May 31, 2012

A yen for yen

As late as 1871, when the new Meiji government replaced the Edo period mon-based currency with the yen, 1 yen was defined as .78 ounces of silver or 1.5 grams of gold.

Rapid currency devaluation caused by fluctuations in the price of silver led to Japan going on the gold standard in 1873 and defining the yen as equal to 50 U.S. cents.

After the hyperinflation of WWII, the yen was pegged at 360 yen to the dollar. The U.S. abandoned the gold standard in 1971. The yen was allowed to float in 1973. Today the yen has risen in value to 80 yen to the dollar, a troubling "success" in export-driven Japan.

In 1871, the Japanese government issued 1 yen gold coins and 1 yen bank notes. In 2012, 1 yen is worth about 1.3 cents, and one yen coins are stamped out of aluminum.

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