TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
|
 Posted: Sun May 20, 2012 4:12 pm Post subject: |
 |
|
| xenon13 wrote: | | The UK and Japan control their own currency and if there's no one to buy their bonds the central bank can buy them thus guaranteeing that always when a bond reaches maturity that the bondholder will be paid. Greece does not control its own currency, it depends on having to get scarce euros on the secondary market according to this Austrian-inspired system. That's why there's a crisis, it's the euro. |
Even if they controlled their own currency, they would be hyper-inflating it, thus leading to a situation similar to what we have now. If Japan or the UK ended up in the same situation, they would be hyper-inflating their currency, thus landing them in a Greece situation. |
|
| Back to top |
|
xenon13
Phoenix
![]()
Joined: Dec 14, 2008
Posts: 3073
|
| Posted: Sun May 20, 2012 4:47 pm Post subject: |
|
|
| How and why would Greece hyperinflate its currency? I presume it's excessive debt that would cause this and money printing to cover that debt. Half of Japan's debt is held by the central bank, is the result of "money printing" thus and according to Conventional Wisdom, that should constitute hyperinflationary behaviour. Well?! Japan's Debt to GDP is 250% and 10 year bonds go at 0.91%. That debt is more than half Greece's was before it got stuck in the austerity trap. Moreover, what Greece is experiencing now is nothing like hyperinflation or even, more plausibly, a situation with relatively high inflation but without bleeding the economy as happens under austerity. |
|
| Back to top |
|
TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
|
| Posted: Sun May 20, 2012 8:27 pm Post subject: |
|
|
| xenon13 wrote: | | How and why would Greece hyperinflate its currency? I presume it's excessive debt that would cause this and money printing to cover that debt. Half of Japan's debt is held by the central bank, is the result of "money printing" thus and according to Conventional Wisdom, that should constitute hyperinflationary behaviour. Well?! Japan's Debt to GDP is 250% and 10 year bonds go at 0.91%. That debt is more than half Greece's was before it got stuck in the austerity trap. Moreover, what Greece is experiencing now is nothing like hyperinflation or even, more plausibly, a situation with relatively high inflation but without bleeding the economy as happens under austerity. |
http://www.economist.com/node/18988858 does a decent job at explaining the Japan situation. This one is quite useful as well http://seekingalpha.com/article/320548-10-crazy-facts-about-japan-s-debt-burden
The biggest difference maker is that so long as cooperating Japanese holders of debt are in the majority, you get better terms and avoid the repo man showing up at your door.
In the case of Greece, there are hardly any positive aspects. The debt is held by foreign holders, the Euro is falling in value, add the Greek import/export balance and you have another issue since the currency situation affects foreign trade, which in the case of them leaving the Euro would rapidly worsen.
I'm not saying that giving up control of currency isn't playing a part, but there are many other factors at play as well. |
|
| Back to top |
|
xenon13
Phoenix
![]()
Joined: Dec 14, 2008
Posts: 3073
|
| Posted: Mon May 21, 2012 12:58 pm Post subject: |
|
|
| If the Bank of Japan is that person then why would it call in the Repo Man. Admit it, Japan controls its currency, it can print currency to buy bonds, therefore it's 100% secure and no one fears not being paid and therefore interest rates can be set at leisure. The euro system does not permit this essential safety feature, and they admit over there that this fact is designed to promote "discipline". Sort of like banning safety features at worksites in order to keep the workers on their toes. Or perhaps banning safety features at nuclear plants to that same end; never mind what happens when someone is not at 100% discipline and there's a meltdown. Great good it does on blaming a lazy worker when it was the choice of the people building the plant to put everyone in danger for the sake of some ridiculous and arbitrary moral principle. |
|
| Back to top |
|
TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
|
| Posted: Mon May 21, 2012 3:29 pm Post subject: |
|
|
| xenon13 wrote: | | If the Bank of Japan is that person then why would it call in the Repo Man. Admit it, Japan controls its currency, it can print currency to buy bonds, therefore it's 100% secure and no one fears not being paid and therefore interest rates can be set at leisure. The euro system does not permit this essential safety feature, and they admit over there that this fact is designed to promote "discipline". Sort of like banning safety features at worksites in order to keep the workers on their toes. Or perhaps banning safety features at nuclear plants to that same end; never mind what happens when someone is not at 100% discipline and there's a meltdown. Great good it does on blaming a lazy worker when it was the choice of the people building the plant to put everyone in danger for the sake of some ridiculous and arbitrary moral principle. |
100% secure is a fallacy, 1.000 yen with severely reduced purchasing power due to inflation (printing money to buy bonds) is a losing investment as your return is killed by the printing. Odds are that if Japan started printing like mad, they may get into an even stickier situation. It's not as simple as "print baby print".
The Euro had to be the way it is due to the lack of a consistent fiscal policy across the Euro zone, while Germans are reliable, disciplined and fiscally conservative, other countries spend money like drunken sailors, to avoid negative effects for the whole zone due to a few countries overspending, the ability to print currency had to be removed. It's more like banning the use of flame throwers to clear brush at kindergartens during play time. The bank of Japan isn't who would call the repo man, the pension funds and other non-government holders of debt are. I do admit that the idea of spending your way out of debt sounds a lot more appealing than tightening your waistband. |
|
| Back to top |
|
xenon13
Phoenix
![]()
Joined: Dec 14, 2008
Posts: 3073
|
| Posted: Mon May 21, 2012 11:05 pm Post subject: |
|
|
| TM wrote: | | xenon13 wrote: | | If the Bank of Japan is that person then why would it call in the Repo Man. Admit it, Japan controls its currency, it can print currency to buy bonds, therefore it's 100% secure and no one fears not being paid and therefore interest rates can be set at leisure. The euro system does not permit this essential safety feature, and they admit over there that this fact is designed to promote "discipline". Sort of like banning safety features at worksites in order to keep the workers on their toes. Or perhaps banning safety features at nuclear plants to that same end; never mind what happens when someone is not at 100% discipline and there's a meltdown. Great good it does on blaming a lazy worker when it was the choice of the people building the plant to put everyone in danger for the sake of some ridiculous and arbitrary moral principle. |
100% secure is a fallacy, 1.000 yen with severely reduced purchasing power due to inflation (printing money to buy bonds) is a losing investment as your return is killed by the printing. Odds are that if Japan started printing like mad, they may get into an even stickier situation. It's not as simple as "print baby print".
The Euro had to be the way it is due to the lack of a consistent fiscal policy across the Euro zone, while Germans are reliable, disciplined and fiscally conservative, other countries spend money like drunken sailors, to avoid negative effects for the whole zone due to a few countries overspending, the ability to print currency had to be removed. It's more like banning the use of flame throwers to clear brush at kindergartens during play time. The bank of Japan isn't who would call the repo man, the pension funds and other non-government holders of debt are. I do admit that the idea of spending your way out of debt sounds a lot more appealing than tightening your waistband. |
The Japanese have "printed money" amounting to more than 100% of its GDP and their problem remains deflation! |
|
| Back to top |
|
marshall
Under the whirlwind
Joined: Apr 15, 2007
Posts: 9187
Location: Western Michigan
|
| Posted: Tue May 22, 2012 2:05 am Post subject: |
|
|
| xenon13 wrote: | | The Japanese have "printed money" amounting to more than 100% of its GDP and their problem remains deflation! |
I don't think they have. They borrowed heavily from their own population. |
|
| Back to top |
|
ruveyn
Phoenix
Joined: Sep 22, 2008
Age: 76
Posts: 29309
Location: New Jersey
|
| Posted: Tue May 22, 2012 4:45 am Post subject: |
|
|
| marshall wrote: | | xenon13 wrote: | | The Japanese have "printed money" amounting to more than 100% of its GDP and their problem remains deflation! |
I don't think they have. They borrowed heavily from their own population. |
That beats taxing their own population heavily.
ruveyn |
|
| Back to top |
|
xenon13
Phoenix
![]()
Joined: Dec 14, 2008
Posts: 3073
|
| Posted: Tue May 22, 2012 7:16 am Post subject: |
|
|
Half of Japan's debt is held by the Bank of Japan, is therefore "monetised"; the Bank buys the debt with money it creates out of the thinnest air. Well?!!!
This increasing inflation is not caused by money becoming less scarce as the Austrians seem to believe, it's caused by too much aggregate demand. It's because too many people can buy and there's not enough production capacity to meet that demand. That's why. |
|
| Back to top |
|
Burzum
Indeed
Joined: Apr 27, 2011
Posts: 1205
|
| Posted: Tue May 22, 2012 9:49 am Post subject: |
|
|
| xenon13 wrote: |
This increasing inflation is not caused by money becoming less scarce as the Austrians seem to believe |
What is "this increasing inflation"? What are you referring to?
You're not seriously trying to imply that all inflation is of the demand-pull form, are you? |
|
| Back to top |
|
TM
Phoenix
Joined: Feb 04, 2012
Posts: 2122
|
| Posted: Tue May 22, 2012 2:56 pm Post subject: |
|
|
| xenon13 wrote: | Half of Japan's debt is held by the Bank of Japan, is therefore "monetised"; the Bank buys the debt with money it creates out of the thinnest air. Well?!!!
This increasing inflation is not caused by money becoming less scarce as the Austrians seem to believe, it's caused by too much aggregate demand. It's because too many people can buy and there's not enough production capacity to meet that demand. That's why. |
Your logic appears quite circular, if inflation is caused by there not being enough supply, IE there exist more money than people are able to spend, requires there to be too much money within the system already. Demand is a result of disposable income, not vice versa. MV=PQ as simple as that. |
|
| Back to top |
|
marshall
Under the whirlwind
Joined: Apr 15, 2007
Posts: 9187
Location: Western Michigan
|
| Posted: Tue May 22, 2012 3:01 pm Post subject: |
|
|
| Quote: | | This increasing inflation is not caused by money becoming less scarce as the Austrians seem to believe, it's caused by too much aggregate demand. It's because too many people can buy and there's not enough production capacity to meet that demand. That's why. |
I'm curious what your explanation for "stagflation" is. How can one go about solving the problem of unemployment if it persists despite there already being "too much aggregate demand"? |
|
| Back to top |
|
xenon13
Phoenix
![]()
Joined: Dec 14, 2008
Posts: 3073
|
| Posted: Tue May 22, 2012 6:46 pm Post subject: |
|
|
There is not too much aggregate demand, there's too little of it. Inflation is not a problem right now.
The inflation happens when the nation's capacity to produced is maximised. That situation is nowhere near to happening at all! As the powers that be deliberately idle capacity much of it will become unusable... more waste by them. When they choose to create massive unemployment in the name of price stability, they waste billions of dollars. Naturally these bean counters don't like to count those specific beans... |
|
| Back to top |
|
Burzum
Indeed
Joined: Apr 27, 2011
Posts: 1205
|
| Posted: Wed May 23, 2012 4:55 am Post subject: |
|
|
| xenon13 wrote: |
The inflation happens when the nation's capacity to produced is maximised. That situation is nowhere near to happening at all! As the powers that be deliberately idle capacity much of it will become unusable... more waste by them. When they choose to create massive unemployment in the name of price stability, they waste billions of dollars. Naturally these bean counters don't like to count those specific beans... |
Explain what happened in Zimbabwe, then. |
|
| Back to top |
|
xenon13
Phoenix
![]()
Joined: Dec 14, 2008
Posts: 3073
|
| Posted: Wed May 23, 2012 7:52 am Post subject: |
|
|
| In Zimbabwe they were trying to pay off American dollar debts by printing Zimbabwean dollars and trading them for American dollars as the tobacco racket that allowed it to actually get significant numbers of American dollars collapsed, as Zimbabwe was locked out of the world financial system to punish Mugabe for a- Fighting Paul Kagame's invasion of the Congo, b- the land reform that helped collapse the tobacco racket. That's what happened over there. A country like Zimbabwe moreover requires American dollars to purchase oil. Such a situation does not exist in the US, in Britain, in Japan... |
|
| Back to top |
|
  |
Wrong Planet Autism Forum Index
-> Politics, Philosophy, and Religion
|
Previous 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 Next
|
|
|
