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Despite repeated errors, it’s never too late to start making things right. Japan should pursue a real fiscal stimulus, ignore the IMF and put the prospect of more sales-tax increases onto the garbage heap of economic policy ideas.

9 Comments

Wall Street Journal columnist Mike Bird

© Wall Street Journal

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9 Comments
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Exactly. The IMF's warnings about Japan's fiscal debt, ie inflation, interest rates, currency strength, financial markets, etc. have been consistently, ridiculously wrong. Embarrassing, or what?

If Japan can borrow its own money from its own institutions and taxpayers at zero interest, and then pay itself back, without inflation dangers....then go for it! And scrap the consumption tax, too.

1 ( +3 / -2 )

The government collects 60 trillion yen in tax revenues, and spends 100 trillion yen every year.

Is this not a 40 trillion yen "stimulus" every year, as things stands? 

That's what it looks like to me. And if they made it a 60 trillion yen "stimulus" or a 1,000 bazillion yen "stimulus", I don't think it would help! I think this form of "medicine" is the wrong one and it's actually making Japan sicker!

2 ( +3 / -1 )

fxgai, can’t agree with you more. It really is this simple, but making it complicated keeps many economists employed.

One thing I still am still not sure is if this “kicking the can down the road” continues, what will the day of reckoning will look like.

2 ( +2 / -0 )

I try not to think about that, and just make sure that I have contingency plans in place, should it come time to execute on Plan B.

Jeff Lee has correctly observed forever that things having not blown up yet, but I have doubts whether that is assurance that they won't blow up in future. I hope so too, but personally can't see evidence to categorically rule out the possibility of the economic equivalent of a sudden volcanic eruption or tsunami-bearing earthquake at some point during my lifetime, or before my kids are grown up and off living their own lives in the world somewhere. I like to have some insurance to cover this.

But I always come back to this point: even if our fears are completely without foundation (which could be the case), the plain reality is that some of us do have these fears, and in Japan there might be quite a proportion of such people. Exactly what effects these fears play on overall economic activity would be fascinating to know, but completely academic unfortunately, as in any case Japan doesn't make drastic changes in the absence of a crisis.

0 ( +0 / -0 )

The IMF is about as relevant and as righteous and correct in its advise as the U.N. do not ever listen to what these inflated corrupt piles of steaming dog doo doo say.

You do know of course the interests of these two organizations dont you? Irrelevant obscure self interested .....

-1 ( +0 / -1 )

@Reckless

A deficit in the public sector largely reflects a surplus in the private sector. Corporate Japan (private sector) has been earning its highest income in history. Economy activity is overwhelmingly carried out by the private sector.

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