http://www.bbc.co.uk/news/business-20352236
Shinzo Abe, who will likely win this month's general election in Japan, has advocated printing "unlimited yen" to combat deflation!
Meanwhile, Shinzo Abe, the leader of the main opposition party, the Liberal Democratic Party, has said the central bank needed to set an inflation target of 3% instead of its current 1% goal to help revive growth in the economy.
Mr Abe, who's party is widely expected to win a snap election, has said that if elected, he will put pressure on the bank to ease its policies further and has called for it to print "unlimited yen" to help fight deflation.
His comments have had an impact on the financial markets.The yen has fallen to its lowest level against the US dollar in six-and-half-months. It was trading close to 80.97 yen against the US dollar in Asian trade.
Good news for those of us who have to do business in Japan (my summer trip there this year had me paying off my credit cards for months!), but can this plan make any economic sense?
Originally posted by TeinosukeThwre's an argument for increasing the money supply, but just like anything it has to be modulated. In general, increasing the money supply punished savers, because it makes the money they've acquired worth less. Taken to extremes, it damages a lot of aspects of an economy. In a manufacturing, export-based economy like Japan's, it can have a lot of positive effects.
http://www.bbc.co.uk/news/business-20352236
Shinzo Abe, who will likely win this month's general election in Japan, has advocated printing "unlimited yen" to combat deflation!
[i]Meanwhile, Shinzo Abe, the leader of the main opposition party, the Liberal Democratic Party, has said the central bank needed to set an inflation target of 3% instead of it ...[text shortened]... had me paying off my credit cards for months!), but can this plan make any economic sense?
A certain amount of inflation is actually something producers like. It allows them to cut costs by lowering wages without having to actually come out and say "I'm lowering your wages." Real wages are lowered by keeping nominal wages the same while prices increase, thus cutting costs for producers. So yes, this can actually have a certain degree of good effect on the economy. For reference, the Federal Reserve's target inflation rate is 2%.
Originally posted by sasquatch672Japan is also a country of savers. Inflation might lead Japanese citizens to spend, thus boosting the economy.
Thwre's an argument for increasing the money supply, but just like anything it has to be modulated. In general, increasing the money supply punished savers, because it makes the money they've acquired worth less. Taken to extremes, it damages a lot of aspects of an economy. In a manufacturing, export-based economy like Japan's, it can have a lot of positive effects.