Comment by panarky | Hacker News Reader

Comment by panarky | Hacker News Reader

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> "hope" does not work in economics. Numbers do, and they do not add up.

Economics is not about math, precise and inevitable. Economics is about people and their social interactions.

Economists try to model social interactions with numbers, but don't mistake the map for the territory.

What does it mean in human terms that Japan has high debt? Is your argument that Japan will inevitably default? Sophisticated traders are willing to lend more money for 30 years at less than half a percent interest [1], so smart people must judge default risk to be very low.

Is your argument that somehow Japan is doomed because of this debt? Even if they default, what does that really mean on a human level? Would millions starve? Would society collapse?

Maybe Japan's history, customs, language and social cohesion are worth more than you think.

And, just for the record, Western stereotypes of Japan as a collectivist society are no longer true [2].

[1] http://www.bloomberg.com/markets/rates-bonds/government-bond...

[2] http://noahpinionblog.blogspot.com/2015/03/japan-is-not-coll...

Not sure about "doomed", but you can't spend money you don't have forever, you are taking the money from the future. Also, aging demographics is a big issue, because there will be fewer and fewer people to pay for retirees.

There are well-known hedge funds (check out Kyle Bass) betting against Japan.

There will be painful decisions to make, not just for Japan, but for other indebted countries (most of the developed world, unfortunately).

> you can't spend money you don't have forever

Nothing lasts forever, so let's talk about your model of how the economy works within your decision horizon.

The BoJ has been printing yen for decades, and the counter-intuitive result is that yen is strong and 30-year interest rates are less than one half of one percent.

Your model predicts imminent catastrophe, yet there is zero evidence that this cannot continue for the foreseeable future.

> you are taking the money from the future

No, we are borrowing from each other in the present. And those lending to Japan apparently think there is an extraordinarily low risk of default over the next 30 years.

> There are well-known hedge funds (check out Kyle Bass) betting against Japan.

And yet the yen is strong and interest rates are low.

When the facts on the ground contradict your mental model of how the world works, maybe it's time to change your model.

This is going off-topic, so I will try to keep it brief:

My "model" is based on common sense. You can't create prosperity through financial engineering - but you can hide worsening prosperity for years (if you are a central bank). I don't know how long it will take to blow up, but blow up it will.

When actual results differ from what our intuition tells us, we call it "counter-intuitive".

When this happens, it could mean that our intuition is right and reality will eventually conform to how we think things should work.

But more often, it means that there is more going on than we understand, so we should calibrate our thinking to correspond with what is actually happening.

You're free to wait for the territory to change to match your map. As for myself, I find it's more profitable to update my map to match the territory.

> No, we are borrowing from each other in the present.

Not according to the Bank of England.

http://www.bankofengland.co.uk/publications/Documents/quarte...

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