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How Japanese Hyperinflation Starts (In 1 Chart)
The Japanese Yen's real effective exchange rate (REER) has collapsed to the weakest since 1982, according to Mitsubishi UFJ Morgan Stanley Securities. Simply put, REER is a trade-weighted measure of Yen strength (or weakness) against, in this case, 59 trading partners; and as the nation posts an unprecedented 27th straight month of trade deficits [43rd straight month of Seasonally-adjusted trade deficits], Bloomberg reports MUFJ indicates "a structural shift" has taken place.
As a reminder, the Real Effective Exchange Rate (REER) is:
The weighted average of a country's currency relative to an index or basket of other major currencies adjusted for the effects of inflation.
The weights are determined by comparing the relative trade balances, in terms of one country's currency, with each other country within the index.
This exchange rate is used to determine an individual country's currency value relative to the other major currencies in the index, as adjusted for the effects of inflation.
This is also the value that an individual consumer will pay for an imported good at the consumer level. This price will include any tariffs and transactions costs associated with importing the good.
In the case of an average Japanese person who likes Big Macs, they will pay 71% more (in JPY) for the McDonalds' haute cuisine if they come to America than they would at home.
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In the case of the Yen, MUFJ warns, "In Japan’s post-float history, the strength of demand for dollars and other foreign currencies among importers has never been higher."
This is a problem as Daisaku Ueno exclaims, "If the trade deficit doesn’t noticeably narrow from here, the yen’s real effective rate could fall to levels never seen before," and, ominously, "from a supply and demand perspective, yen selling for foreign currency by Japanese importers will just continue endlessly."
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And sure enough, tonight's trade deficit is the worst in 6months as imports surge...
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Simply put - as Kyle Bass has warned all along - the JPY becomes self-fulfillingly destroyed by the vicious cycle of trade deficit-facing importers who need to pay in foreign exchange for goods received... et voila, hyperinflation (or the BoJ entirely reverses track and blows up the world's carry traders) and Japan becomes Venezuela...
Source: Bloomberg
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Maybe, just maybe, people will FINALLY see that this is the end result of this type of central banker madness and stop it before it happens everywhere else.
A man can dream, can't he?
Yes! And faries and unicorns will fly out of my BUTT!
Kyle Bass has been talking about a Japanese implosion for a loooong time now.
http://www.planbeconomics.com/2013/04/kyle-bass-on-japan-implosion.html
Still waiting. Are the Keynesians right?
Nope. The end game is coming soon. Don't underestimate the political and financial cunning in sheering the people. It's been going on for 2 decades. I see the Yen collapsing within the next 2 years at the latest. It is a matter of mathematical fact that their current trajectory is a bad one.
People need to understand that this is not about trade, or competitiveness. It is about debt and seniorage. Now that they have started killing their trade off, there is no place left to hide.
Bass may end up being off a little bit, but still amazingly prescient. What happens to Japan won't be like seeing the Venezuelan, Argentinian or Zimbabwean currency wrecked. The Yen, after all, is one of a handful of preeminent fiat currencies. So when the Yen really does crash in a catastrophic way, folks who otherwise would have no interest in the saga will be paying attention. And some of them may even connect the dots and say "Well, if this can happen to the Yen, then this could happen to the Dollar."
2015 is going to be an interesting year.
The BOJ seems to be backing off its pledge to engender more inflation, as it is obviously cutting the wrong way, more cost push, than demand pull. But if they stop printing and stop buying up JGBs, who will? They are the only buyer left. And if the interest rates rise, its lights out.
Agreed. Japan's between a rock and a hard spot.
Being right is one thing. Getting the timing right is something else entirely.
These days I guestimate how long I expect things to take. Then double it, and double it again.
It's not a long time at all. it's a very short time. I don't want to bet against Kyle Bass.
Monkeys - its Monkeys that will fly out of your butt.
No way.....Kim Kardashit has a new baby........
Callsm "Leoturd"
A few more quarters like this and the average Japanese dude will definitely be taking it in the REER.
We will. The problem is is spreads like ebola. The time from when we see it happen in Japan to when the EUR and USD blow up is way less than the time needed to learn from Japan's insanity and correct central bank madness in Europe and the US.
So Japan is really just a canary. There will be no stopping it before it happens everywhere else.
Never, the professors/progressives at the Fed will never admit they are wrong until it crashes... UNless that is their ultimate goal
They won't admit it then either.
Nope. Should have done MOAR PRINTING!
my neighbor's half-sister makes $71 hourly on the laptop . She has been fired from work for 9 months but last month her paycheck was $17975 just working on the laptop for a few hours. look at this site... www.job-reports.com
This is the time for the secret giant robot mecha industry japan has kept hidden until now to save their economy!
Who knows? Maybe they have been building a super-secret space/time machine off the coast of Hokkaido and they'll just go back in time and print even more money. That'll solve everything.
~This comment is endorsed and approved by Paul Krugman and Carl Sagan~
No, a guy called Satoshi Nakamoto will go back in time, start bitcoin in 2008 and mine 1 million bitcoins from his laptop!. Then dissapear and travel back to the future, Oh wait, it already happened!
Robots? What would they do with the out of work people? Oh yeah, Soyrent Gleen. Forgot about that.
"Go, Go, Gadget Cuisinart!"
Godzilla will rise from Tokyo Bay and save the Setting Sun once again.
u know godzilla is not really famous for saving japan, more like the opposit..
but then again he dont bring as much destruction as our fractional bankster elite.
Maybe if they would take their jack boots off interest rates for the first time in 25 years, it would help the currency.
Ya think?
Free markets. The way too radical experiment.
Peter Paul & Mary - Puff The Magic Dragon (with Lyrics)
http://www.youtube.com/watch?v=Y7lmAc3LKWM (3:27)
https://www.youtube.com/watch?v=T65rW_SIzg0
Or they can just go to war.
Japan vs China.
They've been doing that for the last 1000 years.
A structural shift has taken place and it only took them 42 months to figure it out? Fucking geniuses.
Long. Nickel. See below.
And
They are studying
US political
Rhetoric
Of last. 30 years
A lot of people thought Kyle Bass was full of shit a couple years back when he saw this coming. Kyle is gonna make some serious cash here soon imo.
Listen 48.
You know those Japanese people, kamikazes, Seppuku and shit, Hello Kitty.
I really hope it doesn't turn out to be his own personal Pearl Harbor.
Japan has so many headwinds. Their endless deflation, their ageing population and the coup de grace ... FUKUSHIMA.
Shocking how Fukushima has vanished from the headlines. Dangerously silent.
Yep. Shocking and criminal. Just keep smiling and the radiation will pass you by, so it has been said.
I've always wanted to see a country with nuclear weapons ( you know they got em' or can in 10 minutes) go through a Hyper.
so the japanese gov will just close it's own ports , prohibit imports and call it a day. what the fuck people?
do you think governments give a shit about their own peasants?
japan can have a war with china or a civil war. no body in the u.s. or china fucking cares so long as japanese kill their own society off by self imposed insane policies. they are the globalists sacraficial lamb.
Warm up the shredders baby ! It's gonna be a c-c-coooold winter in Japan.
Kindling baby ! Bust out the wheelbarrows.
So, when the yen implodes, that will drive interest rates higher in Japen, which will spark a selloff and contagion HyperEbola all over the world !
Got phyzical, phyzical ?
When the Yen drops it could go fast. In the past when hyperinflation occurred people did not understand what was going on, sometimes for years. When prices start shooting up people will quickly become interested in hyperinflation. With blogs, YouTube, Facebook, and other social media it will not be long before people realize the implications.
Once people understand what is occurring the currency will die. Instead of taking three years, the cycle could go from start to finish in about three months. When Japan crumbles it will be felt across the world as wealth flees the country and contagion is unleashed. More on this subject in the article below.
http://brucewilds.blogspot.com/2014/05/japan-sliding-towards-abyss.html
That is because people are as dumb as yeast.
With respect to the Japanese people, but they better start learning Chinese ASAP. The Rothschild banksters have gutted them and their economy and the rotting core will be sold off to the Chinese.
One sees similar things here under the DC US occupiers and their Rothschild bankster masters.
An American, not US subject.
The most important revelation about the Bundy ranch standoff for Liberty, was that the Reids had sold off access to the land to the Chinese.
If a Yen fell in the woods would it make a sound?
"So Japan is really just a canary."
First Japan implodes then the US later.
Bitcoin Last Price $386
It still looks like it's on the downward slope of the bubble. Probably worth making use of in about a year.
<<< Japan
<<< Europe
Who will implode first? or maybe the
I think the Fed will try and save itself by bullying Japan/EU into imploding first but which will resist harder is hard to say. So far it's been Germany alone in the EU holding back US demands to debase the currency but if German resistance canbe broken then it will probably be the EU. Also I wonder if when their backs are against a wall the Japanese will tell Washington to **** off so that would imply the EU going first as well. So EU would be my guess.
damn i cant press both
<<< USSA (with it's debt bubble and paper gold ponzi) or
<<< China
or it the system gonna crash across the board at the same time...?
<<< it's all gonna blow up at once
<<< some sequential domino effect will take down the global fiat ponzi
Which do you think it is?
both, sequential till a tipping point then sudden
Washington first (after pulling down Japan/EU to save itself) but likely pulling down China in the process so only marginally first.
I frankly doubt the hyerinflation thesis. The game will find suckers and the tokens owned by those least able to make things, sell things, or slit throats at scale will be the tokens flushed. Japan will stumble on, the decade of deflation suffers Kuroda's delusions. Then rebalancing as deflation beckons again.
Stagnation is all Japan has to offer and it has become very good at it.
it seems to me bullying Japan and the EU into debasing their currencies would help slow down the consequences of the Fed's debasing of the dollar.
Well they can't really "bully" the EU as the Germans are in the way and they have already shown willingness to make sacrifices that hurt their export trade, namely to Russia. But where the BUBA is concerned, well that's just off limits.
Japan is trying to debase its currency, by QE'ing in an even wilder way than The Fed. It wouldn't take much to ask them to go faster. But it won't be long before it's academic anyway.
Like Tyler's (and in some respects Bass) have said, if the Japs don't turn that trade deficit round real sharp'ish, back to a trade surplus, then its over. They will have sacrificed their manufacturing base on the altar of fiat, just so scumbag politicians could keep their jobs with easy vote-buying policies.
When the Berlin Wall came down and shortly after it the USSR collapsed the one, arguably, enviable thing about that by today's standards, was that Russia came through it. Don't get me wrong though it would have been hell'ish for their ordinary people. But I daresay many saw the writing on the wall anyway and didn't trust the communists to save them. Now they have oil, gold, low external debt. And they don't mind throwing oligarchs behind bars for 10 years! (e.g Khodorkhovsky.)