Japan Initiates Bold Bid to End Years of Tumbling Prices
Source: NY Times
Japan Initiates Bold Bid to End Years of Tumbling Prices
By HIROKO TABUCHI
TOKYO In its first policy steps under its new governor, Haruhiko Kuroda, the Bank of Japan announced Thursday it would seek to double the amount of money in circulation over two years, initiating a bold bid to end years of falling prices and dispelling market fears that Mr. Kuroda might fail to follow up his recent tough talk with concrete action.
The central bank said it would aggressively buy longer-term bonds and double its holdings of government bonds in two years, in effect doubling the money in circulation in the process. The bank will aim for a robust 2 percent rate of inflation at the earliest possible time, it said. This is monetary easing in an entirely new dimension, Mr. Kuroda said following the banks decision.
The dramatic turn in Japanese monetary policy could open up a new chapter in the countrys economic history, for years defined by what critics said was a halfhearted battle to end deflation the damaging fall in prices, profits and wages that has weighed on its economic growth.
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Government officials welcomed the banks decision. The bold monetary easing steps go beyond expectations, Economy Minister Akira Amari said. The Bank of Japan is finally steering Japan toward rising prices.
Read more: http://www.nytimes.com/2013/04/05/business/global/japan-initiates-a-bold-bid-to-end-years-of-falling-prices.html?pagewanted=all
Trillo
(9,154 posts)for people in the low-to-middle classes, however, retail prices generally haven't experienced vastly falling prices, except narrow sectors where "financial bubbles" have been "Pumped & Dumped".
How is Japan's "deflationary" experience different from the US's? This article doesn't explain it from the viewpoint of the average citizen, rather from the standpoint of technocrats in language of economic cryptease.
dipsydoodle
(42,239 posts)You said that has not happened in the Us : it has happened in Japan.
cstanleytech
(26,080 posts)dipsydoodle
(42,239 posts)This provides a fair explanation of its effects : http://www.economicshelp.org/blog/978/economics/definition-of-deflation/
Art_from_Ark
(27,247 posts)Last edited Fri Apr 5, 2013, 11:26 AM - Edit history (1)
the falling prices I have seen have mostly been welcome, though not everything has fallen in price.
Where prices have fallen, it has sometimes been because cheap Chinese crap has replaced better Japanese-made stuff.
Sometimes, lower prices are due to increased purchasing power of the strong yen in international markets.
Sometimes, lower prices are the result of conservation efforts to, for example, recycle plastics, rare earth metals, etc., rather than constantly buying new raw materials.
Sometimes, lower prices are the result of market saturation (How many new cars can 8 different domestic automakers and several foreign automakers sell in Japan, which already has 60 million vehicles on the road that are nearly all in great running condition?)
Just raising prices for the sake of raising prices is going to hurt a lot of people on fixed incomes, and others like me who will have no chance for getting a raise to offset rising prices.
Bonobo
(29,257 posts)But I think something had to be tried.
The cost of lunch here is the same today as it was when I first came to Japan over 25 years ago.
IMO, wages will rise as the labor force continues to shrink. We will see.
Art_from_Ark
(27,247 posts)It's quite another to dump a lot of yen in the economy just to raise prices.
I am almost certain that my income will not go up even if consumer prices rise, so it will become even harder to save anything. And higher prices might mean less work for my employer, meaning I might actually end up getting a cut in pay.
So I'm not too enthused about this proposal.
Bonobo
(29,257 posts)The 3rd arrow is thought to be some kind of massive structural reforms and there is little denying that the labor force is shrinking.
With the increased exports due to a weak yen and the reduction in the labor force, I have some hopes.
Art_from_Ark
(27,247 posts)I don't have any problem with that. It might even get some companies to reconsider outsourcing.
But I'm not so sure that there is a real labor shortage, since last year only 50% or so of college grads could find a job within a couple of months after graduating ( don't have the statistics yet for this current fiscal year), and older workers (60+) are often pushed out of the workforce to make way for younger workers. I think the labor shortage is the worst for agriculture, forestry and fishing, but there's no shortage of labor for office or retail work.
Locut0s
(6,154 posts)Are you guys Americans who moved to Japan for work? How do you find living there? How is your Japanese?
I have experience living in Asia, lived in China for several years when I was really young. And I've been to a number of other Asian countries over the years. I'm 1/2 Chinese but you wouldn't know it to look at me, I look white. I love south east Asia especially. Would love to live some place in Asia in the future if I had a good job.
Bonobo
(29,257 posts)I came here more because it was best for my family, my finances and my happiness as well as that of the rest of the family.
I also came so my 3 kids would not be toed down to America, a place I have grave doubts about.
My Japanese is very, very good.
Art_from_Ark
(27,247 posts)I moved to Japan for various reasons. At first, I was only planning to stay for a few years, but inertia, coupled with various benefits of living in Japan, has kept me here for a long time. Being able to read and understand the language has been a big plus.
Benefits (in this part of Japan, at least) would include a living wage, decent health care, pretty high level of public safety, well-developed public transportation system, decent public educational system (although an entrance exam must be passed to get into the "right" high school), general acceptance of bicycles on the road (although bicyclists for the most part seem to disregard some basic traffic rules), and, in general, a relatively relaxed atmosphere.