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article imageOp-Ed: Japan's 'Abenomics' following Ben Bernanke's helicopter economics

By Andrew Moran     May 13, 2013 in Politics
Tokyo - The mainstream media, investors and officials are celebrating in stock markets everywhere after Japanese Prime Minister Shinzo Abe vowed to implement "Abenomics," which is essentially to mimic the moves of Federal Reserve Chairman Ben Bernanke.
This year, the Bank of Japan’s Haruhiko Kuroda announced its intentions to end its deflation and stimulate the economy. Some of its measures consist of doubling its present stimulus to 7.5 trillion yen ($81 billion), purchase Japanese government bonds with maturities of up to 40 years (a move to push BoJ bond holdings from three to seven years) and enhance its acquisitions of financial instruments connected to stock and property markets.
Now, these economic and monetary actions seem reminiscent to Fed Chairman Ben “helicopter” Bernanke. He announced late last month that the United States central bank will not cease its policy of purchasing $85 billion each month of Treasury securities and mortgage-backed securities (indefinitely), maintaining near-zero interest rates and expanding its balance sheet to $4 trillion.
At the present time, the Abe and Kuroda faction is being showered with praise and the champagne is flowing from the heavens. However, just like most other failed Keynesian and inflationist economic policies, it might create short-term gains, but it will provide long-term suffering.
Although the yen has been devalued by 20 percent since November compared to the dollar, it seems some of the only people celebrating on the streets of Tokyo are the exporters and their workers because they’re personally benefitting from the decision making (for now). Indeed, the eroding currency will hurt most of Japan’s people because their purchasing power will be severely diminished in the future. This, of course, leads to other economic suffering: what’s more important gas or food?
Furthermore, as reported earlier this year, there have been warnings of a currency war, which will essentially be a race to the bottom for the average person. As more nations inflate their money supply in order to export more of their goods, men, women and children will be hurt badly – it’s a case that has long befuddled central bankers, who don’t seem to grasp the concept of inflation or even money for that matter.
Here is what Japan will experience in the next few years: a jump in price inflation, an astronomical money supply and a stock market crash that will be heard around the world. Of course, only these questionable and silly concepts can only be supported by the likes of economist Paul “alien invasion to save the economy, sound money created Hitler and we need a housing bubble” Krugman.
“All of this reinforces the important point that, as I put it early in this crisis, we’ve entered a looking-glass world in which virtue is vice and prudence is folly, and in which doing the responsible thing is a recipe for economic failure,” wrote Krugman in an op-ed piece. “And it also bodes surprisingly well for "Abenomics," which might work in part precisely because of what everyone imagines to be Japan’s biggest problem, its huge public debt.”
Krugman, unintentionally, summed up Keynesian economics perfectly in his amphigories: “virtue is vice and prudence is folly.” This is similar to what Keynes himself wrote: “For at least another hundred years we must pretend to ourselves and to everyone that fair is foul and foul is fair; for foul is useful and fair is not.”
Apparently the Austrians aren’t the only ones to see the demise of Japan in the next few years. Bloomberg News noted last month that Takeshi Fujimaki, former Japanese adviser to George Soros, foresees the coming crash and has bailed on Tokyo.
“By expanding the monetary base to 270 trillion yen, the BOJ is making a huge bet which I think it will ultimately lose,” Fujimaki said in an interview in Tokyo on April 11. “Kuroda’s QE announcement is declaring double suicide with the government. The BOJ will have to share the country’s fate and default together.”
Instead of reading the likes of Keynes, perhaps central bankers should peruse “Zimbabwe’s Casino Economy,” a 2008 book written by Gideon Gono, the former head of Zimbabwe's central bank. We all know what happened to the African nation.
Here’s what I would like to know: why do the public still have faith in monolithic structures? As Ludwig von Mises, F.A. Hayek and Murray N. Rothbard have proven, it’s impossible for a central authority to plan an economy because of varying factors, such as new technologies, consumers’ actions and other business functions like production and distribution.
Whether it’s Bernanke, Mark Carney, Kuroda or Gono, central planners like to print more money. Unfortunately, they never seem to understand history; price inflation is a monetary phenomenon that can transpire anywhere at any particular time.
Sorry, Krugman, advocating for sound money principles did not create Adolf Hitler, World War II or the Weimar Republic’s hyperinflation. Why do you, and your government cronies, like to inflict pain upon the poor so much with currency devaluation?
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
More about abenomics, Japan, Ben bernanke, keynesianism, austrian economics
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