Please consider Japan signals rise in borrowing.
Japan�s new finance minister has signalled that the government will borrow to boost the struggling economy, as Prime Minister Shinzo Abe unveiled a �crisis beating� cabinet on Wednesday.Nature and Origin of Japan's Crisis
At a press conference following his appointment as finance chief, Taro Aso announced he would issue bonds and lift a cap on new debt for the 2012 fiscal year.
�We will not stick to the debt cap of Y44tn ($514bn) [for the year through to March],� Mr Aso said. The debt limitation was introduced by the previous Democratic party administration, which was defeated in a landslide by Mr Abe�s Liberal Democratic party two weeks ago.
Mr Abe on Wednesday unveiled a cabinet of close allies and policy experts to push his agenda of economic recovery, just hours after being formally appointed as the country�s seventh prime minister in six years.
He has vowed to create a �crisis beating government� to tackle the deflation that has dogged Japan for more than a decade and also the strong yen. Mr Abe said he had instructed his cabinet to do their utmost to achieve economic recovery and reconstruction after last year�s devestating earthquake, and to ensure national security.
�I will direct the energies of my entire cabinet towards implementing bold monetary policy, flexible fiscal policy and a growth strategy that encourages private investment, and aim to achieve results with these three pillars,� Mr Abe said.
He has pledged to reflate the economy through fiscal stimulus and monetary easing. He has also called on the Bank of Japan to carry out �unlimited� easing and warned that the central bank risks losing its independence � through legislative changes � if it does not introduce a 2 per cent inflation target.
Japan's crisis is not deflation as the economic illiterates suggest. Rather, Japan's problem is a debt-to-GDP ratio of 230%, caused by economic illiterates attempting to defeat deflation.
Mad, Mad World
It's a mad, mad world with monetarist fools in complete control of the Fed, the Bank of England, and the ECB.
If prime minister Shinzo Abe gets his way (and I suggest he will), Japan will lead the way with fiscal lunacy and the Bank of Japan will follow suit with massive monetary recklessness.
The Yen is at a two-year low in response to these events, and a currency crisis is now baked in the cake. Exact timing is all that's left in doubt.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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