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But there is a point to be made nonetheless. Japan could not induce inflation through decades of loose monetary policy. It did not work. The Bank of England did not beat inflation with a tight monetary policy. It did not work.

Monetary policy is not a mechanism to control inflation is the obvious conclusion.

I hate to point out the obvious, but someone has to do it.

Idiot claim, but bold one.

The price of money has no influence upon the price of money?

11 thoughts on “Bold claim”

  1. It is like those infants school exercises, where one is given two cards: one with a cart and one with a horse and told to put them in the right order.

    Murphy fails again.

  2. “But there is a point to be made nonetheless. Japan could not induce inflation through decades of loose monetary policy.”

    He has a point though. Japan has indeed injected huge amount of money into its economy but it steadfastly refused to grow. So loose monetary policy doesn’t always result in growth and inflation (something Spud doesn’t seem to have considered when he’s always suggesting borrowing and spending more and more). All of which makes sense, an economy is just lots of people, and people are different. They don’t all react in the same way, and the same people can react in different ways to the same stimulus at different times.

    All of which is grist to my mill that economics is not a science, its a branch of sociology and should be accorded the same amount of respect.

  3. GDP per head in Japan has been growing slightly – GDP stagnant but spread over fewer heads I think.

    Which reminds me of a little paradox in the UK over the past so many years:
    GDP per capita has shrunk slightly
    GDP per head has risen slightly

    Capita being the impersonal – everyone in this place now versus everyone in this place then
    Head being personal – the people now compared to the same people then

    This just needs a name – can’t call it the Murphy paradox as he’s too dosy to understand it.

  4. You could argue that Japan’s loose monetary policies saved it from substantial deflation, even if they did not drive inflation.

  5. Dennis, Inconveniently Noting Reality

    As we all know, the economies of Great Britain and Japan are nearly identical in all respects.

  6. Jim has the point that eludes Murphy – the BOJ has used QE for decades (under another name before the Crash of 2008) and it has had very limited impact. This in a country where education levels and cultural mores are far superior in every aspect to the UK. The implications are clear. End QE and radically cut back the state, starting with the higher education sector.

  7. Jim – All of which is grist to my mill that economics is not a science, its a branch of sociology and should be accorded the same amount of respect.
    It’s a useful historical subject. It can tell you how you got from then to now.
    Tim on the previous thread – You can even say “Here’s the end goal I wish to reach” and economics will help you think through how to get there.
    For a very low value of will. ( or more strongly “Oh shit!”)
    Looking backwards, economics cheats. There were all manner of paths leading to the future from the then. Economics discards all the one’s not taken & rationalises the one that led to now.
    There are manner of paths & branches of paths that lead into the future from now. And no one knows where they lead. Least of all economists. This is about people making choices & people are people. People are rarely completely rational & even more rarely economically rational. Anyone with any experience of people knows that. The best economics can do is educate people to make more rational economic choices. If they’ll listen. But it can’t predict anything. 90%* of economists are usually wrong. We know more about our own world & our choices than they do.
    *Low estimate?

  8. lefties hate Japan. Japan suffers from an ageing and shrinking population. Therer are more deaths per year than births. lefties think that Japan should import millions of third world goat botherers to halt this shrinkage. It would appear that theJapanese would rather die out whilst dying Japanese than become second rate citizens in their own country but saving the nation. Unfortunately TPTB have decided to replace our population with the detritis from the third world.

  9. An economist is an expert who will know tomorrow why the things he predicted yesterday didn’t happen today.
    Laurence Johnston Peter (of the eponymous Principle) 1919 – 1990

  10. UK government spends 45% of GDP. Japan’s government spends on average 16% of GDP, recently rising to the giddying heights of 21% during Covid. Of course the UK can be directly compared to Japan, it’s exactly the same!

  11. While the cultural defences between the UK and Japan are yuge (though not as great as those between us and France – see Hofstede for details), it’s the only developed country comparable to England in terms of population density and (to some extent) age profile. So comparisons can be constructive.

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