Japan Hurries Down the Rabbit Hole With the US in Hot Pursuit

Are the Japanese as irrational as they seem?

As the Bloomberg article below recounts, Liberal Democratic leader Shinzo Abe, expected to win the upcoming Japanese elections, is calling for unlimited money printing and more fiscal stimulus.

Does this sound familiar? It should. Japan leaders have sounded like stuck records ever since the Crash of the late 1980′s. Over two decades have passed since then and Japan has just gotten worse and worse. Government debt has soared to unbelievable levels, many times GDP. Taxes today barely cover interest on government debt plus social security payments.

Wouldn’t you think that someone in Japan would start to figure out that this isn’t working, that the government has been destroying wealth, not creating it, for all these years.

But the same stuck record continues.

This does not bode well for the US. We are only partly down the Japanese road. Will we follow the Japanese all the way down this rabbit hole? Will we ignore the abundant evidence that money printing and stimulus create bubbles and busts, not sustainable prosperity?

Click here for the story.

6 comments
George Mcfarlin
George Mcfarlin

Back around 1990, Japan's massive real estate bubble popped. It endangered nearly every financial institution in the country. And, if they had been following GAAP, they would have been forced to close them all. They kept most open with a wink and a nod. Nonetheless, the economy was totally moribund for the next decade. In 2008, the U.S. experienced a rapid financial panic, followed by massive unemployment. Four year later, the economy is still in neutral. Sound similar?

Ben Calvin
Ben Calvin

Yep and if there are any in denial about this not happening I have a 5,000 dutchmark paper note for your viewing pleasure from my grandfather.

Aidan Haggerty
Aidan Haggerty

The United States will be lucky to avoid a lost 2 decade like Japan

Aidan Haggerty
Aidan Haggerty

Japan was lucky that they avoid a economic depression, but they had a Balance Sheet recession that lasted for decades. Part of it was culture and the laws regulating bankruptcies there.