On April 15, local time, the yen fell below 154:1 against the US dollar, hitting a 34-year low since the bursting of the bubble in the Japanese stock market, returning to the origin of "Japan's lost 30 years". What is the impact of the yen's collapse on people's lives?
At the beginning of March, Japan announced the end of the era of negative interest rates, raising interest rates from 0% to 0.1%, but the yen began to depreciate. According to Japanese media reports on March 9, the Bank of Japan is considering making policy adjustments, including the bond yield curve control policy that has been implemented, and ending the era of negative interest rates.
After Japan took the initiative to puncture the economic bubble in the 90s, the Japanese economy continued to fall to the lowest value in 2012, but in 2013 it began to bottom out and rebound, and began to grow slowly for a long time and steadily, the main reason is that Japan began to implement a new type of policy called QQE, which mainly refers to the purchase of Japanese government bonds by the Bank of Japan, injecting a large amount of liquidity from outside the market to stimulate the domestic market, which can also be simply understood as increasing the Bank of Japan's efforts to print money.
This policy includes reducing the impact of low interest rates on the banking industry by regulating bond yields that stabilize the market better (YCC policy) for the Bank of Japan, and by regulating interest rates for a long time, we will move towards the goal of monetary inflation of more than 2% that Japan needs, and further counter the current deflation of the Japanese economy.
The statements in this article are based on reliable sources and are repeated at the end of this article
However, the implementation of the QQE policy has made the Bank of Japan the largest buyer of the Japanese stock market, but it has a great impact on the rise of the banking industry and the Japanese stock market, so with the cooperation of the YCC policy, the Bank of Japan has controlled the yield curve of government bonds around the interest rate "0" required by the Bank of Japan through the plan of printing money to purchase bonds. In order to ensure the stability of the banking industry and market in Japan.
First, YCC is no longer able to match the current economic and market environment in Japan with the QQE policy. Second, at the beginning of 2022, the Federal Reserve of the United States began to raise interest rates sharply, leading to an increase of almost "0" Japanese bonds and U.S. bonds to open up the excessive interest rate spread, causing a large number of capital to choose to sell Japanese bonds.
The rise in Japanese bond yields has had a huge impact on the measures that the Bank of Japan needs to have a bond yield of "0", but if you want to maintain the "zero" yield, you can only increase the intensity of printing money to buy bonds, which has led to the rapid depreciation of the yen, and the depreciation of the yen has a huge impact on the selling of Japanese bonds.
In fact, at the end of 22, Japan began to stop maintaining the curve of 0 yields. At the end of 2022, it was allowed to rise to 0.5%, in July 2023 it was opened to 1%, and less than three months later, in October 2023, it was allowed to rise above 1%. This is no longer in line with the main purpose of the YCC policy. In this way, it seems that in 2022, the YCC policy has already existed in name only.
At the same time, the "interest rate hike" in the editor's article mainly refers to Japan's own printing of money to buy its own bonds (in fact, the Federal Reserve in the United States also does this). Japanese bonds are borrowed from new money to repay old money, a large number of Japanese bonds are issued, and the money to buy Japanese bonds is purchased by the Bank of Japan printing money on its own. As long as QQE stops, the large number of bonds issued in Japan will instantly increase the yield of Japanese bonds and cause the yen to depreciate further.
Therefore, for the Bank of Japan, it is definitely impossible to raise interest rates, rather less than much. But why did the end result be a slow rate hike? After all, no rate hike would stabilize the rate of decline in yields and the yen. On December 19, 2023, Kazuo Ueda, then governor of the Bank of Japan, also said that it was inappropriate to change economic policy now "in order to cope with the Fed's big moves in 3-6 months."
However, on January 19, 2024, the three major factions of the Liberal Democratic Party, the then ruling party of Japan, announced the dissolution, and on February 22, 2024, Bank of Japan Governor Kazuo Ueda said that "the Japanese economy is not in a state of deflation today" and that the cycle of wages and prices in Japan will become better, which is faster than that of Guangdong. What's more, when the inflation rate is 3% in 2023, Kazuo Ueda said that he had just shaken off deflation and had not yet reached the required 2% inflation rate, and within a few months, he changed his tune and said that the Japanese economy still maintained an inflation rate when the inflation rate was 2.2% at that time. The gap between the front and the back is too big, so there is still a problem.
It is not so much that Japan is starting to raise interest rates slowly to slow down the depreciation of the yen, but rather to slow down the rate at which it is being slaughtered and eaten by the United States. But it seems that the United States is not very satisfied with the speed of the current yen rise, after all, now the United States' own inflation is rising, the Federal Reserve is also constantly raising interest rates, Eagle Sauce is already hungry with his chest and back, and he can't wait to eat Japan's big blood bag to return his blood.
And they did not hesitate to use the Tokyo District Prosecutor's Office to threaten Japanese politicians, as mentioned earlier, the three major factions of the Liberal Democratic Party announced their dissolution one after another, and the initiator was probably the Tokyo District Prosecutor's Office. On December 19, 2023, the Tokyo District Prosecutor's Office conducted a house search of the Abe faction, and since then it has been announced that it has been disbanded.
In economics, deflation generally refers to a decline in prices, a decline in workers' wages, and an increase in unemployment, while inflation, on the other hand, increases in prices, wages, and employment. However, Japan controls the balance of the three parties through a number of economic means.
For example, a few years ago, the conditions for the confession of Japanese and Russian people were [Japanese nationality, Japanese spouse, permanent residence, permanent residence, and work visas are not allowed], but now the recruitment conditions are generally [Tokyo Metropolitan Government long-term recruitment of interior decoration novices, painters and waterproofers, (novices can be black workers, painting and waterproofing belong to the technical type of work and require a visa). Looking at the general direction, it can be seen that there will be more jobs in Japan after inflation begins.
Japan is now skillfully maintaining jobs, wages and prices, and in some statistics in 2023, the employment rate of Japanese college students is 97.3%, and the employment rate of junior college graduates is 98.1%, not only the employment rate of college students is high, but also a large number of labor shortages, and in the future, Japan also hopes to increase 800,000 foreign workers to supplement Japan's empty gap.
Not only are there many job vacancies, but wages are also growing, and although they are still not comparable to those of economically developed countries, they are still very high. New employees of Capcom, a famous Japanese game company, can be given a monthly salary of more than 300,000 yen, about 14,000 yuan per month.
Although salaries are rising, the consumption level of Japanese people has not increased much, after all, prices are also "skyrocketing". For example, the price of eggs in Japan hovered between 100-200 yen from 1989 to 2022 before the economic bubble burst, and the price did not rise much in 33 years, and in 2023, the average price of a kilogram of eggs has exceeded 300 yen, and the highest price has exceeded 350 yen, so the price of goods in Japan has also increased step by step with the company. Therefore, the impact of the collapse of the yen on the lives of ordinary local people is not very large.
Resources
[1] China Economic Net - The exchange rate of the yen against the US dollar hit a new low in 34 years
[2] China Economic Net - Kazuo Ueda hints at ending negative interest rates, Japan's monetary policy turns asymptotic _China Economic Net - National Economic Portal