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If anything, QE is a form of competitive devaluation

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by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Wed Jan 28th, 2015 at 05:26:49 AM EST
[ Parent ]
The end of Coppola's article:

Lets All Play QE

The IMF's Articles of Association explicitly rule out manipulation of exchange rates to benefit local exporters:

Each member shall:.....

(iii)avoid manipulating exchange rates or the international monetary system in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage over other members;

(IMF Article IV: Obligations Regarding Exchange Arrangements)

I fail to see how a QE programme that has as its explicit objective the weakening of the currency to benefit exporters can be seen as anything other than deliberate currency manipulation in contravention of this international agreement. And I also fail to see how weakening a currency in response to QE by a major trade partner can be seen as anything other than deliberate currency manipulation, either, although it is perhaps understandable.

Why is the IMF tolerating the nascent currency wars in Europe and Asia, I want to know?

Except that the US is not weakening but tightening... The US, of course, is an importer, not an exporter.

by afew (afew(a in a circle)eurotrib_dot_com) on Wed Jan 28th, 2015 at 05:57:40 AM EST
[ Parent ]
he US, of course, is an importer, not an exporter.

Bingo.  We're even a food importer now (perhaps the most disgusting joke I've ever heard).  We've stripped our ability to produce anything other than paper and electrons down to effectively nothing, so of course we want hard money so we can buy what everyone else is selling.  Of course, that hard money policy also means there is no domestic growth, the huge private debt gets farther out of control every month, and wealth continues to transfer to the rentier class by the freighter-load.  The US is charging headlong into the 14th Century.  All we need is a good, old-fashioned plague.

by rifek on Wed Jan 28th, 2015 at 01:50:32 PM EST
[ Parent ]


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