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Why did Keynesian fail in saving Japan's economy 2023-09-23 10:48:21

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Why did Keynesian fail in saving  Japan's economy?  

2014-12-05 00:27:51|  分类: Frank'sWritings  |  标签: |字号大中小 订阅  

          Frank  Li    Dec. 4, 2014, in Waterloo, On. Ca.

This topic tells that the soul-dead of Japanese has caused soul-dead of their country.

                Contents

     1. The motivation of the  topic

     2. The  Rational Macroeconomic Policy of Germany 

     3. Fiscal Deficit has acted as economic  heroin

     4. The wrong  is not Keynesian but the dogmatic policy makers

     5. Japan  exhausted all means of Keynesian but useless for  reviving economy

     6.  Digging the nature of Japan's economic downturn

     7.  Bubble Economy degenerated  the quality of Japanese

        7.1.  The incredible lazy of Japan’s employees

        7.2.  The Japanese disease ruins Sharp & Sony

           7.2.1. The decline of Sharp Corporation 

           7.2.2. The decline of Sony Corporation

     8. High-quality of Japanese people before Bubble  Economy

   1. The motivation of the  topic

    Aug. 28, 2014,  in the article that Michael Sandel,  the Sober in the Chaotic World, I  once said with that: For hundreds of years, the world economy has been mainly  driven by two hands, one is invisible hand of Adam Smith, stressed that the Government give up on market regulation in his  book The Wealth of  Nations 1776. The other one is visible hand of  John Maynard Keynes, which stressing that the government intervenes in the market in his  book The General Theory of Employment, Interest and  Money 1936. For example, government regulates interest rates and controls 2% inflation, etc..

    Talking about Keynes,  most people respect The General Theory of Employment, Interest and  Money 1936, but, I prefer The end of laissez-faire 1926, by which Keynes  tries to reverse the ideological confusion on the laissez-faire of the over play of Invisible Hand.  

    In The end of laissez-faire, Keynes said with that:  "These many elements have contributed to the current intellectual bias, the  mental make-up, the orthodoxy of the day. The compelling force of many of the  original reasons has disappeared but, as usual, the vitality of the conclusions  outlasts them.”      

As Keynes warned, that irrational people are always  mechanically imitate economics dogma with going to extremes without  consideration of actual situation has been changed. Two good hands were both  over distorted in the practice - excessive regulation abandon or excessive  government intervention.     However, even a good drug will become a poison when  use in overdose. The world economy has been hovering in this way.

    Dec. 4, 2014, I read article  Can Japan Reboot? The writer is Kenneth Rogoff who is the Professor of Economics and  Public Policy at Harvard University and the chief economist of the International  Monetary Fund from 2001 to 2003.

     In the article, the Professor  provides some suggestions for rebooting Japan's economy due to that Abenomics  seems not work after has made a wide variety of stimulus  dramatically.

     Due to that Abenomics is mainly  based on Keynesian theory, so the failure of the Abenomics, is the failure of  Keynesian theory, at least in some extent.

     I think of my Feb. 16,  2014 article that Why German Economy Can Fly Against Economic  Recession, in which, my comments may  provide a rough answer. I excerpt some section as follow:  

    2.  The Rational Macroeconomic Policy of  Germany   

     In  the last century, after the U.S. President Roosevelt successfully saved the  Great Depression by the means of the government intervene in the  economy, the most of countries take Keynesian  theory, such as, Fiscal Deficit, as the magic to sitimulate their economy. Now, most of them are  debt-ridden, and some of them become losers with bared buttocks and broken  spine.

      However,  at that time, rational Germans did not silly go with the flow. May be that they  have foreseen that Keynesian Fiscal Deficit is the economic heroin with instant  excitement, but long-term fatal. So, they adopts own Freiburg School neoliberal theory that can sustain for long-term stable  development. 

      Now,  nearly 80 years practice have shown that the choice of Germans are smart  prescient.

      We are  aware that, the Fiscal Deficit has caused the European Sovereign Debt  Crisis, and the Freiburg School neoliberal theory helps industrious Germans playing a role  as that of the savior for those European losers under Sovereign Debt  Crisis.

      Facing  new social and economic issues, in 2003, Germns timely develop new solution  Agenda 2010 with aimed at reforming the German social system and labour market  to improve economic growth and thus reduce unemployment.  

     Of course,  Germans is success again with new economic miracle.  

    3.  Fiscal  Deficit has  acted as economic heroin 

     Feb. 9,  2014, in the article The Fed's waning magic in the age of  Yellen, the writer Edward  Luce said that: "Every  chairman of the US Federal Reserve seems to get hit by a crisis in their first  year. Whatever might blindside Janet Yellen, she starts off with a problem that  affected none of her predecessors: the Fed has run out of ammunition. Moreover  the one remaining weapon the Fed thinks it has – the hocus-pocus of 'forward  guidance' – is a gun that fires blanks."

     Many facts  show that Fiscal Deficit is not only has lost its positive effect, but also has  become economic heroin, and the addiction is quick growing in most of countries.  Great many countries have become drug addicts, if, stop using drugs, they  certainly can not stand. However, if, continue in drug use, destined to  premature death. Now Fiscal Deficit has become unbearable economic  nuisance.  

     4.  The wrong is not Keynesian but the dogmatic policy  makers

     However,  those are not the fault of the great  Keynes, but the fault of the dogmatists of  the policy makers, and the ignorance of the governors. They can only draw a  tiger by copying home-cat, but they never have ability to independent  think according to the actual objective situation that is in changing  constantly.

     As my  view, one kind of medicine corresponds to one kind of disease, the disease has  changed, and the good old medicine may become deadly poison.

     Nowadays,  compared with that of formation period of Keynesian theory in before and after  1930s, the big changes in the economic structure, the large increase in the  economic capacity, the over triple times increase in the population, and the  bestial mad plunder of over-developed Financial Economy to the Real Economy, especially, the rapid free flow of the large amount of  international hot money that large enough to destroy the economy of a nation,  and the access is as easy as that of just a finger click. 

     International situation has undergone earth-shaking changes; however, the  governments worldwide are still dogmatically continuing Keynesian economic  theory that developed under old situation and certainly is not suitable for new  problems.

    In the  article The Precious Legacy that Keynes  Left to Us, I said that:  

    "In my  view, the greatest contribution of Keynes was not the The General Theory of Employment,  Interest and Money but  The end of  laissez-faire." "The way of his bold but sensible  questioning about orthodoxy with advancing ideological could help us to advance  the way of our thinking, and avoid to fall into the trap of dogmatism, it is the  prerequisite to do any thing correctly."

    "The world  is in constantly developing, the objective conditions are constantly to be  changed, and the nature of the problems will be changed, too. Only boldly  breaking the restraints of old ideological frame, the horizons of vision is able  to be expanded, the new innovative ideas can be find, the innovation is able  coming true. So that, when facing particular new problems, we can quickly  identify specific new solutions."

     "This the  Precious Legacy that John Maynard Keynes Left to Us." 

    5.  Japan used all means of Keynesian but useless for  reviving economy

    June 4, 2012, in the article Japan’s Bubble Economy of the 1980s, the economic analyst and Forbes columnist Jesse Colombo who wrote  with that: "By 2004, residential real estate in Tokyo was only worth of 10%  of its late 1980s peak, while the most expensive land in Tokyo’s Ginza business  district had fallen back to just 1% of its 1989 level in the same year (Barsky,  2009)."

    "Similarly, the Nikkei stock index is now  trading around 10,000, just little over a quarter of its all-time  high."

    "It has been over two decades since the  popping of Japan’s economic bubble and the country is still actively battling  with deflationary forces that are so powerful that near-zero interest rates,  repeated bouts of quantitative easing (some call it “money printing”) and  constant Yen-weakening currency interventions have barely made a  dent."    

    Jan 6, 2009, on Japan  Times, the report Lessons from when the bubble  burst said with that: after the crash in late 1990,  economic growth stalled various government-sponsored fiscal and economic  stimulus measures, including trillions of yen in failed public works projects,  did nothing to revive the economy. This was started roughly in 1991, when the  effects of the stock market crash became clear.

    Mar 09, 2014, Japan's deficit hits record as economic growth  slows.

    Mar 31, 2014, Japan factory output contracts, dims  growth outlook as tax hike looms.

    Apr. 28, 2014, IMF says Shinzo Abe’s economic  policy is losing momentum and warns growth could  stall unless structural changes to the economy are made.

    Jun. 19, 2014, Abenomics Fails to Shake Japanese  Firms' Addiction to Cash

    Jul. 24, 2014, Japan's record trade deficit raises  fresh doubts about Abenomics

    Aug. 27, 2014,  Abenomics' arrows fail to hit their  mark 

    Nov. 28, 2014, As Japanese Bankruptcies Soar, Goldman Warns  "Further Yen Depreciation Could Be A Net Burden"

    Sept. 15, 2014, Keynes was a failure in Japan - No need to  embrace him in Europe

    Nov. 25, 2914, Soaring prices caused by the depreciation of  the Japanese yen worry off the New Year - Chinese International - China  Daily

    Above reprots reveal the  terrible consequences of Japan's bubble economy, Prime Minister Shinzo Abe  economics seems not work but with a side effect to press Japanese economy  continuously toward deterioration. 

    6. Digging the  nature of Japan's economic downturn

    Why that various  government-sponsored fiscal and economic stimulus measures, including trillions  of yen in failed public works projects, did nothing to revive the  economy?

     Aug. 24, 2014, in  the article that Over-heated real estate  market is ruining Canadian economy from Japan mirroring  Canada, through translation of some articles that wrote by  Japanese scholars, and the people from China who are studying and working in  Japan, by their personal experiences and investigation to reveal  the reality of  the period of Japan's bubble economy 1980s, and after the economic bubble burst,  I have discussed the cause of Japan's economy decline. I excerpt some as  follow:

  7. Bubble Economy degenerated the quality of  Japanese

    Why the all of the fiscal  and economic stimulus measures has been used, but have gained nothing to revive  the economy?

    When talking about the main cause of  Japan’s declining from the economic powerhouse? Most people would blame the  Plaza Accord that forced  appreciation of the Yen to cause Japanese products losing competitiveness and  the Bubble Economy.

    The reason, as my view, all of those  stimulus measures are from the macro elements of the economy, with ignoring the  most basic micro elements - the quality of the people, the work-ethic of the  labor, the efficiency of the production and the capacity of the  innovation.

    The Bubble Economy has  rewritten the code of the DNA of the quality of Japanese people, from  enthusiastic in hard working into enamoring in greedy speculating, thus, further  affected the social moral and national’s spiritual, thereby cause the decay of  whole society of Japan.  

    The easy gaining excessive  profit from speculative activities have fueled Japanese speculative mentality  with unearned ideological. It entices people keen to make living by speculating  instead of hard working and less concerning on the interest of own company and  most of Japanese people have lost the entrepreneurial spirit, hard-working  spirit, and the rational sense of social responsibility and enterprises have  deteriorated as lack of enterprising spirit and innovation dynamicI, such  negative impact is more terrible, even fatal. 

    In essence, the national is the decisive  factor for a nation’s economic development; a nation's economic decline is the  decline of the quality of its national.

    Whether it is a business or a country, if  its member is full of concerning for the self interest, without or lack of  concerning for the public interest, it will doom to be extinction.

    So, I firmly believed that  the impact of the Bubble Economy on the  economy is just a curable social flu, but, the impact on the national’s  spiritual is incurable social cancer.

    The fact of the Japanese  companies loses competitiveness and falling into declining are the vivid proof.  The shortsightedness and lack of entrepreneurial spirit of the management team,  the lack of work enthusiasm of the employees is the main reason, and also it  caused Japan's economy can not recover as expected.  

     7.1. The incredible lazy  of Japan’s employees

    An engineer of China who works for a  German company in taking charge of the branches in South Korea, China and Japan,  after working a while in Japan, he was shocked by the lazy of Japanese  employees, and completely lost the good impression for them.

    Then he wrote an article post on the website and to be widely reproduced on the internet. I excerpt and translate  some as follow. For facilitating narrative, here, I name the writer as  Jim.

    The Japanese employees are  working overtime almost every day, but, only for getting overtime pay rather  than for the need of production.

    Jim arranged a simple task  to a Japanese technician who dragged two days to finish. The same work, if, in  China, a new graduated young man can finish just in half an hour.

     In a break time, Jim complains the matter  with German colleagues, one German said, this guy is a good one, since he did  not drag for a month as that of others. Another German even suspected that  Japanese employee was dozing when working.

    Japanese employee did not  like to take responsibility, when encountering some work trouble, usually; they  will look for helping with endless complaining.

    German company plans to  open new production lines in Japan, so, sent Japanese staff to Germany for  training. The same project in China, within a year, production lines was already  operating at full capacity in three shifts for 24 hours a day. But in Japan, it  took two years still in the state of machine commissioning.

    The workers of China have  mastered all the skills within the three months training in Germany. The German  teacher said: you have learnt every thing on the training plan, you may go back  to China now, and we have nothing for teaching any more.

    Japanese spent six months  in Germany, but, after went back to Japan; they could not work properly, and  complaining that Germans did not teach them well. Germans angered with that: in  Germany, we were teaching you hands by hands, and you also said that you have  mastered every thing already. The Japanese fought back immediately: Sorry, we  forgot, our memory is too bad to remember that.

    Germans were angered and collectively  applied for vacation to leave Japan as a protest. The German company had to  allow them to China by the name of studying for appeasing their  anger.

    Jim went back China with  the German colleagues together. When they held a cup of coffee to watch Workshop  through the window glass of the upstairs office, the production was in an  orderly busy, workers were loading and unloading on the production line, the  transportation-cars were running to and fro between the production sites and the  storages.

    All of Germans was shocked  and some even exclaimed with that: my God, here is simply a heaven. One of them  said with that, they (Japanese) have been sleeping for 20 years, let them  sleeping for another 20 years, then, Japan will decline as a developing country,  and while, China will destine to be a developed country.

    Now, in many Japanese  companies, employees are mostly 40-50 years old, rarely under 30. Many young  Japanese are staying in unemployed. Besides the cause of the economic recession,  the other cause is Japan's "special" corporate culture, which emphasizing  work-qualifications and work-records, so that young Japanese have lesser work  chance. Some girls have to do "compensated dating" for making money. Some boys  also have to make money by doing “duck” - male prostitute.

 7.2.  The Japanese disease ruins  Sharp & Sony

     Mr. Kondo Daisuke, a scholar of Japan, who wrote many articles to criticize the  Management Drawbacks in Japan's enterprises. He coined the term of "Japanese  disease".

    The nature of the "Japanese  disease" is the manner of "evading responsibility" that evolved rigid  organizational structure and Inward Oriented Conservative of the Japanese  Companies. The direct result of the "Illness" is that illed-companies will  increasingly debilitate and ultimately collapse.

     Jul. 11, 2014, Japan's Sharp to post $141 million  loss on Europe solar business.

     Sep. 17, 2014,  Sony predicts increased losses due to struggling mobile  business.

    I excerpt some section from  my article Over-heated real estate is ruining Canadian economy  from Japan mirroring Canada – 2 as follow, to show  the reason that Sharp and Sony declines. I hope that the lessons may play a role  as a mirror to mirror the enterprises of Canada, to ask that Why? How?  

  7.2.1.  The decline of Sharp  Corporation

    Sep. 11, 2012, Mr. Daisuke  Kondo who published a Mandarin article  <Angry Gou Tai-ming> on Economic Observer Online of  China, in which he criticized the “Japanese Disease” that harms Japanese  companies. I excerpt and translate some as follow.

    A hundred years glorious Sharp Corporation has  suffered "Japanese disease." It is not only the Sharp, but the Sony, Panasonic,  NEC, Sanyo, Olympus, and great many Japanese companies are the serious patients  in "Japanese disease".   

For example, a Japanese company  planed to develop a new product. The product development department produced a  "plan book", with depicting the grand blueprint of best market  potential.

    However, when the "plan book" spreading in  other departments of the company, this new product would face with dozens or  even hundreds of blames, in the end, it did not get any support. The reason is  simple: For the heads of departments, the most important thing is not how to  bring new products to market, to improve the turnover, but, how to  avoid the risk-taking of affecting own career in case of the sales of the new  products is not good as expected.

    Because of the whole  company have infected the disease of "evading responsibility", a lot of great  new product plans have been put into the limbo. Meanwhile, in the process of  this "bad model" iterative, the staff for new products’ R & D has gradually  lost enthusiasm and morale, thus, resulting in the number of the plan for new  products’ dropped. Nevertheless, the whole company still does not repent for  that, keeping on its own way.

    Once cooperation with a  Japanese business that suffers "Japanese disease", I believe, regardless, which  leaders of China's company will be angry as same as that of Gou  Tai-Ming.

   Assuming, a Chinese company  raised an advantageous cooperation projects for both sides to a Japanese  company, the local subsidiary of the Japanese company will immediately report to  the International Department of the Japanese parent company. At this time, the  International Department will require the local subsidiary to present a "plan  book" as long as hundreds of pages. Just for completing this "plan book" will be  going to spend a few months of time.

    Then, after the negotiations with various  departments in the head office, which cost more than six months usually,  luckily, the "plan book" may finally appear on the meeting of the Board of  directors once a month in the head office. However, most probably it will suffer  the fate of being sentenced to death, because of all the directors are not  concerns the plan book from its feasible or not, but, from the "how to use the  plan, for their personal interest, rather than the interest of the  company.

    If, some directors believe  that the implementation of the plan was no benefit for them selves, or own  competitors in the company can get more benefits, they would oppose without  hesitation and then put forward some reason to postpone the decision and  ultimately to make the plan was dismissed or forced to ‘another day another  meeting’, without the rational sense of caring about the interest of gaining or  losing for the company."

7.2.2.  The decline of Sony  Corporation 

    Feb. 6, 2014, Japan’s scholar Daisuke Kondo published  another Mandarin article The sundown of SonyDoraemon  or Crayon on a website of  China, in which he criticized the ridiculous management that has been ruining  Sony Corporation.

    “I remember that of my college days, only  the best students in science majors can enter Sony. When going out of Japan,  regardless of which country, we were able to see "SONY" huge billboard and young  people using "walkman". At that time, Sony is our Japanese pride, however,  now?”

    "For this problem, one of  my college classmates, now a Sony employee replied with that: "In the company,  there one by one meetings are from morning to night, after the meetings,  everyone must deal with at least 100 internal mails from the company. So, Sony  is not an electronics manufacturer, but a downright bureaucracy! Only those  people, who are the 'Mr. Nice Guy' without any faults, could be promoted. Such a  Sony could not develop new products that can shine the world any more?”  

    "Our company has a specialized team in  charge of new product development against the rival of Apple of the United  States. There was I admired executive who is in charge of the team. One day, his  immediate leader of a director of Board even ordered him to stop the investment  of 'no value' (ie, to give up the R & D) as soon as possible to vanquish to  Apple. The executive retorted: Do you have self-esteem as a member of Sony? The  Director even contemptuously asked: ‘your self-esteem can help company making  money, right? Heard of the answer of a director of Board, the executive  immediately decided to resign."

    "In recent years, the elite  who left Sony were not only the executive alone. In 2006, the former managing  director who was responsible for "AIBO" R & D of futuristic robots was  demobilized; the reason was that there members of board were questioning that  ‘How much economic benefit that the robot R & D can bring to Sony? In 2007,  former chairman and CEO of the Sony Computer Entertainment Inc., Mr. Ken Kutarag  who known as the "Father of the PS (PlayStation)" was also retired after the  expiry of his Job tenure.”

    "In the booming period of  before, Sony company once gathered a large number of ‘Doraemon’ talents - they can come up with  all kinds of whimsy from their "Mind Treasure Bag", and then to materialize them  into a variety of future products. But now, unfortunately, the Sony is filled  with the people who work with lips only as that of the ‘Crayon’ ”

8. High-quality of Japanese people before Bubble  Economy

    Now, I think of a story in Mandarin long  time ago, the famous American marketing authority Philip Kotler who once said that: For Japan, what is the panacea to heal its  wounds of the war, to stand up on the war-ruins, and to become the economic  powerhouse? For achieving economic advantage, Japanese waged the war, but,  failed. From the pain, they learnt that, the use of economic means can achieve  more brilliant achievements than that of the use of the military. This means is  the marketing.

   The economic miracle shows the high-quality  of Japanese people. Following is a story about it.

In morning August 19, 2013, I  had a chat with the father of my new neighbor in Waterloo, Ontario. He said that  his brother once was a top executive of a Canadian Steel Manufacturer and had  twice visited Japan for learning the experience of the advanced corporate  management in 40 years ago. His brother appreciates the good quality of Japanese  very much with a comparison between Japanese and Canadian in case of production  accident.

    When facing production equipment fails, any  Japanese operator would immediately stop the production, and then, all of the  people gathered together to make diagnosis and treatment, after troubleshooting,  everyone immediately went back own position to resume the production. But, the  Canadian was just blindly standing, there no one was attempting for  troubleshooting.

    Following are some memories about the  industrious noble quality of Japanese people. I could not recall the source of  them already, but the facts are true.

    When 1973 oil crisis, the plant of the  Sony Corporation was  shutdown and the workers were staying home waiting for notification of work.  However, the workers went back to plant to do some thing available voluntarily  with the hope that company could survive.

    Mr. Kazuo Inamori, the founder  of Kyocera Corporation of  Japan. In the newly established period of the company, a customer ordered  special shape of water pipes, because there was no prior experience in the  production of such pipes. In the process of heating and forming to required  shape, the water pipes were burst. Then, Kazuo Inamori was holding  the pipe when sleeping at night and slowly turning the pipe, so that pipes was  heated evenly, and made it into required shape finally.

    Now, we have convinced that it was that  industrious noble nature of Japanese people created Japan's postwar economic  miracle.

    People may ignore an important fact that  the birth of the Plaza Accord is also a proof that made ??in Japan was once invincible and swept  global market, and also is the proof that the high quality of the enterprises  and the employees of Japan.

    Supposing that the enterprises and the  employees of Japan still remained the spirit of entrepreneurial and  responsibility, and still in hard working, today's economy of Japan will still  be over that of Germany, and those made ??in Japan will be still invincible and  sweeping global market.

    This is one of the main reasons that  Japan’s economy has been long-term downturn. And it is why that the Three Magic Arrows of S hinzo  Abe did not achieve the desired results.

    From above lessons, I firmly believed that,  no doubt, such Japanese diseases of the employee lazy, the "evading  responsibility", and more, is an objective results of the Japanese subjective  selfish ideological, which was developed from the Holy Baptism by Japan’s Bubble Economy 1980s.

    The aftermath of the bubble economy is  still hurting all aspects of Japanese society, from the social ideological to  the personal spiritual, from the macro national economy to the micro family  life, from the world class companies to the ordinary employees, and  more.

    The sad facts of Japan made me firmly  believed: it is that the quality of employees decides the fate of the  enterprise. It is that the quality of the nationals decides the fate of the  nation. And it is that social moral, social ideological impacts the quality of  the national in a great extent.

    Japan, one misstep in opening real estate  market, can not get rid of the nightmare of the bubble economy. 

                    ---  Frank     Dec. 4, 2014, in Waterloo, On. Ca. 

Can Japan Reboot?

 Kenneth  Rogoff

Kenneth Rogoff, Professor of  Economics and Public Policy at Harvard University and recipient of the 2011  Deutsche Bank Prize in Financial Economics, was the chief economist of the  International Monetary Fund from 2001 to 2003. His most recent book, co-authored  with Carmen M. Reinhart, is This Time is Different: Eight Centuries of  Financial Folly.

http://www.project-syndicate.org/commentary/japan-slow-economic-growth-by-kenneth-rogoff-2014-12

   CAMBRIDGE  – Japanese Prime Minister Shinzo Abe’s recent policy decisions – to increase  monetary stimulus dramatically, to postpone a consumption-tax increase, and to  call a snap election in mid-December – have returned his country to the  forefront of an intense policy debate. The problem is simple: How can aging  advanced economies revive growth after a financial crisis? The solution is  not.

   It is now  clear that the first round of Abe’s reforms – known as “Abenomics” – has failed  to generate sustained inflation. Hopes for continued recovery have now given way  to two consecutive quarters of negative growth. The question is whether  Abenomics 2.0 will put Japan’s economy back on the path to renewed  prosperity.

    My own  view is that the “three arrows” of Abenomics 1.0 basically had it right:  “whatever it takes” monetary policy to restore inflation, supportive fiscal  policy, and structural reforms to boost long-run growth. But, though the central  bank, under Governor Haruhiko Kuroda, has been delivering on its side of the  bargain, the other two “arrows” of Abenomics have fallen far short.

   There has  been no significant progress on supply-side reforms, especially on the core  issue of how to expand the labor force. With an aging and shrinking population,  Japan’s government must find ways to encourage more women to work, entice older  Japanese to remain in the labor force, and develop more family-friendly labor  policies. Above all, Japan needs to create a more welcoming environment for  immigrant workers.

    There  has been some movement on immigration. Panicked by deadlines for the 2020 Summer  Olympics in Tokyo, the government managed to clear the import of foreign  construction workers (though the decision had to make its way through a  half-dozen ministries). But overall progress has been slow. Japan desperately  needs more nurses and hospice workers to care for its aging population, but  bureaucratic and political resistance to immigration is deeply  entrenched.

   When I  first started asking my Japanese academic friends about Abe’s supply-side  reforms, they said, “Don’t worry, they’re coming.” Then, after a while, they  would say, “Don’t worry, they’re coming – but slowly.” Recently, the mantra has  changed to, “Don’t worry, we still think they’re coming.” One can only hope so.  Without structural reforms, especially of the labor market, Abenomics cannot  succeed in the long run.

    The  timing of the April 2014 consumption-tax hike (from 5% to 8%) was also  unfortunate. It would not have been easy for Abe to postpone the move, given  that it had been locked in place by broad-based political agreement before he  took office. But the government could have engaged in more aggressive fiscal  stimulus to counteract the hike’s short-term effects. Instead, two successive  quarters of negative growth have had a dispiriting psychological  impact.

    True,  the slump is partly an illusion: the earlier boom was fueled by Japanese  households’ effort to beat the tax by front-loading purchases of consumer  durables – a nuance that seems to have been lost in the public debate. But the  big picture remains: Abenomics so far has failed to turn around a deflationary  mindset.

    Mind  you, Japan’s outsize government debt and undersize pension assets are a huge  problem, and only the most reckless and crude Keynesian would advise the  authorities to ignore it. For the moment, the risks are notional, with interest  rates on ten-year government debt below 0.5%. But saying that Japan’s debt is  irrelevant is like saying that a highly leveraged hedge fund is completely safe;  the risks may be remote, but they are not trivial. Think about what would happen  if the Bank of Japan actually managed to convince the public that inflation will  average 2% on a sustained basis. Would ten-year interest rates still be  0.5%?

     What if  other factors – say, a sharp decline in emerging-market growth – led to a sharp  rise in global real interest rates, or a rise in risk premia on Japanese debt?  In principle, Japan could weather such shocks without high inflation or other  extreme measures, but it is folly to deny the country’s vulnerability. A hedge  fund can simply go out of business; that is not an option for a great  nation.

Fiscal  sustainability requires an eventual rise in the consumption tax, and of course  Japan should not wait until international investors start doubting its  willpower. The problem is in the timing and tactics. Postponing the second  consumption-tax increase seems like a good compromise between pushing Abenomics  to escape velocity and maintaining long-run credibility.

But this  brings us back to Japan’s deeper problems. Demand policies alone will not alone  prevent two more lost decades, much less guarantee two golden ones. Demographic  decline was a key factor in setting off Japan’s 1992 financial crisis and the  long malaise that followed. Japan is still a rich country, but its ranking in  terms of real per capita income has now slipped below that of many  other advanced economies – including the United Kingdom, by some measures – and  far below that of the United States.

Japan’s  experience holds important lessons for Europe, the main one being that stimulus  policies, though necessary in the short run to support demand, cannot address  long-term structural deficiencies. If Abenomics 2.0 fails to embrace deep  structural reform, it will fare no better than the  original.

As Japanese Bankruptcies Soar, Goldman Warns "Further Yen  Depreciation Could Be A Net Burden"

Tyler Durden on  11/28/2014 11:20 -0500
It is no secret that one of the primary drivers of  relentless S&P 500 levitation over the past two years, ever since the start  of Japan's mammoth QE, has been the use of the Yen as the carry currency of  choice (once again as during the credit bubble of the early-2000s), whose  shorting has directly resulted in E-mini levitation. One look at the intraday  chart of any JPY pair and the S&P500 is largely sufficient to confirm this.  Those days, however, may be coming to an end, at least according to Goldman  which overnight released a note saying that the Yen is "Almost at  breakeven: Further yen depreciation could be a net  burden."  

Here are the highlights:

The yen has depreciated quickly beyond ?115/US$ from the  ?107/US$ level since the FOMC made the decision to terminate quantitative easing  and the BOJ surprised with additional easing at the end of October. This  has prompted concern over possible damage to Japan as a whole if the yen weakens  further.  

Using industry input/output tables to investigate the costs  and benefits of a weak yen, we find that the manufacturing sector still reaps  forex translation gains under Japan’s current economic structure.  However, in materials and nonmanufacturing industries that have limited  opportunity to pass on forex-driven cost growth to exports, the costs of a weak  yen far outweigh the benefits. According to our calculations, a 25% decline in  the yen’s valueresults in a ?4.1 tn net cost increase for Japanese industry as a  whole since 2012 and a ?10.5 bn increase in household sector import  inducement.  

By contrast, the decline in commodity prices is a  substantial relief. A 10% decline in commodity prices cancels out the increase  in net cost borne by 14.5% yen depreciation. The 25% decline in commodity prices  so far (oil price) offsets the net cost increase borne by 35% yen weakness.  Calculating from the late 2012 rate of ?78/US$, 35% depreciation works out to a  rate of ?120/US$. In other words, the combination of the oil price  around US$80/bbl and the yen exchange rate of ?120/US$ is just about at  breakeven, netting out the benefit and cost of yen depreciation and oil price  decline since Abenomics began.  

That said, our commodities research team sees limited scope  for further decline in crude oil prices, while we expect the yen to depreciate  further as the FRB and BOJ’s policies diverge. If further yen depreciation is  not accompanied by real economic growth in the form of an export volume recovery  and broad wage increases, and ends up merely producing forex translation gains,  we believe it could very well place an increased burden on the Japanese economy  as a whole. Needless to say, the cost burden will ease if the rapid decline in  oil price over the last few days stabilizes at the low  levels.

Oddly enough, one can almost make the case that the collapse  in crude price has been manufactured to allow Japan's QE to continue as long as  possible. And yet, this is hardly comforting news to Japan's companies, which as  shown in the chart below, are seeing a surge in bankruptcies unseen in recent  history. This is how Goldman explains this:

For the nonmanufacturing sector, yen depreciation  means growth in net cost, increased burden for corporate and household  sectors  

Nonmanufacturing industries export little. Most of the goods  they produce are consumed domestically. Imported intermediate products used as  raw materials in the nonmanufacturing sector amount to only ?8.6 tn, but we  estimate that depreciation-linked input cost is ?40.3 tn as this includes  electricity/gas used at retail stores and event spaces as well as fuel (oil)  costs for transporting goods. Nonmanufacturing sector exports, meanwhile, amount  to just ?18.5 bn. A 25% decline in the yen’s value raises the input cost by  ?10.1 tn, but this far exceeds the additional export receipt of ?4.6 tn,  resulting in a net cost increase of ?5.5 tn. This additional cost must be borne  by the “domestic sector” in Japan—i.e., the corporate or household  sector.  

Keeping personnel costs in check is key for  companies forced to bear increased costs due to yen depreciation. Personnel  costs have a high weighting in the nonmanufacturing sector, and if the yen  continues to weaken it will be difficult to continue raising wages unless sales  rise commensurately with cost increases. Cost increases in the  nonmanufacturing sector due to yen depreciation have an ultimate ripple effect  on the household sector because the  higher costs are passed on to retail prices  and/or they prompt companies to rein in personnel costs (see Exhibit  2).  

As Japanese Bankruptcies Soar Further Yen Depreciation Could Be A Net Burden - 风萧萧 - Notebook of Frank Costs of yen depreciation outweigh benefits for industry as  a whole: Policies for addressing weak yen effect appear limited based on past  experience  

A similar calculation made using input/output tables for  2005 results in a “net export” figure of ?16.3 tn for the manufacturing sector.  Even after  subtracting nonmanufacturing sector “net cost” of ?14.9 bn, net  exports of ?1.4 tn remain, indicating that policies to offset the impact of a  weak yen had a positive impact on the Japanese economy as a whole. The secular  rise in crude oil prices from 2005 significantly raised the cost of intermediate  inputs—mining, oil, and coal products—for both manufacturing and  nonmanufacturing. For industry as a whole, input costs affected by yen  depreciation increased to ?86.6 bn in 2012 from ?71.8 tn in 2005. Over the same  period, exports of goods and services from Japan declined to ?70.3 tn from ?73.2  tn due to yen appreciation, the global financial crisis, and the March 2011  earthquake. The lack of growth in exports is due partly to the global demand  cycle, but a larger structural factor is that Japanese companies have lost  global  market share due to the shift of production overseas and increased  competition with foreign products.  

In 2012, the structure of the Japanese economy was that  manufacturing sector had net export value of just ?5.5 tn, which was  insufficient to offset the nonmanufacturing sector’s net cost of ?21.8 tn,  resulting in net cost of ?16.3 tn for Japanese industry as a whole. A 25%  decline in the yen’s value raises industry’s net cost burden by ?4.1 tn, which  is equivalent to 0.8% of GDP. The impact of weak-yen policy measures based on  experiences when Japan was a net exporter, has clearly diminished.  

Bankruptcies precipitated by yen depreciation on the  rise  

According to a recent bankruptcy survey by Tokyo Shoko  Research, there were 214 bankruptcies due to the weak yen in January-September  2014, which is 2.4 times the 89 seen in January-September 2013. Far more of the  bankruptcies were in the nonmanufacturing sector—81 in transport, 41 in  wholesale trade, 19 in services, and 11 in retail—than in the manufacturing  sector (44), which is consistent with our analysis based on the input/output  tables.  

Surprisingly, the number of bankruptcies since 2013 due to  yen depreciation far surpasses the number of bankruptcies in 2009-2011 due to  yen appreciation. Presumably, in many cases in 2009-2011 the strong yen was not  cited as the direct cause of bankruptcy because there were numerous other  factors at work also, beginning with the sharp slowdown in the global economy  and financing difficulties. Nevertheless, the 353 bankruptcies since  2013  attributed to the weak yen are 2.2 times greater than the 157 bankruptcies from  2009 to 2011 attributed to the strong yen (see Exhibit 3). As Japanese Bankruptcies Soar Further Yen Depreciation Could Be A Net Burden - 风萧萧 - Notebook of FrankAnd it is not just corporations that are approaching their weak-yen  breaking point. So are households:

Household burden increases with weaker  yen  

Let us turn to the household sector. The input-output table  has a matrix of “import induction value by final demand categories”. This shows  the value of goods and services imports induced by final demand categories such  as household consumption, private business investments, public fixed investment  and exports (see Exhibit 4).  

Household sector final demand totaled ?279 tn in 2012, with  imports accounting for ?41.9 tn, or 15.0%, of household consumption. This  includes gasoline and mineral fuels (oil, coal) needed to generate electricity  for households. Taking into account the decline in the yen’s value since 2012,  household sector import value has risen ?10.5 tn to ?52.4 tn. The ?10.5 tn rise  is equivalent to 3.6% of 2012 household sector disposable income of ?287  tn.   

In 2005, imports represented ?32.8 tn of household final  consumption. This figure rose ?9.1 tn to ?41.9 tn in 2012, and if we take the  25% decline in the yen’s value into account, the rise comes to ?19.6 tn over  seven years. Mining, oil, and coal products account for 50% of the rise since  2005, clearly showing how the rises in gasoline, kerosene and electricity prices  due to yen depreciation increased households’ burden.  

Household final consumption was largely unchanged during  this period, rising just barely from ?277 tn in 2005 to ?280 tn in 2012. This  means that domestic consumption of goods and services declined to the same  extent that import consumption value increased. Disposable income declined just  slightly over this period, to ?287 tn from ?290 tn, meaning that the rise in  import costs for households due to yen depreciation was borne directly by  households, causing them to curb their spending.  

Food and fuel-related imports in the household sector  totaled ?22 tn in 2012, accounting for 54% of household sector imports of ?41  tn. The recent decline in crude oil and other commodity prices is partially  offsetting the impact of the weak yen, but not the rise in costs due to yen  depreciation on the 46% of imports that are not food or  fuel-related.

Goldman's conclusion:

If further yen weakness is not accompanied by real  economic growth in the form of an export volume recovery and broad wage  increases, and ends up merely producing forex translation gains, we believe it  could very well place an increased burden on the Japanese economy as a  whole. Needless to say, the cost burden will ease if the recent rapid  decline in oil price stabilizes at the low levels.

Needless to say, none of this is preventing the  momentum-chasing algos to push the USDJPY up some 100 pips in the overnight  session to offset the tumble in energy companies and push the S&P higher,  and send it almost back to the highest level seen since 2007. And once the  USDJPY trigger the 119 buy stops, all bets are off, if only for the Japanese  economy. The Nikkei and the S&P 500 on the other hand, well those will keep  rising as more economic devastation rains on Japan's economy thanks to  Abenomics.

Then again, with Paul Krugman now openly advising  Abe, it should come as no surprise that Japan's  economy is in the late stages of a total and unprecedented  collapse.


Keynes was a failure in Japan - No need to  embrace him in Europe

September 15, 2014 By Detlev Schlichter http://detlevschlichter.com/2014/09/keynes   Detlev Schlichter is an independent economist, market commentator and  investment strategist.


Detlev had a  19-year career in international financial markets as a trader and portfolio  manager, including stints at J. P. Morgan, Merrill Lynch, and Western Asset  Management.

In 2011 he  published his first book Paper Money Collapse – The Folly of Elastic Money (John  Wiley & Sons), which won the get Abstract International Book Award in 2012,  and which is now in its second edition.

Detlev is a  frequent commentator on economics and financial markets via this website and the  media. He has appeared on television and radio (Sky  NewsReuters  TVRussia TodayBBC Radio 4 Analysis and  BBC Radio 4′s Start The  Week), and his editorials have been published by The  Wall Street Journal, City A.M., TheStreet.com and mises.org.

Detlev is on  the advisory board of the Ludwig von Mises Institute Canada and a senior fellow  at the Cobden Centre London, a free market think tank devoted to sound money. He  holds a degree in economics (Diplom-?konom) from Ruhr-Universit?t Bochum,  Germany. He lives with his family in London.

Please note:  Nothing on this website, including attached documents or links to other sites,  should be considered investment advice. For use of this website please see  Terms &  Conditions.

 Draghi’s volte-face  two weeks ago has emboldened the Keynesian majority in the media and in economic  research departments. It has injected new life into their relentless campaign  for yet more state intervention in the Eurozone economy. It wasn’t anything the  ECB actually did (or announced) that initiated this new euphoria. As usual, the  measures fell short of what the tireless advocates of “stimulus” demanded. To  the true Keynesian, no interest rate is ever low enough, no “quantitative  easing” program ever ambitious enough, and no fiscal deficit ever large enough.  But with his talk of “stimulating demand” and his calls for “fiscal  flexibility”, Draghi was finally speaking the Keynesian lingo. It was this that  got hearts racing.

“Choirs of  angels must have sung over the statement that the eurozone has a problem with  demand,” enthused Martin  Wolf, head guardian of the Keynesian faith at the  Financial Times, so aptly called the “pink Times”. Remember, that a lack of  demand is, in the Keynesian religion, the original sin and the source of all  economic troubles. “Aggregate demand” is the sum of all individual demand, and  all the individuals together are not demanding enough. How can such a situation  come about? Here the Keynesians are less precise. Either people save too much  (the nasty “savings glut”), or they invest too little, maybe they misplaced  their animal spirits, or they experienced a Minsky moment, and took too much  risk on their balance sheets, these fools. In any case, the private sector is  clearly at fault as it is not pulling its weight, which means that the public  sector has to step in and, in the interest of the common good, inject its own  demand, that is “stimulate” the economy by spending other people’s money and  print some additional money on top. Lack of “aggregate demand” is evidently some  form of collective economic impotence that requires a heavy dose of  government-prescribed Viagra so the private sector can get it’s aggregate demand  up again.

Wolf thinks  deficits should be higher, preferably as a result of public investment and tax  cuts, and of course, there should be some proper quantitative easing, not just  the meagre purchases of ?750 billion of asset-backed securities the ECB promised  at the last meeting. (Sadly for Draghi, the goal posts on what constitutes real  QE have been secretly moved. Now, only buying large chunks of government bonds  is deemed worthy of the label.)

In fairness to  the ECB president, it should be mentioned that he also spoke of the need for  structural reform, but as usual, this is a bore for the Keynesians. “My view is  that structural reforms are mostly irrelevant for the recovery,” opines Wolfgang  Münchau, Wolf’s colleague at the FT. What Münchau  wants is, of course, more fiscal spending and more money printing. Structural  reform – the belief in which he considers “cranky” – should only be thrown into  the mix as a bribe to keep the Germans happy. He envisions some fiscal and  monetary “carpet bombing” to force the economy into higher growth, damn  it!

To commentators  like these the prospect of Germany running a balanced budget (potentially in  2015, it would be the first since 1969) is bound to cause apoplectic seizures.  According to the Wall Street Journal, Germany’s leftish weekly Der Spiegel  called the goal a “fetish”, declaring that “an investment program for Germany  would be an act of European solidarity.” The FT’s Wolf diagnoses that the  deficit forecast for the Eurozone as a whole of “just 2.5 percent” means that  the fiscal stance is “too tight”.

Meanwhile in  Japan

Things must be  much better in Japan then, a place evidently not run by the some  inflation-fearing and austerity-obsessed Teutons, and for the past 20 years the  veritable motherland of “fiscal flexibility.”

“Japan ran  fiscal deficits equivalent to 8.4% of GDP last year, and had a public sector  debt of 245% of GDP, both (!) the highest among major economies,” the Wall Street Journal  reported last week (my emphasis). Well, that must  have injected a lot of aggregate demand into the economy!

Since Japan’s  easy-money-bubble of the 1980s popped in 1989, the country has obediently  implemented the entire tool book of Keynesianism, and has done so repeatedly,  but in particular it employed ad nauseam the proposal of Wolf, Der Spiegel and  Münchau of “public investment” to stimulate the economy – to no avail, other  than causing ever larger deficits.

Drawing from  IMF sources, wikipedia compiled the following  list of suicidal stimulus policies: “Between 1992  and 1995, Japan tried six spending programs totaling 65.5 trillion yen and cut  income tax rates during 1994. In January 1998, Japan temporarily cut taxes again  by 2 trillion yen. Then, in April of that year, the government unveiled a fiscal  stimulus package worth more than 16.7 trillion yen, almost half of which was for  public works. Again, in November 1998, another fiscal stimulus package worth  23.9 trillion yen was announced. A year later (November 1999), yet another  fiscal stimulus package of 18 trillion yen was tried. Finally, in October 2000,  Japan announced yet another fiscal stimulus package of 11 trillion yen. Overall  during the 1990s, Japan tried 10 fiscal stimulus packages totaling more than 100  trillion yen, and each failed to cure the recession. What the spending programs  have done, however, is put Japan’s government in poor fiscal  shape.”

Oh, but the  list is not complete without this additional bon mot:

“Japan’s  expansionary monetary policy failed to achieve recovery.”

Policy rates  have not been above 1 percent in Japan for 18 years. The country has for more  than 20 years been the laboratory rat of applied Keynesianism – and to say that  the promised results did not quite materialize seems a gross  understatement.

To be able to  ignore the abject failure of Keynesianism in Japan the commentariat has adopted  the meme that inflation is too low for fiscal pump priming to work. It’s the  deflation, stupid -  although the consumer price index has hardly changed over  the past 10 years in Japan. In stark contrast to  what the news media want you to believe, Japan had pretty much price stability.  It is true, that the Bank of Japan has not kept the printing presses at full  throttle consistently, and has varied bouts of QE occasionally with a calmer  policy approach. Keynesianism can evidently only deliver the goods if reckless  fiscal spending is paired with reckless money printing. And that is part of the  appeal of “Abenomics”, which started early in 2013 with a promise to end  “deflation” (price stability) to the cheers of the global Keynesian fraternity.  Over the past 12 months, Japan not only had the biggest fiscal deficit, it also  had the fastest growing central bank balance sheet in the developed world. If  anybody tried Herr Münchau’s carpet bombing approach it is  Japan.

Here is the  Wall Street  Journal again:

“Revised  data…showed that the country’s gross domestic product contracted an annualized  7.1% in the April-to-June quarter from the previous three-month period, as  businesses as well as consumers retrenched after the government raised the sales  tax.”

What? – After  20 years of the most extravagant fiscal stimulus in history and on the back of  “all-in” money printing, a 3 percent hike in the sales tax causes the economy to  nosedive?

“Even with the  negative impact of the higher sales tax making a sharp fall in GDP a foregone  conclusion, analysts still expressed concern. …’Everything buckled –  consumption, capital spending, housing investment and infrastructure. This is  very bad,’ said Etsuro Honda, an economic advisor to Mr. Abe, in an  interview.

There is now  talk of postponing the next tax hike which is not going to do much to fix  Japan’s real problem: a growing debt load.

But hey, what  about doing some extra “public investment” to stimulate the  economy?

Hardly a  surprise

I cannot  exclude that all this lunatic hyperactivity may result in the odd calendar  quarter occasionally showing some better headline growth. Maybe the Japanese  even get their wish for proper inflation some day, and higher yields and a  falling currency. (Be careful what you wish for!) We can still safely exclude  that this program of Keynesianism on steroids will someday unshackle Japanese  animal spirits and release the economy on a path of healthy, balanced and  self-sustaining growth. These policies are part of the problem. They are not the  solution.

None of this  should be a surprise. To find out that Keynesianism must fail we do not need the  real-life example of Japan. A proper look at its weak theoretical foundations  should have sufficed. That is what a journalist of a different caliber did  already more than 50 years ago: the incomparable Henry  Hazlitt, who was principal editorial writer on  finance and economics at the New York Times from 1934 to 1946 (oh to think of  who holds that position now!!), and who published his critical dissection of  Keynes’ General Theory in 1959. Hazlitt knew and could explain why Keynesian  policies must fail. What a different type of journalism Hazlitt gave his readers  when compared to the unthinking and unrelenting carping about the need for more  “stimulus” we read everywhere today.

What is  probably most galling about the Keynesian media onslaught is that, with a  brazenness that is reserved for the truly deluded, these commentators invoke the  spectre of a “Japan-like lost decade” in Europe if their advice is not heeded.  It boggles the mind.

Notwithstanding  the new love-in between Draghi and the Keynesians, I believe there is still too  much resistance to outright Keynesianism in Germany and among the Northern  contingent of the Eurozone. These countries broadly remain of the eminently  sensible view that without meaningful structural changes in France and Italy,  without reforms that increase their competitiveness, lower their structural  unemployment, and stabilize their fiscal outlook, Germany and Co. remain at risk  of paying for any fiscal troubles in these countries in the future. The market  is of the view that the debt load has already largely been communalized via the  ECB. Remember Draghi’s dangerous promise to “do whatever it takes.” This is  deeply unpopular in Germany. It is also not that simple. When one of the big  countries faces its Greek moment Draghi will find out that he cannot do that  much after all. I believe the German government will continue to drive home the  point that the French and Italian governments have to do their homework. There  is little appetite for any fiscal adventurism a la Keynes.

But Mr. Wolf  and Mr. Münchau should not despair. They can always enjoy the wonderful  successes of applied Keynesianism in Japan.

Detlev Schlichter says  September 16, 2014 at 10:00  am

No, I don’t  agree at all. You misunderstood. – The statement that, if you print enough money  you lower the purchasing power of the monetary unit, is held by pretty much all  economists. Austrians, Keynesians, and Monetarists alike. In fact, many  Keynesians believe that higher inflation would be good, so they recommend more  money creation. – Has low inflation in Japan falsified the statement that if you  print enough money you lower the purchasing power of the monetary unit? Has it  therefore meant, as you say, a failure for Keynesiansim, Monetarism, and  Austrianism, as all of them agree on this point? – No. Because Japan has  evidently not created “enough” money. In fact, the balance sheet of the Bank of  Japan has grown much less in the 10 years before the 2007/2008 crisis than that  of any other major central bank (including the ECB). (If memory serves, it has  hardly grown at all.) Although the BoJ was the first to do QE, it has frequently  reversed the process and shrunk its balance sheet again, similar to what the ECB  did recently. Then there are the “mitigating factors”, which Swissie mentions in  his comment below. If the demand for money rises faster than the supply, you  won’t get inflation. (Again, all the major “schools” agree on this.) There is no  need to rewrite monetary theory because of what happened recently in Japan.
I  guess most Austrians agree with Shinzo Abe and the Keynesians that if you are  really determined about debasing your currency and creating inflation, you will  ultimately be able to do it. Where we disagree is what the results in terms of  sustainable growth are going to be. So far, the BoJ has done enough money  printing to keep the bond bubble inflated but not enough to cause inflation. Abe  wants to change that.
Why did I say, most observers were surprised about low  inflation? – Because inflation is also the result of public confidence. If  people lose confidence in their money, they spend it, the velocity of money goes  up and inflation kicks in, even if at that point the central bank stops adding  money. This has not happened in Japan, and I think it is somewhat surprising. I  think it could still happen. But none of this constitutes a failure of any  economic theory. No serious monetary theoretician will claim that his theory  shows at what point confidence disappears. This is not a question of theory at  all but is always a judgement call about people’s behavior.
Finally, the  damage that the policy of easy money has caused in terms of capital  misallocations is not measurable. The measurable cost in terms of inflation has  so far been negligible. But the benefit of expansive fiscal policy has clearly  been negligible while the cost in terms of larger deficits has been measurable  and large.

Soaring prices caused by the depreciation of the Japanese yen worry off the  New Year - Chinese International - China Daily

Posted:November 25,2014   Views:10

China News Network November 25 (by Europe leaves,  according to Japanese news network reported on November 25, entered December,  Japan would usher in the New Year peak season. However, due to the depreciation  of the yen, making imported goods prices soaring, Japan began to prepare for the  New Year's housewives, is a major blow livelihood.  

pan's Aeon supermarket news that imports  from Australia beef and fresh vegetables, all have been a price rise of around  5% of the seafood category, salmon and shrimp also have a more substantial price  rise this year in September, salmon price than the same month last year rose 17  percent, shrimp prices have gone up 19 percent.

Although the depreciation of the yen to  foreign tourists to Japan brought great convenience, but the New Year period,  because the depreciation of the yen, making the number of Japanese going abroad  will be there was a substantial reduction in Japanese travel agency JTB said the  forecast data released show, New Year Japanese overseas travel will be reduced  by about 10 percent to 20 percent over last year.

Prime Minister Abe's correspondent at the  recent conference that in the past because of the high yen makes some companies  go bankrupt, it is necessary to continue to uphold the policy of the Japanese  yen depreciation(http://www.like-news.us/).

However, due to the depreciation of the  yen, but also makes the life of people in trouble, the consumption tax tax  increase and the yen's depreciation Daily life in commodity prices increase,  this double whammy, so many housewives to tighten the purse, no more flowers  money, which also makes the Japanese consumer market into a rare in recent years  in the doldrums.

Further reading:

Japanese municipal government for money to  rent office building called Convenience Stores and pull tourists (Editor: Liu  


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