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solobueno
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The Abenomics Death Spiral - Peter Schiff - Euro Pacific Capital

Although Peter is right about the fact that high prices do not stimulate consumer spending, I think he is missing a point about the dynamics of a bubble, or a high inflation scenario. It's true that if a consumer thinks the price is high he will not buy, but if he thinks that the price is rising, with no end in sight, in he might want to buy now before the price becomes totally unattainable. It's this uncertanity that stimulates spending. It actually creates a mania where people are trying to get in before it's too late. I lived this first hand during the housing bubble here in the Pacific coast of Costa Rica, as many of you lived it in other parts of the world. The general concensus was "I better buy now or else it will be twice as much next year", which was a favorite realtor's pitch.

Of course a goverment's covert reason for creating inflation is to inflate away their debt, but they're also betting on the mania that contantly rising prices create.

Futhermore, the sales tax is a static price increase, because it's a one time thing, but high inflation changes prices constantly.

Commented 3586 days ago

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Beginning of the headline :As Japanese Prime Minster Shinzo Abe has turned his country into a petri dish of Keynesian ideas, the trajectory of Japan's economy has much to teach us about the wisdom of those policies. And although the warning sirens are blasting at the highest volumes imaginable, few economists can hear the alarm. (A longer version of this article can be found in Euro Pacific Capital's Global Investor Newsletter.)Data out this week shows the Japanese economy returning to recession by contracting for the sec... Read More

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