Conventional wisdom identifies currency strength with a strong economy, and the yen was the strongest currency in the world until “Abenomics” changed Japan’s deflationary monetary policy. Unfortunately, while Japan had the strongest currency in the world since 1990, it also had the weakest economic performance of any major economy, with nominal GDP flat during this period accompanied by mounting government debt. The argument for zero inflation as a policy target is not bolstered by Japan’s experience. Japanese equities were the worst performing of any developed economy for over 20 years.
