Hello Richard,

Thanks for another "Great Clarification" essay. I agree with Johnson san. The yen needs to fall far beyond 140-150 so Japanese exports can again compete on both quality and price.

William Flanigan, PhD.

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Nov 7, 2022Liked by Richard Katz

Thanks for the post, I could make finally sense why this monetay policy is not sufficient or the solution

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Hi Richard,

Good job with your explanation above. I'm sorry I'm a poor listener of audio files (not yours... all of them). If you have a transcript I would enjoy reading it.

You are correct in most of your assessments of Fiscal policy -- there can be little efficacy of any monetary policy without reasonable fiscal policy. We have seen this in the US where the Fed printed money from 2008 to 2016 while the federal government greatly increased the cost of doing business and growth (and inflation) was much slower than expected. Also, the current inflation issues from government spending (I think there is still $2t waiting to be spent).

Back to Japan. I don't think your "decarbonization" projects will do anything. This is the same concept as paving rivers, building parks and bridges to nowhere... They put people to work, but the projects have zero impact on GDP after they are complete. My idea was to build a big "ring road" around Tokyo. You could buy up tons of real estate and you would end up with something the increased efficiency in the city. What Japan really needs are projects/investments that create long term employment.

A region with casinos could work. Japan needs much more recreation. Reinstating day-light-savings time would help. It gets dark so early in Tokyo there are limited after work activities (other than drinking). Spending the cash on huge investment incentives (and letting companies decide what to spend it on is the best). Again, Japan has to fix its bankruptcy laws first! No one can afford to take any risks.

I would vote for huge "misbehavior!" Have the federal government come up with some major programs and fund them with JGBs and not taxes. This would "juice" the economy while weakening the currency. Yes, Japan needs a weaker currency -- as you stated there is little manufacturing growth in Japan because they are no longer competitive...

Thank you for all you hard work in getting the word out.

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