everyone is an expert on japan

http://www.ft.com/cms/s/0/3401f12e-c0f9-11df-99c4-00144feab49a.html

It may have been a victory lap of sorts. One day after the ruling Democratic Party of Japan leadership contest was resolved in prime minister Naoto Kan’s favour, the Japanese government intervened in the currency market to weaken the yen. While the move is a welcome escape from Tokyo’s policy paralysis, its significance is more political than economic.

Sureeee.  Then read this.

Foreign exchange interventions are more likely to stick if deployed in co-ordination with other countries and when they target speculative bets rather than fundamental market forces. As long as the Japanese allow chronically lower inflation than their trading partners, they must get used to irrepressible upward pressure on their nominal exchange rate. As fattening trade surpluses and historical comparisons show, the real exchange rate is hardly overvalued.

Doesn’t the author get it?  Currency rates can determine inflation, just as much as inflation can determine rates.  If Japan is successfully able to weaken their currency, then they will have inflation.

Ever since the Volker era, it has been much easier to control inflation through currency.   The raising of rates in the 80’s was simply that.  A currency intervention tactic.  No  coordination required.

Do people really think the world has coordinated the deflation that has occurred in japan?

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