It turns out that the Japanese people do not have the Apoplithorismosphobia that their government officials have.
According to the New York Times, instead of hoarding cash in the face of deflation (as predicted by mainstream economists and central bankers), the Japanese consumer is enjoying the new found purchasing power of the Japanese Yen:
But the dirty little secret here is that Japanese consumers are reveling in their newfound spending power, welcoming the chance to buy goods at prices similar to those they once found only on overseas shopping trips. ‘’The key thing about deflation is that it is popular,’’ said Robert A. Feldman, chief economist for Morgan Stanley Japan.
Rather than the cause of economic malaise, deflation can actually help cure the economy of malinvestments.
Mark Thornton is a Senior Fellow at the Mises Institute and the book review editor of the Quarterly Journal of Austrian Economics. He has authored seven books and is a frequent guest on national radio shows. Contact: email, twitter, facebook.
