help me understand the boj’s considerations now

[seekingtoserve]

@pejak No, because the cost to build items rises just as much as the yen weakens. The labor gets cheaper sure, but that’s a domestic equation - the cost to source and import materials and parts, shipping and the energy costs are going up up up

 

[musidian]

@jandolphrohnson When would that be

 

[christalife]

@jandolphrohnson So a policy for big corp, not the people.

 

[adkp]

@pejak The weak JPY is good for exports and exports make up a large portion of the Japanese economy. It's even good for domestic companies that don't export as it makes domestic labor more price competitive with foreign labor.

Raising interest rates in Japan would make Japanese companies less competitive, would cost the government more money in interest, and would tank the Japanese economy because with higher interest rates people would stop spending.

So, where is the benefit to raising interest rates in Japan? There isn't one.

 

[pejak]

@adkp preserving value of japanese citizens savings accounts, but yea i suppose that doesn’t stack up well against other macro considerations?

 

[adkp]

@pejak Smart people invest their money and don't leave it languishing in savings accounts.

 

[almondjoy]

@adkp The f ? The you wanna teach people how to use money ?

 

[saknyc]

@almondjoy what’s wrong with teaching ppl? seems like a nice thing to do haha

 

[almondjoy]

@adkp What wrong with your thinking ?
How to export with normal price when you have to buy a bunch of raw materials at high prices? Did you know that Japan has very big trade deficit because of a weak yen ?

 

[adkp]

@almondjoy Exports are priced in foreign currency. Imported raw materials are priced in foreign currency. For exported products, the two cancel each other out, regardless of if the yen is strong or weak. What changes is that the cost of Japanese labor gets cheaper when the yen is weak.

 

[sparrowly]

@pejak BOJ doesn’t manage currency its concern is price stability (inflation).
And really the yen weakness is much more about relative strength of the dollar than the yen itself. Which is why Japan can’t actually DO all that much to change the strength of the yen (without implementing, you know, actually effective macro policy changes that address Japanese economic performance at a fundamental level.)

 

[pejak]

@sparrowly interesting, thanks. yea i guess the mandate of the central bank is more economic competitiveness rather than yen strength. are there signs that inflation will pick up in japan, and do u see it in your everyday life (increases in prices of goods ands services)?

 

[sparrowly]

@pejak No the mandate is, quite specifically, price stabilization.

In the USA it’s unemployment and inflation.

I do see some inflation but I’ve also been here long enough that I’ve benefited from DEFLATION for decades too so over my time horizon it’s nothing.