Postby blkmage » Sun Jun 19, 2011 12:18 pm
Time for more macroeconomics with C!
So it's been revealed that for whatever reason, there's a wave of bad stuff moving through the markets and is about to hit Japan. Interestingly enough, that's kind of similar to how our very own economic shenanigans occurred circa 2008, with those bad subprime loans in the US poisoning the rest of the worlds' markets. So how did the world fight against this wave and stop countries from disappearing?
In C, Mikuni starts up a Cthulhu-like beating heart thing in Japan's financial district which has the effect of injecting tons of Midas money into the system. In the real world, the governor of a country's central bank will similarly just start injecting money into the system, at least they should if they subscribe to Keynesian economics. Since every modern economy uses fiat money, the central bank can technically just create as much money as it wants.
The problem that comes is inflation. In extreme cases, you end up having so much money that it becomes worthless. Typical examples are German marks in the early 1920s and the Zimbabwean dollar today. In the general case, prices of things rise and your economy can start to slow down. In C, you hear them talk about trading the future to save the present and this is what they're alluding to: the possibility of wrecking the economy in the future to save the economy in the present.
It remains to be seen what the conclusion of the show is, but obviously, things are different from the way they're presented in C. Unlike in C, inflation isn't some irreversible horror that should be avoided at all costs. In fact, as far as I understand, zero inflation monetary policy has been tried and didn't work out so well. Anyhow, the idea behind expansionary monetary policy is to jumpstart the economy and eventually make it grow at a rate faster than inflation rises, so you won't end up with the nasty effects of high inflation. This idea seems to be absent from the presentation in C.
Of course, I'm most familiar with monetary policy as it's been conducted in Canada and, to a lesser extent, Europe and the US. But C is a Japanese cartoon, so I'd imagine the whole debacle with the Lost Decade (the 1990s) plays in to the narrative somehow, because there's a lot of rhetoric that it kind of shares with Eden of the East.