More on the Abenomics Flimflam

[unhappycamper]

http://smirkingchimp.com/thread/mike-whitney/51865/more-on-the-abenomics-flimflam

More on the Abenomics Flimflam
by Mike Whitney | September 30, 2013 - 8:19am

Abenomics is largely a bunko-scam wrapped in public relations gibberish. It has no chance of producing a strong, sustainable economic recovery. The real aim of the policy is to temporarily juice GDP with a sizable blast of fiscal stimulus ($100 billion) so the Bank of Japan can stealthily transfer more money to its chiseling investor friends via its bond buying program called QE. In other words, the program works the same way it does in the US, the only difference is the scale of the operation and a number of anti-worker provisions touted as “critical reforms”. Sound familiar?

Naturally, Abenomics–which is named after right-wing loony, Prime Minister Shinzo Abe–has attracted worldwide attention for its bold “shock and awe” approach to monetary policy. Liberal economists in the US –notably Stiglitz and Krugman—are absolutely gaga over the program and just about wet themselves every time they talk about it. They seem to think that the BoJ’s bond buying blitz will fare better in the Land of the Rising Sun then it has in America where the sputtering economy is still on life support five years after the market crashed.

Why are they so optimistic? Probably because BoJ governor Haruhiko Kuroda has taken a “damn the torpedoes” approach and pledged to double the money supply in two years in an effort to pull the economy out of 15 years of deflation. Kuroda figures that raising prices will boost spending and corporate investment laying the groundwork for more activity and hiring, greater demand and stronger growth. The only bugaboo is how to get all that newly-minted money into the economy. As Fed chairman Ben Bernanke has discovered, the liquidity that flows into bond purchases stays locked in the financial system making stocks bubbly, but leaving the real economy largely unaffected. That’s why unemployment in the US is still above 7 percent and GDP is in the 2 percent-range even while the Fed’s balance sheet has ballooned by $3 trillion. It’s because trickle down doesn’t work for shit.

That doesn’t mean that Abenomics hasn’t had an impact. It has. It’s slashed the value of the yen and sent equities into the stratosphere. It’s also increased exports by many orders of magnitude. Too bad import prices have been rising at the same time or it might have made a difference. Check out this recent update from the Testosterone Pit: