by Patrick Barron, Mises:
What the media calls a “currency war”, whereby nations engage in competitive currency devaluations in order to increase exports, is really “currency suicide”. They engage in the fallacious belief that weakening one’s own currency will improve their products’ competitiveness in world markets and lead to an export driven recovery. As it intervenes to give more of its own currency in exchange for the currency of foreign buyers, a country expects that its export industries will benefit with increased sales, which will stimulate the rest of the economy. So we often read that a country is trying to “export its way to prosperity”.
Mainstream economists everywhere believe that this tactic also exports unemployment to its trading partners by showering them with cheap goods and destroying domestic production and jobs. Therefore, they call for their own countries to engage in reciprocal measures.