Considering that weird phenomena, the regular essayist for Time Magazine Amy Dickinson wrote an essay “Graduation Inflation” to present her views on this peculiar social issue in current society.
Rather than unwinding their securities purchases, the other central banks might do well to take a lesson from Japan and cancel their own governments’ debts. We have entered a new century and a new millennium. Ancient civilizations celebrated a changing of the guard with widespread debt cancellation. It is time for a twenty-first century jubilee from the crippling debts of governments, which could then work on generating some debt relief for their citizens.
With growth expected to remain uneven and limited demand pull inflationary pressures, we expect the MAS to hold the exchange rate in the near term, before returning to a policy of gradual appreciation bias in late-2018.
The rate cut came on the back of lower-than-expected inflation in October and declining inflation expectations this month, reducing the likelihood of overshooting the 4% upper limit of the inflation target by year-end.
We see five reasons for a moderately faster pace of policy tightening in 2018:
(i) Larger estimated fiscal stimulus will boost growth and inflation next year
(ii) Most Fed officials have not previously factored stimulus into their forecasts
(iii) A more hawkish shift in the FOMC's voting composition
(iv) Core CPI has rebounded, led by a recovery in core services prices
(v) More Fed emphasis on tightening resource utilization than inflation
That is not to say that all is idyllic in Japan. , adequate pensions and health insurance. But the point underscored here is that large-scale digital money-printing by the central bank used to buy back the government’s debt has not inflated prices, the alleged concern preventing other countries from doing it. Quantitative easing simply does not inflate the circulating money supply. In Japan, as in the US, that occurs in the reserve accounts of banks. Government securities are swapped for reserves, which cannot be spent or lent into the consumer economy but can only be lent to other banks or used to buy more government securities.
It’s true that Japan has suffered through two decades of low growth . . . . [But] despite its persistently low inflation, Japan’s economy is doing fine. Their GDP per working-age adult is actually higher than ours. So why are they growing so much more slowly than we are? It’s just simple demographics . . . Japan is aging fast. Its working-age population peaked in 1997 and has been declining ever since. Fewer workers means a lower GDP even if those workers are as productive as anyone in the world.
Selling the government’s debt to its own central bank has not succeeded in driving up Japanese prices, even though that was the BoJ’s expressed intent. Meanwhile, the economy is doing well. In a February 2017 article in Mother Jones titled “,” Kevin Drum notes that over the past two decades, Japan’s gross domestic product per capita has grown steadily and is up by 20 percent. He writes:
But if Japan’s experience is any indication, it wouldn’t. Japan has a of .02 percent. That’s not 2 percent, the Fed’s target inflation rate, but 1/100th of 2 percent – almost zero. Japan also has an unemployment rate that is at a , and the yen was for the year against the dollar as of April 2017.
The Bank of Japan is under heavy pressure to join the other central banks and start tightening the money supply, reversing the “accommodations” made after the 2008 banking crisis. But it is holding firm and is forging ahead with its bond-buying program. Reporting on the Bank of Japan’s policy meeting on June 15, 2017, that BoJ Governor Kuroda “refused to be drawn on an exit strategy from easy monetary policy, despite growing pressure from politicians, markets and the local media to set one out. He said the BoJ was still far from its 2 per cent inflation goal and the circumstances of a future exit were too uncertain.”
Many feel that low inflation should be a main aim of monetary policy, while others (such as trade union activists) believe that a higher growth rate to stimulate jobs should be the main concern....
Headline PCE prices ticked up 0.1% while core PCE pricesrose 0.2% on the month. Nonetheless, headline and core PCE inflation remainsubdued at 1.6% and 1.4%, respectively.
The Bank of Japan is in the process of owning most of the outstanding government debt of Japan (it currently owns around 40%). BoJ holdings are part of the consolidated government balance sheet. So its holdings are in fact the accounting equivalent of a debt cancellation. If I buy back my own mortgage, I don’t have a mortgage.