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Japanese banks owning stock

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Banks in Japan are allowed to own stock while U.S. banks are not. Is this a good idea? Why or why not? Defend your answer.

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Solution Summary

An explanation of why the BoJ and other central banks own stocks and other financial assets while the Federal Reserve can't own stocks. To answer this question a description of both the The Keynesian Theory-Central planning/Government intervention and the Austrian theory of economics are provided.

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So this is the type of Yes or No question that really does not have a right or wrong answer. So ultimately you must give your opinion. I will try and help you to form one as well as some points for defending it.

Banks in Japan are members of the central bank- The Bank of Japan or BoJ for short. The US banks are members of the Federal Reserve System also known simply as "The Fed".

To determine if it is a good idea for these member or central banks to own equities would depend on your macroeconomic views. There are really two ends of the spectrum. Which do you favor:

The Keynesian Theory-Central planning/Government intervention: If you are of the Keynesian school you are going to support banks owning equities. A good reason why is that is gives ...

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