The NYT ran a piece that implied that Japan's policy of deliberately trying to raise the rate of inflation is not working when in fact most of the evidence cited in the piece showed the opposite. For example, at one point it tells readers;

"Rather than start an economic revival, this “cost-push” inflation, as economists call it, could become a rising threat to Japanese stuck in a deflationary mind-set. Such people could see their hard-earned savings eroded by rising prices, warned Yukio Sakurai, a housing analyst based in Tokyo."

The point of the policy is to give businesses and individuals more incentive to spend now, since inflation will reduce the value of pools of idle savings. (The notion of "cost-push inflation" is ill-defined, since someone must be ending up with the money that represent higher costs.) Contrary to what is implied in the piece, the policy has led to a turnaround in prices, with core inflation at 0.7 percent over the last year according to the OECD. In prior years prices had been falling at roughly this pace.


Leave your comments

Post comment as a guest

  • No comments found

GuideStar Exchange Gold charity navigator LERA cfc IFPTE

contact us

1611 Connecticut Ave., NW
Suite 400
Washington, DC 20009
(202) 293-5380

let's talk about it

Follow us on Twitter Like us on Facebook Follow us on Tumbler Connect with us on Linkedin Watch us on YouTube Google+ feed rss feed