The japanese government was highly in debted and still deflation happened.
China is now deflating and I think, we're going in their direction. we're not there yet, but deflationary pressure is growing.
whowasthatmaskedman · 70-79, M
The Japanese have been holding interest rates near zero for decades. they have finally faced the futility of this process, bitten the bullet and are raising rates, partly as a result of the Trump tariffs, they are disposing of some of their $US treasury bonds and have rejected Americas request to hold rates down. Looking after their own economy, rather than shielding America from more pressure.
One has to be careful in judging "deflationary pressure" when one measures in $US terms, because the $US itself has devalued in terms of trade by up to 10% against the Yuan and the yen in the last year..😷
One has to be careful in judging "deflationary pressure" when one measures in $US terms, because the $US itself has devalued in terms of trade by up to 10% against the Yuan and the yen in the last year..😷
PDXNative1986 · 36-40, MVIP
@whowasthatmaskedman those bonds being dumped aren't actually relevant because in order for inflation to occur it is absolutely 100% necessary that consumption via demand not for Assets of any kind but for goods and services to increase. In other words all this seemingly relevant shit isn't in reality because the velocity of money is in the toilet and the bond holders are not going to go out and on a shopping spree on us goods and services so deflaiton happens even though Japan is pulling money out because in essence it has no impact on the velocity of money and thus has no effect on how fast money is circulating in the real economy. and thus does not devalue the dollar.
whowasthatmaskedman · 70-79, M
@PDXNative1986 OK. I am not entirely sure what you are saying. But here is the thing is plain language. Japan is holding US T bonds to use to pay for goods and services it buys from the US, because of the reserve currency thing.. And also because with internet interest rates hovering around zero in Japan, the relatively low return on those bonds it still decent. And the investment was seen as rock solid..But all of those factors have shifted recently. And America has tried to bully Japan into lowering its interest rates further to benefit the $US, which Japan has refused to do. This attracted threats from Trump..So Japan is simply not buying more T bonds as they mature..😷