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.

Politics : View from the Center and Left -- Ignore unavailable to you. Want to Upgrade?

To: JohnM who wrote (255127)	7/7/2014 4:54:00 PM
From: Steve Lokness	Respond to of 542229

<<<< I have little doubt the answer would be that there are multiple variables that account for the Japanese level of indebtedness and it's rather hard to separate the effects of any given one.>>>>> BINGO! But when the government spends more than they take in - whatever the cause - that is keynesian economics. .......I understand Krugmans thinking where he is worried about liquidity trap. But shouldn't the question he - and one others should be asking - is what caused the liquidity trap? What is the definition of a liquidity trap (see blow)? Clearly, despite that the Japanese government has faced this problem for decades now, something beyond just a lack of stimulus is at play here. Especially since the Japanese HAVE tried to stimulate. Japan is not dumb John as they have tried one approach after another. So what might keep the Japanese people from spending money and hoarding money instead? What has every investment adviser told old people to do? Be conservative with your money! What happened to Japan started decades ago - when their population growth slowed down and their life span went up and when their baby bubble started to enter retirement. Do NOT take my word for it - but instead look up the trends in graphs. If I post the charts, the claim is always that I'm quoting from some invalid source. Japan has lesson for America! If we do not look at the information honestly though, we will not learn. As we enter our own demographics problem, if we blame everything on the simplicity of not stimulating enough - we will follow Japan. A situation in which prevailing interest rates are low and savings rates are high, making monetary policy ineffective. In a liquidity trap, consumers choose to avoid bonds and keep their funds in savings because of the prevailing belief that interest rates will soon rise. Because bonds have an inverse relationship to interest rates, many consumers do not want to hold an asset with a price that is expected to decline.