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Merv And Jean-Claude Haunted By Japan's Disastrous I R Policies

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http://www.bloomberg.com/news/2011-03-25/trichet-king-haunted-by-bank-of-japan-s-lost-decade-interest-rate-error.html

Trichet, King Haunted by BOJ’s Premature Interest-Rate Errors
By Simon Kennedy - Mar 25, 2011 12:01 AM GMT
European central bankers agitating for higher interest rates to quell inflation may be ignoring the lessons of Japan’s economic history.
As the European Central Bank and Bank of England consider tightening monetary policy, HSBC Holdings Plc and Fathom Financial Consulting warn officials risk misjudging the inflation threat and may end up hurting their recoveries. That’s what repeatedly happened in Japan in the past quarter century as policy makers constrained credit only to reverse within months when expansion faltered.
“The danger is of a policy mistake,” said Stephen King, HSBC’s London-based chief economist and a former U.K. Treasury official. “In an attempt to control inflation this year they could set the scene for more disappointing growth in the future as happened in Japan.”
...../
Deflationary
The risk is that shocks such as an oil-price surge can sometimes prove more deflationary than inflationary by squeezing spending power, said King at HSBC. His fear is that’s what happening in Europe now as the price of crude trades above $100 a barrel, close to the highest in more than two years.
“Dealing with a near-term inflation threat is all very well, but with oil-price spikes, there’s no such thing as a free lunch,” said King. “As we now know, the longer-term costs were enormous: stagnation, deflation and economic underperformance.”
Japan’s failure to escape a slump left its economy less prepared for the shock of this month’s earthquake and its after- effects with rates already near zero and debt twice the size of its economy.

Could not agree more. We are on the borderline of going Japanese. Once deflation sets in there is no getting out of it without a ground shaking tremour and massive infrastructure damage and our fault line may be deeper than the Pacific Rim but it is not as active. Yet.

Edited by Realistbear

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http://www.bloomberg...rate-error.html

Trichet, King Haunted by BOJ's Premature Interest-Rate Errors
By Simon Kennedy - Mar 25, 2011 12:01 AM GMT
European central bankers agitating for higher interest rates to quell inflation may be ignoring the lessons of Japan's economic history.
As the European Central Bank and Bank of England consider tightening monetary policy, HSBC Holdings Plc and Fathom Financial Consulting warn officials risk misjudging the inflation threat and may end up hurting their recoveries. That's what repeatedly happened in Japan in the past quarter century as policy makers constrained credit only to reverse within months when expansion faltered.
"The danger is of a policy mistake," said Stephen King, HSBC's London-based chief economist and a former U.K. Treasury official. "In an attempt to control inflation this year they could set the scene for more disappointing growth in the future as happened in Japan."
...../
Deflationary
The risk is that shocks such as an oil-price surge can sometimes prove more deflationary than inflationary by squeezing spending power, said King at HSBC. His fear is that's what happening in Europe now as the price of crude trades above $100 a barrel, close to the highest in more than two years.
"Dealing with a near-term inflation threat is all very well, but with oil-price spikes, there's no such thing as a free lunch," said King. "As we now know, the longer-term costs were enormous: stagnation, deflation and economic underperformance."
Japan's failure to escape a slump left its economy less prepared for the shock of this month's earthquake and its after- effects with rates already near zero and debt twice the size of its economy.

Could not agree more. We are on the borderline of going Japanese. Once deflation sets in there is no getting out of it without a ground shaking tremour and massive infrastructure damage and our fault line may be deeper than the Pacific Rim but it is not as active. Yet.

Hmmm... so avoiding inflation through long term zero interest rates, printing money, propping up the banks, not marking assets to market, and preventing deleveraging through bankrutpcy is the right way to go is it? Remind me again what the policy in Japan was.

Edited by mikthe20

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Hmmm... so avoiding inflation through long term zero interest rates, printing money, propping up the banks, not marking assets to market, and preventing deleveraging through bankrutpcy is the right way to go is it? Remind me again what the policy in Japan was.

Looking at it extremely simplistically--its a bit like an unblanced binary universe model with more (negative) electrons than positive ones. The black hole attracts the postive particles because they do not have enough strength to resist the negative gravity that is pulling them into the hole (collapsing demand, unemployment, over-capacity, aging populations....).

The financial black hole is measured in multiple trillions whereas QE is chump change in comparison and not a threat to inflationary trends as the forces pulling the other way are still far greater. As Japan has played out.

Bottom line: I think I am on the same track as Merv and J-C.

Edited by Realistbear

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Looking at it extremely simplistically--its a bit like an unblanced binary universe model with more (negative) electrons than positive ones. The black hole attracts the postive particles because they do not have enough strength to resist the negative gravity that is pulling them into the hole (collapsing demand, unemployment, over-capacity, aging populations....).

The financial black hole is measured in multiple trillions whereas QE is chump change in comparison and not a threat to inflationary trends as the forces pulling the other way are still far greater. As Japan has played out.

Bottom line: I think I am on the same track as Merv and J-C.

Thats it then, you've convinced me that holding physical gold and keeping an eye on the very high inflation about to burts is the best policy.

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Thats it then, you've convinced me that holding physical gold and keeping an eye on the very high inflation about to burts is the best policy.

If you think you are smarter than Merv and J-C that might be the way go. If you are are convinced that betting against the CBs is the right thing to do. I just agree with them.

Personally, I think the two best CBs we have seen in years have got it right. They didn't drop us in it--Brown did and his bubbleconomics model of perpetual wealth through borrowing.

Holding gold is worthless as it has no value until it is converted.

Edited by Realistbear

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Have you considered the game plan is to crash the current financial system and introduce a global replacement that supercedes borders?

Indeed. I think this is about the banksters taking over the world's financial system to satisfy their own lust for power. They have been at it for millenia and the last time they got caught it led to the crucifixion of the Whistleblower and the spread of the banksters throughout the world.

IMO the banksters have already pulled it off. They pay themselves with public money as governments look on and wonder how they ever got in such a position to pull off the perfect crime that isn't a crime.

http://uk.finance.yahoo.com/news/Global-regulators-looking-reuters_molt-949306581.html?x=0

Huw "Hugh" Jones, 13:20, Friday 25 March 2011
LONDON (
Reuters
) - Global (Chicago Options: ^RGITRUSD - news) banking regulators are discussing how to use extra capital cushions as a means of stopping very big lenders getting even larger, a source familiar with the talks said on Friday.
World leaders have asked the Basel Committee on Banking Supervision to flesh out a package of extra safeguards on big banks to lessen the need for taxpayer bailouts should one of them get into trouble again.
A source familiar with the talks told Reuters on Friday the committee was looking at how this package could also stop very big lenders growing further and representing more risk to the system.

Bankster power is recognised as a threat to publc interst and government stability. But can the gov ernments find an Elliott Ness to take them down "extra-legally?"

Edited by Realistbear

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OIl prices from 2011-2012 according to the forecast in the budget $ then £

113 112 109 107 107

69.3 68.6 67.0 66.3 66.2

They have $80/£52 in it for 2010-2011

I'd have to point out that Economist's forecasts of the oil price more than a week ahead have officially been declared the numbers Least Likely To Be True In The Known Universe.

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I'd have to point out that Economist's forecasts of the oil price more than a week ahead have officially been declared the numbers Least Likely To Be True In The Known Universe.

Trying to predict currencies is the hardest thing in the world IMO.

The only thng that is certain is that if you snooze you loose. If you have made a profit sell and don't hang on for that last 5% and risk losing the lot. Sell before everyone else catches on to the idea!

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Trying to predict currencies is the hardest thing in the world IMO.

Hint - they all inflate, all the time and never, ever stop until they are repudiated by their populations.

Total deflations in world history - zero.

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http://www.bloomberg.com/news/2011-03-25/trichet-king-haunted-by-bank-of-japan-s-lost-decade-interest-rate-error.html

Trichet, King Haunted by BOJ’s Premature Interest-Rate Errors
By Simon Kennedy - Mar 25, 2011 12:01 AM GMT
European central bankers agitating for higher interest rates to quell inflation may be ignoring the lessons of Japan’s economic history.
As the European Central Bank and Bank of England consider tightening monetary policy, HSBC Holdings Plc and Fathom Financial Consulting warn officials risk misjudging the inflation threat and may end up hurting their recoveries. That’s what repeatedly happened in Japan in the past quarter century as policy makers constrained credit only to reverse within months when expansion faltered.
“The danger is of a policy mistake,” said Stephen King, HSBC’s London-based chief economist and a former U.K. Treasury official. “In an attempt to control inflation this year they could set the scene for more disappointing growth in the future as happened in Japan.”
...../
Deflationary
The risk is that shocks such as an oil-price surge can sometimes prove more deflationary than inflationary by squeezing spending power, said King at HSBC. His fear is that’s what happening in Europe now as the price of crude trades above $100 a barrel, close to the highest in more than two years.
“Dealing with a near-term inflation threat is all very well, but with oil-price spikes, there’s no such thing as a free lunch,” said King. “As we now know, the longer-term costs were enormous: stagnation, deflation and economic underperformance.”
Japan’s failure to escape a slump left its economy less prepared for the shock of this month’s earthquake and its after- effects with rates already near zero and debt twice the size of its economy.

Could not agree more. We are on the borderline of going Japanese. Once deflation sets in there is no getting out of it without a ground shaking tremour and massive infrastructure damage and our fault line may be deeper than the Pacific Rim but it is not as active. Yet.

I think deflation is the likely ultimate consequence of the boom - after it pops and is indeed the elephant in the room. What the CBs seem to be trying to do is to let the air out of the balloon gradually so that it deflates with minimum damage as opposed to inflating it still more and then it bursting catastrophically. I don't think we have either the tools or the people to manage this process so finely so we're just going to end up with trouble either way.

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Hint - they all inflate, all the time and never, ever stop until they are repudiated by their populations.

Total deflations in world history - zero.

Perpetual inflation is similarly unknown. The economy is dynamic and it is cyclical. Prices go up and down, wages go up and down.......a constant state of flux.

Right now we are seeing house price deflation along with wage and savings deflation-thus "deflation." Some things are rising in price such as food, fuel and fun thus some things are inflating which means there is inflation in the economoy. When you add the microeconomic factors together you end up with a picture of the economic cycle. As Friedman observed there is never pure inflation or deflation as one man's loss is another's gain. As Rhett Butler also observed.

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Perpetual inflation is similarly unknown. The economy is dynamic and it is cyclical. Prices go up and down, wages go up and down.......a constant state of flux.

Prices?

I'm talking about inflation.

Right now we are seeing house price deflation along with wage and savings deflation-thus "deflation." Some things are rising in price such as food, fuel and fun thus some things are inflating which means there is inflation in the economoy. When you add the microeconomic factors together you end up with a picture of the economic cycle. As Friedman observed there is never pure inflation or deflation as one man's loss is another's gain. As Rhett Butler also observed.

Money supply is increasing.

Inflation.

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Exactly, worth repeating too:

Inflation = expansion of the money supply

Rising prices = side effect of inflation

You're wrong, when prices increase massively it's deflation.

When money is printed it is deflation.

Zimbabwe, Argentina and Weimar had a horric spell of deflation. Gold is falling to a record low price, silver is so worthless you have to be paid to take it away.

There is no such thing as inflation, don't be ridiculous, we can print trillions of pounds and we will always have deflation :lol:

In fact we should print several quintillion every second just to ensure we get more deflation.

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If you think you are smarter than Merv and J-C that might be the way go. If you are are convinced that betting against the CBs is the right thing to do. I just agree with them.

Personally, I think the two best CBs we have seen in years have got it right. They didn't drop us in it--Brown did and his bubbleconomics model of perpetual wealth through borrowing.

Holding gold is worthless as it has no value until it is converted.

Pig thick Kunt was warned face to face about Northern rock. He had the gall to irnore this warning and teller the teller they did not understand banking. Two years later the frst bank run in 200 years and a huge bill for the taxpayer to pick up. In the scale of getting it wrong that is about as wrong as you could get.

Brown was able to be profligate thanks to low interst rates not causing repayments to rise as they normally would - so every bit as comlicit as brown - still it kept Kunt on the right side of Brown so he could pontificate fromthe position of head of the bankrupt of england. Moreover manufaturing was deciamted in this country during the period and low and behold as soon as the financial bubble burst this Kunt called out for manufacturing to pick up the slack - what an arsehole. Never ws the trade deficit mentioned in any of the centrl banks patheitc monthly flam sessions.

If the US poliy is/was so right why has their manufacturing ******ed off abroad and why have they got 40million+ on food stamps. Don;t say China and the est becuase just look at Germany in comparison.

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Prices?

I'm talking about inflation.

Money supply is increasing.

Inflation.

In the IS/LM model (Investment and Saving equilibrium/ Liquidity Preference and Money Supply equilibrium model), deflation is caused by a shift in the supply-and-demand curve for goods and services, particularly a fall in the aggregate level of demand. That is, there is a fall in how much the whole economy is willing to buy, and the going price for goods. Because the price of goods is falling, consumers have an incentive to delay purchases and consumption until prices fall further, which in turn reduces overall economic activity. Since this idles the productive capacity, investment also falls, leading to further reductions in aggregate demand. This is the deflationary spiral. An answer to falling aggregate demand is
stimulus,
either from the central bank, by expanding the money supply, or by the fiscal authority to increase demand, and to borrow at interest rates which are below those available to private entities.

As Friedman would put it: its ALL about prices that are moved by supply and demand. Everyting else is collateral.

Money supply (stimulus) belongs to the world of Keynes and pre-Friedman reality economics.

If the cost of something is less than it was a day ago you have deflation. The cost of something falls because someone refuses to pay the price or does not want the goods. Supply-demand-price are the chief determinants.

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In the IS/LM model (Investment and Saving equilibrium/ Liquidity Preference and Money Supply equilibrium model), deflation is caused by a shift in the supply-and-demand curve for goods and services, particularly a fall in the aggregate level of demand. That is, there is a fall in how much the whole economy is willing to buy, and the going price for goods. Because the price of goods is falling, consumers have an incentive to delay purchases and consumption until prices fall further, which in turn reduces overall economic activity. Since this idles the productive capacity, investment also falls, leading to further reductions in aggregate demand. This is the deflationary spiral. An answer to falling aggregate demand is
stimulus,
either from the central bank, by expanding the money supply, or by the fiscal authority to increase demand, and to borrow at interest rates which are below those available to private entities.

As Friedman would put it: its ALL about prices that are moved by supply and demand. Everyting else is collateral.

Money supply (stimulus) belongs to the world of Keynes and pre-Friedman reality economics.

If the cost of something is less than it was a day ago you have deflation. The cost of something falls because someone refuses to pay the price or does not want the goods. Supply-demand-price are the chief determinants.

RB you are so far off the mark I'm not sure you know where it is any more.

You should stick to posting news clippings and ammusing stuff about the dollar being great, gold being rubbish and Trichet, Merv and Greenspan being da men!. Sorry what was that? The last bits were not supposed to be a joke. Right!

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  • 312 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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