- 01 Aug 2018 05:49
#14936429
This is totally off the top of my head and I'm just a layman MMTer.
IIRC, the Japanese economy has been in the doldrums for almost 2 decades. They have dropped interest rates to zero and it isn't enough. However, you can't sell bonds with a negative interest rate. Whoever buys them has an asset that loses value over time and who would buy that?
It seems to me that MMT offers a solution. It is to spend more. To have the Japanese Gov. increase its deficit by a lot. To sell bonds with positive interest rate and spend like crazy. Increase the payments to their retired people and poor people. Increase spending on infrastructure. Maybe cut taxes on the rich to give them some benefit too. Ask the recipients of these payments to do their civic duty and mostly spend them in the Japanese economy.
Yes, I know; the current economic thinking is this is a very bad plan. MMT says it isn't.! MMT strongly claims that when the economy is stalled no amount of deficit spending will result in hyper inflation. MMT says that Japan can't be unable to pay the interest on its bonds and also it can always redeem the bonds as they mature. This is because Japan has a fiat currency and it can just create Yen as necessary without limit.
I think that MMT agrees that this plan will definitely have an economic impact. That is the point of doing it, to change the economic conditions of the nation. So, there will be changes. MMT claims they will mostly be positive ones.
I would dearly love to see Japan try this plan. We could call it an experiment. What do they have to lose? They have been suffering for 2 decades now. Isn't it time to get creative?
IIRC, the Japanese economy has been in the doldrums for almost 2 decades. They have dropped interest rates to zero and it isn't enough. However, you can't sell bonds with a negative interest rate. Whoever buys them has an asset that loses value over time and who would buy that?
It seems to me that MMT offers a solution. It is to spend more. To have the Japanese Gov. increase its deficit by a lot. To sell bonds with positive interest rate and spend like crazy. Increase the payments to their retired people and poor people. Increase spending on infrastructure. Maybe cut taxes on the rich to give them some benefit too. Ask the recipients of these payments to do their civic duty and mostly spend them in the Japanese economy.
Yes, I know; the current economic thinking is this is a very bad plan. MMT says it isn't.! MMT strongly claims that when the economy is stalled no amount of deficit spending will result in hyper inflation. MMT says that Japan can't be unable to pay the interest on its bonds and also it can always redeem the bonds as they mature. This is because Japan has a fiat currency and it can just create Yen as necessary without limit.
I think that MMT agrees that this plan will definitely have an economic impact. That is the point of doing it, to change the economic conditions of the nation. So, there will be changes. MMT claims they will mostly be positive ones.
I would dearly love to see Japan try this plan. We could call it an experiment. What do they have to lose? They have been suffering for 2 decades now. Isn't it time to get creative?