‘Time Is Not Infinite’: Draghi, Yellen Hope Japanification Isn’t Coming For Europe, US
"I believe that for the euro area there is some risk of Japanification, but it is by no means a foregone conclusion", Mario Draghi said, via conference call at the American Economic Association’s annual meeting in San Diego on Sunday.
He was participating in a panel called "Japanification, Secular Stagnation, and Fiscal and Monetary Policy Challenges" along with Janet Yellen and Larry Summers.
The former ECB chief said Europe needs to act quickly and decisively to avert a deflationary spira
Spot on sadly.
The world needs education to drive innovation, start ups, new businesses, more efficient allocation of capital, investment in productivity enhancing PP&E, productive employment, reduction in terrorism, reduction In wasteful govt spending, lower barriers, less tariffs, better foreign policy, creative destruction, failures, more people in the world exiting poverty.
Fiscal policy will just delay the result unless the above begins.
Ultimately productivity (innovation) needs to increase.
The aging population will be a drag unless we can turn those people into workers (or pay for them with productivity and innovation).
Health care, regulations, large dominant companies, the political system all are holding back business formations. The cost of capital is low but innovation remains too low.
We don’t have a capital issue we have an idea deficit and a risk taking deficit and too much capital going into unproductive assets and spending.
No politician anytime soon will address the issues that will stave off Japanification. Sorry, but have to be honest. They all know it.
Well yeah, if we keep the Robber Barron Economic paradigm in place this is and always was the expected outcome. Robber Barron Economics are destructive over time. It is simply the elite wanting everyone collectively to have less as long as they get a greater portion of the pie.
Japanification is inevitable. Or we could do something different. Let’s start by eating the rich, metaphorically of course. That would change things.
I would have liked to see a JPYUSD and EURUSD chart along with the rate path. Context