> with the US, which means they must export yen. Their utter dependence on
> the strength of the US market makes things a bit different than in the mid
> 80s, no?
Japan trades more with Asia than the US. Japan's export-dependent period of growth ended in the mid-Eighties, when the yen began to seriously appreciate against the dollar; that's why Toyota, Mitsubishi, et. al. have been investing in US plants, of course.
What Krugman doesn't seem to say, judging by the excerpt, but which should be pointed out, is that any serious dollar crisis would have hideous real-world economic consequences, thanks to the $2 trillion the US owes Japan and the EU. The interest payments on that sucker will compound over time something awful.
-- Dennis