Currency Devaluation Is Inevitable. All Sides Expect G20 To Be The Savior.

The meeting of G20 finance ministers and central bank governors will be held in Shanghai in from February 26th to 27th. The theme of water forecasting will not run out of these two areas. One is the growth of the global economy. The other is how to balance the monetary power of different countries and avoid currency wars.

Because in the past year, especially in emerging market countries, currencies have depreciated greatly. According to the MSCI index, the depreciation rate of the emerging market countries is about 8%.

The yuan also appeared in August last year. Although the aim is to narrow the central parity and settlement price of the RMB, the impact of the depreciation of the renminbi is not small.

Currencies began to depreciate.

In January 29th of 2016, the Bank of Japan announced the implementation of negative interest rates, which immediately depreciated by 2%. The US dollar index has been very strong in the past year, from more than 80 to around 100.

Competing devaluation is likely to lead to the outbreak of currency wars.

Who is the culprit, of course, the United States.

The price fixing power of the global currency is the US dollar. If the currency goes wrong, we must find the United States and the US is the root.

In order to solve the economic situation after the subprime mortgage crisis, the United States has been implementing quantitative easing policy, accumulative total of 4 trillion dollars.

Half of this huge capital is in the US and half of them are in emerging markets.

The money left in the US has increased liquidity and improved economy. The Dow Jones index has seen a 6 year bull market.

The other half of the money flowing to emerging markets brings the false prosperity of emerging market currencies.

Now the US dollar is raising interest rates, the US dollar is strengthening, the US dollar flowing to the emerging market countries is returning to the US, and the currencies of the emerging market countries are going to depreciate naturally.

At the same time, commodity futures prices are falling all the way, because commodities are denominated in US dollars, and their prices have dropped naturally as the US dollar has strengthened.

Demand for commodities is also declining as growth in emerging markets slows.

This has also led to a decline in the supply of commodities such as Russia and Brazil, and the decrease in trade surplus, and the currency will hardly be strong enough.

Some people believe that under the background of currency devaluation, a new version of the plaza accord should be issued to avoid currency killing.

Zhou Xiaochuan, governor of the people's Bank of China, is well known. Zhou Xiaochuan's extended service has also become a heated issue.

Zhou Xiaochuan, 68 years old, according to the regulations on the management of Chinese cadres, has expired. The retirement age of cadres at ministerial level is usually 65 years old. Why can Zhou Xiaochuan be an exception?

Because Zhou Xiaochuan has another title, vice chairman of the CPPCC National Committee, so that he can work till he is 70 years old.

Water skin thinks, this "Prince too protect title" is nothing wrong.

Because central bankers are not old at all.

Kuroda Higashihiko, governor of the Bank of Japan, was 69 years old when he took office. He is 72 years old. Mario Delagi, the European central bank governor, is 69 years old. The Federal Reserve Chairman, Yellen, is 70 years old.

Why do the governor of the central bank have a very large age? Water skin tries to explain that the president's job really needs experience, experience, experience, education, and the ability to co-ordinate, the art of coordination, age, and natural stability.

No matter what, Zhou Xiaochuan's performance during the service is still remarkable. In 2008, when the financial crisis happened, Zhou Xiaochuan put forward the countermeasures. The RMB joined the SDR. Although it is a success now, it seemed like an Arabian tale at that time.

The Ministry of foreign affairs has said that this is Zhou Xiaochuan's personal academic standpoint and does not represent the official position. Now it seems that Zhou Xiaochuan is very forward-looking in looking at the problem.

The central bank is only a constituent unit of the State Council. It is totally impossible to remain completely independent of the State Council under the great framework of the State Council and not affected by other sectors.

Zhou Xiaochuan's background and qualifications can keep the central bank's monetary policy unified and stable. In other words, Zhou Xiaochuan's identity can maintain the independence of the central bank in a certain range.

Then, the G20 finance ministers' meeting and the central bank governor's meeting will be held soon. Zhou Xiaochuan will lead the situation again. What is the situation? Wait and see.

Face up to the role and influence of Plaza Accord

Let's see what the Plaza Accord is.

In 1985, the five countries of the United States, West Germany, France, Britain and Japan held a meeting in New York Times Square, mainly to guide the depreciation of the US dollar in an orderly way.

After the Plaza Accord was drawn up, the yen rose sharply, from 240 to 80.

Some people regard this as the chief culprit of Japan's economic loss for 20 years, but the actual situation is not so simple.

Because after the implementation of the Plaza Accord, Japan's economy did play a lot of positive role. The yen's appreciation forced Japanese enterprises to carry out industrial pformation. In 1995, Japan's GDP reached 5 trillion and 110 billion, the United States was 7 trillion, the per capita GDP was Japan's 1.6 times that of the United States, and the Japanese economy reached its peak.

But since then, Japan's economy has lost its scenery.

Shui Pu thinks that the reasons are mostly from its own: first, Japan's industrial structure is very special, the Japanese government has been deeply involved in the Japanese industry; second, Japan has implemented a comprehensive business model, and you have me, I have you, industry and finance are infiltrating each other. Third, the Japanese government can not introduce the economic shaping scheme that is so late, because it is always a fantasy.

But because the Plaza Agreement is in the front, it's easy for everyone to lose all 10 years or even 20 years of Japanese economic losses to Americans.