AbeNomics: More of the Same & Continued Failures of Mainstream Economics

Japan’s central bank (BOJ) has been fighting a Quixotic battle against an imaginary nemesis: price deflation (data suggests stable prices, NOT a trend for falling prices!!!).

As part of ultra-loose monetary policy, BOJs policy interest rate has not been above 1% for nearly 18 years.

During the 1990s, there were 10 fiscal stimulus packages worth more than 100T yen that aimed to cure recession & fight “deflation” (note to USA: most of the spending was on “shovel-ready” public works!) … .

Stimulus packages (i.e., fiscal deficits) have remained the policy du jour in Japan until now … .

AbeNomics is more of the same old tired Keynesian recipes, including a dose of yen devaluation that did not achieve its desired effect. What happened was that there was no rise in exports while Japan’s trade & current account surplus have decreased … !

Meanwhile, Japan’s economic growth remains far BELOW trend since 1989 … all of the above are consistent with the playbook of conventional, mainstream economic policies … this suggests a fundamental failure of economic models to grasp the nature of recession, bubbles, etc

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About christopher

Content of "Natural Order" attempts to reflect the commitment of Universidad Francisco Marroquin to support the development of a society of free & responsible individuals. The principal commentator for this blog is Christopher Lingle.

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