Here is my Christmas present to you all. A quick guide to a subject that will make your dinner guests think you are an intellectual giant.
Abenomics – economic policies which mean printing money without anybody realising you are doing it.
The term belongs to Shinzo Abe the current Prime Minister of Japan. The ‘neologism’ is, of course, applied to policies such as Reaganomics, the politics of an American President.
The PM of Japan aims to expand the country’s economy by a combination of quantitative easing, a surge in infrastructure spending added to a devaluation of the yen. John Maynard Keynes will be ecstatic. By the end of 2014 the Bank of Japan will hold Y190,000bn of Japanese bonds, double the level in 2012. In other words it is trying to stimulate a moribund economy by injecting about £1,100bn into its cash flow.
In the United States the Federal Reserve is doing just the same: Eastern markets in particular are concerned that the stronger US data will encourage its taper process. The UK has stopped at £375bn of quantitative easing.
The cynics argue that the cash being generated by the purchase of Government stocks is being used to prop up the banking sector and the regulator’s strident calls for improved capital ratios. Others argue that it is simply printing money which stores up a future of rampant inflation.
Keynes would have said that it’s the only way out of recession. Hayek would have argued that you can do what you want: the cycle decides all.
You can now explain to your dinner guests that it’s important to understand ‘abenomics’: they won’t and you can pretend that you support the Government policies of the UK, US and Japan. If you keep pouring the wine nobody will realise that you have no idea what you are talking about.
Better still gather two of the most attractive female guests and take a ‘selfie’ on your iPhone. It will mark you out as a future Prime Minister – much easier than trying to master ‘abenomics’!