It was a 30-page document published by the IMF that fanned the flames of the "war" which Brazilian Finance Minister Guido Mantega says is being waged in foreign-exchange markets.
Now more than a dozen major economies are trying to influence their currencies to restrain their value or ease volatility. Brazil is among the most aggressive, deploying a slew of measures, including a tripling of its tax on foreign purchases of bonds. Indonesia's central bank is forcing international investors to hold its bills for at least a month.
These countries, which with other emerging markets accounted for the bulk of the growth in the world economy in 2010, are fighting against a rush of international capital from investors who want a piece of the action. With interest rates in the United States, Japan and Europe so low, the developing nations represent the best chance to turn a decent profit.
All that money helped emerging markets rebound quickly from the global recession. Now, it is putting the recovery in jeopardy by causing exchange-rate volatility that is hurting export-dependent economies, stoking inflation and exacerbating trade tensions.
"Many of these flows are short-lived, volatile and sometimes speculative in nature," the World Bank said this week in its latest economic outlook. "Left unchecked, such flows can lead to abrupt real appreciations and depreciations that are out of line with underlying fundamentals and can do lasting damage to economies."
Eleven months ago, on Feb. 19, 2010, six economists at the International Monetary Fund in Washington published a paper called "Capital Inflows: The Role of Controls," which took a sledge hammer to one of the pillars of international economic management.
For decades, the IMF had insisted that it was futile, and even dangerous, for emerging markets to try to slow the rise of their currencies by attempting to impede the free flow of international capital.
But upon closer review of the evidence, especially the experience of the most recent crisis, the authors of "Capital Flows" concluded that IMF orthodoxy was wrong. "There may be circumstances," the fund economists wrote, "in which capital controls are a legitimate component of the policy response to surges in capital flows."
That message is now providing the intellectual backing for the numerous insurgencies that constitute a global battle against absorbing the brunt of the U.S. dollar's decline.
The shift in the IMF's stance on the appropriateness of capital controls was an important acknowledgment by the economic establishment that the time had come to explore new approaches to policy. Timothy Geithner, the U.S. Treasury Secretary, told an audience in Washington this week that he is "not troubled at all" by what he called a "new wave of experimentation" by countries seeking to steady potentially destabilizing capital flows.
Yet there's reason to worry that this experimentation is getting out of hand.
As inflation emerges as a serious threat in emerging markets, the embrace of capital controls has resulted in a de-emphasis on perhaps the best measure to control rising prices - a stronger currency, which empowers local consumers and makes imports cheaper.
Increased consumption in countries such as China and India is seen as a way to heal the global economy by providing markets for exporters in the U.S. and Europe. There's also a significant threat that too much meddling by governments in currency markets will stoke protectionist sentiment that leads to retaliatory tariffs that would choke global trade.
When a country such as Thailand attempts to dissuade investors from bidding up its currency by imposing a heavy tax on the interest and capital gains foreigners earn on Thai bonds, as it is doing now, those fund managers and traders seek opportunities in other countries.
This puts upward pressure on other currencies, creating political pressure to respond. The effect is an escalation of market distortions that risk stoking inflation, inflating asset bubbles and triggering that one retaliatory measure that kicks off a trade war.
The tension among policy makers was evident this week on the face of Finance Minister Jim Flaherty. In a speech in Washington, Mr. Flaherty said the "unco-ordinated measures" being taken to influence currency markets underscore the need for the Group of 20 economic powers to bring some order to the situation.
Canada, one of the first countries to abandon fixed exchange rates, is committed to the overall benefits of allowing markets to set the value of currencies.
"Mr. Flaherty is right," said Wendy Dobson, a former associate deputy minister at the Canadian Finance Department who is now co-director of the Institute for International Business at the University of Toronto's Rotman School of Management. "The question is whether the political will exists in the G20 to do it."
The first glimpse at whether that will exists will come next month when G20 finance ministers and central bankers meet for the first time in 2011 in Paris.
Last month, the IMF said it would seek to establish some "rules of the game," pledging to make a priority of determining the best methods to tame volatile capital flows.
Few question why countries such as Brazil are so distraught about what's happening in international markets. The real has appreciated almost 40 per cent against the U.S. dollar since 2009. The gain not only risks factory jobs, but also risks inflating asset-price bubbles that could burst either under their own weight or if all that international capital flees elsewhere.
There's probably no going back to the days when flexible exchange rates were enforced as a universal truth. But to ease tensions, those like Mr. Flaherty who want to bring some order to the financial system might have to remind their new allies from the emerging markets why the older powers in the G7 disliked capital controls.