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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Gang of Four’s David Owen says Labour should “proudly and coherently” work with the SNP

The former Labour politician and SDP co-founder tells his old party to “face up to reality” and agree to ally with the SNP.

We don’t have an effective opposition. The question is how to make it effective. I think they should start to discuss with a view to deciding at a conference this summer on its policies. It’s just got to stop for a moment, have a pause on personalities. They’re going to have to return to personalities, they have to have a new leader. But at the moment, the issue should be: let’s get the policies right. I’m sure there are areas in which people want to see changes, but they’re obviously completely incoherent over Europe, so just let that incoherence lie.

If Labour party MPs can’t start to talk about why young people were attracted to Jeremy Corbyn, they won't find the solution. Corbyn – you can trash him like the right-wing press do every day, but they've always done that with every form of Labour leader we've ever had. I’m not defending Corbyn, I don’t think he is the right person to be leader of the Labour party and become Prime Minister.

They've got to widen their base, and they've got to widen it in an election. That doesn't stop the party having more values. The Labour party instinctively, like the country, needs to move a bit more to the left. I'm not afraid of talking more about socialism and social values. I think that would be matching the mood of the country.

Clement Attlee and the Labour party came in in 1945, and shocked everybody, including all the pundits and newspapers – they responded to a mood in the country that wanted a difference. I believe there is a mood in the country that wants a difference. They don’t want recycled Blairism.

You’ve just got to face up to reality. The fundamental thing is, where we slipped up in [the last] election, is that we were not able to answer the question – when they were ravaged and savaged about the SNP – Ed Miliband should've lost his cool. All he said during the attack about working with the SNP was that it ain't going to happen. Well, it obviously was going to happen.

What they needed to say is proudly and completely coherently: if the electorate send a Parliament back which has the SNP in substantial numbers, it is perfectly legitimate for the Labour party to work with them. Health policy – a pretty good step would be to take what’s happening in Scotland and more or less mirror it.

That is the nature of the beast, which is democracy. Even without changing the system of voting, we now have multi-parties, whether we like it or not. We were told the route through was not to create a Social Democratic Party alongside the Liberals, you had to merge with them and that there was no room for more than three political parties in Britain. Well, it’s absolute nonsense. We now have seven, you could argue. We have to live with that reality. You have to be ready to talk to them. You won’t agree with them on separation but you can agree on many other areas, or you certainly should be trying.

I think it’s asking a hell of a lot to be leader of a party, asking to be Prime Minister, when you've never performed yourself in government, you've never held a serious job anywhere else. It's a very, very big thing. He didn't want to be leader of the party, he didn't expect to be leader of the party, he stood on the basis that he was the person they all turned to on the left, and he did it, and he surprised us all. The fact that he won should be a serious message to us. The reason he won is because everybody was totally sick and fed up with the other people. We've got to face up to the fact that this has happened now twice. Is the Labour party going to go on churning out a sort of mollified form of Blairism?

David Owen is an independent social democratic peer and co-founder of the SDP.

As told to Anoosh Chakelian.

Lord Owen was Foreign Secretary 1977-79, a founder-member of the SDP and is now a crossbench peer.

This article first appeared in the 30 March 2017 issue of the New Statesman, Wanted: an opposition