Japan has joined the crowd and started an even more aggressive asset purchase program as the Japanese economy weakens. Meanwhile, serious tax hikes are poised to go into effect very soon. Japan plans to cut state spending because the country could run out of money in a month as deficit hawks are on the warpath. This juxtaposition between reflationary monetary policy and deflationary fiscal policy is evident everywhere in the developed economies.
As I wrote last Friday:
Right now, every major central bank is supporting domestic growth with very aggressive monetary and currency policy. In Europe, the ECB is doing “whatever it takes” by offering unlimited liquidity in support of periphery debt. In Britain, the Bank of England has repeatedly added liquidity in the form of government debt ...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.