Synopsis: With all the different directions that different economies are dealing with their QE, what are the repercussions?
Click here to read the original article
Click here to read the original article
Discussion:
This article discusses the repercussions of the lack of synchronization between the Federal Reserve’s and the Bank of Japan's monetary actions. While the Fed has ended its bond-buying practices, the BoJ has just intensified it. Consequently, the yen fell sharply against the dollar, which will hopefully increase exports and production in Japan, battling its long-lasting deflation. However, this means that other exporters might have to lower prices in other countries to compete in the global markets. The writer thinks that this might cause worldwide deflation. The author then talks about how the stagnant state of inflation in the US (which has not yet capitulated to the worldwide deflation that the writer fears) has caused the gold price to drop. The U.S. and Japan’s central banks’ diverging monetary decisions are causing a rift in the global markets.
I will be summarizing the points made in this article in a flow chart in the next post, as well as problems I am seeing while applying this article to the actual situation in Japan.
This article discusses the repercussions of the lack of synchronization between the Federal Reserve’s and the Bank of Japan's monetary actions. While the Fed has ended its bond-buying practices, the BoJ has just intensified it. Consequently, the yen fell sharply against the dollar, which will hopefully increase exports and production in Japan, battling its long-lasting deflation. However, this means that other exporters might have to lower prices in other countries to compete in the global markets. The writer thinks that this might cause worldwide deflation. The author then talks about how the stagnant state of inflation in the US (which has not yet capitulated to the worldwide deflation that the writer fears) has caused the gold price to drop. The U.S. and Japan’s central banks’ diverging monetary decisions are causing a rift in the global markets.
I will be summarizing the points made in this article in a flow chart in the next post, as well as problems I am seeing while applying this article to the actual situation in Japan.
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