Currency Wars Heating Up

With domestic economic health at stake of a number of countries at stake because of the Federal Reserve's continual debasing of the U.S. dollar by printing an almost endless stream of money, a currency war has quietly broken out as nations attempt to devalue their own currencies in order to keep exports competitive on the world market.

Of course the currency war has been going on since the Federal Reserve implemented QE2 in August 2010, but it's ramping up because of the continual plunge in value of the U.S. dollar against a number of currencies, which in turn makes exports from other countries more expensive.

Japan is the latest player in the stimulus fiasco to boost their part in the money wars, with new Prime Minister Shinzo Abe committing to printing billions in yen to lower the value of the currency.

This will put pressure on other Asian players, who will be sure to respond in kind.

Other central banks printing money recently, along with the Federal Reserve and the Bank of Japan, have been the Swiss National Bank, the Bank of England, and the ECB.

To give an idea of how the Federal Reserve has attacked the U.S. dollar, it has plummeted by approximately 11 percent in value since the first round of quantitative easing in 2009.

Expectations are many other countries will debase their currencies through central bank stimulus in order to protect their exports.

This should be very positive for commodities, and investors need to take a close look at this, especially in regard to how Asian nations outside of Japan respond to the unfolding circumstances.

Over the long term this will be a disaster as the central banks attempt to unwind their positions.