Felix Salmon

When the finance minister targets stock prices

By Felix Salmon
February 11, 2013

Japan’s economy has been far too stagnant for far too long: everybody can agree on that. The aging population, now used to deflation, prefers saving to spending — an entirely reasonable stance if prices will be lower tomorrow than they are today. So the government has long been facing a very tough task: to change the psychology of a nation, basically. You can’t do that — as Japan learned the hard way — with old-fashioned public-works spending. Instead, you have to target expectations.

The problem of Japan’s household savings

By Felix Salmon
August 2, 2012

Almost two years ago, in September 2010, the Japanese currency reached an all-time high of just 83 yen to the dollar. The Bank of Japan, shocked into action, brought out the big guns: a massive intervention in the fx market, which immediately sent the currency down more than 3%. And I responded with a blog post headlined “Why Japan’s FX intervention might actually work”: the intervention was unsterilized, which meant that the Bank of Japan was essentially printing money. If a central bank prints enough money, the currency will, eventually, fall.