Summit Notebook

Looking forward to inflation

By Tim Kelly

Yoshiharu Hoshino, the president of Hoshino Resort, one of Japan’s leading resort operators, is looking forward to a dose of inflation after years of sliding prices.

By engineering a rise in rates by printing money, he reckons Japan can make a big chunk of its burgeoning national debt disappear, which along with tax hikes is, he predicts, likely the way Japan is going to exit a potential crisis as debt soars to more than twice its gross domestic product.

While having the nasty side affect of making assets worth less tomorrow than today, if, like Hoshino, you borrow money to buy the bricks and mortar of hotels, the plus side is your debt, relative to your cash flow will also get smaller as long as you have low rates locked in.

“It would be a very big plus,” said Hoshino told the Reuters Rebuilding Japan Summit in Tokyo.  Japan defaulting on its debt is unlikely, he said.

AUDIO: Capital flight to cure what ails

Soaring oil prices have helped make Russia rich, but the flood of petrodollars means Russians face double digit price inflation. Dmitry Pankin, Russia’s deputy finance minister, sees a trade off in a recent market selloff: Russian companies might have trouble raising capital, but billions of dollars in capital outflows may be just the thing to help cool inflation.