Japanese firms must be relieved at least for the present that the tax hike was delayed. But that doesn't mean they expect it to boost the economy and consumption. They recognize that fiscal consolidat

"the root of future anxiety"

Anxiety over what,exactly?

They recognize that fiscal consolidation is an issue

Whatever that means. Let's face it, it's just an excuse for employers to forgo pay rises as the current situations is one of 'prolonged uncertainty'. Then, when the inevitable consumption tax rise rears its ugly head, employers will again forgo raises wages as the situation will become 'increasingly uncertain'. Japan Inc. - inaction is what we do best!

Yup, the plain reality is that the government's fiscal mess contributes to anxiety about the future for many people (irrespective of whether or not one shares those views).

Dealing with the issue could therefore have positive impact on people's willingness to spend and invest. Massive government spending reforms may be one way to do this, since consumption tax hikes seem to be politically unacceptable.

Whatever that means. Let's face it, it's just an excuse for employers to forgo pay rises as the current situations is one of 'prolonged uncertainty'. Then, when the inevitable consumption tax rise rears its ugly head, employers will again forgo raises wages as the situation will become 'increasingly uncertain'. Japan Inc. - inaction is what we do best!

exactly!

Anxiety over what,exactly?

The anxiety about continued population decline, which means continued declines in consumption and revenue. Anxiety about how the market and economy will maintain itself when the central bank can no longer pump things up by manipulating interest rates, monetary easing, etc. Anxiety among younger consumers who are worried that the government might not be able to pay them a decent pension, so in order to be secure in later years, they will have to spend and consume less now. Anxiety about the rise of strong competition in other parts of Asia who are taking more and more of Japan's export market. Anxiety about the government's ability to repay it's massive debts in the absence of increased growth and revenue. Need I go on?

"The anxiety about continued population decline"

Yeah, and higher taxes will make everyone feel happy and confident,eh? The last couple of times the govt took that approach, it triggered two recessions. Let's have a third!

Yeah, and higher taxes will make everyone feel happy and confident,eh? The last couple of times the govt took that approach, it triggered two recessions. Let's have a third!

With fewer people and fewer companies generating tax revenue, and government spending at record levels, what options are there? Monetary easing has not worked, zero interest rates have not worked, stimulus soending has not worked, and helicopter money will not work.

Increased taxes of course do not work because Japanese people have small disposable incomes. Tariffs, trade barriers, regulations, price fixing, and bureaucracy all add to the cost of living in Japan. Nearly all things consumed of produced in Japan rely on importation. All practices so far have been to raise the price of imported food and finished goods so they don't compete with domestic products. When things are already too expensive, any tax will decrease consumption. Worse yet (as far as the government is concerned), when things are too expensive, people buy fewer of these things, and deflation occurs.

The entire foundation of Japan's industrial economy and the government it supports is built on sand, and inevitably, it is sinking. The government's solution only adds more weight, and accelerates the speed and depth to which both will sink.

"The entire foundation of Japan's industrial economy and the government it supports is built on sand,"

Apart from being the world's producer of automobiles, industrial robots, and one of the biggest of machine tools, and so on and so on. "Sand," huh?