Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chispas who wrote (72654)	12/22/2007 8:07:58 PM
From: Mike Johnston	Read Replies (1) \| Respond to of 116555

"Why didn't your theory work for Japan in 1990 " I think the answer to your question is simple. But first, let me point out that there is a problem with your question. The way you asked it, implies that somehow this theory as you call it or "outcome" is desirable. Nothing can be further from the truth. Hyperinflation would be a devastating outcome, much worse than a deflationary depression and a depression would follow it anyway. IMO there is nothing wrong with a little bit of deflation. I think Japanese citizens were lucky or more likely their government realized what terrible consequences would be suffered if they were to destroy the yen ( although i must mention that this is no longer true, there is inflation in Japan, statistics are manipulated just like here and they are engaging in controlled destruction of the yen along with the US dollar ). They survived the "crisis" with their savings intact, imagine to endure your savings being wiped out in hyperinflation at first and then being forced to endure a terrible depression in the aftermath. Now to answer your question. Japanese have lowered rates to 0, instituted massive public works projects, engaged in end of tax year support of Nikkei and provided credit to insolvent banks and companies to keep them alive. However as far as i know, they have not engaged in unconventional measures of increasing the money supply, for example monetization of assets and of government debt, at least not until 2002 when they conducted a massive intervention in the currency markets by printing 30 trillion yen ( the biggest intervention in history ) and later instituted some new policies like quantitative easing, which ended the deflation.