Currency War Started?

[Old55]

The U.S. at least gives lip service to a strong dollar, but Japan's
Shinzo Abe has ignited the current currency wars by openly, blatantly
declaring his intention to reflate Japan's economy by weakening the yen.
The current head of the Bank of Japan will step down in April and will
certainly be replaced with someone who will do Abe's bidding.

 

 

 

http://www.cnbc.com/id/100441340

[i am bob]

A country with lots of various natural resources to use in production AND a large production force can get by better with a weaker currency.  This way, when products are sold on the world market, they will recover more in their currency.

 

A country with no natural resources does better if their currency is higher so the natural resources they must buy for production won't cost as much in their currency.  

 

The whole game is actually based on how cheaply you can get your resources in your own currency and then produce a product to get out on the foreign market priced competitively or, better yet, lower priced.

 

When Japan's Yen was worth very little, they were able to import all the materials needed to build automobiles (among other things) and then ship them overseas where they could sell them for less than the local product and eventually take over the world market.  How could they do the opposite of what should have happened?   All the raw materials they had to purchase outside of Japan were subsidized by other countries according to the agreements for ending WW II. In other words, we paid part of the costs for Japan.

 

I think Mr Abe is remembering only part of his history and not looking at what will really happen if he carries on with his plan.

 

(Yes there are other factors involved (gas shortage, Detroit gas guzzlers, etc) but this is the simplest I could make it to show what should happen.)

 

Bottom line?  This world is going to end up in a bigger mess if they start a Currency War!

[Old55]

If more Country's were to manipulate their currency it could affect those living on fixed incomes.