Japan is boosting its economy with a simple idea you won’t believe we’re not trying

The Bank of Japan shocked financial markets overnight by announcing that it is going to start printing Yen at a more rapid pace, 80 trillion a year instead of the 60-70 trillion that it’s been issuing since last April. That sent Japan’s stock market index soaring upwards, and pushed the value of the Yen down. Almost nobody saw it coming and it’s incredibly controversial in Japan. Central bank chief Haruhiko Kuroda was only able to muster a thin 5-4 margin in favor of the action.

After all, Kuroda clearly stated when he took office that he wanted to everything possible to boost the economy until the inflation rate got above 2 percent. Nobody thought 2 percent was a crazy inflation target. The USA, UK, Canada, and the Eurozone all target 2 percent. And nobody doubts that Japanese inflation has been running below 2 percent. Printing money at a faster pace seems like a really obvious thing to do when inflation is running below your target.

So Kuroda is doing it. And the best thing is that he’s not promising to stop any time soon. He described the action as a demonstration of “our unwavering determination to end deflation” in a key indication that if even more is needed in the future, he is not going to hesitate. That is how you beat the secular stagnation blues.

Americans might want to ask ourselves why our central bank isn’t doing the same thing.

As Danielle Kurtzleben wrote on Wednesday, the Fed’s own money-printing exercise (“QE 3”) seems to have helped the economy while it lasted, and our own inflation rate remains below 2 percent. Yet instead of responding to the limited success of QE by doing even more QE, the Fed decided to respond to the limited success of QE by declaring victory and going home.

That’s what we’ve come to expect from the world’s central bankers. But people should ask themselves why more banks don’t take the Japanese approach. Building complicated macroeconomic models is hard. But telling whether inflation is above your target level or below your target level isn’t brain surgery. If it’s too low, then why not print more money? At the very worst, it won’t do anything. At best, it’ll provide the kind of powerful economist boost that Japan’s stock market is anticipating today.