Beggar-Thy-Neighbor Currency Devaluations Proved Ruinous For The Global Economy In The 1930s, But The World Is Setting Off Down The Same Slippery Slope Again

The Global Currency War Is Escalating

According to numerous high-level insiders, we’re in a dangerous global currency war:

• Current Bundesbank president Jens Weidmann

• St. Louis Federal Reserve President James Bullard

• Outgoing Bank of England chief Mervyn King

• Russian Central Banker Alexei Ulyakeyev

• European Central Bank board member Benoit Coeure

• Reserve Bank of Australia Governor Glenn Stevens

• Brazil’s finance minister Guido Mantega

• Billionaire investor George Soros

• Chinese central bankers and state-run media

• The former president of the Bundesbank – and now UBS chairman – Axel Weber

Actually, we’ve been in a global currency war for years.
As the Wall Street Journal asked in 2010:

Beggar-thy-neighbor currency devaluations proved ruinous for the global economy in the 1930s. Is the world setting off down the same slippery slope again?

Yes, we are.
Indeed, Japan’s escalation of the currency war has caused leaders in the Eurozone, Norway, Sweden, South Korea and many other regions to consider further devaluing their currencies.
(And James Rickard and Reggie Middleton think that Germany’s demand for its gold is part of the currency war.)
And it’s not just conservative voices such as the Journal slamming the currency wars.  For example, former Secretary of Labor Robert Reich points out that a weak dollar makes everyone poorer, and any new jobs created by a a policy of devaluation are low-wage jobs.