Deflation returns to Japan

The curse of defeatism

Nov 26th 2009
From The Economist print edit

Anybody who thinks deflation is no longer a threat should look at Japan and its flailing authorities

JUDGING by the shrill comments from Wall Street, Japan’s biggest problem is its huge public-sector debt, which has grown to nearly twice the size of the country’s GDP. But it isn’t (see article). Far more pressing is deflation.
On November 20th the new government of Yukio Hatoyama acknowledged what has been obvious for months: that prices are falling again after a three-year hiatus. This is worrying not just for Japan; countries such as America and Britain have more similarities with Japan than is commonly acknowledged (see article). Sadly neither the Hatoyama administration nor the central bank has shown any intention of tackling the latest incarnation of the deflationary curse. Read it all right here.....