Japan's inflation hits 40-year high as weak yen fans import costs | Hacker News Reader

Japan's inflation hits 40-year high as weak yen fans import costs

asia.nikkei.com

72 pointsrntn88 comments

Japan's federal reserve (the "Bank of Japan") has been trying to increase inflation for decades.

They must be jumping for joy. Now they must be thinking, ok let's never go back to deflation but somehow land near 2% annual.

The BoJ is where the fed get their crazy money printing ideas of QE and YCC from.

And even they were finally forced to raise interest rates or go bust this year after decades of wild monetary experiments.

Even their money printer couldn't afford to backstop global trends anymore.

It's sad but thats what I'm starting to realize.

They are what the rest of the world is trying to model after.

I'm currently in Japan and get paid in USD. Prices are insane, you can get a really nice lunch for like 5 bucks. A tall can of coke is 70 cents. It was even more cheap a few weeks ago when 100 yen was 67 cents.

A 500yen lunch isn't unheard of outside Tokyo, so even at 1 cent to 1yen that was doable.

Even inside Tokyo, that’s very typical for a nice lunch set in an average restaurant.

No it's not. I went there four years ago the average was 1000-2000 yen for the bare minimum at a small shop for below average food. Stop trying to make japan sound like a fantasy world, it isn't.

I’ve lived here for years, not just visited. There are countless restaurants where you get a basic lunch set for ¥500. You’re either going to the wrong places or talking about dinner.

The same places with the ¥500 lunch sets will cost far more at dinner. The cheap lunch is to capture some revenue from the daytime salaryman crowd.

Again, it is not. I don't know why you're fabricating these claims but well I guess it's easy to confuse that with a cheap 7-eleven meal if you've only been there once. Which is probably where you're making up these claims. The reality is that the food quality of these meals are subpar and well for it's price you're paying for what you get. But it's easy to confuse food quality of dishes that are unfamiliar to you so I'll just take it as someone pretending to be an expert rather than maliciousness.

Maybe “nice” is what triggered you? I’m not talking about fancy meals here, just soba, basic fish set, rice bowl, etc. There were like four options within one block of my last office.

And here’s a random list that comes up first on Google; there were plenty of more lists below it:

https://retty.me/theme/100014608/

Edit: Or maybe it was “very typical” that triggered you? That might have been too strong. You can’t expect it everywhere, but it’s common enough to be expected and not at all surprising.

I live in Japan too. If you drop into a random restaurant it’s most probably going to be around 1000 jpy. You can find food for cheaper but as low as 500 jpy is going to take time to find.

> "I currently in x and get paid in USD"

is currently a great place to be

... for x != USA.

For now.

I think this will lead to the end of the petrodollar eventually. The world won't put up with it forever.

https://www.nakedcapitalism.com/2022/11/debunking-the-petrod....

Unlikely in the foreseeable term, not because the world loves dollars, but because there are few good alternatives. Euros are probably the best alternative, but studies have suggested that the US is a better place for holding assets. See, for example, https://www.nber.org/digest/apr20/why-euro-hasnt-become-inte...

Money keeps flowing into the US because it is perceived as safer.

What will we use.... Euros? Renmenbi? Lol

China proposed using SDRs before.

Strange, I was always under the impression that Japan was super expensive. Maybe that's just getting there and the popular tourist destinations.

I've always heard the opposite - that things like food and housing are quite cheap for a developed country. As long as you aren't expecting those things to be Western-style.

I remember as a child (in the late nineties?) reading something about a new ferry transit or some kind of new transportation where a cup of coffee cost ¥300? I have never been to Japan so my math is JPY 100 = USD 1 so three dollars for a coffee which sounds expensive, right?

It is one of the weird things that get stuck in my head for no reason. No idea why I was reading random local news from Japan.

> housing are quite cheap for a developed country

you must be joking.

No, the poster is not. We're talking about the world's third largest economy by GDP, and I have first-hand experience with being on the market for Japanese real estate, today. You want to hear a joke? Try San Francisco Bay Area. Then look at the price of a house in Tokyo.

And my God, the construction, convenience, and technology of Japanese houses beats the living crap out of the shoddy construction you see in the Bay Area. Do you get less usable land square-meters wise to some degree? Sure. But if you can concede some of that, the deal is way better because of the quality of life you can achieve.

Housing (per sqft relative to income) in Japan is cheap if you're making American wages.

Anything anywhere is cheap if you're making American wages.

That's how the empire works.

I don't think London is cheap, American wages or not.

London is also part of the imperial core.

Yikes there is no empire

Japanese real estate is a minefield (https://catforehead.com/2022/11/09/planned-obsolescence/)

That article: Yawn. Couldn't care less about what it has to say.

I'm interested in Japanese houses because I want to live in it like a regular human being, for today. I'm not inerested in buying a house in San Jose because I have moral and ethical beliefs against propping up the housing-as-an-investment industry as if I'm some kind of investor.

Housing is typically cheaper in Japan because:

1. Depopulation

2. Efficient zoning laws

3. Rapid depreciation of home value over time due to natural risks(earthquake etc) and cultural norms

> Depopulation

Tokyo has been growing at a much faster rate than NY or LA.

Housing doesn't seem overly cheap to me if you are looking at equivalent floorspace.

Japan was super expensive 30 years ago when I lived there and had the perspective of a broke student. But the prices in yen haven't changed in those 30 years, and prices in dollars have gone down slightly. Don't you wish you could pay 90's prices today? You can, just go to Japan!

You and I should swap stories sometime. I tell my kids that when I lived there thirty years ago, also as a broke student, that I would load up on pickled ginger when I went out to sushi with friends because it was free (along with the warm towel and the bill.)

He's being paid in USD.

Yes it used to be expensive in the 90's but it stayed flat while the rest of the world saw inflation especially in housing.

And yes, if you see it as a touristic destination it's not cheap, just as doing tourism in NYC isn't cheap at all.

IME being there for a month, the public transportation costs add up but food and housing (provided you stay at cheap-ish hotels) are extremely reasonable unless you're constantly getting the fanciest meals.

I’ve got a two week visit end of Feb and the prices for hotels alone are pretty surprising.

My brother is in Japan at the moment and has the opposite situation. He's paid in JPY and had saved up a fair bit of cash over the past couple years. The value has fallen tremendously and since he's moving back to the states in a few months he's trying to spend it all locally before he leaves. He floated the idea of buying a bunch of PS5s and stuffing his suitcase with them to resell when he gets back to the US. This would work but they are bulky and would likely raise some eyebrows at customs. We're still looking for ideas on how to get money out without too much of a haircut.

I think you're onto it with electronics, but maybe smaller higher-value ones like iPhones would work better. Also, watch out for electronics which only have Japanese language options (or can't be changed without flashing the ROM) - i.e some cameras.

Video cards would probably be a better option.

> We're still looking for ideas on how to get money out without too much of a haircut.

Luxury watches. Buy a Rolex and then wear it home. You can probably move up to $100,000 in a single watch with something like a steel Daytona.

"There are four types of countries: developed, undeveloped, Japan and Argentina." - Simon Kuznets

I wonder - does the UK get its own category now or does it fall into the Argentina box?

The UK is still much stronger economically than most of Europe (southern Europe especially).

And Europe is in that situation because of southern Europe

Are you sure of that? Who saved the French and German banks after '08? There are southern European countries right now paying the same energy costs as northerners, even though they weren't reliant on the same sources. Not saying to feel sorry, but if Europe has to thrive, it must work together.

People who are constantly blaming southern Europeans for their troubles are like those anti immigrants types, yikes.

> There are southern European countries right now paying the same energy costs as northerners, even though they weren't reliant on the same sources.

You mean like Italy?

Portugal for example

When you've lived with negative numbers for so long, I guess even a mere 3.7% looks like an earthquake.

Those yen fans are weak, they're only importing costs. Has nobody told them that you need to import profits?

Had to take a double-take on that grammar as well, though I read it as there being fans of a weak yen (which there certainly are).

It's a crash blossom

https://en.wikipedia.org/wiki/Syntactic_ambiguity

When other country's record high inflation is way lower than (not anymore) "low" inflation of your own country...

> BOJ Gov. Haruhiko Kuroda reiterated on Thursday a pledge to maintain monetary stimulus to support a fragile economy facing still weak inflation and reeling from the COVID downturn.

Anyone have any insight into Japan’s thinking on their monetary policy right now?

I would love to know. Most other central banks are raising rates and tightening policy, especially the US which probably affects the Japanese currency the most.

From my naive view, the BoJ can't keep depressing rates without leading to huge currency weakening and consequently the cost of imported goods can create a lot of inflation.

Inflation like that can quickly go out of control so imo it won't be long until they start seeing 10+% or higher like some other places.

Other central banks are other central banks. Their monetary policy does not affect Japan in the same ways the actions of the BoJ do.

Weakening currency is (indirectly) more or less the point. Lack of monetary expansion may very well not be the only reason for their economic stagnation, but it was a hindrance, so this turn is overall very good news; there's certainly a possibility they'll overdo it, but that remains to be seen.

https://bigthink.com/wp-content/uploads/2022/02/GDPDebt2021_...

I’ve always found this infographic shocking. I don’t know how they can get out from under that and they keep going directly head on into it faster.

The inflation does make all that debt cheaper, so that's one way.

Yields are positive and growing.

https://tradingeconomics.com/japan/government-bond-yield

What will happen when the interest on this debt gets too expensive? Further inflation and/or severe government austerity.

Indeed. But there’s a reason why shorting Japanese government bonds is known as the “widowmaker” trade.

Giant majority of that is internal debt, so inflation is actually helping them.

Bank of Japan owns over half that debt.

Take out that debt and Japan's debt to GDP ratio falls below the US's. Now factor in how Bank of Japan's active surppresion of interest rates occurs by buying debt. If Bank of Japan keeps the 10 year at 0.25% then the net government debt will continue it's free fall.

The Bank of Japan is 55% (100% voting interest) owned by the government. I’ve seen this same scheme before in the Alameda/FTX news…

Those two situations are very different

Roughly half of the US's national debt is owned by the government too.

That figure includes the social security fund which is not included in the japanese figure. The social security fund is a liability, while the bank of Japan is fully a government asset.

I think it helps to start with what you think “getting out from under that” means. Why do you think it’s a problem for Japan have this much debt to GDP?

I think Japan, having failed to transition to an economy driven by internal consumption, is going to devalue its currency until the country is once again cost competitive as an exporter.

> Anyone have any insight into Japan’s thinking on their monetary policy right now?

The BoJ has been throwing money at the economy for decades with little activity/inflation (and some bouts of deflation):

* https://fred.stlouisfed.org/graph/?g=PA7P

Japan has been in the doldrums since (at least) 1998:

* https://www.brookings.edu/bpea-articles/its-baaack-japans-sl...

* https://en.wikipedia.org/wiki/Secular_stagnation

Not super well informed on Japanese markets, but my understanding is that their bond markets are extremely dysfunctional (they even have had days where the BOJ is the only buyer on the market!) and this poses considerable financial risk in the system. This is the main factor why they keep their loose monetary policy as far as I can tell.

https://archive.ph/4zbuj

There's a bunch of economists staying up very late to crunch the numbers.

If 20% debt to gdp deficit spending finally gives them the inflation they need. What is the break even at 2% inflation.

They aren't sleeping because they just found out 20% >>>> 3.7% they have to blow their debt situation so far out of reality to maintain function.

The irony being, they know the 2 actual options they must do. This discovery simply reinforces what they must do. how unfortunately japan doesn't have the courage to do what it right.

Does this mean folks should be buying ¥?? The Japan economy fundamentals are strong, right? So the JPY ought to go back up?

Japan economic fundamentals are not strong. The government has basically been propping up the economy with free money. Now that free money is driving inflation which is another problem.

Expect a major reset at some point. That's like catching a falling knife when it comes to bets on exchange rates.

I don’t think it’s the free money driving inflation, right? It’s impossible to know for sure, but I’d say it’s not likely the driving force is the weak yen. Which is caused by having 0% interest rates in a world where US interest rates are no longer also zero.

> The government has basically been propping up the economy with free money. Now that free money is driving inflation which is another problem.

That sounds very familiar....

Wait until you see how far Japan went. They own most of the equity of the large industries

Not at all, if anything the BoJ promises to maintain 2% inflation, the strength of their economy isn't even particularly relevant. Its drop in value may have overshot, so it might retreat up a little, but in general I wouldn't expect it to gain much at this point. (Plus, be careful of confusing movements in the yen's exchange rate with a change in value of the USD.)

I always use Japan as a response to the ever-present suggestion that what goes down must come back up as it relates to economies and markets. This [1] is a graph of the Nikkei 225 (effectively the Japanese market) dating back to 1949. Keep in mind the scale - that's a logarithmic graph. They were the second largest economy in the world in 1989, with many expecting them to imminently surpass even the United States.

[1] - https://www.macrotrends.net/2593/nikkei-225-index-historical...

That chart doesn't include dividends right? I think it will look slightly better if you include dividend reinvestment.

The old adage is to buy low and sell high.

https://asia.nikkei.com/Business/Markets/Currencies/Yen-surg...

Are you planning to go from losing money in crypto to losing money in fx?

Because you are suggesting the classic BoJ widow maker trade, which has killed many a trader.

But who knows maybe you'll be the foolish but lucky one.

Widow trade is the opposite. OP is saying sell non yen to buy yen.

Widow trade is to short japanese government bonds. That in fact has nothing direct to do with forex. The widow trade is a bet that interest rates will be risen.

Oh I am familiar with the trade and op IS doing the same bet as the widow maker fx trade on a smaller scale without derivatives.

Think abt it, he is suggesting buying currency in hopes that it will appreciate.

Same bet, different method to get there.

If it was guaranteed to rise, people would be buying it and the price would have risen. The current price reflects a level of risk that their economy will not recover!

Is it still better than the UK? Probably...

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