Ever since 2009, I've been using the Peter Pan analogy for the expectations channel of monetary stimulus: If I think I can fly, then I can fly. Now the Japanese are adopting this approach:
Though lower oil prices have stalled progress toward an official 2 percent inflation target, Bank of Japan Gov. Haruhiko Kuroda, insists that a revival of confidence is inevitable.
"Yes, what we need is a positive attitude and conviction," Kuroda said in a speech to a conference last week.
He referred to a line in the children's tale of "Peter Pan" that says "the moment you doubt whether you can fly, you cease forever to be able to do it."
Personally, I prefer Yoda's version:
Do or do not, there is no try.
Lars Christensen started it, and David Beckworth and Nick Rowe also like to refer to the "Chuck Norris effect", although the Japanese might want to substitute the much more formidable Toshiro Mifune. The basic idea is that you do whatever it takes to convince the public that NGDP will grow at the target rate, and then people will no longer want to hoard cash. As they spend their excess cash balances, NGDP will grow.