Yes more free money for Japan... Trillions of yen for everyone

[Maverick1]

The comments from der_kommissar and Maverick1 are the intellectual equivalent of a plumber pontificating on bridge building and what idiots those mechanical engineers in their ivory towers are with their equations and maths and all that. What I love about the anti-intellectual arguments from those who know next to nothing about what topic at hand is that they start with "You ivory tower types with your statistics, have you even been there/done that" comments. Then, when it turns out you have been there/done that (and often they haven't, actually), they turn to quoting a bunch of economics statistics!

Sig,

Where's your answer to my question?

Your argument above is a straw man. I'm not an anti-intellectual and not anti statistics, if that were so I wouldn't see great value in the Austrian school of economics and would not be citing statistics.

The problem with academia today is that it is characterized mostly by group think, with entire departments favoring political left appointees who keep regurgitating the same wrong ideas. Look, great econometric modeling and all the statistical testing power in the world is worth jack when you are barking up the wrong tree. You have to start with sound thinking and common sense.

And Japan's problems can be fixed without a single econometric paper, because the solution lies in common sense reform and a repudiation of unsound ideas chief of which is the notion that the govt or quasi govt (BoJ/Fed) knows the optimal rate of interest and should set it. Flowing from this religious idea is the idea that 2% inflation per year is "price stability" and absolutely required or else the sky is falling on us and let's print money like there's no tomorrow. Utter nonsense.

You guys are just on the wrong side of history. Looking back some 20 years from now, we'll be saying my goodness how could such poverty of thought by policy makers endure for so long.

 

[Maverick1]

Since you refuse to answer the question I'll be happy to. When Japan's GDP per capita falls below the rest of the first world countries I'll be the first to say I'm wrong, or more importantly learn from the information in front of me and change my hypothesis to reflect what I know. Much like if I predicted in 1990 that Japan's economic failure was imminent, and again in 2000, and again in 2010... I would have long ago incorporated that evidence into what I know about economics and stopped insisting that the end is near. Scientific method and all that.
By the way, I don't think that word "nuance" means what you think it does. I think the word you're looking for may be something like eugenics?

Again, your relative argument doesn't fly. The fact that it might take a while for boneheaded policy to bear its fruit unto death does not invalidate the reality that said policy is wrong and dangerous. Japan's national output is down 30% in the last 5 years and is at risk of collapse under the current regime due to the risk of a collapse in confidence in the yen.

Let's separate out two things: the trading aspect of a view on Japan's policy and the actual reality on the ground. On the trading side, one can profit enormously from riding a false narrative, as the palindrome has said. But when the market has a collective aha moment and realizes what's truly been happening all along, you get a reversal and prices adjust to reality in a very painful manner. And all the mainstream economists get on TV, press their lips together and say we didn't see this coming, this is a 10 sigma event or whatever nonsense.

So much for the scientific method...

 

[m22au]

I'll repeat what I posted in a different Japan-related thread:

"If there are no negative consequences [to loose monetary and fiscal policy], then it would follow that there is no need for governments to ever collect any taxation revenue. They could just finance 100% of government expenditure with central bank bond purchases. Obviously such a proposition is silly.

"Japan is just slightly better than 'silly' because government expenditure is partially funded by tax revenue.

"But I find it hard to believe that there will be no negative consequences to the current economic situation in Japan."

.

 

[Maverick1]

This is emotional talk and, as such, it's just patently untrue... Whatever drawbacks mainstream economic thought has (and it has many), one thing you cannot possibly claim is that there has been no progress over the years. Here is something for your reference:
http://web.stanford.edu/~chadj/facts.pdf

As to your reference to "persistent booms and busts", there is ample evidence to suggest that these were not less and often a lot more violent in the past than they have been recently.

Obviously, nobody knows what the future holds and there could be a sh1tstorm right around the corner. However, as Sig says, at which point do you give up on these dire predictions?

First you can't eat GDP for breakfast. Second much of that GDP growth is unsustainable because it was caused by and continues to be driven by credit/debt growth. See the recent US second quarter GDP number for example. Third, why not comment on the statistics I mentioned earlier?

Not only is the mother of all sh1tstorms around the corner when the financial system seizes up from bond losses when yields back up, but there have been too many already in the last 30 years, with the cumulative impact of the latter having a direct effect upon current conditions for the average American/Japanese, especially in regards to purchasing power, income levels and saving. To refresh your memory, Bernanke was on TV denying that there was a housing bubble in 2005/2006, refusing to acknowledge the possibility that he might be mistaken. Why was he so adamant? Because his religion blinds him from seeing the truth, that artificially depressing rates under the guise of knowing where they should be at ultimately leads to asset bubbles which no one can stop. Look at what his "expertise" and that of Greenspan before him has go us into. Can you be honest about that?

 

[Sig]

First you can't eat GDP for breakfast. Second much of that GDP growth is unsustainable because it was caused by and continues to be driven by credit/debt growth. See the recent US second quarter GDP number for example. Third, why not comment on the statistics I mentioned earlier?

Not only is the mother of all sh1tstorms around the corner when the financial system seizes up from bond losses when yields back up, but there have been too many already in the last 30 years, with the cumulative impact of the latter having a direct effect upon current conditions for the average American/Japanese, especially in regards to purchasing power, income levels and saving. To refresh your memory, Bernanke was on TV denying that there was a housing bubble in 2005/2006, refusing to acknowledge the possibility that he might be mistaken. Why was he so adamant? Because his religion blinds him from seeing the truth, that artificially depressing rates under the guise of knowing where they should be at ultimately leads to asset bubbles which no one can stop. Look at what his "expertise" and that of Greenspan before him has go us into. Can you be honest about that?

You may want to go back to what GDP per capita and PPP adjusted GDP are. Or you could just look at the current GDP Per Capita, PPP numbers for every country in the world at http://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD You'll find that there's a rather direct correlation between the PPP adjusted GDP per capita and how well the citizens of the country eat for breakfast. Correlation isn't always causation, but if you study what those numbers actually are you'll see that in this case it is. We did comment on your numbers, by the way, specifically why you first claimed economists are all "ivory tower", asking "have you even been on the ground" then switching to using economist talk and statistics. Your statistics point to a suboptimal Japanese economy, not an implosion/poopstorm. And still waiting for a timeline on when this implosion is either going to happen or else you'll take it as evidence that it's not going to happen.
Japan's economic policy is suboptimal and in many ways stupid. Japan has bumbled along for 25 years with this suboptimal policy and probably lost out on a lot of potential growth because of it. Japan has a lot of other issues, like an aging population, that aren't helping it out. None of that equates to an end of the world implosion for Japan, nor does it point to the wisdom of immediately ending all government control of the economy/interest rates. While that's something different, you haven't show that it would be better. They're going to bumble along for the foreseeable future, remaining a first world country that is a far more pleasant place to live for it's residents than almost anywhere else in the world. As will the U.S. and most of Europe. That's a nuanced view of economics, by the way der Kommissar.

 

[Maverick1]

I gave you the timeline a few posts back along with some of the reasons why I expect it. Are you even reading this thread or are you just posting because your feelings got hurt? Talk about emotional...

Again, your relative argument doesn't fly. The fact that it might take a while for boneheaded policy to bear its fruit unto death does not invalidate the reality that said policy is wrong and dangerous. Japan's national output is down 30% in the last 5 years and is at risk of collapse under the current regime due to the risk of a collapse in confidence in the yen.

To focus on GDP alone is myopic. Nobody cares what GDP per capita is when money printing has debased the value of the dollar in real terms. This kind of thinking is so poor! You have to look at purchasing power, the distribution of income, the level of savings, productivity. Put the GDP in that context and you will see it doesn't amount to very much. If anything it is a testament to the entrepreneurial genius of US businessmen that they've been able to keep going and produce any growth at all in the face of reckless and misguided economic policies. Take away the impediments and add some common sense regulations as opposed to regulations that strangle the stuffing out of them and you would have a much better picture overall. But won't happen as long as you have the Krugman followers and Yellens of the world in charge.

Glad to see you recognize that Japan's policy is in fact, stupid. Unfettered monetarism combined with a kamikaze mentality by policy makers will be their downfall. But as someone said, the markets aren't a one way street, they have observing participants who can learn from their mistakes and correct course. That's why it's alchemy and not science.

 

[Sig]

I gave you the timeline a few posts back along with some of the reasons why I expect it. Are you even reading this thread or are you just posting because your feelings got hurt? Talk about emotional...

Again, your relative argument doesn't fly. The fact that it might take a while for boneheaded policy to bear its fruit unto death does not invalidate the reality that said policy is wrong and dangerous. Japan's national output is down 30% in the last 5 years and is at risk of collapse under the current regime due to the risk of a collapse in confidence in the yen.

To focus on GDP alone is myopic. Nobody cares what GDP per capita is when money printing has debased the value of the dollar in real terms. This kind of thinking is so poor! You have to look at purchasing power, the distribution of income, the level of savings, productivity. Put the GDP in that context and you will see it doesn't amount to very much. If anything it is a testament to the entrepreneurial genius of US businessmen that they've been able to keep going and produce any growth at all in the face of reckless and misguided economic policies. Take away the impediments and add some common sense regulations as opposed to regulations that strangle the stuffing out of them and you would have a much better picture overall. But won't happen as long as you have the Krugman followers and Yellens of the world in charge.

Glad to see you recognize that Japan's policy is in fact, stupid. Unfettered monetarism combined with a kamikaze mentality by policy makers will be their downfall. But as someone said, the markets aren't a one way street, they have observing participants who can learn from their mistakes and correct course. That's why it's alchemy and not science.

From your response I gather you're not aware of what the PPP in PPP adjusted GDP means? And just to be clear, your timeline is "looking back 20 years from now", so that would be 45 years from the 1990's when Japan was first supposed to implode. Come on now, you're saying you need 45 years of predicting an implosion will happen without it happening to re-examine your underlying premise? If you find anything about my posts "emotional" then that word probably doesn't mean what you think it means either. That or you're just devolving to a bizarre ad hominem personal attack, which is usually a pretty good indicator of someone out of ideas.

 

[Maverick1]

From your response I gather that you don't know the difference between purchasing power parity and purchasing power...

http://www.businessinsider.com/gdp-adjusted-for-inflation-2011-5

http://www.advisorperspectives.com/dshort/updates/GDP-Deflators.php

And what part of the following do you not understand?

"Re the timeline: my view is that Japan is on the road to collapse within the next 5-10 years if it does not correct course. There was no reason to expect a collapse even in the last 10 years, because the end game had not been reached. Now that the BOJ owns 40% of JGBs and people are talking about perpetual zero coupon bonds we know that debt monetization is next, which means an eventual complete loss of confidence in the yen"

These people are crazy enough to follow Bernanke off a cliff and try helicopter money, despite Kuroda's apparent denial of it. Just watch.

Re the use of emotional, that was your buddy Martin's original idea, I was just passing it along.

 

[Martinghoul]

Oh, good lord, ShadowStats...

I think this is my cue. I have written about this subject here a number of times, so I am not inclined to do it again. If ShadowStats "real GDP" is your "evidence" of how bad things are, this discussion is not for me. Best of luck!

 

[Sig]

From your response I gather that you don't know the difference between purchasing power parity and purchasing power...

http://www.businessinsider.com/gdp-adjusted-for-inflation-2011-5

http://www.advisorperspectives.com/dshort/updates/GDP-Deflators.php

View attachment 165837

And what part of the following do you not understand?

"Re the timeline: my view is that Japan is on the road to collapse within the next 5-10 years if it does not correct course. There was no reason to expect a collapse even in the last 10 years, because the end game had not been reached. Now that the BOJ owns 40% of JGBs and people are talking about perpetual zero coupon bonds we know that debt monetization is next, which means an eventual complete loss of confidence in the yen"

These people are crazy enough to follow Bernanke off a cliff and try helicopter money, despite Kuroda's apparent denial of it. Just watch.

Re the use of emotional, that was your buddy Martin's original idea, I was just passing it along.

I get off the bus once we start with the conspiracy theory "statistics".