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QCOM 156.34+1.4%3:59 PM EST
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To: dougjn who wrote (15925)10/2/1998 3:56:00 PM
From: Clarksterh  Read Replies (2) of 152472
 
Doug - **OT** - Re: Japanese inflating themselves out of their mess.

In order to inflate themselves out of it, they need some way to make their yen get put into circulation. I can see only two ways of doing that, and neither looks very workable:

1) Lower their interest rates enough to encourage people to borrow. The problem is that everyone is worried about the economy and doesn't want to be saddled with any more debt (nor do the banks want to lend, for the same reason). Undoubtedly there is a rate at which they could get people to take their money, but it looks like it would involve negative rates.

2) Massive government spending. The problem with this is that governments are so bad at spending money efficiently. This would probably just exacerbate future problems.

The solution, IMVHO, is to restore confidence by cleaning up the worst banks (the worst 10%?) and rescuing all the others. How do you think the government could actually get more yen into circulation?

Clark
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