![]() ![]() Now, the Bank of Japan’s argument is, “Oh well, we’ve got the interest rate down to zero what more can we do?” It’s very simple. The economy went into a recession, and it’s been in a state of quasi recession ever since. … In 1989, the Bank of Japan stepped on the brakes very hard and brought money supply down to negative rates for a while. I’m glad you brought it up, because it shows how unreliable interest rates can be as an indicator of appropriate monetary policy. As far as Japan is concerned, the situation is very clear. Here is what Friedman said back in 2000 during a Q&A with economist David Laidler:ĭavid Laidler: Many commentators are claiming that, in Japan, with short interest rates essentially at zero, monetary policy is as expansionary as it can get, but has had no stimulative effect on the economy. The NRO piece is particularly egregious since Paul and his staff had time to research the issue and still failed to mention that Friedman had addressed specifically what a central bank should do when faced with a stagnant economy and very low interest rates. Based on the BBW interview and his NRO piece, Paul doesn’t seem to know or understand much about Milton Friedman’s views on the Fed or monetary policy. ![]() Account icon An icon in the shape of a person's head and shoulders. ![]()
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