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Strategies & Market Trends : John Pitera's Market Laboratory
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To: macavity who wrote (5529)2/8/2002 8:22:23 AM
From: Hawkmoon  Read Replies (1) of 33421
 
Look at Japan - the way to end the misery is to raise rates not lower them.

I believe that's about the only way they can go. But if their economy is slumping under 0% interest rates, it's pretty obvious they will cause a depression if they raise them to compete with the US.

The last thing they need to do is encourage savings by depositors through providing them some return. The Japanese people need to be induced to spend their $12 Trillion in savings, and that really will only happen by inducing inflation in the economy.

However, Japan will face the same problem the US faced when we devalued the USD during the depression. People ran to gold, prompting the government to confiscate it. The Japanese will run to metals and the USD as well, and the BOJ has to be very careful not to induce a financial panic that accelerates the devaluation (inflation) beyond their targets.

Hawk
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