Recently I discussed FDR and the Great Depression with someone, and they brought Japan up as a counterexample to my assertion that Keynesian policies worsened and lengthened the Depression. Japan, it was said, was out of the Depression by about '33 thanks to consistent inflation and deficit spending. I had to admit that I didn't know much about the economic history of Japan, but I did bring up the fact that Japan occupied Manchuria in '31 and later invaded China and South East Asia starting in '37.
I theorized that, in fact, the only way Japan could keep up the inflationary boom and avoid bust was through continual expansion and conquest of new territories. Does anyone around here know more about this? Are there other major factors that have to be considered as well?
Japan's deficit spending was a brilliant investment. The Japanese government borrowed money, invested in guns and tanks, murdered more than 20 million people throughout Asia and plundered their resources, and these stolen goods not only paid down their deficits but even provided a huge profit. So the return on investment was quite impressive.
A perfectly moral Keynesian policy!