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View Diary: Japanese war games (13 comments)

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  •  Dubious economics here (1+ / 0-)
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    FG

    Japan is the poster child for a liquidity trap.  Their central bank lowered its rates to zero and there was still no growth; they refused to follow a stimulative policy and as a result their economy went nowhere for more than a decade.

    The causes (a real estate bubble fueled by foreign investment) are similar to the bigger debacle in the US and Europe.  (The US isn't as far in the dumper, despite the best efforts of conservatives to put us there, because of quantitative easing and TARP: think of it as a few trillion of protection money.)  Note that the current ruling party is relatively militarist by recent Japanese standards and is definitely up for some weaponized Keynesianism.  Hey, it worked for Reagan.

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