JCA co-editor Richard Westra concludes his recent article in The World Financial Review on Japan’s monetary policy with these words:
The belief that a weakened yen to help overseas sales of Japanese cars and flat screen TVs while spending on roads and bridges at home to cajole private companies to borrow and spend the Himalayan idle balance is misguided.
Currently, if state spending is to have any lasting impact it must partner with businesses it has saved to substantively remake the Japanese economy around new technologies and power sources. Remember, fiat money regimes were brought into being precisely to operate social democratically with such policy flexibility as opposed to the gold standard the only policy outcome of which was austerity. The inventiveness and social cohesiveness of Japan is there. But missed opportunities abound as the follow up to the Fukushima Daiichi nuclear disaster demonstrates.