[Steve_American]

Prof. Bill Mitchell's blog, Japan’s monetary policy experiment is working
June 26, 2023

Last week in – "RBA wants to destroy the livelihoods of 140,000 Australian workers – a shocking indictment of a failed state" (June 22, 2023) – I wrote about the sense of being in a parallel universe when one reads official statements from the Bank of Japan and juxtaposes them against the stream of statements coming out of other central banks. The day after I wrote that post (June 23 2026), the Japanese e-Stat service (the portal for Japanese government statistics) released the latest – Monthly CPI data – which showed that the annual inflation rate fell by 0.2 points to 3.2 per cent in May, on the back of significant easing in electricity and gas prices, in part the result of government policy aimed at reducing energy prices rises in the domestic economy. Here is some more about the parallel universe. I conclude that the experiment underway between central banks is indicating that Japan’s zero interest rate regime (with fiscal expansion) is not an inflationary factor. It has not driven dangerous shifts in inflationary expectations for businesses or households. Further, the decision by the Bank of Japan not to hike rates has reduced the cost-of-living squeeze on mortgaged households that is being imposed by the (transitory) inflationary pressures. By way of contrast, other central banks have imposed extra burdens on those with debt and are engineering a massive redistribution of income from poor to rich into the bargain. As they continue with their blindness, they are risking recession and a major rise in unemployment, which will add to the pain the citizens are enduring.

My take on this is that Japan is proving that because the recent inflation had little to do with wage increases being seen as additional business costs by corps, raising interest rates to keep down wages in other nations has had any or much effect on reducing inflation. It was going to fall anyway. IMHO, central banks did it to hide the fact that inflation go going to end anyway. They could not let the people learn that raising rates to fight inflation is a scam to make the rich, richer and keep waages down.

https://billmitchell.org/blog/?p=60938#comment-130421

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[Puffer Fish]

My take on this is it may have more to do, indirectly, with Japan's declining population rate (very little immigration).

The point is, Japan's population is not growing, so that is not placing strain on the economy or putting an upward pressure on land prices, which have an indirect effect on all the other prices in the economy.

[Rich]

The international liberal lie machine have been at it again. They claim high interest rates over the last year have not worked.

There's just one problem with that statement, Interest rates have not been high over the last year they've been incredibly low. Real interest rates have been significantly negative with respect to just about any inflation measure you choose:

Headline inflation
Underlying inflation
Wages
Company Revenue
Profits