[MUSIC] One country we've mentioned repeated times as we've gone through this discussion, especially today, is Japan. You notice that we mentioned Japan's very, very long recessionary gap with its domestic banking crisis, then hit by the Southeast Asian financial crisis, then hit by the global financial crisis. We mentioned quantitative easing in Japan and zero interest rates in Japan. We mentioned also that Japan has the world's largest public debt as a percent of GDP. We know a lot of things are going on there. The country struggled with deflation for very long time. It's having trouble getting growth going. The Yen rises continuously, which as you know from our previous discussion, causes Japan to have trouble exporting more. It wants to import more rather than export more. That also has a restrictive effect on the economy. So, Japan is trying to find a way to get back to growth, to get out of deflation, and the policy combination that the new Prime Minister, the recently elected Prime Minister, has proposed, we know as Abenomics, which much as in the past, we talked about Thatcherism or Reaganomics, this is Prime Minister Shinzo Abe's program for, for curing the ills of Japan. Now, this program has a lot of elements we've talked about. One is a very expansive fiscal policy. And you might ask yourself, how can I carry out a very expansive fiscal policy if I've got this very, very high public debt? And that an unanswered question in Japan. Most of Japan's public debt is owned by the Japanese. So it's not traded in markets where a lot of foreigners are coming in buying and selling. There's not that much speculation over it. Interest rates are low. So, the government feels like its worth its while to continue with this deficit spending. Maybe someday it will turn out to be a free lunch, and the economy will grow. The second arrow of Abenomics is quantitative easing, and they have announced the most aggressive quantitative easing that we have ever seen so far. We've mentioned that Japan invented quantitative easing, but now they're planning to double their money supply by I believe it's the next of, the end of next year, which means a huge amount of additions to the central bank's balance sheet and the cash that's in the banking system. And then the third arrow of Abenomics is structural reform, and this is the one they're working on now. They've also talked about a tax increase to help finance to help reduce that deficit. It would be a sales tax increase. There's a lot of opposition to it. But you can see in the Japanese situation, a lot of these issues together that we've been talking about. I need to do deficit spending because I want to expand my economy. What happens when my debt gets so big? When will Japan's debt become a problem, and when will there be a danger of default, right? I need to use expansive monetary policy, but my interest rates are already at zero. So what do I do? I use quantitative easing. Initially, it brought down the value of the yen. This helped Japan to export. It seemed to working. Right? Now, that effect is being diluted a little bit. I need structure reform. There will be some domestic opposition to it, but I'm going to try to do that to shift aggregate supply out to the right and give a boost to the economy that doesn't cost me money in terms of government spending. So the world's attention is very much centered on Japan now, as they try in an aging country that has struggled with financial crisis, one after another, for decades now. That has struggled with deflation. That's seeing a shrinking population. That has a currency that constantly rises, they're struggling to find growth. It will be interesting to see whether Abenomics is successful because maybe it will point a way forward for us, and maybe it will show us that these tools are just not going to work when there's so many factors, especially demograc, grim, demographic factors that are working against you so we have very important test case in Japan for the rest of the developed world.