“I’m turning Japanese, I think I’m turning Japanese, I really think so.”

The English band, the Vapors, was an 80s one hit wonder with the song “Turning Japanese.”  I was never a fan but the tune seems to be getting renewed airplay with a very narrow audience these days: central bankers and economic policy makers.  The song has little to do with Japan, or Asia for that matter, aside from a clever oriental riff (it’s actually about love).  That hasn’t stopped policy makers from taking the chorus line at face value: namely the risk of their economy “turning Japanese”.

Turning Japanese in today’s macroeconomic environment means that your country (or block of countries) is at risk of deflation and if action is not taken quickly and decisively, that risk can turn into a 20 year battle, just like in Japan.

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