Japan in the Grip of Utter MadnessSubmitted by jrd3820 on Sat, 04/06/2013 - 00:25
Whom the Gods Would Destroy …
April 4, 2013 | Author Pater Tenebrarum
The idea that 'deflation is bad' has been reinforced by decades of Keynesian propaganda, but that constant repetition doesn't make it any more true. Of course, for those who are sitting closest to the printing press of the central banks, inflation is an advantage. Everybody else however gets shafted. And so Haruhiko Kuroda has apparently decided it would be a good idea to shaft the vast bulk of the population of Japan.
Inflation is always a bad idea, but it is an even worse idea in Japan. The country is aging rapidly and has practically no major raw materials resources except fish and rice. It must therefore import all major commodities, like crude oil, natural gas, iron ore, copper…you name it. By weakening the Japanese currency, the 90% of its economy that are not in the export business have just seen their import costs jump by 20% or more. Those in the export business are experiencing a one-off sugar high that will soon dissipate. Eventually their input costs will have caught up and their margins won't be any better than they were before. In fact, it is a very good bet they will be worse, as the current weakness in the global economy probably entices exporters to cut prices now that the exchange rate appears 'favorable' to them.
The growing number of Japanese retirees who depend on fixed income will see the buying power of their savings rapidly erode. What might have been a fairly secure retirement could well become a nightmare henceforth.
Japan is a society in demographic decline. It should be blindingly obvious that a policy of inflation is the by far worst thing that can happen to it. One must therefore ask: what is the government's true motive? It can only be a misguided plan to 'inflate away' its vast debt. However, that will actually require hyperinflation. Nothing can be gained by merely opting for 'mild' inflation, as the cost of servicing the debt load would explode and so throw a major spanner into the works. So we are left to ask: is that that they want? Has the Japanese government embarked on a policy of default via hyperinflation?