Bitcoin and gold would be the first profiteers! “There are currently good global conditions for what is often so nicely described as ‘currency war’ or ‘currency race to the bottom’,” said Alan Ruskin, Global Head of G10 FX Strategy at Deutsche Bank. Sources: rosarionet.com.ar, revenuesandprofits.com, reuters.com.
Ruskin alludes to the factors that gave new impetus to stock prices last week. A continued loose monetary policy by the European Central Bank and the hope of the Americans that the Fed might tighten the reins a little less.
The US President, who regularly criticises the Fed’s policy via Twitter, is also not uninvolved. A few days ago, he was still rumbling on Twitter that the euro and other currencies had depreciated against the dollar and that the USA therefore had a “major disadvantage”.
The signs for Ruskin suggest that there will be a competition for devaluation. The various currency regions continue to devalue their currencies. This is done by the central banks flooding the economic area with money (like the ECB with its monthly bond purchase).
By devaluing one’s own currency, domestic goods can be better valued abroad because they are cheaper relative to the foreign currency. In return, the foreign country will devalue its own currency to compensate for this disadvantage. It comes to the downward spiral and thus to the currency war.
- If the value of their own currency were to fall continuously, the population would flee into assets of stable value. Gold would probably be the first port of call, but Bitcoin would also be a great profiteer. The price would multiply.
- But back to reality. There are currently only signs of such a development. An escalation of the situation still seems very unlikely. However, the fear of a currency war alone could drive Bitcoin’s prices.