It’s spring, and the cherry blossoms are in full bloom in Japan, the “Land of the Rising Sun” and home to the Japanese Yen. While many view spring as a time for new beginnings, from a more practical and economical perspective, it’s also means a new fiscal year in Japan, thus this is an ideal time to review all the data and attempt to gauge the Yen’s next trajectory. Of course, many want to know if the Japanese currency is facing yet another meltdown. While it is a rather straightforward question, with a seemingly straightforward answer, the fact is we must delve deep into complex issues including the mechanics of Quantitative Easing, Japan’s public debt and inflation.
What QE Does?
The intention of Quantitative Easing, or QE as it’s popularly called in the mainstream, is simply to allocate funds to the private sector which, hopefully, will revive growth and inflation. QE is based on one of the key pillars of capitalism, namely that funds are better off in the hands of the private sector if the preservation of growth is the goal. That sounds reasonable, but there is a macroeconomic issue at play, as well. Most of the time, the government (naturally, depending on which government) is deemed a vastly superior borrower to any private company or Continue reading "Is The Yen Facing Another Meltdown?"