60 years ago, in 1957, the USA threatened Britain to sell off a bunch of Sterling denominated bonds, which would have driven down the value of the British pound. At that point in time your currency losing value compared to others was considered such a scary idea, that Britain caved in and withdrew their troops from Suez, ending the Suez crisis (and some say the British Empire). If your currency loses value, all the money that your citizens have is worth less, and prices go up because everything imported becomes more expensive. I haven't quite understood how we got from that very reasonable fear of devaluation in 1957 to the idea that devaluation is good for the economy in 2017.

The only possible explanation that I have is that it is some sort of short-term thinking. A sudden drop in value of a currency, like the drop of the value of the British pound from the Brexit referendum, in the short term leads to a countries exports becoming cheaper. Exports go up, the trade balance goes up, and the GDP goes up. However sooner or later the country's stock of raw materials bought before the devaluation runs out. Now the imported materials are more expensive, and at some point the manufacturer of goods needs to raise his prices to compensate for that. In theory, that is in a system where nothing else changes, the price goes up by exactly as much as it had previously dropped from the devaluation of the currency, and the result on exported goods prices is zero. However the effect of devaluation on the price of imported goods isn't zero, and everybody gets less goods for their money. So I still think that devaluation is not good for an economy in the long run.

Curiously devaluation also has a rather socialist component: It hurts people who have money in that currency, and helps people who have debts in that currency. Devaluation is a form of redistribution from the haves to the have-nots. So maybe that is why governments like it these days, because all governments are heavily indebted, and devaluation is a sneaky form of taxation. However it doesn't just hurt the rich, but also those who have entitlements, like pensions. The British pensioner living at the Costa del Sol in Spain probably feels the devaluation of the British pound more than anybody else. The really rich are more likely to have their money in more than one currency, and what they lose on their British pounds they gain on their Swiss francs.

There is an idea discussed in Europe that dissolving the currency union of the Euro would solve economic problems by making the returned German mark more valuable, and devalue the currencies of the weaker economies like Greece or Italy. I don't see how devaluing their currencies will solve the economic problems of those countries in the long run. And while exports of Germany sure would take a hit in the short term, I don't see how doubling the value of their money would hurt the Germans terribly in the long run. It wasn't as if Germany was poor and Greece and Italy were rich before the currency union. The main practical problem of dissolving the Euro would be that *everybody* in the currency union would want their Euros transformed into German marks, and nobody would want Greek drachmas or Italian lira. It would need really heavy-handed state intervention to force the citizens of each Euro-zone country to take their own national money back.

I think the politicians of 1957 got it right: Your own currency being valuable to other people is an asset, not an obstacle.