Wednesday, March 6, 2013
My letter to the NY Times re: Intent on Destroying the Yen
Re: Nominee for Japan's Central Bank Vows Aggressive Action
Japan's new prime minister, Shinzo Abe, wanted a reckless central banker and he certainly found one in Haruhiko Kuroda. In a world of inflationists he is the current title holder. The failed Keynesian policies of money printing haven't worked for twenty years, but that isn't stopping the new head of the Bank of Japan from printing money until he destroys the yen, with the stated intention of "ending deflation". But what is wrong with deflation? Deflation means lower prices. Aren't lower prices what we all seek? Won't lower prices mean a rising standard of living even if one does not get a pay raise...perhaps even if one takes a pay cut? And aren't artificially high prices a barrier to economic equilibrium; i.e., if housing prices are so high that no one will buy, then prices must come down. Trying to prop up prices merely keeps the glut on the market. The Japanese people have been doing their fair share of innovating, working hard, and saving, but government and the central bank have been spending and inflating away all the people's good work. This horrible experiment in monetary central planning must end.