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BOJ's Kuroda says he won't rule out deepening negative rate cut

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This guy is an economic joke and if he had any honor, he would resign and bow down to Masaki Shirakawa (BOJ former governor) and ask for his forgiveness in deriding his opinion that there's very little the BOJ can do about domestic inflation because of demographic and market variables.

Kuroda has used up all of Japan's fiscal gunpowder and everything from now is just talk. You wait till after the BOJ meeting in September, the Yen will hit the mid-90s to the dollar, if not the 90 to 93 range.

2 ( +3 / -1 )

The crucial issue is to make sure the negative rates affect corporations as well as banks. Incompetent and unimaginative time-serving managers currently (Mar 2016 numbers) have more than JPY200,000,000,000,000 in cash, and this amount is growing by more than 8% annually. Forcing them to disgorge it, whether by investments, dividends or buy-backs, would put that money into the hands of the people - it averages about JPY1.6 million for each citizen - and provide a great stimulus to the economy,

The smarter and more direct alternative is a temporary surtax on retained earnings, but the keidanren would never allow it.

2 ( +2 / -0 )

The people need the money and higher wages to spur the economy not giving Banks and corporations. Higher wages increases spending Spending increases growth and jobs. Feed the people not the corporations and banks

The people do not need more money, they simply need to spend less of it on the goods they need. The problem is not that wages are too low, but that the cost of living is too high. Simply raising wages will result in two things, costs increasing to compensate, and the number of jobs and hours people work reduced, which has the same effect. Incomes in japan are quite high, but disposable incomes (what is left after living expenses and taxes) is quite low.

If Abe and the BOJ kept their sticky fingers out of the economy, deflation would bring prices down to an affordable level, which seems to be happening anyway. When the cost of goods and services decreases, the net effect is the same as a wage increase, right?

But since public spending and the national budget depend on at least 2% inflation in order to be feasible (because inflation is a stealth tax which devalues debts), Abe and the BOJ cannot allow deflation to occur. They are trying to cause inflation in an environment where the natural trend is deflationary. In such an environment, wages cannot keep up with inflation, because consumption continues to decline, because things were too expensive to begin with. How exactly can companies pay higher wages when they are losing hundreds of thousands of customers per year, and the few customers who remain are older people who are more frugal with their money?

Abe and the BOJ seem incapable of understanding basic math. High cost of living equals reduced consumption and population decline. Reduced consumption and population decline equal less sales, income, wages, and tax revenue. By trying to cause inflation with cost-push inflation, the cost of living is pushed higher, which results in less consumption, population decline, decreased sales, income, wages, and tax revenue. So what do they do? More of the same!

2 ( +2 / -0 )

It sounds like he's trying to talk down the yen.

1 ( +3 / -2 )

The people need the money and higher wages to spur the economy not giving Banks and corporations. Higher wages increases spending Spending increases growth and jobs. Feed the people not the corporations and banks

1 ( +1 / -0 )

BOJ & MOF measures should be to: Make Yen very weak, through basically some forms of helicopter money to buy sometime. Make public housing cheap, good, plentiful and very big. Make child-care centers cheap, good and plentiful.

In a country where most food, almost all materials, and most energy is imported, weakening the yen harms more than it helps. You may not realize it, but Japan's economy is not export based; domestic consumption accounts for more than half of what Japanese industry produces.

The "helicopter money" strategy has been tried 17 times in the past 21 years, and what good has it done? Making public housing cheap requires that someone pay a subsidy, basically robbing Peter to pay Paul. The people may get cheaper housing, but the cost of the taxes used to subsidize their housing will inevitably come out of their pockets. We know from decades of experience that rent controls do not work, and that no matter how hard the government tries, it cannot regulate the cost of housing. Housing costs what people in that area are willing to pay for it, and such has always been the case, regardless of where you live.

Build more cheap infrastructural centres available for tech innovation, tech of things, etc with special rental subsidies to young entrepreneurs.

Why does the government have to build or finance such things? If building such centers generated jobs and revenue, companies would have built them years ago. And since technology requires little in the way of space, factories, workers, or support staff, the effect of a strong tech industry has a much smaller positive influence on the economy than a strong manufacturing base. Already those in the tech sector are seeing their jobs dry up as workers in India and other places do quality work for a fraction of the price.

We don't need a strong tech industry, even a strong restaurant industry would employ more people, and provide a better foundation to the nation's economy. People don't need to play with gadgets, share pet videos, or download music, but they do need to be fed, housed, clothed, transported, educated, and whatnot, and these essentials are more important. The tech industry performs three main functions, exchange information, entertainment, and advertising. The entertainment part makes money, but not as much as advertising, and there is no point in advertising if there are not goods to sell, like food, clothes, housing, cars, trucks, etc. And the exchange of information pertains mostly to those who produce, buy, sell, or exchange food, clothes, housing, cars, trucks, etc.

Raise wages of nurses, policemen, soldiers, teachers in government sector.

Absolutely not (and I am a former policeman and soldier). These are public services, and the people who perform these jobs should be serving for our benefit. These jobs should be done for a small wage, and in exchange for a university education, or learning a useful trade. There should be no such thing as a career civil servant, except for a small body of supervisors and officers. When you make public sector jobs very highly paid, eventually the public sector employees end up becoming the masters, and the taxpayers become the servants. This cannot be allowed to happen, go to Illinois and see the results of this practice.

domestic demand will be stronger through higher wages.

This is backwards, wages do not drive demand, demand drives wages. Demand occurs when a product is scarce, or when the price is low enough that the masses can afford to buy the product. When you increase wages, the price of the product must be increased to pay those wages, which reduces demand, increases it's supply, which eventually pushes prices back down. In order to make ends meet with lower prices and higher wages, jobs must be eliminated, or moved to some place where labor is cheaper. This is economics 101 here, not rocket science.

What Kuroda and Abe need to do is simply get out of the way and let the economy work. They need to stop subsidizing agriculture and Japan Inc at the people's expense, they need to eliminate the barriers to competition which drive up the cost of living (and so drive down consumption and population), and they need to reduce public sector spending to a level which the private sector can afford to support. They have to understand that a strong economy is based upon a motivated, active, and industrious people who simply want to succeed, and not by government policy and cronyism.

1 ( +2 / -1 )

Kuroda has used up all of Japan's fiscal gunpowder and everything from now is just talk. You wait till after the BOJ meeting in September, the Yen will hit the mid-90s to the dollar, if not the 90 to 93 range. you willing to bet your money on the FOREX for that prediction, while its certainly a possibility itll be a brave trader to take that gamble. Personally Ill stick with what I know will produce a steady income for my business and let the speculators stress whether they'll be richer or poorer in the coming months.

0 ( +1 / -1 )

BOJ & MOF measures should be to: Make Yen very weak, through basically some forms of helicopter money to buy sometime. Make public housing cheap, good, plentiful and very big. Make child-care centers cheap, good and plentiful. Build more cheap infrastructural centres available for tech innovation, tech of things, etc with special rental subsidies to young entrepreneurs. Raise wages of nurses, policemen, soldiers, teachers in government sector. Then confidence in building bigger family units will increase, while business risk taking will be reinforced and lastly domestic demand will be stronger through higher wages. Exporters trade surpluses will also help as a buffer. Determined leadership despite difficulties; bazooka after bazooka...Mr. Kuroda...not time to stop the firing.

-1 ( +0 / -1 )

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