The International Monetary Fund has lost all credibility with its analysis of Japanese interest rates and Japanese monetary policy. Near-zero interest rates and no inflation are not just puzzling; they are totally incomprehensible for the trained, monetary economist. Japan's reluctance to intervene in the foreign exchange market is laughable because the zero interest rate policy has irresponsibly depreciated the yen, damaging U.S. and European competing industries such as autos.
In the past, other countries have been accused of exporting their inflation. It's time the IMF correctly analyzed the situation and stated that Japan is exporting its unemployment by delaying the economic depression for some 10 years. The lack of inflation in Japan is not a monetary phenomenon; it is the result of overcapacity and the resulting competitive price-cutting, which is on life support by the Bank of Japan's monetary policy.
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