>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.
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.
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.
https://tradingeconomics.com/japan/government-spending-to-gd...
https://tradingeconomics.com/japan/government-debt-to-gdp
266% debt to gdp is about 24% higher than the peak drama about Greece's collapse.
https://tradingeconomics.com/japan/government-budget
Haven't balanced their budget since the 1990s.
Tough decisions coming for Japan.