Tuesday, December 1, 2009

Focus on Deflation is Govt's Biggest Problem

The Hatoyama Cabinet, Finance Ministry, Democratic Party of Japan, Bank of Japan and Financial Services Agency have all been essentially focused on deflationary policies. They tighten finances, cut fiscal spending and tighten finances again. Deflationary trends are worsened; unemployment soars. When the price of goods is falling, it's a crime to pursue deflationary policies.

Japan's economy is in the midst of a deflationary spiral. And yet, the Hatoyama administration, Finance Ministry, Bank of Japan and DPJ are all promoting deflationary policies. The mass media is praising and abetting the very moves that are at the heart of these policies: reducing fiscal spending. The weeding out of projects is the ultimate deflationary policy. In its ignorance, the media is committing a grave blunder.

The government, Finance Ministry and national media would do well to look to the provinces. Most of the high school students nearing graduation have yet to figure out where they will work.

The government should be focused on a plan to overcome these deflationary trends. It needs to stop immediately its current plans.