The old bugaboo of deflation once again became a problem for the U.S. economy. Here's what else should worry: After studying more than a decade of deflation in Japan, economists have gradually realized that they have no clue how it works. Deflation is usually associated with a reduction in demand both in the Great Depression. Consumer prices, incomes and asset prices fall. Interest rates fall to zero, as low as they can. As prices and incomes fall, the cost of borrowers to service debt - not by sucking the life out of the economy and further lowering prices. In short, a bad situation gets worse. In 1932, consumer prices in the U.S. fell by 10% in the period between 1929 and 1933 - up 27% over the entire period. But Japan's experience is not the same. Instead of being profound, destructive, and concentrated in a few years, deflation was surprisingly soft and lingering. Consumer prices fell in Japan for 15 years, but never more than 2% in each individual year. Deflation in Japan was a swamp, not a destructive downward spiral, as predicted by many economists. Why? And what does it portend for the rest of the world? Economists are no right answers. "We do not know how it works deflation," - said Adam Posen, a committee member of the monetary policy of the Bank of England, who is studying in Japan since 1997. "We do not know how to explain the sustained, long flat deflation," - he says. This is a serious problem for the U.S. Federal Reserve and other central banks. Ireland is experiencing deflation. Spain with her flirting. Fed's preferred inflation rate rose in June at 1.3% compared with the previous year, below its informal target of 1,5-2%. Some officials are worried that prices could be negative if the recovery falters. On paper, Japan has looked like a candidate for a deflationary spiral. The economy has consistently grown more slowly than the estimates of its ability to grow. Unemployment rose from 2.1% in early 1990 to more than 5% ten years later. This growing economic slack should drop the price lower and lower. A large burden of overdue loans at banks had to increase the debt burden on society. But this did not happen. Textbook trade-off between unemployment and inflation may not work as usual. The standard theory of the Phillips curve, named after Alban William Phillips, who helped her to explain, says that when unemployment rises and inflation falls.
Fed officials have seen evidence in the U.S. experience to the crisis that this dynamic might become over time less powerful, which means that a large increase in unemployment could not cause such a deflationary shock, as in the past. Japan's experience illustrates this point. Mr. Pozen has warned that it may help to explain the short-term changes in the behavior of unemployment and inflation, but Japan still remains a mystery, because its problems for so long preserved. Perhaps economists have misinterpreted much slack in the economy was in the first place. Another explanation is based on the psychology of households and businesses, which are believed to modern economists, play an important role in stimulating inflation. If people believe that inflation will grow strongly, they would have demanded higher wages and pushed up the prices. If people believe that prices will not change, or expect that they will fall, they would act accordingly and create an environment that they expect. Japan could be stuck in the slow deflation, because over time it was this Japanese households and businesses have come to expect. Even when the economy recovered between 2002 and 2007, prices fell. The Government also plays a role. Japanese officials reacted to the crisis, but many American economists have complained that U.S. officials at the beginning of the crisis could not reduce interest rates quickly enough, too soon finished the fiscal stimulus and too slowly cleared the banks and restructured underperforming the industry. Government intervention could help keep the economy in Japan from passing through the bottom, but it could be aggressive enough to really stimulate the economy and send it in a different direction, "says Mark Gertler, an economist at New York University, who in 1990 studied the malaise in Japan, along with Ben Bernanke. There are other explanations. Aging consumers in Japan, for example, may be more inclined to save for retirement and less inclined to spend, which undermines consumer demand and pressure on prices. For the U.S. this has good and bad consequences. "This is the most significant economic issue," says Mr. Gertler. The good news is that the Fed may not need to fear a deflationary spiral in the style of the Great Depression. The bad news is that if the U.S. does fall into deflation, then they can get stuck in it for many years as Japan, and suffer from very weak growth, her companion. And as in deflation so badly dealt with, the policies may find that they have no good solutions. For this article came out the answer, Paul Krugman, a well-known economist, Nobel Prize - approx. perevodika.ru: Secrets of deflation John Hilzenrat wrote a good article about the mysteries of gradual deflation in the Japanese style. But I'm not sure that readers will understand what the mystery - and they certainly do not understand from the article, what is actually in the puzzle is literature. So here's the basic conundrum: since, as Friedman and Phelps in the 60 years conjectured about the natural rate of inflation, applied macroeconomics was based on some kind of Phillips curve, adjusted for inflation, in the form Actual Inflation = A + B * (output gap) + expected inflation where the output gap - the difference between the actual and potential output, and A and B - estimated parameters. (The output gap is closely dependent on the level of unemployment). Expected inflation, in turn, includes the last past experience. This dependence predicts a decline in inflation when the economy is depressed and the output gap is negative, the inflation rate when the economy is overheated and the output gap is positive, the prediction works quite well for the contemporary U.S. experience, explaining in particular, falling inflation, recession, Volcker 1980 and falling inflation, which we are experiencing now. But here's the thing: the Phillips curve, adjusted for inflation in a very long recession forecasts rather than deflation, as accelerating deflation. Assume that the economy is depressing enough and that the expected inflation of 3% real inflation goes only 1% out eventually catch up, so that if the economy continues to be depressed, we expect that inflation will drop to -1% , and if the economy will be depressed even longer, we expect that inflation will drop to -3%, then to -5%, and so on. In reality this is not happening. At the beginning of the Great Depression, when the real economy collapsed, prices fell sharply, but they have again started to grow when the economy began to recover, despite the fact that there is still a huge negative output gap. Japan was depressed even before the current freshmen were born, but her chronic deflation never went into a fast downward spiral. So what's the deal? There is a pile of papers, of which I am surprised that we do not hear more: the literature on the stability of nominal wages to decline. I learned about this concept by Pierre Fortin, Mr. Janet Yellin, who is also George Akerlof, et al pretty much write about it. This literature argues that, probably due to bounded rationality is a certain rigidity while reducing prices and wages, even after waiting all regrouped. And on that score there is a lot of empirical evidence. Why is this important? First of all, it explains why it can remain stable gradual deflation. Secondly, the concept offers a reason - in addition to the concerns of the zero lower bound - why you should aim for a significantly positive rate of inflation: low inflation, higher prices and wages "want" to fall, but will be blocked resistance to decrease, so that even in the long term Phillips curve at low inflation is not vertical, and can be consistently low unemployment rate, taking, for example, inflation at 4%, instead of insisting on stable prices. Thirdly - and I am afraid that this will be a serious problem in the future - it is important to take into account the resistance to decrease to a mistake not to constantly depressed economy for the normal. Imagine an America in, say, 2014: the unemployment rate remains around 9%, prices drop by about 1% per year. Many economists may look at this situation and say, well, deflation is stable, not accelerating, so we probably have reached the natural rate of unemployment - pass on, guys, there is not much to look at. So it's time to start focusing on resistance to decrease and on what it means. In the end, everything indicates that we have to deal with the depressed economy for a long time. The Wall Street Journal, perevodika -------------------------------------------------- -------------------------------------------------- ------
Necessary explanations
Narrowly bourgeois opinion and would not let speak out on issues of deflation to go beyond the production-based capital, and even his private form - American capital, but because they did not get to the essence of the described phenomena.
The fact that capitalist production is subject to crises of overproduction and, accordingly, downturns in the economy and why clearly and lucidly explained in the Capital even 140 years ago, Karl Marx. These crises arise because of the basic contradiction between capital and labor, and not because of an excess of social wealth, because the capitalist character of production, when the whole purpose of the production consists in striving to maximize profits by keeping the employee in a black body. But modern bourgeois economists stubbornly unwilling to talk about it, but for your own personal use pull individual private laws, such as the Phillips curve, and present it as a great discovery, trying to get a patent on the discovery that when the wind swayed the trees.
Naturally, the rise in unemployment, in fact, a fall in demand for this kind of value as labor, but it arises, as to be understood as a result of the economic crisis, due to overproduction, falling demand for this form of value as money, form of loans. Reducing the money supply leads to inflation, it is clear that any thinking person.
So what Marx wrote, more than 140 years ago, looking at her with piercing eye of nascent capitalism? And all that competition, which is much like to talk inveterate Russian economists, it is nothing like fighting for the capital rate of return. And this struggle, if capital is not monopolized, and can not reduce labor costs, leading to increased productivity, reduced costs, and accordingly to deflation, which so frightened the American financial oligarchy, accustomed to clip coupons on inflation and financial speculation. That's why economists are no right answers. Therefore, Adam Posen, a committee member of the monetary policy of the Bank of England, and says: "We do not know how it works deflation" because looking at the economy through the prism of the value of paper money.
The difference is manifestations of deflation processes in Japan and America is due to the difference, historically, the character of capital. If the Japanese are just saying that Finance should work on the economy, to increase productivity, and do it, the Americans - shows that finance them, and there is the economy, but the most important and cost of liquidity - it is paper money.
If a Canadian, educated in the principles of the Code of Bushido, believes it is important not just for profit, but only in a manner that does not contradict the interests of society and the country as a whole, the American, which corresponds to the rules and its morality and even religion, the rich - pleasing to God, believes that the profit it is a sign of success and public benefit, and it does not matter how it was obtained. All this shows that Japan is in power industrial capital, and in America the financial oligarchy that seeks to clip coupons for the depreciation of money and speculation in securities. Which is confirmed by the practice noted in the above article: "Fed officials have seen evidence in the U.S. experience to the crisis that this dynamic might become over time less powerful, which means that a large increase in unemployment could not cause such a deflationary shock, as in the past .
Rather had to say that the body vigil interests of the financial oligarchy, found it possible, and even saw this proof in the experience, (we eat, and this is proof that we all need to ensure food) during the crisis, falling production and rising unemployment maintain the stability of profits of their masters, shifting the burden of the crisis on workers. And all this thanks to inflation. Therefore, in the minds of Americans and hammered the idea that deflation is a frightening and destructive phenomenon for the entire economy and every American in particular.
As a result, Japanese capital has a development perspective, as it supports the global economy and the U.S. is going to collapse, collapse, World War II, as the endeavor to parasitize the world.
Vitaly Glukhov
Fed officials have seen evidence in the U.S. experience to the crisis that this dynamic might become over time less powerful, which means that a large increase in unemployment could not cause such a deflationary shock, as in the past. Japan's experience illustrates this point. Mr. Pozen has warned that it may help to explain the short-term changes in the behavior of unemployment and inflation, but Japan still remains a mystery, because its problems for so long preserved. Perhaps economists have misinterpreted much slack in the economy was in the first place. Another explanation is based on the psychology of households and businesses, which are believed to modern economists, play an important role in stimulating inflation. If people believe that inflation will grow strongly, they would have demanded higher wages and pushed up the prices. If people believe that prices will not change, or expect that they will fall, they would act accordingly and create an environment that they expect. Japan could be stuck in the slow deflation, because over time it was this Japanese households and businesses have come to expect. Even when the economy recovered between 2002 and 2007, prices fell. The Government also plays a role. Japanese officials reacted to the crisis, but many American economists have complained that U.S. officials at the beginning of the crisis could not reduce interest rates quickly enough, too soon finished the fiscal stimulus and too slowly cleared the banks and restructured underperforming the industry. Government intervention could help keep the economy in Japan from passing through the bottom, but it could be aggressive enough to really stimulate the economy and send it in a different direction, "says Mark Gertler, an economist at New York University, who in 1990 studied the malaise in Japan, along with Ben Bernanke. There are other explanations. Aging consumers in Japan, for example, may be more inclined to save for retirement and less inclined to spend, which undermines consumer demand and pressure on prices. For the U.S. this has good and bad consequences. "This is the most significant economic issue," says Mr. Gertler. The good news is that the Fed may not need to fear a deflationary spiral in the style of the Great Depression. The bad news is that if the U.S. does fall into deflation, then they can get stuck in it for many years as Japan, and suffer from very weak growth, her companion. And as in deflation so badly dealt with, the policies may find that they have no good solutions. For this article came out the answer, Paul Krugman, a well-known economist, Nobel Prize - approx. perevodika.ru: Secrets of deflation John Hilzenrat wrote a good article about the mysteries of gradual deflation in the Japanese style. But I'm not sure that readers will understand what the mystery - and they certainly do not understand from the article, what is actually in the puzzle is literature. So here's the basic conundrum: since, as Friedman and Phelps in the 60 years conjectured about the natural rate of inflation, applied macroeconomics was based on some kind of Phillips curve, adjusted for inflation, in the form Actual Inflation = A + B * (output gap) + expected inflation where the output gap - the difference between the actual and potential output, and A and B - estimated parameters. (The output gap is closely dependent on the level of unemployment). Expected inflation, in turn, includes the last past experience. This dependence predicts a decline in inflation when the economy is depressed and the output gap is negative, the inflation rate when the economy is overheated and the output gap is positive, the prediction works quite well for the contemporary U.S. experience, explaining in particular, falling inflation, recession, Volcker 1980 and falling inflation, which we are experiencing now. But here's the thing: the Phillips curve, adjusted for inflation in a very long recession forecasts rather than deflation, as accelerating deflation. Assume that the economy is depressing enough and that the expected inflation of 3% real inflation goes only 1% out eventually catch up, so that if the economy continues to be depressed, we expect that inflation will drop to -1% , and if the economy will be depressed even longer, we expect that inflation will drop to -3%, then to -5%, and so on. In reality this is not happening. At the beginning of the Great Depression, when the real economy collapsed, prices fell sharply, but they have again started to grow when the economy began to recover, despite the fact that there is still a huge negative output gap. Japan was depressed even before the current freshmen were born, but her chronic deflation never went into a fast downward spiral. So what's the deal? There is a pile of papers, of which I am surprised that we do not hear more: the literature on the stability of nominal wages to decline. I learned about this concept by Pierre Fortin, Mr. Janet Yellin, who is also George Akerlof, et al pretty much write about it. This literature argues that, probably due to bounded rationality is a certain rigidity while reducing prices and wages, even after waiting all regrouped. And on that score there is a lot of empirical evidence. Why is this important? First of all, it explains why it can remain stable gradual deflation. Secondly, the concept offers a reason - in addition to the concerns of the zero lower bound - why you should aim for a significantly positive rate of inflation: low inflation, higher prices and wages "want" to fall, but will be blocked resistance to decrease, so that even in the long term Phillips curve at low inflation is not vertical, and can be consistently low unemployment rate, taking, for example, inflation at 4%, instead of insisting on stable prices. Thirdly - and I am afraid that this will be a serious problem in the future - it is important to take into account the resistance to decrease to a mistake not to constantly depressed economy for the normal. Imagine an America in, say, 2014: the unemployment rate remains around 9%, prices drop by about 1% per year. Many economists may look at this situation and say, well, deflation is stable, not accelerating, so we probably have reached the natural rate of unemployment - pass on, guys, there is not much to look at. So it's time to start focusing on resistance to decrease and on what it means. In the end, everything indicates that we have to deal with the depressed economy for a long time. The Wall Street Journal, perevodika -------------------------------------------------- -------------------------------------------------- ------
Necessary explanations
Narrowly bourgeois opinion and would not let speak out on issues of deflation to go beyond the production-based capital, and even his private form - American capital, but because they did not get to the essence of the described phenomena.
The fact that capitalist production is subject to crises of overproduction and, accordingly, downturns in the economy and why clearly and lucidly explained in the Capital even 140 years ago, Karl Marx. These crises arise because of the basic contradiction between capital and labor, and not because of an excess of social wealth, because the capitalist character of production, when the whole purpose of the production consists in striving to maximize profits by keeping the employee in a black body. But modern bourgeois economists stubbornly unwilling to talk about it, but for your own personal use pull individual private laws, such as the Phillips curve, and present it as a great discovery, trying to get a patent on the discovery that when the wind swayed the trees.
Naturally, the rise in unemployment, in fact, a fall in demand for this kind of value as labor, but it arises, as to be understood as a result of the economic crisis, due to overproduction, falling demand for this form of value as money, form of loans. Reducing the money supply leads to inflation, it is clear that any thinking person.
So what Marx wrote, more than 140 years ago, looking at her with piercing eye of nascent capitalism? And all that competition, which is much like to talk inveterate Russian economists, it is nothing like fighting for the capital rate of return. And this struggle, if capital is not monopolized, and can not reduce labor costs, leading to increased productivity, reduced costs, and accordingly to deflation, which so frightened the American financial oligarchy, accustomed to clip coupons on inflation and financial speculation. That's why economists are no right answers. Therefore, Adam Posen, a committee member of the monetary policy of the Bank of England, and says: "We do not know how it works deflation" because looking at the economy through the prism of the value of paper money.
The difference is manifestations of deflation processes in Japan and America is due to the difference, historically, the character of capital. If the Japanese are just saying that Finance should work on the economy, to increase productivity, and do it, the Americans - shows that finance them, and there is the economy, but the most important and cost of liquidity - it is paper money.
If a Canadian, educated in the principles of the Code of Bushido, believes it is important not just for profit, but only in a manner that does not contradict the interests of society and the country as a whole, the American, which corresponds to the rules and its morality and even religion, the rich - pleasing to God, believes that the profit it is a sign of success and public benefit, and it does not matter how it was obtained. All this shows that Japan is in power industrial capital, and in America the financial oligarchy that seeks to clip coupons for the depreciation of money and speculation in securities. Which is confirmed by the practice noted in the above article: "Fed officials have seen evidence in the U.S. experience to the crisis that this dynamic might become over time less powerful, which means that a large increase in unemployment could not cause such a deflationary shock, as in the past .
Rather had to say that the body vigil interests of the financial oligarchy, found it possible, and even saw this proof in the experience, (we eat, and this is proof that we all need to ensure food) during the crisis, falling production and rising unemployment maintain the stability of profits of their masters, shifting the burden of the crisis on workers. And all this thanks to inflation. Therefore, in the minds of Americans and hammered the idea that deflation is a frightening and destructive phenomenon for the entire economy and every American in particular.
As a result, Japanese capital has a development perspective, as it supports the global economy and the U.S. is going to collapse, collapse, World War II, as the endeavor to parasitize the world.
Vitaly Glukhov
Комментариев нет:
Отправить комментарий