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Bank of Japan, in a Surprise, Adopts Negative Interest Rate

nytimes.com

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Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#141

Post by fiatmoney »

woodpanel wrote: post #67

Maybe OT: Isn't this just proof that Japan needs to let go of it's biggest barrier to growth? By which I mean it's non-existing immigration? I've been recently to Japan and despite my fears Tokio was a really affordable place (leaving out the hotel prices of course). I thought this was due to the lack of growth and the recent quantitative easing and other government measures. Measurements that seem to be failing at t…

I can imagine the Japanese thinking that the solution to Japan not having "enough" Japanese (for what?), is not to import more non-Japanese.

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#142

Post by ihsw »

spyspy wrote: post #80
Hermel wrote: post #57

Earlier 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.

Younger people are saving more cash than ever -- and I'm not willing to chalk it up to financial illiteracy. Even well-off individuals are sticking to plain savings accounts that do nothing other than gather dust with their 1% annual rate of return.

Why? Faith in the financial services industry has been utterly shattered.

The only exception is for tax purposes, eg: Roth IRA/TFSA, 401k/RRSP, etc.

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#143

Post by true_religion »

vetinari wrote: post #70
hackerboos wrote: post #63

Earlier 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.

Immigration will not solve the problem of aging population. In a generation or two, the immigrants would face exactly the same problem. Because with immigration, you didn't solve the underlying cause of why people don't have kids. You just muddled the observable status for a while.

In politics, pushing the need to solve a problem into the distance for 30-40 years is a good thing.

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#144

Post by tankenmate »

phkahler wrote: post #111
HSO wrote: post #86

Those 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…

>> It's not impossible that we will look back in 20 years and see Japan not as some sort of failure but simply as the first society that had to learn to live without growth. They still haven't learned, they're trying really really hard to force growth. Negative interest rates can be seen as a tax on inactivity, and while it's been talked about in the US, I think it comes too close to taxing assets for the rich to emb…

Indeed, one may view it as the central banks' wealth tax to reverse (however small) income inequality which will lead back to more growth.

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#145

Post by vetinari »

SolaceQuantum wrote: post #137
vetinari wrote: post #135

Earlier quoted context omitted.

Capitalism could be indirectly responsible. One of the causes why people postpone having children is financial insecurity. In their mid-twenties they cannot afford to have a home, they are unable to secure the costs of first few years of raising child, when they don't know if they will have a job in three months and they have zero savings. Add student loans to the mix, popular desires to travel the world, to "live" a…

Does Japan have the same issues with student loans and such that USA might have? Otherwise, thank you for the explanation and I do apologize for my ignorance. (Also, I'm still confused about the feminism thing)

With the feminism thing, it was some other guy, won't help you much with that, sorry. I'm ignorant about that too.

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#146

Post by DarkLinkXXXX »

SolaceQuantum wrote: post #131
yuiyui wrote: post #125

Earlier quoted context omitted.

> By which I mean it's non-existing immigration? That's not a bug, it's a feature. Japan enjoys the advantages of having a civilized, educated, homogeneous, high trust society, and they're not willing to abandon that in exchange of what, low skilled workers they don't need and ethnic conflict?

I think that the parent specifically mentioned highly skilled young workers who would be attracted by the modern lifestyle in Tokyo.

That being said though, a number of potential applicants would probably be discouraged by the 10-14 hour work shift. I'm not sure how much of that is spent working, but that doesn't as much room for leisure, regardless.

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#147

Post by chimeracoder »

marvin wrote: post #106
HSO wrote: post #86

Those 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?

> Do we agree on what "growth" means in this instance?

There's a disconnect between how economists use certain terms as well-defined technical jargon and how non-economists adopt them colloquially.[0] This leads to a lot of confusion when people try to discuss economics without understanding the precise meanings of the terms at play.

For the rest of this comment, I'm going to use the economic meaning of these terms, because there is agreement among economists about what "growth" means (though not how to accomplish it).

> Or do we give up the expectancy of a better life for everyone if we give up economic growth as we know it?

Yes, by definition. It would be impossible to have "a better life for everyone" without economic growth. "A better life for everyone" is economic growth, by definition (the creation of more value - whether tangible or not - given access to the same limited input resources).

> Is is possible to have increased leisure/increased standard of living/increased health/decreasing cost of living over time

That is considered "growth" to an economist, yes.

> without having an incerase in GDP and an average positive return on capital?

In theory, yes, but it turns out that an increase in GDP is so highly correlated with economic growth empirically, as well as so intrinsically linked from first principles, that they are usually used interchangeably in most discussions.

There are a few degenerate cases in which an increase in GDP does not actually correspond to economic growth, but they're pretty esoteric and not broadly applicable.

[0] As an analogy, imagine a bunch of non-programmers debating a CS paper about 'complexity' of an algorithm, and using the term 'complexity' to mean by their ability to understand how it works. That may be a relevant metric, and it may even be related to the technical use of the term 'complexity' (complexity class), but it's not really comparing apples to apples even though it's using the same word.

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#148

Post by jessriedel »

sitkack wrote: post #128
jessriedel wrote: post #118

Earlier quoted context omitted.

What time period are you talking about? In 1991, per capita GDP in US and Japan were both ~$32k in 2005 USD. But now it's ~$38k for Japan and $47k for US. http://www.tradingeconomics.com/united-states/gdp-per-capita http://www.tradingeconomics.com/japan/gdp-per-capita

Per capita statistics encourage a false assumption of sharing. It isn't measuring what most people think it is.

I was responding to this claim by jernfrost: "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."

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#149

Post by mc32 »

woodpanel wrote: post #67

Maybe OT: Isn't this just proof that Japan needs to let go of it's biggest barrier to growth? By which I mean it's non-existing immigration? I've been recently to Japan and despite my fears Tokio was a really affordable place (leaving out the hotel prices of course). I thought this was due to the lack of growth and the recent quantitative easing and other government measures. Measurements that seem to be failing at t…

It seems their calculus is:

Growth but at the risk of it not being Japan on its own terms (importing culture)

No growth but at least it's their own no growth (no imported population).

Japan being the nation and a people seeking harmony, I don't think they'd make the deal and risk losing their wa.

And you know what, good on them and good for the test of the world. I'd like to see how a country tackles no growth while maintaining a first world economy, without the subsidy of immigration because one day we'll all be there and we'll need some guidance. Perhaps Japan will offer that guidance if they figure things out.

Re: Bank of Japan, in a Surprise, Adopts Negative Interest Rate

#150

Post by VonGuard »

laotzu wrote: post #97
HSO wrote: post #86

Those 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…

Growth for the sake of growth is cancer

Tell that to your VCs.
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