Japan is all over the blogosphere today (here, here & here, for example). So I thought it would be useful to put up a picture post comprising how NGDP, money supply growth (M2), inflation and the BoJ discount rate have evolved since 1980.
The start of the ‘Japanese saga’ is clearly associated with the rise in rates and the steep drop in money supply growth. Inflation jumped with the introduction of a consumption tax in 1989 and the increase in the rate in 1997. Funny that those moves were seen as reason for the BoJ to tighten!
There´s a lot of enthusiasm surrounding BoJ president Kuroda´s announcements. Hopefully they will be sufficient to reverse those depressive ‘non-trends’.
Note to Bernanke: See that “centuries long zero rates” have not helped Japan at all.