Comment on Yen starts to appreciate again – as you were! by Philip Lawn

The useful part

In one of my comments, I said that I believe it would be desirable for all nations to run trade balances (exports equals imports). The long-run implications of a trade deficit depend a lot on what foreigners accept as payment for the goods that a nation imports. If the capital goods and infrastructure are owned by a CICG, it is never forced to sell them to extinguish its liabilities unless it is stupid enough to borrow in another currency.

How it works

• CICGs of some poor nations are sometimes forced into this situation only because their own currency is too weak to purchase essential imported goods.
• I think you have misunderstood what I meant when I explained the trade implications when a nation's currency depreciates.
• I was effectively referring to the terms of trade rather than total exports and total imports.

Details worth keeping

Without the prices of goods changing, the nation...