4 ms·
I find it a bit unbelievable that the bank of Japan wants inflation but has been unable to produce it. A simpler explanation is the bank of Japan does not want
by benmmurphy 13y ago
I find it a bit unbelievable that the bank of Japan wants inflation but has been unable to produce it. A simpler explanation is the bank of Japan does not want inflation because it is not politically possible. I also noticed he mentioned that economic textbooks say an aging economy should produce inflation so Japan is confusing. But what do political economy textbooks say about the monetary policy demands of an aging population? I can't see an inflationary monetary policy going down too well politically with older people who have savings in fixed interest. Japan has had low monetary growth because that is what is politically popular.
- chrisgd 13y agoWoukdnt most of their savings benefit from inflation as the interest they earned would increase
- benmmurphy 13y agoI think a lot have fixed rate long term bonds that would hurt if inflation increased. 95 % of Japanese bonds are owned domestically (http://m.nber.org//papers/w18287 http://m.nber.org//papers/w18287). Japanese people with wealth (ie old people) would have large direct or indirect exposure to government bonds which are mostly fixed interest.