Japan's Economy is Still Stalling

For John, BLUF:  John Maynard Keynes may have been wrong.  Nothing to see here; just move along.

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From Reuters we have a report on the Japanese economy—not good.  For some time Japan has been following the Keynesian approach to coming out of a dip in an economy (be it recession or depression).  Lots of infrastructure built,♠ but no real recovery.

The headline is "Japan's economy floundering, BOJ to widely miss inflation goal:  poll".  The idea is to stimulate growth by a mild inflation through manipulation of the money stock by the Bank of Japan.

Japan's economy is floundering and analysts polled by Reuters cut their annual growth forecast for a fifth straight month, saying there is no chance the Bank of Japan will meet its 2 percent inflation goal by the next fiscal year.

With demand still suffering from an April sales tax hike and disappointing factory output, most analysts expect the BOJ to ease policy further before the fiscal year ends in March.

The majority expect that to happen early in 2015.

The BOJ launched an unprecedented burst of monetary stimulus last April aimed at reflating the economy, pledging to double the monetary base to 270 trillion yen ($2.50 trillion) over two years, which has helped to send the yen down about 15 percent against the dollar.

Frankly, the "disappointing factory output" suggests lack of sales, not lack of production.  No one is buying, not withstanding the economic stimulation.

Regards  —  Cliff

♠  By the way, as Senate Candidate Brian Herr noted on City Life on Friday last, there are no shovel ready projects.  It is a myth that ignores all the effort it takes to put together a project, including permitting, environmental approvals and design.  All those construction projects in Japan are because this has been a long recession—years and years.