by Jeffrey P. Snider
Alhambra Partners
One of the primary points of emphasis with regard to Japan’s QQE was the yen itself. Pushing the value down, even by misconceptions about what central banks do, was supposed to simultaneously increase inflation pressures via the currency translation while also stimulating the export sector to a sufficient degree that Japan Inc. would be reborn and share the nominal gains with the rest of the country. But it never happened that way even from the very start.
The export sector did receive its nominal yen boost, but that amounted to nothing more than an advantage for it alone. The inflation that was caused by yen devaluation proved both temporary and extremely harmful, as wages didn’t respond to the burst in import costs quite (at all) as economists thought.