Japan, against the market-mechanism...

Article;
BOJ stands pat on easing says winning deflation battle.

Comment;

Inflation targeting by monetary easing can further lengthen the recovery because people will expect that one day inflation targeting will go then they will resume spending... Prices can not fall below the lowest denomination of currency. In Japan it may be 1 yen... Prices fall but they can not be negative... If you buy you have to pay something then what could be the lowest price? It must be the lowest denomination of a currency… The higher end tends to infinity… Nevertheless we can increase the purchasing power of money if we let the prices fall and float a lower denomination of yen which will increase the space in which prices can fall… For example, in Japan if we float a 50 ney (hypothetical) a lower denomination of yen then price can fall from 1 yen to 50 ney… value of yen will go up… Nominal wages are very high in Japan, as high as 750 yen per hour, but we need to increase real wages to reduce income inequality and push growth… Without monetary easing there is a persistent pressure on prices to go down which means we have an excess of supply over demand… The unemployment rate is close to 4%, near the natural-rate which means demand is not a problem within the economy, but falling prices mean oversupply… And, prices should continue to fall to clear the market, but the policy-makers want inflation… Japan has chosen external devaluation over internal devaluation via monetary policy to give exports a push. Falling prices and wages too could make exports competitive…