What have we learned from Japan?
As usual, John Hussman has a great post this week on Pushing the Unstable Limits of Monetary Policy. The entire article is well worth the read, but I really like his quote from a Bank of Japan study on their enormous multi-decade QE 'experiment' (failure):
As a study by the Bank of Japan of its own huge experiment with QE concluded, "While we can enumerate several routes of the monetary base channel which suggest that expansion of the monetary base can have some expansionary effect on the economy, our analyses suggest that the quantitative magnitude of any such effect is highly uncertain and very small." [The Effect of the Increase in the Monetary Base on Japan's Economy at Zero Interest Rates - An Emprical Analysis, Bank of Japan, 2002].
[Emphasis Mine]
So what have we learned in the U.S. from Japan's 2 lost decades (with potentially more still coming)? Apparently Nothing. Maybe it'll take us 2+ decades of failed policies to finally realise the same thing (one decade is already behind us). Hopefully we can wake up before then. As I said before, the entire article is really worth a read.