We're Turning Japanese I Really Think So

Interesting e-mail from St. Louis Fed President Jim Bullard to blogger Tim Duy. (via Mark Thoma)

Which is funny because Duy seems despondent lately.* Bullard seems to say that he sees more positive data than Duy does and suggests that Fed policy will happen incrementally not in big "shock and awe" doses. I do remember reading that Bullard was warning of deflation. So maybe the Fed will keep acting incrementally until the data turns positive. Also according to the committee minutes, they believe the economy will turn around very, very slowly, so maybe that's what we're experiencing and the negative data points are just "noise." But they keep having to revise downwards, just at the Obama administration low-balled the stimulus.
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 * He links Krugman about America turning Japanese.

The whole point of that paper was that when you’re up against the zero lower bound, it doesn’t matter how much money you print -- not unless you credibly promise higher inflation.

And of course, now we’re all Japanese.

And at Jackson Hole, Bernanke said there is no desire on the committee to promise higher inflation. So either the private sector will pick up on its own or we're up a creek without a paddle. Japanese punk:

GISM was a Japanese mid-paced hardcore punk band (with heavy metal influence) formed in Tokyo, Japan in 1980. Even though the guitar style resembled heavy metal style riffs and solos, GISM were one of the first Japanese hardcore bands, while at the same time drawing influence from the early industrial/avant-garde music scene; something extremely uncommon in punk bands at that time.

The acronym GISM had many different variations; they include: God In the Schizoid Mind, Guerrilla Incendiary Sabotage Mutineer, General Imperialism Social Murder, Genocide Infanticide Suicide Menticide & Gnostic Idiosyncrasy Sonic Militant.

...

In Lady Gaga's video for the song "Telephone," released in March of 2010, the performer wears a spiked leather jacket featuring a GISM back patch. Whether Lady Gaga is actually a fan of the band is unclear. However, the director of the music video, Jonas Akerlund, is former member of the Swedish metal band Bathory and could very well be the reason for the jacket's appearance in the video. The jacket also features patches for the UK crust bands Icons of Filth and Doom.

Lady Gaga knows we're turning Japanese. The difference with the Japanese Lost Decade is that our banking system seems to be in better shape with lots of bad banks going under or being absorbed by other banks. The banks are still profitable but are not lending because of a lack of demand. This seems different to me than the Japanese Lost Decade's legions of "zombie banks."