re: Can someone explain 'currency war'?

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You mean print money?

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Not necessarily. The Fed or any central bank could sell their countries currency they have in reserve and purchase another countries currency. Thereby increasing the supply of country A's currency and decreasing country B's supply.

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How does that affect inflation?

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The way I think about inflation is too many dollars chasing too few goods. So if the money supply increases I would expect the prices of goods to increase as well. My two cents.