Some might be familiar with an old rock, pop song from the 1980's called Turning Japanese, a choice of words that increasingly has been used in economic circles to describe what may become of the Western economic experience if we are not careful. That experience is one of low growth, lower asset price valuations and little inflation bordering on deflation with dreaded doses of deleaveraging.
Essentially the Japanese experience since the heady days of asset bubbles being almost everywhere, 39000 on the Nikkei and property valuations that would have taken several lifetimes of mortgage repayments to justify them being just two, has been one of economic struggle. It's not as if Japan has been a total economic basket case, it's just that they have struggled to find that one thing so loved by Western financiers and Governments - inflation.
Don't let the politicians in the West kid you that inflation is a nasty thing that should be fought against at all cost, because for most of them it is what they actually want, or at least a little bit of inflation The last UK politician to promise a fight against inflation was Margaret Thatcher and the cost was several million unemployed, not that the millions out of work should all be put down to her economic policies, but in order to fight the price inflation that was running wild across the UK economy, drastic measures were undertaken. It is unlikely that politicians today would ever take such measures when "printing" money is so simple.
The one thing that has been missing from the economic fallout of the financial crisis of 2008 onwards has been the hyperinflation that many were so convinced was inevitable following the "money printing" of Central Banks as the answer to the crisis. It hasn't happened, probably because that money printing has been kept out of the grubby hands of the masses, there have been no helicopter drops for them (for those not familiar with this, do a search on Ben Bernanke, Helicopter), it has largely been parked in the vaults of the financial elite.
Anyway, in reality, certainly in the UK there has been high price inflation, the BoE effectively ignoring it as it got up to around 5%. If you are not getting a pay rise or losing your job, and with savings IR's around 1% or less after tax, price inflation of around 5% is enough over time to put you in a hole, who needs it to be hyper?
Still, back to Japan, after years of no inflation and trying all manner of ways to bring it on, they finally seem to have someone who is going to do everything come what may to do the job.
Japan's central bank has surprised markets with the size of its latest stimulus package, as it tries to spur growth and end years of falling prices.
The move was seen as a clear signal by the bank's new boss, Haruhiko Kuroda, that he was willing to spend heavily to achieve an inflation target of 2%.
The bank said it would increase its purchase of government bonds by 50 trillion yen ($520bn; £350bn) per year.
That is the equivalent of almost 10% of Japan's annual gross domestic product.
The bank added that it would buy longer-term government bonds as well as riskier assets.
"The previous approach of incremental easing wasn't enough to pull Japan out of deflation and achieve 2% inflation in two years," Mr Kuroda said.http://www.bbc.co.uk/news/business-22023291
So, Kuroda is doing his best Bernanke impression, but if you ever needed proof that the desire for inflation is baked within the cake of the financial system that we live in then this is yet another example of what since 2008 has become increasingly obvious. Because of that we all need to address what we do with our money, because basically Central Bankers, politicians and the financial system has a policy of devaluing what our money is worth in the future and inflation, which always starts by inflating the money supply, is how it comes about.
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