/liberty/ - Liberty

The Bank of Japan created a debt bubble that causes massive artificial appreciation in asset prices. At one point in the 1980s, the gardens around the Imperial Palace were worth more than all of the real estate in California. After this house of cards fell apart, Keynsian stimulus policies prevented the market from readjusting and caused stagnation. I'm not sure if this was done out of malice, or if the Japanese government is just that dumb. Now Abe has his head in the sand, ignoring the 200% debt/gdp and trying to continue stimulus. At some point that reset that they have been trying to avoid will occur, all the more severely for their debt fueled efforts to postpone it.

The Bank of Japan created an asset bubble by maintaining extremely low interest rates throughout the 1980s. At one point, the Imperial Gardens in Tokyo were worth more than all of the real estate in California; the Shibuya ward was worth more than all of Canada. After the started to pop, the government tried to stabilize things through Keynsian stimulus. The stimulus did stabilize things, but it has only been kicking the can down the road by reinflating the bubble. Japan will inevitably suffer the consequences of all of this malinvestment, and it sure won't be pretty. Now their debt/gdp ratio is over 200%, they have a declining tax base, deflation, continued stagnation, and lots of old people trying to get their gibsmedats. They would have been better off letting things run their course without digging the hole they were in any deeper.

>>18454

>>18453

dammit hotwheels

What is the Keynesian/liberal rebuttal to Japan? It feels like you should just be able to point to that country to explain why their model completely fails.

>>18491

>What is the Keynesian/liberal rebuttal to Japan?

To ignore it

>>18491

"They should've spent more"

>>18491

Unregulated capitalism

>>18494

If Japan wasn't regulated enough, what country is/was? The government picked winners and losers by instructing the banks to who to lend money.

>>18491

That Wikipedia article is like 50% analysis by Paul Krugman so I think you have your answer right there.

No you faggots, the problem in Japan is deflation

>>19127

No one is going to reply to this?

>>19127

Its almost like your precious, precious Phillips curves don't actually work!

>>19168

…wait, what? Isn't the example of Japan that he's pointing out be a case of the Phillips curve?

>>19200

I'm not sure what the other guy is trying to say, but have my 2 cents. The Bank of Japan started a monetary stimulus policy in 2014, similar to quantitative easing in America. Basically just printing money and buying up assets with it. Inflation went up to 4% that year, but then came crashing back down to under 1% by April of 2015, where it has stayed ever since. Monetary stimulus and earlier attempts at Keynsian stimulus through the construction of unneeded infrastructure have failed spectacularly. Most market crashes are caused by a growing quantity of malinvestment. During a crash, malinvestments are devalued, allowing the economy to grow organically again with better price information. Government interventions in the Japanese economy have prevented the crash from fully occuring, and have kept the bubble alive for decades, leading to stagnation. What likely would have happened otherwise is a depression from 1989-1992 (or around there) before resumed economic growth at a lessened rate.

>>18491

the economists who believe those things are just narcissts

the people enabling them dont understand economics themselves, dont care about that fact, and what theyre told by the narcisst economists kinda fits their bias

a lot of very smart people still have flawed reasoning, flawed priorities, that prevent them from seeing the empirical truth. specifically they dont care about the existience of empirical truth and will instead call you inhumane etc

one wouldnt believe its that simple, but it really is