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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Gottfried who wrote (1918)	3/19/2001 12:35:18 PM
From: kodiak_bull	Read Replies (1) \| Respond to of 23153

Gottfried, "The Bank of Japan unveiled a radically new monetary policy that will focus on increasing the money supply instead of reducing interest rates. The policy is aimed at ending two years of falling prices and boosting the weak economy." I'm a little puzzled here. I thought one increased money supply by lowering interest rates, encouraging businesses and people to borrow and spend. Since the Japanese have little room to go in lowering interest rates, is this new monetary policy simply the starting of the government printing presses and an attempt to drive down the value of the Yen? If you drive down the Yen you theoretically make Japanese products less expensive to export (theoretically because if the world is in a slump there may not be a whole lot of increased demand for marginally cheaper Made In Japan goods) but you also raise prices for imported goods which will dampen consumer demand (and spending) while giving rise to inflation. Inflation will further reduce the Japanese sense of wealth and cause them to further hunker down in the bunker for the inevitable (!!!) recovery, now 10 years + in the waiting. Maybe someone can straighten me out on how we manage monetary policy (money supply) versus fiscal policy (interest rates). TIA. Kb