I want to elaborate on my post below: Currency War On! The first finance official to state the obvious: "a trade war and an exchange rate war".
Inevitably, the question arises: Who wins a currency and trade war and how? That question in my opinion, is the wrong question. A currency war is merely a symptom of a breakdown in global trade, in other words, the allocation of the world's resources and the imbalances of surpluses and deficts. A currency war is a natural evolution of fiat money. Money needs to be devalued in order to manage the growing debt in an economy.
But there comes a point when the debt has so outgrown an economy's ability to pay, that the devaluation needs to accelerate, or else the system collapses. But acceleration can easily become a runaway train when everyone else is doing it. Some may need to devalue to pay off debts. Others need to devalue to maintain their export based economy. Others need to devalue for both.
As this develops, no one wins. In a currency "race to the bottom" their is no finish line. Only systemic breakdown. Watch the price of gold, that is what it is telling us.
There is no historical lesson we can draw from concerning this currency war. Never in the history of global trade has the entire world gone on free floating irredeemable fiat money. Never.
Central Banking, as we know it today, is barely 40 years old. Historically speaking, it is a mere experiment - a blip in mankind's thousands of years of global trade. And we also can't ignore the fact that the world, through technological advances such as the internet and computers, has attained an extremely high level of complexity. Complexity comes at the expense of resiliency and robustness, IMO.
There is no historical precedent for what we are experiencing, in my opinion.
There will be no winners thru devaluation. Only a systemic breakdown ends the race. But eventually, there will be a "winner" so to speak.
The winner will ultimately emerge thru war.
That's the closest historical precedent I can come up with.
Sovereigns store and/or accumulate weapons and gold for a reason.... for future deployment.