The New Liquidity Trap

The message from Japan is loud and clear: “Bernanke… you magnificent bastard, I read your book!” Sadly, that’s no exaggeration:

The Bank of Japan made a blockbuster announcement overnight, saying that after nearly two decades of economic stagnation and falling prices, it is aiming for 2 percent inflation and will print more yen on an unlimited scale—by the trillions, if necessary—to get there.

That alone is big news; the Japanese central bank has now joined the Federal Reserve and the European Central Bank in pledging bottomless resources to address their respective economic crises.

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Trillions in easy money and trillions more in deficit spending haven’t worked here. They won’t work there. But central planners gotta plan, and string pushers gotta push.

RELATED: Money cannot buy growth.

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