Can America Learn Important Lessons from the Japanese Economy?
This weekend, I will have my eyes turned toward Japan and the Japanese economy, as the nation holds its elections on Sunday. The reason for my interest is that the Liberal Democratic Party, led by Shinzo Abe, has repeatedly called for an ultra-hyper monetary stimulus package to be used in attempting to kick-start economic growth within the Japanese economy.
The Japanese economy has been mired with lackluster economic growth for decades, even though monetary stimulus has been applied. The problem, according to the Liberal Democratic Party, is that monetary stimulus has been too weak, and the tap needs to be opened to flood the system by printing more of its currency, the yen.
However, not all economists believe this monetary stimulus plan will lead the Japanese economy to higher economic growth levels in the future. Stephen Roach, the esteemed Yale University senior fellow, stated on CNBC, “I don’t think it’s going to work. QE (quantitative easing) is good at containing the downside, addressing crisis and disruptive markets, but it definitely doesn’t give you traction in regenerating demand in the real economy.” (Source: “Aggressive Easing Wrong Medicine for Japan: Roach,” CNBC, December 13, 2012.)