In response to calls for clarification by persons as ignorant as myself, Dr. Paul Krugman has explained his support for Abenomics.
Krugman's argument, and it seems a good one, is that Japan is in a liquidity trap, where the optimum real interest rate, where savings and investment intersect, is negative. Unfortunately, with deflation and nominal interest rates at the zero bound, there is no way for conventional monetary policy to generate the optimal real interest rate. (Link and, as background, Link)
The answer is government-policy driven inflation, with allows the economy to achieve the desired intersection of savings and investment.
Ignoramuses such as myself may still not accept the story, convinced that the Abe program as simply the taking advantage of of the patience of Japan's bond holders. If Japan's debt were held more broadly and domestic financial institutions were not stuffed to the gills on Japanese paper, leaving them hostages to their own capital bases, it is unlikely for any of these fiscal and monetary shenanigans would fly.
Is the Indian economy a pack of cards?
7 hours ago