US Intervention in Yen-Tervention Sparks Controversy Over True Motives

The recent intervention in the yen-tervention has sparked widespread commentary from financial media outlets. However, experts claim that Japan's monetary policy is not as loose as previously thought.

According to Professor Steve Hanke of Johns Hopkins, Japanese M2 growth rate is at 2.2% per year, which is below the golden growth rate of around 6%. This means that Japan is running at a third of what it needs to hit its 2% inflation target.

The Bank of Japan has been raising interest rates, with the policy rate reaching 1.00% in June, the highest level since September 1995. However, this did not lead to a stronger yen, but instead a weaker one, trading down to 163.73 against the dollar, its weakest level since 1986.

Hedgeye CEO Keith McCullough claims that the US government's decision to buy Japanese yen was an attempt to manipulate the market and keep Japan's hand off the sell button. This is because Japan holds over $1.1 trillion of US Treasuries, the largest foreign position in existence.