An advisor to Japanese prime minister Shinzo Abe says Bank of Japan Likely to Take Bold Easing Action at its next meeting in September.
The advisor, Etsuro Honda, calls it the “Spirit of Abenomics“.
Etsuro Honda Quotes
- “Monetary policy hasn’t been eased enough.”
- If the central bank began to rein in its stimulus after the review without achieving its 2% inflation target, “we would never, ever be able to get out of deflation.”
- There is “more than a 50% possibility of bold monetary easing measures” in September.
- Yen’s strength “is clearly excessive”.
- “I think it is fine for us to take bolder policy measures [on the yen], no matter what the U.S. may say.”
- “The bank should raise its monetary base target—or the amount of cash it pumps into the banking system—by 25% to ¥100 trillion (around $1 trillion) a year. It should do so mainly by buying Japanese government bonds at a faster annual pace than the current ¥80 trillion.”
- The effects of quantitative easing may be diminishing compared with a few years ago, but “what we should say is, ‘Effects are diminishing, so let’s do more.’ This is the spirit of Abenomics.”
Questions of the Day
Q: Who is this genius?
A: Honda is Japan’s ambassador to Switzerland.
Q: How much influence does an ambassador to Switzerland have over Abe?
A: Uncertain (darn it, there’s that word again).
Spirit of Central Banking
Not only does Honda summarize the “Spirit of Abenomics” rather well, he summarizes the “Spirit of Central Banking” in general.
Yet, we can improve upon his spirit thesis a bit. Here is the correct phraseology as applies to central banks in general.
“Trust the models. If it doesn’t work, keep doing it until it does work.”
Mike “Mish” Shedlock
“It’s not working, so we have to do more of it”
I thought that is the classic definition of insanity?
If the patient is not doing well after having been bled by leeches the obvious solution is to attach more leeches to him.
This is already bordering on the Crazy . . . . but if they stop it will all Collapse !
That’s why they continue to do it. Confidence must not be lost because the market is riding almost entirely on a perception of central bank control, not on fundamentals.
Fundamentals? The US had nearly every imaginable fundamental going for it in the 1930s but those did not stop the Great Depression, did they?
Why the hell should people think that mere government-enabled counterfeiters can create insolvable (except by misery) problems?
Where did I say that stupid choices by governments and central banks couldn’t also act to NEGATIVELY overcome fundamentals?
But do you think that proper policies by government can REVERSE previous errors or must we have a depression to “purge the malinvestments”*?
*That’s NOT an uncommon attitude at this site, unless, I suppose, one’s OWN job or business has been purged. Then one might begin to understand that sufficient deflation can purge many worthwhile investments too.
I think that what is effectively central planning of the world economy using monetary manipulations based upon simplistic, proven again and again to be seriously flawed economic theories that are even now very obviously causing exactly the opposite of their intended effects is not likely to end well.
The FORCED end to this will come, as it has in the past, from an unforeseen or unforeseeable trigger causing confidence in the central bank juggling acts to finally be broken. Until then, central banks will simply be adding more potential energy to the gigantic malinvestment and speculation spring as they continue to pretend that the only reason they aren’t getting their desired results is because because they aren’t doing enough of something, not because their theories and models based upon them are seriously flawed. To even admit otherwise would end the confidence game. In the mean time, much of the world will gradually become Japan v2.0.
I don’t believe in central planning of the most important factor in any economy, the price of money, which should be set solely by market forces, but here’s a video example by someone who does who points out the obvious flaws in the models they’re currently using to run the world. To his video I will add that no model will ever have even remotely enough data point inputs let alone enough valid data inputs that haven’t been manipulated for some political advantage to accurately project a complex, chaotic system like a world economy nor could one predict the irrational actions of individuals and nations that can so greatly influence events:
Being for a Steve Keen like Debt Jubilee is in no way an endorsement of central planning. Nor is advocating for the removal of all privileges for depository institutions.
Halloween 2014 BOJ surprised the markets with a War to end all Wars on deflation.
http://www.reuters.com/article/us-japan-economy-boj-idUSKBN0IK0B120141031
Predictably failed.
The interesting note was BOJ vote was tight, 5 – 4 for action.
Can Kuroda summon a majority for WTEAW.2?
LOL – Thanks for that 2014 flashback
I have an article in mind for it
The beatings will continue until morale improves…
https://media.makeameme.org/created/insanity-doing-the-gzugym.jpg
Since an individual can do absolutely nothing about the idiocy other than protecting their own interests as much as possible, that different thing might be:
Why not fix both the scarcity of individual incomes and inflation with the dual book end policies of a universal dividend and a deflationary discount to retail prices??????????????????????? Merchants will able to find their best price first BEFORE any discount percentage is applied and be rebated all of their discounts as well allowing them to be whole on their margins of profit and overheads. It fits seamlessly and unobtrusively within profit making systems and would enable the elimination of transfer taxes and even social security eventually as well as reduce bureaucracies involved in both. It would also bring economic democracy without onerous and unnecessary taxation on enterprises. These gracious policies would be an integration of Austrian deflationary economics and the best intentions of social democracy.
Shouldn’t we value integrative thinking?….especially if it would resolve the economy’s deepest problems and actually effect more freedom and more of the goals of both theories on the right and left???????
Or should we be doctrinaire and obsessively contentious and resolve nothing?
I do not understand what you mean by “Why not fix both the scarcity of individual incomes and inflation with the dual book end policies of a universal dividend and a deflationary discount to retail prices”
Whatever that means, I am 99% sure to disagree since it implies someone other than the free market setting prices.
A discount at the point of retail sale that is totally rebated back to the merchant granting it IS THE FREE MARKET AT WORK AND HAS NOT MANIPULATED THE MARKET IN ANY WAY BECAUSE POINT OF RETAIL SALE IS THE TERMINAL END OF THE ENTIRE ECONOMIC/PRODUCTIVE PROCESS AND ALL COSTS ARE SUMMED AT THAT POINT.
Please think about that fact, and also realize that this policy would integrate Austrian deflationary thinking into profit making systems without enforcing increased austerity on a system already inherently cost inflationary because as capital costs become more intense in a modern economy those additional costs on top of financial costs etc…..must go into price….and yet even under the most ideal conditions (which never actually exist either) only the amount of money financed is created and available to become individual income.
We have discounts already
Amazon – Walmart – senior citizen, everywhere
Correct, but they are not macro-economic discounts but rather piecemeal ones, and not enough of a discount to integrate deflation into an inherently cost inflationary system. If the monthly flow of total/systemic costs is 5% and the monthly flow of total/systemic individual incomes is 2%….the system and every enterprise and individual in it has an inherent cost inflationary problem. With my policies we can costlessly and unobtrusively increase individual purchasing power and turn the vector of the entire economy around from inflationary to deflationary. And on top of that we can downsize the TBTF Banks so that they take their smaller and proper place in the economy…instead of being the dominating and manipulating force they have been for at least the last several centuries.
And all it takes to see how this is a necessity is
1) to take the empirical data (total individual incomes produced in ratio to total costs for the same period of time) from the cost accounting books of any modern enterprise which reveals the scarcity ratio I’ve posted about here for so long, and
2) realize that a macro-economic i.e. general discount to prices at retail sale (and in addition to any other discounts a business may want to competitively give) AND THAT IS FULLY REBATED BACK TO THE MERCHANT GIVING THE MACRO DISCOUNT eliminates any possibility of inflation, creates a deflationary and yet more profitable system, corrects the unethical dominance of the Banks, is not price controls because the merchant is free to determine his best price BEFORE the discount is applied and in addition to any other discounts he may want to grant and finally that no economic agent can be harmed by it because retail sale is the end of the productive process….and has become consumption.
England, out of necessity I suspect, is doing remarkably well at figuring things out. The Brits are pretty good at figuring things out when the chips are down. Cracked Germany’s Enigma code machine by inventing digital computing I recall. Anyway, first Steve Keen moved there, which certainly helped, and then Adair Turner had a come to Jesus moment and started asking embarrassingly honest questions about how things really work. The BOE research department is issuing papers calling Krugman an idiot (as only the English can do without saying it) and now we have demonstrations in front of Parliament for a People’s QE which is a Steve Keen type helicopter drop. It’s not just fossilized Japanese embassadors who can float wild and crazy ideas. And all wild and crazy ideas aren’t always wild or crazy.
http://s2.quickmeme.com/img/7f/7f4746da984ec3435b94092d348d771d803829b76f8301c49271907d8a0a729f.jpg
Yes, good signs from England. Practical necessity may lead them to do the right thing – provide restitution for the legalized theft which is government-subsidized private credit creation.
What is there left for the BOJ to buy?
They already own something like 30% of the Nikkei and darn near 100% of all new issuance of JGB’s.
Is Abe going to invite Paul Krugman to Japan for another Miso Soup Economics Summit? ha.
I’ll never ever trust anyone w/ Nobel Peace Prize credentials again.
Well…as I see it, the value of actually making things is on full display. It is essentially priceless, because if Japan made nothing, they would already be a Zimbabwe clone.
There lies the lesson: So long as you export things other people want, in a CB paradigm, you can print capital and buy up your entire domestic. Kinda like a giraffe eating popcorn that endlessly pops out of nothing…
The fact that the polestar bank has been able to monetize the entire fisc illustrates just how much satellite bankers were previously extracting from the people via fractional reserve.
Printing is regressive confiscation of goods from the people. Its confiscation regardless of whether bankers use the confiscated loot to build bridges to nowhere, or give the loot to rich financial sector players via a roundabout method.
Printing is regressive confiscation of goods from the people.
Not necessarily, since “printing” can be done in such a manner* that the total money supply does not increase. In fact, “printing” could be done in such a manner that the total money supply might shrink** – not that that is desirable.
*via, for example, coordinated asset sales by the central bank to sterilize the new reserves.
**By eliminating privileges for the banks, it would be much more dangerous for them to create new deposits/liabilities to replace old deposits/liabilities as they were repaid – hence M1 might easily shrink even in the face of new fiat creation.
*via, for example, coordinated asset sales by the central bank to sterilize the new reserves. aa
Pardon me, I should have said “to sterilize the new deposits.”
But it occurs to me that when banks purchase central bank assets that deposits are not consumed so central bank sterilization might not be effective unless banks were not allowed to purchase the assets.
I yield to no man in the area of hatred and disgust for evil bankers. Having said that most bankers are more like happy clueless robots than evil mastermind overloards. Bankers think they’re doing their jobs when they lend to people with good credit ratings against good collateral priced by honest apraisers. Unfortunately it was these honest happy robot bankers who got us into the debt trap we now face due to a mathematical flaw in our version of capitalism. In the end game over the past decade a new cohort of evil fraud committing bankers and financiers has emerged as the system morphed into an end game Ponzi structure. These people belong in jail and they most certainly exploited flaws in the system illegally but they are not the crux of our troubles. Changing the system to eliminate the advantages and subsidies you note will not fix the current debt problem nor will it create a better way to create wealth. A debt jubilee a la Steve Keen will dramatically shrink banking and finance. This is enough hell for them to to pay for now. All of us participated in the asset flipping mentality that brought us here. If you’re sin (and debt, and asset) free you’re likely poor. I’m just not eager to do anything more than shrinking financial sector profits from 25% of total private profits now down to 3% to 5% max where they belong. To a banker that’s a circle of hell in its own right.
Changing the system to eliminate the advantages and subsidies you note will not fix the current debt problem nor will it create a better way to create wealth. A debt jubilee a la Steve Keen will dramatically shrink banking and finance. peterblogdanovich
Well, I advocate BOTH and it turns out (no surprise?) that one hand washes the other. Fundamental reform allows a debt-jubilee a la Steve Keen without increasing total purchasing power and a debt-jubilee a la Steve Keen allows fundamental reform without decreasing total purchasing power.
And the purpose is not to punish bankers but to eliminate an extremely deceptive, seductive system that has caused untold misery and destruction (e.g. the Great Depression and World War II) and seems destined to cause even more so.
And there is a better way to create wealth assuming 100% private banks with 100% voluntary depositors can’t survive – shares in equity, common stock.
But why should people and companies with equity share it when government subsidies for private credit creation allow them to legally steal instead?
I am confused.
Isn’t the basic problem that inflation is taken for granted as a prerequisite for spending money that would otherwise require taxation and further that it is required to make the debts seem manageable when taken to its undefined limits.
Does this not favor and make indispensable those who fund government debts without limits and place them in the cat birds seat?
If you get rid of the inflation expectation and tax within reasonable limits there would be a period of adjustment that no politician would ever want to claim as their legacy but in the end it seems to me that monetary sanity would be restored instead of the current foie gras inflationary model that the world central bankers seem bent upon.
Japan’s goose may have the most swollen liver of all but we all know what happens to the goose after the foie gras.
If the central bank began to rein in its stimulus after the review without achieving its 2% inflation target, “we would never, ever be able to get out of deflation.”
That is mathematically false. Every cycle has an up phase.
“Trust the models. If it doesn’t work, keep doing it until it does work.”
I think they need a new model. How about trading in Honda for a Toyota?