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> Japan has very low wages... so inflation is catastrophic Wages increase with government spending (and inflation), unless productivity falls a lot or there's
by mitthrowaway2 2y ago
> Japan has very low wages... so inflation is catastrophic
Wages increase with government spending (and inflation), unless productivity falls a lot or there's a huge wealth transfer from labor to capital. When the government prints a bunch of money and uses it to purchase a bunch of rice from Japanese farmers, that money ends up as higher wages for farmers and their supply chain, and this in turn circulates throughout the economy, as one farmer's spending is another retail worker's wages.
This doesn't help retirees of course, who aren't earning any more, but the government can choose to hand them more money too if necessary; inflation-indexed pensions are a policy choice. (Although I would say that they should be handing more money to young children, in the custody of their parents).
- alephnerd 2y ago[flagged]
- mitthrowaway2 2y agoFortunately you're not arguing with a "tech bro". When I refer to government spending and money-printing I am talking about fiscal policy, which can produce inflation if not counterbalanced by taxation. The BoJ, like any central bank, sets monetary policy in response to inflation (and expected inflation) and will raise interest rates if inflation increases; this is what "implements monetary policy with the aim of maintaining price stability" means. Although most central banks, the BoJ included, consider price stability to be a state of low inflation, not necessarily zero inflation.