The Bank of Japan’s Quantitative Easing: An Unnatural Imbalance

On October 31, 2014, the Bank of Japan made public its policy of buying larger amounts of government debt—80 trillion yen ($734 billion) a year—so as to stimulate the economy.[1] The Nikkei 225-stock index average rose almost 5 percent that day, while the yen fell to its lowest level against the dollar since the preceding month. In effect, investors and analysts were factoring in the likely stimulatory impact on the economy and the inflationary implication of more yen relative even to the expanded output, respectively. Put another way, the lower yen suggests that any strengthening of the currency from higher economic output would be more than countered by the weakening impact of inflation. Interestingly, not even the likely boost to exports from the cheaper yen was expected by the market participants to give the stimulus the edge in pushing the currency higher rather than lower.

 

The full essay is at "The Bank of Japan's Quantitative Easing"

---

1. Jonathan Soble, “Japan’s Central Bank Unexpectedly Moves to Stimulate Economy,” The New York Times, October 31, 2014.

 

On the Federal Reserve’s Quantitative Easing: Impacts on the U.S. Debt and Inflation

With government-bond purchases of $3.9 trillion (including mortgage-backed bonds) from November 25, 2008 to October 30, 2014, the U.S. Federal Reserve Bank stimulated the American economy by keeping interest rates low. This in turn kept the U.S. Treasury department’s interest payments on the gargantuan federal debt lower than would have otherwise been the case. Put another way, the Federal Reserve Bank’s massive foray into stimulating the economy made holding debt and borrowing still more money less costly than it would otherwise have been, and thus enabled the government’s penchant for debt-financing over raising taxes and/or reducing spending. “Enabling an addict” would be a less charitable way of putting the Fed’s role vis-à-vis the U.S. Government. In this essay, I explore problems resulting from the Fed’s stimulus on the government’s debt-financing.

 

The full essay is at "The Federal Reserve's QE"

On the Credibility of the E.U.: Transfer Payments and State Deficits

In October of 2014, the prime minister of the E.U. state of Britain blatantly (and quite publically) refused to pay a “bill” that the E.U. Commission charged the state on account of upward revisions of its economic growth. “We won’t pay it,” David Cameron said defiantly into a microphone. Meanwhile, Jyrki Katainen, the E.U. commissioner for economic and monetary affairs, accepted the draft budgets of the states of France and Italy even though they violate the limit of 3% of GDP in the European Growth and Stability Pact. Those two states could face fines, however, and the commissioner also noted that the budgets would face strict scrutiny. I contend that these instances of tension between the state and federal levels speak volumes as to the attitude of state officials and likely their constituents toward the E.U. itself. The attitude does not bode well for the European Union as a system of public governance.

The full essay is at "Essays on the E.U. Political Economy," available at Amazon.

Religion and Business Meet in a Catholic Church’s Food Pantry

The sacred and the profane are like oil and water—oil for anointing and water for cleaning. The viability or value of the sacred does not depend on denigrating that which is exogenous to it. In other words, praising the sacred does not require trashing the world. Being in the world but not of it does not imply that the world is necessarily bad. From this perspective, the sacred and profane can both be viewed as viable in their own rights, respectively. The inevitable distance that distinguishes them so starkly is breached only with great difficulty, even if pressed out of sheer practicality. For example, a theological interpretation undergirding a religious organization’s food pantry can clash with a business calculus such as would be held by an auditor pouring over the numbers and procedures. As theology and business enjoy their own, sui generis (i.e., of its own genus or type) bases of justifications or rationales, unraveling a clash can be notoriously difficult for want of a common denominator. 

The full essay is at "Religion and Business Meet"

Is Daily Sustenance a Human Right?

Should healthcare, foodstuffs, and shelter be treated as commodities subject to the buyer’s ability to pay, or designated as rights because a person’s survival depends on them? In short, is the innate human drive of self-preservation worthy of being recognized societally as justifying a right to sustenance? In the E.U., this point of view tends to hold sway, whereas in the U.S., food, medical care (and medicine), and housing units tend to be treated as commodities subject to a buyer’s ability to pay. This difference in political socio-economic ideology is as telling as it is significant, yet in the U.S. at least the question is rarely debated directly rather than through ancillary issues. 

The full essay is at "Daily Sustenance"