Tags: Robin Lewis | Forbes | currency war | collapse

Forbes Contributor Robin Lewis: Currency War Could End in Global Monetary Collapse

By    |   Sunday, 02 March 2014 01:13 PM

A global currency war is raging, and the results may not be pretty, says Forbes contributor Robin Lewis.

In the United States, exports may benefit temporarily, but not for the long term, he writes.

And overall, "what if this time is different from all past deflationary and inflationary cycles? What if the international monetary system destabilizes and collapses, and inflation does not rise sharply?" Lewis says.

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"Just as the Fed’s quantitative easing was supposed to juice our economy, but instead, simply juiced the traders, why would anybody believe that the central banks around the world could stop the enormous forces being set in motion in" so many countries.

People around the world may come to view paper money as worthless, Lewis writes.

The result could be "at best, a global Japan-style deflation, at worst, a worldwide depression," he says. "Then, maybe we’ll go back to bartering, where borrowing, debt and interest rates will not exist. A time when the value of goods and services actually meant something. Hmm."

Fears of a messy end to global currency wars have been a current hot topic.

In its most recent Global Economic Perspectives report, the World Bank highlighted the “impossible trinity” of achieving autonomy over monetary policy, stable exchange rates and full capital account openness.

For its part, the New York Times Editorial Board recently said that “what leaders of developing countries ought to be doing now is addressing economic problems like inflation and corruption while investing in infrastructure and education.”

Earlier last month, the board advised that “emerging markets could better protect themselves from the rapid flow of foreign capital into and out of their financial systems by regulating them.”

Elsewhere, China's central bank has apparently joined in the currency war in recent days, helping to push the yuan to a 10-month low against the dollar Friday.

"Nobody dares to trade against the PBOC [People's Bank of China]. Nobody dares to buy the yuan heavily," a Shanghai-based trader at a large foreign bank told The Wall Street Journal.

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A global currency war is raging, and the results may not be pretty, says Forbes contributor Robin Lewis.
Robin Lewis,Forbes,currency war,collapse
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2014-13-02
Sunday, 02 March 2014 01:13 PM
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