Can someone explain 'currency war'? | TigerDroppings.com
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Zach
LSU Fan
Member since May 2005
68956 posts

Can someone explain 'currency war'?

Supposedly, it's a looming threat globally. I know what trade wars are but am unfamiliar with currency war.


LSURussian
LSU Fan
Member since Feb 2005
85145 posts

re: Can someone explain 'currency war'?
It's a media creation to dramatize something that's been going on for decades with little notice.

It refers to countries trying to stimulate their manufacturing industry and economy by lowering the value of their currency. That makes goods manufactured in their country cheaper in other countries and therefore, more likely for people in other countries to buy their products.

It also makes products made in other countries more expensive within those countries with a devalued currency so citizens tend to buy less foreign made goods and more domestically manufactured goods which again stimulates the manufacturing industry in that country.

Japan is actively pursuing that process now and has been for several months. China is notorious for keeping its currency cheap versus the US dollar.



Zach
LSU Fan
Member since May 2005
68956 posts

re: Can someone explain 'currency war'?
Thanks.
How does a country lower the value of their currency?


GumboPot
LSU Fan
Saints Fan
Member since Mar 2009
27677 posts

re: Can someone explain 'currency war'?
quote:

How does a country lower the value of their currency?


Increase the supply.


rickgrimes
LSU Fan
Member since Jan 2011
2999 posts

re: Can someone explain 'currency war'?
quote:

Increase the supply.

You mean print money? How does that affect inflation?


Notro
LSU Fan
Alison Brie's Boobs
Member since Sep 2011
4532 posts

re: Can someone explain 'currency war'?
quote:

You mean print money?


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.

quote:

How does that affect inflation?


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.

This post was edited on 2/25 at 1:41 pm


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