Abenomics' Dismal Anniversary

Abenomics, the radical set of reflationary policies designed to (air)lift Japan out of its multi-decade slump, is approaching its first anniversary. Don't expect a joyful celebration.

On September 26, 2012, Shinzo Abe won the preliminary vote to run in the country’s national election, and three months later, on December 26, he became Prime Minister. Financial markets, doing their best to discount the rise of Abe and the promise of his aggressive reflationary policies, naturally began to move well in advance of his election. Japan’s currency was the first to respond and by October of last year had begun its astonishing journey downward. From above 126 USD/JPY, the Japanese yen fell (crashed, really) to 96 USD/JPY by May of 2013, and now rests at 99 USD/JPY. Nearly 30% of that decline had already taken place by the time Abe’s LDP Party secured a win in December’s national election.

Meanwhile, the Nikkei was more hesitant to respond. However, almost immediately, the Nikkei, too, began its own astonishing move, breaking out of its trading range between 8400 and 9000 last Autumn and moving into a heroic frenzied top in May of this year, just shy of 16,000. It would be impossible to understate the sense of excitement from the financial press in New York and London at the prospect that Japan would finally, finally “do what it takes” to break the surly bonds of deflation. Keynesians, especially, spent much of the Winter and Spring in elation that, unlike the United States or Europe, at least one major actor in an otherwise stagnant OECD, would take the big risks necessary to confront the economic malaise that has more or less governed Western economies for a decade now.

However, as we approach the end of the first year of Abenomics, the cheerleaders and other hopefuls have fallen silent, as very little of note is happening in Japan’s economy.

The Guardian Economics Blog summed up the last year beautifully, in an even-handed but deservedly critical piece this August:

The honeymoon is over for Japan's prime minister, Shinzo Abe. The financial markets loved it when Abe announced a three-arrow strategy last year for ending his country's two decade struggle with deflation and sluggish growth. Share prices soared and the yen fell after the new government pledged large-scale quantitative easing, higher public spending and structural reform in a package dubbed Abenomics.

...But markets were left distinctly underwhelmed on Monday by Japan's latest GDP figures, which showed growth at 2.6% in the year to the second quarter of 2013, down from 3.8% in the 12 months ending in March. The rate of expansion was far weaker than expected and scotched the always rather fanciful hopes that Abe had found a magic bullet for Japan's woes. He hasn't.

Probably no ongoing indicator better illustrates Japan’s, and Abenomics', failure to launch than the immoveable record of the country’s exports. Indeed, just about every policy initiative over the past few decades has had the increase in exports as its aim. Well, of course. Japan remains very anchored, industrially, economically, and culturally, towards its post-war experience as an exporter of manufactured goods. And every policy initiative has been met by the international trading and financial market community with a selling of JPY, in anticipation that all the stops would be pulled out by Tokyo to lift exports. Unfortunately, there has been very little movement in Japan’s exports over the past few years:

Upon closer inspection of the this chart, which tracks the value of monthly exports, Abenomics kicked off after Japan exports had started to decline more steadily in the early part of 2012. Having oscillated in range between 4750 and 6250 billion JPY per month, the early part of last year saw Japan exports threaten to fall out of range, below the 4750 billion level. Surely it’s not a coincidence that the Japanese electorate, then, would turn back towards a set of more aggressive policy measures. Especially policy measures designed to attack the currency.

The problem is that any highly discreet and in this case, well advertised move in financial markets generally overshoots, because what begins as a fundamental shift usually ends in purely speculative herding. (see George Soros on Reflexivity). Obviously, it made sense for the global leveraged speculating community to both front-run and also press the decline in the JPY, given the strongly declared intent of the incoming government. But the elevated level of excitement and anticipation can be sustained for only so long:

The Nikkei stock index seems to have discounted and then tracked two parts of Abe's Three Arrows Strategy by riding the massive monetary stimulus provided by a weakening JPY and anticipating yet (another) boost to public spending. The question is: Did the Nikkei discount the totality of Japan's big, new, strategy? In other words, by rising nearly 100% from the lows of 2012 near 8,000 to the high near 16,000 in May, did the Nikkei pretty much forecast the endpoint of Japan's latest economic experiment? If so, the Nikkei has probably seen its high for the year, and possibly even for this cycle.

If you disagree and believe that the Nikkei will exceed its May 2013 high, then you have to ask yourself: What set of additional policy measures would Japan need to announce in order to boost the Nikkei to new highs? Abe's Third Arrow, a set of structural reforms, is already greeted by markets just as you would expect: with a yawn. In this regard, Japan's relationship with international markets is pretty similar to any other country. Shock-and-awe fiscal and monetary policies are greeted immediately with a high degree of sensitivity in global forex, credit, and equity markets. Structural reforms? Not so much.

Japan and the Global Economy

Abenomics has run into several limits that no amount of huffing and puffing can overcome. Although it's true that Japan has been able to cobble together slightly better GDP growth this year (roughly in the range of 2.5%), the problem remains that Japan is part of a moribund OECD. Europe and the U.S. may have bottomed, but they're not exactly adding much to global growth, as recent macro data from the U.S. confirms. More difficult, especially as a manufacturer of finely engineered goods, cars, and other infrastructure equipment, is that Japan has also had to weather a slower rate of growth in the Non-OECD.

In truth, the totality of stimulus in Japan has essentially kept the economy out of recession, but not much more than that. In this way, Japan serves as a nice example of what faces the OECD U.S., Europe, and Japan as a whole.

Just this week, an advisor to Abe admitted that Abenomics has done very little. This assessment seems correct. While the waves of new policy measures have kicked up some dust and stirred up a lot of excitement enough to allow cheerleaders to claim early victory the data from Japan is very much like the rest of OECD: At best, we can expect sluggish, plodding growth at very low rates.  From Bloomberg:

Koichi Hamada, an adviser to Prime Minister Shinzo Abe, said it was too early to know whether Japan’s economy has turned the corner under the economic policies known as Abenomics. “Various economic indicators, including investment data, are picking up, but I’m not sure if they show a meaningful improvement,” Hamada said at an event today at Bloomberg’s Tokyo office. Hamada reiterated that a planned increase of the sales tax should be postponed or made in smaller steps, saying growth needs another year or so to reach its potential. Abe will decide whether to proceed with the move to rein in the world’s largest debt burden in early October after examining business confidence and revised growth data. The former Yale University professor said it’s questionable whether Japan needs to go ahead with raising the levy on consumers given the possibility that it could derail Abe’s economic agenda. Capital spending was unchanged from a year earlier in the second quarter after a 3.9 percent drop in the first three months of the year, a finance ministry report showed this week. Business investment by manufacturers fell 9.1 percent in the April-June period, a third quarter of decline. Gross domestic product preliminary data showed an annualized 2.6 percent expansion in the second quarter from the prior period, a third straight quarterly gain.

Although many observers continue to watch Europe and the U.S. for signs of a more sustainable recovery, it's actually Japan that is the pole star to the future of the OECD.

Why? Because Japan is where the most pure form of Keynesian stimulus has been tried for decades and where the heroic effort continues. Structurally speaking, Japan illustrates that once demographics, debt, and the loss of cheap energy and other resources come together, even the most historic set of reflationary policies can do little more than keep the system above the waterline.

Never Enough

It's poetic that Japan has once again embarked on such a journey just as the story of America's own post-crisis experience is being freshly updated. This Autumn marks the five-year anniversary of our financial crisis, a dramatic sequence in which several large financial institutions, starting with Lehman, failed. Echoing Japan, in each year since the 2008 crisis, it seemed that reflationary policy would be withdrawn only to be met by weakening or mixed economic data.

This September brings another staging of this tension as U.S. employment data has turned decidedly soft (or, if you prefer a different phrasing, U.S. employment growth has failed to get better). Meanwhile, the Federal Reserve has signaled its intent to pull back on its monthly purchases -- no, not a halt to monthly purchases -- which has caused tremors in global markets all summer, especially in emerging market currencies and in global interest rates. And especially in U.S. interest rates, which have seen the 10 Year Yield recently rise towards 3.00%.

The U.S. has its own domestic critics, and none more scathing than Paul Krugman, who is marking the five-year anniversary with a post explaining how a much stronger recovery in the U.S. could have been achieved. It ends with the resolute closing line, "by any objective standard, U.S. economic policy since Lehman has been an astonishing, horrifying failure." But there's more, in his September 5th column:

Set aside the politics for a moment, and ask what the past five years would have looked like if the U.S. government had actually been able and willing to do what textbook macroeconomics says it should have done — namely, make a big enough push for job creation to offset the effects of the financial crunch and the housing bust, postponing fiscal austerity and tax increases until the private sector was ready to take up the slack. I’ve done a back-of-the-envelope calculation of what such a program would have entailed: It would have been about three times as big as the stimulus we actually got, and would have been much more focused on spending rather than tax cuts.

And there you have it: The prescription for weak, post-crisis economies is simply more stimulus multiples more. In Krugman's view, 3X more. In defense of Krugman, however, the central point is true: In capitalist systems with a reasonably functioning credit distribution mechanism, the provision of stimulus will indeed pull demand forward. This intertemporal demand shifting, which many critics assert accomplishes nothing, does in fact hoist large economies out of negative territory. That part of the argument is settled.

The more interesting question is: How productive and sustainable can these programs be, in a time of other limits – everything ranging from reduced world trade to higher resource costs?

Will the U.S. go the way of Japan? Not exactly.

In Part II: We're All Turning Japanese, we explore in more detail the various problems faced by the OECD, and in particular the hard limits which Japan is now running up against. Japan is unquestionably the leader in the long decline of the OECD, and while it may have some options, all choices which Japan could make seem to be increasingly radical.

But make no mistake; we need to watch Japan very closely. For as Japan goes, so will go the U.S. and E.U. economies.

Click here to access Part II of this report (free executive summary; enrollment required for full access).

This is a companion discussion topic for the original entry at https://peakprosperity.com/abenomics-dismal-anniversary/

Right there is the crux of the matter. Growth.

...But markets were left distinctly underwhelmed on Monday by Japan's latest GDP figures, which showed growth at 2.6% in the year to the second quarter of 2013, down from 3.8% in the 12 months ending in March. 
That would be a 26 year doubling time. 

So in 26 years Japan's economy is going to be twice the size it is now?

The headline GDP is 2.6%, the real GDP is headline GDP minus the inflation rate. It's been a long time since I studied economics but that's the gist, the words may be wrong. Just like the real interest rate is the headline interest rate minus the inflation rate. It's probably called nominal or marginal, or some other fancy word depending on the school / country where you studied.
Given the size of QE Japan is undertaking in 26 years there will be probably be a drop in the real GDP but not the headline GDP.

It's hard today to get accurate figures, so you have to look at the reason behind a metric, GDP is gross domestic product, so you have to wonder if Japan is producing the same amount of products as before. I guess you could measure it based on export tonnage, but that wouldn't take into account technology, although in fairness it's probably a better long term averaged way to judge GDP. Adjust is based on yen values and you probably have a good way of determining Japans GDP.

Actually, it's very fascinating, given the size and scope of Fukishima, I find it strange that Japan could record a growth rate at all, I'd strongly doubt the figures are accurate in anyway at all, but that's a little paranoid.

I am afraid I am losing all faith in materialism as a measure of wealth. It is becoming more abstract than than the intangibles of life.
If the foundations of Maslow's hierarchy of needs are met, then we can persue real wealth- such things as lack of pain, an easy breath, a sense of wellbeing and, if you must, the company of other beings. (Just be careful of co-dependency).

These are the measures that economists dont count.

Looking through the list, I seee many that are not really necessary for wealth. That whole sex/intimacy/ property/respect of others thing is overblown. My advice would be to eliminate it all-just baggage to lug around. Even friends begin to smell after two days.

I disagree that Japan is just like America and other European countries and we can look at some narrow statistics and make general conclusions from the "decline" of tired old pathetic Japan.  The important, larger  issues are ignored and conclusions from spotlighting narrow statistics taken out of context are not valid. The info often stated, about good Japanese jobs being lost and being replaced with part time jobs, higher unemployment is spot on, although I think that the employment situation in the US is worse in this regard than in Japan.  However these economics discussions leave much to be desired.

True Debt to GDP ratio  is different: Overlooked  is the big picture: total debt to GDP ratio: The US total debt to GDP ratio is about 275%  In Japan it is much less, probably much less than 100% (probably a  third of the US) because Japan is the biggest CREDITOR nation in the world, (non federal govt debt/credit included gives a much different picture) This shows up as individual Japanese owning their federal debt, PLUS owning a big piece of American industry/companies, etc.

YEN Currency is not plummeting Currency is not weak, not really, it is way way overpriced still. The Japanese currency, even now after all of the ballyhooed "drop" in value is still WAY OVERPRICED considered historically and considered on a value basis.  The yen to $ ratio should be Y125 or more and the yen has been exorbitantly overpriced recently, and even now is way overpriced at 100 yen to $. Basic commodities (foods such as fruit/vegetables/fish/ gasoline etc)  even NOW are actually less cost in dollar equivalents now then they have been for many many years.

Why cant shrinking countries naturally have smaller GDP:   Why does GDP per se have to increase when the population has been decreasing for the 4 years (albeit  not much) and more  importantly the total working age population of Japan has been plummeting.  Why isn t even a similar GDP  under these circumstances a healthy thing?  Even the issue  of "not having enough locally grown food" relates to this and is not an issue to many Japanese that I have queried because of the understanding that the amount  of food, gasoline, energy etc. needed in the future is expected to drop much.

Awareness: The Japanese people are well aware that their currency should blow up and may quckly lose much value.  A very popular, recent movie X-Day (Aibou series) details this problem specifically.  I recommend watching this  movie (English subtitles)  There is no analogous popular understanding in the MSM of America on this topic.  The Japanese instituted a national tax of 5% (will go to 8% next April and later to 10%).  Although this does not address  the problem well,  there will  be at least a little money coming in from national sales tax after the collapse, for some payments to retired people.  People I talk to are aware of a possible collapse and point out that they  had  a bigger collapse 80 years ago (think firebombed Tokyo, nuked  cities, mass starvation etc) and can deal with it when it happens. They are not led around by the nose from the likes of CNN, other  mass media and seem less afraid  than many doomers and gloomers here, when considering the same facts. 

Debt vs Investment:  The extreme indebtedness of America is a result of wasting money on war and bombs, and infrastructure is crumbling, and  needs much capital investment going forward to prevent Detroitization of the country.   In a sense US debt ='s war = collapse into 3rd world status.   In contrast the extreme (naational govt) indebtedness of Japan is the result of building up fantastic infrastructure.  Japanese national debt = a healthy infrastructure  That is not necessarily a bad thing.  They dont need trillions of investment to keep from sliding into a hell hole.  On the other hand, their old retired population will lose income and face a  catastophy of sorts, which will be addressed on a community basis (I note here that Japan has had most experience promoting and using local currencies, primarily to deal with this issue.  Yes, Japan is leading the way, but I think that we can get some solutions from Japan and not just consider Japan a pathetic squashed bug on a windshield, althought the latter sentiment is better at selling newspapers and blog subscriptions.

THE REAL STORY IS BEING IGNORED The real story is a mercantilism REPEAT of the 1930's wherein other Asian countries especially Korea have silently (why is this ignored????) dramatically dropped the value of the won, yuang etc, and thereby stolen markets from the Japanese. The yen is extremely high (even now) and the won has become extraordinarily low.  This is the most important reason for the Japanese activities yet is IGNORED by the pundits.  The number one concern of the Japanese powers that be, is the health of the companies there.  The companies (for example) got the govt to change labor laws to eliminate real good full time jobs and replace with part time (a la US style).  Now they are trying desperately to get the yen down to a normal level, and still NOT succeeding: they need another 25% drop before they can even begin to compete again on a normal basis, while the Koreans have gone much further towards cheapening their currency over what it used to be.  The real (ignored) story is that Japanese companies are getting screwed by Chinese and Korean undervaluation of their currencies.  History (1930s?)  is repeating.

The Energy Story The Japanese are replacing nuclear power with solar electric power very aggressively, although this topic as well seems ignored here. 

Mots,You brought up a couple of good points. The total net debt of Japan + Japanese corporations + Japanese citizens is less than the US total net debt. That helps to explain why interest rates are so low over there. You noted that Japan has invested in infrastructure rather than bombs. Bombs really don't have much of an economic multiplier associated with them. Then again, infrastructure can only withstand natural forces that are below the design criteria. Either way, the debt continues (until it is paid or written off.)
You also noted that Japan is agressively instituting solar electric power. Unless a cheap and reliable battery system is used, this only works during daylight hours. Batteries reduce the efficiency and increase the cost. Granted, fossil fuel powered electrical generation can be reduced during the day. PV saturation occurs when the fossil fuel generators can be shut off during the day. Do you know what percentage of noon electrical generation is supplied by solar?


The issue of soalr electric power is 'ignored' around here for Japan as it is in most places because the contribution of solar, wind, and other 'renewables' (are solar and wind really "renewable" when the panels and turbines have to be made using non-renewable energy sources?) is just miniscule compared to conventional sources.

The most recent estimate I could find with a quick search shows that prior to the March 2011 earthquake, Japan 's renewables were just 2% of 65%, or 1.3% of total electricity produced.

By the end of 2011 (most recent data I could find), renewables had not really made any significant headway:

The reasons are probably the same as they are everywhere. Renewable electricity is expensive, and it is unreliable and cannot be used as base load.

Yes we NEED better electricity storage options!

I think this recent article sums up the difficulties in Japan rather well:

Japan's growth in renewable energy dims as nuclear strives for comeback

July 07, 2013

The shining light that was once Japan’s renewable energy industry is beginning to dim as reality sets in and it faces competition from a rejuvenated nuclear power industry.

The green energy industry was buoyed by the nation’s distrust and fear of nuclear power triggered by the 2011 earthquake and tsunami disaster that crippled the Fukushima No. 1 nuclear power plant.

According to a February nationwide survey by the Japan Renewable Energy Foundation, 34 of the 79 solar energy producers who responded said they had given up on at least one solar power project.

Roughly 45 percent of those respondents cited difficulties in land procurement, followed by 25 percent who said they had problems joining the power grid.

One such project in Hokkaido, located near the New Chitose Airport, called for a 100-hectare solar power generation facility. The site adjacent to the Abiragawa river remains covered in weeds to this day.

"We call it an April 17 crisis," said Hiroaki Fujii, the 43-year-old executive vice president at SB Energy Corp., a Tokyo-based company that designed the plans.

On that date this year, Hokkaido Electric Power Co. said it would only purchase a total of 400 megawatts of electricity as part of the feed-in tariff system from the so-called mega-solar power plants, each with a generation capacity of 2 megawatts or more. That amounts to turning down as many as 70 percent of the 87 applications to sell it power, filed through March, with a combined output capacity of 1.568 gigawatts.

One Hokkaido Electric official justified the decision: "Our power grid has a limited capacity. Accepting too much power from solar plants, where output levels fluctuate wildly depending on the weather, compromises a stable supply of electricity."

So I don't think that the recent gains in solar in Japan are being ignored so much as they are ignorable, at least for now.

This is pretty much true everywhere…as fast as solar and wind make gains, they are still tiny fractions of the overall picture.  Reporting usually confounds the issue too.

For example, it is easy to read headlines like "Solar Installations up 100% in 2012!" which sounds great, but if ordinary electricity generation gained 3% in 2012, that could be even larger than solar's 100% gain in terms of GW, so solar actually lost ground in terms of its composition of the total.

if our appliances were designed and built different, they could work directly off of solar during the day. the hold up i see is still making cars run on gas and appliances run via the grid. my father, an me, once told me that diesel engines could be design to run on just about anything, if the compression was great enough.
this should hold me til i invent some of my solar stuff.
some of it, is we are just going to have to our"chores on sunny days" the flick a switch mentality is causing a road block to progression.
doesn’t anyone ask the question: why isn’t the usa rebuilding it’s infrastructure? the grid? we’ve known peak alot of stuff for over 40 years.

we are now producing more power than we use (drive your current vehicle into the ground and buy PV's instead, if its in the ground keep driving it anyway).  Our house is 100% electric, no other power sources.  Spain and and Germany on good clear summer days are producing 60% to 70% their peak demand from renewable energy.  Europe appears to be on track to produce 20% of their electrical generation by 2020 with RE.  Germany has 23.4 GW of capacity installed (California has 2).  Right now Europe produces 2.6% of total demand and 5.2% of peak demand with RE.  In 2012 RE was the largest component of all newly installed power generation sources in europe.  Germany has mothballed 1/3 of their nuclear plants.
Utilities are already starting to try and push back on legally required buy back programs. They are seeing the writing on the wall.  A couple more 2008 recessions and the resultant demand destruction could push precentages higher than anticipated.  Once the infrastructure costs are paid for, no more energy costs.  The stability that introduces into economic systems, to say nothing of what it does to thwart the threat of global warming are enormous. This is a revolution that is on a role.

I think the press (state/corporate propaganda system) is not quite on board with this.  I think that is one reason that there is not a lot of press about it.  Diffuse vs. power centric system are a threat to the system. As the saying goes, the revolution will not be televised, to catch it, you need to turn that thing off.


right on treebeard. you either have and you know what you are talking about or you don’t have and if you talk, are talkin nonsense.
alot what gets lost in the solar debate is what we need electricity for…the tv clicker? how about using some upper leg strength and getting off the every increasing duff to change to a different channel? or turn the damn thing off .and do something… a blender? whatever happened to a good sharp knife?
i have off grid solar power. do you?(on grid, grid tied is bs)
cost effective arguments are nonsense. how many of you cost effect your gas, propane, electric furnace???do you say i paid 5K for this furnance and in x years it will pay for itself. think people think. you don’t say that do you? no you don’t . so why say that for a solar one.?
the smart pp member will go get what they need solar wise and soon.
i mean soon with a capital S(didn’t mean syria but if the shoe fits wear it)
i’m out doing this. buying this. trying this. i know – you don’t know. because your are in your head and mmouth and just talking about theories i’m walkin them and sounds like tree beard anda few others are–too few.
i will be ready early and many of you with such great thoughts will be late. because you talked when you could have been learning and doing.
maybe that is what seem off here…too much talk and not enough walk
this is real folks.

Our newly elected Prime Minister, Abbot,  is going to spend up big on Roads. I kid you not.
When asked about Peak Oil he turned to his side-kick and asked "Whats Peak Oil?"

"Something about Oil running out."

Thus enlightened, he reasured the press gallery that there was no such thing.

We are Doomed.

Do I know what I'm talking about?  Well the proof will be in the pudding as they say, but so far, so good.  We have passive solar house with domestic solar hot water panels and 6 kw of PV's.  For a long time I shunned active systems, I love the simplicity and beauty of passive systems, the house is the system, no moving parts, nothing to break down. But I finally gave in to the technology. I'm glad that i did.
Solar hot water has been on the house since January, PV's for about four weeks.  So far to date we have used 504 kWh and generated 689 kWh.  We've gotten one bill so far since the panels have been up for $6.00 and a credit of 89 kWh (worth about $12.00 so we netted a gain of $6 for the first month).  I have three commercial sized hot water panels that are oversized to provide back up space heating in addition to hot water.  We had a couple of weeks of nights with lows in the 40's, the house has been perfectly warm, not even slightly cool.  As the days shorten we'll have to see how the system performs all together, but I'm hoping that $200 worth of firewood will be all that we need for the year.

If we have a power outage or a SHTF scenario we have a battery system that will cover the essentials, refrigeration, solar hot water, well water, and some convenience outlets.  We could be comfortable with that, no problem. Lots of winter squash in storage, freezer full of summer vegies and trees full of apples. We are hoping to turn our massive bushes full of autum olives into jelly if we can get ourselves organized to do that.  I know that gives some people heartburn, but I figure they are an invasive that are here to stay.

The amount of miss information going around about renewable energy systems is rather stunning, in my more paranoid moments I'm beginning to think that it is intentional.  Like the whole tobacco and global climate change thing, all you need to do is sow enough doubt so that the walking dead will keep stumbling around in the dark, so nothing of substance happens.  I do think that we are nearing that 100th monkey moment though, the pain will increase till the dead wake, despite the propaganda to the contrary.  Regardless, what we are doing feels so right, so good, we would be doing this not matter what anyway.

my words were hard to understand. to clarify, i didn’t mean you didn’t know what you were talking about, i new you did. i was using you as a plural and should hve used the word one either knows…written word funny sometimes, i’ll try to be more careful.
glad you wrote what you did for all to see and get inspired from. enjoy the peace of mind it brings you.

There is a graph of Japanese population projected to fall by 25% by 2050. That means the Japanese economy can shrink by half a percent a year without per capita income falling. Moreover, it means housing, land, etc. will get relatively cheaper due to falling demand. And there will be less pollution, congestion,etc. I think population reduction is absolutely the least risky strategy this century. The Japanese can (unlike most developed countries) control immigration. And the homogeneity and cultural solidarity in the country mean they can share sacrifice and take care of problems that come up. Kobe was rebuilt in less than 10 years after a massive quake for example. The rest of the world could learn a lot from Japan. Trying to grow is a stupid policy anywhere and Abe is foolish to try it. Graceful shrinking is the way to go, while improving individual welfare.

I am sure that the gracefully shrinking population will also have an easier and easier time servicing their non-shrinking debt…  right?  It's all going to come up roses!    

Jim I think that the old people will take it on the chin.  Higher suicide rates and poverty of old people holding that debt (analogous to our social security trust fund) so that inflation and morbidity will service the debt.  I think that yen printing will not dramatically increase domestic-sourced product and service prices.  Instead prices of imported energy and food will shoot up dramatically, and those who create energy and food locally will be real winners.  Wont this happen in the U.S. too?

…will be a worse problem 30,000 years from now, yes?

Abenomics the radical set of relationally policies designed to (air)lift Japan out of its multi-decade slump, is approaching its first anniversary.Third Party Inspection in India