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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

#191

Post by marvin »

chimeracoder wrote: post #147
marvin wrote: post #106

Earlier quoted context omitted.

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,…

Great summary, thanks. This helps with my understanding.

So in other words, zero growth is very likely something we do not want, unless it happens to come with positive benefits that are currently not measured in dollars -- e.g. sufficiently strongly reduced long-term demand for fossil fuels that climate change will have a much smaller negative impact on people's well-being.

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

#192

Post by danmaz74 »

chimeracoder wrote: post #147
marvin wrote: post #106

Earlier quoted context omitted.

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,…

> "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).

But GDP only measures value that gets traded for money, not all value created. For example, if I care for my child at home for free, I'm creating value that isn't measured in the GDP. If instead I send my child to a child care facility, that is measured.

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

#193

Post by refurb »

hackuser wrote: post #178
phkahler wrote: post #111

Earlier quoted context omitted.

>> 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…

> I think it comes too close to taxing assets for the rich to embrace it. What's wrong with taxing assets (wealth)? I don't know the full economic implications, but I think it may be more fair than taxing income. Wealth is a much better measure of a person's financial strength. Consider: * Because we tax income, a person with $1 billion in assets who makes $100,000 pays less tax than a person with $0 assets and makes…

But wealth isn't just a pile of cash under someone's bed. It's usually held as assets: homes, securities, land, etc.

Do you really want to require someone to sell 3.75% of their stake in a start-up every year so they can pay the taxes on it?

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

#194

Post by [deleted] »

jernfrost wrote: post #109
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…

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 wh…

[deleted]

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

#195

Post by spyspy »

adevine wrote: post #100
spyspy wrote: post #80

Earlier quoted context omitted.

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.

But that's only for the long term. If you are in retirement, where you need to spend your savings, you want to keep your money in low risk assets. Central banks are trying their hardest to minimize your spending income by giving you no return on these less risky assets.

The comment I was replying to only mentioned people saving for retirement, not people already retired.

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

#196

Post by dnautics »

dilemma wrote: post #21
dnautics wrote: post #13

Earlier quoted context omitted.

"cheap" is "bad" because it encourages "hoarding". Instead, those that run the economy would much rather put you on a treadmill of devaluation, which forces you to keep working harder (better unemployment figures!) and consume. Basically short shrift the working class of the value of their income - it's a backdoor paycut for workers[0]. It also forces the middle class into investing directly or indirectly (through pe…

That inflation means decreased real wages is elementary and doesn't need a source support the statement. It completely misses the point, however. What is needed to have a strong, growing economy with increasing prosperity for more than the one percent isn't high or low inflation, but stable price levels that makes it possible to plan for the long term and make investments into productivity and efficiency. When witch…

There weren't stable prices by any means from 1800-1900 but would you say there wasn't a growing economy? The US even was able to support the freeing of slaves and their entry into the marketplace as laborers over that term.

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

#197

Post by hackuser »

refurb wrote: post #193
hackuser wrote: post #178

Earlier quoted context omitted.

> I think it comes too close to taxing assets for the rich to embrace it. What's wrong with taxing assets (wealth)? I don't know the full economic implications, but I think it may be more fair than taxing income. Wealth is a much better measure of a person's financial strength. Consider: * Because we tax income, a person with $1 billion in assets who makes $100,000 pays less tax than a person with $0 assets and makes…

But wealth isn't just a pile of cash under someone's bed. It's usually held as assets: homes, securities, land, etc. Do you really want to require someone to sell 3.75% of their stake in a start-up every year so they can pay the taxes on it?

That's a good point, about liquidity. However, not all assets are as illiquid as a stake in a startup; many people have cash, stocks in public companies, etc. Also, they can plan ahead: 'I'll need around $x next year for taxes'.

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

#199

Post by tamana »

madhermit wrote: post #187
djsumdog wrote: post #172

Earlier quoted context omitted.

Exactly, you cannot have infinite growth. Consumerism and planned obsolescence depend on ever expanding growth. Why can't we just have...enough? Why don't we create things that last decades instead of years? We can scale down, consume less, pollute less. We could have fewer factories that produce higher quality products. We could pay people more. We could have a minimum income so we'd get more art and entertainment i…

I concur with your description of the symptoms and your desired outcome. However, the current state of affairs has less to do with capitalism in general and more to do with the western world's addiction to short term results resulting from subscribing to Keynesian economic theory.

What does keynsiean theory have to do with building low quality goods?

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

#200

Post by tamana »

refurb wrote: post #193
hackuser wrote: post #178

Earlier quoted context omitted.

> I think it comes too close to taxing assets for the rich to embrace it. What's wrong with taxing assets (wealth)? I don't know the full economic implications, but I think it may be more fair than taxing income. Wealth is a much better measure of a person's financial strength. Consider: * Because we tax income, a person with $1 billion in assets who makes $100,000 pays less tax than a person with $0 assets and makes…

But wealth isn't just a pile of cash under someone's bed. It's usually held as assets: homes, securities, land, etc. Do you really want to require someone to sell 3.75% of their stake in a start-up every year so they can pay the taxes on it?

Eh, it can be a lien, payable upon transfer or death of the owner.
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