When countries compete to devalue their money in a weak global economy, it's a fight that everybody wins.
Currency wars get a bad rap. The trouble starts with that second word. Wars, as we all know, are very bad. And a currency war -- where countries compete to lower their exchange rate to boost their exports -- reminds people of the kind of trade protectionism that killed some economies in the 1930s. But currency wars are the best kind of war. Nobody dies. Everybody can profit. In fact, currency wars didn't contribute to the Great Depression. They ended it.
The reason why has everything to do with peer pressure. Sometimes, we engage in certain behaviors to keep up with our group. If our friends work out more, we might work out more. If they start bragging about charity donations, we donate to a charity. If they flaunt their community service experience, we grudgingly do more service. In all of these situations, we are acting out of pure selfishness and social competitiveness. But our selfishness is having the side-effect of improving ourselves and the world. This is what economists call a "positive externality."
The same goes for currency wars. A currency war begins, simply enough, when a country decides to push down the value of its currency. This means either printing money or just threatening to print money. A cheaper currency makes exports cheaper, and more competitive exports means more growth and happier people. Well, everybody except people in other countries who were just undersold and lost exports. That's why economists call this kind of devaluation a "beggar-thy-neighbor" policy: Countries boost exports at the expense of others.