Japan, the world’s third largest economy, grew 0.2 percent in the third quarter, down sharply from a 1.8 percent expansion the previous quarter.
Last week, Prime Minister Shinzo Abe announced Japan’s first stimulus package since 2016, which includes a 2019 budget running through March 2020 and spending plans to boost the economy into 2021.
Finance Minister Taro Aso said 50-year bonds are now under consideration. The current maximum is 40 years.
Spending includes reconstruction after the typhoon that destroyed eastern Japan in October 2019, as well as stimulus spending for businesses and agriculture.
Japan’s chief cabinet secretary, Yoshihide Suga, said, “Putting the current low interest rates to good use, we want to deploy fiscal borrowing and investment proactively to invigorate investment for future growth.”
PUBLISHER’S NOTE: As noted in past issues of the Trends Journal, the IMF, World Bank, and others have warned that monetary stimulus has run its course and are urging governments to spend money, i.e., fiscal stimulus, to generate growth.
It is not working in South Korea, and it won’t work in India, Japan, or in most of the declining economies.
What fails to be acknowledged by the money junkies and political/special interests are the realities of basic ups and downs of economic fundamentals. Thus, neither fiscal nor monetary stimulus measures will forestall the “Greatest Depression.”