Dear fool <vbg>,
My analogy to Amazon is more truthful than factual. Amazon loses $4
today, it is correct. About $3 goes into the fixed(?) cost of marketing. The remaining dollar is the negative cost of doing business under their current model. I'm not saying Japanese business is not productive, just that it's not profitable. In America, that's the same thing.
But my contention is that the fiat currency campaign of the G5 in 1985 screwed up all the market signals that would have fixed this. France runs a silly, semi-capitalistic enterprise that's not's entirely rational. Their currency chronically depreciates to reflect that. Japan runs a silly, semi-capitalistic enterprise that's not's entirely rational. Their currency has strengthened.
>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.
This is only true under a healthy banking system. The sudden increase in M1 eventually finds its way into the banks, where the multiplier effect allows for the M3 to increase proportionately. In Japan, if the money enters the banking system at all, it will be used to shore up their balance sheets. Are Japanese businesses unwilling to borrow money at a couple hundred basis points above JGBs, or are banks unwilling to lend it? That's the crucial distinction.
Analagous to this, during the early 90s, when Greenspan was busily lowering rates to give the banks a cool yield curve, M1 increased to a peak of 14.5% in Oct 92. Fed Funds were at 3%. M3 growth? 0.9%. Hmmm...
It's true I'm in the minority. That's why the yen is at 120 or so rather than 300+. But lest you fixate too much on the current accounts surplus as an indicator of Japanese strength, let me just remind you that the easiest way to develop that surplus is to sell below cost.
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