This stuff is really interesting. But I'm a little confused. You say Japan's big problem is the high yen. But the yen's been falling against the dollar for while now. How overvalued is it, do you think - let's say based on PPP?
Also, the cliche is that in the 50's and 60's, the US deliberately let the yen stay undervalued for geopolitical reasons. When do you think that long-term policy ended? The Plaza accords? Hasn't the post-1995 rise in the dollar cancelled out the 1985-95 weakening?
Wouldn't Paul Krugman's proposal of deliberately creating inflation push down the yen? Then why does the BoJ oppose it? What's their strategy?
You say the other Asian countries have bet their economies on the US not allowing the yen to fall. What do you mean?
Sorry for the barrage of questions.
Seth