Axel Merk on Currency Risks: Yen Will Become Worthless

Axel Merk, President and CIO of Merk Investments

Japan’s debt-to-GDP ratio has consistently remained one of the highest among the world’s developed nations, and some of the country’s more radical attempts at fiscal stimulus have been met with strong criticism from skeptical investors. Axel Merk, president and chief investment officer of Merk Investments, has warned that Japan’s pursuit of “Depression-era fiscal policies” will do irreparable damage to the Japanese yen.

Merk writes the Merk Insights newsletter, which follows and reports on global currency issues. Earlier this year, Merk cautioned that currency debasement leads to social unrest, writing that “real people may die when countries engage in ‘currency wars.’

The newsletter has covered many financial developments that have affected currencies, including the U.S. dollar and the euro, but the Bank of Japan’s shift in monetary policy has resulted in a renewed focus on the yen. In a CNBC interview with Paul Toscano, Merk said that the Bank of Japan’s aggressive bond-buying program was going to devalue Japan’s currency and that the Japanese yen will eventually become worthless.

Merk’s criticism of Japan echoes statements made by J. Kyle Bass of Hayman Capital Management, who said in November that Japan is entering “its final checkmate phase of the chess game.”

Both Merk and Bass will be speaking in sessions at the 66th CFA Institute Annual Conference in Singapore. You can register to attend the conference to hear Merk discuss investing in currencies for diversification and their use as an inflation hedge, or learn more about opportunities available to conference delegates in Singapore. Be sure to follow this blog for more updates.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.

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