Five Questions about currency wars: The Fed's massive printing money is the root cause

To uncover the truth. Recently, in the context of the continued depreciation of the dollar, many economies have been forced to intervene in the foreign exchange market, curb the rapid appreciation of currencies, a time of "currency war" rhetoric.　　Behind the numerous and complicated sounds, some essential questions require clear answers.　　Question What is a "currency war" so far, there is no one authoritative, convincing definition of a "currency war".　　According to traditional understanding, "currency war" refers to a country by virtue of its strong economic and financial strength, the use of monetary and exchange rate policy, from the economic fight against rivals, plunder other countries ' wealth.　　Therefore, the "currency war", in essence, has a strong premeditated, purposeful and destructive, is a form of "economic warfare", but also one of the manifestations of fierce conflict between countries.　　However, it must be pointed out that the "currency war" in this sense is only in the stage of speculation and rumors, there is no clear evidence that the world is engaged in such a harmful "suicide action". In fact, in the light of the current world economic situation, the meaning of "currency war" is much simpler and clearer, and it can be roughly understood as follows: some countries and regions have to take measures to stimulate exports and increase employment, in order to reduce their exchange rate artificially, because they face internal economic difficulties.　　If a growing number of countries and regions adopt this beggar-thy-neighbour currency and exchange rate policy, it is bound to exacerbate conflicts of interest among nations, which will ultimately undermine the world economic recovery process, and may in some degree be comparable to "war". Although there has been an increase in the recent opposition and contradictions in monetary and exchange rate policies, it must be seen that the situation is far from being called "war".　　The repeated speculation of the "currency war" in the Western media has in fact exaggerated the differences in currency and exchange rate policies, increasing the tension in the international community. Question who is making the "currency war" atmosphere from the surface, the cause of this round of "currency war" mainly stems from the Sino-US dispute escalation on the RMB exchange rate issue.　　In addition, the Japanese government directly intervened in the currency market after the yen continued to appreciate, and Brazil, South Korea, Singapore and other economies have taken steps to curb the currency's excessive appreciation of the dollar, has played an important role. But the real cause of this round of "currency wars" should be attributed to the United States.　　First, some American politicians, forced by domestic political pressure, once again provoked and intensified the dispute over the renminbi's exchange rate, making the renminbi's currency issue appear to be at the centre of the current "currency war". Now, the U.S. economic recovery is sluggish, domestic employment pressure is high, economic problems have become the November U.S. Congress of the main issue of midterm elections.　　Many American politicians have a political impulse to make the renminbi a scapegoat for America's economic woes.　　Those who spread China's "manipulation of the renminbi" in the international community have, to some extent, created a tense atmosphere of "currency warfare". Second, this round of "currency war" is the root cause of the United States Federal Reserve Board of massive "printing money." Faced with economic woes, the Fed has longThe benchmark interest rate, which remains close to 0 per cent, and a large amount of dollar liquidity to the financial system in the form of buying financial assets, is also vividly known as the Fed's "Start printing machine".　　The Fed's policy has led to a direct increase in the value of the dollar, which has also led to a huge influx of speculative money into emerging and developing economies for arbitrage. As a result, many economies around the world, from South Korea to Brazil, from Thailand to Singapore, feel a strong pressure on their currencies to appreciate against the dollar. The devaluation of the dollar, which drives other currencies to appreciate, poses a challenge to the export and even financial security and stability of these economies.　　These economies, in turn, have been forced to take steps to intervene in the foreign exchange market and weaken their exchange rates, eventually creating a seemingly "currency war" scenario. The key problem is that, in the eyes of some American politicians, the Fed is perfectly "sensible" to keep the dollar down by "printing money", while other economies are "illegal" to keep their currencies low in order to maintain their economic and financial security.　　This is an obvious "double standard".　　Question "Currency war" what is the harm in the end if the "currency war" really started, countries have to devalue the local currency, so as to stimulate exports, out of economic hardship, which will have a serious impact on the world economic and financial stability.　　From the United States, the world's largest economy, if the Fed continues to "print money", it will likely lead to a global dollar liquidity surplus and the depreciation of the dollar, leading to serious "hot" speculation problem. The most typical results will be: a large number of dollars of "hot money" poured into emerging and developing economies to speculate, and if these economies did not intervene, "hot money" could create a new stock and property market bubble in the region, and if the monetary authorities of those economies were to absorb "hot money" through "printing",　　may cause inflation locally.　　At the same time, the depreciation of the dollar could also lead to soaring commodity prices, which the world once faced with "soaring oil prices" and "food crisis" before the global financial crisis.　　More importantly, the world economy will face serious challenges if countries abandon the spirit of cooperation that emerged in the aftermath of the international financial crisis and turn to beggar-thy-neighbour monetary and exchange-rate policies.　　In the 30 's "Great Depression" period, countries have adopted "everyone's own" policy, leading to the rampant trade protectionism, the results of the crisis magnified the destructive, slowing the pace of world economic recovery, is a painful lesson.　　The question of what China should be wary of in the "currency war" is a cautionary note for China that a handful of Western media are using their own logic to explain the causes and solutions to the "currency war", while China is in danger of being "discredited". As mentioned earlier, US politicians have provoked a dispute over the renminbi and the Fed's "banknote printing" is the real reason for this round of "currency war", but some American politicians and a few Western media not only deliberately misinterpreted this fact, but also in the "currency war" in the way, often with "responsibility" under the banner of China to exert pressureForce, even intentionally "smear". In fact, the Fed's "printing money" led to a sharp devaluation of the dollar, which is the root cause of the current forced intervention by many economies.　　Thus, even a sharp appreciation of the renminbi will not solve the problem of "appreciation" of the currencies of emerging and developing economies in the context of a weaker dollar, nor will it prevent those economies from intervening in currency markets.　　The question of where the "currency war" is going. One important reason for the current rhetoric of "currency warfare" is that, as the world economy recovers, some countries are trying to get rid of their own economic woes and try to adopt a "everyone's own" currency and exchange rate policy.　　To defuse the "currency war", countries must learn from the Great Depression of the 30 's and regain the spirit of cooperation. It should be said that at the beginning of this round of the international financial crisis, the international community has basically maintained a posture of solidarity and cooperation, which once let the parties feel gratified. But as the world economy continues to recover, this "hold regiment heating, to the winter" situation began to loosen, whether it is the haunting of trade protectionism, or the international community in the macroeconomic policy focus, exchange rate, financial regulation and reform of international financial organizations and other aspects of the growing differences, all let outside the international community can continue to "together　　, and a total of the difficulties "worried.　　It must be emphasized that, while the current world economy continues to recover, there are still many potential risks and challenges, and the crisis is far from real, and at this juncture the international community continues to uphold the spirit of solidarity and cooperation. Moreover, this round of "currency wars" once again underscores the plight of the current global monetary system, in which the dollar is the sovereign currency of the United States, while assuming the functions of the main international reserve currency, which are often contradictory and antagonistic. The Fed's drive to boost U.S. economic growth is likely to lead to a flood of dollar liquidity and a weaker dollar, which will bring new shocks to international financial stability.　　Therefore, the establishment of a new global monetary system remains urgent. Xinhua News agency, Minkinwi, Beijing, October 17 (Xinhua) The Australian government said it would not intervene in the Australian dollar exchange rate Sydney October 17 (reporter Jiangyaping) The Australian Deputy Prime Minister and Treasury minister Whine Swang 17th said the Australian government will not intervene in the rising AUD　　This will bring about disastrous consequences for the Australian economy.　　In an economic statement, Swan said that artificial measures to suppress the Aussie currency would backfire, "only to bring further inflation and higher interest rates, which would have devastating consequences for the economy as a whole".　　He also recalls that in the 70 's, the Australian government adopted a fixed exchange rate mechanism, resulting in a two-year surge in inflation from 5% to 17%. On 15th, the Australian dollar reached 1:1 against the dollar in the London Foreign exchange market. Some experts estimate the Aussie dollar could continue to strengthen in the next few months, with a possible 1:1.1 per dollar exchange rate.