Lack of Japanese inflation?
Discussion
Why isn't the level of inflation comparable with that seen in Western Nations?
- They import many commodities, including oil which have significantly increased in price.
- The central bank of Japan has engaged in the same practices that we have seen in Western Countries such as QE.
- With such a large national debt a bit of inflation to erode it wouldn't be such a bad thing.
- The population are spending their savings.
- Unemployment is low.
- Interest rates have been very low for a long period of time.
Because Japanese companies repatriate their profits, pushing the value of the Yen up. Also, the deficit is funded domestically so the interest payments don't leave the country. There is also a huge numbers of people who are just keeping money "under the bed" - and I do mean in domestic safes, not in banks.
When I first arrived here, a bar of Ghana chocolate was Y110. 2.5 years later, the price of that bar in the shops is Y73.... The price of a bottle coke out of a vending machine has been Y110 for 15+ years.
When I first arrived here, a bar of Ghana chocolate was Y110. 2.5 years later, the price of that bar in the shops is Y73.... The price of a bottle coke out of a vending machine has been Y110 for 15+ years.
You have to remember as well that it has been twenty years since their crash. We are in year two of our own recovery from a similar collapse.
Some still warn of the dangers of deflation once the initial inflationary surge caused by a weaker pound and rising commodity prices has passed. Personally I doubt it, and it seems to me an argument designed to urge too low interest rates, but it is rather early too tell.
Another factor to consider is that western policy makers have had ample time to study the lessons of the Japanese crash and responded very rapidly in slashing interest rates and implementing 'quantitive easing', before a deflationary spiral had become established.
Some still warn of the dangers of deflation once the initial inflationary surge caused by a weaker pound and rising commodity prices has passed. Personally I doubt it, and it seems to me an argument designed to urge too low interest rates, but it is rather early too tell.
Another factor to consider is that western policy makers have had ample time to study the lessons of the Japanese crash and responded very rapidly in slashing interest rates and implementing 'quantitive easing', before a deflationary spiral had become established.
JagLover said:
Another factor to consider is that western policy makers have had ample time to study the lessons of the Japanese crash and responded very rapidly in slashing interest rates and implementing 'quantitive easing', before a deflationary spiral had become established.
Which has only deferred the pain.Gassing Station | News, Politics & Economics | Top of Page | What's New | My Stuff