Here's the hard lesson Japan learned (and wants America to avoid) about putting tax hikes in during a sour economy. Former Japanese prime minister Hiroshi Kato gets focused, in the New York Times....

QuoteTOKYO — In the annals of economic policy blunders, the one in which Hiroshi Kato played a hand in early 1997 ranks among the biggest in recent Japanese history.

Mr. Kato led a government advisory committee that concluded that the economy, which was then finally starting to rebound from the collapse of its 1980s land and stock bubbles, was healthy enough to raise the national consumption tax to 5 percent from 3 percent.

Aimed at reducing deficits, the tax increase instead quickly snuffed out the fragile recovery, pushing Japan to the brink of a financial meltdown and thrusting the nation deeper into the economic morass from which it has yet to emerge even today.

"Our sins are large," Mr. Kato, now president of Kaetsu University in Tokyo, said ruefully. "I hope the rest of the world can learn from this mistake."

And indeed, the lessons of Japan's long stagnation are well known to American policy makers like the treasury secretary, Timothy F. Geithner, and the chairman of the Federal Reserve, Ben S. Bernanke, who have studied Japan's policy missteps.

In 1999, Mr. Bernanke, then an academic, tartly criticized Japanese officials for mishandling their 1990s financial crisis, saying Japan's plight was "self induced." Partly because of that expertise, American policy makers have long been confident, even during the darkest days of the current financial crisis, that the United States could avoid the fate of Japan and its two lost decades.

But now, with growing signs that the United States might be a lot closer to a Japan-style slump than previously thought, that confidence is waning.

In the United States, a robust recovery remains stubbornly elusive, and Mr. Bernanke is said to be ready to take new, unconventional steps to increase the money supply in order to maintain the uncertain growth of the past year. He is also said by close associates to favor further fiscal measures to stimulate the economy. But in the current political climate, with Republicans poised to make strong gains in the midterm elections while preaching fiscal austerity, the prospect of more federal stimulus spending seems remote, and it is unclear if monetary policy alone will be enough to restore healthy growth.

Partly as a result, some economists now predict that it could take years or even a decade for the American economy to regain the levels of employment and vigor achieved before the 2008 crisis. The growing political pressure for cuts in federal spending — along with plunging consumer confidence and companies that seem more intent on cutting costs and hoarding cash than investing in new growth — have led economists to talk of the United States' entering a grim new era of austerity.

http://www.nytimes.com/2010/10/30/world/asia/30japan.html?src=me&ref=general

You must remember o b is not done ripping the heart out of the U.S. A.

Quote from: walkstall on October 30, 2010, 12:56:54 PM
You must remember o b is not done ripping the heart out of the U.S. A.

Obama and his cabal are not making the same mistakes as Japan, by accident!  Just as he studied Saul Alynsky and the Cloward-Piven Strategy for Change through Orchestrated Crisis, Obama wants our capitalist society to collapse so they can replace it with a system more to their liking. He has made his career as an aggitator/community organizer railing against what he perceives as the evil of the American economic/societal system.

Just remember that Bernanke spelled backwards is Eknanreb.

Quote from: Dan on October 30, 2010, 01:44:54 PM
Just remember that Bernanke spelled backwards is Eknanreb.

Which is why we need government regulation of comedy!

This is just another avoidable tragedy, which almost certainly resulted in a puppy dying, and could have been prevented if there were a Federal Department of Comedic Oversight.

Gentlemen, a couple of excerpts from The Daily Reckoning that may shed a light on the magnitude of the problem.

Quote"From 1947 through 1967, the year before the US began to weasel out of its commitment to dollar-gold convertibility," the story begins, "unemployment averaged only 4.7% and never rose above 7%. Real growth averaged 4% a year. Low unemployment and high growth coincided with low inflation. During the 21 years ending in 1967, consumer-price inflation averaged just 1.9% a year. Interest rates, too, were low and stable – the yield on triple-A corporate bonds averaged less than 4% and never rose above 6%.

"What's happened since 1971," the article wonders aloud, "when President Nixon formally broke the link between the dollar and gold? Higher average unemployment, slower growth, greater instability and a decline in the economy's resilience."

And that's not all.

"For the period 1971 through 2009, unemployment averaged 6.2%, a full 1.5 percentage points above the 1947-67 average, and real growth rates averaged less than 3%. We have since experienced the three worst recessions since the end of World War II, with the unemployment rate averaging 8.5% in 1975, 9.7% in 1982, and above 9.5% for the past 14 months. During these 39 years in which the Fed was free to manipulate the value of the dollar, the consumer-price index rose, on average, 4.4% a year. That means that a dollar today buys only about one-sixth of the consumer goods it purchased in 1971."

And to think the Journal is referring only to official statistics! The real story, when adjusting for the number torture going on in the government's chamber of statistics – what Orwell might call the Ministry for Truth – is far, far worse. But readers get the point. The evidence is in. The facts have been observed. The arguments made. The case against a fiat money system would seem as open and shut as they come.

http://dailyreckoning.com/all-eyes-on-the-fed-awaiting-bernankes-decision/

Quote from: Dan on October 30, 2010, 01:44:54 PM
Just remember that Bernanke spelled backwards is Eknanreb.

Oh, I do not for a minute forget about the unidicted coconspirator in what is sure to become known as the greatest October surpize of all time..The FED and those who have made money while supporting the socialist agenda! They believed they could control their front man.

They sold out their country!