Edward Conard

Top Ten New York Times Bestselling Author

  • “Unintended Consequences provides a provocative interpretation of the causes of the global financial crisis and the policies needed to return to rapid growth. Whether you agree or not, this analysis is well worth reading.” - Nouriel Roubini, New York University; Chairman, Roubini Global Economics
  • “There are an amazing number of good ideas and interesting points made in Unintended Consequences. The thinking underlying it, and the obvious depth of understanding of the author, are very impressive.” - Steven Levitt, coauthor of Freakonomics; 2004 John Bates Clark Medal
  • “…a comprehensive explanation of the modern economy.” - Julian Robertson, Founder, Tiger Management
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “Unintended Consequences represents the most cogent and persuasive analysis of the Financial Crisis to date.” - Andrei Shleifer, 1999 John Bates Clark Medal Winner
  • “…a fresh argument for the productive value of inequality.” - David Autor, Professor of Economics, Massachusetts Institute of Technology
  • “…serious thinking for serious thinkers. …a thought-provoking blueprint for growing middle- and working-class incomes.” - Mitt Romney, former Governor of Massachusetts
  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
  • “Unintended Consequences should be read by anyone who takes for granted the superiority of progressive taxation and has not thought carefully about the trade-offs involved.” - The New Republic
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  • “…a must-read for serious students of economic policy.” - Glenn Hubbard, Dean, Columbia Business School, and former Chairman of the Council of Economic Advisers
Upside of Inequality Oxford Unintended Consequences

AI Summary. Currency intervention has limited power to reverse the yen's decline when underlying forces—wide interest-rate differentials, fiscal concerns, and geopolitical uncertainty—remain intact. Japan's reliance on energy imports adds further downward pressure on the yen when oil prices rise.

Daniel Flatley and Anya Andrianova Bloomberg
Date Posted:

As the impact of the recent intervention recedes, Bloomberg reports on an analysis projecting that if the yen again depreciates back or beyond 160 per dollar, US and/or Japanese intervention will resume.

Can currency intervention stop the yen's decline without addressing root causes?

Core argument: Japan’s near-total dependence on energy imports compounds yen weakness, as rising oil prices driven by geopolitical tensions directly erode the country’s terms of trade.

Japan’s currency slid as much as 1% Monday to past 159 per dollar, wiping out half the rally triggered by the July 31 US-Japan intervention. The exercise, the first coordinated effort since 1998, had lifted the currency near 155 before the retreat resumed. The currency moves highlight the limits of that mechanism in changing the yen’s broader trajectory when the forces behind its decline remain largely intact. Those forces include wide interest-rate differentials between Japan and the US, concerns over Japan’s fiscal outlook, and geopolitical uncertainty. The yen’s retreat on Monday came alongside a rise in the price of oil amid continuing tensions over Iran. Japan imports most of its energy, leaving it vulnerable to higher prices.

Takeaways by Macro Roundup® AI

  1. Japan’s near-total dependence on energy imports compounds yen weakness, as rising oil prices driven by geopolitical tensions directly erode the country’s terms of trade.

Related Articles:

  • The Carry Trade That Can’t Be Unwound — Japan's consolidated public sector carries liabilities worth 255% of GDP, with 75.5% of GDP in floating-rate bank reserves, while holding 56% of GDP in unhedged foreign securities and 50% of GDP in equities — assets that lose value if the yen rises or real rates climb.
  • The Global Fiscal Train Wreck — Rising long-term government bond yields are a global phenomenon driven by the surge in public debt accumulated during the pandemic, not a problem unique to any single country. Markets appear to be pricing in a structural shift toward fiscal deterioration, reflected in strong demand for inflation-resistant assets like precious metals.
  • Yen Intervention = US Self-Preservation — Japan holds $1tn in U.S. government bonds — the largest foreign position globally — giving the U.S. a strong incentive to support a stronger yen rather than risk Japan selling those bonds or raising rates sharply enough to redirect domestic capital away from U.S. debt markets.
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