Quote:
Originally Posted by SeijiSensei
Thrift is one thing, but deflation carries a different set of problems. People refrain from spending today, not necessarily because they prefer savings over consumption, but because they have an incentive to postpone purchases in anticipation of prices being lower in the future. Moreover, savers were rarely rewarded over the past decade. Japanese interest rates have hovered just above zero for quite some time and have actually been zero for about a year now. Many economists believe a small amount of inflation, like the 2% target that Abe has set, is needed to change consumers' incentives and stimulate economic growth.
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Consumer's incentive is to do what's best for themselves. And that means not going into debt. They save not for the interest, but for the savings itself. In Asia, "going into debt" is a horrible thing.You are not going to reverse that mentality easily, especially since it is true.