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To: austrieconomist who wrote (14825)	7/26/2003 10:08:56 AM
From: jrhana	Read Replies (1) \| Respond to of 39344

I think the major difference between the two cases is the ferocious ability of the US consumer to spend Lend them money and the ladies will be in the shoe store.

To: austrieconomist who wrote (14825)	7/26/2003 11:03:01 AM
From: russwinter	Respond to of 39344

<Japan has done all the things that Greenspan and Company have done the past 14 years and prices are still declining there.> Once again read Duncan's book for much of the answer. The US exports back a lot of deflation to Japan. Primarily they just have an undervalued currency, and we have an overvalued one, and that creates huge problems for them (and us). The Asians need to develop domestic demand and get off the exporting for inflated paper money fix to the US. The Japanese people (their govt and banking system is bust) are relative wealthy, and the Chinese have the potential to get that way. Their prospects going forward are far superior to the US. On your point about Greenspan policy, my views on him have been stated on these threads ad nauseam: but the simple version is, he's a fool. Printing money doesn't cure asset deflation.

To: austrieconomist who wrote (14825)	7/26/2003 1:33:00 PM
From: nspolar	Respond to of 39344

Go read Roach. Some very nice comments from an intelligent man on this subject. The longwave is a longwave and is a long way from being over. Personally I doubt we have hit bottom yet and yes I'm referring to LT rates.

To: austrieconomist who wrote (14825)	7/26/2003 11:57:05 PM
From: LLCF	Respond to of 39344

My two cents on deflation/inflation. The fed has said many times it not only will not stand for a FALL in consumer prices, but that it thinks any further decrease in the increase in prices is not acceptable. Now, against the backdrop that Japan has seen LOWER consumer prices for YEARS in a row, let along a quarter we have a fed watching monthly like a hawk: IMO that is the ONLY reason they have not monitized more assets, or lent against those assets... AND the only reason they haven't gone to the administration and congress to widen what they can monitize is that so far inflation hasn't continued lower. When it does [or simply higher unemployment... in which case it won't matter WHAT inflation is doing], it is clear to me that no branch of government or the society as a whole is going to stand in the way of outright printing dollars for assets... and now the fed is willing to lead the charge? Lastly, we've not even spoken of one of the potentially massive inflationary possiblilities, and IMO an inevitability to be an important contributor; dollar selling. From the second paragraph here: Message 19149563 Although it doesn't mean their can't be a deflationary scare near term.. IMO gold remains the great "No brainer". DAK

To: austrieconomist who wrote (14825)	7/27/2003 3:19:32 PM
From: Wyätt Gwyön	Respond to of 39344

Why so cocksure about the conclusion of the inflation/deflation argument i don't think one can be cocksure about this--what's going on has no precedent in many respects, so one is reduced to speculation on the ultimate outcome. having said that, there are many differences between Japan and the US which suggest the outcomes will not be the same for the two countries. Japan has the world's largest cumulative current account surplus and largest positive net international investment position. the US has the world's largest net cumulative current account deficit and largest negative net international investment position. the situations are very different. the above is just the tip of the iceberg. Japan's number one policy goal over the past decade has been to contain the value of the yen versus the dollar. they really have no choice since their industrial capacity so outweighs domestic demand and is predicated on a structural C/A surplus. maintaining the low value of the yen matters to them more than deflation and zombie companies, because if the yen were allowed to trade to a point where the C/A surplus disappeared and they repatriated their trillions of overseas holdings, their goods would be priced out of the market. during the "lost decade" of "crippling" deflation, Japan has increased its net international investment position more than any country in the world and maintained one of the highest standards of living. not exactly a mirror image of the 1930s Great Depression in the US. their central bank has been far more active in the logical intervention scale than the Fed -- monetizing bonds at the long end and even monetizing stocks i believe the vast majority of their operations have been confined to JGBs. didn't the stock purchasing begin just a few months ago and wasn't it tied more to maintaining bank capital ratios than supporting the overall market?