In the past several months, the Bank of Japan has launched the quantitative easing (QE) policies to respond to the appreciation of Japanese yen caused by the unlimited QE policies of Europe and the United States and stimulate the ever-weakening Japanese economy.
Will the QE policies be helpful to the recovery of Japanese economy? The answer is no.
The main problem in Japan is lack of demand, rather than liquidity shortage.
In addition to the impact of global economic slowdown and appreciation of Japanese yen, the right deviation of Japanese politics is the main reason for its economic woes.
The Japanese economy has been heavily dependent on external demand, so the weakened economic trend will be hard to change if Japan does not turn to the right track in politics and build political mutual trust and stable bilateral relations with its principal trade partners.
Japan's QE policies are helpless to stimulate its domestic economy, but will bring adverse impacts on the recoveries of Japanese economy and even the world economy.
The QE policies launched by Japan have brought greater inflation pressure and appreciation of the Asia-Pacific countries' currencies, and it will probably force the Asian countries to take corresponding easing measures if Japan launches another QE monetary policy, thus triggering a new round of devaluation of currencies and global inflation and bringing serious negative impacts on the world economy.
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