Japan Stimulus Will Start Currency War, Say Chinese Economists!

- The logical end to currency wars is hyperinflation! All fiat currencies are going down the toilet bowl of currency debasement. Got physical gold/silver yet?
–
Japan stimulus will start currency war, say Chinese economists!
by Ray Chan, http://www.scmp.com/news
Plan to buy bonds will open liquidity floodgates and spells doom for other nations, observers say
–
Many of China’s top economists are livid at what they view as an effective currency devaluation by Japan and are calling on the People’s Bank of China to retaliate by weakening the yuan to defend itself in what they see as a new currency war.
–
These economists, including Tsinghua University professor Li Daokui and ANZ Bank’s Liu Ligang, see Japan’s plan to double its monetary base within two years as “blackmail” and have criticised the Japanese central bank’s decision to open the liquidity floodgates to bump up the economy.
–
Liu said Japan’s unprecedented easing programme, aimed at ending more than two decades of deflation, was “a monetary blackmail” targeted at other export-driven Asian countries such as China and that the central bank should sell more yuan and buy the US dollar to push down the yuan.
–
He also called on authorities to guard against a fresh wave of hot money into China’s fragile financial markets, warning that Japan’s move would reignite the so-called carry trade, under which investors borrow in low-interest yen and invest in high- interest markets.
–
“The massive monetary stimulus by the Japanese central bank could spell doom for other nations in the region,” said Tsinghua’s Li, a former adviser to the People’s Bank of China.
–
“China could accelerate the freeing up of its capital account by boosting outbound investment in overseas equities markets, which could be an effective way of coping with the latest round of the global currency war.”
–
Under a plan announced on Thursday, the Bank of Japan (BoJ) will double its monetary base to 270 trillion yen (HK$22.1 trillion) by March 2015 by purchasing 7.5 trillion yen of government bonds every month.
–
Haruhiko Kuroda, the newly appointed BoJ governor, has vowed to do whatever it needs to break Japan’s deflationary slump, but the extent of the latest monetary boost came as a surprise, beating all estimates.
–
read more!
end
One comment
Comments are closed.