Mr. Bernanke Goes to War

Finance ministers around the world are up in arms over the Fed's latest efforts to jump-start the anemic U.S. economy. The future of globalization hangs in the balance.

Issue: Jan-Feb 2011

 IN THE genteel world of international financial diplomacy characterized by staid summits and staged photo ops, martial metaphors are out of place. So in October, when Brazilian Finance Minister Guido Mantega warned of an impending “currency war,” he duly shocked the financial world. The United States, Britain, Switzerland and Japan, Mantega complained, were all simultaneously attempting to push down their currencies in an effort to export their way out of their economic doldrums. Their policies were in obvious conflict, since not every country can weaken its exchange rate against the others. This was a zero-sum game that could only come to grief.

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