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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Frodo Baxter who wrote (871)	10/10/1998 11:01:00 AM
From: Robert Douglas	Read Replies (2) of 3536

There are still fools out there talking about Japan's need to stimulate demand, as though this fixes something. Amazon loses $4 per transaction. Would the company be financially stronger if they sold more books? This is Japan's problem. Count me among the fools. The Amazon analogy is a straw man. Many companies spend years operating at losses until they reach the necessary size. Your assumption that Amazon will forever lose $4 per transaction is specious. I know you are no fan of Japanese industry, but it would be a reach to suggest that all Japanese enterprise is non-productive. I also fail to catch your distinction between the nirvana of printing money and the fools paradise of stimulating demand. The only way this can be accomplished is by printing more money: recapitalization, seignorage, monetization, let the good times roll! Isn't the goal of "printing money" to stimulate demand after all? I believe it was the monetarists guru himself (Uncle Milton) who said the best way to increase the money supply was to drop $100 bills from a helicopter. Isn't he acknowledging by this that the ultimate goal of money creation is to stimulate demand? Creating a banking system flush with reserves does nothing to stimulate growth unless there is some reason to borrow that money. -Robert

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