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alstry (35.13)

THIS could be INFLATIONARY

Recs

12

March 05, 2009 – Comments (6)

Japan's parliament has passed legislation to give a cash hand-out to every resident in attempt to boost the recession-hit economy.

Most people will get at least 12,000 yen ($121; £86) under the $20bn plan.

But there are fears many Japanese, who have a strong tradition of saving, will hang on to the cash and not spend it.

The cash hand-out forms the centrepiece of a stimulus package to revive Japan's economy, which is in a far sharper recession than the US or Europe.

Japan's GDP dropped 3.3% in the final quarter of 2008, a much steeper decline than in the US, which saw a 1.6% drop, and the UK, which contracted by 1.5%.

http://news.bbc.co.uk/2/hi/business/7922815.stm

If we start down a similar path here, I may have to revise my position on DEFLATION.  A key characteristic of Alstrynomics is ability to change course....but only when the facts dictate.

At this point the amount seems more sybolic than material....

6 Comments – Post Your Own

#1) On March 05, 2009 at 7:20 AM, abitare (33.88) wrote:

They are pumping a little air into a balloon with a GAINT deflationary rip.

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#2) On March 05, 2009 at 7:38 AM, abitare (33.88) wrote:

I think Japan has done this before

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#3) On March 05, 2009 at 8:35 AM, Gemini846 (50.69) wrote:

At some point Alstry, doesn't all this money pumping become inflationary? Surely the fed can't turn off the spicket before it affects us.

Right now you've got the sink drain open with the tap on a trickle. For every $100 in credit that evaporates you replace $1 of it with Fiat currency. How does the fed ease out of this process w/out jacking up interest rates rapidly and raising taxes?

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#4) On March 05, 2009 at 10:48 AM, BGriffinFlorida (27.08) wrote:

Gemini846:

You seem to be asking, how the fed could tighten the money supply without raising interest rates, once the economy begins to recover.. that is once the theoretical money supply is validated as actual money supply because the then previously stagnant injections have appeared as actual money due to an increase in velocity....

There are many ways to tighten money supply without raising interest rates (and without raising taxes, but taxes are not in the FEDs purview).  Why would you want to remove one of the FED's more valuable tools?  What is wrong with raising interest rates if you fear the economy may be accellerating too quickly?

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#5) On March 05, 2009 at 11:52 AM, jesusfreakinco (28.89) wrote:

Al,

Think about it.  Inflation is a product of supply and demand.  Supply is decreasing dramatically as manufacturing thorughout the world is shutting down.  Demand (i.e. available currency) is skyrocketing because everyone is printing money - UK just announced their own printing press program...  Quantitative Easing is the new buzz word.  Wait for the rest of the 'western' economies to do likewise - Germany next?

JFC
 

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#6) On March 06, 2009 at 2:19 AM, mliu01 (< 20) wrote:

Brits starting to print too.

 

Alstry. Hope you will get it soon.

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