For years now, I’ve been harping on the imbecility of our national bankers seeking to raise inflation. Japan, Europe, the US all have inflation targets, as if a certain inflation rate would make things right.
Before I go on, I would note that there is an ideal inflation rate ….. sort of. It is entirely dependent upon what else is going on in the certain economy. Each is different, yet, all of our national bankers seem to believe a 2% inflation rate is just right, regardless of what else is going on.
Well, Japan edged closer to their sweet spot target! Except ……..
TOKYO (AP) — Japan’s inflation rate rose slightly in November, though lower household spending and incomes slowed progress toward a sustained recovery for the world’s third-largest economy.
The consumer price index was up 0.3 percent from a year earlier, though down 0.3 percent from October, the government reported Friday.
The government has made scant progress toward its goal of a 2 percent inflation rate it has said is needed to ensure a “virtuous cycle” of rising demand and rising production, partly due to the sharp drop in global crude oil prices.
Figures released Friday showed that core inflation excluding food prices was 0.1 percent, while household spending in November fell 2.9 percent from a year earlier. Excluding food and energy, the consumer price index rose 0.9 percent.
Incomes fell 1.4 percent from the year before, suggesting companies are not heeding appeals by Prime Minister Shinzo Abe and other leaders to raise wages and increase investment inside Japan.
Japanese companies have tended instead to invest their surging profits, thanks to massive monetary stimulus, in faster growing markets overseas.
Friday’s data also showed that Japan’s jobless rate edged higher in November, to 3.3 percent from 3.1 percent in October. But companies have tended to add overtime or hire temporary help instead of raising wages to attract new staff.
So, inflation went up a bit. This is good, why? Consumers have to fork over more money for their goods and services. Yet, in Japan, they have less money to fork over. How grand for the Japanese! If they could have just gotten to that 2%, boy! Then things would have been great!
As an aside, I emboldened the next to last paragraph because this also demonstrates Suyts Spaces superior acumen in things economic over the central bankers of the world. As stated many times here, the various central bankings QE/stimulus efforts lands in the markets, not the various nations/entities. The monetary policies invoked have helped nothing.
I wonder if anyone has ever done a study on the value of the money invested in the stock markets and commodities vs the value exacted from the various markets (especially after the IPOs). Today, I would suspect it’s a net negative. Other than a total collapse of a currency, these are one of the few places one can place money/value in, and get absolutely nothing back in return.