A Currency War Battle That Europe and Japan Can’t Afford to Lose

by John Rubino
Dollar Collapse

The dollar is tanking lately. From a high of around 100 in December, the dollar index — which measures USD against a basket of foreign currencies — is down about 8%, and the decline is steepening. In counterintuitive currency war terms, that means the US is winning the latest battle.

[…] After three years of the dollar being pretty much the only strong currency in the world, US corporate profits are falling (because it’s hard to sell things abroad when you price them in an expensive currency) and growth is slowing (because an economy can’t expand if corporate profits are falling). Presumably the plunging dollar will offer some relief on those fronts.

But our relief comes at a high, potentially-catastrophic price for Japan and Europe, because a weak dollar by definition means a strong euro and yen.

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