The G20 summit has failed, not surprising, as usual it failed to diagnose the problem itself. The fact that countries are becoming aggressive about currencies is merely a symptom of a far deeper issue: that the international monetary system has failed, and there is no one willing or able to come up with a reconstruction job.

From this excellent Telegraph article - In an ideal world, one would like to have fixed exchange rates (so that companies can trade internationally without worrying about currency movements), free movement of capital (so investors can put money where it’s most needed) and independent domestic monetary policy (so you set interest rates dependent on how fast or slow your economy is growing). Unfortunately, one can only have two of these three at any one time. Under the 19th century Gold Standard, policy makers gave up independent domestic monetary policy in favour of a system of fixed exchange rates (tied to gold) and free-moving capital. Then, from the 1940s to 1970s, the Bretton Woods system again retained fixed currencies but gave up free capital movement in favour of independent monetary policy. From the 1970s to today Western nations swung behind floating currencies and free capital movement, while retaining independent monetary policy.

Things will only get worse before they get better - With the huge defeat of the Democrats in the recent mid-term election, the Tea Party movement will only intensify global imbalances with a movement towards protectionism.