Who Wins The Currency Devaluation War? (Video)

(N.Morgan) The enigma in question of who wins the currency war presumes that any of the participating adversaries will have the ability to claim victory.

If winning is composed of who ends up with the most money as a store of palpable assets is degraded it is improbable a clear victory can be declared.

The complete idiocy of lowering the purchasing power of a country’s currency  to enable exports to be more competitive is economic sacrilege that the heretical “Free Trade” mythos is based upon.

Without any stable standard of objective comparison, floating currencies maneuver their exchange rates to disguise internal imbalances in their own political and economic expenditures.   

With all of the ruckus following the recent Chinese devaluation, the rupture in the foreign exchange markets has shown signs of a panic. 

“The successive devaluations have generated a range of reactions across the financial world. In Vietnam, the State Bank doubled the trading band of its currency on Wednesday in response to China’s decision, in effect paving the way for the Vietnamese dong to depreciate in value.

Other Asian currencies fell following the yuan’s devaluation, with South Korea’s won, Malaysia’s ringgit and Indonesia’s rupiah all declining by at least 1 percent against the dollar, according to Bloomberg.

Gabriel Stein, Director of Asset Management Services at global think-tank Oxford Economics, says he expects Taiwan, Malaysia and Singapore to follow suit by devaluing their currencies in an attempt to compete with Chinese exports.

However, too many countries devaluing at the same time will lead to a global slowdown in growth, says Stein. “It’s a bad thing because it means imports become more expensive for everyone that does this,” he says.

“The idea with devaluing your currency is you have less domestic demand and your exports gain competitiveness, but everyone cannot do it at the same time and, if they try to, that’s demand deflationary for the global economy.”

An opposing view is expressed clearly in the Forbes version, Yuan Devaluation Does Not Mean a Currency War.