Japan's Massive Fiscal Stimulus
Japanese Prime Minister Sanae Takaichi's cabinet has approved a massive ¥21.3 trillion ($135.40 billion) stimulus package, marking the country's largest fiscal intervention since the COVID-19 pandemic. This represents a significant increase from last year's ¥13.9 trillion package and includes ¥2.7 trillion in tax cuts.
The stated goal of this stimulus is to ease the burden of inflation on households and businesses, though this approach appears to contradict traditional economic thinking that stimulus measures typically fuel inflation rather than combat it.
Bitcoin's Unexpected Response
Despite being widely regarded as a hedge against inflation and fiscal imprudence, Bitcoin has continued its recent decline. The cryptocurrency fell 0.8% to $85,480, extending a sell-off that began after Bitcoin reached its record high of $126,000 on October 8.
This price movement presents an interesting paradox - while Japan launches one of its largest-ever stimulus packages (a scenario that should theoretically support Bitcoin's inflation-hedge narrative), the cryptocurrency continues to face selling pressure.
The stimulus package includes general account outlays of ¥17.7 trillion, significantly larger than previous years, representing what many are calling a "fiscal bazooka" aimed at supporting the Japanese economy during challenging economic times.
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