World Recession Spreads Through Asia, ECB Still Holds Rates Steady - Page 2

laurentius · July 11, 2003, 17:38

Quote:

Originally posted by Kidicious

If they didn't stockpile those reserves their currency would be much stronger, and I think deflation would be worse.

Exactly, with all that foreign currency they don't have to really do anything about their deflation for at least 5 yrs. It's just stupid, they are living in a dreamland...

Colon™ · July 11, 2003, 17:42

Quote:

Originally posted by Kidicious

What does the growth in the money supply have to do with it? The Fed is lowering interest rates when the eocnomy is weak and the ECB is not. Money supply doesn't really matter. Interest rates matter. Nobody cares about money supply when they make economic decisions.

Money supply growth is what drives economic growth and inflation you silly. Interest rates matter but corporations and govts don't borrow at a CB, that's why I mentioned govt and corporate bond rates.

Kidicious · July 11, 2003, 17:43

Quote:

Originally posted by laurentius
Exactly, with all that foreign currency they don't have to really do anything about their deflation for at least 5 yrs. It's just stupid, they are living in a dreamland...

If they reduce their reserves then it will hurt their exports. I don't think they are ready for that. Plus it might mean disaster for the dollar and the world economy.

Colon™ · July 11, 2003, 17:44

Quote:

Originally posted by Kidicious

Mainstream opinion

Mainstream opinion told me to purchase Enron shares.

Quote:

I don't believe that. You really get drag when you are tight with the money supply during times of contraction.

Rephrase please.

Kidicious · July 11, 2003, 17:47

Quote:

Originally posted by Colon
Money supply growth is what drives economic growth and inflation you silly.

Only lower interest rates can drive growth or slow it down. Increased money supply can cause inflation eventually if the economy doesn't pick up, but why are you worried about inflation?

Quote:

Originally posted by Colon
Interest rates matter but corporations and govts don't borrow at a CB, that's why I mentioned govt and corporate bond rates.

That's what I'm talking about. The're too high.

laurentius · July 11, 2003, 17:47

Well, I think dollar deserves to go.....In the long run the reforms in japanese economy are extremely important for the global markets. It will hurt a little but, they are the ones who have ****ed things up, so it's really their prob. I mean they still haven't dealt with the bubbles of the 80'ties...

Kidicious · July 11, 2003, 17:49

Quote:

Originally posted by Colon

Quote:

I don't believe that. You really get drag when you are tight with the money supply during times of contraction.

Rephrase please.

When you don't lower interest rates when there is danger of recession you may get a depression. That's the real danger.

Kidicious · July 11, 2003, 17:51

Quote:

Originally posted by laurentius
Well, I think dollar deserves to go.....In the long run the reforms in japanese economy are extremely important for the global markets. It will hurt a little but, they are the ones who have ****ed things up, so it's really their prob. I mean they still haven't dealt with the bubbles of the 80'ties...

That's a very bad idea. It would probably crush the Japanese economy. That's what we're trying to avoid. Just thought I would remind everyone of that. We are trying to avoid depression.

laurentius · July 11, 2003, 17:53

But you know kid, sometimes depression is the only cure....

laurentius · July 11, 2003, 17:53

and besides japan has been in recession for almost 10 years now.. :P

Kidicious · July 11, 2003, 17:54

Quote:

Originally posted by laurentius
But you know kid, sometimes depression is the only cure....

Is cancer a cure for cancer?

laurentius · July 11, 2003, 18:01

Not the same thing. Not even in the same galaxy with cancer

laurentius · July 11, 2003, 18:06

Look, to clear things up. Japan should have had a deep depression in early 90', but because of their somewhat closed markets and incredible amounts of foreign currency and assets, they have bee able to avoid the ultimate crash. It's stil coming and the more they postpone it the more harder it will hit em. Possibly so hard that in next 15 years most of the japanese corporations will be taken over by the Chinese.

Kidicious · July 11, 2003, 18:16

Quote:

Originally posted by laurentius
Look, to clear things up. Japan should have had a deep depression in early 90', but because of their somewhat closed markets and incredible amounts of foreign currency and assets, they have bee able to avoid the ultimate crash. It's stil coming and the more they postpone it the more harder it will hit em. Possibly so hard that in next 15 years most of the japanese corporations will be taken over by the Chinese.

It doesn't work like that. Just because you avoid a depression doesn't mean that you will face a worse on in the future. The severity of a depression is largely the result of the policy used to recover from it. If poor policy is used the depression will be deep. The past perfomance really doesn't matter.

laurentius · July 11, 2003, 18:24

Yep, but the policy japan has taken to deal with their problem is very, very malicious. Everone knows that japan needs extreme measures to keep their head above the water upcoming years. The problem is that not a single goverment has got the guts to actually do anything about it. they juts keep going with same old and hope, or pretend that things will heal themselves. And in this case the past does matter. Japanese banks have hundreds of billions of bad loans. No economy can stand that forever. Not even the japanese. It's a really severly sick economy.

Az · July 11, 2003, 18:24

I've got a question for you economists:

IIRC, Japan has a budget deficit. in the same time, Japan suffers from Deflation. why can't the government just print some money, and take care of both problems?

laurentius · July 11, 2003, 18:25

Az: Because that would be a total catastrophy.

laurentius · July 11, 2003, 18:29

It's not about printing money, if they would be so crazy the economy would surely collapse in months. Moneys value isn't static you know. the central bank sells their money just like any artisan. if you suddenly have 300% more diamonds in the markets than a month before, the price on diamonds will take a deep dive.

Az · July 11, 2003, 18:29

Now I understand! Not.

laurentius · July 11, 2003, 18:30

take your time..

Kidicious · July 11, 2003, 18:36

Quote:

Originally posted by laurentius
Yep, but the policy japan has taken to deal with their problem is very, very malicious. Everone knows that japan needs extreme measures to keep their head above the water upcoming years. The problem is that not a single goverment has got the guts to actually do anything about it. they juts keep going with same old and hope, or pretend that things will heal themselves. And in this case the past does matter. Japanese banks have hundreds of billions of bad loans. No economy can stand that forever. Not even the japanese. It's a really severly sick economy.

They should have written off that debt when problems started to show up. Things would have been much easier. They are writting it off now, but it might be too little too late.

Az · July 11, 2003, 18:37

I x-posted with you.

I don't think they should drastically increase the amount of money, but only very slightly so, so the deflation could stop, and they could pay (maybe part of ) their internal obligations.

Kidicious · July 11, 2003, 18:41

Quote:

Originally posted by Azazel
I've got a question for you economists:

IIRC, Japan has a budget deficit. in the same time, Japan suffers from Deflation. why can't the government just print some money, and take care of both problems?

That would be a good strategy. In fact, they should increase govt spending and jsut print money to pay for it. There may be a legal problem though. I know that in the US it's only legal to devalue govt debt by 5% a year.

The problem in Japan is expectations though. Trying to inflate out of the depression in Japan will only work if Japanese believe that deflation will end. If they don't believe that the govt will be successfull inflating pirces spending will not increase. I think it's actually too late in Japan for the BOJ or the govt to convince Japanese that they are truely capable or willing to end defaltion.

laurentius · July 11, 2003, 18:43

That's just what I am afraid of. These are the blessings of global economy, if japan gets really ****ed up it will have a huge impact in our domestic markets and economies. They **** things up, everyone pays for their mistakes. It's the same with american and european economies as well. Collective penalty. This is one of the main problems with todays socio-economical system. We in europe and us have virtually zero chances to influence nippon economy, thus securing our own jobs. I think this kind of need for global democracy is one of the most important long-term goals of the 21st-century

Az · July 11, 2003, 18:43

Yeah, they wouldn't want to end up with a stagflation.

laurentius · July 11, 2003, 18:45

and GwB is not helping at all

DanS · July 11, 2003, 18:51

GwB is doing OK with what he inherited.

Velociryx · July 11, 2003, 18:53

If only it were as simple as printing more money.

-=Vel=-

Kidicious · July 11, 2003, 18:57

Quote:

Originally posted by Velociryx

If only it were as simple as printing more money.

-=Vel=-

If only it were as simple as NOT printing more money.

Kidicious · July 11, 2003, 19:01

Quote:

Originally posted by Azazel
Yeah, they wouldn't want to end up with a stagflation.

Stagflation is unrelated to economic policy except maybe higher business taxes that weren't accompanied by increased spending. I don't think that has ever happened, at least not that I know of.