Should Inflation Be Our #1 Concern? Then Why Isn't There (Hyper)Inflation in Japan?

You're asking an overly simplified question about a complicated problem.

In regards to the gold side issue of it, people generally purchase gold as an investment vehicle as protection from diminishing purchase power. This DPP can be caused by hyper-inflation, people loosing trust in the fiat currency and abandonment of fiat currency. The inflation figures that are posted by the US government aren't very accurate because as mentioned previously they don't account for a whole bunch of shit.

You're also not comparing apples to apples, CPI is not calculated the same everywhere.
 


guerilla said:
I find this stuff very amusing tbh. I have the most posts, and probably, the most words written on this forum. And I probably have written the longest and most detailed discourses of anyone here, and I am actually be called to task as not supporting my opinions. It's very funny.
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What does your post count or the fact that your posts are long have to do with my statement or with Moxie's post?

I think there's a definition for this, lemme see: oh yeah, red herring.

My statement was about a specific claim you made in this thread:

"they aren't pursuing a hyper-inflationary path."

This is what Moxie is referring to.

You point out fallacies whenever you come across them but when you're guilty of the same thing (this juicy red herring, for example), the fact that others point out your mistake bothers you.

Everyone makes mistakes ffs.

Again, you made a claim about something that's anything but obvious:

"they aren't pursuing a hyper-inflationary path."

Now that's quite a claim and when I asked you to elaborate, you said you're too busy.

Then why say something in the first place?

I wasn't asking you to cover the basics, I simply wanted you to define your position. Something along the lines of:

"In Japan's case, I don't think (hyper)inflation is a threat because:"

"On the other hand, hyperinflation is a threat in <insert country name>'s case because:"

JakeStratham said:
For what it's worth, there is enormous satisfaction in digging for information, forming connections, thinking, testing, thinking, testing, throwing said connections out the window when they fail to pass muster, and starting anew.
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I agree Jake but when someone makes a claim about something that not even the world's most well-known economists agree on, asking him/her to elaborate is reasonable IMO.
 
This is my last post to this thread.

charlie.simm said:
I wasn't asking you to cover the basics, I simply wanted you to define your position. Something along the lines of:

"In Japan's case, I don't think (hyper)inflation is a threat because:"
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Because they are not pursuing a hyper-inflationary path.

If you don't know what hyper inflation is, don't use it in your title and OP. If you do, and you think I am wrong, prove that they are following a hyper inflationary path.

The burden of proof is not on me to prove a negative.

As far as the red herring, it wasn't. But since you're a guy who uses words, and starts topics he doesn't understand, what's the big deal with throwing around incorrect claims of fallacy too?

There are plenty of things I am wrong about, I don't know about. But you don't see me starting threads about areas where I am explicitly ignorant, and offering my opinions, than attacking someone better informed than me because they won't indulge my ignorance. I have too much pride (foolish or not) and self-respect to do goofy shit like that.

This is my last post to this thread and to you Charlie. You really pissed me off calling me arrogant after I have always taken the time to reply to you thoughtfully and diligently by PM. Classless.
 
guerilla said:
Because they are not pursuing a hyper-inflationary path.

If you don't know what hyper inflation is, don't use it in your title and OP. If you do, and you think I am wrong, prove that they are following a hyper inflationary path.
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I thought the huge-ass chart I posted made it more than obvious why a lot of people thought/think Japan should have/should have had (hyper)inflation-related problems.

Not only countries like Zimbabwe can experience significant inflation or hyperinflation, Israel's 1980-ish hyperinflation scenario is a relevant example.

Israel's situation is similar to Japan's from a lot of perspectives.

In both cases, the government spent too much money and then the central bank tried to fix everything by printing.

guerilla said:
This is my last post to this thread and to you Charlie. You really pissed me off calling me arrogant after I have always taken the time to reply to you thoughtfully and diligently by PM. Classless.
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I like you but yes, you're arrogant.

And I mean "you" as in your online persona.

Maybe you're not arrogant IRL but try to analyze your posts in an objective manner and if you don't think a lot of them make you come across as arrogant, I don't know what to say.
 
drave said:
exactly.
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except of china.
shit doubled in prices, incomes rose not even close to inflation in the last 10 years for the average guy.

just got there in 03 milk was 3 rmb (30 cents) now it's like 15. (more expensive ones even more) and the RMB rose too from 8.3 to 6.2 compared to the dollar
inflation is raping everything.
 
ameyer said:
Did I say I know? The other poster was making claims, I was just trying to see if he even knows what he was talking about.
However, a 3 second google search brought up this:
Inflation - Wikipedia, the free encyclopedia

Core price indices: because food and oil prices can change quickly due to changes in supply and demand conditions in the food and oil markets, it can be difficult to detect the long run trend in price levels when those prices are included. Therefore most statistical agencies also report a measure of 'core inflation', which removes the most volatile components (such as food and oil) from a broad price index like the CPI. Because core inflation is less affected by short run supply and demand conditions in specific markets, central banks rely on it to better measure the inflationary impact of current monetary policy.
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Exactly, its bullshit they dont include it.
 
nicmakaveli said:
except of china.
shit doubled in prices, incomes rose not even close to inflation in the last 10 years for the average guy.

just got there in 03 milk was 3 rmb (30 cents) now it's like 15. (more expensive ones even more) and the RMB rose too from 8.3 to 6.2 compared to the dollar
inflation is raping everything.
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china has joined the game for sure, but then again, they've effectively pegged the yuan to the dollar. washington thought they'd fuck china over by inflating the $ against the RMB to get out of their debt and china just pegged it. brilliant move, IMO. and now US politicians bitch about china's "manipulation"... LOL. they're (mostly) pegged to the fucking dollar. but american politicians somehow seem confused by that. LOL. says alot. america's being run by politicians. china is being run by planners.
 
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ameyer said:
Did I say I know? The other poster was making claims, I was just trying to see if he even knows what he was talking about.
However, a 3 second google search brought up this:
Inflation - Wikipedia, the free encyclopedia
Oh wait, that must be a government conspiracy....
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Agreed but you refer to the core price index while the consumer price index is most common to calculate price inflation. Point is that for the average household it has become more difficult to make ends meet every month. It's just a matter of which inflation index you're looking at. Meanwhile there's a new record of americans on foodstamps, 47 million so inflation should be something to worry about. Foodstamps Surge By Most In One Year To New All Time Record, In Delayed Release | ZeroHedge

Inflation is usually estimated by calculating the inflation rate of a price index, usually the Consumer Price Index.[31] The Consumer Price Index measures prices of a selection of goods and services purchased by a "typical consumer".[4] The inflation rate is the percentage rate of change of a price index over time. The Retail Prices Index is also a measure of inflation that is commonly used in the United Kingdom. It is broader than the CPI and contains a larger basket of goods and services.
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charlie.simm said:
Define "hyper-inflationary path" :anon.sml:

Sorry, couldn't help myself <3

Seriously though, please elaborate.
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I believe what he means by this is that the U.S. budget deficit is being primarily financed by the Fed, whereas Japan's budget deficit is being financed by its citizens.

The Fed isn't using existing money to finance the debt, so they create new money and increase the money supply, diluting the currency value and thus pursuing a "hyper-inflationary path".

Japan's deficit is funded by its citizens using their existing saved capital, meaning the money supply stays the same.

I did read somewhere that Japan is sitting on a ticking time bomb regarding their interest rates though, and that if they ever went up, Japan would implode. I think the trigger for that would be a steep drop in exports, leading to less saved capital/bond demand, etc.. but I could be wrong.

Maybe that helps.
 
BlokBlok said:
Exactly, its bullshit they dont include it.
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Kind of like the REAL unemployment numbers.

It's hideous and downright traitorous how governments are allowed to blatantly deceive their own citizens.

I mean what excuse in the fucking world could they have for not giving us all the data we need to make an accurate assessment of the state of the economy. Is it THAT bad that they need to hide it?

What a fucking embarrassment.
 
I believe what he means by this is that the U.S. budget deficit is being primarily financed by the Fed, whereas Japan's budget deficit is being financed by its citizens.

The Fed isn't using existing money to finance the debt, so they create new money and increase the money supply, diluting the currency value and thus pursuing a "hyper-inflationary path".
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But is hyperinflation really a threat when it comes to huge economies such as the US or Japan?

Historically speaking, I don't think there are any examples of countries which experienced hyperinflation while being in the spotlight.

The United States = the world's #1 economy
Japan = the world's #3 economy

It's tempting to say something like "but what about Germany's hyperinflation problems?" and sure, Germany is the world's #4 economy *now* but back in 1923, their economy was in pretty bad shape and they were anything but a popular destination for investors/capital.

If 30/40/50 years from now, countries like Japan or the US lose their "huge player" status then yeah, they'll be considerably more vulnerable and just like in Germany's case almost 100 years ago, hyperinflation would be a threat.

But right now, the hyperinflation scenario is pretty unlikely.

Inflation? Yes.

Hyperinflation? I don't think so.
 
charlie.simm said:
But is hyperinflation really a threat when it comes to huge economies such as the US or Japan?

Historically speaking, I don't think there are any examples of countries which experienced hyperinflation while being in the spotlight.
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It's math. Math doesn't care if you're big or small.

If your arguing that bond demand will be higher in the U.S. because it is so pivotal to the global economy and that would therefore lengthen the eventual implosion, I would agree, but only to an extent.

Eventually even the most ardent U.S. supporter would realize that the dollar is worthless or that the U.S. is bankrupt. At that point I imagine demand for American debt would dry up. Some people think this has already happened to an extent, with how big a role the Fed is playing in the Treasury auctions.
 
I believe what he means by this is that the U.S. budget deficit is being primarily financed by the Fed, whereas Japan's budget deficit is being financed by its citizens.
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Some people think this has already happened to an extent, with how big a role the Fed is playing in the Treasury auctions.
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I agree that the Fed is buying more US debt than it should but it's definitely not the #1 buyer of US debt.

Through QE1, they primarily purchased mortgage-backed securities.

Through QE2, they purchased US debt, so QE2 can be used as a compelling argument.

QE3 however once again puts mortgage-backed securities in the spotlight.

So to (over-)simplify things:

Q1 -> mortgage-backed securities
Q2 -> US debt
Q3 -> mortgage-backed securities

What I'm trying to explain is that the Fed isn't the #1 buyer of US debt, not by a long shot.

Retail mom & pop investors are the top buyers of US debt and foreigners also buy a lot of US debt.

For example during the 1st quarter of 2012, mom&pop investors bought $170 billion in government debt and foreigners ~$110 billion. During that quarter, domestic investors bought more government debt than foreign investors and the Fed combined.
 
This is about the US, but I'm sure Japan is similar.

For hyperinflation to happen the money needs to be spent. Otherwise there is no reason for prices to go up, if people are sitting on the cash there will be no inflation.

Now think through what's happened in the last 10 years. Banks have massively inflated the money supply between 2001-2008, and there was major inflation in housing, oil etc.

Then the banks, the entities that actually create money went broke. They have huge losses, not to mention their capital reserves need to be refilled as they were leveraged up at less than 10% capital.

Now, where is the money going? Why isn't their hyperinflation. Because the actual creators of money need the money to fulfill Basel requirements, to any excess cash is being soaked up by big banks. And they aren't lending much, so no new money is being created.

The fed's money is just filling up banks capital requirements, therefore no inflation. The fed is buying mortgage backed securities so that banks can recapitalise quicker and actually start lending. Their liablities are being bought at way above market value. But that money (currently) is not going into the economy.
 
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