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Slipping Away
Japan’s Economy Stalls, Abe to Call Elections?
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  • Jacksonian_Libertarian

    Deflationary depressions are caused by excessive debt in the economy. Japan has been in a deflationary depression since 1989, 26 years, during that time they have tried repeatedly to buy their way out with huge TARP type spending bills. The reason why that has repeatedly failed is that you can’t buy your way out of deflation my adding more debt. The only way to get out of a deflation is with inflation. The base money supply needs to be massively increased far beyond what the Fed has done in the 6 years the US economy has been trapped in Great Depression 2.0. The increase in the money supply needs to be large enough to create serious inflation, enough to devalue debts, and cause wages to rise sharply.
    America’s best strategy is to payoff all foreign held US treasuries ($6 Trillion). This would result in a glut of dollars outside the US, causing import prices to rise, and export prices to fall. The US trade deficit would quickly reverse itself into a trade surplus for the first time in decades and add several points of growth to America’s GDP. In addition foreign investment into the US would skyrocket as the price advantage of producing in the US would be obvious. Inflation would soon gain a foothold in the US economy, and debts would fall in value while wages began rising again. This would kickstart the economy with far greater effect than any stupid leftist wasteful big government spending bill.

    • Josephbleau

      That would also destroy all the savings I haven accumulated by depriving myself and family in hopes of having security. I should have been profligate, or bought gold when told it was stupid to.

    • Tom

      Ah…how are we going to pay off $6 trillion worth of foreign treasuries, when we keep adding debt?

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