Also total fiction that the U.S. wants a stronger dollar rather than the opposite. They're as interested in keeping the cost of U.S. exports affordable for foreign customers as the next country... with half the profits of the S&P 500 coming from foreign customers. And, with very good reason, the U.S. has been railing for years about the Chinese who have been continually undervaluing the Yuan while seeking to gain trade advantages, and manufacturing advantages in the wholesale transfers of entire industries, mostly by under pricing U.S. labor using currency manipulations. But, look at the uses of REE in Chinese manufactures, and you see it isn't just currency manipulations... but non free market trading schemes, leaving trade generally being subjected to destabilization efforts where some short term advantages might be won that convert into long term advantages, with focus and effort.
The primary market driver of the generation long currency wars is throttling back a bit now... not because any government or the WTO has succeeded in addressing deliberately imposed disparities properly... but only because of price inflation in China that has Chinese labor costs no longer providing substantive advantages in a global cost/quality/risk comparison. Other Asian nations have lower risks and cheaper labor, now. As China achieves wage parity... there will be couple of colliding sets of expectations that aren't sustainable...
The currency wars are an artifact of deliberately created trade imbalances... and as the markets move toward seeing the currency issues settle out... the focus of in the conflicts will shift... toward more classic trade war issues... or toward far more aggressive currency manipulation.
The big error, though, is in the assumption that "QE is inflationary... because it is printing money"... when QE isn't printing money. QE is "printing debt"... just another balanced but different form of monetary expansion, being used where monetary expansion isn't working, as it doesn't ever work in a secular deflationary period tied to a de-leveraging. QE isn't overtly inflationary rather than just another form of money creation, paired with a risk and wealth transfer mechanism... meaning the reason for doing QE is mostly about subsidizing risk and wealth transfers. With velocity less than one, QE is actually deflationary... as is true in the current environment. That's not saying QE is benign... it is not close to benign... but, its immediate products are risk and wealth transfers... while its longer term products are the same as other debt risks, fully depending on having those risks being realized.
When QE is an inflation risk... it becomes one either due to the secular inflationary trend in the environment... or due to a settlement requirement coming due when there is a need to pay back the debt the QE created. If you pay that debt by printing money... then, it isn't the QE generated debt, but the printing to pay that debt, that causes the delayed but real future inflation risks. QE grows debt risks.
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