Hello, this is Andy. This page contains promotional content. How do you all obtain economic information? Economic news, World Business Satellite, YouTube, seminars, books, etc., come to mind. I recently attended a bank's economic seminar on the latest economic trends.
○ Topic: Yen Depreciation, Inflation Japan's GDP has not grown at all, as Japan has been called the "Lost 30 Years." The economy has not grown due to so-called deflation and a strong yen.
Deficits due to real demand:
- From trade surplus to trade deficit
- Increasing digital deficit Factors other than real demand:
- Influence of President Trump
○ Factors due to real demand: ① From trade surplus to trade deficit Until now, there were many export-oriented industries that produced domestically and exported. Therefore, the acquired foreign currency was converted into yen, which tended to strengthen the yen. When the trade surplus expanded significantly, the yen tended to strengthen. However, due to repeated strong yen, export companies accelerated overseas local production, and the trade surplus gradually decreased, and now there is a trade deficit. In other words, there is no foreign currency to convert into yen, so there is no upward pressure on the yen.
② Digital deficit Recently, the digital deficit has been mentioned as a trend. This is a deficit due to the use of services from global giants such as Microsoft, Amazon, and Meta. This deficit due to usage seems to be swelling to the scale of several trillion yen, and the deficit should continue to grow unless domestic production progresses.
Thus, there is a structural change from the strong yen of the past to the weak yen due to real demand.
○ Factors other than real demand: Also, regarding President Trump's statements to curb the weak yen to resolve the trade deficit, it is completely the opposite. Regarding tariff policies, it encourages direct investment in the United States, which itself is a demand for US dollars, leading to a weaker yen. Both of President Trump's two policies lead to a weaker yen.
In other words, both real demand and factors other than real demand lead to a weaker yen. As a result, the inflation resulting from the weak yen will continue in the future. In fact, Abenomics was intended to continue it. The national policy aims to reduce debt by devaluing the yen through inflation. History tells us that pre-war national debt was also significantly reduced by hyperinflation. This time, as in the past, the aim is to gradually reduce national debt by gradually advancing inflation. However, the value of individual yen assets will be impaired by devaluation. In other words, it is as if the country is making individuals pay for national debt through inflation policies.
In the end, unless you invest overseas, yen assets will continue to lose value due to devaluation. I would like to take the average with index investing and dabble in individual stocks as a satellite strategy. Abenomics, a grand strategy, is terrifying.
