From Gold Scents:
As many of you who have read my work in the past know, I expect this whole Keynesian monetary experiment that has been going on since World War II to finally terminate in a global currency crisis. I'm starting to wonder if we aren't seeing the first domino start to topple.
I'm talking about the Japanese Yen...
I think everyone assumes that the Yen is dropping in response to Prime Minister Abe's intent to imitate U.S. policy and print its way out of its troubles.
The problem with this strategy is eventually Japan will break its currency. Japan is in a particularly tenuous situation in that their debt to GDP dwarfs most of the rest of the world. The only hope they have of servicing this debt is for interest rates to stay basically at zero.
Any move by interest rates above this artificially low level and Japan's debt becomes unserviceable, without resorting to a greater and greater debasement of the currency. Unfortunately, that will also result in...
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