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.
"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.