Japan's Abe is the world's best leader right now?
bloombergview.com
bloombergview.com
where?? Wages have not moved up at all. But hey, my shopping list's total price has gone up by 30% in the past 6 months, and Uniqlo has just announced that for the first time in like 20 years they are going to raise their prices in Japan, because hey, a weak Japanese yen makes commodities more expensive and they just can't continue like that anymore.
But yeah, Abe's the Best Ever!
What a joke of an article.
As I drove by a barber shop on April 1st, they were changing their sign from 2500 yen for a haircut to 2900. A tad more than 3%.
The clinic my wife works at raised one of their monthly services from 7000 yen per month to 12000 yen!
That. And the government encouraged it. In 2004, a law made it obligatory to display prices with consumption tax included (税込み). That obligation was lifted 6 months ago. Guess what happened as a result. Displayed prices didn't change. Products at 1000 yens tax included (税込み) are now 1000 yens without tax (税抜き). 1080 yens out of consumer pockets, instead of 1029. 8% increase instead of ~3%. The flip side is that this makes for better margins for businesses.
Even businesses that did absorb the tax increase now claim to do a bigger favor than they are actually doing (that is, their 1000 yens service is still 1000 yens, but they advertize it's 1000 instead of 1080)
I haven't seen much of the kind of prices increases you describe, though.
Uniqlo is a good example because they had never changed their pricing no matter how up and down the economy went in the past decades. The fact that they are doing it now is actually very worrying as a trend for Japan. It means they had no choice but to do that.
I think purchasing power has gone down more than 2%, because of the sales tax hike. Otherwise you have a point.
So this article excited me - I love to see a grand vision being implemented and the goals coming together. A quick look at the comments, however, (including ekianjo's immediate response here) seems to indicate that rather than demonstrating Abenomics success, all this article does is demonstrate that the author doesn't have a grasp on the facts. Oh well.
Well, the primary goal was reflation, so by that measure, it's been a resounding success so far. Growth, exports, and consumer spending have been boosted a lot, too. I'm a little worried that the sales tax increase will reverse this trend, but we will see.
Yeah, a resounding success by all measures!
Let's reconnect in 5 years and see such policies transformed Japan for the best.
Well, the primary goal was reflation, so by that measure, it's been a resounding success so far.
Notice "by that measure" and "so far". Please do not distort my words.
But yes, you're right; it could end as an unmitigated disaster economically. We just don't know yet.
Let's see, earlier this year, he was campaigning for companies to use their piles of cash to increase wages. What does his government do? He cuts salaries for teachers.
Also, living in Japan as a foreigner, his foreign policy stances worry me. He is antagonistic. He was the first PM to visit the infamous Yasukuni shrine in 6 years provoking China and Korea. He also is currently trying to reopen the constitution so that Japan can support it's own army which will further destabilize relationships in the region.
Sure, he's cutting the corporate tax rate but he raised the consumption tax 3% a couple months ago and will go up another 2% next year. Prices are already very high in Japan and the government already receives a staggering amount of revenue. There are so many taxes and licenses and import controls here it's unbelievable.
The linked article said base pay increased 0.1% from a year earlier. Hardly an indicator that his policies are working. Plus factoring in the consumption tax increase, it means people have less disposable income.
My wife works as a homecare nurse and she has countless stories of families that are struggling to get by. A large percentage of the population is elderly and live on very fixed budgets. Abe wants to increase inflation but has no policies on addressing how to support these people during the transition. 25% of the country is already over 65 and this will keep increasing. Recently coverage for prescription drugs also went down meaning seniors need to pay more for their medicine.
For as long as I can remember, said state pension has been under water, and current 20 year olds are expected to be paid something like $200,000 less than what they put into the system.
The country has some good things going, but it is also littered with numerous time bombs.
This is absolute horseshit. Japan has been following Friedman's proscriptions (QE forever) for the last 20 years! Look where it got them!
Abe has actually continued in these footsteps with one fairly minor difference - he's mixed in a 25% Keynesian spending kick with the QE. This has propelled a bit of inflation and wage growth, along with the business-as-usual propping up asset prices.
Now this author is trying to claim that this was thanks to cutting corporate taxes and QE. These are the policies that Japan DIDN'T change with Abe. Furthermore, these are the policies that are causing the Japanification of the West's economy.
Abe's plan would have been a major success (instead of a dribble of success) if he just cut the Milton Friedman inspired bullshit QE entirely and printed money and spent it on employing people until inflation and wage growth were up to normal levels.
>Boy, was I wrong. I was wrong, wrong, wrong.
He's still wrong, wrong, wrong.
I would say that Japan has been following Friedman's prescriptions until now. The major difference between monetary policy before Abe and after Abe is that Abe has made it clear that he won't jack up interest rates as soon as there is life in the economy. Past governments made it clear they would take away the punch bowl as soon as there was a hint of growth.
Basically, Abe has convincingly promised to be irresponsible. And so far, it has worked to beat deflation. Many other indicators are looking better, too, but it'll take some time before we know if it really works. (Hyperinflation? Wages? and so on)
The only difference is that he mixed in a BIT of stimulus spending to the mix.
That actually had a real inflationary effect on the economy, although the stimulus wasn't that big so the effect wasn't that big either.
Says who ? Of course there are women who are aspiring for a career and this may be a problem for them, but then, most women in Japan are actually fine to leave work and go on with a life at home taking care of the children. I've seen several colleagues of mine who graduated from Tokyo University and had good jobs (with responsibilities similar to men's) and who left their career because they wanted to focus on kids instead, and had no regret doing so.
Hard to say without considering alternative realities.
Steven Pinker wrote about this in his book 'The Blank Slate'. The problem is that women here do not have the choice, as you yourself even point out. Perhaps the large majority voluntarily choose a lifestyle which does not grind against the standard but what about those which choose a career? Equality does not mean that women act the same as men, it means that women have the same choice as men.
"The second change is that, among certain groups, people are not merely marrying later. They are not getting married at all. In 2010 a third of Japanese women entering their 30s were single. Perhaps half or more of those will never marry. In 2010 37% of all women in Taiwan aged 30-34 were single, as were 21% of 35-39-year-olds. This, too, is more than in Britain and America, where only 13-15% of those in their late 30s are single. If women are unmarried entering their 40s, they will almost certainly neither marry nor have a child."
He told me the story of countless meetings in which the senior female exec (there were very few) was expected to get up and leave the meeting for a period of time to retrieve and serve tea. He personally was disgusted and said that that was only a single example. IIRC he said in response to my question about why Japan had struggled to get out of their depression: "Employing only half their labor force might have something to do with it."
How are Japanese women doing outside Japan where they have similar opportunities as men? Given choice, do Japanese women prefer to work outside or stay home? Some data on this question can provide some insight.
From personal experience, there is some truth to what you said. My wife is Japanese. We live in US. Once we didn't need two incomes, first thing she did is to quit her $150K job with a major software company. She is much more happier staying home and taking care of household chores. Just today, I asked her if she misses her job, colleagues, and working outside. Her response was resounding No. I haven't seen her more happier, content and stress free until she quit working. We don't even have kids.
Even though it is preference of one woman, it makes me wonder if cultural upbringing influences the decision to work or not, more than the availability of opportunity.
That is also my understanding. No matter how many daycare centers you put in the country, the key "issue" (and most Japanese don't consider it as an issue) is the cultural uprising. Japan may be a developed country, but culturally it has nothing to do with the US in many aspects.
But I think it is a social problem. This means a lot of jobs offered to women are shitty because employers know they will lose them around their 30ies.
Since there is social consensus to leave after a child birth, it makes it difficult keep the woman's job but with an alternative solutions, like part time, progressively returning after the leave or going remote.
I knew couples who would have wanted to switch positions, with the man at home and the woman working. It is not impossible, but there's a lot of hurdles and there is still a social stigma associated with.
Addition: A secundary effect of women leaving after building a family: the man in the couple has to bare all the burden. The employer knows it, and the power balance changes. This is also a reason why some couples don't want childs, or young men don't even think about marriage (they assess there is nothing good for them in the deal).
The position of women obviously shapes the whole society, and its becoming more and more a problem on a lot of very different aspects.
That's why I was carefully selecting the example of the Todai graduates I knew who has good jobs and still ended up quitting to focus on family and children instead of their jobs. They were not forced to, and they were in companies which were supportive of women having children (making it possible for them to take a year or more of leave and come back in their positions).
Most women are perfectly happy with their role in society in Japan, and consider it "normal".
The people who might be the most hit by all this could be the men, who are as pigeonholed in their roles as women, wether they see it as a bad thing or not (I think it's bad in the long term, but that's my bias)
http://www.bbc.com/news/world-asia-25901572
And there's a large stretch between trying to boost the economy by encouraging female labor force participation and feminism. By that standard, Saddam Hussein might have been called a feminist in some periods of his reign.
Opinion is sharply divided over whether Abe's economic policies make any sense. I'm in the "they're insane" camp. I've likened Abe to the captain of a ship who, seeing an iceberg looming, calls out, "Full steam ahead! We're going to smash our way through." But all observers agree on these two points:
1. Abenomics will be a disaster without large-scale structural reform.
2. The reform we've seen so far isn't nearly enough.
Optimists believe that this reform is just round the corner ... that even as we speak Abe is busy quietly building the necessary consensus in key organisations, because that's the way reform is done in Japan.
The pessimists want proof.
Finally, there is a terrible, terrible paradox at the heart of Abe's economic policies. This is a complex matter, so forgive me for skipping most of the details and implications.
No matter how you measure it, the Government of Japan is up to its neck in debt, and is still sinking. The only reason it can keep going is because it pays remarkably low interest rates. But the first "arrow" of Abenomics is to push up inflation, and you can be sure that this arrow will meet its mark because they can always "print" more yen. One of the iron laws of economics is that, when inflation goes up, so do interest rates.
Now, to cut a long story short, it looks like the government's going to get out of this bind by directing the Bank of Japan to print even more money to buy it's debt at below-market prices. In fact, if you follow the bond market news, it's clear that this is already happening. And that, my friends, is a recipe for collapse in confidence in the yen.
Speaking for myself, as a Japanese resident, I believe that the yen is an increasingly risky asset to hold. I make a point of keeping at least 50% of my savings out of yen, and away from the Japanese financial system. When the shit hits the fan, I don't want my money to be stuck behind Iceland-style capital controls.
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EDIT: Changed "recipe for inflation" to "recipe for collapse in confidence in the yen" in response to comments below.
And that, my friends, is a recipe for hyperinflation.
Perhaps, but given that the situation over the last 15 years has been deflation there is a big, big distance to cover before hyperinflation should be thought of as a significant risk.
Something needs to be done to combat the chronic deflationary cycle Japan has suffered in over 15 years. I'm unconvinced this is as bad an idea as you seem to believe.
But ultimately, it boils down to demographics. The Japanese haven't been having enough babies. One way or another, the people who think they're going to retire comfortably are in for a nasty shock, because there just aren't enough young people to produce what they expect to consume. And inflation looks like the most likely mechanism for this to happen.
As for the government debt, there are two ways out of the mess: inflation or default. And there's no way they're going to opt for default when they can just keep printing more money.
The only real solution (real in the economists sense of the word) is mass immigration, and that's not going to happen until Japan is absolutely desperate. The "200,000 immigrants" the article mentions isn't nearly enough. And in any case, Japan has such a poor record on immigration policy that I confidently expect them to bungle this one, too. Look at the failure of their recent "skilled migrants" program, or their disastrous program to recruit trained Philippino nursing staff, or the abuse and corruption in the "trainee worker" program, or ... I could go on.
But often economic management is delaying a crisis until another problem makes it go away.
If Abe can get the economy growing again it makes it more likely other changes will occur - like the female participation rate increasing.
The consequences of that are unpredictable. One possible scenario is that it could partially reverse the trend of a shrinking workforce.
Economic growth also makes inflation unnecessary to repay debt (since tax receipts increases with growth giving the government an alternate path to repaying debt).
Also worth noting is that some inflation (non-hyperinflation, but higher than comparable nations) would help devalue the Yen, which would make Japanese exports more attractive again.
Anyway, I guess my whole message is that focusing too much on too long-term consequences is often unhelpful in economics. The system is too chaotic to predict that far, and usually tends towards equilibrium.
So I hope you're right, but I'm still keeping my savings overseas in case you're not. Because there's one thing I've learnt from other financial catastrophes: by the time ordinary people like me learn that the shit has hit the fan, it's already too late to respond.
Deflation and wage stagnation wasn't caused by the Japanese not having babies.
The wage stagnation and deflation was THE CAUSE of the Japanese not having babies.
If you ask most young Japanese today working McJobs (a large and growing number) if they are hopeful about the future they will say no.
THIS is the real problem with Japan today and at its heart it is the problem with the west too. It's why they aren't having babies.
If the Japanese government wants the younger Japanese to start having babies again they need to actually provide decent jobs. They can do that by printing/borrowing yen and spending it on employing people, EXACTLY as the US did following the great depression.
>The only real solution (real in the economists sense of the word) is mass immigration
This will make things worse. It will simply ensure that the already crappy McJobs the Japanese young are increasingly doing are paid even less thanks to Fillipino competition.
Want the Japanese suicide rate to skyrocket from its already high level? Start bringing in dirt cheap labor competition from the 3rd world.
About immigration: go look up "lump of labour fallacy".
This is part of it too. As is the migration towards cities (because that's where all the jobs are). Huge crowds and a lack of space has the same effect on humans as it does on rats.
Mix those things up with the younger generation's feelings of hopelessness and/or insecurity about their careers and it's no wonder they've stopped having children.
This can be reversed with a government funded jobs program / public works program, EXACTLY like the one Milton Friedman took full advantage of.
It won't be reversed with immigration.
>About immigration: go look up "lump of labour fallacy".
I never said that there was a fixed amount of work in Japan.
If you think that bringing in 3rd world workers as competition isn't going to drag down wages, though, you're dreaming.
Let me disagree here. Most women don't have a career in the first place in Japan. They have office jobs, yes, but a career leading them to higher positions? Certainly not, for most of them.
No matter how you measure it, the Government of Japan is up to its neck in debt, and is still sinking.
x0 = G/D
Additionally it is surprisingly hard to get hyperinflation, just printing a few percent of GDP in new money per year will not do the trick. ( Try occupation of a major industrial region, after the end of price controls plus a lost world war.)
But you're right about the hyperinflation thing. I was being overly dramatic. I should have said: And that, my friends, is a recipe for a collapse in confidence in the yen. But the effects are pretty similar.
Japan's debt is a trailing indicator of economic malaise, not a leading indicator.
>The only reason it can keep going is because it pays remarkably low interest rates.
It ought to be obvious to anybody with an ounce of sense that any country that prints the currency it borrows in can choose its own interest rates. This is precisely what Quantitative Easing does.
>But the first "arrow" of Abenomics is to push up inflation, and you can be sure that this arrow will meet its mark because they can always "print" more yen.
Yes, this is true.
>One of the iron laws of economics is that, when inflation goes up, so do interest rates.
This is totally utterly false. As long as QE continues (and so far it has continued), interest rates on Japanese bonds will be held at zero.
>Now, to cut a long story short, it looks like the government's going to get out of this bind by directing the Bank of Japan to print even more money to buy it's debt at below-market prices. In fact, if you follow the bond market news, it's clear that this is already happening. And that, my friends, is a recipe for hyperinflation.
This is not just false, it is absurdly false. Hyperinflation hyperventilators have been predicting Japanese hyperinflation since 1997 when their debt went over 80% and they continued deficit spending. What happened instead? Deflation.
They couldn't have been more wrong then just as you couldn't be more wrong now.
Like any economic variable, inflation can be targeted. In Japan, it simply wasn't targeted and it wasn't aimed for during the last 20 years. They just engaged in QE, which swapped bonds that represented Japanese savings earning subinflation interest for cash savings which also earned subinflation interest. And they thought this money was magically going to be spent?
For inflation to happen you need spending. PART of what is new about abenomics is that it actually does do a bit of that, but not very much.
What you say is correct as far as it goes but ... well ... I could write:
> Only a driveling idiot does not understand that a government that prints its own currency doesn't need to borrow money at all.
And it would be completely true. They tried that in Zimbabwe, didn't they?
I'm wall aware that Japan has a few magic charms (high savings rates, strong balance of trade, and so on) that enabled the government to run up far higher debts than would be possible elsewhere. But it looks to me like those charms are all used up now.
Not stupid, but brainwashed perhaps. The fact remains that these predictions of Japanese hyperinflation using the EXACT same argument as yours have continued for two whole decades.
When are the predictions going to cease? How many more decades of zero inflation / deflation are needed before it becomes clear that continued deficit spending DOESN'T inevitably lead to hyperinflation? Three decades? Four decades? A century?
At what point do you start to consider your model broken and your predictions useless?
>And it would be completely true. They tried that in Zimbabwe, didn't they?
ABSOLUTELY WRONG. What they tried in Zimbabwe was borrowing a currency they DIDN'T print (US dollars). They were then reliant upon foreign food imports (because they ruined their farm indsutry) and had no real resources to service their FOREIGN debt. So they printed money and tried to exchange it for USD with predictable consequences.
Japan did not borrow USD. It will NEVER borrow USD. It will NEVER end up like Zimbabwe. Not now. Not in ten years with 300% debt. Not even with a trade deficit and 500% debt. NEVER.
Weimar was like Zimbabwe (its debts were denominated in Gold). Argentina was like Zimbabwe (it pegged its currency to the USD). Greece was like Zimbabwe (it can't print Euros any more than it can print gold).
Japan is NOT like Zimbabwe. It controls its debt. It controls its currency.
>I'm wall aware that Japan has a few magic charms
Japan has no magic charms and its trade balance is irrelevant to its capacity to borrow. It borrows in its own currency so it can borrow as much as it likes at whatever interest rates it likes. End of story.
For it to escape its economic rut this idea that it has to first pay off its huge debt needs to die. It actually needs to ramp up spending on jobs, just like the US did at the end of the great depression.
People need to stop seeing sky high Japanese debt as the cause of its stagnation and start seeing it as the result of its stagnation. Cause and effect flows the other way.
> ... End of story.
End of story indeed. I'm obviously too "brainwashed" to have anything of value to say.
But I would like to point out that I never said government debt was the cause of Japan's economic stagnation.
That depends. Do you still think that hyperinflation is even a remote possibility in Japan?
>But I would like to point out that I never said government debt was the cause of Japan's economic stagnation.
Nope, you didn't, but austerianism IS still the default economic mode of thought these days amongst Japanese and western elites, and it is strongly linked to the belief in impending hyperinflation.
austerianism?? Where? Japan is overspending by large amounts every single year and I have yet to hear any Japanese politician (apart from Hashimoto) talking about making economies. Abe's program is all about spending to death.
Where is this opinion being held? Right ^^^ fucking ^^^ here.
Where is it being implemented?
Here: http://www.bloomberg.com/news/2013-01-29/japan-s-government-...
And the consumption tax hike.
Many among the Japanese elites (not to mention American and European) feel the same way as you. Even among the neoconservatives they're somewhat schizophrenic about spending.
Haha. That's not austerianism. Austerity is when you cut down to the levels of spending you can afford. What Japan (and many other countries around the world) are calling "austerity" is just digging the hole a little less fast. But they are still actively digging the hole, year after year, producing more and more debt.
Austerity is just an over-abused media buzzword to say you are cutting a small piece in your obese amount of spendings. Nothing to do with the actual meaning of the word.
The tax hike will have nil effects on the fact that there are deep changes in Japan's structure to stop overspending, without mentioning the fact that increasing tax will bring diminishing revenues (and lower consumption) after a certain limit.
"In economics, austerity describes policies used by governments to reduce budget deficits during adverse economic conditions."
https://en.wikipedia.org/wiki/Austerity
The fact that you invented a new definition of austerity used only by you changes nothing.
Japan has been practicing austerity for decades because many among the government erroneously believe (like you) that a government's capacity to borrow in a currency it prints is limited and will some day reach a limit.
The fact that Economists invented a new definition to pass fake deficit cuts for real careful spending changes nothing.
The actual definition of the word, man: http://www.merriam-webster.com/dictionary/austerity
"a situation in which there is not much money and it is spent only on things that are necessary"
Yeah, Japan spends ONLY on things that are necessary. Building dams, renovating administration buildings from scratch right after the 3.11 Earthquake is damn necessary.
Seriously, buy a dictionary. They are cheap.
Pretty much what Europe has been doing since 2009, by the way - maybe I don't see the full picture with my limited understanding of economics, but it kinda sounds crazy to me.
I think the deflation and low growth are structural problems. Japan can't really stomach the creative-destruction necessary for a capitalist economy to thrive, and so on. I'm sure you've heard it before.
nl thinks that, if we can just hold it together for a bit longer, something will turn up. And maybe nl is right. Maybe, next week, someone will discover a wonderful new technology that will usher in 20 years of miraculous economic growth, and we'll all be saved. But I'm not counting on it.
>Japan's currency will never inflate because it's always been that way
I think you're going to change your tone very quickly over the next year or so. Japan's government has never set targets for inflation until now. They are sitting on the largest debt stack to gdp in the world right now at ~245%. They spend almost half their revenues on debt service ALONE.
What happens when inflation hits two percent? What do you think all of these people holding JGBs bringing in 60bp are going to do? They're going to run, not walk.
There was a day and a half when not a single person bought a Japanese government bond because the government wasn't purchasing. The government is buying ALL and I mean ALL the bonds right now.
They are printing as much money as the fed in an economy that is a third our size (~70 billion USD per month). They are going to double the monetary base in two years.
This is clearly unsustainable and the yen is in for some serious devaluation in the very near term when people start running from JGBs.
I think it's more like 25% of revenues, not 50%, but otherwise you're spot on. BTW, the bond futures market froze up last week, too.
But what you're forgetting is that our friend crdoconner has no problem with the idea that the government can print money and then lend it to itself at whatever interest rate it chooses. (Either that, or he doesn't understand the difference between benchmark interest rates and government bond prices.)
I think you would have been right a couple years ago. Japan is projected to spend $257 billion on debt service this year. They bring in about $500 billion in revenues.
Why are you quoting me? I NEVER said this.
In fact, I said the OPPOSITE - inflation is already rising in Japan and it is likely to continue to rise.
It's hyperinflation that I ruled out.
>This is clearly unsustainable
No it isn't. It's been said that it was unsustainable 20 years ago as I said above. This is why the ratings agencies IDIOTICALLY predicted Japanese default in 1997. Cue 20 more years of zero percent interest rates. They were a little bit wrong.
It wasn't unsustainable then which is why it continued for 20 more years. And it's not now either.
"How many more decades of zero inflation / deflation are needed"
That's pretty much what you said.
So what if predictions 20 years ago have turned out to be incorrect? That's really not relevant. Japan's government has never said they will do anything to achieve 2% inflation before.
It's going to be a lot messier than you think.
No you weren't. You created a straw man and then set it on fire.
>So what if predictions 20 years ago have turned out to be incorrect?
So you're making the SAME predictions based upon the SAME model that the last 20 years has proven to be utterly wrong.
We've already proved that 20 years of deficit spending and the highest public debt in the world doesn't automatically cause hyperinflation. It doesn't even necessarily cause inflation at all.
If your model cannot sufficiently explain why that happened then your model is wrong. And it can't. If we went back in time, you'd be making the exact same predictions in 1997.
>Japan's government has never said they will do anything to achieve 2% inflation before.
Japan started inflation targeting in March 2001. Is 13 years enough time?
I just quoted your exact words and you said exactly what I summarized. You're being a bit ridiculous.
It's actually a pretty simple explanation. The market can remain irrational for a long time, and Japan has never had a monetary policy as insane as its current one.
They are going to DOUBLE their money supply in TWO years. I'm not sure that you understand that massively monetizing your debt has consequences.
It's a massive experiment that is going to end badly.
Any inflationary pressures are going to come from real supply problems/limits, not monetary policy.
You don't see a problem with that?
So yes, explain why that would be a problem, exactly. In terms of real effects on the economy that the Japanese would experience.
Elsewhere you mention concerns about the rate of increase in Japan's monetary base. The US has quadrupled its monetary base since 2008. [1] The US has experienced everything from very low deflation to very low inflation since 2008. The trendline on the Consumer Price Index hasn't changed _at all_. [2] The current US inflation rate is 2%.
And inflation is, at least, a relatively easy problem to deal with economically, barring some political/military/resource crisis. It is certainly not an evil in itself.
[1] http://research.stlouisfed.org/fred2/series/BASE/ [2] http://research.stlouisfed.org/fred2/graph/?id=CPIAUCSL
And it's an interesting coincidence that inflation has finally started to happen again in Japan.
That said I don't think Abenomics is going to be a resounding success. There's just not that much changing in terms of fiscal policy, which is the only thing that's going to have real short/medium-term impact. There's a little, and it's an improvement, but not a lot. So I'd expect to see small gains.
It's all printing when it comes to a country spending its own floating-rate non-convertible currency. Spending creates, taxing destroys.
> You don't see a problem with that?
If and when inflation comes, there will be a problem. In 20 years, it has yet to manifest; which suggests there's much more room for spending.
When the Japanese hit 2% inflation, people are going to be rushing out of JGBs if the government maintains ZIRP.
This is a complex issue, so I'm going to refer people to this talk that Kyle Bass gave last year:
"Hahahaha...far from it."