In the battle over monetary policy, things have been heating up this week at the G-20 summit. The US wants to cut the trade deficit. China and a host of other nations have over the past several years purchased trillions in US dollars to keep down the value of their currencies. Japan followed suit in September as the yen approached multi year highs. In last week's Fed moves, world leaders see the Fed now doing the same. Meanwhile, Germany's export powerhouse supports the euro despite major problems on the euro zone periphery.
At the heart of the matter is that all countries want to use exports to power their economies, whereas no country wants to increase domestic demand.