This brings us to the yen, the forgotten currency of the least inflation-prone big economy, Japan.
Japan remains the world’s largest creditor. Its net foreign assets—what its residents own abroad minus what they owe to foreigners—amount to around $3.5trn, almost 70% of Japan’s annual. Some of those assets are fixed investments, such as factories and office buildings. But a chunk is held in bank deposits, and in shares and bonds, which can be liquidated quickly.
This has not worked so reliably lately. An important change came with the re-election of Abe Shinzo as prime minister, in December 2012, and the subsequent appointment of Kuroda Haruhiko as governor of Japan’s central bank. A key goal of “Abenomics” was to banish Japan’s chronic deflation through the use of radical monetary policy, including huge central-bank purchases of bonds and equities. A result of all the sustained money-printing was a much weaker yen, but not much stronger inflation.