CNBC World
CNBC's Bernie Lo interviews
He took a few minutes to speak with CNBC's Bernie Lo.
"Reports say you made a billion dollar shorting the yen," Lo said. "What are you trying to do? Break the
"I think the Bank of Japan is eager to have people do that," joked Soros.
On Thursday, the BoJ's Haruhiko Kuroda announced extremely aggressive monetary policy, an effort to stimulate Japan's stagnant
"It is a sensation because he broke some of the monetary taboos," said Soros about Kuroda. "It's a very daring undertaking."
He continued by discussing how to fight deflation.
"In the conditions of deflation that Japan has been in in the last 25 years, one way to break that is to have monetary policy, which buys in the market government bonds and the government providing fiscal stimulus so that it effectively doesn't increase the debt outstanding," explained Soros. "Because what the government sells in bonds on one hand, the bank buys with the other hand. The government owns the bank. That doesn't increase the debt."
"But if it stimulates the economy, using unused resources, then the economy grows," he said. "If you go to Japan, you will find people are quite excited."
Soros, however, warned that Japan's efforts to devalue the yen is risky.
"What Japan is doing right now is actually quite dangerous because they are doing it after 25 years of just simply accumulating deficits and not getting the economy growing," he explained. "So if what they're doing gets something started, they might not be able to stop it. If the yen starts to fall, which it has done, then people in Japan think it's liable to continue, and will want to put their money abroad. The fall may become like an avalanche. You can start it. [But you may not be able to stop it.]"
Lo followed up by asking if that could actually happen because the Japanese may think that they've already missed their opportunity to invest abroad.
Soros explained that people really aren't convinced that the yen sell-off is over.
"Nobody believed Kuroda would have the courage to do what he did," he said. "The amount of quantitative easing that he's introducing is the same as in the United States, but Japan is only one-third the size. So it's three time more powerful than what's happening in the U.S."
Soros later noted that it was interesting what Europe was doing.
"The fascinating thing is that in Europe, the austerity program, is leading them into the same policy that Japan is now trying to escape after 25 years," he said.