Could the US economy go the way of Japan? (BBC/S. Flanders)

[eppur_se_muova]

There have been times, in the past few years, when US policy makers weren't sure how the financial crisis was going to play out.

But on one point they were absolutely certain: the US would not - could not - go the way of Japan.

The economy was too flexible, the policy response to the crisis too dramatic, and the electorate too downright demanding for Japan-style stagnation to happen in the US.

Ask Treasury Secretary Tim Geithner today, he would tell you the same thing. So, for that matter, would Ben Bernanke.

At the recent conference of central bank governors and economists in Jackson Hole, the Federal Reserve Chairman said he did "not expect the long-term growth potential of the US economy to be materially affected by the crisis".
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more: http://www.bbc.co.uk/news/business-14740232

[elleng]

1. Yes, because none of these reflects US economy now:

'The economy was too flexible, the policy response to the crisis too dramatic, and the electorate too downright demanding for Japan-style stagnation to happen in the US.'

Not hard to find the reason: repugs quest for power above all will damage US economy for a LONG TIME, maybe permanently, which will have similar effect on world economy.

[Demeter]

2. No

Japan is funding its deficits internally. The US is funding its deficits externally.

Thus Japan is insulated from speculators making a run on the Yen. The US is relying on its army to keep speculators abroad in line, perhaps, or maybe just the fact that the US has repeatedly bailed them out since 2008, and probably before.