> CPI is flat enough over the decades that the Japanese yen has largely held its value, at least on domestic products
Not contesting—this makes sense—but do you have a source?
> the fact that the purchasing power of the US dollar has fallen substantially over that time, while the exchange rate of JPY to USD has risen, is something quite fascinating to me. I don't see it discussed nearly enough
It’s the widowmaker carry trade. FX traders and macro funds love talking about it.
It comes down to the difference in international versus domestic demand for dollars per se, not dollars in any form (e.g. Treasuries).
The widowmaker carry trade reflects the currency side, but what fascinates me is that for example, a tube of toothpaste (random example) has gone to $3~$4 in the US, while it's still $1 in Japan. Go to a dollar store in Japan (except for Daiso) and it's full of cheap, high-quality goods that are made-in-Japan, from plastic organizers and pencil cases to measuring tapes and bicycle stickers. Those are now cheaper than similar made-in-China products being sold in the USA. The cost of container shipping is still quite low. So you'd think Americans would be hungrily importing Japanese goods until the arbitrage opportunity disappeared, but they're just... not. And perhaps that reflects that the most significant and long-lasting component of inflation in the US is shelter, which can't be imported.
Not contesting—this makes sense—but do you have a source?
> the fact that the purchasing power of the US dollar has fallen substantially over that time, while the exchange rate of JPY to USD has risen, is something quite fascinating to me. I don't see it discussed nearly enough
It’s the widowmaker carry trade. FX traders and macro funds love talking about it.
It comes down to the difference in international versus domestic demand for dollars per se, not dollars in any form (e.g. Treasuries).