Diary on stagflation 2021--2022
Diary on stagflation 2021--2022
スタグフレーションの展開 Development of stagflation：
| Time | Incident |
|---|---|
| 2023-0301 | Toukyu Railways (東急電鉄) raises fares by an average of 10% |
| 2022-0401 | Lixil (リクシル) raises prices of building material by an average of 10.0% |
| 2022-0302 | Oil price (原油価格) exceeds 100 dollars |
| 2022-0301 | Ajinomoto (味の素) raises the price of mayonnaise by 8.04% (from 373 to 403 Yen) |
| 2022-0214 | Fed calls an unscheduled extra meeting |
| 2022-0201 | Tokyo Electricity Bill Model (東京電力) 25.87% YoY increase (from 6325 to 7961 Yen) |
| 2022-01xx | Jp Gov. promoting nuclear energy |
| 2022-01xx | Jp Gov. starts discussing asset tax |
| 2022-0107 | US labor force participation rate remains 1.5 percentage points lower |
| 2021-1231 | Turkey Lira fallen to less one-sixth in 11 years |
2022-0302 原油価格が１００ドルを超える Oil price exceeds 100 dollars：
At the beginning of March, the price of crude oil surpassed 100 dollars. This was due to the combination of Russia's invasion of Ukraine on top of stagflation.
In general, the term "crude oil price" refers to WTI (West Texas Intermediate Crude Oil). The sentence "the price of crude oil has exceeded 100 dollars" means "the price of West Texas crude oil has exceeded 100 dollars."
Crude oil varies in chemical quality from one production area to another and is given a commodity name to distinguish it, such as Dubai Crude, Brent Crude, West Texas Intermediate Crude, Urals Crude, and so on.
However, since crude oil is consumables traded globally, the oil price moves synchronously. In other words, if the price of Dubai crude oil rises, the price of Brent crude oil also rises. If the price of Dubai crude oil falls, the price of Brent crude oil falls.
The Dubai crude oil price is important for Asia (purchased by Japan, South Korea, and China), and the Dubai crude oil price moves almost in proportion to the WTI.
When the price of crude oil rises, the price of electricity rises through thermal power generation. From there, the price will spill over to durable goods. Notably, aluminum and fertilizer will be affected. There is a time lag of three to six months between the oil price rise and the impact on end consumers.
2022-0214 米国緊急金融会議招集 Fed calls an unscheduled extra meeting：
Fed calls an unscheduled extra meeting. This is the first time in several years that a meeting other than the regular ones will be held. The meeting previously scheduled for March 15, will be moved up.
On February 11, the annual inflation rate hit 7.5 percent, the highest in 38 years. Political pressure over the disappointing results is mounting, and policymakers are growing impatient.
東京電力料金モデル前年比25.87%値上 Tokyo Electricity Bill Model 25.87% YoY increase：
Two main reasons for the electricity price increase in 2022: Rising prices of natural resources and the depreciation of the yen.
日本市場短観 JP Market Outlook 2021 Winter Solstice：
Travel agents → Downgrade The value provided by traditional travel agencies will be taken away by software engineers. However, travel agents and the airline industry (aviation) need to be considered separately.
Condominiums of Tokyo metropolitan area → Neutral Property price data fluctuate and show no direction.
Banks strong in the mortgage business → Upgrade The ongoing stagflation is not transitory but arouses a more fundamental structural change. Inflation-indexed mortgages will contribute to the profitability of blue-chip banks in Japan.
2023-0301 電車料金の値上 Train fare rising：
Toukyu Railways (東急電鉄 とうきゅうでんてつ), one of the major railways operating in Shibuya (渋谷 しぶや), announced rail fare increases by an average of 10.0% from April of 2023.
The reason for the fare increase is not the raw materials. It is a change in lifestyle. With the introduction of remote work, the number of train commuters has decreased. To compensate for the decrease in revenue, Toukyu Railways decided to raise fares.
Lifestyle changes are seldom reversible, so the fare increases will continue.
2022-0301 消費財と耐久財 Consumables and durables：
Consumables and durables are rising prices simultaneously.
Ajinomoto (あじのもと 味の素), a traditional company with over 100 years of history, raises the price of mayonnaise by 8.04% (from 373 to 403 Yen). Ajinomoto has long provided seasonings for modern Japanese cuisine.
Lixil (りくしる リクシル), a building material manufacturer, raises prices of its products by an average of 10.0%. Bathtub products will see a price increase of up to 39.0%.
Both companies are going to pass on the rising cost of raw materials to consumers.
2022-01xx 原子力の推進 Jp Gov. promoting nuclear energy：
The Japanese government resumes subsidy programs to promote the nuclear energy (原子力 げんしりょく). Cooperating municipalities will operate nuclear power facilities processing Uranium 235 and 238.
In the background, there is a sharp rise in electricity prices due to stagflation.
Since the financial health of the average household is at stake, 2022 is the best time to gain public support for the policymaker.
2022-01xx 日本資産課税の議論 Jp Gov. starts discussing asset tax：
The Japanese government has started to discuss "bank deposit tax (貯金税 ちょきんぜい)," a type of asset taxation for bank deposits (銀行貯金 ぎんこうちょきん). Unlike traditional income tax (income tax and business tax), asset taxation is considered to be equal because it targets "rich elder people" who own plenty of financial assets. The discussion shows the deepening of socialism in Japan after the huge spending on the Covid crisis.
2022-0107 米国労働参加率 US labor force participation rate remains 1.5 percentage points lower：
The U.S. labor force participation rate was unchanged at 61.9 percent in December but remains 1.5 percentage points lower than in February 2020. According to the historical data of the aging nation, Japan, the labor force participation rate below 60.0 percent leads to a decline in the natural interest rate.
The Covid-19 crisis is not a "health problem" but a "demographic problem." The results have been a shrinking workforce and wage inflation of 4.7% on the year. The competition for scarce labor force became clear.
トルコリラの価値が６分の１ Turkey Lira fallen by one-sixth：
Turkey's national currency, Lira, has fallen from 1.5Lira = 1USD in 2010 to less than 9.0Lira = 1USD in 2021. In 11 years, the value of the national currency has dropped to less than one-sixth.
貨幣の基礎知識 Basics of currency：
| Time | Entity | Incident |
|---|---|---|
| 1921 | Weimar Republic | Hyperinflation |
| 1929 | United States | Great Depression |
| 1944 | IMF | Established |
| 1971 | Nixon shock | Cancelled dollar-gold convertibility |
| 1973 | OPEC | Oil crisis |
| 1981 | Paul Volcker | Raised interest rate to 20% |
| 1985 | Plaza Accord | Coordinated-currency intervention |
| 1995 | WTO | Established |
| 1997 | Asia | Currency crisis |
| 1999 | Europe | Launched Euro currency |
| 2007 | Bear Stearns | Pulled trigger on financial crisis |
| 2008 | Satoshi Nakamoto | Invented Bitcoin and Blockchain |
| 2020 | China | Launched digital currency Yuan |
| 2021 | Bitcoin | Reached 1BTC = 60000USD |
英語 English：stagflation
日語 Japanese：スタグフレーション
類義 Synonym：Recession with inflation Recession-inflation
意味 Meaning：Stagflation is a compound word of "stagnate" and "inflation." In economics, stagflation stands for recession-inflation. Corporate bankruptcies increase, unemployment rate rises, and yet the price of goods goes up in typical stagflation. Stagflation is considered to be avoided.
事例 Case：The most famous case of stagflation is the Oil crisis of 1973. Following the Corona crisis in 2020, stagflation occured.
解説 Commentary：To understand stagflation, we need to look at the relationship between goods and money.
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