Bank of Japan, in a Surprise, Adopts Negative Interest Rate
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Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#2Can someone explain to me why both cheap oil and expensive oil seem to be bad for the economy? Back when oil was >$100 per barrel everybody seemed to blame the weak economy on expensive oil. Now somehow very cheap oil is also a bad thing.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#3I do not understand this.
Japan imports almost all of its oil and commodities. Shouldn't low price of oil and commodities result in a massive surplus for a country that sells high value added goods ? Buy iron for cheap and sell robots for a high price.
Now the argument many people will make is that the people who are buying the high-value added goods won't have money anymore - but the argument can be made in the opposite way too - high prices of oil and commodities will result in lower surplus - meaning growth will be most in countries who produce oil and commodities.
Citing "low price of oil" as a reason for economic woes just seems like bad science - I though economists were better than this ?
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#4Can someone explain to me why both cheap oil and expensive oil seem to be bad for the economy? Back when oil was >$100 per barrel everybody seemed to blame the weak economy on expensive oil. Now somehow very cheap oil is also a bad thing.
I agree - its sloppiness from our "leaders" in the field of economics.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#5But it did not work in the 1990s for Japan, why would it work better a second time?
The zero lower bound problem refers to a situation in which the short-term nominal interest rate is zero, or just above zero, causing a liquidity trap and limiting the capacity that the central bank has to stimulate economic growth" https://en.wikipedia.org/wiki/Zero_interest-rate_policy
http://www.thedailybell.com/exclusive-interviews/35987/Antho...
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#6Can someone explain to me why both cheap oil and expensive oil seem to be bad for the economy? Back when oil was >$100 per barrel everybody seemed to blame the weak economy on expensive oil. Now somehow very cheap oil is also a bad thing.
Cheap oil is bad for net exporters of oil and good for net importers. And visa versa.
I get the impression the media are always talking about an imminent financial catastrophe because eventually they'll be right and we'll forget how many times they have been wrong.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#7Can someone explain to me why both cheap oil and expensive oil seem to be bad for the economy? Back when oil was >$100 per barrel everybody seemed to blame the weak economy on expensive oil. Now somehow very cheap oil is also a bad thing.
It's both good and bad for me. It's cheaper to fill my car up however my pension funds investments in the mineral sector have fallen.
Only in the long term will I know how I faired.
My hope is that I am buying in the down market and the producers are optimising for the next decade.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#8Can someone explain to me why both cheap oil and expensive oil seem to be bad for the economy? Back when oil was >$100 per barrel everybody seemed to blame the weak economy on expensive oil. Now somehow very cheap oil is also a bad thing.
They cause different problems:
Expensive oil - costs more as you'd expect.
Cheap oil - good but leads to falling prices so savers leave their money in the bank waiting for discounts so spending in the economy falls.
The second one is an odd thing that only happens in a deflationary environment.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#9I'm sure none of the hedge funds that were recently discussed as betting against the Yuan had any insider information there.
"[...] ,in a Surprise, [...]"...riiiiiiight.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#10I do not understand this. Japan imports almost all of its oil and commodities. Shouldn't low price of oil and commodities result in a massive surplus for a country that sells high value added goods ? Buy iron for cheap and sell robots for a high price. Now the argument many people will make is that the people who are buying the high-value added goods won't have money anymore - but the argument can be made in the oppo…
Stable prices with a gentle growth are better for everyone. It's not important if oil is cheap or expensive in the long run, what matters is that you can make sensible forecasts and do long range planning without having to worry about one of your main inputs wildly fluctuating in price and causing havoc across the board.