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Currency War

Currency War

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Published by manojpatel51
its a nice research done by Rashmin Chandulal Sanghvi giving the details about currency.
its a nice research done by Rashmin Chandulal Sanghvi giving the details about currency.

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Published by: manojpatel51 on Apr 09, 2011
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04/09/2011

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Currency WarsA Matrix of Concepts
Rashmin Chandulal Sanghvi24
th
January, 2011
Summary of Contents1.
Identify the problem. Currency Wars. (I)
2.
Analyse past and present.Diagnose reasons for the problem. (II to X)
3.
Estimate consequences. (XI & XII)
4.
Offer solution. (XIII)
Detailed Contents
If you are busy, just read the paragraphs marked with * & redcolour. Then if interested, read the whole paper.
ParagraphNos.Paragraph Titles PageNo.
I Preface 1*What is a Currency War1Illustration 1: Exploitation by Europe of its colonies. 3Colonial Exploitation Compared with EconomicExploitation3Conspiracy Theory 4Notes 5Matrix of Concepts. Some details & analysis of past &present. From page 7 to page 60.7II Exchange Rate Determination 7III*U.S. $ Issues10IV A Brief History of Money 11*Nixon Shock12Currency Explosion 13V U.S.S.R. Implosion 15Star Wars 15
Contd…..
 
Contd…
 
ParagraphNos.Paragraph Titles PageNos.
Afghanistan 16VI South East Asian Crisis 22Yen Carry Trade 22Indonesian President Suharto 24Yen as International Currency. 25Crash of 1997 25Some Proverbs 27VII*China and India as Suppliers & financiers to USA.28VIII.*Benefits to USA of $ being the global currency:33IX How U.S. tries to maintain $ Hegemony! 34*Gold Carry Trade34List of U.S. Strategies 37X Practical compulsion to adopt $ as the Currency forinternational trade:39XI Some signs of the trend for U.S. Economy. 42American Financial Crisis of 2008. 42XII Probable Consequences of Currency Wars 43XIII Probable Solutions 49XIV Relevant Issues of Interest 51Annexures1 Concept Vs. Definition 562 Cause of Inflation in India 58This is a summary on a vast subject. Several issues are controversialand need considerable discussion.
Short Forms:
FI = Financial Institutions including banks.Fx = Foreign Exchange
 Next page: Preface
 
Page No.:1
Currency Wars.I. PrefaceI.1
Several currency wars have been fought during last hundred andfifty years. No currency war was fought before 150 years in entire historyof money. At present (January, 2011) the currency war has already started.If it escalates, results can be severe. Senior Economists of the world areworried about currency wars. International Monetary Fund (IMF) andWorld Bank are also worried. Let us see in details these issues in thispaper.Currency movement and currency exchange rate can be abused to
exploit
another country. There are several ways of abuse. Most ways aredifficult to understand or realise. In this article we have a look at the waysof abuse. We take
illustrations
from
history
so that
abstract concepts
 become easier to understand.It can be several decades and even hundreds of years before asociety or nation realises that it has been exploited. The exploiter can
confuse
the exploited. Some people have mastered the art of exploitation.Even when the exploited feels exploitation, he cannot pinpoint real causeof his suffering.
2. What is Currency War?Common Definition.
Some
people have defined “Currency War” as competitivedevaluation of one‟s own currency so that exports become more
competitive and imports become costly. As a result imports are expectedto reduce and exports are expected to go up. As a further result,employment within the country goes up and employment in thecompeting country may go down. The country which devalues itscurrency may get net trade surplus (exports more than imports) and itsforeign exchange reserves go up.This policy
is also referred to as “
Beggar Thy Neighbour
”.
 
At present, U.S. Government‟s allegation is: “China is keeping the
value of its currency artificially low. Hence it has a huge trade surplusand large foreign exchange reserves. U.S. is suffering unemployment andtrade deficit because of Chinese policy.
 U.S.A. tried to push China into revaluing Yuan. China told Hillary
Clinton: “Mind your own business. Instead of advising us, ensure the
safety of
your currency.”
When individual pressure did not work, U.S.tried international organisations and institutions to pressurise China.

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