Japan's economic debate has moved from the bizarre to the ridiculous. Just two years ago we were told that fiscal restraint was the key to economic recovery. Annual bond issues to finance government spending would not be allowed to exceed 30 trillion yen ($250 billion). In other words, cutting demand was supposed to cure a demand-starved economy. Diet pills for anorexics made about the same kind of sense.

Now, with tax revenues plummeting as the economy weakens further, bond issues will have to go far beyond the promised 30 trillion yen limit. So what does Prime Minister Junichiro Koizumi do when confronted with this complete negation of his economic strategy? He turns around and says it is "not important."

The farce does not end there. Koizumi and his high-powered academic advisers also told us that structural reforms were the key to economic recovery, as if privatizing a few government corporations and bankrupting a few banks could spark recovery. Now, as the economy moves into a dangerous deflationary spiral, the prime minister turns around and tries to portray himself as a kind of economic hero by promising to fight the deflation he has caused.