Who is worse? See the answer. Thanks AJ.com
Source link: http://blog.mises.org/10313/money-base-mania-u-s-v-japan/
Money Base Mania: U.S. v. Japan
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Oh……..
that is depressing.
If you could just elaborate on how you’re defining the term “monetary base.” We talking about M1, M2, MZM? Not that it really matters, but I’m curious.
Never mind, monetary base is M0… That’s really scary.
On the other hand, does make you wonder why Japan experienced no material asset or price inflation during last 20 years despite similar monetary base increases to the U.S. which led, we are told, to serial asset bubbles….
“no material asset or price inflation during last 20 years despite similar monetary base increases to the U.S. ”
carry trade.
Money is fungible, can cross borders.
In addtion to the carry trade, the Japanese people have continued to save way more and borrow a lot less than Americans. The Japanese know their government’s policies are stupid and act accordingly. Americans think their government’s policies are stupid, but don’t care. Hmm, has anyone ever done a study on the Government Stupidity Multiplier Effect (GSME)?
ray, money is fungible you say but a yen is not a dollar… if one increases the supply of yen and wants to use that to, say, buy commodities in dollars.. you have to sell the yen to someone else to buy the dollars with which you pay for the oil contract etc… and Mark, the Japanese do save but again, the saving is one man’s foregone consumption, it ‘goes’ somewhere… remember that although the American’s dont save they have the reserve currency and the effect is similar in that trillions of their dollars are ‘saved’ by the Japanese, Chinese etc .. not trying to be difficult but the usual reasons to dismiss Japan as not comparable are not as clear cut as most Austrians would like to think.
Jonathan,
when someone conducts a carry trade, that is de facto the same thing as an import of goods (from a monetary perspective): When Japan imports goods from, say, the USA, that dampens inflation but also domestic output. The carry trades had the similar effect on the Japanese economy.
I’m just glad Crocs are a bubble activity and is finally going the way of the dinosaur. That much bad taste really was unsustainable.
what happened around 2006 that caused japan to decrease their monetary base (not just the increase of it)?
something that’s unheard of either in the US or the eurozone.
Toby, what you say is correct in the sense it is an import of goods… capital account matches the current account… but it is not true that it dampens inflation. Think about the USA… a similar thing has been happening where foreign governments have been buying dollars and exporting goods to the USA. It kept the price of goods down but the dollars were still in the system and found a home in all sorts of other areas as we now know. My point is the Yen doesnt go overseas, I suspect it is just hoarded or else goes into other assets which are not recognised as benefitting from the inflation .. such as JGBs,,,,
Maybe the answer to your question Jonathan can be found in where did the money go? That’s a puzzler. So is Stefan’s question. Could it be that Japan’s central bank saw the light? I spent two weeks in Japan in May and was very impressed by the Japanese people whom above all seem very sensible and willing to try what works. They also obviously have tried what doesn’t work, but seem to learn from their mistakes. Maybe that sensibility is working its way into the central banking elite? We should all be so lucky.
Jeffrey, thanks for the link to the Anarchy Japan site.
I don’t know If I said it already but …Great site…keep up the good work.
I read a lot of blogs on a daily basis and for the most part, people lack substance but, I just wanted to make a quick comment to say I’m glad I found your blog. Thanks, 
A definite great read….
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