The explanation for this is quite simple actually: If they had distributed the new money to the citizens as unconditional basic income rather than the banks, they'd solve the "liquidity crisis" while at the same time indirectly supporting the debt instruments held by the banks -- thus obviating the need for a bailout for the "too big to fail" banks.
What they get by letting the money, instead, trickle down through the banks is more hyper-centralization of wealth through the following scenario: Debtors declare bankruptcy. The banks use the money to buy up the bankruptcy-liquidated assets. The banks now own a greater percentage of the total asset base but it does them no good because there is no demand to put them to use. Then people scratch their heads as to why there's no inflation. On Mon, Oct 21, 2013 at 2:47 PM, Jed Rothwell <[email protected]> wrote: > Chris Zell <[email protected]> wrote: > > But this money printing (or the creation of monetary reserves) does not >> produce inflation automatically. After living thru the '70's, this came as >> a shock to me. It still looks very weird for Japan trying to trigger >> inflation and finding it more difficult than they thought. >> > > They find it kind of weird too. This is despite the fact that their > national debt is a much larger fraction of GDP than anyone else's, I > believe. Wikipedia says it is 214% compared to 74% for the U.S. An economic > expert on NHK described the debt as "a pit from which there is no escape." > I cannot understand why they can't escape it by printing money, but I don't > get economics. > > Japanese leaders resemble the Germans in that they still fear > hyperinflation. The Germans had it in 1920s and Japan in the 1940s, after > the war. They cannot bring themselves to print money, I guess. > > - Jed > >
