To those who believe massive infrastructure spending will end a recession, take note. Japan has practiced such for two decades. Enough roads, bridges, foot paths and harbors were constructed (a number substandard) that every citizen might have something named after them. Resulting in a flat line economy, at best and a national debt over 233 percent of GDP.
There is probably no way out except a sharp inflation spiral.
"Japan is heading for a full-blown solvency crisis as the country runs out of local investors and may ultimately be forced to inflate away its debt in a desperate end-game, one of the world’s most influential economists has warned.
Olivier Blanchard, former chief economist at the International Monetary Fund, said zero interest rates have disguised the underlying danger posed by Japan’s public debt, likely to reach 250pc of GDP this year and spiralling upwards on an unsustainable trajectory.
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