To whom,
First of all, isn't any economist who talks about gold prices living in the dark ages?
That aside, is it now clear that Japan has come swiftly to the end of the Keynesian rope? With government debt at 130% of output, near zero interest rates and the BOJ's tendency to trade high-quality government debt on near-par with low-quality Japanese bank debt (the interest rates on which are far below a realistic risk premium) can the Japanese government stimulate anything but a currency and debt crisis? Isn't the problem here (which no capitalist economist can articulate) that the Japanese economic game has stopped because the Japanese bourgeoisie has picked up the ball and gone home?
Okay, Japan may be the Philip Morris (cash cow) of international economies while America runs itself like a huge Internet start-up, but the difference is that America can get a loan anytime it likes. American debt is a fungible commodity whereas nobody is stepping up to buy debt denominated in yen. The kereitsu system relies on total bank solvency while the American system goes straight to anybody with dollars to lend.
I've been flogging this horse for a few years now, and have been mocked by lefties in love with Japan and the Euro-zone. Dammit, I'm determined to get my due. As productive as Japan and Europe are, nobody wants their paper if indeed it is on offer at all (several forms of debt securities common in America are quite rare in the Euro-zone and Japan) That's why the Euro can't get out of its own way and that's why Japan has remained in the crapper. Capitalism is an inefficient system and you can't make it work if you can't borrow money. I think Karl Marx said that. American dollars enjoy domination of the financial markets. Anybody can lend and borrow them and know what they're worth. Euros and yen are tied up in opaque institutions with huge and disparate baskets of loans.
What's the yen worth? Everybody knows the Japanese government owns a great deal of American (and other) government debt and that the Japanese economy has a positive balance of payments. Okay, but what are the loan portfolios of Japanese banks worth? I don't think the Japanese even know and those portfolios *are* the damned money supply - forget the other stuff. What's the expected return on a yen invested in a deflating economy with an enormous debt burden of uncertain quality?
Seemingly Japan will not go broke piecemeal. The inter-connected Japanese financial system is daring the world to declare that the whole thing is broke. They may find takers for their dare if they don't watch out.
yours as ever,
boddi
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