[deleted]
Bank of Japan, in a Surprise, Adopts Negative Interest Rate
101–110 of 250 posts
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#102Earlier quoted context omitted.
The irony of this approach is that the lower interest rates are, the more people need to save to reach their retirement goals. If this effect is stronger than the incentive to borrow and invest, low interest rates might actually curb consumption.
Saving for retirement using a savings account hasn't been a viable strategy in decades (at least in the US). People need to be encouraged to invest a significant portion of their money in other securities, and know that in the long term, they'll be much better off for it.
As a general rule of financial planning, higher yield means higher risk, so being "much better off for it" is a highly subjective, if not naive statement with respect to saving. Sure, in the long term it is possible to gain more investment returns with certain securities, and in other instances, one can lose the entire principal and be completely worse off. Saving long-term is not a model that totally works during 'catastrophic financial events' but it sure insulates a person from the occasional Enron or other significant event beyond their control.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#103Earlier quoted context omitted.
> Japan needs to bite the bullet and accept immigration. Immigration isn't going to solve anything, immigration from where ? Japan isn't the US, they aren't talking English nor their society is build in a way it can accept huge immigration waves. Japan needs to work on techs that will solve its problems, not resort to a massive immigration wave that will only kick the can down the road.
Not to mention the change immigration could potentially cause in day to day life. In my opinion one of the best things about Japan is the homogeneous and pleasant (in most but not all ways) culture - if I lived there voting for increased immigration would be one of the absolute last resort measures I would vote for.
Alternatives include raising Japan's retirement age from 60 to 70, because they're already raising it to 65 and that's not going to be good enough to deal with the inevitable fiscal situation.
Edit: A lot of people saying "immigration won't work" but not offering alternative solutions.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#104Earlier quoted context omitted.
Wouldn't it be acceptable to just accept a shrinking economy and change policies in such a way to deal with it? i.e. shrink the police and armed forces, public services, cut needless spending, etc. Become more frugal as economy allows.
The key phrase here was 'aging population'. If the majority of Japan's population are retired then there will still be a huge deficit. Japan needs to bite the bullet and accept immigration as part of its economic strategy.
Thinking out loud.. the Olympics in 2020 will be a good chance to showcase the country as an attractive destination, not just for tourism. They could loosen their immigration policy to coincide with the timeline.
It would still be tricky because as a society Japan is famously homogeneous, so the idea of diversity would have to be phased in slowly.. but it could be a starting point. In the end it's about adaptation to ensure a future for the country.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#105Earlier quoted context omitted.
The key phrase here was 'aging population'. If the majority of Japan's population are retired then there will still be a huge deficit. Japan needs to bite the bullet and accept immigration as part of its economic strategy.
Maybe Japan thinks it can benefit more from less congestion and higher wages. "Poor Fiscal policy" is likely a better explanation. If they need to "bite the bullet"; how about balancing the budget?
Very few countries, communities, or individuals are willing to accept a fate of involuntary, slow recession.
As suggested by previous commentators, social policies could possibly play a larger role in the long term Japanese recovery than fiscal stimulus. Opening the country to immigration may help rejuvenate the workforce, but would require significant upheavals of xenophobic Japanese culture. The government could use economic measures to encourage childbirth, but at a population density of 869 people per square mile, one must wonder how many more citizens the island can accommodate.
The rational assumption that Japan should "bite the bullet ... [and] balance the budget" is not what the country will do, as the circumstances of its plight encourage irrationality.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#106Those who think Japan is unique in its condition and/or that the answer to its problems is more of the same old "advice" as proffered by standard issue economists and business types might profit from Robert Gordon's recently published "American Growth". (paper version: http://www.nber.org/papers/w18315.pdf ) At least, it can offer a different, longer-term perspective on the issues. It's not impossible that we will lo…
Do we agree on what "growth" means in this instance? Is is possible to have increased leisure/increased standard of living/increased health/decreasing cost of living over time, without having an incerase in GDP and an average positive return on capital? Or do we give up the expectancy of a better life for everyone if we give up economic growth as we know it?
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#107Can 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 at this precise moment because of the enormous quantity of soon-to-be-impaired debt that was issued by the energy industry on the assumption of perpetually high oil prices. Debt contagion remains as a risk, just as it did in 2008.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#108Instead of pushing people to reinvest into the economy, there is a more sustainable way: 1. R&D AND ROBOTS 2. TAX AUTOMATION 3. BASIC INCOME FOR ALL, growing as tax revenues grow This will let a shrinking population be more productive and align the resources more usefully for everyone - including old people - to spend on their needs.
This, this, and this again.
I just don't understand how lending to banks at negative interest rates is tried before basic income. Or better, I can imagine a few reasons, none of them good.
Really, I don't get how people even accept bank settling rates that are smaller than the short term government bonds. That's just taking money from the people, and sending it for free to banks - no strings attached.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#109Those who think Japan is unique in its condition and/or that the answer to its problems is more of the same old "advice" as proffered by standard issue economists and business types might profit from Robert Gordon's recently published "American Growth". (paper version: http://www.nber.org/papers/w18315.pdf ) At least, it can offer a different, longer-term perspective on the issues. It's not impossible that we will lo…
But the growth problems of Japan is largely an illusion and myth caused by population decline. Growth per capita in Japan has been completely normal in the supposed terrible years. It is the population decline which causes the overall GDP growth to look anemic.
Naturally it is growth per capita which matters as this is what improves the living conditions of people. There are many countries with high GDP growth but which also has higher population growth causing everybody actually to get poorer. That is not something anybody should want to emulate.
But of course low total GDP growth looks bad to business because the markets for their goods does not expand.
Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate
#110Earlier quoted context omitted.
The key phrase here was 'aging population'. If the majority of Japan's population are retired then there will still be a huge deficit. Japan needs to bite the bullet and accept immigration as part of its economic strategy.
Thinking out loud.. the Olympics in 2020 will be a good chance to showcase the country as an attractive destination, not just for tourism. They could loosen their immigration policy to coincide with the timeline. It would still be tricky because as a society Japan is famously homogeneous, so the idea of diversity would have to be phased in slowly.. but it could be a starting point. In the end it's about adaptation to…
I don't understand why you are getting downvoted - there's nothing controversial or ridiculous about this suggestion. Unlikely perhaps, for reason stated elsewhere in the thread but that's another matter entirely.