The U.S. with its "Quantitative Easing," the Euro Zone nations, Britain, China, with its informal link to the U.S. dollar, South Korea and many other nations have purposely weakened their currencies by printing vast sums of money, with the intent of using this cheap currency to spur exports and strengthen their economies.
As a result, Japan, the world's third largest economy, and a strongly export driven nation, has begun to weaken its Yen, until now one of the most respected currencies, in order to compete. Meanwhile, Switzerland, has begun to weaken its Franc, also until now, a very highly respected currency for they too are dependent on exports.
Global currency market makers, which provide stability in currencies are left to scramble. They follow a policy they call "risk-on, risk-off," which means they move in and out of the U.S. dollar, as a source of safety, because the U.S. dollar since 1944 has been the underlying currency to all other currencies, and because the market for U.S. dollars is liquid, meaning it's easy to move in and out of it.
But the U.S. economy is struggling, the employment figures are weak, the "Fiscal Cliff" is largely unresolved and in the next 45 to 60 days, it is likely a new political battle will begin over the U.S.'s uncontrolled spending and its "Debt Ceiling."
What all of this tells you and me is that the world is in a currency race to the bottom and much more financial instability is likely to come.
How can we protect ourselves? By doing two things. The first is to remain calm and not get caught up in the mass psychology of fear. Life is far more meaningful and precious than the latest news and it should be lived to the fullest.
Second, is for us to invest in ourselves. Whether it is in building our work skills, advancing our educations, investing in our own well-run business if we own one, paying down our overhead so it is within manageable levels or in taking other similar actions.
No-one else knows our capabilities better than we do, nor can anyone else improve them other than us and it is in difficult financial times that we have the greatest incentive to take action.
Always remember, we are never alone. Our brethren, whether down the street or across the globe are facing the same problems we are and we are here to care for and help one another.