A must-read for anyone interested in understanding the global economy and exchange rates!

By understanding the fundamental principles and history of exchange rates, which are deeply ingrained in our lives, and the historical facts surrounding US-China relations and the currency war between the two countries, we can develop insight into the future.
Exchange rates can feel even more difficult because they are linked to the political and economic situations of not only domestic but also other countries.
"The Currency War" is an easy-to-understand book that explores the historical roots of how exchange rates began, what determines them, what the modern exchange rate system is like, and the extent to which exchange rates influence the world.

The value of any currency is determined by two factors:
It is the value of the object of exchange and the public's level of trust in the currency.
If a country has a lot of goods and is trustworthy, its currency will appreciate.
Conversely, if a country's stock of goods is very small or unreliable, its currency will be worth less.
In this way, the exchange rate is a comparison of the size of the goods and trustworthiness that can be exchanged for each currency.
--- p.32

Although the free floating exchange rate system has many advantages, it is not without its drawbacks.
The very fact that it is ‘free to change’ is a disadvantage.
In other words, the exchange rate fluctuates freely, so stability is not guaranteed.
High exchange rate volatility increases investment risk, creating headaches for businesses and investors.
Therefore, businesses and investors must consider factors such as exchange rate fluctuations and potential volatility in advance before making business or investment decisions.
This cannot but affect the activism of businesses and investors.
--- p.74

In countries that implement a free floating exchange rate system or a managed floating exchange rate system, when they implement policies to expand fiscal spending or cut taxes, interest rates will rise, which will lead to an inflow of foreign funds, lowering the exchange rate and decreasing exports.
However, if the government lowers interest rates and prints more currency, the exchange rate will rise and exports will increase.
On the other hand, if tariffs are raised, the exchange rate will initially fall due to a decrease in imports and an increase in exports.
However, due to the impact of the depreciation of the exchange rate, the surplus soon disappears, and ultimately, only the increase in the value of the currency remains.
--- p.94

The West's currency stability has become a weapon more threatening than its warships and cannons, allowing the West to acquire wealth from China without shedding a drop of blood.
This is very similar to how the Southern Song Dynasty stole the wealth of the Jin Dynasty in the past.
The only difference is that this history of shame cannot be called a currency war.
Because the gap between the West and China in political, economic, military, and scientific and technological capabilities was so stark, it would be more accurate to describe this as a kind of constant exploitation rather than a war.
As a result, China became increasingly impoverished.
--- p.155

After the rise and fall of the Bretton Woods system, the modern foreign exchange market finally took shape.
Rather than unifying their exchange rate systems with a fixed exchange rate system, each country chose the system that best suited its own situation based on its own interests.
However, the Bretton Woods system was a transitional period from the gold standard to the modern exchange rate system, and its influence has not disappeared even now.
Each topic to be discussed below can find clues in the Bretton Woods system.
--- p.190

The consequences of Japan's bubble burst were indescribably disastrous.
The wealth of the Great Han Dynasty disappeared in an instant, and the real estate price in Ginza, which had reached 1 million dollars per square meter, fell to less than 1% of the original price, or under 10,000 dollars, by 2004.
The prices of houses where the bubble was relatively mild also fell by around 10%.
Many Japanese companies and investors overinvested during the rising price phase, leaving them with massive debts after the bubble burst.
--- p.210

Although Asian countries gradually recovered their economies, many were deeply resentful of the International Monetary Fund's actions at the time.
They resented the IMF's forced measures, which they viewed as imposing American values ​​and economic ideology on their countries through the Washington Consensus.
At the time, many Americans believed that Asian countries were aware of their own mistakes but were refusing to admit them and avoiding responsibility.
But looking back now, the Asians' perspective wasn't entirely unreasonable.
When the subprime mortgage crisis erupted, the United States, instead of adhering to the Washington Consensus, printed a large amount of money and expanded debt to stimulate the economy.
Other scholars, including Nobel Prize winners in economics Joseph Stiglitz and Paul Krugman, believed that many of the IMF's measures were inconsistent with Keynesian principles and would only worsen the economic situation and people's living standards.
--- p.271

Unlike conspiracy theories, economics can be proven wrong.
For example, liberalism could not explain the Great Depression, which proves that liberalism has fundamental problems.
Thus, the Great Depression was explained by the new theory proposed by Keynes.
In this way, as integration of laws increases, awareness of the problem also becomes clearer.
Economics is a perpetual revisionism in the quest for perfection.
This also means that economics itself is imperfect.
So, compared to a perfect conspiracy theory, it shows a weak side.
What's most distressing is that economics holds us, as individuals, accountable, not some conspiracy that will never reveal its true colors.
--- p.300

When financial powers carry out operations, they generally use various means, including the media, to incite people in various ways.
Their ultimate goal is to rally all financial powers to attack their target together, as well as to destabilize normal investors and traders, causing them to withdraw their funds and encourage ordinary citizens to sell their national currencies for fear of losing their wealth.
This is equivalent to putting pressure on the government by simultaneously withdrawing the funds of economic entities from the market, and all economic entities gripped by anxiety are instantly transformed into collaborators of financial power.
In such a situation, no matter how powerful the government may be, there is no way to turn the situation around.
--- p.342

There is one prerequisite for the creation of a currency.
This means that the government must have the power to decide on various policies related to currency circulation.
The fact that the euro has reached a very dangerous situation during this financial crisis demonstrates this fact.
Although unified by the euro, Europe's political system has yet to catch up.
The euro lacks a strong political system behind it, and, moreover, the governments in the eurozone have different agendas.
Ultimately, they are responsible for their own citizens, not for those who belong to the 'European countries'.
Because of these fatal weaknesses, the euro was fundamentally unable to compete with the dollar, and this crisis exposed that flaw.

--- p.385