Why Governments Haven't Learned The Lessons Of Japan
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 14 October 2019
⏱️ 43 minutes
🧾️ Download transcript
Summary
It's well known that Japan has (until recently) been mired in years of mediocre economic growth. And policymakers and economists use Japan as a warning for how developed economies can enter into prolonged slumps. But has anyone learned the lessons of Japan? In our latest episode, we talk to Richard Koo of the Nomura Research Institute, about his concept of the "Balance Sheet Recession" and why developed economies with lots of debt don't behave the way they do in textbooks. He explains how the lessons of Japan apply to Europe and the U.S. and what policymakers have failed to learn.
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| 0:00.0 | On December 4th and 5th, against the backdrop of the United Nations Climate Change Conference, |
| 0:05.2 | Bloomberg Green will convene the foremost leaders in business, finance, policy, academia, |
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| 0:19.5 | problem solvers in Dubai to build connections, inspire innovation and challenge the status quo in the |
| 0:25.1 | battle against climate change. Register at Bloomberg Live.com slash B Green Radio. Hello and welcome to another episodeiesentholts podcast. I'm Tracy Allaway. |
| 0:47.0 | And I'm Joe Wiesenthal. |
| 0:49.0 | Joe, do you think everyone knows what a balance sheet recession is by now? |
| 0:53.8 | I don't think so. Only the cool people know what a balance sheet recession. Only the real |
| 0:59.0 | nerds who are reading up on this stuff pre and post crisis were're into that but I think for the vast |
| 1:04.7 | majority of people including I would say the vast majority of economists |
| 1:08.1 | unfortunately I don't think that concept is one that's like really in their |
| 1:12.3 | their language or their terminology |
| 1:14.0 | typically. |
| 1:15.0 | Yeah I kind of have to remind myself of this because I got into financial journalism right after |
| 1:20.7 | the 2008 financial crisis and balance sheet recession was sort of the hot thing then it was the parallel that everyone was reaching for to explain what was happening to the US at the time but of course it's still a relatively new concept and it's still a relatively rare type of recession I guess. |
| 1:40.0 | Right and you know again this sort of one of the questions that developed market economies are dealing with right now is why have the traditional tools that governments and central banks use to stimulate the |
| 1:54.8 | economy not been effective. Why have lower interest rates not caused faster |
| 2:00.0 | growth than more rapid inflation? Why don't we see more rapid inflation. |
| 2:02.6 | Why don't we see more rapid growth in inflation thanks to budget deficits that are essentially |
| 2:09.2 | near their highest levels of all time in places like the US and elsewhere. |
| 2:14.0 | And so it kind of in keeping things we've talked about a long time, like, |
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