
The Covid-19 pandemic is forcing a rethink in macroeconomics - ml_basics
https://www.economist.com/briefing/2020/07/25/the-covid-19-pandemic-is-forcing-a-rethink-in-macroeconomics
======
wz1000
> Talking about a revolution

> Many economists want precisely this state intervention, but it presents
> clear risks. Governments which already carry heavy debts could decide that
> worrying about deficits is for wimps and that central-bank independence does
> not matter. That could at last unleash high inflation and provide a painful
> reminder of the benefits of the old regime.

Sounds more like a plea than a warning, coming from The Economist. Prophecies
of inflation seem like a joke in a time of record low inflation with high
government deficits. Just look at the case of Japan for one.

~~~
derg
Yep. There's a concerted effort to keep bringing up high inflation as a means
of forcing more austerity. The mythical "high inflation" hasn't materialized
but the cries continue to happen.

~~~
take_a_breath
There is a reasonable argument that we do have inflation, it’s just being
shown in assets prices, not commodity prices. Things like education, housing,
stocks, art, startup valuations, and more have signs of inflation even if oil
and food prices don’t.

~~~
derg
I would agree to this but this isn't necessarily a blanket monetary policy of
spending _too_ much money across the board and is a result of political
capture by the wealthy where it's used to keep fueling the infinite growth
machine for the already wealthy.

I mean housing policy in itself is entirely political: weaponized zoning laws
and the lack of new construction to match the growth of the country are a
direct result of this infinite growth machine. Housing being considered "an
investment" will further perpetuate this price inflation because there is a
vested interest in not allowing property values to decrease which is what
happens when you can build to match demand.

~~~
PoachedSausage
The housing situation is one giant prisoners dilemma loose-loose, nobody wants
to loose out. I've long believed that houses/land are overpriced but I've
recently (Just prior to Covid) become a home owner because I needed somewhere
to live and the mortgage repayments are cheaper than rent here. It could have
been a spectacularly bad move.

~~~
sacred_numbers
Well, it's not a lose lose situation to the people that don't own property
yet. They would greatly benefit from housing costs dropping, since they could
afford to buy their own house or pay less in rent. The problem is that the
people who don't own property tend to have less political power and influence
than property owners.

~~~
PoachedSausage
I agree that the basic human need of shelter should be more affordable. I
remember 10 years ago, when prices dropped after the financial crisis, people
were saying "this is it" but it is politcally untenable to allow prices to
drop. So those that didn't own eventually got tired of waiting and then when
they have bought they don't want a drop, because who wants to burn money?

~~~
RestlessMind
> I agree that the basic human need of shelter should be more affordable.

Affordable where? In West Texas or in Paris? Today, Paris' population is ~2M
and the residential buildings cannot be taller than 50m by law. If 10M people
want to live there, is it a "basic human right" to build 10M homes for them by
replacing existing Parisian building by skyscrapers? What will that do to the
existing fabric/culture of the city, and who gets to decide what is allowed?
Existing residents or the would-be residents?

~~~
PoachedSausage
Perhaps the question isn't where but when.

40 years ago my parents were able to buy a large modern home for about 3 times
times one of their salaries. For young people today it is more like 6 - 10
times the combined salaries of two people.

~~~
RestlessMind
Where did your parents live? In mid-west or in suburbs or in Manhattan? Where
are young people living today and are those similar locations as their
parents?

------
caiobegotti
I believe it's not really "rethink" as if we had once figured it out correctly
in the past already. We are still actually thinking it for the first time,
specially if you consider economists and policy makers were yet looking for
"something new" (mentioned in the article) in macroeconomics during the last,
what, 50 years? It's all pretty new, which suggests to me that it is all in a
pretty extremist and radicalized state: it doesn't have to be 100% trickle
down reaganomics or 100% state interventionism exclusively. I'm very confident
a major crisis like this one will make key people finally realize that a mix
of free global markets + welfare states focused on reducing inequality +
democratic institutions will be the answer to many macroeconomics problems.
Very few countries have realized this, the rest of the world meanwhile will
keep shouting at each other doubling down on stupid policies not based in good
examples and will keep blaming keynesianism or whatever neoliberal approach
they can't understand.

~~~
ericmcer
They have already tried your strategy. Economists thought free global markets
would lead to liberalization in other governments. That has proved to be
utterly untrue with China and as a result they have become the worlds
manufacturing hub, while becoming more and more totalitarian.

Production wise, an economy that is not concerned with democratic institutions
or reducing inequality will outperform one that is. With that in mind,
globalization is basically a race to the bottom human rights wise.

~~~
nickff
Your first point is correct, but your second point is not. Bruce Bueno de
Mesquita demonstrated this in "The Logic of Political Survival", and others
have come to similar findings.

Briefly, rising incomes under a non-democratic regime lead to a local maximum
of growth, as totalitarianism is inextricably linked with economically
inefficient institutions. As an autocrat, your top priority is to compensate
those who keep you in power, which requires wealth extraction from the
productive; this disincentivises efficient production. Unfortunately, nothing
about rising wealth will necessarily lead to regime liberalization.

"Reducing inequality" is very different from democracy, and would probably
lead to reduced economic efficiency, as it necessarily reduces the incentives
for efficient production.

~~~
clairity
> "'Reducing inequality' ... would probably lead to reduced economic
> efficiency, as it necessarily reduces the incentives for efficient
> production."

this argument gets made a lot (for instance, re: the lower capital gains rate)
because proponents want it to be true and its flaws are not immediately
obvious, but it's unambiguously mistaken.

first, esteem from wealth is relative, and as long as there is a spectrum of
wealth, the wealthiest will derive maximal esteem regardless of the absolute
value of wealth. and that's the primary driver for the ambitious and greedy,
not putting resources to highest and best use (which is at best a side
effect). greater equality doesn't change that equation one iota.

second, it's plain to see that large accumulations of wealth are fairly
unproductive, simply illustrated by the localized real estate bubbles driven
by both wealth seeking safe harbor and PE-backed landlords seeking
unproductive rents.

in fact, there seems to be a central optimum. relative to now, wider
dispersion of wealth (less wealth disparity) seems to provide the best bang-
for-buck when it comes to efficiency, putting more potential to work rather
than mostly relegating it to the menial sidelines.

~~~
SuoDuanDao
This argument seems to be ignoring the propensity of wealthy people in
redistributionist environments to send false signals about their own level of
wealth. E.G. Stalin commanded the wealth of a global superpower, but he
dressed in uncomfortable military uniforms to signal solidarity with a poor
majority. That kind of 'wealth falsification' seems likely to cause its own
inefficiencies not present if wealth is considered the result of better
serving the market.

------
notJim
I'm a real dummy when it comes to economics, so I have a question. What is the
theory that buying assets like stocks boosts the economy? Doesn't this just
create incentives to hold on to those stocks, so that you can reap the growth?
Given that most stocks by far are held by wealthy people, it's hard to see how
this stimulates demand, since they already are able to buy what they want.
Theoretically, they might eventually sell the assets and then start a new
business or something, but this seems very indirect. Isn't it easier to just
hold the stocks/real estate? I don't really understand why holding a stock is
considering investing, since the company (where the actual employment and
production happens) doesn't see a benefit.

~~~
kaycebasques
> Given that most stocks by far are held by wealthy people

I also won't pretend to be an expert here, but I think this is where your
thinking may be going astray. There are lots of retirement-age people who are
counting on their pension funds to fund their retirement. Pension fund
managers assume steady growth in stocks, something like 7-10% per year. If
stocks don't meet that threshold, major parts of the pension system run into
big trouble. Pension plans have trillions of USD in assets. This article [1]
estimates ~$9T. Retirement-age people in general are a powerful constituent.

[1] [https://www.investopedia.com/articles/credit-loans-
mortgages...](https://www.investopedia.com/articles/credit-loans-
mortgages/090116/what-do-pension-funds-typically-invest.asp)

~~~
charwalker
Although many regular people have stocks held until retirement, they don't
make up a majority of stock owners: [https://finance.yahoo.com/news/the-
richest-1-own-50-of-stock...](https://finance.yahoo.com/news/the-
richest-1-own-50-of-stocks-held-by-american-households-150758595.html)

And according to Wikipedia data, in 2016 84% of stock was owned by the top
10%. That leaves 16% of the market to everyone else, a very small %.

[https://money.com/stock-ownership-10-percent-
richest/](https://money.com/stock-ownership-10-percent-richest/)

------
nly
Financial repression[0], 0% interest rates and higher inflation, to inflate
away trillions of $$ of national debt and drive up _nominal_ GDP, is the order
of the next decade.

We've reached the limits of what central banks can do, from here on out it's
direct government intervention in the commercial credit sector, and driving up
demand through fiscal policy.

[0]
[https://en.wikipedia.org/wiki/Financial_repression](https://en.wikipedia.org/wiki/Financial_repression)

~~~
beamatronic
Is there anywhere that explains why governments in the US don’t build
infrastructure, as a long-term investment?

~~~
amanaplanacanal
My sense is that states and localities don’t have the money for infrastructure
projects. They mostly can’t even afford maintenance on the infrastructure they
have. Anything that gets built has to come from the feds somehow, so it’s up
to Congress.

The democratically controlled house would have to come up with a bill, then
the republican controlled senate would have to agree to it, then the president
would have to sign it. I don’t think there is that much coordination happening
at the federal level right now.

~~~
vharuck
>I don’t think there is that much coordination happening at the federal level
right now.

There is, but it's divided between two types of bills: boring and
sensationalist. Boring bills usually get coordination, bipartisan support, and
little news coverage. Sensationalist bills, even if they align with both
parties' platforms, get drawn out and played for show on the news.

Sadly, only a few acts can show at the same time. And in the current political
world, new acts keep popping up (email dumps, whistleblowers, official
tweets). So things that take a while, like infrastructure, never get to
launch. (How many times has it been "infrastructure week"?)

------
hypertexthero
Thomas Piketty, in [Cap­i­tal in the Twenty-First Cen­tu­ry][money]:

> Yet it seems to me that all so­cial sci­en­tist­s, all jour­nal­ists and
> com­men­ta­tors, all ac­tivists in the unions and in pol­i­tics of
> what­ev­er stripe, and es­pe­cial­ly all cit­i­zens should take a se­ri­ous
> in­ter­est in mon­ey, its mea­sure­men­t, the facts sur­round­ing it, and
> its his­to­ry. Those who have a lot of it nev­er fail to de­fend their
> in­ter­est­s. Re­fus­ing to deal with num­bers rarely serves the in­ter­ests
> of the least well-off.

[Rutger Bregman][ubi]:

> Poverty isn’t a lack of character; it’s a lack of cash.

[money]:[https://www.tbray.org/ongoing/When/201x/2014/05/01/Piketty-C...](https://www.tbray.org/ongoing/When/201x/2014/05/01/Piketty-
Capital)

[ubi]:[https://www.ted.com/talks/rutger_bregman_poverty_isn_t_a_lac...](https://www.ted.com/talks/rutger_bregman_poverty_isn_t_a_lack_of_character_it_s_a_lack_of_cash)

------
notJim
[http://archive.is/15nqg](http://archive.is/15nqg)

------
dredmorbius
For those of us who've read _The Economist_ for two or three or four decades,
perhaps more, "rethinking economics" is a reliably recurring evergreen which
gets trotted out at times of crisis. When the paper is feeling merely
foreward, a possibility that Keynes may not have been _completely_ wrong is
broached. In periods of sheer desperation, a hesitant suggestion that
subscribers might _read_ (but never follow) Marx is hauled from the deepest
rhetorical powder magazines.

But that's about the limit of it.

The one change I _have_ noted is that where the tactic was invoked only once
or twice a decade, its use now seems far more frequent, every few years in the
aughts, now only months apart. A search of the paper's archives, or external
Web search, largely confirms this:

[https://duckduckgo.com/?q=rethinking+(macroeconomics%7Cmicro...](https://duckduckgo.com/?q=rethinking+\(macroeconomics%7Cmicroeconomics%7Ceconomics\)+site%3Aeconomist.com)

Whilst I'm strongly convinced that economic orthodoxy is sharply flawed,
monetarism a stunted model like its progenitor, Keynes was insightful, and
that Marx's class-consciousness has merits, full understanding and remedy for
present concerns must look further afield.

MMT, W. Brian Arthur's complexity economics, and Steve Keen's work unifying
capital, labour, class, and energy would be a good start.

~~~
gallegojaime
I subscribe to some of aspects of classical liberalism, and the Economist was
a must read for me during years.

It explains good ideas, but I would notice a strange formulaic structure they
often used. Many poor-quality articles were subtitled "A
[paradigm/company/event] brings [boon], but [caveat]".

~~~
dredmorbius
Hence the old joke about the desire for a one-armed economist: they won't be
always saying "on the other hand..."

Though this _does_ bring to mind Robert K. Merton's unintended consequences
and overt/covert functions.

------
thedudeabides5
_Just as inequality creates a need for stimulus, they argue, stimulus
eventually creates more inequality._

Particularly when your predominant stimulus tool is 'print money to buy assets
rich people have.'

~~~
pa7x1
I think we will look back into economic history to our times in surprising
disbelief at how simplistic our central bank policy is. A bit like how we
laugh at how doctors used leeches to treat various ailments.

From 1929, central bankers learnt that liquidity can be a terrifying disease
in an economy, 2008 showed that printing helps and here they go with their
newly learned tool trying to fix all problems. Now they have to figure out
that if you only inject that liquidity from the top, the inflation appears in
certain kind of assets (mostly financial) and has a hard time reaching the
rest of the economy, causing ever-rising inequality.

I think a more refined approach will be developed at some point, where they
will start using two levers to steer the function of the economy. Money
printing from below via UBI and regulating the inflation of day-to-day assets
and money-printing from above and regulating the inflation of financial
assets. This could allow finer control balancing target inflation rates of
different assets and preventing rising inequality to tear down society.

~~~
gallegojaime
UBI as a macroeconomic lever to pull is an intriguing idea - hadn't thought of
that consequence. Although it figures changing the amounts would get extremely
political.

~~~
RobertoG
There is the idea of job guarantee as an automatic stabilizer too.

The government grants a job to anyone that wants to work at a minimum wage
salary. When unemployment grow, the government automatically expend more in
the economy because more people access to the job guarantee.

When the economy recovers the private sector take workers away from the job
guarantee through paying a little more than the minimum wage (or the same and
better conditions) and the government spending is reduced.

It's both an inflation and an unemployment stabilizer. UBI doesn't have those
properties.

~~~
jmaygarden
What's the incentive to perform if you cannot be fired? A "guaranteed job"
might as well be a simple unemployment check.

~~~
dredmorbius
Job satisfaction / better jobs.

The guaranteed job need not be pleasant. Hell, many already aren't.

But a job would be guaranteed and would meet basic needs.

~~~
generatorguy
people would rather be unemployed than have an unpleasant minimum wage job.

~~~
dredmorbius
That becomes an interesting dynamic expecially between universal guaranteed
income and universal guaranteed employment.

But the original question was how to provide incentive. Assuming able-bodied
persons must provide _some_ work, opportunities for advancement, more pay, or
more favourable environment, and the prospect of _less_ attractive work,
remain. Military and similar environments provide models, e.g., latrine duty.

Most people would prefer _some_ useful occupation, I suspect, however humble.

And again, with guaranteed employment, even the worst job would provide a
livelihood.

------
easymovet
"a monetary policy that is not constrained by the presence of physical cash",
that is like saying a democratic government that is not constrained by the
need for voting.

~~~
wl
Democracy doesn't require elections. Sortition is the classical example, but
there are others.

------
torrance
Given that this is precisely what it’s spent the last 30 years coming to
understand, it’s baffling that there is only a single paragraph in this
article about Modern Monetary Theory. And one at that certainly doesn’t convey
the nuance of the theory at all.

For anybody seriously interested in the subject I would recommend the 2019
textbook ‘Macroeconomics’ by Mitchell, Wray & Watts.

~~~
trthomps
I just finished the book "The Deficit Myth: Modern Monetary Theory and the
Birth of the People's Economy" by Stephanie Kelton. Highly recommend to anyone
who hasn't heard of MMT and wants a good intro with examples of how MMT could
help today.

~~~
RobertoG
A good lecture by her (video):

[https://www.youtube.com/watch?v=WS9nP-
BKa3M](https://www.youtube.com/watch?v=WS9nP-BKa3M)

~~~
mdorazio
This lecture was frustrating as hell to watch because she only addressed the
concerns of naive critics of deficits who don't really understand how monetary
policy works. She did basically nothing to address the concerns of people more
versed in the topic, such as:

\- What happens when your deficit gets so high that it's obvious to the people
buying treasuries you can't pay the interest they expect without massive
inflation? \- How do you explain away stagflation from the 70s without being
concerned about repeating it?

Basically, deficit spending is fantastic _for as long as you can get away with
it_. The question is at what point will you no longer be able to get away with
it? 10 years? 20? 100? No one knows. But at some point the interest burden of
the debt itself requires more monetary expansion than purchasers of treasuries
are willing to accept (inflation is the enemy of fixed interest assets), and
then you have a problem. The US _recently_ doesn't have this problem because
of its dominant economic and military position in the world (as well as the
petro dollar/default currency status), but what happens when those things
cease to be true?

Those are the concerns I wanted Stephanie to at least pay lip service to, but
she conveniently didn't even mention them.

~~~
RobertoG
>>"Those are the concerns I wanted Stephanie to at least pay lip service to,
but she conveniently didn't even mention them. "

She, and other MMT proponents, do it in other places. Obviously this was only
an introduction. If you are really interested there is now a full textbook
[1].

Your questions make me think that you don't understand the basic of what MMT
is saying.

>>"[..]deficit gets so high that it's obvious to the people buying treasuries
you can't pay the interest"

All the point of MMT is that governments that use its own floating currency
don't need anybody do finance them. They could just spend without selling any
treasuries. The only limit to that spending is inflationary and selling
treasuries don't reduce the danger of inflation. This is not a belief, it's
just a description of how the system works today.

For instance, now all the main governments in the world are applying stimulus
at the same time. Where is the money coming from? Where is the inflation in
Japan? And where the Yens from the increase in the Japanese public debt in the
last 30 years come from?

>>"explain away stagflation from the 70s"

Frequently, problems of inflation comes from supply problems. Anyway looking
to the QE programs, the current stimulus programs or Japan the last 30 years,
should be obvious, by now, that monetarism is a fallacy.

That doesn't mean that you can't spend too much in the economy, but there are
frequently other causes. In the 70's you have oil crisis, the Vietnam war,
etc..

"[..] at some point the interest burden of the debt itself requires more
monetary expansion "

A government with its own currency don't need to keep the fallacy of selling
debt to "the markets", but if they choose to do it, and the debt is owned by
the Central Bank, the money of the interest goes back to the government.

[1].-
[http://bilbo.economicoutlook.net/blog/?page_id=33139](http://bilbo.economicoutlook.net/blog/?page_id=33139)

~~~
mdorazio
I started reading the book you linked shortly after it came out and gave up
because of how shallow all the reasoning was. I think you and most MMT
proponents don't understand that the concerns are long-term and deal with
knock-on effects, not limited to what is happening right now, and that having
your own fiat currency is not a magic wand that you can use to wave away
problems with no repercussions.

Gregory Mankiw, an economist at Harvard, voices my criticisms with the book
better than I can: [1]

I think it's funny that you point to Japan as a counterexample here. The
reason Japan doesn't have high inflation is _because the Bank of Japan refused
to print money for 20 years_ [2]. If it did when other countries did not,
inflation would be high.

To your next point, you kind of answer it yourself. Why is there no inflation
when all the main governments of the world are applying stimulus at the same
time? Well, first, _because they 're all doing it at the same time_. As soon
as you remove that fact, the situation changes entirely because the economy
(and currency/bond markets!) are global, not local. And second, _because
demand is historically low due to a pandemic_. Again, when you remove that
fact, everything changes.

On stagflation, I think you are misinformed about what causes/caused it. [3]
is a good summary: federal interference in supply + printing money. If that
sounds a lot like what MMT proposes as a magic wand, it's because it is.

Finally, I think it's important to distinguish that many critics of MMT,
myself included, don't disagree with the marketing-friendly premise that debt
spending can be a good thing. We disagree with the idea that it's an unlimited
tool with zero repercussions. At some point there is a reckoning - either
unsustainable inflation (like 1970s US) or effectively dead economic growth
(like Japan) depending on how the central bank reacts. We should be concerned
about these things and take steps to make sure that the time of reckoning
stays far in the future.

[1]
[https://scholar.harvard.edu/files/mankiw/files/skeptics_guid...](https://scholar.harvard.edu/files/mankiw/files/skeptics_guide_to_modern_monetary_theory.pdf)

[2]
[https://www.ceicdata.com/en/indicator/japan/m2-growth#:~:tex...](https://www.ceicdata.com/en/indicator/japan/m2-growth#:~:text=Japan's%20Money%20Supply%20M2%20increased,5.1%20%25%20in%20the%20previous%20month.&text=In%20the%20latest%20reports%2C%20Japan's,of%20Import%20in%20Jun%202020).

[3] [https://www.thebalance.com/what-is-
stagflation-3305964](https://www.thebalance.com/what-is-stagflation-3305964)

~~~
RobertoG
About the Mankiw criticism, I direct you to the answer from people more
knowledgeable that me [1]

About the stagflation I recognize that I have not looking enough into it (yet)
to be able to have a meaningful debate.

About Japan, your comment: "the BOJ refused to print money for 20 years"
puzzles me. The public debt of Japan is, currently, around 240% of GDP, and
around half of it is owned by the BOJ. If that's not your interpretation of
"printing money", what is it?

I don't understand neither your comment "[..] no inflation when all the
governments of the world [..] at the same time". Are you making a reference to
the external sector aspects of inflation?

You say: "[..] debt spending [..] We disagree with the idea that it's an
unlimited tool with zero repercussions."

Please, note that MMT doesn't say that. MMT says that excessive deficits can
be inflationary in a problematic way, what MMT disagree is that public debt
(the accumulate of past deficits) is problematic.

Finally, thanks for engaging in this discussion. It seems to me that it's
reasonable that people disagree in policies, because policies come from values
and those can be very different. What we should be able to agree is in how the
financial system currently works. MMT have some policy proposals but that's
not the important thing, the important thing is that the description of how
the system works is different and, should be falsifiable. Sometimes, in this
kind of exchange, I despair because it seems the other person and I are
talking past each other.

I think I found your webpage, would you be willing to continue this exchange
by mail? I have some problems understanding what is what the MMT critics don't
understand. In the worst case scenario we will finish with a better
understanding of the other position.

[1] \-
[http://bilbo.economicoutlook.net/blog/?p=43900](http://bilbo.economicoutlook.net/blog/?p=43900)
\-
[http://bilbo.economicoutlook.net/blog/?p=43961](http://bilbo.economicoutlook.net/blog/?p=43961)
\-
[http://bilbo.economicoutlook.net/blog/?p=43997](http://bilbo.economicoutlook.net/blog/?p=43997)

------
Animats
This used to be called "secular stagnation". There's not much forward
progress, but nobody really understands why. Japan hit this first, in their
1989 housing crash. In the mid-1980s, Japan seemed poised to dominate the
world economy. After the crash, Japan never came back.[1]

There was a fear that the US would hit that after the 2008 crash. But the US
did come back. At least until the epidemic.

Macroeconomists think macroeconomics determines what happens. Sometimes it
does, and sometimes it doesn't. When it doesn't, central bankers are totally
lost about what to do.

Should a country have an industrial policy? The traditional answer in
capitalist countries is "no". But it worked for Japan, S. Korea, Singapore,
and China, which now make most of the world's good stuff. China's current
industrial policy, set in 2015, is called "China 2025"[2][3]. The plan is to
achieve dominance in the remaining sectors where China is behind - aircraft,
ICs, etc. It's not talked about much outside China, but it's still the
operating plan. The main items in 2015 were:

1\. New advanced information technology

2\. Automated machine tools & robotics

3\. Aerospace and aeronautical equipment

4\. Maritime equipment and high-tech shipping;

5\. Modern rail transport equipment

6\. New-energy vehicles and equipment

7\. Power equipment

8\. Agricultural equipment

9\. New materials

10\. Biopharma and advanced medical products

Halfway through the 10-year plan, China is doing well on at least 7 of those
items.

Western countries are assuming that the knobs controlled by the financial
system determine what happens. When the biggest country on the planet isn't
playing that game, that approach may not be competitive.

[1] [https://www.csis.org/analysis/made-
china-2025](https://www.csis.org/analysis/made-china-2025)

[2] [https://www.pbs.org/wgbh/frontline/article/made-in-
china-202...](https://www.pbs.org/wgbh/frontline/article/made-in-
china-2025-the-industrial-plan-that-china-doesnt-want-anyone-talking-about/)

[3]
[https://static.seekingalpha.com/uploads/2019/1/21/saupload_J...](https://static.seekingalpha.com/uploads/2019/1/21/saupload_Japan-
Nikkei-225-Index-2017-04-03-chart.png)

~~~
barry-cotter
> This used to be called "secular stagnation". There's not much forward
> progress, but nobody really understands why. Japan hit this first, in their
> 1989 housing crash. In the mid-1980s, Japan seemed poised to dominate the
> world economy. After the crash, Japan never came back.

Scott Sumner disagrees on no one understanding this. They’re not printing
enough money. Basic sketch of the market monetarist position is that Friedman
was right about money being really important but very, very wrong about the
appropriate target. Keep printing money until nominal GDP growth hits target,
then stop. Better to target NGDP future to reduce instability. Japan’s central
bank’s is up there with the Fed causing the Great Depression by contracting
the money supply by a third at the beginning of a recession in terms of
economic mismanagement.

------
plmu
The article pleads for more workers rights and bargaining power. While I think
that is a noble wish, it is an illusion, and they know it. The article
describes "out of the box" thinking, but it is still hopelessly trapped.

