The results are plain. Despite racking up the largest peacetime debt in modern economic history, while entirely failing to grow, the government continues to respond to every downturn with more stimulus. This has accomplished nothing. Yet ending large-scale deficit spending is seen as the threat to the economy. So spending continues, reform is non-existent, and Japan trudges along.
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After two decades of stagnation Japan announced today it would unleash a $1.4 trillion stimulus into the economy.
The Bank of Japan unleashed the world’s most intense burst of monetary stimulus on Thursday, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling and bond yields to record lows.
New Governor Haruhiko Kuroda committed the BOJ to open-ended asset buying and said the monetary base would nearly double to 270 trillion yen ($2.9 trillion) by the end of 2014 in a shock therapy to end two decades of stagnation.
The U.S. Federal Reserve may buy more debt under its quantitative easing, but with the Japanese economy about one-third of the size of the United States, the scope of Kuroda’s “Quantitative and Qualitative Monetary Easing” is unmatched.
“This is an unprecedented degree of monetary easing,” a smiling Kuroda told a news conference after his first policy meeting at the helm of the central bank.
“We took all available steps we can think of. I’m confident that all necessary measures to achieve 2 percent inflation in two years were taken today,” he said.