When You Cringe At the Pump, It’s A Sign –   Bernanke’s printing press seems to be adding about 10 cents a gallon per month to the price of gasoline. Food prices are also rising. The negative feedback mechanism of Fed pumping is running full blast. It is boosting economic activity thanks to government deficit spending but it is primarily stimulating non core food and energy inflation—the kind of inflation that the Fed pays no attention to. Bernanke’s policies are decimating the middle class thanks to soaring prices for necessities, and sending senior citizens to the poorhouse by the millions thanks to zero interest rates.  This Fed policy is beyond just stupid. On top of being doomed to massive failure, it is a crime against humanity. While impoverishing the middle class and the elderly, the policy is enriching the oil barons, speculators, and Wall Street financiers. When criminals are rewarded instead of punished what you get is more criminals and more criminal behavior. The system rots until it collapses completely. A house built on fraud cannot long stand 

Japanese workers take pay cuts to stay employed  – Bloomberg reported that "Japanese workers´ willingness to accept wage cuts to safeguard their jobs is lowering prices and deepening deflation". This assertion was attributed to Hisashi Yamada, chief senior economist at the Japan Research Institute in Tokyo. Yamada also asserted that "Japan´s jobless rate would be around 10 percent, compared with the current 5.1 percent, if companies had fired workers rather than cut pay since Japan fell into a recession in 2008. " The monthly average wage in Japan has fallen to 315,294 yen, the lowest level since the government started tracking the data in 1990. Assuming an exchange rate of 90 yen to the dollar, that is roughly $3,500 per month, or $42,000 per year. Presumably Japan’s employers are reducing labor cost to offset the effects of a stronger yen versus the dollar and price competition from Chinese goods on profitability.

What happens if Japan runs a trade deficit – Those who argue that Japan can simply keep eating its own debt indefinitely are right until and unless the economy can no longer run an external trade surplus. Theoretically, as population ages, this point will be reached, since productivity will fall with rising workforce median age. So we know there is an outer limit somewhere, although we have no idea at this point where that limit is. Once Japan has a trade deficit it will all be over pretty quickly, since then of course they will have to attract funds to finance the deficit, and this is where things will start to get pretty tricky."

This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s