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Link As the Biden administration shows no signs of slowing the money-printing (in fact quiet the opposite), it would appear, as we noted previously, that the rest of the world is not enjoying the concomitant dollar depreciation and is starting to fight back (with words for now). With the euro recently soaring back near 6 year highs, ECB Governing Council member Klaas Knot told Bloomberg this morning that the Central Bank has the necessary tools, including interest-rate cuts, to prevent any further strengthening of the euro undermining inflation.
“That is something we of course monitor very, very carefully,” Knot, who heads the Dutch central bank, said in a Bloomberg TV interview on Wednesday. It’s one of the factors, not the exclusive factor, but one of the factors we take into account when arriving at our assessment of where inflation is going to go.”
If the world gets into a currency war, with the assault on wages and savings that devaluation entails, no one wins. A currency war is a war against citizens, their salaries and their savings, to benefit inefficient and indebted sectors. A currency war would devastate the purchasing power of salaries and suppress investment and consumption decisions. When governments attack the currency, the economic agents’ reaction is not to invest and consume more, but a generalized slump in spending and capital allocation. If a country enters a currency war, it disproportionately hurts its own citizens. If China, the Eurozone, Russia and the US do it, it will likely lead to a severe global crisis. A currency war is not about who wins, but who loses the most. And if countries embark on an assault on their citizens’ wealth via devaluation the message to the world is only one: buy true reserve of value assets, like gold and silver and hide.
originally posted by: FamCore
a reply to: Snarl
Great thread, thanks for posting this Snarl.
My own contributions from a historical & economic perspective:
A race to the bottom (Beggar-thy-neighbor policies): www.investopedia.com...
and Triffin's Dilemma help illustrate some of these dynamics at play: www.investopedia.com...
originally posted by: Raggedyman
Looks like Venezuelan like inflation in the US
1 million dollars for a gallon of gas