The Latest From Japan’s Monetary Loony Bin——-Negative Inflation, More Stimulus!


Japan’s “Core CPI” excluding food, fell two months straight. It’s back again below zero again.

Economists expect more stimulus, and Japanese equities are once again in rally mode.

Have any of these economic illiterates ever considered that stimulus is the problem, not the solution?

Back Below Zero

back below zero

Please consider Japan CPI Falls 0.3%, Raising Pressure for More BOJ Stimulus.

Japan’s consumer prices dropped for a second month as central bank Governor Haruhiko Kuroda struggles to spur inflation with record asset purchases and negative interest rates.

Consumer prices excluding fresh food fell 0.3 percent in April from a year earlier, after dropping by the same amount in March, according to a statistics bureau report on Friday.

“Japan’s inflation is going to remain weak,” said Takashi Shiono, an economist at Credit Suisse Group in Tokyo. “If you look at economic and price fundamentals, the BOJ has to ease further soon.” Shiono, who correctly forecast the 0.3 percent drop, cited low energy prices as a key drag on inflation.

“Has to Ease”

Can anyone make a case why Japan “has to ease”?

There is no case, just economic illiteracy.

  • What good has monetary easing and fiscal stimulus done?
  • Didn’t Japan try that for 30 freaking years?
  • What was the result?

Idiots demand more stimulus when it should be crystal clear that stimulus is the problem.

Japan now has the highest debt-to-GDP ratio in the entire developed world. It got there based on the theory “We have to ease!”

Stimulus Expectations Rise

Look on the bright side, Japanese Stocks Rise on Reports Abe Will Delay Hike to Sales Tax.

Japanese stocks rose, led by energy explorers and insurers, after reports that Prime Minister Shinzo Abe has decided to delay a sales-tax increase.

Abe has decided to delay the sales-tax increase based on the global economic slowdown and the impact of last month’s Kumamoto earthquake, the Asahi newspaper reported, saying an announcement is possible on Wednesday. Kyodo newswire and the Nikkei newspaper also reported that a delay is likely to be announced.

Japan is seeking to add a warning that the global economy is at risk of “falling into a crisis” to the final G-7 leaders’ communique to be released Friday, according to a copy of a draft obtained by Bloomberg News.

Falling Into a Crisis

We are not “falling into a crisis” we are IN a crisis caused by Keynesian and Monetarist economic stupidity.

Hiking taxes in a recession is one of the dumbest things one can do. Abe hiked taxes hoping to offset the tax hike with “stimulus”.

The idea that governments know better than free markets where to spend money is the height of central planning economic hubris.

Mike “Mish” Shedlock