I'm not sure how this: inflation is punishing savers who will start buying foreign currency instead to protect their savings, or take it away from banks to do

I'm not sure how this: inflation is punishing savers who will start buying foreign currency instead to protect their savings, or take it away from banks to do something else with it. leads you to believe this: This, in return, will reduce the amount of money that can be lended to the private sector and therefore will drive the economy down further, too. If savers were sticking all their money in government bonds and cash, what more could they possibly do to reduce the amount lended to the private sector? Their money is effectively gone from circulation already. Besides, the Japanese stock market is up 70% (!) in the last 6 months. In what universe if you're Japanese do you dump your money in foreign currency in an environment like that? Heck, I'm thinking of buying a few Japanese stocks, especially in export driven businesses.