The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.© Thomson Reuters 2023.
Kishida says return to deflation can't be ruled outBy Kantaro Komiya TOKYO
©2023 GPlusMedia Inc.
The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.© Thomson Reuters 2023.
Login to comment
Still price is increasing and people wages still flat.
Amazing prognostication skills by PM Kishida. That is why he gets paid the big yen.
Rising inflation, stagnant wages and his tax hike plans and yes consumer demand is low.
Reiterating something that has not worked out for decades and only benefited large capital holders with easy money.
Human Tape Recorder Fumio Kishida.
Every time it’s always outside causes never the LDPs inability to restructure an out dated business model.
I can’t believe that India, where 90% of people don’t have safe drinking water or proper toilets is replacing Japan as the number three country. Why aren’t Japanese people angry?
""However, Kishida told a session of the upper house of parliament that inflation was being driven by high global raw material prices and a weak yen, not by strong domestic demand.""
Spot On, of course it is. Everyone one is raising their prices and are using the war as an excuse, what do you think will happen when the war ends and they run out of EXCUSES???
I don't think even the best economists have an answer for what ales Japan. It was only two or three years ago that much of the west was struggling to overcome global deflationary pressures. The current bout of inflation is temporary and already slowing down. 40 foot container rates from Shanghai to LA are already below 2019 levels and container volume has similarly fallen to pre 2019 levels. Shipping lines are laying up or scrapping not so old ships because the volume is not there to keep them profitably employed. Economies are returning to their pre-pandemic norms and deflationary pressures are returning. The tools to deal with deflation are more limited than those available to flight inflation.
Well, for starters there are about 126.5 million Japanese compared to 1.4 billion Indians. Even if India's nominal GPD eventually exceeds that of Japan, and there is no guarantee it will, their per-capital GPD and per-capita income will remain a fraction of that of the Japanese. India will required decades, if ever, to achieve a standard of living for it's huge population that is close to that enjoyed by the Japanese. And with the BJP running the show there they are more likely to descend into a genocidal ethnic war, Hindus vs Muslims, than develop into something even a little bit close to a first world nation.
that guy is pathetic fool.clown.earlier he quits-better for all.
This clown is just still yapping his mouth.
is he still on his meaningless world tour?
has he actually passed any useful laws or anything this year?
all we have been hearing this month is a lot of hot air, seen a lot of traveling and ZERO changes.
enough of this joker already
enough of this joker already.
@shogun36. Any idea of a better joker?
Exactly, oil and gas are down from their highs and supply is expected to increase within the next 12-24 months so I don't understand why Japanese energy costs are so high. If they restart the nuclear power plants as suggested, how can they justify such big price hikes on electricity?
Let the record show that after the 4.1% inflation we suffered through this year, a return to the roughly 0.1% deflation that working people enjoyed back in the 2000s would still take more than forty years just to get prices back to what they were one year ago.
Japan had some of the most stable prices in the world prior to the dopey money printing experiment - not to stabilize prices obviously, but rather to have them increase. All as a cover for lazy politicians to keep spending money the government doesn’t have, and probably won’t ever have.
Japan’s debt has exploded.
Japan is in a rut, and has been for decades.
The economic approach that has been followed clearly doesn’t work, and needs to be canned.
Alas this place remains heavily centrally planned and regulated, and taxes success excessively, despite laughable suggestions from some quarters including Kishida himself that “neoliberal” policies didn’t work in Japan.
The truth is that they were never tried; government has its fingers in aaaaall the pies
He’s often right in abstract theory and of course what he calls a new capitalism is somehow needed. But then why he doesn’t anything for it or sometimes even the exact contrary? I have no idea. Doesn’t he believe in his own concept or is there too much resistance around him? If nothing is done, then of course an unhealthy inflation on energy or food etc remains while all the other branches will suffer deflation. Isn’t that easily obvious already? But maybe it even just only lacks a more detailed concept right from the beginning, one that so many others, me included, of course have in their desk tray.
So here is the rub. Japan could do nothing to stop the rapid rise in shipping costs nor could it do anything to stop the rapid rise in energy prices. Forces well beyond the direct control are responsible for those. When China closes a port for two weeks over Covid-19, this creates havoc all across the world as shipping schedules are demolished. Every nation was affected. None of that is permanent howeve.
But before that Japan and much of the developed world including the US were on the verge of deflation. The profession of economics doesn't have a lot of tools to use to counter deflation other than inflationary fiscal and monetary policies. As the pandemic wanes and normal commerce resumes those deflationary pressures resume. If anyone here has a better solution to deflation than to counter it with inflationary policies there is undoubtedly a Nobel Prize awaiting you. Japan also has a demographic problem that exacerbates deflation but might be an easier problem to solve.
Deflation is good for 99.99% of the people, inflation is only good for 0.01%. What economists say is good for the “economy” is almost certainly always bad for the majority.
Japan has had a policy of expressly weakening the yen, which makes foreign imports more expensive.
That weak currency policy is absolutely something Japanese policy makers could reverse, if they had the guts to do so.
Japan is supposed to be a deflation poster child, but prices were basically flat - slightly above or below zero.
That is price stability, and it was a lot better than this horrid inflation that has been dumped on the poorest in society by the central planners.
When we talk about inflation, we mean generally prices are increasing by like 2% or more in recent times.
When people talk about deflation, it is not the case the prices in Japan were generally dropping by 2% or more each year.
I hope indeed to see stable prices again, but I am skeptical that we’ll see them in Japan while continuing the current policies.
What Japan needs rather than fiddling with its money, is overhauling its regulatory and tax environment. But politicians were looking for solutions with which they could dump the blame on others rather than take bold actions themselves.
Even if India's nominal GPD eventually exceeds that of Japan, and there is no guarantee it will, their per-capital GPD and per-capita income will remain a fraction of that of the Japanese
That's stating the obvious, but India's GDP on PPP basis is already bigger than that of Japan.
The cost of living in India is low so the purchasing power is more in India for middle and high income earners and those with inherited wealth.
they are more likely to descend into a genocidal ethnic war, Hindus vs Muslims, than develop into something even a little bit close to a first world nation.
Yeah because first world nations such as yours don't have any social problems for you folks to concentrate on.
The tools to deal with deflation are more limited than those available to flight inflation.
There are enough tools to fight deflation, such as QE, fiscal spending, lowering of taxes, negative interest rates, wage increases etc. But Japan has already used those tools with ambiguous results.
Which is why I say having the highest population sometimes isn't something to boast about.
You kind of made my point. The tools available to fight deflation are limited in both number and effectiveness. Until the pandemic much of the world, not just Japan, was sort of teetering on the edge of a deflationary spiral. That situation is very likely returning and not just for Japan.
So here is why deflation is never good for everybody. Consider that in a deflation wages fall, home values fall, prices fall so business incomes also fall. But guess what does not fall? Outstanding loan balances. Almost every business and most homeowners are in debt in some fashion, either business loans, a mortgage, car and furniture loans, etc. But as personal and business incomes fall loan payments remain constant. In addition those with cash put of buying because they know if they wait prices will fall more. This cuts further into business incomes. There comes a point during a deflation where businesses and individuals can no longer afford their loan payments, and the collateral they put up for the loan has lost so much value that it is worth less at current market prices than the outstanding balance on the loan. When this point is reached there are mass bankruptcy, mass unemployment and human misery rivaled only by war. No economist really knows where the bottom is in a fully developed deflationary death spiral, and no economist worthy of the name ever wants to see a nation go there. To say something like you said that if an economist says it is bad then it must be good is not a very informed statement. I'm an economist by training. I'm telling you that deflation hurts everyone, not just business. In fact the wealthy with cash do better because cash becomes more valuable as deflation sets in. No you can vote me down for telling you the truth.
PPPs are a meaningless chimera. To say housing in India is equivalent to housing in Japan is laughable. An Indian works maybe fewer hours to afford housing but the housing is crap, and you have to live with dirty streets, polluted air and ride grossly unsafe trains. PPP assumes equal products in both societies and that is almost never the case. People use PPPs to make them feel good but they are not a valid comparison.
Maybe so, but who wants to live in a third world dump with sewage in the street streets.
Jalan is ok, if you can’t afford things get a new job or a second job.
I had three jobs in U.K. when young when i saved up to get a mortgage.
here is why deflation is never good for everybody
I'm telling you that deflation hurts everyone, not just business
What you are describing is a deflationary spiral which is like a bottomless pit that Japan is facing.
However deflation can occur because of improvements in technology or in supply chain which is not bad.
There was a well known research paper by American economists on good deflation vs bad deflation.
if you can’t afford things get a new job or a second job.
I had three jobs in U.K. when young when i saved up to get a mortgage
That's the point I am making.
3 jobs for a mortgage is not something that anyone should be happy about.
I worked in the UK for a year and in another developed Asian country for 8 years, but could never afford a home of my own and rentals took up between a third and half of my salary.
An Indian works maybe fewer hours to afford housing but the housing is crap, and you have to live with dirty streets, polluted air and ride grossly unsafe trains.
Depending on what one is willing to pay, housing can be decent and no Indian earning even a middle level income uses public transport these days. It's a different case that they spend most of their day stuck in traffic.
The world's most expensive private residence is in India, but yes I do agree with your point that PPPs don't factor in various other things to make meaningful comparisons.
At the same time, nominal GDP is not the best way to compare either simply because it does not factor in the cost of living. GDP per capita is also meaningless because inflated asset prices make up a major portion of GDP in rich countries with low populations.
Because most people don't have extra money to spend on non-essentials. The solution is simple: More money in the hands of the working/middle classes.
Bottom up, not top down is what works. Unfortunately, the folks on top are the ones in charge.
Sigh. Their analysis is grounded in a model of money supply under the international gold standard. It is not relevant today even as they assert it is. Their analysis draws on data from an era when central banks didn't engage in monetary policy as they do now. They also assert that the deflations experienced during the late 19th Century were the "good" deflation even though nobody at that time thought that seeing the value of their farm and its output fall 20-40% was a good thing.
In 2019 the US was far closer to a deflationary death spiral than Japan has ever approached. There was a well earned 2011 Nobel Prize for the two economists who's work informed the US Fed's and US Treasury's much maligned but completely effective bank bailout, TARP. In one year the US lost between $16-$20 Trillion from its money supply. That is more than the 2019 GDP. The $2 Trillion spent on TARP, most of which was repaid, saved not just the banking system but the entire US economy from a horror no economist wants to contemplate. It is like looking over the lip into an almost bottomless pit with a huge beast at the bottom waiting to swallow you. I exaggerate a bit, but only a bit. It is not a place you want to go and the US teetered on that ledge well into 2011.
It's not. Maybe that's why you can't believe it.
In nominal GDP, India ranks anywhere from #5 - #7, depending on source. (US, China, Japan, and Germany are consistently 1, 2, 3, and 4, in that order.)
If you go by per capita GDP, they barely beat out Nigeria.
Two more points First I should have said "In 2009 the US was far closer to a deflationary death spiral ..." 2009 not 2019. Apologies. And the loss from the money supply exceeded the 2009 GDP. Again my apologies.
Second, one of the things those two economists who earned the 2011 Nobel Prize was that public expectations for inflation or deflation could overwhelm any policy tools available and make it a self fulfilling prophesy. During the 2009-2011 period you probably didn't hear anyone talking about deflation. Policy makers were exceedingly careful not to use that term fearing expectations would overwhelm their meager policy tools per the sage advice of the two Nobel Prize winners. Those of us who are economists and had access to data knew the truth and that time period was a real nail biter.
They also assert that the deflations experienced during the late 19th Century were the "good" deflation even though nobody at that time thought that seeing the value of their farm and its output fall 20-40% was a good thing.
That was their point, that nobody thought that deflation at that time was good, but because it resulted from improvements in supply chain it resulted in real economic growth in the long run.
Also, if one looks at Japan's experience of deflation, it also resulted in stronger exports somewhat though not enough to make up for the collapse in consumer spending and asset prices. If one country experiences deflation and its trading partners experience inflation, that can be considered 'good deflation' because it can lead to higher exports.