The fundamental problem is that Japan’s government is struggling to both reflate the economy and establish a semblance of fiscal credibility. It’s the worst of both worlds: no meaningful growth and no

Well, no kidding. They are suffering from extreme cognitive dissonance and trying to do two contradictory things. Fiscal "consolidation" just means you are reducing demand in the economy and reducing the money supply, so of course you are not going to get any growth. It is also the exact opposite of what "Abenomics" fiscal policy originally stated would be done, and more than cancels out any positives (if they even exist) from imaginary monetary "stimulus" and 3rd arrow supply-side growth "reforms". But it's the same story in every other country where hack mainstream economists have been applying their quack theories, why would anybody expect things to work out any differently in Japan? There's nothing unique about Japan, it is just the first country where the credit-expansion economic growth scam stopped working and now every country is in the same boat. And all still equally clueless about what to do about it.

Printing money is what passes for policy in all the major economies of the world these days.

It’s the worst of both worlds:

Absolutely correct. And Japan avoided this problem nicely for over two decades by simply ignoring the "fiscal credibility" part.

But it's the same story in every other country where hack mainstream economists have been applying their quack theories, why would anybody expect things to work out any differently in Japan?

And all still equally clueless about what to do about it.

What a surprise. Another Guy economic sermon throwing around a lot of hackneyed expressions -- "hack mainstream economists", "quack theories" "equally clueless" -- but offering no suggestions for needed policy change.

but offering no suggestions for needed policy change.

LOL, ok I spell it out for you. "Fiscal consolidation" and "fiscal credibility" are quack economic theories, debunked many times and failures every time they have been attempted without a matching increase in private debt levels. And as Japan's economic problem is that private debt levels are not increasing, well it will fail here too.The simple policy change is for the Japanese government to stop sabotaging and vandalizing the Japanese economy due to their following of quack theories. "Reflating" an economy is incredibly simple and only requires the government to issue the correct amount of currency, aka running a deficit, to make up for the shortfall in money creation by the private banking sector. Money creation by private banks has a limit, which is the amount of debt that can be taken on and serviced by the private sector. Currency issued by the government has no such limit, and the only constraint is the point where demand-pull inflation sets in. But they don't want to run a deficit, they want to run a surplus because they think they have too much "debt", aka the sum of all the previous deficits. And because "Zimbabwe" and "Weimar" and "hyperinflation". And because they comically think they "borrow" money in the government bond market without ever asking where that money came from, and that one day "soon" if the "debt" keeps getting bigger nobody will lend them this mysteriously obtained money. So they think they need "fiscal consolidation" and that by reducing the deficit today they will reduce the deficits of yesterday. Which is like saying "if I don't go to Vegas this year I'll be able to get back the money I lost in Vegas last year".

Or for a shorter suggestion, they have no clue what they are doing and should be immediately fired and replaced with people who do.

Fiscal "consolidation" just means you are reducing demand in the economy and reducing the money supply

This isn't true, the money supply can be increased in the absence of government deficit spending / in the face of fiscal consolidation.

For real world examples of this, look to planet Earth.

It is certainly not the case that the 1080 trillion yen of public debt accumulated over the past 2 to 3 decades is too little for Japan's 500 trillion yen economy to be healthy, and it is not the case that increasing the debt load further to some "correct" mirage level is guaranteed to improve the economy.

. "Reflating" an economy is incredibly simple and only requires the government to issue the correct amount of currency, aka running a deficit,

This is the greets example of quackery imaginable, it goes well beyond the borders of stupidity. Economic growth can occur with a complete absence of currency, and it can occur with the complete absence of government.

How much currently is the "correct amount" of currency? Venezuela is following your advice, and their inflation rate is estimated to be more than 800% this year. Zimbabwe has also followed your advice, and have achieved a lot of inflation, as of last week one US dollar will buy you 200,000,000,000,000 (200 trillion) Zimbabwe dollars.

If we want to "reflate" the economy, we need to remove government intervention from the picture entirely.

This isn't true, the money supply can be increased in the absence of government deficit spending / in the face of fiscal consolidation.

This is a correct statement. Happens when there is real economic growth creating investment opportunities and confidence among the public to take on debt because they know they will be able to make the money to pay it back. Or it happens when there is an insane asset bubble, when people borrow to try to be one of the winners. Both cases increase the money supply, and neither case applies to Japan in 2015.

It is certainly not the case that the 1080 trillion yen of public debt accumulated over the past 2 to 3 decades is too little for Japan's 500 trillion yen economy to be healthy

This is also a correct statement. However, that 1080 trillion yen public liability, or "debt", is on the asset side of the balance sheet the net money supply of Japan, and most of it sits on corporate balance sheets and in rich old folks' bank accounts. Dead money not circulating in the real economy, and not invested because, surprise, surprise, the economy is not good. There is plenty of money, it is just not being used for the purpose that money is issued for in the first place.

This is the greets example of quackery imaginable, it goes well beyond the borders of stupidity.

Then I guess you are not aware of the opinions of Milton Friedman on this issue, but then Milton was a raving, left-wing commie pinko!

LOL, ok I spell it out for you. "Fiscal consolidation" and "fiscal credibility" are quack economic theories, debunked many times and failures every time they have been attempted without a matching increase in private debt levels. And as Japan's economic problem is that private debt levels are not increasing, well it will fail here too.The simple policy change is for the Japanese government to stop sabotaging and vandalizing the Japanese economy due to their following of quack theories. "Reflating" an economy is incredibly simple and only requires the government to issue the correct amount of currency, aka running a deficit, to make up for the shortfall in money creation by the private banking sector. Money creation by private banks has a limit, which is the amount of debt that can be taken on and serviced by the private sector. Currency issued by the government has no such limit, and the only constraint is the point where demand-pull inflation sets in. But they don't want to run a deficit, they want to run a surplus because they think they have too much "debt", aka the sum of all the previous deficits. And because "Zimbabwe" and "Weimar" and "hyperinflation". And because they comically think they "borrow" money in the government bond market without ever asking where that money came from, and that one day "soon" if the "debt" keeps getting bigger nobody will lend them this mysteriously obtained money. So they think they need "fiscal consolidation" and that by reducing the deficit today they will reduce the deficits of yesterday. Which is like saying "if I don't go to Vegas this year I'll be able to get back the money I lost in Vegas last year".

Guy, can you please stop wasting space here with your canned "rant" that you memorized from some economics class you attended -- over and over again? You did not "spell anything out". Talking about Zimbabwe, Weimar and hyperinflation is simply foolish in the context of the current Japanese financial dilemna, which the quote is all about. I asked you to "offer suggestions" about what Japan should do, which you could not do. Entirely predictable.

This is also a correct statement. However, that 1080 trillion yen public liability, or "debt", is on the asset side of the balance sheet the net money supply of Japan, and most of it sits on corporate balance sheets and in rich old folks' bank accounts. Dead money not circulating in the real economy, and not invested because, surprise, surprise, the economy is not good. There is plenty of money, it is just not being used for the purpose that money is issued for in the first place.

GJD is absolutely correct.

Japan's balance sheet.

https://www.boj.or.jp/statistics/sj/sjexp.pdf

This is also a correct statement. However, that 1080 trillion yen public liability, or "debt", is on the asset side of the balance sheet the net money supply of Japan, and most of it sits on corporate balance sheets and in rich old folks' bank accounts. Dead money not circulating in the real economy, and not invested because, surprise, surprise, the economy is not good. There is plenty of money, it is just not being used for the purpose that money is issued for in the first place.

GJD is absolutely correct.

And a big "so what'? And printing more and more money, as Guy suggests, to "reinflate" the economy will not change this. As you point out, Nigelboy, economic policy does not operate in a vacuum. It must work within the confines of the demographic and psyschographic realities of that particular country. And scared "old folks" who cannot be 100% certain of their pensions, and companies looking at a shrinking/aging economy are not ever going to spend more domestically, unless real structural reforms take place. And, to make matters worse, the young folks, working in low-paying/part-time/contract positions cannot afford to spend more either.

And a big "so what'? And printing more and more money, as Guy suggests, to "reinflate" the economy will not change this. As you point out, Nigelboy, economic policy does not operate in a vacuum. It must work within the confines of the demographic and psyschographic realities of that particular country. And scared "old folks" who cannot be 100% certain of their pensions, and companies looking at a shrinking/aging economy are not ever going to spend more domestically, unless real structural reforms take place. And, to make matters worse, the young folks, working in low-paying/part-time/contract positions cannot afford to spend more either.

Am I to assume you have finally graduated from "debt is a debt" when it comes to Yen denominated JGB? Good. A suggestion would be to stop the idea of fiscal credibility for that alone is reducing demand.

This is a correct statement. Happens when there is real economic growth creating investment opportunities and confidence among the public to take on debt because they know they will be able to make the money to pay it back.

Right, although cause and effect are presented in reverse. Real economic growth is the result, not the cause, of investment opportunities and confidence among the public.

Dead money not circulating in the real economy, and not invested because, surprise, surprise, the economy is not good.

That's right. Therefore the government ought to seek to make for more attractive investment opportunities.

This is where Abe should have focused his efforts on for the past two years. Such policies won't have their full effect overnight, but they would positively effect sentiment. Unfortunately, he's squandered his time and political capital on war-mongering instead.