economic big bang
  • Loyal readers will know that for a long time I have advocated just the Big Bang that Kuroda's Bank of Japan has unleased on the Japanese economy. Already we see the effects. In fact I have been calling for fiscal and monetary stimulus for almost 20 years now, one result was that falling out with the Nikkei establishment in the Hashimoto era which I describe in my website Life Story. Nikkei's guilt for the harmful policies ever since is large.

    Other points include:

    1. That we had to wait so long for Kuroda's appointment is yet another strong argument for political control over the central bank.

    2. Much of the commentary focuses on whether yen depreciation helping exporters is enough to turn the economy around, or even whether it is of any use to small-meium enterprises - that sacred cow of Japanese political thinking. Japan's economic pundits do not seem to realise that devaluation does even more to help domestic importing substitution industries, many in the service and small enterprise sector. Indeed, economists generally, in their obsessions with tariffs and free trade arguments, fail to understand the far greater effects of currency movements.

    3. Hopefully monetary relaxation alone will be enough to get the economy moving. But it would be much better if there could also be fiscal stimulus.


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