4 ms·

It definitely can, but it's not guaranteed. Japan has been effectively printing money for ages, but it hasn't really led to inflation because demand is so weak

by s_Hogg 7y ago

It definitely can, but it's not guaranteed. Japan has been effectively printing money for ages, but it hasn't really led to inflation because demand is so weak - nothing gets bid up.

benj111 7y ago
Well that's easy, you just build bullet trains everywhere, and create a culture where people build new houses, rather than buy second hand [1]. That should get things moving... Snark aside, are there any good sources looking at Japanese economics, because they don't seem to follow the same rules as everyone else. [1] https://www.theguardian.com/cities/2017/nov/16/japan-reusable-housing-revolution https://www.theguardian.com/cities/2017/nov/16/japan-reusabl...
- RobertoG 7y ago
  I would recommend looking at it from a Modern Monetary Theory perspective (1) (2). In my case, it's only then, when everything started to make sense. (1) - http://bilbo.economicoutlook.net/blog/?p=33094 http://bilbo.economicoutlook.net/blog/?p=33094 (2) - http://bilbo.economicoutlook.net/blog/?p=40250 http://bilbo.economicoutlook.net/blog/?p=40250 They (Japan) themselves are doing it: https://www.bloomberg.com/news/articles/2019-06-05/japan-worries-about-its-deficit-as-mmt-argues-there-s-no-need https://www.bloomberg.com/news/articles/2019-06-05/japan-wor...
  - s_Hogg 7y ago
    Given that even the proponents of MMT don't agree on what it is, I wouldn't. Economics as a discipline has problems(1), but I don't think MMT goes anywhere near to addressing them, nor to providing a scientific basis for doing so. (1) Source: I hold a bachelor and master degree in econ
    - RobertoG 7y ago
      >>"Given that even the proponents of MMT don't agree on what it is [..]" I'm not an economist but I have read a lot of the MMT literature, including the available textbook (1) and it's a totally coherent framework. Can you point me to some of those contradictions that you have observed? (1) - https://www.amazon.com/Macroeconomics-William-Mitchell/dp/1137610662/ref=sr_1_1?keywords=macroeconomics+mitchell&qid=1566640356&s=gateway&sr=8-1 https://www.amazon.com/Macroeconomics-William-Mitchell/dp/11...
- coldtea 7y ago
  >Well that's easy, you just build bullet trains everywhere, and create a culture where people build new houses, rather than buy second hand [1]. That should get things moving... Yeah, so?
marvin 7y ago
They should just throw money out of helicopters. That ought to do it. Dunno why nobody has tried doing that yet.
- pjc50 7y ago
  Protestant work ethic. Giving the average working person money without making them "earn" it is seen as far more offensive to the order of society than, say, burning down the Amazon.
  - dredmorbius 7y ago
    Just to give an entirely hypothetical example. </s>
- imtringued 7y ago
  Because that is the responsibility of the parliament. The problem with that is that the parliament will become addicted to the infinite monry spigot since the parliament isn't bound by the inflation target. If the central banks were authorized to hand out a pseudo UBI but only to hit inflation goals then helicoper money might work. It's basically some stupid political game.
- s_Hogg 7y ago
  Australia avoided recession in 2008-09 by doing almost precisely this. Everyone got A$900 or thereabouts (a month's rent or more for some). Worked fantastically. Think of it as applying a defibrilator to all parts of the body at once because there's no central point you can target. Infrastructure projects aren't as good as this because they take time and only really effect one particular geographic region with some spillover if you're lucky.
  - blackbrokkoli 7y ago
    Defibrillators literally kill people after which you can manually revive them because their ventricular fibrillation is stopped. Maybe the metaphor is still fitting but I'm not sure you were going for it...
sumedh 7y ago
> Japan has been effectively printing money for ages, but it hasn't really led to inflation because demand is so weak So where does this extra money go?
- s_Hogg 7y ago
  In large part, overseas. Japan has long been known for what's called "the carry trade". This is where you borrow money at whatever ridiculously low rate is available in your jurisdiction (e.g. Japan) and then "carry" it to somewhere that has a higher interest rate and invest it there. You then pocket the difference (or spread). I hasten to add that this is due to low interest rates rather than inflation, but guess how we wound up with low rates. The deflation Japan has been suffering from directly arises from the expectation that prices will be lower tomorrow compared to today. So why spend? Invest it somewhere instead. This carry trade stuff has really screwed with a number of exchange rates relative to the Yen and has been going on for a long time.
  - sideshowb 7y ago
    So why is Japan perceived as expensive by most other countries? You'd think this activity would cheapen the yen

by s_Hogg 7y ago

It definitely can, but it's not guaranteed. Japan has been effectively printing money for ages, but it hasn't really led to inflation because demand is so weak - nothing gets bid up.

benj111 7y ago

Well that's easy, you just build bullet trains everywhere, and create a culture where people build new houses, rather than buy second hand [1]. That should get things moving... Snark aside, are there any good sources looking at Japanese economics, because they don't seem to follow the same rules as everyone else. [1] https://www.theguardian.com/cities/2017/nov/16/japan-reusable-housing-revolution https://www.theguardian.com/cities/2017/nov/16/japan-reusabl...

RobertoG 7y ago
I would recommend looking at it from a Modern Monetary Theory perspective (1) (2). In my case, it's only then, when everything started to make sense. (1) - http://bilbo.economicoutlook.net/blog/?p=33094 http://bilbo.economicoutlook.net/blog/?p=33094 (2) - http://bilbo.economicoutlook.net/blog/?p=40250 http://bilbo.economicoutlook.net/blog/?p=40250 They (Japan) themselves are doing it: https://www.bloomberg.com/news/articles/2019-06-05/japan-worries-about-its-deficit-as-mmt-argues-there-s-no-need https://www.bloomberg.com/news/articles/2019-06-05/japan-wor...
- s_Hogg 7y ago
  Given that even the proponents of MMT don't agree on what it is, I wouldn't. Economics as a discipline has problems(1), but I don't think MMT goes anywhere near to addressing them, nor to providing a scientific basis for doing so. (1) Source: I hold a bachelor and master degree in econ
  - RobertoG 7y ago
    >>"Given that even the proponents of MMT don't agree on what it is [..]" I'm not an economist but I have read a lot of the MMT literature, including the available textbook (1) and it's a totally coherent framework. Can you point me to some of those contradictions that you have observed? (1) - https://www.amazon.com/Macroeconomics-William-Mitchell/dp/1137610662/ref=sr_1_1?keywords=macroeconomics+mitchell&qid=1566640356&s=gateway&sr=8-1 https://www.amazon.com/Macroeconomics-William-Mitchell/dp/11...
coldtea 7y ago
>Well that's easy, you just build bullet trains everywhere, and create a culture where people build new houses, rather than buy second hand [1]. That should get things moving... Yeah, so?

marvin 7y ago

They should just throw money out of helicopters. That ought to do it. Dunno why nobody has tried doing that yet.

pjc50 7y ago
Protestant work ethic. Giving the average working person money without making them "earn" it is seen as far more offensive to the order of society than, say, burning down the Amazon.
- dredmorbius 7y ago
  Just to give an entirely hypothetical example. </s>
imtringued 7y ago
Because that is the responsibility of the parliament. The problem with that is that the parliament will become addicted to the infinite monry spigot since the parliament isn't bound by the inflation target. If the central banks were authorized to hand out a pseudo UBI but only to hit inflation goals then helicoper money might work. It's basically some stupid political game.
s_Hogg 7y ago
Australia avoided recession in 2008-09 by doing almost precisely this. Everyone got A$900 or thereabouts (a month's rent or more for some). Worked fantastically. Think of it as applying a defibrilator to all parts of the body at once because there's no central point you can target. Infrastructure projects aren't as good as this because they take time and only really effect one particular geographic region with some spillover if you're lucky.
- blackbrokkoli 7y ago
  Defibrillators literally kill people after which you can manually revive them because their ventricular fibrillation is stopped. Maybe the metaphor is still fitting but I'm not sure you were going for it...

sumedh 7y ago

> Japan has been effectively printing money for ages, but it hasn't really led to inflation because demand is so weak So where does this extra money go?

s_Hogg 7y ago
In large part, overseas. Japan has long been known for what's called "the carry trade". This is where you borrow money at whatever ridiculously low rate is available in your jurisdiction (e.g. Japan) and then "carry" it to somewhere that has a higher interest rate and invest it there. You then pocket the difference (or spread). I hasten to add that this is due to low interest rates rather than inflation, but guess how we wound up with low rates. The deflation Japan has been suffering from directly arises from the expectation that prices will be lower tomorrow compared to today. So why spend? Invest it somewhere instead. This carry trade stuff has really screwed with a number of exchange rates relative to the Yen and has been going on for a long time.
- sideshowb 7y ago
  So why is Japan perceived as expensive by most other countries? You'd think this activity would cheapen the yen