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I'd guess DOR or some other resident economic experts would be more clear about this subject, but some of the things that i've wondered about the agreement in 86 (espeically since nowadays the US's problems seem in many ways similar to the 70s early 80s days)
1. Why did Japan / Germany agree to do this? wasn't the risk of their exports losing competitveness quite obvious? though Germany managed to weather the situaion ok Japan ended up doing quite poorly from this (of course it's to a good extend their own mismanagement in the late 80s)
2. Why didn't inflation go through the roof in the US after this? wouldn't the general logic be that if your currency depreciate very quickly your going to see massive inflation issues? and wasn't the US already having a bad case of inflation before this?
3. How did the rest of the world cope with this situation? I remember during that period Taiwan also saw it's currency go up like the Yen. going from something like 1:40 to 1:25 in less then a decade before moving back down to around 1:32 again until recently and that period seem to conicided with Taiwan's beginning of moving factories to China as well (though it wasn't that obvious until the mid 90s)
4. How did the US government manage to convince congress to do this? although the possible benift of competitiveness to US companies are obvious the risk of hyperinflation and the general political perception of lowering the US dollar value at a time when Japan was basically China of today seems to have been a rather difficult task.
5.Wouldn't the situation today seem likely for a repeat of this? though I'd guess the likelihood of China going along would probably be much lower then Japan / Germany for obvious political reasons (And the hindsight of the risks)
I know it's a very large and complex issue, but it would be nice if someone can shed more light on it.
1. Why did Japan / Germany agree to do this? wasn't the risk of their exports losing competitveness quite obvious? though Germany managed to weather the situaion ok Japan ended up doing quite poorly from this (of course it's to a good extend their own mismanagement in the late 80s)
2. Why didn't inflation go through the roof in the US after this? wouldn't the general logic be that if your currency depreciate very quickly your going to see massive inflation issues? and wasn't the US already having a bad case of inflation before this?
3. How did the rest of the world cope with this situation? I remember during that period Taiwan also saw it's currency go up like the Yen. going from something like 1:40 to 1:25 in less then a decade before moving back down to around 1:32 again until recently and that period seem to conicided with Taiwan's beginning of moving factories to China as well (though it wasn't that obvious until the mid 90s)
4. How did the US government manage to convince congress to do this? although the possible benift of competitiveness to US companies are obvious the risk of hyperinflation and the general political perception of lowering the US dollar value at a time when Japan was basically China of today seems to have been a rather difficult task.
5.Wouldn't the situation today seem likely for a repeat of this? though I'd guess the likelihood of China going along would probably be much lower then Japan / Germany for obvious political reasons (And the hindsight of the risks)
I know it's a very large and complex issue, but it would be nice if someone can shed more light on it.
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