Why the Japanese government is taking dramatic new action

From Gonzalo Lira:
The newly elected Japanese Prime Minister, Shinz? Abe, has caused quite a stir. The leader of the Liberal Democratic Party, which scored a landslide victory in 2012’s election, he's promised to restart the Japanese economy, whatever it takes.
How will he do this? He "will implement bold monetary policy, flexible fiscal policy, and a growth strategy that encourages private investment, and with these three policy pillars, achieve results" – according to his statement following the LDP election victory.
By "bold monetary policy," what he means – and what he has said – is to end the independence of the Bank of Japan, and have the government dictate monetary policy directly. (You could argue whether any central bank in any of the developed economies is truly "independent" – or indeed, has ever been so. But for the sake of this discussion, let's assume that they have been.)
The perception is, the Bank of Japan will not only print yens and buy government bonds à la Quantitative Easing of old – it is also generally thought that Mr. Abe and the incoming Japanese government fully intend to target the yen against foreign currencies, like Switzerland has been doing with the euro.
This perception is what has been driving the Nikkei 225 index higher, and driven the yen lower. Prime Minister Abe’s policies have yet to be fully implemented – so far, it's all been just talk. But the markets are taking Mr. Abe at his word, convinced that he is going to set a policy very similar to what the United States and the Federal Reserve have been doing: Targetting the equities markets, and printing in order to bring the yen down, and thus make Japanese products competitive in foreign markets.
But why was this decision triggered? For going on twenty-three years, Japan’s...
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