Japanese Government Destroying Economy by Shoring Up the Yen

Peter Schiff chimes in on what's happening with the price of currency and comments on how the Japanese government as well as the Swiss government (amongst others) have embarked upon a a sort of trade war whereby they try to shore up declining exports by devaluing their currencies.

Peter Schiff writes:

Last week, Brazilian Finance Minister Guido Mantega made headlines when he mentioned that a worldwide currency war was brewing, with the winner being the nation with the weakest currency. Ignoring the irony of why countries would want to destroy their own currencies, Mantega reasonably warned that the conflict could get out of hand and destabilize the global economy. His comments came in the wake of overt efforts by both the Japanese and Swiss governments to intervene in the foreign exchange market to push down their respective currencies.

The politics of currency intervention are actually quite simple. Japan's economy is dominated by large manufacturers that export lots of goods to Americans. The problem is that Americans can't really afford to buy in the quantities that they did just a few years ago. So, instead of looking for new customers with more money to spend, Japanese manufacturers use their political clout to force a bailout of their traditional US customers.

Long time Japan expert Ira Hata writes; "You've been saying this was going to happen for a long time, Mike.  I agree with you.  Unless those old farts in the Diet get off their ass and do something, Japan will become the next Philippines or, most likely, worse..."

Well, Ira, the way this is going, it might get worse... Though that is hard to imagine...