Can someone explain 'currency war'? | TigerDroppings.com

Posted byMessage
Zach
LSU Fan
Member since May 2005
65918 posts
 Online 

Can someone explain 'currency war'?



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






Back to top
Share:
LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
84432 posts
 Online 

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.







Back to top
Zach
LSU Fan
Member since May 2005
65918 posts
 Online 

re: Can someone explain 'currency war'?


Thanks.
How does a country lower the value of their currency?






Back to top
GumboPot
LSU Fan
Saints Fan
Member since Mar 2009
25776 posts

re: Can someone explain 'currency war'?


quote:

How does a country lower the value of their currency?


Increase the supply.






Back to top
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?






Back to top
Notro
LSU Fan
Alison Brie's Boobs
Member since Sep 2011
4404 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


Back to top
  Replies (0)


Back to top