tag:blogger.com,1999:blog-17232051.post3042027752300065046..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: Should Japan default?Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger62125tag:blogger.com,1999:blog-17232051.post-44078098036942161792013-06-26T03:34:05.514-04:002013-06-26T03:34:05.514-04:00Japan's quadrillion yen of JGB "savings&q...Japan's quadrillion yen of JGB "savings" is simply taxes they've been skipping out on since 1990 or whenever.<br /><br />It's not wealth!<br /><br />It's a claim on wealth though, and I find it bizarre that the System expects Japan's future, smaller taxpaying base to pay the bill on their parents' colossal bad debt bubble hangover.<br /><br />The soft default of adding another digit to domestic prices (and wages!) is the only way to go; all rests on Kuroda having his way.Troyhttp://sample.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-29094409004203525682013-06-22T06:21:54.042-04:002013-06-22T06:21:54.042-04:00Thanks for sharing this great article! That is ver...Thanks for sharing this great article! That is very interesting I love reading and I am always searching for informative information like this.Comex Tipshttp://www.trifidresearch.com/comex-tips.phpnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-13308575376665686472013-06-18T03:21:39.902-04:002013-06-18T03:21:39.902-04:00neurofeedback for adhd
Zengar.com is a Industry Le...<a href="http://www.zengar.com/" rel="nofollow">neurofeedback for adhd<br /></a>Zengar.com is a Industry Leader in Home Neurofeedback, Neurocare, Neurofeedback, Neurofeedback Training, Neuroptimal, Brain Workout, Braintraining, Brain Exercises, Brain Fitness, Healthy Brain, Neural Plasticity and Neurotechnology.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-63217006654547192002013-06-15T18:55:10.135-04:002013-06-15T18:55:10.135-04:00Don't forget Asians!
http://www.theatlantic.c...Don't forget Asians!<br /><br />http://www.theatlantic.com/business/archive/2012/10/the-secret-to-us-growth-in-the-21st-century-more-asians/263161/Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-43783377241856118702013-06-15T18:31:46.542-04:002013-06-15T18:31:46.542-04:00The answer according to the liberal establishment ...The answer according to the liberal establishment and its fanboys such as the author: <br /><br />"Moar! Just print moar!"<br /><br />(And import millions of Islamo-African immigrants)<br /><br />Brilliant!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-27630326482672529182013-06-14T11:33:33.822-04:002013-06-14T11:33:33.822-04:00How many of those defaults in your graph mostly st...How many of those defaults in your graph mostly stiffed foreign creditors? <br />It strikes me that if the Japan government did default, given how much is owed to its domestic elderly the government would face massive pressures to compensate the elderly through pensions, or something, with limited gains overall (though on the other hand such a government funding scheme may be more redistributive than just paying the interest on debt, [although on the third hand, the morality of depriving elderly who brought government debt of their money in the hope of boosting elderly who brought shares, aka my gran at the expense of my grandma, is a bit uncomfortable too]). Tracy Whttps://www.blogger.com/profile/08999246551652981965noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-76577949630237253452013-06-13T22:49:23.036-04:002013-06-13T22:49:23.036-04:00Japan wont default! Not on your sweet life... Kee...Japan wont default! Not on your sweet life... Keep on Dreamin'Anonymoushttps://www.blogger.com/profile/00754824285757740433noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-54924572836388587192013-06-13T22:34:12.600-04:002013-06-13T22:34:12.600-04:00Anonymous,
To continue:
" there is still 2...Anonymous, <br /><br />To continue:<br /><br />" there is still 2 trillion plus (200% increase) in very new high-powered money sloshing around in the financial system out there"<br /><br />MMT does not prescribe QE, printing the "high powered money" because it is not high powered at all. QE doesn't cause inflation, it doesn't cause anything other than lowering rates and forcing money managers into riskier assets and creating bubbles in stocks and commodities despite a weak economy. Monetary base doesn't cause inflation, there is no money multiplier. You sound like an Austrian, so read this: an Austrian scholar saying that the money multiplier never existed, he is right: http://libertarianpapers.org/articles/2010/lp-2-43.pdf<br /><br />Both in Japan and in Sweden printing a ton of "high powered money" via QE (which is an asset swap and does nothing) coincided with... decreasing inflation. <br /><br />There is no "3 times the money chasing 1.1 times the goods" because the monetary base does not translate at all into deposits. The private sector lost trillions in assets in the real estate collapse. Deficits give it trillions to replace those, therefore deficits act expansionary and can be inflationary if not decreased at full employment. But QE and having "(200% increase) in very new high-powered money sloshing around in the financial system" is simply buying 2T bonds with 2T in dollars, changing how banks and we store assets, it has very little effect. It is like someone switched your savings account into a checking account. Do you have more money? Are you running to spend it like crazy? You are saving more if anything because you just lost interest income.<br /><br />Again, you keep talking as if MMT pushed policies that create inflation. It does not push some policies you bemoan and these policies are not even inflationary (QE), you need to learn more how the monetary system works. Start with the Austrian article above and this:<br />http://pragcap.com/understanding-modern-monetary-system<br /><br /><br /><br /><br /><br />PeterPhttps://www.blogger.com/profile/02032621777697914182noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-67760283419322778622013-06-13T22:33:37.228-04:002013-06-13T22:33:37.228-04:00Anonymous,
"How are the perpetual government...Anonymous,<br /><br />"How are the perpetual government deficits financed other than by Central Bank operations (essentially, money printing)?"<br /><br />They are ALWAYS financed by printing *something* or creating something out of thin air. All money is debt. If the government runs a deficits we always have obtained some asset, some form of "money". Treasuries are also money, they are liquid and are exchangeable to other government IOUs (like dollars). There is no difference in financing the deficit by printing dollar bills or by printing Treasuries.<br /><br />You rant about how all this "money printing" causes inflation. Question for you: what is the correlation between deficits (which create money or money like assets) and inflation? Check it out, it is NEGATIVE 20%. Figure out why. The government has been "printing money" for the last 200 years, every year and dumped it into the economy yet no hyperinflation. Why? Because our economy is eg. 6x larger than in the 1950, no wonder it craves 6x the amount of dollars we had in the 1950s, so the additional dollars had to be printed and spent into the economy and not taxed back (deficit). That is why we have 6x as much stuff as in the 1950s, because we can afford 6x as much stuff and the economy responds with supply. Of course you can overdo it, but we didn't.<br /><br />"God knows we built 2 million unnecessary McMansions from 2003 to 2006 on the back of ZIRP-derived monthly mortgage payments but it got us that much closer to Optimal Aggregate Demand!"<br /><br />They were funded with PRIVATE debt, not public debt, that is actually the problem. 2 million mansions cannot be unnecessary, there is a ton of crap housing people would swap into mansions if they could but they cannot afford it. We didn't run out of raw materials or eagerness to live better, we ran out of money. So there was not enough money in 2008 to continue living in better houses. Because financing with private debt is unstable. If we had stable financing we could all live in those mansions that are now left to rot, which is stupid. If we can build them we should live in them.<br /><br />"Anybody required to hold your currency can be herded into the ZIRP cattle cars. There is a reason why it is called financial repression."<br /><br />You are not required to hold currency, you can send it to me if you hate currency so much. Do you realize that paying the interest rate is a CHOICE of the government? Nobody owes you interest just for owning dollars. You sound like it is your God given right to be sent checks by the government for nothing.<br /><br />OTOH I don't think ZIRP can help at all these days, this is the belief of Krugman et al which I think is stupid: they forget that ZIRP invites people to borrow more and become more leveraged, the opposite of what I think we should encourage. <br /><br />Read Bill Mitchell on MMT and inflation because you are very confused in what you think MMT says.<br /><br />PeterPhttps://www.blogger.com/profile/02032621777697914182noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-28046575113699409412013-06-13T21:34:22.174-04:002013-06-13T21:34:22.174-04:00Google "Takahashi Korekiyo."
That prett...Google "Takahashi Korekiyo."<br /><br />That pretty much answers the MMT issue, too.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-30860350999823085532013-06-13T21:22:38.841-04:002013-06-13T21:22:38.841-04:00Another thought - it seems to me that MMT'ers ...Another thought - it seems to me that MMT'ers aren't actually saying inflation won't happen, what they are really saying is that it won't matter to the *government* (which can always set its own borrowing rate to zero through Central Bank lending).<br /><br />Therefore no interest rate spikes (to *government*) and therefore no 250% Debt-to-GDP interest rate death spirals.<br /><br />But government controlled Central Bank operations won't ride to the rescue for *consumer inflation* - there is still 2 trillion plus (200% increase) in very new high-powered money sloshing around in the financial system out there - the real asset base it is supposed to represent has perhaps grown 10% in that time.<br /><br />In other words, the Fed can immunize the Administration from the interest-rate consequences of its actions, but it can't negate the consequences of a vastly altered nominal money/real asset ratio - 3 times the money chasing 1.1 times the goods.<br /><br />At *best*, asset inflation will occur instead of goods inflation - so the asset inflation can be labeled a "recovery" and not inflation at all (unless you want to buy a house, or you had a previous, now diluted, claim on said assets).Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-65057899600891998472013-06-13T20:45:19.688-04:002013-06-13T20:45:19.688-04:00"No MMTer proscrbes inflation"
How are ..."No MMTer proscrbes inflation"<br /><br />How are the perpetual government deficits financed other than by Central Bank operations (essentially, money printing)?<br /><br />MMT's are quite fond of saying that creditors to the sovereign are unnecessary - 100% of deficits can be funded by the Central Bank - which can only do so through money printing - which can only dilute the value of the current currency-savings base, as the real world asset base it is supposed to represent is unaltered by all the monetary jiggery-pokery.<br /><br />The MMT's unspoken response - yeah, well, what's anybody going to do about it?! We control the currency, the tax laws, and the "legally required" means of exchange - therefore, our citizens are our b*tch and our savers are our saps.<br /><br />It is a perfectly authoritarian world view (actually, totalitarian, given the thoroughgoing nature of the economy) - it ignores any understanding of property rights (savings are confiscated through dilution, with nary a vote nor a Constitutional Amendment).<br /><br />All in pursuit of "Optimal Aggregate Demand/Full Employment" - whose levels, if bothered to be described at all, are measured relative to the standards of the bubble-besotted past, rooted in *that era's* grotesque ZIRP-driven, capital misallocation.<br /><br />God knows we built 2 million unnecessary McMansions from 2003 to 2006 on the back of ZIRP-derived monthly mortgage payments but it got us that much closer to Optimal Aggregate Demand!<br /><br />For a while.<br /><br />Until it didn't.<br /><br />So what is needed now?<br /><br />More cowbell.<br /><br />The argument is that all this government spending (purchased at the price of vastly diluted private savings - the Nigerian MMT's "ALL YOUR SAVINGS IS OURS" approach) will result in re-ignited private sector activity and therefore tax revenue, outrunning the consequences of the ZIRP.<br /><br />Japan hasn't reignited in the last 20 years of ZIRP.<br /><br />That is a lot of cowbell.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-41582772547760680022013-06-13T20:14:29.574-04:002013-06-13T20:14:29.574-04:00Anonymous,
No MMTer proscrbes inflation, they thi...Anonymous,<br /><br />No MMTer proscrbes inflation, they think such prescriptions (eg. by Krugman) are nonsensical. Deficits are there to ensure that aggregate demand = full employment demand. Good stewardship requires avoiding inflation. The state doesn't gain anything by diluting its currency. Before Japan has hyperinflation the interest payments on its debt, combined with other government spending will be enough to ensure full employment at which point you stop increasing the debt.<br /><br />Noah, <br /><br />Japan *choosing* to default is like America choosing to nuke its major cities, it is simply idiotic to ponder this question pretending to be doing economics, this falls under politics/psychiatry.PeterPhttps://www.blogger.com/profile/02032621777697914182noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-79361178058070264202013-06-13T19:19:23.920-04:002013-06-13T19:19:23.920-04:00Absolutely! – btw, I was on the edge of my seat re...Absolutely! – btw, I was on the edge of my seat refreshing Twitter like a mad man! <br /><br />He does claim, often and everywhere, “a superior understanding of the macro economy” (from his website). His marketing literature from his website surely promotes that idea, and is a major selling point, if not “the’ selling point: “We use a complex institutional understanding of the monetary system to provide superior market insights, research and investment ideas.” One of his papers accessible to subscribers (yes, I paid the $500 for a subscription. I subscribe to a lot of others too) is titled “How to benefit from Orcam Research”, and the general gist is by “a better understanding of the macro world”. <br /><br />So, when he makes a claim like: “it’s rather disingenuous to claim that economists generally understand endogenous money. They don’t”, which he makes a lot in various forms, am I supposed to think that most economists are a bunch of idiots – because that’s the flip side? I’m cynical, but I’m not ready to go that far.<br /><br />On the other hand (hah!), there is some confusion *out there* on specifics – which gives people like Cullen an opening:<br /><br />http://www.creditwritedowns.com/2012/04/progress-on-the-monetary-policy-and-banking-debate.html<br /><br />So, why don’t you clear this up for us once and for all? <br />Brucenoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-35728562984198611332013-06-13T19:02:29.773-04:002013-06-13T19:02:29.773-04:00NS,
I think you are missing the black heart of th...NS,<br /><br />I think you are missing the black heart of the MMT crowd's argument - "Why do anything as inflammatory as explicit repudiation of national debts, when you can accomplish the same result through the surreptitious dilution of the entire savings base - by 100% central bank financing of any desired level of fiscal expenditure."<br /><br />The MMT'ers are basically saying that you can simply (and consequence-lessly) print money for everything - pay off the interest, the debt, any desired level of spending, etc.<br /><br />Your citizens/creditors are your b*tches, because they are required to hold your currency - which you can dilute at will through Central Bank operations.<br /><br />And, true enough, in a hothouse, tautological sense.<br /><br />Anybody required to hold your currency can be herded into the ZIRP cattle cars. There is a reason why it is called financial repression.<br /><br />But it is that *required* part that the MMT'ers screw up on.<br /><br />They assume it away as part of their models.<br /><br />They willfully ignore the real world consequences of expropriation through dilution - pissed off savers learn their lesson and respond in ways that are very counter-productive to the real economy (using commodities as a store of value instead of a debauched currency - see 2008, halting trade in the wake of great uncertainty as to the true, stable value of the received currency, etc.) <br /><br />It isn't difficult to not "get" the MMT argument because,<br /><br />1) In the real world, normal people understand the consequences immediately and<br /><br />2) MMT'ers don't really want to be up front about what is really going on - the systematic confiscation of private savings through government led dilution and debauchment. So they talk in convoluted phrases that amounts to "Trust us - it has to work".<br /><br />And it will - right up until the moment when there is an alternate currency revolution or real trade collapses due to store of value uncertainty.<br /><br />Next up, Keynesian stimulus through pyramid building upon pain of death...Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-48560139428478859152013-06-13T18:07:45.685-04:002013-06-13T18:07:45.685-04:00Not have to...choose to!Not <i>have</i> to...<i>choose</i> to!Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-89993090436015977382013-06-13T18:01:01.868-04:002013-06-13T18:01:01.868-04:00Interesting post; however, as other posters have n...Interesting post; however, as other posters have noted, I don't see any reason why Japan would have to default on its loans. Anthony Hopperhttps://www.blogger.com/profile/15708347177061466201noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-30984765044578756292013-06-13T17:49:42.207-04:002013-06-13T17:49:42.207-04:00But there have always been incumbents. Your positi...<i>But there have always been incumbents. Your position seems too defeatist to me. A Buchanan-like that the government can't organize anything important because government is just GE and Pepsi by another name. This is ahistorical.</i><br /><br />But is this <i>never</i> the case, or only sometimes the case and sometimes not?Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-47462842264741347732013-06-13T17:48:17.246-04:002013-06-13T17:48:17.246-04:00But there have always been incumbents. Your posit...But there have always been incumbents. Your position seems too defeatist to me. A Buchanan-like that the government can't organize anything important because government is just GE and Pepsi by another name. This is ahistorical.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-68517617337854339312013-06-13T15:26:31.730-04:002013-06-13T15:26:31.730-04:00And in general when an economist puts out a 'j...And in general when an economist puts out a 'just thinking, here............' scenario, it's not 'just thinking', it's pushing a line. Especially since the scenario of Japan defaulting is not a likely thing.Barry DeCiccohttps://www.blogger.com/profile/04735814736387033844noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-83488711055305628422013-06-13T14:55:00.581-04:002013-06-13T14:55:00.581-04:00Well, OK. But then I would suppose the incumbent i...<i>Well, OK. But then I would suppose the incumbent interests are also opposed to default as well, since over 90% of the Japanese debt (no?) is owned by the Japanese people.</i><br /><br />Yes. But default happens quickly and is irreversible.<br /><br /><i>Wasn't Japan's earlier period of dynamic growth driven by big state investments and subsidies? Why not do it again?</i><br /><br />Again, because of incumbents. Incumbents make sure that subsidies go to established players instead of new, growing enterprises.Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-10576019362200426302013-06-13T14:46:43.083-04:002013-06-13T14:46:43.083-04:00LOL, you got me! :). Let everybody default, should...LOL, you got me! :). Let everybody default, should be fun! Gotta love economics. PeterPhttps://www.blogger.com/profile/02032621777697914182noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-62431121048233219192013-06-13T13:49:43.186-04:002013-06-13T13:49:43.186-04:00I don't think that default is the best option,...I don't think that default is the best option, indeed. Simply, I was ironically wondering why it should be good for Japan and not also for the USA, since also the USA have a huge debt, a weak growth, and print money like there's no tomorrow.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-66404975523079919722013-06-13T13:49:14.502-04:002013-06-13T13:49:14.502-04:00Because the government is captured by the incumben...<i>Because the government is captured by the incumbent interests.</i><br /><br />Well, OK. But then I would suppose the incumbent interests are also opposed to default as well, since over 90% of the Japanese debt (no?) is owned by the Japanese people.<br /><br />Wasn't Japan's earlier period of dynamic growth driven by big state investments and subsidies? Why not do it again?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-60425865825381141822013-06-13T13:23:12.625-04:002013-06-13T13:23:12.625-04:00I think you should set forth your definition of hy...I think you should set forth your definition of hyperinflation before using it so much.<br /><br />Certainly you can agree that although there is a consensus around such cases as Zimbabwe as "hyperinflation", at the same time, there is no consensus regarding the close cases.<br /><br />I am really surprised given your normal reasoned tone that you keep using (the somewhat inflammatory) "hyperinflation" when I'm not sure you've excluded the possibility that sustained 8% annual inflation would massively change the situation in Japan.<br /><br />(of course, that's why I'm interested in your definition, because if you think 8% annual is hyperinflation, there's the reason!). But surely, even though we "know it when we see it," there can be no "right" answer in the close cases of whether what is being experienced is "hyperinflation."Anonymousnoreply@blogger.com