“I see lots of people discussing how “successful” Japan’s strategic decimation of the Yen has been so far. They mainly just cite the Nikkei’s enormous rally as “proof” that all’s well that begins well. Of course, that’s not always the case when you’re using a nominal wealth metric to describe how the real economy is responding. Remember, the stock market is not the economy. It is essentially the guesses of a group of semi-intelligent half apes who all think they’re smarter than one another.
Anyhow, the more important point to understand is that a currency war will likely end up with no winners. This isn’t a poker table where one central bank happens to be much better at the game than all other central banks. This is a poker table with a whole punch of very powerful silver backs who are all on relatively equal footing in aggregate.
Let’s just take a look at how this could all unfold for instance. So, Japan has been talking down the Yen and everyone sees how well that’s working. Then the ECB decides they also want to stimulate their economy by driving the Euro down….”
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