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To: robnhood who wrote (12946)	6/12/1998 12:45:00 AM
From: ahhaha	Respond to of 116795

Not initially, but you're quite right that if the BOJ persisted in money creation at a rate exceeding the value of their output, then the value of the money would decline. That's called inflation. You're ahead of the game. It's this potential inflation rationalization that bank authorities give which precludes them from floodgating. They think they know something by studying our venerable FED over the past 30 years and they don't want to make the same mistake. But they are ending up making the inverse mistake by supplying too little money which undervalues the quantity of output with respect to the translation price of other foreign goods makers. They eventually will recognize this mistake and then in their zeal to correct it, will overshoot and create too much money. There is this lag between the creation of money and its effect on prices, demand, output. You never know whether extra money in the hands of consumers will be indifferent to price increases. If you have lots of money in hand and then if sellers have been through a margin killing recession, you could have rapid inflation, because the consumers just indifferently swallow the price increases. So, the point you're making has to be understood in terms of time and tendency. Maybe I shouldn't use the word "floodgating" so much; I do so because that is the way of central banks in their pursuit to refute the equilibrium of the free market mechanism.