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#14936429
This is totally off the top of my head and I'm just a layman MMTer.

IIRC, the Japanese economy has been in the doldrums for almost 2 decades. They have dropped interest rates to zero and it isn't enough. However, you can't sell bonds with a negative interest rate. Whoever buys them has an asset that loses value over time and who would buy that?

It seems to me that MMT offers a solution. It is to spend more. To have the Japanese Gov. increase its deficit by a lot. To sell bonds with positive interest rate and spend like crazy. Increase the payments to their retired people and poor people. Increase spending on infrastructure. Maybe cut taxes on the rich to give them some benefit too. Ask the recipients of these payments to do their civic duty and mostly spend them in the Japanese economy.

Yes, I know; the current economic thinking is this is a very bad plan. MMT says it isn't.! MMT strongly claims that when the economy is stalled no amount of deficit spending will result in hyper inflation. MMT says that Japan can't be unable to pay the interest on its bonds and also it can always redeem the bonds as they mature. This is because Japan has a fiat currency and it can just create Yen as necessary without limit.

I think that MMT agrees that this plan will definitely have an economic impact. That is the point of doing it, to change the economic conditions of the nation. So, there will be changes. MMT claims they will mostly be positive ones.

I would dearly love to see Japan try this plan. We could call it an experiment. What do they have to lose? They have been suffering for 2 decades now. Isn't it time to get creative?
#14936434
Japan are practically the innovators of 'quantitative easy' (ryouteki kanwa), which is the practice of printing mass amounts of money.

It has persistently failed to provide a solution to Japan's economic problems.

It's funny how you include the bit about encouraging Japanese to buy Japanese products as a patriotic duty. This is exactly what Japan has been doing for many decades.

What you have suggested has basically been persistent policy in Japan, and has not been successful. In addition, the level of national debt is very high and is a longstanding concern in Japan. At the same time, they are short on revenues.
#14936436
The Japanese economy is likely to grow 1.5 percent in price-adjusted real terms in the fiscal year starting in April 2019, while it's expected to expand 2.8 percent in nominal terms. But in fiscal 2019, the country's economic growth will be offset the hit from a planned sales tax hike to 10%. The Japanese economy has been malignant for over two decades because the government keeps raising sales tax rates to make up for the budget shortfall, which is a suicidal fiscal policy or harakiri. After the government raised the sales tax to the current 8 percent from 5 percent in 2014, private consumption slumped and took some time to recover. It was much worse when the rate was raised to 5 percent in the 1990s. But the government keeps making the same mistake, prolonging the economic depression. The Japanese economy was strong when there as no sales tax in the 1980s and it went wrong immediately after the initial introduction of the sales tax in the early 1990s. Cutting the rate to 5 percent or less will stimulate the economy by encouraging private consumption.
Last edited by ThirdTerm on 01 Aug 2018 18:58, edited 1 time in total.
#14936466
Crantag wrote:Japan are practically the innovators of 'quantitative easy' (ryouteki kanwa), which is the practice of printing mass amounts of money.
It has persistently failed to provide a solution to Japan's economic problems.
It's funny how you include the bit about encouraging Japanese to buy Japanese products as a patriotic duty. This is exactly what Japan has been doing for many decades.
What you have suggested has basically been persistent policy in Japan, and has not been successful. In addition, the level of national debt is very high and is a longstanding concern in Japan. At the same time, they are short on revenues.

As I understand QE, it is about giving money to the rich.
They don't spend it, they invest it.
I suggested giving it to the retired and the poor because THEY will spend it.

ThirdTerm suggests that Japan taxes too much and that has been the cause of their troubles.
I don't know about that. Maybe.
Anyway, my plan is to massively increase the debt because this makes people feel that they have money to spend. Taxing them makes them feel the opposite.

Maybe tax revenues are low is because the economy has been in a recession for 20 years.
#14936468
Steve_American wrote:As I understand QE, it is about giving money to the rich.
They don't spend it, they invest it.
I suggested giving it to the retired and the poor because THEY will spend it.

ThirdTerm suggests that Japan taxes too much and that has been the cause of their troubles.
I don't know about that. Maybe.
Anyway, my plan is to massively increase the debt because this makes people feel that they have money to spend. Taxing them makes them feel the opposite.

Maybe tax revenues are low is because the economy has been in a recession for 20 years.

Quantitative easing is more or less what you are suggesting.

What the Japanese case shows is that it is not effective, because--while flooding the economy with money does have some effect on spending--countervailing tendencies counteract a sufficiently significant proportion of this effect. At the same time, the process is attended by various other issues.

This is the stuff of the banking-vs-currency school debates, which go back to the 17th century. Monetarism, of which seemingly MMT is simply a variety, is adherent to the flawed currency school position.
#14936578
Crantag wrote:Quantitative easing is more or less what you are suggesting.

What the Japanese case shows is that it is not effective, because--while flooding the economy with money does have some effect on spending--countervailing tendencies counteract a sufficiently significant proportion of this effect. At the same time, the process is attended by various other issues.

This is the stuff of the banking-vs-currency school debates, which go back to the 17th century. Monetarism, of which seemingly MMT is simply a variety, is adherent to the flawed currency school position.

So, if QE is about giving money to the rich, and I said to give money to the poor and elderly; then why change the subject and talk about QE?

And, MMT is only 'flawed' because most economists think so. But, macro-economics has never proven anything, so it isn't proven that MMT is flawed.
#14936584
Steve_American wrote:So, if QE is about giving money to the rich, and I said to give money to the poor and elderly; then why change the subject and talk about QE?

And, MMT is only 'flawed' because most economists think so. But, macro-economics has never proven anything, so it isn't proven that MMT is flawed.

Simple.

Quantitative Easing isn't about giving money to the rich. It's about printing money.

I gave reasons for what I said.

Your reasons consisted of "I am really ignorant on this topic and don't know what I'm talking about, but I just made some shit up so tell me what you think."
#14936593
Crantag wrote:Simple.
Quantitative Easing isn't about giving money to the rich. It's about printing money.
I gave reasons for what I said.
Your reasons consisted of "I am really ignorant on this topic and don't know what I'm talking about, but I just made some shit up so tell me what you think."

"Printing money" to me just means printing money and just spending it on whatever.

QE may be printing money but, it is using it to buy assets that are more or less worthless at their old value before the GFC/2008. What it is in Japan, I have no idea. However, if it isn't close to what QE means in America then, you should not have used the term to describe what Japan has been doing for the last 2 decades. To communicate what you meant you should have used a different word or phrase (if it isn't like QE in America).

And remember what I said about ending the Great Depression. Namely, that if it took spending on the level of what the US spent in 1940-14 to get ready for WWII; then that is how much spending there should have been in the 30s to end the GD earlier. So, no matter how much the deficit in Japan has been in the past, if it were much more then that might be enough to get their economy going again. Remember MMT says that no matter how big the deficit is it can almost always be bigger and that might be enough to get the job done.
#14936598
Steve_American wrote:"Printing money" to me just means printing money and just spending it on whatever.

QE may be printing money but, it is using it to buy assets that are more or less worthless at their old value before the GFC/2008. What it is in Japan, I have no idea. However, if it isn't close to what QE means in America then, you should not have used the term to describe what Japan has been doing for the last 2 decades. To communicate what you meant you should have used a different word or phrase (if it isn't like QE in America).

And remember what I said about ending the Great Depression. Namely, that if it took spending on the level of what the US spent in 1940-14 to get ready for WWII; then that is how much spending there should have been in the 30s to end the GD earlier. So, no matter how much the deficit in Japan has been in the past, if it were much more then that might be enough to get their economy going again. Remember MMT says that no matter how big the deficit is it can almost always be bigger and that might be enough to get the job done.

Quantitative easing means financing government spending by printing money. What you said on WW2 is utterly unoriginal. It's also never been actualized. It's not certain if it is even legitimate. WW2 also destroyed a lot of capital. For the most part, you've merely suggested Japan do what it's been doing, while you proclaimed ignorance, and then stated something every one already knows as if it was something profound as justification.
#14936602
If you ask me this is a cultural issue. It's hard to argue the Japanese economy isn't capacity constrained, yet there's little inflation since firms are reluctant to increase prices. Not that I think that's a positive thing, it kind of defeats the purpose of prices :lol:. It allows the Japanese government to run a permanent large deficit though.
#14936617
Steve_American wrote:This is totally off the top of my head and I'm just a layman MMTer.

IIRC, the Japanese economy has been in the doldrums for almost 2 decades. They have dropped interest rates to zero and it isn't enough. However, you can't sell bonds with a negative interest rate. Whoever buys them has an asset that loses value over time and who would buy that?

It seems to me that MMT offers a solution. It is to spend more. To have the Japanese Gov. increase its deficit by a lot. To sell bonds with positive interest rate and spend like crazy. Increase the payments to their retired people and poor people. Increase spending on infrastructure. Maybe cut taxes on the rich to give them some benefit too. Ask the recipients of these payments to do their civic duty and mostly spend them in the Japanese economy.

Yes, I know; the current economic thinking is this is a very bad plan. MMT says it isn't.! MMT strongly claims that when the economy is stalled no amount of deficit spending will result in hyper inflation. MMT says that Japan can't be unable to pay the interest on its bonds and also it can always redeem the bonds as they mature. This is because Japan has a fiat currency and it can just create Yen as necessary without limit.

I think that MMT agrees that this plan will definitely have an economic impact. That is the point of doing it, to change the economic conditions of the nation. So, there will be changes. MMT claims they will mostly be positive ones.

I would dearly love to see Japan try this plan. We could call it an experiment. What do they have to lose? They have been suffering for 2 decades now. Isn't it time to get creative?


Isn't this what they have been doing for the last 15 years?
#14936623
JohnRawls wrote:
Isn't this what they have been doing for the last 15 years?

Yes and no.
Yes, they have been deficit spending and keeping interest rates at zero
No, because what I suggested is to do much more deficit spending. Double or even triple, or more even of what they have been doing.
Do whatever it takes. No other limit.
Last edited by Steve_American on 02 Aug 2018 15:18, edited 1 time in total.
#14936625
Crantag wrote:Quantitative easing means financing government spending by printing money. What you said on WW2 is utterly unoriginal. It's also never been actualized. It's not certain if it is even legitimate. WW2 also destroyed a lot of capital. For the most part, you've merely suggested Japan do what it's been doing, while you proclaimed ignorance, and then stated something every one already knows as if it was something profound as justification.

What does the damage done during WWII have to do with the economic argument we were having? I brought it up to show that more deficit spending did get America out of the GD.
OK, I was confusing QE with Qualitative Easing.
Of course it was't "actualized", we would need a time machine to go back in time, convince FDR to do more, and get Congress to let him. It wouldn't be difficult to convince them because the time machine lets us SHOW them the future and how it could be different.
No, I'm not suggesting that Japan do what it has been doing. Why is this confusing to you and everyone? If a fire department is fighting a house fire with 2 hoses from 2 trucks and losing; is adding 4 more hoses from 4 more firetrucks "just doing what they have been doing"? No, it is doing much more. Enough more to be a NEW THING. And if 4 more isn't enough, add 10 more.

I'm not sure what profound statement I made got you to finally agree that "everyone already knows that". It is nice that you can agree with 1 thing I say.
#14936764
Steve_American wrote:Yes and no.
Yes, they have been deficit spending and keeping interest rates at zero
No, because what I suggested is to do much more deficit spending. Double or even triple, or more even of what they have been doing.
Do whatever it takes. No other limit.


The economic issues of Japan are related to many factors actually and the least important is their economic management of the situation actually.(My opinion) They can't escape the core of the problem which is its ageing and shrinking population.

There are choices in political spectrum that they can make to improve this:

1) One is to obviously cut down on welfare programs that are increasing in cost year to year. (Very unpopular)
2) Two is that they can continue raising taxes and do basically what they are doing. (Not really unpopular but it doesn't solve the core of the problem. Plus you can't really increase taxes forever) This is basically buying time but it will not work forever.
3) Take in more migrants to adjust for ageing/shrinking population. (Culturally very unpopular decision)
4) Liberalise the worker market and create something like the EU with neighbouring countries. (Hard to achieve and would require setting up a scheme that is something similar to the EU)

European countries are facing the same issue (More developed ones) but the existence of the EU is helping them and also obviously taking in ridiculousness amount of migrants. Eastern Europe helps western Europe in that regard. On the other hand Eastern Europe is also helped by the Western part by investment and lowering their unemployment rates. And again migrants.
#14936812
JohnRawls wrote:The economic issues of Japan are related to many factors actually and the least important is their economic management of the situation actually.(My opinion) They can't escape the core of the problem which is its ageing and shrinking population.
There are choices in political spectrum that they can make to improve this:
1) One is to obviously cut down on welfare programs that are increasing in cost year to year. (Very unpopular)
2) Two is that they can continue raising taxes and do basically what they are doing. (Not really unpopular but it doesn't solve the core of the problem. Plus you can't really increase taxes forever) This is basically buying time but it will not work forever.
3) Take in more migrants to adjust for ageing/shrinking population. (Culturally very unpopular decision)
4) Liberalise the worker market and create something like the EU with neighbouring countries. (Hard to achieve and would require setting up a scheme that is something similar to the EU)

European countries are facing the same issue (More developed ones) but the existence of the EU is helping them and also obviously taking in ridiculousness amount of migrants. Eastern Europe helps western Europe in that regard. On the other hand Eastern Europe is also helped by the Western part by investment and lowering their unemployment rates. And again migrants.

Please try to imagine that MMT might [in fact] be true.
Then understand that there is another option. Increase payments to the poorer citizens and not increase taxes. Instead increase the deficit, a lot. Just create Yen as well as borrow.
Or, explain to me just why MMT is wrong. MMT says that a nation like Japan can always buy its own products with printed money and that this will not cause a problem until full employment is reached.

Doesn't Japan have high under-employment and unemployment? If it does then MMT says it can increase its deficit. OTOH, how is its trade balance doing?
#14936821
Steve_American wrote:Please try to imagine that MMT might [in fact] be true.
Then understand that there is another option. Increase payments to the poorer citizens and not increase taxes. Instead increase the deficit, a lot. Just create Yen as well as borrow.
Or, explain to me just why MMT is wrong. MMT says that a nation like Japan can always buy its own products with printed money and that this will not cause a problem until full employment is reached.

Doesn't Japan have high under-employment and unemployment? If it does then MMT says it can increase its deficit. OTOH, how is its trade balance doing?


I imagined it. This does not change the core issue for Japan. It is hard to grow if your population is ageing and shrinking. Manpower is your economy and if you have less of manpower then the economy will also suffer. It a question of simple math. A population of Estonia can't have the same GDP as the US, simply because we are far less in numbers. There is a question of local development but Japan is already a very developed country. To some degree automatisation can compensate for man power but there is a limit to that also.
#14936836
1. Japan cannot borrow itself into prosperity, that is an insane idea that defies common-sense and that is exactly what QE via deficit spending is.

2. The idea that hyper-inflation is not possible while an economy is stagnant is foolish, because the economic conditions can change on a dime (like recently in the U.S.) or with tariffs, or war, etc., that could leave banks and businesses holding a ton of excess cash. Hyper-Inflation only requires a large amount of currency in circulation to happen as a potentiality, if Japan embraces a more radical QE program, those conditions will be met (period), and it would only take a sudden market change to cause everything to come crashing down.

ThirdTerm wrote:The Japanese economy is likely to grow 1.5 percent in price-adjusted real terms in the fiscal year starting in April 2019, while it's expected to expand 2.8 percent in nominal terms. But in fiscal 2019, the country's economic growth will be offset the hit from a planned sales tax hike to 10%. The Japanese economy has been malignant for over two decades because the government keeps raising sales tax rates to make up for the budget shortfall, which is a suicidal fiscal policy or harakiri. After the government raised the sales tax to the current 8 percent from 5 percent in 2014, private consumption slumped and took some time to recover. It was much worse when the rate was raised to 5 percent in the 1990s. But the government keeps making the same mistake, prolonging the economic depression. The Japanese economy was strong when there as no sales tax in the 1980s and it went wrong immediately after the initial introduction of the sales tax in the early 1990s. Cutting the rate to 5 percent or less will stimulate the economy by encouraging private consumption.


Excellent. Well said.

Crantag wrote:Japan are practically the innovators of 'quantitative easy' (ryouteki kanwa), which is the practice of printing mass amounts of money.

It has persistently failed to provide a solution to Japan's economic problems.

It's funny how you include the bit about encouraging Japanese to buy Japanese products as a patriotic duty. This is exactly what Japan has been doing for many decades.

What you have suggested has basically been persistent policy in Japan, and has not been successful. In addition, the level of national debt is very high and is a longstanding concern in Japan. At the same time, they are short on revenues.


Also excellent. Well stated.

JohnRawls wrote:I imagined it. This does not change the core issue for Japan. It is hard to grow if your population is ageing and shrinking. Manpower is your economy and if you have less of manpower then the economy will also suffer. It a question of simple math. A population of Estonia can't have the same GDP as the US, simply because we are far less in numbers. There is a question of local development but Japan is already a very developed country. To some degree automatisation can compensate for man power but there is a limit to that also.


Also true, which means that Japan must increase its population or decrease its rate of dependency by those that cost the nation a shit-ton in funds.

You are right to note that automation cannot solve this problem alone, that is a transhumanist wet-dream.

However, if you want to maintain a state-funded subsidization of the elderly in an aging population, you will only see an increase in people becoming elderly at a disproportionate rate in comparison to children being born and entering the work-force. This a praxeological given.

Ending government subsidy for elderly care or privatizing it would solve the problem, as the problem with any social security system is that is disincentivizes younger generations caring for the elderly which was historically their responsibility and in turn having their own kids which were essentially their own retirement plan.

Now, since this is not likely to happen, the only two remaining options (other than just killing old people fashy-style) is to increase the birth rate artificially by subsidy (which they are trying to do) or import cheap labor via immigration (which Japan has refused to do).

The problem with the baby-subsidy program is that its not working. The Japanese seem too proud to take hand-outs for babies, really don't want to have babies in general, and now live in a hyper-urban culture that is fairly hostile to maternal necessity.

Japan needs to eliminate its subsidy for the elderly and cut taxes and let system work itself out, or immigrate foreigners and destroy its own culture.

something has got to give, but no MMT fantasy scenario will save them.
#14936886
ThirdTerm wrote: But in fiscal 2019, the country's economic growth will be offset the hit from a planned sales tax hike to 10%. The Japanese economy has been malignant for over two decades because the government keeps raising sales tax rates to make up for the budget shortfall, which is a suicidal fiscal policy or harakiri. After the government raised the sales tax to the current 8 percent from 5 percent in 2014, private consumption slumped and took some time to recover. It was much worse when the rate was raised to 5 percent in the 1990s. But the government keeps making the same mistake, prolonging the economic depression. The Japanese economy was strong when there as no sales tax in the 1980s and it went wrong immediately after the initial introduction of the sales tax in the early 1990s.

Right. I was living in Japan when the 3% consumption tax was introduced in 1990, and it immediately caused the asset markets and the economy to crash. Each subsequent increase in the tax has had a similar effect. But they keep increasing it. It's not that they can't learn from experience. They know very well what the effect will be. It is a deliberate policy to shift the burden of taxation off the rich and onto consumers and the poor, as all broad-based sales taxes do. Their goal is to reduce the population by driving the poor and working class into such poverty and despair that they kill themselves before reaching retirement age.
#14936888
Steve_American wrote:Please try to imagine that MMT might [in fact] be true.

It's not. It's just truer than the neoclassical fairy tales put about by the likes of Krugman, Mankiw, etc.
Or, explain to me just why MMT is wrong.

It doesn't understand taxation, falsely claims that net private financial assets can only be created by government deficits, claims all money is debt, and ignores the need to remove private banksters' money creation privilege to prevent hyperinflation if the government is to create more money as a source of purchasing power.
MMT says that a nation like Japan can always buy its own products with printed money and that this will not cause a problem until full employment is reached.

How well did that work in Zimbabwe, or any other place that has tried it? They printed money, never got remotely close to full employment, and had hyperinflation.
Doesn't Japan have high under-employment and unemployment?

Only by comparison with its earlier self.
If it does then MMT says it can increase its deficit.

Which is true if it also reduces bankster money issuance.
OTOH, how is its trade balance doing?

Long-term surplus.
Last edited by Truth To Power on 03 Aug 2018 19:48, edited 1 time in total.
#14936891
Truth To Power wrote:Their goal is to reduce the population by driving the poor and working class into such poverty and despair that they kill themselves before reaching retirement age.


As much as I agree with most of what you said in both of your posts on here, isn't this bit a little hyperbolic and speculative?

I mean, extraordinary claims require extraordinary evidence and the idea that the wealthy are trying to create conditions in Japan that even the mid-victorians would envy seems a bit far-fetched.

I mean, is an 8% sales tax really going to cause mass suicide due to extreme poverty? That seems a bit nutty to me.

If you are going to claim that the elites are raising consumer taxes to create mass suicide to ameliorate their social-security costs, you need atleast some evidence for this as a motive. Holy fuck does that sound crazy.

Plus its a shitty plan if you think about, even if you kill off 10% of the working population by tax-induced suicide (which everyone would notice BTW), the other 90% is still going to retire anyway and now you have even less workers paying taxes into the retirement subsidy pool because they killed themselves and therefore aren't paying any consumer taxes into the system.

Plus, as any marketing advertiser would tell you, the most important consumers are the young working ones, they buy the most and are the ones that drive the economy....they are exactly the ones you don't want to kill.

If these elites wanted to cull their population, they would kill the ones already retired and leaching off of the subsidies, not the ones paying for those subsidies.

Besides, the birth rate is so low in Japan its population is already shrinking at an exponential rate, so reducing it further would be somewhat superfluous.

Please tell me what I am missing on this.

In a simple paragraph, I don't want to read 400 lines responding to my dozen above. If you could please.

Otherwise, like I said, I generally agree with most of your analysis.

Thanks.

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