devaluing currencies and deflation

Assuming that they're on equal footing, NO CHANGE WOULD occur.

Say $1 = 100 Yen.
US money stock : $100
JApan money stock: 10,000 yen

Both decide to double money stock (devaluation)
US money stock: $200
Japan money stock: 20,000 yen

Currency rate: Still $1 = 100 yen.

This is assuming that inflation is expected (rational expectation).

If inflation is unexpected and applied equally, we have hyperinflation for both country. Nevertheless their currency rate would always remain the same.

Quote from raszorz:

if simultaneous nations are trying to devalue their currency to induce foreign trade, would this be deflating?
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thanks for replying;

but i was thinking, since a yen
that is appreciating would generally
mean a depreciating dollar: and
since both the japanese and the
u.s. want a weaker currency...

how would this be achieved for
both countries to devalue their
currency at the same time? wouldnt
this be deflationary ?

thanks.
 
So yen depreciate FIRST, just they're not on equal footing.

They canNOT have weaker currency relative to each other at the same time! Not conceivable.

Both could be weaker against the Euro for instance, but not each other.

Mathematically and common sense wise, Impossible.


Quote from raszorz:

thanks for replying;

but i was thinking, since a yen
that is appreciating would generally
mean a depreciating dollar: and
since both the japanese and the
u.s. want a weaker currency...

how would this be achieved for
both countries to devalue their
currency at the same time? wouldnt
this be deflationary ?

thanks.
More...
 
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