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Should-Read: Matt O’Brien: How Japan proved printing money can be a great idea

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Should-Read: Matt O’Brien: How Japan proved printing money can be a great idea: “Falling prices would mean falling wages, but not falling debts, so they would become harder to pay back… http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11857507 …In the best case, the economy would get stuck in a cycle of low consumer spending leading to low business investment leading to low hiring, and then even lower consumer spending. And in the worst, everyone would go bankrupt. That’s why Japan has put so much emphasis on getting its inflation rate back above zero. It wants to get into the opposite cycle of higher prices leading to higher wages leading to lower debt burdens leading to more consumer spending and then more business investment…. That has been the whole point of

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How Japan proved printing money can be a great idea The Washington Post

Should-Read: Matt O’Brien: How Japan proved printing money can be a great idea: “Falling prices would mean falling wages, but not falling debts, so they would become harder to pay back… http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11857507

…In the best case, the economy would get stuck in a cycle of low consumer spending leading to low business investment leading to low hiring, and then even lower consumer spending. And in the worst, everyone would go bankrupt. That’s why Japan has put so much emphasis on getting its inflation rate back above zero. It wants to get into the opposite cycle of higher prices leading to higher wages leading to lower debt burdens leading to more consumer spending and then more business investment…. That has been the whole point of “Abenomics”…. Although there have been stops and starts, and debates and doubts, the reality is that it is working, emphasis on those last three letters…. The best way to tell isn’t its super-low unemployment rate, but rather its super-high employment rate… 83.5 per cent, making our own 78.3 per cent rate look downright measly in comparison…. Japan’s unemployment rate hasn’t fallen for the bad reason that people have given up looking for work, but for the good one that almost everyone who isn’t drawing a pension has found one. It’s what unfinished progress looks like…

Bradford DeLong
J. Bradford DeLong is Professor of Economics at the University of California at Berkeley and a research associate at the National Bureau of Economic Research. He was Deputy Assistant US Treasury Secretary during the Clinton Administration, where he was heavily involved in budget and trade negotiations. His role in designing the bailout of Mexico during the 1994 peso crisis placed him at the forefront of Latin America’s transformation into a region of open economies, and cemented his stature as a leading voice in economic-policy debates.

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