Not that I’m a proponent of the existence of government-issued bonds, but Japan’s new finance minister has a new proposal that is seemingly incredulous.
Stating yesterday, “It is worth considering no-interest-bearing bonds.”
Why? Because, “Japan’s households have around 1400 trillion yen ($15.2 trillion) in financial assets, half in savings and cash. Some lawmakers are seeking to unlock those savings and raise money to fund stimulus programs to spur the economy after gross domestic product fell at an annual 12.7 percent pace last quarter, the fastest since 1974.”
Out of curiosity, why do interest rates exist at all? What does time-preference mean? Will the phenomena of “risk” and “inflation” cease to exist during this time frame?
Think anyone would fall for it?
See also: The Japanese just didn’t try hard enough
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Well, of course.
And I wonder when the Japanese will convince their people that DEBT is a really, really, good THING also.
That stimulates the economy, too, like VIAGRA.
Is this the same finance minister who was so drunk he was slurring words at the press conference? I have hope, the prime minister’s support rating is about where Bush’s was when he left office.
to be fair, the investors smart enough to sell japanese real estate and equities twenty years ago, and park the proceeds in japanese government bonds have done brilliantly in relative terms, in spite of the risible yield. the nikkei is one fifth of its value twenty years ago, and commercial property down almost as badly.
the carry-trade saw to it that japanese money supply growth didn’t light a fire under local prices, even if it did help form multiple bubbles offshore.
i think it’s almost certain that to sell jgb’s now and go long japanese property and shares will prove to be as smart as doing the opposite in 1989.
So japan abolishes interest rates. Do they also introduce other elements of sharia law?
I can understand the Japanese finance minister, btw. Me too I’d need a good lot of drinks to get enough courage, if I had the job of trying to justify Japanese policies publicly at a press conference…
Let me get this straight – the Japanese Minister of Finance thinks that people might say “Hmmm… should I keep these yen as cash or should I put them in a less liquid, slightly more risky government bond that pays exactly the same zero return? Let’s go for the bond!”
How did the most powerful positions, public and allegedly private, in finance in the world get filled with people who understand exactly ZERO economics?
Anyone who doesn’t see that we’re all doomed is delusional. Get your gold, get your guns, get your ammo, get your food, secure your bunker.
One point that a poster at the LJ economics community where this has been cross-posted pointed out:
In the broader Austrian sense of “interest” (being something like “return” in common parlance) – these aren’t “zero interest” bonds. They offer a return – a decrease in future inheritance taxes. So, it’s not as totally nonsensical as it first appears.
Interest is a concept created by jews as a part of a conspiracy and its purpose is to enrich the jews by taking money from the gentiles.
Since I don’t think there are many jews in Japan they can abolish interest.
Just as the Muslims did. After abolishing interest, lots of “profit sharing” schemes were created in Muslim countries, and curiously their returns were always close to interest rates but that is a coincidence.
Ktibuk
Interest is a concept created by jews as a part of a conspiracy and its purpose is to enrich the jews by taking money from the gentiles.
This does not fall under the category of intelligent or civil comment.
“This does not fall under the category of intelligent or civil comment.”
Neither does Japanese Finance Minister’s comment.
Lowell Sherris,
I believe ktibuk was being ironic. Surely you are aware of the conspiracy theories in the Muslim world as well as in Europe and even here surrounding “jewish bankers and cabals” and their control over monetary systems.
I think his point was that “interest” on both lending and saving money is a good thing and that people will find a way to maximize their returns no matter the system.
Michael Barnett is right. It is time to prepare for the collapse of civilization and the government’s onslaughts of enslavement. It is not ironic that the vast majority of Americans cheer on the shackling. It is appalling. The majority of Americans are ready for the final Darwinian swoop. They are all connected to government- whether by job, subsidy, pension, contract, or ideological illusion. What is ironic is that a black dude is presiding over this chattelization. What’s doubly-triply ironic is that this African-American, who might really be all African lol, deifies Lincoln- a racist who despised the presence of black people more than he did slavery.
What to do? I have to advocate secession in a way that preserves the market principle and avoids the formation of purely protectionist enclaves (a la the fall of the Roman Empire). But easier said than done. The vast majority of Americans, who are practical but cannot/will not see the unseen costs of their dependence and welfarism/warfarism, are too rooted in ideological totalitarianism. In other words, they will take the guaranteed pension as a practically smart idea- and then justify it with meta-physical statism. They will invoke religion, environmentalism, social justice, public health or you-name-it in defence of their parasitical inequality. It is just that oxymoronic.
In the prevailing statist mindset, interest rates, their existence, mark the distance to full socialism and justice that is yet to be closed.
ehmoran: “That stimulates the economy, too, like VIAGRA.”
If your stimulus lasts longer than four years, see Dr. Hayek immediately.
@ktibuk – Please refrain from the use of racisim, nationalism, or any other “grouping” in these discussions. Human faults are Human faults no matter the sub-classification you assign to the people in question. To say that “Jews” invented it and to categorize all Jews by that statement is just as false as saying “Gentiles” invented the Central Bank, and are therefore guilty of conspiracy to enslave jews and muslims.
This kind of thinking only divides people, and serves no purpose other than to point fingers and lay blame. Furthermore, it plays into the hands of those who wish to stay in power by diverting attention away from the truth and towards some unseen imagined foe. This kind of thinking leads always into false conflict and loss of freedom and liberty. It is the reason for the separation of church and state, because if it is allowed into the law, liberty is the first to fall.
It is natural, when we are afraid for ourselves, when we fear something large and uncertain, to try to put a face to the fear. This is a trap, a conspiracy of our own fear over our own reason, and will lead us to false decisions while easing our feelings of uncertainty.
Perhaps this reaction to fear is from a deep need to “find the tiger”. But for us, as modern humans, the tiger is illusory and hidden, and scary because it is not a thing, but an idea.
Our instincts serve us in the raising of our hakkels, but not in the search for the face of the threat. We must rely on our reason and our intelligence to calm our fear and fight the foe, and resist the temptation to categorize whole sections of our brothers as evil.
Our future as free people depends on our doing this, diligently, and without faltering. Love thy neighbor, reason with him, talk to him, help him, but do not vilify him, or you will find yourself in the jaws of the tiger.
To All:
My Motto: Most People are Mostly Good Most of the Time.
I try to remind myself of this whenever I encounter some one who’s thinking is obviously wrong or even scary to me. I try to remember that they, like me, are trying to do their best. It is my path back to righteousness and faith in my fellow man. It is the thought that prevents me from seeing tigers behind every tree.
God bless us all in these trying times.
Interest rates on bonds in developed economies haven’t provided sufficient compensation for risk, inflation, or time value of money for a long, long time. Since the 80s maybe.
I anxiously await the return of meaninful compensation for those who save. Rates need to be higher, not lower, no matter what the obsolete, “liquidity”-starved bankers say.
Sovereign entities used to issue what were known as consol bonds – bonds that were issued in perpetuity – no repayment of principal. Now we have the answer to all our financial – Mises.org can issue zero interest consol bonds!
to mike d:
actually, consols weren’t zero-coupon bonds; nominal yields were around 2 – 3%. they still exist in the uk as a small part of the government’s debt portfolio.
in the uk, there were redemptions, and consol series were changed and consolidated, which just proves that “perpetual” is anaethema to politicians.
The promised reduction in future inheritance tax represents some possible rate of return. The problem of course is that governments show little feelings of obligation to keep the promises of past administrations.
The purpose of interest is to concentrate wealth into fewer hands. Interest takes from the poor and gives to the rich.
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