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Here’s Martin Wolf:

The traditional view at the BoJ has been that monetary policy cannot raise inflation. This shows a surprising lack of imagination. In principle, the BoJ can use its fiat money to buy everything in the world, at any price it wanted. This would certainly lower the purchasing power of the yen.

And here’s the Japanese breakeven:

And here’s a longer term breakeven:

FWIW, The most (only?) important difference between Paul Krugman and me on monetary policy has been whether a BOJ promise to inflate would be credible. Now take another look at the first graph.

And here’s Peter Pan (You Can Fly) in Japanese:

http://www.youtube.com/watch?v=K_hveXw3xZU



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This entry was posted on March 05th, 2013 and is filed under Monetary Policy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or Trackback from your own site.



