On the Road to Ruin
Reuters has published an extremely interesting article on Shinzo Abe, the father of so-called 'Abenomics'. His economic policy is in essence little more than a warmed-up hoary inflationism, the quack cure that governments have employed throughout history in attempts to 'fix' their economies. It always 'feels good' in the beginning, as asset prices rise and numerous economic activities are set into motion that would never be considered absent the inflationary policy. What happens in the end is best summarized in the conclusion to a speech Fritz Machlup once delivered on the consumption of capital in Austria during the interwar period:
“Austria was successful in pushing through policies which are popular all over the world. Austria has most impressive records in five lines: she increased public expenditures, she increased wages, she increased social benefits, she increased bank credits, she increased consumption. After all these achievements, she was on the verge of ruin.”
The main difference is perhaps that Japan is on the verge of ruin already, at least its government is. On the other hand, Japan also still has a lot of wealth that can be consumed and destroyed by Abe's policies. The de facto insolvency of the government is not an obstacle to additional wealth destruction, quite the contrary in fact.
Japan's current economic policy also has strong mercantilist overtones, as the devaluation of the currency is held to help its export sector. That this is to the detriment of everyone else in Japanese society as a rule remains unmentioned in the press, as it remains unmentioned that the export sector can at best hope to increase its profits temporarily, namely until prices and wages in Japan have adjusted to the devaluation. On the whole, Japan will end up poorer than it was prior to devaluation – and that is without considering the growing potential for a crisis that utterly destroys its currency and makes its outstanding stock of debt worthless.
Japan-Style National Socialism
However, as the Reuters article points out, 'Abenomics' is really not much more than an afterthought to Abe's true agenda, an add-on he thought of because a number of polls indicated that it would be politically more opportune to pursue the 'reflation' of the economy first.
His real goal however is to alter Japan's constitution in order to make it more similar to that of pre-war Japan. He and his clique of closest supporters call themselves 'true conservatives', but it would be more fitting to call them 'nationalists'. In fact, the overall political agenda is best described as national socialist.
Abe is following in the footsteps of his grandfather Nobusuke Kishi, a wartime cabinet minister and later prime minister. Below are a few pertinent excerpts from the Reuters article; note how Abe's comeback is shrouded in mysticism – he visited a 'shrine deep in the mountains' to be 'reborn'. In short, he is a true Führer personality, blessed from on high.
“Conservatives see the 1947 pacifist charter, never once altered, as embodying a liberal social order imposed by the U.S. Occupation after Japan's defeat in World War Two.
Abe's unlikely comeback was engineered by a corps of politicians who called themselves the "True Conservatives," many of whom share his commitment to loosening constitutional constraints on the military and restoring traditional values such as group harmony and pride in Japanese culture and history.
While the cultural-political agenda is what drove them, Abe and his backers also came to realize that voters cared most about the economy, so this time, they made it the top priority.
Months after resigning in September 2007, Abe visited Kumano Shrine deep in the mountains of western Japan, known since ancient times as a place of healing and resurrection. Few thought then he would be politically reborn as one of the country's most popular leaders. "It is said that if you make a pilgrimage there, you will be restored to life," said one government source close to Abe. "I said, ‘Let's go there and you will surely come back.'"
Soon after his resignation, Abe and other LDP conservatives set up the True Conservatives Association. Its goals were to protect tradition and culture, revise the "post-war regime", protect national interests and earn international respect.
Central to the group's world view is a belief that the constitution, drafted by U.S. Occupation officials in February 1946, not only restricted Japan's right to defend itself but also eroded traditional mores by emphasizing individualism and citizens' rights over social harmony and duty to the state.
"The constitution puts individual rights too far out in front," said Komori, who with Kasai later became core members of a more recent corporate-executive support group for Abe, the Cherry Blossom Association. "Mr. Abe is extremely sensitive to the merits of restoring that sort of Japanese spirit. I was in great agreement with that," he told Reuters.
While Abe and his allies remained committed to their conservative agenda, the failure of his first administration had taught them one scarring lesson: Voters care more about pensions and pocketbooks than changing the constitution and reviving patriotic education. The program of drastic monetary easing that became central to "Abenomics" took root in Abe's agenda after the triple disasters of March 11, 2011 – a mammoth earthquake, tsunami and nuclear crisis.
In June of that year, senior LDP member Kozo Yamamoto set up a group calling for a 20 trillion yen ($200 billion) reconstruction program to be funded by debt purchased by the Bank of Japan. Yamamoto invited Abe to head the group. It later morphed into an association urging the central bank to set a 4 percent inflation target – considered an extreme notion to which the BOJ was staunchly opposed. Abe accepted the role, and through his association with the group and its mentors such as Yale University professor Koichi Hamada, became a convert.
Unlike during his first term, cabinet ministers rarely speak out of turn. Abe is kept front and center in the media through interviews, news conferences and Facebook postings. Abe spends considerable effort wooing media executives but shuns the brief daily stand-up Q&A sessions with reporters that tripped him up the first time.
For all the change in style, those close to Abe say his ultimate goal remains unchanged. "He intends to be in office for four or five years and in the end, he wants to revise Article 9 of the constitution," said another government source. The pacifist clause, if taken literally, bans Japan from maintaining a military, but has been stretched to allow armed forces now bigger than Britain's.
This time Abe is pushing first for procedural changes to the constitution's Article 96 to lower the hurdle for revisions. Currently, Article 96 requires that amendments be approved by two-thirds of the members of each house of parliament, followed by a majority of voters in a public referendum. The LDP wants to change that to a simple majority in parliament, followed by the public vote.
Critics say such an amendment would leave the constitution vulnerable to easily shifting political winds.”
In summary, Abe and his allies are militarist nationalists pursuing a socialist economic program. Note the frequent assertions that the current constitution is too focused on individual rights, which are held to be 'too far out in front'. Instead, the Abe group wants the focus to shift to 'duty to the State', which is allegedly more in keeping with the 'Japanese spirit'. Now that they have resurrected the pre-war monetary policy of Korekiyo Takahashi, which helped finance the massive armament of Japan's military in the run-up to Word War II, they want to take the next logical step and enlarge the military – which requires the renunciation of the constitution's pacifist 9th paragraph. As an aside to the inflationary policy, it is noteworthy that Yale University professor Koichi Hamada is apparently responsible for cooking up this part of 'Abenomics'. Readers may recall in this context that the chief of Argentina's central bank, Mercedes Marco del Pont is also Yale-educated and not only has driven the Argentine peso to the verge of a hyper-inflationary collapse, but espouses what can only be called extremely bizarre notions about inflation and its causes. It seems Yale produces a great many monetary cranks.
What is perhaps most disturbing about all of this is that the US are said to be in favor of the changes Abe plans, especially the re-militarization of Japan:
“Japan's security ally, the United States, would likely welcome an easing of the constitution's constraints on Japan's military.”
This is quite possibly the result of fiscal deliberations – if Japan expands its military, it is probably reckoned that it will shoulder more of the cost of defending the Pacific region against imaginary enemies. The fact that Abe also plans to cut down individual rights is likely regarded as a secondary problem. Actually, it is probably not regarded as a problem at all, which is sad testament to the fact that the values that were espoused by the founders of the US have come to be regarded as political obstacles rather than a blessing worth standing up and fighting for.
The Japanese electorate has fallen for a snake oil seller who promised to revive the economy with methods that have failed spectacularly throughout history. Not only that, he successfully concealed his true intentions from voters, which essentially boil down to restricting individual rights in favor of Etatism and rearming and expanding Japan's military. What for would one want to expand one's military, if not war? Abe is bad news in every respect.
Shinzo Abe, nationalist and inflationist: blessed from on high since his pilgrimage to a famous shrine deep in the mountains.
(Photo credit: AFP)
Abe's role model: Nobusuke Kichi, a member of the 'Imperial Rule Assistance Association' and Japan's minster of commerce and industry from 1941 to 1945 and prime minister from 1957 to 1960.
(Photo: Wikimedia Commons)
Dear Readers! We are happy to report that we have reached our turn-of-the-year funding goal and want to extend a special thank you to all of you who have chipped in. We are very grateful for your support! As a general remark, according to usually well informed circles, exercising the donation button in between funding drives is definitely legal and highly appreciated as well.
Bitcoin address: 1DRkVzUmkGaz9xAP81us86zzxh5VMEhNke
3 Responses to “Shinzo Abe’s True Agenda”
Most read in the last 20 days:
- Fresh Mainstream Nonsense on Gold Demand
They Will Never Get It... We and many others have made a valiant effort over the years to explain what actually moves the gold market (as examples see e.g. our article “Misconceptions About Gold”, or Robert Blumen's excellent essay “Misunderstanding Gold Demand”). Sometimes it is a bit frustrating when we realize it has probably all been for naught. Gold wants to know what it has done now... Photo credit: Ajay Verma / Reuters This was brought home to...
- Switzerland About to Vote on “Free Lunch” for Everyone
Will the Swiss Guarantee CHF 75,000 for Every Family? In early June the Swiss will be called upon to make a historic decision. Switzerland is the first country worldwide to put the idea of an Unconditional Basic Income to a vote and the outcome of this referendum will set a strong precedent and establish a landmark in the evolution of this debate. The Swiss Basic Income Initiative in a demonstration in front of parliament. As we have previously reported (see “Swiss...
- Drowning the Fir
Presidential Duties Our editor recently stumbled upon an image in one of the more obscure corners of the intertubes which we felt we had to share with our readers. It provides us with a nice metaphor for the meaningfulness of government activity. First, here is a look at the picture – just quietly contemplate it for while and let it work its magic on you: Yes, these two gentlemen are actually watering a tree in the middle of a downpour... Photo via...
- Gold – The Commitments of Traders
Commercial and Non-Commercial Market Participants The commitments of traders in gold futures are beginning to look a bit concerning these days – we will explain further below why this is so. Some readers may well be wondering why an explanation is even needed. Isn't it obvious? Superficially, it sure looks that way. As the following chart of the net position of commercial hedgers illustrates, their position is currently at quite an extended...
- Heretical Thoughts and Doing the Unthinkable
Heresy! NORMANDY, France – The Dow rose 222 points on Tuesday – or just over 1%. But we agree with hedge-fund manager Stanley Druckenmiller: This is not a good time to be a U.S. stock market bull. Legendary former hedge fund manager Stanley Druckenmiller at the Ira Sohn conference – not an optimist at present, to put it mildly. Photo credit: David A. Grogan / CNBC Speaking at an investment conference in New York last week, George Soros’ former partner...
- Staying Home on Election Day
Pretenses and Conceits The markets are eerily quiet… like an angry man with something on his mind and a shotgun in his hand. We will leave them to brood… and return to the spectacle of the U.S. presidential primaries. On display are all the pretenses, conceits, and absurdities of modern government. And now, the race narrows to the two most widely distrusted and loathed candidates. US election circus: Deep State Rep vs. Rage Channeller The first, a loose...
- How the Deep State’s Cronies Steal From You
Expanding in Ireland DUNMORE EAST, Ireland – We came down the coast from Dublin to check on our new office building. For this visit, we wanted to stay somewhere different than we normally do. So we chose a small hotel on the coast, called the Strand Inn. Irish landscape with alien landing pads. Even the guys from Rigel II have heard about Ireland's corporate tax rate. Photo credit: Tourism Ireland It is an excellent place for seafood and soda bread on a...
- The Japanese Popsicle Affair
Policy-Induced Contrition in Japan As we keep saying, there really is no point in trying to make people richer by making them poorer – which is what Shinzo Abe and Haruhiko Kuroda have been trying to do for the past several years. Not surprisingly, they have so to speak only succeeded in achieving the second part of the equation: they have certainly managed to impoverish their fellow Japanese citizens. Shinzo Abe and Haruhiko Kuroda, professional yen assassins Photo credit:...
- How Elon Musk Helps Fools to Part Ways with Their Money
Tesla Goes Fishing Tesla Motors is up to something remarkable. But what it is, exactly, is unclear. According to the Tesla Motors website, the company’s mission is: to accelerate the world’s transition to sustainable transport. Tesla Model 3: the company’s first “mass market” entry so to speak, which is supposed to help the world to reach the nirvana of “sustainable” transport. On the side, it is helping a number of Wall Street firms to increase their...
- Kuroda-San in the Mouth of Madness
Deluded Central Planners Zerohedge recently reported on an interview given by Lithuanian ECB council member Vitas Vasiliauskas, which demonstrates how utterly deluded the central planners in the so-called “capitalist” economies of the West have become. His statements are nothing short of bizarre (“we are magic guys!”) – although he is of course correct when he states that a central bank can never “run out of ammunition”. BoJ governor Haruhiko Kuroda Photo credit:...
- Revolution at the Ranch
Alarming News BALTIMORE, Maryland – An alarming email came on Tuesday from our ranch in Argentina: “Bad things going on… We thought we had the originarios problem settled. Not at all. They just invaded the ranch.” Originarios on the march... Photo credit: cta.org.ar To bring new readers fully into the picture, Northwest Argentina, where we have our ranch, has a revolution going on. Some of the indigenous people – that is, people with Native...
- The Long-Buried Secret of Napoleon Bonaparte
Family Secrets DUBLIN – The smart money is getting out while the gettin’ is still good. That’s the message we get from reading the recent headlines. Here’s the Financial Times: Redemptions from stock funds have hit nearly $90 billion this year as portfolio managers and hedge funds struggle to navigate a market that no longer seems driven by radical central bank policy. S&P 500 Index: causing navigational problems - click to...