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By the
time central banks warn about something, the practice has likely been going
on for years. Today's case in point is BoE's King warns of growing
currency competition
The head of the Bank of England warned
on Monday that too many countries were trying to weaken their currencies to
offset the impact of the slow global economy and the trend could grow next
year.
"You can see, month by month, the addition to the number of countries
who feel that active exchange rate management, always to push their exchange
rate down, is growing," Mervyn King said in a
speech.
CURRENCY WARS
The warnings by King, who is set to step down in July, echo those made in
October by U.S. Federal Reserve Chairman Ben Bernanke, who delivered a blunt
call for certain emerging economies to allow their currencies to rise.
The back and forth of monetary stimulus and foreign-exchange intervention has
complicated any coordinated efforts to recover from the Great Recession.
"It is fair to say a recovery of a durable kind is proving
elusive," King said in his speech.
Fielding questions later, he said he had "great confidence" that
the United States will avoid the worst-case effects of the so-called fiscal cliff
of automatic tax hikes and spending cuts due to come into force in January.
It "will find a way, if not avoiding going over the cliff, then hanging
on by the finger tips" on the other side, he said.
Elusive Recovery
It's fair to say the reason there is no recovery is that central bankers like
King and Bernanke think competitive currency debasement will solve economic
problems.
It won't, and that has been proven time and time again. Moreover,
"fiscal cliff" avoidance is nothing more than "currency debasement"
under the name "Keynesian stimulus".
The irony is King bitches about exchange rate management while encouraging
Bernanke to do the same, and doing the same himself.
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