G-20: No Currency War, Just More Stimulus

I don't know if I've ever heard such a blatant contradiction as the response of G-20 finance ministers to the idea of there being a currency war going on.

The silly comment by the managing director of the International Monetary Fund, Christine Lagarde, where she said this: "There's been lots of talk of currency wars, and we have not seen any such thing as a currency war," underscores the lack of respect for those who understand what's going on with money policy around the world and the results the stimulus actions produce.

Even the idea of saying nothing to or about Japan's money policy, where the yen has plunged against the U.S. dollar by 21 percent since the middle of November, 2012, reinforces the fact there is a currency war going on.

After all, if the G-20 publicly spanked Japan, they would have to answer as to why they're encouraging more stimulus at this time.

Lagarde all but said there is sure to be more monetary easing in the euro zone, based upon the interest rates in the region are higher than those of competitors like Japan, U.K., and the United States. But there is no currency war going on. No sir.

There have been references to the dishonest statement from the G-7 last week where it attempted to make a difference between a country specifically focusing on a specific currency level and monetary easing in order to boost domestic economies.

Why is that a difference? It isn't. It's saying the same thing using different terminology.

How come they're attempting to make this type of murky but dishonest comparison? You can be sure more stimulus is on the way in response to the ongoing stimulus or money printing, and that means there is a currency war between countries attempting to be sure their exports are competitive with other countries.

If you were to believe the official explanations, the results as to the behavior of the currencies against one another will be the same, but we just aren't going to call it a currency war because it would make the central banks appear to be what they are - government tools being used as economic weapons of mass destruction.

And if you're wondering which country it is that instigated this war, it's the United States as it continues to create money out of thin air at unprecedented rates.

Currency Wars the New Normal

Even though some people such as International Monetary Fund chief economist Olivier Blanchard have attempted to downplay the stimulus released into economies by central banks around the world, which has resulting in currency wars, the reality is that more countries will respond to the aggressive actions of the Federal Reserve, which has been the institution that fired the first, gigantic salvo, which has instigated the wars.

Bizarrely, Douglas McWilliams, who is over the Centre for Economics and Business Research, based in London, blames the Bank of Japan as the entity that launched the currency wars, even though the United States has aggressively debased the U.S. dollar for several years.

Most other developed nations are looking closely at the value of their currencies versus the U.S. dollar, especially China, Germany, and the European Union, as they will respond in kind if it looks like exports, and thus growth, will be seriously hampered by the easy-money policies of America and the Federal Reserve.

It's unlikely these practices will end any time soon, as the Federal Reserve is committed to creating money out of thin air in order to attempt to grow the U.S. economy, even though the practice continues to fail to reach that goal, even while the debt continues to pile up.