From the AFR today:
Treasurer Wayne Swan has declared Australia’s support for letting financial markets determine exchange rates, amid rising unease about a global currency war.
Mr Swan’s move adds Australia’s voice to those of other leading nations concerned that countries are actively devaluing their currencies to boost exports and growth.
In an attempt to calm the situation, which has angered countries in Europe and Latin America, Group of Seven nations are reportedly drafting a statement that they will not target exchange rates when setting monetary and fiscal policies.
The unfortunate part about this is I believe Mr Swan. He does think currencies should be set on markets and acts accordingly.
This misses the lesson of Diplomacy 101. That is, lie about what you’re doing. And obfuscate the lie. I’ve lost count of how many platitudes there are about such things but a personal favourite is from Trygve Lie, Foreign Minister of Norway during WWII:
“A real diplomat is one who can cut his neighbor’s throat without having his neighbor notice it.”
That is what the G7 is doing today. To the world and to each other. It has nothing whatsoever to do with a commitment to markets and it’s not an elaborate typo (as The Kouk suggests). It is simple and raw self-interest deliberately misrepresented as collective agreement.
And so, having agreed furiously with everyone at the G7, we should now do what they are actually doing. Furiously devalue our currency.
