Krugman Goes To Japan, Scolds Abe For Worrying About Quadrillion Yen Debt Pile, Leaves

Tyler Durden's picture

Much like BoJ governor Haruhiko Kuroda, Paul Krugman thinks that the key for Japan when it comes to overcoming decades of deflation is a positive outlook.

“Japan needs to reach a point where everyone believes that it has pulled out of deflation. And then if that can be believed, then it may be able to stay out of trouble thereafter,” he told an audience in Tokyo last September.

That rather ridiculous pronouncement is reminiscent of something Kuroda said last summer: "I trust that many of you are familiar with the story of Peter Pan, in which it says, 'the moment you doubt whether you can fly, you cease forever to be able to do it.' Yes, what we need is a positive attitude and conviction."

In other words, Krugman and Kuroda believe that Japan can wish its way out of deflation. Krugman’s comments in Tokyo came around 10 months after he visited Japan in 2014. On that trip, he’s said to have helped convince PM Shinzo Abe to delay a planned sales tax hike. “That nailed Abe’s decision -- Krugman was Krugman, he was so powerful,” Japanese economist Etsuro Honda said, recounting a meeting between the economist and the premier.

Well, 16 months has passed since that fateful visit and virtually nothing has changed in Japan. In fact, the Japanese have since taken a further plunge down the Keynesian rabbit hole by taking interest rates negative and not only is inflation still languishing at essentially zero, stocks are some 20% off their highs and this month the yen actually hit its highest levels since Kuroda announced the second round of QE two Octobers ago.

With the entire enterprise now falling apart, and with JGBs yo-yoing around like penny stocks as traders try to game BoJ POMO, Krugman was back in Tokyo this week to attend a panel discussion on the global economy with Abe and senior Japanese policy makers. There, the good professor called for Abe to scrap the sales tax hike and introduce more fiscal stimulus. NIRP, he said, is probably “a good idea.”

Excerpts from Krugman’s speech can be found below.

We are now in the world of pervasive economic weakness. In many ways, we are all Japan now. This complicates policy for everyone including Japan.


We are seeing the difficulty in achieving goals through even very bold and unconventional monetary policy. Kuroda-san here, we will clearly need to speak about that. Monetary policy needs help from fiscal and possibly other policies but certainly on the fiscal side, and certainly does not need to be struggling against fiscal policy moving in the opposite direction. That is not just a Japanese issue but very much a global issue at this point.


Despite everything, despite everything that Mr. Kuroda is doing, the rise in the yen, which is a very unfortunate development from Japan’s point of view, is driven by the weakness of other major economies.


Monetary policy has been, in most places, the only game in town. It’s their line because fiscal policy has been politically paralyzed. Here, less so, but still in fact, of the three arrows by far the largest, so far has been monetary. Mr. Kuroda has done most of the lifting here. We are seeing the limits of monetary policy. We are seeing that it becomes difficult when you try the unconventional methods, we can argue this but it seems to be having diminishing effect. Negative interest rates, it is remarkable that that turns out to be possible. I do think it was the right move to make but it is very hard to push it further. The effects are proving to be limited. If we look elsewhere, if we look in Europe, despite another very able essential banker, the ECB seems to be losing traction. Here, as you know better than I, inflation expectation seems to be fading. Wage growth is not what it should be. We are seeing that the policy that has been the principle lever for trying to deal with this global weakness is not as effective as we had hoped and not as effective perhaps as it seems to be recently.


Everything we have seen for the past seven years suggests that fiscal policy remains effective, especially effective in these circumstances. It has been very difficult to apply it, a few years of bad debt, political conflict, the Europe is divided among counties, the United States is divided between parties, but fiscal policy is effective and the global environment right now is one where economies really, really need fiscal support. The idea that one should be prioritizing long-run budget issue over fiscal support now seems to me to be extremely misguided. Obviously I am talking about the consumption tax here. Two points are following on all of that. You notice that I did not say anything about structural reform. That is not because I am against it but because structural reform seems largely beside the point on this crucial issue of boosting demand. Some kind of structural reform might spur private investment, which is good but that is rarely what is emphasized. Some other kinds of reform, the Abenomics, by expanding the future labor force helps to offset the demographic headwinds that the economies face. So all of that is good but I do worry that sometimes the talk of structural reform becomes an excuse not to deal with the primary immediate issue of sufficient demand, of fighting deflation or low-flation, inadequate inflation, which has got to rely on monetary policy. But as I said, that has limits and on fiscal policy which needs to be more focused on that immediate need than it has been.

Ok, so there’s a whole lot of words to make one overarching point: the exceptional measures central bankers have undertaken in pursuit of boosting inflation and recovering demand lost to the global financial crisis aren’t working.

As usual, Krugman doesn’t understand why anyone is worried about long-term sustainability when there’s so much room to be completely irresponsible in the myopic pursuit of short-lived surges in aggregate demand and inflation. Fiscal stimulus - i.e. helicopter money, i.e. pay people to dig holes and then pay other people to fill them up again - is what's needed, Krugman figures. 

When it came time for the Q&A, Abe gingerly told Krugman that Japan is getting slightly concerned about its debt burden, which, when measured in yen, has so many zeros that it barely fits on a 32” monitor. “About two years ago, I had a pleasure meeting with you, Professor Krugman. At that time, Japan was able to be going out of the deflation then we have set for ourselves the 2% inflation goal,” Abe began. “We were talking during that time that a rocket has to go out of the atmospheric region, which means that an escape velocity has to be earned in order to lift the Japanese economy out of deflation and we were looking for a good speed to do that.,” he continued. And then we got this: “We worry about the accumulated debt. That is a source of another concern. What to do about it?

Yes, “what to do about it,” Professor Krugman? Predictably, Krugman’s answer was “spend more”:

The case for spending now is quite strong despite the debt. It is true for multiple reasons. Fiscal stimulus is very important as an aid to monetary policy in breaking out of deflation. the concerns about the debt, I don’t want to wave away entirely but one thing we have learned from Japan but also from other advanced countries is that stable advanced nations that borrow in their own currencies have a very long road for them to have a fiscal crisis. People have been betting against JGBs since about 2000. All of them have suffered financial disaster. The robustness of the market is very strong. It is even hard to tell a story. If someone says Japan would be like Greece, tell me how that happens. You have your own currency. The worst that could happen would be that the yen would depreciate which would be a good thing from your point of view. I do not think that is a thing to be worried about.

Whatever you say Professor. But sooner or later this madness has to end. Japan has been kicking the can for decades and demographic shifts would seem to suggest that the tax base will shrink while dependency on the state will rise. Meanwhile, the economy is stuck in what certainly appears to be a perpetual, never-ending recession while the country's gargantuan debt pile presages a spectacular implosion sometime in the not so distant future.

When Japan descends into failed state status two years from now, we wonder if Krugman will still be the revered figure he is today among Japanese policy makers. We also wonder whether, once everyone "ceases to believe they can fly," it will be Kuroda or Abe who gets the blame for turning one of the world's most "advanced" economies into a banana republic.

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Peter Pan's picture

The only way escape velocity will be achieved is if Krugman and other central bankers are actually achieve escape velocity on their way to hell.

These fools think that the scaffolding and props they are erecting around a debt ridden structure can actually constitute the foundation of a new structure.

A system that allows men like Krugman so much time, space and influence is condemned.

prefan4200's picture

Are Krugman and Gartman twins separated at birth?

WordSmith2013's picture

Former-PM Admits “Future Existence Of Japan Was At Stake”


Japan is facing existential threats -- Tokyo is quite close to Fukushima


Low IQ fan of VVP's picture

Not as close as Indian Point to New York

indygo55's picture

Who doesn't think that Krugman isn't a tool of the Rothschilds? Just listen to the guy. Read his quotes. His every breath is commited. He is totally owned and manipiulated by script. He is an insane Keynsian commited to the narrative of the Rothschilds agenda.


TeamDepends's picture

Krugman: Stroke my pussy!
Abe: And you break windows?
Both: (smiles)

whoflungdung's picture

Krugman is just like the Australian wombat:  "Eats, Roots, Shoots and Leaves"

HardlyZero's picture



The two primary 4-letter words of the new fiat religion - Mammon.

_ConanTheLibertarian_'s picture

He should go to Fukushima and die a painfull death.

silverer's picture

Krugman is definitely my hero. But only if he knows that everything he says is really bullshit. If he really knows that, then he is my hero, because he outbullshitted everyone who listened to him. Good for you Krugman. Maybe you can bring this thing to a more rapid end, so we can get back on track. However, if you really believe your own line of crap, you should be pushed off a cliff. But maybe not, because we still may benefit from it somehow. Entertainment value of 2016 events is very, very high. More popcorn, please.

buzzsaw99's picture

krug forgot to bring the pixie dust

Arnold's picture

Pixie Dust is handled by H1B s now, and since they do not have any of our cultural knowledge, they are making successful attempts to snort it.

all-priced-in's picture

Slowly at first - then all at once.




css1971's picture

Paraphrasing Krugman... "Got a debt problem? You need MOAR DEBT! MOOAAAAARRRRRR!"

gregga777's picture

"Professor" Krugman is a perfect bad example for the moral, ethical and intellectual bankruptcy—nay, make that pure evil—of the Economissed profession. Money is a proxy for human labor, something that "Professor" Krugman is obviously not familiar with. He blithely talks about stoking inflation, a phenomenon that is always due to currency debasement, thereby destroying the People's lifetime of labor. Currency debasement has never benefited the People. It does benefit the rich and the heavily indebted government's that are responsible for the currency. That is, it benefits the government's in the short-term. In the long run it inters those governments in history's "Boot Hill". Boot Hill is where "Prifessor" Krugman and his ideas belong. The quicker the better for all concerned.

Arnold's picture

You are right, very bot - like.

Even the spelling and syntax problems.



VWAndy's picture

 In Bartertown we may get to watch him eat his cat?

Arnold's picture

Right arm, the left hand/ arm is used for sanitary purposes.


Alright I'm gone, but I could not resist.

Joebloinvestor's picture

Krugman is right.

The only time to worry about paying a debt is when it is due or your credit is cut off.

nathan1234's picture

Krugman's task has been to ensure that the people are made slaves to their governments through their debts.

Thats why to give legitmacy and media hype to his comments, he was given the Nobel Prize which is controlled by the Banksters and their Illimuned ilk.



Wait What's picture

giving Krugman a Nobel was the worst thing those idiots in Sweden could have done. it legitimized his economic hackery and now the moron thinks he can contribute meaningfully to ANY conversation. "global warming? i've got a Nobel, so I must be an expert. political gridlock? i've got a Nobel, so I must be an expert. a rusty venture? i've got a Nobel, so I ,must be an expert." fuck Krugman & his enablers, they deserve nothing more than a slow chinese water torture for their efforts.

sumo's picture

It's not a real Nobel, it's a fake that's awarded by the Swedish Central Bank (Riksbank). Quelle surprise.

Shit-for-brains economists call it a Nobel because they are dishonest.

Economics is a cult for believers who like to play with numbers. Dishonesty is a pre-requisite for joining.

ImmodestExtant's picture

Even if that weren't the case, the Nobel prizes are shit anyways. Nowadays it's completely absurd to give them to one, or three, people when science embodies the idea of "standing atop the shoulders of giants", and most discoveries are made by incremental research by a large number of people rather than individuals sitting in an ivory tower (except in economics, where nothing is discovered and everything is make-believe). It's basically all a fart-for-brains publicity stunt. The money would be much better spent actually funding research.

Berspankme's picture

I heard a radio show one day with some assclown named Bob Brinker(?). I was shocked to hear this clown telling people that debt accumulation doesn't matter at all as long as you can service the debt. This is a guy who manages other people's money I assume. He had high praise for Cuntnanke and Ol' yeller. I imagine he has dreamed of orally gratifying Greenspan. 


Where do these guys come from? Who is teaching this MMT bullshit? Seriously dangerous people

posishinuvignurinse's picture

I'd be curious to know how much debt senior Krugman is floating.

Yen Cross's picture

  Never go full KrugTARD...

  I'm sure Abe and Krugman had a nice time riding Unicorns together, through the cherry blossom groves.



ISEEIT's picture

Krugman should be hung upside down and enema-ized with molten lead.


Praeda2's picture

That's what you get for listening to a kike. On their knees again like it was the end of WWII. Other story here today; "

Japan's Finance Minister Accidentally Reveals How It All Ends: "War"
MEFOBILLS's picture

Here is a link to youtube documentary, "princes of yen"  It is about 1.5 hours long, but worth if if you are interested in how Japan got hosted with debt means.  Richard Werner is a rare honest economist who investigated the Japanese property bubble.  Note the same bubble mechanics were later used against the U.S.  Werner used some of his own money to make this movie.

Japan has been in a debt depression since their "property bubble"  was purposefully run against the Japanese people.  Behind this bubble we find the smiling face of Stanley Fischer, and quite probably some of the Western Banking establishment.  The Plaza Accords are related to this gambit, but Werner ignores this.  


Japanese property bubble created non performing PRIVATE DEBTS.  This is a form of slavery that is well understood by bankster insiders.  

A goverment can do things:  These private debts can be unwound by erasing them legally: or by injecting debt free Treasury money aimed at the  debt instruments; or by swapping said private debts for public debts.

You just learned more about economics than Krugman knows.

Private debts converted to public debts can just become ink on a ledger and never redeemed. (I don't agree with debt money systems, but liars like Krugman need to stopped as they only cause human misery - but it is good for their in-group!)

Note in the movie, that post WW2 Japan's debts were CONVERTED to new debt by Japan's victors, and then the country was off to the races.  It is also instructive that Japan used "german" economics to run their economy, which gives one insight into why Germany was attacked by Western Finance Capital.  Pay special attention to credit window guidance, which is credit aimed at productive means.  (Credit aimed at consumption should never be allowed.)

Any criticism of Werner inventing QE should be tempered by realization.  Werner's style of QE was a way of using public debts to swap out for private debts.  For example, building public parks, and then giving them away is not at all the same as the QE run by the FED.  Werner building of parks is a positive act that leaves wealth, infrastructure, and reduced private debts in its wake; while the FED gambit only pays off its cronies in the finance Casino.  Building of the parks puts public money into money supply, and that money later goes on to be erased as it enters into private debt ledgers.



Kagemusho's picture

I'd sooner ask celibate priests on how to have a happy sex life than consult Krugman on economic issues.

Keynsians like Krugman are entirely reflexive when it comes to recessions/depressions. That is, "Print, baby print!" fiat currency and to hell with the aftershocks. Krugman's name may well be remembered by future generations with as much fondness as the bankster Mellon was for making the Great Depression worse than it had to be.

Aquarius's picture

Dr. Mahathir of Malaysia rejected Krugman's proposals back in ~1998 and quickly did the opposite. The Malaysian Economy fully recovered almost immediately.

Lesson to be Learned: Ignore Krugman - he is lost.

Ho hum

Seeing Red's picture

Krugman makes the hidden assumption that gov't spending is just as useful as private-sector spending.  Let's see ... academic, PhD, economics [the "dismal science"], likes cats a bit too much.  Yup, it all fits -- QED.

SparticusUK's picture

Only Nixon could go to China

the_narrator's picture

I think this is ironic because if the Japanese government can convert all their debt to negative interest rates they will eventually be debt free if they can issue enough of it.  When you put negative numbers in, the whole game operates in reverse.  It's quite hillarious.

The Japan deficit is 328 billion dollars? if they just had negative 1% bonds, they could issue 328 trillion dollars in negative 1% interest rate bonds every year and fund the deficit forever without care.

honestann's picture

THE CORRECT ANSWER:  Realize you cannot fly BEFORE you jump off the cliff... MORONS.  Perhaps that statement sounds off-the-cuff, but I mean something important.

What I mean to point out is the following.

The way to have a good economy is to NOT CAUSE A BROKEN ECONOMY.

The way to have a good economy is NOT to attempt to fix a broken economy.

To be more specific, once central planners start manipulating an economy, whether that economy is "good", "middling" or "bad", the economy will become ALL SCREWED UP.  What happens is, a huge number of individuals, businesses and governments start inefficient and even destructive behavior because the central planner manipulation makes that bad, stupid, inefficient behavior look good for the short term (and maybe even actually be good in the short term).  But in the long term the result is always DISASTER.

Why disaster?  Because the longer the manipulation goes on, the more inefficient actions are taken, and the more those actions are habituated as "normal operating procedure".  Eventually people don't even remember how they used to operate... as in EFFICIENTLY... and the ability to be efficient and non-destructive is virtually lost to them.

The longer the bad stimulus (manipulation) exists, the more utterly, completely and thoroughly the inefficiencies become more extensive, more destructive, more habituated and ingrained, and more permanent.  Eventually the entire behavior system becomes directed towards providing short term relief to the overall (long-term) disaster the behavior has caused, at which point the entire entity (individual, business, government, culture, species) is a failure, and headed down the tubes.


Which is the reason for my first line.  The solution is to always be efficient, always be long-term oriented, and always let feedback mechanisms function as they should.  Those feedback mechanisms are what limits the consequences of bad (inefficient/destructive) behavior to those who enact the bad behavior, and thus eliminates the bad behavior.  The modern alternative is to shift the consequences of bad behavior onto those who behave wisely, and thus assure bad/inefficient/destructive results grow and infect everyone and everything that remains part of "the system".

This isn't rocket science, this is simple.

If you can't fly, recognize that fact before you jump... and don't jump off the cliff.

The solution isn't to find ways to break your fall by squishing others who weren't naive and stupid enough to imagine they could fly.

But predators-that-be are full-time consequences shifters who shift the positive consequences of actions taken by others onto themselves (via tax, fraud, theft, etc), and who shift the negative consequences of actions taken by themselves onto others (death, misery, poverty, destruction).

Or, in the current context, the solution is to:

NOT abandon gold standard.
NOT create and adopt a central bank.
NOT adopt debt as standard currency.
NOT let "authorities" decide for others.
NOT abandon and destroy the free market.
NOT adopt fiat, fake, fraud, fiction, fantasy, fractional-reserve currency.
NOT let anyone create debt out of thin air and profit by lending to others.
NOT creating special classes of people with special privileges (lawyers, doctors, etc).

In other words, the solution is to NOT pretend some humans have some absurd fictional "authority" to: take actions for others, to force others to obey, behave and interact in certain specific ways, to prohibit others from living their lives as they see fit.

In other words, the only solution is liberty and individualism.  Everything else is predatory behavior, grossly inefficient, and a sure way to make life suck for billions.

nathan1234's picture

Krugman's rocket fuel is his own stinkin fart.

His stink bomb will explode without even lifting his rocket a few feet into the atmosphere.

Ghostdog's picture

Wont work... Krugman needs a partner like in the Hope & Crosby road movies to be taken seriously..........................

HardlyZero's picture

They are acting within their own Inception (i.e. pixie dust)

Can't wait for the kick when everyone wakes up.


Inception "Car Falling Off The Bridge" Clip


SharkBit's picture

The 2016 Bernie Madoff Shill of the year award goes to Paul Krugman.  Absolute dickhead.

assistedliving's picture

the Mrs and I had dinner w/ the good Dr long time back.  was married then.  the four of us.  should hv stay married

Lady Jessica's picture

Why should you have stayed married?

Lady Jessica's picture

Japan does indeed have demand issues, much related to unique demographics and a private debt sabotage (Mr Mefo described it succinctly) which erroneous monetary pollicy has converted into economic zombification.  But, remarkably, there is:

1.  Full employment.

2.  Price stability.

What are they really trying to achieve?

InsanityIsWinning's picture

It's mathematically impossible to pay the debt, so it's default or debt forgiveness.

iamtheeggman whooooooooooooo's picture

maybe next time Paulie visits, they will dress him up as Peter Pan and swing him from the rafters.