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This could plunge us into a new depression
Topic Started: 19 Sep 2014, 01:34 PM (2,067 Views)
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Count du Monet
19 Sep 2014, 06:50 PM
What you don't know. When it comes to actual printing of money the Japanese must be one of the lowest in the world. Most of the mainstream floating currency nation print around 7% more net cash pa. Japan has gone much lower than this, last time I looked they only printing about 3% more pa. So there is relatively little devaluation domestically of the Japanese currency. They did print like the clappers post ww2 until about 1980. Now they are the reverse.

This graph shows their currency stock.

Posted Image

This show the BOJ balance sheet from last year.

https://www.boj.or.jp/en/statistics/boj/other/acmai/release/2012/ac120331.htm/

So 80 trillion yen was their issued liability. And something like 34 trillion yen in basic deposits from the Japanese retail banks.

:lol
(S – I) + (T - G) + (M - X) = 0
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Count du Monet
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http://thediplomat.com/2014/09/bank-of-japan-urged-to-print-more-money/

Quote:
 
Bank of Japan Urged to Print More Money

The OECD urges central banks in Japan and Europe to step up their monetary easing.
anthony-fensom
By Anthony Fensom
September 17, 2014


The OECD has urged Japan and Europe to step up money printing, even while the United States attempts to unwind quantitative easing. With the world economy still underperforming, can Asia’s monetary chiefs manage the fallout?

Releasing Monday its latest Interim Economic Assessment, the Paris-based group cut its growth forecasts for countries including Japan and the United States, urging more stimulus measures to support an uneven global recovery.

“A moderate expansion is underway in most major advanced and emerging economies, but growth remains weak in the euro area, which runs the risk of prolonged stagnation if further steps are not taken to boost demand,” the OECD said in a statement.

Compared to its May forecasts, the 34-nation economic group cut its growth forecasts for the United States by 0.5 percentage point to 2.1 percent in 2014, with the eurozone’s projected expansion trimmed by 0.4 percentage point to just 0.8 percent this year.

For Asia though, it was a mixed picture, with Japan’s forecast growth cut by 0.3 percentage point to just 0.9 percent this year, improving slightly to 1.1 percent in 2015. China’s expected growth rates were left unchanged at 7.4 percent in 2014 and 7.3 percent next year.

“The euro area needs more vigorous monetary stimulus, while the U.S. and the U.K. are rightly winding down their unconventional monetary easing,” the OECD’s deputy secretary-general and acting chief economist Rintaro Tamaki said. “Japan still needs more quantitative easing to secure a lasting break with deflation, but must make more progress on fiscal consolidation than most other countries.”

According to the OECD, Japan’s April sales tax hike to 8 percent caused “volatile demand” in the first half of the year, but the “underlying recovery” should reassert itself in the second half, “reflecting improved confidence, growing employment and a reversal of the decline in real wages.”

The report noted an improvement in Japan’s labor market, with unemployment back to pre-global financial crisis levels and vacancies per job-seeker now ahead of the peaks reached in 2007. It urged the government to press ahead with the planned rise in the consumption tax in 2015 to reduce public debt, “supported if necessary by other measures, particularly further monetary expansion, to manage demand.”

For China, the OECD said the world’s second-biggest economy had succeeded in its economic transition, an outlook key to the rest of the region’s export growth.

“China has so far managed to achieve an orderly growth slowdown to more sustainable rates. Growth rebounded in the second quarter after weakness early in the year, helped by a range of mini-stimulus measures, supported by significant structural reform measures,” it said.

“Policy settings in China are consistent with achieving an orderly growth slowdown, with ebbing inflation pressures providing ample room for stimulus if needed,” the OECD added, noting that Beijing’s main challenge related to local government debt.

The statement came despite growing speculation over China’s growth prospects, with economists urging further monetary relaxation in the wake of slack industrial production and other economic data for August.

There was better news for India however, with the OECD raising its forecast for 2014 growth by 0.8 percentage point from its May prediction to 5.7 percent, rising to 5.9 percent next year.

“In India, confidence and spending have improved markedly during 2014 as a result of progress to control inflation and the perception that the new government will reinvigorate growth-oriented reform. Growth is expected to pick up in both 2014 and 2015,” the OECD said.

Nevertheless, the report said inflation remained above target in India, requiring restrictive monetary policy. It also urged further fiscal consolidation, including a “reduction in subsidies and a shift in expenditure to social and physical infrastructure” as well as tax changes to remove barriers to investment.

Financial Markets ‘Ignoring Risks’

The OECD tempered its somewhat benign outlook though with a warning that financial markets had virtually ignored growing geopolitical risks, including the escalation of conflicts in Ukraine and the Middle East and uncertainty over the United Kingdom’s referendum on Scottish independence.

“The bullishness of financial markets appears at odds with the intensification of several significant risks. A number of equity markets are reaching record highs, sovereign bond yields in several countries are near all-time lows and implied share price volatility in the United States and Europe is around pre-crisis levels. This highlights the possibility that risk is being mispriced and the attendant dangers of a sudden correction,” it said.

Asia’s emerging economies could be hit hard, with the OECD saying many such economies “remain vulnerable to financial market shocks given the build-up of debt, particularly corporate debt, in recent years. The anticipated tightening of U.S. monetary policy could lead to shifts in international financial flows and sharp exchange rate movements that would be disruptive, especially for some emerging economies.”

Urging policymakers to pay attention, the OECD said “the continued failure of the global economy to generate strong, balanced and inclusive growth underlines the urgency of ambitious reform efforts.”

The OECD’s warning over lax financial markets has been echoed by the Bank for International Settlements (BIS), which said in its latest quarterly review that the large amount of international debt held by emerging market companies “could make them vulnerable to any combination of a domestic slowdown, local currency depreciation and higher global interest rates.”

According to the BIS, accommodative monetary policies have contributed to “an environment of elevated asset price valuations and exceptionally subdued volatility.” As BIS official Claudio Borio told the Australian Financial Review: “The illusion of permanent liquidity is just as prevalent now as in the past.”

He warned, “The last time investors were so uncertain about the macroeconomic outlook was in 2007 – just before one of the largest forecast errors the economics profession has ever made.”

Amid speculation over the U.S. Federal Reserve’s next move on interest rates, Asia’s central bank chiefs are under more pressure than ever before to prevent history from repeating itself.
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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Foxy
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Zero is coming...

Black Panther
19 Sep 2014, 01:34 PM
Why deflation is so terrifying for Europe

FROM Putin’s hordes massing over the eastern borders of Ukraine to the army of homegrown Islamic State fanatics threatening a murderous return from the Middle East, Europe has a lot be frightened of right now.

Yet there’s another nightmare haunting Europe’s economic policy makers: a monster called deflation that’s already clawing at the continent’s financial fundaments.

“We are meeting here at the time when Europe is facing a great threat,” Polish Finance Minister Mateusz Szczurek warned in a recent speech.

“We are on the verge of deflation,” he told a September 4 conference in Brussels. “As Europeans we should never forget that it was depression and deflation ... that brought to power the totalitarian regime that devastated our continent through the world war and unspeakable atrocities 75 years ago.”

At first glance deflation doesn’t sound so bad.

Prices go down, what’s not to like?

Yet the cold economic reality means that when prices fall people stop spending, hoping things will get even cheaper. In response, businesses cut production and lay off workers. That means even less demand, and prices drop further.

By then, your economy’s in a vicious downward spiral.

Making things worse, those falling prices bring declining wages and worsening debt burdens.

Anybody who doubts how bad it could get should look back to the last time the United States caught a serious dose of deflation, from 1929-33. They called that the Great Depression.

Japan has languished in a deflationary cycle pretty much since the late 1990s, its once-booming economy reduced to “lost decades” of stagnation. The country now lays claim to the world’s highest debt — over 1 quadrillion yen ($9 trillion) — more than twice the size of its total economic output.

Europe is now teetering on the edge.

Seventy-four per cent of global investors expressed fears the euro zone was slipping into deflation, according to a recent Bloomberg poll.

http://www.news.com.au/finance/economy/why-deflation-is-so-terrifying-for-europe/story-e6frflo9-1227063772773
Will it come to Australia??
Peter
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The depression started in 2008 and is still going strong.

They all have no answer to any real economic growth, so print money to pay their bills. Just another temporary measure to aviod total collapse as the average joes pay packet buys less and less each week, either through deflation and or the lowering of actual wages or complete job loss or underemployment.

The only reason the US is tappering for now, is because with rates at zero and trillions in stimulus for years on end, they have overinflated their stockmarket. They are forced to pull back or risk really overinflating it, this is much the same way house prices have grown for the last forty years.

This is not real economic growth, where jobs are being created for the long term, jobs are an economy, it seems most western economies seem to have forgotten this or just ignore it altogether. The reason is, they have no answer to cheap asain labour. Would you pay somebody else ten times the price for the same job or item ?

The only jobs being created are dirt cheap wages factory jobs, probably just another inspired stimulus package made to cover the reality and make it look like they have done something.

I mean, why not stop overspending and whack rates at 7%, Get the correction done, instead of drag it out forthe next forty years like japan will, half way there already, everyone else is only into their six year.

The bottom line is, they are all still desperately trying to avoid total collapse.

Don't you clowns get it, we cannot compete with the rise of dirt cheap asian labour over the last the years , and even more so when we have pumped this ponzi hard for the last forty years.

The US won't raise rates, if they did it would be a temporary attempt at disaster, a bluff perhaps. I doubt they will even do a small move to test the waters. They will just keep saying economic growth is not as strong as we expected and will keep rates at zero. Eventually, I don't when exactly, the tapering of stimulus will send the economy into further decline and eventually the stock market with it. When this happens, they will announce more stimulus. No rocket science... :bye:



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Garden Variety
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Black Panther
19 Sep 2014, 01:34 PM
Japan has languished in a deflationary cycle pretty much since the late 1990s, its once-booming economy reduced to “lost decades” of stagnation. The country now lays claim to the world’s highest debt — over 1 quadrillion yen ($9 trillion) — more than twice the size of its total economic output.
Yeh, they been languishing alright ... in them lost decades they only tripled their trade surplus

must be horrifying that deflation stuff .... fer a wunch of bankers anyways

and now they got inflation ... lucky them ... only now theys farked

they shoot economists dont they?
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