Trade War and Currency Devaluation ????

[frayne]

Read the article below last night and have come to the conclusion that trade wars and currency devaluations are all just a zero sum game until somebody blinks. Wouldn't currency devaluation be political suicide ? The question that begs to be answered is, what is going to make someone blink ?

https://www.yahoo.com/finance/news/t...171019174.html

Not meant to be a political post just wondering about opinions out there from people much smarter than I.

[NYEXPAT]

With the collapse ( down 20% yesterday) of the Turkish Lira we are hurriedly making plans to got to Istanbul and Capadocia in October!

[frayne]

Quote:

Originally Posted by NYEXPAT With the collapse ( down 20% yesterday) of the Turkish Lira we are hurriedly making plans to got to Istanbul and Capadocia in October!

Make sure you tell them you're a Canadian.

[USGrant1962]

Well, that is pretty much at totally fabricated story. "Experts" say, and not a single indication from anyone in the actual government that currency devaluation is under consideration. I suspect that the quoted "currency analysts" are short the USD.

Financial news writers gotta write...

[Chuckanut]

Quote:

Originally Posted by frayne Make sure you tell them you're a Canadian.

Whenever I travel overseas I always learn to say the following in the native language:

Good Day
Please
Thank you
Where is the toilet?
I'm sorry. I'm Canadian.

The last one is to avoid problems if I make a major cultural or legal mistake.

Back on topic.....

I don't see a trade war doing us much good with the exception of a few countries that see trade as a blood sport.

[NYEXPAT]

Quote:

Originally Posted by frayne Make sure you tell them you're a Canadian.

Will be changing our Dollars into Euro's ( Euro's dropping as well) and travelling under Peruvian passports!(no Visa's needed for Europe)

[MichaelB]

Quote:

Originally Posted by frayne Read the article below last night and have come to the conclusion that trade wars and currency devaluations are all just a zero sum game until somebody blinks. Wouldn't currency devaluation be political suicide ? The question that begs to be answered is, what is going to make someone blink ? Not meant to be a political post just wondering about opinions out there from people much smarter than I.

Not sure if this thread is about devaluation, trade war, or being Canadian. Based on the thread title it’s probably safer to comment on currency and avoid the other two.

Some countries manage their exchange rates as part of a strategy to keep their exports competitive. South Korea and Japan are good examples. It is very difficult to see that happen in real time, easier to look back over time to assess valuations. Any voice that declares what a country is doing “now” is pure speculation.

It’s also virtually impossible for a Centrail Bank to manage interest rates and exchange rates without capital controls, because each affects the other. They still try, but fail.

Exchange rate usually follows interest rates. What many in the world see today as other currencies falling in value is really the $US rising in value, because the US Central Bank is raising short term interest rates, which makes the $US attractive as a risk free global option, and US Central Bank policy is the most open and reliable in the world. It’s also has a “hands off” policy regarding exchange rate.

As long as the US$ is the global reserve currency, the US is likely to have a slightly overvalued currency, a capital suplpus and a trade deficit.

[Chuckanut]

IMHO, all out trade wars are like MAD wars, nobody wins.

If a country is not playing fair, take steps to put pressure on them. Tough steps if needed. Ban them from acquiring or owning partnerships in industries that have a lot of trade secrets. Outlaw sharing technology with countries that make a habit of stealing it and/or not respecting intellectual property rights. But all out trade war is obsolete, IMHO.

A great example is were we get are pharmaceuticals. Do we really want to really on countries where manufacturers intentionally adulterate drugs for our supplies of antibiotics, blood-pressure drugs, anti-cancer drugs, etc.? Now that is an area where we might take steps to encourage keeping some production within our borders.

[candrew]

Quote:

Originally Posted by MichaelB Not sure if this thread is about devaluation, trade war, or being Canadian. Based on the thread title it’s probably safer to comment on currency and avoid the other two.

Ya' know, my family is from Canada. DW & I have many Canadian friends, as well. They might take some offense the suggestion of avoiding being Canadian.

[MichaelB]

Quote:

Originally Posted by candrew Ya' know, my family is from Canada. DW & I have many Canadian friends, as well. They might take some offense the suggestion of avoiding being Canadian.

Not sure why you quoted me, I didn’t bring Canada into the thread, just suggested we drop it as a thread topic. I certainty didn’t suggest anyone “avoid being Canadian”. BTW, I also have Canadian family members.

[OldShooter]

Quote:

Originally Posted by NYEXPAT With the collapse ( down 20% yesterday) of the Turkish Lira we are hurriedly making plans to got to Istanbul and Capadocia in October!

That's a great trip! Be sure to stay in one of the cave hotels in Cappadocia. We were in Turkey for three weeks and included a mid-trip break in Bodrum, which was very pleasant, right on the Mediterranean.

Quote:

Originally Posted by frayne ... come to the conclusion that trade wars and currency devaluations are all just a zero sum game ...

Well (and I have posted this theory here before) I don't think that's true of the dollar long term. Right now the USD is the world's reserve currency and everyone hates us for it. Some, like China, see it from a nationalistic view and don' like it on principle. Many more hate it because it allows us to use our banking system to punish people we don't like. For example currently, Russia and Iran.

Fortunately, there aren't any realistic contenders right now. Nobody trusts the Chinese, the Russians have flushed themselves down the toilet through bad behavior, and the Euro is still reeling due to Greece and other southerners plus Brexit is looming. So IMO we are safe for a while, but eventually the USD will probably be replaced with a basket of currencies. This will result in a significantly devalued dollar and in inflation that domestic monetary and fiscal policy cannot mitigate. So ... not zero sum at that point. When? I have no idea.

[candrew]

Quote:

Originally Posted by MichaelB Not sure why you quoted me, I didn’t bring Canada into the thread

It was just a poor attempt on my part at a bit of dry humor and sarcasm by playing off of your post! No offense taken or intended.

[MichaelB]

Quote:

Originally Posted by candrew It was just a poor attempt on my part at a bit of dry humor and sarcasm by playing off of your post! No offense taken or intended.

https://m.youtube.com/watch?v=VrbybKWwb7c