Thursday May 24, 2012

JAPAN NEWS AND DISCUSSION

Fed plan sends Asian stocks diving

Business Sep. 22, 2011 - 04:47PM JST ( 6 )

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6 Comments

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Jeffrey DuelleySep. 22, 2011 - 08:00PM JST

There will eventually be QE3. QE4, QE5, until the Yen reaches parity with the dollar.
1

TumbleDrySep. 22, 2011 - 11:06PM JST

EUR is 102.24

GBP is 117.00

USD is 72.26

"Investors" prefer to park their money in Japan and destroying Japan's economy until the storm passes. Greed and selfishness. Tomorrow, Japan is on a holiday. Look for the yen skyrocketing tomorrow. Meanwhile, Japan is going to give subsides to companies. We should be angry against the financial "elite" for destroying economies for a profit.
1

kchozeSep. 23, 2011 - 12:34AM JST

TumbleDry, you're right. Speculators are playing havoc with currencies, modifying exchange rates in a way that has no connection with the fundamentals of the economy. This can devastate entire economies.

Japan doesn't have to take this lying down. It can do what Switzerland did and announce that it will print as much money to buy foreign bonds as needed to keep the Yen below a certain value (say 90 Yen per dollar and more). If the Japanese government is ready to sell as many Yen at 90 Yen per dollar as is demanded, then why would anyone buy Yen at 76 Yen per dollar? No one would buy their Yen.

As to the US, it's nice to see that international economists realize how the Republicans are trying to prevent any kind of stimulative policies from being enacted before the 2012 election, even from institutions supposedly somewhat independent from politicians like the Fed. Too bad everyone can see that, except the American media which still pursues the myth that the absence of action on the economy is due to the two parties equally.
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Eric SchneiderSep. 23, 2011 - 01:10AM JST

Just wait until inflation takes off in the USA. They can't print money forever....
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globalwatcherSep. 23, 2011 - 02:29AM JST

You have not seen anything YET!
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kchozeSep. 23, 2011 - 02:30AM JST

@Eric Schneider

It's unlikely to happen. Inflation depends not so much just on the amount of money in circulation, but on the velocity of money, meaning the frequency at which it changes hands. Right now the velocity is really low, and there are no signs that this will change soon. If you print money to give it to financial markets who just put it in bonds or other long-term investments, then it changes nothing for consumer prices.

For example, large quantitative easing policies were tried in the early 2000s in Japan. The growth of the money supply reached 30%, yet inflation didn't take off.

Anyway, would that inflation took off, for a few years anyway. It would help lower the debt burden. Look at what years of deflation did to debt levels in Japan.