World Recession Spreads Through Asia, ECB Still Holds Rates Steady

[Az]

I've got a question for you economists:

IIRC, Japan has a budget deficit. in the same time, Japan suffers from Deflation. why can't the government just print some money, and take care of both problems?

[laurentius]

Az: Because that would be a total catastrophy.

[laurentius]

It's not about printing money, if they would be so crazy the economy would surely collapse in months. Moneys value isn't static you know. the central bank sells their money just like any artisan. if you suddenly have 300% more diamonds in the markets than a month before, the price on diamonds will take a deep dive.

[Az]

Now I understand! Not.

[laurentius]

take your time..

[Kidlicious]

Originally posted by laurentius
Yep, but the policy japan has taken to deal with their problem is very, very malicious. Everone knows that japan needs extreme measures to keep their head above the water upcoming years. The problem is that not a single goverment has got the guts to actually do anything about it. they juts keep going with same old and hope, or pretend that things will heal themselves. And in this case the past does matter. Japanese banks have hundreds of billions of bad loans. No economy can stand that forever. Not even the japanese. It's a really severly sick economy.

They should have written off that debt when problems started to show up. Things would have been much easier. They are writting it off now, but it might be too little too late.

[Az]

I x-posted with you.

I don't think they should drastically increase the amount of money, but only very slightly so, so the deflation could stop, and they could pay (maybe part of ) their internal obligations.

[Kidlicious]

Originally posted by Azazel
I've got a question for you economists:

IIRC, Japan has a budget deficit. in the same time, Japan suffers from Deflation. why can't the government just print some money, and take care of both problems?

That would be a good strategy. In fact, they should increase govt spending and jsut print money to pay for it. There may be a legal problem though. I know that in the US it's only legal to devalue govt debt by 5% a year.

The problem in Japan is expectations though. Trying to inflate out of the depression in Japan will only work if Japanese believe that deflation will end. If they don't believe that the govt will be successfull inflating pirces spending will not increase. I think it's actually too late in Japan for the BOJ or the govt to convince Japanese that they are truely capable or willing to end defaltion.

[laurentius]

That's just what I am afraid of. These are the blessings of global economy, if japan gets really ****ed up it will have a huge impact in our domestic markets and economies. They **** things up, everyone pays for their mistakes. It's the same with american and european economies as well. Collective penalty. This is one of the main problems with todays socio-economical system. We in europe and us have virtually zero chances to influence nippon economy, thus securing our own jobs. I think this kind of need for global democracy is one of the most important long-term goals of the 21st-century

[Az]

Yeah, they wouldn't want to end up with a stagflation.

[laurentius]

and GwB is not helping at all

[DanS]

GwB is doing OK with what he inherited.

[Velociryx]

If only it were as simple as printing more money.

-=Vel=-

[Kidlicious]

Originally posted by Velociryx
If only it were as simple as printing more money.

-=Vel=-

If only it were as simple as NOT printing more money.

[Kidlicious]

Originally posted by Azazel
Yeah, they wouldn't want to end up with a stagflation.

Stagflation is unrelated to economic policy except maybe higher business taxes that weren't accompanied by increased spending. I don't think that has ever happened, at least not that I know of.