Japan Printing More Money?

When there is a surge in capital flows after Japan’s unprecedented bid to pump up its economy, do you believe the upside of cheap cash and a stronger Japanese economy outweighs the risks?

The Bank of Japan stunned the world last month with its plan to release some $1.4 trillion to end nearly two decades of stagnation and deflation. While others including Bank of Japan Governor Haruhiko Kuroda said they would be on the lookout for signs of unintended spillovers on emerging economies, many hope that the benefits of increased Japanese consumption outweigh the risks of asset bubbles, inflation and the competitive impact of a weaker yen.

Would Asia gain from investment by Japanese companies and in infrastructure that would result from Prime Minister Shinzo Abe’s economic program? How do we monitor capital flows to pre-empt risks to financial and economic stability? Are there previous examples?  What are some history lessons we can study?

Some people think this looks like a currency war. The US and Japan are reducing the value of their respective currencies by seeing who can print the most money; all in an effort to gain a trade advantage in the international trade market. For sure inflation is going to be the results.

Does anyone else see the addiction parallels between quantitative easing to financial systems and crack or meth to druggies? The euphoric highs, the consuming need for more, the detachment from reality, the abandonment of basic moral principles?

This is a most interesting experiment. It will be interesting to note what the yen will be worth vs the dollar a few years from now.  Japan is now feeling the economic pressures of China and to survive in its own turf, it has to realign itself to sustain its grip as an economic power in Asia.