The Effects of a Month of Negative Rates in Japan

imagep said:

Maybe their GDP is maximized already.

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impossible. People go to work every day and figure out how to make more stuff more efficiently. For may people that is their entire job. If someone invents a better light bulb or car or computer here or anywhere it will spread to Japan and enable their GDP to rise.

Who knows, but this level of denialism is astonishing

imagep said:

I honestly don't understand what the Japanese economic issue is. Can someone explain?
Japan has a incredibly low unemployment rate, so unemployment isn't really an issue...

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It's explained Very adequately on Page One by Me and Orphan slug. UNTOUCHED by you.
You obviously Ignore the problems .. and have before as well.
Why?
It's obviously eco-political denialism and your stance on/dismissal of debt, etc.

(For Gavinfielder and Ellis_G also)

1. Not just declining population but declining Workforce.
Far too xenophobic for immigration.
2. Increasing Social demands on a smaller base due to that horrendous 1.3 fertility rate...so that..
3. Japan not only loses ¼ Million people a year, it loses more than that in workforce.
That Loss will become 1 Million people a year in the next 5-10 years.
4. Japan has spent TWICE what they take in 6 of the last 7 years, (imagine if we ran $3.5 Trillion deficits), soooo...
5. Is Printing Yen at wheelbarrow speed to buy their own Newly issued debt.. IOW...
6. A Ponzi Scheme.. ergo..
7. Has had 10 Finance minister in 7 years..
8. One FM who committed suicide..
9. Another FM had a nervous breakdown...
10. Yet another FM who, also realizing the problem, urged the country's elderly to "Hurry up and Die".
!!

11. Historic debt levels/ugly history for that Dwindling population to shoulder



I've posted ALL of this many times, and you have seen, and been in total denialism about it before. Which again, Includes Page One in This string.

The Japanese debt is irrelevant. The yen is sovereign to the Japanese and if they're buying their own debt, they're obviously far less pansyass in using that fact.

Perhaps I do see your connection to currency devaluation. Historically, monetary inflation has only occurred with the loss of industry, but surely a lack of workers would constitute such. There's an argument to be made there, though it's one of degree. I'm not convinced their supply would be so severely impacted as to start inflating the currency. We have to remember it depends primarily on consumption and velocity, and intrinsically tied to income--if everyone in Japan was living large on government subsidies there might be cause for concern, but that's not really the case.

gavinfielder said:

The Japanese debt is irrelevant. The yen is sovereign to the Japanese and if they're buying their own debt, they're obviously far less pansyass in using that fact.

Perhaps I do see your connection to currency devaluation. Historically, monetary inflation has only occurred with the loss of industry, but surely a lack of workers would constitute such. There's an argument to be made there, though it's one of degree. I'm not convinced their supply would be so severely impacted as to start inflating the currency. We have to remember it depends primarily on consumption and velocity, and intrinsically tied to income--if everyone in Japan was living large on government subsidies there might be cause for concern, but that's not really the case.

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Japan's saving grace for the last 20 years has been it's carry trade status.

austrianecon said:

Japan's saving grace for the last 20 years has been it's carry trade status.

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That's interesting. I've learned something. I don't yet see how it is a 'saving grace'. I can see the connection to an inflated currency--assuming the carry trade has a significant enough effect on the japanese economy, there's value in an inflated yen. Does that mean the potential problem created by diminishing supply capacity due to declining workforce, is actually an asset to the economy?

Then again, ultimately, the ones who would pay the price for an inflated currency are senior citizens, as readily available jobs and healthy competition for workers would be irrelevant to them. I have to assume that the carry trade is not such a wide practice as to buoy the entire senior citizen population.

imagep said:

Maybe Japan should start importing some Mexican workers. That would surely increase their GDP.

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why?? We import them and all it does is increase the number of jobs Americans think they are too good for! So Mexicans do the work and our guys go on welfare, taxes go up, and GDP stays about the same. Ironic that we want the union jobs back (screwing a bolt on a car as it goes down an assembly line) but we don't want jobs back as dishwashers and crop pickers.

gavinfielder said:

"Advocates of capitalism are apt to appeal to the sacred principles of liberty, which are embodied in one maxim: the fortunate must not be restrained in the exercise of tyranny over the unfortunate." - Bertrand Russell.

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China just switched to capitalism and now 60 million can buy cars whereas as under libsocialism 60 million slowly starved to death. Its actually amazing how equalitarian capitalism is.

James972 said:

why??

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To increase demand, in addition to increasing the tax base and providing labor to an aging population.

imagep said:

Too increase demand, in addition to increasing the tax base and providing labor to an aging population.

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it does not increase demand when Mexicans get paid and Americans don't

NIRP?

Just a desperate act by a desperate central bank.

Frankly, their massive stock purchase through ETF's is far more troubling to me then NIRP.


My question is when will the Fed join the party (the ECB has already joined - sort of)?

Central banks are run by brilliant, macroeconomic, ignoramuses who are great bean counters but lousy economists... and they have proven it time and time and time again.

But since they use big economic words (Greenspan specialty) or drone on and on (like that nonsensical drivel that Yellen spouted yesterday at the news conference) that most people/politicians do not understand - most assume they must know what they are doing. They don't.

This was just one answer she gave yesterday:

She was asked about the Fed's credibility problem and she responded with this mess...

'Well, let me start -- let me start with the question of the Fed's credibility. And you used the word "promises" in connection with that. And as I tried to emphasize in my opening statement, the paths that the participants project for the federal funds rate and how it will evolve are not a pre-set plan or commitment or promise of the committee. Indeed, they are not even -- the median should not be interpreted as a committee-endorsed forecast. And there's a lot of uncertainty around each participant's projection. And they will evolve. Those assessments of appropriate policy are completely contingent on each participant's forecasts of the economy and how economic events will unfold. And they are, of course, uncertain. And you should fully expect that forecasts for the appropriate path of policy on the part of all participants will evolve over time as shocks, positive or negative, hit the economy that alter those forecasts. So, you have seen a shift this time in most participants' assessments of the appropriate path for policy. And as I tried to indicate, I think that largely reflects a somewhat slower projected path for global growth -- for growth in the global economy outside the United States, and for some tightening in credit conditions in the form of an increase in spreads. And those changes in financial conditions and in the path of the global economy have induced changes in the assessment of individual participants in what path is appropriate to achieve our objectives. So that's what you see -- that's what you see now.'

Just answer yes or no you ignorant cow.

It's utter nonsense and she obviously knows it. She spews this gobbledegook and tries to embarrass everyone to shut up. It worked for Greenspan for years...it still works.

DA60 said:

Central banks are run by brilliant, macroeconomic, ignoramuses who are great bean counters but lousy economists... and they have proven it time and time and time again.

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Of course that's absurd. When the Fed was first formed they were ignoramuses who caused the Great Depression. This time around they prevented a depression and saved the world, perhaps from another world war.
Do you understand?

James972 said:

Of course that's absurd. When the Fed was first formed they were ignoramuses who caused the Great Depression. This time around they prevented a depression and saved the world, perhaps from another world war.
Do you understand?

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No they didn't, they caused the housing bubble back in the early 2000's by pushing rates down to near 1% (and below inflation), so what did they honestly expect to happen other than a huge credit bubble forming.

The Fed is completely utterly inept, as are all central banks.

Ellis_G said:

No they didn't, they caused the housing bubble back in the early 2000's by pushing rates down to near 1% (and below inflation), so what did they honestly expect to happen other than a huge credit bubble forming.

The Fed is completely utterly inept, as are all central banks.

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nobody says the Fed was exclusively responsible for housing crash except you because you are seemingly obsessed with central banks. Let me guess, you're a gold standard( like what we had causing depression) bug waiting for huge inflation? Also, keep in mind Greensapn has argued that the world wide savings glut caused interest rates to go down, not Fed policy alone. Also keep in mind that John Taylor has said Fed policy was mistaken but not solely responsible. There were other huge huge factors like Fanny/Freddy