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Old Jan 30th 2016, 07:51 AM
Tom Palven Tom Palven is offline
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Default Bold Move By Japan?

Like the Flying Spaghetti Monster, central banks work in strange and mysterious ways, their wonders to perform.

Reuters calls this latest action by Japan's a "bold move."

http://www.reuters.com/article/us-gl...-idUSKCN0V701J
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Old Jan 31st 2016, 10:53 AM
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Michael Michael is offline
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Default Re: Bold Move By Japan?

Quote:
Originally Posted by Tom Palven View Post
Like the Flying Spaghetti Monster, central banks work in strange and mysterious ways, their wonders to perform.

Reuters calls this latest action by Japan's a "bold move."

http://www.reuters.com/article/us-gl...-idUSKCN0V701J
Bold move? Not really. It is rather a sign of desperation that cutting interest rates all the way to zero doesn't actually produce the desired increase in economic growth. Now they are trying to go negative, trying to get the boost that zero was supposed to give. I am reminded of Einstein's definition of insanity - doing the same thing over and over again, but expecting different results.

And by the way, Japan should stand as a major case study for western economists - especially the 'Chicago school' and the 'Austrian school' as well as the IMF and the World Bank. The economic evidence from Japan over the last twenty years indicates a major categorical failure of the favored policy prescription of the standing rightwing (neo-liberal) economic policy principle.

I might add that the failure of Japanese monetary policy fits with Keynesian economic theory. According to Keynesian theory, Japan is doing it all wrong. Endless monetary stimulus just creates a new normal [heavily subsidized]. It doesn't actually create stimulus just by existing.
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