Dear Prime Minister Hashimoto,
In these deflationary times, criticism from the public and the media must be growing ever harsher, and I imagine this is causing you considerable concern.
At present, an atmosphere has spread throughout Japan that makes the economy seem to be on the verge of collapse. The media and others appear to be discussing temporarily shelving the Fiscal Structural Reform Act, but I believe it is not actually so difficult to break through the current situation. This is because Japan is now in the unusually simple situation in which Keynesians and monetarists point to the same policy.
Because my work is busy, I have been unable to conduct supporting research. However, if Friedman’s x% rule is applied to Japan’s potential growth rate from before the bubble period, the money supply appears to be considerably insufficient. This is the “quantitative expansion” referred to in the Bank of Japan’s regular statements. The missing money supply should be replenished.
From a Keynesian perspective, on the other hand, a huge deflationary gap has emerged, so the corresponding monetary supply should be provided.
In other words, both monetarists and Keynesians are saying that the money supply should be increased—or, put differently, that banknotes should be printed.
This is a policy that can be carried out without financial resources.
Even if tax cuts are carried out using deficit-covering government bonds, the public will anticipate future tax increases, so from the perspective of rational expectations, little economic stimulus can be expected.
In contrast, if banknotes are printed and given to the public, there is no fear of tax increases, so the funds will be directed toward spending and a far greater stimulus effect can be expected.
We must not forget that very few countries have the policy option of “printing banknotes.” In that sense, Japan is now in a very fortunate position.
I sincerely hope that you, Prime Minister Hashimoto, will adopt this policy as soon as possible, since it can improve Japan’s economy while carrying out fiscal reform at the same time. I believe that, if you do, the present cries of resentment will turn into praise all at once.
Please take care of yourself amid your busy schedule. Respectfully,
1998/4/21
Related posts
Anyone Who Thinks Identity Is Given by the State or Government Should Sit Up and Read This: Utah Digital ID Bill SB260 and the Transformation Brought by a User-Centric Digital ID System
As digital technology evolves, our dependence on personal information and data continues to grow. Yet many government-provided ID systems do not always give sufficient consideration to…
The Provider Liability Limitation Act Has Become the Information Distribution Platform Act (May 10)
Following deliberations by the Ministry of Internal Affairs and Communications’ Study Group on Platforms, of which I was also a member, the amended “Provider Liability Limitation…
MyData Japan submitted comments in response to the public consultation on the “Order Partially Amending the Regulation for Enforcement of the Act on Certification Business of the Japan Agency for Local Authority Information Systems Pertaining to Electronic Signatures, etc.”
In response to the public consultation announced on January 26 regarding the "Draft Order Partially Amending the Regulation for Enforcement of the Act on Certification Business…