http://www.bloomberg.com/news/2011-...rld-s-best-currency-poised-to-strengthen.html The central bank of Japan's persistent easing with low interest rates, and yen intervention through expansion of the money supply. Why is it that the Japanese currency seemed to appreciate for decades with stagnant CPI? Is it simply the force of deleveraging and consumers lack of velocity of money that are mitigating the inflationary force created by the central bank? I guess my question boils down to this: Why Does Monetary Inflation not lead to Price Inflation? -- Thanks. Happy Holidays
Whilst monetary policy (lower benchmark rates) is traditionally used to increase inflation (and therefore devalue a currency), it is still dependent on the country. The Japanese economy has always suffered from a high savings rate (ratio of income saved:income spent), especially in comparison to the US, and so whilst the average American may take the saving on their mortgage (from reduced rates) and spend it on a new TV, the average Japanese person will put that into their retirement fund, thus providing the economy with no benefit and not driving up prices. Whilst there are many rules that govern the markets, none are perfect.
"Because Japanese and Swiss where too slow at first to join the global currency devaluation race which was started by United States Federal Reserve in a pathetic attempt to inflate away their debt." The Yen has been appreciating for decades now, and to say this surge in the price of yen happened just after global currency devaluation perpetuated by the Federal Reserve seems inconceivable. I guess what you are implying is that Swiss and Japan were "late" to the global monetary expansion party and it is not that the Yen is appreciating, but it's just that the dollar is far too devalued compared to yen? Is that right? *not trying to put any holes in your explanations, i'm just trying to understand this perplexing concept.
Thanks. But, is there a chart or a graph that shows accelerating quantitative easing of the dollar than the yen? In addition, Japan's debt to GDP ratio is much more staggering than the United States.. Aside from your monetary expansion, how do you justify this to the appreciation of yen?
Simply, japanese dont spend. That could explain. But it is not true. where is this bottom in NIKKEI !?!?!?