Keynesianism’s Depredations and Futility in Action

posted by Nima

January 7, 2011 · Posted in General Economics 

Japan’s Prime Minister sounds the alarm bells:

Japan’s top government spokesman said the country’s fiscal situation is “approaching the edge of a cliff,” underscoring Prime Minister Naoto Kan’s call for a national debate on raising the 5 percent sales tax.

Kan is “expressing his deep sense of crisis and resolution about the sustainability of social security as the aging population increases under a low birth rate,” Chief Cabinet Secretary Yoshito Sengoku told reporters today in Tokyo. “The supporting fiscal conditions don’t allow for any delays, it’s finally approaching the edge of a cliff.”

Politicians don’t blow the whistle until it’s way too late. So this pretty much sounds like an open and official admission that Japan’s retirement avalanche has begun and is in full swing.

Here’s what I wrote about this a while back:

From 1989 on, the Japanese government has launched one stimulus after another to no avail, leaving Japanese taxpayers with the largest public debt per capita of all industrialized nations.

A burden that the US government seems to be more than willing to have its taxpayers shoulder over the years to come unless someone picks up a history book and tries not to feverishly repeat mistakes others made in the past.

Thus the long term outlook for the US economy is the fate Japan took: A long lasting correction supercycle with one failing “stimulus” program after another, and with on and off periods where the economy slips out of and back into recessions from time to time.

This whole mess in Japan started over 20 Years ago!

Keep this in mind any time you hear Keynesian whackos like Paul Krugman alongside politicians in power propose more and more government spending and debt as a panacea to the US’s comparable problems. They are today laying the foundation for the depredations that are to come in 10+ years from now.

Note that Japan’s PM is proposing to raise the sales tax to cover the shortfall.

This kind of stuff is predictable. As I explained in What’s the Problem With Government Budget Deficits:

Ironically, when you look at the political stage, all you will hear in regards to “solutions” to deficits in the end, will for the most part be tax hikes. These are not solutions. They are the ultimate manifestation of the very problem at hand. They are, in fact, the precise opposite of a solution. Keep this in mind whenever you hear politicians talk about deficit solutions. Raising taxes to reduce deficits is absolutely and 100% an admission that one has completely failed to solve this deficit problem, and in fact laid the final brick that was missing in the very process of the public’s depredation via deficit spending.

Also don’t fall prey to the illusion that the newly elected Republicans in Congress will do anything meaningful to turn the tide. If anything at all, they may come up with half-assed measures to appease the public for a little while longer. But will they propose 50+% cuts in military spending, Medicare, Medicaid, or Social Security??

Just take military spending as an example:

Republicans claim to be anti-taxes, yet they gladly and openly support the wars and destruction that end up gobbling up more tax money than anything else. Democrats claim to be anti-war, yet they gladly and openly support the higher taxes that end up funding all those war expenses.

Could there be a more beautiful example for this mad and brilliant shell game called “public finances”?

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