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High yen could 'hollow out' Japan's industrial heart: Noda

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“Now that confidence in the country is called into question, we cannot continue fiscal management in which debt causes more debt.”

Japan has no choice, when both production and reproduction is shrinking. And elderly population is 'expanding' rising so fast.

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What's wrong with "Made in China"?

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Japan - Get Some. The world is not about Japan and it's earthquakes. You must rebuild with the money you have. Maybe a little less shopping at Omotesando for brand bags and more tax increases on THE RICH and you'll have your reconstruction.

We shouldn't have to adjust currency values to support the Eloi that live in Japan.

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Its like a "perfect storm" of domestic and foreign issues with everyone seeking refuge in the yen.

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We hear screams from exporters and from the small and mid-sized companies that have led our country’s industries. If things carry on like this, domestic industries could go downhill and jobs could be lost.

The spiral has started. Those with enough financial backing are going or have gone overseas for production and / or M&As.

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I hope they will do something about this very soon. It is no longer funny.

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Just as the dollar has weakened, don't you think the yen will too?

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Everything is relative, especially for prices. The yen goes up, so Japanese makers just raise the prices of their products. I've worked for a Japanese electronics maker here for 25 years; they kick, scream and blood shoots out their eyes when the yen appreciates, but I have received my bonuses and raises every year without fail, so I tend to ignore the predictions and doomsday scenarios...

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The sky-high yen risks “hollowing out” Japan’s industrial heart

It's already happening and been going on for awhile, unless this govt takes very decisive action now it will be too late and may already be too late.

Can no longer sit on hands and no more thumb twiddling from the govt.

This is a very serious matter and it has to be addressed NOW.

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The Japanese government has a record of 'manupulating the currency ' willfully!

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In a resource based society, the measure of success would be based on the fulfillment of one's individual pursuits rather than the acquisition of wealth, property and power. If we embrace the concept of a national resource-based economy , learn more about it, and share the understanding , this will help society evolve out of its present state.

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What's wrong with "Made in China"?

Quality really matters. . I am a quality sensitive consumer. I am not willing to spend one penny for poor quality products. Simple is that.

The Japanese government has a record of 'manupulating the currency ' willfully!

Sorry, China man. Get it streight. That's China..LOL.

The world has been pressuring China (Beijin) to go to a currency floating system to play a fair trade in global economy,, but you guys do not want to come out from closets.. What are you afraid of?

China is exporting unemployment to the world while the world is exporting inflation to China. You will pay for this (inflation and social unrest), and the world would say we told you so.

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NetNinja--- Not sure your "Tax the Rich" mantra makes much sense here. In general I agree with the concept that the rich need to pay their fair share ("fair share" being the thing that causes this statement to be politically loaded!)... In the US, we definately need to start taxing the rich and the tax-dodging corporations... In Japan, However, the top tax bracket is 40% National Income tax (for over 18 million JPY), and I believe on top of that is a flat 4% for prefectural taxes and 6% Municipal taxes..... This is really quite high already. It is also my understanding that corporate taxes are already some of the highest around.... Not sure what the best solution would be, but I suspect it would involve raising the idiotically low retirement rate, and increasing productivity of the workforce--- both things which I really don't like at all....

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deflation is inevitable, many areas of the economy need to be deflated, as they have not changed since the Japanese bubble

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Sorry Japan, but this is something you've just got to deal with. If businesses don't build in the possibility of a rising yen into their financial outlook, it's bad on them. Any business that creates a business plan where they can't make a profit if the yen goes up over a certain amount should simply go out of business. That's the whole reasons that the futures markets exist, so that companies can hedge against a potential rise in yen to offset potential losses.

I have no sympathy for businesses who expect the government to step in and manipulate the market somehow if they are having trouble making a profit.

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yes, the world leaders are laughing at japan and it won`t end anythime soon what with all the gaffes and musical chairs. WTF as someone said "japan - get some"

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Truth hurts, Japan. The bankers are not willing to take risks in Japan.

BOJ has tried everything to keep Interest rate at almost "0%" for a long time hoping to jump start economic growth. However, bankers went to US Treasury and Japanese foreign subsidaries (low corporate tax rate) to avoid risks. The money has not been spent on Japan. And why should they?

The corporate tax rate of Japan is the highest in the world. . Unless monetary/fiscal policies are alined (left hand understands what light hand is doing), Japan will continue to send jobs to overseas while current unemployment rate is 4.6% (relative to US employment of 9.2%). Very unfortunate as many more people will be on line to Hello Work offices. I just do not see bright future for Japan.

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Japan is the only country on earth that taxes it's rich and companies more then America.

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There are pros and cons for the sky rocketing value of yen. Why not focus on its pros? Take advantage of it. Import all the necessary raw materials needed to rebuild the communities of the March's disaster. I am not an economist and it is just my opinion. ^^

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High yen could 'hollow out' Japan's industrial heart: Noda

Not if the world's financial system collapses first, which could be very soon. Then like every other fiat currency the yen may well end up being close to the value of the paper it's written on (or not written on since our money is mostly digits on a computer somewhere.)

The value of the yen last month hit a post-World War II high

Only compared to other currencies (paper) and not tangible things like precious metals.

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Yup, I agree with marcelito.

Japan really needs to cut wasteful spending drastically. You should cut all politicians by 1/3 to 1/2. Just talked to my friends in Nerima District of Tokyo. They told me there are over 73 district politicians in that district. Crazy, crazy. I would like to know how many politicians (tokyo, osaka and all other prefectures) are there in Japan. How many national politicians are there in Nagata-cho?

Also, there are too many non performing bureaucrats who are on "WELFARE" (payrolls) for decades. Watch their performance, stop spending on overtime extra pay, and taxi expenses. If they cannot finish these assigned tasks within 8 hrs, they are not top performers. Get rid of them. There are many good, experienced, and skilled workers who are unemployed and available to do the same job better.

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Maybe China has it right - China is the second biggest economy in the world, and it got there by refusing to float its currency and maintaining a fixed exchange rate against the dollar making it devalued, which is why so many "heartland" Japanese manufacturers are relocating there.

In the end of the day, the Yen is high not because Japan has a great economy, low debt, and a bright economic outlook. They are here because the Greek economy is about to go bankrupt and destabilize the Euro, and the US is unable to raise taxes to service its current debt - Japan has the highest levels of personal debt in the world, and it is being treated as a haven for people worried about more immediate crashes in their own economies.

Surely China has proven that the international currency system doesn't work. It has ignored the international rules governing currency value and it is where everyone is investing.

I don't see why Japan needs to be getting so punished for the sins of Greece and the US congress - why not just fix the exchange rate at 100 yen to the dollar, or more - just like China is allowed to do, and be done with it?

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High yen could 'hollow out' Japan's industrial heart

What do you mean could? It already has. An example, I went shopping for a TV recently since returning from Japan - not one of the Japanese branded TV's was actually made there. They were mostly Chinese made, with others from Taiwan & Thailand.

The same for the automotive industry, only the top end stuff is made in Japan now, the less costly components and lines are made off shore because Japan is just too expensive.

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He started to suspect something. It is the first step.

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Some people have no idea at all do they.

I have no sympathy for businesses who expect the government to step in and manipulate the market somehow if they are having trouble making a profit.

It's not just about companys not being abe to make a profit as gaijininfo would like to think it is.

If the goverment does not do something about its high currency then there will be no industry, which means no jobs, which means no money to pay rent or buy food, which means social unrest, which means no english teaching jobs, which means - oh well you go figure it out.

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I agree. Japan runs trade surpluses all the time, while most Western nation haven't seen a trade surplus in decades. Japan has a much brighter future than the future third-world of Europe and America. Also, America's total debt (including Medicare, Social Security, and total debt) is over 1,100% GDP and 95% of Japan's debt is held by Japanese citizens who have over $14 trillion in savings. Japan is the winner here, as much as you Japan bashers hate to admit it.

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Jeffrey Duelley is right. Japan bashers probably don't bother to look at the economic data and understand what the real situation is with the Japanese economy. Unfortunately the DPJ seems to not understand the economy as well! Former Prime Minister Aso was on the right track with regards to economic policy. Unfortunately the DPJ took over, and now we have a finance person on the helm who lacks creative ideas and even seems not to understand Japan's economy. Japan is not an export-dependent country, as its export dependence factor is only around 11 percent, as compared with over 20 percent for most other developed nations (50% for Korea, 34% for China, 33% for Germany, etc.). Speculators are buying Yen because they know it is "safe" because Japan's economic fundamentals are sound. The economy is in a deflationary spiral, deflation meaning that supply capacity exceeds demand. The government's role in a time like this is to stimulate demand through public works spending (and Japan needs public works spending on its ageing infrastructure; without much needed maintenance, we'll start hearing of falling bridges and collapsing tunnels in a few years; not to mention the public works needed to rebuild East Japan). Instead of spending, the DPJ has been on a cost-cutting spree, an anti-inflationary measure -- of course GDP will experience low or negative growth! Public spending makes up a sizeable portion of total GDP! Hopefully the Great East Japan Earthquake will force some sense into the government and cause them to spend, spend, spend on recovery. Also, since 95% of Japanese government bonds are owned by Japanese and 100% denominated in yen, it's impossible for the government to default, unlike Greece. Prime Minister Noda is unnecessarily worried about balancing the budget. They don't need to raise taxes! Since there is some 170 trillion yen in excess savings in the banks and not enough borrowers, Japan can issue another 50 trillion yen in government bonds and long-term interest rates will remain low! Also, to counter the strong yen, it is but a simple thing for the government through the BOJ to just exercise its sovereign right to print its own currency! This should lead to a desirable degree of inflation (and fund recovery projects as well). And, "hyperinflation is something that simply will not* happen in Japan because of its phenomenal production capacity...

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To the two posters above fianlly soem one who understands and can put it into words. Jeez i wish i didnt have A.D.D.

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the world leaders are laughing at japan

Which world leaders exactly? Any in Eastern or Southern Europe? I dont think so.

African leaders - guess again.

East Asian? Doubtful. They havent worked this hard to start laughing at Japan.

North American leaders? Whoo boy - they aint got a right to be laughing at anyone .

Instead of laughter at Japan, more likely tumble weeds bouncing past?

-1 ( +0 / -1 )

Headline should read "could FURTHER hallow out Japan". Decline is well on its inevitable path due to over two decades of neglect, stubborness, xenophobia, and willful ignorence by the government and the people. The recent rise in the yen, as well as the Tohoku/Fukushima disasters, just steepened the slope.

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"Hollowing out"? Again, Japan's export dependence is only around 11%. And, Japan has a trade surplus with China (incl. the trade that goes to China via Hong Kong and Taiwan) and Korea. The more China and Korea export goods, the more Japanese industry benefits! Why? It's because the bulk of Japan's exports are not of cars and consumer electronics, but of capital goods and materials, which China and Korea buy from Japan for use in their factories to produce the cheap goods for export to the US, Europe, emerging markets, etc. This "hollowing out" is just sensationalism in the media...

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Kind of agree with Jesus. Ever since the bubble burst 20 years ago, people in various media outlets have been saying Japan is dying or dead. The economy in Japan is undergoing an evolutionary process and what shape it'll take in the future I doubt anyone can say for sure. What I can say is that I have loved the BOJ for keeping interest rates low! Sure has helped with the mortgage on the home!

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What I can say is that I have loved the BOJ for keeping interest rates low! Sure has helped with the mortgage on the home!

Have to agree with this

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JesusLovesJapan,

I'm not sure I agree with you and the reason is that I'm looking at things from a more fundamental angle. It has nothing to do with Japan bashing. But given the huge financial problems of Europe and the US (in particular), the interconnectedness of banks and economies through globalisation I think Japan will be seriously affected from the fallout when these countries start to default.

to counter the strong yen, it is but a simple thing for the government through the BOJ to just exercise its sovereign right to print its own currency!

This might be a surprise to you but the Japanese government does not print its own currency. It does have a sovereign right to do so but it doesn't. As I understand it the govt purchases money (debt) from the privately-owned BOJ through the issuance of treasury bonds. Same as in virtually every other country in the world where the central banks are fully or part owned by super wealthy banking families.

I don't know what the interest rate is on money borrowed from the BOJ (or any other central bank) but I do know that it's impossible to pay the full debt back because only the principle is lent, never the interest. Where does the interest come from to pay back the loan? You alluded to growth being necessary in your post but if you think about it, this need for non-existent interest can only come out of growth, which basically makes our financial system a gigantic pyramid scheme. This is why we always have booms and busts and, unfortunately, major wars when the system reaches it's limit. It's a bit like musical chairs, in that people always lose through bankruptcy, war and so on.

Since there is some 170 trillion yen in excess savings in the banks and not enough borrowers, Japan can issue another 50 trillion yen in government bonds and long-term interest rates will remain low!

You talk about excess savings but we live under a system of fractional reserve banking. As you probably know, under fractional reserve banking all deposits are leveraged up to 10:1 meaning that there is never enough money to repay depositors if, say, the Japanese or the people of any other country living under a central bank wanted to withdraw all their money, or even only a relatively small portion (2/10s) of it at the same time. Sounds unfair to me. Perhaps when the SHTF in the West, Japanese people might get nervous and start withdrawing? Where's the money going to come from? You can say the government but that would mean yet more interest-bearing loans from the BOJ. And on it goes.

Rebuilding Tohoku is necessary of course but how much more growth do we need and how long can the current system go on for? There is a limit to fiat currencies and throughout history they have always collapsed at some point.

In addition to the above there's also the quadrillion dollar derivatives problem and as I understand it many of the major banks keep 2 sets of accounting books to keep this problem hidden as much as possible. I don't know how much the Japanese banks are involved with these derivatives but I'm guessing probably a lot.

Speculators are buying Yen because they know it is "safe" because Japan's economic fundamentals are sound.

In the old days it would have been ok but globalisation has done away with the economic and financial firewalls and virtually everyone will be affected from the fallout. We need a new system but not one that keeps people in debt slavery. And definitely not the one world currency that the power elite are pushing for.

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I think Japan should let the yen rise. Debasing it's currency would eventually lead the yen to the fiat currency graveyard. I would suggest that Japanese citizens and government do what the Indians, Chinese, Arabs, and Southeast Asian nations are doing and stock up on physical gold and silver. The fall of the West is going to hurt the whole world financially.

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weedkilaSep. 15, 2011 - 01:05AM JST. Rebuilding Tohoku is necessary of course but how much more growth do we need and how long can the current system go on for?

It’s not all about rebuilding. Japan's crude oil imports jumped substantially, in line with higher global energy prices. A strong yen blunts the pain of pricier dollar, denominated energy costs on Japan’s economy and at a time when 35 of the country’s 54 reactors are offline and the future role of nuclear power is uncertain, cheaper fossil fuel is a blessing.

The current system will not work in the future. The accelated investment in China and other parts of Southeast Asia will continue. Very few Japanese companies can manufacture their products in their own country to be profitable. They have to adjust like the Americans.

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Japan should follow the lead of Switzerland: declare that they will not tolerate an overvalued Yen and that they are prepared to buy limitless amounts of foreign currency until the Yen's value has hit that target. It worked great for Switzerland. I'm not saying "spend" yen... I'm outright saying print it, ex nihilo, that's the beauty of sovereign currencies (oh, how Greece would be jealous). Will it be inflationary? Perhaps, but 1- It will flow Yen out of the country, inflation is a internal phenomenon, so the effects shouldn't be massive 2- Japan could do with a bit of inflation to help purge out the debt overhang on companies' and government's spreadsheets (some of it dating from the asset bubble of the 80s!).

If Japan doesn't signal strongly to the markets that their efforts to bring the value of the Yen to more reasonable levels, then efforts are wasted, speculators will just sit it out for a while and return when they feel that Japan has lost the courage to intervene on the markets.

I think Japan should let the yen rise. Debasing it's currency would eventually lead the yen to the fiat currency graveyard.

That's a very bad idea. Money shouldn't be an investment. If it is, then it hurts the entire economy. People who want to keep value in their assets should invest in the economy, which makes it work, not stockpile cash, which slows down the economy. When money's value is perpetually declining, it encourages people to spend or invest it, which is ideal. Of course, if the value of money declines too fast, then that is destabilizing to the economy and therefore undesirable, but Japan is very far from that situation.

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Printing yen will not help, I suppose. Otherwise the government would do that already. "Hitting a particular yen value" is not the aim. The aim is to improve economic output, which is not improved, as far as I understand, by simple printing of money. That is why governments prefer to borrow money instead of printing them. The others will simply adjust to the new yen value, and there will be no net effect.

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Alot of people are missing the point. Regardless of stronger or weaker yen, the problem in Japan is the high labor cost that is no longer competitive with main competitor such as China and India. Even if the exchange rate hits 85-90 yen per dollar, the export from Japan will not improve because of unpredictability in fluctation. The Japanese companies need long term stability, and increase in offshore investment, such as buying foreign companies might be the only answer. There are only few areas in Japan will increase, such as Reseach and Developement for major companies and service industry. This is not much different than California. These companies in Japan has to adjust to the economic changes for survival.

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weedkila

This might be a surprise to you but the Japanese government does not print its own currency.

That's why I wrote, "through the BOJ". Think of the BOJ as a subsidiary of the Japanese government.

Japan is different from, say, Greece, which can not print Euros. The government (+BOJ) can issue its own currency. The government can have the BOJ buy back government bonds from private banks that purchased them. The government does not have to pay back the bonds that the BOJ holds. The government can have the BOJ scratch out any government debt it may own from its balance sheet. Etc.

Please do try to look it up and don't simply just make analogies between the system in Japan and that of other countries'. There are many things the Japanese government with the BOJ can do. What Japan needs are politicians with the creativity and political will to take the necessary steps.

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JesusLovesJapanSep. 15, 2011 - 06:53AM JST. There are many things the Japanese government with the BOJ can do. What Japan needs are politicians with the creativity and political will to take the necessary steps.

Keep dreaming. What politicians with creativity? With 200 percent of GNP debt, I doubt Japan cannot do much.

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sfjp330

It's not all about rebuilding. Japan's crude oil imports jumped substantially, in line with higher global energy prices.

I agree, it's not about rebuilding. What I was trying to say is that at its core the financial system is essentially broken and it seems that nothing the bankers or politicians do is going to change that. Higher energy prices despite the "higher yen" (really a cheaper yen), is one sign of that.

Jeffrey Duelley Sep. 15, 2011 - 04:01AM JST

I agree with your second post. All fiat currencies including the yen are currently being debased "to the fiat currency graveyard" but judging from the comments about the high yen many people don't seem to realise that.

Just to clarify, in my last post I meant to say that banks are only legally required to keep 1/10th of total deposits in the vaults. Yet they can lend out much more than what they actually have on deposit, up to 10x I believe. Sorry if that's obvious but this leveraging, or printing money they don't have, is one of the main reasons the financial system is now on life support.

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Keep dreaming. What politicians with creativity? With 200 percent of GNP debt, I doubt Japan cannot do much.

It seems many people misunderstand the nature of Japanese government debt. The important thing about debt is not so much the amount, but who's borrowing from whom, and in what currency. It would be great if people would chew on this for a while before responding.

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JesusLovesJapan

You say to think of the BOJ as a subsidiary of the Japanese government but you did not mention mercantilism nor the system of regulatory democracy we have where the average Japanese person's vote counts for little.

You did kind of allude to this however when you suggested that what Japan needs are politicians with the creativity and political will to take the necessary steps.

So why is it that politicians lack creativity and do not have political will to take the necessary steps?

I would suggest that the politicians do not work for the Japanese people so much as the bankers and other corporate interests through mercantilism.

So you can talk about the close relationship between the government and the BOJ but when the government fails to represent the people and while taking orders from the elite who control the government behind the scenes then this "subsidiary" arrangement is mostly irrelevant.

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In Japan, there are political constraints, rather than a lack of policy instruments, explain why it has persisted for as long as it has. As the J-goverment realize, both restoring banks and corporations to solvency and implementing significant structural change are necessary for Japan’s long-run economic health. But in the short run, comprehensive economic reform will likely impose large costs on many, in the form of unemployment or bankruptcy. As a result, politicians in Japan have sharply disagreed about competing proposals for reform. In the resulting political deadlock, strong policy actions are discouraged, and cooperation among policymakers is difficult to achieve.

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Konsta

Printing yen will not help, I suppose. Otherwise the government would do that already. "Hitting a particular yen value" is not the aim. The aim is to improve economic output, which is not improved, as far as I understand, by simple printing of money. That is why governments prefer to borrow money instead of printing them. The others will simply adjust to the new yen value, and there will be no net effect.

No one is saying that if we print money, everyone will be richer. If you just print money out of nowhere in an economy and spread it around, you'll mostly get inflation. Of course, when there is an unbalance in the amount of money and it affects the economy, it can help somewhat, but anyway, that's not what I was talking about. I was talking about printing Yen and just buying foreign currencies with them, so the government spends it, not citizens. Because the government would guarantee Yens at a given exchange rate, no one would want to buy Yen at a more unfavorable rate, so speculators would have to follow. After all, if you could get Yens at 90 per dollar, why would you buy Yens at 77 per dollar somewhere else?

The goal of that would be to devalue the Yen on international markets (more correctly: cancel undue overvaluation created by speculation), this would lower production costs of Japanese made products versus the rest of the world. This would make Japanese industries' production more competitive, and would likely increase demand for these products, resulting in likely increase of industrial outputs.

You can ask, does this really work? Well, it works very well for China! They've been keeping their Yuan undervalued for years to attract investments and increase demand for their products.

The next question would be: why don't all governments do it then? Well because it wouldn't work. Everyone cannot devalue their currency against other currencies at the same time. In general, it is also badly seen by orthodox economists because it can start currency wars or trade sanctions and is frowned upon. I would say, in general, they are right, but in this particular situation, they are wrong. That's the problem with orthodox thinking, they keep applying the same policies whether you are in a time of prosperity or of misery.

The difference here is that Japan has seen its currency climb higher and higher based on speculation, Japan's trade partners shouldn't feel attacked if Japan took action against that, it would simply be a return to a situation of a few years back. It would be an act of stabilization, not destabilization.

To convince yourself, look at Switzerland. They adopted this devaluation policy, quite overly, and no country that I know of has attacked them for it, there has been no backlash. Other countries understood that financial speculation was adding distortions to the market unsupported by the fundamentals and they didn't blink an eye when Switzerland took a stand against it.

I do believe that Japan could do the same. It's in the same boat as Switzerland was. But to adopt this policy, you have to have daring political leaders and economists in the central bank, willing to go against orthodox thinking. But a lot of people do not have that courage. You see, doing the orthodox thing carries no risk, if it fails, you can still say that you just did what had worked before and that you can't be blamed for the failure of this "tried and true" policy. But if you go against orthodoxy, then you own the consequences, and some people just don't want to do that.

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kchoze, thanks for the explanation. I think, I understand. But wouldn't this backfire at the main economical partner of Japan, the US, who could put direct economical or political pressure on Japan?

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Could the US lash out at Japan if they did that? It is possible, but I think it is unlikely.

First of all, the US has other problems to deal with.

Second, that would be a strong break with their attitudes towards all the countries that do that: China, South Korea and Taiwan. And there is a lot more pressure to act on China than there would be against Japan, yet no action is ever taken against Chinese currency manipulation. US political leaders tend to like a strong dollar, because it allows cheaper products to their citizens. That's a lack of foresight, but no matter.

Third, Japan has taken more timid steps in that direction. In the past year, it has intervened a few times on the market, but always in small, limited interventions, which had small effects that vanished after a few weeks at most. Yet I do not remember the US political leadership speaking out against it.

Fourth, Japan historically used to manipulate its currency, and the US never took action against them. There was some symbolic laws, but nothing concrete.

Fifth, most of the products that Japan exports have little to no competition in the US anymore, so I don't think US workers would necessarily be affected by it. The one exception is cars, but a lot of "Japanese" cars sold in the US are actually made in the US. I think the big winners of the strong Yen on American markets are the Korean and Chinese competition to Japanese products.

So I don't think that the US would care much if Japan were to implement such a policy, especially if warned beforehand through diplomatic channels. At least, as long as Japan doesn't overdo it (ex: fix the exchange rate at a minimum of 120 yen per dollar).

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Japan does have high taxes on the rich, but like in many other countries, they don't pay them. Tax evasion is very widespread and very seldom investigated or prosecuted, unless the perpetrator offends the bureaucracy in some additional way like opposing a policy dear to it or violating some unspoken rule. The leadership of every yakuza organization could be wiped out tomorrow if the authorities choose to make arrests for tax evasion. (But then the police couldn't use the yakuza to intimidate the small numbers of brave people willing to protest the nuclear power industry.) kchoze is right on the money, as it were. And a little inflation, should it occur, after two decades of deflation would not be excessively painful. Not only good for business debt, it would also help me pay off my housing loan. It's only the bureaucracy's ill-informed, obstinate ideological opposition to printing money that prevents this. Nothing more. Printing money is the best and only solution out of the current economic mess, but alas, Japan's bureaucrats simply, and I would emphasize "simply", believe it is morally wrong to do so.

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The proportion of people over the age of 65 is set to rise to nearly 40 percent by the middle of this century, causing pension and healthcare costs to balloon. By the year 2025 around 70 percent of government spending will be eaten up by debt service and social security spending. Japan is going into very dangerous territory. Post war baby boomers are retiring and they have less than 10 years left to fix the imbalance problem. Japan has to drastically change the immigration policy to make young College and University graduates easier to immigrate from neighboring countries. However, this is Japan, they rather starve and this will not happen.

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