Worthless Currency Devaluation
Counter to the American methodology of printing money; the Chinese keep their economy afloat by devaluing money instead. It’s economic stealth. The end game? We all speak mandarin!
Currency devaluation has become a traditional economic medicine over in China, reducing the purchasing power of the yuan around the world so that Chinese businesses opt to shop at home instead. That supports the domestic economy. Foreign countries seize the opportunity to buy cheap Chinese goods, and all of a sudden produce less themselves, weakening their internal commercial engines. Game, set, and match – China!
That is unless the self-proclaimed “Chosen One” can save us, Donald J. Trump! Citing rampant currency devaluation as his motive, the US president believes his trade war will, eventually, lead to a fairer long-term trade agreement with the Asian superpower. We’re still waiting, but if he can deliver, he may disarm China’s currency as a weapon against the US, snatching long-term advantages on trade that render any short-term currency kicks worthless.
The takeaway? Currencies are all over the place. Traders with a hunch against one relative to another can take their ideas to the forex market. Open 24/7, the currency exchange never sleeps, just like most speculators!
World isolationism is on-trend right now. The IMF yesterday made a strong argument against devaluing a currency for a short-term edge, and it’s right. Trade is better when it’s big! Unless the UK lets Europe sip its tea, the US lets China taste its burgers, and Japan lets South Korea tinker with its technology, we’ll all be worse off. Here’s to free trade!