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.