[KO_TKO]

” Despite growing claims that Tokyo is resorting to a beggar-thy-neighbor policy of weakening its currency to give its exports a competitive edge ” – Online Wall Street Journal

1: How can devaluating the Yen helping its export? There export are getting cheaper, but there imports are getting more expensive. And Japan has a few natural resources. So it’s dependent on imports. The imports are needed to make the export products. So that would make the export more expensive. So in the end the export wouldn’t get cheaper, but the same?

2: The purchasing power of money is determined by supply an demand. The supply is the inflation or the same or deflation of the money supply. But what are the demands of money?

[jmherbener]

The law of one price operates for all goods, including money. Each unit of money will tend to sell at the same price in a given market at a given moment. However, the accuracy of different people’s speculation about the extent of future price inflation can lead to differential speed of movements in different parts of the market. With money, if international currency speculators make more accurate anticipations than the man on the street, when the money stock is increased the currency tends to devalue in foreign exchange markets before its purchasing power goes down domestically. When that happens exporters gain a temporary advantage.

As long as Japanese exporters sell their outputs in countries where the yen is devaluing against foreign currency and buy at least some of their inputs in countries where the yen is not depreciating commensurately, they would gain. I would guess that Japaneses companies buy some of their labor and rent or own some of their land area in Japan.

[KO_TKO]

But this will not make Japan richer, because than they have to pay more for imports?

Also because of the inflation the money of the Japanese people has less value?

So it seems that the Japanese exporters are gaining at the expense of the importers and Japanese people?

” With money, if international currency speculators make more accurate anticipations than the man on the street, when the money stock is increased the currency tends to devalue in foreign exchange markets before its purchasing power goes down domestically. When that happens exporters gain a temporary advantage. ”

At whose expense do they gain a temporary advantage?

” As long as Japanese exporters sell their outputs in countries where the yen is devaluing against foreign currency and buy at least some of their inputs in countries where the yen is not depreciating commensurately, they would gain. ”

The free market makes both in free trade better, But one of the problems with government is that they make alot of times one group richer at expense of other groups?

[jmherbener]

Monetary inflation cannot raise the standards of living of people in society because it doesn’t increase resources. It does, however, redistribute income and thereby, change the pattern of the use of existing resources.

People who receive the new money sooner gain income and those who receive it later lose income. Moreover, the pattern of redistribution depends on which prices change sooner and which change later and which prices rise more and which prices rise less. Those who sell things whose prices rise sooner and to a greater extent and buy things whose prices rise later and to a lesser extent gain income and those who sell things whose prices rise later and to a lesser extent and buy things whose prices rise sooner and to a greater extent lose income. Finally, those who anticipate the changing array of prices more accurate gain income and those who anticipate it less accurately lose income.

[KO_TKO]

Thanks mr Herbener.

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