Posted on 01/21/2013 1:34:30 PM PST by Kaslin
Once again the spotlight is on the Yen. Please consider Japan Learned to Love Deflation in Wage Malaise Facing BOJ
(Excerpt) Read more at finance.townhall.com ...
Japan got into this situation by borrowing money against assumed future earnings. It will fix itself, when their wages and productivity finally matches it’s debt.
It was no different than Iceland, who was willing to do the hard stuff, now their economy is growing again.
1985 - $1 US = ~230 Yen
Today - $1 US = ~90 Yen
Seems to me that the dollar is worth a lot less than it used to be and the Yen is a lot stronger (in terms of dollars) than it used to be. Was this the cause of Japanese deflation?
A lot of this monetary policy is difficult to grasp. Is a strong currency good for anything anymore?
It seems that most countries now want to weaken their currencies to be more competitive in the export market. At some point don’t we eventually run into hyper-inflation and other bad stuff?
Just seems like traditional economic theory is being defied by all this printing of fiat dollars and yen. When does the shoe drop?
I would be interested in anybody’s opinion on the subject.
The dollar is a lot weaker and the Yen grew much, much stronger over the last decade as the Bank of Japan kept the money supply stable. Investors [and businesspeople] like a stable currency
A lot of this monetary policy is difficult to grasp. Is a strong currency good for anything anymore?
The problem, in my opinion, is that there are strong currencies and weak currencies. We used to live under a fixed exchange rate system. It was very, very difficult under that regime for central banks to game the exchange rate. But, now, since the US, then China, then Europe did it, everyone is.
It seems that most countries now want to weaken their currencies to be more competitive in the export market. At some point don’t we eventually run into hyper-inflation and other bad stuff?
You are absolutely correct. We do.
Just seems like traditional economic theory is being defied by all this printing of fiat dollars and yen. When does the shoe drop?
The shoe remains hanging in mid-air until the people lose faith in the currency. The conditions for hyperinflation are set in place by the central bank's printing; but the inflation itself is set in motion only when consumers decide that owning tangible goods is safer than holding money.
Ludwig von Mises called it the "flight to value". We don't know when it will happen, but when you start seeing the first panic-buying of a particular good [it might be as pedestrian as toilet paper], you'll know it's starting.
One particular good = Ammo.
.
That’s a really good question. Wish I knew when this would happen - I’ve been trading in currencies for awhile now.
"Stagnant" wages are offset by dropping prices for goods and services. Price deflation is an unmitigated good. It means the purchasing power of the currency is increasing.
I can't for the life of me understand why it's so misunderstood; and I'm very disappointed in Japan that it's succumbed to the inflation mentality. I suspect there's some tsunami-related reasoning involved.
Clear and concise answers — thanks. I am troubled about a few things though. If the Japaneses currency is so stable why are they running very large budget deficits and, recently, they been having trade deficits as well. I could understand the problem of deflation accounting for some of their problems and demographics (aging of the population) causing some demand issues, but why is their economy so sick by most recent accounts?
When do you see the US dollar losing it world currency reserve status? I know there have been some moves by the IMF and others to create a basket of currencies to replace the dollar as the sole currency. Are moves by the Bundesbank to reclaim their gold reserves a sign that the dollar is about to collapse?
Last question....what’s the best strategy to deal with the eventual collapse of the dollar assuming such a collapse is only a matter of time? Should we stock up on barterable items, get precious metals, or convert our reserves into a more stable currency like the Canadian dollar or some combination of the above?
Yes, I know this is the Internet and all. So, I don’t just do anything some random person on the web says to do, but I have been asking a lot of people what they are doing and using this info to see if any of my preps/financial planning could be improved? After researching the matter, I have been doing a lot more purchasing of barterable items which fits in nicely with my preps anyhow.
Thanks.
One of the issues is sticky wages. When wages dropped, so did prices across the board so that the pain wasn’t as acute. Now you have a FED working to reinflate the RE market to save the banks/financial institutions who are members of the FED and appoint a majority of voting members.
So you have a crazy situation where some things are rising in cost and others are falling. That you can buy cheap televisions, refrigerators, etc. isn’t going to help the average person. The FEDs switch to an employment rate target sounds like a set up for inflation. They’ll ignore it until the unemployment rate is “right”.
They’ve resurrected the Phillip’s Curve. You just cannot trust bankers with a country’s currency. The incentives are all wrong.
Thanks Kaslin.
Japan Threatens To Fire On Chinese Fighters — China Says ‘There Will Be No Second Shot’
TBI | 1-21-2013 | Robert Johnson
Posted on 01/21/2013 3:11:54 PM PST by blam
http://www.freerepublic.com/focus/news/2980502/posts
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