A great summation of the budding currency war

Things are beginning to get a bit strange over in the currency world, as I've been mentioning for a while now. There hasn't been a lot new to report besides government posturing, but I ran across a piece this morning that summed things up very well.

In a post at benzinga.com, investment strategist J.S. Kim wrote that (emphasis his):

US Secretary Treasury Tim Geithner effectively blamed China for the world's monetary crisis when he recently stated, of China's strong yuan policy and resistance to devaluing the yuan: “it's unfair to countries that were already running more flexible regimes and let their currencies appreciate.” ...

You are 100% wrong Tim. It's unfair to blame other countries for the attacks on American people's wealth instigated by the US Federal Reserve. What people fail to understand about currency exchange rates is the theory of currency relativity. To say that other countries like Japan “let their currencies appreciate” is a total distortion of facts. Japan's yen has increased a mind-boggling 51% from about 124 yen to the dollar to just 82 yen to the dollar in three years is primarily due to the US Federal Reserve's destruction of the US dollar. The Thai baht has massively appreciated nearly 41% from 42 baht to the US dollar to 29.85 baht to the US dollar in just 6 years not because the Thai economy is booming but because the US dollar has been crashing.

To say that countries have “let their currencies appreciate” is comparable to saying that British colonists “let Africans ride their ships” to America during the slave trade.

This analysis is dead on, and the last line is particularly incisive. The Fed has been doing everything it can do debase the dollar, dragging other nations kicking and screaming into relative currency appreciation. It's all been done in a transparent attempt to make American goods look more competitive in global markets, and to close the massive trade gap that we have ignored (and benefited from) for decades.

Now other governments are fighting back, and America is crying foul. It's fair to ask here...who's the real "currency manipulator" in this high-stakes game of currency chicken?

[Benzinga.com]