Switzerland's getting into a currency war with us? Brilliant!

Spend, spend, spend.

It's sort of like the Baader-Meinhof Phenomenon – you hear a relatively rare phrase once, and then it starts springing up all over the place. Today's is "currency war".

At the Telegraph, Ambrose Evans-Pritchard has uncovered evidence that Switzerland and the UK are "effectively fighting a 'low intensity' currency war against each other". He writes:

It seems you can’t debase your coinage these days even if you try.

The Bank of England is straining every sinew to drive down sterling with quantitative easing, and what happens?

The Swiss National Bank trumps Threadneedle Street with an outright blitz of Gilt purchases. They just print it, and buy.

Switzerland is one of the most forthright currency manipulators out there at the moment, as it struggles to hold its franc above 1.20 to the euro. This chart, from the ECB, shows the effect of that fight:

Although currency speculators have been battering at the floor, the Swiss central bank has held to its promise (but it did drop down to 1.1997 francs for a few minutes back in April last year) by buying a metric shittonne (technical term) of eurobonds. Now that it owns so many of those, it is trying to diversify its holdings into other currencies, "allegedly into Aussies, Loonies (Canada), Scandies, Won?, Real? but above all pounds" according to Evans-Pritchard.

The Swiss are doing it because a weaker currency, particularly relative to the Eurozone, is good for them – it boosts deficits and interest rates, both things which ought to keep them out of recession. But we want the same thing. Hence: currency war.

In the US, meanwhile, some economists have argued that America needs to get tough on currency manipulators. The Washington Post's Dylan Matthews writes:

In a new working paper, Joe Gagnon and Fred Bergsten at the Peterson Institute argue not just for import tariffs like those Schumer advocates, but for a full-frontal assault on countries that are manipulating their currencies… Specifically, they want the U.S. to offer the eight worst currency manipulators — China, Denmark, Hong Kong, Korea, Malaysia, Singapore, Switzerland and Taiwan — an ultimatum: Stop manipulating, or else we’ll do the following:

Buy up exactly as many assets in their currencies as they have in ours… tax the earnings from dollar-denominated assets as punishment… treat currency manipulation the same way we treat export subsidies for the purposes of imposing retaliatory tariffs [or] take the manipulators to the World Trade Organization (WTO).

The first of those options is an archetypal currency war. Gagnon and Bergsten argue that making that threat would "currency manipulation, make the dollar less expensive, and thus promote U.S. exports"; the standard refrain of those entering currency wars.

And Matthews offers the standard objection:

The risk is that Gagnon and Bergsten’s policies would only provoke the targeted countries, leading them to respond with still more manipulation and/or tariffs on U.S. goods, setting off a full-fledged currency and trade war that just leaves all parties worse off.

Except that that's not really true (well, the trade war part is). A full-fledged currency war – whether it's between America and all eight of its named "manipulators" or Britain and the Swiss – is indeed a zero-sum game when it comes to the actual level of the currencies. Both GBP and CHF cannot weaken against each other at the same time, definitionally.

But while the war is pointless, the act of fighting it could be a good thing. The Atlantic's Matthew O'Brien writes:

The downside of devaluation is that no country gains a real trade advantage, and weaker currencies means the prices of commodities like oil shoot. But and here's the really important part devaluing means printing money. There isn't enough money in the world. That's the simple and true reason why the global economy fell into crisis and has been so slow to recover. It's also the simple and true reason why the Great Depression was so devastating. We know from the 1930s that such competitive devaluation can turn things around.

War is good if it creates more of something you want. A "charity war" between friends is good because it leads to more donations. A currency war is good because it leads to more money. If war is politics by other means, a currency war is stimulus by other means.

Think of it by analogy to fiscal stimulus. Sometimes, a government decides to do that directly. But just as frequently – say, during the Second World War – it embarks on a massive deficit-funded spending programme because it feels it has to, and it just so happens to be macroeconomically beneficial as well.

So please, Switzerland, keep buying British bonds. It will force the Bank of England into making the moves it ought to have done a long time ago.

Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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"Labour are as pro-Brexit as the Tories": what do Sinn Fein's MPs really want from Westminster?

Its seven MPs are much less sympathetic to Corbyn's party than popularly imagined, and won't ever take their seats.

Should the Conservative minority government fall, what is Jeremy Corbyn’s route to power? The counterfactual as popularly understood goes like this: Corbyn would pick up the phone to his old pal Gerry Adams and convince Sinn Fein’s seven MPs to abandon the habit of a century and take their seats.

There are countless reasons why this would never happen, most of them obvious. One is more surprising. Despite Corbyn’s longstanding links with the republican cause, the Labour party is not all that popular among a new intake, which is preoccupied with one thing above all else: Brexit.

No wonder. Sinn Fein’s long game is an all-Ireland one, and the party believe the UK’s departure from the EU will hasten reunification. In the meantime, however, its priority is a Brexit deal that gives Northern Ireland – where 56 per cent of voters backed remain – designated status within the EU.

Pioneered by the moderate nationalist Social Democratic and Labour Party as an antidote to Brexit, designated status would allow the six counties in the North to continue to enjoy the EU’s four freedoms. But the idea is anathema to unionists and the UK government, and Sinn Fein sees little evidence that the Westminster establishment will make it work – not even Labour.

“They are as pro-Brexit as the Conservatives are,” says Mid Ulster MP Francie Molloy. “We’re anti-Brexit. We want to see the right of the people in the North who voted to remain in Europe respected.”

Simmering resentment over what the party perceives to have been broken promises on Tony Blair’s part – especially over legal protection for the Irish language, a key stumbling block obstructing the resumption of power-sharing – makes the already implausible deal even less likely.

“The Irish language act was something that Blair agreed to,” says Molloy. “So when people talk about us taking our seats, they don’t realise we would be backing a Labour government that wouldn’t be living up to its commitments either, and would be just as pro-Brexit as the Conservatives are."

That criticism may well surprise a lay audience whose working assumption is that Adams and Corbyn work hand in glove. But it is perhaps the best illustration of Sinn Fein’s parliamentary priorities: its seven MPs will not in any circumstances take their seats but use their Westminster presence to lobby ministers and MPs of all stripes while running constituency offices at home (they are unsalaried, but claim expenses).

Crucially, its MPs believe abstentionism strengthens, rather than weakens their negotiating hand: by their logic other parties need not and do not fear them given the fact they do not have voting power.

They will use their leverage to agitate for special status above all else. “Special status is the biggest issue that we are lobbying for,” says Molloy. “We feel that is the best way of securing and retaining EU membership. But if we get a referendum on Irish unity and the people vote for that, then the North will automatically join the EU.”

But that wasn’t always the received wisdom. That assurance was in fact secured by Mark Durkan, the former deputy first minister and SDLP MP beaten by Sinn Fein last week, after an exchange with Brexit secretary David Davis at the leaving the EU select committee. The defeat of the three SDLP MPs – two of them by Sinn Fein – means there will be no Irish nationalist voice in the commons while Brexit is negotiated.

Surely that’s bad news for Northern Irish voters? “I don’t think it is,” says Molloy. “The fact we took two seats off the SDLP this time proves abstentionism works. It shows they didn’t deliver by attending. We have a mandate for abstentionism. The people have now rejected attendance at Westminster, and rejected Westminster itself. We’ve never been tempted to take our seats at all. It is very important we live by our mandate.”

If they did, however, they would cut the Conservatives’ and Democratic Unionist Party’s working majority from 13 to a much more precarious six. But Molloy believes any alliance will be a fundamentally weak one and that all his party need do is wait. “I think it’ll be short-lived,” he says. “Every past arrangement between the British government and unionist parties has always ended in tears.”

But if the DUP get its way – the party has signed a confidence and supply deal which delivers extra cash for Northern Ireland – then it need not. Arlene Foster has spoken of her party’s desire to secure a good deal for the entire country. Unsurprisingly, however, Sinn Fein does not buy the conciliatory rhetoric.

“They’ve never really tried to get a good deal for everybody,” says Michelle Gildernew, who won the hyper-marginal of Fermanagh and South Tyrone back from the Ulster Unionists last week. “The assembly and executive [which Sinn Fein and the DUP ran together] weren’t working for a lot of groups – whether that was the LGBT community, the Irish language community, or women...they might say they’re going to work for everybody, but we’ll judge them by their actions, not their words.”

Molloy agrees, and expresses concern that local politicians won’t be able to scrutinise new spending. “The executive needs to be up and running to implement that, and to ensure a fair distribution. If there’s new money coming into the North, we welcome that, but it has to be done through the executive.”

On current evidence, the call for local ministers to scrutinise the Conservatives’ deal with the DUP is wishful thinking – Northern Ireland has been without an executive since February, when the late Martin McGuinness resigned as deputy first minister and triggered a snap election.

The talks since have been defined by intransigence and sluggishness. James Brokenshire, the Northern Ireland secretary, has had to postpone the talks deadline on four separate occasions, and has been criticised by nationalists for his perceived closeness to the DUP.

The final deadline for the restoration of an executive is 29 June 2017. Sinn Fein has called for Brokenshire to recuse himself in favour of a neutral chair. “His hands are tied now, completely,” says Molloy. “The Conservative party were always questionable on where they stood – they’ve always been unionists. The issue now is whether they can act neutrally as a guarantor to the Good Friday Agreement.”

He believes that question is already settled. “Legally, they have to act to ensure that nothing happens to damage that agreement – but we’ve already breached it through Brexit. There was no consultation. The people of the North voted to remain and it hasn’t been recognised. It totally undermines the consent principle.”

Just how they and Brokenshire interpret that principle – the part of the Good Friday Agreement that specifies the constitutional status of the North can only change by consent of its people – will be key to whether they can achieve their ultimate goal: Irish unity.

Molloy and Gildernew say the fact that 11 of Northern Ireland’s 18 constituencies voted to remain in the EU is enough for Brokenshire to call one within the next five years (though polling consistently shows that a clear majority of the province’s electorate, including a substantial minority of nationalists, would vote to stay in the UK). They are confident they can win, though, failing that, Molloy envisages it as the first in several referenda on unification.

But beneath the optimism lies the knowledge that the British government are unlikely to heed their calls. And, willingly absent from the Westminster chamber, they say the UK government’s discussions about Brexit are illegitimate. They see their real powerbase as elsewhere: in Dublin’s Dail Eireann, where Sinn Fein is the third largest party, and the chancelleries of Europe.

“That’s where most of the negotiation will actually happen,” says Molloy. “The EU27 will make the decisions. They won’t be made in Westminster, because the British have already set out what they’re doing: they’re leaving.”

But with seven MPs already lobbying ministers and a united Ireland unlikely to happen in the immediate future, Sinn Fein itself won’t be disappearing anytime soon.

Patrick Maguire writes about politics and is the 2016 winner of the Anthony Howard Award.

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