Sunday, February 17, 2013

“G20 Steps Back from Currency Brink”? Give Me a Break

The Group of 20 nations declared on Saturday there would be no currency war and deferred plans to set new debt-cutting targets, underlining broad concern about the fragile state of the world economy.”

Whew, that was close…? But read the headline carefully and it’s clear that the G20 finance ministers and central bankers met in Moscow on Feb. 15-16 and decided…nothing, really. Well, what were they expected to do? Censouring deflationary Japan for essentially going QE3 lite in a world where the major currencies, i.e. viable reserve currencies, float freely* would have been tantamount to telling it to give up monetary policy as a macroeconomic tool. (And where was the G20 when Switzerland hard-capped the Franc?) And there’s still plenty of time before the September G20 Summit, when the heads of state/government have to make up their minds about what to do with the 2010 Toronto Summit goals. But even the lead did not satisfy the copy editor, who must be being paid by the eyeball, who jazzed ti up with “Brink.” Brink indeed.

* The Renminbi will only qualify as a major currency when it becomes a viable reserve currency.

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