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

[techmen]

^^ thanks for this lesson in economics. You just explained it in a few lines while others need 500 page books to make their point. Duh.

 

[charlie.simm]

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.

True but even if we have a perfect storm, the risk isn't hyperinflation, it's stagflation IMO.

A huge and at the same time attractive economy like the one the US (still) has cannot be brought to its knees by hyperinflation. Hyperinflation occurs *after* the economy in question has been brought to its knees by something else.

Historically speaking, what has been the #1 factor behind the demise of powerful nations/empires (from the Roman Empire to the Soviet Union)?

The fact that they were no longer competitive.

High taxes and generally speaking, the consequences of too much government involvement (tyranny or whatever you want to call it), brought about the fragmentation of the Roman Empire, for example.

As far as the Soviet Union is concerned, well let's just say communism makes long-term competitiveness pretty much impossible.

That's the #1 issue, competitiveness.

After countries lose their "major player" status as a result of the competitiveness issue then sure, the economies become vulnerable to hyperinflation and lots of other things.

From this perspective, the US still has a lot of work to do but it won't be in the spotlight anytime soon. There are other "candidates" like Europe which are in far worse shape, so the likelihood of the US losing its safe haven status in the short run isn't high.

What is the #1 problem in Europe?

Lack of competitiveness.

Waaaaaay too much government involvement + high taxes + making it difficult for people to run businesses and pretty much discouraging entrepreneurship = EPIC FAIL

• 25% unemployment in Greece and Spain (the eurozone's #4 economy), 50%+ youth unemployment in the same countries.
• Debt problems in Ireland and Italy (the eurozone's #3 economy).
• Present but especially future competitiveness problems in France (the eurozone's #2 economy).

The US might not be in great shape but compared to Europe... you get the point.

Again, lack of competitiveness is the #1 problem in my opinion, it can ultimately bring an economy to its knees and after that happens then yeah, hyperinflation becomes a risk.