... collapse, and quite a lot less goes into thinking through why a whole decade was lost as a result.

But that's General Theory Keynesian Macro 101, which only gets complicated if you try to put it into the terms of the neoclassical catechism.

In the 1980's, domestic value added of most Japanese export products was in the range of 90%, and imported value added focused on raw materials. In the 1990's, Japan Inc. decided to shift that to closer to 60% domestic, 40% imported, with a lot of that labor intensive production stages, first in Southeast Asia then in China.

Domestic business fixed investment plummeted while FDI (Foreign Direct Investment) rose. In the depressed economic conditions that result, the only reasonably monetary policy is a nil or negligible cash rate.

Obviously the combination of a rising Yen income and pressure from the Washington Consensus institutions of IMF and World Bank to "open up financial systems" made for a toxic combination of income in own currency and borrowing in another, with the protection against adverse cross exchange movements being largely neglected under the "self regulation" dogma for maximizing transnational corporate economic power. ... however, that failure of financial deregulation in the "Asian Financial Crisis (sic)" was laid at the feet of "crony capitalism", and not at the feet of the failed financial deregulation policy.


I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.