Like a parrot, Prime Minister Junichiro Koizumi has been repeating the same phrase: "There will be no economic growth without structural reform." At last he is being forced to make a policy turnaround to implement a package of antideflation measures to stimulate domestic demand. The reversal has been prompted by global deflationary trends, uncertainties about war, the Nikkei average's plunge below the 8,000 yen level on the Tokyo Stock Exchange and a further slowdown in consumer and business spending.
Koizumi's recent appointments of officials at the Bank of Japan were intended to facilitate policy coordination between the government and the BOJ to fight deflation. Appointed as deputy BOJ governors were a former treasury vice minister and a Cabinet Office official, both advocates of easy money. The government hopes to have the new BOJ leadership implement drastic policies for monetary expansion.
Finance Minister Masajuro Shiokawa, asked recently by an opposition lawmaker at a Diet session whether he supported the theories of Irving Fisher or of Joseph Shumpeter, was unable to answer offhand. In any case, calls for an easy-money policy based on the theories of Fisher or John Maynard Keynes are taking political and bureaucratic circles by storm.