Okay so the US doesn't like something about how Japan's economy was doing in the 90s, what was the beef? I know Japan was manufacturing a ton of stuff, but I thought the US wanted consumer products manufactured overseas.

So they're not happy with this, so they do a run on Japan's currency. What does this mean? Like how do they do it?

The run on the currency causes the value of the Yen to go up. This is bad for some reason, even though your currency is worth more? Like can't you get more for a Yen? But clearly it's bad because it destroyed their economy, I'd like to understand why or how.

Because right now the best I was able to explain it to someone was "America did some money magic bullshit and destroyed Japan's economy", but I would like to be able to answer some follow up questions.

  • Remicita [she/her]
    ·
    2 years ago

    The value of a currency in relation to other currencies doesn’t have one-to-one relationship to prices of goods in that currency. So if a pound is worth more euros than before, it doesn’t mean that the price of a good in pounds will adjust to reflect that, and certainly not right away or in a way that cancels things out. So if a UK football is £20 and the exchange rate is €2 to £1, a UK football costs €40 in Germany (simplifying costs of import and export, tax, etc.) If the exchange rate changes to €2.5 to £1, the UK football now costs €50.

    Wow. This is crazy to me. But it kind of makes sense.

    • Remicita [she/her]
      ·
      2 years ago

      So money being worth more doesn't actually meant I can buy more things with it????

      • Abraxiel
        ·
        2 years ago

        Yes, since the exchange value of the money as it relates to another currency isn't the same as its exchange value as it relates to goods priced in the first money. It should ultimately clear at a price that equalizes things, but that's hindered by multiple currencies exacerbating the chronic inability for markets to perfectly account for all externalities, future pricing, etc. Economics is a really interesting field! I wish more people on the left didn't just dismiss it out of hand, because problems like this calculation problem are enormous hindrances to the accurate estimation of the real value and cost of things.

        • Remicita [she/her]
          ·
          2 years ago

          Okay ty, this has given me a lot to think about. I think I have a somewhat clearer picture now.