Will Abenomics Lead to War?
When Shinzo Abe was elected, he made it clear that he would do all he could to inflate. He appointed a new Governor of the Bank of Japan, Haruhiko Kuroda, who would support Abe's policy. At the time, references were made to the Japanese finance minister in the 1930s, Korekiyo Takahashi, who purportedly helped Japan avoid the Great Depression by pressing forward with reflationary policies.
Given this background, we find today's leaders pressing forward with reflationary policies, hoping to shake Japan out what some have called a "soft depression" that began when the Japanese stock market and real estate market collapsed after 1989, having formed massive bubbles. When I read the references to Takahashi, I was puzzled by the fact that no one drawing favorable comparisons mentioned that Japan in the 1930s was in the midst of a massive military build-up. I wondered whether, either in addition to or aside from the reflation pushed by Takahashi, the economic activity caused by Japan's militarism might have had something to do with their economy avoiding the Depression. It just seemed like it might be more than coincidental. After all, it is generally recognized that the U.S. only exited its Great Depression when a war economy replaced the normal economy in 1940.
Imagine my lack of surprise, then, when BBC News Asia published a story with the headline:
Given this background, we find today's leaders pressing forward with reflationary policies, hoping to shake Japan out what some have called a "soft depression" that began when the Japanese stock market and real estate market collapsed after 1989, having formed massive bubbles. When I read the references to Takahashi, I was puzzled by the fact that no one drawing favorable comparisons mentioned that Japan in the 1930s was in the midst of a massive military build-up. I wondered whether, either in addition to or aside from the reflation pushed by Takahashi, the economic activity caused by Japan's militarism might have had something to do with their economy avoiding the Depression. It just seemed like it might be more than coincidental. After all, it is generally recognized that the U.S. only exited its Great Depression when a war economy replaced the normal economy in 1940.
Imagine my lack of surprise, then, when BBC News Asia published a story with the headline:
Japan defence ministry makes largest-ever
budget request
While we may not be watching another Japanese Empire in the making, the fact that the Japanese government and the Chinese government continue to clash over various claims to contiguous territory, as well as what we can only assume is China's dislike of Japan's running the Yen into the ground, creating cheaper prices for Japanese goods which are in competition with Chinese goods. Over such conflicts are wars instigated.
After watching the government and the BOJ double down on reflationary policies last week, the announcement of which seemed to cause world stock markets to soar, our thoughts harkened back to that BBC story first published in July. And if a military build-up really is part of the strategy of Abe and his crew to reflate Japan, it certainly remains a sub rosa element. All attention has focused on government fiscal policy and central bank monetary actions. Perhaps more attention should be paid to a growing military build-up as well.
And as it turned out, Takahashi was assassinated by the mlitary junta in Japan because he would not publicly support the military exploits Japan aggressively pursued in Asia, which exploits eventually drew the U.S. into World War II with the attack on Pearl Harbor. So eventually it would be military build-up, resulting in war that kept Japan's economic engine whirring - not a result we hope to see this time around.
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