Japan’s Lemming Syndrome

By Michael Pento – Re-Blogged From http://www.gold-eagle.com

The financial world is buzzing about former Fed chairman Ben Bernanke’s recent trip to Japan, where he advised Japan’s central bank chief Haruhiko Kuroda on how to manage his nation out of multi-decades of stagnant growth. Channeling economist Milton Friedman, Bernanke warned that Japan was vulnerable to perpetual deflation and stagnate growth and that helicopter money–where the government issues non-marketable bonds with no maturity date and the Central Bank buys them with counterfeited credit–was the most useful tool in overcoming this condition.

Bernanke encouraged Japan to carry on with the Abenomics policies that have failed to date by supplementing monetary policy with even more fiscal stimulus—as if Japan’s 230% debt to GDP ratio wasn’t enough. And he assured Abe and his staff that the Bank of Japan (BOJ) has instruments to ease monetary policy yet further.

And in case this village needed another idiot, Nobel laureate Paul Krugman, also chimed in. Arguing that Japan should raise its inflation target to 4 percent and embark on a significant but temporary fiscal stimulus to boost prices in the economy. Speaking at a conference on Thursday in Singapore, Krugman called for “a big burst of government spending and maybe also cash donations.”

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Perverse Incentives

  

By ROBERT P. MURPHY – Re-Blogged From http://www.FEE.org

Just about everyone agrees that incentives affect behavior, but economists really mean it. That’s because economists take the logic of incentives further than most other people are willing to. Such analysis often reveals that government policies have unintended consequences that seem shocking to the average person. The list includes welfare programs that lead to higher rates of birth out of wedlock, seatbelt laws that lead to more pedestrian deaths, and even the possibility of changes in estate taxation that lead to people strategically timing their deaths.

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The Most Common Error in Economic Debates

By Keith Weiner – Re-Blogged From http://www.keithweinereconomics.com

Have you ever been in an argument about whether we should raise taxes and then someone tosses out a real whopper? “The top tax rate for decades after World War II was over 90% and look how the economy boomed!”

Or perhaps you read a Paul Krugman column where he said that, “there’s a big problem with the claim that monetary policy has been too loose: where’s the inflation [he means rising prices]?”

Both the Internet troll and Professor Krugman are making the same mistake. Let me explain.

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