There is a perfect word that describes the current condition of governments and consumers around the world today. The word is obdurate, and it means to be stubbornly persistent in wrongdoing.

The word comes to mind when witnessing the renewed enthusiasm of central banks to re-inflate old asset bubbles and to endlessly debase their currencies with the misguided belief that inflation will engender sustainable economic growth.  In the case of the Fed, it has so far to date made at least three QE efforts and six years of ZIRP to achieve this goal. But what it has actually achieved is to create asset bubbles and render the nation insolvent. Governments have failed to grow economies in any viable manner. But today’s central bankers have become the very embodiment of the word obdurate, as they stubbornly persist in the effort to pursue inflation as a panacea, despite all available evidence that it will fail to achieve their desired results. 

Leading the way on this front is Japan, perhaps the paragon of obdurate thought and action. Abysmal GDP numbers produced by Japan’s economy has brought the nation back into an official recession for the second time in past two years. This should have served as a wakeup call, proving Abenomics and its three Keynesian arrows failed to hit their target.  However, Abe and his cohorts at the BOJ are not about to let the facts get in the way of their borrowing and printing fairy tale.  On the contrary, Prime Minister Abe has stated he is now more convinced than ever to aggressively pursue the dangerous course of deficit spending and currency debasement; and clearly will not stop until Japan is in full-blown currency crisis. 

Amusingly, Paul Krugman has emerged as Abe’s chief champion and apologist, proposing Europe follow in Abe’s footsteps. He suggests that, “Europe needs something like Abenomics only Abenomics, I think, is falling short, so they need something really aggressive in Europe.” As if the problem with Abenomics is only in its failure to be bold and audacious enough!