The currency wars are heating up.
Competitive currency devaluation is driving commodities like the price of gold to dizzying new highs. In one corner, you have the "gang green" greenback which made a 15-year low against the yen of 82.11 Thursday and in the other corner you have the yuan, which the Chinese perpetually promise to allow to appreciate but somehow never really get around to it. European Central Bank President Jean-Claude Trichet says economic fundamentals should be reflected in currency levels.
But reality is not a part of this currency game. Treasury Secretary Timothy Geithner was dead on when he said a "dangerous dynamic" is being created with countries that are all trying to keep their currencies values down.
We've heard lots of tough talk about the Yuan in the last week and you can bet you'll hear more of it during the International Monetary Fund meeting this weekend. But you have to wonder if there is any bite behind the bark.
Last week in the House Ways and Means Committee, the Currency Reform for Fair Trade Act \(also known as the China Currency Bill\) was passed. The legislation empowers the Commerce Department to impose tariffs on China if its yuan doesn't accelerate in value. I spoke with Ways and Means Chairman Sander Levin \(D-Mich\) on his expectations coming out of the IMF meeting and if we'll hear more rhetoric rather than action.