It's a official now. Japan in a recession.

[mf0611]

What's odd is that Krugman was right and we followed his recommendations more closely than a lot of other countries. This made all of us better off, but it seems to enrage you. I get the feeling that you would rather him have been wrong and the U.S. worse off, which is weird.

Krugman was right because there is a homogeneous blob/glob of private sector “spending” which is affixed by nature to a “trend line”, right? If the glob/blob of private sector “spending” falls below the “trend line”, the government must engage in “spending” to fill “the gap”, right? Because “spending” is a homogeneous blob/glob, as demonstrated by science and nature.

You're joking right?

 

[Texashiker]

I am pretty sure they are using trees or some kind of cloth to print money on so no worries on that front.

The us dollar is only supported by the promise we will keep printing more of it. It is the greatest sham ever devised.

 

[ElFenix]

Printing money out of thin air is NOT good economic policy.

You're right, When you're in a liquidity trap, printing money is not good economic policy, it's great economic policy.

If the government "really" wanted to improve the economy, end free trade, tell apple, google, samsung, dell,,,, all their tech toys have to be made in the USA.

Overnight factories would start, people would be hired, and the economy would boom.

Autarky doesn't work.

 

[Texashiker]

You're right, When you're in a liquidity trap, printing money is not good economic policy, it's great economic policy.

Please, do tell. What is the us dollar backed by? The full faith of the federal reserve?

Instead of printing money the government should be focused on ending free trade and bringing our jobs back. It is either end free trade and restore our manufacturing sector, or continue to print money.

You want an instant overnight recovery, tell google, apple, dell, acer,,,, everyone who makes tech toys, if you want to sell here you have to make here.

Japans problem is they have been outsourcing just like we have.

 

[theeedude]

Looks like Japan got some bad advice from deficit hawks and decided to raise a regressive sales tax before their recovery has been established.

 

[Texashiker]

before their recovery has been established.

As long as Japan continues to offshore, there will never be a long term recovery.

 

[Bitek]

Looks like Japan got some bad advice from deficit hawks and decided to raise a regressive sales tax before their recovery has been established.

The tax plan was established before Abe, although he did not stop it. There is another planned phase and he is planning a snap election to get a referendum on its repeal.

 

[Bitek]

Please, do tell. What is the us dollar backed by? The full faith of the federal reserve?

Instead of printing money the government should be focused on ending free trade and bringing our jobs back. It is either end free trade and restore our manufacturing sector, or continue to print money.

You want an instant overnight recovery, tell google, apple, dell, acer,,,, everyone who makes tech toys, if you want to sell here you have to make here.

Japans problem is they have been outsourcing just like we have.

Why do you vote R when they are so free trade? Is like an anti abortion single issue voter voting for Democrats...

 

[Texashiker]

Why do you vote R when they are so free trade?

The democrats are free trade also.

No matter which way the people turn they are screwed.

 

[theeedude]

http://www.bloomberg.com/news/2014-...-after-tokyo-limo-ride-on-abenomics-fate.html

Abe Listening to Krugman After Tokyo Limo Ride on Abenomics Fate

Days before his departure, Krugman wrote in the New York Times that “the whole business with the consumption tax drives home a point a number of people have made: the conventional view that short-term stimulus must be coupled with action to produce medium-term fiscal stability sounds prudent, but has proved disastrous in practice.”

“He said we should be cautious this time in raising the sales tax and if we weren’t it would break the back of the economy,” Abe said. “He said if that happened, we wouldn’t escape deflation, it would be uncertain whether we could revive the economy and repair the nation’s finances. I think that’s the case.”

As for the current plan to boost the sales tax in 2017, Krugman says: “I understand that at some point they are going to need more revenue. I would prefer a conditional delay -- ’we will raise it after inflation is at 2 percent or something.’ I understand that’s not likely.”

Looks like they are listening to correct advice now, unlike our GOP.

 

[fskimospy]

Krugman was right because there is a homogeneous blob/glob of private sector “spending” which is affixed by nature to a “trend line”, right? If the glob/blob of private sector “spending” falls below the “trend line”, the government must engage in “spending” to fill “the gap”, right? Because “spending” is a homogeneous blob/glob, as demonstrated by science and nature.

You're joking right?

No, none of this.

This is another /facepalm worthy post. Just stop while you're less far behind.

 

[bryanl]

Bush came into office during the largest stock market crash in US history. The NASDAQ dropped by 70%.

The NASDAQ is not the entire US stock market bus is worth only half as much as the S&P 500, and the stock market lost 90% in the 1929-31 crash.

What's ironic is that the Keynesians are the direct cause of future deflation.

The vast majority of critics of Keynesian economics have and do blame it for inflation.

 

[Bitek]

Krugman was right because there is a homogeneous blob/glob of private sector “spending” which is affixed by nature to a “trend line”, right? If the glob/blob of private sector “spending” falls below the “trend line”, the government must engage in “spending” to fill “the gap”, right? Because “spending” is a homogeneous blob/glob, as demonstrated by science and nature.

You're joking right?

No, none of this.

This is another /facepalm worthy post. Just stop while you're less far behind.

What?! Where did MF get all this?

Can't anybody put anything into context? Actions are situational, so much herpa derp.

Krugman can say tax increases sometimes, other times airs of irresponsibility are needed (as with Japan currently.)

You can encourage investment in housing without advocating or endorsing for destroying the whole regulatory apparatus and creating a shadow banking system.

You have to understand the problem you need to solve, as well as what actions the levers you pull will do.

This has been the whole fight between Keynesian economics and the austarian Austrians. Growth vs debt.

Focusing on debt at the expense of growth has repeatedly shown to be the wrong answer. Stop making decisions based on fear and use your mind.

 

[inachu]

I guess that Japan keep their inflation high on purpose yes?

Otherwise when an economy collapse happens then other nations monetary systems get strong against it but it seems they fight the drop of the power of the yen by raising prices which I think is really stupid.

 

[Texashiker]

Can't anybody put anything into context? Actions are situational, so much herpa derp.

Is this simple enough for you - with no jobs to support the middle class, governments are resorting to currency and interest manipulation.

Governments would have us believe debt is good. In all honesty, debt is the only way to keep the economy afloat.

 

[fskimospy]

I guess that Japan keep their inflation high on purpose yes?

Otherwise when an economy collapse happens then other nations monetary systems get strong against it but it seems they fight the drop of the power of the yen by raising prices which I think is really stupid.

Japan has had a long period of no inflation or even deflation. That's the whole problem. Deflation is absolutely catastrophic for economic growth.

 

[Texashiker]

Deflation is absolutely catastrophic for economic growth.

Bull crap.

As prices go down people have more expendable income.

 

[fskimospy]

Bull crap.

As prices go down people have more expendable income.

Dude, this is basic economics. Why do you so stubbornly refuse to learn?

Deflation is catastrophic because it incentivizes not engaging in commerce. If I can buy ten widgets today for $10 and buy 12 widgets for $10 in a little while, it makes sense to wait. The thing is that it then starts making sense for everyone to wait before engaging in commerce. Since your spending is my income and vice versa, now we're both going broke because nobody is buying anything... so we cut prices further, causing even more deflation.

If you believe deflation is a good thing please provide some evidence to support this from an authoritative source.

 

[Texashiker]

Dude, this is basic economics. Why do you so stubbornly refuse to learn?

You would be right if and only if wages kept up with inflation.

Wages have been stagnate since at least the 1970s. Families in the 1950s had more expendable income than we have today.

Inflation = families struggle to make ends meet.

Deflation = families have expendable income, which equates to buying more stuff.

What is it with you that you do not understand?

Inflation = higher prices, people have less money to spend, economy tanks because of no expendable income.

 

[fskimospy]

You would be right if and only if wages kept up with inflation.

Wages have been stagnate since at least the 1970s. Families in the 1950s had more expendable income than we have today.

Inflation = families struggle to make ends meet.

Deflation = families have expendable income, which equates to buying more stuff.

What is it with you that you do not understand?

Inflation = higher prices, people have less money to spend, economy tanks because of no expendable income.

All I can say is /facepalm.

If all the prices are falling then whatever business you work for doesn't bring in as much money as they did before, so they can't afford to pay you as much as they did before. You lose your job, or you get a pay cut, etc, etc. It's not like everyone suddenly just gets wealthier because of deflation.

Seriously, use your brain for once. Also, still waiting on that source.

 

[mf0611]

Dude, this is basic economics. Why do you so stubbornly refuse to learn?

Deflation is catastrophic because it incentivizes not engaging in commerce. If I can buy ten widgets today for $10 and buy 12 widgets for $10 in a little while, it makes sense to wait. The thing is that it then starts making sense for everyone to wait before engaging in commerce. Since your spending is my income and vice versa, now we're both going broke because nobody is buying anything... so we cut prices further, causing even more deflation.

If you believe deflation is a good thing please provide some evidence to support this from an authoritative source.

By the same logic, I can claim that inflation, and the anticipation of more inflation in the future, is catastrophic because it incentivizes over-consumption and drives up the cost of goods in the present. If I can buy twelve widgets now for $10, but only ten in a little while, I’m more likely to buy more. In the aggregate, the demand for widgets increases, as people increase their present consumption. The price of widgets climbs, giving the impression of ever higher inflation. We have shortages and chaos.
Doesn’t sound right, does it?

Back in reality, we realize that people’s time preference limits how far out they will plan for the future, and that neither inflation nor deflation is necessarily bad. What is bad is when the inflation or deflation is very large, or when it is not driven by market forces, but by government intervention.

 

[fskimospy]

By the same logic, I can claim that inflation, and the anticipation of more inflation in the future, is catastrophic because it incentivizes over-consumption and drives up the cost of goods in the present. If I can buy twelve widgets now for $10, but only ten in a little while, I’m more likely to buy more. In the aggregate, the demand for widgets increases, as people increase their present consumption. The price of widgets climbs, giving the impression of ever higher inflation. We have shortages and chaos.
Doesn’t sound right, does it?

Back in reality, we realize that people’s time preference limits how far out they will plan for the future, and that neither inflation nor deflation is necessarily bad. What is bad is when the inflation or deflation is very large, or when it is not driven by market forces, but by government intervention.

I would strongly suggest you read the academic literature on the difference between modest, sustained inflation and modest, sustained deflation. They are not remotely similar.

And no, it's pretty much universally agreed that deflation is bad. The only people who even try to dispute that are Austrian economics, but that's not a school of economics that's taken seriously. (it being scared of math and all) Additionally, whether a period of inflation or deflation is good or bad is not dependent on whether or not it is market driven. What matters is its effects on the economy. ie: it's the outcome that matters, not the source.

 

[mf0611]

It isn't this bizarre question as to whether we want more consumption or more production, as either one alone is pointless. It is a question of what drives our economy to grow. Apparently you think that when people produce more everyone suddenly decides they want whatever was produced, Steve Jobs style. I would say that most often there is a demand for a product and therefore someone invests in a factory or whatever to make it, but regardless it is the interplay of the two that matters.

Currently, as shown by inflation statistics, we have too little aggregate demand.

People have wants and needs that are unmet. If you are lying in bed, eventually you are going to get thirsty. If you don’t act on that need, you will soon begin to feel discomfort, and that discomfort will motivate you into action.Once your basic needs are met, you will move on to satisfying less immediate needs, like paying your mortgage and saving for your kid’s college fund.

These needs and wants should not be mistaken for demand, as it exists in economics. How you choose to satisfy your needs determines what your demand is. If you are thirsty, you might just get a glass of water, or you might head down to a pub for a beer. If you are lonely, you might see someone in person, or you might go on Facebook. Walking out to visit a friend doesn’t show up in aggregate demand statistics, even if that perfectly satisfies your need for companionship. If, on the other hand, you browse Facebook and play a few games, ad revenue is being generated, and this economists can measure.

It’s silly to think that, before MySpace and Facebook appeared, there existed a consumer demand for websites that let people post pictures of their pets and describe what they are doing at that moment. It’s just that the founders of Facebook found some human wants to satisfy, and came up with a way to monetize on their ideas. Orkut, Google’s social network that appeared in the same year as Facebook, did not thrive, and eventually shut down. Presumably, this service might have satisfied consumer wants, but Facebook offered a superior service, or marketed itself better, or both.

 

[fskimospy]

People have wants and needs that are unmet. If you are lying in bed, eventually you are going to get thirsty. If you don’t act on that need, you will soon begin to feel discomfort, and that discomfort will motivate you into action.Once your basic needs are met, you will move on to satisfying less immediate needs, like paying your mortgage and saving for your kid’s college fund.

These needs and wants should not be mistaken for demand, as it exists in economics. How you choose to satisfy your needs determines what your demand is. If you are thirsty, you might just get a glass of water, or you might head down to a pub for a beer. If you are lonely, you might see someone in person, or you might go on Facebook. Walking out to visit a friend doesn’t show up in aggregate demand statistics, even if that perfectly satisfies your need for companionship. If, on the other hand, you browse Facebook and play a few games, ad revenue is being generated, and this economists can measure.

It’s silly to think that, before MySpace and Facebook appeared, there existed a consumer demand for websites that let people post pictures of their pets and describe what they are doing at that moment. It’s just that the founders of Facebook found some human wants to satisfy, and came up with a way to monetize on their ideas. Orkut, Google’s social network that appeared in the same year as Facebook, did not thrive, and eventually shut down. Presumably, this service might have satisfied consumer wants, but Facebook offered a superior service, or marketed itself better, or both.

This is all nearly totally irrelevant to the discussion. You claimed consumption was a negative thing and that if people consumed too much the economy would shrink. That is insane and has literally zero basis in any economic theory I'm aware of, much less any application to reality.

This is only one of a number of deeply wrong, fundamental misconceptions you've shown about economics. As I asked before, where did you get these from?

 

[mf0611]

I would strongly suggest you read the academic literature on the difference between modest, sustained inflation and modest, sustained deflation. They are not remotely similar.

And no, it's pretty much universally agreed that deflation is bad. The only people who even try to dispute that are Austrian economics, but that's not a school of economics that's taken seriously. (it being scared of math and all) Additionally, whether a period of inflation or deflation is good or bad is not dependent on whether or not it is market driven. What matters is its effects on the economy. ie: it's the outcome that matters, not the source.

I would strongly suggest that you familiarize yourself with basic concepts such as economic calculation and miscalculation, “the pricing process”, prices as essential information, heterogeneous capital (and goods and services), voluntary exchange, violent intervention and the Great Depression as the result of a hangover from central bank shenanigans in WWI.

Your main points have been eviscerated so many times by people who understand basic economics.