Wednesday, January 17, 2007

Lessons from Japan

I sit in wonder sometimes considering how so many people put their faith in government or private sector entities. History shows us that government intervention in anything doesn’t work very well and the Fed has no power to save our economy. In fact Fed meddling has in the past caused more harm than good.

The Fed can no more decide the price of money than it can decide the price of tomatoes. The free market, like water will always find its own level. It seems to work best that way.

It is true, we have never been here before. Even though the landscape looks familiar dynamics are always, well, dynamic. Therefore we are in the unknown, left groping in the dark toward some future destiny, we know not what. The best we can do is to take lessons from others who have gone before us, compare the situations to our own and guess.

I’m guessing that Japans economic policies have some lessons for us in the U.S.
They should not be ignored.
Vern
"On March 9 last year, the BoJ ended a five-year-old super-loose monetary policy under which it flooded the short-term money market with excess cash to keep short-term interest rates near zero in a bid to defeat deflation."

"Obviously "flooding the short-term money market with excess cash to keep short-term interest rates near zero in a bid to defeat deflation" was a totally failed policy. Yet for some reason people think it will have a different effect here if and when we get to the same point."
Read the entire article: Japanese Economic Data January 17 2007 at

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