There’s a race going on right now. A "war" if you take the words of Brazil’s finance minister, Guido Mantega, to devalue currency. The reason is simple: by keeping your currency low against your competitor you will export more.
Timothy Geithner, the US treasury secretary, says his country  is not involved in currency manipulation. On the other hand, the US accuses China of being a currency manipulator and has delayed publishing a report to this effect.
"It is not going to happen in this country." Geithner said.
It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive. It is not a viable, feasible strategy and we will not engage in it.
Really? The dollar has plummeted by more than a quarter against the yen since August 2008. That as the US started to slash rates to almost zero and started pumping trillions into saving the economy.
And the Federal Reserve is well on its way to spending hundreds of billions more to stimulate the economy. That will put more pressure on the dollar to depreciate. So you can image the gasps from around the globe as Geithner made his comments.
Investors are voting with their feet - they’re just not getting the returns from the US and other Western nations.
The World Bank has warned that US policy is destabilising growth in emerging and developing economies. A wall of money is pouring into Asia and could trigger a re-run of the 1997 Asia financial crisis that as money inflates property and stock markets.
"We are seeing an effort by developing East Asia to deal with the large amounts of liquidity driven in very large part by the monetary policy of easing in the United States," the bank’s chief economist for Asia-Pacific, Vickram Nehru, was quoted by Reuters as saying.
Brazil’s Mantega called for an end to “currency wars” and warned that his country was considering more options to fight of hot money.
But there is no end in sight. Bloomberg says India may start selling its currency while a former Chinese central banker has warned - backing up what the World Bank is saying - that the Fed’s move to print cash would flood the country with cash.
This war is going to get nasty.
To bring this to an end, Washington needs to admit that this isn’t about China’s currency being undervalued but the way some businesses are plainly uncompetitive. Remove the impediments, use your technological advantage and the economy will get on to a more stable world-beating footing.