Currency Wars

This blog first alluded to the coming currency wars in 2004. Global economies are actively competing to debase their currencies in an attempt to maintain their export competitiveness. As national treasuries open up their printing presses the expansion in the money supply will have a number of effects. Initially it will cause their currencies to fall relative to stronger economies. In Australia the Aussie dollar is now on a ballistic trajectory that will bring it far beyond parity with the USD.

Latter consequences will be even more severe.

Gold is on an even more pronouced trajectory than the AUD and likely to go into orbit as fiat money is aggressively debased. No doubt in the end it will morph from a legitimate store of wealth and hedge against inflation into a bubble in its own right. This seems inevitable in a civilisation that is addicted to non-productive wealth. However, it is still a very long way from bubble territory yet.

Click on the link that will take you to the article from The Globe and Mail quoted the Brazilian Finance Minister, Guido Mantega.