Belz...
Fiend God
Last edited:
More deflation in Japan
- Thread starter Puppycow
- Start date
Francesca R
Girl
No I don't think it's random, but the S:N ratio in exchange rates (in my view) is very low. So low that it looks random over a year, but not so low it does over 10 years. Having said that I personally find them one of the better investment dimensions. I have lost more money (for longer) on bonds than on FX (some would say because the markets are manipulated, but that ought to make it easier IMO)
Puppycow
Penultimate Amazing
Man, how hard is it to get to a lousy 2% inflation rate?
BOJ Seen Deploying Price Forecasts as Tool Against Deflation
Two more years of massive QE just to get the inflation rate up to a paltry 2%?
Although I guess that's what the plan previously announced said.
BOJ Seen Deploying Price Forecasts as Tool Against Deflation
Two more years of massive QE just to get the inflation rate up to a paltry 2%?
Although I guess that's what the plan previously announced said.
kevsta
RBL CHeck Failed
- Joined
- Jun 28, 2007
- Messages
- 4,016
as always, depends where you're looking for it?
http://www.ft.com/intl/cms/s/0/0ac0229c-a830-11e2-8e5d-00144feabdc0.html#axzz2RBR7PTdz
markets (stocks and Fx) will front-run the CB's actions, but its difficult to get the inflation to go exactly where they want to measure it.
Puppycow
Penultimate Amazing
Oh, yeah. I heard about that the other day. It's the first price rise in 5 years though. Also, near the end of the article it says:
Actually the price of the McNuggets was already reduced from 250 yen to 190. The change for the fries is from like 190 to 150. The burgers were one of the value items on the menu for cheapskates like me (the equivalent of the dollar menu in the US, 100 yen being roughly equivalent to a dollar). The larger burgers like the Big Mac are staying about same and they send you coupons to your mobile phone if you download their app.
Really ? You don't understand the jeopardy of deflation ?
Why should I buy today something I can buy tomorrow ? rinse and repeat this statement until it turns out that I never buy that thing at all.
On a larger scale, apply it to industry. Why should invest now when I can make the same investment later, cheaper. With no incentive to invest it simply does not happen.
Here's an opinion piece on the subject:
http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/
kevsta
RBL CHeck Failed
- Joined
- Jun 28, 2007
- Messages
- 4,016
I understand the arguments, but you buy it today because you need it? if it's an optional item, when you want it, you'll still buy it.
ie I want to go jetskiing this summer, and I dont have one, and this (cheaper than last years one) looks pretty good to me. I have the money saved, why not?
again, because you need it for your business? if not, you shouldn't be investing (using debt generally) on it anyway.
I don't think I've ever agreed with a single thing he's said. he seems to think the whole funnymoney and exponentially increasing
Last edited:
Enough people don't buy it, preferring to wait until tomorrow when it will be cheaper.
Because if you wait until tomorrow it'll be even cheaper. Of course things still get bought but there is a margin of people who will not end up buying.
Investment is always optional. Here in the UK, companies are sitting on huge piles of cash because they aren't confident enough to invest. Add to that the likelihood that investing later will be cheaper and you have a double disincentive to invest and you'll certainly want to drive down wages as well.
He's presented arguments to demonstrate why deflation is bad using real observations in real economies to demonstrate those arguments.
Puppycow
Penultimate Amazing
It's not just theoretical, see The Great Depression for a real-world example of deflation in action.
In Japan it never actually got as bad as that, but the deflation wasn't as severe either. Still, it has been called "Japan's lost decade" (probably more like two decades actually)
Last edited:
kevsta
RBL CHeck Failed
- Joined
- Jun 28, 2007
- Messages
- 4,016
yea but the thing is, they never just let it happen and play out, do they?
if we ever have a sniff of deflation anywhere you can guarantee our central defenders will be battling it vigorously. if the Japanese had not been attempting unsuccessfully to fight it for the last 20 years, it would have been and gone again by now.
if you've had an inflationary boom, maths says you're going to deflate, either violently and quickly (with associated losses of unsuccessful businesses and investors) or attempt to prevent those losses and stimulate for the next 20 years but get nowhere.
better minds than I think that this route can only lead to ultimate destruction of the currency, and I have to say this is looking like a distinct intermediate term possibility with Japan now.
In relatively modern economies you're right, something is either done, or a war gets in the way which stimulates demand (I'm not claiming that the war was started to stimulate demand) but in the past they've let it play out and the results haven't been that great. The Great Sag in late 19th century USA is an example.
You still don't get it, after multiple posts and multiple years on this forum. Deflation due to money shocks in a debt money/fractional reserve system is bad to the extent it is destabalizing. Deflation due to increases in the supply of goods and services is good. Things getting cheaper is good, as long as you have a job and money to pay for them.
If the BOJ's supposed goal is to create inflation, why don't they just cut everyone in Japan checks, instead of propping up their crony's financial assets by buying them, or perpetually lending them cheap money to buy them?
Last edited:
Deflation due to oversupply can also be very destabilising for an economy. If the oversupply is due to increased efficiency then that's fine, if instead it's just a matter of driving down costs by reducing wages without any improvements in efficiency then that's not a good thing.
I don't know, maybe the Japanese have a very low marginal propensity to spend. If you cut them a cheque they'll just stick it in the bank (that's what I'd do). Maybe the Japanese government are concerned that the money won't be used in an economically efficient manner and will just be blown on [lazy stereotype]anime, schoolgirl panties and huge DSLRs [/lazy stereotype]
Belz...
Fiend God
Which just fuels deflation further.
Because it does nothing to increase exports.
The Central Scrutinizer
Penultimate Amazing
- Joined
- Dec 17, 2001
- Messages
- 53,097
I wouldn't brag about that.
kevsta
RBL CHeck Failed
- Joined
- Jun 28, 2007
- Messages
- 4,016
its not a great surprise that you and he would see eye to eye
The Central Scrutinizer
Penultimate Amazing
- Joined
- Dec 17, 2001
- Messages
- 53,097
I don't know a whole lot about Krugman, haven't really read very much that he's written. But one thing I noticed was that his biggest critics always seemed to be gold bugs and POtards on internet forums. Then I went to Omaha last May and heard Charlie Munger speak. Krugman's name came up, and Munger referred to him as a "genius", to which Mr. Buffett nodded in agreement. That spoke volumes.
So let's review:
[table=head]Who|Opinion of Krugman
Charlie Munger|Brilliant
Warren Buffet|Brilliant
Internet Gold Bugs|Idiot
POtards|Idiot
[/table]
I rest my case.
kevsta
RBL CHeck Failed
- Joined
- Jun 28, 2007
- Messages
- 4,016
you haven't missed much. easily summarized by "PRINT MOAR!"
although we did have his defining shark moment a while back..
...
is it any surprise that crony capitalists who were bailed out by money printing, would be in favor of money printing in general, and those who clamor for it publicly in particular? not to people who don't have man crushes on said crony capitalists.
and the great moneyprinting deity The Bernank himself described Krugman's proposals as "reckless", I rest my case.