Japan's failure to stimulate much with its latest stimulus serves as a reminder of how few tools global policymakers have left to drive growth.
Fiscal and monetary authorities announced more plans over the past few days to spur inflation in hopes of driving broader economic hopes. The government on Tuesday announced fiscal stimulus amounting to $274 billion, while the Bank of Japan late last week said it would nearly double its exchanged-traded fund purchases to nearly $60 billion.
They were rewarded with a stronger currency, a sea of red in both global equity prices and bond yields, and a market that generally was disappointed that Japanese leaders were not willing to do more to jump-start the long-moribund economy.
Japan has tried this literally dozens of times over the past quarter century, most often with the same results — perhaps a momentary bounce in activity that ultimately leads back to the same dreary growth pace. Despite all the stimulus, the economy has grown by barely 1 percent a year.
"In short, the dual monetary and fiscal stimulus plans out of Japan over the past few days have chalked up to a disappointment," said Christopher Vecchio, currency analyst at DailyFX, a currency trading firm. "The fault lies with fiscal policymakers, not with the BOJ, though. Whatever the BOJ did/does will have little impact unless the measures are amplified by a concurrent fiscal policy response; we now know the hefty fiscal policy response isn't coming."
Yet even the largest of bazookas seems to do little.