Japan′s Nikkei ends with a weekly gain of 7% while the Japanese Yen collapses. In the race to the bottom, the Bank of Japan has been printing so much Yen that it has now passed the 100 Yen to one U.S. Dollar. Once more, we see how massive currency manipulation by central banks spell wonder for stock markets while average citizens succumb to more financial insecurity. Just as with the U.S. Federal Reserve and its policy of quantitative easing, very few benefit from currency debasement.
But then, Japan does not have Barack Obama around to be hailed and loved by the Media. Japan has been in economic doldrums for nearly two decades now following their real estate collapse in the 1990s. The emerging global market, especially with players like China and South Korea gaining ground, have reduced Japan′s importance. True, they are still one of the largest economies around. But their best days may be far behind them unless they can get some real growth going again.
Like other nations practicing highly regulated markets by their governments, the end result has been stagnation. Japan also has the unpleasant problem of not only an again population but a dwindling one, too, due to very strict immigration laws. The earthquake and nuclear disaster from last year has also contributed mightily to Japan′s economic woes. The big question now is whether or not any sum of money can really stimulate their economy?
With the Japanese Yen collapse, we see the beginnings of another round of global currency debasement starting soon. While it may benefit some markets, such as Japan′s Nikkei which ends with a weekly gain of 7%, the long term problem of inflation is never far away. The only good news is that the Federal Reserve has also been busy, like the Bank of Japan, in increasing the money supply. The race to the bottom will also include China′s Yuan and the Euro. So the short-term may seem rosy but sooner or later, just as with musical chairs, the song will end and somebody will not have a chair to sit upon.