[Steve_American]

Australia’s inflation rate continues to fall despite RBA inflationary rate hikes, July 26, 2023

This summary is an excellent statement of the MMT policies in response to the inflation that was started by the shortages that resulted from worldwide factory lockdowns and shipping snafus that resulted from the pandemic.

"The correct policy response should have been to provide fiscal support for lower-income households to help them cope with the cost of living rises and wait for the adjustment after the disruption to come."

Prof. Bill Mitchell , a founding MMTer wrote: Today (July 26, 2023), the Australian Bureau of Statistics released the latest – Consumer Price Index, Australia – for the June-quarter 2023. It showed that the CPI rose 0.8 per cent in the quarter (down 0.6 points) and over the 12 months by 6.1 per cent (down 0.9 points). The annual inflation rate in Australia was significantly lower again in the June-quarter as the supply-side drivers abate. This was always going to be a transitory adjustment phase after the massive disruption from Covid and the exacerbating factors associated with the Ukraine situation and the OPEC price gouge. There was never any justification for the RBA pushing up interest rates. The correct policy response should have been to provide fiscal support for lower-income households to help them cope with the cost of living rises and wait for the adjustment after the disruption to come. The approach taken by the Bank of Japan and the Japanese government was the correct one and that is now clear even though the mainstream economists still cannot see past their textbooks.

https://billmitchell.org/blog/?p=61018

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[Puffer Fish]

Didn't you just recently post another thread about this?

Prof. Bill Mitchell's blog, Japan’s monetary policy experiment is working, on Monday.

In that thread I put forth the argument that the Japanese Central Bank's response does not prove that monetary expansion does not cause inflation, because due to Japan's notoriously declining population and continually deflating real estate prices (adjusted for inflation) there is reason to believe there could be a deflationary effect, and this deflationary effect is helping to cancel out the inflationary effect from monetary expansion ("quantitative easing").

[Steve_American]

Didn't you just recently post another thread about this?

Prof. Bill Mitchell's blog, Japan’s monetary policy experiment is working, on Monday.

In that thread I put forth the argument that the Japanese Central Bank's response does not prove that monetary expansion does not cause inflation, because due to Japan's notoriously declining population and continually deflating real estate prices (adjusted for inflation) there is reason to believe there could be a deflationary effect, and this deflationary effect is helping to cancel out the inflationary effect from monetary expansion ("quantitative easing").

Your conclusion is wrong.

[Puffer Fish]

Your conclusion is wrong.

Any attempt at discussion or argument?

Any examples of lots of printing of money not causing inflation in a country that has high levels of immigration?

[Steve_American]

Any attempt at discussion or argument?

Any examples of lots of printing of money not causing inflation in a country that has high levels of immigration?

I didn't need to provide any argument, because you didn't provide any. You just asserted that an aging and declining population would lead to deflation that would offset much of the inflation that (you claim) will always follow from deficit spending.

Did you word the 2nd part wrong?
AFAIK, very high immigration would tend to reduce inflation, as the deficit per person is reduced.
Are there any examples of nations with high immigration that "printed" a lot of money? Because both high immigration and lots of money printing are quite rare through history, the number that had both at the same time should be very, very rare.
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[Puffer Fish]

Did you word the 2nd part wrong?
AFAIK, very high immigration would tend to reduce inflation, as the deficit per person is reduced.

That is one effect. But declining population also relieves pressure on land and building prices, both of which have a big effect on prices on all sorts of things. For example if rents on a business and for the employees go down, prices for that business will end up lower.
I believe this greatly outweighs the first effect.

Also consider the factor that government expenses will be lower if there are fewer people, because remember we are talking about the government running budget deficits. So less of a need to print more money also.

[Steve_American]

That is one effect. But declining population also relieves pressure on land and building prices, both of which have a big effect on prices on all sorts of things. For example if rents on a business and for the employees go down, prices for that business will end up lower.
I believe this greatly outweighs the first effect.

Also consider the factor that government expenses will be lower if there are fewer people, because remember we are talking about the government running budget deficits. So less of a need to print more money also.

I think that you didn't think this through fully.
Petr Zeiham talks about the demographic problems of Japan a lot.
Based on his rants, I conclude a few things about Japan.
1] Each year everyone either dies or gets a year older.
2] More old people die than babies are born.
3] Near the top of the graphic on demographics the shape is like a pyramid.
4] As a result each year more people are old enough to begin getting their Gov. pension than people who are getting their pension die of old age or other causes.
5] Means that the Gov. must increase its pension payments every year. So, government expenses will not be lower, they will be higher.
6] This means that the Japanese Gov. will need to deficit spend more each year. You think this will lead to inflation. MMT disagrees with the claim that this is always the case.
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[Puffer Fish]

I think that you didn't think this through fully.

5] Means that the Gov. must increase its pension payments every year. So, government expenses will not be lower, they will be higher.

True of course, but that is besides the specific point I was trying to make there.

My point was, if the government is running a budget deficit, and if we were to assume that both tax revenues and expenses are proportional to the population (which is one factor but not the only one in this), then we would expect a smaller population to result in a lower budget deficit.

It's just one contributing effect, not the total outcome.

[Steve_American]

I didn't need to speculate what Japan's deficit has been.

This bar graph is from 2018 to estimates for 2028. So, 2023 must be an estimate.

https://www.statista.com/statistics/270 ... -in-japan/

The data is in trillions of yen. The yers are given. It goes up and down.
Before covid it was getting more negative, so a bigger deficit.
2018 = -13.78
19 = -16.99
20 = -48.86
21 = -33.83
22 = -43.54
23 = -37.37

In the next 2 years the estimates are smaller deficits, rapidly smaller. Then for the last 3 years the deficit estimates get slowly larger, i.e. more negative.

So, what does this date tell you?

I'm not sure what your point is.

[Puffer Fish]

So, what does this date tell you?

That's a meaningless graph for this conversation. Surely you are smarter than this, Steve_American.
You show a graph for only 6 years that have actually happened, and 5 years that are just projected figures for the future.
Did you not bother to notice that those years in the graph with much higher deficits just happen to line up with Coronavirus pandemic?

I think that shows your graph is pretty much useless if you were trying to prove any point in this discussion.

[Puffer Fish]

I'm not sure what your point is.

You will need to be more specific or quote something I said for me to tell you what the point is.

[Steve_American]

That's a meaningless graph for this conversation. Surely you are smarter than this, Steve_American.
You show a graph for only 6 years that have actually happened, and 5 years that are just projected figures for the future.
Did you not bother to notice that those years in the graph with much higher deficits just happen to line up with Coronavirus pandemic?

I think that shows your graph is pretty much useless if you were trying to prove any point in this discussion.

An attack is not conducive to polite replies.

This the graph I found.
I said that in the years before covid the deficit was growing, actually it was growing slowly.
During covid the deficit was wildly unstable. Nothing can be learned about normal times from those years of covid upheavals.
The 'estimated' years show that the Japanese Gov. thinks that the deficit will slowly grow.

So, you asserted that you think based on your economic theory that the deficit in Japan ought to be falling. You didn't look at any data. This is typical of economists, who look at what their theories predict and don't bother to look at actual data.

My point is that your prediction was wrong if this data is not an anomaly.
You said that the deficit would shrink as the population fell and buildings became empty, etc..
You seem to be wrong.
I said that the deficit would increase for a while as more people start their retirement than retired people die of old age. I seem to have been correct.

Of course, I'm not saying (and wasn't saying) that Japan is stable in the long run. Peter Zeihan says that Japan will crash because it has been having too few children. I tend to agree with him. Besides that, I predict that in less than 10 to 20 years Japan will crash because of climate change, that Peter Zeihan ignores.

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[Puffer Fish]

I said that in the years before covid the deficit was growing, actually it was growing slowly.

Again, Steve, that graph you linked to only shows 2 years before covid. Hardly enough data to see if the deficit was growing.

So, you asserted that you think based on your economic theory that the deficit in Japan ought to be falling.

No. You are taking what I said out of context.
There is a difference between effects and outcomes.
I was simply describing one single effect (out of many) that might be expected to have an effect of pushing the deficit down.

I don't blame you entirely for this misunderstanding though. I can see how you might have thought my third post was an explanation for what I wrote in the first post in this thread, which is not the case.