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

Says:
- 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.

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China Lashes Fed Easing as Risk to Global Recovery

Well.... Tough s__t.

Reuters reported on 11/11/2010:

Nov 11 (Reuters) - China said on Thursday that the U.S. Federal Reserve's move to ease monetary policy risked undermining the global economic recovery, adding that Washington "should not force others to take medicine for its own disease".

A senior Chinese central bank official told reporters at the G20 summit in Seoul that the Fed's move had caused "strong concern" around the globe, and major reserve countries ought to factor in the global impact of their policies.

Oh really? Has China acted as if it cares about anyone, or any country other than Chinese and China?

Oh, I see, the Chinese are exceptional. Literally.

A Foreign Ministry spokesman added that Chinese President Hu Jinatao, discussing Washington's wish to see a sharp revaluation of the yuan, had told U.S. President Barack Obama earlier that reform of the currency would have to be gradual.

Meaning they have no intention of doing it.

It was their choice, aping the Japanese, to pursue mercantilism, artificially devaluing their currency to have an export edge. They've been phenomenally successful, flooding the world with their junk, wiping out the locally produced goods. So, when the Federal Reserve goes mercantilistic, the Chinese cry foul. It's not fair! It's not good for the world! (as if they ever cared about the world.)

For that matter, the EU is a big exporter thanks to Germany, who is also crying foul. So is Brazil.

To these exporters, the US exists simply to gobble up what they offer, without resistance. Like those foie gras goose.

Things are about to get ugly. Now every nation is mercantilist. The currency war is on, and inflation is on.

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Gold Hit New High at $1,311.20

Gold spot (as reported by Kitco.com) hit $1,311.20.


As Ambrose Evans-Pritchard says, "Gold is the final refuge against universal currency debasement".

Hear that, Dr. Bernanke?

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