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FreeMarkets (99.32)

Honest Fiat Currency Question

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October 20, 2010 – Comments (8)

To everyone who believes in a fiat currency and believes they understand it, I ask a simple honest question. Why does Japan have such a hard time reducing the value of the yen?

1) Why don't they simply write a check out and pay off 1/2 their gov't debt?  Or ALL their gov't debt?

2) Why don't they send a check out to every citizen for 100,000 yen?

3) Why don't they build a facility to hold a 20 year supply of oil and fill it?

In all seriousness, why does Japan consistently buy U.S. Treasury's and purchase dollars on the open market trying to reduce the value of the yen, instead of just doing the above?

Zimbabwe seems to have it down pat, why can't the Japanese do it?


Thanks in advance!

8 Comments – Post Your Own

#1) On October 20, 2010 at 10:08 AM, mtf00l (46.69) wrote:

whereaminow?...whereaminow?...

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#2) On October 20, 2010 at 10:27 AM, miteycasey (84.25) wrote:

To keep up an Illusion.

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#3) On October 20, 2010 at 12:31 PM, MegaEurope (22.67) wrote:

Their goals and motivations are different from your impression of their goals and motivations.

If the Prime Minister and the Governor of the Bank of Japan actually woke up every morning planning to destroy the currency, you are right that they could have done it by now.

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#4) On October 20, 2010 at 12:32 PM, leohaas (92.00) wrote:

Maybe they really do not want to reduce the value of the yen? And don't they buy dollars so they can buy oil (of which they have not much, need a lot, and which is paid in dollars)? Feel free to substitue 'oil' with any other commodity in the sentence above...

More to the point: why would Japan want to go the route of Zimbabwe? Isn't that country a mess? Come to think of it, why would any country want to follow Zimbabwe's example?

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#5) On October 20, 2010 at 12:48 PM, rofgile (98.98) wrote:

FreeMarkets:

 Japan and China buy treasuries to allow for the export driven economies.  Because they are/were mercantilist economies to the US, they had huge exports, with small imports.  This leads to an accumulation of dollar currency, which they have to put back into the system (if they just hold the currency eventually the trade breaks down).  Naked Capitalism has covered this topic really well, you should read their blogs on this subject.

 Basically, they buy treasuries because they HAVE to.  They could buy other foreign currencies/debt instead of treasuries, but treasuries are just such a huge traded asset (in fact, the MOST traded of all assets) that it is the easiest to balance out the trade right now.

 -Rof 

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#6) On October 20, 2010 at 1:36 PM, whereaminow (75.12) wrote:

What's interesting here is that MegaEurope answered the question without expressly stating it.

The motivations are different than what is implied here.  FM is asking, why doesn't government use its financing abilities to help its citizens? 

Mega, in his wisdom, points out that the motivation is not to help the citizens.

The motivation is what it always has been since the dawn of fiat privilege:

To finance government expenditures regardless of economic implications up to the extent that they are politically feasible.

To restate it another way: the intent is to pass the buck to the biggest patsy around.... and what bigger patsy than people who acquiesce in their own enslavement?  Give the slaves money?  Ha!  Just wrap the operations in Chartalist apologia, obscuring the fact that the entire operation is a counterfeiting operation designed to remove wealth from the citizenry and place it in the hands of government.

And who can blame them, really?

David in Qatar

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#7) On October 20, 2010 at 1:39 PM, whereaminow (75.12) wrote:

Hmmm, I just used the word operation three times in one sentence.  Perhaps I should stop being so critical of those terrible sports broadcasters for their penchant for triple-negatives and constant reminders that we should "look at that."

David in Qtar

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