07-08/2015 Who's afraid of deflation?
It is particularly important for our industry, both in Japan as well as in Switzerland, that each country is dependent on a strong export sector. Companies here where the ITJ is published are unhappy about the even higher price of their goods abroad, and are afraid that their international ability to compete will suffer greatly as a result of the Swiss National Bank surprisingly ending the franc’s minimum exchange rate vis-à-vis the euro on 15 January. The Far Eastern nation, in turn, has a rather weakly-rated national currency in the yen (whose smallest coin feels almost like toy money). This provides the country with a lot of advantages, not only abroad.
I observed this state of affairs recently during a media trip to the land of the rising sun. It included a talk by professor Franz Waldenburger, the director of the Tokyo-based German Institute for Japanese Studies, who provided fascinating insights into the world’s richest country (in terms of assets abroad). It remains the planet’s third-largest national economy after the USA and China. Economist Waldenburger ascertained that «the country has recovered again, after the bursting of the speculative bubble in the 1990s.» This development is based on well-trained employees and the nation’s uncontested technological leadership. And what is more, after the Second World War Japan was the first country to be hit by deflation, so this no longer holds any great threat for the nation. Demand remains stable and nigh-on full employment prevails. This represents a glimmer of hope for Europe – or more specifically Bulgaria and Greece.
Those who nevertheless still criticise the Swiss National Bank for changing course so dramatically should try its Mopos 3.0 simulation (www.iconomix.ch/en/resources/start/mopos). Every one of us can be a virtual central bank chairman and manage the monetary policy in the national interest.
We wish you success in circumnavigating deflation!
Head of airfreight