“The world currency system is riding down the road to catastrophe.” Those were the words from James Rickards during a recent interview on Wall Street Journal, senior managing director of Tangent Capital Partners and author of the book Currency Wars: The Making of the Next Global Crises. “The world already has entered a currency war that began in 2010 on the heels of the Federal Reserve’s massive easing program. Since then, plenty of nations have joined in, including Brazil, Switzerland and Japan.”
Japan has been devaluing significantly their Yen over the past two months as we wrote here. There is a new competitor in the room. The most recent news, as reported by Bloomberg, is that Venezuela just decided to weaken the exchange rate by 32 percent to 6.3 bolivars per dollar starting February 13th. The currency war has clearly and openly started.
In order to exactly understand what is going on, we need to go back to an earlier interview Jim Rickards gave to Bloomberg. In it, he explained the following:…
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