Speculation in The Foreign War?
by It is not the traditional but the economic war. Will it happen and how? And what should we do if it happens?
Many are sniffing war. It is in this environment, specialists and speculators are looking to get their cut. But should we enter a war without knowing the consequences? Should we go to fight with scissors when the battle is for tanks? It is very likely to end up in a ditch on the tomb of anonymity.
101 Currency War
I’ve been getting emails from many people who want to come to invest their small savings in the currency market because they have heard there is a war. With the desperation to have immediate gratification, some are willing to put up the shirt.
Although it is exciting the world of currencies, and even more so when the world faced the colossal money opening up opportunities to play, does not mean we have to risk the little they have and legs low end of the market volatility.
What’s happening? Although experts do not want to call “war” do recognize that the drums are sounding and the troops are moving. Especially China, the U.S. and certain countries in the Euro-zone, are playing a zero-sum (”zero sum game”) with the value of their currencies where one has to lose for the opponent to win.
United States is going through an adjustment period because he was living beyond their means. Excess consumer expenditures exceeded the income made by many. Now the U.S. is entering a phase of more savings and less spending. This causes consumption to fall. If you have a falling demand, where do you seek growth? Exporting. To export you need a cheaper currency than the other so that the others would be cheaper to buy what the U.S. produces. So the Federal Reserve continues to fill the dollar economy.
But China does not want. You do not want the dollar to lose value. Why? its currency to appreciate, exports fall – your source of foreign exchange would be more costly to invest in China, would force him to increase domestic consumption and lower savings. So China fight to keep the yuan depreciated value.
So, you want the U.S. to lower the value of its currency and China also wants to do the same, devalue its currency.
Other countries competing with China, are also devalued its currency so as not to be affected by Chinese policies. So, think it is your competition and lowering prices. As they sell cheaper, we would be affecting sales. Then you too low prices.
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