Head Bang!! Japan Continues Spiral Of Insanity!!

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Watching this particular train wreck would almost be comedic if this stupidity didn’t actually effect the lives of the people of Japan and around the world. 

Great news!!! 

The data released Friday showed the consumer price index rose 0.7 percent in July from a year earlier, for the second straight month of gains. That suggests efforts to break free of years of demand-dampening deflation are progressing. The CPI rose 0.2 percent in June.

In other news ……

Average household spending fell 1.4 percent in July from a year earlier, despite slight improvements in income and the jobless rate, which fell to 3.8 percent from 3.9 percent the month before.

Retail sales fell 0.3 percent in July from a year earlier for the first decline in three months. Sales of clothing and other items sagged, while food sales rose.

Japan did have some other moderately good news.  But, this illustrates the stupidity of aiming for, and trying to achieve inflation.  You net gains have to improve as individuals or you can’t really achieve anything, other than inflation.  Or as this article put it ….

However, economists say that without matching increases in wages, rising prices and planned tax hikes could actually weaken the consumer demand that accounts for the bulk of business activity, undermining any economic rebound.

Could?  No, will.  Be careful what you wish for, you might just get it. 

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13 Responses to Head Bang!! Japan Continues Spiral Of Insanity!!

  1. Tom in Indy says:

    The central bank just needs to give that money directly to Japanese consumers if they want some inflation. It does no good to put it into the banking system and hope banks make loans when there is little demand for new loans.

    Of course, the thrifty Japanese would probably put most of it in a savings account rather than spend it, defeating the purpose of giving it directly to consumers.

  2. PhilJourdan says:

    Ok, Economics 101 (you know this, but in case one of the Liberals stops by):

    Inflation (moderate) is in and of itself not good. However, it can be a sign (or symptom) of good. If demand is up, and so is inflation, then that means resellers (or manufacturers) have to increase output to keep up with demand. Which means more jobs. But when Inflation is up and demand is down, that usually is an indication that the costs are increasing, but not jobs.

    So the news out of Japan is not good.

    • suyts says:

      What the Japanese don’t seem to understand is that there is little room for them to increase demand. Their unemployment is sitting at 3.9%. It’s totally bizarre what they’re trying to do.

      • DirkH says:

        You can increase demand by lowering prices. Like with smartphones and plasma TV’s.
        But that would be deflation.

        • PhilJourdan says:

          And it has a bottom. The cost. You can sell below cost, but not for long (and no, selling below cost, but making it up in volume does not work).

        • DirkH says:

          Lowering prices leads to increase in demand and more sales and more production. Cost drops with increasing volume following the experience curve of the respective product.
          (Economies of scale.)

        • PhilJourdan says:

          Yes, but lowering prices below costs is designed to drive competitors out of the market (called flooding – which is illegal) or in the short term a loss leader. The former will result is profits in the long term as the vendor is then free to raise prices without fear of competition. The latter is meant to get customers in to buy higher margin goods to make up for the loss.

      • PhilJourdan says:

        How do they count unemployment? Is it our U3? Or worse?

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