Skip to comments.A strong euro is the last thing Europe needs if currency war dawns
Posted on 01/16/2013 11:04:46 AM PST by DeaconBenjamin
Yesterday Jean-Claude Juncker, who presides over meetings of European finance ministers, complained that the euros value has become dangerously high. The comments took many by surprise; its when the currency has been strongest that investors have shown the most faith in the euros continued survival. The euro hit $1.34 on Mondayits highest value since February 2011.
But ironically, this renewed faith in the euro currency comes at the worst possible time for the euro-zone economy. Although policymakers finally appear to be making a concerted slog towards union, the years of political turmoil have severely stunted investment in the euro zone, leading to a collapse of the regions economy. Greeces recession has turned into a depression in its sixth year. A quarter of the Spanish populace is out of work. Even normally resilient Germany has succumbed: growth in industrial production is stalling, and the countrys GDP fell at a rate of 0.5% in the last quarter of 2012.
The blame for a more expensive euro can be squarely placed on the shoulders of the worlds main central bankers and the monetary-policy activists who influence them. Monetary easing is likely to bring down the value of the yen, which has already fallen considerably in the last few months. Continued and unlimited quantitative easingjokingly dubbed QE-infinityin the US is only helping deflate the US dollar. Meanwhile, officials at the European Central Bank continue to stubbornly refuse to cut interest rates, even though credit remains tight in Europe.
Russias central bank today joined the small chorus of voices warning of a currency war, which could entail rounds of easing and interest-rate cutting around the world, both in emerging and advanced economies.
(Excerpt) Read more at finance.yahoo.com ...
So the banks are racing to see who can debase their currency the most first?
What kind of insane logic is this?
After all paper currencies collapse, there will be only two currencies left standing, gold & silver.