...we are all cooperating in this happy global family.
The glue that holds this together are the various trade balances (which are obviously affected by currency fluctuations) and standard of living figures. Once these start to erode (and they will given the austerity measures imposed just about everywhere), all this rhetoric will dutifully jump out the window.
LONDON/TOKYO (Reuters) - Group of Seven nations reiterated their
commitment on Tuesday to market-determined exchange rates and said
fiscal and monetary policies must not be directed at devaluing
currencies.
The intervention follows a round of rhetoric about currency wars,
prompted largely by Japan's new government pressing for an aggressive
expansion of monetary policy, which has seen the yen weaken sharply as
a result.
The statement said the G7 powers - the United States, Britain, France,
Germany, Japan, Canada and Italy - had agreed to consult closely on
exchange rates which if allowed to move in a disorderly fashion could
hurt economic and financial stability.
"We reaffirm that our fiscal and monetary policies have been and will
remain oriented towards meeting our respective domestic objectives
using domestic instruments, and that we will not target exchange
rates," said the statement, released by Britain which chairs the G8
(G7 plus Russia) forum this year.
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