How Japan proved printing money can be a great idea

Tokyo

"EVERYBODY knows" that you can't get rich from just printing money, except for the part where sometimes you can.

Take Japan. Its unemployment rate has fallen to a 22-year low of 2.8 per cent due in large part to all the yen it has created the past four years. Money might not grow on trees, but it can get spit out of a central bank's computer.

How did Japan get to the point where it needed to give itself the economic equivalent of a defibrillator? Well, back in the early 1990s, it was the first country to go through the boom, bust and stagnation cycle that the United States, Europe and most of the rest of the world have gotten to know and hate so well.

Japan managed to avoid a full-fledged depression thanks to all of its infrastructure spending, but it couldn't escape a "lost decade" - a fancy way of saying that while it did grow, it didn't grow much. As economist Brad DeLong points out, Japan didn't just stop catching up with the United States…