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Author Topic: Did Krugman just admit that deflation has been good for Japan?  (Read 1650 times)
benjamindees
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February 08, 2013, 03:13:19 AM
 #1

Then why not the US?

http://www.forbes.com/sites/eamonnfingleton/2013/02/06/paul-krugman-says-it-again-japans-stagnation-is-a-myth/

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during the decades of Japan’s alleged stagnation, living standards have actually improved faster in Japan than they have in the United States.

And why is this?  What does Japan have that the US (no longer) has?  A closed system.  Strict immigration controls.  Trade protectionism.

It turns out that responsible monetary policy actually leads to economic improvement under those conditions.  Who knew.

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Just look at Japanese corporations. Virtually without exception they have continued to boost their revenues — and maintained their employment levels — in the face of a constantly rising yen.

Yet more empirical evidence that Keynesianism only makes sense under the un-physical fantasy-land assumption of infinite growth.

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stochastic
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February 08, 2013, 03:26:13 AM
 #2

Then why not the US?

http://www.forbes.com/sites/eamonnfingleton/2013/02/06/paul-krugman-says-it-again-japans-stagnation-is-a-myth/

Quote
during the decades of Japan’s alleged stagnation, living standards have actually improved faster in Japan than they have in the United States.

And why is this?  What does Japan have that the US (no longer) has?  A closed system.  Strict immigration controls.  Trade protectionism.

It turns out that responsible monetary policy actually leads to economic improvement under those conditions.  Who knew.

Quote
Just look at Japanese corporations. Virtually without exception they have continued to boost their revenues — and maintained their employment levels — in the face of a constantly rising yen.

Yet more empirical evidence that Keynesianism only makes sense under the un-physical fantasy-land assumption of infinite growth.

Loyalty is a very valuable thing and a nation that is not loyal to its own citizens deserves neither respect or loyalty.

Introducing constraints to the economy only serves to limit what can be economical.
Lethn
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February 08, 2013, 09:27:44 AM
 #3

Anyone who ignores basic mathematics like Paul Krugman and his friends do shouldn't be allowed to make economic decisions beyond what type of milk and bread he wants to buy for the week, I don't think that was an admission but it was close lol Tongue
Rassah
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February 09, 2013, 04:12:07 AM
 #4

Strict immigration controls and trade protectionism are never a good thing, regardless of whether in a deflationary or inflationary system. The rest, sure.

Killdozer
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February 09, 2013, 08:42:44 PM
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The article doesn't actually say that the effects were due to deflation, I don't think. At most, that Japan isn't going that bad, despite deflation.

WiW
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February 09, 2013, 11:14:01 PM
 #6

Excuse my crude oafness, but why should deflation/inflation have any effect on the economy?
herzmeister
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February 10, 2013, 10:32:58 PM
 #7

Excuse my crude oafness, but why should deflation/inflation have any effect on the economy?

because corporations, large land owners, banks and insurances rather get bailed out before they'd even think of lowering nominal wages, rents, interest rates and fees.

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WiW
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February 11, 2013, 05:43:50 PM
 #8

because corporations, large land owners, banks and insurances rather get bailed out before they'd even think of lowering nominal wages, rents, interest rates and fees.

You're being cynical and sarcastic, right?
twolifeinexile
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February 13, 2013, 05:55:13 AM
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I would say only Japanese people themselves could judge if the two "lost decades" are good not not.
hashman
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February 13, 2013, 05:08:42 PM
 #10

Strict immigration controls and trade protectionism are never a good thing, regardless of whether in a deflationary or inflationary system. The rest, sure.

+1
johnyj
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February 14, 2013, 02:13:56 AM
 #11

Their export is very strong, when import/export involved, it is difficult to judge the net effect of national economy, they could always transfer some problem to the world outside

In a debt driven economy, one man's earning is another one's debt, so if Japan and China is earning a lot, it means US are getting more debt, it is impossible for every country in the world to have a surplus in today's financial system, at least not in dollar's form

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June 05, 2013, 04:29:52 PM
 #12

Anyone who ignores basic mathematics like Paul Krugman and his friends do shouldn't be allowed to make economic decisions beyond what type of milk and bread he wants to buy for the week, I don't think that was an admission but it was close lol Tongue

probably doesnt even know the price of milk. . .

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xxjs
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June 07, 2013, 06:28:56 PM
 #13

Here is an excellent article on deflation:

Deflation and Liberty
Jörg Guido Hülsmann December 13, 2008

http://mises.org/daily/3231
edmundedgar
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June 08, 2013, 12:07:07 AM
 #14

Then why not the US?

http://www.forbes.com/sites/eamonnfingleton/2013/02/06/paul-krugman-says-it-again-japans-stagnation-is-a-myth/

Quote
during the decades of Japan’s alleged stagnation, living standards have actually improved faster in Japan than they have in the United States.

And why is this?  What does Japan have that the US (no longer) has?  A closed system.  Strict immigration controls.  Trade protectionism.

It turns out that responsible monetary policy actually leads to economic improvement under those conditions.  Who knew.

Quote
Just look at Japanese corporations. Virtually without exception they have continued to boost their revenues — and maintained their employment levels — in the face of a constantly rising yen.

Yet more empirical evidence that Keynesianism only makes sense under the un-physical fantasy-land assumption of infinite growth.

Make sure you click through to the actual Krugman piece, rather than taking Eamonn Fingleton's word for what Krugman is saying.
http://krugman.blogs.nytimes.com/2013/02/05/the-japan-story/

Fingleton has a slightly odd take on this stuff. His big argument way back when was that Japan's economic stagnation was a cunning and devious trick to allow them to keep putting up trade barriers while the US took down theirs. This theory was quite popular in the US at the time, because it gave people a good conspiracy / external threat story to justify protectionist measures to keep out Japanese products.

He wrote this book "Blindside: Why Japan Is Still on Track to Overtake the U.S. By the Year 2000", which was based on a prediction about Japanese GDP beating US GDP.
http://www.amazon.com/Blindside-Japan-Still-Track-Overtake/dp/0395633168

This obviously failed to happen, but instead of figuring he must have gone wrong somewhere he doubled down, and started coming up with amazing theories about why Japan really was beating the US, despite all the evidence to the contrary.

What Krugman actually says about Japanese deflation is:
Quote
What is true is that there were two long periods of depressed output relative to trend, one in the mid-1990s and another, much worse, between 1997 and 2007. And one other thing: Japanese monetary policy was still up against the zero lower bound in 2007, leaving it no room to counter the Great Recession, and hence leaving Japan open to a deep slump when exports plunged.

This is what he's always saying about deflation killing growth.

jamesc760
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June 09, 2013, 01:52:11 PM
 #15

I tend to believe a certain nobel prize winning economist than the rest of the unwashed masses who post here.
herzmeister
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June 09, 2013, 02:09:17 PM
 #16

I tend to believe a certain nobel prize winning economist than the rest of the unwashed masses who post here.

1. Argument from Authority
2. Appeal to Tradition
3. There is no Nobel Prize in Economics
4. Don't bite the hand that feeds you.

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