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Schuster currency war_20101027

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Presentation about the curreny war going on between the U.S. and China.

Published in: Economy & Finance, Business

Schuster currency war_20101027

  1. 1. Currency War as a Trade Political Tool Guest Lecture at Haaga-Helia University of Applied Sciences 27th October 2010 Prof. Dr. Thomas Schuster International University of Applied Sciences Bad Honnef ∙ Bonn
  2. 2. Outline of the lecture • Battelfields of the war • Attackers and victimes involved in the war • Economic background • Suggestions to make peace Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011 2
  3. 3. Questions about the currency war • Who is the attacker? • Who is the victim? • What is the accusation? • Are any countermeasures taken by the victim? 3Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011
  4. 4. China‘s Undervalued Currency 4 Source: The Economist (2010) Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011
  5. 5. China‘s Undervalued Currency 5 Source: finance.yahoo.com (2010) Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011
  6. 6. China‘s Undervalued Currency 6 Source: finance.yahoo.com (2010) Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011
  7. 7. U.S.‘s Quantitative Easing 7Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011
  8. 8. U.S.‘s Quantitative Easing 8 Source: www.tradingeconomics.com (2010) Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011
  9. 9. Developing Countries‘ Capital Controls 9 • Why do countries like Brazil or Thailand introduce capital controls or make it more difficult for foreigners to buy their currency? Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011
  10. 10. Suggestions to make peace • China should completely change to the free floating exchange rate regime • U.S. should watch inflation rate carefully and increase federal funds target rate if necessary • U.S. should not impose tariffs on Chinese products • Developing countries should not impose capital controls or taxes on foreign investment  They need the capital to expand business and to stay competitive 10Prof. Dr. Thomas Schuster Currency War International University of Applied Sciences WS 2010/2011

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