Source: Wikimedia

Dear Diary,

Not much market action yesterday. So, let us turn to what is bound to be the funniest… and scariest… story in the financial world.

Once again, our hat is off to the stalwart, intrepid and half-mad Japanese. They are going where no respectable economist would go… no responsible public policy should go… and no one with his wits about him would want to go.

We begin with the latest news: Nippon is in a slump. The numbers from the third quarter confirm that the feared “triple-dip” recession is here.

Japanese growth fell at a 1.6% annual rate for the June-to-September quarter. The consensus forecast had been for a 2.2% rise in growth.

This is bad news for Abenomics. He lets fly his arrows. They end up sticking in his derriere. The idea (if you can call it that) was to stimulate inflation, growth and job creation.

How?

Easy. You print more money!

Bailouts and Boondoggles

For the last 20 years, the Japanese government has been borrowing the retirement savings of its long-suffering “salarymen” and spending the money on bailouts and boondoggles – often involving vast amounts of concrete that now covers half the country.

If that weren’t enough – and it obviously wasn’t – in March 2001, the Bank of Japan invented QE to add some monetary steel to the fiscal cement. The Bank of Japan became the largest buyer of the government’s debt… increasing the monetary base by roughly 60%.

What did all this feverish building get the Japanese people, apart from five times as much government debt?

Absolutely nothing. The index of Japanese industrial output was at 96.8 in 1989. Today, it is still at 96.8.

In other words, this entire “stimulus” has stimulated not a single electron, proton or neutron. The real economy has not grown by a single yen. Nor has a single new job been created.

Nothing succeeds like failure. Per acre, no nation has ever been abused by so much monetary and fiscal failure.