When I first saw this ad I really enjoyed the concept of it (work in video production.) Not something you see often. Maybe that will change. To me, it's interesting because [1] the consumer has to be familiar enough with the product so much that even its price is memorized, and [2] just seeing a company apologize for a price increase is rare in American culture.
Very true. These countries are all showing syptoms of first-world economy disease; low-birth rate, government budget deficit, high healthcare expenditure, bureaucracy, gutting of manufacturing jobs, and local labor market and education systems that fail to recognize that not everybody has IQ of 120+ and benefit from getting bachelors and masters degrees.
America can thank its dollar as world reserve currency. Billions it spends on military bases around the world and foreign aids is part of its effort to keep its reserve currency status. But at some point, the party is going to be over. American labor force is already very uncompetitive and overpaid compared to its European and Asian counterparts. Yet we enjoy one of the highest standards of living. That gravy train won't last forever.
The only thing that will get the developed countries out of their impending doldrums is 10/100x energy and technological breakthrough.
Until then, we'll get our own version of 60 yen Garagari-kun.
And don't think deflation hasn't been happening already in the U.S. The only difference is, unlike Japan, unscrupulous U.S. food companies have been cutting ingredient quality and content size, rather than raising price for the past 10 years.
Check out Breyer's fake ice cream, Haagen Daaz, McCormick pepper content size, Mars shrinking chocolate bar sizes.
These countries are all showing syptoms of first-world economy disease; low-birth rate, government budget deficit, high healthcare expenditure, bureaucracy
There are two other major problems in parts of the U.S. and Europe (in particular) that're underrated: 1. insane land-use control laws that make it illegal to build reasonably price housing (see Matt Yglesias's The Rent is Too Damn High for more: http://www.amazon.com/TheRent-Too-Damn-High-Matters-ebook/dp...) and 2. transfer payments to older people that were originally conceived and executed when the number of workers to retirees was much different than it is now.
The first is important because it impedes family formation and innovation. The second is important because it makes not having children easier, because other people's children will be forced to support you through their contribution to transfer payment programs. Yet neither issue gets much play in the press.
A land value tax would help get land use right. (Because there would be less incentive for the NIMBYs to protest, and more incentive for the government to move to more efficient forms of land use.)
Land value tax would also allows us to untax labour and capital, thus reducing deadweight losses in the economy.
There is plenty of unincorporated land in the us. You can't have it both ways. You want to live in an area that is the way it is because of housing association rules, and then not live by the rules. If you revoke the rules, your neighbors will leave. You may as well build in unincorporated land to begin with.
Houston has super neighborhoods many of which have deed restrictions which accomplish similar things. Houston is a happy a good way to go. As you can have a poor super neighborhood next to a rich one. But I still hear some people in the rich super neighborhood complaining about the deed restrictions, the only thing separating them from their neighbors across the super neighborhood line. They could have bought in the other super neighborhood, but they didn't want that either...
And don't think deflation hasn't been happening already in the U.S. The only difference is, unlike Japan, unscrupulous U.S. food companies have been cutting ingredient quality and content size, rather than raising price for the past 10 years.
You seem to have gotten confused between inflation and deflation. With deflation, prices decrease, not increase.
Your last paragraph is correct, but I was using the term in more macro environment context.
25 year of unchanged nominal price is symptom of deflationary environment. The reluctance by the Japanese company to raise price even when costs were going up speaks volume about the strong downward pricing pressure in the Japanese market.
Though not to the same degree, similar environment has been brewing here in the U.S. for awhile. Companies don't want to raise prices, and only do so as a last resort.
If economy was better, they would do so without fear that their competitors would not follow suit.
> strong downward pricing pressure in the Japanese market
Downward pricing is what one would expect in any stable market, given that price optimization is the primary market mechanic. Technology is getting ever-better, so it takes ever-larger efforts to erase its gains and create the artificial inflation prescribed by the central banksters.
HDI is actually a really poor estimator of Standard of Living. It is measurement of development, but it really cannot be used to compare Standard of Living, especially in developed countries. HDI before 2010 was useless for comparing developed countries as it was literally just a composed index of life expectancy, literacy rate and GDP per capita: for most developed countries literacy rate and life expectancy are basically at the top of the index, so the only differentiating factor is GDP per capita (PPP) which is a pretty misleading indicator anyway.
They then tried to make it more relevant in 2010 and also created an income inequality-adjusted version. This new index uses GNI instead of GDP and uses years of schooling rather than literacy rate (which is basically 99-100% for all developed countries) which makes it bit better, but it still doesn't figure in life satisfaction or other relevant measures into standard of living which is why it's still mainly a way to rank developing countries. The income inequality-adjusted version is slightly better, but still doesn't measure any psychological well-being.
The index seems to conflate countries to be born in and countries to be raised in. For example, if there is one country in the world to be born in, I would absolutely pick the US, if only for the ease of travel/migration to many desired countries in the world. For countries to be raised in, the index seems to be more relevant, at least judging by the metrics used.
Healthcare cost partly the result of an aging population with expensive chronic diseases? Priority would be ironically to research anti-aging to extend youthful lifespan. However, some problems are a result of a screwed up incentive structure in healthcare that is yet to be fixed, and may be harder than the technical problem.
Anti-aging treatments wouldn't fix anything. Don't you get it? Our economy is broken because it relies on an ever growing workforce. For a slowing economy you only need natality to be equal with mortality rates. It's a freaking Ponzi scheme.
It doesn't rely on an ever growing workforce. It relies on ever growing consumption, whether that's by a growing work force or a not-growing workforce that's spending more.
Stagnation is the main threat the world is waking up to.
People will blame other things of course. Things like MENA immigration, climate patterns, crop failures, these are second order affects of stagnation.
The peripheral fails before the center. Never forget that.
I have to congratulate Peter Thiel. He has managed to see a lot of this ahead of almost anybody else I can think of and this is despite being at the heart of the cozy bubble that is Silicon Valley. One of his expressions is that you can have instances of success in an ocean of general failure or something to that effect.
Even on HN a few hours ago I saw a WSJ article proclaiming that everything is smashingly good these days, that three/four decade wage stagnation is a mere blip on the radar. Though I agreed with the substance of the historical facts she stated I also think this is an utterly clueless point of view on human nature that is shared by huge swathes of the middle class. I didn't live in 1850 and I cannot be expected to appreciate the good fortune of the years since then! If you live in a downcycle then that's all you know.
You see the contradictions at their most dire with the pension funds. They require either massive hikes in funding or 6-7 real percent per year. Wages will have to rise suddenly and dramatically and/or else we need massive massive technological changes.
Somehow I see Larry Summers getting called back into Court. Whether monetary policy is enough, that is another question.
An economist named Harry Dent has said the same thing for quite a while and wrote a book (which is a bit hard to read without being versed in financial terms). He had a debate with Jim Rickards where they wound up both saying deflation would happen due to demographics, but disagreed on the power and will of governments to enact inflation to counter it.
The names of those guys make them sound like characters from Gotham city in Batman. I'll have to take a look at the book and debate, whizzbang financial terminology doesn't scare me.
Wages have not been stagnating [1]. Median wage has stagnated but that is due largely to the polarization of the labor market of which has been talked about long before Peter Thiel [2].
I agree with those statements. I'm not sure we agree on what they mean though.
World becomes more zero sum when growth plateaus. Only now it is proposed that everybody and their dog get PhDs in god only knows what.
Diminishing returns are exactly stagnation. I know blue collar workers making more money than people who took extensive study and got 'good' jobs. This is despite the fact those workers haven't actually had wage increases themselves! They're just working long hours for more pay. We're stuck in a rut. It could be the case that technological stagnation is created by technology itself. A hairy subject!
If I remember rightly wage increases for the higher percentile aren't that great either. I mean they are better than zero but not as great as they used to be. Makes sense since their market of consumers is drying up as everybody becomes cash poor except for those making toys for the actual rich.
What does immigration has to do with price deflation?
(I know you can come up with some relation, of course everything is related, but again, it is not straightforward, and you shouldn't just assume that saying a bunch of buzzywords and stating some facts stands out as an explanation)
Without immigration, the US population would have peaked in the 1970s and our economy would be much worse off. We replaced our reducing replacement rate with an increasing immigration rate.
When you have more people wanting stuff, prices rise and jobs create themselves to meet this need. With a declining population, you have fewer people wanting stuff, so prices go down.
Right, but if prices go down, then people can pay less for them and they don't need to earn a lot in their jobs, everything fits and we're as good as in the other scenario.
Sure, until you find yourself in a deflationary spiral and the economy screeches to a halt. Why would you buy a house if you know that next year it will be cheaper? Who would finance a mortgage in a deflationary environment?
Computers, cell phones, and other consumer electronics get cheaper every year for a given level of features and performance. Yet consumers still buy more and more of them.
Certainly I would buy a house if I know that next year it will be cheaper. I need somewhere to live and don't want to have to move over and over again. Nothing about a deflationary environment would prevent lenders from providing mortgage financing. Mortgages were obviously still available to qualified borrowers during the worst of the housing market crash.
Right, I prefer to die of hunger because I think the price of food will be low next year. Do you really believe this? People buy expensive electronics every day even though they know all them will be much cheaper after some time.
Interest rates can adapt to pricing variations expectations, you know that because it works in inflationary environments.
>Sure, until you find yourself in a deflationary spiral and the economy screeches to a halt.
That's the thought experiment, but it doesn't pan out in reality. The US economy experienced long stretches of high growth and low deflation in the 19th century. People still have physical needs even if the currency is deflating.
We'd be better off if houses weren't treated as investments but rather as shelter; see eg SF/peninsula for what happens when people start winning the housing lottery. ie everyone who owns a home is a millionaire.
Immigration staves off demographic time bomb, which is cited as one of the causes (or symptoms depending on who you ask) for Japan's no-growth economic environment.
Immigration pushes back the social welfare Ponzi scheme time bomb. That's it--and that assumes that the imported people aren't net tax eaters themselves. At any rate, you can set off the bomb now or later, but the longer you wait the more explosive it will be.
Back on planet earth, a smaller population is almost always better than a larger one. The only real difference is that a smaller population has more natural resources per person.
I'd like to stay hopeful and perhaps they can figure out a way balance the welfare income and expenditure. But that will probably not happen. The bomb does need to blow to reset the clock.
It is possible: the US can technically be indebted (and thus borrow) infinitely. Sovereign debt is not like private debt, there is no ceiling to it (unless willingly mandated, as the US Congress does).
I'm not going to pretend to know what the future will look like, but presumably some political change involving multiple planetary systems will succeed the US and do something with the debt.
In any case, human population will peak and then start reducing at some point in the not too distant future (unless we expand to other planets). I wonder what happens if the holders of the debt themselves were to perish.
Although I lean libertarian I don't see how you can control monetary policy without also needing to control population size. Lots of awkward ethical questions nobody wants to talk about here.
What I mean is that there must exist an elemental relationship (min-max limits) between population size and the depth of the division of labour (how complex production can become).
Pairing population to production optimally is a synchronization problem. Cybernetics I suppose, not usually how economists think.
Economic growth and recession could be modulated if there were enough people when we needed them, and there were not, when we did not. Recessions won't go away but they wouldn't be compounded by demographic issues.
Currently this is solved in a haphazard way e.g. using illegal immigration of people like fruit pickers (deporting them when inconvenient) or by green belt zoning and class siloing. That can't be efficient. It couldn't possibly make humans happier. Most actually adopted solutions appear to be quite damaging to humans. How much of this is consciously orchestrated is also hard to ascertain. I suspect it is mostly Scott Alexander's Moloch at work. Every central banker ought to read that poetry because it's quite recognizable.
Since it is unethical to force children to exist (Ceausescu) and also wrong to murder people or prevent them having offspring when demographic issues arise, we need a plausible solution to allow for a world in which people have a realistic chance of having sustenance and purpose in their lives.
Most people really don't like this topic! It is understandable. We prefer not to think of ourselves as elements of production and supply. Of course we are, we're just a special case of it.
All of the problems are ultimately rectified by markets, or failing them, mother Nature. You know what they say about Nature being a mother. My point is that we don't necessarily need to let it get to market corrections if we think ahead.
Suppose you were a Communist official in charge of the One Child policy who anticipated the female infanticide rate. You'd have solved for a good deal of human suffering decades later on with perhaps an afternoon's work. Right place, right time.
Monetary policy tools work on a similar lever principal to this which is a large part of the reason I'm talking about them in the same vein. I'm not confident I know what to do, only that it is a factor. And now; tell me how I'm wrong!
You seem to be trying to say a lot of things without making it clear exactly what the main point is. From what I gather, its that one can control a very exacting control over the market by having a very exacting control over division of labor. Which sounds a lot like communism, which you use in an example. Is that what you're trying to say?
Think of Malthus. He described how human populations could overshoot the food supply because the growth rate in humans was exponential but the growth rate for food production was linear. Famines then follow a predictable cycle.
My hypothesis is that in the economy the growth rate in humans does not relate directly to economic growth. There could exist a religion that promotes large families for example; that's why I said mother nature would ultimately take care of business if things got out of hand.
Sometimes we need more humans but there is a lag time before they appear. Sometimes we need less humans but they stick around absorbing dwindling resources and leaving their children with higher prices later. Both of these outcomes sabotage future growth prospects.
How this relates to economics is that central bankers use interest rates changes in an attempt to produce stable growing economies. As I understand it the mechanism is a kind of lever, by modifying the trajectory of money supply you can slightly influence the larger flow. Central banks then spend their time compiling statistics to anticipate the future.
If one can do that with money then you can do it with humans too by finely tuning the probability of them being able to give birth. Then as long as you can anticipate the amount of workers required you can provide that many at the correct time. Demographic hiccups become a thing of the past.
I leave a lot unsaid here. Evidently controlling one part of the economy causes you to require as you say 'very exacting control' over other parts. As you can see there is nothing controversial here.
I want to point out that the actions of governments tend to support a belief (that they believe) in something of this sort and that changing human production rates is some kind of corollary to changing interest rates. After all the humans use the money. They're the ones incorporating information into prices with their decisions.
This whole topic has the feeling of an 'Ugh field' about it. I understand if I'm downvoted into oblivion but it's an important idea. If I'm totally wrong then great, tell me how.
Who is that `we' that needs more or fewer humans? Ie economists usually take the supply of humans as an exogenous variable, and try to figure out what they do to maximize their welfare. (And very often also: what they could be doing better.)
Taking humans as an endogenous variables is possible. (I've seen one analysis where they started talking about slaves as capital vs free workers. The reveal was that the author actually wanted to talk about the economics of robots (and other automation) as capital vs free workers---but without triggering people's preconceived notion of what automation can and cannot do to macroeconomics.)
I've always been fascinated by Malthus. Without Malthus I don't think you have a Darwin. I know he gets typed as the doomsayer but there has always been something very elemental about his idea. I think it was the first time I encountered a simple concept that explained deeper patterns and so it stuck with me.
> Who is that `we' that needs more or fewer humans?
I'm trying with some difficulty to avoid value judgments e.g. we should or should not interfere in human reproduction patterns so that's a reasonable question.
I think that 'We' is the information network. I don't mean the Internet or the price system. It's a broader idea that probably fits into ecology, something like the Noosphere. The premise is that there exists a lot of different states the network could be in. It could be in an optimal state or in a sub-optimal one. I'd guess that it's governed by something like Cybernetics but I'm confident we won't know most of the rules and certainly not the emergent consequences of the rules.
To be less handwavy - the 'We' can be the union of the Economy and Ecology sets. It would take humans as being endogenous variables. I'm sure other people have thought of all this before, but it seems difficult to avoid metaphors that could suggest latent policy prescriptions e.g. Spaceship Earth (limited resources) or World System (global government).
Yes, Malthus was indeed an inspiration that got Darwin thinking.
About your ethical problems: you could just go purely formal, and try to present your thoughts without any value judgement. Any prescription would be purely conditional like:
- if you want to maximize this variable, you should do that.
Lemin Wu has some great thoughts and simulations that round out Malthus. He's also interested in why ancient authors, especially Chinese, decry commerce and any economic activity that's not food producing:
> For example, during the Warring Period of China (476-221BC), restraint on luxury was the theme of a series of political and economic reforms. In the face of constant nomadic harassment, King Wu-Ling of Zhao (340-295 BC) commanded his subordinates to take off their wide sleeves and long robes and switch to nomadic uniform—pants, belts and boots—
in order to fight as cavalry. Half a century before King Wu-Ling, Shang Yang’s reform swept another kingdom, Qin. The reformer punished commerce, rewarded cultivation, forbade migration and restricted entertainment. In a word, he cut down luxury and directed as many resources as possible to subsistence. The subjects were deprived, but the Qin kingdom defeated all of the six rival kingdoms and united China for the first time in history. A contemporary philosopher commented, “Qin is different from all the other kingdoms. The people are poor and the government is cruel. Whoever hopes for a better life can do nothing but fight hard. This makes the Qin army the strongest of all."
Thanks, that is good of you to offer, I'll let you know how I get on with my Malthus-Say Day once I've done some reading on the material. I get to these things sort of randomly but be sure it'll happen :-)
Oh, by the way Say's Law only makes sense in a classical setting. (And the market monetarists tell us that NGDP level targeting will make economics approximately classical.)
Exactly, they can see that the policies of the US and Europe will lead to lost decades like it has in Japan. You can see it already happening. I believe the problem is the bail outs from the financial crisis and the ongoing belief that nothing can be allowed to fail which is why interest rates have been kept so low. I think they would be much better off raising rates (Fed and ECB simultaneously) - this will lead to some short term pain as businesses that arent very profitable are forced to close. But from the ashes of these 'bad' businesses you will get better ones rising. The metaphor here is of fire which destorys but also clears the way for regrowth.
Some would say that arguments based on demographics are missing the point. Japan has been cannibalizing itself in order to protect its zaibatsus, squeezing every last ounce of productivity from its workers to the point at which they longer reproduce, and enacting corporate welfare policies in the form of QE and ZIRP/ NIRP. The EU and US have been following suit with quantitative easing and stagnant wages, and now we're beginning to experience the same economic decay that Japan has before us.
This whole situation is completely avoidable if someone would just have the courage to stop coddling elites and big business.
I just wonder if they can ever get out of this death spiral for their country. I remember watching a bit of an documentary of men (young and old) who literally live out of net cafes in Japan. It was disturbing to since the same documentary mentioned that it's the norm now for people to be working just temp work (I use to do the same in manufacturing years ago) which can go away at a moment's notice. At some point this has to change, if there's X percent of wealth being generated in a country (and Japan has to be making some gains in that regard) but Y percent of the population that's un/under-employed then I wonder if the question shouldn't be about how we get these people to work but rather how we distribute the wealth to ensure everyone has their necessities met (housing, healthcare, food, education, etc)? I'm not proposing UBI, social democracy, or anything. I'm just posing this as a question because honestly I can't see this situation lasting for long unless there's a massive die off of the population (possibly literally).
Was not aware the Japan's economy is slowing down, i would totally be down to boost their economy by importing Nissan Skylines into the US. Damn Dept. of Transportation and their safety laws ;(
I've seen at least two Nissan GTR Skylines here in Minnesota. Don't know if they're detuned or otherwise modified. First one I saw was at a gas station last year and I was so astounded I had to ask the owner if it was really what I thought it was.
They were both current model year or at most a year old. Well, I use the term "Skyline" loosely. I don't think Nissan actually calls them that anymore.
it never really has ever recovered and probably won't until the government realizes it is the problem, you cannot use public spending to buy your way out. Their central bank hasn't been helping matters much either. Even threatening bank reserves (negative interest which when done by the central bank is in effect a tax) is there. (Some in the US want the Fed to have similar powers)
which rolls neatly into all the recent talk being floated about basic income. see there is this other neat trick with BI. Governments could roll this out as a means to put money into the hands of consumers to spend. Now if you did it short term to jump start an economy it probably would work, just the idea its happening would loosen up money supplies.
> Japanese policy makers have long identified
> deflation as enemy No. 1 for the economy.
It is crazy when policy makers try to make prices increase, prices DO increase, and everyone complains after the fact, including the people who wrote that article and commenters here.
Prices increasing without increase in economic output though, stagflation becomes a danger. Deflation is very dangerous, stagflation is dangerous, runaway inflation is dangerous. Monetary policy isn't easy.
Initially, deflation is a symptom as you suggest. The problem is that deflation is a stable state within the economic system.
Once in deflation, people say "I could invest this $100, and in the long run I'll get back $98. Or I could stick it in a mattress and get back $100 in the long run." Investment ceases. If a manufacturing line needs to be refurbished, the owners will lay off workers and quit rather than pouring in money they will never get back.
This is why the Fed in the US panicked so hard when during the last recession: we were approaching the stable state and they were willing to do anything to prevent that from happening.
Is it a continual decrease in money? That's easy enough to solve through a central bank. You can even solve the problem with specie currency by devaluing that (you'll find historical evidence of this in the Roman denarius and in Adam Smith's discussions of currency).
If the problem is that the real rate of return has fallen, then again, deflation isn't the cause but the symptom of a larger problem.
I'm not sure what the solution in this case is, though a tax on excess retained wealth might be one approach. This is what negative interest rates are aimed at curing.
The Chinese accomplished this on paper currency through requiring bills to be regularly stamped, for, you guessed it, a stamp fee. Effectively a tax on retained monetary savings. (We're talking ancient China, I'd have to look up the specific dates.) This could be accomplished by other means, including re-issuing currency and retiring old bills (again, for a fee).
In the UK we're told we have negligible inflation (or deflation some months), but the indexes don't include mortgage payments or rents which are rising extremely rapidly especially in London. So I dispute that we actually have low inflation.
(I should note this is quite different from the situation in Japan where even house prices are declining, especially outside Tokyo)
I hate to say it, but my only thought is that if every economic indicator is saying negligible inflation and property prices are soaring... that's almost certainly an indicator of an unsustainable bubble.
The problem is that you never know when they are going to burst and what the fallout will be. But my guess is this scenario (if I'm right, you have to quote me later...): At some point there will be a collapse of the pound (possibly due to shenanigans around short term consumer debt). To bolster the currency, interests rates will go up slightly. However, for people who are already incredibly stretched on their mortgages, they will be foreclosed when their term needs to be renegotiated. This will put houses on the market at fire sale prices and put the market into free fall.
Essentially the same thing happened in 91 or 92 (can't remember) when Britain linked their currency to the Deutsche mark which pushed interest rates up. It was only rescued by the Japanese who purchased up all the real estate. The problem is that this time I'm not sure there will be anyone around to mop up.
But on another note, I live in rural Japan and was considering buying a house. My neighbour said, "Look at the age of all the people in this neighbourhood. Everyone is over 60. Soon every house will be for sale." So... it probably pays to wait. Deflation indeed...
Absolutely it's a bubble. That doesn't stop people right now from having large increases in rental payments, so inflation is real. It might become massive deflation when the bubble bursts and as you say in rural Japan it's hard even to sell a house at any price sometimes.
Deflation means that rather than buy a car this year, maybe buy it next year when it's cheaper. It's a massive encouragement to buy nothing and save as much money as possible.
Manufacturing capacity which was keeping up with demand suddenly has too much capacity. Factories shut down. People get laid off. New jobs aren't created.
How do you make a profit in a world where people won't buy a new thing because they think it'll be cheaper in a few years? And you can't compete in the market for old things because there is already too much excess capacity.
It's a giant snowball of bad for everyone involved: both business and for the everyday working guy.
There's only so much purchasing as can be deferred.
People as a whole need water, food, shelter, and clothing. Even under deferred purchase, other infrastructure eventually wears out and needs replacing.
In this circumstance, particularly with lower levels of income falling below living wages, a simple transfer payment from rich to poor will increase trade markedly.
If your real rate of return remains negative, that's another problem, but a somewhat tractable one at modest scales.
I have heard this line of reasoning before, but I'm skeptical.
I don't think I have ever once said to myself "i should hurry up and buy X before inflation makes it more expensive."
It doesn't seem like people will reason like this unless the price changes are observable from day to day, or maybe week to week.
And people already spend so irrationally. Is a little bit of extra delayed gratification is incentive enough to change spending patterns that much?
It typically doesn't work much for individuals as the frequently lack good data, disposable cash or credit, and stockpiling capabilities.
Businesses can do this through warehousing or futures contracts -- going long or short on a commodity (price rise or fall respectively). Especially fuels (Southwest Airlines has famously done this to good effect repeatedly during oil price spikes).
I also think that this may affect business investment more than consumer spending. I remain hazy on this element of economics.
Thank you for being the only reasonable person in this thread.
That argument -- that people would defer consumption forever -- is the craziest thing in the world, and every economist and wannabe economist seem to take it without question.
My question, one to which I have not been able to find an answer, is:
Is this questionable premise (I'm not quite willing to call it crazy,
but it is non-obvious) the entire basis for all of monetary policy?
Approachable texts about why and how the money supply should be controlled seem hard to find. In conversation, this is the only reason I've ever been given for us to need the Fed to ensure that the money supply grows with the economy.
I've also been looking at and for texts on money. Adam Smith and William Stanley Jevons are two of the earlier significant works. Reading Milton Friedman probably has value. Keynes as well.
Niall Ferguson's The Ascent of Money is a well-received popular work on money, trade, and exchange.
(NB: I'm not particularly well-disposed toward either Friedman or Ferguson.)
The answer is yes, and the lack of clear statements confirming it shows that economists feel that it is a stupid idea but they go a long way to hide that from themselves.
If only it was that easy. On the broadest strokes monetary policy effects tend to be delayed and do minor changes until you hit a tipping point then effects rocket on a direction. No-one really knows where the tipping points are as there a bunch of variables and unknowns in every scenario so you dont really know until you 'found it'. The old quote something like "economics is someone looking backwards telling us why stuff happened".
Secondly, policy makers should manage monetary policy in conjugation with fiscal policy. But fiscal policy can a much harder political fight or have different groups/ideologies controlling it. So monetary policy often runs as a solus activity making its effectiveness limited.
Monetary policy can always produce inflation, if the central banks wants it badly enough.
You are right that better fiscal policy can be useful for the economy, too. (I'd like to see Georgism given an honest try again. Funny enough, that's a very orthodox economic suggestion. Just like free trade and free movement of labour.)
Japan pioneered QE and pushes it to the extreme, even to the extent of easing their equity markets. Why do you think any central bank can make a free lunch?
The `no free lunch' theorem only applies when you are already at the efficiency frontier. If someone is still banging their head against the wall, they can stop doing that for a very quick and `free' win.
They just didn't do enough, and didn't announce an NGDP level target.
Announcing the target and that the central bank will do whatever it takes, makes the market help with achieving the target--because any difference between a target that will eventually achieved and current reality is an opportunity for arbitrage.
It's not much fun if you're in the same boat as the average Japanese salaryman, who is seeing prices increase while his meager pay packet stays unchanged.
25 years of governments pumping money into the economy to see if it "grows" again. When will they recognize the policy is failing and the solution is not "more of the same"?
They kept the monetary base pretty steady for a while in the mid 2000's. It ended up hurting their ability to export and made it easier to import. They were unhappy with the slightly higher unemployment, the slight and constant price deflation, and the lack of GDP growth. Otherwise, things actually weren't that bad.
This article is painting the wrong picture, exaggerating this paltry 10 yen rise.
At least from a normal household point of view living in Tokyo, I see rising prices all around - rent getting more expensive, the same type of fish (as an example) I've been buying in supermarket getting more expensive.
Recently I was shopping for a bicycle bag. I saw some blog reviews from 2 years ago stating the price was around 5000 yen; But I see all the shops are now selling it for over 7000 yen!
> But in Japan, businesses that face rising costs feel they have less ability to do so because wages are flat. Instead, they take a hit to their profits or cut back rather than alienate consumers.
Won't that just flatten out wages even more? There's no money to give out raises if nobody's making any money.
Hm. Well the bottled drinks in vending machines was 100yen back in the 90's when I was a child, and is now 120 yen, so many things have increased in price or have followed the American CPG way of maintaining sticker prices but decreasing the payload in the package.
