Yesterday we brought you the latest presentation from Nomura's Richard Koo, which he delivered at the Institute For New Economic Thinking conference in Berlin.
Koo's main viewpoint is that the world today is much like Japan has been since the late 80s: In the throws of a balance sheet recession, a period where the private sector's main objective is debt minimization. This calls for aggressive fiscal policy, as monetary policy doesn't work at these levels. There's no point in lowering rates when people can't or don't want to borrow more.
His presentation is pretty big, but it's a must-see. However we've also clipped out our favorite slides from the presentation to show you a condensed version.
Yes, the US does look like Japan...
Fed pumping doesn't work. These liquidity injections don't make it into the money supply.
As Japan showed, what it takes to keep GDP up is government borrowing.
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