Japan: Is the Sun Rising Again?

[Ad Orientem]

WHEN Shinzo Abe resigned after just a year as prime minister, in September 2007, he was derided by voters, broken by chronic illness, and dogged by the ineptitude that has been the bane of so many recent Japanese leaders. Today, not yet five months into his second term, Mr Abe seems to be a new man. He has put Japan on a regime of “Abenomics”?, a mix of reflation, government spending and a growth strategy designed to jolt the economy out of the suspended animation that has gripped it for more than two decades. He has supercharged Japan’s once-fearsome bureaucracy to make government vigorous again. And, with his own health revived, he has sketched out a programme of geopolitical rebranding and constitutional change that is meant to return Japan to what Mr Abe thinks is its rightful place as a world power.

Mr Abe is electrifying a nation that had lost faith in its political class. Since he was elected, the stockmarket has risen by 55%. Consumer spending pushed up growth in the first quarter to an annualised 3.5%. Mr Abe has an approval rating of over 70% (compared with around 30% at the end of his first term). His Liberal Democratic Party is poised to triumph in elections for the upper house of the Diet in July. With a majority in both chambers he should be able to pass legislation freely.

Read the rest here.

[clacy]

Japan is basically a proxy for MMT now.

We will see how it turns out in 10 years.

[RuralEngineer]

I'm still watching for that inflation. I find this all fascinating as an exercise in what massive currency devaluation by a major economy would look like. I also hope it's successful since I think a strong Japan is good for America in the region.

[clacy]

Japan and the US easing the most and for now, it appears to be working.  France's Hollande has recently publicly asked that the EU consider a "pro-growth" policy. 

It will be very interesting how this all turns out. For now, the inflation that the Austrians have been claiming is imminent for years now, is no where to be found. 

On the other hand, will QE just result in asset bubbles?  Probably, IMO.  I'm not sure it does much to alter the demographic factors that are putting deflationary pressures on the world economy.