It’s really too much.
Both the Japanese and foreign press have been focusing on how the yen has lately been trading for “nominal prices” that haven’t been seen since 1990. Every headline goes, “lowest trading value since 1990!!!” (Or maybe, “LoWeSt VaLuE sInCe 1990!!!!!”)
But that isn’t half the story.
There’s been virtually no yen inflation over the last 34 years. Only recently have we seen noticeable price increases. And, in fact, prices in Japan, overall, are “only” up 20% since 1990.
This is compared to America, where you need $2.40 to have the same purchasing power as what $1.00 bought in 1990.
So really, in yen compared to dollars, you need twice as many yen to buy the same thing as what you could have in 1990. Things in general in America cost over twice what they did. But your yen isn’t double-powered to what it was in 1990. It’s pretty much the same power yen as it was in 1990.
I think that, if you haven’t thought about it, it’s hard to wrap your head around. And so business journalists will say, “yen reaching lows that haven’t been seen since 1990!”, and leave it at that. No one wants to confuse the story by then saying, “and you need a lot more yen because everything is double what it was in America back then!”
But that’s the real story.
The yen is trading at 1/3 century lows in trading price
AND
those prices didn’t even keep up for the inflation of other currencies.
I wish they would say something like, “yen traded at the lowest since 1990 today, and you would need[, say,] 312 yen to match what one dollar would buy you in 1990.”
Like I said on Twitter-X, I don’t think the yen is falling off a cliff. I think it’s going back to where it traded in the 1970s, and the Lost Decades trading ranges really were the unsustainable anomaly.
Hoofin 