Japan Spent 60 Billion Dollars Defending The Yen!

Over a four-day period Japan is suspected to have carried out two interventions to support the yen at an estimated cost of $59 billion dollars.
The first intervention came after the yen fell below 160 to the dollar for the first time in 34 years. The second intervention came a few days later after Jerome Powell announced that a rate hike was unlikely to be the Fed’s next interest-rate move.

The simplest explanation for the declining yen is that it is entirely driven by Japanese interest rates being low relative to other developed markets. People take their money out of the yen which is yielding 0 and put it in dollar denominated bonds to earn 5% - leading to a decline in the yen, but my friend Manoj Pradhan at Talking Heads Macro argues that this is a lazy oversimplification and that the Yen and Japanese markets are possibly the most interesting story in macroeconomics today.

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[ducksupps]

As a 26 year old, I’m concerned by how much I love listening to Pat on quiet weekends instead of going out an making terrible life choices

[patricktwo]

I'm losing sight of what value a billion dollars has.

[Pnstrp]

You know it’s bad when people break out the Ancient Greek myths as an analog for your strategy.

[MarcosElMalo]

I never even knew that there WAS a Japanese Diddy. Thanks for the transpacific rap news, Patrick!

[Derekzparty]

Dark tie and a big city background!
This video must be super important!

[maifantasia]

At 23:41, the Patrick Boyle AI CGI had a glitch. I knew the knowledge of rap news and the lack of blinking couldn't have been the work of an ordinary human.

[relwalretep]

Clearly, Patrick's AI generator is glitching. Not just the weird edits, but the use of the word "we" instead of "I", and the complete absence of rap and crypto news. I look forward to the next model release.

[jamesalias]

Unless there is severe deflation, people do not delay purchases due to deflation only. The reason the Japanese didn't purchase has less to do with deflation but to do with economic sentiment. For example for decades the price of electronics have been falling and the quality improving, yet people still buy electronics instead of waiting for the end game. So it is not deflation that central banks should worry about but consumer sentiment, do consumers feel that they will have jobs, will the future be better, no one really cares if prices slightly go down or up in the short term. Deflation isn't the problem, it is demographics, there wasn't enough demand for the supply. Also productivity in Japan which was a world leader became a laggard during the lost decades.

[paullynch]

Economists always say that deflation is bad because buyers will defer purchases as goods will be cheaper later. Japan's deflation has been about -0.1%. Are people really putting off buying a new car, or fridge because next year it will be 0.1% cheaper? I don't think so!

[monkeydog]

I just vacationed in Japan. It surprised me how cheap the Yen was.

[MaximilianRaetz]

The Japanese economy is an interesting topic looking in, but absolutely terrifying when you live here. Everything has gotten more expensive and salaries aren't keeping up despite what the government hopes will happen.
With housing prices rising, living in Tokyo is going to become more and more difficult.

[jessip]

I'm currently watching a slice of life anime from the 1980's (Maison Ikkoku) and it's kinda bizarre that the prices characters are paying in the show made 40 years ago are very similar to what the Japanese are paying now. Things like small apartments for 60, 000 yen a month, and decent jobs paying 1300 yen an hour.

[blackadder]

Still hoping one day Partick makes a yt short that is just rap news. No financial analasys this time just a man in a suit talking about rap beefs.

[SkynetDrone]

Patrick your voice always helps me put my daughter to sleep in the car. Thanks for your regular updates about rap music and rap beefs

[lextalionis]

Good topic, I live in Japan outside Tokyo and things are not so promising here. Prices are up. Salaries are low. The shelves are not as stocked as they once were. The new trucking law has put a crimp in the logistics chain too. The main issue with Japan as I see it is the tendency to defer to the aging generation to make the final decision. Its both stultifying and the elderly have very little understanding about how the modern world truly works. If I had to guess I think we see 200 yen to the USD before we see 100 yen to the USD. Hopefully I am wrong.

[thomas]

It must be tempting for Japanese workers to work abroad now JPY has devalued circa 40% against USD.

[johnwesely]

I can’t believe Patrick said Japan had a super Asian population…

[nitfitnit]

MoF is selling dollars at Y155-160 that it bought at Y80-100. In the interim, it collected higher yields on its USD holdings than it paid on its JPY debt. Buying low and selling high, it has been a hugely profitable trade. They've basically doubled their money, and can use the profits to help pay down their pile of debt.

[jeffsetter]

It's a testament to just how warped the global financial system has become as even as someone steeped in finance & trading for 10+ years my first question when I read this title was... ""$60 billion, is that a lot?"

[Mr-Spork]

Very informative & fascinating (as always). I've read that economies are categorized into four types: Developed. Developing, Argentina & Japan. This seems to fit that assessment.