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This comes up on HN all the time [0] and it's complete garbage. Japan has a fiat currency; how have they dodged inflation? Where are the successful non-fiat eco

This comes up on HN all the time [0] and it's complete garbage. Japan has a fiat currency; how have they dodged inflation? Where are the successful non-fiat economies? If there's some kind of moral hazard with printing money, why is one of the Fed's 2 mandates to keep inflation at 2%? Why aren't they constantly printing money? Why isn't inflation 1000%? How long do we have to wait for this conspiracy theory to prove out? [0]: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&query=wtfhappedin1971&sort=byPopularity&type=story https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que...

somenameforme 2y ago
Japan is probably not the example you're after as it isn't the country many of us remember from back in the day when it was rivaling the US for economic dominance. Their economy has been in recession/stagnation for about 3 decades now. Their stock market is now finally above where it was in 1989, up 1.5%. [1] Though that will probably be short lived, especially as their population is now dying off fast enough that even places like Tokyo are declining in population! It's a great recipe for affordable housing, keeping inflation manageable, and much more. Probably not an advisable path to go down though! An example of a successful non-fiat economy would obviously be the US. Until 1971 we had various forms of backing to our currency. After 1971 we invented this abomination of a system which probably only lasted as long as it did thanks to the growth of digital technologies making infinite growth, to meet infinite debt, briefly sustainable, all be it only with rather dramatic consequences, particularly for the lower half of society. [1] - https://tradingeconomics.com/japan/stock-market https://tradingeconomics.com/japan/stock-market
- camgunz 2y ago
  The only real problem the Japanese economy has is their top-heavy population, which isn't a result of monetary policy. By your own metric of Japan's failure (stock market value), the US economy has excelled tremendously since 1971 (yes, even adjusting for inflation), so now I'm confused about what argument you're making. I also assume all the other points I made stand.
  - somenameforme 2y ago
    The point with Japan is that their economy is completely stagnant. It's entirely possible to see a healthy growing economy without having runaway inflation. Again, the US was the obvious example. The Campbell's Soup Index is quite a visible illustration of how radically things changed. But with our current system you get endless inflation that negatively affects vast swaths of the population to the benefit of a relatively small percent. Or you get Japan - which went from competing for the world's largest economy to having a dead economy. As a side note, population age ratios are directly determined by fertility rates. And we went from a system where people were comfortably raising family on a single income, to one where full time workers living alone are, in many cases, not exactly thriving, let alone trying to raise a whole family on that income. Most developed economies are seeing fertility rates plummet and it's entirely possible that monetary policy is indeed playing some potentially significant role in that!
    - camgunz 2y ago
      I like the Japan example because they are a modern economy that is absolutely maniacal about inflation, yet their quality of life is very high and their currency floats. Fiat hawks can't countenance this, and have some Rube Goldberg explanation about how floating currencies cause declining birth rates which lead to the only problem the Japanese economy really has. Aside from there being so, so many other reasons for declining birth rates (if less money means less likely to have kids, why do people with higher incomes or wealth have lower birth rates than those without?), Japan doesn't print money: its inflation is famously low. How can a country with famously low inflation experience declining birth rates due to high inflation from printing money?
      - somenameforme 2y ago
        My friend you are again severely lacking knowledge here. Saying Japan doesn't print money is like saying that 2+2=5. They are literally the founding fathers of modern quantitative easing and also one of the clearest examples of why it's not really a productive policy in anything beyond the shortest timeframes. It seems you are more a fan of writing than reading, but this link would be informative. [1] [1] - https://www.investopedia.com/articles/markets/052516/japans-case-study-diminished-effects-qe.asp https://www.investopedia.com/articles/markets/052516/japans-...

somenameforme 2y ago

Japan is probably not the example you're after as it isn't the country many of us remember from back in the day when it was rivaling the US for economic dominance. Their economy has been in recession/stagnation for about 3 decades now. Their stock market is now finally above where it was in 1989, up 1.5%. [1] Though that will probably be short lived, especially as their population is now dying off fast enough that even places like Tokyo are declining in population! It's a great recipe for affordable housing, keeping inflation manageable, and much more. Probably not an advisable path to go down though! An example of a successful non-fiat economy would obviously be the US. Until 1971 we had various forms of backing to our currency. After 1971 we invented this abomination of a system which probably only lasted as long as it did thanks to the growth of digital technologies making infinite growth, to meet infinite debt, briefly sustainable, all be it only with rather dramatic consequences, particularly for the lower half of society. [1] - https://tradingeconomics.com/japan/stock-market https://tradingeconomics.com/japan/stock-market

camgunz 2y ago
The only real problem the Japanese economy has is their top-heavy population, which isn't a result of monetary policy. By your own metric of Japan's failure (stock market value), the US economy has excelled tremendously since 1971 (yes, even adjusting for inflation), so now I'm confused about what argument you're making. I also assume all the other points I made stand.
- somenameforme 2y ago
  The point with Japan is that their economy is completely stagnant. It's entirely possible to see a healthy growing economy without having runaway inflation. Again, the US was the obvious example. The Campbell's Soup Index is quite a visible illustration of how radically things changed. But with our current system you get endless inflation that negatively affects vast swaths of the population to the benefit of a relatively small percent. Or you get Japan - which went from competing for the world's largest economy to having a dead economy. As a side note, population age ratios are directly determined by fertility rates. And we went from a system where people were comfortably raising family on a single income, to one where full time workers living alone are, in many cases, not exactly thriving, let alone trying to raise a whole family on that income. Most developed economies are seeing fertility rates plummet and it's entirely possible that monetary policy is indeed playing some potentially significant role in that!
  - camgunz 2y ago
    I like the Japan example because they are a modern economy that is absolutely maniacal about inflation, yet their quality of life is very high and their currency floats. Fiat hawks can't countenance this, and have some Rube Goldberg explanation about how floating currencies cause declining birth rates which lead to the only problem the Japanese economy really has. Aside from there being so, so many other reasons for declining birth rates (if less money means less likely to have kids, why do people with higher incomes or wealth have lower birth rates than those without?), Japan doesn't print money: its inflation is famously low. How can a country with famously low inflation experience declining birth rates due to high inflation from printing money?
    - somenameforme 2y ago
      My friend you are again severely lacking knowledge here. Saying Japan doesn't print money is like saying that 2+2=5. They are literally the founding fathers of modern quantitative easing and also one of the clearest examples of why it's not really a productive policy in anything beyond the shortest timeframes. It seems you are more a fan of writing than reading, but this link would be informative. [1] [1] - https://www.investopedia.com/articles/markets/052516/japans-case-study-diminished-effects-qe.asp https://www.investopedia.com/articles/markets/052516/japans-...