I felt some of the things in the State of the Union speech last night of FOMC and one last night.
The content, the big surprise was not (it would be nearly the assumption).
Indeed, the decision to continue the low interest rates until the FOMC of the end of 2014, I think that’s drastic measures.
The fact that even three years not to raise the policy rate, that is, the prolongation of the time axis, maybe, and I think there is a reason that should not otherwise.
And then try to the description of the FOMC in dogmatism (some people thank you to comment with suggestions).
First, whether the FOMC is, Mr. Bernanke, would be circumstances, such as what it wants most to avoid.
This is an easy thing, “deflation” or just drop in prices, should want to avoid it anyway.
Even a was carried QE2, base, and avoid deflation, and anyway, are fundamental reasons to keep the expected inflation rate plus.
How can that also wrote many times, if accustomed to deflation, because the inflation rate will be negative, real interest rates is always a plus.
This is, quite, will not work, such as measures to boost economy.
(And so it does not the real interest rate can be a minus)
Among such, three years, is that it does not raise interest rates, perhaps, people of the FOMC, will truth is that not even care about inflation.
Now in the United States, you will you know that does not occur Nante significant rise in prices.
What are you in mind, it is still of a “deflation”.
The Tatte said such a thing, although signs of deflation is not yet visible, Chants Bernanke’s are speaking.
Now, the biggest problem is the housing price.
In the United States, $ 700 billion a negative equity has also faced, policies to solve this problem, and I are speaking not think.
And this negative equity, I say that the difference between the current house prices and the balance of the mortgage (debt).
Of course, in the relationship of debt> house prices, now, even selling the house, do not return all of the debt, it is the debt is saying and may remain even $ 700 billion.
For although this negative remains would, in order to reduce the loan interest rate, you can not even refinancing of mortgage.
Let’s explain it a more familiar.
Now, I, with the help ¥ 100 million from the bank, bought a stock of 100 million yen worth.
One year later, the stock had become half.
Now, if selling a stock, I am leaving a debt of 50 million yen to the bank.
In short, I balance sheet of individuals, have become insolvent state.
In this, the economy does not improve.
Until now, that we have come up with various policies, in its effect, flow around, and I may be considered a strange story, bicycle operation was not rotate well.
In the future, the policy, because I’ll go turn the money, easy-to-I do not think also that the economy is broken.
In fact, the economic indicators of the second half of last year, but it is positive surprise there were many.
I think the policy had worked well.
So, when they are about to go to the fundamental treatment, must be to eliminate the state of personal insolvency.
If this is a company, you can either capital increase, it is either increase the retained earnings.
Capital increase, that is, someone, there is no reason to give us the money.
After all, to increase the internal reserves, to put it simply, we will accumulate the salary and working, it’s no choice but to go back the debt.
That is right.
while the flow is around, so able to return the debt, there is no problem.
However, heck, what can return no matter how money.
and luckily, it’s all well and good if also at work in the high income, but is such a handful.
Many, easy savings to not give elephants, does not reduce the debt.
In this, it is also without the consumption rises, the economy, that depends on the policy, is like wearing an artificial life-support system.
By removing the drip, what happens, still, the health body far I.
When become, remaining means, is one.
In fact, it is the thing simple.
I housing prices may be rising.
If rising house prices, negative equity will dramatically decrease.
To do this, is that we need time.
1 year, in two years, it is difficult.
In the FRB of the Board, it seems some people that should not be raising interest rates until 2016, but it, I by this reason.
Of course, even over time, where there is not even Nante guarantee that house prices will rise.
Is such time, when considered in the paradoxical and I think that it is easy to understand a little.
Now, to economic indicators was also good and split, and what happens if you raise the interest rates, please consider.
When it comes to such a thing, house prices, it is likely to bottom cracking, you easily considered.
With that said, the United States of balance sheet adjustment, that is, the elimination of excessive debt, is to say that it needs time.
Just mortgage, still, is there even $ 700 billion.
Of course, do you think it is that there is variety in the other.
So, to continue the monetary easing, quantitative easing (QE) also, and I think even more likely to do.
In this FOMC, “Oh, I thought, the United States of lesions deep Na of it,” it was the thought again and.
Or would not be true meaning of the message that it is not a three-year rate hike.
After, it might have tailored to (lending in the three years 1%) 3-year LTRO of ECB.
Well, strain, What Is not no good?
Near-term, might somewhat upside is limited, relaxation, such as QE in the stock market I think plus.
This year, because “monetary easing expectations” year, the stock, Well, I think it’s a plus.
Come to think of it, I was saying that there is ready to do further asset purchases also the UK.
Well, the Bank of Japan, and what to do, we have to look forward to.