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Given a massive amount of debt and a problem with deflation, isn't Japan in an ideal position for an aggressive negative income tax? Imagine inflating by print
by drblast 13y ago
Given a massive amount of debt and a problem with deflation, isn't Japan in an ideal position for an aggressive negative income tax?
Imagine inflating by printing money and distributing equally among all citizens. Domestic price increases would be offset by the extra cash and the real debt would decrease accordingly. Why would that not work?
- anentropic 13y agoIt probably would, however it sets a terrible example and must never be allowed to happen anywhere at any cost "distributing equally among all citizens." good grief, what a dangerous idea!
- rm999 13y agoMany economists agree with you and believe Japan has mismanaged its monetary policy for a long time. In fact, the West's aggressive reaction to the Great Recession of 2008 was largely a lesson learned from what Japan didn't do. From an essay by Paul Krugman (I think from the late 90s): >So why doesn't the Bank of Japan just go out and print lots of money? The best theory I have heard is that the bureaucrats at the Bank of Japan and the Ministry of Finance are still mesmerized by the memory of the "bubble economy" - the wild speculation of the late 1980s, which pushed the prices of stocks and real estate to crazy levels (remember when the grounds of the Imperial Palace were supposedly worth more than the whole State of California?). They believe that loose monetary policy created that bubble - which may be true - and that the bursting of the bubble caused the slump of the 1990s - which may also be true. And so they are afraid to increase the money supply now for fear of repeating the experience. http://web.mit.edu/krugman/www/nikkei.html http://web.mit.edu/krugman/www/nikkei.html Japan did some quantitative easing in the 2000s, but as I understand it it was too little too late.