Japan Falls into Recession • Hacker News Board

Re: Japan Falls into Recession

#171

Post by BenoitEssiambre » Mon, Nov 17, 2014, 1:13 PM UTC

cturner wrote: post #79

hindsightbias wrote: post #64

Earlier quoted context omitted.

> even thought (sic) some of them might agree that B were right If you have a citation for that, I'd love to read it. But I think cats and dogs will start raining from the sky first. You don't go anywhere if consumers expect prices to remain the same or deflate.

Why is this? Computers get rapidly cheaper for example.

Currencies are government made artificial stores of value.

If money doesn't lose value fast enough, people, companies and banks invest in government sponsored fiat instead of the real economy. This distorts the markets.

Money should be there to allow transactions and contracts without having to do barter. It has no choice being a store of value to do so, but it should not artificially keep value at a rate that makes it desirable enough so that it replaces private markets for investments. To do so is a subsidy to economic idleness and a promotion of investment in fiat instead of the real economy.

Money doesn't have intrinsic value. It should not artificially be made to seem like it keeps so much value by governments. It should be made stably declining and just valuable enough to allow for low friction transactions and contracts. More than that and you are throwing a wrench in the gears of private markets.

Re: Japan Falls into Recession

#172

Post by pessimizer » Mon, Nov 17, 2014, 1:17 PM UTC

adventured wrote: post #133

cynicalkane wrote: post #74

Earlier quoted context omitted.

This is incorrect. GDP growth in Japan jumped when it became clear Abenomics was going forward, and un-jumped when the recent tax increase went in. The annualized growth[1] in between these two periods has been greater than 2%, with falling unemployment, despite a declining workforce. The growth right before Abenomics was negative and falling. [1] For this comparison, make sure to use annualized QoQ figures. Data-ill…

Real GDP did not jump. Japan massively debased their currency, that provided a fake spike to both GDP and the stock market. In real terms, their stock market has gone down, and their GDP has contracted even more than the nominal terms show.

Or rather, instead of putting more money into their economy by printing it, which was working extraordinarily well, they instead decided to pull money back out with a huge rise in a regressive tax.

"Real GDP" is some kind of economic truther term. If you can sell debt at a low interest rate, whatever paper you've generated is "real" because the market is still buying it.

Re: Japan Falls into Recession

#173

Post by hnnewguy » Mon, Nov 17, 2014, 1:17 PM UTC

lottin wrote: post #148

cturner wrote: post #79

Earlier quoted context omitted.

Why is this? Computers get rapidly cheaper for example.

It's a myth propagated by certain economists who believe there is an optimum inflation rate and that this optimumum is around 2%. They also predict a great calamity if inflation falls below zero. In practice, experimental evidence tells us that this theory is complete rubbish.

>In practice, experimental evidence tells us that this theory is complete rubbish.

Please, provide us with examples of a sustained deflation that didn't harm the economy.

The supply of money has to grow at the same rate as the real economy, otherwise you can end up with "problems" associated with having "too few dollars". In other words, we need to keep increasing the supply of dollars to buy the growing output of goods we produce. This is common sense. Because it's impossible to hit that growth target exactly, we err on the side of caution and produce some inflation, which has the side benefit of preventing the hording of currency, as it naturally diminishes in value over time. For whatever reason most governments have decided on ~2% to be a safe, stable target.

One of the common misconceptions of deflation is that the lower prices should be good for consumers. Which is true, if terms of consumer goods. But keep in mind that wages and debt are also affected, which is where the real pain from deflation for the average person stems from.

Re: Japan Falls into Recession

#174

Post by hnnewguy » Mon, Nov 17, 2014, 1:32 PM UTC

honeybooboo123 wrote: post #160

cturner wrote: post #79

Earlier quoted context omitted.

Why is this? Computers get rapidly cheaper for example.

It's not. Price-inflation means our purchasing power decreases . We're all better off if we get moar stuff for our money instead of less, but governments would like us to believe the opposite. We ordinary people clearly don't benefit from inflation, but who does? -Might it be the same people who are telling us inflation is good?

>We ordinary people clearly don't benefit from inflation, but who does?

How are us ordinary people benefiting when our wages fall and our debts become more onerous, both products of a deflation?

Re: Japan Falls into Recession

#175

Post by hnnewguy » Mon, Nov 17, 2014, 1:39 PM UTC

nandemo wrote: post #116

hudibras wrote: post #83

Earlier quoted context omitted.

There's so much about your post which is incorrect that I don't have time to debunk it all. So let me just hit the biggest error, so that others don't have to waste their time: It's literally impossible for Japan to default on their debts, which are almost completely in Japanese currency.

> It's literally impossible for Japan to default on their debts, which are almost completely in Japanese currency. False. Many countries have defaulted on debt denominated in local currency. E.g. Brazil in 1990 and Russia in '98. In Brazil's case, part of the debt was indexed to inflation, so inflating away the debt wasn't easy. AFAIK most of Japan's debt isn't inflation-linked. Still, a high enough rate of inflation…

>False.

I think you're both right. When you can print your own currency it is literally impossible to default on your debts, unless you choose to.

Often times defaulting has benefits to the debtor, like the Russians escaping from ridiculous fixed exchange rates in 1998.

Re: Japan Falls into Recession

#176

Post by RivieraKid » Mon, Nov 17, 2014, 2:10 PM UTC

jusben1369 wrote: post #41

efjhewjfnkew wrote: post #3

Here's the thing: you actually need a strong middle class to buy your products. No amount of artificially inflating the value of the stock market through quantitative easing will give you a healthy economy. QE is like putting a fresh coat of paint on a house with a rotten interior: it makes things look pretty, but the structural integrity of the building is almost non-existent. Employees working themselves to death f…

You only have to look at the US and Euro economies post 2008 to see the real world benefits of QE. Europeans went down the austerity route and are stuck with consistently underperforming economy and the threat of deflation. The US has turned the corner and is a job creating machine again including the first real signs of inflationary pressure through rising wages. The most unusual thing I can see about Japan is it's…

> The US has turned the corner and is a job creating machine again

The employment-to-population ratio has't recovered and is near the 30 years low.

http://data.bls.gov/pdq/SurveyOutputServlet

Re: Japan Falls into Recession

#177

Post by corin_ » Mon, Nov 17, 2014, 2:11 PM UTC

gear54rus wrote: post #61

kristofferR wrote: post #35

Earlier quoted context omitted.

Yeah, this trick works for most paywalled articles out there. Googling the URL/title of the paywalled article will almost always give you access the full article (or at least a copy somewhere else).

What I don't really get is how people on this tech-savvy resource still submit links to sources which go against the very idea of free information. Can't we just look this up somewhere else instead of encouraging this bullshit paywall behavior? Or is the quality of information that different?

There may be a big overlap, but "tech-savvy" and "think all information should be free" are not synonymous.

Personally I'm against submitting paywall links to HN because it makes it harder for everyone to read, but I have no problem (either overall morally or or a personal level) with content like the WSJ being behind a paywall.

Re: Japan Falls into Recession

#178

Post by DominikR » Mon, Nov 17, 2014, 2:19 PM UTC

Hasn't Japans central bank started last week to buy 100% of all newly issued government bonds? I fear this will end very badly for them since the Yen doesn't have the status as a global reserve currency like the US Dollar.

Also, the debt to GDP ratio is insane, I am still stunned they didn't default 10 years ago.

Maybe a default is the only way for them to get out of the decades of stagnation at this point, even though it will be very painful in the beginning.

Re: Japan Falls into Recession

#179

Post by DominikR » Mon, Nov 17, 2014, 2:28 PM UTC

mc32 wrote: post #4

Quantitative easing, Yen depreciation... What they need to do is figure out a way to grow the population locally or through large-scale immigration. I'm afraid this is the fate that awaits the developed world (or countries with low population growth). Japan is like a canary in the mine of post-industrialism. It'll be interesting to see what they figure out for their society and the lessons they might have for us.

In my view low birthrates are a result of financial insecurity and the fact that now both parents have to work full time to make a decent living while 50 years ago it was sufficient to have only one parent working.

I just don't buy the story that post-industrialist societies are somehow more enlightened and therefore prefer to have less or in case of Japan often no children at all.

Reproduction is one of the strongest needs a human being can have after survival and security.

Re: Japan Falls into Recession

#180

Post by nhaehnle » Mon, Nov 17, 2014, 3:03 PM UTC

pessimizer wrote: post #172

adventured wrote: post #133

Earlier quoted context omitted.

Real GDP did not jump. Japan massively debased their currency, that provided a fake spike to both GDP and the stock market. In real terms, their stock market has gone down, and their GDP has contracted even more than the nominal terms show.

Or rather, instead of putting more money into their economy by printing it, which was working extraordinarily well, they instead decided to pull money back out with a huge rise in a regressive tax. "Real GDP" is some kind of economic truther term. If you can sell debt at a low interest rate, whatever paper you've generated is "real" because the market is still buying it.

To be fair, "real GDP" has a somewhat precise economic meaning as measuring GDP while taking inflation into account; i.e., take nominal GDP and divide it by some measure of inflation (it is only somewhat precise because one can quibble about which inflation measure should be used).

In general though, you are right that especially "real growth", as the antonym of "fake growth", is often used in a way that has economic truther feel to it.