Download Japans Policy Trap: Dollars, Deflation, And The Crisis Of Japanese Finance Drafted By Akio Mikuni Readable In Mobi

as an appetizer after you consumed the literature, wouldn't recommend the book as a starter,

One of the most convincing explanation of why dids bubble happen,
Political economy parts are really interesting, the book is filled with many many juicy details and astute observations you couldn't find it elsewhere easily,
Constantly confuses between real and financial savings, has problems in monetary economics,
"Japan isn't capitalist" is a big strange take, Think currency as a commodity: that in an efficient market, currency and goods should have a balanced amount

Today's Fiat currently is a better currency than hard currency given the fact that hard currency are depreciating by nature you need to constantly have real estate to hold precious metal, security guard to guard them, all these consume money.
In addition, fiat currency can be destoreid by central banks, hard currency can't be easily destroyed, which means in hard currency, inflation and deflation could occur and no one can do anything about it.
Lastly, precious metals are notoriously hard to ship and easy to lose during transit,

However, when international trade and fiat currency comes to play, a major issue occurs: which currency to use Today, the world uses the US dollar as a reserve currency.
On the surface its benefiting the US, but in reality it's suffocating the US, A strong US dollar means that domestic economy, only the strongest and the most value added could survive and this is evident in the US today, Only thriving industries are heavily reliant on technology innovation and ironically, welfare because non innovative jobs got shifted aboard

Currency surplus and/or goods shortage leads to inflation currency shortage and/or goods surplus leads to deflation

For nonEuro and NonUSD countries, they can't help but have a strong dollar reserve: think of dollars as the poker chip you aquire when going to casino.
If you run out of poker chips, you don't get to play anymore this is evident in many developing countries take Latin America for instance, they're masters are running of poker chips.
And in this case, USD is the world's poker chip

Japan's problem arise when they have too much USD but don't know what to do with them.
Ideally, they'll simply print more JPY and maybe have others use JPY, But given the limited size of the Japanese economy, they can't do so without triggering inflation as mentioned before, currency surplus leads to inflation, They could also not use the USD and use other currency, but given other currencies are much smaller than USD, it's not ideal and not easily usable plus, they will easily make enemies buy acquiring them if say, BOJ all the sudden begin buying sterling, sending pounds to the roof.
The Biritish export industry would collapse overnight and an innocent looking Boris Johnson would ask "what did I ever do to you, Japan"

However, the reason why the US can print money without triggering

inflation is because USD is not a domestic currency like the JPY think about the last time you used Yen outside of the US has it ever happened Or better yet, have you actually ever used Yen.


Also because of the nature of the reserve currency, in order to maintain world trade stability, they US actually have to constantly keep printing more money in order to have enough currency in the world because while the US can stop growing, the world economy on the other can could still grow.
When the US stops printing money, currency shortage would occur and deflation or even simply economical collapse would happen and its evident right now, starting in countries ranging from Sri Lanka, Pakistan to Nigeria and South Africa most Americans don't know this because they've never lived aboard to understand the dominance of the USD

Japan's deflationary problem stems from multiple dimensions:

the strong export market means firms have a lot of income in USD.
However, Japan do not consume such USD which would need to happen in the form of import, however, Japan's protectionist government do not allow import to protect its domestic economy.
When Japan do not consume USD, the Japanese currency does not produce itself in a natural world, when firm makes money, new money is minted, But in Japan, when firm makes money, no money is minted domestically, rather a new USD is minted in the US and circulates in the US, Which means that Japan's domestic capacity increases sinc market is getting bigger while the currency volume stays stagnant: increase of goods yet decrease or stagnant currency deflation

on top of that, post bubble era, Japanese household increasingly turn into savings, with more saving and less borrowing, money supply decreases even more

Unlike America, Japan's banks are puppets of BOJ/MOF.
BOJ/MOF sets "window guidance" for banks to follow, In addition, Japanese banks do not worry about credit risk: they are being told buy the government bureaucracy to extend loans at a very favorable rate because firms were always bailed out

In addition, one thing Westerners always gets wrong about Japan is that Japan functions more like coalition of parts this stems from Japanese history being coalition of tribes throughout time, not a cohesive government.
Because of it, Japanese ministers often do competing things such as layingidentical parallel roads next to each other

On bureaucracy: on the surface, it seems like Japan is ruled by the diet.
But in reality, it's ruled by a gigantic network of bureaucracy that functions like a zombie, The system strengthens itself with other bureaucracy to prolong its longevity, That's why regardless who is in power in Japan, the system seldom change: because unlike the US however, to some extent the US also has such zombie system, election doesn't decide the bureaucracy network Dry.
Until quite recently, the Japanese inspired a kind of puzzled awe, They had pulled themselves together from the ruin of war, built at breakneck speed a formidable array of export champions, and emerged as the world's numbertwo economy and largest net creditor nation.
And they did it by flouting every rule of economic orthodoxy, But today only the puzzlement remains at Japan's inability to arrest its economic decline, at its festering banking crisis, and at the dithering of its policymakers, Why can't the Japanese government find the political will to fix the country's problems Japan's Policy Trap offers a provocative new analysis of the country's protracted economic stagnation.
Japanese insider Akio Mikuni and longterm Japan resident R, Taggart Murphy contend that the country has landed in a policy trap that defies easy solution, The authors, who have together spent decades at the heart of Japanese finance, expose the deeprooted political arrangements that have distorted Japan's monetary policy in a deflationary direction.
They link Japan's economic difficulties to the Achilles' heel of the U, S. economy: the U. S. trade and current accounts deficits, For the last twenty years, Japan's dollardenominated trade surplus has outstripped official reserves and currency in circulation, These huge accumulated surpluses have long exercised a growing and perverse influence on monetary policy, forcing Japan's authorities to support a buildup of deflationary dollars, Mikuni and Murphy trace the origins of Japan's policy trap far back into history, in the measures taken by Japan's officials to preserve their economic independence in what they saw as a hostile world.
Mobilizing every resource to accumulate precious dollars, the authorities eventually found themselves coping with a hoard they could neither use nor exchange, To counteract the deflationary impact, Japanese authorities resorted to the creation of yen liabilities unrelated to production via the largest financial bubble in history, The bursting of that bubble was followed by massive public works spending that has resulted in an explosion in public sector debt, Japan's Policy Trap points to the likelihood that Japan will run out of ways to support its vast pile of dollar claims, Should the day come when those claims can no longer be supported, the world could see a horrific deflationary spiral in Japan, a crash in the global value of the dollar, or both.
The effects would reach far beyond Japan's borders, Mikuni and Murphy suggest that a reduction in Japan's surplus must be accompanied by a reduction in deficits somewhere else most obviously through farreaching shifts in the American economy.
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