Protectionism and currency wars

Here's an article by Martin Wolf, laying out similar arguments to those made by Michael Pettis, about how the world cannot export its way out of this mess. Wold focuses on currencies and how countries receiving large net inflows of investment capital (such as China and Brazil) should be running trade deficits (as the U.S. did during its rapid growth phase in the 19th Century).

This will be one area that politicians gravitate towards if social mood slips and the public demands protectionist laws, since it can be partially implemented by "stealth" through the central banks. The politicians will hesitate to pass outright protectionist laws because they are an overt diplomatic faux pas and will be harder to reverse. Adjusting monetary policy is less effective, less public, and more easily reversed.

Currencies clash in new age of beggar-my-neighbour