Introduction: Aristotle once said “it is more difficult to organize a peace than to win a war; but the fruits of victory will be lost if the peace is not organized.” Now, we’ve all heard of the classical wars, but have you ever thought of a war where blood may not be shed? After extensive research from current articles and attentiveness to recent debates from the elections I wish to inform you about the currency wars. As a voter it is up to you to be educated on various political topics to know what candidates stand for. One of the biggest problems in global recovery is that nations are purposefully devaluing their currency and in the long run this is hurting economic growth and stability. First I will discuss who is greatly involved within this war. Then, address a solution that will be beneficial to all parties. (AA)
Transition: Let’s first start with the current problem within this war.
I. In order to understand this issue there are two main terms that you need to know according to Laurence Knight a Business reporter from BBC News in a 2010 article.
A. There are two types of countries in the world “deficit” countries and “surplus” countries.
1. Deficit countries are countries that need to borrow money from other countries and import more than they export.
2. Surplus countries are countries that lend out money to countries to help finance their exports, while exporting more than importing.
3. From this graph you can clearly see the gross domestic product of deficit and surplus countries China and Japan have large GDP and they are able to lend money while the US and UK are in debt and have a significantly lowered GDP. [Show graph of GDP downloaded from http://www.bbc.co.uk/news/business] (St)
B. Ever since the financial crisis and global recession, the United States wants to export more in order to help its economy grow and get out of debt.
1. Again, Knight states “The United States says it wants to export more, to help its economy recover but surplus countries don’t want to lose their competitive edge.” (Et)
C. At the same time when the United States is trying to get out of debt, countries are trying to manipulate their currency.
1. Despite international pressure to increase the value of the yuan, China’s monetary system, they will only appreciate a little.
a. “China has let the yuan appreciate against the US dollar by 6.6% in the past two years and is not likely to rise for the next two years,” according to Brian Wingfield of Forbes.com in 2007. (St)
b. Lee Brodie a producer of Fast Money on CNBC in 2010 states that “China has argued time and again that moving too quickly with currency reforms could devastate its export-driven economy.” (Ex)
Transition: Now that you know a little about the problems within the Currency war, I will explain some solutions.
II. First of all, the United States should try and become more sufficient and not rely so much on imports.
A. Think about the last time you used a product or bought something. Did you notice a “Made in China” sticker? Think about that pencil, backpack, anything; it is all made in China. [Show multiple photos downloaded from Google of everyday items]
1. If you could choose between two products, which would you buy knowing