Quote:
Originally posted by Greedy,Greedy,Greedy
So, that's the story as I understand it. I'll let you fill me in on Japan.
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Ever since the end of the War Japan has been obsessed with inflation (at one time they suffered hyperinflation just like Germany) and so they have been unbelievably cautious about inflation. Sometimes even suffering deflation.
Until the late 80s they experience pretty impressive growth. I was under the impression that the Germans had the same obsession about inflation because of their hyperinflation experience, but that is just what I heard.
The tigers followed Japans example but not to the same extreme. But they didn't have loose monetary policies and at times they experience growth rates of fourteen percent.
Milton Friedman has always argued, among other things, that tight monetary policy is the key to strong growth. In a PBS special I saw, he used Hong Kong and Singapore as examples.
In any case I believe he would say that the choice between high growth and low inflation is a false choice. I think he would argue (and most monetarists) that tight monetary policy facilitates long term high growth where loose monetary policy discourages long term growth.
I agree that tight monetary policy helps with long term growth, but I believe that there are much more important factors when it comes to encouraging growth.
