This post is one of a series, trying to counterbalance a little the majority view of the financial media and vodoo economists about Japan's so called lost decades.
I'm not trying to give an indebth (macroeconomic) analysis about the state of Japan's economy, but rather scratching a little bit on the surface here.
For previous posts touching on this subject please click following links:
Is Japan's lost decade a myth
Is Japan's lost decade a myth? - part two
Is Japan's lost decade a myth? - My own take on it (part one)
Will Japan's "real" trade balance just stand up please
Oh yes. Japan's deflation malaise. That's one of my favourite.
Some headlines from the recent month
Reading the mainstream (propaganda) media and listining to the voodo economists out there, unaware readers have to come to the conclusion that Japan is mired in a horrible deflation trap, comparable to that of the 1930's great depression.
This is what evil deflation looks like.
Within a little more than 3 years consumer prices dropped almost 40 %.
Money supply was crushed.
GDP gets hammered.
Let's look what the so called deflation looks like in Japan:
Let's have a look at Japan's money supply readings.
That's interesting. Not in a single year of Japan's two decade long malaise did Japan experience a shrinkage in its money supply (e.g a negative reading). Actually, it didn't shrink at all, but rather expanded.
Let's have a look at Japan's CPI numbers
Can anyone see any meaningful drop in the japanese CPI numbers? No?
Me neither! Because their is non. I only can see price stability.
So Mr.Abe. Your party left the BOJ into independence in 1998, with one mandate (and only one mandate!), e.g. price stability.
The BOJ, in contrast to the ECB, delivered you that price stability (and not deflation!). And that without crushing GDP (not in nominal terms, neither in real terms and absolutely not so in real GDP per Capita terms.) They have done a fantastic job (since
Dear media and economists, start working properly and dilligently. It's not too hard. One two clicks on the internet and you've got the right data.