2000s, inflation caused by factors, such as, high-energy prices caused Japanese investors to sell Yen and buy dollars. The sudden rise in the Japanese stock market suggested an surge in speculative spending and rise in the overvaluation of the Japanese stock market. The Japanese market depended on US consumption and US consumption depended on cheap Japanese products and massive levels of credit. As the Japanese economy inflated Yen bought less domestic products and a save haven needed to be found. One haven was buying dollars, if the yields remained high enough for the risk. High yield investments in US Treasurer notes made overseas investment became attractive. Low yield Japanese bank notes had no holding power. The selling of the yen made Japanese products cheaper for foreigners too buy and foreign goods expensive. “The yen must, as a matter of sheer accounting, fall enough to match that trade surplus to the desired export of capital”. Demand for Japanese goods would rise to a certain balance point. However, if the dollar was expected to fall then dollars converted back to yen would return less yen. The Japanese saver will be less enticed to transfer savings into overseas investments, if on the dollar/yen conversion a profit was not realized or if the Japanese investor believed a loss in the future was likely on the exchange. Therefore, Japanese savings would not be exportable without confidence in a save return, savings that fueled consumption.[Learn More ...]

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