[A-List] Japan Government holdings of US Treasuries
shimogamo at ashisuto.co.jp
Thu Jan 15 16:41:36 MST 2009
Thanks very much, Henry. Is trade between China and Japan currently
conducted in US dollars rather than Chinese RMB or Japanese yen?
Henry CK Liu wrote:
> The Japanese can sell Japanese export to China denominated in RMB and
> then use the RMB to buy Chinese imports. This will expand
> Chinese-Japanese trade. China has began to do this with Hong Kong,
> Taiwan and the Asean countries (a development widely hailed as "a policy
> victory for Henry C.K. Liu", as I have been advocating that for almost a
> decade, first in Gang8 and then in Asia Times since 2002). If Japan
> should develop trade surplus with China, BOJ will just hold RMB
> reserves by buying Chinese sovereign debt instead of US sovereign debt.
> And if Japan should develop a trade deficit with China, the Chinese
> central bank will buy Japanese sovereign debt. This will reduce the
> excess importance, though not the fundamental relevance of yen-dollar
> exchange rates, by limiting it only to US-Japan trade.
> Why should US-Japan trade imbalance affect Japanese trade with other
> countries? Except because of dollar hegemony.
> Michael Hudson wrote:
>> Dear Bill,
>> If the BoJ refuses to buy dollars, the supply and demand in global
>> markets will push up the yen/$ ratio. This will price exports by Toyota,
>> Sony etc above its competitors.
>> The BoJ could ask the US for a fee -- or a yen-value guarantee -- and
>> the US would refuse.
>> If it charges exporters 17%, there goes their profit rate, which is
>> about 3%. Japanese earnings are totally dissipated in foreign-exchange
>> losses at present.
>> The only solution is to turn to its own internal market or to Asia and
>> other non-$ markets. (The Europeans will join the Americans in anti-Asian
>> All Japan's government needs to do is let the $/yen transactions occur
>> in the market without intervening. That will force up the yen even
>> more. The
>> public won't pay, and the exporting companies will lose the
>> On 1/14/09 4:39 AM, "Bill Totten" <shimogamo at ashisuto.co.jp> wrote:
>>> Michael, I think you told me in the past that when Toyota, Panasonic,
>>> Sony and other Japanese corporations sell products in the USA for US
>>> dollars, they take the US dollars to the Bank of Japan to have them
>>> converted into yen.
>>> If so, when the value of the dollar is falling relative to the yen, as
>>> now, then the Bank of Japan (aka Japanese taxpayers) get stuck with the
>>> losses? That is, Japanese taxpayers are subsidizing exports of Japanese
>>> If so, why can't the Bank of Japan refuse to buy those US dollars? Or
>>> why can't it charge a fee, such as the percentage decline in the dollar
>>> over the past twelve months, for buying US dollars from Japanese
>>> For example, since the dollar has fallen seventeen percent against the
>>> yen over since January 2008, why cannot the Bank of Japan charge
>>> Japanese exporters a seventeen percent premium for converting their
>>> excess dollars into yen? That is, why can't the BOJ pay the current yen
>>> value of 83 US dollars for each 100 US dollars Japanese exporters want
>>> to convert into yen. That is, why can't it force the exporters
>>> themselves, instead of all Japanese taxpayers, to suffer the losses of
>>> selling their products in declining dollars?
>>> Thanks, Bill
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