Steve_American wrote:'m sorry, but I don't understand why you think that the international currency market has the power to reverse the claimed (by mainstream economic schools of thought) that adding any currency (yen or dollars) by creating money will always dilute the value of that currency.
The claim is that deficit spending always causes inflation. I'm claiming that both Japan and the US situations over the last close to 30 years prove that it just isn't always true. In the US close to $15T of new debt has been created over that time and inflation has been low. Most Gov. [even in the EU and the ECB] want or target inflation of about 2%.
Also, please explain to me why the ability of the people of Japan to buy more goods from the world at a cheaper price (in yen) will cause deflation in the Japanese economy. It seems like the Japanese people will have more yen left after they buy the foreign stuff they want and these extra yen should then cause inflation, not cause deflation.
Also, why is the yen appreciating?
Deficit spending(the difference between tax revenues & government spending in any particular fiscal year)adds to the national debt, that debt has to be repaid over the long term, that is it's nature, otherwise a government would raise taxes or cut spending in order to balance it's books, government accounting is the simplets form of accounts.
They are, revenue - spending, no government balances it's books, hence, two outcomes, the more likely, Deficit, or Surplus, which is virtually impossible.
Because of those two outcomes, the former more realistic, due to governments being like women,(they like spending our money)the third outcome is virtually certain. an increase in national debt.
Okay, so, this is the point in why increasing debt is 'wrong', the position is that the fiscal gap creates a requirement to borrow, the cost of that borrowing for however long the period of interest, is being paid each year from the same money pot that is in deficit & is being paid from the very same money that is being borrowed.
So, a government is borrowing money, in order to pay back the borrower, with that same money that the government borrowed from the lender, if that is financial incontenance, then tell me what is.
Now, you may say how is this affecting the currency in terms of it's value & inflation.
Well, the truism, is that 'taxation is theft', it's also true that government's that spend your money, when it has already spent all of it, then borrows more to spend,is engaged in the theft of your money, even if your taxes are not on the surface rising.
The reason that taxation is theft, is because it creates inflation, either domestic or imported, one being from increasing domestic cost, the other from currency adjustments on the currency markets which are very efficient at registering & adjusting to real or perceived movements in values.
It's a simple law of mathematics that there is no such thing as a 'free lunch', no more so than when it comes to money markets, where profits(or losses) are not gleened out of thin air, but extracted with each transaction.
Currencies are adjusted on open markets, they look constantly in real time, as well as future, as to what adjustments are needed to balance the value of one currency against all currencies,if traders perceive that a value has been wrongly placed on a particular currency, in market terms, that is what makes a market move & traders will dive in to sell or buy on that basis.
Those market trading positions have positive, or negative consequencies for countries & individuals affected.
That is how, as individuals, we do or should, decide when, or where we spend or save our own money.
With governments, they are constantly attempting to reduce the real cost of the money that they borrow, to that end inflation is a valuable tool, because if you know for any given period when inflation is going to be above trend level, you would want to repay a lot of debt at the far end of that period before the cost of that debt has to be repaid with real money.
Government's that create inflation through borrowing are dishonest government's, those like America have always been able to manipulate investors in the dollar, because it has traditionally been a petro-currency, where trades are done by the dollar, which makes investors more eager to lend their money to the American goverment.
America is fooling itself if it thinks that it can continue doing so indefinitely, that is because at some point that debt will be valued alongside the assets of the country & that creative accountancy can only fool some of the people some of the time-but not all the people all of the time.
There is now a realisation around that a country's GDPPP is not a true measure of the general wealth of a country's population, rather than a measure of the above product, it's the quality of life that really matters,not the cost that has been passed onto other people-animals-plants & the planet in total for the benefit of the few.