Monday, February 11, 2013

US Treasury: "US supports Japan's efforts to reinvigorate growth and end deflation"

From RANsquawk (2/11/2013):

US Treasury's Brainard says US supports Japan's efforts to reinvigorate growth and end deflation

- G20 needs to deliver on commitment to move to market-based exchange rates and refrain from competitive devaluations.
- G7 "very committed" to market-determined and floating exchange rates except in rare circumstances.
- Downside economic risks have eased but global growth weak and still vulnerable.
Reaction details:

- In immediate reaction to the comment that US support Japan's efforts, the USD/JPY moved 22 pips higher from 93.46 to session highs at 93.68.

I suppose as long as it's not "devaluation" and as long as it makes China and Russia mad it's totally OK. As Bloomberg News reports (2/11/2013):

...Brainard said she supports the effort in Japan to end deflation and “reinvigorate growth. It will be important that structural reforms accompany macroeconomic policies to achieve these goals.”

The Group of Seven nations are considering saying they won’t target exchange rates when setting policy as they try to calm concern that the world is on the brink of a so-called currency war, two officials from G-7 countries said.

...Japanese Prime Minister Shinzo Abe’s push for more aggressive monetary policy has raised concern abroad that his government is directly seeking to weaken the yen, something it denies.

Japan has been criticized for driving down the yen by officials from South Korea to Russia in the run-up to the G-20 meeting. Abe administration officials have said that they are focused on ending deflation, rather than seeking a specific level for the yen.

Brainard, who will attend the Moscow meetings, said China needs to “further boost household demand and reinvigorate the move to a market-determined exchange rate and interest rates.” She also said it’s important for Europe “to come together around a joint strategy that supports growth.”

(Full article at the link)

"Rather than seeking a specific level for the yen". It's because they are not seeking any level anywhere near where yen is at right now. My guess is that they want the level that existed before the Plaza Accord (250 yen per dollar or so).

Good luck achieving growth in real economy by monetary means, aka (digital) printing press. In case of Abe, so far it's nothing but words, not even the digital printing press, that has cheapened Japanese yen from 76 yen per dollar to 93 yen in a matter of 3 months.

Even that didn't help Japanese companies like Sony, who posted another loss quarter and plans to make money by selling real estate.


Anonymous said...

This current fractional reserve, compounding interest type of banking system fails in a deflationary environment.

They will have to send banksters out to pick peoples pockets in broad daylight help banks survive another day.

Anonymous said...

US supports making up shit to bullshit everyone and end intelligent factual logic.

Anonymous said...

Brainturd only want the juicy TPP deals for the US.
I suppose 're-invigorate growth' is a euphemism for hyperinflation?

Great idea, Brainless.

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