Doug French

The talk is all about jobs, jobs, jobs in Washington and on the campaign trail as the unemployment rate continues to be elevated and long-term unemployment is higher than ever. Since getting government out of the way isn't an option, late last year congressional leaders decided to turn up the volume while crying that American workers are being damaged by China's undervalued currency — the renminbi (or yuan).

Bipartisan support was summoned to declare China a currency manipulator, triggering retaliatory tariffs on Chinese imports in hopes that China would allow the renminbi to rise against the dollar.

Scott Paul, who heads the Alliance for American Manufacturing, told American Public Media, "If we were able to revalue the yuan, it would make our exports substantially more competitive, not only in China but also globally."

But the Obama administration declined to finger China as a manipulator, causing a frustrated Mr. Paul to lament, "I'm disappointed that President Obama has now formally refused six times to cite China for its currency manipulation, a practice which has contributed to the loss of hundreds of thousands of American manufacturing jobs."

During the debates and on the campaign trail Republican presidential contender Mitt Romney has said repeatedly he would cite China for manipulating its currency the first day he takes office.

Reasonable people tend to tune out the Washington noise — rightly believing most of it is meaningless grandstanding. But the continued hectoring in China's direction is likely not so harmless. Combined with the Federal Reserve's stated policy to keep interest rates at virtually zero until the end of 2014, these are the sounds of Currency War III (CWIII) in its initial stages.

The big picture is that governments inevitably reduce the value of their currencies to their intrinsic value. But in the meantime, politicians are looking for votes, and governments look for advantage over competing governments. It is not just rockets and bombs that are fired; war is raged on the economic front, with currency manipulation as the primary weapon. It is this brutal economic warfare that is the subject of James Rickards's outstanding new book, Currency Wars: The Making of the Next Global Crisis.

Doug French

Doug French is is president of the Mises Institute and author of Early Speculative Bubbles & Increases in the Money Supply and Walk Away: The Rise and Fall of the Home-Ownership Myth

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