Comparison of Japan and US Monetary Base

Before the Fed eased last week, I wrote that the ECB's actions could force the Fed to ease in order to maintain the value of the dollar relative to the euro.  Today, the BOJ's decision to purchase another 10T Yen worth of assets confirms that global central banks are in a prisoner's dilemma race to the currency bottom.

Below is a chart of the relative size of the Japanese monetary base compared to the US base.  The Japanese monetary base is about 50x larger than the US base (measured in nominal local currency units), but for most of the last 2 decades it has been more like 100x the size.  The chart implies that as the US monetary base grows compared to the Japanese, the Yen could strengthen further, which is a problem for a Japanese economy that relies on exports.  Unfortunately for Japanese exporters, the Fed has announced an easing program which is likely to be larger than the BOJ's.