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Belarus has no trouble generating inflation

Summary:
Harding directed me to the example of Belarus, which like Japan has a falling population in recent years: And yet Belarus has lots of inflation: Not as bad as the 100% inflation of 2012, but still running around 10% per year in recent years, despite a falling population. So why do demographics cause deflation in Japan but not Belarus?  Simple, demographics don’t cause deflation in Japan, or anywhere else. If you have the right model of money, the world is a much less confusing place. Tags:

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Harding directed me to the example of Belarus, which like Japan has a falling population in recent years:

Belarus has no trouble generating inflationAnd yet Belarus has lots of inflation:

Belarus has no trouble generating inflationNot as bad as the 100% inflation of 2012, but still running around 10% per year in recent years, despite a falling population.

So why do demographics cause deflation in Japan but not Belarus?  Simple, demographics don’t cause deflation in Japan, or anywhere else.

If you have the right model of money, the world is a much less confusing place.


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Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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