tag:blogger.com,1999:blog-6714063.post6103810007945748503..comments2023-10-09T00:45:55.603+09:00Comments on Shisaku: A More Serious Slapping Around of Abenomics CheerleadingMTChttp://www.blogger.com/profile/04626942240117432624noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-6714063.post-88980231575313061792013-05-20T11:39:42.645+09:002013-05-20T11:39:42.645+09:00hmm, good point about comparative inflation!
Sinc...hmm, good point about comparative inflation!<br /><br />Since Plaza the dollar has been devalued 50% in purchasing power, while vending machines in Japan still charge ¥100 (+ tax) I suppose.<br /><br />But I think so much of Japan's "deflation" has simply been the effects of Japan's massively increased buying power post-Plaza.<br /><br />In the 80 yen regime, a 12oz can of coke ~should~ be costing the consumer ¥20, tops!Troynoreply@blogger.comtag:blogger.com,1999:blog-6714063.post-9095115286729056182013-05-20T08:04:27.940+09:002013-05-20T08:04:27.940+09:00If we take the real (price-adjusted) value of the ...If we take the real (price-adjusted) value of the yen during 1986-2013 as 100, the real yen as the end of April was 73.1, the lowest level since 1982. At its highest in 2012, it was around 96. The "overvalue" of the yen is a myth. Yes, the nominal value was high, but, from the standpoint of Japanese exporers's competitiveness, what counts is the real yen. And that is affected by the fact that Japan has deflation whereas its trading partners have inflation.Richard Katznoreply@blogger.comtag:blogger.com,1999:blog-6714063.post-65875616329828681572013-05-20T07:49:10.200+09:002013-05-20T07:49:10.200+09:00Sorry, Michael, I cannot say what the yen value &q...Sorry, Michael, I cannot say what the yen value "should" be. But I can say this: when it comes to competitiveness of Japanese exporters, what counts is not the nominal yen/$ ratio that you read about in the newspapers. What counts is the REAL, OR PRICE-ADJUSTED value vis-a-vis all trading partners. Because Japan has deflation, while its trading partners have inflation, the nominal value of the yen has to rise just to keep the real value the same. The Bank of Japan puts out a monthly series on the yen's real value (deflated by the consumer price index relative to major trading partners. If we take the average value of the yen from 1986 to 2013 as 100, then in 2012, the nominal value of the yen reached a NOMINAL level of 141 in 2012, but the highest that the REAL yen got in 2012 was 96.4. In other words, in real terms, the yen was never overvalued in terms of historical comparisons for the past quarter century. It was below the quarter-century average. As of the end of April, the REAL value was 73.1, i.e. 27% BELOW its quarter-century average and the lowest level since 1982! It's around the same level that it was just after the March 1973 Smithsonian agreement. Recall that, at the end of April, the yen was around Y98/$. At Y102/$, the real yen is even cheaper.<br /><br />Richard KatzAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-6714063.post-56066497401653338572013-05-19T13:24:15.000+09:002013-05-19T13:24:15.000+09:00The government is trying some direct methods to ge...<i>The government is trying some direct methods to get older citizens to turn over their savings to younger citizens</i><br /><br />yeah, how the 1 quadrillion yen national debt is going to be monetized by taxpayers (instead of Kuroda) is the interesting bit.<br /><br />In the 1990s the LDP cut taxes and called it savings, essentially.<br /><br />Now these savers want to beat the money out of the generation coming up, making the young pay the taxes the old collectively shirked.<br /><br />fooey on that.<br /><br />But as for competitive devaluation, I think the MOF can just point to the Plaza Accord, and that the average yen was 144, 1986-1990.<br /><br />Seems like a fair target. A large part of Japan's mfg challenge is that Japan's hourly wage is still China's daily wage, more or less.<br /><br />One topic that never gets its due is land valuations. They are still stratospheric in Japan, but I'm hoping that some good depopulation will reduce that particular rent suck on working people.Troynoreply@blogger.com