and foreign exchange reserves.
With the onset of depression, the gold standard has become a loop on the neck of countries fighting for the growth of economies. Countries with strong currencies struggled competitiveness in export markets to avoid the trade deficit leading to gold outflow from the country.
It encouraged central banks Increase interest rates whose growth influenced the further weakening of the economy. Other countries often paid the same coin to protect their gold reserves, which are threatened.
It is the Golden Standard that made many countries of the world hostages of the current situation
The situation has deteriorated until countries have begun to deny the Golden Standard. Care from the Golden Standard was marked by the devaluation by many countries of national currencies in relation to gold to support domestic producers.
Central bank banks were released from the need to raise interest rates in order to protect their gold reserves, therefore, monetary policy could be much more expansionist. The countries of the Golden Block were either amenable to external pressure and left the Golden Standard, or took the loss of competitiveness with the introduction of high tariff barriers.
Therefore, all countries of the world decided to refuse the gold standard of currency reinforcement
It is important to note that the refusal of gold did not undermine the development in the long term, since other countries did the same, realizing that weakening monetary policy, it is also important as the impulse from devaluation. Currently, competitive devaluation is becoming increasingly widespread.
The refusal of the Golden Standard did not lead to complications of relations and monetary policy
Governments and central banks of some countries carry out deliberate actions to achieve a relatively low exchange rate of national currencies, in order to maintain or increase the volume of exports. The cost of production is reduced for enterprises of the export industry, which makes it possible to reduce prices for products in the world market and increases the competitiveness of the industry.
Causes of the currency war
The main source of problems for the global economy remains a risky monetary policy of leading countries
The economy is noticeably different from other scientific disciplines by studying not only the reality surrounding us, but also its perception by people. And no accident: perception is quickly and directly converted into actions that change the existing realities.
Based on such an understanding of the materiality of expectations, journalists from the British The Economist at one time came up with a linguistic index based on a quarterly number of articles in Washington Post and New York Times, in which the word "recession" is given. This index was hardly predicted to the offensive of the economic downturn than the other, more traditional advanced statistical indicators.
Methods used in currency wars
Traditionally, three types of weapons are used in currency wars: rhetoric, reducing rates and direct interventions. But in the present era, these tools are not always effective. Developed countries have already reduced rates to zero, verbal interventions do not always help, and direct currency invasions to the market cause an acute political response in other countries.
A new tool was quantified softening in all its various forms. Of course, it directly does not pursue the goal of reducing the course of the currency, but this is a probable and often welcome side effect. True, it does not always help, for example, the dollar only strengthened after the announcement of the "infinite" QE3 from the Fed.
Developing countries use taxes in currency wars. This weapon was tested in Brazil: there was a tax on financial transactions, which resulted in the course of Real. Other countries increase the requirements for reserves if a foreigner buys local assets, or encourage internal investors to export money abroad.
When predicting the course, it is necessary to consider:
Size, frequency, reasons for interventions of the Central Bank
Range discount Policy
Protectionist measures
Currency regulation B. Russian Federation – legislative form Maintaining the country's policies in relation to domestic and foreign currencies. The regulation understands:
Determining the procedure for the implementation of operations with currencies;
currency control;
Regulation of the conditions for the formation of a currency reserve.
When monitoring state bodies focus on law №173-ФЗ "On currency regulation and currency control" Its main goal is to strengthen the ruble exchange rate and the Russian economy, stop the outflow of funds abroad and attract additional capital from other countries.
Objective and currency regulation tasks
The main goal is to strengthen the country's economy itself, make it credit and competitive. This is done by solving the following tasks:
Ensuring the flow of funds from abroad;
Stop capital outflow abroad;
Strengthening the ruble rate, preventing significant oscillations.
Preventing capital's flight to other countries (primarily in Europe and the USA), the state introduces certain restrictions when exporting funds abroad and prevents the free appeal of other currencies in Russia.
Modern currency wars
The problem with currency wars is that countries can get short-term assistance, having saving their currencies, but sooner or later their trading partners will also reduce their currencies to restore export benefits. There are no winners in such a game.
A few years later, the uselessness of currency wars becomes obvious, countries go to trade wars. They consist of punitive tariffs, export subsidies and non-tariff barriers to trading.
Dynamics are the same as in the currency war. The first country that introduces the tariffs, receives a short-term advantage, but then trading partners establish response tariffs.
Trade wars give the same effect as currency wars. Despite the illusion of a short-term advantage, in the long run, the situation only worsens. The initial state of too large debt and too small growth does not disappear.
Intensity intensity, competing blocks are formed, and the real war begins. So real wars have a fairly obvious economic reasons.
The new currency war began in January 2010. Thanks to the efforts of the Obama administration, aimed at promoting US growth with a weak dollar. By August 2011, the US dollar reached a record low.
Other countries did not slow down with the answer, and after the "cheap dollar" followed the "cheap euro" and "cheap yuan". Again, currency wars started in a dead end.
Trade wars began. On July 27, 2017, the US Congress adopted one of the most difficult bills about economic sanctions.
This new law It provides that US companies cannot participate in Russian oil and gas field exploration operations in the Arctic. Also foreign companieswho are working with Russia in the development of the Arctic, will be prohibited in US markets.
In fact, this law makes it difficult for Russia's efforts in financial and technological plans and weakens control over global energy markets.
Meanwhile, the trading war began with China.
The Trump Administration clearly outlined its intention to introduce tariffs for cheap Chinese steel and aluminum and punish China for theft of intellectual property of the United States. After that, additional measures will be taken to punish Chinese banks that help North Korea finance weapons programs.
The United States can block the acquisition of American firms made from Chinese companies. This is possible thanks to the work of the Foreign Investment Committee in the United States, or CFIUS. This committee has already blocked several Chinese deals.
By November, the United States will announce China currency manipulator, which will open new process Consideration and will lead to further sanctions. Like Russia, China will respond with sanctions, tariffs and prohibitions for US investment in China. Get ready for the total financial war between the United States and China.
This trading and currency war will shake markets and become the main oncoming wind for world growth.
Conclusion
Today, the phrase "Currency War" can very often be found in the news. The era of low interest rates occurred. Unfortunately, weak currencies are their reverse side.
According to experts, the world is now on the threshold of the Global Monetary World War, which will affect many countries. Also, do not forget that the countries of the West are conducted by the currency war against Russia and heads their US.
Material prepared diolea specifically for the site
"We are in the midst of international currency war" - Guido Mantga, Minister of Finance Brazil, September 27, 2010.
Currency wars are known since the twentieth century: after the signing of the Versailles peace treaty, during the "Great Depression", when the dollar was born from gold. Today, the currency war entered into new stageIn which the states gradually lose their positions. And deny this fact is stupid.
Principles of currency war
"The current world currency system is a remnant of the past" - Hu Jintao, Secretary General of the Central Committee of the CPC, January 16, 2011
When the contradictions between countries are exacerbated, it turns on a simple principle - everyone for itself and ruins a neighbor. Such a representation remained from the times of the Great Depression 1929-1933 in the United States. The same story was held by the English pound sterling in 1992, when the Soros Foundation collapsed "Bank of England" and the entire English financial system. It also happened with Mexican Peso in 1994 and the Russian ruble in 1998.
Currency wars begin when the economies of countries cease to grow. Each countries begins to devalue their currencies to get more money for selling its goods to other countries. It revives the internal economy, provides orders, jobs and salary.
However, such a decision never leads to a full victory of one of the countries - everything is suffering. The reason is that the active sale of goods to other countries leads to the fact that production drops there. The consequence of this is the fall in income, unemployment and reducing exports to these countries. Another consequence of the devaluation of the currency is the rise in price of the cost of products, since we have long live in global worldAnd the product consists of parts and materials brought from around the world.
Another way to increase own income In the conditions of the currency war - printing money, which leads to inflation. That is, the value of money is becoming less and less, while their number increases. The currency implanted in this way allows the budgets and keep afloat in difficult situations. Either instead Central bank Lowers interest rategiving cheap loans.
Another cunning way to fight - fake foreign currency. During the US Civil War, the adherent of the North, the owner of the stationery store in Philadelphia Samuel Apham faked the confederation banknotes in the amount of more than 15 million dollars, which makes up about 3% of all money in the United States for that period. Most of the money was in the south, which undermined the confidence of people in the reliability of the confederative currency. The same deals with the North Korean bureau "39", established in 1974.
Along with this, embargo are introduced, customs duties, carry out protectionist policies. These measures are aimed at protecting the national economy, production and markets, which hurts in foreign competitors and opponents.
A few years ago, China introduced the actual ban on the sale of its rare-earth metals to Japan, reducing their supply by 72%. Rare-earth metals are used in the production of high-tech products, including iPhones. As a result, the Japanese economy began to slow down growth, and in response to it devalued by Jenu by 3% in relation to Chinese currency, in parallel, hitting the US public debt. This is the traditional practice of world powers in the resolution of their own, and in fact - general modern economic problems.
History of the currency war
Before the appearance paper money In the mass treatment of VI BC. There was a so-called gold standard that was international monetary system. In 1717, England printed paper money provided with gold, in 1818 - the Netherlands. However, she reached its peak in 1870-1914. At this time, Germany, Japan, France, Spain, Austria, Argentina, Russia and India connected to the Golden Club. The United States entered the club only in 1900.
The gold standard was very stable, and the global financial system was stable and predictable. Inflation and unemployment was almost no, the system caused confidence. In addition, there were no central banks and the IMF. They did not need. The market regulated gold through the Golden Club.
In the period from 1907 to 1913, the US economy has experienced difficulties, and industrialists, together with bankers, conducted great information work to create a US Federal Reserve, which is private company By printing dollars.
After the first and second world wars, the world was in a very difficult situation. Destroy, chaos, payment of reparations and compensation required huge money, which no one had. For the first time the world was in the most complex and confusing system of international financial debt and obligations. And then the US Federal Reserve emerged, ready to uninterrupted printing dollars so that countries could pay mutual debts to each other.
It was initially the vicious system, but only one exit from it is to plunge on the time in the ears with cold water. All world. Either very slowly and with the support of different countries, to eliminate the hegemony of the dollar, which will still hit all the world economies.
"New Economic Policy"
"The main concerns of the United States in the field national Security In the near future are economic crisis And his geopolitical consequences ... indeed, such types of political areas as the devaluation of cash based on competition can free up the wave of destructive protection policy. "
Dennis Blair, Director of National Intelligence of the United States. February, 2009.
August 15, 1971 US President Nixon announced a "new economic Policy" The main event - the dollar stopped being tied to gold and began to rely on the barrel of oil. From there and went to all the term "Nefedollar" known today. This changed the global financial system. The dollar began to dominate in the Western world, and after the fall of the Soviet Union and the disappearance of the two-polar system, the dollar became Hegemon.
For the American economy it is fundamentally important to have open markets on which they will be able to dominate. To this end, the US Federal Reserve constantly prints billions of dollars, which, in fact, are not provided anything except military dominance in different regions of the world.
That is why American gold is not stored in banks, but on military bases in Fort Nox and West-Point. The direct relationship of national security and national wealth of the United States is obvious. In US history, there were already cases when they had to confiscate European gold, which were exported to America during the Second World War, and to issue a receipt instead of gold. The trend of recent years is noteworthy, when European countries as Germany and the Netherlands export their gold from the United States.
Until 2007, Fed USA issued private banking system interest-free loans. So far did not hit the crisis. Since 2008, they changed the strategy and began to print dollars to get the economy of cheap paper and increase the rate of economic growth. But in order for these extra money to leave the free circulation as a result of the crisis falling consumption, nothing remains to American companies, how to increase the cost of goods and services.
Thus, since 2008, when America began an uncontrolled green paper print, they declared a currency war. Military superiority of the United States is also possible only when Dicking the dollar. His weakening is a blow to the national security of the country.
An example with the invasion of Libya is indicative when Gaddafi could displace the dollar from Africa through the creation of a PanFrean currency based on the Golden Dinar.
Modeling war Pentagon
In 2009, a game with the participation of military, exploration and financiers was held in the laboratory for the analysis of combat operations in the laboratory of applied physics on the initiative of the United States military department. The essence of the game was that American experts played a financial war and tried to simulate the future and prevent terrorist attacks on the dollar.
The game was attended by conditional USA, Russia, China, Europe and the Asia-Pacific region, which entered Japan, South Korea, Taiwan, Vietnam. Rules were spelled out and the ability to come up with your own move. Financial expert James Ricards, the author of the book "Currency Wars", played for Russia and specially made provocative and illogical steps for the West, which caused a deep condemnation of other participants in the game.
He made such moves, as a result of which Russia transported her gold to Switzerland and opened new Bank In England, stating the creation of a new currency. Oil and gas Russia from now on in exchange for the purchase of its new currency. The next step was to unite with China, which bought a huge part of the world's gold reserves and undermined the US power to one sit.
The result of the game was surprised and afraid of the Pentagon, who realized that in addition to the unpredictability of players, as well as themselves financial marketsThe American financial system itself is very vulnerable.
Output
Currency war has been going on about 5 years, but this is just the beginning. IN last years It also became clear that Russia is actively buying gold, as well as China, which at the same time created the Bank of Infrastructure Investments along with 58 countries of the world, one of the main founders and investors of Russia and India. And European countries have begun to export their gold from the territory of the United States.
From another side, it turned out that OPEC member countries as a result of a price collapse on oil forced to sell debentures States, throwing out billions of unnecessary green paper USA. The most interesting thing is that according to the agreement, the number of these obligations is unknown. This is a real "surprise" for the American dollar and the economy, which will suffer from everyone.
Also obvious is the fact that no currency can compete with the dollar. At the moment, only gold can squeeze the BCS from the regions of the world and create alternative financial systems. More stable and predictable.
This may mean the end of the US attempts to impose by all the neoliberal model of the economy, sharpened for the interests of America. It is worth only to say that if China is throwing into the market of American debt securities per 100 billion dollars, then a third of the American gold stock will be in China. But it will hit in China.
In this case, the rush in this case only harms, but the total trend in the desire to find other financial sources and tools independent of the dollar are evident.
None of the major economies of the world can now boast of sustainable growth rates. China, Brazil and Germany feel better than others, but the general trend does not change this: the band of good macroeconomic news is replaced by a portion of bad. Unemployment is not in a hurry to decline, the banking sector is far from the combat form, long ago there is no growth in the housing markets. Financial investors are forced to nervous then Greece, then Spain, then Ireland, balancing on the verge of default. Against this background, statesmen who are responsible for economic development, There is a temptation to ensure economic growth by devaluation of the national currency.
Power - in weakness
The mechanism of stimulating growth due to the weakening of its currency is quite simple. First, part of the most expensive imported goods Replaced with domestic products. The same applies to services - for example, exit tourism is replaced by internal. Secondly, local products are becoming more competitive in foreign markets. So stimulating economic growth by weakening its currency is in a certain sense of "borrowing" growth in neighbors. Then, when the situation worsens in the neighbors, they themselves resort to a similar means.
But unlike the former crises that have had national or regional borders, now the situation is similar in most countries of the world. Everyone really wants to at least lower a course of their currency and this achieve several additional interest of economic growth. When all countries are at the same time forced to go to the same measures, a peculiar "tool" is formed in the foreign exchange market, warns the IMF in the world economy review published recently. What, according to the head of the International Monetary Fund of Dominic Strauss-Khana, "will create a threat to restoration global economy And it will have extremely destructive consequences for a long time. "
Fort investor
Investors who are disappointed with the economic results of the United States and Europe are paying more attention to the "young" markets. There economy grow faster, and the budget situation is better than in developed countries. It causes a solid capital influx and, as a result, the growth rate of the local currency is even with a negative balance of foreign trade balance.
In recent years, Brazil felt more stronger than others. This forced her in October 2009 to introduce a 2 percent tax on speculative capital - the purchase of foreigners Brazilian bonds. A year later, this tax was upgraded to 4%. And without any transition period: On the doubling of the tax, the Minister of Finance Guido Mantga announced on October 4, and by virtue of it entered the next day. It is not by chance that Montaga was the first loud to declare foreign currency wars. Since the end of 2008, Brazilian Real has already strengthened by 36%. Investors are attracted except good economic indicators Countries are high interest rates (this year they rose from 8.75% to 10.75%). In order not to increase inflation, it is necessary to "drive off" tax investors. But real (taking into account inflation) banknotes In Brazil, according to Bloomberg, the highest among the 20 largest economies of the world. And it is already clear that the increase in antinvestment tax will not be corrected. The fight against the strengthening of Real will become one of the most difficult tasks of the new government (in late October in Brazil the second round of the presidential election), quotes Reuters Gray Newman from Morgan Stanley.
Brazil is not one such. The other day, the presidents of Chile and Colombia were discussed against the strengthening of their currencies with the heads of the National Bank. Already taken measures to slow down the strengthening of the national currency, Korea, Thailand, Taiwan, Peru.
Who is softer?
When the yen rate to the dollar rose to a maximum for 15 years, for unusual for developed country Measures to weaken their currency had to go and Japan. From September 15, for the first time in 6 years, National Bank began currency interventions in order to weaken Ien. And then lowered the key interest rate on loans to a range of 0-0.1%. Parallel to the National Bank announced a buying assets for $ 60 billion - this measure should give banking sector Means for lending to the economy.
Japan's prime minister Naoto Conguses National Bank This is not limited to this: while the course of the yen does not decrease, there is no hopes for the revival of the economy. Since the problems of Japan are not unique, it is irritated by John Maikin from American Enterprise Institute, it is clearly not possible to solve them. Japan simply forces other countries to follow her example. The following in the chain of countries going to mitigate monetary policy will probably be the United States. The leadership of the Federal Reserve System discusses the need for these measures for several weeks.
Against China
The last round of currency wars began the American Congress. In September, he adopted a bill, threatening China with regular sanctions for the underestimated yuan course. This law allows US companies to demand an increase in import duties, referring to the underestimated yuan rate as a subsidy of Chinese manufacturers.
To try to persuade the PRC to strengthen yuan in lately Europe was also connected led by Jean-Claude Juncker, the head of the Eurozone Finance Ministers. Since June 19, when China announced that it will make a course of Yuan more free, it increased in relation to the dollar by 2.15%, but fell to the euro by 9.4%. At the same time, China rejected the docks and Americans, and Europeans. Instead of increasing the course of Yuan to the euro, he promised Europe to support the economy of Greece, bought her state binding.
Haste attempts of different countries to conduct devaluation lead only to one: all currencies are becoming less stable, warns the IMF. This trend increases and, due to the fact that in recent years, world trading volumes have grown many times (see chart).
Russian specificity
In Russia, in recent weeks, they also talk a lot about the potential devaluation of the ruble. The former first deputy chairman of the Central Bank Sergey Aleksashenko considers it inevitable, the current first deputy chairman of the Central Bank, Alexei Ulyukayev, argues that there is no need for it. A fundamental difference from other developing markets is that Russia is afraid not to strengthen, but the weakening of the ruble. While Brazil and Korea suffer from excessive capital influx, he has not yet reached Russia. In addition, Russian exports have not been growing recently (in particular, due to drought and failing), but imports increase very quickly - by 30% compared with the level of last year.
In such a situation, a small (10-20%) devaluation would only help russian economy Faster growing. But the chances of what it happens is not too great. First, the devaluation of the ruble is hindered by other countries that weaken our currencies faster. Secondly, there is a possibility that some of those investors who are now chased almost everywhere, will definitely come to Russia, and we even have dollars in sufficient quantities in a growing import, so as not to drop the ruble.
