Now, Japan Needs Domestic Growth
Japan's money pump is pouring liquidity into the global financial system at a prodigious rate. By recycling its huge trade surpluses, Japan is helping to boost stock and bond markets around the world. Interest rates are lower, equities are higher, and everyone benefits, right? Not exactly. Japan has been running a low-yen, high-tax, anticonsumer policy mix for much of its postwar history. That leads to tremendous export-led growth. But it generates giant trade surpluses that must be constantly recycled to keep the yen from soaring further and curbing exports. What Japan--and the global economy--need is not more liquidity but more Japanese growth.
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