After currency wars are always followed by trade, and then, finally, among the major powers unfold actual fighting, He writes the author of the site & Quot; Who know".
So it was in 1930 — So, looks like, will now, said James Rickards, known economist-analyst, investor and US military adviser.
Currency wars begin with too much debt and a lack of economic growth. Countries hinder the growth of its trading partners, affordable for their currencies, to promote their exports and cause inflation.
The current currency war started in January 2010 of the year. During these wars the benefits of players are short-lived and quickly eliminated by the response. Trading partners are taking revenge on each other a decrease in the exchange rate. Cross currency exchange rates are returned to their original positions, with costs, cause confusion.
The world is not only getting better – in front of, because of the costs and chaos, caused by currency manipulation, all just complicated.
Finally, the world becomes accustomed to this reality and proceeds to block trade war. realizing, that currency battles are not effective, country unleash a trade war, since the introduction of tariffs and other trade barriers.
The problem is, that trade wars, too, do not work for the same reason, as the currency: principle & quot; tit-for-tat & quot; discards all the players to the starting position.
New trade war began in January 2018 year with the announcement of the introduction of duties. The tariffs actually started to take effect last week. Start of trade wars does not mark the end of the exchange.
Oh no. Currency and trade wars are fought simultaneously, they are related.
If the United States impose duties on Chinese imports, China may be & quot; shoot out & quot; two ways.
At first, impose their own tariffs on US goods.
Secondly — reduce the cost of currency, to compensate for the costs of the duties. If the US imposes a tariff of $ 25 percent on Chinese products — China cheaper yuan against the dollar 25 percent, and everything starts all over again. Such actions are extremely damaging effect on the markets.
Shock devaluation of the yuan thunder the whole world, as it happened in August and December 2015 of the year (both times US stocks fell more than 10 percent in a few weeks).
In the foreign exchange and trade wars are some winners and losers, but the world economy as a whole always loses. A new trade war is ugly, and the world economy will suffer a corresponding damage.
During the trade and currency wars, we should expect a slowdown in economic growth and, perhaps, recessions. cleave, that history does not repeat itself and we have not entered into a third world war, because that currency and trade wars of the 1930s were one of the important causes of the Second World.
