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Japan to implement bank-deposit-backed digital currency in 2022 (nikkei.com)
133 points by thesuperbigfrog on Nov 24, 2021 | hide | past | favorite | 88 comments

I’m just confused about this. Isn’t most money system digitized already? When we buy stuff online it is indistinguishable from digital money, and the bank as far as they are concerned is seeing numbers on a screen from a database, which is backed by fractional deposits.

Basically it means that you'll have a bank account directly with the government. They'll be able to monitor every transaction you make from that account and block transactions on your account.

It'll also give the government the ability to add conditions to your money (ie. you need to spend X amount of yen / dollars this month or your money will expire and you'll lose it), or your money can only be spent at approved stores.

The government can do way worse than add conditions to your money. They can arrest you and put you in jail.

They can already take all your money. They can take it no matter what form you put it n in.

Yes, one day India invalidated just about all their physical bills.


> They can take it no matter what form you put it n in.

tell that to criminals and money launderers!

This is specifically not what this is. Banks in Japan have a central role in the economy so the govt has no wish to remove the ability of banks to create money (they are also have a lot of political power). The digital currency will be backed by bank deposits, and the aim of this appears to be creating a interbank payments system that can run with lower costs.

The article says this is being run by a group of banks and other businesses, not the government.

Maybe not exactly the same, but there is a lot of connection between them.

>It'll also give the government the ability to add conditions to your money

Some of China’s experiments with digital RMB have already done this where the money they handed out had an expiration date. Japan as well with the GoToTravel/GoToEat stimulus campaigns where the money equivalent could only be used at certain hotels/restaurants.

This comment is the literal definition of FUD.

The idea that a government or bank would expire your money is pretty hilarious.

I think this has already happened in China. They provided digital RMB as a stimulus that expired if you didn’t use it. We’re all Mario now.

It doesnt take much searching to find that is an actual proposed use case.


It doesnt take much knowledge of history to know that giving government full control over individual's money is a very bad idea.

Governments already have control over money by simply being able to choose what is and isn't legal to use. FDR outlawed private gold ownership. India banned cash:


Governments have imperfect control over money. Outlawing private gold ownership and banning cash are two examples that are noteworthy because they were so extreme. Each created a huge amount of controversy and havoc, and also required leaders to obtain buy-in from legislators and other political figures.

The point of many CBDC electronic currencies is to reduce the barriers to this control, so restrictions on currency (such as expiring currency) can be implemented with a few keystrokes on a computer rather than, say, requiring everyone to turn in their cash and jewelry.

No it's an idea and never concretely proposed.

And governments already have full control over an individual's money.


> winners have until January 17 to spend their e-yuan before it expires

The caveat there is that expiration in this case is probably to encourage winners to spend the money/provide an end date to the experiment. Most likely regular e-money would not have that condition but special payments (ex: stimulus) could.

That is a fair caveat, though I'd argue that it is clearly a test case for broader expansion in an instance where the condition is unlikely to produce a backlash, attached as it is to stimulus money.

c.f. speed of yuan CBDC rollout; https://www.economist.com/the-world-ahead/2021/11/08/central...

c.f. central banks salivating at the prospect of having extra levers to pull: https://www.economist.com/the-economist-explains/2021/02/16/...

> An impediment to negative interest rates at the moment is that savers can switch to cash, which has a de facto interest rate of zero. In a cashless world central banks could in theory programme digital currency to have negative rates.

> Once ascendant, govcoins could become panopticons for the state to control citizens: think of instant e-fines for bad behaviour.

It's a good question.

Those are second order digital money. They are not actual assets or liabilities on the central bank balance sheet. They are digital ious on a bank's balance sheet.

The difference here is that the asset and liability are moved directly onto the central bank balance sheet.

The reason this matters is because CBDCs are fundamentally about creating a hybrid fiscal /monetary policy tool that the central bank can use and allowing the central bank to digitally alter the balance sheet in a way that affects retail customers is the only thing that enables that.

As a side note, there is nothing which intrinsically ties these to crypto or block chain. You could implement this without either of those concepts.

When buying stuff online, either the credit card network temporarily foots the bill until the charge actually hits your bank, or your bank processes the transaction directly and money moves away by a bank to bank call. It needs to ne synchronous and connected.

With this new system I’d assume you transfer ownership of your money but it doesn’t need to have both banks connect directly, and there might be a chance to have it work offline as well.

So, debit cards?

Debit cards ask your bank for your balance and request them to debit you. This system is decentralized (backed by banks but offline use is assumed)

HYPE-based debit cards!

No, digital cash

As far as I’m concerned 99% of my money is already digital cash. Unless I go through the effort of taking cash out via ATM/bank or at a grocery story etc, all I ever see are numbers in a browser/app get bigger or smaller.

How is this different? It precludes me from __ever__ having a tangible form of currency?

You are putting too much meaning on the “digital” (yes, I know, it’s a name but).

The point is not the digitalness but the decentralized part. One of the main participant in this system is railroads, and they already introduced a money equivalent offline system (Suica/Pasmo) that is wildly used in lieu of cash. As worded in the article they want to take it a step further and convert their “points” to actual legal tender.

So it seems like what really should happen is a decentralized USD “blockchain” where the difference is transparent to the users. ACH exchanges just don’t take 3 days and investment transfers don’t have a settling period. This is where I see the actual value of digital currency. If Bitcoin were truly of value in and of itself, it would not be tied back to the dollar. The tech makes it valuable, the concept and the potential, not btc (or a mimic of it) by itself.

Just smile and back away slowly.

Yes, the only difference is this currency will be on a blockchain. Although I'm assuming it will be completely centralized so I'm not sure what benefits this will have over a traditional database.

Eliminate or substantially reduce third-party transaction guarantee fees, and at the same time, one-hundred percent of the transactions are digitally recorded.

A preponderance of big finance relies on trusted third-parties to intermediate transactions. Those third parties charge non-negligible fees to execute each and every transaction. Large value transactions can be done between untrusting parties directly, due to rigid cryptographic signing of the transaction record.

None of these features require a blockchain and can be done trivially by a central authority issuing append-only cryptographically signed ledger entries.

> Large value transactions can be done between untrusting parties directly...

What's the benefit of this when the bank has to accept a cleared record for a party to withdraw funds anyway?

>None of these features require a blockchain and can be done trivially by a central authority issuing append-only cryptographically signed ledger entries.

Why would you want to depend on a central authority when you can have a network of trusted blockchain users all signing and broadcasting their transactions to each-other in real time, without an intermediary?

Why hamstring yourself with a database and the upgradability woes therein, when you can use a blockchain?

>What's the benefit of this when the bank has to accept a cleared record for a party to withdraw funds anyway?

With a permissioned blockchain, the funds can be cleared much faster (instantly?) than in the current system.

I left another comment about this. These technologies are very powerful and not thoroughly explored in a permissioned context for use by traditional finance.

> Why would you want to depend on a central authority when you can have a network of trusted blockchain users all signing and broadcasting their transactions to each-other in real time, without an intermediary?

You're already depending on a central authority to back your funds. So forcing a blockchain into the mix just introduces that additional complexity and risk, not a new dependency on a central authority.

> Why hamstring yourself with a database and the upgradability woes therein, when you can use a blockchain?

You're conflating "blockchain" with "distributed database". For example, a trivial example is a git repository storing ledger entries. It's distributed, can be used in an append-only fashion (and enforced at a higher layer), and such a system probably doesn't have the "upgradability woes" you're worried about. It's not a blockchain.

> With a permissioned blockchain, the funds can be cleared much faster (instantly?) than in the current system.

This can also be arranged without a blockchain.

> Why would you want to depend on a central authority when you can have a network of trusted blockchain users all signing and broadcasting their transactions to each-other in real time, without an intermediary?

The choice here is between:

1. A known intermediary with a physical address to which a judge/magistrate can have a summons mailed and which my local elected government officials can at least in principle regulate, or

2. An unknown number of unidentified intermediaries, at least some of whom are almost certainly beyond jurisdictional reach.

If I'm fucking around with gambling money, whatever. If we're talking about national payment infrastructure, the choice is obvious.

> [databases and] upgradability woes therein, when you can use a blockchain

...huh? I don't understand.

I think you misunderstand. The answer is most likely

3. A consortium of permissioned parties. I'm assuming at least the 3 major banks and some if not all of the 70 companies.

This is similar to Diem (aka Facebook Libra). PoA (Proof-of-Authority) as opposed to PoW or PoS.

The point is that the parties keep each other in check, and collectively have some level of fault tolerance. At the scale of a national economy, it's desirable to not have a single point of failure on an institutional level.

If you think "Signed Git+Raft/Paxos", that's pretty close.

I'm curious if they'll allow some level of unpermissioned access to the chain and/or for individuals to manage their own keys. The pessimist in my thinks no, but one can dream.

I don't think this is what rattlesnakedave was describing.

It was. The key words are "trusted" and "permissioned".

Cryptocurrency validators are untrusted and the networks are unpermissioned.

Money on a blockchain isn’t necessarily cryptocurrency.

Blockchains rely on intermediaries to process transactions. The difference is, in a blockchain-based system, the end user has no freedom at all to choose which intermediary they want to use. The intermediary is chosen at random, according to how much useless computations they have done. And because of these useless computations, the system is also less economically efficient, in other words more expensive, compared to alternatives.

> None of these features require a blockchain and can be done trivially

what can be done and what is done -- different. You might want to tell those companies that charge a fee to guarantee the transaction, that they can just trivially stop doing that now.

Gives government more ability to track flow of capital. Hugely awful move for the world to give government more control.

Yes. In the US context, we already have a digital currency, they're called "US dollars".

Something that gets floated periodically is the idea of creating a bank that only accepts deposits, and then sticks them in the Federal Reserve. This is sometimes called "narrow banking", and one of the more prominent efforts to do this involved a proposed bank called The Narrow Bank or TNB. (Alternatively, you could let individuals deposit money directly with the Fed.)

If implemented, such accounts would be 100% backed. You have a dollar, you put it in the account, it sits there until you ask for it back.

There's an article here: https://www.spglobal.com/marketintelligence/en/news-insights...

As it noted, US regulators seem strongly opposed, at least for now.

It would be more accurate to call it "visa dollars" as transactions are only possible at the discretion of visa and by paying visa a fee.

A better example would be in new zealand they truly have digital "NZ dollars" because anyone can transfer them to anyone for no fee.

Central bank digital money normally means normal bank account but held directly with the central bank

Japan is still very cash based.

When people say "digital money" they mean being able to for example move it from one account to another with a few lines of Python code, like you can with Bitcoin/Ethereum/Tether.

You can't really do that with USD, you need an intermediary like Stripe, an attached bank account, ...

Yeah, but this new system will still have a middleman, the bank...

Not necessarily a middleman. The banks will back the digital coin, but might not be much involved in transfers (we'll see).

A bit like physical cash, it is backed by the gov, but you don't need to involve the gov to transfer it.

I wonder if it would be ideal for a separate company, not the banks and not the government, to control the nodes to “mine” or whatever equivalent this currency has. Maybe it should just be the government since you would likely just end up with such a company beholden to the banks.

https://www.reuters.com/business/finance/consortium-japan-fi... this one doesn't mention blockchain. Which gives me hope.

The cozy relationship between the state and the big corps gives me worry, but ideally:

1. Giving everyone a central bank account makes issuing a UBI really easy. That would be great for Japan to boost domestic consumption, and get those hikikomoris some non-shit non-saleryman jobs.

2. If this does eventually displace cash, they can also try out fun things like https://en.wikipedia.org/wiki/Demurrage which would really counteract deflation in all the right ways but none of the wrong ways.

Ultimately, per stuff like https://yalebooks.yale.edu/book/9780300244175/trade-wars-are... the world really needs the big exporter countries to consume more. The world we live in of large trade imbalances is not healthy for the US or the big exporters alike.

I don't think the US has the political will to overcome it's oligarchs and stop the imports, plus the poorer countries that don't even export a lot still greatly depend on our trade deficit to be able to get USD reserves. It is better the big exporters stop "importing our demand" so much, and focus more on domestic consumption (and at least China has stated they want to do this). That will put the pressure on the US from the outside to side-step our failed-state politics.

Oh I thought this thing involved the Bank of Japan, but evidently it is all private sector. Arg nevermined. Hopefully the Bank of Japan does indeed continue with it's exploratory plans, though.

> makes issuing a UBI really easy

Query: Who produces the goods & services that create value in a country/society when everyone is collecting UBI? Is it just the people who 'enjoy' working? And, when UBI causes baseline consumable prices to rise, we just keep raising UBI, right? Can we just call it for what it really is... communism? Why keep pretending?

Communism would imply a lot more than providing a base income to everyone to keep them out of abject poverty. You might be thinking of socialist democracy which maintains a balance between unfettered capitalism and full-blown communism.

In the UK you get about 10k personal allowance before you have to start paying tax. That is one form of UBI although it requires you to earn an income (and you actually start to lose this allowance once you start earning over 100k). You could replace that all the same with a system that dumps 10k into your account every year and then starts taxing you for every penny earned (at a higher rate).

We have had the past 100-or-so years to learn, empirically, that both unfettered capitalism and full-blown communism are not particularly good ways to maintain a healthy society.

> Who produces the goods & services that create value in a country/society when everyone is collecting UBI?

The people collecting UBI, duh. The events of the past 2 years have convinced me that even a small UBI can still have a large effect.

> And, when UBI causes baseline consumable prices to rise, we just keep raising UBI, right?

Don't be an idiot. "pure inflation" is multiplicative, scaling all prices the same. UBI is additive providing a base-line income stream. The interaction will be very complex.

UBI can be paired with simple-stupid regressive taxes like VAT and still come out net-progressive.

There will be some adjustments in prices but a new equilibrium absolutely can be reached.

> Can we just call it for what it really is... communism? Why keep pretending?

The idea is that "the first x dollars of consumption are socialism, the rest capitalism". It is not 100% socialism, don't be an idiot.

It is only bad if you believe society depends on sticks and workers will not work for mostly carrots. Is that what you believe?

> The events of the past 2 years have convinced me that even a small UBI can still have a large effect

Can you expand on this. What events have convinced you? Fwiw I'm trying not to be an idiot ;)

Sure, the expanded but still measly unemployment insurance (the other UI :)) along with one-off pandemic checks is much less than an 1000/month UBI, and yet turned what was ready to be to a far worse recession than the 2009 one until something we quickly bounced back from, got higher real wages for the bottom 50% (or so), and got a bunch of a healthy strikes.

We truly made lemonade out of life's lemons, turning 2020 and 2021 into better years than 2019 or poorer Americans.

It's beautiful that this happened, and yet it's super frustrating had we done the same thing in 2010 or so, we could have prevented much of the lousy growth and other malaise of the past decade.

So yes, pretty dramatic efffect from just a little bit of cash printed into the right hands. (As opposed to regular monetary policy which is far more complicated in its effects, and doesn't seem to work very well at all.)

That's just traditional banking with extra steps...

Being able to convert back go standard money is a big deal. Currently all the digital offline payment means are a one way trip: you can pay for goods with them, but not exchange with someone or return it to your account. This initiative would solve that issue.

Don't forget that there is still nothing backing the bank deposits themselves. So yes, extra steps, and extra risk. Which also means extra room from intermediaries and fees.

So, do I understand correctly that these are the main benefits of a CBDC?

  - A centralized ledger which is maintained by the central bank in question.  
  - Instant payment clearing - no ACH or other steps. You simply request a transaction and it happens immediately if it's possible.  
  - No fees - presumably you can send large amounts without paying for a wire transfer.  
  - Convertible into "regular money" with no fees or intermediaries. You can exchange this currency for traditional deposits at a regular bank, and vice-versa.  
  - Easy transactions with the government. You can pay your taxes, or get paid (stimulus payments, paychecks, for example), instantly.  
  - From the central bank / policymaker perspective, there are many benefits because of the gigantic amount of data they gain access to.
Would this be essentially like Fedwire, but for everyone rather than a special service for banks?

I'm very bullish on federated, permissioned, blockchains in the world of traditional finance, and here's why:

- Having ledger that is append only by a set of trusted parties gives you all of the benefits of a distributed ledger, as well as the ability to do things like clawbacks, comply with regulation, etc.

- The future I see is multiple blockchains operated by networks of payment processors. For instance, Visa, MasterCard, etc. can all work together to maintain one blockchain. Other countries / regions can have their own. Interop can be done with bridges (like in defi now).

- Throughput can be drastically increased between banks. Transactions become confirmed instantly. No more waiting several days for ACH. You can confirm a good balance from the sender, and credit the receiver instantly.

- "Just use a database" the hackernews commenter shouted out. Using a database instead of a blockchain limits what you can do in terms of 3rd party interop, and hamstrings you for upgradability in the future. Facebook's MySQL upgrade is taking YEARS, and they're a SINGLE TECH COMPANY. If you want to move faster, and maintain interop blockchain is the way to go.

- This opens the door to multi-asset blockchains between financial institutions. Instruments like loans, equities, etc. can be tokenized, FRACTIONALIZED and traded b/t institutions much more quickly than they can today, because they'll be a part of a permissioned verifiable system. Write a loan today, fractionalize and sell it instantly.

There's so much more that's possible here too. Technologies like HyperLedger are really moving the ball forward. I think a lot of the criticisms of this sort of thing are due to shortsightedness of what is possible.

I'm somewhat bullish on the promise of permissioned blockchain systems, but the Facebook/MySQL example is misleading --

* Facebook doesn't need MySQL to interop with other systems in the same way that blockchain enables.

* Relational semantics are way more complex than what most distributed ledgers technologies offer. A blockchain is more analogous to the MySQL binlog than to MySQL itself. I would guess that Facebook's DB transaction log is orders of magnitude larger than all the blockchains in the world combined.

* Facebook's challenges with MySQL are most likely due to their unprecedented scale. If one were to layer on the governance challenges associated with distributed ledger systems, I would think an upgrade like that would basically be impossible.

Regarding scale:

Bitcoin is a ledger of transactions, it has in the last 12 years had 690m transactions.

Facebook has 2.9B MAU. ~4X the number of transactions ever done on BTC.

Each user probably generates tens of “transactions” (changes to a DB) per month.

> Write a loan today, fractionalize and sell it instantly.

To make error is human. To propagate error to all server in automatic way is #devops. To burn down entire global financial system due to parser bug in bastardized typescript clone for blockchain contract language is #defi.

(On a more serious note, this sort of thing really rings of "what could possibly go wrong" for me :)

Just wait until you hear about FedNow...

This is related to yesterdays: https://news.ycombinator.com/item?id=29312300

Japan is on the verge of economic collapse. Negative interest rates, major deflation during all of covid. Barely pulling out of deflation and trending back downwards.


Japan is in deflationary spiral due to high taxes and tremendous debt. Deficit spending to temporarily pull themselves out of deflation and recession will only makes things worse in the long term.

I dunno, they've been stumbling through deflation for 30 years now, why not expect them to keep muddling through?


This feels like the hallmarks of a system that over values 'hard work' but doesn't value entrepreneurship or risk taking.

Corporate rent seeking is proper up by a strong welfare state.

"Herein lies the unique twist that Piketty’s theory takes on in Japan: the disparity is not so much between the super-rich and everyone else, but between large corporations, which can retain earnings and accumulate capital, and the individuals who are being squeezed in the process."


Is there some reason why a country experiencing deflation can't print money and hand it out to voters until inflation returns?

>Is there some reason why a country experiencing deflation can't print money and hand it out to voters until inflation returns?

That's a great question. Japan has been doing this for about a decade. Shinzo Abe kind of called it abenomics; aka quantative easing. https://en.wikipedia.org/wiki/Abenomics

It has worked, no question, effectively exactly as you propose. The problem is that it clearly didn't solve the problem. While also creating new problems and since the original problem never gets solved, when you are forced to cut spending because the cost of debt has become too crippling. You retain all the new problems and now feel the old problems.



266% debt to gdp is about 24% higher than the peak drama about Greece's collapse.


Haven't balanced their budget since the 1990s.

Tough decisions coming for Japan.

The big difference vs. Greece is that ~90% of all Japanese government bonds are held domestically.

>The big difference vs. Greece is that ~90% of all Japanese government bonds are held domestically.

Of which ~45% is held by the bank of japan itself.



Japan is so bankrupt that nobody else will hold their not properly rated debt.

Mind you, Japan's clearly bankrupt central bank cannot actually go bankrupt. There is no gold standard, there is no bank run, there is no liquidation requirements. So what? You just magically keep raising the imaginary numbers with no consequences?

This is where OP happens.

Flipside, I am curious about an alternative approach to fixing the issue like Greece did. Japan is headed toward a situation where their currency will be worthless and their people own nothing. Yes it will mean all retirees pretty much have to go get a job but the federal gov will effectively take ownership over most land. People who actually own their homes will effectively become fiefs.

I bet bitcoin and similar coins is beyond popular in Japan right now.

They also have substantial foreign assets that can be sold. The situation in Japan is very unusual because the financial system has a massive synthetic net short JPY position. Because rates are so low, savings have been effectively dollarized in an economy that isn't dollarized (this is why USD/JPY is so correlated with rate differentials)...so I don't think anyone really knows how this will works out (there aren't a lot of historical examples, no country that held so many claims denominated in a foreign currency has been such a large part of the world economy...this is the end game of the export-oriented, mercantilist political economy...Germany is a ways down the same road).

It makes no difference whatsoever that JGBs are held domestically in practice because it is harder to push through a debt restructuring politically when voters are the ones losing money (you have seen this in Italy too, they have "bailed in" domestic savers which has significantly reduced their options...if the debt is owned by foreign investors, you can usually restructure and point at them: look at these greedy capitalists, terrible...but we have no choice).

On some of the other stuff mentioned above, the reason why Japan is in such a mess is because their financial/corporate sectors is totally screwed. There is no real demand for money, corporate balance sheets are loaded down with cash, no-one wants to invest, demand for money is so low that Japan's savings banks are huge players in US corporate lending, banks seem to have no actual capacity to make corporate loans...they don't know how, they just buy US bonds and call it a day, monetary policy (counter-intuitively) is making this worse, it is reducing the supply of "safe assets" but hasn't increased the capacity of institutions for "non-safe assets", it has led to a significant reduction in lending within Japan because rates overseas are so much higher...it is a real shit storm, but it all comes down to monetary policy officials not understanding money transmission (unusually for Japan, in the 1980s the govt was involved in directing lending on a loan-by-loan basis so they have a history of real control over monetary transmission).

The problem is that economists still require fiscal accountability for the government, which was a rule to mainly prevent runaway inflation. This is obviously counter-productive to what they want right now. There should be a policy framework to allow the central bank to just directly invest in the economy, no need for government to incur debt.

To be clear, I'm not talking about QE, but specifically minting of actual paper currency and just handing it out to every citizen. It seems like that should directly create as much inflation as you want, without creating any debt.

Japan is a very rigid economy where doing things a bureaucratic, traditional way is prized and new innovations are difficult and slow. They have low immigration and culturally non-Japanese cannot assimilate fully. Their birth rate is low, they can't replace population with immigrants, and an ever increasing percentage of those who are alive are old, no longer productive / contributing to the economy, and spending money on end-of-life things in retirement.

No matter how much money they print, it can't solve for an economy where there are fewer consumers and producers every year.

I think the Bank of Japan might be more innovative than you give them credit for, seeing as how they were the first to deploy almost all of today's unconventional policies, including QE itself.

A low birth rate also is certainly not some immutable characteristic of Japanese culture; they had very high birth rates through most of the 20th century. It's clearly the result of economic circumstances and incentives, like the high cost of childcare and long working hours. These do seem like things that government and monetary policy cannot control directly but can certainly influence. In some respect the low birth rate might be both a cause of deflation itself and also a result.


> No matter how much money they print, it can't solve for an economy where there are fewer consumers and producers every year.

It might not solve the economy, but speaking strictly of inflation, it doesn't seem imaginable that no matter how much money they print it won't create inflation. They must just be printing the wrong kind of money. (As this economist explains, there are indeed different kinds: https://youtu.be/4xgHbW2A9KE )

If they were giving it out unevenly it would be unjust.

If they were giving it bout evenly, there’d be no difference. Nominally, the price of goods would increase but so would your reserve. So there’be no added incentive to buy.

Helicopter money is not like a stock split, because you aren't handing it out in proportion to how much money people already have. When prices go up it certainly creates an incentive to spend your savings, even if you're getting new money to offset the costs.

In theory, they could. In practice, the typical way to "print money" is to do things like lower interest rates (incentivizing more borrowing, which increases the money in circulation) and lowering bank reserve requirements (letting them loan more in proportion to their reserves). Both depend on people voluntarily taking out loans, which they might avoid if they're pessimistic about the economy or expect deflation.

That's why I was wondering about not doing that, and literally minting new cash and using handouts / UBI instead. We can't expect people to borrow money to spend on consumption, even at low interest rates, because they'll be worried about paying it back. No wonder they always just put it into asset purchases. Give them the money no strings attached and they'll spend it.

Normally the downside to that is inflation, but since that's the goal anyway it seems like a win-win.

Makes sense to me.

Good summary but slightly out of date. What they rely on now is QE, with the central bank buying assets from banks to free up money for investment. Ends up similar to lowering reserve requirements, but without the drawbacks of lowering reserve requirements.

Japan is dealing with it by massive infra projects like the new maglev Shinkansen. So when we are talking about loans, we aren't just talking about consumer credit, although that can be a major component in a consumption-led economy.

Supply Side vs. Demand Side very different though.

Poor people buying stuff they 'need' is different than coaxing businesses to invest more broadly with slightly cheaper loans but with the demographic decline still on their daily charts.

I think the person you replied to got confused - Japan is experiencing a severe collapse and suffering from inflation in most asset classes.

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