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> These folks don't believe dropping Yen is the solution as majority of investment by Japanese companies is outside Japan and weaker Yen just reduces that inves

by azernik 12y ago

> These folks don't believe dropping Yen is the solution as majority of investment by Japanese companies is outside Japan and weaker Yen just reduces that investment, in turn less profit flow back in the country. The more expected result would be a change of investment patterns so that more is invested inside Japan; investments abroad bring back only a relatively small amount of money back into the domestic economy and spread over a long period of time, as opposed to domestic investment which generally involves spending in the local economy and increased aggregate demand. > The expectation of deflation is deeply rooted in regular folks. Everyone is waiting to spend on large items, just not right now. And this is exactly why some inflation (caused by QE and a falling yen) would be a good thing - delays in consumer spending are a classic pitfall of deflation. This doesn't sound like an issue of the average Japanese citizen knowing less than the establishment or vice versa, but of individuals making rational economic decisions are good for them, but bad for the economy as a whole. (BTW, I agree with you on the VAT increase, which sounds like the exact wrong thing to do to get out of this low-growth, deflationary trap Japan has been in for so long.)

ekianjo 12y ago
> And this is exactly why some inflation (caused by QE and a falling yen) would be a good thing - delays in consumer spending are a classic pitfall of deflation. What do you mean by "delay in consumer spending" ? Oh, you mean like in the US when people buy everything at credit so that they don't have to wait, and have zero savings and huge debts as they go ? Is that the model you recommend ? > This doesn't sound like an issue of the average Japanese citizen knowing less than the establishment or vice versa, but of individuals making rational economic decisions are good for them, but bad for the economy as a whole. You fail to incorporate the bad decisions from the japanese government which are bad for the economy as a whole. As if it were JUST the fault of dumb people. Yeah, elites know much better :D
- bildung 12y ago
  > What do you mean by "delay in consumer spending" ? Oh, you mean like in the US when people buy everything at credit so that they don't have to wait, and have zero savings and huge debts as they go ? Is that the model you recommend ? In the context of macro economics, delay in consumer spending actually means just that: They'll spend money later. You fancy a new car, but actually your current one still runs fine? You'll delay your spending and just drive your current car a year longer.
  - ekianjo 12y ago
    That does not mean it hurts the economy as a whole. Capitalism never predicts that growth should be skyrocketing every single year. When there are reasons for the consumption to decrease, it does and that's when new market opportunities arise for companies to grab new consumers, either by providing more affordable products, competing on features, or providing new payment options to make easier for consumers to scale their purchases.
    - bildung 12y ago
      > That does not mean it hurts the economy as a whole. The only way for that not to hurt the economy would be finding a way to persuade the consumer to put all the money saved by delaying this specific consumption into goods that cannot be delayed. If I just saved $10k by not buying a new car, you won't be able to persuade me to buy a motorcycle instead, as that buy would be delayable in the same way.
tomp 12y ago
> > The expectation of deflation is deeply rooted in regular folks. Everyone is waiting to spend on large items, just not right now. > And this is exactly why some inflation (caused by QE and a falling yen) would be a good thing - delays in consumer spending are a classic pitfall of deflation. Waiting until house prices fall isn't a sign of deflation - it's a sign of overpriced housing. Especially compared with the rent yields, vs. rent yields elsewhere in the world (grandparent compared them to Seattle). And it's definitely a good thing - I'm part of the millennial generation, and one of our main issues is that we simply don't have the money to buy property (even to live in), because older people have more money saved up, so they can bid more, hence a bubble (this is what happened in Europe, I assume it's similar in Japan).

by azernik 12y ago

ekianjo 12y ago

> And this is exactly why some inflation (caused by QE and a falling yen) would be a good thing - delays in consumer spending are a classic pitfall of deflation. What do you mean by "delay in consumer spending" ? Oh, you mean like in the US when people buy everything at credit so that they don't have to wait, and have zero savings and huge debts as they go ? Is that the model you recommend ? > This doesn't sound like an issue of the average Japanese citizen knowing less than the establishment or vice versa, but of individuals making rational economic decisions are good for them, but bad for the economy as a whole. You fail to incorporate the bad decisions from the japanese government which are bad for the economy as a whole. As if it were JUST the fault of dumb people. Yeah, elites know much better :D

bildung 12y ago
> What do you mean by "delay in consumer spending" ? Oh, you mean like in the US when people buy everything at credit so that they don't have to wait, and have zero savings and huge debts as they go ? Is that the model you recommend ? In the context of macro economics, delay in consumer spending actually means just that: They'll spend money later. You fancy a new car, but actually your current one still runs fine? You'll delay your spending and just drive your current car a year longer.
- ekianjo 12y ago
  That does not mean it hurts the economy as a whole. Capitalism never predicts that growth should be skyrocketing every single year. When there are reasons for the consumption to decrease, it does and that's when new market opportunities arise for companies to grab new consumers, either by providing more affordable products, competing on features, or providing new payment options to make easier for consumers to scale their purchases.
  - bildung 12y ago
    > That does not mean it hurts the economy as a whole. The only way for that not to hurt the economy would be finding a way to persuade the consumer to put all the money saved by delaying this specific consumption into goods that cannot be delayed. If I just saved $10k by not buying a new car, you won't be able to persuade me to buy a motorcycle instead, as that buy would be delayable in the same way.

tomp 12y ago

> > The expectation of deflation is deeply rooted in regular folks. Everyone is waiting to spend on large items, just not right now. > And this is exactly why some inflation (caused by QE and a falling yen) would be a good thing - delays in consumer spending are a classic pitfall of deflation. Waiting until house prices fall isn't a sign of deflation - it's a sign of overpriced housing. Especially compared with the rent yields, vs. rent yields elsewhere in the world (grandparent compared them to Seattle). And it's definitely a good thing - I'm part of the millennial generation, and one of our main issues is that we simply don't have the money to buy property (even to live in), because older people have more money saved up, so they can bid more, hence a bubble (this is what happened in Europe, I assume it's similar in Japan).