Limbo Crock

Now I know America was already well populated before Columbus discovered it.  And I think Limbo Dancing probably pre-dates Chubby Checker but he’s the one who taught me my moves.  Anyway, as I assume you well know, the object is to pass your entire body under a stick set as low to the ground as possible without falling over.
In this period of global slow economic growth nations are now starting to perform their own version of this dance using their currencies.  Here the object is to get the exchange rate of your monetary unit lower than that of your trading partners.  In theory this boosts your exports as they become cheaper on a relative basis.  In turn you keep the population employed as they produce these goods being exported.  The list of countries using this technique is long and expanding.  We complain to China that they are unfairly keeping their Yuan’s value tied to dollars.  Europe worries their Euro is too strong relative to dollars.  The Japanese recently spent two trillion yen trying to weaken their currency.  Brazil is talking about it.  Even the Swiss are doing it.  To believe that every country can lower the value of its currency all at the same time is, in the parlance of economic theory, a crock.
An interesting thing is happening as the world competes to see how low they can go.  Obviously, if all currencies are declining simultaneously, on a relative basis they generally maintain their relationship.  It’s the bar that’s moving; it keeps going up.  And that’s what’s interesting: it seems to be a gold bar.