And yes, this does mean that the nuclear catastrophe could end up being expansionary, if not for Japan then at least for the world as a whole.

And yes, this does mean that the nuclear catastrophe could end up being expansionary, if not for Japan then at least for the world as a whole. If this sounds crazy, well, liquidity-trap economics is like that — remember, World War II ended the Great Depression.

So, back to Japan: I’m terrified about the possible loss of life; nervous about the disruption of world production; not worried at all about the impact of Japanese borrowing on world bond markets.

Obviously not up my alley; I’m just watching the images in horror like everyone else. If you haven’t done so already, check out the Times’s awesome and disturbing before-and-after satellite photo multimedia.

One interesting note: the catastrophe will, of course, require large public spending to aid recovery, even as it depresses Japan’s economy and reduces revenue. And Japan already has a very high debt level. So you might have expected the bond vigilantes to strike, driving bond prices down and interest rates up. You’d be wrong: at least so far, rates are actually down, presumably on the view that monetary policy will remain loose even longer than previously expected.

-La radioactividás es positifa, hamijos.

Cuanta hipocresía detecto entre los turbocapitalistas

As I tried to explain almost two years ago, one way to think about a liquidity trap is that it’s a situation in which the amount people would save if we were at full employment — S in the figure below — is greater than the amount businesses would want to invest, even at a zero interest rate. So there are, in effect, excess desired savings floating around:

So government borrowing doesn’t have to come at the expense of private investment, driving up interest rates; instead, it just mobilizes some of those desired but unrealized savings.

Iniciado por ominae

¿pero de que turbocapitalistas habla usted? A este tío le han dado un Nobel y sus ideas son aplicadas por gobiernos de todo el mundo. Ahora dice que un maremoto, explosiones nucleares, miles de muertes y la próxima liberación de Godzilla son en realidad cosas buenas para la economía.

¿Entiendes el mundo al que nos quiere dirigir este hombre con estas "ideas"? Pues imaginatelo, si su idea de crecimiento económico es arreglar desastres y calamidades. No en vano estos tios sostienen que la segunda guerra mundial supuso un gran crecimiento economico para el mundo porque sus graficas de pib y gasto apuntaban hacia arriba. Delirante.

Ese es el concepto de "economia" que tienen estos tios y mucha gente inexplicablemente les hace caso y les ríe las gracias.

Iniciado por Pérfida Albión

Lo que afirma es que un incidente inesperado de este calibre, puede llegar a romper la trampa de liquidez a la que estaba siendo sometida la economía Japonesa durante años, eso es todo; proponer provocar catástrofes para expansionar está fuera del alcance de todo economista, incluso de los keynesianos. No así del pentágono, claro.