Friday :: Jul 16, 2010

Open Thread

by Mary

Apologies for a very late thread. Hopefully ya'all are enjoying happy hour now.

A thought for the day concerns what happens when a national government relies on the Central Bank to respond a deflationary economy. As I mentioned a few days ago, my Japanese friend thought their government was a failure because they didn't do anything in the face of the financial crisis. Well, 15 years later, the Japanese Central Bank is still doing nothing about the deflation pit the Japanese economy fell into as a result of a terrible real estate bubble and the ensuing period of unrolling the massive leveraged debt. And as Krugman says, this isn't a good thing to have our country following in the footsteps of the Japanese who show that getting out of the pit is a lot harder than getting in, and people should be working harder to make sure we don't fall down that snake pit.

Mary :: 5:28 PM :: Comments (5) :: Digg It!