morningtology

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currency war: the defitinion

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i have read slate coverage about the latest currency war. slate wrote an inspiring coverage about the fundamental knowledge of the war. therefore, the article mainly talking about the definition, the basic knowledge that is needed to move to a more serious discussion about the currency war.

 

A “currency war” is just a headline writer’s term for what economists describe as “competitive devaluation.” It’s helpful, in this context, to think of a dollar or a euro—any currency, really—as just another product: Its value goes up and down according to market forces. At any given time, any given currency exists in a global market determined by supply (how much of a currency exists) and demand (how much investors want to buy goods and assets denominated in that currency).

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Written by ardinusw

November 2, 2010 at 5:17 am

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