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Adam Smith and the Yen

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From: The Washington Post
Date: 19930429
Author:

JAPANESE politicians angrily blame President Clinton for the painful rise in the yen's exchange rate against the American dollar. It's making Japanese exports here more expensive and harder to sell. But Mr. Clinton isn't the culprit this time. It's Adam Smith.

Japan continues to run a gigantic trade surplus, by far the world's largest. It can be sustained only as long as Japanese banks and investors export an equal flow of capital - in effect, lending their customers the money to keep buying. Because of the Japanese economy's troubles, that financing is now faltering. The rise of the yen is ...

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