Miners used to keep canaries in coal mines as an early warning device. If the air was so bad that it killed the canary, the miners would soon be next. Japan may be the canary for the out-of-control deficit spending policies now being pursued in the United States and the United Kingdom. In a November 1 article in the Daily Telegraph called “It Is Japan We Should Be Worrying About, Not America,” international business editor Ambrose Evans-Pritchard wrote:
“Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world’s second-largest economy has been … feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return. The rocketing cost of insuring against the bankruptcy of the Japanese state is telling us that the model has smashed into the buffers.
“. . . Tokyo’s price index fell 2.4 percent in October, the deepest deflation in modern Japanese history. . . . The government could stop this . . . . It could print money à l’outrance to stave off deflation. Yet it sits frozen, like a rabbit in the headlamps.
“Japan’s terrible errors are by now well known. . . . QE was too little, too late, and this is the lesson for the West. We must cut borrowing drastically over the next decade, and offset this with ultra-easy monetary policy. Does Downing Street understand this? Does the White House? . . . Clearly not.”
In case you too have forgotten your high school French, “a l’outrance” means “to the uttermost.” “QE” is “quantitative easing” – printing money. Evans-Pritchard’s proposed solution to the mounting fiscal crisis is that the government needs to quit borrowing money and start printing it.
More Funny Money? Please!
[Read more at Truthout]