Why is the yen failed to become the world's second-largest currency?
Southern Metropolis Daily: This scene seems to China allowed the yuan in 2005, after the repeat of appreciation and floating.
To loose jo: Digital put in this, in 2005 China less than 8 billion foreign exchange reserves, nearly 2 trillion today. This increase in the amount of 1.2 trillion, the conservative estimate that only half of the real trade surplus, at least half of speculative hot money July 21 .2005 We carry out expected appreciation of the syndrome. is not only counterproductive, but .
to loose Jo: Yes, . retrospective Japan-US trade relations, from the 60's trade frictions between Japan and the U.S. is very serious, the United States is the basic national policy of oppression yen . Here is a deeper meaning, the yen hope international, to become a world leading currency. in accordance with the basic economic logic inference, the United States is the world's largest economy, the U.S. dollar as the world's major currencies as it should be. Japan In the 70's has become the world's second largest economy, and why the yen did not become the world's second currency? In fact the Japanese use a lot of ways, but without success. This is a question worth pondering Chinese economists
a currency to become the leading international currency, we should have some basic conditions, I used to have these conditions, summarized as Central government support; the second is the country's economic strength should be strong enough technology that there is sufficient capacity to create enough real wealth, which is the currency of the last support; The third is the financial and monetary market depth and breadth to be large enough; the fourth is the bank system should be enough to improve the billing system; The fifth is the country's monetary policy to ensure the stability of monetary conditions in the country to ensure stability of the currency.
There is no doubt the first two are available in Japan, Japan's capital market and money market, banking system and clearing system can be, the problem of Japan in the last one. Japanese yen willing to maintain stable, but the U.S. does not. a country's currency float, how can the currency stable?
1971 floating exchange rate in the United States decided to engage in system, many economics textbooks, the so-called a long period of study, Congress has created a specialized committee to study the floating exchange rate, the final conclusion is: He drafted the first concrete plan for building the euro. when the Europeans asked him, able to achieve, one of the most important reason is that the Bretton Woods system after the destruction of the United States, the European internal chaos, Mark, francs, lire, pesetas, guilders hh of these currencies in chaos, can not integrate, Japan the same element.
Japan in the 70s early 80s, has become very good conditions for the yen, at least in Asia, the world's largest currency. because Asian neighboring countries to buy things in Japan, home appliances, cars imported from Japan Japan also provided loans to them, but the U.S. only to let the yen appreciate, but also secretly made a lot of work to Asian countries such as Philippines, Malaysia, Indonesia these countries do not do business with the Japanese yen clearing, use U.S. dollars. up after the euro, the yen lower proportion of total trade settlement. I just mentioned is one of the most basic explanation, the Japanese have a lot of people in-depth study of this problem, but their data do not give outsiders to see, eat their own loss, but does not want to tell other countries lessons.
Southern Metropolis Daily: those who have done work in Japan?
to loose Jo: Actually, the Japanese did a lot of effort to improve the status of the yen, until today, Japanese are working hard. A few examples may illustrate, the 1997 Asian financial crisis, the Japanese feel that chance. was that the Asian crisis a serious shortage of foreign exchange reserves, the Government has to find the International Monetary Fund to borrow money. But the IMF to borrow money are very harsh to require cutting the fiscal deficit, the various reforms, as well as better political conditions, that is, the IMF and World Bank annual meeting in Hong Kong, Japan formally proposed the establishment of an Asian monetary fund, mainly by Japanese money, you can pay in other countries, Asian countries after the accident can use the fund money, do not have to International Monetary Fund to find out. Japanese is not no money, it is hoped that through the Asian Monetary Fund assistance to further enhance the influence of these countries. Japan proposed the idea of just one to categorically rejected by the United States, said that all foreign economic assistance must be international IMF-led, not to leave the International Monetary Fund.
the early 60s of last century, the Japanese engage in the Asian Development Bank is very visionary. The Japanese have a far-reaching strategic vision, this is very worthy of our study. Japan engage in the Asian Development Bank, also of Japan in the Asian region in order to enhance the financial, economic and political influence. is modeled on the United States has been the practice, the money to where political and economic influence to the where. This is the American basic ideas. The Japanese also want to do this thing, it is planning for the Asian Development Bank, know that the U.S. would oppose, but the Japanese are smart, put the Americans come in to participate. but once invited to the United States come in, some asking for trouble on the meaning of their own controlling power was greatly weakened.
Southern Metropolis Daily: Asian Development Bank and now the impact of the Asian region is still very limited.
to loose jo: the establishment of the Asian Development Bank, Japan is the largest shareholder The United States is the second largest shareholder, the proportion between the two countries is similar to Japan's effort to always be president, vice president of the United States forever. But the lead out of the Development Bank of Japan, stands to reason that the headquarters should be placed on Tokyo ah, United States people do not agree on the final result of a compromise is the Philippines.
year after leaving the subject of the Bretton Woods system, Europe and the United States fight the very powerful, the agency headquarters in the end should be put where? Americans are very arrogant, requiring three large organizations - the United Nations, the World Bank, International Monetary Fund headquarters must be placed m the United States, was even said that also on the United Nations Headquarters in Washington, that the United States to become the outright ruler of the world. Europeans certainly do not agree, Finally discussion going on at United Nations Headquarters in New York, World Bank, International Monetary Fund on Washington, but the president must be American, European nations compete, the result is the chairman of the IMF is always the Europeans, although there is no written In clear, but has become a practice. This is a contest of big powers.
However, the Asian Development Bank in the world, the role of Asia is very limited, because the U.S. has always stressed the World Bank, International Monetary Fund-led. This is China and other Asian countries, in contrast, I still think the Chinese government pay little attention to foreign financial and monetary strategy, the United States of Europe will always be of paramount importance on the financial position of foreign currency. The World Bank, International Monetary Fund, in a sense the United States to implement the international monetary, financial and economic strategy tools, although they seem to seemingly objective and neutral. World Bank chief economist elected to do the Chinese people, and the Fund have many foreign employees, but in fact the World Bank, International Monetary IMF policies are all determined by the United States because the United States has veto power. International Monetary Fund, the United States accounted for 23% of the shares first, so that all the things the United States more than 77% of the shares must be adopted, then there are a number of other countries to join, U.S. equity is now 16.7%, it changed the terms again, all things must have more than 83% of shareholder equity by, anyway, it has veto power just kept on going. The World Bank, too, of the World Bank are the United States appointed by the President, if the U.S. government can not listen to you?
World Bank, International Monetary Fund said white is a division of the U.S. Treasury, they faithfully carry out U.S. policies. International Monetary Fund to borrow money trapped state, when he is transported to the idea of advocating policies of those countries, the concept is the U.S. policy concept. but they are seemingly a neutral, impartial body, there are so many people there to do research, so they academic reports, statistics, forecasts, the world considered to be authoritative, is it then the authority is the need for specific analysis. International Monetary Fund to sell many of the policy idea is not withstand scrutiny.
Southern Metropolis Daily : International Monetary Fund, actively promoting the economist, he learned and truth .1971 faithful years ago, the world's annual report the IMF must have a period of a year, then how good of a fixed exchange rate, requiring officials of the IMF should adhere to a fixed exchange rate policy concept, because it was The United States supports the fixed exchange rate. but suddenly changed after 1971, because the United States engage in a floating exchange rate adopted in .1976 So since the beginning, the National Monetary Fund's annual report each year on a floating exchange rate began to actively advocate. Mundell sharply pointed out: the proliferation of floating exchange rate policy is not what the new theory of economics proves it better, but it is more interests of the U.S.!
the choice of financial strategy in China?
Southern Metropolis Daily: This is reminiscent of the current diagnosis of the Asian financial crisis, many Chinese support the attributed the crisis to the Asian governments dictatorship, corruption, nepotism and the Asian countries, the natural regulation of financial incompetence and lack of financial innovation.
to loose jo: attributed to the Asian financial crisis in Asia crony Marxism, dictatorship or corruption, it was a great misunderstanding and misleading. Asian countries, these problems do exist, but these problems are not generated the financial crisis. to respect the history, the no promotion in the world before floating exchange rate, these countries have the financial crisis? not. Second, those who called politically democratic, very clean country, such as Western Europe, Scandinavia, the United States is not claiming they are little or no corruption corruption model? No, not the so-called crony capitalism? However, these countries over the past three decades there have been many times of financial crisis? why other countries would blame the financial crisis to corruption, authoritarian, crony capitalism?
to really say crony capitalism? United States is also typical of crony capitalism. the current Treasury Secretary Henry Paulson is a former Goldman Sachs CEO,, U.S. Vice President Dick Cheney was the boss of a big company, that company's main business is selling arms contract works or the Middle East . Americans are making their own film are those people? George Bush, British Prime Minister John Major, former U.S. Treasury Secretary, Secretary of State, etc., not all other Board members? This is not the crony capitalism? this to save the financial crisis, even the Americans themselves say: if the Financial Minister is not Paulson, chances are would not be the closure of Lehman, but Goldman Sachs! United States is a hegemonic state, it thinks it about every word, others have it as the truth, the whole world should recognize it stresses right. the crisis blamed the so-called crony capitalism, obscures the understanding of the nature of things the people, but also cover the United States as a global power should bear the responsibility, the U.S. consumes so many resources in the world, they should take responsibility, not to shift the focus and confuse. Over the past few decades the primary responsibility for the financial crisis spread is too loose U.S. monetary policy is vigorously pursued global expansion caused by the U.S. fiscal deficit, the national debt in the United States. U.S. National debt (including state, local governments, companies, families and individuals) for the year, more than 4 times its GDP a year! how can this continue it?
Southern Metropolis Daily: We look back to 2002, made the first appreciation of the renminbi, but senior officials and the media in Japan, Japan Why are forced appreciation of the renminbi?
to loose jo: Japan is a victim of the United States, they do a lot of research to explore the reasons for Japan's macroeconomic condition is also clear that the crux. in accordance with the Confucian saying, Do not impose on others, very absurd, China's exports in world terms, share very low. China's export to Japan, China, Japan, the motivation is to repeat the mistakes of Japan. basic purpose is to contain China's rising international competitiveness. as Professor McKinnon said:
Southern Metropolis Daily: Japan's bitter experience can provide to learn from China?
to loose jo: First, the need to ensure exchange rate stability; second international currency strategy to become the highest important part of a high degree of attention, but very clever to take the means to achieve this goal. China should make maximum use of the international monetary and capital markets, while striving to avoid the dollar standard, floating exchange rate system and the international hot money, the enormous risk associated with shocks, this is the financial liberalization strategy, the basic starting point.
specific financial strategy, it is necessary to quickly stabilize the RMB exchange rate expectations; second is to complete internal liberalization of the financial system, be sure to give priority in the national capital; third is to eliminate the state-owned monopoly, allow equal participation in domestic capital development of competition in all industries; Fourth, carefully opening up the financial sector and capital markets; Fifth, strict regulation of international hot money; sixth is to accelerate the Greater China region and Southeast Asian currency area monetary construction.
South are: here have a question, like Japan in those years, as the world's second largest economy in the country, failed to withstand the pressure of appreciation, and a floating exchange rate system, China can withstand up?
to loose Jo: The Japanese are lucky, Under the Bretton Woods system it has completed the process of modernization, China's reality and not in the same category in Japan. China has continued, if the expected appreciation of the yuan, the consequences more severe than in Japan, because Japan's overseas assets were already quite large, foreign exchange market, capital market size is relatively large, exposed to exchange rate risks stronger than China.
but Japan did not want the yen exchange rate stability and success, this is the United States basic policy of Japan's economic and financial decisions. in a very long time , the fixed exchange rate of China is a realistic choice, we will resist U.S. pressure to stick to their policy. is not our inability to stabilize the exchange rate, but let us know the error to give up. the so-called mechanism of supply and demand mechanism for determining the exchange rate control. There is also a third misunderstanding, it seems that opening the capital account, capital and out of all is whether, this is not right. you take one hundred thousand cash to the United States is inspected, not to mention the huge financial relationships. < br> written dry.
Friedman is wrong?
Southern Metropolis Daily: In fact, thinking of his later years Friedman has also undergone a transformation, tend to the national monetary system should be an .
to loose Jo: Milton Friedman monetary theory, there are many new insights, but the most basic level the currency has been his lack of running his knowledge of the mechanisms of the exchange rate is inadequate, but failed to recognize floating exchange rate is an automatic expansion of money supply, the internal mechanism. If he recognizes this, he advocated the principle of the money supply can not because domestic banks can not control their money supply. All the Masters are both advocates of the currency to constrained and controlled, but the final analysis, any way to better use of restraint and control, in this respect on the big difference. Mundell has long been considered the gold standard is good, although there are many defects, any system can be said that there a lot of problems. so much better system which in the end, the best use economic indicators to determine the entity, floating exchange rate in human history is a new experience, not previously been to the decades of experience, but this experience is speaking is very painful.
human history, there are three monetary system, one commodity monetary standard, monetary control entirely on natural forces, such as relying on the production of gold; the second constraint is the human interaction of fixed exchange rate system; third one is the floating exchange rate system. whether it is engaged in fixed exchange rate or gold standard, countries of the monetary, fiscal policy must be self-restraint. any good monetary system, if other policies do not complement each other, constraints, constraints, coordination, it is not possible be sustained.
any human system in accordance with the rules if we truly among people bound to each other will be a good system. Monarchy what's wrong with it? the world, a lot of economists, Political scientists believe that an open system of absolute monarchy is actually the best. Democracy is very cumbersome, very tedious. but a tyranny even more stupid or bad, even the democratic system, the absence of constraint and restraint, as Chen Shui-bian as Taiwan messing around, out of Wuqibazao. the world's a mess out of democratic countries to engage more to go. Chinese economists often exhaustive, trade-off, they think the gold standard, the Bretton Woods system of fixed exchange rates have a lot of problems, so abandoned, floating exchange rates more problems than it? they often do not belong to the original scope of the problem is also attributed to currency exchange rate. For example, scholars believe that the better the economic collapse of the Bretton Woods system of fixed exchange rates is due to not continue to maintain, a fixed exchange rate system itself no. Their logic is wrong.
either from the real economic growth, or from the financial crisis, the frequency of these two categories of indicators, in front of two types of monetary systems are better than the latter. Man does not have a perfect monetary system, even if engaged in a fixed exchange rate system, if monetary policy, fiscal policy have to chaos, the consequences will be catastrophic, but the comparison, the floating exchange rate for the whole humanity of uncertainty and risk greater. floating exchange rate to more than one degree of freedom it? allow unfettered fiscal policy and monetary policy messing around it? In that case, the disaster will be faster and more violent. We are facing a crisis so great, that the consequences do not ?
fact, even Milton Friedman did not advocate engaging in small floating exchange rate countries and regions, such as his view that such areas of Hong Kong, particularly in the areas of external dependence should engage in a fixed exchange rate, the dollar should be fixed.
Southern Metropolis Daily: Why did he support the big powers can be a floating exchange rate, a small country will not do?
to Song Zuo: His core point is that the small dependence on foreign powers, can be understood as a closed economy, small countries with high external dependence, is an open economy. Why did Friedman and Mundell have so much in monetary theory, the difference? Mundell outset of the global economy as the objects of his study an open economy, Mundell's famous quote A closed economy is the whole earth, speaking, monetary policy should be independent, this is what I said earlier, his logic. The facts prove that even for a large country, his logic is not established. how to control money supply? Friedman said the best every year to the money supply a fixed rate, such as 4% per annum, this is his most famous money supply rule. He is afraid of bones to the Central Bank of chaos, so he made the iron rules of annual money supply to grow by 4%, history , the Federal Reserve and the Bank of England practice approach him to prove that not because the money supply itself is not clear what, it was still adjusting the federal funds rate the Fed, the British interbank interest rate is adjusted. according to some rule, regulation reference interest rates seem more reliable (such as the Taylor rule). in the financial and monetary system and the complexity of the case, the definition of money supply has been unclear, and how to adjust let alone the.
Southern Metropolis Daily: Free Goldman to balance within a country so important, want to adjust the money supply to maintain price stability, he believes this is the most important, and Mondale see each other in the world may impact interest rate fluctuations internal balance.
to loose Jo: It can be understood. Friedman has the concept and theory of economics, not from his detailed observations of the real world, but from some of his basic beliefs. not I say, Mundell also said so. He believes that much of what Friedman is derived from a belief, not from the real world. Why is he a floating exchange rate between the main Zhang Daguo? In addition to speaking in front of us that two logical addition, Friedman strongly opposes capital controls, against the control of capital flows, it is totally out of his extreme liberal ideas, he thinks the government will not control what is good, he and Hayek, who is the most extreme, he believes the government should not control everything the best. Friedman that the Government should not control even the drugs, not to mention financial flows, and his theory of floating exchange rates mainly due to his opposition to the core values of government intervention. are interested we can see his article in 1951 his famous Song Jo: Yes, they always think that people's behavior will automatically move towards equilibrium, it will automatically move towards equilibrium and the exchange rate is the same philosophy. as long as the drug cost low enough, and drug use will hurt the body, and slowly people will not abuse , and that the drug market will eventually disappear. such an extreme philosophy is based on an assumption of human nature, they believe that drugs, guns do not have control, sooner or later people will know the gunman killed himself, will not gun .
but we should pay attention: the extreme liberals or better advocate or advocacy of free trade free trade of goods, why people can not free trade? If the logic to a peak, the U.S. scholars who advocate free trade should first advocate of free immigration. because of the principles of economics has long been proven, so the population can replace the trade and free movement the free movement of capital, and the cost is much lower, but the U.S. many economists do not advocate free trade, free immigration advocate, this is their major flaw in logic, Friedman also this problem with my Front Lide Man's understanding, I've never seen him clearly favor of free immigration, may be less than I know it. Unfortunately, I was born late, did not have time, and asked him, and his debate.
Friedman study is a closed economy, he closed economic system internal stability, full employment, the most important look. This is his influence by Keynes. a closed economy, without the interference of the exchange rate, monetary policy is independent and you're right . Friedman did not believe the government, but he believes the central bank since it has been, and will have to recognize this fact. He has not reached the extreme of Hayek, Hayek thought that the central bank is not required, Everyone can and should issue currency. some economists logic sometimes seems to have fun, worthy of deep thinking is feasible. Hayek is really such a claim, he believes the central bank monopoly of currency is the root cause of inflation caused by .
Southern Metropolis Daily: ideas that change the currency Friedman old age is even more intriguing.
to loose Jo: Because the fact of his education in 2002 year is the 90th birthday of Milton Friedman, President Bush also went to , many economists around the world to celebrate his birthday, Mondale, too. At that time the two of them still in debate, the debate generally agree that Friedman is not the present situation. But when he was very old, he could not do strict logical reasoning, the global monetary environment can not do in-depth analysis of the turbulence. global currency turmoil, are part of the earth, which a country's currency could settle? that the country can become a flood inside the side down and careful reasoning is wrong, is the reasoning mind, but many of today's textbooks, or to follow his train of thought, because Friedman's influence is too great. He advocated the views of a floating exchange rate is in fact a direct successor Keynes. Cairns in 1923 wrote a book called preferred to return to the gold standard. Keynes did not advocate the gold standard, that would engage in a fixed exchange rate, the UK price level will depend on the Fed, because it was all the gold to the United States, the Fed can control money supply, if the Fed fucks, price instability to spread to England, he opposed a fixed exchange rate, while engaged in floating exchange rates, then you can own the interest rate as the Bank of England, which he first proposed, the so-called internal balance and external balance in contradiction, Keynes advocated internal balance priority, which is inherited Friedman.
But Keynes's theory than Friedman clever, why? because Keynes did invest in stocks he was fried, fried foreign exchange, Friedman has never been done business. So did business and has done business is different, Friedman does not feel the market. John Maynard Keynes was well aware of the exchange rate volatility can not stand up. So, although in 1923 Keynes wrote advocated floating exchange rate, but after the 20th century, after the bitter experience of the twenties and thirties, Keynes outlined later, when the Bretton Woods system of fixed exchange rate is advocated, along with foreign exchange control. This is a departure from reality, seeking truth from facts. Keynes never had the foreign exchange market will automatically move towards a balanced, even in the done investment, but he particularly eloquent, do research is very solid, engaging in a lot of information, wrote in particular, floating exchange rate theory, I was criticized. divorced from reality theory, logic is useless no matter how good.
Southern Metropolis Daily: Friedman has a deep background statistics.
Zuo to loose: he put a lot of people are intimidated, he is too strong, so others will believe, but Mondale did not believe. I think that in terms of the 20th century, monetary theory, Keynes, Friedman clever than Mondale. Mongolia Dyer himself evaluation of Keynes than the evaluation of high Friedman.
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