Hiroshi Nakaso, chairman of Daiwa Institute of Research and former deputy governor of the Bank of Japan, said in an interview with the Asahi Shimbun that the monetary easing measures of the past 25 years aimed at escaping deflation in which prices continued to fall, “we were aware of the side effects, but we had no choice but to pursue them.” The Bank of Japan is currently in the process of raising interest rates, and the report states that its monetary policy aimed at escaping deflation has “largely accomplished its mission,” but that the government’s growth strategy and fiscal reconstruction “cannot be said to have produced sufficient results.” The interview was conducted on the 10th, ahead of the Bank of Japan’s release on the 19th of a “multifaceted review” examining its monetary easing policies over the past 25 years. Nakaso served as deputy governor under former Governor Kuroda Haruhiko for five years from 2013. In April 2013, the Bank of Japan began “unprecedented” monetary easing as a pillar of Abenomics. It pushed forward with large-scale purchases of government bonds and exchange-traded funds (ETFs). Nakasone reflected, “We felt that we had to do something, so we decided to take the measure, even knowing that side effects would occur, in order to turn the situation around.” However, the initial target of a 2% inflation rate, which was to be achieved within around two years, was not achieved. “Contrary to the short-term strategy, prices did not rise as expected.” The Bank of Japan decided to implement a negative interest rate policy in January 2016, and in September of the same year, it decided to introduce yield curve control (YCC) to suppress long-term interest rates. Nakaso said, “Every time we have faced challenges or limitations, we have introduced new mechanisms and done our best,” adding that the YCC, which was considered unusual even on a global scale, “was the ultimate form of unconventional monetary policy that we arrived at through repeated trial and error.” Nevertheless, the price target was not achieved during Nakaso’s term, and it was not until Russia’s invasion of Ukraine in February 2022 that the inflation rate exceeded 2%. “Growth strategy is weak” “Sustainable fiscal structure” In March of this year, the Bank of Japan announced that it would appoint Kuroda as the next prime minister… (The following is a paid version, 1590 characters remaining) Asahi Shimbun, December 23, 2024, 15:00.
>>2 What are you talking about? Continued price increases are the goal. A sustained fall in prices is abnormal in a capitalist world. If we leave it alone, the economy will collapse.
First of all, it’s strange to talk about escaping deflation. You start by investing in people, which improves products and services, boosting economic power, which leads to higher wages, which results in rising prices, or inflation.
I understand getting away from deflation, but raising taxes doesn’t make sense. They’re not just taxing us twice, they’re taxing us three or four times, so get rid of them. How long are you going to make us pay the special income tax for reconstruction, you idiot?
Now is the only time we can play the “interest rate cut” card! If we don’t raise interest rates now, the global economy will stagnate and we will have no cards to play!
Deflation was so severe that it took 10 years for side effects to appear after the start of quantitative easing. If they hadn’t done it, things would have gotten awful.
Money has a different meaning if you give it to someone who wants to start a business than if you give it to someone who just wants to save their cash. Even if you ease monetary policy, you can’t control who gets the money. To be honest, the idea that value can be created with just money is a kind of unfounded religion. If I had to say, it’s just telekinesis.
If they had combined this with wage increases from the start, we might have seen better results. I think the Bank of Japan did a good job, but 10 years later, the political and business worlds are still talking about wage increases.
>>49 That’s not quite right. People who are bad at math and can’t even do differential or integral calculus go to the economics department, so the end result is that there are a lot of people who are bad at economics. That’s because the departments are separated into arts and science.
Comments