The David Lin Report · Thursday, August 6, 2026
Steve Hanke attributes the yen's depreciation to Japan's anemic money supply growth, which is currently at 2.2% year-over-year, falling short of the 6% needed for its 2% inflation target. He explains that this low money supply growth fails to generate sufficient nominal GDP growth, leading to low real GDP growth and inflation, further exacerbated by US interest rate hikes and Japanese banks needing to acquire dollars.
“Everyone agrees that the monetary policy in Japan is very easy. And it's very easy because the interest rates are low in Japan.”
“And the money supply growth is growing now at anemic rate and has been growing at anemic rate in Japan for a long time. It's currently growing at 2.2% year over year.”
“So, so you have those three factors going on. The US intervention was to stop the yen from falling. Why? Because if the yen falls, the Japanese economy is hurt. And if the Japanese economy is hurt, it has a ripple effect throughout the global economy.”