Re: Is Bernanke Behind The Rallies? Query to Barkley

[Warren Mosler <mosler@xxxxxxxxxxxxxx>]

--- "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx> wrote:
> Not guite, Warren.  When the BoJ buys dollars, and
> it has been doing so
> rather massively in the name of smoothing the rise
> of the yen in recent
> months, it increases the yen money supply, but not
> the amount of yen
> assets.
Yen net financial assets.

 This normally will "import" inflation to
> Japan from the US if
> not for the Japanese trade surplus in dollars.
> Japanese trade surplus
> runs about $20 billion a month now and BoJ spends
> about $2 to 4 billion
> a month to shore up the dollar (no one knows exactly
> how much, but
> surely less than $20 billion a month). The trade
> surplus turns yen input
> into dollar output thus shrinking the yen money
> supply and contracting
> the yen economy.  The Japanese trade surplus in
> dollars,together with
> the US capital account surplus in dollars, cause
> deflation in Japan
> which in turn supports the Japanese trade surplus,
> which in turn
> supports the US capital account surplus, thus
> causing spiralling
> Japanese domestic deflation.

I respectively disagree.

Best!

w

>
> Henry
>
> Warren Mosler wrote:
> > --- "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx> wrote:
> >
> >>My point is that lowering the exchange rate of the
> >>yen will only
> >>contribute to deflation because it increases the
> >>dollar denominated
> >>trade surplus which Japan must reinvest in dollar
> >>assets, thus shrinking
> >>the yen economy.
> >
> >
> > The way I see it, when the boj buys $US, for
> example,
> > it increases net yen denomimated financial assets
> of
> > the non govt sector, just like any other form of
> net
> > govt. spending.  It also increases its net savings
> of
> > $US, so the process
> > in fact could be said to be importing US
> 'inflation'
> > or exporting Japan's 'deflation?'
> >
> > warren
> >
> >
> > =====
> > Warren Mosler, www.mosler.org
> > c/o James River Capital Corp
> > 5007 Chandler's Wharf, Suite 201/202
> > Christiansted, USVI  00820
> > 340-719-8813 office phone
> > 340-719-8804 Fax
> > Primary email contact:  mosler@xxxxxxxxxxxxxx
> >
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>
>
>


=====
Warren Mosler, www.mosler.org
c/o James River Capital Corp
5007 Chandler's Wharf, Suite 201/202
Christiansted, USVI  00820
340-719-8813 office phone
340-719-8804 Fax
Primary email contact:  mosler@xxxxxxxxxxxxxx

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