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You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. Europeans went down the austerity route and are stuck with co

You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. Europeans went down the austerity route and are stuck with consistently underperforming economy and the threat of deflation. The US has turned the corner and is a job creating machine again including the first real signs of inflationary pressure through rising wages. The most unusual thing I can see about Japan is it's trying to take the US and Euro approach together at the same time. Their problem is deflation. Deflation tells consumers not to buy as you wait 6 months and it'll be cheaper. It's a deadly downward spiral. So the Japanese are trying to stoke their economy to create inflation which in turn spurs consumption. Yet they go into this with a massive amount of debt already so are raising consumption taxes at the very time they need consumption. Something has to give.

kyledrake 12y ago
I agree. They eased and increased taxes at the same time, which was not a smart move. Now they're back to square one, and they don't have much room left to maneuver because of the already high debt. If they wanted to accomplish their goal (more inflation) they should have stuck with the hail mary, rather than changing the play right in the middle of it. This, plus Japan's anti-immigration policy and rapidly ageing population, spells a pretty bleak future for Japan. They need some really radical reforms, not just economic policies that devalue their citizen's purchasing power and then get cancelled out by a huge raise to the consumption tax less than a few years later. What Japan really needs is a major reform of their overbloated corporate and banking infrastructure, combined with less-xenophobic immigration policies and improved workforce participation by women, but I'm not holding my breath.
- jtbigwoo 12y ago
  >> They eased and increased taxes at the same time, which was not a smart move. Increased sales taxes which was an especially dumb thing to do. The folks that spend the largest percentage of their income are hardest hit by sales taxes.
ekianjo 12y ago
> Deflation tells consumers not to buy as you wait 6 months and it'll be cheaper. I live in Japan for many years and I have never seen such thing as deflation here. Prices have remained stable for most items or have increased a little bit. The idea that stuff becomes cheaper as you wait is ludicrous in Japan.
- vilhelm_s 12y ago
  Japan did have deflation, some years in the 90s and most years in the 00s. See e.g. the curve for 1995-2013: http://www.tradingeconomics.com/japan/consumer-price-index-cpi http://www.tradingeconomics.com/japan/consumer-price-index-c... or the "index of all items" here http://www.e-stat.go.jp/SG1/estat/ListE.do?bid=000001033700&cycode=0 http://www.e-stat.go.jp/SG1/estat/ListE.do?bid=000001033700&...
  - ekianjo 12y ago
    Inflation/deflation indexes are massively skewed if you don't incorporate the right things into it. How sure are you that these indexes are factually correct?
    - adventured 12y ago
      Keynesian economists think that Japan's real estate implosion was deflation. Back in reality, Japan hasn't suffered any real deflation in 25 years. Which is why their prices are among the highest for pretty much everything. The deflation argument is a fraud cover for the failed Keynesian experiment. It's meant to give them the ability to endlessly print to debase the debt that the failed experiment took on. That's why the US Fed pretends to worry non-stop about deflation, while they massively expand the monetary base and hold rates at zero; it's a lie to provide cover for the massive inflation programs.
      - eli_gottlieb 12y ago
        Biflation is a thing.
- 12y ago
ekianjo 12y ago
> Yet they go into this with a massive amount of debt already so are raising consumption taxes at the very time they need consumption The Japanese government needs to cut deep in spending, and that's what they have NOT been doing for the past 20 years. As long as they don't try to fix the debt problem, nothing else is going to work in the long term.
- Thimothy 12y ago
  Becouse that is working quite nicely for Europe.
  - adventured 12y ago
    Show me the countries in Europe that have substantially reduced government spending over the last six years. In fact, spending as a % of GDP has increased. http://www.cato.org/blog/where-are-european-spending-cuts http://www.cato.org/blog/where-are-european-spending-cuts There has been almost zero spending reduction in Europe. They're calling a slow-down in spending expansion, austerity, when in fact there has been no austerity.
    - tomp 12y ago
      They're spending on different things, e.g. bailing out banks, which has the net effect of less spending for investments/services/wages.
    - bildung 12y ago
      how me the countries in Europe that have substantially reduced government spending over the last six years. In fact, spending as a % of GDP has increased.> Show me the countries in Europe that have substantially reduced government spending over the last six years. >In fact, spending as a % of GDP has increased. Because e.g. in Greece, GDP shrank over 30% in the last 5 years. Have you ever looked at the things a country spends its taxes on? How should it out-save it shrinkage without destroying the very infrastructure it's economy needs to flourish? > cato.org Cato is good PR agency, but you should not take them seriously on anything economics-related. Just look who works there, I wasn't able to find a single phd in economics there, only public relations staff (people who studied politics, sociology etc, practically no one who actually did research in any field before working there).
unclebucknasty 12y ago
>You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. Europeans went down the austerity route and are stuck with consistently underperforming economy and the threat of deflation. I don't think it was a comparison between austerity and QE that was on display. If anything, it's more a comparison between a Keynesian approach and austerity (even given the relatively anemic Keynesian implementation on which we settled). But, even that is not a fully valid comparison. More to the point, austerity just seemed an insanely bad choice, and I am not sure that it is illustrative of QE being a good choice. QE was more a boon to the stock market than anything. Likewise (and ironically), the record profits that companies are realizing is due to automation and increased productivity--two things that are largely responsible for the stubborn unemployment that has actually dogged a broader recovery. To my mind, the jury is still out on QE and, for that matter, on the sustainability of this "recovery" in the long run.
gw 12y ago
> You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. You cannot isolate variables in two separate economies; any conclusions assuming you can are bogus.
- guelo 12y ago
  Then we can never look at any real world examples for guidance because there are always too many variables. That leaves us with untested partisan theories pushed by ideologues. I mean, how can it be that all the American conservative economists that have been predicting massive inflation since 2008 have not changed their theories at all?
  - gw 12y ago
    > Then we can never look at any real world examples for guidance because there are always too many variables. Agreed. > That leaves us with untested partisan theories pushed by ideologues. The theory I responded to was not "tested" either. What double-blind study did the citizens of the U.S. and Europe take part in?
RivieraKid 12y ago
> The US has turned the corner and is a job creating machine again The employment-to-population ratio has't recovered and is near the 30 years low. http://data.bls.gov/pdq/SurveyOutputServlet http://data.bls.gov/pdq/SurveyOutputServlet
- bfrog 12y ago
  Not to mention "Real" pay hasn't increased since the 70's

kyledrake 12y ago

I agree. They eased and increased taxes at the same time, which was not a smart move. Now they're back to square one, and they don't have much room left to maneuver because of the already high debt. If they wanted to accomplish their goal (more inflation) they should have stuck with the hail mary, rather than changing the play right in the middle of it. This, plus Japan's anti-immigration policy and rapidly ageing population, spells a pretty bleak future for Japan. They need some really radical reforms, not just economic policies that devalue their citizen's purchasing power and then get cancelled out by a huge raise to the consumption tax less than a few years later. What Japan really needs is a major reform of their overbloated corporate and banking infrastructure, combined with less-xenophobic immigration policies and improved workforce participation by women, but I'm not holding my breath.

jtbigwoo 12y ago
>> They eased and increased taxes at the same time, which was not a smart move. Increased sales taxes which was an especially dumb thing to do. The folks that spend the largest percentage of their income are hardest hit by sales taxes.

ekianjo 12y ago

> Deflation tells consumers not to buy as you wait 6 months and it'll be cheaper. I live in Japan for many years and I have never seen such thing as deflation here. Prices have remained stable for most items or have increased a little bit. The idea that stuff becomes cheaper as you wait is ludicrous in Japan.

vilhelm_s 12y ago
Japan did have deflation, some years in the 90s and most years in the 00s. See e.g. the curve for 1995-2013: http://www.tradingeconomics.com/japan/consumer-price-index-cpi http://www.tradingeconomics.com/japan/consumer-price-index-c... or the "index of all items" here http://www.e-stat.go.jp/SG1/estat/ListE.do?bid=000001033700&cycode=0 http://www.e-stat.go.jp/SG1/estat/ListE.do?bid=000001033700&...
- ekianjo 12y ago
  Inflation/deflation indexes are massively skewed if you don't incorporate the right things into it. How sure are you that these indexes are factually correct?
  - adventured 12y ago
    Keynesian economists think that Japan's real estate implosion was deflation. Back in reality, Japan hasn't suffered any real deflation in 25 years. Which is why their prices are among the highest for pretty much everything. The deflation argument is a fraud cover for the failed Keynesian experiment. It's meant to give them the ability to endlessly print to debase the debt that the failed experiment took on. That's why the US Fed pretends to worry non-stop about deflation, while they massively expand the monetary base and hold rates at zero; it's a lie to provide cover for the massive inflation programs.
    - eli_gottlieb 12y ago
      Biflation is a thing.
12y ago

ekianjo 12y ago

> Yet they go into this with a massive amount of debt already so are raising consumption taxes at the very time they need consumption The Japanese government needs to cut deep in spending, and that's what they have NOT been doing for the past 20 years. As long as they don't try to fix the debt problem, nothing else is going to work in the long term.

Thimothy 12y ago
Becouse that is working quite nicely for Europe.
- adventured 12y ago
  Show me the countries in Europe that have substantially reduced government spending over the last six years. In fact, spending as a % of GDP has increased. http://www.cato.org/blog/where-are-european-spending-cuts http://www.cato.org/blog/where-are-european-spending-cuts There has been almost zero spending reduction in Europe. They're calling a slow-down in spending expansion, austerity, when in fact there has been no austerity.
  - tomp 12y ago
    They're spending on different things, e.g. bailing out banks, which has the net effect of less spending for investments/services/wages.
  - bildung 12y ago
    how me the countries in Europe that have substantially reduced government spending over the last six years. In fact, spending as a % of GDP has increased.> Show me the countries in Europe that have substantially reduced government spending over the last six years. >In fact, spending as a % of GDP has increased. Because e.g. in Greece, GDP shrank over 30% in the last 5 years. Have you ever looked at the things a country spends its taxes on? How should it out-save it shrinkage without destroying the very infrastructure it's economy needs to flourish? > cato.org Cato is good PR agency, but you should not take them seriously on anything economics-related. Just look who works there, I wasn't able to find a single phd in economics there, only public relations staff (people who studied politics, sociology etc, practically no one who actually did research in any field before working there).

unclebucknasty 12y ago

>You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. Europeans went down the austerity route and are stuck with consistently underperforming economy and the threat of deflation. I don't think it was a comparison between austerity and QE that was on display. If anything, it's more a comparison between a Keynesian approach and austerity (even given the relatively anemic Keynesian implementation on which we settled). But, even that is not a fully valid comparison. More to the point, austerity just seemed an insanely bad choice, and I am not sure that it is illustrative of QE being a good choice. QE was more a boon to the stock market than anything. Likewise (and ironically), the record profits that companies are realizing is due to automation and increased productivity--two things that are largely responsible for the stubborn unemployment that has actually dogged a broader recovery. To my mind, the jury is still out on QE and, for that matter, on the sustainability of this "recovery" in the long run.

gw 12y ago

> You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. You cannot isolate variables in two separate economies; any conclusions assuming you can are bogus.

guelo 12y ago
Then we can never look at any real world examples for guidance because there are always too many variables. That leaves us with untested partisan theories pushed by ideologues. I mean, how can it be that all the American conservative economists that have been predicting massive inflation since 2008 have not changed their theories at all?
- gw 12y ago
  > Then we can never look at any real world examples for guidance because there are always too many variables. Agreed. > That leaves us with untested partisan theories pushed by ideologues. The theory I responded to was not "tested" either. What double-blind study did the citizens of the U.S. and Europe take part in?

RivieraKid 12y ago

> The US has turned the corner and is a job creating machine again The employment-to-population ratio has't recovered and is near the 30 years low. http://data.bls.gov/pdq/SurveyOutputServlet http://data.bls.gov/pdq/SurveyOutputServlet

bfrog 12y ago
Not to mention "Real" pay hasn't increased since the 70's