Apple Raises iPad and iPod Prices in Japan

[ugahairydawgs]

It's not meaningless. We can't do anything about our debt until the deficit is tamed.

And we'll never get our deficit under control until we quit spending like a college freshman off with his parent's credit card.

 

[Eraserhead]

No, not quite.


The federal government took in $2.3 trillion in revenues in fiscal year 2011, most which comes from individual income taxes and the payroll taxes that for Social Security and Medicare. Not including all the other things that need funding.

The Federal government would only come close to $16 trillion in revenue at damn near 100% taxation.

Good argument - I guess this means on a household basis that debt of ~$10 trillion would be about the limit.

 

[Technarchy]

It's not meaningless. We can't do anything about our debt until the deficit is tamed.

You can't cut or tax your way out of $16 trillion dollars in debt. This is a massive lie the GOP and Dems keep spouting. The interest alone will exceed our tax revenue unless we are willing to raise the tax rate to insane levels on all people and purchases which would destroy the economy.

Literally, the only way to pay our debts is to inflate our currency, which would also destroy the economy.

About the only way I can see paying off our debt is shrinking the government by half or more, cutting medicaid and medicare and social security and gutting defense to the extent where we would no longer project force. Maybe then we can pay our debts and not wreck the economic engine in the process; or least not wreck it to the extent that we wont recover.

No president has the balls to make those tough calls, so the fed will keep printing until we are Weimer 2.0.

 

[arcite]

You can't cut or tax your way out of $16 trillion dollars in debt. This is a massive lie the GOP and Dems keep spouting. The interest alone will exceed our tax revenue unless we are willing to raise the tax rate to insane levels on all people and purchases which would destroy the economy.

Literally, the only way to pay our debts is to inflate our currency, which would also destroy the economy.

About the only way I can see paying off our debt is shrinking the government by half or more, cutting medicaid and medicare and social security and gutting defense to the extent where we would no longer project force. Maybe then we can pay our debts and not wreck the economic engine in the process; or least not wreck it to the extent that we wont recover.

No president has the balls to make those tough calls, so the fed will keep printing until we are Weimer 2.0.

As the USD is the reserve currency of the world, the rest of the world will go bankrupt before the US... which is exactly what is happening, inflation is exported. It's all good for the US.

For those complaining about high cost of Apple products, just hop on a plane to NY and buy them there, cheapest on the planet.

 

[Eraserhead]

For those complaining about high cost of Apple products, just hop on a plane to NY and buy them there, cheapest on the planet.

Except Hong Kong .

 

[Z400Racer37]

As Krugman or any other proponent of a stimulative monetary policy would state outright, imported goods will be more expensive as the currency weakens. That's one of the inflationary components of the policy, which is both predicted and intended.

At the same time, Japanese goods becoming cheaper, so exports become more attractive. Japan has traditionally had an export-driven economy, but that has stagnated lately.

Finally, and most importantly-- sometimes a little inflation is a good thing. Japan has actual been teetering into deflationary territory, which is BAD, for many reasons. The most obvious being deflation means it is more attractive to hoard money (under the mattress) than to spend it. We could discuss this point at further length, if you are interested.

Looking at just ONE number to condemn an economic policy, especially when it is acting just as the proponents of the policy predicted, seems rather foolish.

1.
The resources they are dependent on importing just went up in price. This =
The resources they were importing which they were not dependent on should have been being made there in the first place if they need jobs and investment so badly. The fact that it wasn’t being made there is usually a function of too much government oversight/regulation (don’t tell me it’s because of labor costs, I’m looking at a rubber band right now that was made in China. A. Rubber. Band.). This in many cases makes it extremely difficult to produce many products inside country, thus making it more attractive to import them, even though they wouldn’t need to import them if the government made it easier for them to produce them domestically. Doing this would be much more attractive and killing your currency to try to offset the stupidity of the government, and it has the added benefit of not making it more difficult for people to retire, thus making it more difficult for young people to enter the labor force, thus increasing the rates of unemployment and under employment. Also, the imports you are dependent upon are now cheaper than they otherwise would be. This =

2. Sure, weakening the strength of your currency makes exports more attractive, but on the other hand, so does just reducing the price of the good or service you’re trying to sell. If you want to sell something for $100, and nobody’s buying it, and then your government decides to weaken your currency by 10%, you’re effectively getting $90 for the thing you wanted to sell for $100. Sure, you would get the same amount of nominal dollars that you initially wanted, but they would be worth 10% less individually, so what’s the point of that? Why wouldn’t you just cut the price to $90, and not destroy your currency? Perhaps reduced government interference/regulation would take enough cost out of operating businesses in that country to make it so that they could sell that product $10 cheaper without reducing margins, while also stimulating demand in a sustainable and logical fashion?

Why is deflation bad again? I mean, would you rather pay $20,000 for a car or $18,000 for the same car? If it causes people to hoard money (as if they could do that if they wanted to, remember about their over $80,000 in debt per person), then wouldn’t that mean that there would be a surplus of capital available for lending, thus pushing interest rates on borrowing down anyways? If people aren’t saving their money, it means that theyre spending it on consumption. Since there is over $80,000 in debt per person, it sounds like they’re doing plenty of consuming as it is. If they save it however, then that savings inherently becomes investment, which if done correctly, is much more efficient than blowing your money buying things you don’t need.
Who said I only looked at one number. Maybe this is just another example of how Keynesianism doesn’t work?

And, if you have actually been paying attention-- the deficit has been dropping rapidly as the economy recovers. When are you yourself going to "man up" and start handing out credit along with that blame?

BTW, where is the rampant inflation and weakening dollar that you guys have been predicting would result from the stimulus? I'm still waiting on that.

The deficit is dropping rapidly to… $1TRILLION?? Nice achievement. Oh, and if we’re recovering so well, then why does the FED need to buy 90% of the debt we offer at auction? And when you say that number is ridiculous, I’ll say I’ll trust Bill Gross and his enormous research department on the matter more than you. No one reasonable was predicting “rampant inflation” to be caused by the stimulus bill. They did, however, predict wasteful federal spending on unsustainable jobs, that would be lost as soon as the stimulus money went away. Which is exactly what happened. The official unemployment number is still 7.5%, and when you take into account the anemic labor force participation rate (what reasonable person wouldn’t), which is at an all time low (here: http://data.bls.gov/timeseries/LNS11300000) the number is way over 10%. Then if the underemployed are counted, that number skyrockets. This is before people who are employed full time watch 11 hours get hacked off their weekly schedule so the employer doesn’t need to pay for their Obamacare, mind you. I’ll certainly man up and give him credit for that.

Saving money is GREAT if it leads to investment; which, in many economic situations, it does. However, sometimes the economy is awash in savings and there aren't enough productive investments available. A symptom of that is extremely low real interest rates, which means supply of capital exceeds demand-- which we are seeing in Japan and the US. There are a number of factors at work in the US, but in Japan it's pretty clear that they are mainly just stuck in a rut-- nobody is investing because there is no point to it-- consumers aren't buying, and the currency is too strong for exporting. So why would anyone invest to increase output? You can invest to reduce costs, but that's typically a much more limited set of opportunities.

So the goal of Japanese policy has multiple facets-- weaken the currency to help exports, making idling capital less attractive, and put more money in the hands of consumers. All of these are intended to shake Japan out of the doldrums. Time will tell whether this works.

What savings? Japan doesn’t have to worry about a surplus of saved capital sitting on the sidelines, once again they have over $80,000 in debt per person. They need to worry about paying off the stuff they already consumed. And so do we. The reason interest rates are so low in both countries is because our central banks are printing enormous amounts of money to buy the government debt that the private sector refuses to support. If there aren’t enough “productive assets to invest in” then thats a pretty good sign that the government needs to stop interfering with the efficiency of the private sector, and roll back regulations and restrictions to investment. This would lower costs and allow operating costs to come down and thus make the price of the good the company makes much more competitive and attractive to exporting. It has nothing to do with the monetary policy.

So, you don’t need to weaken a currency to make exports more attractive, you can just cut the price and not destroy your currency (and your debtors) in the process. They don’t have idling capital, they have over $11 trillion in debt. Complete opposite. The consumers, who you say you want to put more money in the hands of, has already spent themselves into oblivion. They don’t need more money to consume things they don’t need. Time has told that these Keynesian policies never work because when times are bad, they juice the economy with cheap money and debt, and when times are good, it’s not politically popular to be responsibly and pay down the debt and tighten rates, so the debt never comes in. Plus trying to numb the downside by taking on that debt and printing that money, doesn’t allow the inefficient sectors of the economy to restructure or go bankrupt, so when things start “recovering” and a more sensible monetary policy is attempted to be enacted, the bad parts of the economy start failing again, and there goes the “recovery.”

 

[Eraserhead]

once again they have over $80,000 in government debt per person.

They do however have a high personal savings rate.

 

[jnpy!$4g3cwk]

Whatever, it's still apple greed!!!

I am very skeptical about arguments that depend on the assumption that labor markets are "free" since very often they are not.

That said, the market in laptops and tablets is pretty darn free. Cell phones less so, but, a bring-your-own-phone on T-Mobile is pretty close to being a free market. As far as I am concerned, Apple can charge whatever they want. I might buy it, or, I might not, depending.

 

[Z400Racer37]

They do however have a high personal savings rate.

Since the bust of the dot com bubble, they have had a very low savings rate relative to their pre dot com savings rate. Since the government is theoretically supposed to pay back the debt at some point, you can rationally apportion the average amount of debt owed per person and apply it to those savings, which are negative.

 

[the8thark]

I didn't realise a simple price rise was such a political issue. But yeah money and politics do go hand in hand.

But it was bound to happen. Apple's prices do roughly rise based on the fortunes of the US dollar. So I am not surprised with this at all.

 

[GodWhomIsMike]

I wish my new boss wasn't blocking everyone from taking vacation time this summer.

I had originally planned to do another trip to Japan this summer. I could have snapped up some new Mac stuff like a 512GB 13" Macbook Air with 8GB ram and a Core i7 for just 172,801 Yen ($1710). Or a Base 13" Macbook Air for $1079 for my Dad.

 

[Mr.damien]

I've been using Apple products for over 30 years. It's price points are relatively stable. They don't raise or lower prices much either way so I'm not sure what you are talking about Apple being fast to raise prices. Agree some of their products are way out of line for my taste, but it's not correct to suggest they increase prices regularly. Its margins have been shrinking, not growing.

Then you mustn't live in Europe if you don't see what I mean ...

----------

What savings? Japan doesn’t have to worry about a surplus of saved capital sitting on the sidelines, once again they have over $80,000 in debt per person. They need to worry about paying off the stuff they already consumed.

Well, the difference is that 90% if not more of the current Japan debt is own ... by japanese themselve. Us debt is own mainly by China and Japan.

I would much prefer leave in a country where people own their debt than a country with lower debt owned by foreigners...

 

[chown33]

Us debt is own mainly by China and Japan.

I would much prefer leave in a country where people own their debt than a country with lower debt owned by foreigners...

http://en.wikipedia.org/wiki/National_debt_of_the_United_States#Foreign_holdings

As of January 2011, foreigners owned $4.45 trillion of U.S. debt, or approximately 47% of the debt held by the public of $9.49 trillion and 32% of the total debt of $14.1 trillion.​

Emphasis added.

Further details are given in the article.

 

[lk400]

...So your solution for a country that has over $80,000 in debt per citizen, is to go out and... go further into debt to buy things they don't need? Hmm.

Question. What's wrong with saving money (after you've paid off all the debt of course) again? Where would the money come to finance investment without savings? Print it out of thin air, and take value from the existing currency? Why can't they just make more things in their country, sell those things overseas, consume less of it themselves, thus bringing more capital into the economy, paying down their debt, and stimulating the economy and the job creation you mentioned previously?

Just wondering.

No - I did not proffer a solution to the Japanese problem. If I had such a solution, I would be running for office in Japan, not posting on MacRumors.

I also hardly think that Japan can be accused of buying things they don't need. To generalise, Japanese are minimalist (that is the stereotype, right) - they buy the minimum they do need, and use what they buy.

I am certainly not arguing against saving. And neither is Japan. Japanese are some of the most prudent savers in the world. And that is the problem. People have not been spending for decades, and this has stalled the economy. The $80,000 in debt you have mentioned (which I don't know if it is accurate) is not people borrowing to go and buy the next big screen TV. It is the reverse, it reflects government debt held by the citizens - it is the citizens' savings. And as the government debt is primarily held domestically, this is why it is not really comparable to other highly indebted nations. Mrs Watanabe is hardly about to call the debt and send her country bankrupt.

My post was simply that of course this will cause prices to rise - the Prime Minister's whole strategy is to create sustainable inflation. If I am wrong - are you saying that sustainable inflation is a bad thing? And that countries should instead aim for deflation?

----------

I think the Japanese would have been happier with a cheaper iPod! Inflation only help the bankers. Silly Keynesians.

From an individual's point of view, that is absolutely true. Imagine living in a country where a can of coke costs the same now that it did 20 years ago. But economic growth is not only good for the bankers, but for the country as a whole.

 

[Dmunjal]

From an individual's point of view, that is absolutely true. Imagine living in a country where a can of coke costs the same now that it did 20 years ago. But economic growth is not only good for the bankers, but for the country as a whole.

You can have economic growth with no inflation you know? The US did this for most of the 19th century. The reason Japan wants inflation is the same reason the US Fed wants inflation, so they can debase the currency and inflate away the debt. In real terms, there still won't be economic growth.

 

[Eraserhead]

You can have economic growth with no inflation you know? The US did this for most of the 19th century.

The US did have inflation in the 19th century, they just had deflation as well so it came out as a wash.

http://www.pbs.org/teachers/mathline/concepts/president/activity1.shtm

 

[Dmunjal]

The US did have inflation in the 19th century, they just had deflation as well so it came out as a wash.

http://www.pbs.org/teachers/mathline/concepts/president/activity1.shtm

Yes, but I'd rather have that than continued inflation where the dollar has lost 98% of its value in the last 100 years.

Edit: Adding a picture from your link. Yikes! This is what Japan is trying to do as well. Notice the big rise since the 70s when we came off the gold standard.

I agree that inflation by definition increases the money supply which results in nominal economic growth. But who gets the benefit is what we're discussing here. The newly created money first goes to the chosen ones. The banks, the hedge funds, the multinational corporations, the governments, etc. The last to get access to it are the middle and lower classes. By the time it trickles down to the lower classes, prices of everything (assets, stocks, real estate, energy, food) has already gone up and their standard of living actually declines. This is what we've been seeing in the US for the last 40 years.

Liberals, if you like Keynesian economics and inflation, you're actually supporting trickle-down economics no different than the Republicans with their tax cuts for the wealthy.

http://www.cbsnews.com/8301-505123_162-57587033/wealth-of-most-americans-down-55-since-recession/

 

[lk400]

You can have economic growth with no inflation you know? The US did this for most of the 19th century. The reason Japan wants inflation is the same reason the US Fed wants inflation, so they can debase the currency and inflate away the debt. In real terms, there still won't be economic growth.

Yes, of course - sorry I missed a step my in logic. I believe that one of the (advertised) idea behind Japan's inflation target is to shift the Japanese psychology and cause more spending today, rather than to put it off until tomorrow, which is what has been happening. The Japanese economy no longer can just rely on exports, it also needs strong spending at home. So, 1. cause inflation, 2. shock a change in psyche 3. ??? 4. economic growth.

But of course the benefits and detriments of inflation or deflation for different interests is a much more complex debate - I certainly dont understand all the nuances.

Interesting point RE inflating away the debt. Does that still stand if the debt is in local currency? I dont know much about finance, but I thought interest rates (or whatever the equivalent is on government bonds) paid on debt were meant to factor in inflation.

 

[Dmunjal]

Yes, of course - sorry I missed a step my in logic. I believe that one of the (advertised) idea behind Japan's inflation target is to shift the Japanese psychology and cause more spending today, rather than to put it off until tomorrow, which is what has been happening. The Japanese economy no longer can just rely on exports, it also needs strong spending at home. So, 1. cause inflation, 2. shock a change in psyche 3. ??? 4. economic growth.

But of course the benefits and detriments of inflation or deflation for different interests is a much more complex debate - I certainly dont understand all the nuances.

Interesting point RE inflating away the debt. Does that still stand if the debt is in local currency? I dont know much about finance, but I thought interest rates (or whatever the equivalent is on government bonds) paid on debt were meant to factor in inflation.

You can't force people to take on more debt they feel comfortable with. You can debase the currency by making it less valuable and making goods more expensive but history has shown us that people might just switch to a new currency instead (Zimbabwe).

Japan, the EU, and the US have the luxury of being a reserve currency so the risk of everyone dumping the currency is small. But that doesn't make it a good idea!

As for inflating away the debt, by making the future yen (or euros or dollars) less valuable, you can pay off the debt easier. Imagine inflation compounding to 100% over 25 years. You've just cut your debt in half in nominal terms.

 

[Technarchy]

As the USD is the reserve currency of the world, the rest of the world will go bankrupt before the US... which is exactly what is happening, inflation is exported. It's all good for the US.

The dollar is 62 percent of the foreign exchange holdings by the world’s central banks. More nations are seeking to trade currency directly, and the dollar as a percent of holdings is shrinking.

As there are fewer nations that are willing to buy our paper, the more we will have to inflate the currency to handle our debt...only it literally destroys the value of our dollar, savings etc etc.

 

[Dmunjal]

The dollar is 62 percent of the foreign exchange holdings by the world’s central banks. More nations are seeking to trade currency directly, and the dollar as a percent of holdings is shrinking.

As there are fewer nations that are willing to buy our paper, the more we will have to inflate the currency to handle our debt...only it literally destroys the value of our dollar, savings etc etc.

There's a reason China and India are buying gold like it's going out of style!

 

[Eraserhead]

India are buying gold

The Indians have always bought gold jewellery to store their wealth - that's how they roll.

Them buying gold now is merely because they are richer than in the past.