Only days ago Wizbang Pop wrote about the coming monetary crisis that could soon sweep the free market world economy. Now, Japan has announced dangerous new plans to solve their own financial crisis by printing up a whopping $650 billion in new currency to pay for their own bills, but greatly devaluing their existing currency, savings, and creating serious inflation for Japanese goods. Further, expect the cost to American consumers of Japanese-made products to skyrocket upward and to greatly increase in price.
While many Japanese products such as automobiles have assembly plants in the United States, expect any Japanese built models to greatly increase in price very soon as this new influx of printed currency only cheapens the existing money supply in Japan.
This is a highly controversial form of economics called “quantitative easing”. It means that that a sick economy, unable to pay it’s own bills, simply prints up vast new amounts of currency to pay it’s existing debts, but loses the value of the existing money supply and savings of citizens as inflation also follows this voodoo form of economics. It also means that an economy unable to expound exports to bring new money from other economies into it’s own economy, has given up some measure of hope to expand trade with other nations. This is a dangerous trend that at some point could lead to a worldwide monetary crisis as nations jockey against other nations to prop up their economies in this unsound manner.
Japan is now joining the United States which has been increasing it’s own money supply in recent quarters by printing up more currency to pay it’s bills, although the long range impact could be devastating to an economy and to the savings of citizens in these countries. Some countries such as Iran have been accused in the past of damaging the U.S. economy by counterfeiting our currency, helping their own economy, but cheapening our economy. But, now our own nation is doing the same thing by increasing the money supply on a quarterly basis while failing to really provide new trade with other nations or expand the domestic economy at home to pay the bills and remain solvent.
In the 1980’s Communist states associated with the Soviet Union faced their own financial and political collapse due to many bad factors destroying these systems. But, now the free market economy world is facing a number of ominous signs of an upcoming financial meltdown crisis as well as sick economies unable to pay their own bills seek to hold of economic collapse by increasing the money supply at the expense of the value of the current amount of currency.
Economic experts see the devaluing of the Japanese yen only half done against other currency like the dollar as the yen loses value with more currency being dropped into the Japanese economy. Graphs illustrate the fall of the value of the yen against the dollar.