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Today the Nikkei 225 closed at 13,014.87...down 518.89.
Two weeks ago it was almost 16,000.
Is the debt-fuelled, mega-Keynesian stimulus starting to fade?
IMO, it inevitably will...disastrously so. I believe Japan is on a desperate, rocket powered, market stimulation that will eventually come crashing down as the West continues it's monetary 'Race to the Bottom'.
And remember, what Japan is doing now is in many ways exactly what America is also doing right now...but on a much larger and more extensive scale.
Japan is doing everything in its power to devalue its own currency so investors will no longer hold onto it. I think that's a reasonable goal, but it falls short of reality in that inflation is driven by the average consumer having too manyFor the record monetary policy is not Keynesian, but Friedman who advocated helicopter money.
So yes I think Abenomics will not work, monetary policy never works. But good old fiscal Keynesian policies would be a welcome surprise to developed nations.
Not only that, but they are printing tons of money and it is not going to spending but to savings. So more proof that printing doesn't equal inflation.Japan is doing everything in its power to devalue its own currency so investors will no longer hold onto it. I think that's a reasonable goal, but it falls short of reality in that inflation is driven by the average consumer having too manydollarsyen chasing too few goods. Seeing that they've levied consumption taxes, which we know to be regressive, as the primary method of balancing their budget, I think their inflation targeting is almost sure to fail.
An austrian irony in so many ways.
Not only that, but they are printing tons of money and it is not going to spending but to savings. So more proof that printing doesn't equal inflation.
Gee, well, the job guarantee comes to mind.JP, if monetary policy isn't the answer to getting people to spend, then how could a government get people to spend more, other than through welfare?
Gee, well, the job guarantee comes to mind.
Oh, well that works too.That would be great, but I was hoping someone was going to suggest lower taxes for the middle class because it would be a lot easier to implement and possibly more politically feasible.
Why wouldn't we? Austrians are about the only thing holding back real economic science, progress, and the restoration of opportunity here.So does this mean when this crashes and burns you won't blame Austrians?
I mean apart from fiscal stimulus, the whole thing reeks of austrian economics from the start. From the start, the idea that monetary policy can cause inflation is an austrian myth, and why the hell would they levy regressive taxes on consumers as well? It's like Shinzo Abe's policy was raised on austrian assumptions and now he's suddenly a wannabe Keynesian while missing a few details.
I hope their stimulus does something but if it's not enough, yes, their inflation targeting will fail because it's entirely premised on fallacy.
You know nothing of Austrian Economics. Quantity theory of money is accepted by all schools of economics. Austrians don't think it's perfect nor assume money supply is the only cause but rather.. fails to explain the mechanism of variations in the value of money.
No one denies quantity theory of money, but most people don't understand that increasing the money supply (demand) also increases production (supply). It is the belief that "ceteris Peribus" is actually real, that all things stay equal, when they don't.
It's true because a video says so?'Following last night's 'surprising' upward GDP revisions, Japan's trade balance plunged to near-record deficit levels (but that didn't matter) and while China's trade data is questionable at best (and now proven 'false'), Japan is facing a much more considerable worry at home. Abenomics' goal to reduce the value of the JPY to improve competitiveness and spur a renaissance has had a rather nasty side-effect for all the Japanese people who eat, drive, or in any way use energy. The cost of Japan's crude basket has risen 35% in the last six months and is now at its highest for the domestic energy user since 2008 (which sparked the last collapse into deflation). As Bloomberg notes in this brief clip, this surge is not related to demand or the price of oil, but to the devaluation of the Japanese currency and leaves both the refiner crushed on margins and the consumer more cash-strapped.'
The Painful Side Of Japan's "Growth Strategy" | Zero Hedge
It's true because a video says so?
Yeah, ok, I expect that from you.
So now both you and JP claim Abenomics is doing exactly what it's intended to do.Yen is down 13% against the dollar so far this year.