… With the US on the same path but a bit behind.
Here is what the Japanese government now plans to do:
1) It will raise sales tax by 3% to 8%, even though sales taxes hit the average person hard while hardly affecting the rich.
2) It will allow each Japanese to put $10,000 in the stock market for five years with dividend and capital gains taxes waived.
3) It will offer more home purchase subsidies.
4) It will offer other government “stimulus” measures even though government debt has reached a level equal to 245% of gross domestic product ( annual economic output).
All of this is just more of the same old, same old Keynesian fallacies:
A) Government knows what the economy needs and can interfere as much as it wants with the market price system. This will help the system rather than accelerate its collapse.
B) Spending is always good for an economy and it doesn’t matter where the spending comes from ( e.g. a completely over indebted government) or where it goes.
C) When an economy is choking on debt that cannot be repaid, piling on more will help.
D) Adding more debt will magically help to repay debt, although it never has.
E) Driving up the stock market will help, even though there is no economic link between stock market level and employment, and even though this just makes the rich richer because it is the rich who predominantly own stocks.
F) Temporary programs such as subsidizing the stock market for 5 years give the government the most flexibility and the more flexibility government has to change things the better.
All of this defies common sense. It also underlines that there is no limit to Keynesian madness. Those holding these views will not turn back until they have completely destroyed the economy and ruined the lives of ordinary people.