Mark Thoma Sends us to William Black on Peter Wallison's Fake Narrative on the Financial Crisis
Twitterstorm delong: December 31, 2011

Yes, Virginia, the Yen Is Overvalued

Paul Krugman:

A Yen For Yenm: Japan has expected inflation that is around 2 points less than in other safe haven countries, but it has long interest rates that are only about 1 percentage point lower; Japan is a high real rate country. And this pushes up the value of the yen.

Just to be clear, this is a bad thing from Japan’s point of view; the country really needs more exports, and the high yen prevents that.

Another reason why you really, really don’t want to get into a deflation trap.