Japan Finance Minister Looking to the Past

Japanese Finance Minister Taro Aso said the government is imitating his Depression-era predecessor, Korekiyo Takahashi, who told the Bank of Japan to underwrite government debt to fund deficit spending.

“There is no one in the government, the bureaucracy or the BOJ who has experience in anti-deflation policy,” Aso said yesterday in an interview on NHK television. “We can only learn from history,” he said, adding that the new administration is looking to Takahashi’s example.

Emulating Takahashi’s policies of monetary expansion and government-financed spending has a chance of helping Japan beat deflation, said Masaaki Kanno, chief economist at JPMorgan Securities Japan Co., who used to work at the central bank. Yet lobbying by interest groups empowered by increased spending, such as the construction industry, could make it difficult for leaders to tighten policy once growth is achieved, he said.


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