Japan faces prospect of third decade of low growth
News On Japan via guardian.co.uk -- Dec 21
Investors are not ready to bet against Japan. But maybe that's the country's biggest problem.
Until there is a sign that the outside world is prepared to park its savings somewhere else, Tokyo will continue to sail further into debt.
The Bank of Japan delivered its third shot of monetary stimulus in four months on Thursday, adding another 10 trillion yen (£73bn) to the £740bn of electronic money already spent by the bank on its own government's debt.
The move is considered a prelude to more aggressive action next year as the country confronts the prospect of a third decade of low growth.
Like the British chancellor, George Osborne, the incoming government of Shinzo Abe has ruled out a budget stimulus. Creating central bank money is the only game in town as ministers seek to boost the amount of funds available for borrowing.
How long will it last? Until demand pushes up consumer spending and thereby prices and, with the prospect of rising prices into the future, encourages consumers to spend even more.
At the moment companies and consumers are acting as a counterweight to central bank action because they are hoarding their money.
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