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Ambrose Evans-Pritchard writes the following:

Democrat leader Yukio Hatoyama, who won a landslide victory over the weekend, has pledged that there would be no increase in debt to fund his $180bn boost for child allowances and social policy by 2013, but his advisors are already back-tracking as they examine the dire tax figures.

While Japan pulled out of recession in the second quarter, it has barely begun to make up for the 11.7pc contraction of its economy over the preceding year. Industrial production was still down 23pc in July. Exports were down 39pc to the US.

Uh huh. These are great promises, but Japan's tax receipts are down 27% over the last year. This sounds oddly familiar.... our government's tax receipts are down huge as well, as are the tax receipts of the states.

Michael Taylor from Lombard Street Research said Japan made a strategic error during its Lost Decade by waiting too long to pull the monetary levers. "They failed to boost money supply the way the Fed and the Bank of England are trying to do through quantitative easing. Their fiscal packages led to a massive deterioration in public finances."

Oh nonsense.

Japan tried to avoid the truth. They tried to sweep the bad debt under the rug instead of forcing it out of the system. They attempted to apply the Keynesian "fix" that seems to be the tonic to all that ails the economy - spend spend spend and loosen loosen loosen monetary policy.

Did it work? No.

Nor will it work here, because just like in Japan the lies have not been flushed from the system and those who have hidden boluses of garbage have not been forced to admit to and clear them.

"IMF studies show that as public debt rises above 60pc of GDP fiscal stimulus loses it effect. People anticipate the consequences: higher taxes, and eventually higher interest rates. The bond vigilantes will always get you in the end," he said.

Hmmm.... Public debt in the US is about $11 trillion, GDP 14ish, so where does that leave us?

Here's a hint: But for Bernanke's machinations, we'd be forcing the bad debt into the open and clearing it now. Since we have refused for political purposes (read: bribes in the guise of "lobbying" and "campaign contributions") to force the exposure and resolution of bad debt, and instead have chosen to "extend and pretend" (lie), "mark to model" (tell damned lies) and not close banks immediately that are demonstrably insolvent (stick your head in the sand like an ostrich) we have a clogged credit system that is incapable - not unwilling - of properly performing its function in the economy.

Source: A Warning to America from the East