‘Abe Bliss’ Or Getting Poorer And Liking It

The Inflationist Land of Cockaigne Remains a Pipe Dream

No-one can accuse the Japanese of not having done everything the Keynesian playbook said they should do, and in spades. Today, the government is burdened with the by far biggest debt of any industrialized nation and the central bank is printing money with gay abandon, while threatening to do even more of the same if it somehow fails to impoverish Japanese wage slaves by saddling them with rising consumer goods prices.

Well, the verdict so far must be that at least in this latter respect, the latest campaign dubbed ‘Abenomics’ has already been quite a smashing success. Of course, ‘Abenomics’ is the same warmed over inflationism that has been tried since the times of John Law. It can, for a while, create an illusion of growing prosperity, but in order to realize that printing money and pumping water from one end of the pool into the other (=deficit spending) cannot possibly create one iota of wealth, one only needs a tiny modicum of common sense. This in turn proves beyond a shadow of doubt that our monetary and economic affairs are run by what Bill Bonner referred to as ‘high IQ morons’. In Japan an especially virulent strain of same has infested the policy making landscape.

The latest economic news from Japan was that “Japan Industrial Output Unexpectedly Drops” (sic – maiming the English language is a sine qua non for a Bloomberg headline.)

“Japan’s industrial production fell in February, undershooting all forecasts by economists surveyed by Bloomberg News, as the first sales-tax increase since 1997 risks stalling recovery in the world’s third-biggest economy.

Output fell 2.3 percent from the previous month, the steepest drop in eight months, the trade ministry said inTokyo today. The median estimate of 28 economists was for a 0.3 percent gain. A separate gauge of manufacturing fell in March for a second straight month.

[…]

The 3 percentage-point increase in the sales tax is forecast to cause the economy to shrink at an annualized 3.5 percent in the second quarter, before a rebounding grow 2.1 percent in the following three months, according to a separate Bloomberg survey. Prime Minister Shinzo Abe gave the go-ahead for the sales tax increase to help deal with the world’s biggest debt burden, even as he pushes reflationary policies to spur growth and end 15 years of deflation.

[…]

Finance Minister Taro Aso last week outlined plans to front-load spending in next fiscal year’s budget to help the economy weather the blow from the higher levy. The Bank of Japan has also signaled that it’s ready to boost record easing if needed to drive inflation toward its 2 percent target.”