You can read Shirakawa Masaaki’s memoir Tumultuous Times and find that the real problem was the inaction on the fiscal side(echoed by today’s China and Korea). Or Richard Koo’s books on balance sheet recession. If no one is willing to borrow then money stock cannot grow despite ZIRP. If QE is done but the proceeds are used to build highways to nowhere velocity will remain low. As a matter of fact, Japan’s monetary policy is primarily set by the Federal Reserve through carry trade and REER. While an undervalued currency stokes growth(and trade wars) for some time(2006 was a great example in the book when Japanese businesses reshored industries implicitly selling a call on US bonds), the lack of programs like EITC cannot be masked by monetary policy.
Or to put it more simply, the central bank does not print money, only bank reserves/treasury cash holdings. If it is not being spent into the economy, money does not exist.
You can read Shirakawa Masaaki’s memoir Tumultuous Times and find that the real problem was the inaction on the fiscal side(echoed by today’s China and Korea). Or Richard Koo’s books on balance sheet recession. If no one is willing to borrow then money stock cannot grow despite ZIRP. If QE is done but the proceeds are used to build highways to nowhere velocity will remain low. As a matter of fact, Japan’s monetary policy is primarily set by the Federal Reserve through carry trade and REER. While an undervalued currency stokes growth(and trade wars) for some time(2006 was a great example in the book when Japanese businesses reshored industries implicitly selling a call on US bonds), the lack of programs like EITC cannot be masked by monetary policy.
Or to put it more simply, the central bank does not print money, only bank reserves/treasury cash holdings. If it is not being spent into the economy, money does not exist.