Fix the Yen

[wfhummel@xxxxxxxxxxxx (William F. Hummel)]

A piece by that name appears on the editorial page in the Wall
Street Journal by former Fed governor Wayne Angell.  He is
proposing that the Bank of Japan work its balance sheet as
required to fix the exchange rate between the yen and the dollar
for some extended period, at least 3 to 5 years.  He claims that
"would mean abstinence savings above capital spending would be
drawn into the global capital market.  Japan could thereby turns
its high savings rate into a comparative advantage.  And Japanese
households would no longer be penalized by low interest rates,
but instead would be rewarded by the level of interest rates
prevailing in world capital markets.  ....  Deflation would end.
Price stability would return."

One can debate the real effect on the Japanese economy, but the
notion that the BOJ could actually engineer a fixed exchange rate
is the most questionable point in my opinion.  Any comments?

William F. Hummel