Currency Wars Return, 1930s Style: BoJ Doubled Its Inflation Target, China Prints And Injects Record 450 Billion Yuan Into Money Markets, Fed Bought More U.S. Debt This Year Than Treasury Issued And There Was Even A Call Last Week To Print $30 Trillion!! Jim Rogers: Don’t Sell Your Gold and Silver Coins!!
February 7th, 2013
Currency Wars Return, 1930s Style…
The balance of power now rests with Japan, according to the bank, as Japan’s policy-makers’ more dovish approach looks set to bring the world a step closer to a currency war.
The Bank of Japan doubled its inflation target to 2 percent in January and made an open-ended commitment to continue buying assets from next year. This follows a leadership change, with new Prime Minister Shinzo Abe openly calling for aggressive monetary stimulus from the country’s central bank.
“While a currency war is not our base case, the new-found commitment of Japan’s policy-makers does raise the risk of retaliatory action to keep the yen weak,” he said.
“The experience of the 1930s suggests to us that such large currency crises are likely triggered by domestic issues, and that they do create distinct winners and losers. EM (emerging market) policy-makers are already gearing up to make sure they remain on the winning side, but the balance of power for now rests with Japan.”