[OPE-L:4245] Re: RE: Interest rates in Japan [re OPE-L:4154]

From: Steve Keen (s.keen@uws.edu.au)
Date: Mon Oct 23 2000 - 20:42:51 EDT


Very briefly, official interest rates in Japan have been zero from 1990
until just recently. The reason for this was the massive accumulation of
debt--mainly by Japanese companies--to finance purchases of Japanese real
estate during their Bubble Economy in 1987-89.

The levels of debt are such that, while before interest profit rates are
nothing out of the ordinary, they would be swamped by interest repaytments
on this debt were interest rates in the normal range of 1-2% after inflation.

Inflation has also mainly been deflation in the last decade, so that a zero
nominal rate translates as a positive "real" rate.


At 10:20 23/10/00 +0100, you wrote:
>One real world question that has just struck me is that money market
>rates in Japan are currently less than 1%.
>Does anyone know if the rate of profit in Japan is of this same
>low order?

Dr. Steve Keen
Senior Lecturer
Economics & Finance
University of Western Sydney Macarthur
Building 11 Room 30,
Goldsmith Avenue, Campbelltown
PO Box 555 Campbelltown NSW 2560
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
Home 02 9558-8018 Mobile 0409 716 088
Home Page: http://bus.macarthur.uws.edu.au/steve-keen/

This archive was generated by hypermail 2b29 : Tue Oct 31 2000 - 00:00:11 EST