Wall Street Journal (January 10)
“Based on the growth of the money supply, Japan clearly fails to qualify as ultra-loose. On the contrary, it has been ultra-tight for decades.” Based on the quantity theory of money and Milton Friedman’s insights, “that tightness put Japan right where anyone… would expect: with ultra-low inflation.” That’s right, “Japan’s ultra-low inflation rates have been the result of ultra-tight, not ‘ultra-loose,’ monetary policy. The Bank of Japan’s attraction to this fallacy has resulted in Japan’s lost decades.”
Tags: BOJ, Fallacy, Friedman, Growth, Japan, Lost decades, Monetary policy, Money supply, Rates, Ultra-loose, Ultra-low inflation, Ultra-tight
Wall Street Journal (March 15)
This week, the Fed meets “to address the worst inflation in 40 years amid new risks to economic growth.” The mess is “largely of the Fed’s own making. The central bank’s inflation target is 2% for personal-consumption expenditure inflation, and the rate in February was probably three times higher.” The Fed’s “historic exertions were needed” when Covid struck, but it continued them for “too long, even as the money supply exploded and clear signs of inflation began to appear.”
Tags: Central bank, Covid, Economic growth, Fed, Inflation, Inflation target, Mess, Money supply, Personal consumption, Risks
Reuters (May 16)
“Years of heavy money printing by the BOJ have pushed down long-term interest rates near zero, adding to a squeeze on margins for Japan’s regional banks already suffering from a dwindling population and weak loan demand.”
Tags: BOJ, Dwindling population, Interest rates, Japan, Loan demand, Margins, Money supply, Regional banks
