Friday, May 17, 2013

Why the Japanese devaluation ought to work...

Got this from mostly economics here. The paper cited is actually quite cool.

Talks about how 1933/ 34 saw Roosevelt signaling and initiating a regime change - a bold change.
And goes on to talk about the Japan situation...

One astonishing thing that has often been cited, and is done here too, by quite a few fund managers is - the Japanese asset purchase commitment of USD 77 Bn per month is the same as the Fed purchase in an economy that is 1/3rd the size of the US.

Now, Bass and Druckenmiller have different outcomes predicted but Bass has made money on his trade, because the path to the end game seems to be the same :S

And the paper ends with a witty comment - don't know if the Japanese monetary regime change will work, but we will surely learn from this bold experiment.
Very Keynesian - "In the long run, we are all dead" - so might as well see this as an practical academic lesson.

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