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© KYODOBOJ under pressure as inflation tops 2%
By Noriyuki Suzuki TOKYO©2024 GPlusMedia Inc.
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© KYODO
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Peter Neil
For heavens sake, the BOJ has been doing everything possible to reach a target inflation of 2% for a decade.
The global financial system, including the BOJ and the FED and bankers, are nothing but charlatans and con men.
AgentX
The usual catch phrases, including this one...
Please, stop. Turns out the bulk of the public isn't that stupid after all and are finally waking up to the global fleecing going on for 'most 2.5 years now...
JeffLee
The BOJ's credibility now depends on whether the current inflation remains at its level or goes higher, or whether it's temporary. If the Ukraine shock eases and China finally conquers its COVID crisis (with better vaccines), I expect prices will move back down again, and the BOJ's loose policy will be warranted.
AgentX
Since when have prices gone down in JP?
Skeptical
Found yourself asking, “what is forced savings”? And how can it be a savior?
Good questions.
In the most common usage, forced savings / involuntary savings is
Close, but not quite there, you would say. And you would be right; particularly since it involves the integration of severals theories of economics, that do not always apply in the real world. Or make sense in all situations.
Here is a way of looking at this, that might take us closest to where the Bank of Japan is hovering towards salvation. If looking, not at redistribution of wealth that may accompany a credit-driven boon, in a boon-and-bust model, then forced savings may refer more closely:
Perfect? No. But is a starting point. But it is kind of interesting. And good for a robust discussion.
If this has drawn out the natural economist in you, there is much more available in the above reference at https://webhome.auburn.edu/~garriro/strigl.htm.
And if this really inspires a deeper understanding, you can ruminate over the base theory with the Austrians at the Mises Institute - Jesús Huerta de Soto, Artificial Booms and the Theory of "Forced Saving,"2018, for The Mises Institute - at https://mises.org/wire/artificial-booms-and-theory-forced-saving .
Good times.
GBR48
Folk with 'forced savings' are lucky.
For many of us, the pandemic was brutally expensive in lost business, lost earnings and higher costs.
Rich people won't notice inflation. It is the poor who will feel it, with no savings, forced or otherwise. And it is the basics that the poor buy - food and energy - that are going up the most.
Real price rises for food products are more like 20% to 50% in Europe. Japan must be truly special if it gets 2.2% this year, falling to 0.7% next year.
Wage hikes won't help. They won't keep pace with inflation and they will be paid for by further increasing prices for goods and services, which will in turn push inflation up even more.
This is not Abe's 'virtuous cycle' but a toxic one.
Successive Japanese PMs might regret signing their names to a policy promoting the joys of inflation, now that it is here.
I guess deflation is one of those things you only appreciate after you have lost it.
JeffLee: The US and EU are settling in for a long war accompanied by a wider Cold War 2.0, whilst Covid Zero is not just unsustainable, but impossible to maintain with Omicron. To get Covid figures down, it has to run through a (preferably vaccinated) population. That means letting the case numbers shoot up and then come down naturally, as happens with seasonal flu. That has happened in the UK and much of Europe. China continues to suppress Covid, so it will return as soon as they reduce their lockdowns. They have condemned themselves to an Orwellian endless war in pursuit of Covid Zero, with their citizens and economy as the victims. It is 50/50 whether Japan will close its borders again (needlessly) for monkeypox. That is a political decision. But don't expect a fast rebound unless someone bumps off Putin and the next Russian regime decide to rejoin civilised society.
The BoJ will always consider their credibility to be intact. If things don't go the way they say, they will just point to something unexpected and give that as the reason why they got it wrong.
Skeptical: Quoting: The prices of consumer goods are bid up, which . . . "brings about the tendency toward forced saving."
No. When consumer goods go up, people have to pay more for them and have less cash. Poor people don't have luxury goods that they can put off buying. Everything they have, they need, and when it fails, they have to replace it.
JeffLee
AgentX
Since the bursting of the Japanese bubble and until quite recently. The cost of living in Japan before 1992 was outrageous.
AgentX
Fair point, but at what cost?
And prices were going down until recently? I didn't notice...
Septim Dynasty
The mission is accomplished?
Abenomics finally brought inflation to Japan at the cost of becoming a poor country that will be heavily reliant on foreign, communist money.
Abe234
If it wants to increase inflation it might want to consider increasing sales tax 1% every year to break that psychology of deflation and prices never moving instead of jamming in 2% increase every few years, then saying it’s to pay for blah blah when the truth is, it’s to keep the ship steady or pay the debt. If inflation goes too high, japans going to be crushed if interest rates have to go up. But I wonder if japans strategy is to let all the other countries do the work in keeping prices down as Japan is mainly an export country, then repatriate the dollar’s, pounds, euros, as it’ll get more taxes from the huge corporations.
fxgai
Central planning in Japan has been such a roaring success, hasn’t it.
Anyone remember Kuroda’s original 2-2-2 thing? Steady 2% inflation in 2 years by doubling the monetary base.
Completely didn’t do what Kuroda claimed it would do, yet almost a decade later, there he still is.
The only 2 in there is the value of the yen, cut in half.
2 Year Old
They don’t seem to factor in the quantity in food packets has been shrinking for a decade. You get way less value for the yen these days.
Just noticed this week, the packet of ice creams my daughter likes, down from frozen 7 bars per box last time I bought them, to now 6 bars. The size of each one is at least 30% smaller than a few years ago, yet price remains the same.
The supermarkets in my area always sold fish with three pieces per pack. Now they are all two.
Yoghurts went from 500ml to 450, past year or two down to 400ml and some are even claiming a huge 375ml per container!
Some milk companies tried to sell 900ml cartons… in my area very few people bought them, so they changed back to 1 liter.
Hundreds of examples over the past decade, at least In Chūō-ku Tokyo.
Sven Asai
That’s all only becoming a problem if a majority of 51% or more would be affected and getting some first slight feelings of becoming poorer. But that’s obviously not the case so far. They all have average or quite ‘fat’ cars and completely fill with them all available parking lots of the Pachinko parlors. That’s the economical indicator here, the only one that really counts and gives you all information you need. Complaining loudly about some lunch or food prices rising a few yen, but still happily gambling away several 10,000¥ bills, that’s giving you a more realistic picture.
Robert N
Central bank scam continues. Nothing to do with inflation and everything to do with trying to keep borrowing costs down so the J Govt and can issue more deb
albaleo
My memory is that only house prices and stock prices fell, after rising massively during the bubble.