Free Money in Japan?
Monday, April 18, 2005 Posted: 11:18 AM JST
Bloomberg columnist William Pesek Jr. has a very interesting view on Japan's low interest rates. "Japanese households," he writes, "lost 154 trillion yen ($1.4 trillion) in interest income in 10 years as the BOJ cut borrowing costs to end deflation. It means that an amount of money equal to one-third the current size of Japan's gross domestic product evaporated thanks to ultra-low rates."
"It makes you wonder if Japan has been targeting the wrong part of the economy. Have efforts to help the corporate sector these last 10 years been cannibalized by lost income in the household sector? Has the inordinate amount of time and energy Japan spent weakening the yen meant it neglected a far more potent economic force -- the consumer? Most likely, the answer to both questions is yes."
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