Over the past three decades, the United States has maintained strong economic growth, while Japan has experienced a series of challenges and difficulties. Japan, which was once the world's second-largest economy, has repeatedly lost currency wars, causing its economy to gradually lag behind the United States. Although this outcome may not have been anticipated when the United States launched a currency war 40 years ago, the fact is now that the dollar has once again won.
In 1995, the economic gap between Japan and the United States had narrowed to just over $2,000 billion, and Japan's GDP was already close to that of the United States. However, after more than 20 years of development, Japan's GDP has gradually declined amid fluctuations, while the GDP of the United States has grown steadily and has reached 25 in 202274 trillion dollars, 21 more than Japan$51 trillion. This huge disparity is reminiscent of the currency wars of 40 years ago, and defeated Japan is still paying the price.
Japan was once a defeated country in World War II, and its economy fell into a slump after the war. However, with the assistance of the United States, the Japanese economy achieved a rapid rise and made the United States feel threatened in the 80s. In response to Japan's rise, the United States demanded that Japan sign the Plaza Accord under the pretext of the imbalance caused by the depreciation of the yen, which led to a sharp appreciation of the yen. It also marked the beginning of the currency war 40 years ago. However, the appreciation of the yen not only led to a dilemma, but also triggered a huge asset bubble. Eventually, in the early 90s, this bubble burst, the property market and ** collapsed, and the economy also suffered a heavy blow. Since then, Japan has experienced an economic downturn for nearly 30 years.
In recent years, the Federal Reserve has continued to raise interest rates, and currencies have generally depreciated, but the yen has fallen the most. This year, the yen has again fallen sharply**, with a maximum decline of more than 15% to 151. This allows one to foresee the possibility of another harvest of the dollar. However, what is surprising is that while the yen continues to depreciate, Japan has frequently ** US bonds. Although the Bank of Japan sold $28.5 billion in U.S. bonds in September, the data showed that Japan still netted about $20 billion in U.S. bonds in the same month. This raises the question of whether the Japanese are more willing to cooperate with the harvest of dollars
However, economists in Japan recently said that the Bank of Japan will raise interest rates next year. If the Fed has to cut interest rates at the same time as Japan tightens monetary policy, this will be the best opportunity for Japan to fight back. Japan has not raised interest rates, and if they do, it will have a positive impact on the yen. If you combine this with a possible 100 basis point rate cut by the Fed next year, the dollar index could be rapid**, and the yen will appreciate even more against the dollar at that point.
Now, the situation has reached a critical juncture, whether the yen can successfully fight back and kill the dollar, the outcome of this currency war is about to be revealed. Whatever the outcome, this currency war will be a tough economic test for Japan. Whether the yen is harvested or the dollar is killed, it will have a profound impact on the direction of Japan's economy.
The currency war has been going on for 40 years, with the dollar continuing to hold a strong position while the yen is constantly being challenged and in recession. Despite the fact that Japan once threatened the United States in the 80s, the dollar won the currency war. However, in the current situation, Japan has the opportunity to fight back by raising interest rates and cutting interest rates by the Fed to gain more economic benefits for itself.
From this currency war, we can see the importance of monetary policy for the country's economy. At the same time, we also need to recognize that currency wars cannot increase economic power in the long run, and that only through real economic strength and innovation can we maintain a lasting competitive advantage.
Finally, from a personal perspective, we should think about how to protect an individual's wealth and assets in this currency war. In a rapidly changing economic environment, we need to think deeply and research our investment decisions in order to make informed choices. At the same time, we should also pay attention to the changes in national economic policies so that we can make corresponding adjustments and responses.
1."International Monetary Organization".(2022).Official of the International Monetary Organization. Get:
2."World Bank".(2022).World Bank Official**. Get:
3."The Federal Reserve".(2022).Federal Reserve Official**. Get:
4."Bank of Japan".(2022).Official Bank of Japan **. Get: