Thinking about it, so much of what we social scientists do is extremely passive. Generally, we feel pretty lucky if we can create a meaningful description of what is or what was with regard to societies and human behavior. [Our track record for predicting the future is positively abysmal.]
I am, therefore, always intrigued by economics, because at the highest levels of the discipline you have men and women attempting to practically steer society based on theoretical concepts that generally can't be tested in a laboratory setting. They are dealing with fantastically multi-dimensional problems, and the situations of today often vary from the condition in which the guiding theories were formed.
Economists at the Bank of Japan, under pressure from political forces in the Liberal Democratic Party, have initiated a grand experiment with the Japanese economy this week. They have decided to apply extreme financial engineering to shock the country out of its 25-year economic malaise. The plan calls for roughly doubling the supply of money in the country and forcing prudent Japanese to save less and spend more by devaluing the yen/stoking inflation. Just the first stages of the plan have caused the currency to weaken by more than 25%.
The experiment is fraught with potential perils. The country is the most deeply indebted nation in the world. If inflation is indeed manufactured, then the fear is that Japan's creditors may demand interest payments in excess of all the taxes collected in the country. Such a scenario could trigger a major crisis that would make the recent problems in Europe seem downright trivial.
This video provides an excellent visual description of the the overall picture with regard to Japan's finances and the grand experiment it is implementing. Let's hope these social scientist know what they are doing!
I am, therefore, always intrigued by economics, because at the highest levels of the discipline you have men and women attempting to practically steer society based on theoretical concepts that generally can't be tested in a laboratory setting. They are dealing with fantastically multi-dimensional problems, and the situations of today often vary from the condition in which the guiding theories were formed.
Economists at the Bank of Japan, under pressure from political forces in the Liberal Democratic Party, have initiated a grand experiment with the Japanese economy this week. They have decided to apply extreme financial engineering to shock the country out of its 25-year economic malaise. The plan calls for roughly doubling the supply of money in the country and forcing prudent Japanese to save less and spend more by devaluing the yen/stoking inflation. Just the first stages of the plan have caused the currency to weaken by more than 25%.
The experiment is fraught with potential perils. The country is the most deeply indebted nation in the world. If inflation is indeed manufactured, then the fear is that Japan's creditors may demand interest payments in excess of all the taxes collected in the country. Such a scenario could trigger a major crisis that would make the recent problems in Europe seem downright trivial.
This video provides an excellent visual description of the the overall picture with regard to Japan's finances and the grand experiment it is implementing. Let's hope these social scientist know what they are doing!
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