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Japan’s Deflation Mindset Could Be Contagious

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When the maker of a popular Japanese popsicle decided to raise prices for the first time in 25 years, executives of Akagi Nyugyo Co.—which introduced the treat in 1981—felt a need to apologize to their customers. On the day of the hike, in April 2016, they ran a 60-second commercial showing the company’s gray-haired chairman, backed by a phalanx of dark-suited workers, all bowing in deep contrition. Three years later, the Akagi Nyugyo manager who came up with the idea for the ad is still feeling contrite. “It’s not like people have any extra spending money,” Fumio Hagiwara says.
Japan is the only developed economy where wages have dropped year after year. Since 1996 inflation-adjusted pay has fallen about 13 percentage points—a big reason businesses are loath to raise prices or invest in a shrinking market. The downward spiral has led to a “deflationary mindset” that Bank of Japan Governor Haruhiko Kuroda blames for thwarting his efforts to revive the economy, using every trick in the central bankers’ playbook.
Japan’s deflationary mindset has defied policymakers, impeding a sustained improvement in the country’s economic fortunes...

 

https://www.bloomberg.com/news/articles/2019-04-17/japan-s-deflation-mindset-could-be-contagious?utm_content=business&utm_medium=social&utm_campaign=socialflow-organic&cmpid=socialflow-twitter-business&utm_source=twitter

 

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Wouldn't deflation be awesome ? You put money in the bank, wait, and its buying power increases....

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Not in the US. Consumers in the US spend every penny and then borrow to spend more. We would be wise to spend less and save more.

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The central bank of Japan is getting out of mandate exit from deflation in years. But t would not regard much about the policy impact on the global markets surviving in trades.

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Nice. Japan's "deflationary mindset" means consumers are cutting tissue boxes in half to save money and companies are apologizing for (rare) price increases.

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4 minutes ago, damirUSBiH said:

Nice. Japan's "deflationary mindset" means consumers are cutting tissue boxes in half to save money and companies are apologizing for (rare) price increases.

Nothing new for me. I do that too, inflation not for me!😃

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4 hours ago, francoba said:

Nothing new for me. I do that too, inflation not for me!😃

" cutting tissue boxes in half to save money "

Why go thru the bother of cutting up the box - just buy one box and keep re-using the tissues - one whole box could last 2-3 yrs.:S

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(edited)

15 hours ago, rainman said:

Japan is the only developed economy where wages have dropped year after year. Since 1996 inflation-adjusted pay has fallen about 13 percentage points—a big reason businesses are loath to raise prices or invest in a shrinking market. The downward spiral has led to a “deflationary mindset” that Bank of Japan Governor Haruhiko Kuroda blames for thwarting his efforts to revive the economy, using every trick in the central bankers’ playbook.
Japan’s deflationary mindset has defied policymakers, impeding a sustained improvement in the country’s economic fortunes...

 

 

 

If Japan's central bank really does want to fight deflation/induce moderate amounts of inflation, there is a simple trick they haven't tried yet - just physically print more money, and pass it out to people.  Maybe try to address their low birth rates at the same time by passing cash out to couples who have 3 or more children. Yes, their central bank has done a lot of qualitative easing, creating money to buy up bonds & drive interest rates down, but that only seems to be helping a little, so why not try to skip all those convoluted steps and see what happens if you just mail out half a million yen (~$4500 USD) to every one. As long you don't go full Wiemar Republic with it, it is worth a shot. Milton Friedman first proposed this sort of thing, dubbing it "helicopter money". 

Edited by Dread Cthulhu (Dreadcthulhu)
Adding a bit more info
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1 hour ago, Dread Cthulhu (Dreadcthulhu) said:

If Japan's central bank really does want to fight deflation/induce moderate amounts of inflation, there is a simple trick they haven't tried yet - just physically print more money, and pass it out to people.  Maybe try to address their low birth rates at the same time by passing cash out to couples who have 3 or more children. Yes, their central bank has done a lot of qualitative easing, creating money to buy up bonds & drive interest rates down, but that only seems to be helping a little, so why not try to skip all those convoluted steps and see what happens if you just mail out half a million yen (~$4500 USD) to every one. As long you don't go full Wiemar Republic with it, it is worth a shot. Milton Friedman first proposed this sort of thing, dubbing it "helicopter money". 

All that rather clashes with the Japanese cultural mentality, don't you think? (Seems to work, sort of, in South America).

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15 hours ago, Dread Cthulhu (Dreadcthulhu) said:

If Japan's central bank really does want to fight deflation/induce moderate amounts of inflation, there is a simple trick they haven't tried yet - just physically print more money, and pass it out to people.  Maybe try to address their low birth rates at the same time by passing cash out to couples who have 3 or more children. Yes, their central bank has done a lot of qualitative easing, creating money to buy up bonds & drive interest rates down, but that only seems to be helping a little, so why not try to skip all those convoluted steps and see what happens if you just mail out half a million yen (~$4500 USD) to every one. As long you don't go full Wiemar Republic with it, it is worth a shot. Milton Friedman first proposed this sort of thing, dubbing it "helicopter money". 

That's actually been happening in the US. It ends up as cash in Apple's, Microsoft's, Google's, etc. accounts instead of triggering inflation. QE is in effect a kind of 'helicopter money'. If people use it for tech goods it gets sucked out of circulation as fast as it's introduced.

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