Any day, week, month, year now... Japan's adjusted trade balance missed expectations by the most since October 2013 (back over a JPY1 trillion deficit) as the QQE-ing, j-curve-any-minute-now nation awaits the arrival of the competitive pickup for the 40th month in a row. Exports beat expectations (which we are sure will be the headline crowed about by all) but imports surged by 2.3% (against expectations of a 1.5% drop). It appears you single-handedly devalue yourself to prosperity in an interconnected world after all - whocouldanode? As we said before, "Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery."
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On the terrible missing J-Curve (via Patrick Barron of the Ludwig von Mises Institute of Canada): [11]
Perhaps I can shed some light on Japanese Prime Minister Abe’s missing J-curve; i.e., why Japan’s trade deficit seems to be increasing rather than decreasing after massive monetary intervention to reduce the purchasing power of the yen. Monetary debasement does NOT result in an economic recovery, because no nation can force another to pay for its recovery.
Monetary debasement transfers wealth within an economy by subsidizing exports at the expense of the entire economy, but this effect is delayed as the new money works it way from first receivers of the new money to later receivers. The BOJ gives more yen to buyers using dollars, euros, and other currencies, as the article states, but this is nothing more than a gift to foreigners that is funneled through exporters. Because exporters are the first receivers of the new money, they buy resources at existing prices and make large profits. As most have noted, exporters have seen a surge in their share prices, but this is exactly what one should expect when government taxes all to give to the few.
Eventually the monetary debasement raises all costs and this initial benefit to exporters vanishes. Then the country is left with a depleted capital base and a higher price level. What a great policy!
The good news is that Japan does know how to rebuild its economy. It did it the old-fashioned way seventy years ago–hard work and savings.
Of course, with USDJPY so close to 103.00, we are sure Japan's open will run stops and take NKY (and S&P futures to new highs overnight) or did the big block sales into the US close finally end the last week's facade?
