Currency Wars: Causes and Consequences

The Realist understanding of international affairs is that it is a realm of competition.  The competition is multi-faceted, taking place in politics and economics.  It has a cultural dimension.  It take place even in the writing of history.  This competition spills over into the foreign exchange market.  It did not begin with the unorthodox pursuit of monetary policy in high income countries beset with crisis.  Even at Bretton Woods countries were jockeying for advantage.  From the time that the dollar-gold standard of Bretton Woods became operational, the foreign exchange market was politicized. The US wanted the German mark and Japanese yen, for example, to be adjusted higher, rather than devalue the dollar.  The attempt to re-start Bretton Woods with the Smithsonian Agreement was shaped by the conflict of national interest. This has also been t...