Calling a Turn in the Yen

The yen's decline over the past six months has been nothing short of stunning, surprising even the most ardent bears. I admit that even I got this wrong when I voiced skepticism about the currency's decline in February. My point at the time was that monetary operations by the Bank of Japan -- quantitative easing, for example -- were not money-printing and therefore not bearish for the yen over the long term.

I've explained this many times, as well as how the public and many commentators get it wrong. A central bank can set interest rates by changing the composition of the financial assets held by the public. When it buys government bonds, that adds reserves to the banking system and this brings rates down. The public is left with fewer bonds and more reserves (cash), but no new financial assets have been created. In essence, no new money has been created, therefore, the currency effect is neutral. Moreover, the central bank does not "spend," which is the only way that new government fiat money can be created....321 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

Read the full story and get access to the Real Money Pro trading floor.

There’s no substitute for a trading floor to get great ideas, so Jim Cramer created a better one at Real Money and blogs there exclusively. We then added legendary hedge fund manager, Doug Kass, with his exclusive Daily Diary and best investing ideas. Staffed with more than 4 dozen investing pros, money managers, journalists and analysts, Real Money Pro gives you a flood of opinions, analysis and actionable trading advice found nowhere else, and allows you to interact directly with each expert.

Already a Subscriber? Please login.

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.