QE3 triggers currency wars

            The FED has finally decided to start QE3 and currency investors are shying away from the dollar as they expect it to devaluate. Currency investors are moving towards the currency of Russia, India and Mexico given that those countries historically have avoided manipulating the value of their currency. Other countries with central banks that also plan to intervene and devaluate their currency have also scared investors away. 

The currency war has begun with the Czech koruna, the Brazilian real and the Japanese yen retaliating in response to the devaluation of the dollar. The U.S. intends to devaluate their currency enough so that importation becomes very expensive and the domestic industry will flourish and thus unemployment would decrease. However, this harms other countries by increasing their unemployment rate and their retaliation could lead to a harmful decrease on the purchasing power of all this countries if the U.S. continues to devaluate its currency.

            For my money, I think this is all a bad idea. It damages the purchasing power of everyone in the country and unjustly benefits the big bankers. This is because they get the government to deal with the toxic assets they created and should be responsible for. Cutting spending is the right solution not printing more money.