Abe was so well-studied and perfectly understood that even Mr. Krugman, who visited Japan after receiving the Nobel Prize, was to be amazed.
Jul. 21, 2022
The following is from a tweet by Yoichi Takahashi (Kaetsu Univ.) that I just discovered.
@YoichiTakahashi
How to solve Japan.
Abenomics started like this.
He has been interested in monetary policy for about 20 years, comprehending it himself without taking it at face value. He is invincible in parliamentary debates without bureaucratic answers.
How did former Prime Minister Shinzo Abe become interested in the monetary policy of "Abenomics," and how did he adopt it as policy?
Let's look back at the history.
Let's look back at the history.
The first time Mr. Abe asked me to talk about monetary policy was to question the Bank of Japan's lifting of the zero interest rate in August 2000.
After returning from the U.S. in July 2001, I assisted the Council on Economic and Fiscal Policy under the direction of Heizo Takenaka, Minister of State for Economic and Fiscal Policy.
I remember being surprised when Mr. Abe, then Deputy Chief Cabinet Secretary, asked me about lifting the zero interest rate at one point.
At the time, few politicians were interested in monetary policy.
They felt it was a complex topic and would not win any votes.
I also introduced him to a personal letter sent to me by Professor Paul Krugman explaining that the lifting of the zero interest rate was a failure.
As to why Mr. Abe was interested in monetary policy, I failed to ask him directly.
Mr. Abe has always sympathized with a tragic hero.
Since he did not have to worry about losing the election, he probably had a sense of mission that he should work on important areas such as monetary policy and security, even though they did not win votes.
Even after Mr. Abe became LDP Secretary General and Chief Cabinet Secretary, I was often asked about monetary policy.
Since monetary policy is also an employment policy, I told him that the Federal Reserve has the dual responsibility of "ensuring employment" and "price stability.
I also explained to him that central bank independence is "independence of means," meaning that the government can tell the central bank what its significant policies are, such as overcoming deflation, and can appoint the governor and other officials but cannot interfere in daily operations, such as raising or lowering interest rates.
Mr. Abe responded with a laugh, "Independence of means" is convenient for politicians who can only talk big.
I also told him that when monetary easing is implemented, stock prices immediately respond by rising, and after about six months, employment (the number of workers) also tends to increase.
I also mentioned that one of the significant factors behind Japan's rapid postwar growth was the weak yen.
When the Bank of Japan lifted its quantitative easing policy in March 2006, the Junichiro Koizumi administration, which was in the final stages of power, could not object.
Still, I predicted the economic trends after the policy was lifted.
Mr. Abe later told me I was pretty right, and he even talked about it in his Dieter answers.
Monetary policy is also an employment policy, so if you look around the world, leftist parties are often the first to advocate it.
I confirmed this point, but Mr. Abe, a realist, made it clear that there was no problem at all.
He did not fail to confirm that "the opposition parties haven't done it yet."
Mr. Abe is a politician who comprehends and expresses himself without taking things at face value, so I believe that Abenomics, which consists of monetary policy, fiscal policy, and growth strategy, was gradually formed through discussions not only by me but also by various experts.
From the middle of the second Abe administration, he answered monetary policy questions without bureaucratic answers and was almost invincible in Diet debates.
Mr. Abe was so well-studied and perfectly understood that even Mr. Krugman, who visited Japan after winning the Nobel Prize, was to be amazed.
(Yoichi Takahashi, former cabinet counselor and professor at Kaetsu University)
* Mr. Abe's stories in the monthly magazine, which I keep referring to as a must-read, clearly prove that he is the best economic expert in Japan.
This picture was a miracle, as if Mr. Abe had just appeared. At Nagai Botanical Garden, Osaka, 2022.
