Steve,
There's a (temporary) difference, though:
At 06:51 10/07/2010 -0400, you wrote:
On 7/10/2010 3:22 AM, Keith Hudson wrote:
They're in paralysis at the moment but, in desperation, they'll probably
choose the Krugman route. This is probably the better route because it
will bring about hyperinflation, and then sensible currencies, all the quicker.
Keith
Japan has tried it for 20 years with little success. Their debt to GDP is
around double the US rate, yet interest rates are zero at spot and 1%
longer term. As they say: you can lead a horse to water...and you can't
push on a rope. Of course if the US issues a million dollars to every
citizen as a gift (not via borrowing, just by decree), then inflation
would jump...due to a sudden halving of the $US value. Within days, its
buying power would drop likewise. If the US borrows the money, the
devaluation will just take longer.
By about 1985 Japan had no significantly new consumer products to offer so
there was no demand. And, unlike America and Western Europe today, Japan
had no surplus immigrant population to make up demand. In effect, Japan's
national debt, lent by its own people mainly (not foreigners as in our
case), was a piggy-bank on the mantel-piece. It isn't producing much by way
of interest but it's been sufficient (so far) for an ageing population with
declining needs for consumer goods to draw on. But the piggy-bank can't
last for ever, particularly when the oldies need more services.
In our case, all the additional printed money since 2008 has been snaffled
by the banks to try and restore their reserves. This hasn't happened yet
nor have the banks lent sufficient money to stimulate extra production of
products for either the immigrants or their own surplus young people (even
if they had the education for the higher-skill jobs which are the only ones
with significant incomes).
Given any more "Quantitative Easing" then hyperinflation will break out in
Japan soon enough, and in Western Europe and America even sooner if the US
Congress and the EMU so decide to print more money.
Keynesian-Krugmanesque methods would have worked in the 1930s, had
governments tried them wholeheartedly because there were still plenty of
consumer products for the middling and poor to have a go at -- just as
China's money boost of 2008 worked well enough with no debilitating
hangovers. But not today in the Western bloc. We've reached the end of the
industrial-consumerist revolution and a new production-consumerist set-up
will have to emerge -- this time with the accent on new production methods
rather than new consumer goods, and also with a very much smaller
populations than are presently thought to be necessary in the advanced
countries.
Keith
Keith Hudson, Saltford, England
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