I am not sure why it is so difficult for people to understand. Particularly, our Nobel Prize winning economists and charlatans throughout world governments. Let me spell it out.

YOU CANNOT PRINT YOUR WAY TO PROSPERITY.

Japan is a perfect illustration of that(see the article below). With Nikkei being roughly at the same level it was about 30 years ago, things are not looking good. Japan is a good case study of what not to do when facing “Deflation”. Instead of embracing it and letting defaults work themselves out of the financial system, Japan did everything in its power to keep zombie companies afloat. Cutting interest rates to zero, printing money, devaluing currency, inflation targeting, etc…. Today’s Abenomics is simply a continuation of fiscal insanity. Japan, once a great financial powerhouse, is now an empty shell.

Too bad America is following Japan’s footsteps to a tee.

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Japan’s Economy About To Collapse….Again? Google

Japan’s Economy Expands Less Than Initially Estimated

Japan’s economy expanded less than estimated in the fourth quarter and the current-account deficit widened to a record in January, highlighting risks to Abenomics as a sales-tax increase looms.

Gross domestic product grew an annualized 0.7 percent from the previous quarter, the Cabinet Office said today inTokyo, less than a preliminary estimate of 1 percent and a 0.9 percent median forecast in a Bloomberg News survey of 20 economists. The current-account deficit widened to 1.59 trillion yen ($15.4 billion), a record in data back to 1985, the finance ministry said.

While growth is set to surge this quarter before the bump in the sales levy next month, a sentiment survey released today highlighted expectations for a sharp pullback when businesses and consumers face the higher burden. Prime Minister Shinzo Abe is due to detail growth measures in June to sustain momentum, while economists forecast the Bank of Japan will add to unprecedented easing to keep the world’s third-biggest economy on track for a 2 percent inflation target.

“Capital spending remains weak and exports are not coming back to strengthen the recovery, and without support in these areas, Japan’s economy is going to contract significantly in the second quarter,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. “The negative effect from the sales tax rise could be worse than the BOJ and government expect.”

Net Creditor

The Topix index of shares fell for the first time in five days after growth missed estimates, closing down 0.8 percent. The yen traded at 103.15 per dollar at 3:11 p.m. in Tokyo, up 0.1 percent.

Business investment rose 0.8 percent from the previous quarter, revised down from a preliminary 1.3 percent increase, today’s data showed. Consumer spending climbed 0.4 percent, less than an initial estimate of a 0.5 percent gain.

Abe jump started the economy last year with reflationary policies dubbed Abenomics. Record easing by the BOJ helped to push the yen down 18 percent against the dollar last year, boosting corporate profits and fueling economic growth.

The government in December approved a 5.5 trillion yen extra budget to offset the higher sales levy, which will rise to 8 percent in April from 5 percent now.

Sentiment Falls

Companies and consumers have rushed to make purchases before April, with industrial production rising the most in January since June 2011 and retail sales gaining at the fastest pace since April 2012.

Businesses are bracing for a drop in economic activity after the sales tax rise, according to a survey released today by the Cabinet Office.

Economic expectations of people such as taxi drivers, supermarket managers and restaurant workers fell in February by the most since March 2011, when the economy was struck by a record earthquake and tsunami, the Economy Watchers survey showed.

The expectations index fell to 40 from 49 in January, reaching the lowest since April 2011 and erasing all the improvement made after Abe took office in December 2012.

The BOJ, which concludes a two-day board meeting tomorrow, will keep its main policy target of expanding the monetary base at a pace of 60 trillion to 70 trillion yen per year, according to 33 of 34 economists surveyed by Bloomberg News.

Meiji Yasuda Life Insurance Co. forecasts the central bank will add to its record stimulus tomorrow, predicting a boost in the target range to 80 trillion to 90 trillion yen.

Thirty-eight percent of 34 economists forecast the BOJ will add to easing by the end of June, according to the Bloomberg survey, which was conducted from Feb. 26 to March 4.

Prolonged deterioration in Japan’s current-account balance would erode the nation’s position as a net creditor, one of its main credit strengths, Moody’s Investors Service said last month in a report.

CNN Money Writes: Financial risks recede in 2014

Eurasia, which advises businesses on political and economic concerns, released its annual list of potential risks to global economic stability in 2014 — and impending financial doom is not among them.

“That’s over,” the Eurasia analysts wrote in the report. “In 2014, big-picture economics are stable if not yet comforting.”

Europe has emerged from recession and Japan’s economy is shaking off decades of stagnation. The recovery in the United States is expected to accelerate this year even as the Federal Reserve gradually reduces its stimulus policies. China’s new government is implementing reforms to make the world’s second-largest economy more stable.

The relatively calm outlook comes after a period of heightened financial risks. Investors and economists have been on alert for another meltdown since 2008. But none of the dire predictions came to pass. The euro is still around. China has not crash landed. And the U.S. didn’t fall off the fiscal cliff.

Read The Rest Of The Article Here

I am sure you have heard of the “Calm Before The Storm”. The report above pertains to exactly that. Just because the “storm” hasn’t arrived yet, doesn’t mean that it never will. Let’s take a look at the reality.

Has Europe emerged from a recession?

Is there any evidence to support this statement? Of course not. As far as I am concerned only German economy is doing good. The rest of EU members are not doing so well. While the Socialist Party in France is working overtime trying to destroy their economy, countries like Spain, Italy and Greece are going through downright depression with 20%+ unemployment and an insolvent banking systems. Maybe the EU emerged from a recession right into a depression.

Japan’s economy is shaking off decades of stagnation?

It might seem that way at the initial glace, yet the reality is different. The perceived improvement in Japan has nothing to do with real economy or any sort or real economic growth and everything to do with currency debasement and massive credit/stimulus expansion. As always, short term gains will eventually turn into a long term pain.

As for the US and China, all of the fundamental issues remain there. Just because the calendar year turned 2014 doesn’t mean that all structural issues got better or vanished into thin air. If anything, things are getting worst. The only reason things haven’t blown up, just yet, is because both Governments pumped a huge amount of liquidity into the system to paper over issues. Eventually, this will force the markets to correct themselves with greater intensity in the future.

Bottom line is, the report above is garbage. Don’t believe it for a second. This is the calm before what might be “The Perfect Storm”.

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What You Ought To Know About The Upcoming Economic Storm