politics

BOJ may ease policy for some time to beat deflation: Kuroda

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The BOJ can supply all the bait it wants. But if no one takes it, it's pointless.

Japan and other developed countries need to realize that globalization and "free trade" are limiting their ability to grow. Our future is stagnation.

-3 ( +3 / -6 )

It's no surprise that the actions taken have been a failure as they are based on an errant premise.

You can't dig yourself out of a hole by digging deeper. First, you've got to stop digging, then get creative about climbing out of the hole. The only tool Kuroda, Abe, Noda, and the other Keynesians have is a shovel and haven't the basic sense to stop digging.

2 ( +6 / -4 )

John Galt

It's no surprise that the actions taken have been a failure as they are based on an errant premise.

You can't dig yourself out of a hole by digging deeper

So you have never heard of a tunnel ?

-1 ( +2 / -3 )

After reading this article, check out the picture at left ... the one captioned "business is bad." This scene is what is being seen alll over Japan. Everything planned by Kuroda and Abe seems to be going haywire. As prices rise everywhere thanks to Abenomics, Kuroda keeps saying deflation is still out of control. Nothing makes sense anymore. Perhaps Japan needs some new economic experts to try to dig it out of the doldrums without hurting the average citizen any more.

5 ( +7 / -2 )

The point is that they have to break deflationary expectations. That is not the same as breaking deflation. So long as people and firms expect deflation, whether or not there is in fact deflation, they will hoard cash, not spend or hire, not ask for or expect wage hikes and reinforce the downward spiral.

1 ( +2 / -1 )

Storm, IF they had the creativity to dig a tunnel, they wouldn't be feverishly digging the hole deeper, as they HAVE been, would they.

The truth is they couldn't find their way out of a paper bag.

0 ( +2 / -2 )

Speaking at a global central banking conference here, Kuroda said the central bank’s efforts to overcome deflation by stimulating Japan’s economy with large-scale asset purchases was proving effective.

How does dilluting the currency and devaluing people's incomes "stimulate" the economy? How does borrowing vast sums of money against future tax revenues (which are shrinking in step with the declining population) promote economic growth?

Japan and other developed countries need to realize that globalization and "free trade" are limiting their ability to grow.

It is not globalization or free trade that is causing the decline. Japan has protected it's domestic economy and limited free trade more than any other developed country, and yet now is fiscally worse off. The current situation in Japan seems to point to the opposite of your statement. Globalization is unavoidable, particularly for a country with almost no material resources, no energy resources, and limited agricultural resources. The Edo era didn't end because Japan was wealthy and prosperous living in a closed economy, it ended because a great part of the people lived in poverty, and on the edge of starvation. With much larger countries in the region which have cheaper labor and vastly greater resources, attempting to close the Japanese economy further would be national suicide.

The one and only reason that the economies of developed countries are stagnant is that their public-sector spending has grown too heavy for their private sectors to finance. During the strong-growth eras of developed countries, public sector spending was half or less what it is today. Right now, most companies' largest expense is tax. Tax is higher than payroll, R&D, real estate payments, or other costs. As govermments and government spending grow ever larger, and consume an ever greater part of GDP, the private sector must necessarily shrink, or move elsewhere.

Globalization is one of the greatest checks against governments taking even more, as if they try to take too much, they risk driving business away, and then they get nothing. Steve Jobs laughed when he moved Apple production overseas for this very reason.

6 ( +7 / -1 )

BOJ policies of inflation will fail because:

Higher wages from firms have to come from greater demand of goods & services. That is not coming. Declining & rapidly aging population points to lower domestic demand. Weaker Yen effects are not as strong as in the past. Many Japanese exporters have already diversified globally. Japanese exporters are also not as competitive to other nations as before. Higher import costs will also impede overall competitiveness, especially energy & resources costs. Fukushima nuclear problems will limit Japan attractiveness to businesses & tourists. When higher inflation is achieved JGB bond yields will spike, creating a financial disaster. Higher wages per se will lower the profits of businesses.

Best Japan policy is to be contented, cut down government spending, try to enjoy its savings as much and as long as possible.

5 ( +5 / -0 )

I pay fix interest on my apartment loan :) Let's have more inflation so I will be paying negative interest :))) Well it is working!

1 ( +1 / -0 )

John GaltAug. 24, 2014 - 09:42PM JST

Storm, IF they had the creativity to dig a tunnel, they wouldn't be feverishly digging the hole deeper, as they HAVE been, would they.

The truth is they couldn't find their way out of a paper bag.

Former BOJ chief Mr. Shirakawa has already express his concern about the stagnation. So this is nothing new. Japan is caught between two hard rocks while the demography is rapidly changing in free trade environment.

It is too bad he spoke about the deflation while everybody was in denial. The 2% inflation WILL not be possible and attainable. Now Japan is addicted to drugs (printing money). .

0 ( +1 / -1 )

So you have never heard of a tunnel ?

They are not digging a tunnel, they are like termites eating the heart out of the economy. Pretty soon, the economy will be so rotten and weak that it will collapse under it's own weight. But by that time, the politicians have cashed out, and those of us who remain will have the mess fall down on our heads.

5 ( +5 / -0 )

hkitagawa: I pay fix interest on my apartment loan :) Let's have more inflation so I will be paying negative interest :))) Well it is working!

Sorry, after government, banks and bank execs, zaibatsu, and keiretsu get their cuts, your negative is back to positive again.

:(.

3 ( +3 / -0 )

The idea of quantative easing being able to make people expect inflation and therefore spend money is a little strange.

To my way of thinking, people will spend their money when they are confident about the economy and their future. The BOJ buying lots of JGBs doesn't inspire my confidence in either the economy or it's future, it's just potentially creating stagflation.

The biggest failure lies with the politicians and bureaucrats who should just get out of the way of the Japanese economy and let it figure out how best to grow by itself.

2 ( +2 / -0 )

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