Posts Tagged ‘1994’

Notes From Underground: A New Tapering That Is Needed

August 8, 2013

Japanese Prime Minister ABE may need to taper, but this would be a fiscal tapering as he may want to take a Greenspanian approach to raising the sales tax and drip feed the increase into the economy. It MAY behoove the Japanese government to make the SALES TAX increase data dependent (sound familiar) and increase it 1% with every incremental improvement in the GDP. The NIKKEI index is struggling as it comes to terms with the projected increase due to take hold next year. Investors are nervous about the negative impact from the tax increase as they remember the last time that the Japanese authorities increased taxes to bring down the DEBT/GDP RATIO. The economy went into a deflationary downturn, even as the sovereign debt level was decreased for a short period of time. But ultimately as growth slowed tax revenue decreased and a negative feedback loop developed.