tag:blogger.com,1999:blog-5776375569387669394.post5011693672981740947..comments2023-10-19T10:43:38.825-04:00Comments on Free Advice: "But how do you explain Japan's deflation?"Bob Murphyhttp://www.blogger.com/profile/04001108408649311528noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-5776375569387669394.post-70665888568351308722009-12-15T20:55:42.036-05:002009-12-15T20:55:42.036-05:00I thought the reason Japan did not experience exce...I thought the reason Japan did not experience excessive price inflation was mostly due to the Yen Carry trade?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5776375569387669394.post-9924064085086272862009-12-14T23:15:59.122-05:002009-12-14T23:15:59.122-05:00There was a discussion about Japan's case on G...There was a discussion about Japan's case on Gary North's website a few weeks ago. Here's a comment I posted on Gary North's Banking and Politics forum: <i>In <a href="http://www.lewrockwell.com/north/north788.html" rel="nofollow">Why the Deflationist Argument is Wrong in Both Theory and Practice,</a> on LewRockwell.com today, Gary North wrote, "you should dismiss the entire deflationist position as crackpottery".<br />Two of his 6 arguments are "2 The FED has chosen to imitate post-1990 Japan.<br />3 Japan has has never had a year since 1990 in which consumer prices went negative by as much as 2%." The arguments (all 6) are convincing.<br /><br />Can someone then explain this headline today on the Nikkei website: <a href="http://www.nni.nikkei.co.jp/e/fr/tnks/Nni20091202D02JF080.htm" rel="nofollow">Hatoyama 'Shares Views With BOJ' On Need For Beating Deflation.</a> </i><br />Prof. North's response was, <i>Japanese central bankers are Keynesians and don't know what deflation is.</i><br />and<br /><i>Japan could survive because it exported. The yen was not a reserve currency. The dollar is. The world was not ready to dump yen. The world is ready to dump dollars. That is a huge difference. </i><br />Gary North also addressed the issue in an article entitled <a href="http://www.garynorth.com/members/5771.cfm" rel="nofollow">"Spooked by Headlines" (this may be behind a membership wall).</a>Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5776375569387669394.post-6852481080612117142009-12-14T12:49:42.904-05:002009-12-14T12:49:42.904-05:00And Japan's terrible deflation was, what at mo...And Japan's terrible deflation was, what at most a percent a year? Wow, something to be terrified of. I can see where people would be jumping off tall buildings under those conditions.Jim O'Connornoreply@blogger.comtag:blogger.com,1999:blog-5776375569387669394.post-20292957429377809322009-12-14T12:43:11.179-05:002009-12-14T12:43:11.179-05:00Bob
Japan has tried all the monetary and deficit ...Bob<br /><br />Japan has tried all the monetary and deficit levers over the last twenty years without success, just like the US in the thirties. The big difference is that its trading counterparties have been buying Japanese goods, so it has been kept afloat not by government intervention but by its export markets and investment returns on its foreign manufacturing operations.<br /><br />We should be so lucky.<br /><br />The population is savings-driven and is therefore fundamentally different from us Anglo-Saxons. This means that when the Bank of Japan pumps money into the system, it is not spent, but saved and invested, for example, in the carry trade. This is why, I think, that the performance of the Yen defies western logic.<br /><br />Using Japan as a precedent for US economic policy decisions is very foolish.Alasdair Macleodhttps://www.blogger.com/profile/14991410834761387367noreply@blogger.comtag:blogger.com,1999:blog-5776375569387669394.post-28482679253222287482009-12-14T11:07:09.504-05:002009-12-14T11:07:09.504-05:00Japan is an interesting case... but there's o...Japan is an interesting case... but there's one important note: Japan's Year-over-Year growth in M2 never exceeded 4.5% from 1999-2003. In contrast, in the US our YoY growth in M2 has never been BELOW 4.5% since 2006.<br /><br />I'm very happy to grant that inflation won't happen as long as the monetary base growth stays in the monetary base. But, the data suggests that it's NOT staying in the monetary base.Unknownhttps://www.blogger.com/profile/16437750433283509380noreply@blogger.com