Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Japan Falls into Recession

online.wsj.com

Post reply on HN
Print view View original

191–200 of 201 posts

Re: Japan Falls into Recession

#191

Post by Amezarak »

dagw wrote: post #186
nhaehnle wrote: post #183

Earlier quoted context omitted.

> Keynesian economics has failed. QE, inflation, central bank stimulus, debt accumulation It's kind of funny how much of a content-free buzzword Keynes has become. None of the measures you mentioned are originally tied to the original Keynesian idea of anti-cyclical government behaviour.

"Keynesian" as used by the mainstream today is only very weakly related the writing and thinking of John Maynard Keynes. I've seen it suggested in more than one place that if Keynes was alive today he wouldn't be a Keynesian.

Even modern Keynesians are usually the first to tell you the central bank is going to be pretty much helpless in a liquidity trap, that QE isn't going to make a big difference, etc.

Re: Japan Falls into Recession

#192

Post by hnnewguy »

Tyr42 wrote: post #188
hnnewguy wrote: post #175

Earlier quoted context omitted.

>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.

I'd take another look, didn't he say that there exists inflation adjusted debt, which I don't think you can print money to get out of debt.

>there exists inflation adjusted debt

Because they decided to issue it, mainly to instill confidence in a currency with a history of big inflation. But this isn't the norm.

It doesn't change the argument that it is impossible to be unable to "pay back" something that you have an infinite supply of.

Re: Japan Falls into Recession

#193

Post by hnnewguy »

grey-area wrote: post #153
hudibras wrote: post #127

Earlier quoted context omitted.

A country defaults when it can no longer service the interest on its debt. Japan's interest on the public debt is around $250B/year, or around 5% of GDP. 5% is a higher percentage than most countries (U.S. is around 2.5%) but less than, say, Greece at the height of their crisis. And Greece ended up not defaulting and not devaluing their currency (obviously, being in the Eurozone). $250B is around 25% of the annual go…

In summary, Japan is in absolutely no danger of defaulting under current conditions, without even taking the additional step of "printing more money" to pay its future debts. That statement is far more reasonable than 'It's literally impossible for Japan to default on their debts', which is false. Japan could default on debts if it chose to (many countries have in the past).

>That statement is far more reasonable than 'It's literally impossible for Japan to default on their debts', which is false.

This is slightly pedantic. The argument was about whether incurring ever-greater amounts of debt would result in the default of Japan, a country with a sovereign currency. It's a fallacy that is often repeated. As long as the debts are denominated in said currency, the answer is: no. A country with its own currency will always be able print more money to fulfill these obligations, making default practically (not literally, I guess) impossible.

The fact that they can choose to default, or that we may run out of trees, or ink, or whatever, is a bit outside of the scope of the argument.

Re: Japan Falls into Recession

#194

Post by zeyus »

techdragon wrote: post #21
tormeh wrote: post #15

Earlier quoted context omitted.

I agree, but QE is not a dumb idea per se, it's just the way that it's done is severely lacking. What you want is inflation, which means you want to increase the amount of money in circulation. A simple way to do that is for the central bank to make money up and give, say, 20000 yen to each citizen every year until deflation went away. This is called a helicopter drop in finance-speak, and seen as very radical. Defla…

Australia did one and it worked wonderfully. We rode out most of the brunt of the impact of the 2008 'GFC' with little disaster. The worst of it for most of us was that getting a home loan got a bit tougher, but really this was more a case of returning to earlier norms than really getting "harder"

Australia has just delayed it, we are still letting people borrow more money than they can ever hope to repay (interest only loans on owner occupied places) now with our relationship with China growing tenuous (they're making deals with the USA and Russia instead of Australia), it spells bad news.

Re: Japan Falls into Recession

#195

Post by honeybooboo123 »

hnnewguy wrote: post #174
honeybooboo123 wrote: post #160

Earlier quoted context omitted.

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?

By getting more stuff for our money, as I said?

Even if wages do fall, as long as your purchasing power increases more than your wage drops, you're just fine.

People take on massive loans exactly because prices have been inflated. That certainly doesn't mean deflation is bad.

Even if you're paying off a loan, price deflation is not a problem because though the loan is becoming more "onerous", you'll have more money left over for paying the loan after you've bought everything else you need.

Re: Japan Falls into Recession

#196

Post by hindsightbias »

dimitar wrote: post #78
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.

Oh wow, it is certainly a challenge to find a public intellectual to admit something like that, especially considering that not everyone can be neatly placed in one of the two camps. But you can get close to that by reading between the lines, by the viewing the context. Enjoy reading Kenneth Rogoff: http://www.project-syndicate.org/print/austerity-and-debt-re... A close reading will show him admitting, quite begrudgi…

Brilliant

Re: Japan Falls into Recession

#197

Post by grey-area »

hnnewguy wrote: post #193
grey-area wrote: post #153

Earlier quoted context omitted.

In summary, Japan is in absolutely no danger of defaulting under current conditions, without even taking the additional step of "printing more money" to pay its future debts. That statement is far more reasonable than 'It's literally impossible for Japan to default on their debts', which is false. Japan could default on debts if it chose to (many countries have in the past).

> That statement is far more reasonable than 'It's literally impossible for Japan to default on their debts', which is false. This is slightly pedantic. The argument was about whether incurring ever-greater amounts of debt would result in the default of Japan, a country with a sovereign currency. It's a fallacy that is often repeated. As long as the debts are denominated in said currency, the answer is: no. A country…

That's called a soft default. It also has negative consequences.

Re: Japan Falls into Recession

#198

Post by gd1 »

bildung wrote: post #159
adventured wrote: post #134

Earlier quoted context omitted.

Show me the countries in Europe that have substantially reduced government spending over the last six years. In fact, spending as a % of GDP has increased. http://www.cato.org/blog/where-are-european-spending-cuts There has been almost zero spending reduction in Europe. They're calling a slow-down in spending expansion, austerity, when in fact there has been no austerity.

how me the countries in Europe that have substantially reduced government spending over the last six years. In fact, spending as a % of GDP has increased.> Show me the countries in Europe that have substantially reduced government spending over the last six years. >In fact, spending as a % of GDP has increased. Because e.g. in Greece, GDP shrank over 30% in the last 5 years. Have you ever looked at the things a count…

>I wasn't able to find a single phd in economics there,

Sounds like a good thing to me.

Re: Japan Falls into Recession

#199

Post by kenshiro_o »

nichtich wrote: post #93

Before Abe, Japan is in a trap: 1. It has 200% debt-to GDP ratio 2. It has near zero interest rate and negative to zero inflation 3. It has near zero growth rate. It's important to understand how this trap works: Japan simply can't have meaningful growth. If there's real growth, that will force the interest up, otherwise there will be mass misallocation and high inflation. But given a 200% debt to GDP, the government…

I read a similar article on the BBC which stated that Abenomics rejuvenated the Japanese stock market and improved the country's exports, so the government was expecting that companies which generated additional income thanks to their import would increase their employees' salaries, which seems not to have been the case.

Is there any way the government could have predicted that the windfall from stock market rise and exports would not trickle down to the general public?

Re: Japan Falls into Recession

#200

Post by quanticle »

ekianjo wrote: post #107
quanticle wrote: post #104

Earlier quoted context omitted.

>inflation is literally destroying your economy for any foreseeable future. Is that actually true? Is inflation really worse than default? I mean, we don't have any samples from "advanced" economies, but from the what I've seen, high inflation, in the long run, doesn't seem to be that much worse for economic health than default. They're both very painful, but it's not clear to me that one is especially worse than the…

Have you heard of Argentina, or Germany in the 30s ? Both of them did not like Inflation too much.

Have you heard of Malaysia or Mexico in the '90s? They didn't like default too much either.

Germany in the '20s (not the '30s - hyperinflation was over by the '30s - just in time for Germany to be sucker-punched by the Great Depression) was a special case. They hyper-inflated in order to default. Namely, the Triple Entente had imposed massive war debts onto Germany at the end of World War 1, and Germany resorted to printing currency in order to pay off its war debts. When formal default justifies military invasion and the annexation of your territory (which was the French argument when the Weimar Republic talked about default), hyper-inflation begins to look awfully attractive.

While it's a trope to use the Weimar Republic as an cautionary tale about inflation, we can't really learn very many lessons from it, because of the relatively exceptional historical circumstances preceding the founding of the Weimar Republic.

(In the end, it was all moot, of course. Hitler unilaterally canceled Germany's debt payments, essentially calling the French on their bluff about invading the Rhineland. The French didn't invade, and Hitler was emboldened to pursue further expansionism.)

Post reply on HN