Abe and Bank of Japan deluded – another round of fiscal stimulus on the way.
Well – Yen dropped Nikkei soared – oil dropped and he won the upper house election in a landslide and immediately announced that he would add further fiscal stimulus – that is – “to continue Abenomics and try to succeed in his aim of bringing the Japanese economy back to life, as well as increasing inflation,” said Commerzbank currency strategist Thulan Nguyen, in Frankfurt. “That is causing the yen slide at the moment.” (1)
This stimulus is reported to be around 10 trillion yen – around $98 billion.
At this point I think Abe and Bank of Japan should study history – yes it is a historical fact that all stimulus programmers implemented in Japan have failed – akin to the definition of insanity – the full set of attempts are listed in Wikipedia (2) – in the -1990’s I counted ten then gave up.
Anyway good luck with latest the attempt against a backdrop of global trade declining – weak Japanese machinery orders – weak theoretical foundations plus – global inflation and trade well below expectations – it is called ‘global deflation’.
Now do not get me wrong – financial stimulus via Keynesian policies can work – even though this is contrary to Hazlitt’s dissection of Keynes General Theory (1959) – plus Misis and – but and you know I love buts – the stimulus as originally theorized should be implemented – without government interference whatsoever – well – good luck with that.
None of this however should be a surprise – Japan is different – there will be a short term benefit – one to two months – as demonstrated with negative interest rates – thereafter due to their policies and demographics failure will follow – they never learn and now I will label them stupid.
Yes stupid is as stupid does – one of the most stupid central bankers Ben Bernanke is giving Abe advice – and notice I said one – there are plenty of stupid central bankers out there.
And on a final note – I understand that Abe did not get the absolute majority to change Japan’s constitution – so the warmongers can stop partying – it is now all about the Yen.