Jim Letourneau's Blog

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Currency Wars!

The United Statest QE2 program is not going over well with the rest of the world. The reactions of Brazil, China, and Germany are uniformly negative. Hold onto your hats, this is going to create a rapid commodities run up.

“It’s no use throwing dollars out of a helicopter,” Guido Mantega, the finance minister, said on Thursday. “The only result is to devalue the dollar to achieve greater competitiveness on international markets.”

Unbridled printing of dollars is the biggest risk to the global economy, an adviser to the Chinese central bank said in comments published on Thursday, a day after the Federal Reserve unveiled a new round of monetary easing.

Bruederle said China had been criticised for having an undervalued currency but Beijing argues that U.S. monetary policy is also artificially influencing its currency. The German minister said there was some truth to that. He said a currency war would be a "disaster" which must be prevented and also said U.S. midterm election results made him more concerned about protectionism.