Japan: Canary in Keynesian Coal Mine?

With austerity (versus bank nationalizations/liquidations) in Europe seemingly failing the general population and with certain of what might be termed versions of Keynesianism, such as in Japan, under attack, whose right?

GDP growth must be financed somehow. Obviously, such growth can be financed with either debt or equity. And while we don’t have data on equity to estimate total investment, we do have the data on debt. The change in total debt over this same 1990–2012 time frame is ¥761 trillion. Had the entirety of this ¥761 trillion been put toward long-term investment, then GDP would be ¥761 trillion higher. [Yen for yen?] Had it all gone toward consumption, then GDP would not have changed (materially) in 22 years, assuming the money supply was held constant.

So, dividing the change in GDP by the change in total debt gives us an indication as to how much of the additional debt went toward investment and how much went toward consumption. Shockingly, the ratio yields an answer of only 4.2%. In essence, it means that 4.2% of this additional debt created long-term growth in the economy — and, in essence, 96% of it was wasted.

via Is Japan the Canary in the Keynesian Coal Mine? | Enterprising Investor.

Well, it would appear that Japan is intending upon drastically lowering it's wage and salary rates via inflation in order to compete globally. It has a long slog ahead. Other nations are going to also continue to compete. May the best economic ideology finally prevail and whether that be Austrian School austerity, Keynesianism, a hybrid of one or the other or both, or some entirely different system.

If you are an investor in 1-4 unit properties in Arizona, California, Nevada, Oregon, Utah, or Washington, please do the financially responsible thing and make sure you have proper Landlord Insurance with PropertyPak™. We love focusing on real estate and the economy in general, but we are also here to serve your insurance needs.

Hill & Usher (PropertyPak™ is a division) has many insurance offerings. See our menu above for more info and links.

Did this post help you? Let us know by leaving your comment below.

Note: This blog does not provide legal, financial, or accounting advice. Seek professional counsel.

Furthermore, we, as insurance producers, are prohibited by law from disparaging the insurance industry, carriers, other producers, etc. With that in mind, we provide links without staking out positions that violate the law. We provide them solely from a public-policy standpoint wherein we encourage our industry to be sure our profits, etc., are fair and balanced.

We do not necessarily fact checked the contents of every linked article or page, etc.

If we were to conclude any part or parts of our industry are in violation of fundamental fairness and the legal standards of a state or states, we'd address the issue through proper, legal channels. We trust you understand.

The laws that tie our tongues, so to speak, are designed to keep the public from losing confidence in the industry and the regulatory system overseeing it. Insurance commissioners around the country work very hard to analyze rates and to not allow the industry to be damaged by bad rate-settings and changes in coverages. The proper way for people in the industry to deal with such matters is by adhering to the laws, rules, and regulations of the applicable states and within industry associations where such matters may be discussed in private without giving the industry unnecessary black eyes. Ethics is very high on the list in the insurance industry, and we don't want to lose the people's trust. That said, the industry is not perfect; but what industry is?

For our part, we believe in strong regulations and strong regulators.

We welcome your comments and ask you to keep in mind that we cannot and will not reply in any way or ways where any insurance commissioner could rightly say we've violated the law of the given state.

We are allowed to share rating-bureau data/reports and industry-consultant opinions but make clear here that those opinions are theirs and do not necessarily reflect our position.