Japanese Policy Creating Historic Increase in Cost of Capital

By Rafael Diamond, Archaea Capital Research
  
Japan is “borrowing” growth from virtually every other major exporting nation on the planet, especially from its Asian neighbors. The same thing happened in 1998 after the yen fell almost 50 percent versus the U.S. dollar during the preceding three years. Meanwhile, Japanese policy has raised the global cost of capital in a profound and historic way – a major decline in the bond market has contaminated other core nations’ rates – and any sustainable economic improvement will probably be reversed in the next several months.

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